QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of Incorporation) | (I.R.S. Employer Identification No.) | ||||||||||
| |||||||||||
(Address of Principal Executive Offices; Zip Code) | |||||||||||
(Registrant’s Telephone Number, Including Area Code) | |||||||||||
Securities registered pursuant to Section 12(b) of the Act: | |||||||||||
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | |||||||||
None | |||||||||||
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |
Large accelerated filer | ☐ | ☒ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the | ||||||||||||||||||||
Exchange Act. | ☐ |
Page | |||||
September 30, 2020 | June 30, 2020 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Income tax receivable | |||||||||||
Short-term derivative assets | |||||||||||
Prepaid expenses | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Long-term derivatives assets | |||||||||||
Right-of-use operating lease assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | |||||||||||
Accrued payroll expenses | |||||||||||
Operating leases liabilities - current | |||||||||||
Short-term derivative liabilities | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term borrowings under revolving credit facility | |||||||||||
Accrued pension liabilities | |||||||||||
Accrued postretirement benefits | |||||||||||
Accrued workers’ compensation liabilities | |||||||||||
Operating lease liabilities - noncurrent | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $1.00 par value, 500,000 shares authorized; Series A Convertible Participating Cumulative Perpetual Preferred Stock, 21,000 shares authorized; 14,700 shares issued and outstanding as of September 30, 2020 and June 30, 2020; liquidation preference of $16,320 and $16,178 as of September 30, 2020 and June 30, 2020, respectively | |||||||||||
Common stock, $1.00 par value, 25,000,000 shares authorized; 17,431,815 and 17,347,774 shares issued and outstanding as of September 30, 2020 and June 30, 2020, respectively | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | $ | $ | |||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Net sales | $ | $ | ||||||||||||
Cost of goods sold | ||||||||||||||
Gross profit | ||||||||||||||
Selling expenses | ||||||||||||||
General and administrative expenses | ||||||||||||||
Net losses (gains) from sales of assets | ( | |||||||||||||
Operating expenses | ||||||||||||||
(Loss) income from operations | ( | |||||||||||||
Other (expense) income: | ||||||||||||||
Interest expense | ( | ( | ||||||||||||
Other, net | ||||||||||||||
Total other income (expense) | ( | |||||||||||||
(Loss) income before taxes | ( | |||||||||||||
Income tax expense (benefit) | ( | |||||||||||||
Net (loss) income | ( | |||||||||||||
Less: Cumulative preferred dividends, undeclared and unpaid | ||||||||||||||
Net (loss) income available to common stockholders | $ | ( | $ | |||||||||||
Net (loss) income available to common stockholders per common share—basic | $ | ( | $ | |||||||||||
Net (loss) income available to common stockholders per common share—diluted | $ | ( | $ | |||||||||||
Weighted average common shares outstanding—basic | ||||||||||||||
Weighted average common shares outstanding—diluted |
Three Months Ended September 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Net (loss) income | $ | ( | $ | |||||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||
Unrealized gains (losses) on derivative instruments designated as cash flow hedges, net of tax | ( | |||||||||||||
(Losses) gains on derivative instruments designated as cash flow hedges reclassified to cost of goods sold and interest expense, net of tax | ( | |||||||||||||
Losses on derivative instruments de-designated as cash flow hedges reclassified to interest expense, net of tax | ||||||||||||||
Change in pension and retiree benefit obligations, net of tax | ( | |||||||||||||
Total comprehensive (loss) income, net of tax | $ | ( | $ |
FARMER BROS. CO. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share and per share data) | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred Shares | Preferred Stock Amount | Common Shares | Common Stock Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Net reclassification of unrealized gains on cash flow hedges, net of taxes | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Change in the funded status of retiree benefit obligations, net of taxes | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
ESOP compensation expense, including reclassifications | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock and stock option exercises | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Cumulative preferred dividends, undeclared and unpaid | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
FARMER BROS. CO. CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (Continued) (In thousands, except share and per share data) | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred Shares | Preferred Stock Amount | Common Shares | Common Stock Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net reclassification of unrealized losses on cash flow hedges, net of taxes | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
ESOP compensation expense, including reclassifications | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock and stock option exercises | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Cumulative preferred dividends, undeclared and unpaid | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
FARMER BROS. CO. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||
(In thousands) | |||||||||||
Three Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net (loss) income | $ | ( | $ | ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Net losses (gains) from sales of assets | ( | ||||||||||
Net losses on derivative instruments | |||||||||||
Other adjustments | |||||||||||
Change in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Inventories | ( | ( | |||||||||
Derivative assets/liabilities, net | ( | ( | |||||||||
Other assets | ( | ||||||||||
Accounts payable | |||||||||||
Accrued expenses and other liabilities | ( | ||||||||||
Net cash provided (used) by operating activities | $ | $ | ( | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Proceeds from sales of property, plant and equipment | |||||||||||
Net cash (used) provided in investing activities | $ | ( | $ | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from revolving credit facility | $ | $ | |||||||||
Repayments on revolving credit facility | ( | ( | |||||||||
Payments of finance lease obligations | ( | ( | |||||||||
Payment of financing costs | ( | ||||||||||
Net cash used by financing activities | $ | ( | $ | ( | |||||||
Net (decrease) increase in cash and cash equivalents | $ | ( | $ | ||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ |
FARMER BROS. CO. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - (continued) | |||||||||||
(In thousands) | |||||||||||
Three Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
Non-cash additions to property, plant and equipment | $ | $ | |||||||||
Non-cash issuance of 401-K common stock | $ | $ | |||||||||
Cumulative preferred dividends, undeclared and unpaid | $ | $ |
Standard | Description | Effective Date | Effect on the Financial Statements or Other Significant Matters | |||||||||||||||||
In March 2020, the FASB issued ASU No. 2020-04, “Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”) | The London Interbank Offered Rate (LIBOR) is set to expire at the end of 2021. Contracts affected by the rate change would be required to be modified. Under current U.S. GAAP, those modifications would have to be evaluated to determine whether they result in new contracts or continuation of the existing contracts. ASU 2020-04 provides temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the transition from LIBOR to alternative reference rate. | Issuance date of March 12, 2020 through December 31, 2022. | The Company is currently evaluating the impact ASU 2020-04 will have on its consolidated financial statements. | |||||||||||||||||
In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes" ("ASU 2019-12"). | ASU 2019-12 guidance simplifies the accounting for income taxes by removing the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income). With the removal of this exception, entities will determine the tax effect of pre-tax income or loss from continuing operations without consideration of the tax effects of other items that are not included in continuing operations. | Annual periods beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. | The Company is currently evaluating the impact ASU 2019-12 will have on its consolidated financial statements. | |||||||||||||||||
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). | ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. | Annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. | The Company adopted the new guidance effective July 1, 2020 on a prospective basis which did not require the Company to adjust comparative periods. Adoption of ASU 2018-15 did not have a material impact on the results of operations, financial position or cash flows of the Company. | |||||||||||||||||
In August 2018, the FASB issued ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU 2018-14”). | ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures and adding disclosure requirements identified as relevant. | Annual periods beginning after December 15, 2020. Early adoption is permitted. | Effective for the Company beginning July 1, 2021. The Company is currently evaluating the impact ASU 2018-14 will have on its consolidated financial statements. | |||||||||||||||||
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Since that date, the FASB has issued additional ASUs clarifying certain aspects of ASU 2016-13. | The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. The amendments in ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. The model requires an estimate of the credit losses expected over the life of an exposure or pool of exposures. The income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. | Annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods. | The Company adopted the new guidance effective July 1, 2020 on a modified retrospective basis. Adoption of ASU 2018-13 did not have a material impact on the results of operations, financial position or cash flows of the Company. |
Classification | September 30, 2020 | June 30, 2020 | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Operating lease assets | Right-of-use operating lease assets | $ | ||||||||||||||||||
Finance lease assets | Property, plant and equipment, net | |||||||||||||||||||
Total lease assets | $ | $ | ||||||||||||||||||
Operating lease liabilities - current | Operating lease liabilities - current | $ | ||||||||||||||||||
Operating lease liabilities - noncurrent | Operating lease liabilities - noncurrent | |||||||||||||||||||
Finance lease liabilities | Other long-term liabilities | |||||||||||||||||||
Total lease liabilities | $ | $ |
Three Months Ended September 30, | |||||||||||||||||||||||
Classification | 2020 | 2019 | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Operating lease expense | General and administrative expenses and cost of goods sold | $ | $ | ||||||||||||||||||||
Finance lease expense: | |||||||||||||||||||||||
