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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 26, 201531, 2016

o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to

Commission file number: 001-14556

INVENTURE FOODS, INC.

(Exact name of registrant as specified in its charter)

5415 East High Street, Suite 350

Phoenix, Arizona 85054

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:  (623) 932-6200

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  o☐ No  x☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  o☐ No  x☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x☒ No  o☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x☒ No  o☐

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§(§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  o☐ No  x☒

The aggregate market value of the voting stock (common stock) held by non-affiliates of the registrant was approximately $206.8$148.5 million based upon the closing market price on June 26, 2015,25, 2016, the last business day of the registrant’s most recently completed second fiscal quarter.

The number of issued and outstanding shares of the registrant’s common stock, $.01 par value, as of March 2, 201629, 2017 was 19,610,838.19,687,912.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the registrant’s 20162017 annual meeting of stockholders to be held on May 11, 201619, 2017 are incorporated herein by reference in Part III of this Form 10-K to the extent stated herein.

Table of Contents

INVENTURE FOODS, INC. AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

Year Ended December 26, 201531, 2016

TABLE OF CONTENTS

Cautionary Statement Regarding Forward-Looking Statements

Our disclosure and analysis in this Annual Report on Form 10-K (“Form 10-K) and in our 20152016 Annual Report to Stockholders contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995.  From time to time, we also provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements.  We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “project,” “may,” “should,” “will,” “likely,” “will likely result,” “will continue,” “future,” “plan,” “target,” “forecast,” “goal,” “observe,” “seek,” “strategy” and other words and terms of similar meaning.  The forward-looking statements in this Form 10-K reflect the Company’s current views with respect to future events and financial performance.

Forward-looking statements are neither historical facts nor assurances of future performance.  Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to certain risks and uncertainties, including, without limitation, our ability to continue as a going concern, general economic conditions, increases in cost or availability of ingredients, packaging, energy and employees, price competition and industry consolidation, ability to execute strategic initiatives, product recalls or safety concerns, disruptions of supply chain or information technology systems, customer acceptance of new products and changes in consumer preferences, food industry and regulatory factors, interest rate risks, dependence upon major customers, dependence upon existing and future license agreements, the possibility that we will need additional financing and/or to refinance our existing indebtedness due to future operating losses or in order to implement the Company’sour business strategy, acquisition and divestiture-related risks, volatility of the market price of the Company’sour common stock, $.01 par value (“Common Stock”), and those other risks and uncertainties discussed herein, that could cause actual results to differ materially from historical results or those anticipated.  In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this Form 10-K will in fact transpire or prove to be accurate.  Readers are cautioned to consider the specific risk factors described herein and in “Item 1A. Risk Factors” of this Form 10-K, and not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof.

The Company undertakes no obligation to update or publicly revise any forward-looking statement whether as a result of new information, future developments or otherwise.  All subsequent written or oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this paragraph.  You are advised, however, to consult any further disclosures we make on related subjects in our subsequently filed Form 10-Q and Form 8-K reports and our other filings with the SEC.  Also note that we provide a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our business under “Item 1A. Risk Factors” of this Form 10-K.  We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995.  You should understand it is not possible to predict or identify all such factors.

PART I

Item 1.Business.

General

Inventure Foods, Inc., a Delaware corporation (referred to herein as the “Company,” “Inventure Foods,” “we,” “our,” or “us”), is a leading marketer and manufacturer of healthy/natural and indulgent specialty snack food brands with more than $282$269 million in annual net revenues for the most recently completed fiscal year.  We are headquartered in Phoenix, Arizona with plants in Arizona, Florida, Georgia, Indiana, Oregon and Washington.  Our executive offices are located at 5415 East High Street, Suite 350, Phoenix, Arizona 85054, and our telephone number is (623) 932-6200.

The Company was formed in 1995 as a holding company to acquire a potato chip manufacturing and distribution business that was founded by Donald and James Poore in 1986.  In December 1996, we completed an initial public offering of our Common Stock.  In November 1998, we acquired the business and certain assets, including the Bob’s Texas Style® potato chip brand, of Tejas Snacks, L.P., a Texas-based potato chip manufacturer.  In October 1999, we acquired Wabash Foods, LLC (“Wabash”), including the Tato Skins®, O’Boisies® and Pizzarias® trademarks and its Bluffton, Indiana manufacturing operation, and assumed all of Wabash’s liabilities.  In June 2000, we acquired Boulder Authentic Foods, Inc., including the Boulder Canyon® brand of potato chips.  In May 2006, we changed our name from Poore Brothers, Inc. to The Inventure Group, Inc.  In May 2007, we acquired a farming operation and berry processing facility in Lynden, Washington from Rader Farms, Inc. (“Rader Farms”).  In May 2010, we changed our name from The Inventure Group, Inc. to Inventure Foods, Inc.  In May 2013, we acquired the berry processing business of Willamette Valley Fruit Company, LLC (“Willamette Valley Fruit Company”), including the Willamette Valley Fruit CompanyTMCompany™ frozen fruit and vegetable products.  In November 2013, we acquired Fresh Frozen Foods, LLC (“Fresh Frozen Foods”), including the Fresh FrozenTMFrozen™ frozen fruit and vegetable products. In September 2014, we acquired certain assets of a small boutique frozen desserts business, Sin In A TinTMTin™.

Segments

We operate in two segments: frozen products and snack products. The frozen products segment produces frozen fruits, vegetables, beverages and frozen desserts for sale primarily to groceries,grocery stores, club stores and mass merchandisers. All products sold under our frozen products segment are considered part of the healthy/natural food category. The snack products segment produces potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products and extruded products for sale primarily to snack food distributors and retailers. The products sold under our snack products segment includesinclude products considered part of the indulgent specialty snack food category, as well as products considered part of the healthy/natural food category.

The contributions of each of our product segments to net revenues from external customers and gross profit are set forth in Note 12 “Business Segments and Significant Customers”  to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Products

For the fiscal years 2016, 2015 2014 and 2013,2014, net revenues totaled $269.0 million, $282.6 million $285.7million and $215.6 million,$285.7million, respectively.

In our healthy/natural food category, products include Rader Farms® frozen berries, Boulder Canyon® Authentic Foods brand kettle cooked potato chips, Willamette Valley Fruit CompanyTMCompany™ frozen fruit and vegetables, Fresh FrozenTMFrozen™ frozen fruit and vegetables, Jamba® branded blend-and-serve smoothie kits under license from Jamba Juice Company, Seattle’s Best Coffee® Frozen Coffee Blends branded blend-and-serve frozen coffee beverage under license from Seattle’s Best Coffee, LLC, and Sin In A TinTMTin™ chocolate pate and other frozen desserts and private label frozen fruit and healthy/natural snacks.  For the year ended December 26, 2015,31, 2016, our healthy/natural food category represented 83.8%85.8% of net sales. For fiscal 2016, 2015 2014 and 2013,2014, net revenues of our healthy/natural food category totaled $236.7$230.8 million, $238.1 million and $236.6 million, and $152.2 million, respectively.

In our indulgent specialty snack food category, products include T.G.I. Friday’s® brand snacks under license from T.G.I. Friday’s, Nathan’s Famous® brand snack products under license from Nathan’s Famous Corporation, Vidalia® brand snack products under license from Vidalia Brands, Inc., Poore Brothers® kettle cooked potato chips, Bob’s Texas Style® kettle cooked chips and Tato Skins® brand potato snacks. We also manufacture private label snack chip products for several grocery chains and natural stores and co-pack products for other snack manufacturers.  While extremely price competitive, we believe that such arrangements provide a profitable opportunity for us to improve the capacity utilization of our manufacturing facilities. For fiscal 2016, 2015 2014 and 2013,2014, net revenues of our indulgent specialty snack category totaled $45.9$38.2 million, $49.1$44.5 million and $63.3$49.1 million, respectively.

During fiscal 20152016 and 2014,2015, we launched the following new products under our existing brands:

The contributions of each product segment to net revenues from external customers are set forth in Note 12 “Business Segments and Significant Customers” to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Business Strategy

Our business strategy is to continue building a diverse portfolio of high quality, competitively priced healthy/natural food brands and indulgent specialty snack food brands through expansion of existing brands, licensing acquisition and development.through acquisitions.  Our goals are to (i) capitalize on healthy/natural andconsumer trends, (ii) capture the market segment of consumers interested in indulgent specialty snack food brand opportunities, (ii)snacks, (iii) deliver incremental category growth for retailers, (iii) provide product(iv) drive innovation targeted to a definedin our brands and each consumer segment, (iv)(v) build relationships with major retailers in all channels of distribution by providing them higher margins, unique product offerings and excellent customer service, and continued innovation and (v)(vi) maintain a diverse set of brands, products, customers and channels.  The primary elements of our long-term business strategy are as follows:

Develop, Promote, Develop, Acquire or License Innovative Healthy/Natural and Indulgent Specialty Snack Food Brands.  A significant element of our business strategy is to develop, promote, develop, acquire or license new innovative healthy/natural frozen and snack brands as well as build our indulgent specialty snack food brands that provide a strategic fit withbrands.  Our focus is on our existing business and that have strongstronger, faster growing national brand recognitionbrands in order to expand, complement and diversify our existing business. Our primary focus is to promote products under brands which we own.

Broaden Distribution of Existing Brands.  We plan to increase distribution and the market share of our existing branded products through selectedadditional market penetration and consumer and trade activity insupporting the brands within various existing ormarkets, new markets and channels. Marketing efforts may include, among other things, trade advertising and promotional programs with distributors and retailers, in-store advertisements, in-store displays and limited consumer advertising, public relations social media and coupon programs. We believe growth opportunities exist to increase the distribution of our (i) Boulder Canyon®, Fresh Frozen™ and Radar Farms products in grocery stores, which have all-commodity volumes, or ACVs, in such stores of less than 38%50% for Boulder Canyon®, less than 20%9% for Fresh Frozen™ and less than 20%23% for Radar Farms, (ii) Boulder Canyon® and Fresh FrozenFrozen™TM products in mass merchandise stores, (iii) Boulder Canyon® and Radar Farms products in club stores, and (iv) Boulder Canyon® products in natural food store, vending, foodservice, drug and convenience stores. Our Boulder Canyon® products have an ACV of approximately 83%88% in natural food stores.

Broaden Distribution of Private Label.  We plan to increase distribution of our private label products to existing orand new customers.  This will help leverage our infrastructure and capacity and is expected to improve profit margins as there are no related advertising and promotional costs.costs with the customers.  Our manufacturing and distribution of private label products enhances our ability to partner and grow our branded business with key retailers.

Develop New Products for Existing Brands.  We plan to continue our innovation activities to identify and develop (i) new product forms and formats within our brands, (ii) add new line extensions for our brands, such as new flavors or products, and (ii)(iii) explore new food segments in whichcategories to expand the presence of our brands.

Leverage Infrastructure and Capacity.  Our Bluffton, Indiana, Goodyear, Arizona, Lynden, Washington, Salem, Oregon, Jefferson, Georgia, and Thomasville, Georgia facilities operated at approximately 25%, 90%71%, 70%67%, 70%75%, 50% and 50%33% of their respective manufacturing capacities as of December 26, 2015.31, 2016.  We intend to continue to expand our branded product lines, as well as secure new manufacturing opportunities in private label and co-packing arrangements. In addition, we plan to continue capital investment in our plants and improve operating efficiencies.

Pursue Selective Licenses and Acquisitions.     We continue to evaluate acquisition opportunities where we can use our competencies in operations, sales, marketing and distribution in order to drive revenue and profit growth.

Improve Profit Margins.  We plan to increase our profit margins through increased long-term revenue growth, improved operating efficiencies, higher margin new products and high-growth product categories. For example, we believe the following margin improvement initiatives are important elements of our strategy: rationalization of unprofitable customer accounts,customers, improved product mix and channel flow, expanded sales growth, improved operating efficiencies and leverage and higher margin new product introductions. We believe that improved profit margins are possible with the achievement of the business strategies discussed above.

