Discontinued Operations

12 Months Ended

Apr. 25, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Effective January 28, 2013, we entered into a definitive agreement for the sale of our Mimi’s Café reporting segment to Le Duff. As a result of the anticipated transaction, we performed a recoverability test and determined that undiscounted cash flows of the long-lived asset group were less than the carrying amount of the long-lived asset group. Our market-approached valuation indicated that the asset group’s then-current carrying value exceeded its fair value, which resulted in a pretax noncash impairment charge on assets held for sale in the Mimi’s Café segment of $68,409, which is included in the “Income (loss) from discontinued operations, net of income taxes” line in the Consolidated Statements of Net Income.

Effective February 15, 2013, we completed the sale of Mimi’s Café to Le Duff. The purchase price of the transaction was $50,000, consisting of $20,000 in cash and a promissory note for $30,000, subject to customary purchase price allocations and adjustments. The current discounted carrying value of the note is $16,018 and is reflected as a long term asset on the Consolidated Balance Sheets. The note has an annual interest rate of 1.5% and a term of seven years. The interest and note are payable in full at maturity. In fiscal 2013 we realized a loss on the sale of $57,743, included in the "Income (loss) from discontinued operations, net of income taxes" line in the Consolidated Statements of Net Income. 

As part of the sale, we entered into a transition services agreement with Le Duff whereby we provided corporate support services and a supply agreement whereby we provided food products. The transition services agreement was originally expected to expire in December 2013, and the supply agreement was originally expected to expire in February 2014.

In accordance with FASB ASC 205-20, Discontinued Operations, there is an assessment period for one year after a component has been disposed of, whereby an entity must reassess if they have significant continuing cash flows or significant continuing involvement in the operations of the component after the disposal to assess if the segment should be classified as continuing operations. As a result of having significant continuing cash flows, due to the two agreements noted above, the Mimi’s Café reporting segment was not initially presented within discontinued operations. On July 23, 2013, the Company received a notice from SWH Mimi’s Café, LLC that it was terminating this supply agreement with BEF Foods, Inc. The transition services agreement timing did not change significantly and expired in January 2014. As a result of this termination notice, the Company determined that it no longer had significant cash flows from Mimi’s Café operations, thus Mimi’s Café should be presented within discontinued operations for all years presented in the financial statements, effective with the Form 10-Q filed for the three months ended July 26, 2013.

Discontinued operations only include the revenues and expenses that are specifically identified with Mimi’s Café, and excludes any allocation of corporate costs, including general and administrative expenses, which represented $2,882 and $2,504 in fiscal 2013 and fiscal 2012, respectively.

The results of Mimi's Café, reported on the "Income (loss) from discontinued operations, net of income taxes" line in the Consolidated Statements of Net Income, consist of the following (in thousands):

	2014			2013			2012
				(recast)			(recast)
Net sales	$	—		$	278,683		$	365,619
(Loss) income from discontinued operations before income taxes	$	(886	)	$	(134,606	)	$	1,793
Benefit from income taxes	(3,603		)	(51,232		)	(964		)
Income (loss) from discontinued operations, net of income taxes	$	2,717		$	(83,374	)	$	2,757

The nature of the activities which give rise to continuing cash flows from discontinued operations are not direct cash flows from our previous Mimi's Café segment, but rather include costs associated with severance as a result of change in control, an adjustment to the sale transaction working capital, and a net income tax benefit.