XML 72 R9.htm IDEA: XBRL DOCUMENT
v3.20.1

Basis of Presentation | 4 Months Ended
--- | ---
Apr. 18, 2020
Accounting Policies [Abstract] |
Basis of Presentation | 1. BASIS OF PRESENTATION BASIS OF ACCOUNTING — The accompanying unaudited Condensed Consolidated Financial Statements of Flowers Foods, Inc. (the “company”, “Flowers Foods”, “Flowers”, “us”, “we”, or “our”) have been prepared by the company’s management in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and applicable rules and regulations of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, they do not include all the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements included herein contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the company’s financial position, results of operations and cash flows. The results of operations for the sixteen weeks ended April 18, 2020 and April 20, 2019 are not necessarily indicative of the results to be expected for a full fiscal year. The Condensed Consolidated Balance Sheet at December 28, 2019 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 28, 2019 (the “Form 10-K”). COVID-19 — On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide, which has led to adverse impacts on the United States (“U.S.”) and global economies. Due to the drastic shift in consumer buying patterns as a result of the recent COVID-19 pandemic, we have experienced significant demand for our retail products resulting in significant sales increases and substantial growth in income from operations for the first quarter of fiscal 2020 compared to the prior year quarter. In light of COVID-19, the company has taken actions to safeguard its capital position. During the first quarter of fiscal 2020, we drew an additional $200.0 million on our credit facility. We borrowed this additional amount out of an abundance of caution to ensure future liquidity given the recent significant impact on global financial markets and economies as a result of the COVID-19 outbreak. If the company experienced a significant reduction in revenues, the company would have additional alternatives to maintain liquidity, including $266.6 million of remaining availability on the credit line, capital expenditure reductions, adjustments to its capital allocation policy, and cost reductions. Although we do not currently anticipate a need, we also believe that we could access the capital markets to raise additional funds. ESTIMATES — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The company believes the following critical accounting estimates affect its more significant judgments and estimates used in the preparation of its consolidated financial statements: revenue recognition, derivative instruments, valuation of long-lived assets, goodwill and other intangible assets, leases, self-insurance reserves, income tax expense and accruals, pension obligations, stock-based compensation, and commitments and contingencies. These estimates are summarized in the Form 10-K. REPORTING PERIODS — The company operates on a 52-53 week fiscal year ending the Saturday nearest December 31. Fiscal 2020 consists of 53 weeks, with the company’s quarterly reporting periods as follows: first quarter ended April 18, 2020 (sixteen weeks), second quarter ending July 11, 2020 (twelve weeks), third quarter ending October 3, 2020 (twelve weeks) and fourth quarter ending January 2, 2021 (thirteen weeks). REPORTING SEGMENT — The company has one operating segment based on the nature of products the company sells, intertwined production and distribution model, the internal management structure and information that is regularly reviewed by the chief executive officer (“CEO”), who is the chief operating decision maker, for the purpose of assessing performance and allocating resources. SIGNIFICANT CUSTOMER — Below is the effect that our largest customer, Walmart/Sam’s Club, had on the company’s sales for the sixteen weeks ended April 18, 2020 and April 20, 2019. Walmart/Sam’s Club is the only customer to account for greater than 10% of the company’s sales.
|  | For the Sixteen Weeks Ended |
|  | April 18, 2020 |  |  | April 20, 2019 |
|  | (% of Sales) |
Total |  |  | 21.4 |  |  |  | 20.5 |
Walmart/Sam’s Club is our only customer with greater than 10% of outstanding trade receivables, representing 21.2% and 18.9%, on a consolidated basis, as of April 18, 2020 and December 28, 2019, respectively, of our trade receivables. SIGNIFICANT ACCOUNTING POLICIES — Significant changes to our critical accounting policies from those disclosed in the Form 10-K are presented below. The policy changes for accounting for credit losses during the first quarter of our fiscal 2020 are a result of adopting new guidance issued by the Financial Accounting Standards Board (the “FASB”). See Note 2, Recent Accounting Pronouncements, of Notes to Condensed Consolidated Financial Statements of this Form 10-Q for details on the new guidance. Accounts and Notes Receivable. Accounts and notes receivable consist of trade receivables, current portions of distributor notes receivable, and miscellaneous receivables. The company recognizes an allowance for credit losses related to its accounts and notes receivable to present the net amount expected to be collected as of the balance sheet date. The company estimates this allowance based on historical data such as days sales outstanding trends, previous write-offs of balances, and weekly reviews of aged trial balances, among others. Accounts and notes receivable balances are written off when deemed uncollectible and are recognized as a deduction from the allowance for credit losses. Expected recoveries, not to exceed the amount previously written off, are considered in determining the reserve balance at the balance sheet date. As of fiscal year end, balances older than six months are deemed uncollectible and are fully reserved for in the allowance. Activity in the allowance for trade accounts receivable credit losses for the sixteen weeks ended April 18, 2020 was as follows (amounts in thousands):
Allowance at December 28, 2019 |  | $ | 2,089 |
Amounts charged to expense |  |  | 4,668 |
Write-offs |  |  | — |
Recoveries and other |  |  | (1,082 | )
Allowance at April 18, 2020 |  | $ | 5,675 |
The amounts charged to expense for bad debts in the table above are reported as adjustments to reconcile net (loss) income to net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. The write-offs represent the amounts that are used to reduce the gross accounts and notes receivable at the time the balance due from the customer is written-off. In light of the current economic uncertainty for certain of our foodservice customers caused by COVID-19, we have recorded an additional bad debt allowance of $2.7 million in the first quarter of fiscal 2020. RECOVERY ON INFERIOR INGREDIENTS Beginning in the second quarter of fiscal 2018 and continuing through the fourth quarter of fiscal 2019, we have recognized identifiable and measurable costs associated with receiving inferior ingredients. These costs totaled $1.3 million for the sixteen weeks ended April 20, 2019. We received reimbursements for a portion of previously incurred costs of $1.7 million during the prior year first quarter. These reimbursements, net of the costs incurred, are presented as recoveries on the ‘Recovery on inferior ingredients’ line item in our Condensed Consolidated Statements of Income (Loss). There were no costs or recoveries recognized in the first quarter of fiscal 2020. We continue to seek recovery of all losses through appropriate means.

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration