Discontinued Operations

6 Months Ended

Jul. 01, 2017

Discontinued Operations

Discontinued Operations

2.Discontinued Operations

On March 23, 2017, the Company soldcertain assets, properties and rights of our wholly owned subsidiary, Fresh Frozen Foods, to Pictsweet pursuant to the Purchase Agreement.  In accordance with the Purchase Agreement, Pictsweet acquired Fresh Frozen Food’s frozen food processing equipment assets, certain real property and associated facilities located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property and inventory.  As consideration for the acquisition, Pictsweet paid the Company $23.7 million in cash. The Fresh Frozen business was part of the Company’s frozen products segment.  The net proceeds from the Fresh Frozen Asset Sale were $19.5 million, after payment of professional fees and other transaction expenses, and were used to pay down amounts outstanding under the Credit Facilities.  As of December 31, 2016, total assets and total liabilities related to the Fresh Frozen Foods business were $32.2 million and $2 million, respectively.  The activity included in discontinued operations in the fiscal quarter ended July 1, 2017, related to the changes in estimated accruals that were settled during the period. The results of operations for the Fresh Frozen Foods business have been classified as discontinued operations for all periods presented.

The summary comparative financial results of the Fresh Frozen Foods business, included within discontinued operations, were as follows (in thousands):

	Quarter Ended				Six Months Ended
	July 1, 2017		June 25, 2016		July 1, 2017		June 25, 2016
Net revenues	$	58	$	11,467	$	8,735	$	24,141
Cost of revenues		8		10,902		8,602		24,040
Gross profit		50		565		133		101
Operating expenses:
Selling, general and administrative expenses		39		884		669		1,839
Operating income (loss)		11		(319)		(536)		(1,738)
Loss (gain) on sale of Fresh Frozen Foods		(64)		—		10,082		—
Interest expense, net		—		354		331		708
Income (loss) before income taxes		75		(673)		(10,949)		(2,446)
Income tax expense (benefit)		—		(334)		1,909		(1,012)
Net income (loss) from discontinued operations	$	75	$	(339)	$	(12,858)	$	(1,434)