SANFILIPPO JOHN B & SON INC, 10-Q filed on 30 Jan 20
v3.19.3.a.u2
Cover Page - shares
6 Months Ended
Dec. 26, 2019
Jan. 23, 2020
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Dec. 26, 2019  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Trading Symbol JBSS  
Entity Registrant Name SANFILIPPO JOHN B & SON INC  
Security Exchange Name NASDAQ  
Entity Interactive Data Current Yes  
Entity Central Index Key 0000880117  
Current Fiscal Year End Date --06-25  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Title of 12(b) Security Common Stock  
Entity Address, State or Province IL  
Common Stock, Non-Cumulative Voting Rights of One Vote Per Share [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   8,821,490
Class A Common Stock [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   2,597,426
v3.19.3.a.u2
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 26, 2019
Dec. 27, 2018
Dec. 26, 2019
Dec. 27, 2018
Statement of Comprehensive Income [Abstract]        
Net sales $ 246,423 $ 253,317 $ 464,269 $ 457,605
Cost of sales 196,443 210,434 372,041 381,768
Gross profit 49,980 42,883 92,228 75,837
Operating expenses:        
Selling expenses 16,103 18,189 30,215 32,260
Administrative expenses 9,411 8,054 18,485 16,885
Total operating expenses 25,514 26,243 48,700 49,145
Income from operations 24,466 16,640 43,528 26,692
Other expense:        
Interest expense including $232, $293, $479 and $602 to related parties 435 798 956 1,677
Rental and miscellaneous expense, net 274 278 678 567
Other expense 567 486 1,133 973
Total other expense, net 1,276 1,562 2,767 3,217
Income before income taxes 23,190 15,078 40,761 23,475
Income tax expense 5,729 3,814 10,374 5,605
Net income 17,461 11,264 30,387 17,870
Other comprehensive income:        
Amortization of prior service cost and actuarial loss included in net periodic pension cost 344 263 687 526
Income tax expense related to pension adjustments (86) (66) (172) (132)
Other comprehensive income, net of tax 258 197 515 394
Comprehensive income $ 17,719 $ 11,461 $ 30,902 $ 18,264
Net income per common share-basic $ 1.52 $ 0.99 $ 2.65 $ 1.57
Net income per common share-diluted $ 1.52 $ 0.98 $ 2.64 $ 1.56
v3.19.3.a.u2
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 26, 2019
Dec. 27, 2018
Dec. 26, 2019
Dec. 27, 2018
Statement of Comprehensive Income [Abstract]        
Interest expense to related parties $ 232 $ 293 $ 479 $ 602
v3.19.3.a.u2
Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Dec. 26, 2019
Jun. 27, 2019
Dec. 27, 2018
CURRENT ASSETS:      
Cash $ 1,393 $ 1,591 $ 2,583
Accounts receivable, less allowance for doubtful accounts of $425, $350 and $342 52,653 60,971 62,580
Inventories 172,340 157,024 171,708
Prepaid expenses and other current assets 5,992 5,754 6,943
TOTAL CURRENT ASSETS 232,378 225,340 243,814
PROPERTY, PLANT AND EQUIPMENT:      
Land 9,285 9,285 9,285
Buildings 109,671 109,955 109,380
Machinery and equipment 212,532 210,962 206,663
Furniture and leasehold improvements 5,160 5,128 5,039
Vehicles 682 673 641
Construction in progress 3,817 1,127 2,563
Property, plant and equipment gross 341,147 337,130 333,571
Less: Accumulated depreciation 233,825 228,778 222,976
Property, plant and equipment net 107,322 108,352 110,595
Rental investment property, less accumulated depreciation of $11,615, $11,212 and $10,827 17,508 17,831 18,066
TOTAL PROPERTY, PLANT AND EQUIPMENT 124,830 126,183 128,661
Intangible assets, net 13,282 14,626 15,970
Cash surrender value of officers' life insurance and other assets 9,124 9,782 8,743
Deferred income taxes 5,616 5,723 4,591
Goodwill 9,650 9,650 9,650
Operating lease right-of-use assets 4,823    
TOTAL ASSETS 399,703 391,304 411,429
CURRENT LIABILITIES:      
Revolving credit facility borrowings 13,495   24,541
Current maturities of long-term debt, including related party debt of $565, $4,375 and $4,359 and net of unamortized debt issuance costs of $30, $35 and $40 7,110 7,338 7,254
Accounts payable 70,979 42,552 69,732
Bank overdraft 1,349 901 3,887
Accrued payroll and related benefits 13,429 22,101 10,293
Other accrued expenses 11,374 11,014 9,808
TOTAL CURRENT LIABILITIES 117,736 83,906 125,515
LONG-TERM LIABILITIES:      
Long-term debt, less current maturities, including related party debt of $9,244, $11,495 and $13,323 and net of unamortized debt issuance costs of $30, $44 and $60 16,597 20,381 23,707
Retirement plan 25,212 24,737 21,713
Long-term operating lease liabilities, net of current portion 3,456    
Other 7,786 7,725 7,121
TOTAL LONG-TERM LIABILITIES 53,051 52,843 52,541
TOTAL LIABILITIES 170,787 136,749 178,056
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:      
Capital in excess of par value 122,984 122,257 121,133
Retained earnings 111,807 137,712 116,116
Accumulated other comprehensive loss (4,786) (4,325) (2,787)
Treasury stock, at cost; 117,900 shares of Common Stock (1,204) (1,204) (1,204)
TOTAL STOCKHOLDERS' EQUITY 228,916 254,555 233,373
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 399,703 391,304 411,429
Class A Common Stock [Member]      
STOCKHOLDERS' EQUITY:      
Common Stock 26 26 26
TOTAL STOCKHOLDERS' EQUITY 26 26 26
Common Stock, Non-Cumulative Voting Rights of One Vote Per Share [Member]      
STOCKHOLDERS' EQUITY:      
Common Stock 89 89 89
TOTAL STOCKHOLDERS' EQUITY $ 89 $ 89 $ 89
v3.19.3.a.u2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Dec. 26, 2019
Jun. 27, 2019
Dec. 27, 2018
Allowance for doubtful accounts for accounts receivable, current $ 425 $ 350 $ 342
Accumulated depreciation of rental investment property 11,615 11,212 10,827
Current maturities of long-term debt, related party debt 565 4,375 4,359
Unamortized debt issuance costs, current 30 35 40
Related party debt, Non-current 9,244 11,495 13,323
Unamortized debt issuance costs, noncurrent $ 30 $ 44 $ 60
Treasury stock, shares 117,900 117,900 117,900
Class A Common Stock [Member]      
Common stock, par value $ 0.01 $ 0.01 $ 0.01
Common stock, shares authorized 10,000,000 10,000,000 10,000,000
Common stock, shares issued 2,597,426 2,597,426 2,597,426
Common stock, shares outstanding 2,597,426 2,597,426 2,597,426
