| ý | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| ¨ | Transition Report pursuant to Section 13 or 15(d) of |
| Delaware | 22-3240619 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
58 South Service Road Melville, New York | 11747 | |
| (Address of principal executive offices) | (Zip Code) | |
(Title of Each Class) | (Name of Each Exchange on which registered) | |
| Common Stock, par value $.01 per share | The | |
| Large accelerated filer | ý | Accelerated filer | ¨ | |||
| Non-accelerated filer | ¨ | Smaller | reporting company | ¨ | ||
Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 10. Item 11. Item 12. Item 13. Item 15. 2013. Joint Ventures. 2010. colder months while sales of snack foods and certain of our prepared food products are stronger in the warmer months. Boulder, Colorado, which produces Celestial Moonachie, New Jersey, which produces Lancaster, Pennsylvania, which produces Sensible Hereford, Texas, which produces Arrowhead Shreveport, Louisiana, which produces West Chester, Pennsylvania, which produces Ethnic Ashland, Oregon, which produces Boulder, Colorado, which produces our Culver City, California, which produces Alba Brussels, Belgium, which prepares Grains Eitorf, Germany, which produces Andiran, France, which produces our In addition to the products manufactured in our own facilities, independent manufacturers, who are referred to in our industry as co-packers, manufacture many of our products. During 2012, 2011 and 2010, approximately 52%, 56%and For a discussion of risks related to our co-packers, see "Risk Factors" in Item 1A. maintain ethical trade standards for Cocoa Communities Program for supporting sustainable farming practices, fair pricing and labor conditions. satisfy consumer preferences. agencies to ensure compliance with country-specific government regulations for selling organic products. and ISO (International Organization for Standardization). our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (“SEC”); our policies related to corporate governance, including our Code of Business Conduct and Ethics (“Code of Ethics”) applying to our directors, officers and employees (including our principal executive officer and principal financial and accounting officer) that we have adopted to meet the requirements set forth in the rules and regulations of the SEC and Nasdaq; and the charters of the Audit, Compensation and Corporate Governance and Nominating Committees of our Board of Directors. connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report. dietary habits and nutritional values, such as fat content or sodium concerns regarding the health effects of ingredients, such as sugar or processed a shift in preference from organic to non-organic and from natural products to non-natural products; the availability of competing private label products offered by retailers; and economic factors and social trends. identify suitable acquisition candidates; negotiate identified acquisitions on terms acceptable to us; or integrate acquisitions that we complete. the impact of these types of potential liabilities through indemnities and warranties from the seller, which may in some instances be supported by deferring payment of a portion of the purchase price. However, these indemnities and warranties, if obtained, may not fully cover the liabilities due to limitations in scope, amount or duration, financial limitations of the indemnifying party or other reasons. We cannot be certain: as to the timing or number of marketing opportunities or amount of cost savings that may be realized as the result of our integration of an acquired brand; that a business combination will enhance our competitive position and business prospects; that we will be successful if we enter categories or markets in which we have limited or no prior experience; that we will not experience difficulties with customers, personnel or other parties as a result of a business combination; or that, with respect to our acquisitions outside the United States, we will not be affected by, among other things, exchange rate risk. integrating an acquired brand’s distribution channels with our own; coordinating sales force activities of an acquired brand or in selling the products of an acquired brand to our customer base; or integrating an acquired brand into our management information systems or integrating an acquired brand’s products into our product mix. and Senior Management Team are required to obtain additional or alternative distribution agreements or arrangements in the future, we cannot be certain that we will be able to do so on satisfactory terms or in a timely manner. Our inability to enter into satisfactory distribution agreements may inhibit our ability to implement our business plan or to establish markets necessary to expand the distribution of our products successfully. may lengthen the number of days we carry certain inventories, hence impeding our effort to manage our inventory efficiently and thereby increasing our costs. periodic economic downturns and the instability of governments, including the threat of war, terrorist attacks, epidemic or civil unrest; price and foreign currency exchange controls; fluctuations in the relative values of currencies; unexpected changes in trading policies, regulatory requirements, tariffs and other barriers; compliance with applicable foreign laws; the imposition of tariffs or quotas; changes in tax laws; and difficulties in managing a global enterprise, including staffing, collecting accounts receivable and managing distributors. The USDA’s National Organic Program (“NOP”) is reevaluating the use and certification of accessory nutrients in organic foods and defining organic personal care standards. The growth in international markets requires organic equivalence agreements, which have already been established between The FDA’s Safe Cosmetics Act of 2011 would ensure that personal care products are formulated with ingredients deemed safe by regulatory authorities and that all ingredients are fully disclosed on package labels. Legislative and regulatory authorities in the months while our snack food product lines and certain of our prepared food products are stronger in the warmer months. 2012. determined from time-to-time by our board of directors. Although we have no present intention to issue any shares of our preferred stock, we may do so in the future under appropriate circumstances. Primary Use Location Expiration of Lease Headquarters Office Manufacturing and offices (Tea) Manufacturing & distribution (Grocery) Manufacturing (Frozen foods) Manufacturing (Vegetable chips) Manufacturing & distribution (Snack products) Manufacturing & distribution (Grocery) Manufacturing (Personal care) Manufacturing (Meat alternatives) Manufacturing (Nut butters) Distribution center (Grocery, snacks and personal care products) Distribution center (Snack products) Distribution center (Tea) Distribution center (Meat alternatives) Distribution center (Personal care) Manufacturing and offices (Meat alternatives) Manufacturing and offices (Soymilk & other non-dairy products) Manufacturing (Fresh prepared food products) Distribution center and offices (Natural & organic food products) Manufacturing & offices (Meat-free frozen products) Manufacturing and offices (Organic food products) Distribution (Organic food products) Manufacturing and distribution Manufacturing & offices (Fresh prepared food products) use of our properties by segments, see Item 1, Business - Production. First Quarter Second Quarter Third Quarter Fourth Quarter 2012. Period April 2011 May 2011 June 2011 Total Plan Category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total 2007. Operating results: Net sales (a) Net income (loss) attributable to The Hain Celestial Group, Inc. (b) Basic income (loss) per common share (b) Diluted income (loss) per common share (b) Financial position: Working capital Total assets Long-term debt Stockholders’ equity This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the June 30, TM brand name, in the United Kingdom, have been reclassified as discontinued operations for all periods presented. Other Expenses, net 2012 and 2011, respectively. Corporate and other also includes reductions of expense of quarter of fiscal 2010. Our international sales increased Administrative Expenses the carrying values of contingent consideration. We also incurred approximately the Sensible Portions brand. items discussed above. contingent consideration. Canada. Cash flows provided by (used in): Operating activities Investing activities Financing activities Exchange rate changes Net increase (decrease) in cash additions. Cash flow provided by operating activities Purchases of property, plant and equipment Operating free cash flow Our anticipated significant capital expenditures during fiscal 2013 include the acquisition of equipment for a new non-dairy production facility in Europe and the expansion of our Fakenham, United Kingdom production facility to accommodate new products and increased volume. Long-term debt obligations (1) Capital lease obligations Operating lease obligations Purchase obligations Other long-term liabilities (2) Total contractual obligations of business, anticipated fiscal Furthermore, our discontinued operations are not expected to have a significant impact on the Company's liquidity and capital resources. independent coupon redemption clearing-houses as well as on historical information. Should actual redemption rates vary from amounts estimated, adjustments to accruals may be required. option, the risk-free interest rate and the expected dividend yield. Expected volatility is based on historical volatility of our common stock. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of restricted stock awards is equal to the market value of the Company’s common stock on the date of grant and is recognized in expense over the vesting period using the straight-line method. We recognize compensation expense for only that portion of stock based awards that are expected to vest. We utilize historical employee termination behavior to determine our estimated forfeiture rates. If the actual forfeitures differ from those estimated by management, adjustments to compensation expense will be made in future periods. In the fourth quarter of fiscal 2012, we elected to early adopt ASU No. 2012-02, assets. support of increased consumer consumption; (viii) our expectations for our business for fiscal year changes in estimates or judgments related to our impairment analysis of goodwill and other intangible assets, as well as with respect to our ability to implement our business and acquisition the ability of our joint venture investments, including HPP, to successfully execute their business plans; our ability to realize sustainable growth generally and from investments in core brands, offering new products and our focus on cost containment, productivity, cash flow and margin enhancement in particular; our ability to effectively integrate our acquisitions; our ability to successfully consummate our proposed divestitures; the success and cost of introducing new products as well as our ability to increase prices on existing products; availability and retention of key personnel; our reliance on third party distributors, manufacturers and suppliers; our ability to maintain existing our ability to respond to changes and trends in customer and consumer demand, preferences and consumption; international sales and operations; changes in fuel, raw material and commodity costs; changes in, or the failure to comply with, government regulations; the loss of one or more of our manufacturing facilities; Net sales Gross profit Operating income (a) Income before income taxes and equity in earnings of equity-method investees Net income (a) (b) Basic income per common share (a) (b) Diluted income per common share (a) (b) Net sales Gross profit Operating income (c) Income before income taxes and equity in earnings of equity-method investees Net income (c) (d) Basic income (loss) per common share (c) (d) Diluted income (loss) per common share (c) (d) months. In years where there are warm winter seasons, our sales of cooler weather products, which typically increase in our second and third fiscal quarters, may be negatively impacted. Market Risk foreign exchange rates, generating translation and transaction gains and ingredient inputs. Instruments Measured at Fair Value. 2012 2011 2010 2010 2010 2012 ASSETS Current assets: Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $1,280 and $1,574 Inventories Deferred income taxes Prepaid expenses and other current assets Total current assets Property, plant and equipment, net of accumulated depreciation and amortization of $113,798 and $93,459 Goodwill Trademarks and other intangible assets, net of accumulated amortization of $27,866 and $21,095 Investments and joint ventures Other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued expenses and other current liabilities Income taxes payable Current portion of long-term debt Total current liabilities Long-term debt, less current portion Deferred income taxes Other noncurrent liabilities Total liabilities Commitments and contingencies Stockholders’ equity: Preferred stock - $.01 par value, authorized 5,000,000 shares, no shares issued Common stock - $.01 par value, authorized 100,000,000 shares, issued 45,045,097 and 43,646,677 shares Additional paid-in capital Retained earnings Accumulated other comprehensive income Less: 1,144,610 and 1,072,705 shares of treasury stock, at cost Total stockholders’ equity Total liabilities and stockholders’ equity INCOME Net sales Cost of sales Gross profit Selling, general and administrative expenses Acquisition related expenses and restructuring charges Impairment of goodwill and other intangibles Operating income (loss) Interest and other expenses, net Income (loss) before income taxes and equity in earnings of equity-method investees Provision for income taxes Equity in net (income) loss of equity-method investees Net income (loss) Loss attributable to noncontrolling interest Net income (loss) attributable to The Hain Celestial Group, Inc. Net income (loss) per share attributable to The Hain Celestial Group, Inc.: Basic Diluted Weighted average common shares outstanding: Basic Diluted Balance July 1, 2008 (41,106,078 common shares and 945,590 treasury shares) Net loss Loss attributable to non-controlling interest Foreign currency translation adjustments Deferred gains on cash flow hedging instruments, net of tax of $(89) Unrealized loss on available for sale investment, net of tax of $475 Total comprehensive loss Issuance of common stock pursuant to stock compensation plans (467,795 shares) Stock based compensation charge Stock based compensation income tax effects Shares withheld for payment of employee payroll taxes due on shares issued under stock based compensation plans (56,308 shares) Issuance of common stock in connection with license agreement (125,636 shares) Deconsolidation of subsidiary Balance June 30, 2009 (41,699,509 common shares and 1,001,898 treasury shares) Net income Foreign currency translation adjustments, net of tax of $6,356 Change in deferred gains on cash flow hedging instruments, net of tax of $32 Change in unrealized loss on available for sale investment, net of tax of $(181) Total comprehensive income Issuance of common stock pursuant to stock compensation plans (336,111 shares) Stock based compensation charge Stock based compensation income tax effects Shares withheld for payment of employee payroll taxes due on shares issued under stock based compensation plans (70,807 shares) Issuance of common stock in connection with acquisition (1,558,442 shares) Issuance of common stock in connection with license agreement (52,615 shares) Balance June 30, 2010 (43,646,677 common shares and 1,072,705 treasury shares) amounts) Balance at June 30, 2010 Net income Foreign currency translation adjustments, net of tax of $(692) Change in deferred gains on cash flow hedging instruments, net of tax of $251 Change in unrealized loss on available for sale investment, net of tax of $(51) Total comprehensive income Issuance of common stock pursuant to stock compensation plans (1,156,235 shares) Stock based compensation charge Stock based compensation income tax effects Shares withheld for payment of employee payroll taxes due on shares issued under stock based compensation plans (71,905 shares) Issuance of common stock in connection with acquisition (242,185 shares) Balance June 30, 2011 (45,045,097 common shares and 1,144,610 treasury shares) amounts) statements. CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Impairment of goodwill and other intangibles Unrealized loss on available for sale investment Deferred income taxes Tax benefit from stock based compensation Equity in net (income) loss of equity-method investees Stock based compensation Contingent consideration expense Interest accretion on contingent consideration Other non-cash items, net Increase (decrease) in cash attributable to changes in operating assets and liabilities, net of amounts applicable to acquisitions: Accounts receivable Inventories Other current assets Other assets Accounts payable and accrued expenses Acquisition-related contingent consideration Income taxes Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions, net of cash acquired Purchases of property and equipment Proceeds from disposals of property and equipment (Advances to) repayments from equity-method investees, net Deconsolidation of subsidiary Net cash provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds (payments) from bank revolving credit facility, net Repayments of other long-term debt, net Acquisition-related contingent consideration Shares withheld for payment of employee payroll taxes Investments by and advances from minority shareholder in joint venture Proceeds from exercise of stock options, net of related expenses Excess tax benefits from share-based compensation Net cash provided by (used in) financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year segments. presentation. Buildings and improvements Machinery and equipment Furniture and fixtures liabilities typically occurs in subsequent periods primarily through an authorization process for deductions taken by a customer from amounts otherwise due to the Company. equity. expense is recorded when the achievement of the performance criteria is probable and is recognized over the performance and vesting service periods. Compensation expense is recognized for only that portion of stock based awards that are expected to vest. Therefore, we apply estimated forfeiture rates that are derived from historical employee termination activity to reduce the amount of compensation expense recognized. If the actual forfeitures differ from the estimate, additional adjustments to compensation expense may be required in future periods. a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The Numerator: Net income (loss) attributable to The Hain Celestial Group, Inc. Denominator (in thousands): Denominator for basic earnings per share - weighted average shares outstanding during the period Effect of dilutive securities: Effect of dilutive stock options and unvested restricted stock Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions Basic net income (loss) per share Diluted net income (loss) per share share calculations. Liability balance June 30, 2008 Charges Amounts utilized Liability balance June 30, 2009 Charges Amounts utilized Liability balance June 30, 2010 Charges Amounts utilized Liability balance June 30, 2011 deductible for tax purposes. Purchase price: Cash paid Equity issued Fair value of contingent consideration Allocation: Current assets Property, plant and equipment Identifiable intangible assets Assumed liabilities Deferred income taxes Goodwill of acquisition. Continuing Operations Pro forma net sales Pro forma net income (loss) Pro forma earnings per common share - diluted results from continuing operations. of products, integration of systems and personnel, changes in trade practices, application of our credit policies, changes in manufacturing processes or locations, and changes in marketing and advertising programs. Had any of these changes been implemented by the former managements of the businesses acquired prior to acquisition by us, the net sales and net income information might have been materially different than the actual results achieved and from the pro forma information provided. In management’s opinion, these unaudited pro forma results of operations are not intended to represent or to be indicative of the actual results that would have occurred had the acquisitions been consummated at the beginning of the periods presented or of future operations of the combined companies under our management. Finished goods Raw materials, work-in-process and packaging Land Buildings and improvements Machinery and equipment Furniture and fixtures Leasehold improvements Construction in progress Less: Accumulated depreciation and amortization Balance at beginning of year: Goodwill Accumulated impairment losses Carrying value Additions Reallocations to tangible and intangible assets Translation and other adjustments, net Balance at end of year: Goodwill Accumulated impairment losses Carrying value this adjustment. ASU 2011-08 ( Amounts assigned to indefinite-life intangible assets primarily represent the values of Non-amortized intangible assets: Trademarks and tradenames Amortized intangible assets: Other intangibles Less: accumulated amortization Net carrying amount assets: Amortization of intangible assets Estimated amortization expense Payroll and employee benefits Advertising and trade promotions Contingent consideration Other Senior Notes Revolving Credit Agreement borrowings payable to banks Capitalized leases and equipment financing Current Portion As of 2012 2013 2014 2015 2016 Thereafter Domestic Foreign Total Current: Federal State and local Foreign Deferred: Federal State and local Foreign Total Expected U.S. federal income tax at statutory rate State income taxes, net of federal benefit Non-deductible goodwill impairment Domestic manufacturing deduction Non-deductible compensation Foreign income at different rates Effect of settled tax matters Valuation allowances established for UK losses Other Provision for income taxes assets. Current deferred tax assets: Basis difference on inventory Reserves not currently deductible Other Current deferred tax assets Noncurrent deferred tax liabilities: Difference in amortization Basis difference on property and equipment Other comprehensive income Noncurrent deferred tax assets: Net operating loss and tax credit carryforwards Stock based compensation Other Valuation allowances Noncurrent deferred tax liabilities, net Balance at beginning of year Additions charged to income tax expense Reductions credited to income tax expense Currency translation adjustments Balance at end of year were as follows: Balance at beginning of year Additions based on tax positions related to prior years Reductions for tax positions of prior years Reductions due to lapse of statute of limitations Balance at end of year 4) 4) Foreign currency translation adjustment Unrealized loss on available for sale securities Deferred gains (losses) on hedging instruments Total accumulated other comprehensive income plans and grants. 2012 Compensation cost (included in selling, general and administrative expense) Related income tax benefit Outstanding at beginning of year Granted Exercised Cancelled Outstanding at end of year Options exercisable at end of year Intrinsic value of options exercised Cash received from stock option exercises Tax benefit recognized from stock option exercises Risk-free rate Expected volatility Expected life Dividend yield Fair value at grant date Stock certain grants. The compensation cost of these awards is determined using the fair market value of the Company’s common stock on the date of the grant. Compensation expense for restricted stock awards with a service condition is recognized on a straight-line basis over the vesting term. Compensation expense for restricted stock awards with a performance condition is recorded when the achievement of the performance criteria is probable and is recognized over the performance and vesting service periods. Outstanding at beginning of year Granted Vested Forfeited Outstanding at end of year Fair value of restricted stock and restricted stock units granted Fair value of shares vested Tax benefit recognized from restricted shares vesting years Committee, provided that any such stock-based awards shall be issued pursuant to and be subject to the terms and conditions of the 2002 Long-Term Incentive and Stock Award Plan, as in effect and as amended from time to time. Upon the adoption of each two year plan, the Compensation Committee granted an initial award to each participant in the form of equity-based instruments (either restricted stock or stock options), for a portion of the individual target AND JOINT VENTURES Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Assets: Cash equivalents Available for sale securities Liabilities: Derivatives designated as hedging instruments: Forward foreign currency contracts Contingent consideration Total 2012 Assets: Cash equivalents Available for sale securities Derivatives designated as hedging instruments: Forward foreign currency contracts Liabilities: Derivatives designated as hedging instruments: Forward foreign currency contracts Contingent consideration Total 2011 Balance at beginning of year Accretion of interest expense on contingent consideration Fair value of initial contingent consideration Contingent consideration adjustment expense Contingent consideration paid Translation adjustment Balance at end of year . months Net carrying amount at beginning of year Cash flow hedges deferred in OCI Change in deferred taxes Net carrying amount at end of year 2011 2012 2013 2014 2015 Thereafter 2012 about each of the Company's reportable segments. Prior period information has been recast to conform to the current year presentation. Transactions between reportable segments were insignificant for all periods presented. Grocery Snacks Tea Personal care Protein (1) Other Years ended June 30, Net sales: United States (1) Canada Europe Income (loss) before income taxes, equity in earnings of equity-method investees and loss attributable to non-controlling interest: United States (1) (2) Canada Europe (2) As of June 30, Long-lived assets: United States Canada Europe then ended. Framework. Cully & Sully Limited. 2012 2010 2010 2010 Furnished, not filed Column A Year Ended June 30, 2011: Allowance for doubtful accounts Valuation allowance for deferred tax assets Year Ended June 30, 2010: Allowance for doubtful accounts Valuation allowance for deferred tax assets Year Ended June 30, 2009: Allowance for doubtful accounts Valuation allowance for deferred tax assets Signature Title Date /s/ Page PART I Page PART IItem 1.Business 1Item 1. 1Products2 4Marketing4Production4Item 1A. Item 1B. Item 2. Item 3. Item 4. 5PART II Competition 6Trademarks6Government Regulation7Independent Certification7Available Information7Item 1A.Risk Factors8Item 1B.Unresolved Staff Comments18Item 2.Properties18Item 3.Legal Proceedings19Item 4.Removed and reserved19PART II1923Item 9A. Item 9B. 69Part III Item 9A.Controls and Procedures 69Item 9B.Other Information71PART III717171Item 14. 71Part IV Item 14.Principal Accountant Fees and Services 71PART IV 71Signatures76Item 1.Business2009 or “fiscal” 2012, 2011, 2010 2009 or other years refer to our fiscal year ended June 30 of that year and references to 20122013 or “fiscal” 20122013 refer to our fiscal year ending June 30, 2012.“AA Healthy Way of Life™TM.” Our brand names are well recognized in the various market categories they serve. We are a leader in many natural and organic products categories, with such well-known food brands as Earth’s Best®Earth's Best®, Celestial Seasonings®Seasonings®, Terra®Terra®, Garden of Eatin’Eatin'®, Sensible Portions®Portions®, Rice Dream®Dream®, Soy Dream®Dream®, Almond Dream®Dream®, Imagine®Imagine®, WestSoy®WestSoy®, The Greek Gods®Gods®, Rosetto®Ethnic Gourmet®, Rosetto®, Arrowhead Mills®Mills®, MaraNatha®MaraNatha®, SunSpire®, Health Valley®Valley®, Spectrum Naturals®Naturals®, Spectrum Essentials®Essentials®, Lima®DeBoles®, Danival®Lima®, Danival®, GG UniqueFiber™, Yves Veggie Cuisine®Cuisine®, Europe's Best®, Linda McCartney®McCartney® (under license), New Covent Garden Soup Co.®, Johnson's Juice Co.