Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 26, 2015 | Nov. 13, 2015 | Mar. 28, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | KEURIG GREEN MOUNTAIN, INC. | ||
Entity Central Index Key | 909,954 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 26, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-26 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 17,377,984,000 | ||
Entity Common Stock, Shares Outstanding | 148,926,020 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 59,334 | $ 761,214 |
Restricted cash and cash equivalents | 30,460 | 378 |
Short-term investment | 100,000 | |
Receivables, less uncollectible accounts and return allowances of $35,459 and $66,120 at September 26, 2015 and September 27, 2014, respectively | 517,936 | 621,451 |
Inventories | 691,980 | 835,167 |
Income taxes receivable | 51,786 | |
Other current assets | 95,526 | 69,272 |
Deferred income taxes, net | 70,181 | 58,038 |
Total current assets | 1,517,203 | 2,445,520 |
Fixed assets, net | 1,293,563 | 1,171,425 |
Intangibles, net | 423,887 | 365,444 |
Goodwill | 747,406 | 755,895 |
Deferred income taxes, net | 854 | 131 |
Long-term restricted cash | 278 | |
Other long-term assets | 18,386 | 58,892 |
Total assets | 4,001,577 | 4,797,307 |
Current liabilities: | ||
Current portion of long-term debt | 279 | 19,077 |
Current portion of capital lease and financing obligations | 3,271 | 2,226 |
Accounts payable | 298,609 | 411,107 |
Accrued expenses | 226,519 | 305,677 |
Income tax payable | 1,085 | 53,586 |
Dividend payable | 44,048 | 40,580 |
Deferred income taxes, net | 264 | 340 |
Other current liabilities | 28,049 | 10,395 |
Total current liabilities | 602,124 | 842,988 |
Long-term debt, less current portion | 330,766 | 140,937 |
Capital lease and financing obligations, less current portion | 117,187 | 116,240 |
Deferred income taxes, net | 195,063 | 202,936 |
Other long-term liabilities | $ 42,525 | $ 23,085 |
Commitments and contingencies (See Notes 6 and 20) | ||
Redeemable noncontrolling interests | $ 4,554 | $ 12,440 |
Stockholders' equity: | ||
Preferred stock, $0.10 par value: Authorized - 1,000,000 shares; No shares issued or outstanding | ||
Common stock, $0.10 par value: Authorized - 500,000,000 shares; Issued and outstanding - 153,209,256 and 162,318,246 shares at September 26, 2015 and September 27, 2014, respectively | $ 15,321 | $ 16,232 |
Additional paid-in capital | 879,060 | 1,808,881 |
Retained earnings | 2,014,279 | 1,687,619 |
Accumulated other comprehensive loss | (199,302) | (54,051) |
Total stockholders' equity | 2,709,358 | 3,458,681 |
Total liabilities and stockholders' equity | $ 4,001,577 | $ 4,797,307 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Consolidated Balance Sheets | ||
Receivables, uncollectible accounts and return allowances (in dollars) | $ 35,459 | $ 66,120 |
Preferred stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
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) | $ 0.10 | $ 0.10 |
Common stock, Authorized shares | 500,000,000 | 500,000,000 |
Common stock, Issued shares | 153,209,256 | 162,318,246 |
Common stock, outstanding shares | 153,209,256 | 162,318,246 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Consolidated Statements of Operations | |||
Net sales | $ 4,520,031 | $ 4,707,680 | $ 4,358,100 |
Cost of sales | 2,912,507 | 2,891,820 | 2,738,714 |
Gross profit | 1,607,524 | 1,815,860 | 1,619,386 |
Selling and operating expenses | 539,259 | 561,573 | 560,430 |
General and administrative expenses | 287,591 | 307,046 | 293,729 |
Restructuring expenses | 15,250 | ||
Operating income | 765,424 | 947,241 | 765,227 |
Other income, net | 1,123 | 262 | 960 |
Gain on financial instruments, net | 8,077 | 8,307 | 5,513 |
Loss on foreign currency, net | (22,166) | (19,746) | (12,649) |
Interest expense | (1,882) | (11,691) | (18,177) |
Income before income taxes | 750,576 | 924,373 | 740,874 |
Income tax expense | (251,948) | (326,959) | (256,771) |
Net Income | 498,628 | 597,414 | 484,103 |
Net income attributable to noncontrolling interests | 353 | 896 | 871 |
Net income attributable to Keurig | $ 498,275 | $ 596,518 | $ 483,232 |
Net income attributable to Keurig per common share: | |||
Basic (in dollars per share) | $ 3.17 | $ 3.80 | $ 3.23 |
Diluted (in dollars per share) | 3.14 | 3.74 | $ 3.16 |
Cash dividends declared per common share (in dollars per share) | $ 1.15 | $ 1 | |
Weighted-average common shares outstanding: | |||
Basic (in shares) | 157,286,303 | 157,085,574 | 149,638,636 |
Diluted (in shares) | 158,898,678 | 159,568,342 | 152,801,493 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 498,628 | $ 597,414 | $ 484,103 |
Cash flow hedges, Pre-tax: | |||
Unrealized gains (losses) arising during the period, Pre-tax | 1,135 | 20,641 | (3,732) |
(Gains) losses reclassified to net income, Pre-tax | (14,894) | 6,315 | 1,484 |
Foreign currency translation adjustments, Pre-tax | (137,469) | (52,068) | (28,742) |
Other comprehensive (loss) income, Pre-tax | (151,228) | (25,112) | (30,990) |
Cash flow hedges, Tax (expense) benefit: | |||
Unrealized gains (losses) arising during the period, Tax (expense) benefit | (342) | (8,307) | 1,489 |
(Gains) losses reclassified to net income, Tax (expense) benefit | 5,994 | (2,556) | (599) |
Other comprehensive (loss) income, Tax (expense) benefit | 5,652 | (10,863) | 890 |
Cash flow hedges, After-tax: | |||
Unrealized gains (losses) arising during the period, After-tax | 793 | 12,334 | (2,243) |
(Gains) losses reclassified to net income, After-tax | (8,900) | 3,759 | 885 |
Foreign currency translation adjustments, After-tax | (137,469) | (52,068) | (28,742) |
Other comprehensive (loss) income, After-tax | (145,576) | (35,975) | (30,100) |
Total comprehensive income | 353,052 | 561,439 | 454,003 |
Total comprehensive income (loss) attributable to noncontrolling interests | 13 | (203) | 156 |
Total comprehensive income attributable to Keurig | $ 353,039 | $ 561,642 | $ 453,847 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Total |
Balance at Sep. 29, 2012 | $ 15,268 | $ 1,464,560 | $ 771,200 | $ 10,200 | $ 2,261,228 |
Balance (in shares) at Sep. 29, 2012 | 152,680,855 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Options exercised | $ 285 | 19,532 | 19,817 | ||
Options exercised (in shares) | 2,849,308 | ||||
Issuance of common stock under employee stock purchase plan | $ 34 | 9,926 | 9,960 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 343,678 | ||||
Restricted stock awards and units | $ 3 | (3) | |||
Restricted stock awards and units (in shares) | 34,761 | ||||
Repurchase of common stock | $ (564) | (187,714) | (188,278) | ||
Repurchase of common stock (in shares) | (5,642,793) | ||||
Stock compensation expense | 26,081 | 26,081 | |||
Tax benefit from equity-based compensation plans | 54,706 | 54,706 | |||
Deferred compensation expense | 234 | 234 | |||
Adjustment of redeemable noncontrolling interests to redemption value | (2,025) | (2,025) | |||
Other comprehensive loss, net of tax | (29,385) | (29,385) | |||
Net income | 483,232 | 483,232 | |||
Balance at Sep. 28, 2013 | $ 15,026 | 1,387,322 | 1,252,407 | (19,185) | 2,635,570 |
Balance (in shares) at Sep. 28, 2013 | 150,265,809 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Sale of common stock | $ 1,809 | 1,346,605 | 1,348,414 | ||
Sale of common stock (in shares) | 18,091,139 | ||||
Options exercised | $ 187 | 27,930 | 28,117 | ||
Options exercised (in shares) | 1,872,448 | ||||
Issuance of common stock under employee stock purchase plan | $ 18 | 12,546 | 12,564 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 170,531 | ||||
Restricted stock awards and units | $ 6 | (6) | |||
Restricted stock awards and units (in shares) | 56,911 | ||||
Repurchase of common stock | $ (814) | (1,051,616) | (1,052,430) | ||
Repurchase of common stock (in shares) | (8,138,592) | ||||
Stock compensation expense | 30,673 | 30,673 | |||
Tax benefit from equity-based compensation plans | 55,218 | 55,218 | |||
Deferred compensation expense | 209 | 209 | |||
Adjustment of redeemable noncontrolling interests to redemption value | (2,368) | (2,368) | |||
Cash dividends declared | (158,938) | (158,938) | |||
Other comprehensive loss, net of tax | (34,866) | (34,866) | |||
Net income | 596,518 | 596,518 | |||
Balance at Sep. 27, 2014 | $ 16,232 | 1,808,881 | 1,687,619 | (54,051) | $ 3,458,681 |
Balance (in shares) at Sep. 27, 2014 | 162,318,246 | 162,318,246 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Options exercised | $ 152 | 16,406 | $ 16,558 | ||
Options exercised (in shares) | 1,520,757 | ||||
Issuance of common stock under employee stock purchase plan | $ 18 | 12,696 | 12,714 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 183,546 | ||||
Restricted stock awards and units | $ 22 | (22) | |||
Restricted stock awards and units (in shares) | 215,662 | ||||
Repurchase of common stock | $ (1,103) | (1,032,218) | (1,033,321) | ||
Repurchase of common stock (in shares) | (11,028,955) | ||||
Stock compensation expense | 31,934 | 31,934 | |||
Tax benefit from equity-based compensation plans | 40,846 | 40,846 | |||
Deferred compensation expense | 537 | 537 | |||
Adjustment of redeemable noncontrolling interests to redemption value | 7,560 | 7,560 | |||
Cash dividends declared | (179,175) | (179,175) | |||
Other comprehensive loss, net of tax | (145,251) | (145,251) | |||
Net income | 498,275 | 498,275 | |||
Balance at Sep. 26, 2015 | $ 15,321 | $ 879,060 | $ 2,014,279 | $ (199,302) | $ 2,709,358 |
Balance (in shares) at Sep. 26, 2015 | 153,209,256 | 153,209,256 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Cash flows from operating activities: | |||
Net income | $ 498,628 | $ 597,414 | $ 484,103 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization of fixed assets | 217,515 | 214,607 | 183,814 |
Amortization of intangibles | 48,148 | 43,032 | 45,379 |
Amortization of deferred financing fees | 4,606 | 5,651 | 7,125 |
Loss on impairment of fixed assets | 16,256 | ||
Unrealized (gain) loss on foreign currency, net | (2,862) | 15,196 | 9,159 |
Provision for doubtful accounts | 5,452 | 1,782 | 689 |
Provision for sales returns | 114,392 | 114,057 | 79,747 |
Gain on derivatives, net | (20,959) | (1,582) | (4,507) |
Excess tax benefits from equity-based compensation plans | (40,843) | (55,444) | (54,699) |
Deferred income taxes | (8,591) | (52,708) | (17,701) |
Deferred compensation and stock compensation | 32,471 | 30,882 | 26,315 |
Other | 10,563 | 4,224 | 759 |
Changes in assets and liabilities, net of acquisitions | |||
Receivables | (24,303) | (274,884) | (187,221) |
Inventories | 128,423 | (166,473) | 87,677 |
Income tax payable/receivable, net | (64,337) | 120,553 | 46,290 |
Other current assets | (23,573) | (838) | (12,668) |
Other long-term assets, net | 2,369 | 3,162 | 3,915 |
Accounts payable and accrued expenses | (155,922) | 133,818 | 133,532 |
Other current liabilities | (1,191) | (7,521) | 3,100 |
Other long-term liabilities | 18,620 | (5,495) | 1,161 |
Net cash provided by operating activities | 754,862 | 719,433 | 835,969 |
Cash flows from investing activities: | |||
Change in restricted cash | (5,383) | 182 | 3,005 |
Purchase of short-term investment | (100,000) | ||
Maturity of short term investment | 100,000 | ||
Acquisition, net of cash acquired | (180,698) | ||
Purchase of long-term investment | (1,000) | (35,905) | |
Proceeds from the sale of subsidiary, net of cash retained | 765 | ||
Capital expenditures for fixed assets | (411,099) | (337,860) | (232,780) |
Other investing activities | (1,016) | 1,164 | 4,208 |
Net cash used in investing activities | (498,431) | (472,419) | (225,567) |
Cash flows from financing activities: | |||
Net change in revolving line of credit | 330,000 | (226,210) | |
Proceeds from issuance of common stock under compensation plans | 29,272 | 40,681 | 29,777 |
Proceeds from sale of common stock | 1,348,414 | ||
Repurchase of common stock | (1,033,321) | (1,052,430) | (188,278) |
Excess tax benefits from equity-based compensation plans | 40,843 | 55,444 | 54,699 |
Payments on capital lease and financing obligations | (2,823) | (1,931) | (8,288) |
Deferred financing fees | (4,123) | ||
Proceeds from borrowings of long-term debt | 403 | ||
Repayment of long-term debt | (158,730) | (13,361) | (71,620) |
Dividends paid | (175,707) | (118,358) | |
Purchase of noncontrolling interest | (4,752) | ||
Other financing activities | 2,710 | (1,124) | (1,406) |
Net cash (used in) provided by financing activities | (971,879) | 252,986 | (411,326) |
Effect of exchange rate changes on cash and cash equivalents | 13,568 | 1,122 | 2,727 |
Net (decrease) increase in cash and cash equivalents | (701,880) | 501,122 | 201,803 |
Cash and cash equivalents at beginning of period | 761,214 | 260,092 | 58,289 |
Cash and cash equivalents at end of period | 59,334 | 761,214 | 260,092 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | (2,785) | 4,012 | 9,129 |
Cash paid for income taxes | 320,239 | 270,367 | 223,580 |
Dividends declared not paid at the end of each period | 44,048 | 40,580 | |
Fixed asset purchases included in accounts payable and not disbursed at the end of each year | 32,122 | 64,202 | 30,541 |
Noncash investing and financing activities: | |||
Fixed assets acquired under capital lease and financing obligations | $ 375 | $ 40,125 | 27,791 |
Settlement of acquisition-related liabilities through release of restricted cash | $ 9,227 |
Nature of Business and Organiza
Nature of Business and Organization | 12 Months Ended |
Sep. 26, 2015 | |
Nature of Business and Organization | |
Nature of Business and Organization | 1. Nature of Business and Organization Keurig Green Mountain, Inc. (together with its subsidiaries, "the Company") is a leader in the coffeemaker and specialty coffee businesses in the United States and Canada. Keurig Green Mountain, Inc. is a Delaware corporation. The Company manages its operations through two business segments, its United States operations within the Domestic segment (including immaterial operations related to international expansion) and its Canadian operations within the Canada segment. The Company distributes its products in two channels: at-home ("AH") and away-from-home ("AFH"). The Domestic segment sells brewers, accessories, and sources, produces and sells coffee, hot cocoa, teas and other beverages in K-Cup®, Vue®, Rivo®, K-Carafe™, and K-Mug™ pods ("pods", formerly referred to as portion packs) and coffee in more traditional packaging including bags and fractional packages to retailers including supermarkets, department stores, mass merchandisers, club stores, and convenience stores; to restaurants, hospitality accounts, office coffee distributors, and partner brand owners; and to consumers through its website. Substantially all of the Domestic segment's distribution to major retailers is processed by fulfillment entities which receive and fulfill sales orders and invoice certain retailers primarily in the AH channel. The Domestic segment also earns royalty income from pods sold by a third-party licensed roaster. The Canada segment sells brewers, accessories, and sources, produces and sells coffee and teas and other beverages in pods and coffee in more traditional packaging including bags, cans and fractional packages under a variety of brands to retailers including supermarkets, department stores, mass merchandisers, club stores, through office coffee services to offices, convenience stores, restaurants, hospitality accounts, and to consumers through its website. The Company's fiscal year ends on the last Saturday in September. Fiscal years 2015, 2014 and 2013 represent the years ended September 26, 2015, September 27, 2014 and September 28, 2013, respectively. Fiscal years 2015, 2014 and 2013 each consist of 52 weeks. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Sep. 26, 2015 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect amounts reported in the accompanying Consolidated Financial Statements. Significant estimates and assumptions by management affect the Company's inventory, deferred tax assets, allowance for sales returns, warranty reserves, accrued restructuring and other certain accrued expenses, goodwill, intangible and long-lived assets and stock-based compensation. Although the Company regularly assesses these estimates, actual results could differ from these estimates. Changes in estimates are recorded in the period they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and all of the entities in which the Company has a controlling financial interest. All intercompany transactions and accounts are eliminated in consolidation. Noncontrolling Interests Noncontrolling interests ("NCI") are evaluated by the Company and are shown as either a liability, temporary equity (shown between liabilities and equity) or as permanent equity depending on the nature of the redeemable features at amounts based on formulas specific to each entity. Generally, mandatorily redeemable NCI's are classified as liabilities and non-mandatorily redeemable NCI's are classified outside of stockholders' equity in the Consolidated Balance Sheets as temporary equity under the caption, Redeemable noncontrolling interests, and are measured at their redemption values at the end of each period. If the redemption value is greater than the carrying value, an adjustment is recorded in retained earnings to record the NCI at its redemption value. Redeemable NCIs that are mandatorily redeemable are classified as a liability in the Consolidated Balance Sheets under either Other current liabilities or Other long-term liabilities , depending on the remaining duration until settlement, and are measured at the amount of cash that would be paid if settlement occurred at the balance sheet date with any change from the prior period recognized as interest expense. See Note 9, Noncontrolling Interests in the Consolidated Financial Statements included in this Annual Report for further information. Net income attributable to NCIs reflects the portion of the net income (loss) of consolidated entities applicable to the NCI stockholders in the accompanying Consolidated Statements of Operations. The net income attributable to NCIs is classified in the Consolidated Statements of Operations as part of consolidated net income and deducted from total consolidated net income to arrive at the net income attributable to the Company. If a change in ownership of consolidated subsidiary results in a loss of control or deconsolidation, any retained ownership interests are remeasured with the gain or loss reported to net earnings. Business Combinations The Company uses the acquisition method of accounting for business combinations and recognizes assets acquired and liabilities assumed measured at their fair values on the date acquired. Goodwill represents the excess of the purchase price over the fair value of the net assets. The fair values of the assets and liabilities acquired are determined based upon the Company's valuation. The valuation involves making significant estimates and assumptions which are based on detailed financial models including the projection of future cash flows, the weighted average cost of capital and any cost savings that are expected to be derived in the future. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include money market funds which are carried at cost, plus accrued interest, which approximates fair value. The Company does not believe that it is subject to any unusual credit or market risk. Restricted Cash and Cash Equivalents Restricted cash and cash equivalents represents cash that is not available for use in our operations. The Company had restricted cash and cash equivalents of $30.5 million and $0.4 million as of September 26, 2015 and September 27, 2014, respectively. Short-Term Investments The Company considers all investments purchased with an original maturity of more than three months but less than one year to be short-term investments. The short-term investment balance as of September 27, 2014 represented a certificate of deposit that the Company had the intent and ability to hold to maturity. It was therefore classified as held-to-maturity and carried at amortized cost. The fair value of this instrument was equal to its amortized cost and therefore there were no unrealized gains or losses associated with the instrument. Allowance for Doubtful Accounts A provision for doubtful accounts is provided based on a combination of historical experience, specific identification and customer credit risk where there are indications that a specific customer may be experiencing financial difficulties. Inventories Inventories consist primarily of green and roasted coffee, including coffee in pods, purchased finished goods such as coffee brewers, and packaging materials. Inventories are stated at the lower of cost or market. Cost is being measured using an adjusted standard cost method which approximates FIFO (first-in, first-out). The Company regularly reviews whether the net realizable value of its inventory is lower than its carrying value. If the valuation shows that the net realizable value is lower than the carrying value, the Company takes a charge to cost of sales and directly reduces the carrying value of the inventory. The Company estimates any required write downs for inventory obsolescence by examining its inventories on a quarterly basis to determine if there are indicators that the carrying values exceed net realizable value. Indicators that could result in additional inventory write downs include age of inventory, damaged inventory, slow moving products and products at the end of their life cycles. While management believes that inventory is appropriately stated at the lower of cost or market, significant judgment is involved in determining the net realizable value of inventory. Financial Instruments The Company enters into various types of financial instruments in the normal course of business. Fair values are estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk. Cash, cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses are reported at carrying value and approximate fair value due to the short maturity of these instruments. Long-term debt is also reported at carrying value, which approximates fair value due to the fact that the interest rate on the debt is based on variable interest rates. The fair values of derivative financial instruments have been determined using market information and valuation methodologies. Changes in assumptions or estimates could affect the determination of fair value; however, management does not believe any such changes would have a material impact on the Company's financial condition, results of operations or cash flows. The fair values of short-term investments and derivative financial instruments are disclosed in Note 13, Fair Value Measurements , in the Consolidated Financial Statements included in this Annual Report. Derivative Instruments The Company enters into over-the-counter derivative contracts based on coffee futures ("coffee futures") to hedge against price increases in price-to-be-coffee purchase commitments and anticipated coffee purchases. Coffee purchases are generally denominated in the U.S. dollar. The Company also enters into interest rate swap agreements to mitigate interest rate risk associated with the Company's variable-rate borrowings and foreign currency forward contracts to hedge the purchase and payment of certain green coffee purchase commitments as well as certain recognized liabilities in currencies other than the Company's functional currency. All derivatives are recorded at fair value. Interest rate swaps, coffee futures, and certain foreign currency forward contracts which hedge the purchase and payment of green coffee purchase commitments are designated as cash flow hedges with the effective portion of the change in the fair value of the derivative instrument recorded as a component of other comprehensive income ("OCI") and subsequently reclassified into net earnings when the hedged exposure affects net earnings. Foreign currency forward contracts which hedge certain recognized liabilities denominated in non-functional currencies are designated as fair value hedges with the changes in the fair value of these instruments along with the changes in the fair value of the hedged liabilities recognized in gain or loss on foreign currency, net in the Consolidated Statements of Operations. Effectiveness is determined by how closely the changes in the fair value of the derivative instrument offset the changes in the fair value of the hedged item. The ineffective portion of the change in the fair value of the derivative instrument is recorded directly to earnings. The Company formally documents hedging instruments and hedged items, and measures at each balance sheet date the effectiveness of its hedges. When it is determined that a derivative is not highly effective, the derivative expires, or is sold or terminated, or the derivative is discontinued because it is unlikely that a forecasted transaction will occur, the Company discontinues hedge accounting prospectively for that specific hedge instrument. The Company also occasionally enters into certain foreign currency forward contracts to hedge certain exposures that are not designated as hedging instruments for accounting purposes. These contracts are recorded at fair value, with the changes in fair value recognized in the Consolidated Statements of Operations. The Company does not engage in speculative transactions, nor does it hold derivative instruments for trading purposes. See Note 12, Derivative Financial Instruments and Note 15, Stockholders' Equity in the Consolidated Financial Statements included in this Annual Report for further information. Deferred Financing Costs Deferred financing costs consist primarily of commitment fees and loan origination fees and are being amortized over the respective life of the applicable debt using a method that approximates the effective interest rate method. Deferred financing costs included in Other long-term assets in the accompanying Consolidated Balance Sheets as of September 26, 2015 and September 27, 2014 was $7.0 million and $9.6 million, respectively. Goodwill and Intangibles Goodwill is tested for impairment annually at the end of the Company's fiscal year or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is assigned to reporting units for purposes of impairment testing. A reporting unit is the same as an operating segment or one level below an operating segment. The Company may assess qualitative factors to determine if it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further testing is necessary. If, however, the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the first step of a two-step goodwill impairment test. The assessment of qualitative factors is optional and at the Company's discretion. The Company may bypass the qualitative assessment for any reporting unit in any period and perform the first step of the quantitative goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period. The first step is a comparison of each reporting unit's fair value to its carrying value. The Company estimates fair value based on a weighting of the income approach, using discounted cash flows, and the market approach, using the guideline company method. The reporting unit's discounted cash flows require significant management judgment with respect to sales forecasts, gross margin percentages, selling, operating, general and administrative ("SG&A") expenses, capital expenditures and the selection and use of an appropriate discount rate. The projected sales, gross margin and SG&A expense rate assumptions and capital expenditures are based on the Company's annual business plan or other forecasted results. Discount rates reflect market-based estimates of the risks associated with the projected cash flows directly resulting from the use of those assets in operations. The market approach uses observable market data such as comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the extent available). The estimates of fair value of reporting units are based on the best information available as of the date of the assessment. If the carrying value of a reporting unit exceeds its estimated fair value in the first step, a second step is performed, which requires the Company to allocate the fair value of the reporting unit derived in the first step to the fair value of the reporting unit's net assets, with any fair value in excess of amounts allocated to such net assets representing the implied fair value of goodwill for that reporting unit. If the implied fair value of the goodwill is less than the book value, goodwill is impaired and is written down to the implied fair value amount. Intangible assets that have finite lives are amortized over their estimated economic useful lives on a straight line basis. Intangible assets that have indefinite lives are not amortized and are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Similar to the qualitative assessment for goodwill, the Company may assess qualitative factors to determine if it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If the Company determines that it is not more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, no further testing is necessary. If, however, the Company determines that it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the Company compares the fair value of the indefinite-lived asset with its carrying amount. If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, the individual indefinite-lived intangible asset is written down by an amount equal to such excess. The assessment of qualitative factors is optional and at the Company's discretion. The Company may bypass the qualitative assessment for any indefinite-lived intangible asset in any period and resume performing the qualitative assessment in any subsequent period. Impairment of Long-Lived Assets When facts and circumstances indicate that the carrying values of long-lived assets, including fixed assets, may be impaired, an evaluation of recoverability is performed by comparing the carrying value of the assets, at an asset group level, to undiscounted projected future cash flows in addition to other quantitative and qualitative analyses. When assessing impairment, property, plant and equipment assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of other groups of assets. Upon indication that the carrying value of such assets may not be recoverable, the Company recognizes an impairment loss as a charge against current operations based upon an assessment of fair value of such assets. