SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(mark one)
☑Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended February 27, 2016
OR
☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File Number: 000-04892
CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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64-0500378 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S Employer Identification No.) |
3320 Woodrow Wilson Avenue, Jackson, Mississippi 39209
(Address of principal executive offices)(Zip Code)
(601) 948-6813
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☑ No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer ☑ |
Accelerated filer ☐ |
Non – Accelerated filer ☐ (Do not check if a smaller reporting company) |
Smaller reporting company ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
There were 43,736,481 shares of Common Stock, $0.01 par value, and 4,800,000 shares of Class A Common Stock, $0.01 par value, outstanding as of March 25, 2016.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
FOR THE QUARTER ENDED FEBRUARY 27, 2016
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Page Number |
Part I. |
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Financial Information |
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Item 1. |
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Condensed Consolidated Balance Sheets - |
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Item 2. |
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Management’s Discussion and Analysis of |
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Item 3. |
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23 | |
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Item 4. |
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23 | |
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Part II. |
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Other Information |
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Item 1. |
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24 | |
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Item 1A. |
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25 | |
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Item 6. |
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26 | |
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27 |
ITEM 1. FINANCIAL STATEMENTS
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
February 27, 2016 |
May 30, 2015 |
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(unaudited) |
||||||
ASSETS |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$ |
8,139 |
$ |
8,667 | ||
Investment securities available-for-sale |
378,910 | 249,961 | ||||
Trade and other receivables (less allowance for doubtful accounts of |
||||||
$450 and $513 at February 27, 2016 and May 30, 2015, respectively) |
110,765 | 101,977 | ||||
Inventories |
154,165 | 146,260 | ||||
Prepaid expenses and other current assets |
2,289 | 2,099 | ||||
Total current assets |
654,268 | 508,964 | ||||
Property, plant and equipment, net |
382,271 | 358,790 | ||||
Goodwill |
29,196 | 29,196 | ||||
Other investments |
47,971 | 18,843 | ||||
Other intangible assets |
5,495 | 7,560 | ||||
Other assets |
5,031 | 5,300 | ||||
TOTAL ASSETS |
$ |
1,124,232 |
$ |
928,653 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
Current liabilities: |
||||||
Accounts payable and accrued expenses |
$ |
70,338 |
$ |
70,821 | ||
Accrued dividends payable |
21,388 | 15,372 | ||||
Current maturities of long-term debt |
6,159 | 10,065 | ||||
Income taxes payable |
7,946 | 5,288 | ||||
Deferred income taxes |
21,796 | 30,391 | ||||
Total current liabilities |
127,627 | 131,937 | ||||
Long-term debt, less current maturities |
21,081 | 40,795 | ||||
Other noncurrent liabilities |
6,301 | 5,745 | ||||
Deferred income taxes |
53,207 | 45,614 | ||||
Total liabilities |
208,216 | 224,091 | ||||
Commitments and Contingencies - see Note 4 |
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Stockholders’ equity: |
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Common stock, $0.01 par value, 120,000 shares authorized, 70,261 shares issued, |
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and 43,738 and 43,698 shares outstanding, at February 27, 2016 and May 30, 2015, respectively |
703 | 703 | ||||
Class A common stock, $0.01 par value, 4,800 shares authorized, |
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issued and outstanding at February 27, 2016 and May 30, 2015 |
48 | 48 | ||||
Paid-in capital |
45,473 | 43,304 | ||||
Retained earnings |
890,838 | 679,969 | ||||
Accumulated other comprehensive income (loss), net of tax |
(812) | 22 | ||||
Common stock in treasury at cost – 26,523 and 26,563 shares at February 27, 2016 |
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and May 30, 2015, respectively |
(22,254) | (20,482) | ||||
Total Cal-Maine Foods, Inc. stockholders’ equity |
913,996 | 703,564 | ||||
Noncontrolling interests in consolidated entities |
2,020 | 998 | ||||
Total stockholders’ equity |
916,016 | 704,562 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
1,124,232 |
$ |
928,653 |
See Notes to Condensed Consolidated Financial Statements.