®, Farmhouse Fare® and Daily Bread™Cully & Sully®. Our naturalwell-known personal care products are marketed under the Avalon Organics®Organics®, Alba Botanica®Botanica®, JASON®JASON®, Queen Helene®Helene® and Earth’sEarth's Best TenderCare®TenderCare® brands. brands. Our household cleaning products are marketed under the Martha Stewart Clean™ (under license) brand.We have a minority investment in Hain Pure Protein Corporation (“HPP” or “Hain Pure Protein”), which processes, markets and distributes antibiotic-free chicken and turkey products. We also have an investment in a joint venture in Hong Kong with Hutchison China Meditech Ltd. (“Chi-Med”), a majority owned subsidiary of Hutchison Whampoa Limited, a company listed on the Alternative Investment Market, a sub-market of the London Stock Exchange, to market and distribute co-branded infant and toddler feeding products and market and distribute selected Company brands in China and other markets. See Note 2, Basis of Presentation, and Note 14, Equity Investments.We operate in one segment, the manufacturing, distribution, marketing and sale of natural and organic products. See Notes 1 and 18 to the Consolidated Financial Statements included in Item 15 of this Form 10-K for additional information about our segment, as well as information about our geographic operations.Our brand names are well recognized in the various market categories they serve. We have acquired numerous companies and brands since our formation and intend to seek future growth through internal expansion as well as the acquisition of complementary brands. all of our brands under one management team and employ a uniform marketing, sales and distribution program.programs. We believe that by integrating our various brands, we will continue to achieve economies of scale and enhanced market penetration. We seek to capitalize on the equity of our brand equitybrands and the distribution achieved through each of our acquired businesses with strategic introductions of new products that complement existing lines to enhance revenues and margins.believe that by integrating our varioushave a minority investment in Hain Pure Protein Corporation (“HPP” or “Hain Pure Protein”), which processes, markets and distributes antibiotic-free chicken and turkey products. We also have an investment in a joint venture in Hong Kong with Hutchison China Meditech Ltd. ("Chi-Med"), a majority owned subsidiary of Hutchison Whampoa Limited, a company listed on the Alternative Investment Market, a sub-market of the London Stock Exchange, to market and distribute co-branded infant and toddler feeding products and market and distribute selected brands we will continue to achieve economies of scale and enhanced market penetration. We consider the acquisition of natural and organic food and personal care companies and product lines to be an integral part of our business strategy.Our products are sold to specialty and natural food distributors, supermarkets, natural food stores,in China and other retail classesmarkets. See Note 2, Summary of trade including mass-marketSignificant Accounting Policies, and on-line retailers, drug store chains, food service channelsNote 13, Investments and club stores.- 1 -2011,2012, we employed a total of 2,0313,720 full-time employees. Of these employees, 220252 were in sales and 1,1862,359 in production, with the remaining 6251,109 employees filling management, accounting, marketing, operations and clerical positions.Natural products are minimally processed, largely or completely free of artificial ingredients, preservatives, and other non-naturally occurring chemicals, and are not genetically modified and as near to their whole natural state as possible. Many ofalso contain organic ingredients that are grown without dependence upon artificial pesticides, chemicals or fertilizers. We develop, manufacture, market and distribute a comprehensive line of branded natural and organicin five product categories: grocery, products in several core categories, including: infant and toddler, beverages, meals and meal preparation, snacks, fresh,tea, personal care and household.GroceryWe develop, manufacture, marketfresh. Our product lines include natural products, products made with organic ingredients and distribute a comprehensive linecertified organic products. Our five product categories consist of branded natural and organic grocerytheincludinginclude infant formula, infant and toddler food, non-dairy beverages and frozen desserts (such as soy, rice, almond and almond)coconut), flour and baking mixes, hot and cold cereals, pasta, condiments, cooking and culinary oils, granolas, granola bars, cereal bars, canned, chilled fresh, aseptic and instant soups, greek-style yogurt, chilis, packaged grains, chocolate, nut butters, nutritional oils, juices, chilled hot-eating and frozen desserts, cookies, crackers, gluten-free frozen entrees and bars, frozen pastas and ethnic meals, frozen fruit and vegetables, cut fresh fruit, refrigerated and frozen soy protein meat-alternative products, tofu, seitan and tempeh products as well as other food products. We develop, manufacture, market and distribute The Greek Gods® brand of Greek-style yogurt products and recently expanded our offerings with new Earth’s Best® organic baby yogurt and fruit smoothies. We also develop, manufacture, market and distribute refrigerated product offerings including a full line of soy protein meat alternative products under the Yves Veggie Cuisine® brand name, and we produce a line of tofu, seitan and tempeh products which are sold under the WestSoy® brand. We also manufacture, market and distribute a full line of meat-free frozen products under the Linda McCartney® (under license) brand. Grocery products accounted for approximately 61%68% of our consolidated net sales in 2012, 62% in 2011 65%and 67% in 20102010.52% in 2009.SnacksWe develop, manufacture, market and distribute a full line of branded natural and organic snack products includinginclude a variety of potatoveggie and vegetable chips, organic tortilla style chips, whole grain chips and popcorn under the Terra®, Garden of Eatin’®, Sensible Portions® and Little Bear Snack Foods® names. Terra natural snack food products consist of varieties ofother straws, potato, root vegetable chips, potato chips and other exotic vegetable chips. Garden of Eatin’ snack food products includechips, tortilla style chips made with organic tortilla chip products. Sensible Portions products include Garden Veggie Straws™, Potato Straws and Apple Straws™, Pita Bites® and Miners Gold®corn, whole grain chips, baked cheddar puffs.puffs and popcorn. Snack products accounted for approximately 17%15% of our consolidated net sales in 2012, 18% in 2011 10%and 11% in 2010 and 8% in 2009.2010.TeaCelestial Seasonings isWe are a leading manufacturer and marketer of specialty tea in North America. Our teas are sold in natural food, grocery, and mass-market retailers, as well as drug store chains and other retail stores, and are generally offered in 20- and 40-count packages.s. We develop flavorful unique and 100% naturalunique blends that are made from high-quality natural ingredients and flavors, and packaged in attractive, colorful and thought-provoking boxes. Our tea products include more than 70 varieties of herbal, green, wellness, white, red (rooibos) and chai teas, with familiar names like Sleepytime®, Lemon Zinger®, Mandarin Orange Spice®, Cinnamon Apple Spice, Red Zinger®, Tension Tamer® and Country Peach Passion®.teas. We offer teas withcaffeinated and without caffeine,herbal teas and also offer Cool Brew iced teas that do not require boiling water. All of our teas are produced and packaged with social responsibility in mind – for example, our tea bag has no string, tag, staple or individual overwrap, saving more than 3.5 million pounds of waste from landfills each year. Since 2003, we have worked closely with Green Mountain Coffee Roasters, Inc. (GMCR) toWe also offer a selection of Celestial Seasonings teas in K-Cup® portion packs for the Keurig® Single-Cup Brewing system,- 2 -including many of our popular hot teas and a new line of Brew Over Ice iced teas. Our partnership with GMCR remains strongready to drink kombucha products and we look forward to introducing additional new items to the marketplace in the coming year.green tea and kombucha energy shots. Tea beveragesproducts accounted for approximately 9%8% of our consolidated net sales in 2012, 9%2011 10% 2010 and 8%10% in 2009.We develop, manufacture, market and distributeOur natural health and beauty aids that include skin and hair care, oral care, deodorants and baby care items under the Avalon Organics®, Alba Botanica®, JASON®, Zia®, Queen Helene® and Earth’s Best® brands. We believe our products are natural industry leaders incover a variety of personal care segmentscategories including skin, hair and oral care, deodorants, baby care items, diapers, acne treatment, body washes and sunscreens. Our personal care brands are sold in natural food, grocery, mass-market retailers, drug store chains and other retail stores. Personal care products accounted for approximately 9%8% of our consolidated net sales in 2012, 10% in 2011 and 10% in 2010 and 11% in 2009.2010.OtherWe process, market and distribute prepared foods from our facility in Luton, England under the Daily Bread™ brand and from our facility in Brussels, Belgium under the Grains Noirs® brand. Our food-to-go products include fresh sandwiches, appetizers and full-plated meals for distribution to retailers, caterers, and food service providers, such as those in the transportation business.Household ProductsWe develop, manufacture, market, sell and distribute a line of natural home cleaning solutions under the Martha Stewart Clean™ brand (under license). Our Martha Stewart Clean Fresh products include laundry detergent and fabric softener, glass, bathroom, wood floor and all purpose cleaners and dish cleaners which are primarily derived from plants and minerals.ProteinHain Pure Protein offers a complete line of natural and antibiotic-free poultry products including FreeBird™ chicken and Plainville Farms® turkey products. On June 30, 2009, the minority owner in HPP acquired a controlling interest in the joint venture through the purchase of newly issued shares of HPP. As a result, the Company’s equity interest was reduced to 48.7% and effective June 30, 2009, the Company deconsolidated HPP and began accounting for its investment in HPP under the equity method of accounting. Beginning on July 1, 2009, the revenues and expenses of HPP are no longer consolidated and the Company’s 48.7% share of HPP’s results is reported as a separate line on the consolidated statement of operations. The Company’s consolidated statements of operations for all periods prior to July 1, 2009 include the revenues and expenses of HPP. Prior to the deconsolidation of HPP, protein products accountedaccount for approximately 15% of1% our consolidated net sales.2009. Fiscal Year ended June 30, 2012 2011 2010 United States 991,626 72% 910,095 82% 722,211 81% United Kingdom 192,352 14% 39,284 4% 31,304 4% Rest of World 194,269 14% 159,167 14% 136,492 15% Total $ 1,378,247 100% 1,108,546 100% 890,007 100% $3.8$3.9 million in Company-sponsored research and development activities in 2012, $3.5 million in 2011 $3.0and $2.5 million in 2010 and $3.0 million in 2009.2010. Our research and development investments do not include the expenditures on such activities undertaken by co-packers and suppliers who develop numerous products and ingredients collaboratively with us which are aligned with our brand strategies and our corporate mission. These efforts by co-packers and suppliers have resulted in a substantial number of our new product introductions and product reformulations. We- 3 -SalesDistribution2010, approximately Our products are sold throughout the United States48%, 44% and in more than 50 countries. Our customer base consists principally of natural food distributors, mass-market and on-line retailers, supermarkets, drug store chains, club stores and grocery wholesalers.In the United States, our products are sold through a combination of our retail direct sales force and internal sales professionals, supported by third-party food brokers. Food brokers act as agents for us within designated territories, usually on a non-exclusive basis, and receive commissions. We utilize our retail direct sales force for sales into natural food stores, which has allowed us to reduce our reliance on food brokers.A significant portion of the products marketed by us are sold through independent food distributors. Food distributors purchase products from us for resale to retailers. Because food distributors take title to the products upon purchase, product pricing decisions on sales of our products by the distributors to the retailers are generally made in their sole discretion. We may influence product pricing with the use of promotional incentives. In fiscal 2011, 2010 and 2009, one of our distributors, United Natural Foods, Inc., accounted for approximately 21%, 21% and 19% of our net sales, respectively. No other customer represents more than 10% of our net sales.Our subsidiaries in Canada and Europe sell to all major channels of distribution in the countries they serve. International sales represented approximately 19.5% of our consolidated net sales in 2011, 21.3% in 2010 and 18.5% in 2009.Certain of our product lines have seasonal fluctuations. Hot tea, baking, hot cereal and soup sales are stronger in colder months while sales of snack foods and certain of our prepared food products are stronger in the warmer months.We use a combination of trade and consumer promotions to market our products. We use trade advertising and promotion, including placement fees, cooperative advertising and feature advertising in distribution catalogs. We also utilize advertising and sales promotion expenditures via national and regional consumer promotion through magazine advertising, couponing and other trial use programs. We utilize in-store product demonstrations and sampling in the club store channel. Our investments in consumer spending are aimed at enhancing brand equity. These consumer spending categories include, but are not limited to, coupons, consumer advertising using radio and print, direct mailing and e-consumer relationship programs and other forms of promotions.We utilize sponsorship programs including Earth’s Best® with PBS Kids and Sesame Street and Terra Blues® as the official snack of JetBlue Airways. Our Alba Botanica® is the official sunscreen of the New York Mets. Hain Celestial Canada was the official supplier of natural and organic packaged grocery products for the 2010 Olympic Winter Games and Paralympic Winter Games held in Vancouver, Canada. As the official supplier, Hain Celestial Canada has the right to use the Olympic logo on the packaging of certain of its brands for sale in Canada through December 2012. There is no guarantee that these promotional investments in consumer spending will be successful.ManufacturingDuring 2011, 2010 and 2009, approximately 45%, 40% and 50%, respectively, of our revenue was derived from products manufactured at our own facilities. The decrease from fiscal 2009 to fiscal 2010 resulted primarily from the deconsolidation of HPP from our results. Weoperateoperates the following manufacturing facilities located throughout the United States:- 4 -
facilities:•▪ Seasonings®Seasonings® specialty teas and Kombucha;•▪ Terra®Terra® root vegetable and potato and vegetable chips;•▪ Portions®Portions® snack products;•▪ Mills®Mills® cereals, flours and baking ingredients;•▪ DeBoles®DeBoles® organic and gluten-free pasta;•▪ Gourmet®Gourmet® frozen meals, and Rosetto®Rosetto® frozen pasta dishespastas and Gluten Free Café® frozen entrees;•▪ MaraNatha®MaraNatha® nut butters;•▪ WestSoy®WestSoy® fresh tofu, seitan and tempeh products; and•▪ Botanica®Botanica®, Avalon Organics®Organics®, JASON® and JASON®Earth's Best® personal care products and Martha Stewart Clean™products.Outside theStates, we haveKingdom segment has the following manufacturing facilities:•▪ Grimsby, England, which produces our New Covent Garden Soup Co.® fresh soups; ▪ Peterborough, England, which also produces New Covent Garden Soup Co.® fresh soups; ▪ Ashford, England, which produces our Johnsons Juice Co.® fruit juices; ▪ Clitheroe, England, which produces our Farmhouse Fare® hot-eating desserts; ▪ Leeds, England, which prepares our fresh fruit products; ▪ Luton, England, which produces healthy fruit and vegetable meal solutions; and ▪ Fakenham, England, which produces Linda McCartney® and other meat-free frozen foods and frozen dessert products. ▪ Vancouver, British Columbia, which produces Yves Veggie Cuisine®Cuisine® soy-based meat alternativemeat-alternative products;•▪ Noirs®Noirs® fresh organic appetizers, salads, sandwiches and other full-plated dishes;•▪ NatumiNatumi® soymilk, Rice Dream®Dream® and other non-dairy beverages;•▪ Danival®Danival® organic food products,•▪ ®TM products, products.•Luton, England, where we produce Daily Bread™ fresh prepared foods;•Fakenham, England, where we produce Linda McCartney® and other meat-free frozen foods, and frozen dessert products.FranceFrance; Ashford, England; and Fakenham, England.Co-Packers2009, approximately 55%, 60% and 50%62%, respectively, of our revenue was derived from products manufactured by independent co-packers. Many of our co-packers produce products for other companies as well. We believe that alternative sources of co-packing production are available for the majority of our co-packed products, although we may experience disruption in our operations if we are required to change any of our significant co-packing arrangements. Our co-packers are provided with a Co-Packeraudited regularly by our quality assurance staff and are required to follow our Food Safety & Quality manual detailing required standard operating procedures and compliance to Good Manufacturing Practices (GMPs), as well as to our standards for human and animal welfare.new Supplier Code of Conduct. Additionally, the co-packers are audited by our quality assurance staffrequired to ensure our products are manufactured in accordance with our quality and safety specifications and that they are compliant with all regulations, including new regulations issued under the 2010 U.S. Food Safety and Modernization Act. ingredients and raw materials as well as our packaging materials are obtained from various suppliers primarily located in the United States, and in the United Kingdom, Canada and Europe for our operations in those areas.Our tea ingredients are purchased from numerous foreign and domestic manufacturers, importers and growers, with the majority of those purchases occurring outside of the United States. Our organic and botanical purchasers visit major suppliers around the world annually to procure ingredients and to assure quality by observing production methods and providing product specifications. We- 5 -these ingredients such as well ascocoa by partnering with Fair Trade USA and Caring for cocoa-based ingredients used in many of our other products to promote socially responsible relationships with these suppliers.most of our international suppliers. Purchase arrangements with ingredient suppliers are generally made annually and in the local currency of the country in which we operate. Purchases are made through purchase orders or contracts, and price, delivery terms and product specifications vary.markets,markets. Competitors include large national and international companies and numerous local and regional companies, some of these markets are dominated by competitors withwhich have greater resources. For example, weWe compete for limited retailer shelf space for our products. Larger competitors for our groceryproducts, and snack products include mainstream food companies such as Campbell Soup Company, Dean Foods Company, General Mills, Inc., Groupe Danone, The J. M. Smucker Company, Kellogg Company, Kraft Foods, Inc., Nestlé S.A., Pepsico, Inc., Sara Lee Corporation and Unilever PLC. The principal competitors in natural personal care products include The Clorox Company’s Burt’s Bees, Colgate-Palmolive’s Tom’ssome of Maine and Kiss My Face. Our personal care products also compete with natural and conventional personal care products from much larger competitors such as The Proctor and Gamble Company, Johnson & Johnson and Colgate-Palmolive. Retailersthose retailers also market competitive products under their own private labels.The beverage market for tea is large and highly competitive. Competitive factors in We also compete with the tea industry includeconventional products of larger mainstream companies. Products are distinguished based on product quality, price, nutritional value, brand recognition and taste, brand awareness among consumers, variety of specialty tea flavors, interesting or uniqueloyalty, product names, product packaginginnovation, promotional activity, and package design, supermarketthe ability to identify and grocery store shelf space, alternative distribution channels, reputation, price, advertising and promotion. Celestial Seasonings currently competes in the specialty tea market segment which includes herb tea, green tea, wellness tea, black tea and organic tea. Celestial Seasonings specialty tea products, like other specialty tea products, are priced higher than most commodity black tea products. The principal competitors of Celestial Seasonings on a national basis in the specialty teas market are Thomas J. Lipton Company (a division of Unilever PLC), Twinings (a division of Associated British Grocers) and R.C. Bigelow, Inc. Additional competitors include a number of regional specialty tea companies such as Golden Temple of Oregon, Inc., with its Yogi brand, Traditional Medicinals, Tazo and The Stash Tea Company.consumer’sconsumer's decision to purchase one product over another in highly competitive consumer products industries. Our trademarks and brand names for the product lines referred to herein are registered in the United States, Canada, the European Union and a number of other foreign countries and we intend to keep these filings current and seek protection for new trademarks to the extent consistent with business needs. We also copyright certain of our artwork and package designs. We own the trademarks for our principal products, including Earth's Best®, Sensible Portions®, Terra®, Rice Dream®, New Covent Garden Soup Co.®, Arrowhead Mills®Mills®, Bearitos®Bearitos®, Breadshop’s®Breadshop's®, Casbah®Casbah®, Spectrum Naturals®Naturals®, Spectrum Essentials®Essentials®, MaraNatha®MaraNatha®, SunSpire®SunSpire®, Celestial Seasonings®Seasonings®, DeBoles®, Earth’s Best®DeBoles®, Ethnic Gourmet®Gourmet®, Garden of Eatin’Eatin'®, The Greek Gods®Gods®, Hain Pure Foods®Foods®, Health Valley®Valley®, Imagine®Imagine®, JASON®JASON®, Zia®Zia®, Little Bear Organic Foods®Foods®, Nile Spice®Spice®, Boston’sBoston's The Best You’veYou've Ever Tasted®, Rice Dream®Tasted®, Soy Dream®Dream®, Rosetto®Rosetto®, Gluten Free Café®, Sensible Portions®, Terra®, Walnut Acres Organic®Organic®, Westbrae Natural®Natural®, WestSoy®WestSoy®, Lima®Lima®, Danival®Danival®, Grains Noirs®Noirs®, Natumi®Natumi®, GranoseJohnson's Juice Co.®, Realeat®Farmhouse Fare®, Cully & Sully®, Yves Veggie Cuisine®Cuisine®, Avalon Organics®Organics®, Alba Botanica®Botanica®, Queen Helene®Helene®, Batherapy®Batherapy®, Shower Therapy®Therapy®, Footherapy®Footherapy® and Earth’sEarth's Best TenderCare®TenderCare® brands.Celestial Seasonings has We also have trademarks for most of itsour best-selling Celestial Seasonings teas, including Sleepytime®Sleepytime®, Lemon Zinger®Zinger®, Mandarin Orange Spice®Spice®, Red Zinger®Zinger®, Wild Berry Zinger®Zinger®, Tension Tamer®Tamer®, Country Peach Passion®Passion® and Raspberry Zinger®Zinger®.- 6 -McCartney®McCartney® brand under license. In addition, we license the right from Sesame Workshop to utilize the Sesame Street name and logo, as well as other Sesame Street intellectual property, on certain of our Earth’s Best®Earth's Best® products. We also have a license agreement with Martha Stewart Living Omnimedia to market, sell and distribute environmentally-friendly cleaning products under the Martha Stewart Clean™ brand. (See Item 1A. Risk Factors –- “Our Inability to Use Our Trademarks Could Have a Material Adverse Effect on Our Business.”)U.S.,United States, we certify our organic products in accordance to the USDA’sUSDA's National Organic Program through organizations such as Quality Assurance International (“QAI”), Certsys, QC&I International Services, Oregon Tilth and the Texas Department of Agriculture. Where reciprocity does not exist or where a product is marketed solely outside of the United States, we use locally-accreditedaccredited certifying agencies. kosher supervision of accredited agencies including The Union of Orthodox Jewish Congregations, The Organized Kashruth Laboratories, “KOF-K” Kosher Supervision, Star K Kosher Certification, Kosher Overseers Associated of America and Upper Midwest Kashruth.organicthird party certification through QAI for our personal care products in the absence of an established government standardregulation for these products., among others.- 7 -Item 1A.Risk Factorshigherlower retail prices than do their private labelbranded counterparts. Distributors and retailers may become more conservative in response to these conditions and seek to reduce their inventories. Our results of operations depend upon, among other things, our ability to maintain and increase sales volumes with existing customers, our ability to attract new customers, the financial condition of our customers and our ability to provide products that appeal to consumers at the right price., Sara Lee Corporation and Unilever, PLC, and conventional personal care products companies, including but not limited to The Proctor and Gamble Company, Johnson & Johnson and Colgate-Palmolive, may be able to use their resources and scale to respond to competitive pressures and changes in consumer preferences by introducing new products, reducing prices or increasing promotional activities. We also compete with other natural and organic packaged food brands and companies, including Annie's, Inc., Nature's Path Foods, Inc. and Amy's Kitchen, and with smaller companies, which may be more innovative, able to bring new products to market faster and better able to quickly exploit and serve niche markets. Retailers also market competitive products under their own private labels, which are generally sold at lower prices and compete with some of our products. As a result of actual or perceived conflicts resulting from this competition, retailers may take actions that negatively affect us. As a result, we may need to increase our marketing, advertising and promotional spending to protect our existing market share, which may result in an adverse impact on our profitability.One example of the competitiveness of the markets in which we participate is in the tea portion of the beverage market. Competitive factors in the tea industry include product quality and taste, brand awareness among consumers,- 8 -variety of specialty tea flavors, interesting or unique product names, product packaging and package design, supermarket and grocery store shelf space, alternative distribution channels, reputation, price, advertising and promotion. Our principal competitors on a national basis in the U.S. specialty tea market are Thomas J. Lipton Company, a division of Unilever PLC, andR.C. Bigelow, Inc. Unilever has substantially greater financial resources than we do. Additional competitors include a number of regional specialty tea companies.in markets geared to consumers of natural foods, including specialty teas, non-dairy beverages, infant and toddler foods, cereals, breakfast bars, cannedchilled and fresh aseptic and instant soups, nut butters, cooking oils and personal care products which, if consumer demand for such categories were to decrease, could harm our business. In addition, we have other product categories, such as meat alternativemeat-alternative products and other specialty food items which are subject to evolving consumer preferences.levels,wheat,mix.mix and identifying and acquiring brands in new geographies for purposes of expanding our business internationally. We cannot be certain that we will be able to successfully:- 9 -management’smanagement's attention from our day-to-day operations. If we are not successful in integrating the operations of acquired brands, our business could be harmed.Simon’sSimon's reputation as our founder and his expertise and knowledge in the natural and organic products industry are critical factors in our continuing growth. His relationships with customers and suppliers are not easily found elsewhere in the natural and organic products industry. The loss of the services of Mr. Simon could harm our business.21%18%, 21% and 19%21% of our consolidated net sales for the fiscal years ended June 30, 2012, 2011, 2010, and 2009,2010, respectively. The loss of, or business disruption at, one or more of these distributors may harm our business. If we- 10 -U.S.United States and the European Union continue to consolidate. This consolidation has produced larger, more sophisticated organizations with increased negotiating and buying power that are able to resist price increases or demand increased promotional programs, as well as operate with lower inventories, decrease the number of brands that they carry and increase their emphasis on private label products, which could negatively impact our business. The consolidation of retail customers also increases the risk that a significant adverse impact on their business could have a corresponding material adverse impact on us.21%18%, 21% and 19%21% of our consolidated net sales for the fiscal years ended June 30, 2012, 2011, 2010, and 2009,2010, respectively. No other customer accounted for more than 10% of our net sales in the past three fiscal years.2009, approximately 45%, 40% and 50%38%, respectively, of our revenue was2009, approximately 55%, 60% and 50%62%, respectively, of our revenue was derived from products manufactured at independent co-packers. In some cases an individual co-packer may produce all of our requirements for a particular brand. The success of our business depends, in part, on maintaining a strong sourcing and manufacturing platform. We believe there are a limited number of competent, high-quality co-packers in the industry, and if we were required to obtain additional or alternative co-packing agreements or arrangements in the future, we can provide no assurance that we would be able to do so on satisfactory terms in a timely manner. Therefore, the loss of one or more co-packers, disruptions or delays at a co-packer, or our failure to retain co-packers for newly acquired products or brands, could delay or postpone production of our products or reduce or eliminate the availability of some of our products, which could have a material adverse effect on our business, results of operations and financial condition.co-packers’co-packers' facilities. We utilize distribution centers which are managed by third parties. Activity at these distribution centers could be disrupted by a number of factors, including labor issues, failure to meet customer standards, acts of war, terrorism, fire, earthquakes, flooding or other natural disasters or bankruptcy or other financial issues affecting the third party providers. Any extended disruption in the distribution of our products could have a material adverse effect on our business.