1. Significant Accounting Policies

Basis of Presentation

These consolidated financial statements include the accounts of SunOpta Inc. and those of its wholly-owned subsidiaries (collectively, the "Company" or "SunOpta") and have been prepared by the Company in United States ("U.S.") dollars and in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated on consolidation.

Fiscal Year

The fiscal year of the Company consists of a 52- or 53-week period ending on the Saturday closest to December 31. Fiscal years 2024, 2023 and 2022 were each 52-week periods ending on December 28, 2024, December 30, 2023 and December 31, 2022, respectively. Fiscal year 2025 will be a 53-week period ending on January 3, 2026, with quarterly periods ending on March 29, 2025, June 28, 2025, and September 27, 2025.

Revision of Prior Period Financial Statements

In connection with the preparation of the Company's consolidated financial statements for fiscal 2024, management determined that certain fruit snack products produced at the Company's Niagara, Ontario, facility, had been improperly classified and reported at the time of entry into the U.S., resulting in the underpayment of duties to U.S. Customs and Border Protection ("CBP") for the period from January 2022 to December 2024. As at December 28, 2024, the Company accrued $7.4 million for duties and interest thereon estimated to be owed for the impacted periods, of which $2.9 million, $2.9 million and $1.6 million related to the years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively. As described in note 19, on February 3, 2025, the Company voluntarily reported the tariff classification change to CBP.

In accordance with ASC 250 - Accounting Changes and Error Corrections and Staff Accounting Bulletins No. 99 - Materiality and No. 108 - Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, management assessed the materiality of the errors arising due to the underpayment of duties in fiscal years 2023 and 2022, and determined that the impacts were not material to the Company's previously issued consolidated financial statements for any of the prior quarters or annual periods in which they occurred, but that correcting the errors in the current period would be material to the Company's consolidated results of operations for fiscal 2024. As a result, the Company has corrected the 2023 and 2022 errors by revising the consolidated financial statements and related disclosures included herein for those prior fiscal periods. Additionally, the Company has corrected the prior fiscal period for unrelated immaterial errors originating in fiscal 2023 that were previously corrected in fiscal 2024. The Company also reclassified certain consideration payable to a customer in 2023 from cost of goods sold to a reduction in revenues and remeasured certain lease assets and liabilities recognized as at December 30, 2023.

The tables that follow present the effect of these revisions on the consolidated statements of operations and cash flows for the years ended December 30, 2023 and December 31, 2022, and on the consolidated balance sheet as at December 30, 2023. Additionally, revisions to our previously reported disclosures are reflected in notes 2 - Discontinued Operations, 7 - Property, Plant and Equipment, 8 - Leases, 12 - Long-Term Debt, 15 - Stock-Based Compensation, 16 - Income Taxes, 17 - Loss Per Share, 18 - Supplemental Cash Flow Information, and 20 - Segment Information. The effect of these revisions on the Company's previously reported unaudited quarterly consolidated results of operations is provided in note 21.

	Year Ended December 30, 2023						Year Ended December 31, 2022
	As Previously Reported		Adjust- ments		As Revised		As Previously Reported		Adjust- ments		As Revised
	$		$		$		$		$		$
Consolidated Statements of Operations
Revenues	630,297		(3,567	)	626,730		591,395		-		591,395
Cost of goods sold	541,680		(950	)	540,730		491,665		1,592		493,257
Gross profit	88,617		(2,617	)	86,000		99,730		(1,592	)	98,138
Selling, general and administrative expenses	78,000		654		78,654		78,469		-		78,469
Intangible amortization	1,784		-		1,784		1,784		-		1,784
Other expense, net	455		-		455		1,651		-		1,651
Foreign exchange loss (gain)	110		-		110		(107	)	-		(107	)
Operating income	8,268		(3,271	)	4,997		17,933		(1,592	)	16,341
Interest expense, net	26,909		-		26,909		13,156		-		13,156
Earnings (loss) from continuing operations before income taxes	(18,641	)	(3,271	)	(21,912	)	4,777		(1,592	)	3,185
Income tax expense	3,269		-		3,269		896		-		896
Earnings (loss) from continuing operations	(21,910	)	(3,271	)	(25,181	)	3,881		(1,592	)	2,289
Net loss from discontinued operations	(153,108	)	(500	)	(153,608	)	(8,722	)	-		(8,722	)
Net loss	(175,018	)	(3,771	)	(178,789	)	(4,841	)	(1,592	)	(6,433	)
Dividends and accretion on preferred stock	(1,981	)	-		(1,981	)	(3,109	)	-		(3,109	)
Loss attributable to common shareholders	(176,999	)	(3,771	)	(180,770	)	(7,950	)	(1,592	)	(9,542	)