Common Stock, Non-Cumulative Voting Rights of One Vote Per Share [Member]      
Common stock, par value $ 0.01 $ 0.01 $ 0.01
Common stock, shares authorized 17,000,000 17,000,000 17,000,000
Common stock, shares issued 8,937,236 8,909,406 8,898,827
v3.19.3.a.u2
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Total
Capital in Excess of Par Value [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Loss [Member]
Treasury Stock [Member]
Class A Common Stock [Member]
Common Stock, Non-Cumulative Voting Rights of One Vote Per Share [Member]
Balance at Jun. 28, 2018 $ 243,002 $ 119,952 $ 127,320 $ (3,181) $ (1,204) $ 26 $ 89
Balance, Shares at Jun. 28, 2018           2,597,426 8,865,475
Net income 6,606   6,606        
Cash dividends (29,074)   (29,074)        
Pension liability amortization, net of income tax (expense) 197     197      
Stock-based compensation expense 616 616          
Balance at Sep. 27, 2018 221,347 120,568 104,852 (2,984) (1,204) $ 26 $ 89
Balance, Shares at Sep. 27, 2018           2,597,426 8,865,475
Balance at Jun. 28, 2018 243,002 119,952 127,320 (3,181) (1,204) $ 26 $ 89
Balance, Shares at Jun. 28, 2018           2,597,426 8,865,475
Net income 17,870            
Balance at Dec. 27, 2018 233,373 121,133 116,116 (2,787) (1,204) $ 26 $ 89
Balance, Shares at Dec. 27, 2018           2,597,426 8,898,827
Balance at Sep. 27, 2018 221,347 120,568 104,852 (2,984) (1,204) $ 26 $ 89
Balance, Shares at Sep. 27, 2018           2,597,426 8,865,475
Net income 11,264   11,264        
Pension liability amortization, net of income tax (expense) 197     197      
Equity award exercises, net of shares withheld for employee taxes (335) (335)          
Equity award exercises, net of shares withheld for employee taxes, shares             33,352
Stock-based compensation expense 900 900          
Balance at Dec. 27, 2018 233,373 121,133 116,116 (2,787) (1,204) $ 26 $ 89
Balance, Shares at Dec. 27, 2018           2,597,426 8,898,827
Balance at Jun. 27, 2019 254,555 122,257 137,712 (4,325) (1,204) $ 26 $ 89
Balance, Shares at Jun. 27, 2019           2,597,426 8,909,406
Net income 12,926   12,926        
Cash dividends (34,321)   (34,321)        
Pension liability amortization, net of income tax (expense) 257     257      
Impact of adopting ASU 2018-02 [1]     976 (976)      
Stock-based compensation expense 633 633          
Balance at Sep. 26, 2019 234,050 122,890 117,293 (5,044) (1,204) $ 26 $ 89
Balance, Shares at Sep. 26, 2019           2,597,426 8,909,406
Balance at Jun. 27, 2019 254,555 122,257 137,712 (4,325) (1,204) $ 26 $ 89
Balance, Shares at Jun. 27, 2019           2,597,426 8,909,406
Net income 30,387            
Impact of adopting ASU 2018-02       (976)      
Balance at Dec. 26, 2019 228,916 122,984 111,807 (4,786) (1,204) $ 26 $ 89
Balance, Shares at Dec. 26, 2019           2,597,426 8,937,236
Balance at Sep. 26, 2019 234,050 122,890 117,293 (5,044) (1,204) $ 26 $ 89
Balance, Shares at Sep. 26, 2019           2,597,426 8,909,406
Net income 17,461   17,461        
Cash dividends (22,947)   (22,947)        
Pension liability amortization, net of income tax (expense) 258     258      
Equity award exercises, net of shares withheld for employee taxes (761) (761)          
Equity award exercises, net of shares withheld for employee taxes, shares             27,830
Stock-based compensation expense 855 855          
Balance at Dec. 26, 2019 $ 228,916 $ 122,984 $ 111,807 $ (4,786) $ (1,204) $ 26 $ 89
Balance, Shares at Dec. 26, 2019           2,597,426 8,937,236
[1] See Note 15 – “Recent Accounting Pronouncements” for additional information.
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Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Dec. 26, 2019
Sep. 26, 2019
Dec. 27, 2018
Sep. 27, 2018
Statement of Stockholders' Equity [Abstract]        
Cash dividends per common share $ 2.00 $ 3.00 $ 2.55
Pension liability amortization income tax expense $ (86) $ (86) $ (66) $ (66)
v3.19.3.a.u2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Dec. 26, 2019
Dec. 27, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 30,387 $ 17,870
Depreciation and amortization 9,225 8,535
(Gain) loss on disposition of assets, net (33) 57
Deferred income tax expense 107 433
Stock-based compensation expense 1,488 1,516
Change in assets and liabilities:    
Accounts receivable, net 8,316 3,041
Inventories (15,316) 2,654
Prepaid expenses and other current assets (345) (1,659)
Accounts payable 28,486 9,655
Accrued expenses (8,964) 2,833
Income taxes payable (640) 2,285
Other long-term assets and liabilities 582 261
Other, net 992 885
Net cash provided by operating activities 54,285 48,366
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property, plant and equipment (6,465) (9,367)
Proceeds from insurance recoveries 232  
Other 85 44
Net cash used in investing activities (6,148) (9,323)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Net short-term borrowings (repayments) 13,495 (6,737)
Debt issue costs (218)  
Principal payments on long-term debt (4,031) (3,588)
Increase in bank overdraft 448 1,825
Dividends paid (57,268) (29,074)
Taxes paid related to net share settlement of equity awards (761) (335)
Net cash used in financing activities (48,335) (37,909)
NET (DECREASE) INCREASE IN CASH (198) 1,134
Cash, beginning of period 1,591 1,449
Cash, end of period 1,393 $ 2,583
Supplemental disclosure of non-cash activities:    
Right-of-use assets recognized at ASU No. 2016-02 transition, see Note 3 $ 5,361  
v3.19.3.a.u2
Basis of Presentation and Description of Business
6 Months Ended
Dec. 26, 2019
Accounting Policies [Abstract]  
Basis of Presentation and Description of Business
Note 1 – Basis of Presentation and Description of Business
As used herein, unless the context otherwise indicates, the terms “we”, “us”, “our” or “Company” collectively refer to John B. Sanfilippo & Son, Inc. and our wholly-owned subsidiary, JBSS Ventures, LLC. Our fiscal year ends on the final Thursday of June each year, and typically consists of
fifty-two
weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows:
 
