Commitments And Contingencies

3 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

COMMITMENTS AND CONTINGENCIES

On May 11, 2011, Rosminah Brown, on behalf of herself and all other similarly situated individuals, as well as a non-profit organization, filed a putative class action in the Superior Court of California, Alameda County against the Company. The complaint alleged that the labels of certain Avalon Organics^® brand and JASON^® brand personal care products used prior to the Company’s implementation of ANSI/NSF-305 certification in mid-2011 violated certain California statutes. Defendants removed the case to the United States District Court for the Northern District of California. The action was consolidated with a subsequently-filed putative class action containing substantially identical allegations concerning only the JASON^® brand personal care products. The consolidated actions seek an award for damages, injunctive relief, costs, expenses and attorneys’ fees. These consolidated lawsuits are currently at the discovery phase. The Company intends to defend this lawsuit vigorously and believes that the plaintiffs’ claims are without merit.

On August 19, 2014, the Company announced a voluntary recall on certain nut butters. In connection with the voluntary recall, the Company recorded pre-tax costs totaling $22,844 in the three months ended September 30, 2014 and previously recorded charges of $6,000 in the fourth quarter of fiscal 2014. The charges recorded primarily relate to returns of product from customers ($10,442) and inventory on-hand and other cost of goods sold charges ($9,925), and to a lesser extent consumer refunds and other administrative costs ($2,477). The charges recorded are based upon management’s estimates of the total costs incurred through September 30, 2014, however it is reasonably possible that additional pre-tax costs up to $7,000 could be recorded, excluding any recovery from our insurance carrier, with whom the Company is working to recover a portion of these costs. Additionally, the Company anticipates certain ongoing period costs, primarily transportation and storage costs, to be incurred during the remainder of fiscal 2015 of approximately $800 before tax. The Company is continuing to work with the U.S. Food and Drug Administration to finalize the matter.

In addition to the contingencies described above, the Company may be a party to a number of legal actions, proceedings, audits, tax audits, claims and disputes, arising in the ordinary course of business, including those with current and former customers over amounts owed. While any action, proceeding, audit or claim contains an element of uncertainty and may materially affect the Company’s cash flows and results of operations in a particular quarter or year, based on current facts and circumstances, the Company’s management believes that the outcome of such actions, proceedings, audits, claims and disputes will not have a material adverse effect on the Company’s business, prospects, results of operations, financial condition, cash flows or liquidity.