- 11 -customers’customers' inventory levels, access to shelf space and changes in consumer preferences,- 12 -U.S.United States dollar, primarily the British pound, Canadian dollar and the Euro. Our consolidated financial statements are presented in U.S. dollars, and therefore we must translate the assets, liabilities, revenue, and expenses into U.S.United States dollars for external reporting purposes. As a result, changes in the value of the U.S. dollar during a period may unpredictably and adversely impact our consolidated operating results and our asset and liability balances in our consolidated financial statements, even if their value has not changed in their original currency.2011,2012, approximately 19.5%28.1% of our consolidated net sales were generated outside the United States, while such sales outside the U.S.United States were 21.3%17.9% of net sales in 20102011 and 18.5%18.9% in 2009.2010. Sales from outside our U.S.United States markets may continue to represent a significant portion of our total net sales in the future. Our non-U.S. sales and operations are subject to risks inherent in conducting business abroad, many of which are outside our control, including:consumer’sconsumer's decision to purchase one product over another in the highly competitive food, beverage and personal care and household products industries. Although we endeavor to protect our trademarks and trade names, there can be no assurance that these efforts will be successful, or that third parties will not challenge our right to use one or more of our trademarks or trade names. We believe that our trademarks and trade names are significant to the marketing and sale of our products and that the inability to utilize certain of these names could have a material adverse affect on our business, results of operations and financial condition.Earth’sEarth's Best® products, Candle Cafe™ and our Martha Stewart Clean™Candle- 13 -Federal Trade Commission (“FTC”), Environmental Protection Agency (“EPA”),FTC, EPA, Canadian Food Inspection Agency (“CFIA”) and other foreign regulators as well as state and local government agencies. The U.S. Food Safety Modernization Act passed in January 2011 grants the FDA greater authority over the safety of the national food supply with a specific emphasis on imported foods, which may cause delays on imported ingredients and finished goods. In addition, we advertise our products and could be the target of claims relating to false or deceptive advertising under foreign laws and U.S. federal and state laws, including the consumer protection statutes of some states.management’smanagement's time from other business activities.USthe United States and Canada as well as EUthe European Union and Canada, in an effort to reduce and potentially eliminate trade barriers across the globe.The stateState legislative environment, specificallyinitiatives, including the California Safe Drinking Water and Toxic Enforcement Act of 1986, known as Proposition 65, which defines maximum daily exposure levels of substances that may cause developmental or cancer risk in individuals. Where research efforts have failed to reduce chemicals like acrylamide that are naturally produced in fried and roasted products, warning labels may be required at point-of-sale for food and beverage products. Additionally, while we have commercialized BPA-free packaging for many of our products, there are no alternatives to metal can linings used in acidic products at this time.U.S.,United States, Canada and internationally will likely require manufacturers to consider using alternative energy sources to minimize climate change and reduce greenhouse gas emissions and household products. Any change in manufacturing, labeling or packaging requirements for our products may lead to an increase in costs, interruptions or delays, any of which could adversely affect the operations and financial condition of our business.- 14 -brand’sbrand's image or its ability to attract consumers. Further, our results could be negatively impacted if one of our brands suffers a substantial impediment to its reputation due to real or perceived quality issues or the Company is perceived to act in an irresponsible manner.food products for human use and consumption involves the risk of injury or illness to consumers. Such injuries may result from inadvertent mislabeling, tampering by unauthorized third parties or product contamination or spoilage. Under certain circumstances, we may be required to recall or withdraw products, which may lead to a material adverse effect on our business. Even if a situation does not necessitate a recall or market withdrawal, product liability claims might be asserted against us. While we are subject to governmental inspection and regulations and believe our facilities and those of our co-packers and suppliers comply in all material respects with all applicable laws and regulations, if the consumption of any of our products causes, or is alleged to have caused, a health-related illness in the future we may become subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or physical harm, including the risk of reputational harm being magnified and/or distorted through the rapid dissemination of information over the Internet, including through news articles, blogs, chat rooms and social media sites, could adversely affect our reputation with existing and potential customers and consumers and our corporate and brand image. Moreover, claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others. We maintain product liability insurance in an amount that we believe to be adequate. However, we cannot be sure that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage. A product liability judgment against us or a product recall could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.Food Productsfoodproducts company, which could harm our business.Our tea brand manufacturesmarketsmarket hot tea products and, as a result, our quarterly results of operations reflect seasonal trends resulting from increased demand for our hot tea products in the cooler months of the year. In addition, some of our other products (e.g., baking and cereal products and soups) also show stronger sales in the cooler- 15 -2011,2012, we had approximately $789 million$1.01 billion of goodwill and other intangible assets (primarily indefinite-lived intangible assets associated with our brands) on our balance sheet as a result of the acquisitions we have made since our inception. The value of these intangible assets depends on a variety of factors, including the success of our business, market conditions, earnings growth and expected cash flows. Impairments to these intangibles may be caused by factors outside of our control, such as increasing competitive pricing pressures, changes in discount rates based on changes in market interest rates or lower than expected sales and profit growth rates. Pursuant to generally accepted accounting principles in the United States, we are required to perform impairment tests on our goodwill and indefinite-lived intangible assets annually or at any time when events occur which could impact the value of our reporting units or our indefinite-lived brands. Impairment analysis and measurement is a process that requires considerable judgment. Our determination of whether a goodwill impairment has occurred is based on a comparison of each of our reporting units’ estimated fair value with its carrying value. Our determination of whether an impairment has occurred in our indefinite-lived brands is based on a comparison of the book value of the brand and its fair value. We determine the fair value of our indefinite-lived intangibles using the relief from royalty method. Significant and unanticipated changes in the value of our reporting units or our indefinite-lived intangible assets could require a charge for impairment in a future period that could substantially affect our consolidated earnings in the period of such charge. In addition, such charges would reduce our consolidated net worth.thirdfourth quarter of fiscal 20092012, we recorded a pre-tax non-cash goodwill impairment charge of $49.6charges totaling $14.9 million related to our Europe and Protein reporting units, including $7.6 million attributed to the then minority interestcertain long-lived assets of HPP, and a non-cash impairment charge of $3.0 million related to a customer relationship in the United Kingdom.businesses being held for sale which are classified as discontinued operations (see Note 18, Discontinued Operations). Our reviews in fiscal 2010, 2011 and 20112012 did not indicate an impairment;impairment related to our continuing operations; however, if our common stock price trades below book value per share for a sustained period, if there are changes in market conditions or a future downturn in our business, or if future interim or annual impairment tests indicate an impairment of our goodwill or indefinite-lived intangible assets, we may have to recognize additional non-cash impairment charges which may materially adversely affect our consolidated results of operations and net worth. For further details, see Note 8 (“7, Goodwill and Other Intangible Assets”)Assets, to our consolidated financial statements for the fiscal year ended June 30, 2011.- 16 -ExamplesFor example, although the FDA and USDA have each issued statements regarding the appropriate use of the word “natural,” there is no single, U.S. government-regulated definition of the term21.6%20.9% of our common stock as of June 30, 2011.2012. Accordingly, our officers and directors and 10% or greater beneficial owners may be in a position to influence the election of our directors and otherwise influence stockholder action.16.4%15.9% of our outstanding common stock (based upon the 43,456,60144,955,920 shares of our common stock stated to be outstanding as of May 4, 2011 in our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2011)August 20, 2012). As a result, the Icahn Group could increase its beneficial ownership of our common stock.- 17 -Item 1B.Unresolved Staff CommentsItem 2.Properties Approximate
Square Feet Melville, NY 35,000 2012 Boulder, CO 158,000 Owned Hereford, TX 136,000 Owned West Chester, PA 105,000 Owned Moonachie, NJ 75,000 Owned Lancaster, PA 57,000 2013 Shreveport, LA 37,000 Owned Culver City, CA 24,000 2015 Boulder, CO 21,000 Owned Ashland, OR 13,000 Owned Ontario, CA 375,000 2012 Lancaster, PA 99,000 2012 Boulder, CO 81,000 2014 Boulder, CO 45,000 Month to month Culver City, CA 26,000 2012 Vancouver, BC, Canada 76,000 Owned Eitorf, Germany 46,000 2012 Brussels, Belgium 20,000 2013 Aalter, Belgium 80,000 2018 Fakenham, England 101,000 Owned Andiran, France 39,000 Owned Nerrac, France 18,000 Owned Larvik, Norway 16,000 2019 Luton, England 97,000 2015 Primary Use Location Headquarters office Melville, NY 35,000 2012 Headquarters office (beginning 2013) Lake Success, NY 86,000 2028 Manufacturing and offices (Tea) Boulder, CO 158,000 Owned Manufacturing and distribution (Grocery) Hereford, TX 136,000 Owned Manufacturing (Frozen foods) West Chester, PA 105,000 Owned Manufacturing (Vegetable chips) Moonachie, NJ 75,000 Owned Manufacturing and distribution center (Snack products) Lancaster, PA 100,000 2017 Manufacturing and distribution (Grocery) Shreveport, LA 37,000 Owned Manufacturing (Personal care) Culver City, CA 24,000 2015 Manufacturing (Meat-alternatives) Boulder, CO 21,000 Owned Manufacturing (Nut butters) Ashland, OR 13,000 Owned Distribution center (Grocery, snacks and personal care products) Ontario, CA 375,000 2014 Distribution center (Snack products) Landisville, PA 56,000 2013 Distribution center (Tea) Boulder, CO 81,000 2014 Distribution center (Meat-alternatives) Boulder, CO 45,000 Month to month Distribution center (Personal care) Culver City, CA 26,000 2015 Manufacturing and offices (Meat-alternatives) Vancouver, BC, Canada 76,000 Owned Manufacturing and offices (Soymilk & other non-dairy products) Eitorf, Germany 46,000 2012 Manufacturing (Fresh prepared food products) Brussels, Belgium 20,000 2013 Manufacturing and offices (Organic food products) Andiran, France 39,000 Owned Distribution (Organic food products) Nerrac, France 18,000 Owned Manufacturing and distribution (Crackers) Larvik, Norway 16,000 2019 Manufacturing and offices (Fresh prepared food products) Luton, England 97,000 2015 Manufacturing (Hot-eating desserts) Clitheroe, England 38,000 2018 Manufacturing and offices (Fresh fruit and salads) Leeds, England 37,000 2022 Manufacturing (Chilled soups) Grimsby, England 61,000 2029 Manufacturing (Chilled soups) Peterborough, England 54,000 (1) Distribution Peterborough, England 35,000 Owned Manufacturing and offices (Meat-free frozen products) Fakenham, England 101,000 Owned Manufacturing (Juices, Smoothies and Ingredients) Ashford, England 53,000 Owned 16 to15, Commitments and Contingencies. For further information regarding the Consolidated Financial Statements.18 -Item 3.Legal ProceedingsItem 4.Removed and reservedItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20092010 through June 30, 2011. Common Stock Fiscal Year 2011 Fiscal Year 2010 High Low High Low $ 24.99 $ 19.20 $ 19.77 $ 14.88 28.49 23.35 19.90 14.92 33.25 25.59 18.17 14.45 37.24 30.30 23.56 17.04 Common Stock Fiscal Year 2012 Fiscal Year 2011 High Low High Low First Quarter $ 34.72 $ 26.10 $ 24.99 $ 19.20 Second Quarter 38.47 27.90 28.49 23.35 Third Quarter 44.82 33.72 33.25 25.59 Fourth Quarter 57.42 42.81 37.24 30.30 19, 2011,20, 2012, there were 370332 holders of record of our Common Stock.Credit Facility (as defined below)credit facility and our outstanding senior notes, our general financial condition and general business conditions. (a) (b) (c) (d) Total number
of shares
purchased Average
price paid
per share Total number of
shares purchased
as part of
publicly
announced plans Maximum number
of shares that
may yet be
purchased under
the plans(2) 42,297 (1) $ 33.14 — 900,300 193 (1) $ 33.56 — — 444 (1) $ 32.17 — — 42,934 $ 33.13 — 900,300 Period April 2012 192 $ 47.30 — — May 2012 — $ — — — June 2012 — $ — — — Total 192 $ — — — (1) Shares surrendered for payment of employee payroll taxes due on shares vested and issued under stockholder approved stock based compensation plans.- 19 -(2)The Company’s plan to repurchase up to one million shares of its common stock was first announced publicly on a conference call on August 29, 2002. At March 31, 2005, there remained authorization to repurchase 545,361 shares of our common stock. Effective April 18, 2005, the Board of Directors voted to refresh the authorization of shares to be repurchased to a total of one million, of which 99,700 were subsequently repurchased.2011,2012, concerning shares of common stock authorized for issuance under all of the Company’s equity compensation plans. (A) (B) (C) Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights Number of Securities
Remaining Available for
Future Issuance Under Equity
Compensation Plans
(excluding securities
reflected in column (A)) (1) 3,497,752 $ 17.35 3,599,303 None None None 3,497,752 $ 17.35 3,599,303 Plan Category Equity compensation plans approved by security holders 2,580,433 $18.00 3,566,443 Equity compensation plans not approved by security holders None None None Total 2,580,433 $18.00 3,566,443 (1) Of the 3,599,3033,566,443 shares available for future issuance under our equity compensation plans, 3,508,5083,515,648 shares are available for grant under the Amended and Restated 2002 Long Term Incentive and Stock Award Plan and 90,79550,795 shares are available for grant under the 2000 Directors Stock Plan.20062007 through June 30, 2011.2012. The comparison assumes $100 invested on June 30, 2006.- 20 -
Item 6.Selected Financial DataSeeAdditionally, as described further in Note 218, Discontinued Operations, the Company made the decision during fiscal 2012 to sell its private-label chilled ready meals and sandwich operations in the United Kingdom, and as such, the results of Notes to Consolidated Financial Statements. (Amountsthese businesses have been classified as discontinued operations for all periods presented. Amounts are in thousands except for per share amounts.)- 21 - Year Ended June 30, 2011 2010 2009 2008 2007 $ 1,130,257 $ 917,337 $ 1,122,734 $ 1,046,593 $ 892,163 $ 54,982 $ 28,619 $ (24,723 ) $ 41,221 $ 47,482 $ 1.27 $ 0.70 $ (0.61 ) $ 1.03 $ 1.21 $ 1.23 $ 0.69 $ (0.61 ) $ .99 $ 1.16 $ 200,381 $ 174,967 $ 212,592 $ 246,726 $ 198,524 $ 1,333,504 $ 1,198,087 $ 1,123,496 $ 1,259,384 $ 1,058,456 $ 229,540 $ 225,004 $ 258,372 $ 308,220 $ 215,446 $ 866,703 $ 765,723 $ 701,323 $ 742,811 $ 696,956 Fiscal Year ended June 30, 2011 2010 2008 Operating results: Net sales $ 1,378,247 $ 1,108,546 $ 890,007 $ 1,060,580 $ 977,271 Income (loss) from continuing operations attributable to The Hain Celestial Group, Inc. $ 94,214 $ 58,971 $ 38,191 $ (13,827 ) $ 33,396 Income/(loss) from discontinued operations attributable to The Hain Celestial Group, Inc. $ (14,989 ) $ (3,989 ) $ (9,572 ) $ (10,896 ) $ 7,825 Net income (loss) attributable to The Hain Celestial Group, Inc. $ 79,225 $ 54,982 $ 28,619 $ (24,723 ) $ 41,221 Basic net income per common share: From continuing operations $ 2.12 $ 1.37 $ 0.93 $ (0.34 ) $ 0.83 From discontinued operations (0.33 ) (0.10 ) (0.23 ) (0.27 ) 0.20 Net income per common share - basic $ 1.79 $ 1.27 $ 0.70 $ (0.61 ) $ 1.03 Diluted net income per common share: From continuing operations $ 2.05 $ 1.32 $ 0.92 $ (0.34 ) $ 0.80 From discontinued operations (0.32 ) (0.09 ) (0.23 ) (0.27 ) 0.19 Net income per common share - diluted $ 1.73 $ 1.23 $ 0.69 $ (0.61 ) $ 0.99 Financial position: Working capital $ 245,999 $ 200,383 $ 174,967 $ 212,592 $ 246,726 Total assets $ 1,673,593 $ 1,333,504 $ 1,198,087 $ 1,123,496 $ 1,259,384 Long-term debt $ 390,288 $ 229,540 $ 225,004 $ 258,372 $ 308,220 Stockholders’ equity $ 964,602 $ 866,703 $ 765,723 $ 701,323 $ 742,811 (a) Net sales amounts for2009, 2008 and 2007 have been revised to reflect the reclassification2012 includes impairment charges of certain promotional expenses from selling, general and administrative expenses to a reduction of net sales.$14.9 million, or $0.32 per diluted share.(b) The net loss in fiscal 2009 includes goodwill and other intangibles impairment charges of $52.6 million, or $1.20 per share. See Note 8 to the Consolidated Financial Statements.share, of which $14.4 million is included in discontinued operations.- 22 -Management’s Discussion and Analysis of Financial Condition and Results of Operations20112012 Consolidated Financial Statements and the related Notes and “Item 1A. Risk Factors” contained in this Annual Report on Form 10-K for the year ended June 30, 2011.2012. Forward-looking statements in this review are qualified by the cautionary statement included in this review under the sub-heading, “Note Regarding Forward Looking Information,” below. Operating results for the Company's private-label chilled ready meals and sandwich businesses, including the Daily BreadLife™LifeTM. We are a leader in many natural food and personal care products categories, with an extensive portfolio of well knownwell-known brands. We operateDuring the fourth quarter of fiscal 2012, the Company reorganized its reporting structure in a manner that resulted in a change to our operating and reportable segments. The change resulted from the Company's international expansion and was primarily driven by the acquisition of The Daniels Group in October 2011. Our operations are now organized and managed by geography, and are comprised of four operating segments: United States, United Kingdom, Canada and Europe. The Company previously operated and reported in one segment,segment. Prior period information has been recast to conform to the manufacturing, distribution, marketing and sale of natural and organic products, including food, beverage, personal care and household products.current year presentation. Our business strategy is to integrate allthe brands in each of our brandssegments under one management team and employ a uniform marketing, sales and distribution program.strategies where possible. We market our products through a networkcombination of direct sales personnel, brokers and distributors. We believe that our direct sales personnel combined with brokers and distributors provide an effective means of reaching a broad and diverse customer base. Our products are sold to specialty and natural food distributors, as well as to supermarkets, natural food stores, and other retail classes of trade including mass-market and on-line retailers, drug store chains,e-tailers, food service channels and club stores. We manufacture domestically and internationally and our products are sold in more than 50 countries.andor product lines an integral part of our business strategy. We believe that by integrating our various brands, we will continue to achieve economies of scale and enhanced market penetration. We seek to capitalize on the equity of our brand equitybrands and the distribution achieved through each of our acquired businesses with strategic introductions of new products that complement existing lines to enhance revenues and margins. OurWe believe our continuing investments in the operational performance of our business units and our focused execution on cost containment, productivity, cash flow and margin enhancement positions us to offer innovative new products with healthful attributes and enables us to build on the foundation of our long-term strategy of sustainable growth. We are committed to creating and promoting A Healthy Way of Life™LifeTM for the benefit of consumers, our customers, shareholders and employees.increasedcontinued to increase during a period of challenging macroeconomic conditions.difficult period. We expect that we will continue to monitorsupport the economicincreased consumer consumption we have experienced in the United States over the last two years with expanded distribution, efficient use of promotional allowances and political environmentthe introduction of innovative new products. We have experienced increases in select input costs, and anticipate that high unemployment and uncertainty may affect consumer confidence, behavior and spending. In addition, we expect that higher input costs will continue to affect future periods. We strive to mitigate the impact of these challenging conditions and input cost increases with improvements in operating efficiencies, cost savings initiatives and price increases to our customers.continuebelieve the acquisition of Cully & Sully complements our existing product offerings and provides us with the opportunity to investexpand our presence into the Irish marketplace.delivercomplement our existing product offerings.consumers. Our recentthe settlement of the contingent consideration for the World Gourmet acquisition.and Sensible Portions snacks brands have achieved increased sales over their pre-acquisition results. Initial results from our two most recent acquisitions in Europe,brand, Danival SAS and GG UniqueFiber AS, are encouraging. We will continueand other acquisition and integration activities, which was offset by $4.2 million of net expense reduction related to evaluate potential acquisitionsadjustments in the carrying values of complementary brands, both domestically and internationally. Published independent syndicated consumption data (consumption data measures sales scanned through cash registers at retail) and similar information provided directly by retailers indicate that our consumption trends at certain retailers continued to improve. We monitor consumption trends as part of the total mix of information used to evaluate expectations of future sales.Recent DevelopmentsAcquisitionsDuring the quarter ended March 31, 2011 we completed two acquisitions in Europe. We acquired Danival SAS, a manufacturer of certified organic food products based in France. Danival’s product line includes over 200 branded organic sweet and salted grocery, fruit, vegetable and delicatessen products currently distributed in Europe. The Danival acquisition complements the organic food line of our existing Lima brand in Europe and we expect it to provide additional opportunities to us through expanded distribution of Danival’s products in Europe, the United States- 23 -and Asia.contingent consideration. We also acquired GG UniqueFiber AS,incurred approximately $0.7 million of restructuring expenses, primarily related to the closing of a manufacturer of all natural high fiber crackers based in Norway. GG UniqueFiber’s products are distributed through independent distributorssmall non-dairy production facility in the United StatesKingdom.Europe.gross profit. Operating income as a percentage of net sales was 11.0% in fiscal 2012 compared with 10.0% in fiscal 2011. The GG UniqueFiberchange in operating income percentage is attributable to the decrease in acquisition broadens our offeringsrelated expenses (primarily due to the adjustment in the carrying value of whole graincontingent consideration) recorded during fiscal 2012, as described above.high fiber products, for which we believe we can provide expanded distribution.Results of OperationsInterest and other expenses, net (which includes foreign currency gains and losses) were Fiscal 2011 Compared to Fiscal 2010$17.3 millionNET SALESNet sales for the year ended June 30, 2012 compared to $12.2 million for fiscal 2011. Net interest expense totaled $15.8 million in fiscal 2012, which includes interest on the $150 million of 5.98% senior notes outstanding, interest related to borrowings under our revolving credit agreement, amortization of deferred financing costs and certain other interest charges, offset partially by interest income earned on cash equivalents. Net interest expense in fiscal 2011 was $14.1 million. The increase in interest expense primarily resulted from higher average borrowings under our revolving credit facility, the proceeds of which were used to purchase Daniels during the period, offset partially by a lower interest accretion on contingent consideration due to payments that were made during the first and second quarters of fiscal 2012. were $1.13 billion, an. Our equity in the earnings of HPP increased to $2.4 million during fiscal 2012 from a loss of $2.2 million during fiscal 2011, which was partially offset by losses incurred by HHO as they continue to develop the Asian markets for our products.$212.9$4.0 million from for the fiscal year ended June 30, 2011. Net sales reported within discontinued operations was $73.7 million and $21.7 million during fiscal 2012 and fiscal 2011, respectively. The operating loss included within discontinued operations was $16.8 million and $4.4 million for the respective periods. The operating loss for fiscal 2012 includes non-cash impairment and other non-recurring charges totaling $14.9 million related to the write-down of certain long-lived assets based on their current estimated fair value.of $917.3 millionand operating income/(loss) by reportable segment for the yearfiscal years ended June 30, 2012 and 2011:(dollars in thousands) United States United Kingdom Rest of World Consolidated Fiscal 2012 net sales $ 991,626 $ 192,352 $ 194,269 $ — $ 1,378,247 Fiscal 2011 net sales $ 910,095 $ 39,284 $ 159,167 $ — $ 1,108,546 % change - Fiscal 2012 vs. 2011 9.0 % 389.6 % 22.1 % 24.3 % Fiscal 2012 operating income(loss) $ 149,791 $ 9,690 $ 13,347 $ (21,300 ) $ 151,528 Fiscal 2011 operating income(loss) $ 130,155 $ (4,844 ) $ 9,787 $ (23,924 ) $ 111,174 % change - Fiscal 2012 vs. 2011 15.1 % 300.0 % 36.4 % 36.3 % Fiscal 2012 operating income (loss) margin 15.1 % 5.0 % 6.9 % 11.0 % Fiscal 2011 operating income (loss) margin 14.3 % (12.3 )% 6.1 % 10.0 % 2010.$910.1$991.6 million, an increase of $187.9$81.5 million, or 9.0%, from last year’s net sales of $722.2 million.