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Product Recall
6 Months Ended
Jul. 02, 2016
Other Income And Expenses [Abstract]  
Other Operating Income And Expense [Text Block]

4. Product Recall

During the second quarter of 2016, the Company announced a voluntary recall of certain roasted sunflower kernel products produced at its Crookston, Minnesota facility due to potential contamination with Listeria monocytogenes bacteria. The affected sunflower products originated from the Crookston facility between May 31, 2015 and April 21, 2016. For the quarter and two quarters ended July 2, 2016, the Company recognized estimated losses of $15.5 million and $16.0 million related to this recall, reflecting the estimated cost of the affected sunflower kernel products expected to be returned to or replaced by the Company, and the estimated cost to reimburse customers for costs incurred by them related to the recall of their retail products that contain the affected sunflower kernels as an ingredient or component. However, these losses do not reflect costs associated with the interruption of production at the Crookston facility for the period from April 21, 2016 to the time regular production resumed on or about May 15, 2016, subject to a positive release protocol, or the costs to put into place corrective and preventive actions at the Company’s roasting facilities.

The Company’s estimates of the losses related to the recall are provisional and were determined based on an assessment of the information available to the Company up to the date of filing this report, including a preliminary review of customer claims received to-date and consideration of the extent of potential additional claims that have yet to be received. The Company may need to revise its estimates in subsequent periods, as it continues to work with its customers to substantiate the claims received to-date and any additional claims that may be received. In addition, the Company is currently unable to estimate the impact that this recall may have on its future sales of sunflower products or on its ongoing relationships with its customers, which may have an adverse impact on the fair value of the customer relationship intangible asset and goodwill associated with the Company’s sunflower operations, which had carrying values of $6.7 million and $17.5 million, respectively, as at July 2, 2016.

The Company carries general liability and product recall insurance and is expecting to recover the recall-related costs through its insurance policies, less applicable deductibles under these policies. The Company recognizes expected insurance recoveries in the period in which the recoveries are determined to be probable of realization. Accordingly, in the second quarter of 2016, the Company recorded estimated insurance recoveries of $15.4 million for the losses recognized to-date related to the recall. However, ability of the Company to recover the recall-related costs from insurance is uncertain, and the amount, if any, recovered could be less than the amount of the losses recognized.

As at July 2, 2016, $15.8 million of the estimated recall-related costs were unsettled and were recorded in accounts payable and accrued liabilities on the consolidated balance sheet. These costs were offset by the corresponding estimated insurance recoveries of $15.4 million included in accounts receivable on the consolidated balance sheet as at July 2, 2016.