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Commitments and Contingencies | 3 Months Ended
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Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Leases The terms of the Company's capital leases vary from 12 months to 84 months with varying expiration dates through 2021. The Company is also obligated under operating leases for branch warehouses, distribution centers and its production facility in Portland, Oregon. Some operating leases have renewal options that allow the Company, as lessee, to extend the leases. The Company has one operating lease with a term greater than five years that expires in 2018 and has a ten year renewal option, and operating leases for computer hardware with terms that do not exceed five years. On July 17, 2015, the Company entered into the Lease Agreement with Lessor pursuant to which the Company will lease a 538,000 square foot facility to be constructed on 28.2 acres of land located in Northlake, Texas (see Note 3). Contractual obligations for the remainder of fiscal 2016 and future fiscal years are as follows:
|  | Contractual Obligations
(In thousands) |  | Capital Lease Obligations |  | Operating Lease Obligations |  | Texas Facility Lease Obligation(1) |  | Pension Plan Obligations |  | Postretirement Benefits Other Than Pension Plans |  | Revolving Credit Facility |  | Purchase Commitments(2)
Nine months ending June 30, |  |  |  |  |  |  |  |  |  |  |  |  |  |
2016 |  | $ | 2,516 |  |  | $ | 2,217 |  |  | $ | — |  |  | $ | 5,693 |  |  | $ | 807 |  |  | $ | 154 |  |  | $ | 45,503 |
Year Ending June 30, |  |  |  |  |  |  |  |  |  |  |  |  |  |
2017 |  | 1,598 |  |  | 2,585 |  |  | 1,860 |  |  | 7,179 |  |  | 1,171 |  |  | — |  |  | — |
2018 |  | 898 |  |  | 2,234 |  |  | 3,757 |  |  | 7,345 |  |  | 1,306 |  |  | — |  |  | — |
2019 |  | 144 |  |  | 1,573 |  |  | 3,832 |  |  | 7,604 |  |  | 1,480 |  |  | — |  |  | — |
2020 |  | 51 |  |  | 563 |  |  | 3,909 |  |  | 7,787 |  |  | 1,555 |  |  | — |  |  | — |
Thereafter |  | 4 |  |  | 31 |  |  | 50,973 |  |  | 43,653 |  |  | 8,950 |  |  | — |  |  | — |
|  |  |  | $ | 9,203 |  |  | $ | 64,331 |  |  | $ | 79,261 |  |  | $ | 15,269 |  |  | $ | 154 |  |  | $ | 45,503 |
Total minimum lease payments |  | $ | 5,211 |  |  |  |  |  |  |  |  |  |  |  |  |
Less: imputed interest (0.82% to 10.7%) |  | (248 | ) |  |  |  |  |  |  |  |  |  |  |  |
Present value of future minimum lease payments |  | $ | 4,963 |  |  |  |  |  |  |  |  |  |  |  |  |
Less: current portion |  | 2,904 |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term capital lease obligations |  | $ | 2,059 |  |  |  |  |  |  |  |  |  |  |  |  |
____________ (1) Includes estimated minimum lease payments commencing December 31, 2016 for the new facility under the Lease Agreement assuming the purchase option thereunder is not exercised. Calculation of the annual base rent under the Lease Agreement shown in the table uses the total estimated budget for the project. If the Company were to exercise the purchase option under the Lease Agreement on or before July 17, 2016, the estimated option purchase price in lieu of the lease payments would be $51.1 million payable in the year ending June 30, 2017. This estimate is based upon the preliminary budget delivered at the time the Lease Agreement was executed and includes amounts in respect of construction costs, acquisition of the land upon which the Northlake, Texas facility will be constructed, Lessor and Company fees and expenses (such as legal fees), and preliminary contingency amounts of approximately $5.1 million, in the aggregate. The actual option purchase price would be based upon the amounts set forth in the final budget (see Note 3). (2) Purchase commitments include commitments under coffee purchase contracts for which all delivery terms have been finalized but the related coffee has not been received as of September 30, 2015. Amounts shown in the table above: (a) include all coffee purchase contracts that the Company considers to be from normal purchases; and (b) do not include amounts related to derivative instruments that are recorded at fair value on the Company’s consolidated balance sheets. Self-Insurance Due to the Company’s failure to meet the minimum credit rating criteria for participation in the alternative security program for California self-insurers for workers’ compensation liability, the Company posted a $7.0 million letter of credit at September 30, 2015 and June 30, 2015 as a security deposit with the State of California Department of Industrial Relations Self-Insurance Plans. Non-cancelable Purchase Orders As of September 30, 2015, the Company had committed to purchasing green coffee inventory totaling $36.9 million under fixed-price contracts, other inventory totaling $8.3 million and equipment totaling $0.4 million 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 CBI, which sell coffee in California. The suit alleges that the defendants have failed to issue clear and reasonable warnings in accordance with Proposition 65 that the coffee they produce, distribute and sell contains acrylamide. This lawsuit was filed in Los Angeles Superior Court (the “Court”). CERT has demanded that the alleged violators remove acrylamide from their coffee or provide Proposition 65 warnings on their products and pay $2,500 per day for each and every violation while they are in violation of Proposition 65. 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 joined a Joint Defense Group and, along with the other co-defendants, has answered the complaint, denying, generally, the allegations of the complaint, including the claimed violation of Proposition 65 and further denying CERT’s right to any relief or damages, including the right to require a warning on products. The Joint Defense Group contends that based on proper scientific analysis and proper application of the standards set forth in Proposition 65, exposures to acrylamide from the coffee products pose no significant risk of cancer and, thus, these exposures are exempt from Proposition 65’s warning requirement. To date, the pleadings stage of the case has been completed. The Court has phased trial so that the “no significant risk level” defense, the First Amendment defense, and the preemption defense will be tried first. Fact discovery and expert discovery on these “Phase 1” defenses have been completed, and the parties filed trial briefs. Trial commenced on September 8, 2014, and testimony completed on November 4, 2014, for the three Phase 1 defenses. Following two continuances, the Court heard on April 9, 2015 final arguments on the Phase 1 issues. On July 25, 2015, the Court issued its Proposed Statement of Decision with respect to Phase 1 defenses against the defendants, which was confirmed, on September 2, 2015 in the Final Statement of Decision. The Court has stated that all defendants would be included in “Phase 2,” though this remains unresolved, including the extent of the involvement or participation in discovery. The joint defense group received permission to file an interlocutory appeal, filed the writ petition, and is awaiting the appeals court’s decision as to whether the interlocutory appeal will be heard. In the interim, the matter is stayed for everything other than issues related to case management, if and when Phase 2 commences, and some further work ordered by the Court as to how Phase 2 will be conducted. At this time, the Company is not able to predict the probability of the outcome or estimate of loss, if any, related to this matter.

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