  
References herein to fiscal 2020 and fiscal 2019 are to the fiscal year ending June 25, 2020 and the fiscal year ended June 27, 2019, respectively.
 
  
References herein to the second quarter of fiscal 2020 and fiscal 2019 are to the quarters ended December 26, 2019 and December 27, 2018, respectively.
 
  
References herein to the first half or first
twenty-six
weeks of fiscal 2020 and fiscal 2019 are to the
twenty-six
weeks ended December 26, 2019 and December 27, 2018, respectively.
We are one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds, and other nuts in the United States. These nuts are sold under a variety of private brands and under the
Fisher, Orchard Valley Harvest,
Squirrel Brand, Southern Style Nuts
and
Sunshine Country
brand names. We also market and distribute, and in most cases, manufacture or process, a diverse product line of food and snack products, including peanut butter, almond butter, cashew butter, candy and confections, snacks and trail mixes, snack bites, sunflower kernels, dried fruit, corn snacks, chickpea snacks, sesame sticks and other sesame snack products under private brands and brand names. Our products are sold through
three
primary distribution channels to significant buyers of nuts, including food retailers in the consumer channel, commercial ingredient users and contract packaging customers.
The accompanying unaudited financial statements fairly present the consolidated statements of comprehensive income, consolidated balance sheets, consolidated statements of stockholders’ equity and consolidated statements of cash flows, and reflect all adjustments, consisting only of normal recurring adjustments which are necessary for the fair statement of the results of the interim periods. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
The interim results of operations are not necessarily indicative of the results to be expected for a full year. The balance sheet data as of June 27, 2019 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, these unaudited financial statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2019 Annual Report on Form
10-K
for the fiscal year ended June 27, 2019.
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Revenue Recognition
6 Months Ended
Dec. 26, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 2 – Revenue Recognition
We recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. For each customer contract, a five-step process is followed in which we identify the contract, identify performance obligations, determine the transaction price, allocate the contract transaction price to the performance obligations, and recognize the revenue when (or as) the performance obligation is transferred to the customer.
When Performance Obligations Are Satisfied
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations are primarily for the delivery of raw and processed recipe and snack nuts, nut butters and trail mixes.
Our customer contracts do not include more than one performance obligation. If a contract were to contain more than one performance obligation, we are required to allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data.
Revenue recognition is generally completed at a point in time when product control is transferred to the customer. For approximately 99% of our revenues, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can then direct the use and obtain substantially all of the remaining benefits from the asset at that point in time. Therefore, for 99% of our revenues, the timing of revenue recognition requires little judgment.
Variable Consideration
Some of our products are sold through specific incentive programs consisting of promotional allowances, volume and customer rebates,
in-store
display incentives and marketing allowances, among others, to consumer and some commercial ingredient customers. The ultimate cost of these programs is dependent on certain factors such as actual purchase volumes or customer activities and is dependent on significant management estimate and judgment. The Company accounts for these programs as variable consideration and recognizes a reduction in revenue (and a corresponding reduction in the transaction price) in the same period as the underlying program based upon the terms of the specific arrangements.
Trade promotions, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons, are also offered through various programs to customers and consumers. A provision for estimated trade promotions is recorded as a reduction of revenue (and a reduction in the transaction price) in the same period when the sale is recognized. Revenues are also recorded net of expected customer deductions which are provided for based upon past experiences. Evaluating these estimates requires management judgment.
We generally use the most likely amount method to determine the variable consideration. We believe there will not be significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. The Company reviews and updates its estimates and related accruals of variable consideration and trade promotions at least quarterly based on the terms of the agreements and historical experience. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe, therefore, no additional constraint on the variable consideration is required.
Contract Balances
Contract assets or liabilities result from transactions with revenue recorded over time. If the measure of remaining rights exceeds the measure of the remaining performance obligations the Company records a contract asset. Conversely, if the measure of the remaining performance obligations exceeds the measure of the remaining rights, the Company records a contract liability. There was
no
contract asset balance at December 26, 2019. Contract asset balances at June 27, 2019 and December 27, 2018 were $117 and $65, respectively, and are recorded in the caption “Prepaid expenses and other current assets” on the Consolidated Balance Sheets. The Company generally does not have material deferred revenue or contract liability balances arising from transactions with customers.
Disaggregation of Revenue
Revenue disaggregated by sales channel is as follows:
 
   
For the Quarter Ended
   
For the Twenty-six Weeks Ended
 
Distribution Channel
  
December 26,

2019
   
December 27,

2018
   
December 26,

2019
   
December 27,

2018
 
Consumer
  $188,086   $195,478   $345,232   $334,922 
Commercial Ingredients
   34,247    31,454    71,135    68,656 
Contract Packaging
   24,090    26,385    47,902    54,027 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $246,423   $253,317   $464,269   $457,605 
   
 
 
   
 
 
   
 
 
   
 
 
 
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Leases
6 Months Ended
Dec. 26, 2019
Leases [Abstract]  
Leases
Note 3 – Leases
On June 28, 2019 we adopted ASU
No. 2016-02,
Leases (“Topic 842”)
using the alternative transition method under ASU
No. 2018-11,
which permit
ted
 application of the new guidance at the beginning of the period of adoption, with comparative periods continuing to be reported under
the previous lease accounting guidance in 
Topic 840. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. We did not elect the practical expedients regarding hindsight or land easements. See Note 15 – “Recent Accounting Pronouncements” for additional information.
Upon adoption of the new standard, we recognized operating lease
right-of-use
assets and liabilities on our Consolidated Balance Sheet of $5,361 and $5,320 respectively. We utilized a portfolio approach to establish discount rates for leases that are similar. Discount rates ranging from 4.2% to 5.8% were used when determining the present value of future lease payments. All of our lessee arrangements
that were
classified as operating leases
under Topic 840
continue to be classified as operating leases
 since the adoption of Topic 842
, and the pattern of lease expense recognition
is
unchanged. The adoption of Topic 842 did not materially impact our consolidated net earnings and had no impact on cash flows.
Description of Leases
We lease equipment used in the transportation of goods in our warehouses, as well as a limited number of automobiles and a small warehouse near our Bainbridge, Georgia facility. Our leases generally do not contain
non-lease
components and do not contain any explicit guarantees of residual value. Our leases for warehouse transportation equipment generally require the equipment to be returned to the lessor in good working order.
We determine if an arrangement is a lease at inception and analyze the lease to determine if it is operating or finance. Operating lease
right-of-use
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease
right-of-use
assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental collateralized borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Implicit rates are used when readily determinable. None of our leases currently contain options to extend the term. In the event of an option to extend the term of a lease, the lease term used in measuring the liability would include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the respective lease term. Our leases have remaining terms of up to 5.4 years.
Topic 842
 
allows for the election as an accounting policy to not apply lease recognition requirements to short term leases, defined as leases with an initial term of 12 months or less. We have elected to use this policy, and as such, leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheet. We have also made the policy election to not separate lease and
non-lease
components for all leases.
The following table provides supplemental information related to operating lease
right-of-use
assets and liabilities:
 
   
December 26,
2019
   
Affected Line Item in Consolidated Balance Sheet
Assets
        
Operating lease
right-of-use
assets
  $4,823   
Operating lease
right-of-use
assets
   
 
 
    
Total lease
right-of-use
assets
  $4,823    
   
 
 
    
Liabilities
        
Current:
        
Operating leases
  $1,354   
Other accrued expenses
Noncurrent:
        
Operating leases
   3,456   
Long-term operating lease liabilities
   
 
 