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value, less estimated costs to sell. The Company makes judgments related to the expected useful lives of long-lived assets and its ability to realize undiscounted cash flows in excess of the carrying amounts of such assets which are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions and changes in operating performance. Fixed Assets Fixed assets are carried at cost, net of accumulated depreciation. Expenditures for maintenance, repairs and renewals of minor items are expensed as incurred. Expenditures for refurbishments and improvements that significantly improve the productive capacity or extend the useful life of an asset are capitalized. Depreciation is calculated using the straight-line method over the assets' estimated useful lives. The cost and accumulated depreciation for fixed assets sold, retired, or otherwise disposed of are relieved from the accounts, and the resultant gains and losses are reflected in income. The Company follows an industry-wide practice of purchasing and loaning coffee brewing and related equipment to wholesale customers in our AFH channel. These assets are also carried at cost, net of accumulated depreciation. Depreciation costs of manufacturing and distribution assets are included in cost of sales on the Consolidated Statements of Operations. Depreciation costs of other assets, including equipment on loan to customers, are included in selling and operating expenses on the Consolidated Statements of Operations. Leases Occasionally, the Company is involved in the construction of leased properties. Due to the extent and nature of that involvement, the Company is deemed the owner during the construction period and is required to capitalize the construction costs on the Consolidated Balance Sheets along with a corresponding financing obligation for the project costs that are incurred by the lessor. Upon completion of the project, a sale-leaseback analysis is performed to determine if the Company can record a sale to remove the assets and related obligation and record the lease as either an operating or capital lease obligation. If the Company is precluded from derecognizing the assets when construction is complete due to continuing involvement beyond a normal leaseback, the lease is accounted for as a financing transaction and the recorded asset and related financing obligation remain on the Consolidated Balance Sheet. Accordingly, the asset is depreciated over its estimated useful life in accordance with the Company's policy. If the Company is not considered the owner of the land, a portion of the lease payments is allocated to ground rent and treated as an operating lease. The portion of the lease payment allocated to ground rental expense is based on the fair value of the land at the commencement of construction. Lease payments allocated to the buildings are recognized as reductions to the financing obligation and interest expense. See Note 20 Commitments and Contingencies , for further information. Leases that qualify as capital leases are recorded at the lower of the fair value of the asset or the present value of the future minimum lease payments over the lease term generally using the Company's incremental borrowing rate. Assets leased under capital leases are included in fixed assets and generally are depreciated over the lease term. Lease payments under capital leases are recognized as a reduction of the capital lease obligation and interest expense. All other leases are considered operating leases. Assets subject to an operating lease are not recorded on the balance sheet. Lease payments are recognized on a straight-line basis as rent expense over the expected lease term. Revenue Recognition Revenue from sales of brewer systems, coffee and other specialty beverages in pods, and coffee in more traditional packaging including whole bean and ground coffee selections in bags and ground coffee in fractional packs is recognized when title and risk of loss passes to the customer, which generally occurs upon shipment or delivery of the product to the customer as defined by the contractual shipping terms. Shipping charges billed to customers are also recognized as revenue, and the related shipping costs are included in cost of sales. Cash received in advance of product delivery is recorded in deferred revenue, which is included in other current liabilities on the accompanying Consolidated Balance Sheets, until earned. The majority of the Company's distribution to major retailers is processed by fulfillment entities. The fulfillment entities receive and fulfill sales orders and invoice certain retailers. All product shipped by the Company to the fulfillment entities are owned by the Company and included in inventories on the accompanying consolidated balance sheets. The Company recognizes revenue when delivery of the product from the fulfillment entity to the retailer has occurred based on the contractual shipping terms and when all other revenue recognition criteria are met. Sales of brewers, pods and other products are recognized net of any discounts, returns, allowances and sales incentives, including coupon redemptions and rebates. The Company estimates the allowance for returns using an average return rate based on historical experience and an evaluation of contractual rights or obligations. The Company routinely participates in trade promotion programs with customers, including customers whose sales are processed by the fulfillment entities, whereby customers can receive certain incentives and allowances which are recorded as a reduction to sales when the sales incentive is offered and committed to or, if the incentive relates to specific sales, at the later of when that revenue is recognized or the date at which the sales incentive is offered. These incentives include, but are not limited to, cash discounts and volume based incentive programs. Allowances to customers that are directly attributable and supportable by customer promotional activities are recorded as selling expenses at the time the promotional activity occurs. Roasters licensed by the Company to manufacture and sell pods, both to the Company for resale and to their other coffee customers, are obligated to pay a royalty to the Company upon shipment to their customer. The Company records royalty revenue upon shipment of pods by licensed roasters to third-party customers as set forth under the terms and conditions of various licensing agreements. For shipments of pods to the Company for resale, this royalty payment is recorded as a reduction to the carrying value of the related pods in inventory and as a reduction to cost of sales when sold through to third-party customers by the Company. Cost of Sales Cost of sales for the Company consists of the cost of raw materials including coffee beans, hot cocoa, flavorings and packaging materials; a portion of our rental expense; production, warehousing and distribution costs which include salaries; distribution and merchandising personnel; leases and depreciation on facilities and equipment used in production; the cost of brewers manufactured by suppliers; third-party fulfillment charges; receiving, inspection and internal transfer costs; warranty expense; freight, duties and delivery expenses; and certain third-party royalty charges. All shipping and handling expenses are also included as a component of cost of sales. Product Warranty The Company provides for the estimated cost of product warranties in cost of sales, at the time product revenue is recognized. Warranty costs are estimated primarily using historical warranty information in conjunction with current engineering assessments applied to the Company's expected repair or replacement costs. The estimate for warranties requires assumptions relating to expected warranty claims which can be impacted significantly by quality issues. Advertising Costs The Company expenses the costs of advertising the first time the advertising takes place, except for direct mail campaigns targeted directly at consumers, which are expensed over the period during which they are expected to generate sales. As of September 26, 2015 and September 27, 2014, prepaid advertising costs of $3.7 million and $3.3 million, respectively, were recorded in Other current assets in the accompanying Consolidated Balance Sheets. Advertising expense totaled $115.8 million, $137.2 million, and $193.2 million, for fiscal years 2015, 2014, and 2013, respectively. Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax benefits or consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Judgment is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities. These include establishing a valuation allowance related to the ability to realize certain deferred tax assets. The Company currently believes that future earnings and current tax planning strategies will be sufficient to recover substantially all of the Company's recorded net deferred tax assets. To the extent future taxable income against which these assets may be applied is not sufficient, some portion or all of our recorded deferred tax assets would not be realizable. Accounting for uncertain tax positions also requires significant judgments, including estimating the amount, timing and likelihood of ultimate settlement. Although the Company believes that its estimates are reasonable, actual results could differ from these estimates. The Company uses a more-likely-than-not measurement attribute for all tax positions taken or expected to be taken on a tax return in order for those tax positions to be recognized in the financial statements. Stock-Based Compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Equity awards consist of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs"), and performance stock units ("PSUs"). The cost is recognized over the period during which an employee is required to provide service in exchange for the award. The Company measures the fair value of stock options using the Black-Scholes option pricing model and certain assumptions, including the expected life of the stock options, an expected forfeiture rate and the expected volatility of its common stock. The expected life of options is estimated based on options vesting periods, contractual lives and an analysis of the Company's historical experience. The expected forfeiture rate is based on the Company's historical employee turnover experience and future expectations. The risk-free interest rate is based on the U.S. Treasury rate over the expected life. The Company uses a blended historical volatility to estimate expected volatility at the measurement date. The fair value of RSUs, RSAs and PSUs is based on the closing price of the Company's common stock on the grant date. Foreign Currency Translation and Transactions The financial statements of the Company's foreign subsidiaries are translated into the reporting currency of the Company which is the U.S. dollar. The functional currency of certain of the Company's foreign subsidiaries is the local currency of the subsidiary. Accordingly, the assets and liabilities of the Company's foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts are generally translated using the average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income or loss as a separate component of stockholders' equity. Gains and losses arising from transactions denominated in currencies other than the functional currency of the entity are charged directly against earnings in the Consolidated Statement of Operations. Gains and losses arising from transactions denominated in foreign currencies are primarily related to inter-company loans that have been determined to be temporary in nature, cash, long-term debt and accounts payable denominated in non-functional currencies. Significant Customer Credit Risk and Supply Risk The majority of the Company's customers are located in the U.S. and Canada. With the exception of M.Block & Sons ("MBlock") as described below, concentration of credit risk with respect to accounts receivable is limited due to the large number of customers in various channels comprising the Company's customer base. The Company does not require collateral from customers as ongoing credit evaluations of customers' payment histories are performed. The Company maintains reserves for potential credit losses and such losses, in the aggregate, have not exceeded management's expectations. The Company procures the majority of the brewers it sells from one third-party brewer manufacturer. Purchases from this brewer manufacturer amounted to approximately $443.1 million, $735.2 million and $637.0 million in fiscal years 2015, 2014 and 2013, respectively. The Company primarily relies on MBlock to process the majority of sales orders for our AH business with retailers in the United States. The Company is subject to significant credit risk regarding the creditworthiness of MBlock and, in turn, the creditworthiness of the retailers. Sales processed by MBlock to retailers amounted to $1,557.5 million, $1,706.1 million and $1,600.2 million for fiscal years 2015, 2014 and 2013, respectively. The Company's account receivables due from MBlock amounted to $69.1 million and $148.2 million at September 26, 2015 and September 27, 2014, respectively. Sales to customers that represented more than 10% of the Company's net sales included Wal-Mart Stores, Inc. and affiliates ("Wal-Mart"), representing approximately 17%, 17% and 14% of consolidated net sales for fiscal years 2015, 2014 and 2013 respectively; and Costco Wholesale Corporation and affiliates ("Costco"), representing approximately 12%, 12% and 11% of consolidated net sales for fiscal 2015, 2014, and 2013, respectively. For Wal-Mart, the majority of U.S. sales are processed through MBlock whereby MBlock is the vendor of record. Starting in fiscal 2012, for U.S. sales to Costco, the Company became the vendor of record and although the sales are processed through MBlock, the Company records the account receivables from the customer and pays MBlock for their fulfillment services. The Company's account receivables due from Costco amounted to $66.9 million and $104.5 million, net of allowances, at September 26, 2015 and September 27, 2014, respectively. Research & Development Research and development charges are expensed as incurred. These expenses amounted to $84.7 million, $76.5 million and $57.7 million in fiscal years 2015, 2014 and 2013, respectively. These costs primarily consist of salary and consulting expenses and are recorded in selling and operating expenses in each respective segment of the Company. Collaborative Arrangements From time to time, the Company enters into collaborative arrangements for the research and development ("R&D"), manufacture and/or commercialization of products and product candidates. These collaborations generally provide R&D cost sharing, and/or royalty payments. The Company's collaboration agreements with third parties are performed with no guarantee of either technological or commercial success. No cost recoveries or royalties have been received to date under these arrangements. Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03— Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"), which changes the p |
Acquisition
Acquisition | 12 Months Ended |
Sep. 26, 2015 | |
Acquisition | |
Acquisition | 3. Acquisition Fiscal 2015 On December 18, 2014, the Company, through its wholly owned subsidiary Keurig International S.à.r.l., acquired all of the outstanding equity of MDS Global Holding p.l.c. ("Bevyz"), a manufacturer and distributor of an all-in-one drink system, for total cash consideration of $180.7 million, net of cash acquired. The Company currently intends to hold the rights to the technology acquired to prevent others from using such technology. Such defensive action likely contributes to the value of the Company's Keurig® Kold beverage system. The goodwill represents the excess value of the purchase price over the aggregate fair value of the tangible and intangible assets acquired. The goodwill primarily represents the intangible assets that do not qualify for separate recognition, such as expected synergies from combined operations and assembled workforces, and the future development initiatives of the assembled workforces. The goodwill and intangible assets recognized in the acquisition are not deductible for tax purposes. Prior to the acquisition, the Company owned approximately 15% of the outstanding equity of Bevyz. During the second quarter ended March 28, 2015, the Company completed its valuation of the fair value of the business acquired and the acquisition date fair value of the Company's previously held equity interest in Bevyz with the exception of the tax impact of the transaction. The fair value for 100% of Bevyz identifiable assets less liabilities assumed was determined using an income approach. The excess of (i) the sum of the consideration for the shares purchased on December 18, 2014 and the acquisition date fair value of the Company's previously held equity interest in Bevyz, over (ii) 100% of the fair value of identifiable assets acquired less liabilities assumed, was recognized as goodwill. The acquisition date fair value of the Company's previously held equity interest in Bevyz was determined using a market approach, specifically prior transactions in shares of Bevyz, which resulted in the recognition of a $1.5 million loss included in other income, net in the accompanying Consolidated Statements of Operations. Amortizable intangible assets acquired, valued at the date of acquisition, include approximately $161.7 million for defensive intangible assets, $3.8 million for non-compete agreements and $1.6 million for contractual agreements. Amortizable intangible assets are amortized on a straight-line basis over their respective useful lives, and the weighted-average amortization period is 12.8 years. The weighted-average amortization periods for defensive intangible assets, non-compete agreements, and contractual agreements are 13 years, 3 years, and 15 years, respectively. The following summarizes the allocation of fair value (in thousands): Accounts receivable $ Inventories Other current assets Fixed assets Other long-term assets Intangibles Goodwill Accounts payable and accrued expenses ) Capital lease obligation ) Deferred tax liability ) Other long-term liabilities ) Total estimated fair value net assets acquired Less fair value of previously held equity interest in Bevyz ) Total cash paid, net of cash acquired $ Acquisition costs of $1.5 million were expensed as incurred and recognized in general and administrative expenses in the fourth quarter of fiscal 2014. Approximately $25.0 million of the purchase price was held in escrow at September 26, 2015 and is included under the captions Restricted cash and cash equivalents and Other current liabilities in the accompanying Consolidated Balance Sheet. The revenue and earnings of Bevyz since acquisition and the proforma financial statements are immaterial. For information on the assignment of goodwill to our operating segments, see Note 8, Goodwill and Intangible Assets . |
Segment Reporting
Segment Reporting | 12 Months Ended |
Sep. 26, 2015 | |
Segment Reporting | |
Segment Reporting | 4. Segment Reporting Segment information is prepared on the same basis that our CEO, who is our chief operating decision maker ("CODM"), manages the business, evaluates financial results, and makes key operating decisions. The structure includes a Domestic segment containing all U.S. Operations and immaterial operations related to international expansion, and a Canada segment containing all Canadian operations. For a description of the operating segments, see Note 1, Nature of Business and Organization . Management evaluates the performance of the Company's operating segments based on several factors, including net sales to external customers and operating income. Net sales are recorded on a segment basis and intersegment sales are eliminated within the operating segment as part of the financial consolidation process. Operating income represents gross profit less selling, operating, general and administrative, and restructuring expenses. The Company's manufacturing operations occur within both the Domestic and Canada segments, and the costs of manufacturing are recognized in cost of sales in the operating segment in which the sale occurs. Information system technology services are mainly centralized while finance and accounting functions are primarily decentralized. Expenses consisting primarily of compensation and depreciation related to certain centralized administrative functions including information system technology are allocated to the operating segments. Expenses not specifically related to an operating segment are presented under "Corporate Unallocated." Corporate Unallocated expenses are comprised mainly of the compensation and other related expenses of certain of the Company's senior executive officers and other selected employees who perform duties related to the entire enterprise. Corporate Unallocated expenses also include depreciation for corporate headquarters, sustainability expenses, legal expenses, and other professional fees. The Company does not disclose assets or property additions by segment as only consolidated asset information is provided to the CODM for use in decision making. The following tables summarize selected financial data for segment disclosures for fiscal 2015, 2014 and 2013. For Fiscal 2015 (Dollars in thousands) Domestic Canada Corporate- Unallocated Consolidated Net sales $ $ $ — $ Operating income (loss) $ $ $ ) $ Depreciation and amortization $ $ $ $ Stock compensation expense $ $ $ $ For Fiscal 2014 (Dollars in thousands) Domestic Canada Corporate- Unallocated Consolidated Net sales $ $ $ — $ Operating Income (loss) $ $ $ ) $ Depreciation and amortization $ $ $ $ Stock compensation expense $ $ $ $ For Fiscal 2013 (Dollars in thousands) Domestic Canada Corporate- Unallocated Consolidated Net sales $ $ $ — $ Operating Income (loss) $ $ $ ) $ Depreciation and amortization $ $ $ $ Stock compensation expense $ $ $ $ Geographic Information Net sales are attributed to countries based on the location of the customer. Information concerning net sales of principal geographic areas is as follows (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Net Sales: United States $ $ $ Canada Other $ $ $ Sales to customers that represented more than 10% of the Company's net sales included Wal-Mart, representing approximately 17%, 17% and 14% of consolidated net sales for fiscal years 2015, 2014 and 2013, respectively, and Costco, representing approximately 12%, 12% and 11% of consolidated net sales for fiscal 2015, 2014 and 2013, respectively. Sales to Wal-Mart and Costco in fiscal years 2015, 2014 and 2013 were through both the Domestic and Canada segments. Information concerning long-lived assets of principal geographic area is as follows (in thousands) as of: September 26, 2015 September 27, 2014 Fixed Assets, net: United States $ $ Canada Other $ $ Net Sales by Major Product Category Net sales by major product category (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Pods $ $ $ Brewers and Accessories Other Products and Royalties $ $ $ |
Restructuring Programs
Restructuring Programs | 12 Months Ended |
Sep. 26, 2015 | |
Restructuring Programs | |
Restructuring Programs | 5. Restructuring Programs On July 31, 2015, the Company's Board of Directors approved a multi-year productivity program intended to reduce structural costs and streamline organization structures to drive efficiency. In connection with the program, the Company expects to ultimately reduce its workforce by approximately 330 roles, or 5%, over the first two quarters of the program. Implementation of the productivity program is expected to result in cumulative pre-tax restructuring charges of approximately $18.6 million, primarily including costs associated with employee terminations and other business transition costs and accelerated depreciation on assets as a result of a business exit plan. A pretax restructuring charge of $15.3 million was recorded in the fourth quarter of fiscal 2015, the first fiscal quarter of the program, of which approximately $11.5 million represents employee severance related costs that will be settled in cash. The following represents cumulative estimated pre-tax restructuring charges, by segment, to be incurred for the implementation of the productivity program (in thousands): 2015 Expenses Incurred 2016 Estimated Expenses Cumulative Estimated Expenses Domestic $ $ $ Canada Corporate—Unallocated — Total $ $ $ In fiscal 2015, the Company recorded restructuring expenses for the multi-year productivity program under the caption Restructuring expenses, within operating income in the accompanying Consolidated Statements of Operations as follows (in thousands): Severance and Related Costs Asset Write- downs Other Exit Activities Total Domestic $ $ $ — $ Canada — Corporate Unallocated — — Total fiscal 2015 restructuring charge $ $ $ $ The activity for the restructuring liability associated with the multi-year productivity program was as follows (in thousands): Severance and Related Costs Asset Write- downs Other Exit Activities Total Liability balance, September 27, 2014 — — — — Charges Cash spent ) — — ) Non-cash settlements / adjustments ) ) — ) Foreign currency adjustments — ) Liability balance, September 26, 2015 — The Company spent $3.0 million in fiscal 2015 in cash severance and related costs. The Company also recognized non-cash asset write-downs (including accelerated depreciation) and other non-cash adjustments totaling $3.4 million in fiscal 2015. At September 26, 2015, the Company's accrued restructuring liability was recorded in accrued expenses. |
Inventories
Inventories | 12 Months Ended |
Sep. 26, 2015 | |
Inventories | |
Inventories | 6. Inventories Inventories consisted of the following (in thousands) as of: September 26, 2015 September 27, 2014 Raw materials and supplies $ $ Finished goods $ $ As of September 26, 2015, the Company had approximately $264.3 million in green coffee purchase commitments, of which approximately 90% had a fixed price. These commitments primarily extend through fiscal 2017. The value of the variable portion of these commitments was calculated using an average "C" price of coffee of $1.29 per pound at September 26, 2015. In addition to its green coffee commitments, the Company had approximately $313.6 million in fixed price brewer and related accessory purchase commitments and $920.9 million in production raw materials commitments at September 26, 2015. The Company believes, based on relationships established with its suppliers, that the risk of non-delivery on such purchase commitments is remote. As of September 26, 2015, minimum future inventory purchase commitments were as follows (in thousands): Fiscal Year Inventory Purchase Obligations (1) 2016 $ 2017 2018 2019 2020 Thereafter — $ (1) Certain purchase obligations are determined based on a contractual percentage of forecasted volumes. |
Fixed Assets
Fixed Assets | 12 Months Ended |
Sep. 26, 2015 | |
Fixed Assets | |
Fixed Assets | 7. Fixed Assets Fixed assets consisted of the following (in thousands) as of: Useful Life in Years September 26, 2015 September 27, 2014 Production equipment 1 - 15 $ $ Coffee service equipment 3 - 7 Computer equipment and software 1 - 6 Land Indefinite Building and building improvements 4 - 30 Furniture and fixtures 1 - 15 Vehicles 4 - 5 Leasehold improvements 1 - 20 or remaining life of lease, whichever is less Assets acquired under capital leases 5 - 15 Construction-in-progress Total fixed assets $ $ Accumulated depreciation ) ) $ $ Assets acquired under capital leases, net of accumulated amortization, were $32.0 million and $34.1 million at September 26, 2015 and September 27, 2014, respectively. Total depreciation and amortization expense relating to all fixed assets was $217.5 million, $214.6 million and $183.8 million for fiscal years 2015, 2014, and 2013, respectively. Assets classified as construction-in-progress are not depreciated, as they are not ready for productive use. During fiscal years 2015, 2014 and 2013, $21.7 million, $8.0 million, and $6.1 million, respectively, of interest expense was capitalized. In September 2015, the Company decided to discontinue sales of the Keurig ® Bolt ® brewer and accordingly revised its forecasted unit sales for fiscal year 2016 and beyond. As a result of this decision the Company recorded an impairment loss of $16.3 million in fiscal 2015, which was included in Cost of sales in the Consolidated Statements of Operations. These impairment losses were recorded in the Domestic segment. The fair value of the Keurig ® Bolt ® asset group was determined based upon the discounted cash flow method. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Sep. 26, 2015 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 8. Goodwill and Intangible Assets The following represented the change in the carrying amount of goodwill by segment for fiscal 2015 and 2014 (in thousands): Domestic Canada Total Balance as of September 28, 2013 $ $ $ Other — ) ) Foreign currency effect — ) ) Balance as of September 27, 2014 $ $ $ Acquisition of Bevyz (see Note 3, Acquisition) $ $ — $ Foreign currency effect $ ) $ ) $ ) Balance as of September 26, 2015 $ $ $ Indefinite-lived intangible assets included in the Canada operating segment consisted of the following (in thousands) as of: September 26, 2015 September 27, 2014 Trade names $ $ The Company conducted its annual impairment test of goodwill and indefinite-lived intangible assets as of September 26, 2015, and elected to bypass the optional qualitative assessment and performed a quantitative impairment test. Goodwill was evaluated for impairment at the following reporting unit levels: • Domestic • Canada—Roasting and Retail • Canada—Coffee Services Canada For the goodwill impairment test, the fair value of the reporting units was estimated based on a weighting of the income approach, using the discounted cash flow method, and the market approach, using the guideline company method. A number of significant assumptions and estimates are involved in the application of the discounted cash flow method, including discount rate, sales volume and prices, costs to produce and working capital changes. The market approach uses observable market data such as comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the extent available). For the indefinite-lived intangible assets impairment test, the fair value of the trade name was estimated using the Relief-from-Royalty Method. This method estimates the savings in royalties the Company would otherwise have had to pay if it did not own the trade name and had to license the trade name from a third-party with rights of use substantially equivalent to ownership. The fair value of the trade name is the present value of the future estimated after-tax royalty payments avoided by ownership, discounted at an appropriate, risk-adjusted rate of return. For goodwill and indefinite-lived intangible impairment tests, the Company used a royalty rate of 4.0%, an income tax rate of 37.5% for the United States and 26.6% for Canada, and discount rates ranging from 10.5% to 16.5%. There was no material impairment of goodwill or indefinite-lived intangible assets in fiscal years 2015, 2014, or 2013. Intangible Assets Subject to Amortization Definite-lived intangible assets consisted of the following (in thousands) as of: September 26, 2015 September 27, 2014 Useful Life in Years Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Acquired technology 4 - 15 $ $ ) $ $ ) Defensive intangible assets (1) ) — — Customer and roaster agreements 10 - 11 ) ) Customer relationships 2 - 16 ) ) Trade names 5 - 11 ) ) Non-compete agreements 3 - 5 ) — — Total $ $ ) $ $ ) (1) See Note 3, Acquisition , for discussion of defensive intangible assets acquired in connection with the Bevyz acquisition. Definite-lived intangible assets are amortized on a straight-line basis over the period of expected economic benefit. Total amortization expense was $48.1 million, $43.0 million, and $45.4 million for fiscal years 2015, 2014, and 2013, respectively. The weighted average remaining life for definite-lived intangibles at September 26, 2015 is 8.7 years. The estimated aggregate amortization expense over each of the next five years and thereafter, is as follows (in thousands): 2016 2017 2018 2019 2020 Thereafter |
Noncontrolling Interests
Noncontrolling Interests | 12 Months Ended |
Sep. 26, 2015 | |
Non controlling Interests | |
Noncontrolling Interests | 9. Noncontrolling Interests The changes in the liability and temporary equity attributable to redeemable NCIs for the three fiscal years in the period ended September 26, 2015 are as follows (in thousands): Liability attributable to mandatorily redeemable noncontrolling interests Equity attributable to redeemable noncontrolling interests Balance at September 29, 2012 $ $ Net income Adjustment to redemption value Cash distributions ) ) Other comprehensive loss, net of tax ) ) Balance at September 28, 2013 $ $ Net income Adjustment to redemption value Cash distributions ) ) Other comprehensive loss, net of tax ) ) Purchase of noncontrolling interest ) — Balance at September 27, 2014 $ — $ Net income — Adjustment to redemption value — ) Cash distributions — ) Other comprehensive loss, net of tax — ) Balance at September 26, 2015 $ — $ Mandatorily Redeemable Noncontrolling Interest On June 22, 2012, the Company executed a Share Purchase and Sale Agreement under which the Company was required to purchase a noncontrolling interest holder's shares in L'Authentique Pose Café Inc., an entity in which the Company held a controlling interest within 30 days of the end of the Company's third quarter of fiscal 2014. The mandatorily redeemable noncontrolling interest was classified as a liability in the accompanying Consolidated Balance Sheet as of September 28, 2013 under the caption, Other current liabilities. On August 22, 2014, the Company purchased the noncontrolling interest holder's shares for approximately $5.6 million, resulting in the subsidiary being wholly-owned by the Company. Of the $5.6 million purchase price, $0.8 million is in escrow and is contingently returnable to the Company upon final determination of fair value of the noncontrolling interest holder's shares. The contingent consideration is recorded in the accompanying Consolidated Balance Sheet as of September 26, 2015 under the caption, Restricted Cash and Cash Equivalents, and any changes in the fair value of the contingent consideration will be recognized in earnings until resolved. Redeemable Noncontrolling Interest On June 22, 2012, the Company executed a Share Purchase and Sale Agreement under which the Company agreed to purchase a noncontrolling interest holder's shares in Pause Cafe Estrie Inc., an entity in which the Company had a controlling interest within 30 days of the end of the Company's third quarter of fiscal year 2015. The redeemable noncontrolling interest is classified as mezzanine equity in the Consolidated Balance Sheets under the caption, Redeemable noncontrolling interests , and is measured at the greater of the amount of cash that would be paid if settlement occurred at the balance sheet date based on the formula in the Share Purchase and Sale Agreement and its historical value with any change from the prior period recognized in equity. On September 27, 2015, the Company purchased the noncontrolling interest holder's shares for approximately $6.1 million CAD, resulting in the subsidiary being wholly-owned by the Company. |
Product Warranties
Product Warranties | 12 Months Ended |
Sep. 26, 2015 | |
Product Warranties | |
Product Warranties | 10. Product Warranties The Company offers a one-year warranty on all Keurig® hot beverage system brewers it sells. The Company provides for the estimated cost of product warranties, primarily using historical information and current repair or replacement costs, at the time product revenue is recognized. Brewer failures may arise in the later part of the warranty period, and actual warranty costs may exceed the reserve. As the Company has grown, it has added significantly to its product testing, quality control infrastructure and overall quality processes. Nevertheless, as the Company continues to innovate, and its products become more complex, both in design and componentry, product performance may tend to modulate, causing warranty rates to possibly fluctuate going forward. As a result, future warranty claims rates may be higher or lower than the Company is currently experiencing and for which the Company is currently providing in its warranty reserve. The changes in the carrying amount of product warranties for fiscal years 2015 and 2014 are as follows (in thousands): Fiscal 2015 Fiscal 2014 Balance, beginning of year $ $ Provision related to current period Change in estimate ) Usage ) ) Balance, end of year $ $ During fiscal years 2015 and 2014, the Company recovered approximately $1.3 million and $1.8 million respectively, as reimbursement from suppliers related to warranty issues. The recoveries are under agreements with suppliers and are recorded as a reduction to warranty expense. The recoveries are not reflected in the provision charged to income in the table above. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Sep. 26, 2015 | |
Long-Term Debt | |
