Discontinued Operations

9 Months Ended

Sep. 30, 2017

Discontinued Operations

Discontinued Operations

2.Discontinued Operations

On March 23, 2017, the Company sold its Fresh Frozen Foods Business, to Pictsweet pursuant to the Pictsweet Purchase Agreement.  In accordance with the Pictsweet Purchase Agreement, Pictsweet acquired Fresh Frozen Foods’ 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 Foods 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, which 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 September 30, 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 assets and liabilities that were included in Fresh Frozen Asset Sale have been presented as held for sale as of December 31, 2016.

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

	Quarter Ended				Nine Months Ended
	September 30, 2017		September 24, 2016		September 30, 2017		September 24, 2016
Net revenues	$	—	$	10,388	$	8,734	$	34,529
Cost of revenues		5		9,051		8,606		33,091
Gross profit		(5)		1,337		128		1,438
Operating expenses:
Selling, general and administrative expenses		-		890		668		2,730
Operating income (loss)		(5)		447		(540)		(1,292)
Loss on sale of Fresh Frozen Foods		174		—		10,257		—
Interest expense, net		—		354		331		1,062
Income (loss) before income taxes		(179)		93		(11,128)		(2,354)
Income tax expense (benefit)		—		226		1,909		(786)
Net loss from discontinued operations	$	(179)	$	(133)	$	(13,037)	$	(1,568)

On September 22, 2017, the Company sold its Frozen Fruit Business to OPC pursuant the OPC Purchase Agreement.  In accordance with the OPC Purchase Agreement, OPC acquired Rader’s and Willamette’s frozen fruit processing equipment assets, Sin In A Tin frozen desert processing equipment, certain real property and associated facilities located in Lynden, Washington, Bellingham, Washington, Salem, Oregon and Pensacola, Florida, and other intellectual property and inventory.  As consideration for the acquisition, OPC paid the Company $50.0 million in cash.  The net proceeds from the Frozen Fruit Asset Sale were $38.9 million, after payment of professional fees and transaction and other expenses, and were used to repay in full the indebtedness under the ABL Credit Facility and to pay down indebtedness under the Term Loan Credit Facility, as required under such Credit Facilities.  Also on the September 22, 2017, $2.0 million of the net proceeds were placed in escrow to be released upon final determination of the working capital adjustment required under the OPC Purchase Agreement.  The results of operations for the Frozen Fruit Business have been classified as discontinued operations for all periods presented.  The assets and liabilities that were included in Frozen Fruit Asset Sale have been presented as held for sale as of December 31, 2016.

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

	Quarter Ended				Nine Months Ended
	September 30, 2017		September 24, 2016		September 30, 2017		September 24, 2016
Net revenues	$	20,228	$	27,554	$	64,383	$	90,162
Cost of revenues		17,154		26,021		52,961		79,561
Gross profit		3,074		1,533		11,422		10,601
Operating expenses:
Selling, general and administrative expenses		1,115		1,592		3,983		4,383
Operating income (loss)		1,959		(59)		7,439		6,218
Loss on sale of Frozen Fruit Business		22,460		—		22,460		—
Interest expense, net		641		658		2,046		1,992
Income (loss) before income taxes		(21,142)		(717)		(17,067)		4,226
Income tax expense (benefit)		(1,421)		(17)		(1,329)		1,581
Net income (loss) from discontinued operations	$	(19,721)	$	(700)	$	(15,738)	$	2,645

The summary of the assets and liabilities of both the Fresh Frozen Foods Business and the Frozen Fruit Business that were included as assets and liabilities held for sale as of December 31. 2016, were as follows (in thousands):

	December 31,
	2016
Current assets:
Accounts receivable, net of allowance for doubtful accounts	$	7,394
Inventories		58,791
Other current assets		636
Total current assets held for sale	$	66,821
Property and equipment, net of accumulated depreciation		31,117
Goodwill		8,999
Trademarks and other intangibles, net		6,347
Other assets		469
Total noncurrent assets held for sale	$	46,932
Current liabilities:
Accounts payable	$	10,737
Accrued liabilities		3,342
Line of credit		—
Current portion of term debt		2,497
Total current liabilities held for sale	$	16,576
Other liabilities		1,521
Total noncurrent liabilities held of sale	$	1,521