    
Total lease liabilities
  $4,810    
   
 
 
    
 
The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:
 
   
For the
Quarter ended
December 26, 2019
   
For the Twenty-six

weeks ended
December 26, 2019
 
Operating lease costs
(a)
  $460   $834 
Variable lease costs
(b)
   15    31 
   
 
 
   
 
 
 
Total Lease Cost
  $475   $865 
   
 
 
   
 
 
 
 
(a)
 
Includes short-term leases which are immaterial.
(b)
 
Variable lease costs consist of sales tax.
Supplemental cash flow and other information related to leases was as follows:
 
   
For the Twenty-
six 
weeks ended
December 26,
 
2019
 
Operating cash flows information:
     
Cash paid for amounts included in measurements for lease liabilities
  $770 
Non-cash
activity:
     
Right-of-use
assets obtained in exchange for new operating lease obligations
  $163 
 
   
December 26,
 
2019
 
Weighted Average Remaining Lease Term (in years)
   3.8 
Weighted Average Discount Rate
   4.5
Maturities of operating lease liabilities as of December 26, 2019 are as follows:
 
Fiscal year ending
  
 
 
June 25, 2020 (excluding the
twenty-six
weeks ended December 26, 2019)
  $792 
June 24, 2021
   1,439 
June 30, 2022
   1,316 
June 29, 2023
   1,065 
June 27, 2024
   469 
Thereafter
   132 
   
 
 
 
Total lease payment
   5,213 
Less imputed interest
   (403
   
 
 
 
Present value of operating lease liabilities
  $4,810 
   
 
 
 
As of December 26, 2019 the Company has additional operating leases totaling $164 that have not yet commenced and therefore are not reflected in the Consolidated Balance Sheet and tables above. These leases will commence in the third quarter of fiscal 2020 with initial lease terms ranging from 3 to 5 years.
Disclosures related to periods prior to adoption
As the Company has not recast prior year information for its adoption of Topic 842, the following presents its future minimum lease payments for operating leases under Topic 840 on June 27, 2019:
 
Fiscal year ending
  
 
 
June 25, 2020
  $1,715 
June 24, 2021
   1,540 
June 30, 2022
   1,392 
June 29, 2023
   1,109 
June 27, 2024
   464 
Thereafter
   133 
   
 
 
 
   $6,353 
 
Lessor Accounting
We lease office space in our four-story office building located in Elgin, Illinois. As a lessor, we retain substantially all of the risks and benefits of ownership of the investment property and under Topic 842 we continue to account for all of our leases as operating leases. Lease agreements may include options to renew. We accrue fixed lease income on a
straight-line
basis over the terms of the leases. There is generally an immaterial amount of variable lease consideration and an immaterial amount of
non-lease
components such as recurring utility and storage fees. Leases between related parties are immaterial.
Leasing revenue is as follows:
 
   
For the

Quarter
e
nded
December 26, 2019
   
For
 
the
 
Twenty-six

w
eeks
e
nded
December 26, 2019
 
Lease income related to lease payments
  $462   $1,005 
The future minimum, undiscounted cash flows under
non-cancelable
tenant operating leases for each of the next five years and thereafter is presented below and is materially consistent with our previous accounting under Topic 840.
 
Fiscal year ending
  
 
 
June 25, 2020 (excluding the
twenty-six
weeks ended December 26, 2019)
  $1,082 
June 24, 2021
   1,948 
June 30, 2022
   1,707 
June 29, 2023
   1,737 
June 27, 2024
   1,766 
Thereafter
   2,512 
   
 
 
 
   $10,752 
 
v3.19.3.a.u2
Inventories
6 Months Ended
Dec. 26, 2019
Inventory Disclosure [Abstract]  
Inventories
Note 4 – Inventories
Inventories consist of the following:
 
   
December 26,

2019
   
June 27,

2019
   
December 27,

2018
 
Raw material and supplies
  $81,135   $58,927   $87,717 
Work-in-process
and finished goods
   91,205    98,097    83,991 
   
 
 
   
 
 
   
 
 
 
Total
  $172,340   $157,024   $171,708 
   
 
 
   
 
 
   
 
 
 
v3.19.3.a.u2
Goodwill and Intangible Assets
6 Months Ended
Dec. 26, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
Note 5 – Goodwill and Intangible Assets
Identifiable intangible assets that are subject to amortization consist of the following:
 
   
December 26,
2019
   
June 27,
2019
   
December 27,
2018
 
Customer relationships
  $21,100   $21,100   $21,100 
Brand names
   16,990    16,990    16,990 
Non-compete
agreement
   270    270    270 
   
 
 
   
 
 
   
 
 
 
    38,360    38,360    38,360 
Less accumulated amortization:
               
Customer relationships
   (15,438   (14,466   (13,494
Brand names
   (9,527   (9,182   (8,838
Non-compete
agreement
   (113   (86   (58
   
 
 
   
 
 
   
 
 
 
    (25,078   (23,734   (22,390
   
 
 
   
 
 
   
 
 
 
Net intangible assets
  $13,282   $14,626   $15,970 
   
 
 
   
 
 
   
 
 
 
 
Customer relationships are being amortized on an accelerated basis. The brand names remaining to be amortized consist of the
Squirrel Brand
and
Southern Style Nuts
brand names.
Total amortization expense related to intangible assets, which is a component of Administrative expense, was $672 and $1,344 for the quarter and
twenty-six
weeks ended December 26, 2019
,
respectively. Amortization expense for the remainder of fiscal 2020 is expected to be approximately $1,157 and expected amortization expense the next five fiscal years is as follows:
 
Fiscal year ending
    
June 24, 2021
  $2,165 
June 30, 2022
   1,896 
June 29, 2023
   1,657 
June 27, 2024
   1,414 
June 26, 2025
   1,156 
Our net goodwill of $9,650 relates entirely to the Squirrel Brand acquisition (the “Acquisition”) completed in the second quarter of fiscal 2018. There was no change in the carrying amount of goodwill during the
twenty-six
weeks ended December 26, 2019.
v3.19.3.a.u2
Credit Facility
6 Months Ended
Dec. 26, 2019
Debt Disclosure [Abstract]  
Credit Facility
Note 6 – Credit Facility
On February 7, 2008, we entered into a Credit Agreement with a bank group providing a $117,500 revolving loan commitment and letter of credit subfacility (the “Credit Facility”). The Credit Facility is secured by substantially all our assets other than real property and fixtures.
At December 26, 2019, we had $100,830 of available credit under the Credit Facility which reflects borrowings of $13,495 and reduced availability as a result of $3,175 in outstanding letters of credit. As of December 26, 2019, we were in compliance with all financial covenants under the Credit Facility and Mortgage Facility.
v3.19.3.a.u2
Earnings Per Common Share
6 Months Ended
Dec. 26, 2019
Earnings Per Share [Abstract]  
Earnings Per Common Share
Note 7 – Earnings Per Common Share
The following table presents the reconciliation of the weighted average shares outstanding used in computing basic and diluted earnings per share:
 