$910.1 million in fiscal 2011. The sales increase was directly related to continued improved consumption and expanded distribution with growth from many of our brands, including Earth's Best, Celestial Seasonings, Imagine, MaraNatha, Garden of Eatin', Sensible Portions, The Greek Gods, Alba Botanica, Avalon and JASON. Operating income in the United States in fiscal 2012was led$149.8 million, an increase of $19.6 million, or 15.1%, from operating income of $130.2 million in fiscal 2011. Additionally, operating income as a percentage of net sales in the United States increased to 15.1% from 14.3% during these periods. The improvement primarily resulted from savings from the integration of the Sensible Portions brand operations, price increases and productivity improvements, offset partially by our Earth’shigher input costs.renewed growthto a lesser extent, increased sales in our personal care brands,Europe from Danival and GG UniqueFiber, both of which were acquired during the third quarter of fiscal 2011. Operating income as a percentage of net sales increased to 6.9% from 6.1%, reflecting the continued leveraging of the existing cost structure.yogurt and a full year of sales of Sensible Portions, acquired in last year’sthe fourth quarter.$220.2 millionboth acquired in the third quarter of fiscal 2011. Refer to the Segment Results section for additional details. accounting for 19.5% of our consolidated net sales, was $319.8 million, an increase of $25.1$71.1 million from international sales of $195.1 million in fiscal 2010. Sales in Europe increased $17.2 million,, or 13.0 %, with minimal impact from changes in foreign exchange rates. Sales by our continent-based European operations increased by $14.9 million for the year ended June 30, 2011, including sales from Danival and GGUniqueFiber, compared to the prior year. Sales in the United Kingdom increased $2.4 million as we had increased sales of our Linda McCartney meat-free frozen foods and our frozen desserts.GROSS PROFITGross profit for the year ended June 30, 2011 was $319.5 million, an increase of $68.3 million, or 27.2%$251.2 million.$248.8 million. Gross profit in fiscal 2011 was 28.3%28.9% of net sales compared to 27.4%28.0% of net sales for fiscal 2010. Our gross profit in fiscal 2010 was impacted by a decrease in the gross profit at our United Kingdom food-to-go operations, which resulted from the phasing out of production of sandwiches supplied to MarksSpencer.SELLING, GENERAL AND ADMINISTRATIVE EXPENSES$212.5$208.6 million, an increase of $39.8$42.7 million, or 23.0%25.7%, in fiscal 2011 from $172.7$165.9 million in fiscal 2010.2010. Selling, general and administrative expenses as a percentage of net sales was 18.8% in fiscal 2011 and 18.6% in fiscal 2010.SG&AACQUISITION RELATED EXPENSES AND RESTRUCTURING CHARGESSAS and GG UniqueFiber SA and other acquisition and integration activities, which was offset by $4.2 million of net expense reduction related to adjustments in- 24 -$0.8$0.7 million of restructuring expenses, primarily related to the closing of a small production facility in the United Kingdom.$3.6$2.8 million of acquisition related expenses, including approximately $0.6 million of employee termination and exit costs. We also incurred approximately $3.7 million of restructuring expenses during the year ended June 30, 2010primarily related to the consolidationacquisition of our Daily Bread production activities into our Luton, United Kingdom facility.OPERATING INCOME (LOSS)$106.7$111.2 million for the year ended June 30, 2011 compared to $71.1, an increase of $31.1 million, or 38.8%, from $80.1 million in the prior year.fiscal 2010. The increase in operating income resulted primarily from the increased sales and gross profit. Operating income as a percentage of net sales was 9.4%10.0% in fiscal 2011 compared with 9.0% in fiscal 2011 compared with 7.8% for2010. The increase in operating income percentage is attributable to the year ended June 30, 2010.INTEREST AND OTHER EXPENSES, NET$12.3$12.2 million for the year ended June 30,fiscal 2011 compared to $11.8$11.8 million for fiscal 2010.Interest$13.0$14.1 million for the year ended June 30, in fiscal 2011, which was primarily related toincludes interest on the $150 million of 5.98% senior notes outstanding,facilityagreement, amortization of deferred financing costs and certain other interest accretioncharges, offset partially by interest income earned on contingent consideration. Interestcash equivalents. Net interest expense forin fiscal 2010 was $10.1 million.$9.8 million. The increase in interest expense resulted from a combination of higher borrowings under our revolving credit facility used to fund our recent acquisitions and the interest accretion on contingent consideration of $1.7 million. Other expenses includes approximately $2.1 million of exchange gains for the fiscal year ended June 30, 2011 compared to $0.7 million of exchange losses in the prior year. Also included in other expenses for the year ended June 30, 2010 is a $1.2 million non-cash impairment charge for an other-than-temporary decline in the fair value of our investment in the shares of Yeo Hiap Seng Limited, a Singapore-based natural food and beverage company listed on the Singapore Stock Exchange.INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF EQUITY-METHOD INVESTEESyearfiscal years ended June 30, 2011 and 2010 was $94.4$98.9 million compared to $59.4 and $68.3 million in the prior year., respectively. The increase in each period was due to the items discussed above.INCOME TAXESThe provision for income taxes includes federal, foreign, state and local income taxes. $37.3$37.8 million in fiscal 2011 compared to $28.4 million in fiscal 2011 compared to $29.0 million in fiscal 2010.2010. Our effective income tax rates for the years ended June 30,fiscal 2011 and 2010 were 39.5%38.2% and 48.9%41.5%, respectively. The effective tax rate in both years was affected by losses incurred related to our continuing operations in the United Kingdom for which no deferred tax benefit is currentlywas being recorded. Additionally, in fiscal 2010, the Company recorded valuation allowances of $3.2 million for deferred tax assets in the United Kingdom recorded prior to fiscal 2010. The impact of the United Kingdom continuing operations losses and deferred tax valuation allowances on the effective tax rate in fiscal 2011 was to increase it 3.92.1 percentage points and in fiscal 2010 was to increase it 10.78.4 percentage points. Until an appropriate level of profitability is attained, we expect to continue to record and maintain a valuation allowance on our net deferred tax assets related to future United Kingdom tax benefits. If we are able to realize any of these deferred tax assets in the future, the provision for income taxes will be reduced by a release of the corresponding valuation allowance. The fiscal 2011 year effective tax rate was also favorably impacted by an increase in the benefit for the domestic production activities deduction of $1.4 million.fiscal 2011 and 2010 effective income tax rates differedrate for each period differs from the federal statutory rate primarily due to the items noted abovepreviously as well as the effect of state and local income taxes and the mix of pretax earnings by jurisdiction.taxes. Our effective tax rate may change from periodquarter to periodquarter based on recurring and non-recurring factors including the geographical mix of earnings, the ability to utilize carryforward losses against which we have recorded valuation allowances, enacted tax legislation, state and local income taxes and tax audit settlements.- 25 -EQUITY IN EARNINGS OF EQUITY-METHOD INVESTEES$2.1$2.1 million for the year ended June 30, 2011 compared to a loss of $1.7$1.7 million for the fiscal year ended June 30, 2010.2010. HPP’s results for fiscal 2011 included approximately $7.9 million of net loss (of which $3.9 million is included in the Company’s portion of HPP’s earnings) related to the impairment of long lived assets previously used in HPP’s divested Kosher Valley operation. HPP’s results for fiscal 2010 included approximately $4.6 million of net loss related to its Kosher Valley brand. HPP’s profitable antibiotic-free chicken and turkey results were more than offset by the losses incurred in the start-up of the Kosher Valley brand. In the fourth quarter of fiscal 2010, HPP divested its Kosher Valley brand in a transaction with Empire Kosher Poultry, Inc. (“Empire”), wherein the Kosher Valley brand and customer relationships were exchanged for an equity interest in Empire.NET INCOME (LOSS)Net incomeyearfiscal years ended June 30, 2011 and 2010 was $55.0$59.0 million and $38.2 million, or $1.23$1.32 and $0.92 per diluted share, compared to $28.6 million, or $0.69 per diluted share, for the year ended June 30, 2010.respectively. The increase of $26.4 million in earningseach period was attributable to the factors noted above.FiscalThe following table provides a summary of net sales and operating income/(loss) by reportable segment for the fiscal years ended June 30, 2011 and 2010:(dollars in thousands) United States United Kingdom Rest of World Consolidated Fiscal 2011 net sales $ 910,095 $ 39,284 $ 159,167 $ — $ 1,108,546 Fiscal 2010 net sales $ 722,211 $ 31,304 $ 136,492 $ — $ 890,007 % change - Fiscal 2011 vs. 2010 26.0 % 25.5 % 16.6 % 24.6 % Fiscal 2011 operating income(loss) $ 130,155 $ (4,844 ) $ 9,787 $ (23,924 ) $ 111,174 Fiscal 2010 operating income(loss) $ 98,672 $ (6,053 ) $ 8,653 $ (21,183 ) $ 80,089 % change - Fiscal 2011 vs. 2010 31.9 % 20.0 % 13.1 % 38.8 % Fiscal 2011 operating income (loss) margin 14.3 % (12.3 )% 6.1 % 10.0 % Fiscal 2010 operating income (loss) margin 13.7 % (19.3 )% 6.3 % 9.0 % Compared to Fiscal 2009NET SALESNet salesrespectively. Corporate and other also includes reductions of expense of $4,177 for the fiscal year ended June 30, 2010 were $917.3 million, a decrease of $205.4 million, which decrease includes $165.7 million of HPP sales reported in the prior year, from2011 related to net sales of $1.123 billion for the year ended June 30, 2009. The sales decrease also includes the impactreversals of the reduced salescarrying value of fresh sandwiches to Marks and Spencer of $32.4 million.$722.2$910.1 million, a decreasean increase of $192.7$187.9 million from last year’sthe prior year's net sales of $914.9 million, which includes HPP’s$722.2 million. The sales increase was directly related to improved consumption and was led by our Earth's Best brand, renewed growth in our Avalon, Alba Botanica, and JASON brands, as well as sales from the acquisition of The Greek Gods brand and a full year of sales of $165.7 million. The balance of the decrease resulted from a number of factors, including increased promotional spending (which is recorded as a reduction of sales), which is targeted at increasing consumption, distributor and retailer destocking, the SKU rationalization implementedSensible Portions brand, acquired in the fourth quarter of fiscal 20092010. United States operating profit increased 31.9% to $130.2 million. United States operating margin improved to 14.3% of net sales in fiscal 2011 from 13.7% in the previous year. The improvement resulted from the profit contribution of the aforementioned acquired brands as well as an increase in gross profit, which resulted from the mix of product sales, including the sales from The Greek Gods and decreasedSensible Portions acquisitions, which have relatively higher gross profit margins, and productivity improvements and cost savings which partially offset input cost increases.personal care products. These decreasesLinda McCartney meat-free frozen foods and our frozen desserts. Changes in foreign exchange rates had a minimal impact on net sales. United Kingdom operating loss decreased in fiscal 2011 as a result of improvement in gross profit and reduced operating expenses.partially offset by sales increases in other channels and the commencement of sales to our Hong Kong joint venture which we expect will expand the distribution of our global brands in Asia; however, there can be no assurances that we will realize such benefits from the joint venture.Our international sales were $195.1$159.2 million in fiscal 2010, accounting for 21.3%2011, an increase of our consolidated sales, a decrease of $12.7$22.7 million from net sales of $136.5 million in fiscal 2009. Favorable2010. Sales in Europe increased $14.9 million, or 20.3%. Sales in Europe included sales from Danival and GGUniqueFiber, each acquired in the third quarter of fiscal 2011 and were unfavorably impacted by $1.3 million as a result of changes in foreign exchange rates slightly mitigated the decrease over the prior year’s sales. Our salesrates. Sales in both Canada and continental Europe increased over the prior year, but these increases were more than offset in the United Kingdom with the phasing out of the supply of fresh sandwiches to Marks and Spencer.GROSS PROFITGross profit for the year ended June 30, 2010 was $251.2 million, an increase of $4.8$7.8 million, or 1.9%12.4%, from last year’s gross profitwhich includes a $4.1 million favorable impact as a result of $246.4 million. Gross profitchanges in fiscal 2010 was 27.4% of net sales comparedforeign exchange rates. Operating income increased 13.1% to 21.9% of net sales for fiscal 2009.The increase in gross profit percentage was primarily attributable to lower input costs and productivity improvements in the United States and the deconsolidation of HPP, which impacted the prior year’s gross profit percentage by approximately 410 basis points. Gross profit was also impacted by $8.6$9.8 million in fiscal 2009 for SKU rationalization, severance and other reorganization costs related to our Celestial Seasonings and personal care operations. Our gross profit in fiscal 2010 was impacted by a decrease in the gross profit at our United Kingdom food-to-go operations, which resulted from the phasing out of production of sandwiches supplied to Marks and Spencer.- 26 -SELLING, GENERAL AND ADMINISTRATIVE EXPENSESSelling, general and administrative expenses decreased by $25.5 million, or 12.9%, to $172.7 million in 2010 from $198.3 million in 2009. Selling, general and administrative expenses as a percentage of net sales was 18.8% in fiscal 2010 compared to 17.7% in fiscal 2009.Selling, general and administrative expenses have decreased primarily2011 as a result of the savings from the cost reduction initiatives we implementedtwo acquisitions in fiscal 2009 and $10.9 million of expense reported by HPP in the year ended June 30, 2009. HPP’s lower selling, general and administrative expense ratio impacted the comparison to fiscal 2009 by 190 basis points. Selling, general and administrative expenses included approximately $1.7 million of expenses related to litigation in the year ended June 30, 2010. Selling, general and administrative expenses in fiscal 2009 included a $1.4 million charge to settle a personal injury litigation matter and $4.4 million of professional fees incurred in connection with the investigation of our stock option practices, which were partially offset by a $3.0 million insurance reimbursement.ACQUISITION RELATED EXPENSES AND RESTRUCTURING CHARGESWe incurred approximately $3.6 million of acquisition related expenses in the year ended June 30, 2010, including approximately $0.6 million of employee termination and exit costs. As a result of adopting the provisions of a new accounting standard related to business combinations issued by the Financial Accounting Standards Board (FASB), for acquisitions completed after June 30, 2009, all transaction and other expenses related to acquisition activity are charged directly to the statement of operations, whereas previous to that date, these costs were recorded as a part of the purchase price.We incurred approximately $3.7 million of restructuring expenses during the year ended June 30, 2010 related to the consolidation of our Daily Bread production activities into our Luton, United Kingdom facility. In fiscal 2009, we incurred approximately $4.1 million of severance and restructuring costs related to actions taken in several of our United States locations.OPERATING INCOME (LOSS)We had income from operations of $71.1 million for the year ended June 30, 2010 compared to a loss from operations of $8.7 million in fiscal 2009. The increase in operating income was primarily a result of the impairment charges for goodwill and other intangibles recorded in fiscal 2009 at HPP and in Europe.INTEREST AND OTHER EXPENSES, NETInterest and other expenses, net were $11.8 million for the year ended June 30, 2010 compared to $15.1 million for fiscal 2009.Interest expense totaled $10.1 million for the year ended June 30, 2010, which was primarily related to interest on the $150 million of 5.98% senior notes outstanding and interest related to borrowings under our revolving credit facility. Interest expense for fiscal 2009 was $14.3 million. The decrease in interest expense resulted from a combination of lower borrowings under our revolving credit facility and lower average interest rates. Included in other expenses for the year ended June 30, 2010 is a $1.2 million non-cash impairment charge for an other-than-temporary decline in the fair value of our investment in the shares of Yeo Hiap Seng Limited, a Singapore-based natural food and beverage company listed on the Singapore Stock Exchange.INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF EQUITY-METHOD INVESTEESIncome before income taxes and equity in the after tax earnings of our equity-method investees for the year ended June 30, 2010 was $59.4 million compared to a loss of $23.8 million in the prior year. The improvement is primarily attributable to the impairment charges for goodwill and other intangible assets at HPP and in Europe in the prior year.- 27 -INCOME TAXESThe provision for income taxes includes federal, foreign, state and local income taxes. Our income tax expense was $29.0 million in fiscal 2010 compared to $5.6 million in fiscal 2009.Our effective income tax rate was 48.9% of pre-tax income for fiscal 2010. The effective tax rate for fiscal 2010 was impacted by approximately $6.4 million of valuation allowances recorded related to carryforward losses and deferred tax assets in the Company’s United Kingdom operations. The Company’s United Kingdom operations have incurred losses in recent years, having been affected by restructuring and other charges, such as the costs incurred in connection with the recent consolidation of its food-to-go production facilities, the phase out of sales to Marks and Spencer, as well as the economyincreased sales in the United Kingdom. These losses represented sufficient evidence for management to determine that a full valuation allowance for these deferred tax assets was appropriate in accordance with accounting standards. The valuation allowances recorded included approximately $3.2 million of deferred tax assets recorded in prior years. The impact of the United Kingdom losses on the effective tax rate in fiscal 2010 was to increase it 11.0 percentage points. In fiscal 2009, we had income tax expense of $5.6 million and a pre-tax loss of $23.8 million. The fiscal 2009 tax provision was impacted by impairment losses on intangible assets recognized, of which approximately $40.7 million was nondeductible for tax purposes and which were treated as discrete tax items. The fiscal 2010 and 2009 effective income tax rates differed from the federal statutory rate primarily due to the items noted above as well as the effect of state income taxes and the mix of pretax earnings by jurisdiction. Our effective tax rate may change from period to period based on recurring and non-recurring factors including the geographical mix of earnings, the ability to utilize carryforward losses against which we have recorded valuation allowances, enacted tax legislation, state and local income taxes and tax audit settlements.EQUITY IN EARNINGS OF EQUITY-METHOD INVESTEESOur share of the after-tax loss from our investment in HPP was $1.7 million for the year ended June 30, 2010. HPP’s results for the year included approximately $4.6 million of net loss related to its Kosher Valley brand. HPP’s profitable antibiotic-free chicken and turkey results were more than offset by the losses incurred in the start-up of the Kosher Valley brand. In the fourth quarter of fiscal 2010, HPP divested its Kosher Valley brand in a transaction with Empire Kosher Poultry, Inc. (“Empire”), wherein the Kosher Valley brand and customer relationships were exchanged for an equity interest in Empire. HPP recorded a pre-tax gain of approximately $0.3 million on the exchange. Empire is one of the country’s most established kosher poultry processors. In the year ended June 30, 2009, HPP’s results were consolidated into the Company’s results.NET INCOME (LOSS)Net income attributable to The Hain Celestial Group, Inc. for the year ended June 30, 2010 was $28.6 million, or $0.69 per diluted share, compared to a net loss of $24.7 million, or $0.61 per diluted share, for the year ended June 30, 2009. The increase of $53.3 million in earnings was attributable to the factors noted above.$10.3$2.4 million during the year ended June 30, 20112012 to $27.5 million.$29.9 million. Our working capital was $200.4$246.0 million at June 30, 2011,2012, an increase of $25.4$45.6 million from $175.0$200.4 million at the end of fiscal 2010.2011. The increase was due principally to a $29.1$26.9 million increase in accounts receivable, a $14.1$15.7 million increase in inventories, and an increase of $10.3 million in cash, offset partially by a $31.8$21.4 million increase in accounts payable, accrued expenses and other current liabilities.2011,2012, all of our investments mature in less than three months. Accordingly, we do not believe that our investments have significant exposure to interest rate risk. Cash provided by (used in) operating, investing and financing activities is summarized below.- 28 -Years ended June 30, 2011 2010 2009 $ 58,658 $ 71,030 $ 21,625 (55,483 ) (62,758 ) 3,205 7,134 (32,381 ) (39,734 ) (58 ) (33 ) (2,201 ) $ 10,251 $ (24,142 ) $ (17,105 ) Fiscal Year ended June 30, (amounts in thousands) 2012 2011 2010 Cash flows provided by (used in): Operating activities $ 121,960 $ 58,658 $ 71,030 Investing activities (270,664 ) (55,483 ) (62,758 ) Financing activities 147,423 7,134 (32,381 ) Exchange rate activities 3,659 (58 ) (33 ) Net increase (decrease) in cash $ 2,378 $ 10,251 $ (24,142 ) $58.7$122.0 million for the fiscal year ended June 30, 2011,2012, compared to $71.0$58.7 million provided in fiscal 20102011 and $21.6$71.0 million provided in fiscal 2009.2010. The increase in cash provided by operations in fiscal 2012 as compared to fiscal 2011 resulted from a $37.5 million increase due to changes in our working capital and a $25.8 million increase in net income and other non-cash items. The improvement in cash used for changes in operating assets and liabilities (which is exclusive of the opening balances of acquired companies), primarily resulted from favorable changes in accounts receivable and accounts payable, including timing of income tax payments. The decrease in cash provided by operationsoperating activities in fiscal 2011 as compared to fiscal 2010 resulted from a $45.1 million decrease due to changes in our working capital, partially offset by a $32.7 million increase in net income and other non-cash items. Withcharges.increase in our sales, from both acquisitions as well as internal performance, our accounts receivable and inventories both increased over the prior year’s comparisons. Additionally, as a result of the increase in our income,fiscal year ended June 30, 2012, we used more cash for income tax payments. The increase in cash provided by operating activities in 2010 resulted from a $12.6$270.7 million increase in our net income and other non-cash items and a $36.8 million increase from changes in our working capital.In the year ended June 30, 2011, we used $55.5 million$45.3$257.3 million of cash in connection with our acquisitions of The Daniels Group, Europe's Best and Cully & Sully, and $20.4 million for capital expenditures. We also received $6.9 million of repayments of advances made to HPP. We used cash in investing activities of $55.5 million during the year ended June 30, 2011. We used $45.3 million of cash in connection with our acquisitions of the assets and business of 3 Greek Gods, LLC, Danival SAS and GG UniqueFiber AS and $11.5 million for capital expenditures. This was partially offset by proceeds from the sale of property, plant and equipment of $1.6 million. We also received $3.5 million of repayments of advances made to HPP and loaned $3.8 million of cash to Hutchison Hain Organic Holding Limited, our Hong Kong joint venture. We used cash in investing activities of $62.8 million during the year ended June 30, 2010. We used $51.4 million of cash in connection with our acquisitions of the assets and business of World Gourmet Marketing L.L.C. and Churchill Food Products, Ltd.UniqueFiber. We also used $11.4$11.5 million of cash in investing activities in connection with capital additions. We hadused cash flows fromin investing activities during fiscal 2010 of $62.8 million, of which $51.4 million was used in connection with our acquisitions of the Sensible Portions business and Churchill Food Products Limited. We also used $11.4 million of cash in investing activities in fiscal 2009 of $3.2 million, principally as a result of $18.5 million of funds repaid to us by HPP from the proceeds of their new credit facility. This was partially offset by $13.0 million ofconnection with capital expenditures made, and $1.0 million of payments made related to previous acquisitions.$7.1$147.4 million was provided by financing activities for the fiscal year ended June 30, 2011.2012. We had proceeds from exercises of stock options of $17.9$14.2 million in fiscal 2011.2012. We also drew $161.0 million under our revolving credit facility, which was used $4.1for the Daniels acquisition, offset partially by $32.4 million of borrowings,contingent consideration paid related to the acquisitions of Sensible Portions and The Greek Gods brands. During fiscal 2011, net drawncash of $7.1 million was provided by financing activities. We had proceeds from exercises of stock options of $17.9 million and from net borrowings under our Credit Agreement andof $4.1 million. These items were partially offset by $14.8 million of cash used cash of $14.8 million to settle the first payment of contingent consideration due in connection with theThe Greek Gods acquisition. We used cash of $32.4$32.4 million in financing activities for the year ended June 30,during fiscal 2010, principally as a result of repaying $33.4$33.4 million of outstanding borrowings, under our credit facility, which was partially offset by $2.1$2.1 million of cash proceeds from stock option exercises. We used cash of $39.7 million in financing activities for the year ended June 30, 2009, principally as a result of repaying $47.2 million of outstanding borrowings under our credit facility. This was partially offset by $5.3 million of cash proceeds from stock option exercises and the repayment of $2.9 million of advances from the minority shareholder in our HPP joint venture.- 29 - Fiscal Year ended June 30, (amounts in thousands) 2012 2011 2010 Cash flow provided by operating activities $ 121,960 $ 58,658 $ 71,030 Purchase of property, plant and equipment (20,427 ) (11,490 ) (11,428 ) Operating free cash flow $ 101,533 $ 47,168 $ 59,602 Years ended June 30, 2011 2010 2009 $ 58,658 $ 71,030 $ 21,625 (11,490 ) (11,428 ) (12,990 ) $ 47,168 $ 59,602 $ 8,635 $47.2$101.5 million for the year ended June 30, 2011, a decrease2012, an increase of $12.4$54.4 million from the year ended June 30, 2010.2011. The increase in our operating free cash flow resulted from the increase in our cash flow from operations, as discussed above. Our operating free cash flow for the year ended June 30, 2011 decreased $12.4 million from the year ended June 30, 2010. The decrease in our operating free cash flow resulted from the decrease in our cash flow from operations, as discussed above. Our operating free cash flow for the year ended June 30, 2010 increased $51.0 million from the year ended June 30, 2009. The improvement in our operating free cash flow in that year resulted from the increase in our cash flow from operations. We have maintained our capital spending athas increased slightly lower thanover historical levels as a result of theour recent economic uncertainties.acquisitions. We expect that our capital spending for the next fiscal year will be approximately $20$50 million.and 2010, $150.0$150.0 million of the senior notes was outstanding.$400$600 million revolving credit facility (the “Credit Agreement”) expiring in July 2015. The Credit Agreement provides forwas increased on August 20, 2012 from $400 million to $600 million upon the exercise of an uncommittedexisting $100 million accordion feature, under which the facility may befeature was increased to $500 million, provided certain conditions are met.$200 million. Loans under the Credit Agreement bear interest at a base rate (greater of the applicable prime rate or Federal Funds Rate plus an applicable margin) or, at our option, the reserve adjusted LIBOR rate plus an applicable margin. As of June 30, 20112012 and 2010,2011, there were $79.0$240.0 million and $74.9$79.0 million of borrowings outstanding, respectively, under the Credit Facility.20112012 are as follows: Payments Due by Period
Total Less than
1 year 1-3
years 3-5
years