2
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
13 Weeks Ended |
39 Weeks Ended |
|||||||||||
February 27, 2016 |
February 28, 2015 |
February 27, 2016 |
February 28, 2015 |
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Net sales |
$ |
449,760 |
$ |
437,556 |
$ |
1,605,630 |
$ |
1,173,117 | ||||
Cost of sales |
317,034 | 325,039 | 998,236 | 886,790 | ||||||||
Gross profit |
132,726 | 112,517 | 607,394 | 286,327 | ||||||||
Selling, general, and administrative expense |
46,955 | 40,492 | 135,356 | 117,542 | ||||||||
Operating income |
85,771 | 72,025 | 472,038 | 168,785 | ||||||||
Other income (expense): |
||||||||||||
Interest income (expense), net |
1,377 | (351) | 2,020 | (1,362) | ||||||||
Royalty income |
362 | 331 | 1,266 | 2,355 | ||||||||
Patronage dividends |
6,879 | 4,336 | 6,879 | 4,581 | ||||||||
Equity in income of affiliates |
1,542 | 817 | 3,574 | 1,462 | ||||||||
Other, net |
1,584 | (84) | 404 | 549 | ||||||||
11,744 | 5,049 | 14,143 | 7,585 | |||||||||
Income before income taxes and noncontrolling interest |
97,515 | 77,074 | 486,181 | 176,370 | ||||||||
Income tax expense |
33,173 | 26,115 | 167,839 | 60,365 | ||||||||
Net income before noncontrolling interest |
64,342 | 50,959 | 318,342 | 116,005 | ||||||||
Less: Net income attributable to noncontrolling interest |
178 | 77 | 1,925 | 865 | ||||||||
Net income attributable to Cal-Maine Foods, Inc. |
$ |
64,164 |
$ |
50,882 |
$ |
316,417 |
$ |
115,140 | ||||
Net income per common share attributable to Cal-Maine Foods, Inc.: |
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Basic |
$ |
1.33 |
$ |
1.06 |
$ |
6.57 |
$ |
2.39 | ||||
Diluted |
$ |
1.33 |
$ |
1.05 |
$ |
6.54 |
$ |
2.38 | ||||
Dividends per common share |
$ |
0.441 |
$ |
0.350 |
$ |
2.175 |
$ |
0.793 | ||||
Weighted average shares outstanding: |
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Basic |
48,204 | 48,137 | 48,177 | 48,134 | ||||||||
Diluted |
48,367 | 48,447 | 48,359 | 48,416 |
See Notes to Condensed Consolidated Financial Statements.
3
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
13 Weeks Ended |
39 Weeks Ended |
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February 27, 2016 |
February 28, 2015 |
February 27, 2016 |
February 28, 2015 |
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Net income, including noncontrolling interests |
$ |
64,342 |
$ |
50,959 |
$ |
318,342 |
$ |
116,005 | ||||
Other comprehensive loss, before tax: |
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Unrealized holding loss on available-for-sale securities, net of reclassification adjustments |
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(897) |
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(42) |
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(1,355) |
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(115) |
Income tax benefit related to items of other comprehensive income |
341 | 17 | 521 | 45 | ||||||||
Other comprehensive loss, net of tax |
(556) | (25) | (834) | (70) | ||||||||
Comprehensive income |
63,786 | 50,934 | 317,508 | 115,935 | ||||||||
Less: comprehensive income attributable to the noncontrolling interest |
178 | 77 | 1,925 | 865 | ||||||||
Comprehensive income attributable to Cal-Maine Foods, Inc. |
$ |
63,608 |
$ |
50,857 |
$ |
315,583 |
$ |
115,070 |
See Notes to Condensed Consolidated Financial Statements.