   
For the Quarter Ended
   
For the
Twenty-six
Weeks
 
Ended
 
   
December 26,

2019
   
December 27,

2018
   
December 26,

2019
   
December 27,

2018
 
Weighted average number of shares outstanding – basic
   11,458,524    11,425,566    11,451,542    11,415,787 
Effect of dilutive securities:
                    
Stock options and restricted stock units
   66,863    53,865    80,640    69,894 
   
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average number of shares outstanding – diluted
   11,525,387    11,479,431    11,532,182    11,485,681 
   
 
 
   
 
 
   
 
 
   
 
 
 
There were no anti-dilutive awards excluded from the computation of diluted earnings per share for any periods presented.
v3.19.3.a.u2
Stock-Based Compensation Plans
6 Months Ended
Dec. 26, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation Plans
Note 8 – Stock-Based Compensation Plans
During the second quarter of fiscal 2020, there were 38,572 restricted stock units (“RSUs”) awarded to employees and
non-employee
members of the Board of Directors. The vesting period is generally three years for awards to employees and one year for awards to
non-employee
directors.
There was no stock option activity during the first half of fiscal 2020.
 
The following is a summary of RSU activity for the first half of fiscal 2020:
 
Restricted Stock Units
  
Shares
   
Weighted
Average Grant
Date Fair Value
 
Outstanding at June 27, 2019
   188,992   $46.79 
Activity:
          
Granted
   38,572    91.47 
Vested
(a)
   (36,179   60.56 
Forfeited
   (7,439   63.62 
   
 
 
   
 
 
 
Outstanding at December 26, 2019
   183,946   $52.77 
   
 
 
   
 
 
 
 
(a)
 
The number of RSUs vested includes shares that were withheld on behalf of employees to satisfy statutory tax withholding requirements.
At December 26, 2019, there
we
re 58,541 RSUs outstanding that
we
re vested but deferred.
The following table summarizes compensation expense charged to earnings for all equity compensation plans for the periods presented:
 
   
For the Quarter Ended
   
For the
Twenty-six
Weeks
 
Ended
 
   
December 26,

2019
   
December 27,

2018
   
December 26,
2019
   
December 27,
2018
 
Stock-based compensation expense
  $855   $900   $1,488   $1,516 
As of December 26, 2019, there was $5,255 of total unrecognized compensation expense related to
non-vested
RSUs granted under our stock-based compensation plans. We expect to recognize that cost over a weighted average period of 1.7 years.
v3.19.3.a.u2
Retirement Plan
6 Months Ended
Dec. 26, 2019
Retirement Benefits [Abstract]  
Retirement Plan
Note 9 – Retirement Plan
The Supplemental Employee Retirement Plan is an unfunded,
non-qualified
deferred compensation plan that will provide eligible participants with monthly benefits upon retirement, disability or death, subject to certain conditions. The monthly benefit is based upon each participant’s earnings and his or her number of years of service. The components of net periodic benefit cost are as follows:
 
   
For the Quarter Ended
   
For the
Twenty-six
Weeks
 
Ended
 
   
December 26,

2019
   
December 27,

2018
   
December 26,
2019
   
December 27,
2018
 
Service cost
  $178   $153   $356   $305 
Interest cost
   223    223    446    447 
Amortization of prior service cost
   240    240    479    479 
Amortization of loss
   104    23    208    47 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net periodic benefit cost
  $745   $639   $1,489   $1,278 
   
 
 
   
 
 
   
 
 
   
 
 
 
The components of net periodic benefit cost other than the service cost component are included in the line item “Other expense” in the Consolidated Statements of Comprehensive Income.
v3.19.3.a.u2
Accumulated Other Comprehensive Loss
6 Months Ended
Dec. 26, 2019
Equity [Abstract]  
Accumulated Other Comprehensive Loss
Note 10 – Accumulated Other Comprehensive Loss
The table below sets forth the changes to accumulated other comprehensive loss (“AOCL”) for the
twenty-six
weeks ended December 26, 2019 and December 27, 2018.
These changes are all related to our defined benefit pension plan.
 
Changes to AOCL
(a)
  
For the Twenty-Six Weeks Ended
 
  
December 26,
2019
   
December 27,
2018
 
Balance at beginning of period
  $(4,325  $(3,181
Other comprehensive income before reclassifications
   
 
 
    
 
 
 
Amounts reclassified from accumulated other comprehensive loss
   687    526 
Tax effect
   (172   (132
   
 
 
   
 
 
 
Net current-period other comprehensive income
   515    394 
Impact of adopting ASU
2018-02
(b)
   (976   
 
 
 
   
 
 
   
 
 
 
Balance at end of period
  $(4,786  $(2,787
   
 
 
   
 
 
 
 
(a)
Amounts in parenthesis indicate debits/expense.
(b)
See Note 15 – “Recent Accounting Pronouncements” for additional information.
The reclassifications out of AOCL for the quarter and
twenty-six
weeks ended December 26, 2019 and December 27, 2018 were as follows:
 
   
For the Quarter Ended
  
For the
Twenty-six
Weeks
 
Ended
  
Affected line
item in
the Consolidated
 
Reclassifications from AOCL to earnings
(c)
  
December 26,
2019
  
December 27,
2018
  
December 26,
2019
  
December 27,
2018
  
Statements of

Comprehensive
Income
 
Amortization of defined benefit pension items:
                     
Unrecognized prior service cost
  $(240 $(240 $(479 $(479  Other expense 
Unrecognized net loss
   (104  (23  (208  (47  Other expense 
   
 
 
  
 
 
  
 
 
  
 
 
     
Total before tax
   (344  (263  (687  (526    
Tax effect
  86   66   172   132   Income tax
 
expense
 
   
 
 
  
 
 
  
 
 
  
 
 
     
Amortization of defined pension items, net of tax
  $(258 $(197 $(515 $(394    
   
 
 
  
 
 
  
 
 
  
 
 
     
 
(c)
 
Amounts in parenthesis indicate debits to expense. See Note 9 – “Retirement Plan” above for additional details.
v3.19.3.a.u2
Commitments and Contingent Liabilities
6 Months Ended
Dec. 26, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingent Liabilities
Note 11 – Commitments and Contingent Liabilities
We are currently a party to various legal proceedings in the ordinary course of business. While management presently believes that the ultimate outcomes of these proceedings, individually and in the aggregate, will not materially affect our Company’s financial position, results of operations or cash flows, legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur. Unfavorable outcomes could include substantial monetary damages in excess of any accruals 
that
management has established. Were such unfavorable final outcomes to occur, there exists the possibility of a material adverse effect on our financial position, results of operations and cash flows.
v3.19.3.a.u2
Fair Value of Financial Instruments
6 Months Ended
Dec. 26, 2019
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
Note 12 – Fair Value of Financial Instruments
Authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:
 
Level 1    Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities.
   