Long-Term Debt | 11. Long-Term Debt On June 29, 2015, the Company entered into a new Credit Agreement, by and among the Company and Keurig Trading Sàrl, a wholly-owned subsidiary of the Company, as borrowers, Bank of America, N.A., as administrative agent, and the other lenders named therein (the "Credit Agreement") that provides for a $1,800,000,000 unsecured revolving credit facility (the "New Revolving Facility") comprised of a $1,300,000,000 U.S. revolving credit facility under which the Company may obtain extensions of credit, subject to the satisfaction of customary conditions, in U.S. Dollars (the "U.S. Revolver") and a $500,000,000 alternative currency facility under which the Company and Keurig Trading Sàrl, a wholly owned subsidiary of the Company, may obtain extensions of credit, subject to the satisfaction of customary conditions, in U.S. Dollars or in Canadian Dollars, Euros, Pounds Sterling, Yen, Swiss Franc and any other currency that is approved by the administrative agent and appropriate lenders or U.S. letter of credit issuer pursuant to the terms of the Credit Agreement (the "Alternative Currency Revolver"). The New Revolving Facility includes a $200,000,000 subfacility for the issuance of letters of credit, and a $50,000,000 sublimit for swing line loans restricted to borrowings in U.S. Dollars only. The Credit Agreement permits the Company to request increases to the New Revolving Facility, and/or the establishment of one or more new term loan commitments, in an aggregate amount not to exceed $750,000,000 (the "Incremental Credit Facility"). The lenders under the New Revolving Facility will not be under any obligation to provide any such increases or new term loan commitments, and the availability of such additional increases and/or establishment of new term loan commitments is subject to customary terms and conditions. Long-term debt outstanding consists of the following (in thousands) as of: September 26, 2015 September 27, 2014 U.S. Revolver $ $ — Term loan A, as part of the Former Credit Agreement — Other Total long-term debt $ $ Less current portion Long-term portion $ $ Interest rates per year on the New Revolving Facility at the option of the Company, are (i) LIBOR plus an applicable margin based on the Company's leverage ratio, or (ii) the Alternate Base Rate (defined as the highest of the Bank of America prime rate, the Federal Funds rate plus 0.50%, and one-month LIBOR plus 1.00%) plus an applicable margin based on the Company's leverage ratio. Under the New Revolving Facility, initially, the applicable margin for base rate loans and eurocurrency rate loans is a percentage per annum equal to 0.125% and 1.125%, respectively, and U.S. letter of credit fees will be a percentage per annum equal to 1.125%. Beginning with the delivery date of financial statements for the fiscal year ending September 26, 2015, the applicable margin with respect to the U.S. Revolver and the Alternative Currency Revolver and the U.S. letter of credit fees will be subject to adjustments based upon the Company's consolidated leverage ratio ranging from, in the case of the applicable margin with respect to base rate loans, 0.125% to 0.75%, in the case of the applicable margin with respect to eurocurrency rate loans, 1.125% to 1.75%, and in the case of U.S. letter of credit fees, 1.125% to 1.75%. Under the New Revolving Facility, the Company is required to pay a quarterly commitment fee on the unused portion of the U.S. Revolver and the Alternative Currency Revolver in the range of, based on the Company's consolidated leverage ratio, 0.15% to 0.25% of the dollar amount of such unused portion, unless the Company elects to reduce the aggregate commitments under the U.S. Revolver and the Alternative Currency Revolver at the Company's option without penalty or premium. The Credit Agreement contains customary representations, warranties and affirmative and negative covenants. Further, the Credit Agreement contains a financial covenant requiring that the Company must maintain a minimum consolidated interest coverage ratio of 3.00:1.00. The Credit Agreement also contains a financial covenant requiring that the Company not exceed a maximum consolidated leverage ratio of 3.25:1.00, which maximum consolidated leverage ratio may be increased on a temporary basis to 3.50:1.00 in connection with certain material acquisitions and subject to certain conditions. As of September 26, 2015 and throughout fiscal year 2015, the Company was in compliance with these covenants. The U.S. Revolver was partially drawn in an aggregate amount of $325 million on June 29, 2015 to repay the Company's approximately $295 million of borrowings under the Company's previous Amended and Restated Credit Agreement ("Former Credit Agreement"), to finance the upfront and commitment fees in connection with the New Revolving Facility, as well as expenses related thereto, and for general working capital purposes. As a result of the refinancing, in the third quarter of fiscal 2015, hedge accounting was discontinued for the interest rate swaps that were originally designated to hedge the forecasted future debt payments under the Former Credit Agreement, and the Company recognized a loss of $1.8 million in (loss) gain on financial instruments, net in the accompanying consolidated statements of operations representing the accumulated loss in OCI up to the date discontinuance. The refinancing also resulted in a net loss of approximately $2.1 million related to the write-off of deferred financing fees in connection with the Former Credit Agreement that was recognized as a loss on extinguishment of debt in the Consolidated Statement of Operations, and the recognition of approximately $4.1 million of additional deferred financing fees that were recorded on the Consolidated Balance Sheet and included in Other Long-Term Assets in the fourth quarter of fiscal 2015. The deferred financing fees are amortized as interest expense over the life of the respective loan using a method that approximates the effective interest rate method. The Company's average effective interest rate as of September 26, 2015 and September 27, 2014 was 1.3% and 3.7%, respectively, excluding amortization of deferred financing charges and including the effect of interest swap agreements. As of September 26, 2015 and September 27, 2014, outstanding letters of credit under the Credit Agreement and Former Credit Agreement, respectively, totaled $5.4 million and $7.8 million, respectively. No amounts have been drawn against the letters of credit as of September 26, 2015 and September 27, 2014. The Company has historically entered into interest rate swap agreements to limit a portion of its exposure to variable interest rates by entering into interest rate swap agreements which effectively fixed the rates. In accordance with the interest rate swap agreements and on a monthly basis, interest expense was calculated based on the floating 30-day Libor rate and the fixed rate. If interest expense as calculated was greater based on the 30-day Libor rate, the interest rate swap counterparty pays the difference to the Company; if interest expense as calculated was greater based on the fixed rate, the Company pays the difference to the interest rate swap counterparty. See Note 12, Derivative Financial Instruments . The Company did not have any interest rate swap agreements in effect as of September 26, 2015. In fiscal years 2015, 2014 and 2013 the Company paid approximately $2.3 million, $3.2 million and $3.4 million, respectively, in additional interest expense pursuant to the interest rate swap agreements. Maturities Scheduled maturities of long-term debt are as follows (in thousands): Fiscal Year 2016 2017 2018 2019 2020 $ |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Sep. 26, 2015 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 12. Derivative Financial Instruments Cash Flow Hedges The Company is exposed to certain risks relating to ongoing business operations. The primary risks that are mitigated by financial instruments are interest rate risk, commodity price risk and foreign currency exchange rate risk. The Company uses interest rate swaps to mitigate interest rate risk associated with the Company's variable-rate borrowings, enters into coffee futures contracts to hedge future coffee purchase commitments of green coffee with the objective of minimizing cost risk due to market fluctuations, and uses foreign currency forward contracts to hedge the purchase and payment of green coffee purchase commitments denominated in non-functional currencies. The Company designates these contracts as cash flow hedges and measures the effectiveness of these derivative instruments at each balance sheet date. The changes in the fair value of these instruments are classified in accumulated other comprehensive income (loss). The gains or loss on these instruments is reclassified from OCI into earnings in the same period or periods during which the hedged transaction affects earnings. If it is determined that a derivative is not highly effective, the gain or loss is reclassified into earnings. In the third quarter of fiscal 2015, the Company reclassified a loss of $1.8 million from OCI into earnings due to the discontinuance of hedge accounting for interest rate swaps related to the Former Credit Agreement. Fair Value Hedges In prior fiscal years, the Company entered into foreign currency forward contracts to hedge certain recognized liabilities in currencies other than the Company's functional currency. The Company designated these contracts as fair value hedges and measured the effectiveness of the derivative instruments at each balance sheet date. The changes in the fair value of these instruments along with the changes in the fair value of the hedged liabilities were recognized in net gains or losses on foreign currency on the consolidated statements of operations. Other Derivatives The Company is also exposed to certain foreign currency and interest rate risks on an intercompany note with a foreign subsidiary denominated in Canadian currency. At September 26, 2015, the Company has approximately 3 months remaining on a CDN $50.0 million, Canadian cross currency swap to exchange interest payments and principal on the intercompany note. This cross currency swap is not designated as a hedging instrument for accounting purposes and is recorded at fair value, with the changes in fair value recognized in the Consolidated Statements of Operations. Gains and losses resulting from the change in fair value are largely offset by the financial impact of the re-measurement of the intercompany note. In accordance with the cross currency swap agreement, on a quarterly basis, the Company pays interest based on the three month Canadian Bankers Acceptance rate and receives interest based on the three month U.S. Libor rate. The Company incurred 0.6 million, $1.3 million, and $1.7 million in additional interest expense pursuant to the cross currency swap agreement during fiscal 2015, 2014, and 2013 respectively. The Company also occasionally enters into certain foreign currency forward contracts and coffee futures contracts to hedge certain exposures that are not designated as hedging instruments for accounting purposes. These contracts are recorded at fair value, with the changes in fair value recognized in the Consolidated Statements of Operations. The Company does not hold or use derivative financial instruments for trading or speculative purposes. The Company is exposed to credit loss in the event of nonperformance by the counterparties to these financial instruments, however, nonperformance is not anticipated. The following table summarizes the fair value of the Company's derivatives included on the Consolidated Balance Sheets (in thousands) as of: September 26, 2015 September 27, 2014 Balance Sheet Classification Derivatives designated as hedges: Interest rate swaps $ — $ ) Other current liabilities Coffee futures — Other current assets Foreign currency forward contracts Other current assets Derivatives not designated as hedges: Cross currency swap Other current assets Total $ $ Offsetting Generally, all of the Company's derivative instruments are subject to a master netting arrangement under which either party may offset amounts if the payment amounts are for the same transaction and in the same currency. By election, parties may agree to net other transactions. In addition, the arrangements provide for the net settlement of all contracts through a single payment in a single currency in the event of default or termination of the contract. The Company's policy is to net all derivative assets and liabilities in the accompanying audited Consolidated Balance Sheets when allowable by GAAP. Additionally, the Company has elected to include all derivative assets and liabilities, including those not subject to a master netting arrangement, in the following offsetting tables. Offsetting of financial assets and derivative assets as of September 26, 2015 and September 27, 2014 is as follows (in thousands): Net amount of assets presented in the Consolidated Balance Sheet Gross amounts not offset in the Consolidated Balance Sheet Gross amounts offset in the Consolidated Balance Sheet Gross amounts of recognized assets Financial instruments Cash collateral received Net amount Derivative assets, as of September 26, 2015 $ $ — $ $ — $ — $ Derivative assets, as of September 27, 2014 ) — — Offsetting of financial liabilities and derivative liabilities as of September 26, 2015 and September 27, 2014 is as follows (in thousands): Net amount of assets presented in the Consolidated Balance Sheet Gross amounts not offset in the Consolidated Balance Sheet Gross amounts offset in the Consolidated Balance Sheet Gross amounts of recognized assets Financial instruments Cash collateral pledged Net amount Derivative liabilities, as of September 26, 2015 $ — $ — $ — $ — $ — $ — Derivative liabilities, as of September 27, 2014 ) — — There were no coffee futures contracts outstanding as of September 26, 2015. The following table summarizes the coffee futures contracts outstanding as of September 27, 2014 (in thousands, except for average contract price and "C" price): Coffee Pounds Average Contract Price "C" Price Maturity Fair Value of Futures Contracts 900 $ $ July 2015 $ 4,725 $ $ July 2015 938 $ $ July 2015 ) 937 $ $ September 2015 ) 7,500 $ The following table summarizes the amount of gain (loss), pre-tax, arising during the period on financial instruments that qualify for hedge accounting included in OCI (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Cash Flow Hedges: Interest rate swaps $ $ $ Coffee futures ) ) Foreign currency forward contracts ) Total $ $ $ ) The following table summarizes the amount of gain (loss), pre-tax, reclassified from OCI to income (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Location of Gain or (Loss) Reclassified from OCI into Income Coffee futures ) ) Cost of sales Interest rate swaps ) — — Gain on financial instruments, net Foreign currency forward contracts — Cost of sales Foreign currency forward contracts ) ) ) Loss on foreign currency, net Total $ $ ) $ ) The Company expects to reclassify $0.3 million of net losses, net of tax, from OCI to earnings on coffee derivatives within the next twelve months. See Note 15, Stockholders' Equity for a reconciliation of derivatives in beginning accumulated other comprehensive income (loss) to derivatives in ending accumulated other comprehensive income (loss). The following table summarizes the amount of net gains (losses), pre-tax, representing ineffectiveness on cash flow hedges recorded in income (in thousands). Fiscal 2015 Fiscal 2014 Fiscal 2013 Location of gain (loss) recognized in income on derivative Coffee futures $ ) $ $ — Cost of sales The following table summarizes the amount of gain (loss), pre-tax, on fair value hedges and related hedged items (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Location of gain (loss) recognized in income on derivative Foreign currency forward contracts Net loss on hedging derivatives $ — $ — $ ) Loss on foreign currency, net Net gain on hedged items $ — $ — $ Loss on foreign currency, net Net gains on financial instruments not designated as hedges for accounting purposes are as follows (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Location of net gain (loss) in Consolidated Statements of Operations Net gain on cross currency swap $ $ $ Gain (loss) on financial instruments, net Net gain on interest rate swaps — — Gain (loss) on financial instruments, net Net gain on coffee futures — — Cost of sales Total $ $ $ |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Sep. 26, 2015 | |
Fair Value Measurements | |
Fair Value Measurements | 13. Fair Value Measurements The Company measures fair value as the selling price that would be received for an asset, or paid to transfer a liability, in the principal or most advantageous market on the measurement date. The hierarchy established by the Financial Accounting Standards Board prioritizes fair value measurements based on the types of inputs used in the valuation technique. The inputs are categorized into the following levels: Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than quoted prices that are observable, either directly or indirectly, which include quoted prices for similar assets or liabilities in active markets and quoted prices for identical assets or liabilities in markets that are not active. Level 3—Unobservable inputs not corroborated by market data, therefore requiring the entity to use the best available information, including management assumptions. The following table summarizes the fair values and the levels used in fair value measurements as of September 26, 2015 for the Company's financial (liabilities) assets (in thousands): Fair Value Measurements Using Level 1 Level 2 Level 3 Derivatives: Cross currency swap — — Foreign currency forward contracts — — Total $ — $ $ — The following table summarizes the fair values and the levels used in fair value measurements as of September 27, 2014 for the Company's financial liabilities (in thousands): Fair Value Measurements Using Level 1 Level 2 Level 3 Derivatives: Interest rate swaps $ — $ ) $ — Cross currency swap — — Coffee futures — — Foreign currency forward contracts — — Total $ — $ $ — Level 2 derivative financial instruments use inputs that are based on market data of identical (or similar) instruments, including forward prices for commodities, interest rates curves and spot prices that are in observable markets. Derivatives recorded on the balance sheet are at fair value with changes in fair value recorded in OCI for cash flow hedges and in the Consolidated Statements of Operations for fair value hedges and derivatives that do not qualify for hedge accounting treatment. Derivatives The Company has entered into various derivative financial instruments, including coffee futures contracts, interest rate swap agreements, a cross-currency swap agreement and foreign currency forward contracts. The Company has identified concentrations of credit risk based on the economic characteristics of the instruments that include interest rates, commodity indexes and foreign currency rates and selectively enters into the derivative instruments with counterparties using credit ratings. To determine fair value, the Company utilizes the market approach valuation technique for coffee futures and foreign currency forward contracts and the income approach for interest rate and cross currency swap agreements. The Company's fair value measurements include a credit valuation adjustment for the significant concentrations of credit risk. As of September 26, 2015, the amount of loss estimated by the Company due to credit risk associated with the derivatives for all significant concentrations was not material based on the factors of an industry recovery rate and a calculated probability of default. Long-Term Debt The carrying value of long-term debt was $331.0 million and $160.0 million as of September 26, 2015 and September 27, 2014, respectively. The inputs to the calculation of the fair value of long-term debt are considered to be Level 2 within the fair value hierarchy, as the measurement of fair value is based on the net present value of calculated interest and principal payments, using an interest rate derived from a fair market yield curve adjusted for the Company's credit rating. The carrying value of long-term debt approximates fair value as the interest rate on the debt is based on variable interest rates that reset every 30 days. Long-Term Investment The Company had a long-term investment in Bevyz of approximately $35.9 million included in other long-term assets in the accompanying Consolidated Balance Sheet as of September 27, 2014, that was not publicly traded. This investment was carried at cost and was reviewed quarterly for indicators of other-than-temporary impairment. There were no events or circumstances during the fiscal year ended September 27, 2014 that indicated a decline in the fair value of the investment. On December 18, 2014, the Company acquired all of the remaining outstanding equity of Bevyz, resulting in Bevyz becoming a wholly-owned subsidiary of the Company. See Note 3, Acquisition , for discussion of the Bevyz acquisition. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 26, 2015 | |
Income Taxes | |
Income Taxes | 14. Income Taxes Income before income taxes and the provision for income taxes for fiscal years 2015, 2014 and 2013 consist of the following (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Income before income taxes: Domestic $ $ $ Foreign Total income before income taxes $ $ $ Income tax expense: United States federal: Current $ $ $ Deferred ) ) ) State and local: Current Deferred ) ) ) Total United States Foreign: Current Deferred ) ) ) Total foreign Total income tax expense $ $ $ Net deferred tax liabilities consist of the following (in thousands) as of: September 26, 2015 September 27, 2014 Deferred tax assets: Section 263A capitalized expenses $ $ Deferred compensation Net operating loss carryforward — Valuation Allowance—Net operating loss carryforward ) — Capital loss carryforward — Valuation allowance—capital loss carryforward — ) Warranty, obsolete inventory and bad debt allowance Tax credit carryforwards Other reserves and temporary differences Gross deferred tax assets Deferred tax liabilities: Prepaid expenses ) ) Deferred hedging losses ) ) Depreciation ) ) Intangible assets ) ) Other reserves and temporary differences ) ) Gross deferred tax liabilities ) ) Net deferred tax liabilities $ ) $ ) A reconciliation for continuing operations between the amount of reported income tax expense and the amount computed using the U.S. Federal Statutory rate of 35% is as follows (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Tax at U.S. Federal Statutory rate $ $ $ Increase (decrease) in rates resulting from: Foreign tax rate differential ) ) ) Non-deductible stock compensation expense State taxes, net of federal benefit Provincial taxes Domestic production activities deduction ) ) ) Federal tax credits ) ) ) Other ) ) ) Tax at effective rates $ $ $ As of September 26, 2015, the Company has a state net operating loss carryforward of $11.5 million available to be utilized against future taxable income for years through fiscal 2029 subject to annual limitation pertaining to change in ownership rules under the Internal Revenue Code of 1986, as amended. Based upon earnings history and future plans, the Company concluded it is more likely than not that the state net operating loss carryforward will be utilized prior to expiration. In addition, the Company has foreign net operating loss carryforwards of $37.1 million available to be utilized against future taxable income with no expiration date. Based upon earnings history and future plans, the Company concluded it is more likely than not that $34.6 million of foreign net operating loss carryforwards will not be utilized and a valuation allowance has been recognized. In addition, our income tax returns are periodically audited by domestic and foreign tax authorities. These audits typically review our tax filing positions, the timing and amount of deductions taken, and the allocation of income between tax jurisdictions. We evaluate exposures associated with the Company's various tax filing positions and recognize a tax benefit only where it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authorities, including resolutions of any related appeals or litigation processes, based on the technical merits of our position. For uncertain tax positions that do not meet this threshold, we record a related liability. The total amount of unrecognized tax benefits as of September 26, 2015 and September 27, 2014 was $31.8 million and $14.8 million, respectively. The amount of unrecognized tax benefits at September 26, 2015 that would impact the effective tax rate if resolved in favor of the Company is $6.3 million. As a result of acquisitions, the Company is indemnified for $5.2 million of the total reserve balance, with a total indemnification pool of $24.6 million. If these unrecognized tax benefits are resolved in favor of the Company, the associated indemnification receivable, recorded in other long-term assets, would be reduced accordingly. As of September 26, 2015 and September 27, 2014, accrued interest and penalties of $4.1 million and $2.4 million, respectively, were included in the Consolidated Balance Sheets related to unrecognized tax benefits. The Company recognizes interest and penalties in income tax expense. Income tax expense included $1.7 million, $0.4 million and $0.4 million of interest and penalties for fiscal 2015, 2014, and 2013, respectively. The Company released $1.5 million of unrecognized tax benefits during the fourth quarter of fiscal 2015 and does not expect to release any unrecognized tax benefits over the next twelve months due to the expiration of the statute of limitations. In addition, the Company added $15.8 million of unrecognized tax benefits during the fourth quarter of fiscal 2015. A reconciliation of increases and decreases in unrecognized tax benefits is as follows (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Gross tax contingencies—balance, beginning of year $ $ $ Increases from positions taken during prior periods — Decreases from positions taken during prior periods — — — Increases from positions taken during current periods Decreases resulting from the lapse of the applicable statute of limitations ) ) ) Gross tax contingencies—balance, end of year $ $ $ The Company is currently under audit by the Internal Revenue Service and Canada Revenue Agency for the 2012 and 2013 fiscal years and is generally not subject to examination with respect to returns filed for fiscal years prior to 2011. As of September 26, 2015, the Company had approximately $295.2 million of undistributed international earnings, most of which are Canadian-sourced. With the exception of the repayment of intercompany debt, all earnings of the Company's foreign subsidiaries are considered indefinitely reinvested and no U.S. deferred taxes have been provided on those earnings. If these amounts were distributed to the U.S. in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes, which could be material. Determination of the amount of any unrecognized deferred income tax on these earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Sep. 26, 2015 | |
Stockholders' Equity | |
Stockholders' Equity | 15. Stockholders' Equity Stock Issuances On February 27, 2014, pursuant to a common stock purchase agreement dated February 5, 2014, the Company sold 16,684,139 shares of its common stock to Atlantic Industries, an indirect wholly owned subsidiary of The Coca-Cola Company, at $74.98 per share for an aggregate purchase price of $1,251.0 million. In addition, on April 17, 2014, pursuant to a common stock purchase agreement dated March 28, 2014 and the pre-emptive rights of Luigi Lavazza S.p.A. ("Lavazza") set forth in the common stock purchase agreement (the "CSPA") between the Company and Lavazza dated August 10, 2010, the Company sold 1,407,000 shares of its common stock to Lavazza at $74.98 per share for an aggregate purchase price of $105.5 million. Both common stock sales were recorded to stockholders' equity, net of transaction-related expenses of approximately $8.0 million. Stock Repurchase Program On July 31, 2015, the Company's Board of Directors authorized the repurchase of up to an additional $1.0 billion of the Company's outstanding common stock over the next two years, at such times and prices as determined by the Company's management (the "July 2015 repurchase authorization"). At various times beginning in fiscal 2012, and including the July 2015 repurchase authorization, the Board has authorized the Company to repurchase a total of $3.5 billion of the Company's common stock (the "repurchase program"). Under the repurchase program, the Company may purchase shares in the open market (including pursuant to pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or in privately negotiated transactions. Under its existing repurchase programs, on February 28, 2014, the Company entered into an accelerated share repurchase ("ASR") agreement with a major financial institution ("Bank"). The ASR allowed the Company to buy a large number of shares immediately at a purchase price determined by an average market price over a period of time. Under the ASR, the Company agreed to purchase $700.0 million of its common stock, in total, with an initial delivery to the Company of 4,340,508 shares of the Company's common stock by the Bank. In the second quarter of fiscal 2015, the purchase period for the ASR ended and an additional 1,489,476 shares were delivered to the Company. In total, 5,829,984 shares were repurchased under the ASR at an average repurchase price of $120.07 per share. The shares were retired in the quarters they were delivered, and the up-front payment of $700.0 million was accounted for as a reduction to stockholders' equity in the Company's Consolidated Balance Sheet in the second quarter of fiscal 2014. On March 3, 2015, the Company, under its repurchase program, completed the repurchase of 5,231,991 shares of common stock from Lavazza for an aggregate purchase price of $623.6 million. The price per share was $119.18, which represented a 3.0% discount off the closing price of the Company's common stock on February 20, 2015, which was the business day immediately preceding the entry into the stock repurchase agreement between the Company and Lavazza. An aggregate amount of $1,149.5 million remained authorized for common stock repurchase as of September 26, 2015. Summary of share repurchase activity under the repurchase program: Fiscal 2015 Fiscal 2014 (1) Number of shares acquired on the open market Average price per share of open market acquired shares $ $ Number of shares acquired from Lavazza — Average price per share of Lavazza acquired shares $ — Number of shares under February 2014 ASR Average price per share of ASR shares (2) $ $ Total cost of acquired shares (in thousands) $ $ (1) Total cost of acquired shares in fiscal 2014 includes initial purchase price of $700.0 million under the ASR. (2) Average price per share for total shares repurchased under February 2014 ASR. Common Stock Dividends The Company declared a quarterly dividend of $0.2875 per common share during each quarter of fiscal 2015, for $179.2 million in the aggregate. During the fiscal year ended September 26, 2015, the Company paid dividends of approximately $175.7 million. The Company declared a quarterly dividend of $0.25 per common share during each quarter of fiscal 2014, for $158.9 million in the aggregate. During the fiscal year ended September 27, 2014, the Company paid dividends of approximately $118.4 million. On November 16, 2015, Keurig's Board of Directors declared the next quarterly cash dividend of $0.325 per common share, an increase of 13% over previous quarters, payable on February 16, 2016 to stockholders of record as of the close of business on January 15, 2016. Accumulated Other Comprehensive Income (Loss) The following table provides the changes in the components of accumulated other comprehensive income (loss), net of tax (in thousands): Cash Flow Hedges Translation Accumulated Other Comprehensive Income (Loss) Balance at September 29, 2012 ) Other comprehensive loss during the period ) ) ) Balance at September 28, 2013 ) ) ) Other comprehensive income (loss) during the period ) ) Foreign currency exchange impact on cash flow hedges — Balance at September 27, 2014 ) ) Other comprehensive loss during the period ) ) ) Foreign currency exchange impact on cash flow hedges ) — ) Balance at September 26, 2015 $ $ ) $ ) The unfavorable translation adjustments change during each of fiscal 2015, fiscal 2014 and fiscal 2013 was primarily due to the continued weakening of the Canadian dollar against the U.S. dollar. See also Note 12, Derivative Financial Instruments . |
Employee Compensation Plans
Employee Compensation Plans | 12 Months Ended |
Sep. 26, 2015 | |
Employee Compensation Plans | |