Amortization of finance lease assets | General and administrative expenses | ||||||||||||||||||||||
Interest on finance lease liabilities | Interest expense | ||||||||||||||||||||||
Total lease expense | $ | $ |
September 30, 2020 | ||||||||||||||
(In thousands) | Operating Leases | Finance Leases | ||||||||||||
Maturities of lease liabilities are as follows: | ||||||||||||||
2021 | $ | $ | ||||||||||||
2022 | ||||||||||||||
2023 | ||||||||||||||
2024 | ||||||||||||||
2025 | ||||||||||||||
Thereafter | ||||||||||||||
Total lease payments | ||||||||||||||
Less: interest | ( | |||||||||||||
Total lease obligations | $ | $ |
September 30, 2020 | June 30, 2020 | |||||||||||||
Weighted-average remaining lease terms (in years): | ||||||||||||||
Operating lease | ||||||||||||||
Finance lease | ||||||||||||||
Weighted-average discount rate: | ||||||||||||||
Operating lease | % | % | ||||||||||||
Finance lease | % | % |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2020 | 2019 | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
Operating cash flows from operating leases | $ | $ | ||||||||||||
Operating cash flows from finance leases | $ | $ | ||||||||||||
Financing cash flows from finance leases | $ | $ | ||||||||||||
Leased assets obtained in exchange for new finance lease liabilities | $ | $ | ||||||||||||
Leased assets obtained in exchange for new operating lease liabilities | $ | $ |
(In thousands) | September 30, 2020 | June 30, 2020 | ||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||
Long coffee pounds | ||||||||||||||
Derivative instruments not designated as cash flow hedges: | ||||||||||||||
Long coffee pounds | ||||||||||||||
Total |
Derivative Instruments Designated as Cash Flow Hedges | Derivative Instruments Not Designated as Accounting Hedges | |||||||||||||||||||||||||
September 30, 2020 | June 30, 2020 | September 30, 2020 | June 30, 2020 | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Financial Statement Location: | ||||||||||||||||||||||||||
Short-term derivative assets: | ||||||||||||||||||||||||||
Coffee-related derivative instruments(1) | $ | $ | $ | $ | ||||||||||||||||||||||
Long-term derivative assets: | ||||||||||||||||||||||||||
Coffee-related derivative instruments (2) | $ | $ | $ | $ | ||||||||||||||||||||||
Short-term derivative liabilities: | ||||||||||||||||||||||||||
Coffee-related derivative instruments | $ | $ | $ | $ | ||||||||||||||||||||||
Interest rate swap derivative instruments | $ | $ | $ | $ | ||||||||||||||||||||||
Long-term derivative liabilities: | ||||||||||||||||||||||||||
Coffee-related derivative instruments (3) | $ | $ | $ | $ | ||||||||||||||||||||||
Interest rate swap derivative instruments (3) | $ | $ | $ | $ |
Three Months Ended September 30, | Financial Statement Classification | ||||||||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||||||||
Net losses recognized in AOCI - Interest rate swap | $ | ( | $ | ( | AOCI | ||||||||||||||||||
Net (losses) gains recognized from AOCI to earnings - Interest rate swap | $ | ( | $ | Interest Expense | |||||||||||||||||||
Net losses reclassified from AOCI to earnings for de-designated Interest rate swap (1) | $ | ( | $ | Interest Expense | |||||||||||||||||||
Net gains (losses) recognized in AOCI - Coffee-related | $ | $ | ( | AOCI | |||||||||||||||||||
Net gains (losses) recognized in earnings - Coffee - related | $ | $ | ( | Cost of goods sold | |||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||
Net gains (losses) on coffee-related derivative instruments(1) | $ | $ | ( | ||||||||||||||
Non-operating pension and other postretirement benefit (2) | |||||||||||||||||
Other gains (losses), net | ( | ||||||||||||||||
Other, net | $ | $ |
(In thousands) | Gross Amount Reported on Balance Sheet | Netting Adjustments | Cash Collateral Posted | Net Exposure | ||||||||||||||||||||||||||||
September 30, 2020 | Derivative Assets | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Derivative Liabilities | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
June 30, 2020 | Derivative Assets | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Derivative Liabilities | $ | $ | ( | $ | $ |
(In thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Coffee-related derivative liabilities (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative instruments not designated as accounting hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets(1) | $ | $ | $ | $ | ||||||||||||||||||||||
Coffee-related derivative liabilities(1) | $ | $ | $ | $ | ||||||||||||||||||||||
Interest rate swap derivative liabilities (2) | $ | $ | ||||||||||||||||||||||||
(In thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
June 30, 2020 | ||||||||||||||||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Coffee-related derivative liabilities (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Interest rate swap derivative liabilities (2) | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative instruments not designated as accounting hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Coffee-related derivative liabilities (1) | $ | $ | $ | $ | ||||||||||||||||||||||
(In thousands) | September 30, 2020 | June 30, 2020 | ||||||||||||
Trade receivables | $ | $ | ||||||||||||
Other receivables(1) | ||||||||||||||
Allowance for doubtful accounts | ( | ( | ||||||||||||
Accounts receivable, net | $ | $ |
(In thousands) | September 30, 2020 | June 30, 2020 | ||||||||||||
Coffee | ||||||||||||||
Processed | $ | $ | ||||||||||||
Unprocessed | ||||||||||||||
Total | $ | $ | ||||||||||||
Tea and culinary products | ||||||||||||||
Processed | $ | $ | ||||||||||||
Unprocessed | ||||||||||||||
Total | $ | $ | ||||||||||||
Coffee brewing equipment parts | $ | $ | ||||||||||||
Total inventories | $ | $ |
(In thousands) | September 30, 2020 | June 30, 2020 | ||||||||||||
Buildings and facilities | $ | $ | ||||||||||||
Machinery, vehicles and equipment | ||||||||||||||
Capitalized software | ||||||||||||||
Office furniture and equipment | ||||||||||||||
$ | $ | |||||||||||||
Accumulated depreciation | ( | ( | ||||||||||||
Land | ||||||||||||||
Property, plant and equipment, net | $ | $ |
(In thousands) | September 30, 2020 | June 30, 2020 | ||||||||||||
Coffee Brewing Equipment | $ | $ | ||||||||||||
Accumulated depreciation | ( | $ | ( | |||||||||||
Coffee Brewing Equipment, net | $ | $ |
Three Months Ended September 30, | |||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||
Depreciation expense | $ | $ | |||||||||||||||
Other CBE expenses | $ | $ |
September 30, 2020 | June 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Weighted Average Amortization Period as of September 30, 2020 | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Impairment | Net | |||||||||||||||||||||||||||||||||||||||||||||
Amortized intangible assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | — | $ | |||||||||||||||||||||||||||||||||||||||||||
Non-compete agreements | ( | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Recipes | ( | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Trade name/brand name | ( | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total amortized intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | — | $ | |||||||||||||||||||||||||||||||||||||||||||
Unamortized intangible assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Trademarks, trade names and brand name with indefinite lives | $ | $ | — | $ | $ | $ | — | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
Total unamortized intangible assets | $ | $ | — | $ | $ | $ | — | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Service cost | $ | $ | |||||||||||||||
Interest cost | |||||||||||||||||
Expected return on plan assets | ( | ( | |||||||||||||||
Amortization of net loss(1) | |||||||||||||||||
Net periodic benefit cost | $ | $ |
September 30, 2020 | June 30, 2020 | |||||||||||||
Discount rate | ||||||||||||||
Expected long-term return on plan assets |
Three Months Ended September 30, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Contributions | $ | $ |
(In thousands) | September 30, 2020 | June 30, 2020 | ||||||||||||
Local 807 Pension Fund (1) | $ | $ |
Three Months Ended September 30, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Components of Net Periodic Postretirement Benefit Cost (Credit): | |||||||||||||||||
Service cost | $ | $ | |||||||||||||||
Interest cost | |||||||||||||||||
Amortization of net gain | ( | ( | |||||||||||||||
Amortization of prior service credit | ( | ( | |||||||||||||||
Net periodic postretirement benefit credit | $ | ( | $ | ( |
Fiscal | ||||||||||||||
2021 | 2020 | |||||||||||||
Retiree Medical Plan discount rate | ||||||||||||||
Death Benefit discount rate |
September 30, 2020 | June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Debt Origination Date | Maturity | Original Borrowing Amount | Carrying Value | Weighted Average Interest Rate | Carrying Value | Weighted Average Interest Rate | |||||||||||||||||||||||||||||||||||||
Credit Facility | Revolver | 11/6/2023 | N/A | $ | % | $ | % |
September 30, 2020 | June 30, 2020 | |||||||||||||
Allocated shares | ||||||||||||||
Committed to be released shares | ||||||||||||||
Unallocated shares | ||||||||||||||
Total ESOP shares | ||||||||||||||
(In thousands) | ||||||||||||||
Fair value of ESOP shares | $ | $ |
Three Months Ended September 30, 2020 | ||||||||
Weighted average fair value of NQOs | $ | |||||||
Risk-free interest rate | % | |||||||
Dividend yield | % | |||||||
Average expected term | ||||||||
Expected stock price volatility | % |
Outstanding NQOs: | Number of NQOs | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value ($ in thousands) | ||||||||||||||||||||||
Outstanding at June 30, 2020 | ||||||||||||||||||||||||||
Granted | — | — | ||||||||||||||||||||||||
Exercised | — | |||||||||||||||||||||||||
Forfeited | ( | — | — | |||||||||||||||||||||||
Expired | ( | — | — | |||||||||||||||||||||||
Outstanding at September 30, 2020 | ||||||||||||||||||||||||||
Exercisable at September 30, 2020 | ||||||||||||||||||||||||||
Outstanding PNQs: | Number of PNQs | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value ($ in thousands) | |||||||||||||||||||||||||
Outstanding at June 30, 2020 | |||||||||||||||||||||||||||||
Granted | — | — | |||||||||||||||||||||||||||
Exercised | — | ||||||||||||||||||||||||||||
Forfeited | — | — | |||||||||||||||||||||||||||
Expired | — | — | |||||||||||||||||||||||||||
Outstanding at September 30, 2020 | — | ||||||||||||||||||||||||||||
Exercisable at September 30, 2020 | — | ||||||||||||||||||||||||||||
Outstanding and Nonvested Restricted Stock Awards: | Shares Awarded | Weighted Average Grant Date Fair Value ($) | ||||||||||||
Outstanding and nonvested at June 30, 2020 | ||||||||||||||
Granted | ||||||||||||||
Vested/Released | ( | |||||||||||||
Cancelled/Forfeited | ( | |||||||||||||
Outstanding and nonvested at September 30, 2020 | ||||||||||||||
Outstanding and Nonvested PBRSUs: | PBRSUs Awarded(1) | Weighted Average Grant Date Fair Value ($) | ||||||||||||
Outstanding and nonvested at June 30, 2020 | ||||||||||||||
Granted(1) | ||||||||||||||
Vested/Released | ||||||||||||||
Cancelled/Forfeited | ( | |||||||||||||
Outstanding and nonvested at September 30, 2020 | ||||||||||||||
(In thousands) | September 30, 2020 | June 30, 2020 | ||||||||||||
