Correction of Immaterial Errors To Prior Period Financial Statements

9 Months Ended

Mar. 31, 2017

Accounting Changes and Error Corrections [Abstract]

Correction of Immaterial Errors To Prior Period Financial Statements

CORRECTION OF IMMATERIAL ERRORS TO PRIOR PERIOD FINANCIAL STATEMENTS

Accounting Review

During the fourth quarter of fiscal 2016, the Company identified the practice of granting additional concessions to certain distributors in the United States and commenced an internal accounting review in order to (i) determine whether the revenue associated with those concessions was accounted for in the correct period and (ii) evaluate the Company’s internal control over financial reporting. The Audit Committee of the Company’s Board of Directors separately conducted an independent review of these matters and retained independent counsel to assist in their review. On November 16, 2016, the Company announced that the independent review of the Audit Committee was completed and that the review found no evidence of intentional wrongdoing in connection with the preparation of the Company’s financial statements. The aforementioned reviews identified material weaknesses in our internal control over financial reporting. Refer to “Part I, Item 4. Controls and Procedures” of the Form 10-Q for a description of these material weaknesses and management’s plan and implementation of remediation efforts to address these material weaknesses.

Although the initial focus of the Company’s internal accounting review discussed above pertained to the evaluation of the timing of the recognition of the revenue associated with the practice of granting additional concessions to certain distributors, the Company subsequently expanded its internal accounting review and performed an analysis of previously-issued financial statements in order to identify and assess other potential errors. Based upon this review, the Company identified certain immaterial errors relating to its previously-issued financial statements which resulted in revisions to our previously-issued financial statements. Accordingly, prior period amounts presented in the consolidated financial statements and the related notes have been revised (referred to as the “Revision”). All costs incurred in connection with the internal accounting review, the Audit Committee’s independent review and related matters are included in “Accounting review costs,” in the Company’s Consolidated Statements of Income.

Based on an analysis of Accounting Standards Codification (“ASC”) 250 - “Accounting Changes and Error Corrections” (“ASC 250”), Staff Accounting Bulletin 99 - “Materiality” (“SAB 99”) and Staff Accounting Bulletin 108 - Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”), the Company determined that these errors were immaterial to the previously-issued financial statements; however, a cumulative correction of these errors would have had a material impact on the financial results for the three and twelve months ended June 30, 2016. Accordingly, we have revised our presentation of certain amounts in the consolidated financial statements for the three and nine months ended March 31, 2016 to reflect such corrections as if they had been recorded in the appropriate fiscal period.

We refer the reader to the Company’s Form 10-K for the fiscal year ended June 30, 2016 for a detailed explanation of the immaterial errors.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended March 31, 2016
	As Reported			Adjustment			As Revised
Net sales	$	749,862		$	(13,199	)	$	736,663
Cost of sales	576,653			102			576,755
Gross profit	173,209			(13,301		)	159,908
Selling, general and administrative expenses	93,915			(15,025		)	78,890
Amortization of acquired intangibles	4,586			(33		)	4,553
Acquisition related expenses, restructuring and integration charges   and other	5,701			(384		)	5,317
Operating income	69,007			2,141			71,148
Interest and other financing expense, net	6,920			—			6,920
Other (income)/expense, net	378			—			378
Gain on fire insurance recovery	(9,013		)				(9,013		)
Income before income taxes and equity in earnings of equity-   method investees	70,722			2,141			72,863
Provision for income taxes	21,576			2,338			23,914
Equity in net income of equity-method investees	161			—			161
Net income	$	48,985		$	(197	)	$	48,788
Net income per common share:
Basic	$	0.47		$	—		$	0.47
Diluted	$	0.47		$	—		$	0.47
Weighted average common shares outstanding:
Basic	103,265			103,265			103,265
Diluted	104,087			104,087			104,087

* Net income per common share may not add in certain periods due to rounding

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (CONTINUED)

	Nine Months Ended March 31, 2016
	As Reported			Adjustment			As Revised
Net sales	$	2,189,639		$	(41,812	)	$	2,147,827
Cost of sales	1,686,820			(3,043		)	1,683,777
Gross profit	502,819			(38,769		)	464,050
Selling, general and administrative expenses	262,776			(39,355		)	223,421
Amortization/impairment of acquired intangibles	13,994			(98		)	13,896
Acquisition related expenses, restructuring and integration charges   and other	11,852			(617		)	11,235
Operating income	214,197			1,301			215,498
Interest and other financing expense, net	19,760			(73		)	19,687
Other (income)/expense, net	8,771			73			8,844
Gain on fire insurance recovery	(9,013		)	—			(9,013		)
Income before income taxes and equity in earnings of equity-   method investees	194,679			1,301			195,980
Provision for income taxes	57,337			2,509			59,846
Equity in net income of equity-method investees	108			—			108
Net income	137,234			(1,208		)	136,026
Net income per common share:
Basic	$	1.33		$	(0.01	)	$	1.32
Diluted	$	1.32		$	(0.01	)	$	1.31
Weighted average common shares outstanding:
Basic	103,030			103,030			103,030
Diluted	104,168			104,168			104,168