Manufacturing

Our Company-owned manufacturing facility in Bluffton, Indiana produces snack products utilizing a sheeting and frying process with three fryer lines that can produce up to approximately 9,000 pounds per hour, and two extruded lines capable of producing up to 4,000 pounds per hour.hour, and in 2016, the installation of four batch-frying kettles which extended the Company’s kettle potato chip production beyond our plant in Goodyear, Arizona. Previously introduced production capabilities at our Bluffton, Indiana facility allow us to use existing equipment to make additional snacks, including pellet snacks, which are entirely different in appearance and taste from our other product lines. We believe this technology will help expand our product lines and facilitate growth. In fiscal 2013, we2016, the Company installed additional packaging capacitythe aforementioned four batch-frying kettles to meet increasing demand on branded, licensed and contractexpand the geographical manufacturing opportunities.  In fiscal 2014, we installed additional extrusion capacity to service thiscapabilities for our growing business segment.  We also produce snackkettle potato chip products for customers under private label and co-packing agreements.including Boulder Canyon® Authentic Foods.  This marks the first time the Company has self-manufactured kettle potato chips outside of the Goodyear, Arizona facility.   Our Indiana facility is operating at approximately 20%21% of sheeted processing capacity, and 35%12% of extruded capacity, and 54% of kettle potato chip capacity as of December 26, 2015.31, 2016.

Our Company-owned manufacturing facility in Goodyear, Arizona has the capacity to produce up to approximately 4,6005,800 pounds of potato chips per hour, including 2,5003,700 pounds of batch-fried potato chips per hour and 2,100 pounds of continuous-fried potato chips per hour. Poore Brothers®, Bob’s Texas Style®, Boulder Canyon® Authentic Foods, co-packing and private label branded potato chips are produced in a variety of flavors utilizing a batch-frying process. While conventional continuous line cooking methods may produce higher production volume, we believe that our batch-frying process is superior and produces premium potato chip products with enhanced crispness and distinctive flavor. In the fourth quarter of fiscal 2015 and first quarter of 2016 we installed two additional batch-frying kettles. Our Arizona facility is operating at approximately 90%a total of packaging capacity as of December 26, 2015.  In February 2016, we completed the installation of twofour additional batch-frying kettles and additional packaging equipment in our Goodyear, and we plan on adding four more batch-frying kettles in Bluffton by the endArizona facility.  This facility is operating at approximately 70% of the second quarter of fiscal 2016.  These new kettles will reduce our potato chip packaging capacity to 79% in 2016 compared to 90% in 2015, while also significantly reducing our useas of co-packers.December 31, 2016. 

Our Company-owned Rader Farms farming facility in Lynden, Washington has the capacity to grow up to eight million pounds of raspberries and blueberries per year.annually.  Rader Farms grows, processes and markets premium berry blends, raspberries, blueberries, and rhubarb and purchases marionberries, cherries, cranberries, strawberries and other fruits from a select network of fruit growers for resale. The fruit is processed and packaged for sale and distribution nationally to wholesale customers under the Rader Farms® brand, as well as through store brands. We also use third-party processors for certain products. Our individually quick frozen, or IQF, processing facilities located at the same location have the capacity to apply the IQF process to 55 million pounds of berries annually.  In fiscal 2013, we invested in new processing equipment to more effectively and efficiently cool the fruit after being harvested, thereby increasing quality. Additionally,In May of 2016, we addedmoved our packaging equipment for our Lynden, Washington facility to a packaging lineleased facility adjacent to increase capacity. In 2014, additionalour largest fruit distribution center in Bellingham, Washington.   We expect this move to help lower freight costs and enhance the capacity and productivity of our IQF processing equipment was added to further increase capacity.operations. Our Washington processing facility is operating at approximately 70%67% of packaging capacity as of December 26, 2015.31, 2016.

In May 2013, we acquired the berry processing business of Willamette Valley Fruit Company. Willamette Valley Fruit Company has two plants in Salem, Oregon. Both plants occupy leased facilities and process and package marionberries, other blackberries, blueberries, strawberries, cranberries, rhubarb, and other fruits and vegetables for industrial customers, as well as contract manufacturing and private label brands. The processing facility has four IQF lines capable of freezing 35,000 pounds per hour of fruit during peak production. As this plant is seasonal with the fruit harvests, it operates at approximately 100% of capacity in the peak production months of June through September and at approximately 20% of capacity the remainder of the year. The packaging plant has the ability to package up to approximately 19 million pounds annually and is operating at 70%75% of capacity as of December 26, 2015.31, 2016.

In November 2013, we acquired Fresh Frozen Foods. Fresh Frozen Foods has two plants located in Jefferson, Georgia and Thomasville, Georgia whichthat process and package IQF vegetables, breadsbeans and other items sold under the Fresh FrozenTMFrozen™ brand. The Jefferson plant operates as a packaging facility capable of packaging approximately 95 million pounds of products annually. This plant is operated at approximately 70%50% of capacity as of December 26, 2015.31, 2016. The Thomasville facility is a processing facility which has one

IQF line capable of producing approximately 77 million pounds of IQF carrots, peas, potatoes, onions and other vegetables and fruits annually. This plant is operatedoperating at approximately 50%33% of capacity as of December 26, 2015.

31, 2016.

Marketing and Distribution

We conduct our marketing efforts through threethe following principal sets of activities: (i) consumer sampling and marketing in print, outdoor, digital and social media;media, (ii) consumer incentives such as coupons; andcoupons, (iii) trade promotions to support price features, displays and other merchandising of our products by our customers.customers, and (iv) public relations.

Our products are sold through a number of channels, including: grocery stores, natural food stores, mass merchandisers, drug and convenience stores, club stores, value, vending, food service, industrial and international. Our products are distributed through Company-owned and third-party warehouses, direct store delivery, distribution centers and other facilities.

Suppliers

The principal raw materials we utilize are potatoes, potato flakes, potato starch, corn, oils, seasonings, berries and vegetables. We believe that the raw materials we need to produce our products are readily available from numerous suppliers on commercially reasonable terms. Potatoes, potato flakes and corn are widely available year-round, although they are subject to seasonal price fluctuations. We use a variety of oils and seasonings in the production of our snack products and believe that alternative sources for such oils and seasonings, as well as alternative oils and seasonings, are readily abundant and available. We may lock in prices for raw materials, such as oils, as we deem appropriate. We freeze an average of approximately 50%60% of our total annual berry requirements and approximately 35% of our total annual vegetable requirements in our own processing facilities, and augment that production by purchasing additional frozen berries and vegetables to meet customer demand. We purchase both fresh berries and vegetables from local farmers and already frozen berries and vegetables for our repackaging business, and we purchase yogurt in cube form from a third-party company for use in our at home smoothie kits. We use packaging materials in our snack and frozen businesses.

We choose our suppliers based primarily on price, quality, availability and service. Although we believe that our required products and ingredients are readily available, and that our business success is not dependent on any single supplier, the failure of certain suppliers to meet our performance specifications, quality standards or delivery schedules could have a material adverse effect on our business and results of operations. In particular, a sudden scarcity, a substantial price increase, or an unavailability of product ingredients could materially adversely affect our business and results of operations. In such circumstances, alternative ingredients may not be available when needed or, if available, on terms acceptable to the Company.

Customers

Costco accounted for approximately 23%, 26% and 35% of the Company’s 2015, 2014 and 2013 net revenues, respectively.  With the addition of our Willamette Valley Fruit Company and Fresh Frozen Foods businesses in 2013, Costco accounted for approximately 27%19%, 23% and 26% of consolidated 2013 pro formathe Company’s 2016, 2015 and 2014 net revenues, (see Note 3 “Acquisitions” to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K).respectively. The remainder of our revenues were derived from sales to customers, grocery chains, club stores, regional distributors and other manufacturers, none of which individually accounted for more than 10% of our net revenues in fiscal 2015.2016.  A decision by any of our major customers to cease or substantially reduce their purchases could have a material adverse effect on our business.

The majority of our revenues are attributable to external customers in the United States.  We do sell to Canadian and international customers as well, however, the revenues attributable to these customers are immaterial.  All of our assets are located in the United States.

Competition

Our snack products generally compete against other snack foods, including potato chips, tortilla chips, popcorn, cheese snacks and other specialty snack brands. The snack food industry is large and highly competitive and is dominated by large food companies, including Frito-Lay, Inc., a subsidiary of PepsiCo, Inc., The Kellogg Company, ConAgra Foods, Inc., Diamond Foods, Inc., General Mills, Inc. and Snyder’s-Lance, Inc. These companies possess

substantially greater financial, production, marketing, distribution and other resources than us,we do, and their brands are more widely recognized than our products.  Numerous other companies that are actual or potential competitors offer products similar to ours, and some of these have greater financial and other resources (including more employees and more extensive facilities) than us.we have. In addition, many competitors offer a wider range of products than we offer. Local or regional markets often have significant smaller competitors, many of whom offer products similar to ours. Expansion of our operations into new markets has and will continue to encounter significant competition from national, regional and local competitors that may be greater than that encountered by us in our existing markets. In addition, such competitors may challenge our position in our existing markets.

While we believe that we have innovative products and methods of operation that will enable us to compete successfully, no assurance can be given that we will be able to do so when faced with such competition.

Our frozen berry products generally compete against other packaged berries on the basis of quality and price. Key competitors include Townsend Farms, Inc., Sunopta Inc., Cascadia Farm of Small Planet Foods, Inc., Wyman’s of Maine, Dole Food Company, Inc., Frozen Foods Inc., Stahlbush Island Farms Inc. and other regional IQF and bagging fruit operations.  Obtaining freezer space at supermarketsgrocery stores and club stores is critical to successfully compete with other berry products, as supermarkets and clubsuch stores will frequently only carry one brand of frozen berry products, contrasted to snack products where multiple brands are typically carried.

Our frozen vegetable products generally compete against other packaged vegetables on the basis of quality and price. Key competitors include the Birds Eye Frozen division of Pinnacle Foods, Inc., General Mills, Inc.,B&G Foods, The Pictsweet Company and Hanover Foods Corp. Obtaining freezer space at supermarketsgrocery stores and club stores is also critical to successfully compete with other vegetable products, as supermarketsgrocery stores and club stores will frequently only carry a few brands of frozen vegetable products.

Our smoothie kits generally compete against other packaged smoothie kits on the basis of quality and price. Key competitors include Dole Food Company, Inc. smoothies and a number of smaller competing brands. Obtaining freezer space at grocery stores, mass merchandiser and club stores is critical to successfully compete with other smoothie products, as grocery stores, mass merchandiser and club stores will frequently only carry two to three brands of frozen smoothie products, contrasted to snack products where multiple brands are typically carried.

The principal competitive factors affecting the markets in which we compete include product quality and taste, brand awareness among consumers, access to shelf or freezer space, price, advertising and promotion, varieties offered, nutritional content, product packaging and package design. We compete in our markets principally on the basis of product quality and taste. Frozen products are produced at our Lynden, Washington, Salem, Oregon and Thomasville, Georgia facilities utilizing IQF technology, for which we do not have exclusive rights.  However, we have patent pending technology to apply nutrients sourced from fruits and vegetables to boost the nutrition level in our fortified fruit products.  Products produced at our Bluffton, Indiana facility involve the use of unique technology including sheeted dough and pellet snacks. We do not have exclusive rights for this technology either. The taste and quality of the products we produce at our Goodyear, Arizona facility areis largely attributable to twothree elements of our manufacturing process: batch-frying, and distinctive seasonings and frying in unique oils to produce a variety of flavors. We do not have exclusive rights to the use of either element. Consequently, competitors may incorporate such elements into their own processes.

Government Regulation

The manufacture, labeling and distribution of our products are subject to the rules and regulations of a variety of federal, state and other governmental agencies.  There can be no assurance that new laws or regulations will not be passed that could require us to alter the taste or composition of our products or impose other obligations on us.  New or increased government regulation of the food industry, including, but not limited to, laws or regulations related to food safety, chemical composition, production processes, traceability, product quality, packaging, labeling and product recalls, could adversely impact our results of operations by increasing production costs, or restricting our methods of operation and distribution.  Such changes could also affect sales of our products and have a material adverse effect on our business, financial condition and results of operations.  These regulations may address food industry or society factors, such as obesity, nutritional and environmental concerns and diet trends.  In addition to laws relating to food

products, our operations are governed by laws relating to, among other things, environmental matters, workplace safety and worker health.  We believe that we presently comply in all material respects with such laws and regulations.