Accrued postretirement benefits | $ | $ | ||||||||||||
Accrued workers’ compensation liabilities | ||||||||||||||
Cumulative preferred dividends, undeclared and unpaid (1) | ||||||||||||||
Working capital dispute payable(2) | ||||||||||||||
Other (3) | ||||||||||||||
Other current liabilities | $ | $ |
(In thousands) | September 30, 2020 | June 30, 2020 | ||||||||||||
Derivative liabilities—noncurrent | $ | |||||||||||||
Deferred compensation(1) | ||||||||||||||
Deferred income taxes and other liabilities(2) | ||||||||||||||
Finance lease liabilities | ||||||||||||||
Other long-term liabilities | $ | $ |
Three Months Ended September 30, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
Income tax expense (benefit) | $ | $ | ( | ||||||||||||||
Effective tax rate | ( | % | ( | % |
Three Months Ended September 30, | |||||||||||||||||
(In thousands, except share and per share amounts) | 2020 | 2019 | |||||||||||||||
Undistributed net (loss) income available to common stockholders | $ | ( | $ | ||||||||||||||
Undistributed net (loss) income available to nonvested restricted stockholders and holders of convertible preferred stock | ( | ||||||||||||||||
Net loss available to common stockholders—basic | $ | ( | $ | ||||||||||||||
Weighted average common shares outstanding—basic | |||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||
Shares issuable under stock options | |||||||||||||||||
Shares issuable under PBRSUs | |||||||||||||||||
Shares issuable under convertible preferred stock | |||||||||||||||||
Weighted average common shares outstanding—diluted | |||||||||||||||||
Net (loss) income available to common stockholders per common share—basic | $ | ( | $ | ||||||||||||||
Net (loss) income available to common stockholders per common share—diluted | $ | ( | $ |
Three Months Ended September 30, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
Shares issuable under stock options | |||||||||||||||||
Shares issuable under convertible preferred stock | |||||||||||||||||
Shares issuable under PBRSUs |
(In thousands, except share and per share amounts) | ||||||||||||||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Stated Value per Share | Carrying Value | Cumulative Preferred Dividends, Undeclared and Unpaid | Liquidation Preference | |||||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||||
(In thousands) | $ | % of total | $ | % of total | ||||||||||||||||||||||
Net Sales by Product Category: | ||||||||||||||||||||||||||
Coffee (Roasted) | $ | % | $ | % | ||||||||||||||||||||||
Coffee (Frozen Liquid) | % | % | ||||||||||||||||||||||||
Tea (Iced & Hot) | % | % | ||||||||||||||||||||||||
Culinary | % | % | ||||||||||||||||||||||||
Spice | % | % | ||||||||||||||||||||||||
Other beverages(1) | % | % | ||||||||||||||||||||||||
Other revenues(2) | % | % | ||||||||||||||||||||||||
Net sales by product category | % | % | ||||||||||||||||||||||||
Fuel surcharge | % | % | ||||||||||||||||||||||||
Net sales | $ | % | $ | % |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | Favorable (Unfavorable) | |||||||||||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||||
Net sales | $ | 97,270 | $ | 138,600 | $ | (41,330) | (29.8) | % | ||||||||||||||||||
Gross margin | 23.0 | % | 29.3 | % | (6.3) | % | NM | |||||||||||||||||||
Operating expenses as a % of sales | 34.8 | % | 24.3 | % | (10.5) | % | NM | |||||||||||||||||||
(Loss) income from operations | $ | (11,443) | $ | 6,892 | $ | (18,335) | NM | |||||||||||||||||||
Net (loss) income | $ | (6,270) | $ | 4,654 | $ | (10,924) | NM | |||||||||||||||||||
Net (loss) income available to common stockholders per common share—basic | $ | (0.37) | $ | 0.26 | $ | (0.63) | NM | |||||||||||||||||||
Net (loss) income available to common stockholders per common share—diluted | $ | (0.37) | $ | 0.26 | $ | (0.63) | NM | |||||||||||||||||||
Operating Data: | ||||||||||||||||||||||||||
Coffee pounds | 20,933 | 25,958 | (5,025) | (19.4) | % | |||||||||||||||||||||
EBITDA(1) | $ | 2,906 | $ | 13,440 | $ | (10,534) | (78.4) | % | ||||||||||||||||||
EBITDA Margin(1) | 3.0 | % | 9.7 | % | (6.7) | % | NM | |||||||||||||||||||
Adjusted EBITDA(1) | $ | 5,693 | $ | 4,016 | $ | 1,677 | 41.8 | % | ||||||||||||||||||
Adjusted EBITDA Margin(1) | 5.9 | % | 2.9 | % | 3.0 | % | NM | |||||||||||||||||||
Percentage of Total Net Sales By Product Category | ||||||||||||||||||||||||||
Coffee (Roasted) | 68.0 | % | 63.0 | % | 5.0 | % | 7.9 | % | ||||||||||||||||||
Coffee (Frozen Liquid) | 2.6 | % | 5.7 | % | (3.1) | % | (54.4) | % | ||||||||||||||||||
Tea (Iced & Hot) | 1.7 | % | 5.6 | % | (3.9) | % | (69.6) | % | ||||||||||||||||||
Culinary | 10.7 | % | 10.2 | % | 0.5 | % | 4.9 | % | ||||||||||||||||||
Spice | 4.9 | % | 4.5 | % | 0.4 | % | 8.9 | % | ||||||||||||||||||
Other beverages(2) | 11.7 | % | 9.2 | % | 2.5 | % | 27.2 | % | ||||||||||||||||||
Other revenues(3) | — | % | 1.3 | % | (1.3) | % | NM | |||||||||||||||||||
Net sales by product category | 99.6 | % | 99.5 | % | 0.1 | % | NM | |||||||||||||||||||
Fuel Surcharge | 0.4 | % | 0.5 | % | (0.1) | % | NM | |||||||||||||||||||
Total | 100.0 | % | 100.0 | % | — | % | NM | |||||||||||||||||||
Other data: | ||||||||||||||||||||||||||
Capital expenditures related to maintenance | $ | 1,595 | $ | 4,352 | $ | (2,757) | (63.4) | % | ||||||||||||||||||
Total capital expenditures | $ | 4,366 | $ | 5,276 | $ | (910) | (17.2) | % | ||||||||||||||||||
Depreciation and amortization expense | $ | 7,041 | $ | 7,617 | $ | (576) | (7.6) | % |
Three Months Ended September 30, | Favorable (Unfavorable) | |||||||||||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||||||||||||
Net sales | $ | 97,270 | $ | 138,600 | $ | (41,330) | (29.8) | % | ||||||||||||||||||
Cost of goods sold | 74,851 | 97,959 | 23,108 | 23.6 | % | |||||||||||||||||||||
Gross profit | 22,419 | 40,641 | (18,222) | (44.8) | % | |||||||||||||||||||||
Selling expenses | 23,498 | 33,614 | 10,116 | 30.1 | % | |||||||||||||||||||||
General and administrative expenses | 9,746 | 12,740 | 2,994 | 23.5 | % | |||||||||||||||||||||
Net losses (gains) from sales of assets | 618 | (12,605) | (13,223) | (104.9) | % | |||||||||||||||||||||
Operating expenses | 33,862 | 33,749 | (113) | (0.3) | % | |||||||||||||||||||||
(Loss) income from operations | (11,443) | 6,892 | (18,335) | NM | ||||||||||||||||||||||
Other (expense) income: | ||||||||||||||||||||||||||
Interest expense | (3,244) | (2,548) | (696) | (27.3) | % | |||||||||||||||||||||
Other, net | 8,559 | 203 | 8,356 | 4,116.3 | % | |||||||||||||||||||||
Total other income (expense) | 5,315 | (2,345) | 7,660 | 326.7 | % | |||||||||||||||||||||
(Loss) income before taxes | (6,128) | 4,547 | (10,675) | 234.8 | % | |||||||||||||||||||||
Income tax expense (benefit) | 142 | (107) | (249) | (232.7) | % | |||||||||||||||||||||
Net (loss) income | $ | (6,270) | $ | 4,654 | (10,924) | 234.7 | % | |||||||||||||||||||
Less: Cumulative preferred dividends, undeclared and unpaid | 142 | 137 | (5) | (3.6) | % | |||||||||||||||||||||
Net (loss) income available to common stockholders | $ | (6,412) | $ | 4,517 | (10,929) | 242.0 | % | |||||||||||||||||||
Three Months Ended September 30, | Favorable (Unfavorable) | |||||||||||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||||||||||||
Units sold | ||||||||||||||||||||||||||
Coffee (Roasted) | 16,746 | 20,766 | (4,020) | (19.4) | % | |||||||||||||||||||||
Coffee (Frozen Liquid) | 45 | 98 | (53) | (54.1) | % | |||||||||||||||||||||
Tea (Iced & Hot) | 350 | 625 | (275) | (44.0) | % | |||||||||||||||||||||
Culinary | 1,125 | 1,858 | (733) | (39.5) | % | |||||||||||||||||||||
Spice | 124 | 167 | (43) | (25.7) | % | |||||||||||||||||||||
Other beverages(1) | 592 | 939 | (347) | (37.0) | % | |||||||||||||||||||||
Total | 18,982 | 24,453 | (5,471) | (22.4) | % | |||||||||||||||||||||
Unit Price | ||||||||||||||||||||||||||
Coffee (Roasted) | $ | 3.95 | $ | 4.26 | $ | (0.31) | (7.3) | % | ||||||||||||||||||
Coffee (Frozen Liquid) | $ | 56.53 | $ | 80.72 | $ | (24.19) | (30.0) | % | ||||||||||||||||||
Tea (Iced & Hot) | $ | 4.66 | $ | 12.33 | $ | (7.67) | (62.2) | % | ||||||||||||||||||
Culinary | $ | 9.26 | $ | 7.92 | $ | 1.34 | 16.9 | % | ||||||||||||||||||
Spice | $ | 38.27 | $ | 37.08 | $ | 1.19 | 3.2 | % | ||||||||||||||||||
Other beverages(1) | $ | 19.18 | $ | 13.80 | $ | 5.38 | 39.0 | % | ||||||||||||||||||
Average unit price | $ | 5.10 | $ | 5.67 | $ | (0.57) | (10.1) | % | ||||||||||||||||||
Total Net Sales By Product Category(2) | ||||||||||||||||||||||||||
Coffee (Roasted) | $ | 66,154 | $ | 88,375 | $ | (22,221) | (25.1) | % | ||||||||||||||||||
Coffee (Frozen Liquid) | 2,544 | 7,928 | (5,384) | (67.9) | % | |||||||||||||||||||||
Tea (Iced & Hot) | 1,630 | 7,705 | (6,075) | (78.8) | % | |||||||||||||||||||||
Culinary | 10,423 | 14,710 | (4,287) | (29.1) | % | |||||||||||||||||||||
Spice | 4,746 | 6,206 | (1,460) | (23.5) | % | |||||||||||||||||||||
Other beverages(1) | 11,355 | 12,952 | (1,597) | (12.3) | % | |||||||||||||||||||||
Net sales by product category | $ | 96,852 | $ | 137,876 | $ | (41,024) | (29.8) | % | ||||||||||||||||||
Fuel Surcharge | 418 | 724 | (306) | (42.3) | % | |||||||||||||||||||||
Total | $ | 97,270 | $ | 138,600 | $ | (41,330) | (29.8) | % |
Three Months Ended September 30, 2020 vs. 2019 | % of Total Mix Change | |||||||||||||
Effect of change in unit sales | $ | (27.9) | (67.6) | % | ||||||||||
Effect of pricing and product mix changes | (13.4) | (32.4) | % | |||||||||||
Total decrease in net sales | $ | (41.3) | (100.0) | % |
Three Months Ended September 30, | |||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||
Net (loss) income, as reported | $ | (6,270) | $ | 4,654 | |||||||||||||
Income tax (benefit) expense | 142 | (107) | |||||||||||||||
Interest expense (1) | 1,993 | 1,276 | |||||||||||||||
Depreciation and amortization expense | 7,041 | 7,617 | |||||||||||||||
EBITDA | $ | 2,906 | $ | 13,440 | |||||||||||||
EBITDA Margin | 3.0 | % | 9.7 | % |
Three Months Ended September 30, | |||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||
Net (loss) income, as reported | $ | (6,270) | $ | 4,654 | |||||||||||||
Income tax (benefit) expense | 142 | (107) | |||||||||||||||
Interest expense(1) | 1,993 | 1,276 | |||||||||||||||
Depreciation and amortization expense | 7,041 | 7,617 | |||||||||||||||
ESOP and share-based compensation expense | 1,155 | 869 | |||||||||||||||
Strategic initiatives | 341 | — | |||||||||||||||
Net losses (gains) from sales of other assets | 618 | (12,605) | |||||||||||||||
Non-recurring costs associated with the COVID-19 pandemic | 111 | — | |||||||||||||||
Severance | 562 | 2,312 | |||||||||||||||
Adjusted EBITDA(2) | $ | 5,693 | $ | 4,016 | |||||||||||||
Adjusted EBITDA Margin | 5.9 | % | 2.9 | % |
September 30, 2020 | June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Debt Origination Date | Maturity | Original Borrowing Amount | Carrying Value | Weighted Average Interest Rate | Carrying Value | Weighted Average Interest Rate | |||||||||||||||||||||||||||||||||||||
Credit Facility | Revolver | 11/6/2023 | N/A | $ | 69,800 | 5.93 | % | $ | 122,000 | 4.91 | % |
Three Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
Condensed Consolidated Statements of cash flows data (in thousands) | |||||||||||
Net cash provided (used) by operating activities | $ | 8,985 | $ | (3,887) | |||||||
Net cash (used) provided in investing activities | (4,140) | 11,342 | |||||||||