4
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
39 Weeks Ended |
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February 27, 2016 |
February 28, 2015 |
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Operating activities: |
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Net income including noncontrolling interest |
$ |
318,342 |
$ |
116,005 | ||
Depreciation and amortization |
33,185 | 30,201 | ||||
Other adjustments, net |
(18,807) | (9,852) | ||||
Net cash provided by operations |
332,720 | 136,354 | ||||
Investing activities: |
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Purchase of investments |
(352,315) | (139,956) | ||||
Sales of investments |
221,879 | 109,489 | ||||
Investment in joint ventures |
(29,209) | (8,160) | ||||
Purchases of property, plant and equipment |
(55,119) | (62,109) | ||||
Payments received on notes receivable and from affiliates |
4,677 | 1,409 | ||||
Net proceeds from disposal of property, plant and equipment |
2,724 | 2,031 | ||||
Net cash used in investing activities |
(207,363) | (97,296) | ||||
Financing activities: |
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Proceeds from issuance of common stock from treasury, net (including tax benefit on nonqualifying disposition of incentive stock options) |
- |
60 | ||||
Purchase of company stock |
(1,831) |
- |
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Distributions to noncontrolling interests |
(903) | (941) | ||||
Principal payments on long-term debt |
(23,620) | (7,726) | ||||
Payments of dividends |
(99,531) | (31,938) | ||||
Net cash used in financing activities |
(125,885) | (40,545) | ||||
Net change in cash and cash equivalents |
(528) | (1,487) | ||||
Cash and cash equivalents at beginning of period |
8,667 | 14,521 | ||||
Cash and cash equivalents at end of period |
$ |
8,139 |
$ |
13,034 |
See Notes to Condensed Consolidated Financial Statements.
5
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
February 27, 2016
(unaudited)
1. Presentation of Interim Information
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the results for the interim periods presented have been included. The preparation of condensed consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions affected reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions. Operating results for the thirteen and thirty-nine weeks ended February 27, 2016 are not necessarily indicative of the results that may be expected for the year ending May 28, 2016.
The condensed consolidated balance sheet at May 30, 2015 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.
For further information, refer to the consolidated financial statements and footnotes thereto included in Cal-Maine Foods, Inc.'s annual report on Form 10-K for the fiscal year ended May 30, 2015. References to “we,” “us,” “our,” or the “Company” refer to Cal-Maine Foods, Inc.
2. Stock Based Compensation
Total stock based compensation expense for the thirty-nine weeks ended February 27, 2016 and February 28, 2015 was $2.2 million and $1.7 million, respectively.
Liabilities associated with Stock Appreciation Rights as of February 27, 2016 and May 30, 2015 were zero and $1.4 million, respectively. The liabilities for our 2005 Stock Appreciation Rights are included in the line item “Accounts payable and accrued expenses” in our Condensed Consolidated Balance Sheets.
Unrecognized compensation expense as a result of non-vested shares of the 2012 Omnibus Long-Term Incentive Plan at February 27, 2016 was $6.4 million and will be recorded over a weighted average period of 2.3 years. Refer to Note 11 of our May 30, 2015 audited financial statements for further information on our stock compensation plans.
At February 27, 2016, there were 290,600 restricted shares outstanding, with a weighted average grant date fair value of $35.94 per share. A summary of the Company’s restricted share activity for the thirty-nine weeks ended February 27, 2016 follows:
Number of Shares |
Weighted Average Grant Date Fair Value |
||||
Outstanding, May 30, 2015 |
335,140 |
$ |
27.24 | ||
Granted |
78,560 | 49.39 | |||
Vested |
(121,250) | 20.70 | |||
Forfeited |
(1,850) | 30.76 | |||
Outstanding, February 27, 2016 |
290,600 |
$ |
35.94 |
6
3. Inventories
Inventories consisted of the following (in thousands):
February 27, 2016 |
May 30, 2015 |
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Flocks |
$ |
90,929 |
$ |
87,280 | ||
Eggs |
15,742 | 15,507 | ||||
Feed and supplies |
47,494 | 43,473 | ||||
$ |
154,165 |
$ |
146,260 |
4. Contingencies
Financial Instruments
The Company maintained cash collateralized standby letters of credit (“LOC”) for the benefit of certain insurance companies totaling $3.7 million at February 27, 2016. The cash collateralizing the LOCs is included in the line item “Other assets” in the Condensed Consolidated Balance Sheets. As a result, none of the LOCs are recorded as a liability on the consolidated balance sheets.
