Value Creation Plan

3 Months Ended

Mar. 30, 2019

Restructuring and Related Activities [Abstract]

4. Value Creation Plan

Overview

In the fourth quarter of 2016, the Company conducted a thorough review of its operations, management and governance, with the objective of maximizing the Company's ability to deliver long-term value to its shareholders. As a product of this review, the Company developed a Value Creation Plan built on four pillars: portfolio optimization, operational excellence, go-to-market effectiveness, and process sustainability. In addition to the sale of the Company's soy and corn business (as described in note 3) and related cost reduction measures, other actions taken under the Value Creation Plan have included the rationalization of certain of the Company's operations and facilities, including the closure of the Company's juice facility in San Bernardino, California, in the fourth quarter of 2016, the exit from flexible resealable pouch and nutrition bar product lines and operations initiated in the fourth quarter of 2017, and the consolidation of roasted snack operations and related disposal of the Company's roasting facility in Wahpeton, North Dakota, in the second quarter of 2018, as well as other cost savings initiatives. In addition, other actions taken to-date under the Value Creation Plan include investments in certain of the Company's operations and facilities to enhance food safety and quality and to improve production efficiencies, as well as investments in personnel, processes and tools.

Costs Incurred Under the Value Creation Plan

The following table summarizes costs incurred under the Value Creation Plan for the quarters ended March 30, 2019 and March 31, 2018:

			Employee
	Asset		recruitment,		Consulting
	impairments		retention and		fees and
	and facility		termination		temporary
	closure costs^(a)		costs^(b)		labor costs		Total
	$		$		$		$
March 30, 2019
Balance payable, December 29, 2018⁽¹⁾	477		436		-		913
Costs incurred and charged to expense	256		1,508		94		1,858
Cash payments, net	(381	)	(1,374	)	(94	)	(1,849	)
Non-cash adjustments	-		2,102		-		2,102
Balance payable, March 30, 2019⁽¹⁾	352		2,672		-		3,024

March 31, 2018
Balance payable (receivable), December 31, 2017	(700	)	4,427		-		3,727
Costs incurred and charged to expense	1,650		435		110		2,195
Cash receipts (payments), net	700		(2,883	)	(110	)	(2,293	)
Non-cash adjustments	(339	)	-		-		(339	)
Balance payable, March 31, 2018	1,311		1,979		-		3,290

(1)Balance payable was included in accounts payable and accrued liabilities on the consolidated balance sheets.

(a)Asset impairments and facility closure costs

For the quarter ended March 30, 2019, costs incurred included costs to dismantle and move equipment from the Company's soy extraction facility in Heuvelton, New York, which was closed in December 2016. As at March 30, 2019, the balance payable represented the remaining lease obligation (net of sublease rentals) related to the Company's former nutritional bar facility. The lease and sublease on this facility extend to December 2020.

For the quarter ended March 31, 2018, costs incurred included the remaining lease obligation related to the former nutrition bar facility, and an impairment loss related to the disposal of the Company's roasting facility in Wahpeton, North Dakota. Net cash receipts reflected proceeds on the sale of nutrition bar equipment.

(b)Employee recruitment, retention and termination costs

For the quarter ended March 30, 2019, costs incurred included severance benefits related to the termination of the Company's former President and Chief Executive Officer ("CEO") in February 2019, and employee terminations from cost rationalizations associated with the sale of the soy and corn business, net of the reversal of $2.1 million of previously recognized stock-based compensation related to forfeited awards of terminated employees. In addition, costs incurred included recruitment costs related to the Company's CEO transition, and accrued retention bonuses for certain employees who remain employed by the Company through specified retention dates. As at March 30, 2019, the balance payable included severance benefits for the former CEO (paid in April 2019) and other severance benefits payable to certain employees through salary continuance extending up to 24 months, as well as accrued recruitment and retention costs.

For the quarter ended March 31, 2018, costs incurred represented severance benefits to terminated employees, and cash payments included retention bonuses that were paid out to certain employees.

The following table summarizes costs incurred since the inception of the Value Creation Plan to March 30, 2019:

			Employee
	Asset		recruitment,		Consulting
	impairments		retention and		fees and
	and facility		termination		temporary
	closure costs		costs		labor costs		Total
	$		$		$		$
Costs incurred and charged to expense	34,908		16,489		21,073		72,470
Cash payments, net	(10,059	)	(16,342	)	(21,073	)	(47,474	)
Non-cash adjustments	(24,497	)	2,525		-		(21,972	)
Balance payable, March 30, 2019	352		2,672		-		3,024

For the quarters ended March 30, 2019 and March 31, 2018, costs incurred and charged to expense were recorded in the consolidated statement of operations as follows:

	Quarter ended
	March 30, 2019	March 31, 2018
	$	$
Cost of goods sold⁽¹⁾	-	100
Selling, general and administrative expenses⁽²⁾	203	313
Other expense⁽³⁾	1,655	1,782
	1,858	2,195

(1) For the quarter ended March 31, 2018, inventory write-downs and facility closure costs recorded in cost of goods sold were allocated to the Consumer Products operating segment.

(2)Professional fees and employee retention and recruitment costs recorded in selling general and administrative expenses were allocated to Corporate Services.

(3)For the quarter ended March 30, 2019, employee termination, recruitment and relocation costs, net of the reversal of stock-based compensation, and facility closure costs recorded in other expense were allocated as follows: Global Ingredients reportable segment - $0.2 million (March 31, 2018 - $0.3 million); Consumer Products operating segment - $0.8 million (March 31, 2018 - $1.3 million); and Corporate Services - $0.7 million (March 31, 2018 - $0.1 million).