Thereafter $ 284,234 $ 12,267 $ 23,818 $ 248,149 — 109 40 57 12 — 22,906 9,239 7,887 3,257 $ 2,523 39,092 25,165 12,494 1,433 — 123,648 98,840 24,808 — — $ 469,989 $ 145,551 $ 69,064 $ 252,851 $ 2,523 (1)Including interest.(2)As of June 30, 2011, we had non-current unrecognized tax benefits of $0.4 million for which we are not able to reasonably estimate the timing of future cash flows. As a result, this amount has not been included in the table above. Payments Due by Period (amounts in thousands) Total Less than 1 year 1-3 years 3-5 years Thereafter Long-term debt obligations (1) $ 443,084 $ 15,297 $ 30,312 $ 397,475 $ — Capital lease obligations 66 30 36 — — Operating lease obligations 97,290 12,566 20,152 12,883 51,689 Purchase obligations 14,582 1,975 9,407 3,200 — Other long-term liabilities (2) 203,999 174,217 29,782 — — Total contractual obligations $ 759,021 $ 204,085 $ 89,689 $ 413,558 $ 51,689 $27.5$29.9 million at June 30, 2011,2012, as well as projected cash flows from operations and availability under our Credit Agreement are sufficient to fund our working capital needs in the ordinary course- 30 -20122013 capital expenditures of approximately $20$50 million, and the $21.5$27.9 million of debt and lease obligations described in the table above, during the 20122013 fiscal year.to the consolidated financial statements.Summary of Significant Accounting Policies. The policies below have been identified as the critical accounting policies we use which require us to make estimates and assumptions and exercise judgment that affect the reported amounts of assets and liabilities at the date of the financial statements and amounts of incomepromotion incentivespromotions, including price discounts, slotting fees and coupons, to our customers and to consumers such as price discounts, consumer coupons, volume rebates, cooperative marketing programs, slotting fees and in-store displays. The costs of these activitiesto support the Company's products. These incentives are generally recognized at the time the related revenue is recorded and are classified as a reduction of revenue.deducted from our gross sales to determine reported net sales. The recognition of the costs ofexpense for these programs involves judgmentsthe use of judgment related to performance and redemption rates, whichestimates. Differences between estimated expense and actual redemptions are madenormally insignificant and recognized as a change in estimate in the period such change occurs.historical experience and other factors. Actual expenses may differ ifexpected levels of performance. Settlement of these liabilities typically occurs in subsequent periods primarily through an authorization process for deductions taken by a customer from amounts otherwise due to the Company.and performance variesthat are developed by management. Management estimates are based on recommendations from our estimates.16%20% and KeHE Distributors LLCa second customer represented approximately 11%8% of our trade receivable balance at June 30, 2011,2012, we believe there is no significant or unusual credit exposure at this time.- 31 -(including, prior to fiscal 2010, transaction costs) over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. See Note 54 of the Notes to Consolidated Financial Statements. Prior to fiscal 2010, the estimated cost of these restructuring activities were also included as costs of the acquisition and, as such, affected the ultimate recording of goodwill. Under the accounting guidance adopted by us effective July 1, 2010, these costs must now be expensed.directors under several stock based plans.directors. The cost of stock based compensation is recorded at fair value at the date of grant and expensed in the consolidated statement of operationsincome over the requisite service period. The fair value of stock option awards is estimated on the date of grant using the Black-Scholes option pricing model and is recognized in expense over the vesting period of the options using the straight-line method. The Black-Scholes option pricing model requires various assumptions, including the expected volatility of our stock, the expected term of the- 32 -SegmentsAn operating segment is defined as that component of an enterprise (i) that engages in business activities from which it may earn revenues and incur expenses, (ii) whose operating results are regularly reviewed by the enterprise’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and (iii) for which discrete financial information is available. A reporting unit is defined as an operating segment or one level below an operating segment if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The Company has determined that it operates in one segment, the sale of natural and organic products, including food, beverage, personal care and household products, and further that such single segment includes five reporting units in the annual test of Goodwill for impairment. Characteristics of the Company’s operations which are relied on in making these determinations include the similarities apparent in the Company’s products in the natural and organic consumer markets, the commonality of the Company’s customers across brands, the Company’s unified marketing strategy, and the nature of the financial information used by the CODM, described below, other than information on sales and direct product costs, by brand. The Company’s five reporting units are Grocery (including snacks); Tea; Personal Care; Canada; and Europe. Prior to its deconsolidation at the end of fiscal 2009, HPP constituted a sixth reporting unit. The Company has further determined that its Chairman of the Board and Chief Executive Officer is the Company’s CODM, and is also the manager of the Company’s single segment. In making decisions about resource allocation and performance assessment, the Company’s CODM focuses on sales performance by brand using internally generated sales data as well as externally developed market consumption data acquired from independent sources, and further reviews certain data regarding standard costs and standard gross margins by brand. In making these decisions, the CODM receives and reviews certain Company consolidated quarterly and year-to-date information; however, the CODM does not receive or review any discrete financial information by geographic location, business unit, subsidiary, division or brand. The CODM reviews and approves capital spending on a Company consolidated basis rather than at any lower unit level. The Company’s Board of Directors receives the same quarterly and year-to-date information as the Company’s CODM.athe second step twoof the analysis, wherein we measure the excess, if any, of the carrying value of a reporting unit’s goodwill over its implied fair value, and record the impairment loss indicated.- 33 -2011,2012, with the assistance of an independent valuation firm. The analysis and assessment of these assets indicated that no impairment was required as either the fair values exceeded the recorded carrying values.values (for our indefinite-lived intangible assets and certain reporting units), or as described above, the qualitative assessment resulted in a determination that it was more likely than not that the fair value of the reporting unit exceeded its carrying amount (for certain of our reporting units). Although we believe our assumptions are reasonable, different assumptions or changes in the future may result in different conclusions and expose us to impairment charges in the future. The fair value of our Europe reporting unit exceeded its carrying valuesvalue by less than 10%. This reporting unit represented approximately 3%2% of our remaining goodwill balance as of April 1, 2011.2012. Holding all other assumptions constant at the testing date, a one percentage point increase in the discount rate used in the testing of this unit would reduce the estimated fair value below its carrying value, indicating a possible impairment. While we believe this operation can support the value of goodwill reported, this reporting unit is the most sensitive to changes in the underlying assumptions.allowance isallowances are based upon a number of assumptions, judgments, and estimates, including forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various jurisdictions in which we operate. Concluding that a valuation allowance is not required is difficult when there is significant negative evidence that is objective and verifiable, such as cumulative losses in recent years.ourthose net deferred tax assets related to future United Kingdom tax benefits.wherein a manner such that those prior losses (for which we have recorded full valuation allowances,allowances) may be utilized, our conclusion regarding the need for full valuation allowances in these tax jurisdictions could change, resulting in the reversal of some or all of the valuation allowances. If these operations generate taxable income prior to reaching profitability on a sustained basis, we would reverse a portion of the valuation allowance related to the corresponding realized tax benefit for that period, without changing our conclusions on the need for a full valuation allowance against the remaining net deferred tax assets.the Notes to Consolidated Financial StatementsSignificant Accounting Policies, for information regarding recent accounting pronouncements.Section 27ARule 3b-6 of the Securities Act1934 (the “Exchange Act”).1934. Words such as “plan,” “continue,” “expect,” “expected,” “anticipate,” “intend,” “estimate,” “believe,” “may,” “potential,” “can,” “positioned,” “should,” “future,” “look forward” and similar expressions, or the negative of those expressions, may identify forward-looking statements. These forward-looking statements include the following:Company's beliefs or expectations relating to: (i) our intentions for growth through acquisitions as well as internal expansion; (ii) our beliefs regarding the integration of our brands and the resulting impact thereof; (iii) our expectations that we will achieve expanded distribution(ii) the availability of the Danival and GG UniqueFiber products and that our joint venture in Hong Kong will expand the distribution of our brands in Asia; (iv) our statements regarding the introduction of new productsalternative co-packers and the impact onto our revenues and margins; (v)business if we are required to change our beliefs regardingsignificant co-packing arrangements; (iii) the positioninglevel of our business forsales made outside the future andUnited States; (iv) our intention to grow through acquisitions as well as internal expansion; (v) our long-term strategy for sustainable growth; (vi) our expectations concerning consumption trends;the economic environment; (vii) our beliefs that we will continue to derive benefits from new products;- 34 -our beliefs regardinghigher input costs; (ix) the interest rateintegration of acquisitions and the opportunities for growth related thereto; (x) the completion of divestitures; (xi) the repatriation of foreign cash balances; (xii) our cash and cash equivalent investments; (xi)investments having no significant exposure to interest rate risk; (xiii) our belief thatexpectations regarding our capital spending for fiscal year 2013; and (xiv) our sources of liquidity arebeing adequate to fund our anticipated operating and cash requirements for the next twelve months; (x) our belief that there is no impairment in the carrying value of property, plant and equipment assets; and (xi) our expectations that we will maintain a valuation allowance on our net deferred tax assets related to future United Kingdom tax benefits. months20122013 given the economic environment in the U.S. and other markets that we sell products as well as economic, political and business conditions generally and their effect on our customers and consumers’consumers' product preferences, and our business, financial condition and results of operations;20122013 and its positioning for the future;ourthe Company's valuation allowances of ourits deferred tax assets;strategy, including our strategy for improving results in the United Kingdom;contractscustomers and secure and integrate new customers;the effects on our results of operations from the impacts of foreign exchange;- 35 -20112012 and 20102011 is summarized as follows: Three Months Ended September 30,
2010 December 31,
2010 March 31,
2011 June 30,
2011 $ 257,961 $ 291,8780 $ 288,3860 $ 292,032 70,102 85,3920 82,5640 81,426 18,543 29,7120 30,8200 27,662 16,086 26,185 27,969 24,198 9,095 16,2670 16,7720 12,848 $ 0.21 $ 0.380 $ 0.390 $ 0.29 $ 0.21 $ 0.370 $ 0.380 $ 0.28 Three Months Ended September 30,
2009 December 31,
2009 March 31,
2010 June 30,
2010 $ 230,484 $ 241,967 $ 222,098 $ 222,788 61,808 69,900 61,502 57,975 17,465 21,561 19,341 12,779 14,423 18,046 17,317 9,567 8,090 11,182 2,656 6,691 $ 0.20 $ 0.27 $ 0.07 $ 0.16 $ 0.20 $ 0.27 $ 0.06 $ 0.16 (a)Operating income was impacted by approximately $0.6 million ($0.6 million net of tax) for the three months ended September 30, 2010, $0.4 million ($0.3 million net of tax) for the three months ended December 31, 2010 and $0.6 million ($0.6 million net of tax) for the three months ended March 31, 2011 as a result of restructuring expenses incurred. Operating income was also impacted by $1.2 million ($0.8 million net of tax) for the three months ended September 30, 2010, $0.6 million ($0.4 million net of tax) for the three months ended December 31, 2010 and $(2.4) million ($(1.5) million net of tax) for the three months ended March 31, 2011 as a result of acquisition related transaction expenses incurred.(b)Net income was favorably impacted by $1.0 million for the three months ended June 30, 2011 as a result of a discrete tax item related to uncertain tax benefits.(c)Operating income was impacted by approximately $1.8 million ($1.3 million net of tax) for the three months ended September 30, 2009, $1.2 million ($0.8 million net of tax) for the three months ended December 31, 2009 and $1.3 million ($1.3 million net of tax) for the three months ended June 30, 2010 as a result of restructuring expenses incurred in connection with the integration of United Kingdom food-to-go production facilities. Operating income was also impacted by $3.0 million ($2.0 million net of tax) for the three months ended June 30, 2010 as a result of acquisition related transaction expenses incurred.(d)Net income was negatively impacted by approximately $7.1 million for the three months ended March 31, 2010 as a result of valuation allowances recorded related to deferred tax assets in the United Kingdom.SeasonalityOur tea brand primarily manufacturesfollows. The sum of the net income per share from continuing and marketsdiscontinued operations for each of the four quarters may not equal the net income per share for the full year, as presented, due to rounding. Three Months Ended September 30, 2011 December 31, 2011 March 31, 2012 Net sales $ 286,837 $ 364,837 $ 375,781 $ 350,792 Gross profit 79,804 104,585 104,681 93,400 Operating income (a) 23,837 36,204 41,633 49,854 Income before income taxes and equity in earnings of equity-method investees 20,288 31,597 37,439 44,904 Income from continuing operations 12,640 21,080 24,819 35,675 Loss from discontinued operations, net of tax (949 ) (1,043 ) (712 ) (12,285 ) Net income (a) (b) 11,691 20,037 24,107 23,390 Basic net income per common share: From continuing operations $ 0.29 $ 0.48 $ 0.56 $ 0.80 From discontinued operations (0.02 ) (0.03 ) (0.02 ) (0.28 ) Net income per common share - basic $ 0.27 $ 0.45 $ 0.54 $ 0.52 Diluted net income per common share: From continuing operations $ 0.28 $ 0.46 $ 0.54 $ 0.77 From discontinued operations (0.02 ) (0.02 ) (0.02 ) (0.27 ) Net income per common share - diluted $ 0.26 $ 0.44 $ 0.52 $ 0.50 Three Months Ended September 30, 2010 December 31, 2010 March 31, 2011 Net sales $ 252,015 $ 286,174 $ 283,484 $ 286,873 Gross profit 70,405 85,318 82,696 81,418 Operating income (c) 20,103 30,626 31,864 28,581 Income before income taxes and equity in earnings of equity-method investees 17,660 27,099 29,036 25,132 Income from continuing operations 10,544 17,057 17,713 13,657 Loss from discontinued operations, net of tax (1,448 ) (789 ) (943 ) (809 ) Net income (c) (d) 9,095 16,267 16,772 12,848 Basic net income per common share: From continuing operations $ 0.25 $ 0.40 $ 0.41 $ 0.31 From discontinued operations (0.04 ) (0.02 ) (0.02 ) (0.02 ) Net income per common share - basic $ 0.21 $ 0.38 $ 0.39 $ 0.29 Diluted net income per common share: From continuing operations $ 0.24 $ 0.38 $ 0.40 $ 0.30 From discontinued operations (0.03 ) (0.01 ) (0.02 ) (0.02 ) Net income per common share - diluted $ 0.21 $ 0.37 $ 0.38 $ 0.28 itsour quarterly results of operations reflect seasonal trends resulting from increased demand for its hot tea products in the cooler months of the year. In addition, some of our other products (e.g., soups, hot-eating desserts, and baking and cereal products and soups)products) also show stronger sales in the cooler months while our snack food and certain of our prepared food product lines are stronger in the warmer- 36 -2011,2012, we did not have any off-balance sheet arrangements as defined in item 303(a)(4) of Regulation S-K that have had or are likely to have a material current or future effect on our consolidated financial statements.Item 7A.Market Riskequivalents,equivalents;losses,losses; and2011,2012, we had $79.0$240.0 million of variable rate debt outstanding. Assuming current cash equivalents and variable rate borrowings, a hypothetical change in average interest rates of one percentage point would not have a material effect on our financial position, results of operations or cash flows over the next fiscal year.2011,2012, approximately 19.5%28.1% of our consolidated net sales were generated from sales outside the United States, while such sales outside the United States were 21.3%17.9% of net sales in 20102011 and 18.5%18.9% of net sales in 2009.2010. These revenues, along with related expenses and capital purchases are conducted in British Pounds Sterling, Euros and Canadian Dollars.- 37 -$13.7$16.6 million in notional amounts of forward contracts at June 30, 2011.2012. See Note 15 of the Notes to Consolidated14, Financial Statements.increased $14.6decreased $13.6 million, net of tax, during the fiscal year ended June 30, 2011.2011.2012. Based on our cost of goods sold during the twelve months ended June 30, 2011,2012, such a change would have resulted in an increase or decrease to cost of sales of approximately $33$62 million. We attempt to offset the impact of input cost increases with a combination of cost savings initiatives and efficiencies and price increases to our customers.Item 8.Financial Statements and Supplementary Data20112012 and 2010OperationsIncome - Fiscal Years ended June 30, 2012, 2011 2010 and 20092010 and 20092010 and 2009- 38 -20112012 and 2010,2011, and the related consolidated statements of operations,income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended June 30, 2011.2012. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.20112012 and 2010,2011, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended June 30, 2011,2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole presents fairly in all material respects the information set forth therein.2011,2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 29, 20112012 expressed an unqualified opinion thereon./s/ Ernst & Young LLP 2011- 39 - and 2010 June 30 2011 2010 $ 27,517 $ 17,266 143,348 114,215 171,098 157,012 13,993 10,738 15,110 14,586 371,066 313,817 110,423 106,985 568,374 516,455 220,429 198,129 50,557 52,273 12,655 10,428 $ 1,333,504 $ 1,198,087 $ 93,194 $ 91,435 73,884 37,847 2,974 9,530 633 38 170,685 138,850 229,540 225,004 52,915 38,283 13,661 30,227 466,801 432,364 — — 451 437 582,972 548,782 295,886 240,904 7,144 (6,871 ) 886,453 783,252 (19,750 ) (17,529 ) 866,703 765,723 $ 1,333,504 $ 1,198,087 June 30, 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 29,895 $ 27,517 Accounts receivable, less allowance for doubtful accounts of $2,661 and $1,230 166,677 139,803 Inventories 186,440 170,739 Deferred income taxes 15,834 13,993 Prepaid expenses and other current assets 19,864 14,306 Assets of businesses held for sale 30,098 4,708 Total current assets 448,808 371,066 Property, plant and equipment, net 148,475 110,423 Goodwill 702,556 565,879 Trademarks and other intangible assets, net 310,378 207,384 Investments and joint ventures 45,100 50,557 Other assets 18,276 12,644 Assets of businesses held for sale — 15,551 Total assets $ 1,673,593 $ 1,333,504 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 123,634 $ 90,699 Accrued expenses and other current liabilities 60,469 72,013 Income taxes payable 5,074 2,925 Current portion of long-term debt 296 633 Liabilities of businesses held for sale 13,336 4,413 Total current liabilities 202,809 170,683 Long-term debt, less current portion 390,288 229,540 Deferred income taxes 107,633 51,921 Other noncurrent liabilities 8,261 13,661 Liabilities of businesses held for sale — 996 Total liabilities 708,991 466,801 Stockholders’ equity: Preferred stock - $.01 par value, authorized 5,000,000 shares, no shares issued — — 462 451 Additional paid-in capital 616,197 582,972 Retained earnings 375,111 295,886 Accumulated other comprehensive income (5,383 ) 7,144 986,387 886,453 Less: 1,202,804 and 1,144,610 shares of treasury stock, at cost (21,785 ) (19,750 ) Total stockholders’ equity 964,602 866,703 Total liabilities and stockholders’ equity $ 1,673,593 $ 1,333,504 - 40 -OPERATIONS and 2009 Year Ended June 30 2011 2010 2009 $ 1,130,257 $ 917,337 $ 1,122,734 810,773 666,152 876,344 319,484 251,185 246,390 212,544 172,746 198,291 203 7,293 4,145 — — 52,630 106,737 71,146 (8,676 ) 12,299 11,793 15,145 94,438 59,353 (23,821 ) 37,308 28,995 5,637 2,148 1,739 — 54,982 28,619 (29,458 ) — — (4,735 ) $ 54,982 $ 28,619 $ (24,723 ) $ 1.27 $ 0.70 $ (0.61 ) $ 1.23 $ 0.69 $ (0.61 ) 43,165 40,890 40,483 44,537 41,514 40,483 Fiscal Year ended June 30, 2012 2011 2010 Net sales $ 1,378,247 $ 1,108,546 $ 890,007 Cost of sales 995,777 788,709 641,249 Gross profit 382,470 319,837 248,758 Selling, general and administrative expenses 237,595 208,610 165,918 Acquisition related (credits) expenses and restructuring charges (6,653 ) 53 2,751 Operating income 151,528 111,174 80,089 Interest and other expenses, net 17,300 12,247 11,797 Income before income taxes and equity in earnings of equity-method investees 134,228 98,927 68,292 Provision for income taxes 41,154 37,808 28,362 Equity in net (income) loss of equity-method investees (1,140 ) 2,148 1,739 Income from continuing operations 94,214 58,971 38,191 Loss from discontinued operations, net of tax (14,989 ) (3,989 ) (9,572 ) Net income $ 79,225 $ 54,982 $ 28,619 Basic net income/(loss) per common share: From continuing operations $ 2.12 $ 1.37 $ 0.93 From discontinued operations (0.33 ) (0.10 ) (0.23 ) Net income per common share - basic $ 1.79 $ 1.27 $ 0.70 Diluted net income/(loss) per common share: From continuing operations $ 2.05 $ 1.32 $ 0.92 From discontinued operations (0.32 ) (0.09 ) (0.23 ) Net income per common share - diluted $ 1.73 $ 1.23 $ 0.69 Shares used in the calculation of net income per common share: Basic 44,360 43,165 40,890 Diluted 45,847 44,537 41,514 - 41 - and 2009data) Common
Stock and
Additional
Paid-in Capital Retained
Earnings Treasury
Stock Accumulated
Other
Comprehensive
Income Non-
controlling
Interest Total
Stockholders’
Equity $ 489,061 $ 237,008 $ (15,473 ) $ 32,215 $ 30,502 $ 773,313 (24,723 ) (24,723 ) (4,735 ) (4,735 ) (29,902 ) (29,902 ) 201 201 (745 ) (745 ) $ (59,904 ) 5,283 5,283 7,211 7,211 223 223 (836 ) (836 ) 1,800 1,800 (25,767 ) (25,767 ) $ 503,578 $ 212,285 $ (16,309 ) $ 1,769 — $ 701,323 28,619 28,619 (9,051 ) (9,051 ) (49 ) (49 ) 460 460 $ 19,979 2,139 2,139 6,979 6,979 164 164 (1,220 ) (1,220 ) 35,393 35,393 966 966 $ 549,219 $ 240,904 $ (17,529 ) $ (6,871 ) — $ 765,723 See notes to consolidated financial statements- 42 - Common Stock Additional Amount Paid-in Retained Treasury Stock Comprehensive Shares at $.01 Capital Earnings Shares Amount Income (Loss) Total Balance at July 1, 2009 41,699,509 $ 417 $ 503,161 $ 212,285 1,001,898 $ (16,309 ) $ 1,769 $ 701,323 Net income 28,619 28,619 Foreign currency translation adjustments, net of tax (9,051 ) (9,051 ) Change in deferred gains on cash flow hedging instruments, net of tax (49 ) (49 ) Change in unrealized loss on available for sale investment, net of tax 460 460 Total comprehensive income $ 19,979 Issuance of common stock pursuant to compensation plans 336,111 3 2,136 2,139 Stock based compensation income tax effects 164 164 Shares withheld for payment of employee payroll taxes due on shares issued under stock based compensation plans 70,807 (1,220 ) (1,220 ) Stock based compensation charge 6,979 6,979 Issuance of common stock in connection with acquisition 1,558,442 16 35,377 35,393 Issuance of common stock in connection with license agreement 52,615 1 965 966 Balance at June 30, 2010 43,646,677 $ 437 $ 548,782 $ 240,904 1,072,705 $ (17,529 ) $ (6,871 ) $ 765,723 Net income 54,982 54,982 Foreign currency translation adjustments, net of tax 14,641 14,641 Change in deferred gains on cash flow hedging instruments, net of tax (724 ) (724 ) Change in unrealized loss on available for sale investment, net of tax 98 98 Total comprehensive income $ 68,997 Issuance of common stock pursuant to compensation plans 1,156,235 12 17,900 17,912 Stock based compensation income tax effects 2,525 2,525 Shares withheld for payment of employee payroll taxes due on shares issued under stock based compensation plans 71,905 (2,221 ) (2,221 ) Stock based compensation charge 9,031 9,031 Issuance of common stock in connection with acquisition 242,185 2 4,734 4,736 Balance at June 30, 2011 45,045,097 $ 451 $ 582,972 $ 295,886 1,144,610 $ (19,750 ) $ 7,144 $ 866,703 and 2009data) Common
Stock and
Additional
Paid-in Capital Retained
Earnings Treasury
Stock Accumulated
Other
Comprehensive
Income Non-
controlling
Interest Total
Stockholders’