Legal Contingencies
The Company is a defendant in certain legal actions, and intends to vigorously defend its position in these actions. If the Company’s assessment of a contingency indicates it is probable a material loss has been incurred and the amount of the liability can be reasonably estimated, the estimated liability is accrued in the Company’s financial statements. If the assessment indicates a potential material loss contingency is not probable, but is reasonably possible, or probable but cannot be reasonably estimated, then the nature of the contingent liability, together with an estimate of the possible loss or range of possible loss will be disclosed, or a statement will be made that such an estimate cannot be made.
These legal actions are discussed in detail at Part II, Item 1, of this report.
7
5. Net Income per Common Share
Basic net income per share was calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share was calculated by dividing net income by the weighted-average number of common shares outstanding during the period plus the dilutive effects of options and restricted stock. The computations of basic and diluted net income per share attributable to the Company are as follows (in thousands, except per share data):
13 Weeks Ended |
39 Weeks Ended |
||||||||||
February 27, 2016 |
February 28, 2015 |
February 27, 2016 |
February 28, 2015 |
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Net income attributable to |
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Cal-Maine Foods, Inc. |
$ |
64,164 |
$ |
50,882 |
$ |
316,417 |
$ |
115,140 | |||
Basic weighted-average common shares |
48,204 | 48,137 | 48,177 | 48,134 | |||||||
Effect of dilutive securities: |
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Restricted shares |
163 | 288 | 182 | 260 | |||||||
Common stock options |
- |
22 |
- |
22 | |||||||
Dilutive potential common shares |
48,367 | 48,447 | 48,359 | 48,416 | |||||||
Net income per common share |
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attributable to Cal-Maine Foods, Inc.: |
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Basic |
$ |
1.33 |
$ |
1.06 |
$ |
6.57 |
$ |
2.39 | |||
Diluted |
$ |
1.33 |
$ |
1.05 |
$ |
6.54 |
$ |
2.38 |
6. Accrued Dividends Payable and Dividends per Common Share
We make an accrual of dividends payable at the end of each quarter according to the Company’s dividend policy adopted by its Board of Directors. According to the policy, the Company pays a dividend to shareholders of its Common Stock and Class A Common Stock on a quarterly basis for each quarter for which the Company reports net income attributable to Cal-Maine Foods, Inc. computed in accordance with generally accepted accounting principles in an amount equal to one-third (1/3) of such quarterly income. Dividends are paid to shareholders of record as of the 60th day following the last day of such quarter, except for the fourth fiscal quarter. For the fourth quarter, the Company will pay dividends to shareholders of record on the 65th day after the quarter end. Dividends are payable on the 15th day following the record date. Following a quarter for which the Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will not pay a dividend for a subsequent profitable quarter until the Company is profitable on a cumulative basis computed from the date of the last quarter for which a dividend was paid. The amount of the accrual appears on the Condensed Consolidated Balance Sheets as “Accrued dividends payable.”
8
On our condensed consolidated statement of income, we determine dividends per common share in accordance with the computation in the following table (in thousands, except per share data):
13 Weeks Ended |
39 Weeks Ended |
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February 27, 2016 |
February 28, 2015 |
February 27, 2016 |
February 28, 2015 |
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Net income attributable to Cal-Maine Foods, Inc. available for dividend |
$ |
64,164 |
$ |
50,882 |
$ |
316,417 |
$ |
115,140 | |||
1/3 of net income attributable to Cal-Maine Foods, Inc. |
21,388 | 16,961 | 105,472 | 38,380 | |||||||
Common stock outstanding (shares) |
43,738 | 43,672 | |||||||||
Class A common stock outstanding (shares) |
4,800 | 4,800 | |||||||||
Total common stock outstanding (shares) |
48,538 | 48,472 | |||||||||
Dividends per common share* |
$ |
0.441 |
$ |
0.350 |
$ |
2.175 |
$ |
0.793 |
*Dividends per common share = 1/3 of Net income (loss) attributable to Cal-Maine Foods, Inc. available for dividend ÷ Total common stock outstanding (shares)
7. Fair Value Measurements
The Company is required to categorize both financial and nonfinancial assets and liabilities based on the following fair value hierarchy. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable, and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor.