Employees

As of December 26, 2015,31, 2016, we had 1,100687 total employees.  There are 972583 employees in manufacturing and distribution, composed of 527521 full-time 66 part-time, and 379 temporary positions.62 part-time.  There are 4441 employees in sales and marketing, and 8463 in administration and finance.  Our employees are not represented by any collective bargaining organization, and we have never experienced a work stoppage.  We believe that our relations with our employees are good.

Patents, Trademarks and Licenses

We own the following trademarks in the United States: Boulder Canyon®, Canyon Cut®, Rader Farms®, Poore Brothers®, Intensely Different®, Texas Style®, Tato Skins®, O’Boisies®, Pizzarias®, Braids®, Willamette Valley Fruit

Company™, Fresh Frozen™ and Sin In A Tin™. We consider our trademarks to be of significant importance in our business. We are not aware of any circumstances that would have a material adverse effect on our ability to use our trademarks.

From time to time, we enter into licenses with owners of distinctive brands to produce branded snack food products. These licenses may require us to make royalty payments on sales and to achieve certain minimum sales levels by certain dates during the contract term.  The termination of any of our license agreements, whether at the expiration of their term or prior thereto, could have a material adverse effect on our business, financial condition and results of operations.

In 2000, we launched our T.G.I. Friday’s® brand snack products under a license agreement with T.G.I. Friday’s, which expires in December 2019, subject to automatic renewal for an additional five year term unless we provide notice of nonrenewal on or prior to July 1, 2019.  In July 2009, we entered into a license agreement with Jamba Juice, which expires in 2035, and, in 2010, launched a line of Jamba® branded blend-and-serve smoothie kits.  In January 2011, we entered into a license agreement with Nathan’s Famous Corporation, which expires in 2031, and launched a line of Crunchy Crinkle Fries. In June 2012, we entered into a license agreement with Vidalia Brands, Inc. that expires in 2019 and launched a line of onion flavored snacks. In November 2012, we entered into a license agreement with Seattle’s Best Coffee LLC, with an initial term expiring in November 2017 and an automatic five-year extension upon meeting certain minimum sales targets, and created a line of blend-and-serve frozen coffee drink kits.

We produce T.G.I. Friday’s® brand snack products, Tato Skins® brand potato crisps and Boulder Canyon® Authentic Foods Rice and Bean Hummus Chips, Garden Select Vegetable Crisps and Ancient Grains utilizing a sheeting and frying process that includes technology that we license from a third party. Under the terms of such license agreement, we have a royalty-bearing license to use the technology in the United States, Canada and Mexico until such time as the parties mutually agree to terminate the license agreement. Even though the patents for this technology expired in December 2006, in consideration for the use of this technology, we are required to make royalty payments on sales of products manufactured utilizing the technology until the termination date of such agreement. However, should products substantially similar to Tato Skins®, O’Boisies® and Pizzarias® become available for any reason in the marketplace by any manufacturer other than us which results in a sales decline of 10% or more, any royalty obligation for the respective products shallwill cease.

In 2014, we introduced Rader Farms® Fruit PLUS Vitamins™, the first-ever fortified whole frozen fruit product.  Using proprietary technology and topical nutrients sourced from whole fruits and vegetables, Fruit PLUS Vitamins builds on naturally-occurringnaturally occurring vitamins found within whole strawberries, blueberries and blackberries and boosts the nutrition level with five additional vitamins: B1, B6, D, E and K.  We currently have a patent pending for this technology.

Seasonality

The foodSales of certain of our products industry is seasonal.tend to be seasonal and may be influenced by holidays, changes in seasons/weather or certain other annual events. Consumers tend to purchase our snack products at higher levels during

the major summer holidays and also at times surrounding major sporting events throughout the year.  Additionally, smoothieSales variation may also be affected by significant sales tend to peakpromotion activity or club channel rotations that might not occur at the same time each year. 

We farm or purchase fresh berries during the warmer summer months. Our industrial berry business at Willamette Valley Fruit Company is generally slowermonths and fresh vegetables during the first quarter of each fiscalspring and fall and freeze the fruit or vegetables for our retail or industrial products sold throughout the year.  Additionally, we may face seasonal price increases for raw materials.

Industry Practices

Our agreements with customers are generally short-term, primarily due to the nature of our products, industry practices and fluctuations in supply, demand and price for such products. In certain instances where we are selling further processed products to large customers, we may enter into written agreements whereby we will act as the exclusive or preferred supplier to the customer, with pricing terms that are either fixed or variable.

Research and Development

We incur research and development costs to support growth through the introduction of new products and the improvement in quality of existing products.  We recorded $0.4 $0.2 million, $0.3million$0.4 million and $0.3 million in fiscal 2016, 2015 2014 and 2013,2014, respectively, for research and development costs.

Available Information

Our Internet address is www.inventurefoods.com. We make available at this address, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports

filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). In this Form 10-K, we incorporate by reference as identified herein certain information from parts of our proxy statement for the 20162017 annual meeting of stockholders, which we will file with the SEC and will be available free of charge on our website. Reports of our executive officers, directors and any other persons required to file securities ownership reports under Section 16(a) of the Exchange Act are also available through our website. Information contained on our website is not part of this Form 10-K.

You may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.  You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC also maintains an Internet website located at http://www.sec.gov that contains the information we file or furnish electronically with the SEC.

Item 1A.Risk Factors.

Our operations and financial results are subject to various risks and uncertainties, including those described below, that could materially adversely affect our business, financial condition, results of operations, cash flows and the trading price of our Common Stock.  You should read and carefully consider these risk factors, and the entirety of this Form 10-K, before you invest in our securities.

Risks Related to Our Business

There is substantial doubt as to our ability to continue as a going concern.

Our financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.   On November 18, 2015, we entered into (i) a five-year $50.0 million revolving credit facility (with all related loan documents, and as amended from time to time, the “ABL Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), as the administrative agent, and the other lenders party

thereto, and (ii) a five-year $85.0 million term loan facility (with all related loan documents, and as amended from time to time, the “Term Loan Credit Facility”), with BSP Agency, LLC (“BSP), as administrative agent, and the other lenders party thereto, which facilities replaced our prior credit agreement with U.S. Bank National Association (“U.S. Bank”) dated November 8, 2013 (with all related loan documents, and as amended from time to time, the “Prior Credit Facility”).  The ABL Credit Facility and the Term Loan Credit Facility are collectively referred to in this Form 10-K as the “Credit Facilities” and individually as a “Credit Facility.”

Under the terms of the Term Loan Credit Facility, we are required to comply with leverage ratio and fixed charge coverage ratio covenants by the end of the second quarter of fiscal 2017 and a minimum EBITDA target by the fiscal month ending April 30, 2017 (the “Minimum EBITDA Covenant”).  Absent a waiver from our Term Loan Credit Facility lenders or an amendment deferring compliance with the Minimum EBITDA Covenant, we will not be in compliance with this covenant at April 30, 2017.  Further, absent the completion by the end of our second fiscal quarter of a transaction yielding sufficient cash proceeds to pay down or refinance the Term Loan Credit Facility, or the receipt of a waiver from the lenders thereunder or a further amendment to the Term Loan Credit Facility, we will not be able to comply with the leverage ratio and fixed charge coverage ratio covenants. 

Further, under the terms of the ABL Credit Facility, we are required to comply with a fixed charge coverage ratio if our liquidity as of the date of any determination is less than the greater of (i) 12.5% of the Maximum Revolver Amount ($50,000,000) and (ii) $6,125,000, subject to certain conditions. As of March 31, 2017, we would not be able to comply with this ratio if our liquidity were to fall below the applicable threshold. Should the lenders under our Credit Facilities demand immediate repayment of all of our obligations, we will likely be unable to pay such obligations. In such event, we may have to recapitalize, refinance, raise additional liquidity by selling some or all of our assets or seek to reorganize under Chapter 11 of the United States Bankruptcy Code.   

Our Credit Facilities also require us to furnish our audited financial statements without a “going concern” uncertainty paragraph in the auditor’s opinion.  Our consolidated financial statements for the fiscal year ended December 31, 2016 included herein contain a “going concern” explanatory paragraph.  We have obtained a temporary waiver of the going concern qualification until May 15, 2017 from each of the lenders under our Credit Facilities.  Absent the completion by May 15, 2017 of a transaction yielding sufficient cash proceeds to pay down or refinance our debt, or receipt of further waivers from our lenders, we will be in default of the Credit Facilities as a result of the expiration of the temporary going concern waivers. 

Failure to meet any financial covenant under the Credit Facilities or the existence of a going concern opinion that has not been waived by our lenders would result in an event of default thereunder and, to the extent the applicable lenders so elect, an acceleration of the Company’s existing indebtedness, causing such debt of approximately $122.1 million at December 31, 2016 (including $5.2 million of other equipment financing indebtedness that includes cross-default provisions) to be immediately due and payable.  In such event, our lenders could foreclose on any of our assets securing such debt.  The Company does not have sufficient liquidity to repay all of its outstanding debt in full if such debt were accelerated.  It could also result in the termination of all commitments to extend further credit under our ABL Credit Facility.  Should the lenders under our Credit Facilities accelerate our debt and demand immediate repayment of all of our obligations, we may have to seek to reorganize under Chapter 11 of the United States Bankruptcy Code.    These events could materially adversely affect our business, results of operations and financial condition.  See also “Risks Related to Our Indebtedness, the Economy and the Credit Markets.”

In the future, it may be necessary for the Company to seek bankruptcy protection, which may harm our business, impact our creditors and place our equity holders at significant risk of losing some or all of their interests in our business.

If we are not able to timely complete a strategic transaction or obtain additional waivers from our lenders under the Credit Facilities or a further amendment thereto to defer compliance with our financial covenant requirements, we may seek protection under Chapter 11 of the United States Bankruptcy Code. Seeking bankruptcy protection could have a material adverse effect on our business, financial condition, results of operations and liquidity. So long as a proceeding related to a Chapter 11 bankruptcy is ongoing, our senior management would be required to spend a significant amount of

time and effort dealing with the reorganization instead of focusing exclusively on our business operations. Bankruptcy protection also might make it more difficult to retain management and other key personnel necessary to the success and growth of our business. In addition, the longer a proceeding related to a bankruptcy continues, the more likely it is that our customers and suppliers would lose confidence in our ability to reorganize our businesses successfully and would seek to establish alternative commercial relationships or request financial assurances such as letters of credit and cash deposits.

It is not possible to predict the outcome of any bankruptcy proceeding that may be required. In the event of a bankruptcy proceeding, there can be no assurance that we would be able to restructure as a going concern or successfully propose or implement a plan of reorganization that provides for the continuation of the business post-bankruptcy. Moreover, we have a significant amount of secured indebtedness that is senior to our existing common shares.  As a result, we believe that if we are subject to a bankruptcy court proceeding, it is likely that holders of claims and interests with respect to our equity securities would be entitled to little or no recovery, and those claims and interests would likely be canceled for little or no consideration.

Material weaknesses can exist in our system of internal control over financial reporting, which could have a material impact on our business.  

Our ability to implement our business plan and comply with regulations requires an effective planning and management process. We expect that we will need to improve existing operational and financial systems, procedures and controls, and implement new ones, to manage our future business effectively.

Furthermore, we are required to maintain internal control over financial reporting adequate to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) . In connection with preparing this Form 10-K, we determined that we had a material weakness, as of December 31, 2016, in our controls over accounting for and reporting of our trade spend liabilities.

As a result of the material weakness in internal control over financial reporting as set forth above, we have concluded that, as of December 31, 2016, our internal controls over financial reporting were not effective. Until the evaluation and review of this material weakness is fully remediated, our ability to report results accurately and on time could be impaired.

Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in additional significant deficiencies or material weaknesses, cause us to fail to timely meet our periodic reporting obligations, or result in material misstatements in our consolidated financial statements. Any such failure could adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding disclosure controls and the effectiveness of our internal control over financial reporting, cause us to incur unforeseen costs, negatively impact our results of operations, or cause the market price of our Common Stock to decline.