Employee Compensation Plans | 16. Employee Compensation Plans Equity-Based Incentive Plans On March 6, 2014, the Company registered on a Form S-8 shares of common stock pursuant to the 2014 Omnibus Plan (the "2014 Plan"), which replaced the 2006 Incentive Plan (the "2006 Plan") and increased the total shares of common stock authorized for issuance to 8,000,000 (the "Fungible Pool Limit"). Both plans provide for the issuance of several types of share-based incentive compensation including stock options, stock appreciation rights, restricted stock, restricted stock units and performance stock units. Following stockholder approval of the 2014 Plan, there were no further awards made under the 2006 Plan. Under the 2014 Plan, each share of common stock issued or to be issued in connection with any award that is not a stock option or stock appreciation right shall be counted against the Fungible Pool Limit as 1.704 Fungible Pool Units. Stock options and stock appreciation rights are counted against the Fungible Pool Limit as 1.0 Fungible Pool Unit. Both the 2014 Plan and 2006 Plan require the exercise price for all awards requiring exercise to be no less than 100% of fair market value per share of common stock on the date of grant, with certain provisions which increase the option exercise price of an incentive stock option to 110% of the fair market value of the common stock if the grantee owns in excess of 10% of the Company's common stock at the date of grant. As of September 26, 2015,7.0 million shares of common stock were available for grant for future equity-based compensation awards under the 2014 Plan. Options under the 2006 Plan and 2014 Plan become exercisable over periods determined by the Board of Directors, generally in the range of three to four years. As of September 26, 2015, 17,481 options remain outstanding under the Keurig, Incorporated 2005 Stock Option Plan assumed in the 2006 acquisition of Keurig, Incorporated as well as stock options related to one inducement grant of non-qualified options to an officer of the Company which was not subject to stockholder approval. Option activity is summarized as follows: Number of Shares Weighted Average Exercise Price (per share) Outstanding at September 27, 2014 $ Granted $ Exercised ) $ Forfeited/expired ) $ Outstanding at September 26, 2015 $ Exercisable at September 26, 2015 $ The following table summarizes information about stock options that have vested and are expected to vest at September 26, 2015: Number of options outstanding Weighted average remaining contractual life (in years) Weighted average exercise price Intrinsic value at September 26, 2015 (in thousands) 2,036,855 $ $ The following table summarizes information about stock options exercisable at September 26, 2015: Number of options exercisable Weighted average remaining contractual life (in years) Weighted average exercise price Intrinsic value at September 26, 2015 (in thousands) 1,413,283 $ $ Compensation expense is recognized only for those options expected to vest, with forfeitures estimated based on the Company's historical employee turnover experience and future expectations. The Company uses a blend of recent and historical volatility to estimate expected volatility at the measurement date. The expected life of options is estimated based on options vesting periods, contractual lives and an analysis of the Company's historical experience. The intrinsic values of options exercised during fiscal years 2015, 2014 and 2013 were approximately $107.4 million, $167.0 million and $165.5 million, respectively. The Company's policy is to issue new shares upon exercise of stock options. The grant-date fair value of employee share options and similar instruments is estimated using the Black-Scholes option-pricing model with the following assumptions for grants issued during fiscal years 2015, 2014 and 2013: Fiscal 2015 Fiscal 2014 Fiscal 2013 Average expected life 5.5 years 5.5 years 6.0 years Average volatility % % % Dividend yield % % — % Risk-free interest rate % % % Weighted average grant date fair value $ $ $ Restricted Stock Units and Other Awards The Company awards restricted stock units ("RSUs"), restricted stock awards ("RSAs"), and performance stock units ("PSUs") to eligible employees (each, a "Grantee") which entitle the Grantee to receive shares of the Company's common stock. RSUs and PSUs are awards denominated in units that are settled in shares of the Company's common stock upon vesting. RSAs are awards of common stock that are restricted until the shares vest. In general, RSUs and RSAs vest based on a Grantee's continuing employment. The fair value of RSUs, RSAs and PSUs is based on the closing price of the Company's common stock on the grant date. Compensation expense for RSUs and RSAs is recognized ratably over a Grantee's service period. Compensation expense for PSUs is also recognized over a Grantee's service period, but only if and when the Company concludes that it is probable (more than likely) the performance condition(s) will be achieved. The assessment of probability of achievement is performed each quarter based on the relevant facts and circumstances at that time, and if the estimated grant-date fair value changes as a result of that assessment, the cumulative effect of the change on current and prior periods is recognized in the period of change. In addition, the Company has previously awarded deferred cash awards ("DCAs") to Grantees which entitle a Grantee to receive cash paid over time upon vesting. The vesting of DCAs is conditioned on a Grantee's continuing employment. All awards are reserved for issuance under the 2006 Plan and, beginning with awards granted after March 6, 2014, the 2014 Plan. These awards vest over periods determined by the Board of Directors, generally in the range of three to four years for RSUs, RSAs and DCAs, and three years for PSUs. The following table summarizes the number and weighted average grant-date fair value of nonvested RSUs: Share Units Weighted Average Grant-Date Fair Value Weighted Average Remaining Contractual Life (in Years) Intrinsic Value (in Thousands) Nonvested, September 27, 2014 $ $ Granted $ Vested ) $ Forfeited ) $ Nonvested, September 26, 2015 $ $ As of September 26, 2015, total RSUs expected to vest totaled 410,392 shares with an intrinsic value of $22.8 million. The weighted average grant-date fair value of RSUs granted was 116.80 and $119.95 for fiscal 2015 and fiscal 2014, respectively. The total intrinsic value of RSUs converted to shares of common stock during fiscal 2015 and fiscal 2014 were $15.5 million and $6.1 million, respectively. The following table summarizes the number and weighted average grant-date fair value of unvested PSUs based on the target award amounts in the PSU agreements as of September 26, 2015: Share Units Weighted Average Grant-Date Fair Value Outstanding on September 27, 2014 $ Granted $ Converted ) $ Forfeited ) $ Actual performance change (1) ) $ Outstanding on September 26, 2015 (2) $ (1) Reflects the net number of PSUs above and below target levels based on actual performance measured at the end of the performance period. (2) The outstanding PSUs, for which the performance period has not ended as of September 26, 2015, at the threshold award and maximum award levels, were 65,392 and 149,804, respectively. Does not include shares underlying the performance stock units granted in fiscal 2014 as the performance period has concluded and the threshold performance criteria was not achieved. The weighted average grant-date fair value of PSUs granted was $138.08 in fiscal 2015 compared to $107.12 in 2014. In addition, during fiscal 2012 the Company issued a grant for 55,432 RSAs which vested in fiscal 2013 with a total intrinsic value of $2.7 million. Employee Stock Purchase Plan On March 6, 2014, the Company registered on a Form S-8 shares pursuant to the 2014 Amended and Restated Employee Stock Purchase Plan ("2014 ESPP") which replaced the Amended and Restated Employee Stock Purchase Plan ("2008 ESPP"). Under these plans eligible employees may purchase shares of the Company's common stock, subject to certain limitations, at the lesser of 85 percent of the beginning or ending withholding period fair market value as defined in the plan. There were two six-month withholding periods in each fiscal year. As of September 26, 2015, rights to acquire 1,861,973 shares of common stock were available for issuance under the 2014 ESPP. The grant-date fair value of employees' purchase rights granted during fiscal years 2015, 2014 and 2013 under the Company's ESPP is estimated using the Black-Scholes option-pricing model with the following assumptions: Fiscal 2015 Fiscal 2014 Fiscal 2013 Average expected life 6 months 6 months 6 months Average volatility % % % Dividend yield % % — % Risk-free interest rate % % % Weighted average grant date fair value $ $ $ Stock-Based Compensation Expense Stock-based compensation expense recognized in the Consolidated Statements of Operations in fiscal years 2015, 2014, and 2013 (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Options $ $ $ RSUs/PSUs/RSAs ESPP Total stock-based compensation expense recognized in the Consolidated Statements of Operations $ $ $ Total related tax benefit $ $ $ As of September 26, 2015, total unrecognized compensation cost related to all nonvested stock-based compensation arrangements was approximately $45.4 million, net of estimated forfeitures. This unrecognized cost is expected to be recognized over a weighted-average period of approximately 1.7 years at September 26, 2015. |
Employee Retirement Plans
Employee Retirement Plans | 12 Months Ended |
Sep. 26, 2015 | |
Employee Retirement Plans | |
Employee Retirement Plans | 17. Employee Retirement Plans Defined Contribution Plans The Company has a defined contribution plan which meets the requirements of section 401(k) of the Code. All full-time U.S. employees of the Company who are at least 18 years of age and have completed one month of service, and U.S. employees of the Company who are not full-time employees but are at least 18 years of age and have completed one year of service, are eligible to participate in the plan. The plan allows employees to defer a portion of their salary on a pre-tax basis and the Company matches 100% on the first 1% of eligible compensation, and then 60% on up to the next 5% of eligible compensation, capped at the Internal Revenue Service limits. Company contributions to the plan were $10.5 million, $6.4 million, and $5.2 million, for fiscal years 2015, 2014, and 2013, respectively. In conjunction with the Van Houtte acquisition, the Company also has several Canadian Group Registered Retirement Savings Plans ("GRRSP") and a Deferred Profit Sharing Plan ("DPSP"). Under these plans, employees can contribute a certain percentage of their salary and the Company can also make annual contributions to the plans. Company contributions to the Canadian plans were $1.3 million, $1.5 million and $1.4 million for fiscal years 2015, 2014 and 2013, respectively. Defined Benefit Plans The Company has a supplementary defined benefit retirement plan and a supplementary employee retirement plan (collectively the "Plans") for certain management employees in the Canada segment. The cost of the Plans is calculated according to actuarial methods that encompass management's best estimate regarding the future evolution of salary levels, the age of retirement of salaried employees and other actuarial factors. These Plans are not funded and there are no plan assets. Future benefits will be paid from the funds of the Company. For the years ended September 26, 2015 and September 27, 2014, the projected benefit obligation was $1.2 million and $1.4 million, respectively, and is classified in other long-term liabilities . Net periodic pension expense was $0.1 million, $0.2 million and $0.3 million for fiscal years 2015, 2014, and 2013, respectively. |
Deferred Compensation
Deferred Compensation | 12 Months Ended |
Sep. 26, 2015 | |
Deferred Compensation | |
Deferred Compensation | 18. Deferred Compensation The Amended and Restated 2002 Deferred Compensation Plan, adopted October 1, 2015 (the "2002 Deferred Compensation Plan"), permits certain highly compensated officers and employees of the Company and non-employee directors to defer eligible compensation payable for services rendered to the Company. On March 8, 2013, the Company registered on Form S-8 shares related to the 2002 Deferred Compensation Plan. Participants may elect to receive deferred compensation in the form of cash payments or shares of Company Common Stock on the date or dates selected by the participant or on such other date or dates specified in the 2002 Deferred Compensation Plan. The 2002 Deferred Compensation Plan is in effect for compensation earned on or after September 29, 2002. To date the administrator of the plan has not designated any officers or employees as eligible participants. As of September 26, 2015, and September 27, 2014, 346,432 shares and 351,276 shares of Common Stock were available for future issuance under this Plan, respectively. During fiscal 2015, rights to acquire 4,844 shares of Common Stock were granted and vested, and 12,568 rights to shares of Common Stock were exercised. As of September 26, 2015 and September 27, 2014, rights to acquire 53,865 and 61,589 shares of Common Stock were outstanding under this plan. Effective January 1, 2015 the Company also adopted an annual deferred compensation benefit plan for Vice Presidents and above. The annual deferred compensation plan is a non-qualified deferred compensation plan which provides additional retirement benefits to select executives by providing for an annual deferred compensation benefit equal to 4% of the executive's compensation that exceeds certain Internal Revenue Service limits applicable to the Company's 401(k) plan. The Company recognized $0.1 million in expenses for the annual non-qualified deferred compensation plan in fiscal 2015. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Sep. 26, 2015 | |
Accrued Expenses | |
Accrued Expenses | 19. Accrued Expenses Accrued expenses consisted of the following (in thousands) as of: September 26, 2015 September 27, 2014 Accrued compensation costs $ $ Accrued customer incentives and promotions Accrued restructuring — Accrued freight, fulfillment and transportation costs Accrued legal and professional services Warranty reserve Other $ $ |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 26, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 20. Commitments and Contingencies Lease Commitments The Company leases office and retail space, production, distribution and service facilities, and certain equipment under various non-cancellable operating leases, with terms ranging from one to twenty years. Property leases normally require payment of a minimum annual rental plus a pro-rata share of certain landlord operating expenses. Total rent expense, under all operating leases approximated $20.0 million, $24.8 million, and $23.1 million in fiscal years 2015, 2014, and 2013, respectively. The Company has subleases relating to certain of its operating leases. Sublease income approximated $1.0 million and $1.1 million for fiscal years 2014 and 2013, respectively. Sublease income for fiscal year 2015 was not material. In addition, the Company leases a manufacturing facility which is accounted for as a capital lease. The initial term of the lease is 15 years with six additional renewal terms of five years each at the Company's option. The lease requires payment of a minimum annual rental and the Company is responsible for property taxes, insurance and operating expenses. In June 2012, the Company entered into an arrangement to lease approximately 425,000 square feet located in Burlington, Massachusetts. Due to the Company's involvement in the Burlington, Massachusetts construction project, including its obligations to fund certain costs of construction exceeding amounts incurred by the lessor, the Company was deemed to be the owner of the project, which includes a pre-existing structure on the site, even though the Company is not the legal owner. Accordingly, total project costs incurred during construction were capitalized along with a corresponding financing obligation for the project costs that were incurred by the lessor. In addition, the Company capitalized the estimated fair value of the pre-existing structure of $4.1 million at the date construction commenced as construction-in-progress with a corresponding financing obligation. Upon completion of the project, the Company has continued involvement beyond a normal leaseback, and therefore has not recorded a sale or derecognized the assets. As a result, the lease is accounted for as a financing transaction and the recorded asset and related financing obligation remains on the Balance Sheet. As of September 26, 2015, future minimum lease payments under financing obligations, capital lease obligations and non-cancellable operating leases as well as minimum payments to be received under non-cancellable subleases are as follows (in thousands): Fiscal Year Capital Leases Operating Leases Subleases Financing Obligations 2016 $ $ $ ) $ 2017 ) 2018 ) 2019 ) 2020 ) Thereafter ) Total $ $ $ ) $ Less: amount representing interest ) ) Present value of future minimum lease payments $ $ The financing obligations in the table above represent the portion of the future minimum lease payments which have been allocated to the facility in Burlington, Massachusetts and will be recognized as reductions to the financing obligation and as interest expense. Legal Proceedings Proposition 65 On May 9, 2011, an organization named Council for Education and Research on Toxics ("CERT"), purporting to act in the public interest, filed suit in Los Angeles Superior Court (Council for Education and Research on Toxics v. Brad Barry LLC, et al., Case No. BC461182) against several companies, including the Company, that roast, package, or sell coffee in California. The Brad Barry complaint alleges that coffee contains the chemical acrylamide and that the Company and the other defendants are required to provide warnings under section 25249.6 of the California Safe Drinking Water and Toxics Enforcement Act, better known as Proposition 65. Acrylamide is not added to coffee, but forms in trace amounts (parts per billion) as part of a chemical reaction that occurs in the coffee bean when it is roasted. Therefore it is present in all roasted coffee. To date, the Company is unaware of any reliable method for reducing acrylamide levels in coffee without adversely affecting the quality of the product. The Brad Barry action has been consolidated for all purposes with another Proposition 65 case filed by CERT on April 13, 2010 over allegations of acrylamide in "ready to drink" coffee sold in restaurants, convenience stores, and donut shops. (Council for Education and Research on Toxics v. Starbucks Corp., et al., Case No. BC 415759). The Company was not named in the Starbucks complaint. The Company has joined a joint defense group ("JDG") organized to address CERT's allegations, and the Company intends to vigorously defend against these allegations. The Court ordered the case phased for discovery and trial. Trial of the first phase of the case commenced on September 8, 2014 and was limited to three affirmative defenses shared by all defendants in both cases. Other affirmative defenses, plaintiff's prima facie case, and remedies are deferred for subsequent phases if defendants do not prevail on the three Phase 1 defenses. On September 1, 2015, the trial court issued a final ruling adverse to defendants on all Phase 1 defenses. Defendants have filed a writ petition seeking interlocutory review of the trial court's ruling in the Court of Appeals. Litigation in the trial court is temporarily stayed pending the outcome of the petition. If the Court of Appeal grants the petition, the JDG expects that further proceedings in the trial court would be stayed until a decision is reached on the merits. If the petition is denied, or if the Court of Appeal takes the appeal and affirms the trial court, litigation on the second phase of the trial will commence. At this stage of the proceedings, the Company is unable to predict its outcome, the potential loss or range of loss, if any, associated with its resolution or any potential effect it may have on the Company or its operations. Stockholder Litigation Two consolidated putative securities fraud class actions are presently pending against the Company and certain of its officers and directors, along with two putative stockholder derivative actions. The pending putative securities fraud class actions were first filed on November 29, 2011 and June 19, 2015, respectively. The first putative stockholder derivative action is a consolidated action pending in the United States District Court for the District of Vermont that consists of five separate putative stockholder derivative complaints, the first two were filed after the Company's disclosure of the SEC inquiry on September 28, 2010, while the others were filed on February 10, 2012, March 2, 2012, and July 23, 2012, respectively. The second putative stockholder derivative action is pending in the Superior Court of the State of Vermont for Washington County and was commenced following the Company's disclosure of the SEC inquiry on September 28, 2010. The first putative securities fraud class action, captioned Louisiana Municipal Police Employees' Retirement System ("LAMPERS") v. Green Mountain Coffee Roasters, Inc., et al., Civ. No. 2:11-cv-00289, was filed in the United States District Court for the District of Vermont before the Honorable William K. Sessions, III. Plaintiffs' amended complaint alleged violations of the federal securities laws in connection with the Company's disclosures relating to its revenues and its inventory accounting practices. The amended complaint sought class certification, compensatory damages, attorneys' fees, costs, and such other relief as the court should deem just and proper. Plaintiffs sought to represent all purchasers of the Company's securities between February 2, 2011 and November 9, 2011. The initial complaint filed in the action on November 29, 2011 included counts for alleged violations of (1) Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, (the "Securities Act") against the Company, certain of its officers and directors, and the Company's underwriters in connection with a May 2011 secondary common stock offering; and (2) Section 10(b) of the Exchange Act and Rule 10b-5 against the Company and the officer defendants, and for violation of Section 20(a) of the Exchange Act against the officer defendants. Pursuant to the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), 15 U.S.C. § 78u-4(a)(3), plaintiffs had until January 30, 2012 to move the court to serve as lead plaintiff of the putative class. Competing applications were filed and the Court appointed Louisiana Municipal Police Employees' Retirement System, Sjunde AP-Fonden, Board of Trustees of the City of Fort Lauderdale General Employees' Retirement System, Employees' Retirement System of the Government of the Virgin Islands, and Public Employees' Retirement System of Mississippi as lead plaintiffs' counsel on April 27, 2012. Pursuant to a schedule approved by the court, plaintiffs filed their amended complaint on October 22, 2012, and plaintiffs filed a corrected amended complaint on November 5, 2012. Plaintiffs' amended complaint did not allege any claims under the Securities Act against the Company, its officers and directors, or the Company's underwriters in connection with the May 2011 secondary common stock offering. Defendants moved to dismiss the amended complaint on March 1, 2013 and on December 20, 2013, the court issued an order dismissing the amended complaint with prejudice. On January 21, 2014, plaintiffs filed a notice of intent to appeal the court's December 20, 2013 order to the United States Court of Appeals for the Second Circuit. Pursuant to a schedule entered by the appeals court, briefing on the appeal was completed on June 23, 2014. The Second Circuit heard oral argument on the appeal on December 1, 2014. On July 24, 2015, the Second Circuit issued an opinion vacating the district court's dismissal of the amended complaint and remanding the action to the district court. On September 29, 2015, defendants answered the complaint and on October 14, 2015, the district court approved a stipulated discovery schedule for proceedings in the remanded action. The underwriters previously named as defendants notified the Company of their intent to seek indemnification from the Company pursuant to their underwriting agreement dated May 5, 2011 in regard to the claims asserted in this action. The second consolidated putative securities fraud class action is pending in the United States District Court for the Northern District of California and consists of the following actions: Blasco v. Keurig Green Mountain, Inc. et al., Civ. No. 3:15-cv-02766-VC; Jazlowiecki v. Keurig Green Mountain, Inc. et al., Civ. No. 5:15-cv-03396-BLF; and Patel v. Keurig Green Mountain, Inc. et al., Civ. No. 3:15-cv-03715. The underlying complaints in the actions allege violations of the federal securities laws in connection with the Company's disclosures relating to its forward guidance, as well as the Company's public statements concerning the anticipated timing of the launch of Keurig® Kold. The complaints include counts for violation of Section 10(b) of the Exchange Act and Rule 10b-5 against all defendants, and for violation of Section 20(a) of the Exchange Act against the officer defendants. The plaintiffs seek to represent all purchasers of the Company's securities between February 4, 2015 and May 6, 2015 or May 14, 2015 or, in the case of the Patel action, from November 19, 2014 through August 5, 2015. The plaintiffs seek class certification, compensatory damages, attorneys' fees, costs, and such other relief as the court should deem just and proper. Pursuant to the PSLRA, 15 U.S.C. § 78u-4(a)(3), stockholders had until August 18, 2015 to move the court to serve as lead plaintiff of the putative class. Competing applications were filed and on September 28, 2015, the court consolidated the pending actions, appointed Jessica Lee, Alan Schlussel, and Lawrence E. Wilder as lead plaintiffs, and approved their selection of Glancy, Prongay & Murray LLP and The Rosen Law Firm, P.A. as co-lead counsel. On October 6, 2015, the court approved a stipulation filed by the parties providing for the filing of a consolidated complaint and setting a briefing schedule for defendants' motions to dismiss. Lead plaintiffs filed their consolidated complaint on November 6, 2015 and defendants' motions to dismiss are due on December 11, 2015. The first putative stockholder derivative action, a consolidated action captioned In re Green Mountain Coffee Roasters, Inc. Derivative Litigation, Civ. No. 2:10-cv-00233, premised on the same allegations asserted in the now dismissed Horowitz v. Green Mountain Coffee Roasters, Inc., Civ. No. 2:10-cv-00227 securities class action complaint, the LAMPERS action described above, and the now dismissed action captioned Fifield v. Green Mountain Coffee Roasters, Inc., Civ. No. 2:12-cv-00091, is pending in the United States District Court for the District of Vermont before the Honorable William K. Sessions, III. On November 29, 2010, the federal court entered an order consolidating two actions and appointing the firms of Robbins Umeda LLP and Shuman Law Firm as co-lead plaintiffs' counsel. On February 23, 2011, the federal court approved a stipulation filed by the parties providing for a temporary stay of that action until the court rules on defendants' motions to dismiss the consolidated complaint in the Horowitz putative securities fraud class action. On March 7, 2012, the federal court approved a further joint stipulation continuing the temporary stay until the court either denies a motion to dismiss the Horowitz putative securities fraud class action or the Horowitz putative securities fraud class action is dismissed with prejudice. On April 27, 2012, the federal court entered an order consolidating the stockholder derivative action captioned Himmel v. Robert P. Stiller, et al., with two additional putative derivative actions, Musa Family Revocable Trust v. Robert P. Stiller, et al., Civ. No. 2:12-cv-00029, and Laborers Local 235 Benefit Funds v. Robert P. Stiller, et al., Civ. No. 2:12-cv- 00042. On November 14, 2012, the federal court entered an order consolidating an additional stockholder derivative action, captioned Henry Cargo v. Robert P. Stiller, et al., Civ. No. 2:12-cv-00161, and granting plaintiffs leave to lift the stay for the limited purpose of filing a consolidated complaint. The consolidated complaint is asserted nominally on behalf of the Company against certain of its officers and directors. The consolidated complaint asserts claims for breach of fiduciary duty, waste of corporate assets, unjust enrichment, contribution, and indemnification and seeks compensatory damages, injunctive relief, restitution, disgorgement, attorney's fees, costs, and such other relief as the court should deem just and proper. On May 14, 2013, the court approved a joint stipulation filed by the parties providing for a temporary stay of the proceedings until the conclusion of the appeal in the Horowitz putative securities fraud class action. On August 1, 2013, the parties filed a further joint stipulation continuing the temporary stay until the court either denies a motion to dismiss the LAMPERS putative securities fraud class action or the LAMPERS putative securities fraud class action is dismissed with prejudice, which the court approved on August 2, 2013. On February 24, 2014, the court approved a further joint stipulation filed by the parties continuing the temporary stay until the appeals court rules on the pending appeal in the LAMPERS putative securities fraud class action. The Second Circuit's July 24, 2015 decision on the LAMPERS appeal lifts the temporary stay and requires the parties to confer on scheduling. The second putative stockholder derivative action, M. Elizabeth Dickinson v. Robert P. Stiller, et al., Civ. No. 818-11-10, is pending in the Superior Court of the State of Vermont for Washington County. On February 28, 2011, the court approved a stipulation filed by the parties similarly providing for a temporary stay of that action until the federal court rules on defendants' motions to dismiss the consolidated complaint in the Horowitz putative securities fraud class action. As a result of the federal court's ruling in the Horowitz putative securities fraud class action, the temporary stay was lifted. On June 25, 2013, plaintiff filed an amended complaint in the action, which is asserted nominally on behalf of the Company against certain current and former directors and officers. The amended complaint is premised on the same allegations alleged in the Horowitz, LAMPERS, and Fifield putative securities fraud class actions. The amended complaint asserts claims for breach of fiduciary duty, unjust enrichment, waste of corporate assets, and alleged insider selling by certain of the named defendants. The amended complaint seeks compensatory damages, injunctive relief, restitution, disgorgement, attorneys' fees, costs, and such other relief as the court should deem just and proper. On August 7, 2013, the parties filed a further joint stipulation continuing the temporary stay until the court either denies a motion to dismiss the LAMPERS putative securities fraud class action or the LAMPERS putative securities fraud class action is dismissed with prejudice, which the court approved on August 21, 2013. On April 21, 2014, the court approved a joint stipulation filed by the parties continuing the temporary stay until the appeals court rules on the pending appeal in the LAMPERS putative securities fraud class action. The Second Circuit's July 24, 2015 decision on the LAMPERS appeal lifts the temporary stay and requires the parties to confer on scheduling. The Company and the other defendants intend to vigorously defend all the pending lawsuits. Additional lawsuits may be filed and, at this time, the Company is unable to predict the outcome of these lawsuits, the possible loss or range of loss, if any, associated with the resolution of these lawsuits or any potential effect they may have on the Company or its operations. Antitrust Litigation On February 11, 2014, TreeHouse Foods, Inc., Bay Valley Foods, LLC, and Sturm Foods, Inc. filed suit against Green Mountain Coffee Roasters, Inc. and Keurig, Inc. in the U.S. District Court for the Southern District of New York (TreeHouse Foods, Inc. et al. v. Green Mountain Coffee Roasters, Inc. et al., No. 1:14-cv-00905-VSB). The TreeHouse complaint asserted claims under the federal antitrust laws and various state laws, contending that the Company has monopolized alleged markets for single serve coffee brewers and single serve coffee pods, including through its contracts with suppliers and distributors and in connection with the launch of the Keurig® 2.0. The TreeHouse complaint sought monetary damages, declaratory relief, injunctive relief, and attorneys' fees. On March 13, 2014, JBR, Inc. (d/b/a Rogers Family Company) filed suit against Keurig Green Mountain, Inc. in the U.S. District Court for the Eastern District of California (JBR, Inc. v. Keurig Green Mountain, Inc., No. 2:14-cv-00677-KJM-CKD). The claims asserted and relief sought in the JBR complaint were substantially similar to the claims asserted and relief sought in the TreeHouse complaint. Additionally, beginning on March 10, 2014, twenty-seven putative class actions asserting similar claims and seeking similar relief were filed on behalf of purported direct and indirect purchasers of the Company's products in various federal district courts. On June 3, 2014, the Judicial Panel on Multidistrict Litigation (the "JPML") granted a motion to transfer these various actions, including the TreeHouse and JBR actions, to a single judicial district for coordinated or consolidated pre-trial proceedings. The actions are now pending before Judge Vernon S. Broderick in the Southern District of New York (In re: Keurig Green Mountain Single-Serve Coffee Antitrust Litigation, No. 1:14-md-02542-VSB) (the "Multidistrict Antitrust Litigation"). On August 11, 2014, JBR filed a motion for a preliminary injunction, which the Company opposed. After a hearing, the district court in the Multidistrict Antitrust Litigation denied JBR's motion by order dated September 19, 2014. JBR appealed the district court's denial of the preliminary injunction to the United States Court of Appeals for the Second Circuit; the appeal was fully briefed on March 3, 2015. On September 30, 2015, the Court of Appeals heard oral argument on the appeal. On October 26, 2015, the Court of Appeals affirmed the district court's denial of JBR's motion for a preliminary injunction. Consolidated putative class action complaints by direct purchaser and indirect purchaser plaintiffs were filed on July 24, 2014. The Company filed motions to dismiss these complaints and the complaints in the TreeHouse and JBR actions on October 6, 2014. On November 25, 2014, all plaintiffs filed amended complaints and on February 2, 2015 the Company again moved to dismiss. Plaintiffs filed opposition briefs on April 10, 2015, and the Company filed reply briefs on May 11, 2015. Oral argument on the Company's motions to dismiss was held on July 9, 2015. The court has not yet issued a decision on the motions to dismiss. On August 21, 2015, a putative class action complaint was filed against the Company in the Circuit Court of Faulkner County, Arkansas (Julie Rainwater et al. v. Keurig Green Mountain, Inc., No. 23CV-15-818) (the "Rainwater Action"). The allegations raised in the Rainwater Action are substantially similar to the allegations in the complaints filed in the Multidistrict Antitrust Litigation. Like the complaint filed by the putative class of indirect purchaser plaintiffs in the Multidistrict Antitrust Litigation, the Rainwater Action seeks relief under Arkansas state law on behalf of a putative class of indirect purchasers of K-Cup portion packs in the state of Arkansas. On September 21, 2015, the Company removed the Rainwater Action to the U.S. District Court for the Eastern District of Arkansas (No. 4:15-cv-590-JLH). On September 25, 2015, the Company filed a Notice of Potential Tag-Along Action with the JPML, and on November 10, 2015, the JPML ordered the transfer of the Rainwater Action to the Southern District of New York for inclusion in the Multidistrict Antitrust Litigation. On September 30, 2014, a statement of claim was filed against the Company and Keurig Canada Inc. in Ontario, Canada by Club Coffee L.P. ("Club Coffee"), a Canadian manufacturer of single serve beverage pods, claiming damages of $600 million and asserting a breach of competition law and false and misleading statements by the Company. Following the filing by the Company and Keurig Canada of a notice of motion for a motion to strike the claims made by Club Coffee for failure to state a reasonable cause of action, on August 31, 2015 Club Coffee filed a second amended statement of claim against the Company and Keurig Canada Inc. claiming the same amount of damages as in the original statement of claim. The Company intends to vigorously defend all of the pending lawsuits. At this time, the Company is unable to predict the outcome of these lawsuits, the potential loss or range of loss, if any, associated with the resolution of these lawsuits or any potential effect they may have on the Company or its operations. Employment Class Action A putative employment class action, captioned Alvaro Sanchez v. Keurig Green Mountain, Inc. and Does 1 - 100, was filed against Keurig in the Superior Court of California County of Monterey on July 14, 2015. The complaint alleges that the Company failed to pay proper wages and provide certain breaks to non-exempt employees of the Company's processing plant located in Castroville, California during the class period (which is defined as the period of time beginning four years before the commencement of the action through the date on which judgment on the action becomes final). The complaint seeks alleged damages, attorneys' fees, penalties, and injunctive and equitable relief on behalf of the putative class. The Company filed its Answer denying all substantive allegations and recently removed the lawsuit to the United States District Court for the Northern District of California. The Company intends to vigorously defend itself against this complaint. Additional lawsuits may be filed and, at this time, the Company is unable to predict the outcome of these lawsuits, the possible loss or range of loss, if any, associated with the resolution of these lawsuits or any potential effect they may have on the Company or its operations. Product Liability In November 2014, the Company informed the U.S. Consumer Product Safety Commission ("CPSC") and Health Canada that it identified a potential issue involving certain Keurig® MINI Plus (non-reservoir) brewers (K10 and B31 models), where on very rare occasions, hot liquid could escape the brewer. On December 23, 2014 the Company issued a recall for its Keurig® MINI Plus brewers. On April 17, 2015 the CPSC notified the Company that it had commenced a routine investigation of the recall and the Company is cooperating with the CPSC on this matter. These actions did not materially change the Company's estimate for the reserve or the anticipated insurance recovery; however, as the total charge recorded to date is based on estimates, the Company's ultimate liability and recovery may exceed or be less than the amounts recorded. Based on current information known to the Company, the Company believes that this issue will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company. |
