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Changes in Accounting Principles and Corrections to Previously Issued Financial Statements | 6 Months Ended
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Dec. 31, 2018
Accounting Changes and Error Corrections [Abstract] |
Changes in Accounting Principles and Corrections to Previously Issued Financial Statements | Changes in Accounting Principles and Corrections to Previously Issued Financial Statements Effective June 30, 2018, the Company changed its method of accounting for its coffee, tea and culinary products from the LIFO basis to the FIFO basis. Total inventories accounted for utilizing the LIFO cost flow assumption represented 91% of the Company’s total inventories as of June 30, 2018 prior to this change in method. The Company believes that this change is preferable as it better matches revenues with associated expenses, aligns the accounting with the physical flow of inventory, and improves comparability with the Company’s peers. Additionally, effective June 30, 2018, the Company implemented a change in accounting principle for freight costs incurred to transfer goods from a distribution center to a branch warehouse and warehousing overhead costs incurred to store and ready goods prior to their sale, from expensing such costs as incurred within selling expenses to capitalizing such costs as inventory and expensing through cost of goods sold. The Company has determined that it is preferable to capitalize such costs into inventory and expense through cost of goods sold because it better represents the costs incurred in bringing the inventory to its existing condition and location for sale to customers and it is consistent with the Company’s accounting treatment of similar costs. In connection with these changes in accounting principles, subsequent to the issuance of the Company's consolidated financial statements for the fiscal year ended June 30, 2017, the Company determined that freight associated with certain non-coffee product lines ("allied") was incorrectly expensed as incurred in selling expenses, and the overhead variances and purchase price variances (“PPVs”) associated with these product lines were incorrectly expensed as incurred in cost of goods sold for the fiscal years ended June 30, 2017 and 2016 and for the first three quarters in the fiscal year ended June 30, 2018. These costs should have been capitalized as inventory costs in accordance with ASC 330, "Inventory." Accordingly, the Company has corrected the accompanying condensed consolidated financial statements for the three and six months ended December 31, 2017 to capitalize the appropriate portion of these costs in ending inventory and to reclassify remaining allied freight to cost of goods sold. In accordance with SFAS No. 154, “Accounting Changes and Error Corrections,” the change in method of accounting for coffee, tea and culinary products and the change in accounting principle for freight and warehousing overhead costs have been retrospectively applied, and the corrections relating to the reclassification and capitalization of allied freight and the capitalization of allied overhead variances and PPVs have been made, to all prior periods presented herein. The cumulative effect on retained earnings for these changes as of July 1, 2017 is $17.6 million. In addition to the foregoing, during the six months ended December 31, 2018, the Company adopted new accounting standards that required retrospective application. The Company updated the condensed consolidated statements of income as a result of adopting ASU 2017-07, and updated the condensed consolidated statements of cash flows as a result of adopting ASU 2016-18. See Note 2. The following table presents the impact of these changes on the Company's condensed consolidated statement of operations for the three months ended December 31, 2017:
|  | Three Months Ended December 31, 2017
(In thousands, except per share data) |  | As Previously Reported |  | LIFO to FIFO Adjustment |  | Preferable Freight and Warehousing Adjustments |  | Corrections of Freight, Overhead Variances and PPVs |  | ASU 2017-07 Adjustments(1) |  | Retrospectively Adjusted
Cost of goods sold |  | $ | 101,847 |  |  | $ | 2,330 |  |  | $ | 5,226 |  |  | $ | 1,772 |  |  | $ | (86 | ) |  | $ | 111,089 |
Gross profit |  | $ | 65,519 |  |  | $ | (2,330 | ) |  | $ | (5,226 | ) |  | $ | (1,772 | ) |  | $ | 86 |  |  | $ | 56,277 |
Selling expenses |  | $ | 49,328 |  |  | $ | — |  |  | $ | (5,878 | ) |  | $ | (1,036 | ) |  | $ | (287 | ) |  | $ | 42,127 |
General and administrative expenses |  | $ | 13,914 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 391 |  |  | $ | 14,305 |
Operating expenses |  | $ | 63,077 |  |  | $ | — |  |  | $ | (5,878 | ) |  | $ | (1,036 | ) |  | $ | 104 |  |  | $ | 56,267 |
Income from operations |  | $ | 2,442 |  |  | $ | (2,330 | ) |  | $ | 652 |  |  | $ | (736 | ) |  | $ | (18 | ) |  | $ | 10 |
Interest expense |  | $ | (861 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (1,645 | ) |  | $ | (2,506 | )
Other, net |  | $ | 554 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,663 |  |  | $ | 2,217 |
Total other expense |  | $ | (300 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 18 |  |  | $ | (282 | )
Income (loss) before taxes |  | $ | 2,142 |  |  | $ | (2,330 | ) |  | $ | 652 |  |  | $ | (736 | ) |  | $ | — |  |  | $ | (272 | )
Income tax expense |  | $ | 20,910 |  |  | $ | (3,978 | ) |  | $ | 1,113 |  |  | $ | (1,257 | ) |  | $ | — |  |  | $ | 16,788 |
Net loss |  | $ | (18,768 | ) |  | $ | 1,648 |  |  | $ | (461 | ) |  | $ | 521 |  |  | $ | — |  |  | $ | (17,060 | )
Net loss available to common stockholders |  | $ | (18,897 | ) |  | $ | 1,648 |  |  | $ | (461 | ) |  | $ | 521 |  |  | $ | — |  |  | $ | (17,189 | )
Net loss available to common stockholders per common share—basic |  | $ | (1.13 | ) |  | $ | 0.10 |  |  | $ | (0.03 | ) |  | $ | 0.03 |  |  | $ | — |  |  | $ | (1.03 | )
Net loss available to common stockholders per common share—diluted |  | $ | (1.13 | ) |  | $ | 0.10 |  |  | $ | (0.03 | ) |  | $ | 0.03 |  |  | $ | — |  |  | $ | (1.03 | )
_____________ (1) Reflects changes resulting from the adoption of ASU 2017-07. See Note 2. The following table presents the impact of these changes on the Company's condensed consolidated statement of operations for the six months ended December 31, 2017:
| Six Months Ended December 31, 2017
(In thousands, except per share data) | As Previously Reported |  | LIFO to FIFO Adjustment |  | Preferable Freight and Warehousing Adjustments |  | Corrections of Freight, Overhead Variances and PPVs |  | ASU 2017-07 Adjustments(1) |  | Retrospectively Adjusted
Cost of goods sold | $ | 184,553 |  |  | $ | 1,885 |  |  | $ | 9,689 |  |  | $ | 721 |  |  | $ | (129 | ) |  | $ | 196,719 |
Gross profit | $ | 114,526 |  |  | $ | (1,885 | ) |  | $ | (9,689 | ) |  | $ | (721 | ) |  | $ | 129 |  |  | $ | 102,360 |
Selling expenses | $ | 88,243 |  |  | $ | — |  |  | $ | (10,923 | ) |  | $ | (2,078 | ) |  | $ | (258 | ) |  | $ | 74,984 |
General and administrative expenses | $ | 25,241 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 423 |  |  | $ | 25,664 |
Operating expenses | $ | 113,342 |  |  | $ | — |  |  | $ | (10,923 | ) |  | $ | (2,078 | ) |  | $ | 165 |  |  | $ | 100,506 |
Income from operations | $ | 1,184 |  |  | $ | (1,885 | ) |  | $ | 1,234 |  |  | $ | 1,357 |  |  | $ | (36 | ) |  | $ | 1,854 |