· |
Level 1 - Quoted prices in active markets for identical assets or liabilities |
· |
Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly |
· |
Level 3 - Unobservable inputs for the asset or liability that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
The disclosure of fair value of certain financial assets and liabilities that are recorded at cost are as follows:
Cash and cash equivalents: The carrying amount approximates fair value due to the short maturity of these instruments.
9
Long-term debt: The carrying value of the Company’s long-term debt is at its stated value. We have not elected to carry our long-term debt at fair value. Fair values for debt are based on quoted market prices or published forward interest rate curves, which are level 2 inputs. Estimated fair values are management’s estimate, which is a level 3 input; however, when there is no readily available market data, the estimated fair values may not represent the amounts that could be realized in a current transaction, and the fair values could change significantly. The fair value and carrying value of the Company’s borrowings under its credit facilities and long-term debt were as follows (in thousands):
February 27, 2016 |
May 30, 2015 |
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Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
||||||||
2.0% – 6.84% Notes payable |
$ |
27,240 |
$ |
27,586 |
$ |
44,549 |
$ |
45,158 | |||
Series A Senior Secured Notes at 5.45% |
- |
- |
6,311 | 6,312 | |||||||
$ |
27,240 |
$ |
27,586 |
$ |
50,860 |
$ |
51,470 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis
In accordance with the fair value hierarchy described above, the following table shows the fair value of financial assets and liabilities measured at fair value on a recurring basis as of February 27, 2016 and May 30, 2015):
Total |
||||||||||||
February 27, 2016 |
Level 1 |
Level 2 |
Level 3 |
Balance |
||||||||
Assets |
||||||||||||
US government and agency obligations |
$ |
- |
$ |
10,991 |
$ |
- |
$ |
10,991 | ||||
Municipal bonds |
- |
80,177 |
- |
80,177 | ||||||||
Commercial paper |
- |
2,989 |
- |
2,989 | ||||||||
Corporate bonds |
- |
266,475 |
- |
266,475 | ||||||||
Foreign government obligations |
- |
2,056 |
- |
2,056 | ||||||||
Asset backed securities |
- |
12,686 |
- |
12,686 | ||||||||
Mutual Funds |
5,415 |
- |
- |
5,415 | ||||||||
Total assets measured at fair value |
$ |
5,415 |
$ |
375,374 |
$ |
- |
$ |
380,789 |
Total |
||||||||||||
May 30, 2015 |
Level 1 |
Level 2 |
Level 3 |
Balance |
||||||||
Assets |
||||||||||||
US government and agency obligations |
$ |
- |
$ |
9,630 |
$ |
- |
$ |
9,630 | ||||
Municipal bonds |
- |
76,311 |
- |
76,311 | ||||||||
Certificates of deposit |
- |
2,002 |
- |
2,002 | ||||||||
Commercial paper |
- |
7,496 |
- |
7,496 | ||||||||
Corporate bonds |
- |
136,364 |
- |
136,364 | ||||||||
Foreign government obligations |
- |
1,045 |
- |
1,045 | ||||||||
Asset backed securities |
- |
14,352 |
- |
14,352 | ||||||||
Mutual Funds |
4,508 |
- |
- |
4,508 | ||||||||
Commodity contracts |
- |
82 |
- |
82 | ||||||||
Total assets measured at fair value |
$ |
4,508 |
$ |
247,282 |
$ |
- |
$ |
251,790 | ||||
Liabilities |
||||||||||||
Contingent consideration |
$ |
- |
$ |
- |
$ |
1,024 |
$ |
1,024 | ||||
Total liabilities measured at fair value |
$ |
- |
$ |
- |
$ |
1,024 |
$ |
1,024 |
Investment securities – available-for-sale, classified as level 2, consist of U.S. government and agency obligations, taxable and tax exempt municipal bonds, zero coupon municipal bonds, foreign government obligations, asset backed securities and corporate bonds with maturities of three months or longer when purchased. We classify these securities as
10
current, because amounts invested are available for current operations. Observable inputs for these securities are yields, credit risks, default rates, and volatility.
