Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Annie's, Inc. (1431897) 10-Q published on Aug 07, 2014 at 5:20 pm
Reporting Period: Jun 29, 2014
The accompanying unaudited condensed consolidated financial statements of Annie’s Inc. have been prepared pursuant to generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for Form 10-Q. The March 31, 2014 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except as noted in Note 7 below) considered necessary for a fair statement have been included. The results for the three months ended June 30, 2014 are not necessarily indicative of the results of operations to be expected for the entire fiscal year.
On April 2, 2014, the Company acquired a snack manufacturing business including a plant in Joplin, Missouri (the “Joplin Plant”) for $6.0 million of cash, plus the value of inventory and supplies at closing. The Joplin Plant has been the primary manufacturer of the Company's cookie and cracker products for more than ten years. The Company funded the acquisition with $7.2 million in cash on hand and restricted cash of $0.3 million, which was allocated to tangible assets acquired and liabilities assumed based on their respective estimated fair values on the date of acquisition. The excess of the consideration paid over the fair value of the identifiable net assets acquired of $1.3 million was recorded as goodwill, of which $0.2 million is expected to be deductible for tax purposes. In connection with the closing of the acquisition, the Company entered into a three-year supply agreement with an affiliate of Safeway Inc. (“Safeway”), pursuant to which the Company will manufacture products for the affiliate. The Company recorded deferred revenue of $1.9 million related to this supply agreement that will be recorded as revenue over the term of the agreement. Since the date of acquisition, the Joplin Plant generated net sales to Safeway of $2.0 million and had net income of $0.1 million through June 30, 2014. The preliminary allocation of the aggregate cost of the acquisition was as follows (in thousands):
On June 18, 2014, Anna H. Goodman, filed a derivative complaint purportedly on behalf of Annie’s, Inc., against the Company’s Board and Solera Capital LLC. On July 29, 2014 Dan Stanick, represented by the same law firm as Ms. Goodman, filed substantially the same complaint in the Superior Court of California, County of Alameda. These lawsuits generally allege breaches of fiduciary duties by each of the Board members and Solera Capital, by engaging in alleged wrongful conduct, including conduct complained of in the securities litigation matters described above, and seek unspecified monetary damages and other relief against the defendants.
We and our Board of Directors are committed to maintaining a strong internal control environment, and believe that these remediation efforts represent significant improvements in our control environment and in our controls over the accounting for trade promotion costs and contract manufacturing. Additional controls may also be required over time. The identified material weakness in internal control will not be considered fully addressed until the internal controls over these areas have been in operation for a sufficient period of time for our management to conclude that the material weakness has been fully remediated. We continue to work on implementing and testing the new controls in order to make this final determination.
On or about June 11, 2014, Steve Taormina filed a purported class action complaint against the Company, and certain of our current and former officers, in the United States District Court for the Northern District of California. The lawsuit alleges violations of the Exchange Act by the Company and the officers for making allegedly material false and misleading public statements regarding the Company’s business and operations between August 8, 2013 and June 3, 2014 and seeks unspecified monetary damages and other relief against the defendants. On June 30, 2014, Donna Weiss filed a second purported class action complaint in the Northern District of California, against the same parties, containing substantially similar allegations and seeking a substantially similar recovery.