Interest expense | $ | (1,384 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (3,290 | ) |  | $ | (4,674 | )
Other, net | $ | 641 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3,326 |  |  | $ | 3,967 |
Total other expense | $ | (730 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 36 |  |  | $ | (694 | )
Income before taxes | $ | 454 |  |  | $ | (1,885 | ) |  | $ | 1,234 |  |  | $ | 1,357 |  |  | $ | — |  |  | $ | 1,160 |
Income tax expense | $ | 20,200 |  |  | $ | (3,370 | ) |  | $ | 1,264 |  |  | $ | (714 | ) |  | $ | — |  |  | $ | 17,380 |
Net loss | $ | (19,746 | ) |  | $ | 1,485 |  |  | $ | (30 | ) |  | $ | 2,071 |  |  | $ | — |  |  | $ | (16,220 | )
Net loss available to common stockholders | $ | (19,875 | ) |  | $ | 1,485 |  |  | $ | (30 | ) |  | $ | 2,071 |  |  | $ | — |  |  | $ | (16,349 | )
Net loss available to common stockholders per common share—basic | $ | (1.19 | ) |  | $ | 0.09 |  |  | — |  |  | $ | 0.12 |  |  | $ | — |  |  | $ | (0.98 | )
Net loss available to common stockholders per common share—diluted | $ | (1.19 | ) |  | $ | 0.09 |  |  | $ | — |  |  | $ | 0.12 |  |  | $ | — |  |  | $ | (0.98 | )
___________________ (1) Reflects changes resulting from the adoption of ASU 2017-07. See Note 2. The following table presents the impact of these changes on the Company's condensed consolidated statement of cash flows for the six months ended December 31, 2017:
|  | Six Months Ended December 31, 2017
(In thousands) |  | As Previously Reported |  | LIFO to FIFO Adjustment |  | Preferable Freight and Warehousing Adjustments |  | Corrections of Freight, Overhead Variances and PPVs |  | Retrospectively Adjusted
Net loss |  | $ | (19,746 | ) |  | $ | 1,485 |  |  | $ | (30 | ) |  | $ | 2,071 |  |  | $ | (16,220 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |  |  |
Deferred income taxes |  | $ | 19,375 |  |  | $ | (3,370 | ) |  | $ | 1,264 |  |  | $ | (714 | ) |  | $ | 16,555 |
Net losses (gains) on derivative instruments and investments |  | $ | 1,033 |  |  | $ | (1,759 | ) |  | $ | — |  |  | $ | — |  |  | $ | (726 | )
Change in operating assets and liabilities:
Inventories |  | $ | (7,682 | ) |  | $ | 3,644 |  |  | $ | (1,234 | ) |  | $ | (1,357 | ) |  | $ | (6,629 | )
Derivative assets (liabilities), net |  | $ | (3,000 | ) |  | $ | (38 | ) |  | $ | — |  |  | $ | — |  |  | $ | (3,038 | )
Accounts payable |  | $ | 1,264 |  |  | $ | 38 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,302 |
The impacts shown above have also been reflected in the Company’s condensed consolidated statements of comprehensive loss for the three and six months ended December 31, 2017 as follows:
| Three Months Ended December 31, 2017 |  | Six Months Ended December 31, 2017
(In thousands) | As Previously Reported |  | Retrospectively Adjusted |  | As Previously Reported |  | Retrospectively Adjusted
Net loss | $ | (18,768 | ) |  | $ | (17,060 | ) |  | $ | (19,746 | ) |  | $ | (16,220 | )
Unrealized losses on derivative instruments designated as cash flow hedges, net of tax | $ | (1,279 | ) |  | $ | (1,279 | ) |  | $ | (1,711 | ) |  | $ | (1,707 | )
Losses (gains) on derivative instruments designated as cash flow hedges reclassified to cost of goods sold, net of tax | $ | 365 |  |  | $ | 64 |  |  | $ | 369 |  |  | $ | (708 | )
Total comprehensive loss, net of tax | $ | (19,682 | ) |  | $ | (18,275 | ) |  | $ | (21,088 | ) |  | $ | (18,635 | )

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- Definition The entire disclosure for reporting accounting changes, excludes error corrections information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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