We may incur losses and costs as a result of any product recalls we are required to make or product liability claims that may be brought against us.

We may need to recall some of our products if they become adulterated or if they are mislabeled.  We may also be liable if the consumption of any of our products causes injury.  Such injury could result from tampering by unauthorized third parties; product contamination (such as listeria, e-coli, and salmonella) or spoilage; the presence of foreign objects, substances, chemicals, and other agents; residues introduced during the growing, storage, handling or transportation phases; or improperly formulated products.  A widespread product recall could result in significant and unexpected expenditures and losses due to the costs of a recall, the destruction of product inventory and lost sales due to the unavailability of product for a period of time.  We could also suffer losses from a significant product liability judgment against us.  The product liability and product recall insurance maintained by us may not be adequate to cover any loss or exposure for product liability, and such insurance may not continue to be available on terms acceptable to us.  Any product liability claim not fully covered by insurance, as well as any adverse publicity resulting from a product liability claim or product recall, could have a material adverse effect on our operating results, and could also result in

adverse publicity, damage to our reputation and a loss of consumer confidence in our products.  In addition, our results could be adversely affected if consumers lose confidence in the safety and quality of our products, ingredients or packaging, even in the absence of a recall or a product liability case.

Concerns with the safety and quality of our food products or ingredients could negatively impact our brand image and profitability.

Our success depends on our ability to maintain consumer confidence in the safety and quality of our products or ingredients.  Our success also depends on our ability to maintain the brand image of our existing products, build up brand image for new products and brand extensions, and maintain our corporate reputation.  We cannot assure you, however, that our commitment to product safety and quality and our continuing investment in advertising and marketing will have the desired impact on our products’ brand image and on consumer preferences. Product safety or quality issues, actual or perceived, or allegations of product contamination, even when false or unfounded, could tarnish the image of the affected brands and may cause consumers to choose other products.  Allegations of product safety or quality issues or contamination, even if untrue, may require us from time to time to recall a product from all of the markets in which the affected production was distributed.  Such issues or recalls could negatively affect our profitability and brand image.

A significant portion of our revenues are derived from one customer.

Overall, Costco accounted for approximately 19% of our 2016 net revenues.  A decision by Costco to no longer carry certain frozen berry products could have a material adverse impact on our Frozen business.  A decision by any major customer to cease or substantially reduce its purchases, or a decrease in the popularity of frozen berries during any year, could have a material adverse effect on our operating results, and such decision by Costco would have a material adverse effect on our business, financial condition and results of operations.

We depend on a license agreement for the right to sell our T.G.I. Friday’s® and Jamba® brands.

For the year ended December 31, 2016, approximately 11.5% of our net revenues were attributable to the T.G.I. Friday’s® brand products, which are manufactured and sold by us under our license agreement with T.G.I. Friday’s that expires in December 2019, subject to one five year renewal period.  The license agreement imposes certain requirements and conditions on us (including, without limitation, minimum sales targets).  Our failure to comply with these requirements and conditions could result in the early termination of this license agreement by T.G.I. Friday’s.  If we are unsuccessful in negotiating an extension of this license agreement, or the license agreement is not renewed at the expiration of its term or is terminated prior thereto, our business, financial condition and results of operations would be materially and adversely affected.

For the year ended December 31, 2016, approximately 4.4% of our net revenues were attributable to the Jamba® brand products, which are manufactured and sold by us under our license agreement with Jamba Juice Company that expires in 2035.  Pursuant to the license agreement, we are required to make royalty payments on sales of Jamba® products and are required to achieve certain minimum sales levels by certain dates during the contract term.  Our failure to comply with these requirements and conditions could result in the early termination of this license agreement by Jamba Juice Company.  If this license is terminated early, our business, financial condition and results of operations would be materially and adversely affected.

Our business may be adversely affected by oversupply of snack and frozen products at the wholesale and retail levels.

Profitability in the food product industry is subject to oversupply of certain snack and frozen products at the wholesale and retail levels, which can result in our products going out of date before they are sold. 

We may incur substantial costs in order to market our products.

Successful marketing of our products generally depends upon obtaining adequate retail shelf space for product display, particularly in grocery stores.  Frequently, food manufacturers and distributors, incur costs in order to obtain additional shelf space.  Whether or not we incur such costs in a particular market is dependent upon a number of factors, including demand for our products, relative availability of shelf space and general competitive conditions.  We may incur significant shelf space or other promotional costs as a necessary condition of entering into competition or maintaining market share in particular markets or stores.  If incurred, such costs may have a material adverse effect on our results of operations.

We may not be able to respond successfully to shifting consumer preferences.

Consumer preferences evolve over time and are extremely difficult to predict.  Our success depends in part on our ability to timely respond to current market trends and anticipate changing consumer tastes and dietary habits and to develop and license new products that appeal to such preferences, including concerns of consumers regarding health and wellness, obesity, product attributes, and ingredients.  Introduction of new products and product extensions requires significant development and marketing investment.  If our products fail to meet consumer preferences, or we fail to introduce new and improved products on a timely basis, then the return on that investment will be less than anticipated and our strategy to grow sales and profits with investments in marketing and innovation will be less successful.  Similarly, demand for our products could be affected by increased attention to nutritional values, such as the sodium, fat, protein, or calorie content of different products, or concerns regarding the health effects of specific ingredients, such as gluten, soybeans, nuts, and oils.  If consumer demand for our products declines, our sales volumes and our business could be negatively affected.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or breach of security of that technology could harm our ability to effectively operate our business.

We rely on information systems across our operations, including for management, sales, and order processing. Our ability to effectively manage our business and coordinate the sales and delivery of our products depends significantly on the reliability and capacity of these systems.  Like other companies, our information technology systems may be vulnerable to a variety of interruptions due to events beyond our control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers, and other security issues.  The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, a material network breach in the security of these systems as a result of cyber-attack or computer hacking, or any other failure to maintain a continuous and secure cyber network could result in substantial harm or inconvenience to us or our customers.  This could include the theft of our intellectual property or trade secrets, or the improper use of personal information or other “identity theft.”  Each of these situations or data privacy breaches may cause delays in customer service, reduce efficiency in our operations, require significant capital investments to remediate the problem, or result in negative publicity that could harm our reputation and results.

The costs to eliminate or address the foregoing security threats and vulnerabilities before or after a cyber incident could be significant. The Company’s remediation efforts may not be successful and could result in interruptions, delays or cessation of service, and loss of existing or potential suppliers or customers. In addition, breaches of the Company’s security measures and the unauthorized dissemination of sensitive personal, proprietary or confidential information about the Company, its business partners or other third parties could expose the Company to significant potential liability and reputational harm. As threats related to cyber-attacks develop and grow, the Company may also find it necessary to make further investments to protect its data and infrastructure, which may impact the Company’s profitability. Although the Company has insurance coverage for protecting against cyber-attacks, it may not be sufficient to cover all possible claims, and the Company may suffer losses that could have a material adverse effect on its business.

Changes in the legal and regulatory environment in which we operate could limit our business activities, increase our operating costs, reduce demand for our products or result in litigation.

The conduct of our businesses, including the production, storage, distribution, sale, display, advertising, marketing, labeling, health and safety practices, transportation and use of many of our products, are subject to various laws and regulations administered by federal, state and local governmental agencies in the United States, as well as to laws and regulations administered by government entities and agencies outside the United States in markets in which our products are made, manufactured or sold.  These laws and regulations and interpretations thereof may change, sometimes dramatically, as a result of a variety of factors, including political, economic or social events.  Such changes may include changes in: food and drug laws; laws related to product labeling, advertising and marketing practices; laws regarding the import or export of our products or ingredients used in our products; laws and programs restricting the sale and advertising of certain of our products; laws and programs aimed at reducing, restricting or eliminating ingredients present in certain of our products; laws and programs aimed at discouraging the consumption or altering the package or portion size of certain of our products; increased regulatory scrutiny of, and increased litigation involving, product claims and concerns regarding the effects on health of ingredients in, or attributes of, certain of our products; state consumer protection laws; taxation requirements, including the imposition or proposed imposition of new or increased taxes or other limitations on the sale of our products; competition laws; anti-corruption laws; employment laws; privacy laws; laws regulating the price we may charge for our products; and environmental laws.  New laws, regulations or governmental policy and their related interpretations, or changes in any of the foregoing, including taxes or other limitations on the sale of our products, ingredients contained in our products or commodities used in the production of our products, may alter the environment in which we do business and, therefore, may impact our operating results or increase our costs or liabilities.

We may incur significant future expenses in connection with the implementation of our business strategy.

We strive to achieve our long-term vision of being a leading marketer and manufacturer of healthy/natural and indulgent specialty snack food brands. Our efforts are subject to the substantial risks, expenses and difficulties frequently encountered in the implementation of a business strategy. If we are unsuccessful in developing, acquiring and/or licensing new brands, and increasing distribution and sales volume of our existing products, our operating results could be negatively impacted. Even if we are successful, this business strategy may require us to incur substantial additional expenses, including advertising and promotional costs, “slotting” expenses (i.e., the cost of obtaining shelf or freezer space in certain grocery stores), and integration costs of any future acquisitions. We also may be unsuccessful at integrating any future acquisitions.

We may not be successful in our future acquisition or other strategic transaction endeavors, if any, which could have an adverse effect on our business and results of operations.

A material element of our business strategy is the development, acquisition and/or licensing of innovative specialty food brands, for the purpose of expanding, complementing and/or diversifying our business. We may in the future engage in acquisitions or other strategic transactions, such as joint ventures or investments in other entities to facilitate this business strategy. We may be unable to identify suitable targets, opportunistic or otherwise, for acquisitions or other strategic transactions in the future. If we identify a suitable candidate, our ability to successfully implement the strategic transaction would depend on a variety of factors, including our ability to obtain financing on acceptable terms and comply with the restrictions contained in our debt agreements. If we need to obtain our lenders’ consent to a strategic transaction, they may refuse to provide such consent or condition their consent on our compliance with additional restrictive covenants that limit our operating flexibility. Strategic transactions involve risks, including those associated with integrating the operations or maintaining the operations as separate (as applicable), financial reporting, disparate technologies and personnel of acquired companies, joint ventures or related companies; managing geographically dispersed operations, joint ventures or other strategic investments; the diversion of management’s attention from other business concerns; the inherent risks in entering markets or lines of business in which we have either limited or no direct experience; unknown risks; and the potential loss of key employees, customers and strategic partners of acquired companies, joint ventures or companies in which we may make strategic investments. We may not successfully integrate any businesses or technologies we may acquire or strategically develop in the future and may not achieve anticipated revenue and cost benefits relating to any such strategic transactions. Strategic transactions may be expensive, time consuming and may strain our resources. Strategic transactions may not be accretive to our earnings and may negatively impact our results of operations as a result of, among other things, the incurrence of debt, one-time write-offs

of goodwill and amortization expenses of other intangible assets. In addition, strategic transactions that we may pursue could result in dilutive issuances of equity securities.

We may incur losses and costs as a result of any product recalls we are required to make or product liability claims that may be brought against us.

We may need to recall some of our products if they become adulterated or if they are mislabeled.  We may also be liable if the consumption of any of our products causes injury.  Such injury could result from tampering by unauthorized third parties; product contamination (such as listeria, e-coli, and salmonella) or spoilage; the presence of foreign objects, substances, chemicals, and other agents; residues introduced during the growing, storage, handling or transportation phases; or improperly formulated products.  A widespread product recall could result in significant and unexpected expenditures and losses due to the costs of a recall, the destruction of product inventory and lost sales due to the unavailability of product for a period of time.  We could also suffer losses from a significant product liability judgment against us.  The product liability and product recall insurance maintained by us may not be adequate to cover any loss or exposure for product liability, and such insurance may not continue to be available on terms acceptable to us.  Any product liability claim not fully covered by

insurance, as well as any adverse publicity resulting from a product liability claim or product recall, could have a material adverse effect on our operating results, and could also result in adverse publicity, damage to our reputation and a loss of consumer confidence in our products.  In addition, our results could be adversely affected if consumers lose confidence in the safety and quality of our products, ingredients or packaging, even in the absence of a recall or a product liability case.

Concerns with the safety and quality of our food products or ingredients could negatively impact our brand image and profitability.