Net cash used by financing activities | (53,833) | (7,013) | |||||||||
Net (decrease) increase in cash and cash equivalents | $ | (48,988) | $ | 442 |
Three Months Ended September 30, | |||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||
Maintenance: | |||||||||||||||||
Coffee brewing equipment | $ | 1,100 | $ | 2,145 | |||||||||||||
Building and facilities | 45 | 75 | |||||||||||||||
Vehicles, machinery and equipment | 95 | 687 | |||||||||||||||
IT, software, office furniture and equipment | 355 | 1,445 | |||||||||||||||
Capital expenditures, maintenance | $ | 1,595 | $ | 4,352 | |||||||||||||
Expansion Project: | |||||||||||||||||
Machinery and equipment | $ | 2,410 | $ | 924 | |||||||||||||
IT equipment | $ | 361 | $ | — | |||||||||||||
Capital expenditures, Expansion Project | $ | 2,771 | $ | 924 | |||||||||||||
Total capital expenditures | $ | 4,366 | $ | 5,276 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
(In thousands) | Principal | Interest Rate | Annual Interest Expense | |||||||||||||||||
–150 basis points | $4,800 | 4.43 | % | $ | 213 | |||||||||||||||
–100 basis points | $4,800 | 4.93 | % | $ | 237 | |||||||||||||||
Unchanged | $4,800 | 5.93 | % | $ | 285 | |||||||||||||||
+100 basis points | $4,800 | 6.93 | % | $ | 333 | |||||||||||||||
+150 basis points | $4,800 | 7.43 | % | $ | 357 |
Increase (Decrease) to Net Loss | Increase (Decrease) to AOCI | |||||||||||||||||||||||||
10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | 10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Coffee-related derivative instruments(1) | $ | 968 | $ | (968) | $ | 2,782 | $ | (2,782) |
Item 4. | Controls and Procedures |
PART II - OTHER INFORMATION |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits |
Exhibit No. | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS** | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH** | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB** | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104** | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
* | Filed herewith | ||||
** | Furnished, not filed, herewith |
FARMER BROS. CO. | |||||||||||||||||
By: | /s/ Deverl Maserang | ||||||||||||||||
Deverl Maserang President and Chief Executive Officer (principal executive officer) | |||||||||||||||||
November 5, 2020 | |||||||||||||||||
By: | /s/ Scott R. Drake | ||||||||||||||||
Scott R. Drake Chief Financial Officer (principal financial officer) | |||||||||||||||||
November 5, 2020 |
/S/ DEVERL MASERANG | ||
Deverl Maserang President and Chief Executive Officer (principal executive officer) |
/S/ SCOTT R. DRAKE | ||
Scott R. Drake Chief Financial Officer (principal financial officer) | ||
/S/ DEVERL MASERANG | ||
Deverl Maserang President and Chief Executive Officer (principal executive officer) |
/S/ SCOTT R. DRAKE | ||
Scott R. Drake Chief Financial Officer (principal financial officer) | ||
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Preferred stock, par value (in US$ per share) | $ 1.00 | $ 1.00 |
Preferred Stock, Shares Authorized (in shares) | 500,000 | 500,000 |
Liquidation preference | $ 16,038 | $ 15,624 |
Common stock, par value (in US$ per share) | $ 1.00 | $ 1.00 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, shares issued (in shares) | 17,231,473 | 17,042,132 |
Common stock, shares outstanding (in shares) | 17,231,473 | 17,042,132 |
Cumulative Preferred Stock | ||
Preferred Stock, Shares Authorized (in shares) | 21,000 | 21,000 |
Preferred stock, issued (in shares) | 14,700 | 14,700 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (6,270) | $ 4,654 |
Other comprehensive (loss) income, net of tax: | ||
Unrealized gains (losses) on derivative instruments designated as cash flow hedges, net of tax | 3,961 | (3,889) |
(Losses) gains on derivative instruments designated as cash flow hedges reclassified to cost of goods sold and interest expense, net of tax | (28) | 2,588 |
Losses on derivative instruments de-designated as cash flow hedges reclassified to interest expense, net of tax | 339 | 0 |
Change in pension and retiree benefit obligations, net of tax | 7,289 | 0 |
Total comprehensive (loss) income, net of tax | $ (9,287) | $ 3,353 |
Summary of Significant Accounting Policies |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Recent Accounting Pronouncements The Company considers the applicability and impact of all ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its condensed consolidated financial statements. The following table provides a brief description of the applicable recent ASUs issued by the FASB:
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Introduction and Basis of Presentation |
3 Months Ended |
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Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Introduction and Basis of Presentation | Introduction and Basis of Presentation Farmer Bros. Co., a Delaware corporation (including its consolidated subsidiaries unless the context otherwise requires, the “Company”), is a national coffee roaster, wholesaler and distributor of coffee, tea, and culinary products. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021. Events occurring subsequent to September 30, 2020 have been evaluated for potential recognition or disclosure in the unaudited condensed consolidated financial statements for the three months ended September 30, 2020. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020, filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2020 (the “2020 Form 10-K”). Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FBC Finance Company, a California corporation, Coffee Bean Holding Co., Inc., a Delaware corporation, the parent company of Coffee Bean International, Inc., an Oregon corporation (“CBI”), China Mist Brands, Inc., a Delaware corporation, Boyd Assets Co., a Delaware corporation, and Coffee Bean International LLC, a Delaware limited liability company. All inter-company balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.
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Leases (Notes) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company has entered into leases for building facilities, vehicles and other equipment. The Company’s leases have remaining contractual terms of up to 10 years, some of which have options to extend the lease for up to 10 years. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease termination until it is reasonably certain that the Company will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. In September 2020, the Company entered a new 89 month lease for its western U.S. distribution center. The lease terminates on March 31, 2028, with a one 5 year renewal option. The lease has been classified as an operating lease and included in the lease tables and the related disclosures below. Supplemental unaudited consolidated balance sheet information related to leases is as follows:
The components of lease expense are as follows:
Lease term and discount rate:
Other Information:
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Leases | Leases The Company has entered into leases for building facilities, vehicles and other equipment. The Company’s leases have remaining contractual terms of up to 10 years, some of which have options to extend the lease for up to 10 years. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease termination until it is reasonably certain that the Company will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. In September 2020, the Company entered a new 89 month lease for its western U.S. distribution center. The lease terminates on March 31, 2028, with a one 5 year renewal option. The lease has been classified as an operating lease and included in the lease tables and the related disclosures below. Supplemental unaudited consolidated balance sheet information related to leases is as follows:
The components of lease expense are as follows:
Lease term and discount rate:
Other Information:
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments Derivative Instruments Held Coffee-Related Derivative Instruments The Company is exposed to commodity price risk associated with its price to fixed green coffee purchase contracts, which are described further in Note 2 to the consolidated financial statements in the 2020 Form 10-K. The Company utilizes forward and option contracts to manage exposure to the variability in expected future cash flows from forecasted purchases of green coffee attributable to commodity price risk. Certain of these coffee-related derivative instruments utilized for risk management purposes have been designated as cash flow hedges, while other coffee-related derivative instruments have not been designated as cash flow hedges or do not qualify for hedge accounting despite hedging the Company’s future cash flows on an economic basis. The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at September 30, 2020 and June 30, 2020:
Coffee-related derivative instruments designated as cash flow hedges outstanding as of September 30, 2020 will expire within 15 months. At September 30, 2020 and June 30, 2020 approximately 74% and 81%, respectively, of the Company's outstanding coffee-related derivative instruments were designated as cash flow hedges. Interest Rate Swap Derivative Instruments Pursuant to an International Swap Dealers Association, Inc. Master Agreement (“ISDA”) which was effective March 20, 2019, the Company on March 27, 2019, entered into an interest rate swap transaction utilizing a notional amount of $80.0 million, with an effective date of April 11, 2019 and a maturity date of October 11, 2023 (the “Rate Swap”). In December 2019, the Company amended the notional amount to $65.0 million. The Rate Swap is intended to manage the Company’s interest rate risk on its floating-rate indebtedness under the Company’s revolving credit facility. Under the terms of the Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.1975%. The Company’s obligations under the ISDA are secured by the collateral which secures the loans under the revolving credit facility on a pari passu and pro rata basis with the principal of such loans. The Company had designated the Rate Swap derivative instrument as a cash flow hedge; however, during the quarter ended September 30, 2020, the Company de-designated the Rate Swap derivative instruments. As a result, the balance in AOCI was frozen at the time of de-designation. The Company recognized $0.3 million in interest expense during the quarter ended September 30, 2020. The remaining balance of $3.5 million frozen in AOCI will be amortized over the life of the Rate Swap through November 6, 2023. Effect of Derivative Instruments on the Financial Statements Balance Sheets Fair values of derivative instruments on the Company’s condensed consolidated balance sheets:
________________ (1) Included in “Short-term derivative assets” on the Company’s condensed consolidated balance sheets. (2) Included in “Long-term derivative assets” on the Company's condensed consolidated balance sheets. (3) Included in “Other long-term liabilities” on the Company's condensed consolidated balance sheets. Statements of Operations The following table presents pretax net gains and losses for the Company's derivative instruments designated as cash flow hedges, as recognized in “AOCI,” “Cost of goods sold” and “Other, net”.