Level 2    Observable inputs other than quoted prices in active markets. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
   
Level 3    Unobservable inputs for which there is little or no market data available.
The carrying values of cash, trade accounts receivable and accounts payable approximate their fair values at each balance sheet date because of the short-term maturities and nature of these balances.
The carrying value of our revolving credit facility borrowings approximates fair value at each balance sheet date because interest rates on this instrument approximate current market rates (Level 2 criteria), the short-term maturity and nature of this balance. In addition, there has been no significant change in our inherent credit risk.
The following table summarizes the carrying value and fair value estimate of our current and long-term debt, excluding unamortized debt issuance costs:
 
   
December 26,
2019
   
June 27,

2019
   
December 27,

2018
 
Carrying value of long-term debt:
  $23,767   $27,798   $31,061 
Fair value of long-term debt:
   24,164    27,720    30,176 
The estimated fair value of our long-term debt was determined using a market approach based upon Level 2 observable inputs, which estimates fair value based on interest rates currently offered on loans with similar terms to borrowers of similar credit quality or broker quotes. In addition, there have been no significant changes in the underlying assets securing our long-term debt.
v3.19.3.a.u2
Related Party Transaction
6 Months Ended
Dec. 26, 2019
Related Party Transactions [Abstract]  
Related Party Transaction
Note 13 – Related Party Transaction
In connection with the Acquisition in the second quarter of fiscal 2018, we incurred $11,500
of unsecured debt (the “Promissory Note”) to the principal owner and seller of the Squirrel Brand business, who was subsequently appointed as an executive officer of the Company and was considered a related party. Late in the second quarter of fiscal 2020, the employment of this executive officer with the Company ceased. He is no longer considered a related party, and therefore the outstanding balance on the Promissory Note is not reflected as related party debt on our Consolidated Balance Sheet as of December 26, 2019. Interest paid on the Promissory Note for the quarter and
twenty-six
weeks ended December 26, 2019 while the executive officer was still a related party
was $57 and $127
, respectively, and is reflected as related party interest on our Consolidated Statements of Comprehensive Income.
v3.19.3.a.u2
Garysburg, North Carolina Facility
6 Months Ended
Dec. 26, 2019
Damage From Fire In Business Unit [Abstract]  
Garysburg, North Carolina Facility
Note 14 – Garysburg, North Carolina Facility
On October 7, 2019 we experienced a fire at our peanut processing facility located in Garysburg, North Carolina. No personnel were injured, and there was no damage to our peanut shelling and inventory storage areas. The fire occurred in our roasting room where all of the roasting equipment was destroyed. The fire also damaged some equipment in our packaging room and a portion of the roof. We have contracted with a third party to roast and salt our inshell peanuts to meet our current production requirements. We do not expect any negative impact on our customer service levels or a material adverse impact on our operating or financial results for the 2020 fiscal year.
After evaluating our options with regard to our peanut production operations, the Company is considering strategic alternatives for this facility and currently plans to permanently cease all operations at the Garysburg facility once we have finished shelling the current crop of peanuts at this facility, which is estimated to take approximately sixteen months. We have ceased roasting operations in the current second quarter, which resulted in a partial reduction in the workforce at this facility, and recognized an immaterial amount of separation costs in the second quarter of fiscal 2020.
We have adequate property damage and business interruption insurance, subject to applicable deductibles. To date, approximately $
1,500
in
clean-up
costs and damage to capital assets has been incurred. Insurance claims have been filed under our property damage and business interruption policies, and an advance payment of $
1,500
​​​​​​​ was received from the insurance carrier in our current second quarter. Insurance proceeds received for damage to capital equipment were recorded as investing activities on the Consolidated Statements of Cash Flows.
v3.19.3.a.u2
Recent Accounting Pronouncements
6 Months Ended
Dec. 26, 2019
Accounting Changes and Error Corrections [Abstract]  
Recent Accounting Pronouncements
Note 15 – Recent Accounting Pronouncements
The following recent accounting pronouncements have been adopted in the current fiscal year:
In February 2016, the FASB issued ASU
No. 2016-02
Leases (Topic 842)
”. The primary goal of this Update is to require the lessee to recognize all lease commitments, both operating and finance, by initially recording a lease asset and liability on the balance sheet at the lease commencement date. Additionally, enhanced qualitative and quantitative disclosures 
are
required. ASU
No. 2016-02
is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. This new guidance
became
 effective for the Company beginning in fiscal year 2020. Under ASU
No. 2016-02
the guidance was to be adopted using a modified retrospective approach, with elective reliefs, with application of the new guidance for all periods presented. In July 2018, the FASB issued ASU
No. 2018-11
Leases (Topic 842): Targeted Improvements
” which provides for another transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The amendments in this Update also provide lessors with a practical expedient, by class of underlying asset, to not separate
non-lease
components from the associated lease component, similar to the expedient provided for lessees. In July 2018, the FASB also issued ASU
No. 2018-10
Codification Improvements to Topic 842, Leases
” which affects narrow aspects of the guidance issued in ASU
No. 2016-02.
In December 2018, the FASB issued ASU
No. 2018-20
Leases (Topic 842) – Narrow Scope Improvements for Lessors
” which provides specific guidance for lessors on the issues of sales taxes and other similar taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease and
non-lease
components. In March 2019, the FASB issued ASU
No. 2019-01
Leases (Topic 842) – Codification Improvements
” which clarifies transition disclosure requirements for annual and interim periods after the date of adoption of ASU
No. 2016-02.
We have implemented processes and information technology tools to assist in our
compliance with Topic 842
. We have also updated our accounting policies and internal controls that are impacted by the new guidance. We adopted ASU
No. 2016-02
utilizing the modified retrospective transition method and did not recast comparative periods in transition to the new standard. In addition, the new standard provides a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the
use-of-hindsight
or the practical expedient pertaining to land easements; the latter not being applicable to us. The adoption of this standard resulted in the recognition of operating lease
right-of-use
assets and liabilities on our Consolidated Balance Sheet of $5,361 and $5,320
,
 
respectively
, during the first quarter of fiscal 2020
. The new standard also provides practical expedients for an entity’s initial and ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. We also elected the practical expedient to not separate lease and
non-lease
components for all of our leases. Refer to Note 3 –
"
Leases
"
for additional information regarding the Company’s leases.
In February 2018, the FASB issued ASU
No. 2018-02
“Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”
. The amendments in this Update allow a reclassification from accumulated other comprehensive income (loss) (“AOCL”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The amendments in this Update also require certain disclosures about stranded tax effects. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU
N
o.
 