Our success depends on our ability to maintain consumer confidence in the safety and quality of our products or ingredients.  Our success also depends on our ability to maintain the brand image of our existing products, build up brand image for new products and brand extensions, and maintain our corporate reputation.  We cannot assure you, however, that our commitment to product safety and quality and our continuing investment in advertising and marketing will have the desired impact on our products’ brand image and on consumer preferences. Product safety or quality issues, actual or perceived, or allegations of product contamination, even when false or unfounded, could tarnish the image of the affected brands and may cause consumers to choose other products.  Allegations of product safety or quality issues or contamination, even if untrue, may require us from time to time to recall a product from all of the markets in which the affected production was distributed.  Such issues or recalls could negatively affect our profitability and brand image.

A significant portion of our revenues are derived from one customer.

Overall, Costco accounted for approximately 23% of our 2015 net revenues.  A decision by Costco to no longer carry certain frozen berry products could have a material adverse impact on our Frozen business.  A decision by any major customer to cease or substantially reduce its purchases, or a decrease in the popularity of frozen berries during any year, could have a material adverse effect on our operating results, and such decision by Costco would have a material adverse effect on our business, financial condition and results of operations.

We depend on a license agreement for the right to sell our T.G.I. Friday’s® brand.

For the year ended December 26, 2015, approximately 12% of our net revenues were attributable to the T.G.I. Friday’s® brand products, which are manufactured and sold by us under our license agreement with T.G.I. Friday’s that expires in December 2019.  The license agreement imposes certain requirements and conditions on us (including, without limitation, minimum sales targets).  Our failure to comply with these requirements and conditions could result in the early termination of this license agreement by T.G.I. Friday’s.  If we are unsuccessful in negotiating an extension of this license agreement, or the license agreement is not renewed at the expiration of its term or is terminated prior thereto, our business, financial condition and results of operations would be materially and adversely affected.

Our business may be adversely affected by oversupply of snack and frozen products at the wholesale and retail levels and seasonal fluctuations.

Profitability in the food product industry is subject to oversupply of certain snack and frozen products at the wholesale and retail levels, which can result in our products going out of date before they are sold.  The snack and frozen products industry is also seasonal.  Consumers tend to purchase our snack products at higher levels during the major summer holidays and also at times surrounding major sporting events throughout the year.  Our industrial berry business at Willamette Valley Fruit Company is generally slower during the first quarter of each fiscal year.  Additionally, we may face seasonal price increases for raw materials.  Such seasonal costs could materially and adversely affect our results of operations in any given quarter.

We may incur substantial costs in order to market our products.

Successful marketing of our products generally depends upon obtaining adequate retail shelf space for product display, particularly in supermarkets.  Frequently, food manufacturers and distributors, incur costs in order to obtain additional shelf space.  Whether or not we incur such costs in a particular market is dependent upon a number of factors, including demand for our products, relative availability of shelf space and general competitive conditions.  We may incur significant shelf space or other promotional costs as a necessary condition of entering into competition or maintaining market share in particular markets or stores.  If incurred, such costs may have a material adverse effect on our results of operations.

We may not be able to respond successfully to shifting consumer preferences.

Consumer preferences evolve over time and are extremely difficult to predict.  Our success depends in part on our ability to timely respond to current market trends and anticipate changing consumer tastes and dietary habits and to develop and license new products that appeal to such preferences, including concerns of consumers regarding health and wellness, obesity, product attributes, and ingredients.  Introduction of new products and product extensions requires significant development and marketing investment.  If our products fail to meet consumer preferences, or we fail to introduce new and improved products on a timely basis, then the return on that investment will be less than anticipated and our strategy to grow sales and profits with investments in marketing and innovation will be less successful.  Similarly, demand for our products could be affected by increased attention to nutritional values, such as the sodium, fat, protein, or calorie content of different products, or concerns regarding the health effects of specific ingredients, such as gluten, soybeans, nuts, and oils.  If consumer demand for our products declines, our sales volumes and our business could be negatively affected.

The loss of certain key employees could adversely affect our business.

Our success is dependent in large part upon the abilities of our executive officers, including Terry McDaniel, Chief Executive Officer, and Steve Weinberger, Chief Financial Officer.  Implementation of our business strategy will challenge our executive officers, and the inability of such officers to perform their duties or our inability to attract and retain other highly qualified personnel could have a material adverse effect upon our operating results.

We may not be able to successfully implement our strategy to expand our business internationally.

We plan to expand sales to Canadian customers and are exploring other international market opportunities for our brands.  Such expansion may require significant management attention and financial resources and may not produce desired levels of revenue.  International business is subject to inherent risks, including longer accounts receivable collection cycles, difficulties in managing operations across disparate geographical areas, difficulties enforcing agreements and intellectual property rights, fluctuations in local economic, market and political conditions, compliance requirements with U.S. and foreign export regulations, potential adverse tax consequences and currency exchange rate fluctuations.  Currency exchange rate fluctuations may impact our ability to remain competitive in international markets.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or breach of security of that technology could harm our ability to effectively operate our business.

We rely on information systems across our operations, including for management, sales, and order processing. Our ability to effectively manage our business and coordinate the sales and delivery of our products depends significantly on the reliability and capacity of these systems.  Like other companies, our information technology systems may be vulnerable to a variety of interruptions due to events beyond our control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers, and other security issues.  The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, a material network breach in the security of these systems as a result of cyber-attack, or any other failure to maintain a continuous and secure cyber network could result in substantial harm or inconvenience to us or our customers.  This could include the theft of our intellectual property or trade secrets, or the improper use of personal information or other “identity theft.”  Each of these situations or data privacy breaches may cause delays in customer service, reduce efficiency in our operations, require significant capital investments to remediate the problem, or result in negative publicity that could harm our reputation and results.

Changes in the legal and regulatory environment in which we operate could limit our business activities, increase our operating costs, reduce demand for our products or result in litigation.

The conduct of our businesses, including the production, storage, distribution, sale, display, advertising, marketing, labeling, health and safety practices, transportation and use of many of our products, are subject to various laws and regulations administered by federal, state and local governmental agencies in the United States, as well as to laws and regulations administered by government entities and agencies outside the United States in markets in which our products are made, manufactured or sold.  These laws and regulations and interpretations thereof may change, sometimes dramatically, as a result of a variety of factors, including political, economic or social events.  Such changes may include changes in: food and drug laws; laws related to product labeling, advertising and marketing practices; laws regarding the import or export of our products or ingredients used in our products; laws and programs restricting the sale and advertising of certain of our products; laws and programs aimed at reducing, restricting or eliminating ingredients present in certain of our products; laws and

programs aimed at discouraging the consumption or altering the package or portion size of certain of our products; increased regulatory scrutiny of, and increased litigation involving, product claims and concerns regarding the effects on health of ingredients in, or attributes of, certain of our products; state consumer protection laws; taxation requirements, including the imposition or proposed imposition of new or increased taxes or other limitations on the sale of our products; competition laws; anti-corruption laws; employment laws; privacy laws; laws regulating the price we may charge for our products; and environmental laws.  New laws, regulations or governmental policy and their related interpretations, or changes in any of the foregoing, including taxes or other limitations on the sale of our products, ingredients contained in our products or commodities used in the production of our products, may alter the environment in which we do business and, therefore, may impact our operating results or increase our costs or liabilities.

We may incur significant future expenses in connection with the implementation of our business strategy.

We strive to achieve our long-term vision of being a leading marketer and manufacturer of healthy/natural and indulgent specialty snack food brands. Our efforts are subject to the substantial risks, expenses and difficulties frequently encountered in the implementation of a business strategy. If we are unsuccessful in developing, acquiring and/or licensing new brands, and increasing distribution and sales volume of our existing products, our operating results could be negatively impacted. Even if we are successful, this business strategy may require us to incur substantial additional expenses, including advertising and promotional costs, “slotting” expenses (i.e., the cost of obtaining shelf or freezer space in certain grocery stores), and integration costs of any future acquisitions. We also may be unsuccessful at integrating any future acquisitions.

Risks Related to Our Indebtedness, the Economy and the Credit Markets

Our business is subject to the general health of the economy, including consumer spending, and any slowdowns or decreases in the U.S. economy could materially affect our revenue and operating results.

An economic slowdown in the U.S., including consumer spending, may cause substantial volatility in the stock market and layoffs and other restrictions on spending by companies in almost every business sector could impact our business in a variety of ways, including:

Without similar changes in expenses, which may be difficult to achieve, our margins will contract if revenue falls, and ultimately may result in having a material adverse effect on our financial condition and results of operations.

We are required to maintaincomply with certain ongoing financial and other covenants under our credit facilities,Credit Facilities, and if we fail to meet those covenants or otherwise suffer a default thereunder, our lenders may accelerate the payment of such indebtedness.

On November 18, 2015, we entered into (i) a new five-year $50.0 million revolving credit facility (with all related loan documents, and as amended from time to time, the “ABLABL Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), as the administrative agent,Facility and the other lenders party thereto, and (ii) a new five-year $85.0 million term loan facility (with all related loan documents, and as amended from time to time, the “TermTerm Loan Credit Facility”), with BSP Agency, LLC (“BSP), as administrative agent, and the other lenders party thereto,Facility, which facilities replaced our prior credit agreement with U.S. Bank National Association (“U.S. Bank”) dated November 8, 2013.Prior Credit Facility.  Our obligations under the ABL Credit Facility and the Term Loan Credit Facility (collectively, the “Credit Facilities”) are secured by substantially all of our assets and are guaranteed by our subsidiaries.  We are required to comply with certain financial and other restrictive covenants pursuant to these two credit facilitiesCredit Facilities so long as borrowings remain outstanding thereunder. Should

Absent the completion of a transaction yielding sufficient cash proceeds to pay down or refinance our debt, or  receipt of waivers from our lenders   or a further amendment to the Term Loan Credit Facility , we will not be able to comply with the financial covenants under our Credit Facilities when required to do so.  Failure to meet these covenants would result in default under anyan Event of such covenants, Wells FargoDefault (as defined in the applicable Credit Facility ) and, BSP, asto the extent the applicable havelenders so elect, an acceleration of the right, upon written notice and afterCompany’s existing indebtedness following the expiration of any applicable period during whichcure periods, causing such default may be cured, to demand immediate paymentdebt of all of the then unpaid principal and accrued but unpaid interestapproximately $122.1 million at December 31, 2016 (including $32.8 million under the respective Credit Facility.  At December 26, 2015, we were in compliance with all covenants of each Credit Facility.

As we execute our business strategy, we may not be able to remain in compliance with our financial covenants.  Any acceleration of the borrowings under the ABL Credit Facility orand $5.2 million of equipment lease financing indebtedness with cross-default provisions) to be immediately due and payable.  It could also result in the Term Loantermination of all commitments to extend further credit under our ABL Credit Facility priorFacility. As of the date of this Form 10-K, the Company does not have sufficient liquidity to the applicable maturity datesrepay all of its outstanding debt in full if such debt were accelerated.  In such event, our lenders could have a material adverse effect uponforeclose on any of our assets securing such debt.  These events could materially adversely affect our business, financial condition and results of operations.  operations and financial condition.See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”  If we are not able to timely, successfully or efficiently implement one or more of the strategic transactions that we are pursuing, we may need to seek voluntary protection under Chapter 11 of the U.S. Bankruptcy Code.

Our substantial indebtedness could adversely affect our operations and financial condition.

Our operations are capital intensive, and we operate with a high amount of debt relative to our size. At December 26, 2015,31, 2016, we had (i) $26.0$32.8 million in aggregate principal amount of indebtedness outstanding under our ABL Credit Facility, and (ii) ) $85.0$84.2 million in aggregate principal amount of indebtedness outstanding under our Term Loan Credit Facility.  Our level of indebtedness could have important consequences, such as:

·

·                  limiting our operational flexibility due to the covenants contained in our debt agreements;

·                  limiting our ability to compete with companies that are less leveraged and that may be better positioned to withstand economic downturns;

·                  making us vulnerable to fluctuations in market interest rates, to the extent our debt is subject to floating interest rates or needs to be refinanced;

·                  requiring us to sell assets to reduce indebtedness or influence our decisions about whether to do so;

·                  increasing our vulnerability to general adverse economic and industry conditions; and

·                  limiting our flexibility in planning for, or reacting to, changes in our business and our industry.