________________ (1)The $339 thousand of realized loss was due to the amortization of de-designated interest rate swap. For the three months ended September 30, 2020 and 2019, there were no gains or losses recognized in earnings as a result of excluding amounts from the assessment of hedge effectiveness. Net losses (gains) on derivative instruments in the Company’s condensed consolidated statements of cash flows also include net losses (gains) on coffee-related derivative instruments designated as cash flow hedges reclassified to cost of goods sold from AOCI in the three months ended September 30, 2020 and 2019. Gains and losses on coffee-related derivative instruments not designated as accounting hedges are included in “Other, net” in the Company’s condensed consolidated statements of operations and in “Net losses (gains) on derivative instruments and investments” in the Company’s condensed consolidated statements of cash flows. Net gains and losses recorded in “Other, net” are as follows:
___________ (1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three months ended September 30, 2020 and 2019. (2) Presented in accordance with ASU 2017-07. Offsetting of Derivative Assets and Liabilities The Company has agreements in place that allow for the financial right of offset for derivative assets and liabilities at settlement or in the event of default under the agreements. Additionally, under certain coffee derivative agreements, the Company maintains accounts with its counterparties to facilitate financial derivative transactions in support of its risk management activities. The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:
Cash Flow Hedges Changes in the fair value of the Company’s coffee-related derivative instruments designated as cash flow hedges are deferred in AOCI and subsequently reclassified into cost of goods sold in the same period or periods in which the hedged forecasted purchases affect earnings, or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. Based on recorded values at September 30, 2020, $0.8 million of net gains on coffee-related derivative instruments designated as a cash flow hedge are expected to be reclassified into cost of goods sold within the next twelve months. These recorded values are based on market prices of the commodities as of September 30, 2020. Changes in the fair value of the Company's interest rate swap derivative instruments designated as a cash flow hedge are deferred in AOCI and subsequently reclassified into interest expense in the period or periods when the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. As of September 30, 2020, $2.6 million of net losses on interest rate swap derivative instruments designated as a cash flow hedge are expected to be reclassified into interest expense within the next twelve months assuming no significant changes in the LIBOR rates. Due to LIBOR volatility, actual gains or losses realized within the next twelve months will likely differ from these values.
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Fair Value Measurements |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:
____________________ (1)The Company's coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2. (2)The Company's interest rate swap derivative instrument are model-derived valuations with directly or indirectly observable significant inputs such as interest rate and, therefore, classified as Level 2.
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Accounts Receivable, net |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, net | Accounts Receivable, Net
__________ (1) Includes vendor rebates and other non-trade receivables. The $0.4 million decrease in the allowance for doubtful accounts during the three months ended September 30, 2020 was due to improvement of the Company’s accounts receivable aging balance.
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Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories
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Property, Plant and Equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, Plant and Equipment
Coffee Brewing Equipment (“CBE”) and Service Capitalized CBE included in machinery and equipment above are:
Depreciation expense related to capitalized CBE and other CBE related expenses (excluding CBE depreciation) provided to customers and reported in cost of goods sold were as follows:
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Goodwill and Intangible Assets |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets The carrying value of goodwill was fully impaired and written down to zero as of June 30, 2020. See below. The following is a summary of the Company’s amortized and unamortized intangible assets other than goodwill:
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans Single Employer Pension Plans Effective June 30, 2011, the Company amended its defined benefit pension plans, freezing the benefit for all participants. As of the effective date, participants do not accrue any benefits under the plans, and new hires are not eligible to participate in the plans. The net periodic benefit cost for the defined benefit pension plans is as follows:
___________ (1) These amounts represent the estimated portion of the net loss in AOCI that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year. Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost
Multiemployer Pension Plans The Company participates in two multiemployer defined benefit pension plans that are union sponsored and collectively bargained for the benefit of certain employees subject to collective bargaining agreements, of which the Western Conference of Teamsters Pension Plan ("WCTPP") is individually significant. The Company makes contributions to these plans generally based on the number of hours worked by the participants in accordance with the provisions of negotiated labor contracts. Contributions made by the Company to the multiemployer pension plans were as follows:
Outstanding balance of settlement obligations of the Company to certain multiemployer pension plans are as follows:
__________ (1) Lump sum cash settlement payment of $3.0 million plus two remaining installment payments of $91,000 due on or before October 1, 2034 and on or before January 1, 2035. As of September 30, 2020, the Company has paid the Local 807 Pension Fund $3.0 million and has accrued $0.2 million within “Accrued pension liabilities” on the Company’s condensed consolidated balance sheet. Multiemployer Plans Other Than Pension Plans The Company participates in nine multiemployer defined contribution plans other than pension plans that provide medical, vision, dental and disability benefits for active, union-represented employees subject to collective bargaining agreements. The plans are subject to the provisions of the Employee Retirement Income Security Act of 1974, and provide that participating employers make monthly contributions to the plans in an amount as specified in the collective bargaining agreements. Also, the plans provide that participants make self-payments to the plans, the amounts of which are negotiated through the collective bargaining process. The Company’s participation in these plans is governed by collective bargaining agreements which expire on or before January 31, 2025. 401(k) Plan The Company’s 401(k) Plan is available to all eligible employees. Participants in the 401(k) Plan may choose to contribute a percentage of their annual pay subject to the maximum contribution allowed by the Internal Revenue Service. The Company recorded matching contributions of $0.7 million in operating expenses in the three months ended September 30, 2019. Effective March 31, 2020, the Company temporarily suspended its 401K matching program in response to the COVID-19 pandemic. Additionally, the Company makes an annual safe harbor non-elective contribution of shares of the Company’s common stock equal to 4% of each eligible participant’s annual plan compensation. During the three months ended September 30, 2020 and 2019, the Company contributed a total of 108,426 and 55,624 shares of the Company’s common stock with a value of $0.5 million and $0.9 million, respectively, to eligible participants’ annual plan compensation. Postretirement Benefits Retiree Medical Plan and Death Benefit On March 23, 2020, the Company announced a plan to amend and terminate the postretirement medical benefit plan that covers qualified non-union retirees and certain qualified union retirees (“Retiree Medical Plan”) effective January 1, 2021. The plan provides medical, dental and vision coverage for retirees under age 65 and medical coverage only for retirees age 65 and above. Under this postretirement plan, the Company’s contributions toward premiums for retiree medical, dental and vision coverage for participants and dependents are scaled based on length of service, with greater Company contributions for retirees with greater length of service, subject to a maximum monthly Company contribution. The Company's retiree medical, dental and vision plan was unfunded and its liability was calculated using an assumed discount rate. The Company’s communication of its intention to amend and terminate the Retiree Medical Plan triggered re-measurement and curtailment of the plan. As a result, the re-measurement generated a prior service credit of $13.4 million to be amortized over the remaining months of the plan, and a revised net periodic postretirement benefit credit for fiscal 2021 of $14.6 million. Also, the Company recognized a one-time non-cash curtailment credit of $5.8 million for the fiscal year ended June 30, 2020. The Company continues to provide a postretirement death benefit (“Death Benefit”) to certain of its employees and retirees, subject, in the case of current employees, to continued employment with the Company until retirement and certain other conditions related to the manner of employment termination and manner of death. The following table shows the components of net periodic postretirement benefit cost (credit) for the Retiree Medical Plan and Death Benefit for the three months ended September 30, 2020 and 2019. Net periodic postretirement benefit cost was based on employee census information and asset information as of June 30, 2020.
Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost
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Debt Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations | Debt Obligations The following table summarizes the Company’s debt obligations:
On July 23, 2020 (the "Effective Date"), pursuant to Amendment No. 3 to Amended and Restated Credit Agreement (the “Third Amendment”), the Company amended its existing senior secured revolving credit facility (such facility as amended to date, including pursuant to the Third Amendment, the “Amended Revolving Facility”) with certain financial institutions. The Third Amendment, among other things: 1.retained the amount of revolving commitments under the Amended Revolving Facility of $125.0 million and the sublimit on letters of credit and swingline loans of $15.0 million each; 2.added a $5.0 million quarterly commitment reduction beginning September 30, 2021; 3.adjusted from cash flow-based to an asset-based lending structure with borrowing a base equal to 85% of eligible accounts receivable plus 50% of eligible inventory with certain permitted maximum over advance amounts, minus certain reserves; 4.removed all previous financial covenants of net leverage ratio, interest coverage ratio and minimum EBITDA; 5.added a covenant relief period (commencing on the effective date and ending upon delivery of a compliance certificate on or after fiscal month ending September 30, 2021), during which the Company must comply with the following: (i) a minimum cumulative EBITDA covenant, tested on a monthly basis until the last day of June 2021; (ii) a standalone minimum monthly EBITDA covenant tested on the last day of July 2021 and August 2021; and (iii) a restriction on capital expenditures such that the amount of capital expenditures shall not exceed $25.0 million in the aggregate. 6.added covenant requiring the Company to comply with a minimum liquidity covenant, tested on a weekly basis; 7.added an anti-cash hoarding provision; 8.added a minimum fixed charge coverage ratio of 1.05:1.00 commencing with fiscal quarter ending September 30, 2021, and tested on a quarterly basis thereafter; 9.modified the applicable margin for base rate loans to range from PRIME + 3.50% to PRIME + 4.50% per annum and the applicable margin for Eurodollar loans to range from Adjusted LIBO Rate + 4.50% to Adjusted LIBO Rate + 5.50% per annum and fixed the commitment fee at 0.50%; 10.provided for the revolving commitments to be reduced upon the occurrence of certain asset dispositions and incurrence of non-permitted indebtedness and imposed additional restrictions on the Company’s ability to utilize certain other negative covenant baskets; and 11.added a requirement to provide mortgages and related mortgage instruments with respect to certain specified real property owned by the Company. The Amended Revolving Facility is subject to a variety of affirmative and negative covenants of types customary in a senior secured assets-based lending facility and it has no scheduled payback required on the principal prior to the maturity date on November 6, 2023. As of September 30, 2020, the Company was in compliance with all of the covenants under the Amended Revolving Facility and had utilized $4.3 million of the letters of credit sublimit. Effective March 27, 2019, the Company entered into an interest rate swap to manage the interest rate risk on its floating-rate indebtedness. See Note 4 for details.
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Employee Stock Ownership Plan |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Stock Ownership Plan | Employee Stock Ownership Plan The Company’s ESOP was established in 2000. As of December 31, 2018, the Company froze the ESOP such that (i) no employees of the Company may commence participation in the ESOP on or after December 31, 2018; (ii) no Company contributions will be made to the ESOP with respect to services performed or compensation received after December 31, 2018; and (iii) the ESOP accounts of all individuals who are actively employed by the Company and participating in the ESOP on December 31, 2018 will be fully vested as of such date. Additionally, the Administrative Committee, with the consent of the Board of Directors, designated certain employees who were terminated in connection with certain reductions-in-force in 2018 to be fully vested in their ESOP accounts as of their severance dates. Shares are held by the plan trustee for allocation among participants using a compensation-based formula. Subject to vesting requirements, allocated shares are owned by participants and shares are held by the plan trustee until the participant retires.