Equity $ 549,219 $ 240,904 $ (17,529 ) $ (6,871 ) — $ 765,723 54,982 54,982 14,641 14,641 (724 ) (724 ) 98 98 $ 68,997 17,912 17,912 9,031 9,031 2,525 2,525 (2,221 ) (2,221 ) 4,736 4,736 $ 583,423 $ 295,886 $ (19,750 ) $ 7,144 — $ 866,703 Common Stock Additional Amount Paid-in Retained Treasury Stock Comprehensive Shares at $.01 Capital Earnings Shares Amount Income (Loss) Total Balance at June 30, 2011 45,045,097 $ 451 $ 582,972 $ 295,886 1,144,610 $ (19,750 ) $ 7,144 $ 866,703 Net income 79,225 79,225 Foreign currency translation adjustments, net of tax (13,573 ) (13,573 ) Change in deferred gains on cash flow hedging instruments, net of tax 842 842 Change in unrealized loss on available for sale investment, net of tax 204 204 Total comprehensive income $ 66,698 Issuance of common stock pursuant to compensation plans 1,110,815 11 16,124 16,135 Stock based compensation income tax effects 8,811 8,811 Shares withheld for payment of employee payroll taxes due on shares issued under stock based compensation plans 58,194 (2,035 ) (2,035 ) Stock based compensation charge 8,290 8,290 Balance at June 30, 2012 46,155,912 $ 462 $ 616,197 $ 375,111 1,202,804 $ (21,785 ) $ (5,383 ) $ 964,602 statements- 43 - and 2009 Year Ended June 30 2011 2010 2009 $ 54,982 $ 28,619 $ (29,458 ) 24,124 18,772 21,354 — — 52,630 — 1,210 — 5,160 4,046 (2,177 ) 2,525 955 223 2,148 1,739 — 9,031 6,979 7,211 (4,177 ) — — 1,691 — — 329 771 703 (22,545 ) 4,593 (7,889 ) (5,677 ) 5,856 (26,623 ) 778 4,719 1,769 (6,141 ) (3,267 ) (4,692 ) 4,459 (15,225 ) 11,668 (650 ) — — (7,379 ) 11,263 (3,094 ) 58,658 71,030 21,625 (45,339 ) (51,415 ) (1,024 ) (11,490 ) (11,428 ) (12,990 ) 1,617 85 952 (271 ) — 18,500 — — (2,233 ) (55,483 ) (62,758 ) 3,205 4,100 (33,400 ) (47,170 ) (22 ) (88 ) (34 ) (14,750 ) — — (2,221 ) (1,220 ) (836 ) — — 2,906 17,912 2,139 5,283 2,115 188 117 7,134 (32,381 ) (39,734 ) (58 ) (33 ) (2,201 ) 10,251 (24,142 ) (17,105 ) 17,266 41,408 58,513 $ 27,517 $ 17,266 $ 41,408 Fiscal Year ended June 30, 2012 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 79,225 $ 54,982 $ 28,619 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 30,459 24,124 18,772 Unrealized loss on available for sale investment — — 1,210 Deferred income taxes 1,642 5,160 4,046 Equity in net (income) loss of equity-method investees (1,140 ) 2,148 1,739 Stock based compensation 8,290 9,031 6,979 Tax benefit from stock based compensation 1,681 2,525 955 Contingent consideration expense/(reduction) (15,866 ) (4,177 ) — Interest accretion on contingent consideration 736 1,691 — Non-cash impairment charges relating to discontinued operations 16,001 — — Other non-cash items, net 599 329 771 Increase (decrease) in cash attributable to changes in operating assets and liabilities, net of amounts applicable to acquisitions: Accounts receivable (4,316 ) (22,545 ) 4,593 Inventories (5,597 ) (5,677 ) 5,856 Other current assets (1,556 ) 778 4,719 Other assets and liabilities (5,200 ) (6,141 ) (3,267 ) Accounts payable and accrued expenses 12,489 4,459 (15,225 ) Acquisition-related contingent consideration (850 ) (650 ) — Income taxes 5,363 (7,379 ) 11,263 Net cash provided by operating activities 121,960 58,658 71,030 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions, net of cash acquired (257,264 ) (45,339 ) (51,415 ) Purchases of property and equipment (20,427 ) (11,490 ) (11,428 ) Proceeds from disposals of property and equipment 93 1,617 85 Repayments from (advances to) equity-method investees, net 6,934 (271 ) — Net cash used in investing activities (270,664 ) (55,483 ) (62,758 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercises of stock options, net of related expenses 14,179 17,912 2,139 Borrowings (repayments) under bank revolving credit facility, net 160,989 4,100 (33,400 ) Repayments of other long-term debt, net (460 ) (22 ) (88 ) Acquisition-related contingent consideration (32,380 ) (14,750 ) — Excess tax benefits from stock based compensation 7,130 2,115 188 Shares withheld for payment of employee payroll taxes (2,035 ) (2,221 ) (1,220 ) Net cash provided by (used in) financing activities 147,423 7,134 (32,381 ) Effect of exchange rate changes on cash 3,659 (58 ) (33 ) Net increase in cash and cash equivalents 2,378 10,251 (24,142 ) Cash and cash equivalents at beginning of period 27,517 17,266 41,408 Cash and cash equivalents at end of period $ 29,895 $ 27,517 $ 17,266 - 44 -UniqueFiber™UniqueFiberTM, Yves Veggie Cuisine®, DeBolesEurope’s Best®, DeBoles®, Linda McCartney® (under license), The New Covent Garden Soup Co.®, Johnson’s Juice Co.®, Farmhouse Fare®, and Daily Bread™Cully & Sully®. Our natural personal care products are marketed under the Avalon Organics®, Alba Botanica®, JASON®, Zia®, Queen Helene®, and Earth’s Best TenderCare® brands. Our household cleaning products are marketed under the Martha Stewart Clean™ (under license) brand.Hain Celestialof the Company’s brands in China and other markets. See Note 2, BasisPresentation,fiscal 2012, we reorganized our reporting structure in a manner that resulted in a change to our operating and Note 14, Equity Investments.We operatereportable segments. Our operations are now organized and managed by geography, and are comprised of four operating segments: United States, United Kingdom, Canada and Europe. The Company previously operated in one business segment: the manufacturing, distribution, marketingsegment. Refer to Note 17, Segment Information, for additional information and sale of natural and organic products. During the three years ended June 30, 2011, approximately 45%, 40% and 50% ofselected financial information for our revenues were derived from products that were manufactured within our own facilities with 55%, 60% and 50% produced by various co-packers. In fiscal 2011, 2010 and 2009, there was no co-packer who manufactured 10% or more of our products.InNotes to Consolidated Financial Statements, all dollar amounts,nearest thousand, except share and per share data, are in thousandsamounts, unless otherwise indicated.(loss) includes the Company’s equity portion ofin the current earnings or losses of such companies. Investments in which the Company does not exercise significant influence (generally less than a 20 percent ownership interest) are accounted for under the cost method.Certain prior yearclassifications.On June 30, 2009, the minority owner in our HPP joint venture acquired a controlling interest in the joint venture through the purchase of newly issued shares of HPP. As a result, the Company’s equity interest was reduced to 48.7% and effective June 30, 2009, the Company deconsolidated HPP. The Company’s investment in HPP is accounted for under the equity method of accounting effective from June 30, 2009. The Company’s consolidated statements of operations for all periods prior to July 1, 2009 include the revenues and expenses of HPP.Management evaluated all events and transactions occurring after the balance sheet date through the filing of this annual report on Form 10-K.- 45 -and 2010,respectively, and a second customer represented approximately 8% and 11% of our trade receivable balances at June 30, 20112012 and 2010,2011, we believe there is no significant or unusual credit exposure at this time.($3,556($3,159 at June 30, 2012 and $3,556 at June 30, 2011 and $4,577 at June 30, 2010)) could be different had we used different assumptions and judgments.2010 and 2009,2010, sales to one customer and its affiliates approximated 21%18%, 21% and 19%21% of consolidated net sales, respectively. 10-4010-50 years 3-20 years 3-15 years - 46 - The Company has determined that it operates in one segment and that this single segment consists of five reporting units (see Note 18). The Company uses a blended analysis of a discounted cash flow model and a market valuation approach to determine the fair values of its reporting units. If the carrying value of a reporting unit exceeds its fair value, the Company would then compare the carrying value of the goodwill to its implied fair value in order to determine the amount of the impairment, if any.The Company offerspromotional incentives to its customers and consumers,promotions, including tradeprice discounts, slotting fees and coupon costs. Salescoupons, to our customers and to consumers to support the Company's products. These incentives are deducted from our gross sales to determine reported net sales. The recognition of expense for these programs involves the use of judgment related to performance and redemption estimates. Differences between estimated expense and actual redemptions are normally insignificant and recognized as a change in estimate in the period such change occurs.sales incentives. Translationequity and other comprehensive income.$3,819$3,906 in fiscal 2012, $3,504 in fiscal 2011 $2,958 in fiscal 2010 and $3,032$2,453 in fiscal year 2009.2010. Our research and development expenditures do not include the expenditures on such activities undertaken by co-packers and suppliers who develop numerous products based on ideas we generate and on their own initiative with the expectation that we will accept their new product ideas and market them under our brands. These efforts by co-packers and suppliers have resulted in a substantial number of our new product introductions. We are unable to estimate the amount of expenditures made by co-packers and suppliers on research and development; however, we believe such activities and expenditures are important to our continuing ability to introduce new products.$6,664$9,054 in fiscal 2012, $6,664 in fiscal 2011 $5,264 in fiscal 2010 and $6,019$5,264 in fiscal year 2009.2010. Such costs are expensed as incurred.- 47 -20112012 and 2010,2011, we had $7,300$300 and $10,586$7,300 invested in corporate money market securities, including commercial paper, repurchase agreements, variable rate instruments and bank instruments. These securities are classified as cash equivalents as their maturities when purchased are less than three months. At June 30, 20112012 and 2010,2011, the carrying values of financial instruments such as accounts receivable, accounts payable, accrued expenses and other current liabilities and borrowings under our credit facility approximate fair value based upon either the short maturities or variable interest rates of these instruments. The fair value of the Company’s foreign currency contracts are based upon information from third parties.- 48 -StatementStatements of Cash Flows.20112012, we adopted new accounting guidance included in Accounting Standards Codification (“ASC”) 810, “Consolidation,” regarding the consolidation of variable interest entities. The standard includes guidance for determining whether an entity is a variable interest entity and replaces the quantitative-based risks and rewards approach with a qualitative approach that focuses on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance. It also requires an ongoing reassessment of whether an entity is the primary beneficiary, and it requires additional disclosures about an enterprise’s involvement in variable interest entities. The adoption of the guidance did not have any impact on our results of operations or financial condition.Recently Issued Accounting Pronouncements Not Yet EffectiveIn December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-28, “Intangibles-Goodwill and Other (Topic 350), When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force),” which provides updated authoritative guidance related to performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. The qualitative factors that an entity should consider when evaluating whether it is more likely than not that a goodwill impairment exists are consistent with the existing guidance for determining whether an impairment exists between annual tests. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010, with no early adoption, which for the Company is our fiscal year beginning July 1, 2011. We do not expect this standard to have a material impact on our consolidated financial statements.In December 2010, the FASB issued ASU No. 2010-29, “DisclosureCombinations.”Combinations. The amendments in this standard specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This standard also expands the supplemental pro forma disclosures under ASCAccounting Standards Codification (“ASC”) Topic 805 to include- 49 -amendments in this ASU are effective prospectively for business combinations for which the acquisition date is on or after the beginningadoption of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted. This standard is therefore effective for the Company for acquisitions made in our fiscal year beginning July 1, 2011. We do not expect the pro forma disclosure requirements under this standard todid not have a material impact on our consolidated financial statements. ATTRIBUTABLE TO THE HAIN CELESTIAL GROUP, INC. 2011 2010 2009 $ 54,982 $ 28,619 $ (24,723 ) 43,165 40,890 40,483 1,372 624 — 44,537 41,514 40,483 $ 1.27 $ 0.70 $ (0.61 ) $ 1.23 $ 0.69 $ (0.61 ) Shares Fiscal Year ended June 30, 2012 2011 2010 Numerator: Income from continuing operations $ 94,214 $ 58,971 $ 38,191 Income from discontinued operations, net of tax (14,989 ) (3,989 ) (9,572 ) Net income $ 79,225 $ 54,982 $ 28,619 Denominator (in thousands): Denominator for basic earnings per share - weighted average shares outstanding during the period 44,360 43,165 40,890 Effect of dilutive stock options, unvested restricted stock and unvested restricted share units 1,487 1,372 624 Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 45,847 44,537 41,514 Basic net income per common share: From continuing operations $ 2.12 $ 1.37 $ 0.93 From discontinued operations (0.33 ) (0.10 ) (0.23 ) Net income per common share - basic $ 1.79 $ 1.27 $ 0.70 Diluted net income per common share: From continuing operations $ 2.05 $ 1.32 $ 0.92 From discontinued operations (0.32 ) (0.09 ) (0.23 ) Net income per common share - diluted $ 1.73 $ 1.23 $ 0.69 net income per share calculations exclude anti-dilutive common equivalent shares, consisting ofamount from continuing operations was also used in computing the diluted per share amounts from discontinued operations even if those amounts were anti-dilutive.awards. These anti-dilutive common shares totaled awards totaling 29,000, 624,000 shares and 2,442,000 shares for the fiscal years endingended June 30, 2012, 2011, and 2010, respectively. As a result of our net loss for the fiscal year ended June 30, 2009, all potentially dilutive sharesrespectively, were anti-dilutive and therefore excluded from the computation of diluted net lossour earnings per share.STOCK KEEPING UNIT RATIONALIZATION AND REORGANIZATIONThe Company periodically assesses its operations to ensure that they are efficient, aligned with market conditions and responsive to customer needs.In the third quarter of fiscal 2011 we initiated a plan to close our Manchester, United Kingdom non-dairy beverage facility. For the year ended June 30, 2011, we recorded $321 of costs associated with this plan, including $116 for employee terminations and $205 for other exit costs.During the first quarter of fiscal 2010 we initiated a plan to consolidate the production of our fresh food-to-go products in the United Kingdom into our Luton facility. As a result, we recorded costs of $3,740 for the year ended June 30, 2010 related to this plan, including $2,910 for severance and benefits and $830 of other exit costs. In addition, in connection with our acquisition of Churchill Food Products Ltd, in June 2010 (see Note 5) we recorded employee termination and exit costs of $516. In the year ended June 30, 2011, we recorded an additional $465 of employee termination costs.During fiscal 2009, the Company undertook several actions to improve performance and position the Company for future growth. We implemented a Stock Keeping Unit (“SKU”) rationalization, principally in our Celestial Seasonings tea products, to eliminate SKUs based on low sales volume or insufficient margins, and position the Celestial Seasonings line for increased consumption and sales growth and improved profitability. We also initiated a plan to streamline and integrate the back office and warehousing operations of our personal care operations into other locations we operate. With this activity, we also completed the SKU rationalization of our personal care products begun- 50 -in fiscal 2008. These actions collectively resulted in pre-tax charges of $12,708, which included $8,563 charged to cost of sales for inventory and related items and $4,145 charged to general and administrative expenses for severance and other costs.The changes in the liability for the reorganization and restructuring activities for the years ended June 30, 2009, 2010 and 2011 were as follows: Asset write downs Severance Other Exit
Costs Total — $ 1,165 — $ 1,165 $ 1,055 3,012 $ 815 4,882 (1,055 ) (3,858 ) (695 ) (5,608 ) — 319 120 439 266 3,316 830 4,412 (266 ) (3,061 ) (309 ) (3,636 ) — 574 641 1,215 — 581 205 786 — (976 ) (397 ) (1,373 ) — $ 179 $ 449 $ 628 5. ACQUISITIONS Any changeestimatedConsolidated Statements of Income. Acquisition-related costs of $5,921, $3,548, and $2,692 were expensed in the fiscal years ended June 30, 2012, 2011, and 2010, respectively. During the fiscal years ended June 30, 2012 and 2011, these costs were offset by net reversals of $14,627 and $4,177 of contingent consideration (See Note 14).net assets prior tocontingent consideration ($15,637) was subsequently reversed with a corresponding reduction of expense in the finalizationfourth quarter of fiscal 2012 (see Note 14). The acquisition was funded with borrowings under our revolving credit facility. Daniels is a leading marketer and manufacturer of natural chilled foods, including three leading brands – The New Covent Garden Soup Co.®, Johnson’s Juice Co.® and Farmhouse Fare®. Daniels also offers fresh prepared fruit products and chilled ready meals. Daniels’ product offerings are sold at all major supermarkets and select foodservice outlets throughout the United Kingdom. We believe the acquisition of Daniels extended our presence into one of the allocationfastest-growing healthy food segments in the United Kingdom and provided a platform for acquisitions could change the amountgrowth of our combined operations. We also believe the acquisition provides us with the scale in our international operations to allow us to introduce some of our existing brands in the marketplace in a more meaningful way. During the third quarter of fiscal 2012, the Company decided to sell the Daniels private label chilled ready meals operations. Refer to Note 18, Discontinued Operations, for additional information. Since the date of acquisition, Daniels net sales and income before income taxes from continuing operations of $144,290 and $12,999, respectively, were included in the Consolidated Statement of Income for the fiscal year ended June 30, 2012.allocableallocations for the fiscal 2012 acquisitions: Daniels Cully & Sully Total Purchase price: Cash paid $ 233,822 $ 9,513 $ 13,835 $ 257,170 Fair value of contingent consideration 15,637 — 3,363 19,000 $ 249,459 $ 9,513 $ 17,198 $ 276,170 Allocation: Current assets $ 55,639 $ 7,157 $ 1,549 $ 64,345 Property, plant and equipment 46,799 — 35 46,834 Identifiable intangible assets 103,529 2,706 11,693 117,928 Other non-current assets, net 1,108 — — 1,108 Assumed liabilities (46,431 ) (184 ) (1,342 ) (47,957 ) Deferred income taxes (27,942 ) (166 ) (1,462 ) (29,570 ) Goodwill 116,757 — 6,725 123,482 $ 249,459 $ 9,513 $ 17,198 $ 276,170 goodwill.identifiable intangible assets acquired were based on assumptions and estimates made by management. Identifiable intangible assets acquired consisted of customer relationships initially valued at $59,602 with a weighted average estimated useful life of 11.0 years, a non-compete arrangement initially valued at $820 with an estimated useful life of 3 years, and trade names initially valued at $57,506 with indefinite lives. The companygoodwill represents the future economic benefits expected to arise that could not be individually identified and separately recognized, including use of our existing infrastructure to expand sales of the acquired business' products. The goodwill recorded as a result of the Daniels and Cully & Sully acquisitions is not aware of any information that indicates the final purchase price allocations will differ materially from the preliminary estimates.€18,083 ($€18,083 ($24,741 based on the transaction date exchange rate). Danival’s product line includesincluded over 200 branded organic sweet and salted grocery, fruits, vegetables and delicatessen products currently distributed in Europe. The Danival acquisition complements the organic food line of our Lima brand in Europe and provides additional opportunities to us through expanded distribution of Danival’s products in Europe, the United States and Asia.Europe. Identifiable intangible assets acquired consisted of customer relationships, recipes and the trade name. The trade name intangible relates to the “Danival” brand name, which has an indefinite life, and therefore, is not amortized. The customer relationship and recipes intangible assets are being amortized on a straight-line basis over thetheir estimated useful lives. The goodwill recorded of $9,142$9,142 represented the future economic benefits expected to arise that could not be individually identified and separately recognized and is not deductible for tax purposes.recognized. The goodwillrecognized and is not deductible for tax purposes.January 28, 2011, we acquired GG UniqueFiber AS, a manufacturer of all natural high fiber crackers based in Norway. GG UniqueFiber’s products are distributed through independent distributors in the United States and Europe. The acquisition broadens our offerings of whole grain and high fiber products, for which we can provide expanded distribution. The acquisition of GG UniqueFiber was completed for cash consideration of Norwegian kroner (“NOK”) 25,000 ($4,281 based on the transaction date exchange rate) plus up to NOK 25,000 ($4,281) of additional contingent consideration based upon the achievement of specified operating results, of which the Company recorded- 51 -NOK 17,600 ($3,050) as the fair value at the acquisition date. The goodwill recorded of $4,893 represents the future economic benefits expected to arise that could not be individually identified and separately recognized. The goodwill is not deductible for tax purposes.On Greek-stylegreek-style yogurt products, and assumed certain liabilities of 3 Greek Gods, LLC (“Greek Gods”). Greek Gods developed, produced, marketeddevelops, produces and soldmarkets The Greek Gods brand of Greek-stylegreek-style yogurt products into various sales channels. The acquisition of The Greek Gods brand expandsexpanded our refrigerated product offerings. The acquisition was completed for initial cash consideration of $16,277,$16,277, and 242,185 shares of the Company’s common stock, valued at $4,785,$4,785, plus up to $25,800 of additional contingent consideration based upon the achievement of specified operating results in fiscal 2011 and 2012.2012. The Company paid $15,400 of contingent consideration during the fourth quarter of fiscal 2011, representing payment for the achievement of the first year’s operating results and paid the remaining $9,000 in the second quarter of fiscal 2012. The Company recorded $22,900$22,900 as the fair value of the contingent consideration at the acquisition date. The Company is required to reassessdate and the fair value of the contingent consideration on a periodic basis. During the year ended June 30, 2011, we increased our liability for the contingent consideration andadditional payments totaling $1,500 were recorded an additional expense of $443. The increase in the liability resulted fromConsolidated Statementsactual attainment of the first year’s results and our current projection of the second year’s financial results.acquisition. Identifiable intangible assets acquired consisted of customer relationships and the trade name. The trade name intangible relates to “The Greek Gods” brand name, which has an indefinite life, and therefore, is not amortized. The customer relationship intangible asset is being amortized on a straight-line basis over its estimated useful life. The goodwill recorded of $23,686$23,686 represents the future economic benefits expected to arise that could not be individually identified and separately recognized, including entry into the greek-style yogurt category and use of our existing infrastructure to expand sales of the acquired business products. The goodwillproducts and is expected to be deductible for tax purposes. Greek Gods GG UniqueFiber Danival Total $ 16,277 $ 4,281 $ 24,741 $ 45,299 4,785 — — 4,785 22,900 3,050 — 25,950 $ 43,962 $ 7,331 $ 24,741 $ 76,034 $ 2,172 $ 429 $ 7,320 $ 9,921 — 673 3,049 3,722 18,800 2,116 12,587 33,503 (696 ) (527 ) (5,239 ) (6,462 ) — (253 ) (2,118 ) (2,371 ) 23,686 4,893 9,142 37,721 $ 43,962 $ 7,331 $ 24,741 $ 76,034 Acquisition costs related to the 2011 acquisitions have been expensed as incurred and are included in “Acquisition related expenses and restructuring charges” in the Consolidated Statement of Operations. Total acquisition-related costs, primarily professional fees, of approximately $3,538, offset by $(4,177) of contingent consideration adjustments, were expensed in the year ended June 30, 2011. The amounts of revenue and earnings from the Danival and GG UniqueFiber acquisitions included in our results since their respective dates of acquisition were not significant. Greek Gods Danival Total Purchase price: Cash paid $ 16,277 $ 4,281 $ 24,741 $ 45,299 Equity issued 4,785 — — 4,785 Fair value of contingent consideration 22,900 3,050 — 25,950 $ 43,962 $ 7,331 $ 24,741 $ 76,034 Allocation: Current assets $ 2,172 $ 429 $ 7,320 $ 9,921 Property, plant and equipment — 673 3,049 3,722 Identifiable intangible assets 18,800 2,116 12,587 33,503 Assumed liabilities (696 ) (527 ) (5,239 ) (6,462 ) Deferred income taxes — (253 ) (2,118 ) (2,371 ) Goodwill 23,686 4,893 9,142 37,721 $ 43,962 $ 7,331 $ 24,741 $ 76,034 - 52 -$50,914,$35,392,$35,392, plus up to $30,000$30,000 of additional contingent consideration based upon the achievement of specified operating results in fiscal 2011. The Company paid $23,660 of contingent consideration during the fiscal year ended June 30, 2012. The Company recorded $26,600$26,600 as the fair value of the contingent consideration at the acquisition date. During the year ended June 30, 2011, wedate and recorded a net decrease in ourthat liability for contingent consideration, resultingof $2,940, which resulted in income of $4,620. The decreaserecorded in the liability resulted fromConsolidated Statements of Income in periods subsequent to the actual financial results achieved. However, the final determination of the contingent consideration is subject to agreement by the selling shareholders.consideration paidcomponents of the purchase price allocation for the World Gourmet acquisition and the amountsacquisition:Purchase price: Cash paid $ 50,914 Equity issued 35,392 Fair value of contingent consideration 26,600 $ 112,906 Allocation: Current assets $ 10,114 Property, plant and equipment 7,212 Identifiable intangible assets 43,000 Other liabilities, net (8,777 ) Goodwill 61,357 $ 112,906 respective estimated useful life. The goodwill of $54,357$61,357 represents the future economic benefits expected to arise that could not be individually identified and separately recognized, including expansion of the Company’s sales into the club store channel, an increased presence in the snack category and use of our existing infrastructure to expand sales of the acquired business products. The goodwill is deductible for tax purposes.Acquisition costs related to World Gourmet have been expensed as incurred and are included in “Acquisition related expenses and restructuring charges” in the Consolidated StatementOperations. Total acquisition related costs of $2,011 were expensed in the year ended June 30, 2010.On June 15, 2010, we also acquired Churchill Food Products Limited (“Churchill”), a manufacturer and distributor of food-to-go products in the United Kingdom. The acquisition of Churchill complemented our existing Daily Bread brand by broadening our customer base for food-to-go products and expanding our product offerings. The acquisition of Churchill was completed for cash consideration of £1,271 ($1,871 based on the transaction date exchange rate) plus up to £1,800 ($2,650) of additional contingent consideration based upon the achievement of specified operating results in fiscal 2011 and 2012, of which the Company recorded £1,314 ($1,980) as the fair value at the acquisition date. Acquisition costs related to Churchill have been expensed as incurred and are included in “Acquisition related expenses and restructuring charges” in the Consolidated Statement of Operations. Total acquisition-related costs of $280 were expensed in the year ended June 30, 2010.Pro forma information does not included Churchill because Churchill’s operations would not have materially impacted our consolidated results of operations.2010, and 2009,2010, as if all of the above acquisitions had been completed at the beginning of fiscal year 2009.2010. The following pro forma combined results of continuing operations have been provided for illustrative purposes only, and do not purport to be indicative of the actual results that would have been achieved by the Company for the periods presented or that will be achieved by the combined company in the future. The pro forma information has been adjusted to give effect to items that are directly attributable to the transactions and are expected to have a continuing impact on the combined results. The adjustments include amortization expense associated with acquired identifiable intangible assets, interest expense associated with bank borrowings to fund the acquisitions and elimination of transactions costs incurred in fiscal 2011 and 2010 that are directly related to the transactions and do not have a continuing impact on operating results. June 30, 2011 June 30, 2010 June 30, 2009 $ 1,141,405 $ 1,020,487 $ 1,164,969 $ 55,300 $ 36,206 $ (26,429 ) $ 1.24 $ 0.84 $ (0.63 ) Fiscal Year ended June 30, 2012 2011 2010 Net sales from continuing operations $ 1,451,658 $ 1,357,781 $ 1,211,601 Net income from continuing operations $ 85,094 $ 65,311 $ 50,993 Net income per common share from continuing operations - diluted $ 1.86 $ 1.47 $ 1.23 - 53 -6.following at June 30: 2011 2010 $ 113,086 $ 102,472 58,012 54,540 $ 171,098 $ 157,012 7.following: June 30,
2012 June 30,
2011Finished goods $ 118,538 $ 113,047 Raw materials, work-in-progress and packaging 67,902 57,692 $ 186,440 $ 170,739 following at June 30: 2011 2010 $ 9,157 $ 9,106 41,779 37,957 156,739 138,748 8,230 6,660 1,934 3,477 6,382 4,496 224,221 200,444 113,798 93,459 $ 110,423 $ 106,985 8.following: June 30,
2012 June 30,