Related Party
Related Party | 12 Months Ended |
Sep. 26, 2015 | |
Related Party | |
Related Party | 21. Related Party The Company, from time to time, used travel services provided by Heritage Flight, a charter air services company acquired in September 2002 by Robert P. Stiller, who previously served on the Company's Board of Directors and who is a security holder of more than 5% of the Company's Common Stock. For fiscal year 2013, the Company incurred expenses of $0.2 million for Heritage Flight travel services. There were no expenses incurred with Heritage Flight travel services during fiscal year 2015 and 2014. On March 3, 2015, the Company, under its repurchase program, completed the repurchase of 5,231,991 shares of common stock from Lavazza for an aggregate purchase price of $623.6 million. The price per share was $119.18, which represented a 3.0% discount off the closing price of the Company's common stock on February 20, 2015, which was the business day immediately preceding the entry into the stock repurchase agreement between the Company and Lavazza. Prior to the repurchase, Lavazza held more than 5% of the Company's common stock. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Sep. 26, 2015 | |
Earnings Per Share | |
Earnings Per Share | 22 Earnings Per Share The following table illustrates the reconciliation of the numerator and denominator of basic and diluted earnings per share computations (dollars in thousands, except share and per share data): Fiscal 2015 Fiscal 2014 Fiscal 2013 Numerator for basic and diluted earnings per share: Net income attributable to Keurig $ $ $ Denominator: Basic weighted average shares outstanding Effect of dilutive securities—stock options Diluted weighted average shares outstanding Basic net income per common share $ $ $ Diluted net income per common share $ $ $ For the fiscal years 2015, 2014, and 2013, 351,000, 277,000, and 822,000 equity-based awards for shares of common stock, respectively, have been excluded in the calculation of diluted earnings per share because they were antidilutive. |
Unaudited Quarterly Financial D
Unaudited Quarterly Financial Data | 12 Months Ended |
Sep. 26, 2015 | |
Unaudited Quarterly Financial Data | |
Unaudited Quarterly Financial Data | 23. Unaudited Quarterly Financial Data The following table presents the quarterly information for fiscal 2015 (dollars in thousands, except per share data). Each fiscal quarter comprises 13 weeks. Fiscal 2015 December 27, 2014 March 28, 2015 June 27, 2015 September 26, 2015 Net sales $ $ $ $ Gross profit $ $ $ $ Net income attributable to Keurig $ $ $ $ Earnings per share: Basic $ $ $ $ Diluted $ $ $ $ Dividends paid per share $ $ $ $ The following table presents the quarterly information for fiscal 2014 (dollars in thousands, except per share data). Each fiscal quarter comprises 13 weeks. Fiscal 2014 December 28, 2013 March 29, 2014 June 28, 2014 September 27, 2014 Net sales $ $ $ $ Gross profit $ $ $ $ Net income attributable to Keurig $ $ $ $ Earnings per share: Basic $ $ $ $ Diluted $ $ $ $ Dividends paid per share $ — $ $ $ The following table presents the quarterly information for fiscal 2013 (dollars in thousands, except per share data). Each fiscal quarter comprises 13 weeks. Fiscal 2013 December 29, 2012 March 30, 2013 June 29, 2013 September 28, 2013 Net sales $ $ $ $ Gross profit $ $ $ $ Net income attributable to Keurig $ $ $ $ Earnings per share: Basic $ $ $ $ Diluted $ $ $ $ Dividends paid per share $ — $ — $ — $ — |
Schedule II-Valuation and Quali
Schedule II-Valuation and Qualifying Accounts | 12 Months Ended |
Sep. 26, 2015 | |
Schedule II-Valuation and Qualifying Accounts | |
Schedule II-Valuation and Qualifying Accounts | Schedule II—Valuation and Qualifying Accounts For the Fiscal Years Ended September 26, 2015, September 27, 2014, and September 28, 2013 (Dollars in thousands) Description Balance at Beginning of Period Acquisitions (Dispositions) Charged to Costs and Expenses Deductions Balance at End of Period Allowance for doubtful accounts: Fiscal 2015 $ $ — $ $ $ Fiscal 2014 $ $ — $ $ $ Fiscal 2013 $ $ — $ $ $ Description Balance at Beginning of Period Acquisitions (Dispositions) Charged to Costs and Expenses Deductions Balance at End of Period Sales returns reserve: Fiscal 2015 $ $ — $ $ $ Fiscal 2014 $ $ — $ $ $ Fiscal 2013 $ $ — $ $ $ Description Balance at Beginning of Period Acquisitions (Dispositions) Charged to Costs and Expenses Deductions Balance at End of Period Warranty reserve (1) : Fiscal 2015 $ $ — $ $ $ Fiscal 2014 $ $ — $ $ $ Fiscal 2013 $ $ — $ $ $ (1) Includes warranty recoveries from suppliers of $1.3 million, $1.8 million and $0.8 million for fiscal 2015, 2014, and 2013 respectively. |
Significant Accounting Polici32
Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 26, 2015 | |
Significant Accounting Policies | |
Use of estimates | Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect amounts reported in the accompanying Consolidated Financial Statements. Significant estimates and assumptions by management affect the Company's inventory, deferred tax assets, allowance for sales returns, warranty reserves, accrued restructuring and other certain accrued expenses, goodwill, intangible and long-lived assets and stock-based compensation. Although the Company regularly assesses these estimates, actual results could differ from these estimates. Changes in estimates are recorded in the period they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and all of the entities in which the Company has a controlling financial interest. All intercompany transactions and accounts are eliminated in consolidation. |
Noncontrolling Interests | Noncontrolling Interests Noncontrolling interests ("NCI") are evaluated by the Company and are shown as either a liability, temporary equity (shown between liabilities and equity) or as permanent equity depending on the nature of the redeemable features at amounts based on formulas specific to each entity. Generally, mandatorily redeemable NCI's are classified as liabilities and non-mandatorily redeemable NCI's are classified outside of stockholders' equity in the Consolidated Balance Sheets as temporary equity under the caption, Redeemable noncontrolling interests, and are measured at their redemption values at the end of each period. If the redemption value is greater than the carrying value, an adjustment is recorded in retained earnings to record the NCI at its redemption value. Redeemable NCIs that are mandatorily redeemable are classified as a liability in the Consolidated Balance Sheets under either Other current liabilities or Other long-term liabilities , depending on the remaining duration until settlement, and are measured at the amount of cash that would be paid if settlement occurred at the balance sheet date with any change from the prior period recognized as interest expense. See Note 9, Noncontrolling Interests in the Consolidated Financial Statements included in this Annual Report for further information. Net income attributable to NCIs reflects the portion of the net income (loss) of consolidated entities applicable to the NCI stockholders in the accompanying Consolidated Statements of Operations. The net income attributable to NCIs is classified in the Consolidated Statements of Operations as part of consolidated net income and deducted from total consolidated net income to arrive at the net income attributable to the Company. If a change in ownership of consolidated subsidiary results in a loss of control or deconsolidation, any retained ownership interests are remeasured with the gain or loss reported to net earnings. |
Business Combinations | Business Combinations The Company uses the acquisition method of accounting for business combinations and recognizes assets acquired and liabilities assumed measured at their fair values on the date acquired. Goodwill represents the excess of the purchase price over the fair value of the net assets. The fair values of the assets and liabilities acquired are determined based upon the Company's valuation. The valuation involves making significant estimates and assumptions which are based on detailed financial models including the projection of future cash flows, the weighted average cost of capital and any cost savings that are expected to be derived in the future. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include money market funds which are carried at cost, plus accrued interest, which approximates fair value. The Company does not believe that it is subject to any unusual credit or market risk. |
Restricted Cash and Cash Equivalents | Restricted Cash and Cash Equivalents Restricted cash and cash equivalents represents cash that is not available for use in our operations. The Company had restricted cash and cash equivalents of $30.5 million and $0.4 million as of September 26, 2015 and September 27, 2014, respectively. |
Short-Term Investments | Short-Term Investments The Company considers all investments purchased with an original maturity of more than three months but less than one year to be short-term investments. The short-term investment balance as of September 27, 2014 represented a certificate of deposit that the Company had the intent and ability to hold to maturity. It was therefore classified as held-to-maturity and carried at amortized cost. The fair value of this instrument was equal to its amortized cost and therefore there were no unrealized gains or losses associated with the instrument. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts A provision for doubtful accounts is provided based on a combination of historical experience, specific identification and customer credit risk where there are indications that a specific customer may be experiencing financial difficulties. |
Inventories | Inventories Inventories consist primarily of green and roasted coffee, including coffee in pods, purchased finished goods such as coffee brewers, and packaging materials. Inventories are stated at the lower of cost or market. Cost is being measured using an adjusted standard cost method which approximates FIFO (first-in, first-out). The Company regularly reviews whether the net realizable value of its inventory is lower than its carrying value. If the valuation shows that the net realizable value is lower than the carrying value, the Company takes a charge to cost of sales and directly reduces the carrying value of the inventory. The Company estimates any required write downs for inventory obsolescence by examining its inventories on a quarterly basis to determine if there are indicators that the carrying values exceed net realizable value. Indicators that could result in additional inventory write downs include age of inventory, damaged inventory, slow moving products and products at the end of their life cycles. While management believes that inventory is appropriately stated at the lower of cost or market, significant judgment is involved in determining the net realizable value of inventory. |
Financial Instruments | Financial Instruments The Company enters into various types of financial instruments in the normal course of business. Fair values are estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk. Cash, cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses are reported at carrying value and approximate fair value due to the short maturity of these instruments. Long-term debt is also reported at carrying value, which approximates fair value due to the fact that the interest rate on the debt is based on variable interest rates. The fair values of derivative financial instruments have been determined using market information and valuation methodologies. Changes in assumptions or estimates could affect the determination of fair value; however, management does not believe any such changes would have a material impact on the Company's financial condition, results of operations or cash flows. The fair values of short-term investments and derivative financial instruments are disclosed in Note 13, Fair Value Measurements , in the Consolidated Financial Statements included in this Annual Report. |
Derivative Instruments | Derivative Instruments The Company enters into over-the-counter derivative contracts based on coffee futures ("coffee futures") to hedge against price increases in price-to-be-coffee purchase commitments and anticipated coffee purchases. Coffee purchases are generally denominated in the U.S. dollar. The Company also enters into interest rate swap agreements to mitigate interest rate risk associated with the Company's variable-rate borrowings and foreign currency forward contracts to hedge the purchase and payment of certain green coffee purchase commitments as well as certain recognized liabilities in currencies other than the Company's functional currency. All derivatives are recorded at fair value. Interest rate swaps, coffee futures, and certain foreign currency forward contracts which hedge the purchase and payment of green coffee purchase commitments are designated as cash flow hedges with the effective portion of the change in the fair value of the derivative instrument recorded as a component of other comprehensive income ("OCI") and subsequently reclassified into net earnings when the hedged exposure affects net earnings. Foreign currency forward contracts which hedge certain recognized liabilities denominated in non-functional currencies are designated as fair value hedges with the changes in the fair value of these instruments along with the changes in the fair value of the hedged liabilities recognized in gain or loss on foreign currency, net in the Consolidated Statements of Operations. Effectiveness is determined by how closely the changes in the fair value of the derivative instrument offset the changes in the fair value of the hedged item. The ineffective portion of the change in the fair value of the derivative instrument is recorded directly to earnings. The Company formally documents hedging instruments and hedged items, and measures at each balance sheet date the effectiveness of its hedges. When it is determined that a derivative is not highly effective, the derivative expires, or is sold or terminated, or the derivative is discontinued because it is unlikely that a forecasted transaction will occur, the Company discontinues hedge accounting prospectively for that specific hedge instrument. The Company also occasionally enters into certain foreign currency forward contracts to hedge certain exposures that are not designated as hedging instruments for accounting purposes. These contracts are recorded at fair value, with the changes in fair value recognized in the Consolidated Statements of Operations. The Company does not engage in speculative transactions, nor does it hold derivative instruments for trading purposes. See Note 12, Derivative Financial Instruments and Note 15, Stockholders' Equity in the Consolidated Financial Statements included in this Annual Report for further information. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs consist primarily of commitment fees and loan origination fees and are being amortized over the respective life of the applicable debt using a method that approximates the effective interest rate method. Deferred financing costs included in Other long-term assets in the accompanying Consolidated Balance Sheets as of September 26, 2015 and September 27, 2014 was $7.0 million and $9.6 million, respectively. |
Goodwill and Intangibles | Goodwill and Intangibles Goodwill is tested for impairment annually at the end of the Company's fiscal year or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is assigned to reporting units for purposes of impairment testing. A reporting unit is the same as an operating segment or one level below an operating segment. The Company may assess qualitative factors to determine if it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further testing is necessary. If, however, the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the first step of a two-step goodwill impairment test. The assessment of qualitative factors is optional and at the Company's discretion. The Company may bypass the qualitative assessment for any reporting unit in any period and perform the first step of the quantitative goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period. The first step is a comparison of each reporting unit's fair value to its carrying value. The Company estimates fair value based on a weighting of the income approach, using discounted cash flows, and the market approach, using the guideline company method. The reporting unit's discounted cash flows require significant management judgment with respect to sales forecasts, gross margin percentages, selling, operating, general and administrative ("SG&A") expenses, capital expenditures and the selection and use of an appropriate discount rate. The projected sales, gross margin and SG&A expense rate assumptions and capital expenditures are based on the Company's annual business plan or other forecasted results. Discount rates reflect market-based estimates of the risks associated with the projected cash flows directly resulting from the use of those assets in operations. The market approach uses observable market data such as comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the extent available). The estimates of fair value of reporting units are based on the best information available as of the date of the assessment. If the carrying value of a reporting unit exceeds its estimated fair value in the first step, a second step is performed, which requires the Company to allocate the fair value of the reporting unit derived in the first step to the fair value of the reporting unit's net assets, with any fair value in excess of amounts allocated to such net assets representing the implied fair value of goodwill for that reporting unit. If the implied fair value of the goodwill is less than the book value, goodwill is impaired and is written down to the implied fair value amount. Intangible assets that have finite lives are amortized over their estimated economic useful lives on a straight line basis. Intangible assets that have indefinite lives are not amortized and are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Similar to the qualitative assessment for goodwill, the Company may assess qualitative factors to determine if it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If the Company determines that it is not more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, no further testing is necessary. If, however, the Company determines that it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the Company compares the fair value of the indefinite-lived asset with its carrying amount. If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, the individual indefinite-lived intangible asset is written down by an amount equal to such excess. The assessment of qualitative factors is optional and at the Company's discretion. The Company may bypass the qualitative assessment for any indefinite-lived intangible asset in any period and resume performing the qualitative assessment in any subsequent period. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets When facts and circumstances indicate that the carrying values of long-lived assets, including fixed assets, may be impaired, an evaluation of recoverability is performed by comparing the carrying value of the assets, at an asset group level, to undiscounted projected future cash flows in addition to other quantitative and qualitative analyses. When assessing impairment, property, plant and equipment assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of other groups of assets. Upon indication that the carrying value of such assets may not be recoverable, the Company recognizes an impairment loss as a charge against current operations based upon an assessment of fair value of such assets. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value, less estimated costs to sell. The Company makes judgments related to the expected useful lives of long-lived assets and its ability to realize undiscounted cash flows in excess of the carrying amounts of such assets which are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions and changes in operating performance. |
Fixed Assets | Fixed Assets Fixed assets are carried at cost, net of accumulated depreciation. Expenditures for maintenance, repairs and renewals of minor items are expensed as incurred. Expenditures for refurbishments and improvements that significantly improve the productive capacity or extend the useful life of an asset are capitalized. Depreciation is calculated using the straight-line method over the assets' estimated useful lives. The cost and accumulated depreciation for fixed assets sold, retired, or otherwise disposed of are relieved from the accounts, and the resultant gains and losses are reflected in income. The Company follows an industry-wide practice of purchasing and loaning coffee brewing and related equipment to wholesale customers in our AFH channel. These assets are also carried at cost, net of accumulated depreciation. Depreciation costs of manufacturing and distribution assets are included in cost of sales on the Consolidated Statements of Operations. Depreciation costs of other assets, including equipment on loan to customers, are included in selling and operating expenses on the Consolidated Statements of Operations. |
Leases | Leases Occasionally, the Company is involved in the construction of leased properties. Due to the extent and nature of that involvement, the Company is deemed the owner during the construction period and is required to capitalize the construction costs on the Consolidated Balance Sheets along with a corresponding financing obligation for the project costs that are incurred by the lessor. Upon completion of the project, a sale-leaseback analysis is performed to determine if the Company can record a sale to remove the assets and related obligation and record the lease as either an operating or capital lease obligation. If the Company is precluded from derecognizing the assets when construction is complete due to continuing involvement beyond a normal leaseback, the lease is accounted for as a financing transaction and the recorded asset and related financing obligation remain on the Consolidated Balance Sheet. Accordingly, the asset is depreciated over its estimated useful life in accordance with the Company's policy. If the Company is not considered the owner of the land, a portion of the lease payments is allocated to ground rent and treated as an operating lease. The portion of the lease payment allocated to ground rental expense is based on the fair value of the land at the commencement of construction. Lease payments allocated to the buildings are recognized as reductions to the financing obligation and interest expense. See Note 20 Commitments and Contingencies , for further information. Leases that qualify as capital leases are recorded at the lower of the fair value of the asset or the present value of the future minimum lease payments over the lease term generally using the Company's incremental borrowing rate. Assets leased under capital leases are included in fixed assets and generally are depreciated over the lease term. Lease payments under capital leases are recognized as a reduction of the capital lease obligation and interest expense. All other leases are considered operating leases. Assets subject to an operating lease are not recorded on the balance sheet. Lease payments are recognized on a straight-line basis as rent expense over the expected lease term. |
Revenue Recognition | Revenue Recognition Revenue from sales of brewer systems, coffee and other specialty beverages in pods, and coffee in more traditional packaging including whole bean and ground coffee selections in bags and ground coffee in fractional packs is recognized when title and risk of loss passes to the customer, which generally occurs upon shipment or delivery of the product to the customer as defined by the contractual shipping terms. Shipping charges billed to customers are also recognized as revenue, and the related shipping costs are included in cost of sales. Cash received in advance of product delivery is recorded in deferred revenue, which is included in other current liabilities on the accompanying Consolidated Balance Sheets, until earned. The majority of the Company's distribution to major retailers is processed by fulfillment entities. The fulfillment entities receive and fulfill sales orders and invoice certain retailers. All product shipped by the Company to the fulfillment entities are owned by the Company and included in inventories on the accompanying consolidated balance sheets. The Company recognizes revenue when delivery of the product from the fulfillment entity to the retailer has occurred based on the contractual shipping terms and when all other revenue recognition criteria are met. Sales of brewers, pods and other products are recognized net of any discounts, returns, allowances and sales incentives, including coupon redemptions and rebates. The Company estimates the allowance for returns using an average return rate based on historical experience and an evaluation of contractual rights or obligations. The Company routinely participates in trade promotion programs with customers, including customers whose sales are processed by the fulfillment entities, whereby customers can receive certain incentives and allowances which are recorded as a reduction to sales when the sales incentive is offered and committed to or, if the incentive relates to specific sales, at the later of when that revenue is recognized or the date at which the sales incentive is offered. These incentives include, but are not limited to, cash discounts and volume based incentive programs. Allowances to customers that are directly attributable and supportable by customer promotional activities are recorded as selling expenses at the time the promotional activity occurs. Roasters licensed by the Company to manufacture and sell pods, both to the Company for resale and to their other coffee customers, are obligated to pay a royalty to the Company upon shipment to their customer. The Company records royalty revenue upon shipment of pods by licensed roasters to third-party customers as set forth under the terms and conditions of various licensing agreements. For shipments of pods to the Company for resale, this royalty payment is recorded as a reduction to the carrying value of the related pods in inventory and as a reduction to cost of sales when sold through to third-party customers by the Company. |
Cost of Sales | Cost of Sales Cost of sales for the Company consists of the cost of raw materials including coffee beans, hot cocoa, flavorings and packaging materials; a portion of our rental expense; production, warehousing and distribution costs which include salaries; distribution and merchandising personnel; leases and depreciation on facilities and equipment used in production; the cost of brewers manufactured by suppliers; third-party fulfillment charges; receiving, inspection and internal transfer costs; warranty expense; freight, duties and delivery expenses; and certain third-party royalty charges. All shipping and handling expenses are also included as a component of cost of sales. |
Product Warranty | Product Warranty The Company provides for the estimated cost of product warranties in cost of sales, at the time product revenue is recognized. Warranty costs are estimated primarily using historical warranty information in conjunction with current engineering assessments applied to the Company's expected repair or replacement costs. The estimate for warranties requires assumptions relating to expected warranty claims which can be impacted significantly by quality issues. |
Advertising Costs | Advertising Costs The Company expenses the costs of advertising the first time the advertising takes place, except for direct mail campaigns targeted directly at consumers, which are expensed over the period during which they are expected to generate sales. As of September 26, 2015 and September 27, 2014, prepaid advertising costs of $3.7 million and $3.3 million, respectively, were recorded in Other current assets in the accompanying Consolidated Balance Sheets. Advertising expense totaled $115.8 million, $137.2 million, and $193.2 million, for fiscal years 2015, 2014, and 2013, respectively. |