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Share-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-based Compensation Farmer Bros. Co. Long-Term Incentive Plan As of September 30, 2020, there were 152,970 shares available under the 2017 Plan including shares that were forfeited under the Prior Plans for future issuance. As of September 30, 2020, there were 171,371 shares available under the 2020 Inducement Plan. Non-qualified stock options with time-based vesting (“NQOs”) One-third of the total number of shares subject to each stock option vest ratably on each of the first three anniversaries of the grant date, contingent on continued employment, and subject to accelerated vesting in certain circumstances. Following are the assumptions used in the Black-Scholes valuation model for NQOs granted during three months ended September 30, 2020:
The following table summarizes NQO activity for three months ended September 30, 2020:
The weighted-average grant-date fair value of options granted during three months ended September 30, 2020 was $2.36. The aggregate intrinsic values outstanding at the end of period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of $4.42 at September 30, 2020 and $7.34 at June 30, 2020, representing the last trading day of the respective periods, which would have been received by NQO holders had all award holders exercised their NQOs that were in-the-money as of those dates. The aggregate intrinsic value of NQO exercises in three months ended September 30, 2020 represents the difference between the exercise price and the value of the Company’s common stock at the time of exercise. NQOs outstanding that are expected to vest are net of estimated forfeitures. The were no options exercised during the three months ended September 30, 2020 and 2019. At September 30, 2020 and June 30, 2020, respectively, there was $1.6 million and $1.7 million of unrecognized NQO compensation cost. The unrecognized NQO compensation cost at September 30, 2020 is expected to be recognized over the weighted average period of 2.0 years. Total compensation expense for NQOs was $210.8 thousand and $99.1 thousand for the three months ended September 30, 2020 and 2019, respectively. Non-qualified stock options with performance-based and time-based vesting (“PNQs”) The following table summarizes PNQ activity for the three months ended September 30, 2020:
The aggregate intrinsic values outstanding at the end of each fiscal period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of $4.42 at September 30, 2020 and $7.34 at June 30, 2020, representing the last trading day of the respective fiscal periods, which would have been received by PNQ holders had all award holders exercised their PNQs that were in-the-money as of those dates. The aggregate intrinsic value of PNQ exercises in the three months ended September 30, 2020 represents the difference between the exercise price and the value of the Company’s common stock at the time of exercise. PNQs outstanding that are expected to vest are net of estimated forfeitures. There were no options exercised during the three months ended September 30, 2020 and 2019. At September 30, 2020 and June 30, 2020, there was no unrecognized PNQ compensation cost. Total compensation expense related to PNQs in the three months ended September 30, 2020 and 2019 was zero and $13.7 thousand, respectively. Restricted Stock The following table summarizes restricted stock activity for the three months ended September 30, 2020:
The total grant-date fair value of restricted stock granted during the three months ended September 30, 2020 was $2.0 million. At September 30, 2020 and June 30, 2020, there was $3.2 million and $1.7 million, respectively, of unrecognized compensation cost related to restricted stock. The unrecognized compensation cost related to restricted stock at September 30, 2020 is expected to be recognized over the weighted average period of 1.6 years. Total compensation expense for restricted stock was $0.5 million and $0.2 million, respectively, in the three months ended September 30, 2020 and 2019. Performance-Based Restricted Stock Units (“PBRSUs”) The following table summarizes PBRSU activity for the three months ended September 30, 2020:
_____________ (1) The target number of PBRSUs is presented in the table. Under the terms of the awards, the recipient may earn between 0% and 200% of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals. There were no PBRSUs granted during the three months ended September 30, 2020. At September 30, 2020 and June 30, 2020, there was $0.4 million and $0.5 million, respectively, of unrecognized PBRSU compensation cost. The unrecognized PBRSU compensation cost at September 30, 2020 is expected to be recognized over the weighted average period of 1.9 years. Total compensation expense for PBRSUs was $49.6 thousand and $32.9 thousand, respectively, for the three months ended September 30, 2020 and 2019. Performance Cash Awards (“PCAs”) In November 2019, the Company granted PCAs under the 2017 Plan to certain employees. The PCAs cliff vest on the third anniversary of the date of grant based on the Company’s achievement of certain financial performance goals for the performance period July 1, 2019 through June 30, 2022, subject to certain continued employment conditions and subject to acceleration provisions of the 2017 Plan. At the end of the three-year performance period, the amount of PCAs that actually vest will be —% to 200% of the target amount, depending on the extent to which the Company meets or exceeds the achievement of those financial performance goals measured over the full three-year performance period. The PCAs are measured initially based on a fixed amount of the awards at the date of grant and are required to be re-measured based on the probability of achieving the performance conditions at each reporting date until settlement. Compensation expense for PCAs is recognized over the applicable performance periods. The Company records a liability equal to the cost of PCAs for which achievement of the performance condition is deemed probable. As of September 30, 2020, the Company had recognized accrued liabilities of $72.2 thousand. At September 30, 2020, there was $0.3 million of unrecognized PCA compensation cost. The unrecognized PCA compensation cost at September 30, 2020 is expected to be recognized over the weighted average period of 2.1 years. Total compensation expense for PCAs was $25.8 thousand and zero for the three months ended September 30, 2020 and 2019, respectively.
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Other Current Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | Other Current Liabilities Other current liabilities consist of the following:
_________ (1) Represents the cumulative preferred dividends, undeclared and unpaid. Previously accrued long-term portion has been reclassified to current liabilities. (2) Represents accrued expenses related to working capital disputes in connection with the Company's acquisition of Boyd Coffee on October 2, 2017. (3) Includes accrued property taxes, sales and use taxes and insurance liabilities.
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Other Long-Term Liabilities |
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Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-Term Liabilities | Other Long-Term Liabilities Other long-term liabilities include the following:
___________ (1) Includes payroll taxes and performance cash awards liabilities.. (2) Includes deferred tax liabilities that have an indefinite reversal pattern.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The income tax expense (benefit) and the related effective tax rates are as follows (in thousands, except effective tax rate):
The effective tax rate is negative primarily due to the previously recorded valuation allowance and change in the Company’s estimated deferred tax liability. The Company’s interim tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The Company recognizes the effects of tax legislation in the period in which the law is enacted. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the Company estimates the related temporary differences to reverse. The Company evaluates its deferred tax assets quarterly to determine if a valuation allowance is required. In making such assessment, significant weight is given to evidence that can be objectively verified, such as recent operating results, and less consideration is given to less objective indicators such as future income projections. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state and local tax authorities. With limited exceptions, as of September 30, 2020 and June 30, 2020, the Company is no longer subject to income tax audits by taxing authorities for any years prior to 2018. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.
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Net Income (loss) Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (loss) Per Common Share | Net Income (loss) Per Common Share Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to the Company by the weighted average number of common shares outstanding during the periods presented. Diluted net income (loss) per common share is calculated by dividing diluted net income (loss) attributable to the Company by the weighted average number of common shares outstanding adjusted to include the effect, if dilutive, of the exercise of in-the-money stock options, unvested performance-based restricted stock units, and shares of Series A Preferred Stock, as converted, during the periods presented. The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such option’s exercise prices were greater than the average market price of our common shares for the period) and unvested performance-based restricted stock units because their inclusion would be have been anti-dilutive. The following table presents the computation of basic and diluted earnings (loss) per common share:
The following table summarizes anti-dilutive securities excluded from the computation of diluted net income (loss) per common share for the periods indicated:
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Preferred Stock Preferred Stock |
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Preferred Stock [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock The Company is authorized to issue 500,000 shares of preferred stock at a par value of $1.00, including 21,000 authorized shares of Series A Preferred Stock. On October 2, 2017, the Company issued 14,700 shares of Series A Preferred Stock in connection with the Boyd Coffee acquisition. At September 30, 2020, Series A Preferred Stock consisted of the following:
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Revenue Recognition Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition The Company’s primary sources of revenue are sales of coffee, tea and culinary products. The Company recognizes revenue when control of the promised good or service is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales. The Company delivers products to customers through Direct-store-delivery (“DSD”) to the Company’s customers at their place of business and direct ship from the Company’s warehouse to the customer’s warehouse or facility. Each delivery or shipment made to a third party customer is to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates. The Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:
____________ (1)Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee. (2)Represents revenues for certain transition services related to the sale of the Company’s office coffee assets. The Company does not have any material contract assets and liabilities as of September 30, 2020. Receivables from contracts with customers are included in “Accounts receivable, net” on the Company’s condensed consolidated balance sheets. At September 30, 2020 and June 30, 2020, “Accounts receivable, net” included, $41.5 million and $40.7 million, respectively, in receivables from contracts with customers.