2018-02
in the first quarter of fiscal 2020 and reclassified $976 from AOCL to retained earnings. Refer to Note 10 –
"
Accumulated Other Comprehensive Loss
"
for additional detail. ASU
2018-02
was not applied retrospectively. No other income tax effects related to the application of the Tax Cuts and Jobs Act were reclassified from AOCL to retained earnings.
The following recent accounting pronouncements have not yet been adopted:
In December 2019
,
the FASB issued ASU
No.
2019-12
Income Taxes (Topic 740)
.
The amendments in this Update simplify the accounting for income taxes by removing certain exceptions, providing updated requirements and specifications in certain areas and by making minor codification improvements. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption is permitted. This Update is effective for the Company beginning in fiscal 2022. We do not expect this accounting Update to have a material impact on our Consolidated Financial Statements.
v3.19.3.a.u2
Revenue Recognition (Policies)
6 Months Ended
Dec. 26, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 2 – Revenue Recognition
We recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. For each customer contract, a five-step process is followed in which we identify the contract, identify performance obligations, determine the transaction price, allocate the contract transaction price to the performance obligations, and recognize the revenue when (or as) the performance obligation is transferred to the customer.
When Performance Obligations Are Satisfied
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations are primarily for the delivery of raw and processed recipe and snack nuts, nut butters and trail mixes.
Our customer contracts do not include more than one performance obligation. If a contract were to contain more than one performance obligation, we are required to allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data.
Revenue recognition is generally completed at a point in time when product control is transferred to the customer. For approximately 99% of our revenues, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can then direct the use and obtain substantially all of the remaining benefits from the asset at that point in time. Therefore, for 99% of our revenues, the timing of revenue recognition requires little judgment.
Variable Consideration
Some of our products are sold through specific incentive programs consisting of promotional allowances, volume and customer rebates,
in-store
display incentives and marketing allowances, among others, to consumer and some commercial ingredient customers. The ultimate cost of these programs is dependent on certain factors such as actual purchase volumes or customer activities and is dependent on significant management estimate and judgment. The Company accounts for these programs as variable consideration and recognizes a reduction in revenue (and a corresponding reduction in the transaction price) in the same period as the underlying program based upon the terms of the specific arrangements.
Trade promotions, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons, are also offered through various programs to customers and consumers. A provision for estimated trade promotions is recorded as a reduction of revenue (and a reduction in the transaction price) in the same period when the sale is recognized. Revenues are also recorded net of expected customer deductions which are provided for based upon past experiences. Evaluating these estimates requires management judgment.
We generally use the most likely amount method to determine the variable consideration. We believe there will not be significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. The Company reviews and updates its estimates and related accruals of variable consideration and trade promotions at least quarterly based on the terms of the agreements and historical experience. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe, therefore, no additional constraint on the variable consideration is required.
Contract Balances
Contract assets or liabilities result from transactions with revenue recorded over time. If the measure of remaining rights exceeds the measure of the remaining performance obligations the Company records a contract asset. Conversely, if the measure of the remaining performance obligations exceeds the measure of the remaining rights, the Company records a contract liability. There was
no
contract asset balance at December 26, 2019. Contract asset balances at June 27, 2019 and December 27, 2018 were $117 and $65, respectively, and are recorded in the caption “Prepaid expenses and other current assets” on the Consolidated Balance Sheets. The Company generally does not have material deferred revenue or contract liability balances arising from transactions with customers.
Disaggregation of Revenue
Revenue disaggregated by sales channel is as follows:
 
   
For the Quarter Ended
   
For the Twenty-six Weeks Ended
 
Distribution Channel
  
December 26,

2019
   
December 27,

2018
   
December 26,

2019
   
December 27,

2018
 
Consumer
  $188,086   $195,478   $345,232   $334,922 
Commercial Ingredients
   34,247    31,454    71,135    68,656 
Contract Packaging
   24,090    26,385    47,902    54,027 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $246,423   $253,317   $464,269   $457,605 
   
 
 
   
 
 
   
 
 
   
 
 
 
v3.19.3.a.u2
Revenue Recognition (Tables)
6 Months Ended
Dec. 26, 2019
Revenue from Contract with Customer [Abstract]  
Summary of Revenue Disaggregated by Sales Channel
Revenue disaggregated by sales channel is as follows:
 
   
For the Quarter Ended
   
For the Twenty-six Weeks Ended
 
Distribution Channel
  
December 26,

2019
   
December 27,

2018
   
December 26,

2019
   
December 27,

2018
 
Consumer
  $188,086   $195,478   $345,232   $334,922 
Commercial Ingredients
   34,247    31,454    71,135    68,656 
Contract Packaging
   24,090    26,385    47,902    54,027 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $246,423   $253,317   $464,269   $457,605 
   
 
 
   
 
 
   
 
 
   
 
 
 
v3.19.3.a.u2
Leases (Tables)
6 Months Ended
Dec. 26, 2019
Leases [Abstract]  
Supplemental information related to operating lease right-of-use assets and liabilities
The following table provides supplemental information related to operating lease
right-of-use
assets and liabilities:
 
   
December 26,
2019
   
Affected Line Item in Consolidated Balance Sheet
Assets
        
Operating lease
right-of-use
assets
  $4,823   
Operating lease
right-of-use
assets
   
 
 
    
Total lease
right-of-use
assets
  $4,823    
   
 
 
    
Liabilities
        
Current:
        
Operating leases
  $1,354   
Other accrued expenses
Noncurrent:
        
Operating leases
   3,456   
Long-term operating lease liabilities
   
 
 
    
Total lease liabilities
  $4,810    
   
 
 
    
Summary of company's total lease costs and other information arising from operating lease transactions
The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:
 
   
For the
Quarter ended
December 26, 2019
   
For the Twenty-six

weeks ended
December 26, 2019
 
Operating lease costs
(a)
  $460   $834 
Variable lease costs
(b)
   15    31 
   
 
 
   
 
 
 
Total Lease Cost
  $475   $865 
   
 
 
   
 
 
 
 
(a)
 
Includes short-term leases which are immaterial.
(b)
 
Variable lease costs consist of sales tax.
Supplemental cash flow and other information related to leases
Supplemental cash flow and other information related to leases was as follows:
 
   
For the Twenty-
six 
weeks ended
December 26,
 
2019
 
Operating cash flows information:
     
Cash paid for amounts included in measurements for lease liabilities
  $770 
Non-cash
activity:
     
Right-of-use
assets obtained in exchange for new operating lease obligations
  $163 
Summary of other information
 
   
December 26,
 
2019
 
Weighted Average Remaining Lease Term (in years)
   3.8 
Weighted Average Discount Rate
   4.5
Summary of maturities of operating lease liabilities
Maturities of operating lease liabilities as of December 26, 2019 are as follows:
 
Fiscal year ending
  
 
 
June 25, 2020 (excluding the
twenty-six
weeks ended December 26, 2019)
  $792 
June 24, 2021
   1,439 
June 30, 2022
   1,316 
June 29, 2023
   1,065 
June 27, 2024
   469 
Thereafter
   132 
   
 
 
 
Total lease payment
   5,213 
Less imputed interest
   (403
   
 
 
 
Present value of operating lease liabilities
  $4,810 
   
 
 
 
Schedule of future minimum payments under non-cancelable operating leases
As the Company has not recast prior year information for its adoption of Topic 842, the following presents its future minimum lease payments for operating leases under Topic 840 on June 27, 2019:
 
Fiscal year ending
  
 
 
June 25, 2020
  $1,715 
June 24, 2021
   1,540 
June 30, 2022
   1,392 
June 29, 2023
   1,109 
June 27, 2024
   464 
Thereafter
   133 
   
 
 
 
   $6,353 
Summary of operating lease revenue
Leasing revenue is as follows:
 
   
For the

Quarter
e
nded
December 26, 2019
   
For
 
the
 
Twenty-six

w
eeks
e
nded
December 26, 2019
 
Lease income related to lease payments
  $462   $1,005 
Undiscounted fixed lease consideration under non-cancelable tenant operating leases
The future minimum, undiscounted cash flows under
non-cancelable
tenant operating leases for each of the next five years and thereafter is presented below and is materially consistent with our previous accounting under Topic 840.
 