* Net income per common share may not add in certain periods due to rounding

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended March 31, 2016									Nine Months Ended March 31, 2016
	As Reported			Adjustment			As Revised			As Reported			Adjustment			As Revised
Net income	$	48,985		$	(197	)	$	48,788		$	137,234		$	(1,208	)	$	136,026
Other comprehensive income (loss):
Foreign currency translation adjustments	$	(20,296	)	$	193		(20,103		)	$	(86,380	)	690			(85,690		)
Change in deferred gains (losses) on cash flow hedging instruments	(1,209		)	—			(1,209		)	(164		)	—			(164		)
Change in unrealized gain (loss) on available for sale investment	20			—			20			(112		)	—			(112		)
Total other comprehensive income (loss)	$	(21,485	)	$	193		$	(21,292	)	$	(86,656	)	$	690		$	(85,966	)
Total comprehensive income	$	27,500		$	(4	)	$	27,496		$	50,578		$	(518	)	$	50,060

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended March 31, 2016
	As Reported			Adjustment			As Revised
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	137,234		$	(1,208	)	$	136,026
Adjustments to reconcile net income to net cash provided by (used in) operating   activities:
Depreciation and amortization	47,494			605			48,099
Deferred income taxes	(9,377		)	(155		)	(9,532		)
Equity in net income of equity-method investees	108			—			108
Stock-based compensation	10,005			—			10,005
Contingent consideration expense	1,511			—			1,511
Gain on fire insurance recovery and other, net	(8,401		)	—			(8,401		)
Other non-cash items, including unrealized currency (gains)/loss, net	7,403			—			7,403
Increase (decrease) in cash attributable to changes in operating assets and   liabilities, net of amounts applicable to acquisitions:
Accounts receivable	(29,201		)	(1,260		)	(30,461		)
Inventories	(11,397		)	621			(10,776		)
Other current assets	(650		)	22,691			22,041
Other assets and liabilities	1,111			—			1,111
Accounts payable and accrued expenses	(13,986		)	(21,294		)	(35,280		)
Net cash provided by operating activities	$	131,854		$	—		$	131,854

There were no adjustments to cash balances and to cash flows from investing and financing activities for the nine months ended March 31, 2016 as a result of the Revision.

SEGMENT NET SALES AND OPERATING INCOME (UNAUDITED)

	Three months ended March 31, 2016
	As Reported (1)			Adjustment			As Revised
Net Sales:
United States	$	332,904		$	(7,520	)	$	325,384
United Kingdom	208,391			(2,231		)	$	206,160
Hain Pure Protein	113,643			(1,430		)	$	112,213
Rest of World	94,924			(2,018		)	$	92,906
	$	749,862		$	(13,199	)	$	736,663
Operating Income:
United States	$	52,103		$	4,278		$	56,381
United Kingdom	16,217			(391		)	$	15,826
Hain Pure Protein	4,613			(2,186		)	$	2,427
Rest of World	8,641			(509		)	$	8,132
	$	81,574		$	1,192		$	82,766
Corporate and Other	(12,567		)	949			(11,618		)
	$	69,007		$	2,141		$	71,148

⁽¹⁾ The information previously reported for the three months ended March 31, 2016 has been adjusted to reflect the Company’s

new operating and reporting structure effective in the first quarter of fiscal 2017. See Note 1, Business, and Note 16, Segment

Information, for additional details surrounding the formation of Cultivate.

	Nine months ended March 31, 2016
	As Reported (1)			Adjustment			As Revised
Net Sales:
United States	$	970,368		$	(27,668	)	$	942,700
United Kingdom	567,971			(9,702		)	$	558,269
Hain Pure Protein	379,337			122			$	379,459
Rest of World	271,963			(4,564		)	$	267,399
	$	2,189,639		$	(41,812	)	$	2,147,827
Operating Income:
United States	$	144,305		$	4,523		$	148,828
United Kingdom	45,189			(1,096		)	$	44,093
Hain Pure Protein	33,009			(1,931		)	$	31,078
Rest of World	17,910			(264		)	$	17,646
	$	240,413		$	1,232		$	241,645
Corporate and Other	(26,216		)	69			(26,147		)
	$	214,197		$	1,301		$	215,498

⁽¹⁾ The information previously reported for the nine months ended March 31, 2016 has been adjusted to reflect the Company’s

new operating and reporting structure effective in the first quarter of fiscal 2017. See Note 1, Business, and Note 16, Segment

Information, for additional details surrounding the formation of Cultivate.