Covenants in our debt instruments restrict or prohibit our ability to engage in or enter into a variety of transactions.

The Credit Facilities require us, under certain limited circumstances, to maintain certain financial ratios and limit our ability to make capital expenditures.  As discussed above under the risk factor “There is substantial doubt as to our ability to continue as a going concern,” our Term Loan Credit Facility and related governing documents require us to comply with leverage ratio and fixed charge coverage ratio covenants by the end of the second quarter of fiscal 2017 and a minimum EBITDA target by the fiscal month ending April 30, 2017.  Under our ABL Credit Facility we are required to comply with a fixed charge coverage ratio if our liquidity as of the date of any determination is less than the greater of (i) 12.5% of the Maximum Revolver Amount ($50,000,000) and (ii) $6,125,000, subject to certain conditions. These covenants and ratios could have an adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition or other corporate opportunities and to fund our operations.   Moreover, absent the completion of a transaction yielding sufficient cash proceeds to pay down or refinance our debt, or receipt of waivers from our lenders    or a further amendment to our Term Loan Credit Facility, we will not be able to comply with the covenants under our Term Loan Credit Facility.  Breach of a covenant in the Credit Facilities could cause acceleration of a significant portion of our outstanding indebtedness. Any future debt could also contain financial and other covenants more restrictive than those imposed under the Credit Facilities.

A breach of a covenant or other provision in any debt instrument governing our current or future indebtedness could result in a default under that instrument and, due to cross-default and cross-acceleration provisions, could result in a default under our other debt instruments. Upon the occurrence of an event of default under the ABL Credit Facility, Term Loan Credit Facility or any other debt instrument, the lenders could elect to declare all amounts outstanding to be immediately due and payable and, in the case of the ABL Credit Facility, terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders could proceed against the collateral granted to them to secure the indebtedness. If the lenders under our current or future indebtedness accelerate the payment of the indebtedness, we cannot assure you that our assets or cash flow would be sufficient to repay in full our outstanding indebtedness.

The amount we can borrow under our ABL Credit Facility depends in part on the value of certain pledged collateral. If the value of such collateral declines under appraisals our lenders receive, the amount we can borrow will similarly decline. If the amount we can borrow declines as a result of the foregoing, we may be required to repay certain outstanding borrowings in order to remain in compliance with the covenants under the ABL Credit Facility.  In such event, we cannot assure you our cash flow would be sufficient to repay such indebtedness.

We may not be able to generate sufficient cash to service all of our debt, and may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our obligations under our debt will depend on our financial and operating performance and that of our subsidiaries, which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which may be beyond our control. See the table under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Contractual Obligations” for disclosure regarding the amount of cash required to service our debt.

We may not maintain a level of cash flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital or restructure our debt. Such alternative measures may not be successful and may not enable us to meet our scheduled debt service obligations. We may not be able to refinance any of our indebtedness or obtain additional financing, particularly because of our anticipated high levels of debt and the debt incurrence restrictions imposed by the agreements governing our debt, as well as prevailing market conditions. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations

to meet our debt service and other obligations. The instruments governing our indebtedness restrict our ability to dispose of assets and use the proceeds from any such dispositions. We may not be able to consummate those sales, or if we do, at an opportune time, or the proceeds that we realize may not be adequate to meet debt service obligations when due.

Global capital and credit market conditions could have an adverse effect on our ability to access the capital and credit markets, including our revolving credit facility.

Disruptions in the global credit markets that materially impact liquidity in the debt market, making financing terms for borrowers less attractive or, in some cases, unavailable altogether, have occurred in the past and may occur again in the future. Such a disruption could result in the unavailability of certain types of debt financing, including access to revolving lines of credit. We engage in borrowing and repayment activities under our revolving credit facility on an almost daily basis and have not had any disruption in our ability to access our revolving credit facility as needed. However, future credit market conditions could increase the likelihood that one or more of our lenders may be unable to honor its commitments under our revolving credit facility, which could have an adverse effect on our business, financial condition and results of operations.

Additionally, in the future we may need to raise additional funds to, among other things, fund our existing operations, improve or expand our operations, respond to competitive pressures, or make acquisitions. If adequate funds are not available on acceptable terms, we may be unable to meet our business or strategic objectives or compete effectively. If we raise additional funds by issuing equity securities, stockholders may experience dilution of their ownership interests, and the newly issued securities may have rights superior to those of the Common Stock. If we raise additional funds by issuing debt, we may be subject to further limitations on our operations arising out of the agreements governing such debt. If we fail to raise capital when needed, our business will be negatively affected.

Our business is subject to the general health of the economy, including consumer spending, and any slowdowns or decreases in the U.S. economy could materially affect our revenue and operating results.

An economic slowdown in the U.S., including consumer spending, may cause substantial volatility in the stock market and layoffs and other restrictions on spending by companies in almost every business sector could impact our business in a variety of ways, including:

Without similar changes in expenses, which may be difficult to achieve, our margins will contract if revenue falls, and ultimately may result in having a material adverse effect on our financial condition and results of operations.

Risks Related to the Frozen Products Segment

Farming is subject to numerous inherent risks, including changes in weather conditions orand natural disasters, that can have an adverse impact on crop production and materially affect our results of operations.

We are subject to the risks that generally relate to the agricultural industry.  Adverse changes in weather conditions and natural disasters, such as windstorms, floods, earthquakes, droughts, extreme temperatures or pestilence, may affect the crop quality and size.  In extreme cases, entire harvests may be lost in some geographic areas.  These factors can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material

adverse effect on our business, results of operations and financial condition.  Fresh berries and vegetables are also vulnerable to crop disease and to pests, which may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions.  Moreover, there can be no assurance that available technologies to control such infestations will continue to be effective.  These infestations can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition.  Our competitors may be affected differently by such weather conditions and natural disasters depending on the location of their supplies or operations.

Unavailability of purchased berries and vegetables, at reasonable prices, could adversely affect operations.

Our manufacturing costs are subject to fluctuations in certain commodity prices. Berries and vegetables are not readily available year-round.  Therefore, we use the IQF technique to freeze the berries and vegetables harvested for use during the year to meet processing demands.  In addition to freezing our own home-grown berries, we also purchase a substantial amount of berries from outside suppliers to meet customer demands. We are dependent on our suppliers to provide us with an adequate supply of vegetables and berries on a timely basis. The failure of certain suppliers to meet our performance specifications, quality standards or delivery schedules could have a material adverse effect on our operating results.  To the extent that certain types of berries or vegetables become scarce, substantially increase in price, or become unavailable or unavailable on commercially attractive terms, our operating results could be materially and adversely affected.

Risks Related to the Snack Product Segment

We may not be able to compete successfully in the highly competitive snack food industry.

The market for snack foods, such as those sold by us, is large and intensely competitive.  Competitive factors in the snack food industry include product quality and taste, brand awareness among consumers, access to supermarketgrocery store shelf space, price, advertising and promotion, variety of snacks offered, nutritional content, product packaging and package design.  We compete in that market principally on the basis of product taste and quality.

The snack food industry is dominated by large food companies, including Frito-Lay, Inc., a subsidiary of PepsiCo, Inc., The Kellogg Company, ConAgra Foods, Inc., Diamond Foods, Inc., General Mills, Inc., Snyder’s-Lance, Inc. and others which have substantially greater financial and other resources than us and sell brands that are more widely recognized than our products. Numerous other companies that are actual or potential competitors of ours, many with greater financial and other resources (including more employees and more extensive facilities) than us, offer products similar to ours. In addition, many of our competitors offer a wider range of products than that offered by us.  Local or regional markets often have a significant number of smaller competitors, many of whom offer products similar to ours. With the expansion of our operations into new markets, we have and will continue to encounter significant competition from national, regional and local competitors that may be greater than that encountered by us in our existing markets. In addition, such competitors may challenge our position in our existing markets.

A disruption in the performance of our suppliers could have an adverse effect on our operations.

Our manufacturing costs are subject to fluctuations in the prices of potatoes, potato flakes, potato starch, corn and oil, as well as other ingredients used in our products.  Potatoes, potato flakes, potato starch and corn are widely available year-round, and we use a variety of oils in the production of our products.  Nonetheless, we are dependent on our suppliers to provide us with products and ingredients in adequate supply and on a timely basis.  The failure of certain suppliers to meet our performance specifications, quality standards or delivery schedules could have a material adverse effect on our operating results.  Changing suppliers can require long lead times. The failure of our suppliers to meet our needs could occur for many reasons, including fires, natural disasters, weather, manufacturing problems, disease, crop failure, strikes, transportation interruption, government regulation, political instability and terrorism.  A failure of supply could also occur due to suppliers’ financial difficulties, including bankruptcy.  Any significant interruption to supply or cost increase could substantially harm our business and financial performance.  To the extent that product ingredients become scarce, substantially increase in price, or become unavailable or unavailable on commercially attractive terms, our operating results could be materially and adversely affected.  From time to time, we may lock in prices for raw

materials, such as oils, as we deem appropriate, and such strategies may result in us paying prices for raw materials that are above market at the time of purchase.

We do not own the patents for the technology we use to manufacture certain T.G.I. Friday’s®, Boulder Canyon® and Tato Skins® brand products,, as well as certain private label branded products.

We license technology from a third party in connection with the manufacture of certain T.G.I. Friday’s®, Boulder Canyon® and Tato Skins® brand products, as well as certain private label branded products, and have a royalty-bearing, exclusive right license to use the technology necessary to produce these products in the United States, Canada, and Mexico until such time as the parties mutually agree to terminate the agreement. Even though the patents for this technology expired in December 2006, in consideration for the use of this technology, we are required to make royalty payments to the third

party on sales of products manufactured utilizing the technology until the termination of such license agreement.  Since these patents have expired, we no longer have exclusive rights to this technology and, as a result, may face additional competition that could adversely affect our revenues. Moreover, our competitors, some of which may have significantly greater resources than us, may utilize different technology in the manufacture of products that are similar to those we currently manufacture, or that we may manufacture in the future. The entry of any such products into the marketplace could have a material adverse effect on our sales of certain T.G.I. Friday’s®, Boulder Canyon® and Tato Skins® brand products, certain private label branded products, as well as any such future products.

We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business.

Our ability to compete effectively depends in part upon our ability to protect our rights to trademarks, copyrights and other intellectual property we own or license. Our use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to protect our intellectual property and other proprietary rights may not be adequate. Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties that our services or our use of intellectual property infringe their intellectual property rights.  Any litigation or claims brought by or against us could result in substantial costs and diversion of our resources.  A successful claim of trademark, copyright or other intellectual property infringement against us could prevent us from providing services, which could have a material adverse effect on our business, financial condition or results of operations. In addition, a breakdown in our internal policies and procedures may lead to an unintentional disclosure of our proprietary, confidential or material non-public information, which could in turn harm our business, financial condition or results of operations.

Risks Related to Our Securities

Our shares of common stock would likely be delisted from trading on the NASDAQ Global Select Market following a Chapter 11 bankruptcy filing.

NASDAQ rules provide that securities of a company that trades on NASDAQ may be delisted in the event that such company seeks bankruptcy protection. In response to a Chapter 11 bankruptcy filing by us, NASDAQ would likely issue a delisting letter immediately following such a filing. If NASDAQ issued such a letter, our common stock would soon thereafter be delisted and there would be a very limited market or no market at all, in which its securities would be traded.

Substantial sales of our Common Stock by our stockholders could depress the market price of our Common Stock regardless of our operating results.