Income Taxes | Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax benefits or consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Judgment is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities. These include establishing a valuation allowance related to the ability to realize certain deferred tax assets. The Company currently believes that future earnings and current tax planning strategies will be sufficient to recover substantially all of the Company's recorded net deferred tax assets. To the extent future taxable income against which these assets may be applied is not sufficient, some portion or all of our recorded deferred tax assets would not be realizable. Accounting for uncertain tax positions also requires significant judgments, including estimating the amount, timing and likelihood of ultimate settlement. Although the Company believes that its estimates are reasonable, actual results could differ from these estimates. The Company uses a more-likely-than-not measurement attribute for all tax positions taken or expected to be taken on a tax return in order for those tax positions to be recognized in the financial statements. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Equity awards consist of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs"), and performance stock units ("PSUs"). The cost is recognized over the period during which an employee is required to provide service in exchange for the award. The Company measures the fair value of stock options using the Black-Scholes option pricing model and certain assumptions, including the expected life of the stock options, an expected forfeiture rate and the expected volatility of its common stock. The expected life of options is estimated based on options vesting periods, contractual lives and an analysis of the Company's historical experience. The expected forfeiture rate is based on the Company's historical employee turnover experience and future expectations. The risk-free interest rate is based on the U.S. Treasury rate over the expected life. The Company uses a blended historical volatility to estimate expected volatility at the measurement date. The fair value of RSUs, RSAs and PSUs is based on the closing price of the Company's common stock on the grant date. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The financial statements of the Company's foreign subsidiaries are translated into the reporting currency of the Company which is the U.S. dollar. The functional currency of certain of the Company's foreign subsidiaries is the local currency of the subsidiary. Accordingly, the assets and liabilities of the Company's foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts are generally translated using the average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income or loss as a separate component of stockholders' equity. Gains and losses arising from transactions denominated in currencies other than the functional currency of the entity are charged directly against earnings in the Consolidated Statement of Operations. Gains and losses arising from transactions denominated in foreign currencies are primarily related to inter-company loans that have been determined to be temporary in nature, cash, long-term debt and accounts payable denominated in non-functional currencies. |
Significant Customer Credit Risk and Supply Risk | Significant Customer Credit Risk and Supply Risk The majority of the Company's customers are located in the U.S. and Canada. With the exception of M.Block & Sons ("MBlock") as described below, concentration of credit risk with respect to accounts receivable is limited due to the large number of customers in various channels comprising the Company's customer base. The Company does not require collateral from customers as ongoing credit evaluations of customers' payment histories are performed. The Company maintains reserves for potential credit losses and such losses, in the aggregate, have not exceeded management's expectations. The Company procures the majority of the brewers it sells from one third-party brewer manufacturer. Purchases from this brewer manufacturer amounted to approximately $443.1 million, $735.2 million and $637.0 million in fiscal years 2015, 2014 and 2013, respectively. The Company primarily relies on MBlock to process the majority of sales orders for our AH business with retailers in the United States. The Company is subject to significant credit risk regarding the creditworthiness of MBlock and, in turn, the creditworthiness of the retailers. Sales processed by MBlock to retailers amounted to $1,557.5 million, $1,706.1 million and $1,600.2 million for fiscal years 2015, 2014 and 2013, respectively. The Company's account receivables due from MBlock amounted to $69.1 million and $148.2 million at September 26, 2015 and September 27, 2014, respectively. Sales to customers that represented more than 10% of the Company's net sales included Wal-Mart Stores, Inc. and affiliates ("Wal-Mart"), representing approximately 17%, 17% and 14% of consolidated net sales for fiscal years 2015, 2014 and 2013 respectively; and Costco Wholesale Corporation and affiliates ("Costco"), representing approximately 12%, 12% and 11% of consolidated net sales for fiscal 2015, 2014, and 2013, respectively. For Wal-Mart, the majority of U.S. sales are processed through MBlock whereby MBlock is the vendor of record. Starting in fiscal 2012, for U.S. sales to Costco, the Company became the vendor of record and although the sales are processed through MBlock, the Company records the account receivables from the customer and pays MBlock for their fulfillment services. The Company's account receivables due from Costco amounted to $66.9 million and $104.5 million, net of allowances, at September 26, 2015 and September 27, 2014, respectively. |
Research & Development | Research & Development Research and development charges are expensed as incurred. These expenses amounted to $84.7 million, $76.5 million and $57.7 million in fiscal years 2015, 2014 and 2013, respectively. These costs primarily consist of salary and consulting expenses and are recorded in selling and operating expenses in each respective segment of the Company. |
Collaborative Arrangements | Collaborative Arrangements From time to time, the Company enters into collaborative arrangements for the research and development ("R&D"), manufacture and/or commercialization of products and product candidates. These collaborations generally provide R&D cost sharing, and/or royalty payments. The Company's collaboration agreements with third parties are performed with no guarantee of either technological or commercial success. No cost recoveries or royalties have been received to date under these arrangements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03— Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"), which changes the presentation of debt issuance costs in financial statements. Under ASU 2015-03, an entity will present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. In August 2015, the FASB issued ASU No. 2015-15— Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements ("ASU 2015-15"), which incorporates the SEC staff's announcement that clarifies the exclusion of line-of-credit arrangements from the scope of ASU 2015-03. The ASU clarifies that debt issuance costs related to line-of-credit arrangements can be deferred and presented as an asset that is subsequently amortized over the time of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-03 is effective retrospectively for interim and annual periods beginning after December 15, 2015. The Company expects to adopt ASU 2015-03 beginning on September 25, 2016 and the adoption of the new guidance is not expected to have a material impact on the Company's financial condition or financial statement disclosures. In July 2015, the FASB issued ASU No. 2015-11— Simplifying the Measurement of Inventory ("ASU 2015-11") that changes the measurement principle for inventory from the lower of cost or market to the lower of cost or net realizable value. The amendments in this guidance do not apply to inventory that is measured using last-in, first-out ("LIFO") or the retail inventory method; rather, the amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out ("FIFO") or average cost. Within the scope of this new guidance, an entity should measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation, which is consistent with existing GAAP. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. The Company expects to adopt ASU 2015-11 beginning in its third quarter of fiscal 2016. The adoption of ASU 2015-11 is not expected to have a material impact on the Company's net income, financial position, cash flows or disclosures. In April 2015, the FASB issued ASU No. 2015-05— Customer's Accounting for Fees Paid in a Cloud Computing Arrangement (an update to Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software) ("ASU 2015-05"), which provides guidance on accounting for cloud computing fees. If a cloud computing arrangement includes a software license, then the customer should account for the license element of the arrangement consistent within the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract. ASU 2015-05 is effective for arrangements entered into, or materially modified, in interim and annual periods beginning after December 15, 2015. Retrospective application is permitted but not required. Management is currently evaluating the impact of ASU 2015-05 on the consolidated financial statements. In August 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern , which requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. ASU 2014-15 will be effective for the Company in the fourth quarter of 2017. The adoption of ASU 2014-15 is not expected to have a material impact on the Company's disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard will require the Company to separate performance obligations within a contract, determine total transaction costs, and ultimately allocate the transaction costs across the established performance obligations. In August 2015, the FASB issued ASU No. 2015-14, " Revenue from Contracts with Customers " (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 will become effective for the Company beginning in fiscal 2019 under either full or modified retrospective adoption, with early adoption permitted as of the original effective date of ASU 2014-09. The Company is currently assessing the potential effects of these changes on the Company's net income, financial position, cash flows and disclosures. In April 2014, FASB issued ASU No. 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity," which raises the threshold for disposals to qualify as discontinued operations ("ASU 2014-08"). A discontinued operation is defined as: (1) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity's operations and financial results; or (2) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. It is effective for annual periods beginning on or after December 15, 2014. Early adoption is permitted but only for disposals that have not been reported in financial statements previously issued. The adoption of ASU 2014-08 in the first quarter of fiscal 2016 is not expected to have a material impact on the Company's net income, financial position, cash flows or disclosures. |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Acquisition | |
Summary of the allocation of fair value | The following summarizes the allocation of fair value (in thousands): Accounts receivable $ Inventories Other current assets Fixed assets Other long-term assets Intangibles Goodwill Accounts payable and accrued expenses ) Capital lease obligation ) Deferred tax liability ) Other long-term liabilities ) Total estimated fair value net assets acquired Less fair value of previously held equity interest in Bevyz ) Total cash paid, net of cash acquired $ |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Segment Reporting | |
Summary of selected financial data for segment disclosures | For Fiscal 2015 (Dollars in thousands) Domestic Canada Corporate- Unallocated Consolidated Net sales $ $ $ — $ Operating income (loss) $ $ $ ) $ Depreciation and amortization $ $ $ $ Stock compensation expense $ $ $ $ For Fiscal 2014 (Dollars in thousands) Domestic Canada Corporate- Unallocated Consolidated Net sales $ $ $ — $ Operating Income (loss) $ $ $ ) $ Depreciation and amortization $ $ $ $ Stock compensation expense $ $ $ $ For Fiscal 2013 (Dollars in thousands) Domestic Canada Corporate- Unallocated Consolidated Net sales $ $ $ — $ Operating Income (loss) $ $ $ ) $ Depreciation and amortization $ $ $ $ Stock compensation expense $ $ $ $ |
Schedule of information concerning net sales of principal geographic areas | Information concerning net sales of principal geographic areas is as follows (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Net Sales: United States $ $ $ Canada Other $ $ $ |
Schedule of information concerning long-lived assets of principal geographic areas | Information concerning long-lived assets of principal geographic area is as follows (in thousands) as of: September 26, 2015 September 27, 2014 Fixed Assets, net: United States $ $ Canada Other $ $ |
Schedule of net sales by major product category | Net sales by major product category (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Pods $ $ $ Brewers and Accessories Other Products and Royalties $ $ $ |
Restructuring Programs (Tables)
Restructuring Programs (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Restructuring Programs | |
Schedule of cumulative estimated pre-tax restructuring charges, by segment | The following represents cumulative estimated pre-tax restructuring charges, by segment, to be incurred for the implementation of the productivity program (in thousands): 2015 Expenses Incurred 2016 Estimated Expenses Cumulative Estimated Expenses Domestic $ $ $ Canada Corporate—Unallocated — Total $ $ $ |
Schedule of restructuring expenses recorded for the multi-year productivity program | In fiscal 2015, the Company recorded restructuring expenses for the multi-year productivity program under the caption Restructuring expenses, within operating income in the accompanying Consolidated Statements of Operations as follows (in thousands): Severance and Related Costs Asset Write- downs Other Exit Activities Total Domestic $ $ $ — $ Canada — Corporate Unallocated — — Total fiscal 2015 restructuring charge $ $ $ $ |
Schedule of activity for the restructuring liability associated with the multi-year productivity program | The activity for the restructuring liability associated with the multi-year productivity program was as follows (in thousands): Severance and Related Costs Asset Write- downs Other Exit Activities Total Liability balance, September 27, 2014 — — — — Charges Cash spent ) — — ) Non-cash settlements / adjustments ) ) — ) Foreign currency adjustments — ) Liability balance, September 26, 2015 — |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Inventories | |
Schedule of inventories | Inventories consisted of the following (in thousands) as of: September 26, 2015 September 27, 2014 Raw materials and supplies $ $ Finished goods $ $ |
Schedule of minimum future inventory purchase commitments | As of September 26, 2015, minimum future inventory purchase commitments were as follows (in thousands): Fiscal Year Inventory Purchase Obligations (1) 2016 $ 2017 2018 2019 2020 Thereafter — $ (1) Certain purchase obligations are determined based on a contractual percentage of forecasted volumes. |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Fixed Assets | |
Schedule of fixed assets | Fixed assets consisted of the following (in thousands) as of: Useful Life in Years September 26, 2015 September 27, 2014 Production equipment 1 - 15 $ $ Coffee service equipment 3 - 7 Computer equipment and software 1 - 6 Land Indefinite Building and building improvements 4 - 30 Furniture and fixtures 1 - 15 Vehicles 4 - 5 Leasehold improvements 1 - 20 or remaining life of lease, whichever is less Assets acquired under capital leases 5 - 15 Construction-in-progress Total fixed assets $ $ Accumulated depreciation ) ) $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Goodwill and Intangible Assets | |
Schedule of change in the carrying amount of goodwill by segment | The following represented the change in the carrying amount of goodwill by segment for fiscal 2015 and 2014 (in thousands): Domestic Canada Total Balance as of September 28, 2013 $ $ $ Other — ) ) Foreign currency effect — ) ) Balance as of September 27, 2014 $ $ $ Acquisition of Bevyz (see Note 3, Acquisition) $ $ — $ Foreign currency effect $ ) $ ) $ ) Balance as of September 26, 2015 $ $ $ |
Schedule of indefinite-lived intangible assets | Indefinite-lived intangible assets included in the Canada operating segment consisted of the following (in thousands) as of: September 26, 2015 September 27, 2014 Trade names $ $ |
Schedule of definite-lived intangible assets | Definite-lived intangible assets consisted of the following (in thousands) as of: September 26, 2015 September 27, 2014 Useful Life in Years Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Acquired technology 4 - 15 $ $ ) $ $ ) Defensive intangible assets (1) ) — — Customer and roaster agreements 10 - 11 ) ) Customer relationships 2 - 16 ) ) Trade names 5 - 11 ) ) Non-compete agreements 3 - 5 ) — — Total $ $ ) $ $ ) (1) See Note 3, Acquisition , for discussion of defensive intangible assets acquired in connection with the Bevyz acquisition. |
Schedule of estimated aggregate amortization expense over each of the next five years and thereafter | The estimated aggregate amortization expense over each of the next five years and thereafter, is as follows (in thousands): 2016 2017 2018 2019 2020 Thereafter |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Non controlling Interests | |
Schedule of changes in the liability and temporary equity attributable to redeemable NCIs | The changes in the liability and temporary equity attributable to redeemable NCIs for the three fiscal years in the period ended September 26, 2015 are as follows (in thousands): Liability attributable to mandatorily redeemable noncontrolling interests Equity attributable to redeemable noncontrolling interests Balance at September 29, 2012 $ $ Net income Adjustment to redemption value Cash distributions ) ) Other comprehensive loss, net of tax ) ) Balance at September 28, 2013 $ $ Net income Adjustment to redemption value Cash distributions ) ) Other comprehensive loss, net of tax ) ) Purchase of noncontrolling interest ) — Balance at September 27, 2014 $ — $ Net income — Adjustment to redemption value — ) Cash distributions — ) Other comprehensive loss, net of tax — ) Balance at September 26, 2015 $ — $ |
Product Warranties (Tables)
Product Warranties (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Product Warranties | |
Schedule of changes in the carrying amount of product warranties | The changes in the carrying amount of product warranties for fiscal years 2015 and 2014 are as follows (in thousands): Fiscal 2015 Fiscal 2014 Balance, beginning of year $ $ Provision related to current period Change in estimate ) Usage ) ) Balance, end of year $ $ |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Long-Term Debt | |
Schedule of long-term debt outstanding | Long-term debt outstanding consists of the following (in thousands) as of: September 26, 2015 September 27, 2014 U.S. Revolver $ $ — Term loan A, as part of the Former Credit Agreement — Other Total long-term debt $ $ Less current portion Long-term portion $ $ |
Scheduled maturities of long-term debt | Scheduled maturities of long-term debt are as follows (in thousands): Fiscal Year 2016 2017 2018 2019 2020 $ |
Derivative Financial Instrume42
Derivative Financial Instruments (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Derivative Financial Instruments | |
Summary of fair value of derivatives | The following table summarizes the fair value of the Company's derivatives included on the Consolidated Balance Sheets (in thousands) as of: September 26, 2015 September 27, 2014 Balance Sheet Classification Derivatives designated as hedges: Interest rate swaps $ — $ ) Other current liabilities Coffee futures — Other current assets Foreign currency forward contracts Other current assets Derivatives not designated as hedges: Cross currency swap Other current assets Total $ $ |
Schedule of offsetting of financial assets and derivative assets | Offsetting of financial assets and derivative assets as of September 26, 2015 and September 27, 2014 is as follows (in thousands): Net amount of assets presented in the Consolidated Balance Sheet Gross amounts not offset in the Consolidated Balance Sheet Gross amounts offset in the Consolidated Balance Sheet Gross amounts of recognized assets Financial instruments Cash collateral received Net amount Derivative assets, as of September 26, 2015 $ $ — $ $ — $ — $ Derivative assets, as of September 27, 2014 ) — — |
Schedule of offsetting of financial liabilities and derivative liabilities | Offsetting of financial liabilities and derivative liabilities as of September 26, 2015 and September 27, 2014 is as follows (in thousands): Net amount of assets presented in the Consolidated Balance Sheet Gross amounts not offset in the Consolidated Balance Sheet Gross amounts offset in the Consolidated Balance Sheet Gross amounts of recognized assets Financial instruments Cash collateral pledged Net amount Derivative liabilities, as of September 26, 2015 $ — $ — $ — $ — $ — $ — Derivative liabilities, as of September 27, 2014 ) — — |
Summary of outstanding coffee futures contracts | The following table summarizes the coffee futures contracts outstanding as of September 27, 2014 (in thousands, except for average contract price and "C" price): Coffee Pounds Average Contract Price "C" Price Maturity Fair Value of Futures Contracts 900 $ $ July 2015 $ 4,725 $ $ July 2015 938 $ $ July 2015 ) 937 $ $ September 2015 ) 7,500 $ |
Summary of gain (loss), pre-tax, arising during the period on financial instruments that qualify for hedge accounting included in OCI | The following table summarizes the amount of gain (loss), pre-tax, arising during the period on financial instruments that qualify for hedge accounting included in OCI (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Cash Flow Hedges: Interest rate swaps $ $ $ Coffee futures ) ) Foreign currency forward contracts ) Total $ $ $ ) |
Summary of gain (loss), pre-tax, reclassified from OCI to income | The following table summarizes the amount of gain (loss), pre-tax, reclassified from OCI to income (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Location of Gain or (Loss) Reclassified from OCI into Income Coffee futures ) ) Cost of sales Interest rate swaps ) — — Gain on financial instruments, net Foreign currency forward contracts — Cost of sales Foreign currency forward contracts ) ) ) Loss on foreign currency, net Total $ $ ) $ ) |
Summary of gain (loss), pre-tax, representing ineffectiveness on cash flow hedges recorded in income | The following table summarizes the amount of net gains (losses), pre-tax, representing ineffectiveness on cash flow hedges recorded in income (in thousands). Fiscal 2015 Fiscal 2014 Fiscal 2013 Location of gain (loss) recognized in income on derivative Coffee futures $ ) $ $ — Cost of sales |
Summary of gain (loss), pre-tax, on fair value hedges and related hedged items | The following table summarizes the amount of gain (loss), pre-tax, on fair value hedges and related hedged items (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Location of gain (loss) recognized in income on derivative Foreign currency forward contracts Net loss on hedging derivatives $ — $ — $ ) Loss on foreign currency, net Net gain on hedged items $ — $ — $ Loss on foreign currency, net |
Schedule of net gains (losses) on financial instruments not designated as hedges for accounting purposes | Net gains on financial instruments not designated as hedges for accounting purposes are as follows (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Location of net gain (loss) in Consolidated Statements of Operations Net gain on cross currency swap $ $ $ Gain (loss) on financial instruments, net Net gain on interest rate swaps — — Gain (loss) on financial instruments, net Net gain on coffee futures — — Cost of sales Total $ $ $ |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Fair Value Measurements | |
Summary of the fair values and the levels used in fair value measurements for financial (liabilities) assets | The following table summarizes the fair values and the levels used in fair value measurements as of September 26, 2015 for the Company's financial (liabilities) assets (in thousands): Fair Value Measurements Using Level 1 Level 2 Level 3 Derivatives: Cross currency swap — — Foreign currency forward contracts — — Total $ — $ $ — The following table summarizes the fair values and the levels used in fair value measurements as of September 27, 2014 for the Company's financial liabilities (in thousands): Fair Value Measurements Using Level 1 Level 2 Level 3 Derivatives: Interest rate swaps $ — $ ) $ — Cross currency swap — — Coffee futures — — Foreign currency forward contracts — — Total $ — $ $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Income Taxes | |
Schedule of income before income taxes | Income before income taxes and the provision for income taxes for fiscal years 2015, 2014 and 2013 consist of the following (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Income before income taxes: Domestic $ $ $ Foreign Total income before income taxes $ $ $ Income tax expense: United States federal: Current $ $ $ Deferred ) ) ) State and local: Current Deferred ) ) ) Total United States Foreign: Current Deferred ) ) ) Total foreign Total income tax expense $ $ $ |
Schedule of provision for income taxes | Income before income taxes and the provision for income taxes for fiscal years 2015, 2014 and 2013 consist of the following (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Income before income taxes: Domestic $ $ $ Foreign Total income before income taxes $ $ $ Income tax expense: United States federal: Current $ $ $ Deferred ) ) ) State and local: Current Deferred ) ) ) Total United States Foreign: Current Deferred ) ) ) Total foreign Total income tax expense $ $ $ |
Schedule of net deferred tax liabilities | Net deferred tax liabilities consist of the following (in thousands) as of: September 26, 2015 September 27, 2014 Deferred tax assets: Section 263A capitalized expenses $ $ Deferred compensation Net operating loss carryforward — Valuation Allowance—Net operating loss carryforward ) — Capital loss carryforward — Valuation allowance—capital loss carryforward — ) Warranty, obsolete inventory and bad debt allowance Tax credit carryforwards Other reserves and temporary differences Gross deferred tax assets Deferred tax liabilities: Prepaid expenses ) ) Deferred hedging losses ) ) Depreciation ) ) Intangible assets ) ) Other reserves and temporary differences ) ) Gross deferred tax liabilities ) ) Net deferred tax liabilities $ ) $ ) |
Reconciliation for continuing operations between reported income tax expense and the amount computed using the U.S. Federal Statutory rate | A reconciliation for continuing operations between the amount of reported income tax expense and the amount computed using the U.S. Federal Statutory rate of 35% is as follows (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Tax at U.S. Federal Statutory rate $ $ $ Increase (decrease) in rates resulting from: Foreign tax rate differential ) ) ) Non-deductible stock compensation expense State taxes, net of federal benefit Provincial taxes Domestic production activities deduction ) ) ) Federal tax credits ) ) ) Other ) ) ) Tax at effective rates $ $ $ |
Reconciliation of increases and decreases in unrecognized tax benefits | A reconciliation of increases and decreases in unrecognized tax benefits is as follows (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Gross tax contingencies—balance, beginning of year $ $ $ Increases from positions taken during prior periods — Decreases from positions taken during prior periods — — — Increases from positions taken during current periods Decreases resulting from the lapse of the applicable statute of limitations ) ) ) Gross tax contingencies—balance, end of year $ $ $ |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Stockholders' Equity | |
Summary of share repurchase activity | Fiscal 2015 Fiscal 2014 (1) Number of shares acquired on the open market Average price per share of open market acquired shares $ $ Number of shares acquired from Lavazza — Average price per share of Lavazza acquired shares $ — Number of shares under February 2014 ASR Average price per share of ASR shares (2) $ $ Total cost of acquired shares (in thousands) $ $ (1) Total cost of acquired shares in fiscal 2014 includes initial purchase price of $700.0 million under the ASR. (2) Average price per share for total shares repurchased under February 2014 ASR. |
Changes in components of accumulated other comprehensive income (loss), net of tax | The following table provides the changes in the components of accumulated other comprehensive income (loss), net of tax (in thousands): Cash Flow Hedges Translation Accumulated Other Comprehensive Income (Loss) Balance at September 29, 2012 ) Other comprehensive loss during the period ) ) ) Balance at September 28, 2013 ) ) ) Other comprehensive income (loss) during the period ) ) Foreign currency exchange impact on cash flow hedges — Balance at September 27, 2014 ) ) Other comprehensive loss during the period ) ) ) Foreign currency exchange impact on cash flow hedges ) — ) Balance at September 26, 2015 $ $ ) $ ) |
Employee Compensation Plans (Ta
Employee Compensation Plans (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Compensation Plans | |
Summary of option activity | Number of Shares Weighted Average Exercise Price (per share) Outstanding at September 27, 2014 $ Granted $ Exercised ) $ Forfeited/expired ) $ Outstanding at September 26, 2015 $ Exercisable at September 26, 2015 $ |
Summary of information about stock options vested and expected to vest | Number of options outstanding Weighted average remaining contractual life (in years) Weighted average exercise price Intrinsic value at September 26, 2015 (in thousands) 2,036,855 $ $ |
Summary of information about stock options exercisable | Number of options exercisable Weighted average remaining contractual life (in years) Weighted average exercise price Intrinsic value at September 26, 2015 (in thousands) 1,413,283 $ $ |
Schedule of assumptions used in estimating the grant-date fair value of employee stock options and similar instruments | Fiscal 2015 Fiscal 2014 Fiscal 2013 Average expected life 5.5 years 5.5 years 6.0 years Average volatility % % % Dividend yield % % — % Risk-free interest rate % % % Weighted average grant date fair value $ $ $ |
Summary of the number and weighted average grant-date fair value of nonvested RSUs | Share Units Weighted Average Grant-Date Fair Value Weighted Average Remaining Contractual Life (in Years) Intrinsic Value (in Thousands) Nonvested, September 27, 2014 $ $ Granted $ Vested ) $ Forfeited ) $ Nonvested, September 26, 2015 $ $ |
Summary of the number and weighted average grant-date fair value of nonvested PSUs | Share Units Weighted Average Grant-Date Fair Value Outstanding on September 27, 2014 $ Granted $ Converted ) $ Forfeited ) $ Actual performance change (1) ) $ Outstanding on September 26, 2015 (2) $ (1) Reflects the net number of PSUs above and below target levels based on actual performance measured at the end of the performance period. (2) The outstanding PSUs, for which the performance period has not ended as of September 26, 2015, at the threshold award and maximum award levels, were 65,392 and 149,804, respectively. Does not include shares underlying the performance stock units granted in fiscal 2014 as the performance period has concluded and the threshold performance criteria was not achieved. |
Schedule of assumptions used in estimating the grant-date fair value of employees' purchase rights under the ESPP | Fiscal 2015 Fiscal 2014 Fiscal 2013 Average expected life 6 months 6 months 6 months Average volatility % % % Dividend yield % % — % Risk-free interest rate % % % Weighted average grant date fair value $ $ $ |
Schedule of stock-based compensation expense recognized | Stock-based compensation expense recognized in the Consolidated Statements of Operations in fiscal years 2015, 2014, and 2013 (in thousands): Fiscal 2015 Fiscal 2014 Fiscal 2013 Options $ $ $ RSUs/PSUs/RSAs ESPP Total stock-based compensation expense recognized in the Consolidated Statements of Operations $ $ $ Total related tax benefit $ $ $ |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Accrued Expenses | |
Schedule of accrued expenses | Accrued expenses consisted of the following (in thousands) as of: September 26, 2015 September 27, 2014 Accrued compensation costs $ $ Accrued customer incentives and promotions Accrued restructuring — Accrued freight, fulfillment and transportation costs Accrued legal and professional services Warranty reserve Other $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Commitments and Contingencies | |
Schedule of future minimum lease payments and minimum payments to be received | As of September 26, 2015, future minimum lease payments under financing obligations, capital lease obligations and non-cancellable operating leases as well as minimum payments to be received under non-cancellable subleases are as follows (in thousands): Fiscal Year Capital Leases Operating Leases Subleases Financing Obligations 2016 $ $ $ ) $ 2017 ) 2018 ) 2019 ) 2020 ) Thereafter ) Total $ $ $ ) $ Less: amount representing interest ) ) Present value of future minimum lease payments $ $ |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Earnings Per Share | |
Reconciliation of the numerator and denominator of basic and diluted earnings per share computations | The following table illustrates the reconciliation of the numerator and denominator of basic and diluted earnings per share computations (dollars in thousands, except share and per share data): Fiscal 2015 Fiscal 2014 Fiscal 2013 Numerator for basic and diluted earnings per share: Net income attributable to Keurig $ $ $ Denominator: Basic weighted average shares outstanding Effect of dilutive securities—stock options Diluted weighted average shares outstanding Basic net income per common share $ $ $ Diluted net income per common share $ $ $ |