Basic and diluted earnings (loss) per share:⁽¹⁾
Earnings (loss) from continuing operations operations attributable to common shareholders	(0.21	)	(0.03	)	(0.24	)	0.01		(0.01	)	(0.01	)
Loss from discontinued operations	(1.34	)	(0.00	)	(1.34	)	(0.08	)	-		(0.08	)
Loss attributable to common shareholders	(1.55	)	(0.03	)	(1.58	)	(0.07	)	(0.01	)	(0.09	)

(1) The sum across of individual per share amounts may not add due to rounding.

	As at December 30, 2023
	As Previously Reported		Adjustments		As Revised
	$		$		$
Consolidated Balance Sheet
Accounts receivable	64,862		(1,839	)	63,023
Inventories	83,215		1,855		85,070
Prepaid expenses and other assets	25,235		(1,459	)	23,776
Total current assets	184,245		(1,443	)	182,802
Property, plant and equipment, net	319,898		301		320,199
Operating lease right-of-use assets	105,919		(1,131	)	104,788
Total assets	669,424		(2,273	)	667,151
Accounts payable	75,761		1,706		77,467
Accrued liabilities	20,889		1,835		22,724
Current portion of long-term debt	24,346		301		24,647
Total current liabilities	154,400		3,842		158,242
Operating lease liabilities	100,102		(1,406	)	98,696
Total liabilities	493,890		2,436		496,326
Additional paid-in capital	27,534		654		28,188
Accumulated deficit	(332,687	)	(5,363	)	(338,050	)
Total shareholders' equity	161,025		(4,709	)	156,316
Total liabilities and shareholders' equity	669,424		(2,273	)	667,151

	Year Ended December 30, 2023						Year Ended December 31, 2022
	As Previously Reported		Adjust- ments		As Revised		As Previously Reported		Adjust- ments		As Revised
	$		$		$		$		$		$
Consolidated Statements of Cash Flows
Net loss	(175,018	)	(3,771	)	(178,789	)	(4,841	)	(1,592	)	(6,433	)
Net loss from discontinued operations	(153,108	)	(500	)	(153,608	)	(8,722	)	-		(8,722	)
Earnings (loss) from continuing operations	(21,910	)	(3,271	)	(25,181	)	3,881		(1,592	)	2,289
Items not affecting cash:
Stock-based compensation	11,778		654		12,432		13,830		-		13,830
Changes in operating assets and liabilities, net of divestitures	(24,999	)	2,617		(22,382	)	(15,142	)	1,592		(13,550	)
Net cash provided by operating activities of continuing operations	3,575		-		3,575		30,746		-		30,746
Net cash provided by operating activities of discontinued operations	11,269		-		11,269		29,829		-		29,829
Net cash provided by operating activities	14,844		-		14,844		60,575		-		60,575

Reclassification

Commencing in 2024, the Company is reporting accrued liabilities as a separate line item on the consolidated balance sheet, rather than combined with accounts payable. Accrued liabilities as at December 30, 2023, have been reclassified from the previously reported accounts payable and accrued liabilities line item to conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates and assumptions require judgment on the part of management and are based on the Company's historical experience and various other factors that are believed to be reasonable in the circumstances. Actual results could differ from these estimates.

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, an exit price). Fair value measurements are estimated based on inputs categorized as follows:

Level 1 inputs include quoted prices (unadjusted) for identical assets or liabilities in active markets that are observable.
Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 includes unobservable inputs that reflect the Company's own assumptions about what factors market participants would use in pricing the asset or liability.

When measuring fair value, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs.

Foreign Currency Transactions

Gains or losses resulting from transactions denominated in foreign currencies are included in foreign exchange gain/loss on the consolidated statements of operations.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and short-term deposits with an original maturity of 90 days or less. The Company places its cash and cash equivalents with institutions of high creditworthiness.

Restricted Cash

Restricted cash consists of cash that is legally restricted as to withdrawal or usage.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for credit losses is an estimate of the amount of probable losses in existing accounts receivable. The Company routinely assesses the financial strength of its customers and believes that its accounts receivable credit risk exposure is limited. The Company closely monitors receivable balances and estimates an allowance for credit losses based on historical collection experience, and account aging analysis and trends, and evaluates the adequacy of the allowance each reporting period, considering individual customer account reviews, write-offs recorded in the period, sales forecasts and trends, and current and expected economic and customer-specific conditions. Account balances are charged off against the allowance when the Company determines the receivable will not be recovered. As at December 28, 2024, three long-term customers represented approximately 14%, 13% and 11%, respectively, of the Company's consolidated accounts receivable balance. The Company does not believe it is exposed to any significant credit risks with respect to these customers.