2011Land $ 10,905 $ 9,157 Buildings and improvements 47,640 41,779 Machinery and equipment 195,392 156,739 Furniture and fixtures 7,846 8,230 Leasehold improvements 7,363 1,934 Construction in progress 4,916 6,382 274,062 224,221 Less: Accumulated depreciation and amortization 125,587 113,798 $ 148,475 $ 110,423 The changes20112012 and 20102011 were as follows:- 54 - 2011 2010 $ 558,484 $ 498,488 (42,029 ) (42,029 ) 516,455 456,459 37,721 55,885 8,179 — 6,019 4,111 610,403 558,484 (42,029 ) (42,029 ) $ 568,374 $ 516,455 The addition to US United Kingdom Rest of World Total Balance as of June 30, 2010 $ 460,623 $ — $ 54,543 $ 515,166 Acquisition activity 30,806 — 14,035 44,841 Translation and other adjustments, net — — 5,872 5,872 Balance as of June 30, 2011 $ 491,429 $ — $ 74,450 $ 565,879 Acquisition activity — 123,482 — 123,482 Other adjustments 20,688 — — 20,688 Translation and other adjustments, net — (2,882 ) (4,611 ) (7,493 ) Balance as of June 30, 2012 $ 512,117 $ 120,600 $ 69,839 $ 702,556 in fiscal 2011impairment charges were $42,029 as of $37,721 relatedJune 30, 2012, 2011 and 2010, which relate to the acquisitionsCompany's United Kingdom and Continental Europe (which is included in "Rest of Danival ($9,142) and GG UniqueFiber ($4,893) and the acquisition of the assets and business of 3 Greek Gods LLC ($23,686). The addition to goodwill inWorld" - see note 17) operating segments. Other adjustments during fiscal 2010 of $55,885 related2012 relate to the acquisitionrecording of deferred tax liabilities for acquired indefinite-lived intangible assets for certain acquisitions completed prior to 2009. The recording of such deferred tax liabilities increased the assets and businessgoodwill associated with those acquisitions. There was no impact to the Company's consolidated statement of World Gourmet Marketing L.L.C. ($54,357) and the acquisitionincome as a result of Churchill Food Products, Ltd. ($1,528). Included in translation and other adjustments are the impacts of changes in foreign currency exchange rates on goodwill and adjustments of certain purchase accounting liabilities.2011 and determined that no impairment existed as of the date of that analysis.Based upon2012, which included a combination of factors including a sustained decline in the Company’s market capitalization below the Company’s carrying value during the fiscal quarter ended March 31, 2009, coupled with challenging macro-economic conditions, the Company concluded that sufficient indicators existed to require it to perform an interim goodwill impairment analysis at March 1, 2009. Accordingly, the Company performed the first step of its interim goodwill impairment testqualitative assessment for each of its then six reporting units. For purposes of this analysis, our estimates of fair values were based on a combination of the income approach, which estimates the fair value of each reporting unit based on the future discounted cash flows, and the market approach, which estimates the fair value of thecertain reporting units based on comparable market prices. The income approach requires that assumptions be made for, among others, forecasted revenues, gross profit margins, operating profit margins, working capital cash flow, perpetual growth rates and long-term discount rates, all of which require significant judgments by management. As a result of this step one analysis,under the Company determined that the carrying value of its Protein and Europe reporting units exceeded their estimated fair values, indicating potential goodwill impairment existed. Having determined that the goodwill of these two reporting units was potentially impaired, the Company performed the second step of the goodwill impairment analysis which involved calculating the implied fair value of its goodwill by allocating the estimated fair value of a reporting unit to its assets and liabilities other than goodwill (including both recognized and unrecognized intangible assets) and comparing the residual amount to the carrying value of goodwill. Based on the results, the Company recognized a pre-tax non-cash goodwill impairment charge of $49,676, including $7,553 attributed to the then minority interest of its Hain Pure Protein joint venture, to write off all of the goodwill related to its Protein and Europe reporting unitsnewly adopted guidance in the Consolidated Statement of Operations for the three and nine months ended March 31, 2009. The non-cash charge had no impact on the Company’s compliance with its debt covenants, cash flows or available liquidity.In April 2009, the Company was informed by the exclusive customer of its fresh prepared sandwich business in the United Kingdom that the customer’s purchases from the Company would be significantly reduced in phases with reductions through April 2010. The Company performed an impairment test on the intangible asset associated with the customer relationship, which was being amortized. The projected undiscounted future cash flows related to this customer relationship were determined to be less than the carrying value, and as a result, the Company recognized a full impairment loss of $2,954 in the third quarter of fiscal 2009.- 55 -The Company has License and Promotion Agreements with Martha Stewart Living Omnimedia, Inc. (“MSLO”see Note 2) for the use of the trademark Martha Stewart Clean and the Martha Stewart name in connection with the marketing and sale of natural home cleaning solutions and for the use of the trademark Martha Stewart.™ and the Martha Stewart name in connection with the marketing and sale of certain baking and pasta products. The Company issued 125,636 shares of its common stock in February 2009 and 52,615 shares in October 2009, respectively, in exchange for the use of the trademarks for five-year terms. The fair value of the shares issued was $1,802 and $965, respectively, based on the market price of our common stock on the dates of issuance and is being amortized on a straight-line basis over the respective five-year terms.trademarks.trademarks and tradenames. At June 30, 2011,2012, included in trademarks and other intangible assets on the balance sheet are $55,314$108,504 of intangible assets deemed to have a finite life which are being amortized over their estimated useful lives of 3 to 20 years.years. The following table reflects the components of trademarks and other intangible assets at June 30: 2011 2010 $ 186,273 $ 165,260 55,314 47,385 (21,158 ) (14,516 ) $ 220,429 $ 198,129 June 30,
2012 June 30,
2011Non-amortized intangible assets: Trademarks and tradenames $ 230,945 $ 176,822 Amortized intangible assets: Other intangibles 108,504 48,923 Less: accumulated amortization (29,071 ) (18,361 ) Net carrying amount $ 310,378 $ 207,384 for the years ended June 30included in continuing operations was as follows: 2011 2010 2009 $ 6,412 $ 3,067 $ 3,219 Fiscal Year ended June 30, 2012 2011 2010 Amortization of intangible assets $ 9,150 $ 5,333 $ 2,307 2012 2013 2014 2015 2016 $ 6,315 $ 5,721 $ 4,767 $ 4,450 $ 4,134 Fiscal Year ended June 30, 2013 2014 2015 2016 2017 Estimated amortization expense $ 10,159 $ 9,847 $ 9,740 $ 8,945 $ 8,763 6.9 years.9.9.1 years. 2011 2010 $ 18,469 $ 7,273 17,196 15,379 23,901 390 14,318 14,805 $ 73,884 $ 37,847 10. June 30,
2012 June 30,
2011Payroll and employee benefits $ 25,272 $ 17,945 Advertising and trade promotions 21,970 16,558 Contingent consideration 375 23,901 Other 12,852 13,609 $ 60,469 $ 72,013 at June 30 consisted of the following: 2011 2010 $ 150,000 $ 150,000 79,000 74,900 1,173 142 230,173 225,042 633 38 $ 229,540 $ 225,004 - 56 - June 30,
2012 June 30,
2011Senior Notes $ 150,000 $ 150,000 Revolving Credit Agreement borrowings payable to banks 240,000 79,000 Capitalized leases and equipment financing 584 1,173 390,584 230,173 Current Portion 296 633 $ 390,288 $ 229,540 $150$150 million in aggregate principal amount of 10 year senior notes due May 2, 2016 issued in a private placement. The notes bear interest at 5.98%, payable semi-annually on November 2 and May 2. As of June 30, 2011 and 2010, $150,0002012, $150,000 of the senior notes was outstanding.$400$600 million revolving credit facility (the “Credit Agreement”), expiring in July 2015.2015. The Credit Agreement was increased on August 20, 2012 from $400 million to $600 million upon the exercise of an existing $100 million accordion feature, which feature was increased to $200 million. Borrowings may be used to provide working capital, finance capital expenditures and permitted acquisitions, refinance certain existing indebtedness and for other corporate purposes. The Credit Agreement contains restrictive covenants usual and customary for facilities of its type, which include, with specified exceptions, limitations on our ability to engage in certain business activities, incur debt, have liens, make capital expenditures, pay dividends or make other distributions, enter into affiliate transactions, consolidate, merge or acquire or dispose of assets, and make certain investments, acquisitions and loans. The Credit Agreement also requires that we satisfy certain financial covenants, such as maintaining a consolidated interest coverage ratio (as defined) of no less than 4.00 to 1.00 and a consolidated leverage ratio (as defined) of no more than 3.50 to 1.00, which consolidated leverage ratio may The Credit Agreement may be increased by an additional uncommitted $100 million, provided certain conditions are met. Our obligations under the Credit Agreement are guaranteed by all of our existing and future domestic subsidiaries, subject to certain exceptions.2011,2012, are as follows: $ 633 442 86 12 229,000 — $ 230,173 Due in Fiscal Year Amount 2013 $ 296 2014 276 2015 12 2016 390,000 $ 390,584 2010 and 20092010 amounted to $11,004, $10,216$14,377, $11,004 and $15,048,$10,216, respectively.11. (loss) before income taxes and equity in earnings of equity-method investees for the years ended June 30, 2011, 2010 and 2009 were as follows: 2011 2010 2009 $ 95,048 $ 66,006 $ 25,673 (610 ) (6,653 ) (49,494 ) $ 94,438 $ 59,353 $ (23,821 ) - 57 - Fiscal Year ended June 30, 2012 2011 2010 Domestic $ 111,255 $ 95,048 $ 66,005 Foreign 22,973 3,879 2,287 Total $ 134,228 $ 98,927 $ 68,292 for the years ended June 30, 2011, 2010 and 2009 is presented below. 2011 2010 2009 $ 24,878 $ 20,357 $ 7,245 4,833 2,361 1,591 2,437 2,231 (1,022 ) 32,148 24,949 7,814 4,201 515 558 501 205 (11 ) 458 3,326 (2,724 ) 5,160 4,046 (2,177 ) $ 37,308 $ 28,995 $ 5,637 The current tax benefit realized upon the exercise of stock options and the vesting of restricted stock and restricted share units amounted to $6,183 in 2011, $1,487 in 2010 and $1,653 in 2009. Fiscal Year ended June 30, 2012 2011 2010 Current Federal $ 28,983 $ 24,878 $ 20,357 State and local 3,414 4,833 2,361 Foreign 6,050 2,437 2,231 38,447 32,148 24,949 Deferred: Federal 3,963 4,201 515 State and local 493 501 205 Foreign (1,749 ) 958 2,693 2,707 5,660 3,413 Total $ 41,154 $ 37,808 $ 28,362 2010 and 20092010 amounted to $34,297, $12,335$21,902, $34,297 and $13,903,$12,335, respectively. 2011 % 2010 % 2009 % $ 33,053 35.0 % $ 20,773 35.0 % $ (8,337 ) 35.0 % 3,467 3.7 2,356 4.0 1,574 (6.6 ) — — — 14,247 (59.8 ) (2,191 ) (2.3 ) (770 ) (1.3 ) (333 ) 1.4 1,278 1.3 1,194 2.0 335 (1.4 ) — — 1,531 2.6 (937 ) 3.9 — — (1,205 ) (2.0 ) — — 3,689 3.9 6,354 10.7 — — (1,988 ) (2.1 ) (1,238 ) (2.1 ) (912 ) 3.8 $ 37,308 39.5 % $ 28,995 48.9 % $ 5,637 (23.7 )% 2012 % 2011 % 2010 % Expected U.S. federal income tax at statutory rate $ 46,980 35.0 % $ 34,624 35.0 % $ 23,902 35.0 % State income taxes, net of federal benefit 3,267 2.4 % 3,467 3.5 % 2,356 3.4 % Domestic manufacturing deduction (2,275 ) (1.7 )% (2,191 ) (2.2 )% (770 ) (1.1 )% Non-deductible compensation 216 0.2 % 1,278 1.3 % 1,194 1.7 % Foreign income at different rates (11,513 ) (8.6 )% (534 ) (0.5 )% (2,555 ) (3.7 )% Effect of settled tax matters — — % — — % (1,205 ) (1.8 )% Valuation allowances established for UK losses — — % 2,118 2.1 % 5,721 8.4 % Contingent consideration expense reversal 5,434 4.0 % — — % — — % Other (955 ) (0.6 )% (954 ) (1.0 )% (281 ) (0.4 )% Provision for income taxes $ 41,154 30.7 % $ 37,808 38.2 % $ 28,362 41.5 % $7,868,$4,594, against which full valuation allowances have been recorded. These valuation allowances were initially recorded in the third quarter of fiscal 2010 as a result of the Company’s evaluation of its United Kingdom tax position in accordance with ASC 740, “Accounting for Income Taxes.” ThePrior to the acquisition of Daniels, the Company’s United Kingdom subsidiarysubsidiaries had recorded historical losses and had been affected by restructuring and other charges in recent years.charges. These losses represented sufficient evidence for management to determine that a full valuation allowance for the deferred tax assets was appropriate under ASC 740. We continuePrior to the Daniels acquisition, we did not recognize noa tax benefit for losses incurred in the United Kingdom. Under current U.K. tax law, our carryforward losses have no expiration. If the Company is able to realize any of these deferred tax assets in the future, the provision for income taxes will be reduced by a release of the corresponding valuation allowance. Until an appropriate level of profitability is attained in a manner such that those historical loss carryforwards can be utilized, we expect to continue to maintain a valuation allowance on ourthose net deferred tax assets related to future U.K. tax benefits.- 58 -as of June 30 were as follows: 2011 2010 $ 4,628 $ 5,206 8,853 5,187 512 345 13,993 10,738 (41,746 ) (31,441 ) (10,997 ) (7,695 ) (7,678 ) (7,775 ) 14,301 15,214 2,705 3,234 927 27 (10,427 ) (9,847 ) (52,915 ) (38,283 ) $ (38,922 ) $ (27,545 ) Current deferred tax assets: Basis difference on inventory $ 4,359 $ 4,628 Reserves not currently deductible 11,106 8,853 Other 369 512 Current deferred tax assets 15,834 13,993 Noncurrent deferred tax liabilities: Basis difference on intangible assets (93,090 ) (40,752 ) Basis difference on property and equipment (13,976 ) (11,226 ) Other comprehensive income (8,246 ) (7,678 ) Noncurrent deferred tax assets: Net operating loss and tax credit carryforwards 11,204 12,058 Stock based compensation 3,458 2,705 Other (8 ) (626 ) Valuation allowances (6,975 ) (6,402 ) Noncurrent deferred tax liabilities, net (107,633 ) (51,921 ) $ (91,799 ) $ (37,928 ) $1,552$1,012 at June 30, 20112012 with various expiration dates through 2020. We have U.S. federal tax net operating losses available for carryforward at June 30, 20112012 of $10,901$3,551 that were generated by certain subsidiaries prior to their acquisition and have expiration dates through 2028. The use of pre-acquisition operating losses is subject to limitations imposed by the Internal Revenue Code. We do not anticipate that these limitations will affect utilization of the carryforwards prior to their expiration. In addition to the net operating losses in the United Kingdom described above, we also have deferred tax benefits for foreign net operating losses of $2,291$2,114 which are available to reduce future income tax liabilities in Belgium and the Netherlands. The Company believes it is more likely than not that these net operating losses will not be realized and a valuation allowance has been established against these deferred tax assets.were: 2011 2010 $ 9,847 $ 7,701 1,148 3,166 (1,255 ) (755 ) 686 (265 ) $ 10,426 $ 9,847 Fiscal Year ended June 30, 2012 2011 Balance at beginning of year $ 6,402 $ 7,041 Additions charged to income tax expense 1,064 89 Reductions credited to income tax expense — (1,255 ) Currency translation adjustments (491 ) 527 Balance at end of year $ 6,975 $ 6,402 2011,2012, the Company had approximately $31,864$38,225 of undistributed earnings of foreign subsidiaries for which taxes have not been provided as the Company has invested or expects to invest these undistributed earnings indefinitely. If in the future these earnings are repatriated to the U.S., or if the Company determines such earnings will be remitted in the foreseeable future, additional tax provisions would be required. Due to complexities in the tax laws and the assumptions that would have to be made, it is not practicable to estimate the amounts of income taxes that might be payable if some or all of such earnings were to be remitted.for the years ended June 30, 2011, 2010 and 2009 is summarized below:- 59 - 2011 2010 2009 $ 2,248 $ 2,489 $ 2,268 224 304 430 — (545 ) (209 ) (1,000 ) — — $ 1,472 $ 2,248 $ 2,489 Fiscal Year ended June 30, 2012 2011 2010 Balance at beginning of year $ 1,472 $ 2,248 $ 2,489 Additions based on tax positions related to prior years 15 224 304 Additions for acquired companies 690 — — Reductions for tax positions of prior years — — (545 ) Reductions due to lapse in statute of limitations (840 ) (1,000 ) — Balance at end of year $ 1,337 $ 1,472 $ 2,248 2011, $1,1852012, $1,178 represents thatthe amount that would impact the effective tax rate in future periods if recognized.$224$(135), $224 and $113$113 of interest and penalties related to the above unrecognized benefits within income tax expense for the fiscal years ended June 30, 2012, 2011 and 2010.2010, respectively. The Company had accrued $287$152 and $282$287 for interest and penalties at the end of fiscal 2012 and 2011, and 2010, respectively. In the fourth quarter of fiscal 2011 theThe Company reduced its reserves by $1,000$840 and $1,000 in fiscal 2012 and 2011, respectively, as a result of an expiration of the statutecertain statutes of limitations. TheIn addition, the Internal Revenue Service completed the examination of our income tax returns for fiscal years 2005 and 2006 in the fourth quarter of fiscal 2010, which resulted in the receipt of a small refund. As a result, the Company reduced its reserves for uncertain tax positions by $400.$400.2008.2008. Given the uncertainty regarding when tax authorities will complete their examinations and the possible outcomes of their examinations, a current estimate of the range of reasonably possible significant increases or decreases of income tax that may occur within the next twelve months cannot be made.12.(upof up to 5 million shares) shares with such designations, rights and preferences as may be determined from time to time by the Board of Directors. Accordingly, the Board of Directors is empowered to issue, without stockholder approval, preferred stock with dividends, liquidation, conversion, voting, or other rights which could decrease the amount of earnings and assets available for distribution to holders of our Common Stock. At June 30, 2012 and 2011, and 2010, no preferred stock was issued or outstanding.Three Greek Gods L.L.C. in the first quarter of fiscal 2011, 242,185 shares were issued to the sellers, valued at $4,785.$4,785. (See Note 5)Marketing L.L.C. in the fourth quarter of fiscal 2010, 1,558,442 shares were issued to the sellers, valued at $35,392.$35,392. (See Note 5)at June 30 consisted of the following: 2011 2010 2009 $ 7,903 $ (6,738 ) $ 2,313 (187 ) (285 ) (745 ) (572 ) 152 201 $ 7,144 $ (6,871 ) $ 1,769 - 60 -13. Foreign currency translation adjustment $ (5,670 ) $ 7,903 Unrealized gain/(loss) on available for sale securities 17 (187 ) Deferred gains/(losses) on hedging instruments 270 (572 ) Total accumulated other comprehensive income/(loss) $ (5,383 ) $ 7,144 amended.amended.In November 2002, our stockholders approved the 2002 Long-Term Incentive and Stock Award Plan. An aggregate of 1,600,000 shares of common stock were originally reserved for issuance under this plan. At various Annual Meetings of Stockholders, including the 20102011 Annual Meeting, the plan was amended to increase the number of shares issuable to 10,250,00010,750,000 shares. The plan provides for the granting of stock options, stock appreciation rights, restricted shares,stock, restricted share units, performance shares, performance share units and other equity awards to employees, directors and consultants. Awards denominated in shares of common stock other than options and stock appreciation rights will be counted against the available share limit as 2.07 shares for every one share covered by such award. All of the options granted to date under the plan have been incentive or non-qualified stock options providing for the exercise price equal to the fair market price at the date of grant. Effective December 1, 2005, stock option awards granted under the plan expire seven7 years after the date of grant; options granted prior to this date expired ten10 years after the date of grant. Options and other stock-based awards vest in accordance with provisions set forth in the applicable award agreements. No awards shall be granted under this plan after December 1, 2015.2009,2010, options to purchase 816,574173,289 shares were granted under this plan with an estimated fair value of $3.62$6.03 per share. In addition, 209,806 shares of restricted stock were granted during fiscal 2009. During fiscal year 2010, options to purchase 173,289 shares were granted under this plan with an estimated fair value of $6.03 per share. In addition, 119,436 shares of restricted stock were granted during fiscal 2010. During fiscal year 2011, there were no options granted under this plan. stockshare units granted under this plan during fiscal 2011.years 2012, 2011 and 2010, respectively. Included in this grantthese grants during fiscal years 2012 and 2011 were 150,699 and 183,449, respectively, of restricted sharesstock and restricted stockshare units granted under the Company’s 2011-2012 Long-term Incentive Plan, 122,841long-term incentive programs, of which75,361 and 122,841, respectively, are subject to the achievement of minimum performance goals established under that planthose programs (see “Long-term Incentive Plan,” below).2011, 2,656,3082012, 2,402,461 options and 347,064416,162 unvested restricted sharesstock and restricted stockshare units were outstanding under this plan and there were 3,508,508 options3,515,648 shares available for grant under this plan. Option Plan. The plan originally provided for the granting of stock options to non-employee directors to purchase up to an aggregate of 750,000 shares of our common stock. In December 2003, the plan was amended to increase the number of shares issuable by 200,000 shares to 950,000 shares. In March 2009, the plan was amended to permit the granting of restricted shares,stock, restricted share units and dividend equivalents and was renamed. All of the options granted to date under thethis plan have been non-qualified stock options providing for the exercise price equal to the fair market price at the date of grant. Effective December 1, 2005, stock optionseven7 years after the date of grant; options granted prior to this date expire ten10 years after the date of grant. During fiscal years 2009, 2010 and 2011, were granted under this plan. Duringplan in fiscal years 2009, 20102012, 2011, or 2010.2011, 35,00038,750 shares of restricted shares, 38,750 restricted shares and 31,500 restricted shares, respectively, werestock granted under the plan. this plan during fiscal years 2012, 2011 and 2010, respectively.2011, 217,5002012, 97,000 options and 60,16771,247 unvested restricted shares were outstanding and there were 90,795 options50,795 shares available for grant under this plan.20112012 there were also 623,94480,972 options outstanding that were granted under threetwo other prior Hain and Celestial Seasonings plans. Although no further awards can be granted under those plans, the options outstanding continue in accordance with the terms of the respective plans.7,504,2866,634,285 shares of Common Stock reserved for future issuance in connection with stock based awards as of June 30, 2011.- 61 -Company’s consolidated statementsConsolidated Statements of operationsIncome for share-basedstock based compensation plans were as follows: Years ended June 30, 2011 2010 2009 $ 9,031 $ 6,979 $ 7,211 $ 3,077 $ 2,153 $ 2,069 Fiscal Year ended June 30, 2012 2011 2010 Compensation cost (included in selling, general and administrative expense) $ 8,290 $ 9,031 $ 6,979 Related income tax benefit $ 3,019 $ 3,077 $ 2,153 20112012 is as follows:
2011 Weighted
Average
Exercise
Price 2010 Weighted
Average
Exercise
Price 2009 Weighted
Average
Exercise
Price 5,153,233 $ 20.42 5,568,667 $ 20.64 6,094,221 $ 21.55 — — 173,289 $ 18.20 816,574 $ 11.76 (899,681 ) $ 19.91 (126,713 ) $ 16.88 (309,737 ) $ 17.06 (755,800 ) $ 35.25 (462,010 ) $ 24.28 (1,032,391 ) $ 20.25 3,497,752 $ 17.35 5,153,233 $ 20.42 5,568,667 $ 20.64 2,811,784 $ 17.44 4,072,092 $ 21.10 4,308,963 $ 21.33 For the years ended June 30, 2011 2010 2009 $ 10,275 $ 373 $ 2,642 $ 17,912 $ 2,139 $ 5,283 $ 3,930 $ 140 $ 982 2012 2011 2010 Outstanding at beginning of year 3,497,752 $17.35 5,153,233 $20.42 5,568,667 $20.64 Granted — — — — 173,289 $18.20 Exercised (914,119 ) $15.51 (899,681 ) $19.91 (126,713 ) $16.88 Canceled and expired (3,200 ) $16.11 (755,800 ) $35.25 (462,010 ) $24.28 Outstanding at end of year 2,580,433 $18.00 3,497,752 $17.35 5,153,233 $20.42 Options exercisable at end of year 2,289,642 $18.55 2,811,784 $17.44 4,072,092 $21.10 Fiscal Year ended June 30, 2012 2011 2010 Intrinsic value of options exercised $ 23,798 $ 10,275 $ 373 Cash received from stock option exercises $ 14,179 $ 17,912 $ 2,139 Tax benefit recognized from stock option exercises $ 8,811 $ 3,930 $ 140 2011,2012, the aggregate intrinsic value (the difference between the closing stock price on the last day of trading in the year and the exercise price) was $56,007$95,579 and the weighted average remaining contractual life was 3.6 years.3.1 years. For options exercisable at June 30, 2011,2012, the aggregate intrinsic value was $44,773$83,552 and the weighted average remaining contractual life was 3.4 years.3.0 years. At June 30, 20112012 there was $2,404$702 of unrecognized compensation expense related to stock option awards, which will be recognized over a weighted average period of approximately 1.5 years.1.0 year. 2010 2009 2.38 % 1.90 % 34.20 % 32.20 % 4.75 years 4.75 years 0.0 % 0.0 % $ 6.03 $ 3.62 Risk-free rate 2.38 % Expected volatility 34.20 % Expected life (years) 4.75 Dividend yield 0 % Fair value at grant date $6.03 stock- 62 -Non-vestedA summary of our restricted stock and restricted share unit awards at units activity for the three fiscal years ended June 30, 2011 and activities during fiscal 2011, 2010 and 2009 were2012 is as follows: 2011 Weighted
Average
Grant
Date Fair
Value (per
share) 2010 Weighted
Average
Grant
Date Fair
Value (per
share) 2009 Weighted
Average
Grant
Date Fair
Value (per
share) 410,553 $ 19.93 489,878 $ 21.73 409,004 $ 30.14 272,824 $ 26.10 158,186 $ 18.26 244,806 $ 12.76 (256,554 ) $ 22.17 (209,398 ) $ 23.24 (158,058 ) $ 29.27 (19,592 ) $ 22.47 (28,113 ) $ 17.31 (5,874 ) $ 29.99 407,231 $ 22.43 410,553 $ 19.93 489,878 $ 21.73 For the years ended June 30, 2011 2010 2009 $ 7,121 $ 2,889 $ 3,124 $ 5,689 $ 3,636 $ 2,381 $ 2,253 $ 1,347 $ 671 2012 2011 2010 Non-vested restricted stock and restricted share units – beginning of year 407,231 $22.43 410,553 $19.93 489,878 $21.73 Granted 235,824 $35.47 272,824 $26.10 158,186 $18.26 Vested (136,031 ) $17.51 (256,554 ) $22.17 (209,398 ) $23.24 Forfeited (19,615 ) $26.71 (19,592 ) $22.47 (28,113 ) $17.31 Non-vested restricted stock and restricted share units – end of year 487,409 $29.94 407,231 $22.43 410,553 $19.93 Fiscal Year ended June 30, 2012 2011 2010 Fair value of restricted stock and restricted share units granted $ 8,364 $ 7,121 $ 2,889 Fair value of shares vested $ 5,098 $ 5,689 $ 3,636 Tax benefit recognized from restricted shares vesting $ 1,914 $ 2,253 $ 1,347 2011, $6,3412012, $7,608 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.6 years.(currently, the “2010-2011(the “2011-2012 LTIP” and the “2011-2012“2012-2013 LTIP”) that provide for a combination of equity grants and performance awards that can be earned over eachthe two year period. The initial two-year long-term incentive plan (the “2010-2011 LTIP”) concluded in fiscal 2011. Participants in the LTI Plan include our executive officers, including the Chief Executive Officer, and certain other key executives.CompanyCompany’s common stock at the discretion of the Compensation Committee.awards.awards (the “Initial Equity Grants”). These grantsInitial Equity Grants are subject to time vesting requirements, and a portion of the 2011-2012 LTIP and 2012-2013 LTIP related grantgrants are also subject to the achievement of the minimum performance goals. These initial grantsThe Initial Equity Grants are being expensed over the respective vesting periodperiods on a straight-line basis. The payment of the actual awards earned at the end of the applicable performance period, if any, will be reduced by the value of this initial grant.the Initial Equity Grants.wasfor the 2011-2012 LTIP and 2012-2013 LTIP are probable and, accordingly, recorded $9,239 and $335 of expense in(in addition to the stock based compensation expense associated with the Initial Equity Grants) of $8,743 and $9,239for the fiscal years ended June 30, 20112012 and 2010,2011, respectively, related to these awards. It is the Company’s expectation that such awards will be settled in cash, and therefore the impact of these awards has been excluded from- 63 -the diluted EPS calculation.14. EQUITYLTI plans.2011,2012, the Company owned 48.7% of its Hain Pure Protein joint venture.Protein. This investment is accounted for under the equity method of accounting (see Note 2).accounting. The carrying value of our investment of $23,107$25,553 and advances to HPP of $17,083$10,152 are included on the consolidated balance sheet in “Investment in“Investments and advances to equity-method investees.joint ventures.” The Company previously provided advances to HPP when it was a consolidated subsidiary to finance its operations. Simultaneously with the dilution of the Company’s interest in HPP in June 2009 and its deconsolidation, HPP entered into a separate credit agreement. The Company and HPP entered into a subordination agreement covering the outstanding advances at the date of deconsolidation. The subordination agreement allows for prepayments of the advances based on HPP’s meeting certain conditions under its credit facility. HPP repaid $3,000$6,934 of the advances induring the fiscal year ended June 30, 2011.2012. The balance of the advances are due no later than December 31, 2012.In October 2009,July 1, 2014.formedalso owned 50.0% of a joint venture, Hutchison Hain Organic Holdings Limited (“HHO”), with Hutchison China Meditech Ltd. (“Chi-Med”), a majority owned subsidiary of Hutchison Whampoa Limited, to marketLimited. HHO markets and distributedistributes co-branded infant and toddler feeding products and marketmarkets and distributedistributes selected Hain CelestialCompany brands in Hong Kong, China and other markets. The Company’s investment in its 50% share of the joint venture totaled approximately $177. In addition, the Company and Chi-Med each advanced $3,800 to the joint venture for working capital needs during the year ended June 30, 2011. Voting control of the joint venture is shared equally50/50 between the Company and Chi-Med, although, in the event of a deadlock, Chi-Med has the ability to cast the deciding vote. The carrying value of our investment and advances to HHO of $2,670 are included on the consolidated balance sheet in “Investments and joint ventures.” The investment is being accounted for under the equity method of accounting. For the years ended June 30, 2011 and 2010, the joint venture’s results of operations were not significant.$6,390$6,725 at June 30, 2012 and $6,390 at June 30, 2011 (cost basis of $6,696 as of both dates) and $6,232 at June 30, 2010. The fair value of this investment is included in “Other assets” in“Investments and joint ventures,” with the Company’s condensed consolidated balance sheets. During the second quarter of fiscal 2010, the Company determined that an other-than-temporary decline in the fair value of YHS occurred based upon various factors including the near-term prospects of YHS, the length of time the investment was in anrelated unrealized loss position, and publicly available information about the industry and geographic region in which YHS operates and, accordingly recorded a loss of $1,210 on the write-down of this investment, which is included in “Interest and other expenses, net”. At June 30, 2011, the fair value of the security decreased by an additional $306. The Company concluded that the additional decline in the investment is temporary and, accordingly, has recorded the unrealizedgain or loss, net of tax, included in “Accumulatedstockholders’ equity section of the condensed consolidated balance sheet.15.Consolidated Balance Sheets.(liabilities)liabilities measured at fair value on a recurring basis as of June 30, 2011:- 64 - Total Quoted