The Company applies fair value accounting guidance to measure non-financial assets and liabilities associated with business acquisitions. These assets and liabilities are measured at fair value for the initial purchase price allocation and are subject to recurring revaluations. The fair value of non-financial assets acquired is determined internally. Our internal valuation methodology for non-financial assets takes into account the remaining estimated life of the assets acquired and what management believes is the market value for those assets based on their highest and best use. Liabilities for contingent consideration (earn-outs) take into account commodity prices based on published forward commodity price curves, projected future egg prices as of the date of the estimate, and projected future cash flows expected to be received as a result of a business acquisition (Refer to Note 2 in the Annual Report on Form 10-K). Given the unobservable nature of these inputs, they are deemed to be Level 3 fair value measurements. During the thirty-nine weeks ended February 27, 2016, the final payment of $1.0 million was made related to contingent consideration.
Thirty-nine weeks ended February 27, 2016 |
||
Balance at May 30, 2015 |
$ |
1,024 |
(Gains)/Losses recognized in earnings |
- |
|
Actual payments made |
(1,024) | |
Balance at February 27, 2016 |
$ |
- |
8. Investment Securities
The following represents the Company’s investment securities as of February 27, 2016 and May 30, 2015 (in thousands):
February 27, 2016 |
Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Estimated Fair Value |
|||||||
US government and agency obligations |
$ |
10,989 |
$ |
2 |
$ |
- |
$ |
10,991 | |||
Municipal bonds |
79,951 | 226 |
- |
80,177 | |||||||
Commercial paper |
2,992 |
- |
3 | 2,989 | |||||||
Corporate bonds |
267,802 |
- |
1,327 | 266,475 | |||||||
Foreign government obligations |
2,056 |
- |
- |
2,056 | |||||||
Asset backed securities |
12,687 |
- |
1 | 12,686 | |||||||
Mutual funds |
3,561 |
- |
25 | 3,536 | |||||||
Total current investment securities |
$ |
380,038 |
$ |
228 |
$ |
1,356 |
$ |
378,910 | |||
Mutual funds |
1,493 | 386 |
- |
1,879 | |||||||
Total noncurrent investment securities |
$ |
1,493 |
$ |
386 |
$ |
- |
$ |
1,879 |
11
May 30, 2015 |
Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Estimated Fair Value |
|||||||
US government and agency obligations |
$ |
9,609 |
$ |
21 |
$ |
- |
$ |
9,630 | |||
Municipal bonds |
76,228 | 83 |
- |
76,311 | |||||||
Certificates of deposit |
2,001 | 1 |
- |
2,002 | |||||||
Commercial paper |
7,491 | 5 |
- |
7,496 | |||||||
Corporate bonds |
136,411 |
- |
47 | 136,364 | |||||||
Foreign government obligations |
1,042 | 3 |
- |
1,045 | |||||||
Asset backed securities |
14,356 |
- |
4 | 14,352 | |||||||
Mutual funds |
2,758 | 3 |
- |
2,761 | |||||||
Total current investment securities |
$ |
249,896 |
$ |
116 |
$ |
51 |
$ |
249,961 | |||
Mutual funds |
1,199 | 548 |
- |
1,747 | |||||||
Total noncurrent investment securities |
$ |
1,199 |
$ |
548 |
$ |
- |
$ |
1,747 |
Proceeds from sales of available-for-sale securities were $221.9 million and $109.5 million during the thirty-nine weeks ended February 27, 2016 and February 28, 2015, respectively. Gross realized gains on those sales during the thirty-nine weeks ended February 27, 2016 and February 28, 2015 were $100,000 and $68,000, respectively. Gross realized losses on those sales during the thirty-nine weeks ended February 27, 2016 and February 28, 2015 were $102,000 and $6,000, respectively. For purposes of determining gross realized gains and losses, the cost of securities sold is based on the specific identification method.