Inventories

Inventories are valued at the lower of cost and net realizable value on a first-in, first-out basis. Shipping and handling costs are included in cost of goods sold on the consolidated statements of operations.

Property, Plant and Equipment

Property, plant and equipment assets are stated at cost, less accumulated depreciation. Cost includes capitalized interest on borrowings during the construction of major capital projects. Depreciation begins when an asset is ready for its intended use. Property, plant and equipment assets, other than land, are depreciated on a straight-line basis over the estimated useful lives of the assets, as follows:

Buildings	20 - 40 years
Machinery and equipment	5 - 20 years
Enterprise software	3 - 5 years
Office furniture and equipment	3 - 7 years
Vehicles	3 - 7 years

Leases

At the lease commencement date, the Company recognizes a right-of-use lease asset for an amount equal to the lease liability, less any lease incentives. The lease liability is determined based on the present value of future lease payments over the lease term. The lease term includes the noncancellable term of the lease, together with periods covered by options to extend the lease that the Company is reasonably certain to exercise. The discount rate used to determine the present value of the future lease payments is the implicit rate in the lease if readily determinable. When that rate is not readily determinable, the Company applies its incremental borrowing rate, which its estimated using relevant interest rate yield curves and credit spreads derived from available market data. The Company excludes material non-lease components in determining the future lease payments. Material leases with an initial term of 12 months or less are recorded on the balance sheet.

Intangible Assets

The Company's finite-lived intangible assets consist of brand names and customer relationships. Intangible assets are amortized on a straight-line basis over their estimated useful lives, which are 15 years for brand names and 20 years for customer relationships.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount of an asset is not recoverable, the fair value of the asset is determined typically using an income approach (discounted cash flow analysis). An impairment loss is recognized in earnings for any excess of the carrying amount of the asset over its fair value.

Goodwill

Goodwill represents the excess in a business combination of the purchase price over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is instead tested for impairment at the reporting unit level at least annually, or whenever events or circumstances change between the annual impairment tests that would indicate the carrying amount of goodwill may be impaired. The Company performs its annual test for goodwill impairment in the fourth quarter of each fiscal year. The Company can elect to qualitatively assess goodwill for impairment if it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If the Company elects to quantitatively assess goodwill, or it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, the Company estimates the fair value of each of its reporting units using an income approach (discounted cash flow method). Goodwill impairment charges are recognized based on the excess of a reporting unit's carrying amount over its fair value. Based on the Company's qualitative assessment, it was determined that goodwill was not impaired as at December 28, 2024. Prior to fiscal 2019, the Company recognized accumulated goodwill impairment losses of $213.8 million.

Debt Issuance Costs

Costs incurred in connection with obtaining debt financing are deferred and amortized over the term of the financing arrangement. Costs incurred to secure revolving credit facilities are recorded in other long-term assets. All other debt issuance costs are recorded as a direct deduction from the related debt liability.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes whereby deferred income tax assets are recognized for deductible temporary differences and operating loss carryforwards, and deferred income tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the amounts of assets and liabilities recorded for income tax and financial reporting purposes.

Deferred income tax assets are recognized only to the extent that management determines that it is more likely than not that the deferred income tax assets will be realized. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The income tax expense or benefit is the income tax payable or recoverable for the year plus or minus the change in deferred income tax assets and liabilities during the year.

The Company is subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional income tax expense based upon the outcomes of such matters. In addition, when applicable, the Company adjusts income tax expense to reflect the Company's ongoing assessments of such matters, which requires judgment and can materially increase or decrease its effective rate as well as impact operating results. The evaluation of tax positions taken or expected to be taken in a tax return is a two-step process, whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the related tax authority.

Stock Incentive Plan

The Company maintains a stock incentive plan under which stock options and other stock-based awards may be granted to selected employees and directors. The Company measures stock-based awards at fair value as of the date of grant. Compensation expense is recognized on a straight-line basis over vesting period of the entire stock-based award. Upon exercise, stock-based awards are settled through the issuance of common shares and are therefore treated as equity awards.