prices in
active
markets
(Level 1) Significant
other
observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3) $ 7,300 — $ 7,300 — 6,390 $ 6,390 — — $ 13,690 $ 6,390 $ 7,300 — $ 766 $ 766 — 37,145 — — $ 37,145 $ 37,911 — $ 766 $ 37,145 Total Assets: Cash equivalents $ 300 — $ 300 — Forward foreign currency contracts 361 — 361 — Available for sale securities 6,725 $ 6,725 — — $ 7,386 $ 6,725 $ 661 — Liabilities: Contingent consideration, of which $6,207 is noncurrent $ 6,582 — — $ 6,582 Total $ 6,582 — — $ 6,582 2010: Total Quoted
prices in
active
markets
(Level 1) Significant
other
observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3) $ 10,586 — $ 10,586 — 6,232 $ 6,232 — — 256 — 256 — $ 17,074 $ 6,232 $ 10,842 — $ 57 — $ 57 — 28,580 — — $ 28,580 $ 28,637 — $ 57 $ 28,580 Total Assets: Cash equivalents $ 7,300 — $ 7,300 — Available for sale securities 6,390 $ 6,390 — — $ 13,690 $ 6,390 $ 7,300 — Liabilities: Forward foreign currency contracts $ 766 — $ 766 — Contingent consideration, of which $13,244 is noncurrent 37,145 — — $ 37,145 Total $ 37,911 — $ 766 $ 37,145 14)13). Fair value is measured using the market approach based on quoted prices. The Company utilizes the income approach to measure fair value for its foreign currency forward contracts. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates, and forward prices.3 Greek Gods LLC in July 2010 and the assets and business of World Gourmet Marketing LLC in June 2010, GG UniqeFiber AS in January 2011 and Churchill Products Limited in June 2010, payment of a portion of the respective purchase prices are contingent upon the achievement of certain operating results. We estimated the original fair value of the contingent consideration as the present value of the expected contingent payments, determined using the weighted probabilities of the possible payments. We are required to reassess the fair value of contingent payments on a periodic basis. During the fiscal year ended June 30, 2011,2012, the Company reassessed the fair value of the contingentresultingwhich resulted in a reduction of expense related to the Daniels acquisition of $15,527. Additionally, during fiscal 2012, the Company finalized the payment of contingent consideration related to the acquisition of the Sensible Portions brand which resulted in additional expense of $443$900. During the fiscal year ended June 30, 2011, additional expense of $443 was recorded related to the Greek Gods acquisition and a reduction of expense of $4,620$4,620 was recorded related to the World Gourmet acquisition (See Note 5)acquisition. The significant inputs used in these estimates include a weighted average discount rate of 12.1% (which is based on a risk analysis of the respective liabilities) and numerous possible scenarios for the payments based on the contractual terms of the contingent consideration, for which probabilities are assigned to each scenario. Although we believe our assumptions are reasonable, different assumptions or changes in the future may result in different estimated amounts. A one percentage point change in the discount rates used would result in a change to the recorded liability of approximately $100 as of June 30, 2012.- 65 -Year ended June 30, 2011 2010 $ 28,580 — 1,691 — 25,950 $ 28,580 (4,177 ) — (15,400 ) 501 — $ 37,145 $ 28,580 Fiscal Year ended June 30, 2012 2011 Balance at beginning of year $ 37,145 $ 28,580 Fair value of initial contingent consideration 19,000 25,950 (15,131 ) (2,486 ) Contingent consideration paid (33,230 ) (15,400 ) Translation adjustment (1,202 ) 501 Balance at end of year $ 6,582 $ 37,145 20112012 or 2010.Derivative Financial Instruments2011 – Foreign Exchange ContractsDerivative financial instruments are not used for speculative purposes. The notional and fair value amounts of the Company’s foreign exchange derivative contracts at June 30, 20112012 were $16,550 and 2010$361 of net assets. There were $13,650$13,650 of notional amount and $766$766 of net liabilities and $13,450 and $199 of net assets, respectively.foreign exchange derivative contracts outstanding at June 30, 2011. The fair value of these derivatives is included on the Company’s consolidated balance sheets in prepaid expenses and other current assets and accrued expenses at June 30, 2011 and 2010.other current liabilities in the Consolidated Balance Sheets. For these derivatives, which qualify as hedges of probable forecasted cash flows, the effective portion of changes in fair value is temporarily reported in Accumulated Other Comprehensive Income (“OCI”)accumulated OCI and recognized in earnings when the hedged item affects earnings. These foreign exchange contracts have maturities over the next 13 months.20112012 and 2010,2011, the impact of hedge ineffectiveness on earnings was not significant. The Company will discontinue cash flow hedge accounting when the forecasted transaction is no longer probable of occurring on the originally forecasted date or when the hedge is no longer effective. There were no discontinued foreign exchange hedges for the fiscal years ended June 30, 20112012 and 2010.2011.Other Comprehensive Income (“OCI”)OCI from foreign exchange contracts that qualified as cash flow hedges for the fiscal years ended June 30, 2011 and 2010 werewas as follows:Year ended June 30, 2011 2010 $ 152 $ 201 (975 ) (81 ) 251 32 $ (572 ) $ 152 16. Fiscal Year ended June 30, 2012 2011 Net carrying amount at beginning of year $ (572 ) $ 152 Cash flow hedges deferred in OCI 1,127 (975 ) Changes in deferred taxes (285 ) 251 Net carrying amount at end of year $ 270 $ (572 ) 2011,2012, are as follows:- 66 - $ 9,239 4,866 3,021 1,970 1,287 2,523 $ 22,906 Fiscal Year 2013 $ 12,566 2014 11,739 2015 8,413 2016 6,604 2017 6,279 Thereafter 51,689 $ 97,290 2010 and 20092010 was $10,332, $8,077$12,603, $10,332 and $9,937,$8,077, respectively.17.$418$491, $418 and $278,$278, respectively. There was nomadeplan for United Kingdom eligible employees. For the fiscal year ended June 30, 2009.18.company is engaged in one business segment:operations are now organized and managed by geography, and are comprised of four operating segments: United States, United Kingdom, Canada and Europe. The United States and the manufacturing, distribution, marketingUnited Kingdom are now reportable segments, while Canada and saleEurope do not currently meet the quantitative thresholds for reporting and are therefore combined and reported as “Rest of naturalWorld.”organic products. We define business segments as components of an enterprise about which separate financial information is available that is evaluated on a regular basisoperating profit are the primary measures used by our chiefChief Operating Decision Maker (“CODM”) to evaluate segment operating decision maker (“CODM”).performance and to decide how to allocate resources to segments. Our chief operating decision makerCODM is the Company’sCompany's Chief Executive Officer. Characteristics of our operations whichExpenses related to certain centralized administration functions that are relied onnot specifically related to an operating segment are included in making this determination include the similarities apparent in the Company’s products in the natural“Corporate and organic consumer markets, the commonalityother.” Corporate and other expenses are comprised mainly of the Company’s customers across brands, the Company’s unified marketing strategy,compensation and the naturerelated expenses of certain of the financial information usedCompany's senior executive officers and other selected employees who perform duties related to our entire enterprise, as well as expenses for certain professional fees, facilities, and other items which benefit the Company as a whole. Additionally, acquisition related expenses and restructuring charges are included in "Corporate and other." Expenses that are managed centrally but can be attributed to a segment, such as employee benefits, are principally allocated based on headcount. Assets are reviewed by the CODM described below, other than information on salesa consolidated basis and direct product costs,are not reported by brand. In making decisions about resource allocation and performance assessment, the Company’s CODM focuses on sales performance by brand using internally generated sales data as well as externally developed market consumption data acquired from independent sources, and further reviews certain data regarding standard costs and standard gross margins by brand. In making these decisions, the CODM receives and reviews certain Company consolidated quarterly and year-to-date information; however, the CODM does not receive or review any discreteoperating segment.by geographic location, business unit, subsidiary, division or brand. The CODM reviews and approves capital spending on a Company consolidated basis rather than at any lower unit level. Fiscal Years ended June 30, 2012 2011 2010 United States $ 991,626 $ 910,095 $ 722,211 United Kingdom 192,352 39,284 31,304 Rest of World 194,269 159,167 136,492 $ 1,378,247 $ 1,108,546 $ 890,007 Operating Income: United States $ 149,791 $ 130,155 $ 98,672 United Kingdom 9,690 (4,844 ) (6,053 ) Rest of World 13,347 9,787 8,653 $ 172,828 $ 135,098 $ 101,272 (21,300 ) (23,924 ) (21,183 ) $ 151,528 $ 111,174 $ 80,089 (1) (2) - 67 - 2011 2010 2009 $ 688,097 $ 593,393 $ 582,061 196,390 94,828 91,713 99,120 90,508 86,583 105,649 92,769 119,068 — — 165,727 41,001 45,839 77,582 $ 1,130,257 $ 917,337 $ 1,122,734 Fiscal Year ended June 30, 2012 2011 2010 Grocery $ 935,136 $ 688,097 $ 593,393 Snacks 209,319 196,390 94,828 Tea 103,950 99,120 90,508 Personal Care 109,907 105,649 92,769 19,935 19,290 18,509 Total $ 1,378,247 $ 1,108,546 $ 890,007 (1) Net sales of protein products for the years ended June 30, 2011 and 2010 are no longer includedThe “other” category in the Company’s resultsabove table includes, but is not limited to, sales in product categories such as they are related to HPP, which was deconsolidated asfresh prepared foods. Sales of June 30, 2009. See Note 2.each of these categories and in the aggregate were less than 10% of total sales in each fiscal year.“other” categoryCompany's long-lived assets, which primarily represent net property, plant and equipment, by geographic area are as follows: June 30,
2012 June 30,
2011United States $ 130,522 $ 136,261 Canada 11,607 12,196 United Kingdom 54,240 27,911 Continental Europe 15,482 12,807 $ 211,851 $ 189,175 above table includes, but is not limitedUnited Kingdom, which was acquired in October 2011 as part of the acquisition of Daniels. The sale of the CRM business was completed on August 20, 2012. Additionally, during the fourth quarter of fiscal 2012, the Company made the decision to salesdispose of its sandwich business, including the Daily BreadTM brand name, in such product categories as, meat alternative products and fresh prepared foods. Sales of each of these categories were less than 10% of total sales in each year.Outside the United States, we primarily conductKingdom. The sale of sandwich business is expected to be completed during fiscal 2013. Operating results for the CRM business, which have been included in Canadathe Company's consolidated financial statements for the period subsequent to the October 2011 acquisition, and Europe. Selected informationthe sandwich business have been classified as discontinued operations for all periods presented. Fiscal Year ended June 30, 2012 2011 2010 Net sales $ 73,743 $ 21,711 $ 27,330 Impairment charges $ (14,880 ) $ — $ — Operating loss $ (16,822 ) $ (4,437 ) $ (8,942 ) Loss from discontinued operations, net of tax $ (14,989 ) $ (3,989 ) $ (9,572 ) operations by geographic area isdiscontinued operations.Customer relationships $ 1,756 Tradenames 8,541 Goodwill 2,433 Cumulative currency translation adjustment recognized 2,150 Total impairment charges $ 14,880 follows: 2011 2010 2009 $ 910,095 $ 722,211 $ 914,875 71,041 63,205 54,807 149,121 131,921 153,052 $ 1,130,257 $ 917,337 $ 1,122,734 $ 95,371 $ 66,312 $ 25,673 7,805 5,608 3,955 (8,738 ) (12,567 ) (53,449 ) $ 94,438 $ 59,353 $ (23,821 ) 2011 2010 $ 821,169 $ 798,116 65,952 60,748 75,317 25,406 $ 962,438 $ 884,270 (1)Includes net sales of $165,727 and losses before income taxes of $22,282 for the year ended June 30, 2009 related to HPP, which was deconsolidated as of June 30, 2009. See Note 2.(2)Earnings (loss) before income taxes in 2009 include non-cash impairment charges for goodwill and other intangibles of $7,647 in the United States and $44,983 in Europe.- current in the consolidated balance sheet as the sales have or are expected to occur within the next twelve months. - June 30,
2012 June 30,
2011Receivables $ 12,379 $ 3,545 Inventory 5,331 359 Other assets 4,089 815 Property, plant and equipment 6,850 — Intangible assets 1,449 15,540 Total assets of businesses held for sale $ 30,098 $ 20,259 Accounts payable and accrued expenses $ 12,012 $ 4,413 Deferred taxes 1,324 996 Total liabilities of businesses held for sale $ 13,336 $ 5,409 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A.Controls and Proceduressubstantially all of the assets and business of 3 Greek Gods LLC (“Greek Gods”)Daniels Group on July 2, 2010 and GG UniqueFiber AS (“GG”) on January 28,October 25, 2011 and Danival AS (“Danival”)Cully & Sully Limited on February 4, 2011.April 27, 2012 (collectively, the "acquired businesses"). We have excluded Greek Gods, GG and Danivalthese acquired businesses from our assessment of and conclusion on the effectiveness of the Company’s internal control over financial reporting as of June 30, 2011. Greek Gods, GG and Danival2012. The acquired businesses accounted for less than 320.4 percent of our consolidatedtotal assets as of June 30, 20112012 and less than 410.6 percent of our consolidated net sales and 9.0 percent of our income from continuing operations for the fiscal year ended June 30, 2011.2011.2012. In making this assessment, management used the criteria set forth by the Committee on Sponsoring Organizations of the Treadway Commission inInternal Control—Integrated Framework.2011,2012, our internal control over financial reporting is effective based on those criteria.20112012 has been audited by Ernst & Young LLP, the independent registered public accounting firm who also audited the Company’s consolidated financial statements. Ernst & Young’s attestation report on management’s assessment of the Company’s internal control over financial reporting follows.- 69 -2011,2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.3 Greek Gods LLC (“Greek Gods”)the Daniels Group acquired on July 2, 2010, GG UniqueFiber AS (“GG UniqueFiber”)October 25, 2011 and Cully & Sully Limited acquired on January 28, 2011 and Danival SAS (“Danival”) acquired on February 4, 2011,April 27, 2012, which are included in the 2011fiscal 2012 consolidated financial statements of the Company and constituted less than 320.4 percent of total assets (excluding cost in excess of net assets of companies acquired recorded in connection with these acquisitions) as of June 30, 20112012 and less than 410.6 percent of revenues,consolidated net sales and 9.0 percent of the income from continuing operations for the fiscal year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Greek Gods, GG UniqueFiberthe Daniels Group and Danival.2011,2012, based on the COSO criteria.20112012 and 2010,2011, and the related consolidated statements of operations,income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended June 30, 20112012 of the Company and our report dated August 29, 20112012 expressed an unqualified opinion thereon./s/ Ernst & Young LLP2011- 70 -Item 9B.Other Information of the Registrant,”Item 11, “Executive Compensation,”Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,”Item 13, “Certain Relationships and Related Transactions, and Director Independence” andItem 14, “Principal AccountantAccounting Fees and Services” have been omitted from this report inasmuch as the Company will file with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report a definitive Proxy Statement for the 20112012 Annual Meeting of Stockholders of the Company, at which meeting the stockholders will vote upon the election of the directors. This information in such Proxy Statement is incorporated herein by reference.Item 15.Exhibits and Financial Statement SchedulesConsolidatedBalance Sheets - June 30, 2011 and 2010OperationsIncome - Fiscal Years ended June 30, 2012, 2011 2010 and 20092010 and 20092010 and 2009Description 3.1 Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of Amendment No. 1 to the Registrant’sCompany's Registration Statement on Form S-4 (Commission File No. 333-33830) filed with the Commission on April 24, 2000).3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Form 8-K filed with the Commission on November 22, 2010). - 71 -4.1 Specimen of common stock certificate (incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Registrant’sCompany's Registration Statement on Form S-4 (Commission File No. 333-33830) filed with the Commission on April 24, 2000).4.2 Note Purchase Agreement, dated as of May 2, 2006, by and among the RegistrantCompany and the several purchasers named therein (incorporated by reference to Exhibit 10.2 of the Registrant’sCompany's Current Report on Form 8-K filed with the Commission on May 4, 2006).4.3 Form of Senior Note under Note Purchase Agreement dated as of May 2, 2006 (incorporated by reference to Exhibit 4.7 of the Registrant’sCompany's Annual Report on Form 10-K for the fiscal year ended June 30, 2006, filed with the Commission on September 13, 2006).10.1 Credit Agreement, dated as of July 6, 2010, by and among the Registrant,Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, N.A. and Capital One, N.A.,, as Syndication Agents, HSBC Bank USA, N.A. and First Pioneer Farm Credit, ACA , as Documentation Agents, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Registrant’sCompany's Current Report on Form 8-K filed with the Commission on July 9, 2010).First Amendment to Credit Agreement, dated as of July 26, 2012, by and among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, N.A. and Capital One, N.A., as Syndication Agents, HSBC Bank USA, N.A. and First Pioneer Farm Credit, ACA , as Documentation Agents, and the lenders party thereto. 10.2 Amended and Restated 1994 Long Term Incentive and Stock Award Plan (incorporated by reference to Annex F to the Joint Proxy Statement/Prospectus contained in the Registrant’sCompany’s Registration Statement on Form S-4 (Commission File No. 333-33830) filed with the Commission on April 24, 2000).10.3 1996 Directors Stock Option Plan (incorporated by reference to Appendix A to the Registrant’sCompany’s Notice of Annual Meeting of Stockholders and Proxy Statement dated November 4, 1996).10.4 2000 Directors Stock Plan (incorporated by reference to Annex A to the Registrant’sCompany’s Notice of Annual Meeting of Stockholders and Proxy Statement dated February 18, 2009).10.5 Amended and Restated 2002 Long Term Incentive and Stock Award Plan (incorporated by reference to Exhibit 10.1 to the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on November 22, 2010)18, 2011).10.6 2010-2014 Executive Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on November 25, 2009).10.7 Employment Agreement between the RegistrantCompany and Irwin D. Simon, dated July 1, 2003 (incorporated by reference to Exhibit 10.1 of the Registrant’sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2003, filed with the Commission on November 14, 2003), as amended as described in the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on November 3, 2006.10.7.1 Amendment to Employment Agreement between the Company and Irwin D. Simon, dated as of December 31, 2008 (incorporated by reference to Exhibit 10.1 to the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on January 7, 2009).10.7.2 Amendment to Employment Agreement between the RegistrantCompany and Irwin D. Simon, dated as of July 1, 2009 (incorporated by reference to Exhibit 10.1 of the Registrant’sCompany’s Current Report on Form 8-K, filed with the Commission on July 2, 2009).10.7.3 Amendment to Employment Agreement between the Company and Irwin D. Simon, dated as of June 30, 2012 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on July 6, 2012). 10.8 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2004, filed with the Commission on February 9, 2005).- 72 -10.9Form of Change in Control Agreement (incorporated by reference to Exhibit 10.2 of the Registrant’sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2004, filed with the Commission on February 9, 2005).10.9 Form of Change in Control Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2004, filed with the Commission on February 9, 2005). 10.10 Form of Option Agreement under the Company’s Amended and Restated 2002 Long Term Incentive and Stock Award Plan (incorporated by reference to Exhibit 10.1 to the Registrant’sCompany’s Current Report on Form 8-K/A filed with the Commission on April 7, 2008).10.11 Form of Option Agreement with the Company’s Chief Executive Officer under the Company’s Amended and Restated 2002 Long Term Incentive and Stock Award Plan (incorporated by reference to Exhibit 10.2 to the Registrant’sCompany’s Current Report on Form 8-K/A filed with the Commission on April 7, 2008).10.12 Form of Restricted Stock Agreement under the Company’s Amended and Restated 2002 Long Term Incentive and Stock Award Plan (incorporated by reference to Exhibit 10.3 to the Registrant’sCompany’s Current Report on Form 8-K/A filed with the Commission on April 7, 2008).10.13 Form of Restricted Stock Agreement with the Company’s Chief Executive Officer under the Company’s Amended and Restated 2002 Long Term Incentive and Stock Award Plan (incorporated by reference to Exhibit 10.4 to the Registrant’sCompany’s Current Report on Form 8-K/A filed with the Commission on April 7, 2008).10.14 Form of Notice of Grant of Restricted Stock Award under the Company’s Amended and Restated 2002 Long Term Incentive and Stock Award Plan (incorporated by reference to Exhibit 10.6 to the Registrant’sCompany’s Current Report on Form 8-K/A filed with the Commission on April 7, 2008).10.15 Form of the Change in Control Agreements between the Company and each of Ira J. Lamel, John Carroll and Michael J. Speiller (incorporated by reference to Exhibit 10.2 to the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on January 7, 2009).10.16 Form of the Offer Letter Amendments between the Company and each of Ira J. Lamel, John Carroll and Michael J. Speiller (incorporated by reference to Exhibit 10.3 to the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on January 7, 2009).10.17 Form of Restricted Stock Agreement under the Company’s 2000 Directors Stock Plan (incorporated by reference to Exhibit 10.1 to the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on March 17, 2009).10.18 Form of Notice of Grant of Restricted Stock Award under the Company’s 2000 Directors Stock Plan (incorporated by reference to Exhibit 10.2 to the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on March 17, 2009).10.19 Form of Change in Control Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’sCompany’s Quarterly Report on Form 10-Q filed with the Commission on February 9, 2010).10.20 Form of Option Agreement under the Company’s Amended and Restated 2002 Long Term Incentive and Stock Award Plan (incorporated by reference to Exhibit 10.4 to the Registrant’sCompany’s Quarterly Report on Form 10-Q filed with the Commission on February 9, 2010).10.21 Agreement, dated as of July 7, 2010, between the Company and certain investment funds managed by Carl C. Icahn (incorporated by reference to Exhibit 99.1 to the Registrant’sCompany’s Current Report on Form 8-K filed with the Commission on July 7, 2010).10.22 Form of Restricted Stock Agreement with the Company’s Chief Executive Officer under the Company’s Amended and Restated 2002 Long Term Incentive and Stock Award Plan (2011-2012 Long Term Incentive Plan) (incorporated by reference to Exhibit 10.2(a) to the Registrant’sCompany’s Quarterly Report on Form 10-Q filed with the Commission on February 9, 2011).10.23 Form of Restricted Stock Agreement with the Company’s non-CEO executive officers under the Company’s Amended and Restated 2002 Long Term Incentive and Stock Award Plan (2011-2012 Long Term Incentive Plan) (incorporated by reference to Exhibit 10.3(a) to the Registrant’sCompany’s Quarterly Report on Form 10-Q filed with the Commission on February 9, 2011).10.24 Restricted Stock Agreement between the Company and Irwin D. Simon, dated as of July 3, 2012 (incorporated by reference to Exhibit 10.2(a) to the Company's Current Report on Form 8-K filed with the Commission on July 6, 2012). Subsidiaries of Registrant.Company. Consent of Independent Registered Public Accounting Firm - Ernst & Young LLP. - 73 - Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. Certification by CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification by CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101* 2011,2012, formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations,Income, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, (v) Notes to Consolidated Financial Statements, and (vi) Financial Statement Schedule.Schedule(a)—Filed herewith*—Furnished, not filed.74Filed herewith Column B Column C Column D Column E Additions Balance at
beginning of
period Charged to
costs and
expenses Charged to
other accounts -
describe Deductions -
describe Balance of
end of
period $ 1,574 $ 249 — $ 543 (1) $ 1,280 $ 9,847 $ 1,148 — $ 569 (1) $ 10,426 $ 1,175 $ 484 — $ 85 (1) $ 1,574 $ 7,701 $ 2,411 — $ 265 (1) $ 9,847 $ 2,068 $ 37 — $ 930 (1) $ 1,175 $ 7,558 $ 322 — $ 179 (1) $ 7,701 (1)Amounts written off and changes in exchange rates.- 75 -Column A Column B Column C Column D Column E Additions Deductions - describe (2) Year Ended June 30, 2012: Allowance for doubtful accounts $ 1,230 $ 546 $ 969 $ (84 ) $ 2,661 Valuation allowance for deferred tax assets $ 6,402 $ 1,064 $ — $ (491 ) $ 6,975 Year Ended June 30, 2011: Allowance for doubtful accounts $ 1,574 $ 249 $ — $ (593 ) $ 1,230 Valuation allowance for deferred tax assets $ 7,041 $ (1,166 ) $ — $ 527 $ 6,402 Year Ended June 30, 2010: Allowance for doubtful accounts $ 1,175 $ 484 $ — $ (85 ) $ 1,574 Valuation allowance for deferred tax assets $ 7,701 $ (365 ) $ — $ (295 ) $ 7,041 of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.THE HAIN CELESTIAL GROUP, INC. Date: August 29, 2012 By:Date:August 29, 2012 /s/ IRWIN D. SIMON Irwin D. SimonPresident, Chief Executive Officer andChairman of the Board of DirectorsBy:/s/ IRA J. LAMEL Date: August 29, 2011- 76 - IRWINIRWIN D. SIMON Irwin D. Simon President, Chief Executive Officer and Chairman of the Board of Directors August 29, 20112012/s/ IRA J. LAMEL Ira J. Lamel /s/ IRA J. LAMEL Executive Vice President and Chief Financial Officer August 29, 20112012Ira J. Lamel /s/ MICHAELMICHAEL J. SPEILLER Michael J. Speiller Senior Vice President-Finance and Chief Accounting Officer August 29, 20112012/s/ BARRYMichael J. ALPERIN Barry J. Alperin /s/ BARRY J. ALPERIN Director August 29, 20112012/s/ RICHARD C. BERKE Richard C. Berke /s/ RICHARD C. BERKE Director August 29, 20112012/s/ JACK FUTTERMAN Jack Futterman /s/ JACK FUTTERMAN Director August 29, 20112012/s/ MARINA HAHN Marina Hahn /s/ MARINA HAHN Director August 29, 20112012/s/ BRETT ICAHN Brett Icahn /s/ BRETT ICAHN Director August 29, 20112012/s/ ROGER MELTZER Roger Meltzer /s/ ROGER MELTZER Director August 29, 20112012/s/ DAVID SCHECHTER David Schechter /s/ SCOTT M. O'NEIL Director August 29, 20112012/s/ LEWIS D. SCHILIRO Lewis D. Schiliro /s/ DAVID SCHECHTER Director August 29, 20112012/s/ LAWRENCE S. ZILAVY Lawrence S. Zilavy /s/ LEWIS D. SCHILIRO Director August 29, 20112012Lewis D. Schiliro /s/ LAWRENCE S. ZILAVY Director August 29, 2012 Lawrence S. Zilavy - 77 -