Unaudited Quarterly Financial50
Unaudited Quarterly Financial Data (Tables) | 12 Months Ended |
Sep. 26, 2015 | |
Unaudited Quarterly Financial Data | |
Quarterly information | The following table presents the quarterly information for fiscal 2015 (dollars in thousands, except per share data). Each fiscal quarter comprises 13 weeks. Fiscal 2015 December 27, 2014 March 28, 2015 June 27, 2015 September 26, 2015 Net sales $ $ $ $ Gross profit $ $ $ $ Net income attributable to Keurig $ $ $ $ Earnings per share: Basic $ $ $ $ Diluted $ $ $ $ Dividends paid per share $ $ $ $ The following table presents the quarterly information for fiscal 2014 (dollars in thousands, except per share data). Each fiscal quarter comprises 13 weeks. Fiscal 2014 December 28, 2013 March 29, 2014 June 28, 2014 September 27, 2014 Net sales $ $ $ $ Gross profit $ $ $ $ Net income attributable to Keurig $ $ $ $ Earnings per share: Basic $ $ $ $ Diluted $ $ $ $ Dividends paid per share $ — $ $ $ The following table presents the quarterly information for fiscal 2013 (dollars in thousands, except per share data). Each fiscal quarter comprises 13 weeks. Fiscal 2013 December 29, 2012 March 30, 2013 June 29, 2013 September 28, 2013 Net sales $ $ $ $ Gross profit $ $ $ $ Net income attributable to Keurig $ $ $ $ Earnings per share: Basic $ $ $ $ Diluted $ $ $ $ Dividends paid per share $ — $ — $ — $ — |
Nature of Business and Organi51
Nature of Business and Organization (Details) | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 29, 2012 | Sep. 26, 2015segmentitem | Sep. 27, 2014 | Sep. 28, 2013 | |
Nature of Business and Organization | |||||||||||||||
Number of operating segments | segment | 2 | ||||||||||||||
Number of channels in which products are distributed | 2 | ||||||||||||||
Length of fiscal period | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 364 days | 364 days | 364 days |
Significant Accounting Polici52
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Cash and Cash Equivalents | |||
Restricted cash and cash equivalents | $ 30,460 | $ 378 | |
Deferred Financing Costs | |||
Deferred financing costs | 7,000 | 9,600 | |
Advertising Costs | |||
Prepaid advertising costs | 3,700 | 3,300 | |
Advertising expense | 115,800 | 137,200 | $ 193,200 |
Research & Development | |||
Research and development charges | $ 84,700 | $ 76,500 | $ 57,700 |
Significant Accounting Polici53
Significant Accounting Policies (Details 2) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 26, 2015USD ($) | Jun. 27, 2015USD ($) | Mar. 28, 2015USD ($) | Dec. 27, 2014USD ($) | Sep. 27, 2014USD ($) | Jun. 28, 2014USD ($) | Mar. 29, 2014USD ($) | Dec. 28, 2013USD ($) | Sep. 28, 2013USD ($) | Jun. 29, 2013USD ($) | Mar. 30, 2013USD ($) | Dec. 29, 2012USD ($) | Sep. 26, 2015USD ($)item | Sep. 27, 2014USD ($)item | Sep. 28, 2013USD ($)item | |
Significant Customer Credit Risk and Supply Risk | |||||||||||||||
Sales processed | $ 1,036,964 | $ 969,525 | $ 1,127,184 | $ 1,386,358 | $ 1,195,567 | $ 1,022,371 | $ 1,103,072 | $ 1,386,670 | $ 1,047,177 | $ 967,072 | $ 1,004,792 | $ 1,339,059 | $ 4,520,031 | $ 4,707,680 | $ 4,358,100 |
Accounts receivable | 517,936 | 621,451 | $ 517,936 | $ 621,451 | |||||||||||
Supply Risk | Cost of Goods | Brewer Purchases | |||||||||||||||
Significant Customer Credit Risk and Supply Risk | |||||||||||||||
Number of major suppliers | item | 1 | 1 | 1 | ||||||||||||
Purchases from brewer manufacturer | $ 443,100 | $ 735,200 | $ 637,000 | ||||||||||||
Significant Customer Credit Risk | Accounts Receivable | Costco | |||||||||||||||
Significant Customer Credit Risk and Supply Risk | |||||||||||||||
Accounts receivable | 66,900 | 104,500 | 66,900 | 104,500 | |||||||||||
Significant Customer Credit Risk | Accounts Receivable | MBlock | |||||||||||||||
Significant Customer Credit Risk and Supply Risk | |||||||||||||||
Sales processed | 1,557,500 | 1,706,100 | $ 1,600,200 | ||||||||||||
Accounts receivable | $ 69,100 | $ 148,200 | $ 69,100 | $ 148,200 | |||||||||||
Significant Customer Concentration Risk | Consolidated Net Sales | Wal-Mart | |||||||||||||||
Significant Customer Credit Risk and Supply Risk | |||||||||||||||
Percentage of net sales | 17.00% | 17.00% | 14.00% | ||||||||||||
Significant Customer Concentration Risk | Consolidated Net Sales | Costco | |||||||||||||||
Significant Customer Credit Risk and Supply Risk | |||||||||||||||
Percentage of net sales | 12.00% | 12.00% | 11.00% |
Significant Accounting Polici54
Significant Accounting Policies (Details 3) - Collaborative arrangements - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Collaborative Arrangements | |||
Cost recoveries received | $ 0 | $ 0 | $ 0 |
Royalties received | $ 0 | $ 0 | $ 0 |
Acquisition (Details)
Acquisition (Details) - USD ($) $ in Thousands | Dec. 18, 2014 | Sep. 27, 2014 | Sep. 26, 2015 | Mar. 28, 2015 | Sep. 28, 2013 |
Preliminary allocation of the purchase price | |||||
Goodwill | $ 755,895 | $ 747,406 | $ 788,184 | ||
Total cash paid, net of cash acquired | 180,698 | ||||
Bevyz | |||||
Acquisitions | |||||
Outstanding equity owned prior to the acquisition (as a percent) | 15.00% | ||||
Fair value of assets less liabilities determined using income approach (as a percent) | 100.00% | ||||
Weighted-average amortization period for intangible assets | 12 years 9 months 18 days | ||||
Preliminary allocation of the purchase price | |||||
Accounts receivable | $ 218 | ||||
Inventories | 743 | ||||
Other current assets | 504 | ||||
Fixed assets | 2,370 | ||||
Other long-term assets | 247 | ||||
Intangibles | 167,085 | ||||
Goodwill | 60,179 | ||||
Accounts payable and accrued expenses | (5,911) | ||||
Capital lease obligation | (763) | ||||
Deferred tax liability | (8,325) | ||||
Other long-term liabilities | (1,274) | ||||
Total estimated fair value net assets acquired | 215,073 | ||||
Less fair value of previously held equity interest in Bevyz | (34,375) | ||||
Total cash paid, net of cash acquired | $ 180,698 | ||||
Purchase price held in escrow | 25,000 | ||||
Bevyz | Other income, net | |||||
Acquisitions | |||||
Loss recognized on fair value remeasurement of previously held equity interest | $ 1,500 | ||||
Bevyz | General and administrative expense | |||||
Preliminary allocation of the purchase price | |||||
Acquisition costs incurred | $ 1,500 | ||||
Bevyz | Defensive intangible assets | |||||
Acquisitions | |||||
Weighted-average amortization period for intangible assets | 13 years | ||||
Preliminary allocation of the purchase price | |||||
Intangibles | $ 161,700 | ||||
Bevyz | Non-compete agreements | |||||
Acquisitions | |||||
Weighted-average amortization period for intangible assets | 3 years | ||||
Preliminary allocation of the purchase price | |||||
Intangibles | $ 3,800 | ||||
Bevyz | Contractual agreements | |||||
Acquisitions | |||||
Weighted-average amortization period for intangible assets | 15 years | ||||
Preliminary allocation of the purchase price | |||||
Intangibles | $ 1,600 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 29, 2012 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Segment Reporting | |||||||||||||||
Net sales | $ 1,036,964 | $ 969,525 | $ 1,127,184 | $ 1,386,358 | $ 1,195,567 | $ 1,022,371 | $ 1,103,072 | $ 1,386,670 | $ 1,047,177 | $ 967,072 | $ 1,004,792 | $ 1,339,059 | $ 4,520,031 | $ 4,707,680 | $ 4,358,100 |
Operating income (loss) | 765,424 | 947,241 | 765,227 | ||||||||||||
Depreciation and amortization | 265,663 | 257,639 | 229,193 | ||||||||||||
Stock compensation expense | 31,934 | 30,673 | 26,081 | ||||||||||||
Corporate-Unallocated | |||||||||||||||
Segment Reporting | |||||||||||||||
Operating income (loss) | (156,315) | (171,941) | (148,539) | ||||||||||||
Depreciation and amortization | 12,220 | 9,776 | 1,500 | ||||||||||||
Stock compensation expense | 10,618 | 13,873 | 13,653 | ||||||||||||
Domestic | |||||||||||||||
Segment Reporting | |||||||||||||||
Net sales | 3,979,667 | 4,083,326 | 3,725,008 | ||||||||||||
Operating income (loss) | 847,357 | 1,016,577 | 826,092 | ||||||||||||
Depreciation and amortization | 199,553 | 185,874 | 162,359 | ||||||||||||
Stock compensation expense | 19,129 | 14,071 | 9,909 | ||||||||||||
Canada | |||||||||||||||
Segment Reporting | |||||||||||||||
Net sales | 540,364 | 624,354 | 633,092 | ||||||||||||
Operating income (loss) | 74,382 | 102,605 | 87,674 | ||||||||||||
Depreciation and amortization | 53,890 | 61,989 | 65,334 | ||||||||||||
Stock compensation expense | $ 2,187 | $ 2,729 | $ 2,519 |
Segment Reporting (Details 2)
Segment Reporting (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 29, 2012 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Geographic Information | |||||||||||||||
Net sales | $ 1,036,964 | $ 969,525 | $ 1,127,184 | $ 1,386,358 | $ 1,195,567 | $ 1,022,371 | $ 1,103,072 | $ 1,386,670 | $ 1,047,177 | $ 967,072 | $ 1,004,792 | $ 1,339,059 | $ 4,520,031 | $ 4,707,680 | $ 4,358,100 |
Fixed assets, net | 1,293,563 | 1,171,425 | $ 1,293,563 | $ 1,171,425 | |||||||||||
Significant Customer Concentration Risk | Consolidated Net Sales | Wal-Mart | |||||||||||||||
Geographic Information | |||||||||||||||
Percentage of net sales | 17.00% | 17.00% | 14.00% | ||||||||||||
Significant Customer Concentration Risk | Consolidated Net Sales | Costco | |||||||||||||||
Geographic Information | |||||||||||||||
Percentage of net sales | 12.00% | 12.00% | 11.00% | ||||||||||||
United States | |||||||||||||||
Geographic Information | |||||||||||||||
Net sales | $ 3,988,786 | $ 4,074,968 | $ 3,721,182 | ||||||||||||
Fixed assets, net | 1,136,179 | 1,010,181 | 1,136,179 | 1,010,181 | |||||||||||
Canada | |||||||||||||||
Geographic Information | |||||||||||||||
Net sales | 524,770 | 621,460 | 634,360 | ||||||||||||
Fixed assets, net | 95,009 | 125,155 | 95,009 | 125,155 | |||||||||||
Other | |||||||||||||||
Geographic Information | |||||||||||||||
Net sales | 6,475 | 11,252 | $ 2,558 | ||||||||||||
Fixed assets, net | $ 62,375 | $ 36,089 | $ 62,375 | $ 36,089 |
Segment Reporting (Details 3)
Segment Reporting (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 29, 2012 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Net Sales by Major Product Category | |||||||||||||||
Net sales | $ 1,036,964 | $ 969,525 | $ 1,127,184 | $ 1,386,358 | $ 1,195,567 | $ 1,022,371 | $ 1,103,072 | $ 1,386,670 | $ 1,047,177 | $ 967,072 | $ 1,004,792 | $ 1,339,059 | $ 4,520,031 | $ 4,707,680 | $ 4,358,100 |
Pods | |||||||||||||||
Net Sales by Major Product Category | |||||||||||||||
Net sales | 3,645,070 | 3,604,539 | 3,187,350 | ||||||||||||
Brewers and Accessories | |||||||||||||||
Net Sales by Major Product Category | |||||||||||||||
Net sales | 632,634 | 822,271 | 827,570 | ||||||||||||
Other Products and Royalties | |||||||||||||||
Net Sales by Major Product Category | |||||||||||||||
Net sales | $ 242,327 | $ 280,870 | $ 343,180 |
Restructuring Programs (Details
Restructuring Programs (Details) $ in Thousands | Jul. 31, 2015position | Sep. 26, 2015USD ($) | Sep. 26, 2015USD ($) |
Restructuring expenses recorded | |||
Restructuring charge | $ 15,250 | ||
Multi-year productivity program | |||
Restructuring Programs | |||
Expected reduction in workforce roles (in positions) | position | 330 | ||
Expected reduction in workforce roles (as a percent) | 5.00% | ||
Period for reduction in workforce | 6 months | ||
Cumulative pre-tax restructuring charges, by segment | |||
2015 Expenses Incurred | $ 15,250 | 15,250 | |
2016 Estimated Expenses | 3,300 | 3,300 | |
Cumulative Estimated Expenses | 18,550 | 18,550 | |
Restructuring expenses recorded | |||
Restructuring charge | 15,300 | 15,250 | |
Multi-year productivity program | Domestic | |||
Cumulative pre-tax restructuring charges, by segment | |||
2015 Expenses Incurred | 11,997 | 11,997 | |
2016 Estimated Expenses | 600 | 600 | |
Cumulative Estimated Expenses | 12,597 | 12,597 | |
Restructuring expenses recorded | |||
Restructuring charge | 11,997 | ||
Multi-year productivity program | Canada | |||
Cumulative pre-tax restructuring charges, by segment | |||
2015 Expenses Incurred | 2,512 | 2,512 | |
2016 Estimated Expenses | 2,700 | 2,700 | |
Cumulative Estimated Expenses | 5,212 | 5,212 | |
Restructuring expenses recorded | |||
Restructuring charge | 2,512 | ||
Multi-year productivity program | Corporate-Unallocated | |||
Cumulative pre-tax restructuring charges, by segment | |||
2015 Expenses Incurred | 741 | 741 | |
Cumulative Estimated Expenses | 741 | 741 | |
Restructuring expenses recorded | |||
Restructuring charge | 741 | ||
Multi-year productivity program | Severance and Related Costs | |||
Restructuring Programs | |||
Costs that will be settled in cash | $ 11,500 | ||
Restructuring expenses recorded | |||
Restructuring charge | 12,333 | ||
Multi-year productivity program | Severance and Related Costs | Domestic | |||
Restructuring expenses recorded | |||
Restructuring charge | 9,424 | ||
Multi-year productivity program | Severance and Related Costs | Canada | |||
Restructuring expenses recorded | |||
Restructuring charge | 2,168 | ||
Multi-year productivity program | Severance and Related Costs | Corporate-Unallocated | |||
Restructuring expenses recorded | |||
Restructuring charge | 741 | ||
Multi-year productivity program | Asset Write-downs | |||
Restructuring expenses recorded | |||
Restructuring charge | 2,573 | ||
Multi-year productivity program | Asset Write-downs | Domestic | |||
Restructuring expenses recorded | |||
Restructuring charge | 2,573 | ||
Multi-year productivity program | Other Exit Activities | |||
Restructuring expenses recorded | |||
Restructuring charge | 344 | ||
Multi-year productivity program | Other Exit Activities | Canada | |||
Restructuring expenses recorded | |||
Restructuring charge | $ 344 |
Restructuring Programs (Detai60
Restructuring Programs (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Sep. 26, 2015 | Sep. 26, 2015 | |
Restructuring liability | ||
Restructuring charge | $ 15,250 | |
Multi-year productivity program | ||
Restructuring liability | ||
Restructuring charge | $ 15,300 | 15,250 |
Cash spent | 3,025 | |
Non-cash settlements / adjustments | (3,358) | |
Foreign currency adjustments | 7 | |
Liability balance, at the end of year | 8,874 | 8,874 |
Multi-year productivity program | Severance and Related Costs | ||
Restructuring liability | ||
Restructuring charge | 12,333 | |
Cash spent | 3,025 | |
Non-cash settlements / adjustments | (785) | |
Foreign currency adjustments | 10 | |
Liability balance, at the end of year | 8,533 | 8,533 |
Multi-year productivity program | Asset Write-downs | ||
Restructuring liability | ||
Restructuring charge | 2,573 | |
Non-cash settlements / adjustments | (2,573) | |
Multi-year productivity program | Other Exit Activities | ||
Restructuring liability | ||
Restructuring charge | 344 | |
Foreign currency adjustments | (3) | |
Liability balance, at the end of year | $ 341 | $ 341 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Inventories | ||
Raw materials and supplies | $ 227,529 | $ 169,858 |
Finished goods | 464,451 | 665,309 |
Inventories | $ 691,980 | $ 835,167 |
Inventories (Details 2)
Inventories (Details 2) $ in Millions | Sep. 26, 2015USD ($)$ / lb |
Green coffee purchase commitments | |
Purchase commitments | |
Amount of purchase commitment | $ 264.3 |
Percentage of purchase commitment that has a fixed price | 90.00% |
Average C price of coffee per pound used to calculate variable portion of purchase commitment (in dollars per pound) | $ / lb | 1.29 |
Brewer and related accessory purchase commitments | |
Purchase commitments | |
Amount of purchase commitment | $ 313.6 |
Production raw material commitments | |
Purchase commitments | |
Amount of purchase commitment | $ 920.9 |
Inventories (Details 3)
Inventories (Details 3) - Inventory $ in Thousands | Sep. 26, 2015USD ($) |
Purchase commitments | |
2,016 | $ 574,636 |
2,017 | 490,538 |
2,018 | 258,140 |
2,019 | 109,805 |
2,020 | 65,762 |
Minimum future inventory purchase commitments | $ 1,498,881 |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Fixed Assets | |||
Total fixed assets | $ 2,008,989 | $ 1,765,949 | |
Accumulated depreciation | (715,426) | (594,524) | |
Fixed assets, net | 1,293,563 | 1,171,425 | |
Depreciation and amortization | 217,515 | 214,607 | $ 183,814 |
Amount of interest expense capitalized | 21,700 | 8,000 | $ 6,100 |
Impairment loss | 16,256 | ||
Keurig Bolt brewer | |||
Fixed Assets | |||
Impairment loss | 16,300 | ||
Production equipment | |||
Fixed Assets | |||
Total fixed assets | $ 856,235 | 779,850 | |
Production equipment | Minimum | |||
Fixed Assets | |||
Useful life in years | 1 year | ||
Production equipment | Maximum | |||
Fixed Assets | |||
Useful life in years | 15 years | ||
Coffee service equipment | |||
Fixed Assets | |||
Total fixed assets | $ 51,261 | 61,029 | |
Coffee service equipment | Minimum | |||
Fixed Assets | |||
Useful life in years | 3 years | ||
Coffee service equipment | Maximum | |||
Fixed Assets | |||
Useful life in years | 7 years | ||
Computer equipment and software | |||
Fixed Assets | |||
Total fixed assets | $ 257,075 | 177,878 | |
Computer equipment and software | Minimum | |||
Fixed Assets | |||
Useful life in years | 1 year | ||
Computer equipment and software | Maximum | |||
Fixed Assets | |||
Useful life in years | 6 years | ||
Land | |||
Fixed Assets | |||
Total fixed assets | $ 14,124 | 12,767 | |
Building and building improvements | |||
Fixed Assets | |||
Total fixed assets | $ 341,514 | 238,945 | |
Building and building improvements | Minimum | |||
Fixed Assets | |||
Useful life in years | 4 years | ||
Building and building improvements | Maximum | |||
Fixed Assets | |||
Useful life in years | 30 years | ||
Furniture and fixtures | |||
Fixed Assets | |||
Total fixed assets | $ 36,254 | 36,899 | |
Furniture and fixtures | Minimum | |||
Fixed Assets | |||
Useful life in years | 1 year | ||
Furniture and fixtures | Maximum | |||
Fixed Assets | |||
Useful life in years | 15 years | ||
Vehicles | |||
Fixed Assets | |||
Total fixed assets | $ 11,847 | 13,032 | |
Vehicles | Minimum | |||
Fixed Assets | |||
Useful life in years | 4 years | ||
Vehicles | Maximum | |||
Fixed Assets | |||
Useful life in years | 5 years | ||
Leasehold improvements | |||
Fixed Assets | |||
Total fixed assets | $ 121,933 | 95,373 | |
Leasehold improvements | Minimum | |||
Fixed Assets | |||
Useful life in years | 1 year | ||
Leasehold improvements | Maximum | |||
Fixed Assets | |||
Useful life in years | 20 years | ||
Assets acquired under capital leases | |||
Fixed Assets | |||
Total fixed assets | $ 42,003 | 41,200 | |
Fixed assets, net | $ 32,000 | 34,100 | |
Assets acquired under capital leases | Minimum | |||
Fixed Assets | |||
Useful life in years | 5 years | ||
Assets acquired under capital leases | Maximum | |||
Fixed Assets | |||
Useful life in years | 15 years | ||
Construction-in-progress | |||
Fixed Assets | |||
Total fixed assets | $ 276,743 | $ 308,976 |
Goodwill and Intangible Asset65
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 26, 2015 | Sep. 27, 2014 | |
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | $ 755,895 | $ 788,184 |
Other | (233) | |
Acquisition of Bevyz (see Note 3, Acquisition) | 60,179 | |
Foreign currency effect | (68,668) | (32,056) |
Balance at the end of the period | 747,406 | 755,895 |
Domestic | ||
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | 369,353 | 369,353 |
Acquisition of Bevyz (see Note 3, Acquisition) | 60,179 | |
Foreign currency effect | (5,574) | |
Balance at the end of the period | 423,958 | 369,353 |
Canada | ||
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | 386,542 | 418,831 |
Other | (233) | |
Foreign currency effect | (63,094) | (32,056) |
Balance at the end of the period | $ 323,448 | $ 386,542 |
Goodwill and Intangible Asset66
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Trade names | Canada | ||
Indefinite-lived intangible assets | ||
Indefinite-lived intangible assets | $ 75,525 | $ 90,257 |
Goodwill and Intangible Asset67
Goodwill and Intangible Assets (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Goodwill and indefinite lived intangible impairment tests | |||
Impairment of goodwill or indefinite-lived intangible assets | $ 0 | $ 0 | $ 0 |
Goodwill and indefinite-lived intangible assets | |||
Goodwill and indefinite lived intangible impairment tests | |||
Royalty rate | 4.00% | ||
Goodwill and indefinite-lived intangible assets | Minimum | |||
Goodwill and indefinite lived intangible impairment tests | |||
Discount rate | 10.50% | ||
Goodwill and indefinite-lived intangible assets | Maximum | |||
Goodwill and indefinite lived intangible impairment tests | |||
Discount rate | 16.50% | ||
Domestic | Goodwill and indefinite-lived intangible assets | |||
Goodwill and indefinite lived intangible impairment tests | |||
Income tax rate | 37.50% | ||
Canada | Goodwill and indefinite-lived intangible assets | |||
Goodwill and indefinite lived intangible impairment tests | |||
Income tax rate | 26.60% |
Goodwill and Intangible Asset68
Goodwill and Intangible Assets (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Intangible assets subject to amortization | |||
Useful Life in Years | 8 years 8 months 12 days | ||
Gross Carrying Amount | $ 551,557 | $ 451,914 | |
Accumulated Amortization | (203,195) | (176,727) | |
Total amortization expense | 48,148 | 43,032 | $ 45,379 |
Acquired technology | |||
Intangible assets subject to amortization | |||
Gross Carrying Amount | 17,891 | 16,501 | |
Accumulated Amortization | $ (15,378) | (13,713) | |
Acquired technology | Minimum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 4 years | ||
Acquired technology | Maximum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 15 years | ||
Defensive intangible assets | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 13 years | ||
Gross Carrying Amount | $ 146,772 | ||
Accumulated Amortization | (8,685) | ||
Customer and roaster agreements | |||
Intangible assets subject to amortization | |||
Gross Carrying Amount | 8,047 | 8,939 | |
Accumulated Amortization | $ (5,670) | (5,303) | |
Customer and roaster agreements | Minimum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 10 years | ||
Customer and roaster agreements | Maximum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 11 years | ||
Customer relationships | |||
Intangible assets subject to amortization | |||
Gross Carrying Amount | $ 342,113 | 390,563 | |
Accumulated Amortization | $ (155,047) | (141,163) | |
Customer relationships | Minimum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 2 years | ||
Customer relationships | Maximum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 16 years | ||
Trade names | |||
Intangible assets subject to amortization | |||
Gross Carrying Amount | $ 33,315 | 35,911 | |
Accumulated Amortization | $ (17,541) | $ (16,548) | |
Trade names | Minimum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 5 years | ||
Trade names | Maximum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 11 years | ||
Non-compete agreements | |||
Intangible assets subject to amortization | |||
Gross Carrying Amount | $ 3,419 | ||
Accumulated Amortization | $ (874) | ||
Non-compete agreements | Minimum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 3 years | ||
Non-compete agreements | Maximum | |||
Intangible assets subject to amortization | |||
Useful Life in Years | 5 years |
Goodwill and Intangible Asset69
Goodwill and Intangible Assets (Details 5) $ in Thousands | Sep. 26, 2015USD ($) |
Estimated aggregate amortization expense over each of the next five years and thereafter | |
2,016 | $ 48,082 |
2,017 | 46,683 |
2,018 | 45,807 |
2,019 | 45,441 |
2,020 | 41,349 |
Thereafter | $ 121,000 |
Noncontrolling Interests (Detai
Noncontrolling Interests (Details) $ in Thousands, CAD in Millions | Sep. 27, 2015CAD | Aug. 22, 2014USD ($) | Jun. 27, 2015 | Jun. 28, 2014 | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | Sep. 28, 2013USD ($) |
Changes in the liability and temporary equity attributable to redeemable NCIs | |||||||
Net income | $ 353 | $ 896 | $ 871 | ||||
Carrying amount of noncontrolling interest | 4,554 | 12,440 | |||||
L'Authentique Pose Cafe Inc. | |||||||
Changes in the liability and temporary equity attributable to redeemable NCIs | |||||||
Contingent consideration in escrow for purchase of noncontrolling interest holder's shares | 800 | ||||||
L'Authentique Pose Cafe Inc. | Mandatorily Redeemable Noncontrolling Interest | |||||||
Changes in the liability and temporary equity attributable to redeemable NCIs | |||||||
Period from end of third quarter for purchase of noncontrolling interest | 30 days | ||||||
Purchase of noncontrolling interest holder's shares | $ 5,600 | ||||||
Pause Cafe Estrie Inc. | Redeemable Noncontrolling Interest | |||||||
Changes in the liability and temporary equity attributable to redeemable NCIs | |||||||
Period from end of third quarter for purchase of noncontrolling interest | 30 days | ||||||
Purchase of noncontrolling interest holder's shares | CAD | CAD 6.1 | ||||||
Other current liabilities | |||||||
Changes in the liability and temporary equity attributable to redeemable NCIs | |||||||
Balance at the beginning of the period | 4,934 | 4,928 | |||||
Net income | 344 | 462 | |||||
Adjustment to redemption value | 47 | 372 | |||||
Cash distributions | (348) | (583) | |||||
Other comprehensive loss, net of tax | (225) | (245) | |||||
Purchase of noncontrolling interest | (4,752) | ||||||
Balance at the end of the period | 4,934 | ||||||
Redeemable noncontrolling interests | |||||||
Changes in the liability and temporary equity attributable to redeemable NCIs | |||||||
Balance at the beginning of the period | 12,440 | 11,045 | 9,904 | ||||
Net income | 353 | 552 | 409 | ||||
Adjustment to redemption value | (7,560) | 2,368 | 2,025 | ||||
Cash distributions | (339) | (651) | (823) | ||||
Other comprehensive loss, net of tax | (340) | (874) | (470) | ||||
Balance at the end of the period | $ 4,554 | $ 12,440 | $ 11,045 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 26, 2015 | Sep. 27, 2014 | |
Changes in carrying amount of product warranties | ||
Balance, beginning of period | $ 12,850 | $ 7,804 |
Provision related to current period | 30,051 | 27,484 |
Change in estimate | 832 | (1,485) |
Usage | (28,571) | (20,953) |
Balance, end of period | 15,162 | 12,850 |
Recoveries | $ 1,300 | $ 1,800 |
Keurig hot beverage system brewers | ||
Product Warranties | ||
Period of warranty | 1 year |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Sep. 26, 2015 | Sep. 27, 2014 |
Long-term debt | ||
Total long-term debt | $ 331,045,000 | $ 160,014,000 |
Less current portion | 279,000 | 19,077,000 |
Long-term portion | 330,766,000 | 140,937,000 |
Credit Agreement | New Revolving Facility | ||
Long-term debt | ||
Maximum borrowing capacity under credit facility | 1,800,000,000 | |
Credit Agreement | U.S. Revolver | ||
Long-term debt | ||
Maximum borrowing capacity under credit facility | 1,300,000,000 | |
Total long-term debt | 330,000,000 | |
Credit Agreement | Alternative Currency Revolver | ||
Long-term debt | ||
Maximum borrowing capacity under credit facility | 500,000,000 | |
Credit Agreement | Letters of credit | ||
Long-term debt | ||
Maximum borrowing capacity under credit facility | 200,000,000 | |
Credit Agreement | Swing line loans | ||
Long-term debt | ||
Maximum borrowing capacity under credit facility | 50,000,000 | |
Credit Agreement | Incremental Credit Facility | ||
Long-term debt | ||
Maximum borrowing capacity under credit facility | 750,000,000 | |
Former Credit Agreement | Term loan A | ||
Long-term debt | ||
Total long-term debt | 158,438,000 | |
Other | ||
Long-term debt | ||
Total long-term debt | $ 1,045,000 | $ 1,576,000 |
Long-Term Debt (Details 2)
Long-Term Debt (Details 2) $ in Millions | Jun. 29, 2015USD ($) | Sep. 26, 2015USD ($) | Jun. 27, 2015USD ($) | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) |
Long-term debt | |||||
Average effective interest rate (as a percent) | 1.30% | 3.70% | |||
Alternative Currency Revolver | Minimum | |||||
Long-term debt | |||||
Commitment fee on unused portion of credit facility (as a percent) | 0.15% | ||||
Alternative Currency Revolver | Maximum | |||||
Long-term debt | |||||
Commitment fee on unused portion of credit facility (as a percent) | 0.25% | ||||
Letters of credit | |||||
Long-term debt | |||||
Amount drawn on credit facility | $ 0 | $ 0 | $ 0 | ||
Credit Agreement | |||||
Long-term debt | |||||
Minimum interest coverage ratio | 3 | 3 | |||
Maximum leverage ratio | 3.25 | 3.25 | |||
Maximum leverage ratio allowed on a temporary basis under certain limited circumstances | 3.50 | 3.50 | |||
Debt issuance costs deferred to be amortized over the life off the loan | $ 4.1 | $ 4.1 | |||
Outstanding letters of credit | 5.4 | $ 5.4 | $ 7.8 | ||
Credit Agreement | New Revolving Facility | Alternate Base Rate | |||||
Long-term debt | |||||
Variable rate spread (as a percent) | 0.125% | ||||
Credit Agreement | New Revolving Facility | Federal Funds rate | |||||
Long-term debt | |||||
Variable rate spread (as a percent) | 0.50% | ||||
Credit Agreement | New Revolving Facility | One-month LIBOR | |||||
Long-term debt | |||||
Variable rate spread (as a percent) | 1.00% | ||||
Credit Agreement | New Revolving Facility | Eurocurrency | |||||
Long-term debt | |||||
Variable rate spread (as a percent) | 1.125% | ||||
Credit Agreement | U.S. Revolver | |||||
Long-term debt | |||||
Amount drawn on credit facility | $ 325 | ||||
Credit Agreement | U.S. Revolver | Minimum | |||||
Long-term debt | |||||
Commitment fee on unused portion of credit facility (as a percent) | 0.15% | ||||
Credit Agreement | U.S. Revolver | Minimum | Alternate Base Rate | |||||
Long-term debt | |||||
Variable rate spread (as a percent) | 0.125% | ||||
Credit Agreement | U.S. Revolver | Maximum | |||||
Long-term debt | |||||
Commitment fee on unused portion of credit facility (as a percent) | 0.25% | ||||
Credit Agreement | U.S. Revolver | Maximum | Alternate Base Rate | |||||
Long-term debt | |||||
Variable rate spread (as a percent) | 0.75% | ||||
Credit Agreement | Alternative Currency Revolver | Minimum | Eurocurrency | |||||
Long-term debt | |||||
Variable rate spread (as a percent) | 1.125% | ||||
Credit Agreement | Alternative Currency Revolver | Maximum | Eurocurrency | |||||
Long-term debt | |||||
Variable rate spread (as a percent) | 1.75% | ||||
Credit Agreement | Letters of credit | |||||
Long-term debt | |||||
Letter of credit fees (as a percent) | 1.125% | ||||
Credit Agreement | Letters of credit | Minimum | |||||
Long-term debt | |||||
Letter of credit fees (as a percent) | 1.125% | ||||
Credit Agreement | Letters of credit | Maximum | |||||
Long-term debt | |||||
Letter of credit fees (as a percent) | 1.75% | ||||
Former Credit Agreement | |||||
Long-term debt | |||||
Debt repayment | $ 295 | ||||
Write-off of deferred financing fees | $ 2.1 | ||||
Former Credit Agreement | Gain (loss) on financial instruments, net | |||||
Long-term debt | |||||
Loss on discontinuance of hedge accounting | $ 1.8 |
Long-Term Debt (Details 3)
Long-Term Debt (Details 3) - Interest rate swaps - USD ($) | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Mitigating interest rate exposure of variable-rate borrowings | |||
Notional amount of agreements in effect | $ 0 | ||
Interest expense, long-term debt | $ 2,300,000 | $ 3,200,000 | $ 3,400,000 |
Long-Term Debt (Details 4)
Long-Term Debt (Details 4) - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Long-Term Debt | ||
2,016 | $ 279 | |
2,017 | 291 | |
2,018 | 305 | |
2,019 | 170 | |
2,020 | 330,000 | |
Total long-term debt | $ 331,045 | $ 160,014 |
Derivative Financial Instrume76
Derivative Financial Instruments (Details) $ in Millions | 3 Months Ended |
Jun. 27, 2015USD ($) | |
Cash Flow Hedges | Interest rate swaps | |
Cash Flow Hedges | |
Loss reclassified from OCI into earnings on discontinuance of hedge accounting | $ 1.8 |
Derivative Financial Instrume77
Derivative Financial Instruments (Details 2) - Derivatives not designated as hedges - Cross currency swap CAD in Millions, $ in Millions | 12 Months Ended | |||
Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | Sep. 28, 2013USD ($) | Sep. 26, 2015CAD | |
Other Derivatives | ||||
Period of derivative | 3 years | |||
Notional amount | CAD | CAD 50 | |||
Variable interest rate basis payable | Three month Canadian Bankers Acceptance rate | |||
Variable interest rate basis receivable | Three month U.S. Libor rate | |||
Additional interest expense | $ 0.6 | $ 1.3 | $ 1.7 |
Derivative Financial Instrume78
Derivative Financial Instruments (Details 3) - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Fair value of derivatives | ||
Total fair value of derivatives | $ 11,396 | $ 6,125 |
Fair value of derivative liabilities | (3,371) | |
Fair value of derivative assets | 11,396 | 9,496 |
Coffee futures | ||
Fair value of derivatives | ||
Total fair value of derivatives | 0 | 3,437 |
Derivatives designated as hedges | ||
Fair value of derivatives | ||
Total fair value of derivatives | 533 | 174 |
Derivatives designated as hedges | Interest rate swaps | Other current liabilities | ||
Fair value of derivatives | ||
Fair value of derivative liabilities | (3,371) | |
Derivatives designated as hedges | Coffee futures | Other current assets | ||
Fair value of derivatives | ||
Fair value of derivative assets | 3,437 | |
Derivatives designated as hedges | Foreign currency forward contracts | Other current assets | ||
Fair value of derivatives | ||
Fair value of derivative assets | 533 | 108 |
Derivatives not designated as hedges | Cross currency swap | Other current assets | ||
Fair value of derivatives | ||
Fair value of derivative assets | $ 10,863 | $ 5,951 |
Derivative Financial Instrume79
Derivative Financial Instruments (Details 4) - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Derivatives | ||
Gross amounts of recognized assets | $ 11,396 | $ 9,830 |
Gross amounts offset in the Unaudited Consolidated Balance Sheet | (334) | |