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Commitments and Contingencies |
3 Months Ended |
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Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies For a detailed discussion about the Company’s commitments and contingencies, see Note 22, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the 2020 Form 10-K. During the three months ended September 30, 2020, other than the following, or as otherwise disclosed in these footnotes in the current Form 10-Q, there were no material changes in the Company’s commitments and contingencies. Purchase Commitments As of September 30, 2020, the Company had committed to purchase green coffee inventory totaling $55.9 million under fixed-price contracts, $12.4 million in other inventory under non-cancelable purchase orders and $8.7 million in other purchases under non-cancelable purchase orders. Legal Proceedings Council for Education and Research on Toxics (“CERT”) v. Brad Berry Company Ltd., et al., Superior Court of the State of California, County of Los Angeles On August 31, 2012, CERT filed an amendment to a private enforcement action adding a number of companies as defendants, including the Company’s subsidiary, Coffee Bean International, Inc., which sell coffee in California under the State of California's Safe Drinking Water and Toxic Enforcement Act of 1986 (“Prop 65”). The suit alleges that the defendants have failed to issue clear and reasonable warnings in accordance with Prop 65 that the coffee they produce, distribute, and sell contains acrylamide. This lawsuit was filed in Los Angeles Superior Court (the “Court”). CERT alleges that the Company and the other defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under Prop 65. Plaintiff seeks equitable relief, including providing warnings to consumers of coffee products, as well as civil penalties in the amount of the statutory maximum of $2,500.00 per day per violation of Prop 65. The Plaintiff asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Prop 65. The Company, as part of a joint defense group (“JDG”) organized to defend against the lawsuit, disputes the claims of CERT. Acrylamide is not added to coffee but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee bean roasting process. Acrylamide is produced naturally in connection with the heating of many foods, especially starchy foods, and is believed to be caused by the Maillard reaction, though it has also been found in unheated foods such as olives. With respect to coffee, acrylamide is produced when coffee beans are heated during the roasting process-it is the roasting itself that produces the acrylamide. While there has been a significant amount of research concerning proposals for treatments and other processes aimed at reducing acrylamide content of different types of foods, to our knowledge there is currently no known strategy for reducing acrylamide in coffee without negatively impacting the sensorial properties of the product. The Company has asserted multiple affirmative defenses. Trial of the first phase of the case commenced on September 8, 2014, and was limited to three affirmative defenses shared by all defendants. On September 1, 2015, the trial court issued a final ruling adverse to defendants on all Phase 1 defenses. Trial of the second phase of the case commenced in the fall of 2017. On May 7, 2018, the trial court issued a ruling adverse to defendants on the Phase 2 defense, the Company's last remaining defense to liability. On June 22, 2018, the California Office of Environmental Health Hazard Assessment (OEHHA) proposed a new regulation clarifying that cancer warnings are not required for coffee under Proposition 65. The case was set to proceed to a third phase trial on damages, remedies and attorneys' fees on October 15, 2018. However, on October 12, 2018, the California Court of Appeal granted the “defendants” request for a stay of the Phase 3 trial. On June 3, 2019, the Office of Administrative Law (OAL) approved the coffee exemption regulation. The regulation became effective on October 1, 2019. On June 24, 2019, the Court of Appeal lifted the stay of the litigation. A status conference was held on July 11, 2019. The Court granted the JDG’s motion for leave to amend its answers to add the coffee exemption regulation as a defense. Concurrently, the Court denied CERT’s motion to add OEHHA as a party but granted CERT’s motions to complete the administrative record with respect to the exemption and to undertake certain third party discovery. A status conference was held November 12, 2019 to discuss discovery issues and dispositive motions. Plaintiff’s motion to compel OEHHA to add documents to the rulemaking file for the new coffee exemption regulation was denied. CERT continues to pursue third-party discovery with plans to file motions to compel appearances of proposed deponents. These motions, along with CERT’s eight summary judgment motions, were heard at a January 21, 2020 hearing where the Court denied several of CERT’s discovery requests. The JDG’s reply in support of its motion for summary judgment was due to the Court on the March 16, 2020 however, on March 17, 2020, notice was given that the Court was rescheduling the hearings set for March 23, 2020. Due to COVID 19 restrictions, the Court continued the hearing on the nine motions until July 16, 2020. At the hearing, the Court denied three of CERT’s motions for summary adjudication that challenged the OEHHA rulemaking, and rescheduled the balance of the pending motions for August 10, 2020. Subsequent to the hearing on January 21, 2020, Plaintiff made broad discovery requests against each of the defendants in hopes of opening up a third round of discovery. The discovery focuses on “additives to” and “flavorings” in coffee. The JDG has responded to the discovery requests but Plaintiff has filed a motion to compel further answers to discovery and production of documents. The Court continued a hearing on this matter until August 21, 2020. At the August 10, 2020 hearing, the Court denied multiple motions by the Plaintiffs for summary adjudication. The hearing on the remaining motions was scheduled for August 21, 2020 and at that hearing, the Court denied CERT’s motion for summary judgment and granted the JDG’s motion for summary judgment, noting that the discovery and claims regarding additives were outside the scope of this case. The JDG is preparing an order and a proposed form of judgment reflecting the Courts ruling to submit to the Court. At this time, the Company is unable to predict the timing of the final judgment or any procedural next steps by CERT. In addition, the Company is not able to predict the probability of the outcome or estimate of loss, if any, related to this matter. The Company is a party to various other pending legal and administrative proceedings. It is management’s opinion that the outcome of such proceedings will not have a material impact on the Company’s financial position, results of operations, or cash flows.
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Sales of Assets (Notes) |
3 Months Ended |
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Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sales of Assets | Sales of Assets Sale of Branch Property On September 14, 2020, the Company signed a purchase and sale agreement for the sale of its Austin, Texas branch property for an aggregate purchase price, exclusive of closing costs, of $1.4 million. The sale is expected to close in November 2020. As of September 30, 2020, the net book value of the Austin property is not material.
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Subsequent Event Subsequent Event |
3 Months Ended |
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Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Events The Company evaluated all events or transactions that occurred after September 30, 2020 through the date the condensed consolidated financial statements were issued. During this period the Company had the following material subsequent events that require disclosure: None.
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Summary of Significant Accounting Policies (Policies) |
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Basis of Accounting | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021. Events occurring subsequent to September 30, 2020 have been evaluated for potential recognition or disclosure in the unaudited condensed consolidated financial statements for the three months ended September 30, 2020. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020, filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2020 (the “2020 Form 10-K”). For a detailed discussion about the Company’s significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in the 2020 Form 10-K. During the three months ended September 30, 2020, other than as set forth below and the adoption of Financial Accounting Standards Board Accounting (“FASB”) Standards Update (“ASU”) ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” (“ASU 2016-13”) and ASU 2018-15, “Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service” (“ASU 2018-15”), there were no significant updates made to the Company’s significant accounting policies.
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Concentration of Credit Risk | Concentration of Credit Risk At September 30, 2020 and June 30, 2020, the financial instruments which potentially expose the Company to concentration of credit risk consist of cash in financial institutions (in excess of federally insured limits), derivative instruments and trade receivables. The Company does not have any credit-risk related contingent features that would require it to post additional collateral in support of its net derivative liability positions. At September 30, 2020 and June 30, 2020, none of the cash in the Company’s coffee-related derivative margin accounts was restricted. Further changes in commodity prices and the number of coffee-related derivative instruments held, could have a significant impact on cash deposit requirements under certain of the Company's broker and counterparty agreements. Approximately 42% and 39% of the Company’s trade accounts receivable balance was with five customers at September 30, 2020 and June 30, 2020, respectively. The Company estimates its maximum credit risk for accounts receivable at the amount recorded on the balance sheet. The trade accounts receivables are generally short-term and all estimated credit losses have been appropriately considered in establishing the allowance for doubtful accounts.
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Use of Estimates | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FBC Finance Company, a California corporation, Coffee Bean Holding Co., Inc., a Delaware corporation, the parent company of Coffee Bean International, Inc., an Oregon corporation (“CBI”), China Mist Brands, Inc., a Delaware corporation, Boyd Assets Co., a Delaware corporation, and Coffee Bean International LLC, a Delaware limited liability company. All inter-company balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its condensed consolidated financial statements. The following table provides a brief description of the applicable recent ASUs issued by the FASB:
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets And Liabilities, Lessee | Supplemental unaudited consolidated balance sheet information related to leases is as follows:
Lease term and discount rate:
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Lease, Cost | The components of lease expense are as follows:
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Lessee, Operating Lease, Liability, Maturity |
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Derivative Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at September 30, 2020 and June 30, 2020:
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Schedule of Fair Values of Derivative Instruments on the Consolidated Balance Sheets | Fair values of derivative instruments on the Company’s condensed consolidated balance sheets:
________________ (1) Included in “Short-term derivative assets” on the Company’s condensed consolidated balance sheets. (2) Included in “Long-term derivative assets” on the Company's condensed consolidated balance sheets. (3) Included in “Other long-term liabilities” on the Company's condensed consolidated balance sheets.
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Schedule of Pretax Effect of Derivative Instruments on Earnings and OCI | The following table presents pretax net gains and losses for the Company's derivative instruments designated as cash flow hedges, as recognized in “AOCI,” “Cost of goods sold” and “Other, net”.
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Schedule of Net Realized and Unrealized Gains and Losses Recorded in 'Other, net' | Net gains and losses recorded in “Other, net” are as follows:
___________ (1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three months ended September 30, 2020 and 2019. (2) Presented in accordance with ASU 2017-07.
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Schedule of Offsetting Assets | The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:
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Schedule of Offsetting Liabilities | The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:
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Fair Value Measurements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:
____________________ (1)The Company's coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2. (2)The Company's interest rate swap derivative instrument are model-derived valuations with directly or indirectly observable significant inputs such as interest rate and, therefore, classified as Level 2.
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Accounts Receivable, net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable |
__________ (1) Includes vendor rebates and other non-trade receivables.
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Inventories (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current |
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Property, Plant and Equipment (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment |
Coffee Brewing Equipment (“CBE”) and Service Capitalized CBE included in machinery and equipment above are:
Depreciation expense related to capitalized CBE and other CBE related expenses (excluding CBE depreciation) provided to customers and reported in cost of goods sold were as follows:
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Goodwill and Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure | The following is a summary of the Company’s amortized and unamortized intangible assets other than goodwill:
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Employee Benefit Plans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Benefit Costs | The net periodic benefit cost for the defined benefit pension plans is as follows:
___________ (1) These amounts represent the estimated portion of the net loss in AOCI that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year. Contributions made by the Company to the multiemployer pension plans were as follows:
Outstanding balance of settlement obligations of the Company to certain multiemployer pension plans are as follows:
__________ (1) Lump sum cash settlement payment of $3.0 million plus two remaining installment payments of $91,000 due on or before October 1, 2034 and on or before January 1, 2035. As of September 30, 2020, the Company has paid the Local 807 Pension Fund $3.0 million and has accrued $0.2 million within “Accrued pension liabilities” on the Company’s condensed consolidated balance sheet. The following table shows the components of net periodic postretirement benefit cost (credit) for the Retiree Medical Plan and Death Benefit for the three months ended September 30, 2020 and 2019. Net periodic postretirement benefit cost was based on employee census information and asset information as of June 30, 2020.
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Defined Benefit Plan, Assumptions | Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost
Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost
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Debt Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table summarizes the Company’s debt obligations:
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Employee Stock Ownership Plan (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity | Shares are held by the plan trustee for allocation among participants using a compensation-based formula. Subject to vesting requirements, allocated shares are owned by participants and shares are held by the plan trustee until the participant retires.
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Share-Based Compensation (Tables) |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Following are the assumptions used in the Black-Scholes valuation model for NQOs granted during three months ended September 30, 2020:
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Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes NQO activity for three months ended September 30, 2020:
The following table summarizes PNQ activity for the three months ended September 30, 2020:
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Schedule of Share-based Compensation, Nonvested Restricted Stock Shares Activity | The following table summarizes restricted stock activity for the three months ended September 30, 2020:
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Schedule of Nonvested Performance-Based Restricted Stock Units Activity | The following table summarizes PBRSU activity for the three months ended September 30, 2020:
_____________ (1) The target number of PBRSUs is presented in the table. Under the terms of the awards, the recipient may earn between 0% and 200% of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals.
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Other Current Liabilities (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Liabilities | Other current liabilities consist of the following:
_________ (1) Represents the cumulative preferred dividends, undeclared and unpaid. Previously accrued long-term portion has been reclassified to current liabilities. (2) Represents accrued expenses related to working capital disputes in connection with the Company's acquisition of Boyd Coffee on October 2, 2017. (3) Includes accrued property taxes, sales and use taxes and insurance liabilities.
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Other Long-Term Liabilities (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-Term Liabilities | Other long-term liabilities include the following:
___________ (1) Includes payroll taxes and performance cash awards liabilities.. (2) Includes deferred tax liabilities that have an indefinite reversal pattern.