Fiscal year ending
  
 
 
June 25, 2020 (excluding the
twenty-six
weeks ended December 26, 2019)
  $1,082 
June 24, 2021
   1,948 
June 30, 2022
   1,707 
June 29, 2023
   1,737 
June 27, 2024
   1,766 
Thereafter
   2,512 
   
 
 
 
   $10,752 
v3.19.3.a.u2
Inventories (Tables)
6 Months Ended
Dec. 26, 2019
Inventory Disclosure [Abstract]  
Components of Inventories
Inventories consist of the following:
 
   
December 26,

2019
   
June 27,

2019
   
December 27,

2018
 
Raw material and supplies
  $81,135   $58,927   $87,717 
Work-in-process
and finished goods
   91,205    98,097    83,991 
   
 
 
   
 
 
   
 
 
 
Total
  $172,340   $157,024   $171,708 
   
 
 
   
 
 
   
 
 
 
v3.19.3.a.u2
Goodwill and Intangible Assets (Tables)
6 Months Ended
Dec. 26, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Components of Identifiable Intangible Assets
Identifiable intangible assets that are subject to amortization consist of the following:
 
   
December 26,
2019
   
June 27,
2019
   
December 27,
2018
 
Customer relationships
  $21,100   $21,100   $21,100 
Brand names
   16,990    16,990    16,990 
Non-compete
agreement
   270    270    270 
   
 
 
   
 
 
   
 
 
 
    38,360    38,360    38,360 
Less accumulated amortization:
               
Customer relationships
   (15,438   (14,466   (13,494
Brand names
   (9,527   (9,182   (8,838
Non-compete
agreement
   (113   (86   (58
   
 
 
   
 
 
   
 
 
 
    (25,078   (23,734   (22,390
   
 
 
   
 
 
   
 
 
 
Net intangible assets
  $13,282   $14,626   $15,970 
   
 
 
   
 
 
   
 
 
 
Summary of Expected Amortization Expense
Total amortization expense related to intangible assets, which is a component of Administrative expense, was $672 and $1,344 for the quarter and
twenty-six
weeks ended December 26, 2019
,
respectively. Amortization expense for the remainder of fiscal 2020 is expected to be approximately $1,157 and expected amortization expense the next five fiscal years is as follows:
 
Fiscal year ending
    
June 24, 2021
  $2,165 
June 30, 2022
   1,896 
June 29, 2023
   1,657 
June 27, 2024
   1,414 
June 26, 2025
   1,156 
v3.19.3.a.u2
Earnings Per Common Share (Tables)
6 Months Ended
Dec. 26, 2019
Earnings Per Share [Abstract]  
Weighted Average Shares Outstanding Used in Computing Basic and Diluted Earnings Per Share
The following table presents the reconciliation of the weighted average shares outstanding used in computing basic and diluted earnings per share:
 
   
For the Quarter Ended
   
For the
Twenty-six
Weeks
 
Ended
 
   
December 26,

2019
   
December 27,

2018
   
December 26,

2019
   
December 27,

2018
 
Weighted average number of shares outstanding – basic
   11,458,524    11,425,566    11,451,542    11,415,787 
Effect of dilutive securities:
                    
Stock options and restricted stock units
   66,863    53,865    80,640    69,894 
   
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average number of shares outstanding – diluted
   11,525,387    11,479,431    11,532,182    11,485,681 
   
 
 
   
 
 
   
 
 
   
 
 
 
v3.19.3.a.u2
Stock-Based Compensation Plans (Tables)
6 Months Ended
Dec. 26, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Summary of RSU Activity
The following is a summary of RSU activity for the first half of fiscal 2020:
 
Restricted Stock Units
  
Shares
   
Weighted
Average Grant
Date Fair Value
 
Outstanding at June 27, 2019
   188,992   $46.79 
Activity:
          
Granted
   38,572    91.47 
Vested
(a)
   (36,179   60.56 
Forfeited
   (7,439   63.62 
   
 
 
   
 
 
 
Outstanding at December 26, 2019
   183,946   $52.77 
   
 
 
   
 
 
 
Summary of Compensation Cost and Income Tax Benefit
The following table summarizes compensation expense charged to earnings for all equity compensation plans for the periods presented:
 
   
For the Quarter Ended
   
For the
Twenty-six
Weeks
Ended
 
   
December 26,

2019
   
December 27,

2018
   
December 26,
2019
   
December 27,
2018
 
Stock-based compensation expense
  $855   $900   $1,488   $1,516 
v3.19.3.a.u2
Retirement Plan (Tables)
6 Months Ended
Dec. 26, 2019
Retirement Benefits [Abstract]  
Schedule of Net Periodic Pension Cost The components of net periodic benefit cost are as follows:
   
For the Quarter Ended
   
For the
Twenty-six
Weeks
 
Ended
 
   
December 26,

2019
   
December 27,

2018
   
December 26,
2019
   
December 27,
2018
 
Service cost
  $178   $153   $356   $305 
Interest cost
   223    223    446    447 
Amortization of prior service cost
   240    240    479    479 
Amortization of loss
   104    23    208    47 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net periodic benefit cost
  $745   $639   $1,489   $1,278 
   
 
 
   
 
 
   
 
 
   
 
 
 
v3.19.3.a.u2
Accumulated Other Comprehensive Loss (Tables)
6 Months Ended
Dec. 26, 2019
Equity [Abstract]  
Changes in Accumulated Other Comprehensive Loss
Note 10 – Accumulated Other Comprehensive Loss
The table below sets forth the changes to accumulated other comprehensive loss (“AOCL”) for the
twenty-six
weeks ended December 26, 2019 and December 27, 2018.
These changes are all related to our defined benefit pension plan.
 
Changes to AOCL
(a)
  
For the Twenty-Six Weeks Ended
 
  
December 26,
2019
   
December 27,
2018
 
Balance at beginning of period
  $(4,325  $(3,181
Other comprehensive income before reclassifications
   
 
 
    
 
 
 
Amounts reclassified from accumulated other comprehensive loss
   687    526 
Tax effect
   (172   (132
   
 
 
   
 
 
 
Net current-period other comprehensive income
   515    394 
Impact of adopting ASU
2018-02
(b)
   (976   
 
 
 
   
 
 
   
 
 
 
Balance at end of period
  $(4,786  $(2,787