Net amount of assets presented in the Unaudited Consolidated Balance Sheet | 11,396 | 9,496 |
Net amount | $ 11,396 | $ 9,496 |
Derivative Financial Instrume80
Derivative Financial Instruments (Details 5) $ in Thousands | Sep. 27, 2014USD ($) |
Derivatives | |
Gross amounts of recognized liabilities | $ 3,705 |
Gross amounts offset in the Unaudited Consolidated Balance Sheet | (334) |
Net amount of liabilities presented in the Unaudited Consolidated Balance Sheet | 3,371 |
Net amount | $ 3,371 |
Derivative Financial Instrume81
Derivative Financial Instruments (Details 6) lb in Thousands, $ in Thousands | 12 Months Ended | |
Sep. 27, 2014USD ($)lb$ / lb | Sep. 26, 2015USD ($) | |
Summary of outstanding coffee futures contracts | ||
Fair Value of Futures Contracts | $ | $ 6,125 | $ 11,396 |
Coffee futures | ||
Summary of outstanding coffee futures contracts | ||
Coffee Pounds | lb | 7,500 | |
Fair Value of Futures Contracts | $ | $ 3,437 | $ 0 |
Coffee futures | Coffee futures, contract one | ||
Summary of outstanding coffee futures contracts | ||
Coffee Pounds | lb | 900 | |
Average Contract Price | 1.27 | |
"C" Price | 1.94 | |
Fair Value of Futures Contracts | $ | $ 602 | |
Coffee futures | Coffee futures, contract two | ||
Summary of outstanding coffee futures contracts | ||
Coffee Pounds | lb | 4,725 | |
Average Contract Price | 1.27 | |
"C" Price | 1.94 | |
Fair Value of Futures Contracts | $ | $ 3,169 | |
Coffee futures | Coffee futures, contract three | ||
Summary of outstanding coffee futures contracts | ||
Coffee Pounds | lb | 938 | |
Average Contract Price | 2.13 | |
"C" Price | 1.94 | |
Fair Value of Futures Contracts | $ | $ (174) | |
Coffee futures | Coffee futures, contract four | ||
Summary of outstanding coffee futures contracts | ||
Coffee Pounds | lb | 937 | |
Average Contract Price | 2.12 | |
"C" Price | 1.95 | |
Fair Value of Futures Contracts | $ | $ (160) |
Derivative Financial Instrume82
Derivative Financial Instruments (Details 7) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Net gain (loss) on derivative instruments | |||
Net gains on financial instruments not designated as hedges | $ 9,860 | $ 15,312 | $ 5,513 |
Interest rate swaps | Gain (loss) on financial instruments, net | |||
Net gain (loss) on derivative instruments | |||
Net gains on financial instruments not designated as hedges | 516 | ||
Coffee futures | |||
Net gain (loss) on derivative instruments | |||
Amount of net gains, net of tax expected to be reclassified from OCI to earnings | (300) | ||
Coffee futures | Cost of sales | |||
Net gain (loss) on derivative instruments | |||
Net gains on financial instruments not designated as hedges | 7,005 | ||
Foreign currency forward contracts | Loss on foreign currency, net | |||
Net gain (loss) on derivative instruments | |||
Net loss on hedging derivatives | (10) | ||
Net gain on hedged items | 10 | ||
Cross currency swap | Gain (loss) on financial instruments, net | |||
Net gain (loss) on derivative instruments | |||
Net gains on financial instruments not designated as hedges | 9,344 | 8,307 | 5,513 |
Cash Flow Hedges | |||
Net gain (loss) on derivative instruments | |||
Amount of gain (loss), pre-tax, arising during the period on financial instruments qualifying for hedge accounting included in OCI | 1,135 | 20,641 | (3,732) |
Amount of gain (loss), pre-tax, reclassified from OCI to income | 14,894 | (6,315) | (1,484) |
Cash Flow Hedges | Interest rate swaps | |||
Net gain (loss) on derivative instruments | |||
Amount of gain (loss), pre-tax, arising during the period on financial instruments qualifying for hedge accounting included in OCI | 1,587 | 2,634 | 3,014 |
Cash Flow Hedges | Interest rate swaps | Gain (loss) on financial instruments, net | |||
Net gain (loss) on derivative instruments | |||
Amount of gain (loss), pre-tax, reclassified from OCI to income | (1,783) | ||
Cash Flow Hedges | Coffee futures | |||
Net gain (loss) on derivative instruments | |||
Amount of gain (loss), pre-tax, arising during the period on financial instruments qualifying for hedge accounting included in OCI | (1,288) | 17,824 | (6,617) |
Cash Flow Hedges | Coffee futures | Cost of sales | |||
Net gain (loss) on derivative instruments | |||
Amount of gain (loss), pre-tax, reclassified from OCI to income | 16,556 | (6,387) | (1,482) |
Amount of net gains (losses), pre-tax, representing ineffectiveness on cash flow hedges recorded in income | (94) | 1,675 | |
Cash Flow Hedges | Foreign currency forward contracts | |||
Net gain (loss) on derivative instruments | |||
Amount of gain (loss), pre-tax, arising during the period on financial instruments qualifying for hedge accounting included in OCI | 836 | 183 | (129) |
Cash Flow Hedges | Foreign currency forward contracts | Cost of sales | |||
Net gain (loss) on derivative instruments | |||
Amount of gain (loss), pre-tax, reclassified from OCI to income | 196 | 74 | |
Cash Flow Hedges | Foreign currency forward contracts | Loss on foreign currency, net | |||
Net gain (loss) on derivative instruments | |||
Amount of gain (loss), pre-tax, reclassified from OCI to income | $ (75) | $ (2) | $ (2) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 26, 2015 | Sep. 27, 2014 | |
Fair Value Measurements | ||
Derivatives | $ 11,396 | $ 6,125 |
Carrying value of long-term debt | $ 331,045 | 160,014 |
Period of reset of debt variable interest rates | 30 days | |
Long-term investment carried at cost | $ 35,900 | |
Coffee futures | ||
Fair Value Measurements | ||
Derivatives | 0 | 3,437 |
Recurring | Level 2 | ||
Fair Value Measurements | ||
Derivatives | 11,396 | 6,125 |
Recurring | Level 2 | Interest rate swaps | ||
Fair Value Measurements | ||
Derivatives | (3,371) | |
Recurring | Level 2 | Cross currency swap | ||
Fair Value Measurements | ||
Derivatives | 10,863 | 5,951 |
Recurring | Level 2 | Coffee futures | ||
Fair Value Measurements | ||
Derivatives | 3,437 | |
Recurring | Level 2 | Foreign currency forward contracts | ||
Fair Value Measurements | ||
Derivatives | $ 533 | $ 108 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Income before income taxes: | |||
Domestic | $ 668,729 | $ 856,240 | $ 675,438 |
Foreign | 81,847 | 68,133 | 65,436 |
Income before income taxes | 750,576 | 924,373 | 740,874 |
United States federal: | |||
Current | 179,137 | 288,757 | 202,006 |
Deferred | (975) | (41,589) | (8,654) |
Total United States federal | 178,162 | 247,168 | 193,352 |
State and local: | |||
Current | 44,707 | 61,839 | 47,930 |
Deferred | (1,877) | (811) | (1,695) |
Total State and local | 42,830 | 61,028 | 46,235 |
Total United States | 220,992 | 308,196 | 239,587 |
Foreign: | |||
Current | 52,165 | 36,903 | 29,901 |
Deferred | (21,209) | (18,140) | (12,717) |
Total foreign | 30,956 | 18,763 | 17,184 |
Total income tax expense | $ 251,948 | $ 326,959 | $ 256,771 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Deferred tax assets: | ||
Section 263A capitalized expenses | $ 1,904 | $ 9,011 |
Deferred compensation | 20,158 | 17,053 |
Net operating loss carryforward | 2,242 | |
Valuation Allowance - Net operating loss carryforward | (1,729) | |
Capital loss carryforward | 1,568 | |
Valuation allowance - capital loss carryforward | (1,568) | |
Warranty, obsolete inventory and bad debt allowance | 39,238 | 42,903 |
Tax credit carryforwards | 3,862 | 2,085 |
Other reserves and temporary differences | 8,896 | 10,053 |
Gross deferred tax assets | 74,571 | 81,105 |
Deferred tax liabilities: | ||
Prepaid expenses | (1,412) | (6,190) |
Deferred hedging losses | (218) | (6,059) |
Depreciation | (98,567) | (97,977) |
Intangible assets | (98,661) | (115,812) |
Other reserves and temporary differences | (5) | (174) |
Gross deferred tax liabilities | (198,863) | (226,212) |
Net deferred tax liabilities | $ (124,292) | $ (145,107) |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Income Taxes | |||
U.S. Federal Statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Tax at U.S. Federal Statutory rate | $ 262,701 | $ 323,530 | $ 259,306 |
Increase (decrease) in rates resulting from: | |||
Foreign tax rate differential | (15,605) | (13,614) | (13,087) |
Non-deductible stock compensation expense | 1,334 | 1,562 | 2,700 |
State taxes, net of federal benefit | 34,904 | 47,195 | 31,869 |
Provincial taxes | 10,695 | 8,080 | 7,878 |
Domestic production activities deduction | (22,083) | (32,568) | (23,558) |
Federal tax credits | (917) | (336) | (4,506) |
Other | (19,081) | (6,890) | (3,831) |
Total income tax expense | $ 251,948 | $ 326,959 | $ 256,771 |
Income Taxes (Details 4)
Income Taxes (Details 4) $ in Millions | Sep. 26, 2015USD ($) |
State and local | |
Income Taxes | |
Net operating loss carryforward | $ 11.5 |
Foreign | |
Income Taxes | |
Net operating loss carryforward | 37.1 |
Valuation allowance for net operating losses | $ 34.6 |
Income Taxes (Details 5)
Income Taxes (Details 5) $ in Thousands, CAD in Millions | 3 Months Ended | 12 Months Ended | ||||
Sep. 26, 2015USD ($) | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | Sep. 28, 2013USD ($) | Sep. 26, 2015CAD | Sep. 26, 2015USD ($) | |
Income Taxes | ||||||
Unrecognized tax benefits that would impact effective tax rate | $ 6,300 | |||||
Indemnification receivable associated with unrecognized tax benefits | 5,200 | |||||
Maximum amount of unrecognized tax benefit indemnification | CAD | CAD 24.6 | |||||
Accrued interest and penalties | $ 2,400 | 4,100 | ||||
Interest and penalties included in income tax expense | $ 1,700 | 400 | $ 400 | |||
Gross tax contingencies, beginning balance | 14,839 | 23,283 | 23,956 | |||
Increases from positions taken during prior periods | 22,842 | 438 | ||||
Increases from positions taken during current periods | 1,332 | 504 | 2,709 | |||
Decreases resulting from the lapse of the applicable statute of limitations | $ (1,500) | (7,239) | (8,948) | (3,820) | ||
Gross tax contingencies, ending balance | 31,774 | $ 31,774 | $ 14,839 | $ 23,283 | ||
Unrecognized tax benefits expected to be released in next 12 months due to expiration of statutes of limitations | 0 | |||||
Additions to unrecognized tax benefits | $ 15,800 | |||||
Undistributed international earnings | 295,200 | |||||
Deferred taxes provided on undistributed international earnings | $ 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 17, 2014 | Feb. 27, 2014 | Apr. 17, 2014 | Sep. 27, 2014 |
Stockholders' equity | ||||
Aggregate purchase price of share sold | $ 1,348,414 | |||
Private placement pursuant to a common stock purchase agreement | Security holder | Common stock, including additional paid-in capital | ||||
Stockholders' equity | ||||
Transaction-related expenses | $ 8,000 | |||
The Coca-Cola Company | Private placement pursuant to a common stock purchase agreement | Common stock, including additional paid-in capital | ||||
Stockholders' equity | ||||
Sale of common stock (in shares) | 16,684,139 | |||
Purchase price per share for shares sold | $ 74.98 | |||
Aggregate purchase price of share sold | $ 1,251,000 | |||
Lavazza | Private placement pursuant to a common stock purchase agreement | Security holder | Common stock, including additional paid-in capital | ||||
Stockholders' equity | ||||
Sale of common stock (in shares) | 1,407,000 | |||
Purchase price per share for shares sold | $ 74.98 | $ 74.98 | ||
Aggregate purchase price of share sold | $ 105,500 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - USD ($) $ / shares in Units, $ in Thousands | Jul. 31, 2015 | Mar. 03, 2015 | Feb. 28, 2014 | Mar. 28, 2015 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | Sep. 26, 2015 |
Stockholders' equity | ||||||||
Additional amount authorized for repurchase of common stock | $ 1,000,000 | |||||||
Period of stock repurchase program | 2 years | |||||||
Amount authorized for repurchase of common stock | $ 3,500,000 | |||||||
Value of shares remaining for repurchase under the current authorization | $ 1,149,500 | $ 1,149,500 | ||||||
Total cost of acquired shares | $ 1,033,321 | $ 1,052,430 | $ 188,278 | |||||
ASR | Bank | ||||||||
Stockholders' equity | ||||||||
Total cost of acquired shares | $ 700,000 | $ 700,000 | ||||||
Share Repurchase Program - privately negotiated transactions | Security holder | Lavazza | ||||||||
Stockholders' equity | ||||||||
Total cost of acquired shares | $ 623,600 | |||||||
Common stock | ||||||||
Stockholders' equity | ||||||||
Number of shares acquired | 11,028,955 | 8,138,592 | 5,642,793 | |||||
Common stock | ASR | Bank | ||||||||
Stockholders' equity | ||||||||
Number of shares acquired | 4,340,508 | 1,489,476 | 1,489,476 | 4,340,508 | 5,829,984 | |||
Average price per share of acquired shares (in dollars per share) | $ 120.07 | $ 120.07 | $ 120.07 | |||||
Common stock | Share Repurchase Program - open market transactions | ||||||||
Stockholders' equity | ||||||||
Number of shares acquired | 4,307,488 | 3,798,084 | ||||||
Average price per share of acquired shares (in dollars per share) | $ 95.13 | $ 92.79 | ||||||
Common stock | Share Repurchase Program - privately negotiated transactions | Security holder | Lavazza | ||||||||
Stockholders' equity | ||||||||
Number of shares acquired | 5,231,991 | 5,231,991 | ||||||
Average price per share of acquired shares (in dollars per share) | $ 119.18 | $ 119.18 | ||||||
Stock repurchase price discount (as a percent) | 3.00% |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) - USD ($) $ / shares in Units, $ in Thousands | Nov. 16, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 26, 2015 | Sep. 27, 2014 |
Dividends | |||||||||||
Dividend declared per common share (in dollars per share) | $ 0.325 | $ 0.2875 | $ 0.2875 | $ 0.2875 | $ 0.2875 | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | $ 1.15 | $ 1 |
Dividend declared on common shares | $ 179,175 | $ 158,938 | |||||||||
Dividend paid on common shares | $ 175,707 | $ 118,358 | |||||||||
Percent increase in dividend over prior year | 13.00% |
Stockholders' Equity (Details 4
Stockholders' Equity (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Accumulated Other Comprehensive Income (Loss) | |||
Balance | $ 3,458,681 | $ 2,635,570 | $ 2,261,228 |
Balance | 2,709,358 | 3,458,681 | 2,635,570 |
Accumulated other comprehensive income (loss) | |||
Accumulated Other Comprehensive Income (Loss) | |||
Balance | (54,051) | (19,185) | 10,200 |
Other comprehensive income during the period | (145,236) | (34,875) | (29,385) |
Foreign currency exchange impact on cash flow hedges | (15) | 9 | |
Balance | (199,302) | (54,051) | (19,185) |
Cash Flow Hedges | |||
Accumulated Other Comprehensive Income (Loss) | |||
Balance | 8,952 | (7,150) | (5,792) |
Other comprehensive income during the period | (8,107) | 16,093 | (1,358) |
Foreign currency exchange impact on cash flow hedges | (15) | 9 | |
Balance | 830 | 8,952 | (7,150) |
Translation | |||
Accumulated Other Comprehensive Income (Loss) | |||
Balance | (63,003) | (12,035) | 15,992 |
Other comprehensive income during the period | (137,129) | (50,968) | (28,027) |
Balance | $ (200,132) | $ (63,003) | $ (12,035) |
Employee Compensation Plans (De
Employee Compensation Plans (Details) | 12 Months Ended | |
Sep. 26, 2015perioditemshares | Sep. 27, 2014shares | |
Employee stock options | ||
Compensation Plans | ||
Outstanding options for shares of common stock | 2,039,969 | 3,436,727 |
Number of previous inducement grants with outstanding awards | item | 1 | |
ESPP | ||
Compensation Plans | ||
Shares of common stock available for grant | 1,861,973 | |
Option price as a percentage of fair market value of the common stock | 85.00% | |
Number of withholding periods per fiscal year | period | 2 | |
Length of withholding periods | 6 months | |
2014 Plan | ||
Compensation Plans | ||
Shares of common stock authorized for issuance under the plan | 8,000,000 | |
Ratio of Fungible Pool Units per award other than options or SARs | 1.704 | |
Ratio of Fungible Pool Units per stock option or stock appreciation right | 1 | |
Shares of common stock available for grant | 7,000,000 | |
2006 Plan and 2014 Plan | Minimum | ||
Compensation Plans | ||
Option price as a percentage of fair market value of the common stock | 100.00% | |
2006 Plan and 2014 Plan | Employee stock options | ||
Compensation Plans | ||
Option price as a percentage of fair market value of the common stock, if grantee owns in excess of 10% of Company common stock | 110.00% | |
2006 Plan and 2014 Plan | Employee stock options | Minimum | ||
Compensation Plans | ||
Vesting period of award | 3 years | |
Percentage of common stock to be owned to increase the option price at the date of grant | 10.00% | |
2006 Plan and 2014 Plan | Employee stock options | Maximum | ||
Compensation Plans | ||
Vesting period of award | 4 years | |
2005 Plan | Employee stock options | ||
Compensation Plans | ||
Outstanding options for shares of common stock | 17,481 |
Employee Compensation Plans (94
Employee Compensation Plans (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Number of shares | |||
Number of Shares, Exercisable | 1,413,283 | ||
Weighted Average Exercise Price (per share) | |||
Weighted Average Exercise Price, Exercisable | $ 28.82 | ||
Summary of stock options | |||
Stock options vested and expected to vest, Number of options outstanding | 2,036,855 | ||
Stock options vested and expected to vest, Weighted average remaining contractual life | 5 years 6 months 11 days | ||
Stock options vested and expected to vest, Weighted average exercise price | $ 44.83 | ||
Stock options vested and expected to vest, Intrinsic value | $ 43,169 | ||
Stock options exercisable, Weighted average remaining contractual life | 4 years 4 months 28 days | ||
Stock options exercisable, Intrinsic value | $ 40,858 | ||
Employee stock options | |||
Number of shares | |||
Number of shares, outstanding, beginning balance | 3,436,727 | ||
Number of Shares, Granted | 201,798 | ||
Number of Shares, Exercised | (1,520,757) | ||
Number of Shares, Forfeited/expired | (77,799) | ||
Number of Shares, Outstanding, ending balance | 2,039,969 | 3,436,727 | |
Number of Shares, Exercisable | 1,413,283 | ||
Weighted Average Exercise Price (per share) | |||
Weighted Average Exercise Price, Outstanding, beginning balance | $ 25.24 | ||
Weighted Average Exercise Price, Granted | 137.31 | ||
Weighted Average Exercise Price, Exercised | 10.89 | ||
Weighted Average Exercise Price, Forfeited/expired | 80.75 | ||
Weighted average exercise price, outstanding, ending balance | 44.91 | $ 25.24 | |
Weighted Average Exercise Price, Exercisable | $ 28.82 | ||
Summary of stock options | |||
Intrinsic values of options exercised | $ 107,400 | $ 167,000 | $ 165,500 |
Employee Compensation Plans (95
Employee Compensation Plans (Details 3) - $ / shares | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Employee stock options | |||
Compensation Plans | |||
Average expected life | 5 years 6 months | 5 years 6 months | 6 years |
Average volatility (as a percent) | 57.00% | 74.00% | 81.00% |
Dividend yield (as a percent) | 0.84% | 1.30% | |
Risk-free interest rate (as a percent) | 1.61% | 1.70% | 1.02% |
Weighted average grant date fair value (in dollars per share) | $ 66.19 | $ 42.38 | $ 31.23 |
ESPP | |||
Compensation Plans | |||
Average expected life | 6 months | 6 months | 6 months |
Average volatility (as a percent) | 35.00% | 55.00% | 86.00% |
Dividend yield (as a percent) | 1.55% | 1.14% | |
Risk-free interest rate (as a percent) | 0.10% | 0.06% | 0.13% |
Weighted average grant date fair value (in dollars per share) | $ 20.28 | $ 26.06 | $ 14.38 |
Employee Compensation Plans (96
Employee Compensation Plans (Details 4) - DCAs | 12 Months Ended |
Sep. 26, 2015 | |
Minimum | |
Deferred cash awards ("DCAs") | |
Vesting period | 3 years |
Maximum | |
Deferred cash awards ("DCAs") | |
Vesting period | 4 years |
Employee Compensation Plans (97
Employee Compensation Plans (Details 5) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | Sep. 29, 2012 | |
RSUs | ||||
Share Units | ||||
Nonvested at beginning of the period (in shares) | 409,173 | |||
Granted (in shares) | 154,064 | |||
Vested (in shares) | (128,465) | |||
Forfeited (in shares) | (20,359) | |||
Nonvested at end of the period (in shares) | 414,413 | 409,173 | ||
Weighted Average Grant-Date Fair Value | ||||
Nonvested at beginning of the period (in dollars per shares) | $ 86.50 | |||
Granted (in dollars per shares) | 116.80 | $ 119.95 | ||
Vested (in dollars per shares) | 65.96 | |||
Forfeited (in dollars per shares) | 114.12 | |||
Nonvested at end of the period (in dollars per shares) | $ 102.78 | $ 86.50 | ||
Additional information | ||||
Weighted average remaining contractual life of unvested awards | 2 years 2 months 23 days | 3 years 3 months 4 days | ||
Intrinsic value of unvested awards | $ 23,008 | $ 53,450 | ||
Awards expected to vest (in shares) | 410,392 | |||
Intrinsic value of awards expected to vest | $ 22,800 | |||
Total intrinsic value of awards vested | $ 15,500 | $ 6,100 | ||
RSAs | ||||
Share Units | ||||
Granted (in shares) | 55,432 | |||
Additional information | ||||
Total intrinsic value of awards vested | $ 2,700 | |||
Minimum | RSUs | ||||
Compensation Plans | ||||
Vesting period of award | 3 years | |||
Minimum | RSAs | ||||
Compensation Plans | ||||
Vesting period of award | 3 years | |||
Maximum | RSUs | ||||
Compensation Plans | ||||
Vesting period of award | 4 years | |||
Maximum | RSAs | ||||
Compensation Plans | ||||
Vesting period of award | 4 years |
Employee Compensation Plans (98
Employee Compensation Plans (Details 6) - PSUs - $ / shares | 12 Months Ended | |
Sep. 26, 2015 | Sep. 27, 2014 | |
Compensation Plans | ||
Vesting period of award | 3 years | |
Share Units | ||
Nonvested at beginning of the period (in shares) | 195,782 | |
Granted (in shares) | 45,216 | |
Converted (in shares) | (75,421) | |
Forfeited (in shares) | (5,451) | |
Actual performance change (in shares) | (52,528) | |
Nonvested at end of the period (in shares) | 107,598 | 195,782 |
Weighted Average Grant-Date Fair Value | ||
Nonvested at beginning of the period (in dollars per shares) | $ 67.38 | |
Granted (in dollars per shares) | 138.08 | $ 107.12 |
Converted (in dollars per share) | 41.52 | |
Forfeited (in dollars per shares) | 124.73 | |
Actual performance change (in dollars per share) | 91.59 | |
Nonvested at end of the period (in dollars per shares) | $ 78.43 | $ 67.38 |
Additional information | ||
Outstanding awards, at the threshold award level | 65,392 | |
Outstanding awards, at the maximum award level | 149,804 |
Employee Compensation Plans (99
Employee Compensation Plans (Details 7) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Compensation Plans | |||
Total stock based compensation expense recognized in the Consolidated Statements of Operations | $ 31,934 | $ 30,673 | $ 26,081 |
Total related tax benefit | 12,065 | 12,005 | 9,936 |
Unrecognized share-based compensation costs | $ 45,400 | ||
Weighted average period for the unrecognized cost | 1 year 8 months 12 days | ||
Employee stock options | |||
Compensation Plans | |||
Total stock based compensation expense recognized in the Consolidated Statements of Operations | $ 13,464 | 13,029 | 14,151 |
ESPP | |||
Compensation Plans | |||
Total stock based compensation expense recognized in the Consolidated Statements of Operations | 3,724 | 4,444 | 4,401 |
RSUs/PSUs/RSAs | |||
Compensation Plans | |||
Total stock based compensation expense recognized in the Consolidated Statements of Operations | $ 14,746 | $ 13,200 | $ 7,529 |
Employee Retirement Plans (Deta
Employee Retirement Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
U.S. 401(k) plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Minimum age of eligible employees | 18 years | ||
Service requirement for plan eligibility, full-time employees | 1 month | ||
Service requirement for plan eligibility, other than full-time employees | 1 year | ||
Company match on first tier of eligible compensation (as a percent) | 100.00% | ||
First tier of eligible compensation matched by Company contributions (as a percent) | 1.00% | ||
Company match on second tier of eligible compensation (as a percent) | 60.00% | ||
Second tier of eligible compensation matched by Company contributions (as a percent) | 5.00% | ||
Contributions to 401(k) plan | $ 10.5 | $ 6.4 | $ 5.2 |
Canadian Group Registered Retirement Savings Plans and Deferred Profit Sharing Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Contributions to Canadian plans | $ 1.3 | $ 1.5 | $ 1.4 |
Employee Retirement Plans (D101
Employee Retirement Plans (Details 2) - Supplementary retirement plans - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Defined Benefit Plans | |||
Plan assets | $ 0 | ||
Projected benefit obligation classified in other long-term liabilities | 1.2 | $ 1.4 | |
Net periodic pension expense | $ 0.1 | $ 0.2 | $ 0.3 |
Deferred Compensation (Details)
Deferred Compensation (Details) - 2002 Deferred Compensation Plan - shares | 12 Months Ended | |
Sep. 26, 2015 | Sep. 27, 2014 | |
Deferred Compensation Plan | ||
Shares of common stock available for future issuance | 346,432 | 351,276 |
Common stock rights granted and vested under the plan | 4,844 | |
Common stock rights exercised under the plan | 12,568 | |
Common stock rights outstanding under the plan | 53,865 | 61,589 |
Deferred Compensation (Details
Deferred Compensation (Details 2) - Annual deferred compensation benefit plan $ in Millions | 12 Months Ended |
Sep. 26, 2015USD ($) | |
Deferred compensation benefit plan | |
Deferred compensation benefit as a percentage of executive compensation in excess of 401(k) plan limits | 4.00% |
Compensation expense | $ 0.1 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 26, 2015 | Sep. 27, 2014 |
Accrued Expenses | ||
Accrued compensation costs | $ 67,094 | $ 101,734 |
Accrued customer incentives and promotions | 43,180 | 74,578 |
Accrued restructuring | 8,874 | |
Accrued freight, fulfillment and transportation costs | 22,522 | 30,108 |
Accrued legal and professional services | 8,168 | 18,635 |
Warranty reserve | 15,162 | 12,850 |
Other | 61,519 | 67,772 |
Total accrued expenses | $ 226,519 | $ 305,677 |
Commitments and Contingencie105
Commitments and Contingencies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Lease Commitments | |||
Total rent expense | $ 20 | $ 24.8 | $ 23.1 |
Sublease income | $ 1 | $ 1.1 | |
Maximum | |||
Lease Commitments | |||
Operating leases term | 20 years | ||
Minimum | |||
Lease Commitments | |||
Operating leases term | 1 year |
Commitments and Contingencie106
Commitments and Contingencies (Details 2) $ in Thousands | 12 Months Ended | |
Sep. 26, 2015USD ($)ft²item | Jun. 30, 2012USD ($) | |
Capital Leases | ||
2,016 | $ 4,453 | |
2,017 | 4,061 | |
2,018 | 3,838 | |
2,019 | 3,838 | |
2,020 | 3,838 | |
Thereafter | 23,985 | |
Total | 44,013 | |
Less: amount representing interest | (12,956) | |
Present value of future minimum lease payments | 31,057 | |
Operating Leases | ||
2,016 | 17,824 | |
2,017 | 15,181 | |
2,018 | 10,412 | |
2,019 | 8,698 | |
2,020 | 7,865 | |
Thereafter | 23,697 | |
Total | 83,677 | |
Subleases | ||
2,016 | (419) | |
2,017 | (218) | |
2,018 | (215) | |
2,019 | (221) | |
2,020 | (221) | |
Thereafter | (443) | |
Total minimum income | (1,737) | |
Financing Obligations | ||
2,016 | 9,773 | |
2,017 | 9,773 | |
2,018 | 9,858 | |
2,019 | 9,956 | |
2,020 | 10,167 | |
Thereafter | 148,416 | |
Total | 197,943 | |
Less: amount representing interest | (108,542) | |
Present value of future minimum lease payments | $ 89,401 | |
Manufacturing facility | ||
Lease Commitments | ||
Initial term of capital lease | 15 years | |
Number of additional optional renewals of capital lease | item | 6 | |
Capital leases optional renewal term | 5 years | |
Burlington, Massachusetts building | ||
Lease Commitments | ||
Area of leased property recorded as an asset with related financing obligation | ft² | 425,000 | |
Pre-existing fair value capitalized | $ 4,100 |
Commitments and Contingencie107
Commitments and Contingencies (Details 3) $ in Millions | Apr. 27, 2012claim | Nov. 29, 2010claim | Sep. 28, 2010claim | Sep. 26, 2015USD ($)claimitem |
Putative securities fraud class actions | ||||
Legal Proceedings | ||||
Number of pending actions | 2 | |||
Legal Proceedings | Brad Barry action | ||||
Legal Proceedings | ||||
Number of affirmative defenses shared by all defendants | item | 3 | |||
Legal Proceedings | Putative stockholder derivative actions | ||||
Legal Proceedings | ||||
Number of pending actions | 2 | |||
Legal Proceedings | Consolidated putative stockholder derivative action, District of Vermont | ||||
Legal Proceedings | ||||
Number of separate complaints in consolidated action | 5 | |||
Number of separate complaints filed after disclosure of SEC Inquiry | 2 | |||
Number of separate complaints ordered by federal court to be consolidated into the action | 2 | 2 | ||
Legal Proceedings | Antitrust litigation, putative class actions | ||||
Legal Proceedings | ||||
Number of pending actions | 27 | |||
Legal Proceedings | Club Coffee claim | ||||
Legal Proceedings | ||||
Amount of damages claimed | $ | $ 600 |
Related Party (Details)
Related Party (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 03, 2015 | Mar. 02, 2015 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 |
Related party | |||||
Aggregate purchase price | $ 1,033,321 | $ 1,052,430 | $ 188,278 | ||
Common stock | |||||
Related party | |||||
Number of shares repurchased | 11,028,955 | 8,138,592 | 5,642,793 | ||
Security holder | Heritage Flight | |||||
Related party | |||||
Minimum percentage of the Company's outstanding common stock held by the related party | 5.00% | ||||
Expense incurred for travel services provided by the related party | $ 0 | $ 0 | $ 200 | ||
Security holder | Lavazza | |||||
Related party | |||||
Minimum percentage of the Company's outstanding common stock held by the related party | 5.00% | ||||
Security holder | Lavazza | Share Repurchase Program - privately negotiated transactions | |||||
Related party | |||||
Aggregate purchase price | $ 623,600 | ||||
Security holder | Lavazza | Share Repurchase Program - privately negotiated transactions | Common stock | |||||
Related party | |||||
Number of shares repurchased | 5,231,991 | 5,231,991 | |||
Price per share of repurchase (in dollars per share) | $ 119.18 | $ 119.18 | |||
Stock repurchase price discount (as a percent) | 3.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 29, 2012 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Numerator for basic and diluted earnings per share: | |||||||||||||||
Net income attributable to Keurig | $ 94,596 | $ 113,621 | $ 155,479 | $ 134,579 | $ 141,056 | $ 155,151 | $ 162,084 | $ 138,227 | $ 126,956 | $ 116,272 | $ 132,421 | $ 107,583 | $ 498,275 | $ 596,518 | $ 483,232 |
Denominator: | |||||||||||||||
Basic weighted average shares outstanding | 157,286,303 | 157,085,574 | 149,638,636 | ||||||||||||
Effect of dilutive securities - stock options (in shares) | 1,612,375 | 2,482,768 | 3,162,857 | ||||||||||||
Diluted weighted average shares outstanding | 158,898,678 | 159,568,342 | 152,801,493 | ||||||||||||
Basic and diluted net income per common share | |||||||||||||||
Basic net income per common share (in dollars per share) | $ 0.61 | $ 0.74 | $ 0.98 | $ 0.83 | $ 0.87 | $ 0.95 | $ 1.05 | $ 0.93 | $ 0.84 | $ 0.78 | $ 0.89 | $ 0.72 | $ 3.17 | $ 3.80 | $ 3.23 |
Diluted net income per common share (in dollars per share) | $ 0.61 | $ 0.73 | $ 0.97 | $ 0.82 | $ 0.86 | $ 0.94 | $ 1.03 | $ 0.91 | $ 0.83 | $ 0.76 | $ 0.87 | $ 0.70 | $ 3.14 | $ 3.74 | $ 3.16 |
Earnings Per Share (Details 2)
Earnings Per Share (Details 2) - shares | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Equity-based compensation | |||
Antidilutive securities | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 351,000 | 277,000 | 822,000 |
Unaudited Quarterly Financia111
Unaudited Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 29, 2012 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Unaudited Quarterly Financial Data | |||||||||||||||
Length of fiscal period | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 364 days | 364 days | 364 days |
Net sales | $ 1,036,964 | $ 969,525 | $ 1,127,184 | $ 1,386,358 | $ 1,195,567 | $ 1,022,371 | $ 1,103,072 | $ 1,386,670 | $ 1,047,177 | $ 967,072 | $ 1,004,792 | $ 1,339,059 | $ 4,520,031 | $ 4,707,680 | $ 4,358,100 |
Gross profit | 335,334 | 349,260 | 458,808 | 464,122 | 449,789 | 444,592 | 457,432 | 464,047 | 377,459 | 407,618 | 415,146 | 419,163 | 1,607,524 | 1,815,860 | 1,619,386 |
Net income attributable to Keurig | $ 94,596 | $ 113,621 | $ 155,479 | $ 134,579 | $ 141,056 | $ 155,151 | $ 162,084 | $ 138,227 | $ 126,956 | $ 116,272 | $ 132,421 | $ 107,583 | $ 498,275 | $ 596,518 | $ 483,232 |
Basic (in dollars per share) | $ 0.61 | $ 0.74 | $ 0.98 | $ 0.83 | $ 0.87 | $ 0.95 | $ 1.05 | $ 0.93 | $ 0.84 | $ 0.78 | $ 0.89 | $ 0.72 | $ 3.17 | $ 3.80 | $ 3.23 |
Diluted (in dollars per share) | 0.61 | 0.73 | 0.97 | 0.82 | 0.86 | 0.94 | 1.03 | $ 0.91 | $ 0.83 | $ 0.76 | $ 0.87 | $ 0.70 | $ 3.14 | $ 3.74 | $ 3.16 |
Dividend paid per share (in dollars per share) | $ 0.2875 | $ 0.2875 | $ 0.2875 | $ 0.2875 | $ 0.25 | $ 0.25 | $ 0.25 |
Schedule II-Valuation and Qu112
Schedule II-Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 | |
Allowance for doubtful accounts | |||
Valuation and Qualifying Accounts | |||
Balance at Beginning of Period | $ 3,270 | $ 2,886 | $ 2,750 |
Charged to Costs and Expenses | 5,452 | 1,782 | 689 |
Deductions | 4,544 | 1,398 | 553 |
Balance at End of Period | 4,178 | 3,270 | 2,886 |
Sales returns reserve | |||
Valuation and Qualifying Accounts | |||
Balance at Beginning of Period | 62,850 | 30,754 | 31,767 |
Charged to Costs and Expenses | 114,392 | 114,057 | 79,747 |
Deductions | 145,961 | 81,961 | 80,760 |
Balance at End of Period | 31,281 | 62,850 | 30,754 |
Warranty reserve | |||
Valuation and Qualifying Accounts | |||
Balance at Beginning of Period | 12,850 | 7,804 | 20,218 |
Charged to Costs and Expenses | 29,570 | 24,158 | 6,948 |
Deductions | 27,258 | 19,112 | 19,362 |
Balance at End of Period | 15,162 | 12,850 | 7,804 |
Warranty recoveries from suppliers | $ 1,300 | $ 1,800 | $ 800 |