Revenue Recognition

The Company manufactures and sells food and beverage products to retailers, foodservice operators, branded food companies, and other food manufacturers. The Company recognizes revenue when performance obligations under the terms of a contract with a customer are satisfied, which is upon the transfer of control of the contracted goods. Except for goods sold under bill-and-hold arrangements, control is transferred when title and physical possession of the product transfers to the customer, which is at the point in time that product is shipped from the Company's facilities or delivered to a specified destination, depending on the terms of the contract, and the Company has a present right to payment. Under bill-and-hold arrangements, whereby the Company bills a customer for product to be delivered at a later date, control typically transfers when the product is ready for physical transfer to the customer, and the Company has a present right to payment.

A performance obligation is a promise within a contract to transfer distinct goods to the customer. A contract with a customer may involve multiple products and/or multiple delivery dates, with the transfer of each product at each delivery date being considered a distinct performance obligation, as each of the Company's products has standalone utility to the customer. In these cases, the contract's transaction price is allocated to each performance obligation based on relative standalone selling prices and recognized as revenue when each individual product is transferred to the customer.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods. Consideration is typically determined based on a fixed unit price for the quantity of product transferred. Certain contracts include rebates and other forms of variable consideration. For contracts involving variable consideration, the Company estimates the transaction price based on the amount of consideration to which it expects to be entitled. These estimates are determined based on historical experience and the expected outcome of the variable consideration, and are updated as new information becomes available, including actual claims paid, which indicate an estimate is not indicative of the expected results. Changes to these estimates are recorded in the period the adjustment is identified. The Company does not typically grant customers a general right of return for goods transferred but will generally accept returns of product for quality-related issues. The cost of satisfying this promise of quality is accounted for as an assurance-type warranty obligation rather than variable consideration. The Company's contracts do not typically include any significant payment terms, as payment is normally due shortly after the time of transfer.

Revenue contracts are typically represented by short-term, binding purchase orders from customers, identifying the quantity and pricing for products to be transferred. Customer purchase orders may be issued under long-term master supply arrangements. On their own, these master supply arrangements are typically not considered contracts for purposes of revenue recognition, as they do not create enforceable rights and obligations regarding the quantity, pricing, or timing of goods to be transferred; however, certain master supply agreements impose minimum purchase obligations on the part of the customers, which is considered a form of variable consideration. Other master supply arrangements provide for the transfer of product on a bill-and-hold basis at the specific request of the customer. As goods are produced under these bill-and-hold arrangements to meet individual customer specifications, they are identifiable as belonging to the customer and cannot be directed to another customer.

The timing of the Company's revenue recognition, customer billings and cash collections, does not result in significant unbilled receivables (contract assets) or customer advances (contract liabilities) on the consolidated balance sheet. Contract costs, such as sales commissions, are generally expensed as incurred given the short-term nature of the associated contracts.

Advertising Costs

Advertising costs are expensed as incurred and are included in selling, general and administrative expenses.

Research and Development Costs

Research and development costs are expensed as incurred and are included in selling, general and administrative expenses. The Company's research and development activities are directed towards custom product formulations, packaging innovations, and production process improvements. The Company's research and development expenditures primarily consist of employee-related compensation and supplies, as well as rental costs and depreciation expense related to the Company's innovation center and pilot plant.

Earnings Per Share

Basic earnings per share is computed by dividing earnings available to common shareholders by the weighted-average number of common shares outstanding during the year. Earnings attributable to common shareholders is computed by deducting dividends and accretion on convertible preferred stock from net earnings. The potential diluted effect of stock options and other stock-based awards is computed using the treasury stock method whereby the weighted-average number of common shares used in the basic earnings per share calculation is increased to include the number of additional common shares that would have been outstanding if the potential dilutive common shares had been issued at the beginning of the year. The potential dilutive effect of convertible preferred stock is computed using the if-converted method whereby dividends and accretion on the convertible preferred stock are added back to the numerator, and the common shares resulting from the assumed conversion of the convertible preferred stock are included in the denominator of the diluted earnings per share calculation.

Contingencies

The Company is subject to loss contingencies, including various legal and regulatory proceedings, and asserted and potential claims that arise in the ordinary course of business. Accruals for loss contingencies are recorded when the Company determines that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. If the estimate of the amount of the loss is a range and some amount within the range appears to be a better estimate than any other amount within the range, that amount is accrued as a liability. If no amount within the range is a better estimate than any other amount, the minimum amount of the range is accrued as a liability.

Recent Accounting Pronouncements

Adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. The Company adopted the annual disclosure requirements of ASU 2023-07 in the fourth quarter of 2024 (see note 20) and will adopt the interim disclosure requirements beginning with the first quarter of 2025. The adoption of ASU 2023-07 did not have any impact of the Company's consolidated financial statements.

Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. ASU 2024-03 will be effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential effect that ASU 2024-03 will have on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-09.