Sales of substantial amounts of our Common Stock in the public market, particularly sales by our directors, executive officers, employees and significant stockholders, or the perception that these sales could occur, could adversely affect the market price of our Common Stock and impair our ability to raise capital through offerings of our Common Stock.  AsAll of December 26, 2015, we had 19,610,838our outstanding shares are either freely tradable, without restriction, in the public market or eligible for sale in the public market at various times, subject, in some cases, to volume limitations under Rule 144 of the Securities Act. Substantial sales of our Common Stock outstanding.  In addition, as of December 26, 2015, there were outstanding options to purchase 644,602 shares of our Common Stock and 390,279 shares of Common Stock issuable upon the vesting of restricted stock units. Substantially all of our outstanding Common Stock is eligible for sale, subject to Rule 144 volume limitations for holders affected by such limitations, as are shares of our Common Stock issuable under vested and exercisable options. If our existing stockholders sell a large number of shares of our Common Stock or the public market perceives that existing stockholders might sell our Common Stock, the market price of our Common Stock could decline significantly. These sales might alsomay make it more difficult for us to sell equity or equity-linked

securities in the future at a time and at a price that we deem appropriate. These sales also could cause our stock price to fall and make it more difficult for you to sell shares of our Common Stock.

Our stock price has been,fluctuated, and may continue to be, volatile,fluctuate, and may decline regardless of our financial performance.

The market price of our Common Stock has fluctuated and may continue to fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

·                  actual or anticipated fluctuations in our financial results;

·                  announcements relating to our industry or to our own business or prospects;

·                  the failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

·                  changes in operating performance and stock market valuations of other public companies generally, or those in our industry in particular;

·                  price and volume fluctuations in the overall stock market, including as a result of trends in the global economy;

·                  our ability or inability to raise additional capital and the terms on which we raise it;

·                  future sales of Common Stock or the perception that sales could occur;

·                  failure of suppliers to meet expectations;

·                  the unavailability of berries or vegetables at attractive prices;

·                  any major change in our board of directors or management;

·                  developments relating to litigation, governmental investigation, the legal and regulatory environment, product recalls or changes in competitive conditions; and

In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of publicly traded companies.  Broad market and industry factors may seriously affect the market price of companies’ stock, including ours, regardless of actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against such a company. If securities class action litigation is instituted against us, it could result in substantial costs and a diversion of our management’s attention and resources and could materially adversely affect our operating results.

Anti-takeover provisions contained in our amended certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our amended certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that could have the effect of delaying, preventing or rendering more difficult an acquisition of us if such acquisition is

deemed undesirable by our board of directors.Board.  Among other things, our amended certificate of incorporation and amended and restated bylaws include provisions:

·                  authorizing “blank check” preferred stock, which could be issued by our board of directors

·                  controlling the procedures for the conduct and scheduling of board of directors

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents certain stockholders holding more than 15% of our outstanding Common Stock from engaging in certain business combinations without approval of our Board and the holders of at least two-thirds of our outstanding Common Stock not held by such 15% or greater stockholder.

Any provision of our amended certificate of incorporation, amended and restated bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock, and could also affect the price that some investors are willing to pay for our Common Stock.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, if they change their recommendations regarding our stock adversely, or if our operating or financial results do not meet expectations, our stock price and trading volume could decline.

The trading market for our Common Stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors.  If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline.  If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets.  In addition, if our operating or financial results do not meet analysts’ expectations, our stock price or trading volume could decline. Any of these factors could cause you to lose part or all of you investment in our Common Stock.

We do not expect to declare any dividends in the foreseeable future.

We do not anticipate declaring any cash dividends to holders of our Common Stock in the foreseeable future. In addition, certain debt agreements of ours limit our ability to declare and pay cash dividends, and any future financing agreements may prohibit us from paying any type of dividends. Consequently, investors may need to rely on sales of their Common Stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our Common Stock.

Item 1B.Unresolved Staff Comments.

We have received no written comments regarding our periodic or current reports from the staffStaff of the SEC that were issued 180 days or more preceding the end of our 20152016 fiscal year that remain unresolved.

Item 2.Properties.

The following table summarizes information about our significant manufacturing, distribution, farming and administrative facilities in use as of December 26, 2015:31, 2016:

We are responsible for all insurance costs, utilities and real estate taxes in connection with our facilities.  We believe that our facilities are adequately covered by insurance.  We also believe that our properties generally are in good operating condition and are suitable for our current purposes.

Item 3.Legal Proceedings.

For a discussion of legal proceedings, see Note 13 “Legal Proceedings” to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Item 4.Mine Safety Disclosures.

Not applicable.

PART II

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our Common Stock is traded on the Nasdaq Global Select Market tier of the Nasdaq Stock Market under the symbol “SNAK.”

The following table sets forth the range of high and low sale prices of our Common Stock as reported on the Nasdaq Global Market for each quarter of the fiscal year ended December 26, 2015,31, 2016, and each quarter of the fiscal year ended December 27, 2014.26, 2015.

Stockholders of Record

There were approximately 135120 stockholders of record as of March 2, 2016.29, 2017.  We believe the number of beneficial owners is substantially greater than the number of record holders because a significant percentage of the Common Stock is held of record in broker “street names.”

Dividends

We have never declared or paid any dividends on the shares of our Common Stock.  Management intends to retain any future earnings for the operation and expansion of our business and does not anticipate paying any dividends at any time in the foreseeable future.  Additionally, certain of our debt agreements restrict our ability to declare and pay dividends.

Sales of Unregistered Securities

We did not make any sales of unregistered securities during fiscal 2015.2016.

Issuer Purchases of Equity Securities

There were no shares repurchased during fiscal 2015.2016.

Stock Price Performance Graph

Set forth below is a graph comparing the percentage change in the cumulative total stockholder return on our Common Stock with the cumulative total return of the Russell 2000 Index (Market Index) and the S&P Packaged Foods Index (Peer Index) for the period starting December 27, 201026, 2011 and ending December 26, 2015.31, 2016.  The graph assumes that $100 was invested on December 25, 201026, 2011 in our Common Stock and in each of the two indices, and that, as to such indices, dividends were reinvested.  We have not, since our inception, paid any cash dividends on our Common Stock.  Historical stock price performance reflected in the below graph is not necessarily indicative of future price performance.

See Note 10 “Stockholders“Stockholders’ Equity” to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a summary of treasury stock repurchases and retirements.

Item 6.Selected Financial Data.

The following selected historical consolidated financial data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited Consolidated Financial Statements and related notes to those statements included in this Form 10-K.  Numbers are expressed in thousands except per share data.  The selected historical consolidated financial data as of and for the fiscal years ended December 31, 2016, December 26, 2015, December 27, 2014, December 28, 2013 and December 29, 2012 and December 31, 2011 have been derived from our audited Consolidated Financial Statements.  Fiscal 20112016 contained 53 weeks and fiscal 2015, 2014, 2013 and 2012 each contained 52 weeks.weeks. The historical results are not necessarily indicative of results to be expected in any future periodperiod.

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the other sections of this Form 10-K, including “Item 1. Business” and “Item 8. Financial Statements and Supplementary Data.”  The various sections of this MD&A contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing and particularly in “Item 1A. Risk Factors.”  Accordingly, the Company’s actual future results may differ materially from historical results or those currently anticipated.

Executive Overview

The Company is a leading marketer and manufacturer of healthy/natural and indulgent specialty snack food brands.  Our products are marketed under a strong portfolio of brands, including Rader Farms®, Boulder Canyon®, Fresh FrozenFrozen™,TM, Willamette Valley Fruit CompanyTMCompany™ , T.G.I. Friday’s®, Jamba®, Vidalia®, Poore Brothers®, Nathan’s Famous ®, Bob’s Texas Style®, Tato Skins® and Seattle’s Best Coffee®.  T.G.I. Friday’s®, Jamba®, Nathan’s Famous® and Vidalia® are licensed brand names.  We complement our branded product retail sales with private label retail sales and co-packing arrangements.  The majority of our revenues are attributable to external customers in the United States.  We sell to external customers internationally; however, the revenues attributable to those customers are immaterial.

Our better-for-you snack and frozen products are supported by strong underlying consumer trends.  We seek to stay competitive with consistent, on-trend new product offerings.  A focus of our snack products has been on cooking in

healthier oils for our kettle and popcorn products.  Our Boulder Canyon brand is particularly focused on healthy eating trends and clean ingredients.  During the fourth quarter of 2016 we introduced new on-trend baked snack items that are very unique and consist of vegetables, lentils and ancient grains with distinctive seasonings.  The Boulder Canyon brand has experienced solid distribution gains in both the natural and grocery channels.  An additional offering in-line with recent consumer trends was the successful launch of our Boulder Canyon riced vegetable products. 

Fiscal 20152016 was impacted by market pricing pressure on frozen fruit, capacity constraints during part of the voluntary product recallyear for kettle snack products, loss of our Fresh FrozenTM business,a co-pack customer and decreased distribution of certain products, resulting in a 1.1%4.8% decrease in net revenues over the prior fiscal year to $282.6$269.0 million.  In fiscal 2015,2016, our products in the healthy/natural category represented 83.8%85.8% of net sales, a one1.5 point increase from the prior year.  For fiscal 2016, 2015 2014 and 2013,2014, net revenues of our healthy/natural food category totaled $236.7$230.8 million, $236.6$238.1 million and $152.2$236.6 million, respectively.  For fiscal 2016, 2015 2014 and 2013,2014, net revenues of our indulgent specialty snack food category totaled $45.9$38.2 million, $49.1$44.5 million and $63.3$49.1 million, respectively.

Our frozen berry business experienced pressure primarily due to lostreduced sales distribution and a lower sellingdecrease in the market price forof our most significant frozen berry item asproduct.  These factors contributed to a result of year-over-year cost declines.  Even so,decrease in frozen berry sales grew 4.1%of 8.4% for the year. OurSales of our Rader Farms® Fresh Start products, which combine a healthful blend of frozen fruit and vegetables, have demonstratedincreased 69% for the early strong potentialyear, reflecting the continuing strength of this product.our Rader Farms® branded products.  We continue to ramp up distribution across sales channels including club stores, mass merchandisers, and several key supermarketgrocery store retailers.  During 2016, we succeeded in expanding our industrial fruit sales and increasing volumes sold.  However, the pricing of our fruit was negatively impacted by market declines.   We remain focused on ways to grow our branded frozen berry business.

TheBetter-for-you snack industry has been heavily influenced by a proliferationbrands are outpacing the growth of new flavors and health focused snacks, with a rapid increase in the number of low-fat, low-carb, all-natural and organic products.traditional snacks.  We believe the trend for healthier snacks will continue and will provide new revenue growth opportunities for our Rader Farms®, Boulder Canyon®, Fresh FrozenTM and premium private labelhealthy/natural products.  We intend to continue brand investments in 2016fiscal 2017 to drive further sales and earnings growth in the long term. During fiscal 2015,2016, we also launched new flavors of Boulder Canyon® Coconut Oil Sea Salt Kettle Chips, Coconut Oil Pineapple Habanero Kettle Chips,  Coconut Oil Red Curry Kettle Chips, Coconut Oil Sea Salt Popcorn, Avocado Oil Sea Salt Popcornincreased our kettle capacity and Olive Oil White Cheddar Popcorn.expanded our kettle manufacturing capabilities to our Bluffton, Indiana plant.  We expect the increased capacity to help improve margins, with both increased efficiencies and decreased freight expense to the east coast. 

On May 28, 2013, we completed our acquisition of the berry processing business of Willamette Valley Fruit Company for a cash purchase price of $9.3 million.  An additional amount of up to $3.0 million may be payable to Willamette Valley Fruit Company as contingent consideration in the form of an earn-out if certain performance thresholds are met during the seven-year period following the closing of this transaction (see Note 3 “Acquisitions” to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K).

On November 8, 2013, we completed our acquisition of Fresh Frozen Foods for a cash purchase price of $38.4 million plus a working capital adjustment of $0.4 million.  An additional amount of up to $3.0 million could have been payable to Fresh Frozen Foods in the form of an earn-out based on the achievement of specified fiscal 2014 performance objectives, which were not met (see Note 3 “Acquisitions” to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K).

On September 29, 2014, we acquired the assets and intellectual property of a small boutique frozen desserts business, Sin In A TinTMTin™, for approximately $160,000 in cash. An additional amount of up to $0.5 million is payable to the seller in the form of an earn-out based on future net revenues derived from the Sin In A TinTMTin™ products.

All of our assets are located in the United States and include manufacturing facilities in Arizona, Georgia, Florida, Indiana, Oregon and Washington.