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Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax | The income tax expense (benefit) and the related effective tax rates are as follows (in thousands, except effective tax rate):
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Net Income (loss) Per Common Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings (Loss) Per Common Share, Basic and Diluted | The following table presents the computation of basic and diluted earnings (loss) per common share:
The following table summarizes anti-dilutive securities excluded from the computation of diluted net income (loss) per common share for the periods indicated:
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Preferred Stock (Tables) |
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Preferred Stock [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Auction Market Preferred Securities by Stock Series | At September 30, 2020, Series A Preferred Stock consisted of the following:
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Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:
____________ (1)Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee. (2)Represents revenues for certain transition services related to the sale of the Company’s office coffee assets.
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Summary of Significant Accounting Policies - Narrative (Details) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Jun. 30, 2020 |
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Property, Plant and Equipment | |||
% of total | 100.00% | 100.00% | |
Accounts Receivable | Five Customers | |||
Property, Plant and Equipment | |||
% of total | 42.00% | 39.00% |
Introduction and Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Debt Instrument [Line Items] | ||
Cash and cash equivalents | $ 11,025 | $ 60,013 |
Leases - Narrative (Details) |
Sep. 30, 2020 |
---|---|
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 10 years |
Lessee, Operating Lease, Renewal Term | 10 years |
Western U.S. Distribution Center | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 89 months |
Lessee, Operating Lease, Renewal Term | 5 years |
Leases - Balance Sheet (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Leases [Abstract] | ||
Right-of-use operating lease assets | $ 29,025 | $ 21,117 |
Finance Lease, Right-of-Use Asset | 0 | 9 |
Leases, Right Of Use Assets | 29,025 | 21,126 |
Operating Lease, Liability, Current | 7,631 | 5,854 |
Operating lease liabilities - noncurrent | 21,818 | 15,628 |
Finance Lease, Liability, Noncurrent | 0 | 9 |
Leases, Liabilities | $ 29,449 | $ 21,491 |
Leases - Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Leases [Abstract] | ||
Operating Lease, Cost | $ 1,625 | $ 1,109 |
Finance Lease, Right-of-Use Asset, Amortization | 9 | 13 |
Finance Lease, Interest Expense | 0 | 1 |
Lease, Cost | $ 1,634 | $ 1,123 |
Leases - Weighted Average Information (Details) |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Leases [Abstract] | ||
Operating Lease, Weighted Average Remaining Lease Term | 8 years | 8 years 3 months 18 days |
Finance Lease, Weighted Average Remaining Lease Term | 0 years | 2 months 12 days |
Operating Lease, Weighted Average Discount Rate, Percent | 5.01% | 4.50% |
Finance Lease, Weighted Average Discount Rate, Percent | 0.00% | 4.50% |
Leases - Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Leases [Abstract] | ||
Operating Lease, Payments | $ 1,593 | $ 1,041 |
Finance Lease, Interest Payment on Liability | 0 | 1 |
Finance Lease, Principal Payments | 9 | 13 |
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability | 0 | 0 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 0 | $ 0 |
Derivative Instruments - Schedule of Notional Volumes of Derivative Instruments (Details) - lb lb in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Derivative [Line Items] | ||
Derivative, Nonmonetary Notional Amount | 33,021 | 44,761 |
Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative, Nonmonetary Notional Amount | 24,413 | 36,413 |
Cash Flow Hedging | Not Designated as Hedging Instrument | Long | ||
Derivative [Line Items] | ||
Derivative, Nonmonetary Notional Amount | 8,608 | 8,348 |
Derivative Instruments - Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 27, 2019 |
|
Derivative [Line Items] | |||
Derivative Instruments, Percentage Designated As Cash Flow Hedges | 74.00% | 81.00% | |
Gain (loss) from components excluded from assessment of cash flow hedge effectiveness, net | $ 0 | ||
Cash flow hedge gain (loss) to be reclassified within twelve months | $ 800,000 | ||
Cash Flow Hedging | |||
Derivative [Line Items] | |||
Derivative, Term of Contract | 15 months | ||
Interest Rate Swap | |||
Derivative [Line Items] | |||
Derivative, Notional Amount | $ 65,000,000.0 | $ 80,000,000.0 | |
Derivative, Floor Interest Rate | 0.00% | ||
Derivative, Fixed Interest Rate | 2.1975% | ||
Derivative Instrument, To Be Amortized | $ 3,500,000 | ||
Cash flow hedge gain (loss) to be reclassified within twelve months | $ (2,600,000) |
Derivative Instruments - Net Realized and Unrealized Gains and Losses Recorded in "Other, net" (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other, net | $ 8,559 | $ 203 |
Coffee | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net realized and unrealized losses from coffee-related derivatives not designated as accounting hedges | 496 | (1,043) |
Net (losses) gains on derivatives and investments | 7,744 | 1,248 |
Other gains, net | 319 | (2) |
Other, net | $ 8,559 | $ 203 |
Derivative Instruments - Schedule of Offsetting Derivative Asset and Liability Positions (Details) - Counterparty A - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 968 | $ 175 |
Derivative asset, netting adjustment | (670) | (175) |
Derivative asset, cash collateral posted | 0 | 0 |
Derivative asset, net | 298 | 0 |
Derivative liability, fair value | 5,178 | 8,115 |
Derivative liability, netting adjustment | (670) | (176) |
Derivative liability, cash collateral posted | 0 | 0 |
Derivative liability, net | $ 4,508 | $ 7,939 |
Accounts Receivable, net - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Receivables [Abstract] | ||
Trade receivables | $ 41,537 | $ 40,695 |
Other Receivables | 1,990 | 1,983 |
Allowance for doubtful accounts | (1,412) | (1,796) |
Accounts receivable, net | $ 42,115 | $ 40,882 |
Accounts Receivable, net - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Receivables [Abstract] | |
Decrease in allowance for doubtful accounts | $ (0.4) |
Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Product Information | ||
Total | $ 71,729 | $ 67,408 |
Coffee | ||
Product Information | ||
Processed | 22,153 | 17,840 |
Unprocessed | 31,629 | 32,913 |
Total | 53,782 | 50,753 |
Tea and Culinary Products | ||
Product Information | ||
Processed | 11,709 | 10,627 |
Unprocessed | 60 | 45 |
Total | 11,769 | 10,672 |
Coffee Brewing Equipment | ||
Product Information | ||
Total | $ 6,178 | $ 5,983 |
Goodwill and Intangible Assets - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Jun. 30, 2020 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 0 | |
Amortization expense | $ 600,000 | $ 600,000 |
Employee Benefit Plans - Schedule of Single Employer Pension Plans (Details) - Pension Plan - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Components of net periodic benefit cost | ||
Service cost | $ 0 | $ 0 |
Interest cost | 859 | 1,059 |
Expected return on plan assets | (1,038) | (1,102) |
Amortization of net loss (gain) | 502 | 370 |
Net periodic benefit cost | $ 323 | $ 327 |
Weighted average assumptions used to determine benefit obligations | ||
Discount rate | 2.55% | 3.45% |
Expected long-term return on plan assets | 6.25% | 6.75% |
Employee Stock Ownership Plan - Number and Value of ESOP Shares (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Share-based Payment Arrangement [Abstract] | ||
Allocated shares | 1,156,159 | 1,170,015 |
Committed to be released shares | 0 | 0 |
Unallocated shares | 0 | 0 |
Total ESOP shares | 1,156,159 | 1,170,015 |
Fair value of ESOP shares | $ 5,110 | $ 8,588 |
Share-Based Compensation - Weighted-average assumptions using Black-Scholes model (Details) - PNQs |
3 Months Ended |
---|---|
Sep. 30, 2020
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 4.60 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.29% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 4 years 7 months 6 days |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 35.40% |
Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued postretirement benefits | $ 617 | $ 744 |
Accrued workers’ compensation liabilities | 1,145 | 1,466 |
Liability, Defined Benefit Plan, Current | 1,619 | 1,477 |
Working capital dispute payable | 551 | 551 |
Other (including net taxes payable) | 2,692 | 2,564 |
Other current liabilities | $ 6,624 | $ 6,802 |
Other Long-Term Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Other long-term liabilities-capital leases | $ 0 | $ 9 |
Derivative liabilities—noncurrent | 2,548 | 2,859 |
Multiemployer Plan Holdback Liability, Long-Term | 2,075 | 1,170 |
Deferred income taxes | 1,586 | 1,494 |
Other long-term liabilities | $ 6,209 | $ 5,532 |
Income Taxes - Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ 142 | $ (107) |
Effective tax rate | (2.30%) | (2.30%) |
Preferred Stock - Narrative (Details) - $ / shares |
Sep. 30, 2020 |
Jun. 30, 2020 |
Oct. 02, 2017 |
---|---|---|---|
Class of Stock [Line Items] | |||
Preferred Stock, Shares Authorized (in shares) | 500,000 | 500,000 | 21,000,000 |
Preferred stock, par value (in US$ per share) | $ 1.00 | $ 1.00 | $ 1,110 |
Preferred stock, issued (in shares) | 14,700,000 | ||
Convertible Preferred Stock | |||
Class of Stock [Line Items] | |||
Preferred Stock, Shares Authorized (in shares) | 21,000 | ||
Series A Preferred Stock | |||
Class of Stock [Line Items] | |||
Preferred stock, issued (in shares) | 14,700 |
Preferred Stock - Schedule of Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands |
Oct. 02, 2017 |
Sep. 30, 2020 |
Jun. 30, 2020 |
---|---|---|---|
Auction Market Preferred Securities, Stock Series [Line Items] | |||
Preferred Stock, Shares Authorized (in shares) | 21,000,000 | 500,000 | 500,000 |
Preferred stock, issued (in shares) | 14,700,000 | ||
Preferred stock, par value (in US$ per share) | $ 1,110 | $ 1.00 | $ 1.00 |
Preferred Stock, Value, Outstanding | $ 16,320 | $ 15 | $ 15 |
Cumulative Dividends | 1,620 | ||
Liquidation preference | $ 16,320 | $ 16,038 | $ 15,624 |
Series A Preferred Stock | |||
Auction Market Preferred Securities, Stock Series [Line Items] | |||
Preferred stock, issued (in shares) | 14,700 |
Commitments and Contingencies - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Aug. 31, 2012 |
Sep. 30, 2020 |
|
Contractual Obligations | ||
Long-term Purchase Commitment, additional | $ 8,700,000 | |
Loss Contingency, Damages Sought, Maximum Daily, Value | $ 2,500.00 | |
Inventories | Coffee | ||
Contractual Obligations | ||
Purchase Obligation, Due in Next Twelve Months | 55,900,000 | |
Inventories | Other Inventory | ||
Contractual Obligations | ||
Purchase Obligation, Due in Next Twelve Months | $ 12,400,000 |
Sales of Assets - Narrative (Details) $ in Millions |
Sep. 14, 2020
USD ($)
|
---|---|
Austin, Texas Branch | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Disposal Group, Including Discontinued Operation, Consideration | $ 1.4 |
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