Unrealized holding losses, net of tax, on available-for-sale securities classified as current in the amount of $740,000 and $128,000 were recorded in other comprehensive income (loss) for the thirty-nine weeks ended February 27, 2016 and February 28, 2015, respectively. Unrealized holding gains (losses), net of tax, on long-term available-for-sale securities of $(94,000) and $58,000 were recorded in other comprehensive income (loss) for the thirty-nine weeks ended February 27, 2016 and February 28, 2015, respectively.
Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Contractual maturities at February 27, 2016, are as follows (in thousands):
Estimated Fair Value |
||
Within one year |
$ |
206,189 |
1-5 years |
169,185 | |
Total |
$ |
375,374 |
9. Equity
The following reflects the equity activity, including our noncontrolling interest, for the thirty-nine weeks ended February 27, 2016:
Cal-Maine Foods, Inc. Stockholders |
||||||||||||||||
Common Stock |
||||||||||||||||
Class A |
Treasury |
Paid In |
Accum. Other |
Retained |
Noncontrolling |
|||||||||||
Amount |
Amount |
Amount |
Capital |
Comp. Loss |
Earnings |
Interests |
Total |
|||||||||
Balance at May 30, 2015 |
$ |
703 |
$ |
48 |
$ |
(20,482) |
$ |
43,304 |
$ |
22 |
$ |
679,969 |
$ |
998 |
$ |
704,562 |
Dividends |
- |
- |
- |
- |
- |
(105,548) |
- |
(105,548) | ||||||||
Other comprehensive loss, net of tax |
- |
- |
- |
- |
(834) |
- |
- |
(834) | ||||||||
Purchase of Company stock |
- |
- |
(1,831) |
- |
- |
- |
(1,831) | |||||||||
Grant of restricted stock, net of forfeitures |
- |
- |
59 | (59) |
- |
- |
- |
|||||||||
Distribution to noncontrolling interest partners |
- |
- |
- |
- |
- |
- |
(903) | (903) | ||||||||
Restricted stock compensation |
- |
- |
- |
2,228 |
- |
- |
- |
2,228 | ||||||||
Net income |
- |
- |
- |
- |
- |
316,417 | 1,925 | 318,342 | ||||||||
Balance at February 27, 2016 |
$ |
703 |
$ |
48 |
$ |
(22,254) |
$ |
45,473 |
$ |
(812) |
$ |
890,838 |
$ |
2,020 |
$ |
916,016 |
12
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains numerous forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our shell egg business, including estimated production data, expected operating schedules, projected construction costs, and other operating data, including anticipated results of operations and financial condition. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plans,” “projected,” “contemplates,” “anticipates,” or similar words. Actual production, operating schedules, capital costs, results of operations, and other projections and estimates could differ materially from those projected in the forward-looking statements. The forward-looking statements are based on management’s current intent, belief, expectations, estimates, and projections regarding the Company and its industry. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions, and other factors that are difficult to predict and may be beyond our control. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include, among others, (i) the risk factors set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 30, 2015, as updated by our subsequent Quarterly Reports on Form 10-Q, (ii) the risks and hazards inherent in the shell egg business (including disease, pests, weather conditions, and potential for product recall), (iii) changes in the demand for and market prices of shell eggs and feed costs, (iv) risks, changes, or obligations that could result from our future acquisition of new flocks or businesses, and (v) adverse results in pending litigation matters. Readers are cautioned not to place undue reliance on forward-looking statements because, while we believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. Further, forward-looking statements in