Recent Developments

On March 23, 2017, we announced the sale ofcertain assets, properties and rights of our wholly owned subsidiary, Fresh Frozen Foods (the “Fresh Frozen Asset Sale”), to The Pictsweet Company (“Pictsweet”),  pursuant to an Asset Purchase Agreement, dated as of such date, by and among the Company, Fresh Frozen Foods and Pictsweet (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 plants located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property and inventory.  The Fresh Frozen Foods plants processed and packaged IQF vegetables and fruits sold primarily under the Fresh Frozen™ brand. As consideration for the acquisition, Pictsweet paid the Company $23.7 million in cash.  The Company’s net proceeds from the Fresh Frozen Asset Sale were $19.5 million, after payment of professional fees and other transaction expenses.  These proceeds were used to pay down amounts outstanding under the Company’s Credit Facilities.

Strategic and Financial Review Process

In July 2016, we announced that our Board had commenced a strategic and financial review of the Company, with the objective to increase shareholder value.  We engaged Rothschild Inc. to serve as our financial advisor and assist

us in this process.  We remain actively involved in this process and are continuing to pursue various strategic alternatives.  No assurance can be given as to the outcome or timing of this process or that it will result in the consummation of any specific transaction.

Going Concern Uncertainty

We have incurred losses from operations in each of the quarterly periods since our product recall in April 2015.  This fact, together with the projected near term outlook for our business and our inability to complete a strategic transaction (other than the Fresh Frozen Asset Sale) by year end or demonstrate that such a transaction is imminent, raise substantial doubt about our ability to continue as a going concern.  In reaching such conclusion, management considered the following specific conditions:

As noted above and as more fully described under “Liquidity and Capital Resources” below, the Company’s Board and management are in the process of exploring various strategic transactions.  We have obtained a temporary waiver of the going concern qualification until May 15, 2017 from each of the lenders under the Credit Facilities.  There can be no assurance that we will be successful in our pursuit of a strategic transaction or that we will be able consummate a strategic transaction in time to address our financial covenant requirements and going concern qualification, or at all, or if we do complete a strategic transaction it will be on commercially reasonable terms.  As a result, our liquidity and ability to timely pay our obligations when due could be adversely affected.   

The accompanying consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about our ability to continue as a going concern, other than the reclassification of certain long-term debt and the related debt issuance costs to current liabilities and current assets, respectively.  The report from our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2016 includes an explanatory paragraph regarding our ability to continue as a going concern.  

Our lenders may resist renegotiation or lengthening of payment and other terms through legal action or otherwise if we are unsuccessful in our efforts to complete a strategic transaction.  If we are not able to timely, successfully or efficiently implement the strategies that we are pursuing, we may need to voluntarily seek protection under Chapter 11 of the U.S. Bankruptcy Code.

Results of Operations

The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources.  This discussion should be read in conjunction with “Item 8. Financial Statements and Supplementary Data” and the “Cautionary Statement Regarding Forward-Looking Statements” on page 1.

Our fiscal year ends on the last Saturday occurring in the month of December of each calendar year.  Accordingly, fiscal 20152016 commenced December 28, 201427, 2015 and ended December 26, 2015.31, 2016.  The fiscal year end dates result in an additional week of results every five or six years.  There were 53 weeks in fiscal 2016 and 52 weeks in each of fiscal 2015 2014 and 2013.2014.  The following table sets forth for the periods presented certain financial data as a percentage of net sales for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 and December 28, 2013:2014:

Our operations consist of two reportable segments:  frozen products and snack products.  The frozen products segment includes frozen fruits, vegetables, beverages and frozen desserts, for sale primarily to groceries,grocery stores, club stores and mass merchandisers. The snack product segment includes manufactured potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products, popcorn and extruded products for sale primarily to snack food distributors and retailers.

Fiscal 20152016 Compared to Fiscal 20142015

Net Revenues.  In fiscal 2015,2016, net revenues decreased $3.1$13.5 million, or 1.1 %,4.8%, to $282.6$269.0 million compared with net revenues of $285.7$282.6 million for the previousprior fiscal year. Our net revenues by operating segment were as follows (in thousands):

The frozen products segment net revenues were $160.6 million in fiscal 2016, a decrease of $6.6 million, or 4.0%, compared with net revenues of $167.2 million for the prior fiscal year.  This decrease was driven by lower revenues for the Company’s most significant frozen berry product due to reduced sales distribution and a market price

decrease, which was partially offset by increased net revenues for branded frozen fruit and frozen vegetables as compared to the prior-year period.

The snack products segment net revenues were $108.5 million in fiscal 2016, a decrease of $6.9 million, or 6.0%, compared with net revenues of $115.4 million for the prior fiscal year.  This decrease was driven by an increase in trade promotional investments to support future growth and a decline in production of product for third parties and license brand net revenues, partially offset by an increase in Boulder Canyon® net revenues as a result of increased distribution and velocity.

Gross Profit.  Gross profit for fiscal 2016 was $32.8 million, or 12.2% of net revenues, compared to $20.3 million, or 7.2% of net revenues, for the prior fiscal year.  Our gross profit and gross profit as a percentage of net sales by operating segment were as follows (in thousands):

The frozen products segment gross profit was $15.1 million in fiscal 2016, compared to $2.7 million for the prior fiscal year.  Excluding $17.1 million of product recall expenses recorded in cost of revenues in fiscal 2015 (as discussed below in “Non-GAAP Data and Reconciliations”), our frozen products segment gross profit decreased $4.8 million for fiscal 2016 compared to the prior fiscal year and as a percentage of net revenues decreased 250 basis points to 9.4%, compared to 11.9% for the prior fiscal year. This decrease was due to packing higher priced purchased fruit remaining from fiscal 2015 purchase commitments, as well as sales pricing pressure attributable to decreasing market prices.  Our frozen products segment gross margin decline was also due to incremental costs incurred in our Fresh Frozen business to enhance product testing and improve manufacturing operations implemented in the second half of fiscal 2015.

The snack products segment gross profit was $17.7 million in fiscal 2016, an increase of $0.1 million, or 0.5%, compared to gross profit of $17.6 million for the prior fiscal year, and increased as a percentage of net revenues to 16.3% in fiscal 2016 compared to 15.3% in the prior fiscal year.  The increase in snack product gross margin was primarily due to increased capacity eliminating the need for co-packers used in the prior year to supplement production and reduced freight for east coast sales. The increased capacity also allowed for improved efficiency and overhead absorption.  The snack products segment gross margin was negatively affected by product and sales channel mix.

Selling, General and Administrative Expenses.  Selling, general and administrative (“SG&A”) expenses decreased $2.6 million, or 6.8%, during fiscal 2016, compared to the prior fiscal year. Excluding $2.2 million of costs related to the product recall recorded in SG&A in fiscal 2015 (as discussed below in “Non-GAAP Data and Reconciliations”), SG&A expenses decreased $0.4 million for fiscal 2016 compared to the prior fiscal year and, as a percentage of net revenues, increased 50 basis points to 13.0% compared to 12.5% for the prior fiscal year. The increase in SG&A expenses as a percentage of net revenues was a result of $0.7 million of costs related to ongoing litigation and the strategic and financial review     

Impairment of Goodwill and Intangible Asset.  In fiscal 2016, as a result of declining sales from our Fresh Frozen business we concluded that the goodwill was fully impaired and the intangible asset related to the Fresh Frozen trademark was partially impaired. Accordingly, we recorded an impairment of goodwill related to the Fresh Frozen business of $8.3 million and an impairment of the Fresh Frozen Foods trademark of $7.1 million.  In fiscal 2015, as a result of the product recall we concluded that the intangible asset related to the acquired customer relationships of Fresh

Frozen Foods was fully impaired.  Accordingly, we recorded an intangible asset impairment charge of $9.3 million in the first quarter of fiscal 2015.

Interest Expense.  Net interest expense increased $3.5 million, to $9.9 million, in fiscal 2016 compared to $6.3 million in fiscal 2015.  This increase was primarily due to higher debt balances and interest rates associated with the Credit Facilities entered into in November 2015.

Income Tax Provision.  The income tax provision was an expense of $2.7 million for fiscal 2016 compared to a benefit of $12.0 million of tax provision in the prior fiscal year.  Our effective income tax expense rate was (9.8)% in fiscal 2016, compared to 36.7% in fiscal 2015.  The fiscal 2016 tax provision included non-cash tax expense of $12.6 million from recording of a full valuation allowance of our deferred tax asset. 

Fiscal 2015 Compared to Fiscal 2014

Net Revenues.  In fiscal 2015, net revenues decreased $3.1 million, or 1.1%, to $282.6 million compared with net revenues of $285.7 million for the prior fiscal year. Our net revenues by operating segment were as follows (in thousands):

The frozen products segment net revenues were $167.2 million in fiscal 2015, a decrease of $12.3 million, or 6.9%, compared with net revenues of $179.5 million for the previousprior fiscal year.  This decrease was primarily attributable to the voluntary product recall of our Fresh Frozen™Frozen business whichthat commenced in April 2015. Excluding Fresh Frozen sales since the product recall in April 2015*2015 (as discussed below in “Non-GAAP Data and Reconciliations”), the frozen products segment net revenues increased by 3.6%, driven by our frozen fruit business that grew even withincreased despite a nearly 20% pricing decline and lost distribution of our most significant frozen berry item.

The snack products segment net revenues were $115.4 million in fiscal 2015, an increase of $9.3 million, or 8.7 %,8.7%, compared with net revenues of $106.1 million for the previousprior fiscal year.  This increase was primarily due to increased sales of our Boulder Canyon® and healthy/natural private label products. Our Boulder Canyon® brand hasbrand’s increased distribution and sales growth has been supported with continued new product innovation.

*See “Non-GAAP Data and Reconciliations” below for information on the calculation of net revenues excluding the Fresh Frozen business since the product recall.

Gross Profit.  Gross profit for fiscal 2015 was $20.3 million, or 7.2% of net revenues, compared to $53.1 million, or 18.6% of net revenues for the prior fiscal year.  Our gross profit and gross profit as a percentage of net sales by operating segment were as follows (in thousands):

The frozen products segment gross profit was $2.7 million in fiscal 2015, a decrease of $29.6 million, or 91.6%, compared to gross profit of $32.3 million for the prior fiscal year.  ThisThe decrease is attributable to our voluntary product recall.  Expenses associated with the voluntary product recall reduced gross profit by $17.1 million and consisted of $21.3 million of recall-related disposal costs of inventory, product returns and fees from consumers and customers, as well as increased co-packing, costs partially offset by $4.2 million of insurance recoveries (see Note 2 “Product Recall” to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K). Excluding the costs directly associated with the Fresh Frozen product recall (as discussed below in “Non-GAAP Data and Reconciliations”), gross profit for fiscal 2015 was $19.9 million**,million, compared to $32.3 million in the prior fiscal year. Gross profit as a percentage of revenue was 11.9% in fiscal 2015, compared to 18.0% in the prior year.  This 610 basis point decrease in gross margin was driven in part by incremental costs added to the Fresh Frozen business to enhance product testing and improve therelated manufacturing operations, as well as increased cold storage costs incurred as a result of higher raw material inventory levels.  The gross margin decline was also a result of pricing pressure experienced in our frozen fruit business.

The snack products segment gross profit was $17.6 million in fiscal 2015, a decrease of $3.2 million, or 15.3%, compared to gross profit of $20.8 million for the prior fiscal year, and decreased as a percentage of net revenues to 15.3% in fiscal 2015 from 19.6% in the prior fiscal year.  The decrease in gross margin in fiscal 2015 was primarily a result of $4.3 million of increased costs to produce certain kettle chips attributable to various co-packing arrangements we entered into in fiscal 2015 due to capacity constraints at our Goodyear, Arizona facility.

**See “Non-GAAP Data and Reconciliations” below for information on the calculation of gross profit exclusive of product recall costs.

Selling, General and Administrative Expenses.  Selling, general and administrative (“SG&A”)&A expenses increased $3.4 million, or 9.9%, during fiscal 2015, compared to the prior fiscal year.  SG&A expense included additional professional fee expenses of $2.2 million due to the Fresh Frozen voluntary product recall.  In fiscal 2014, SG&A expense included the reversal of the Fresh Frozen Foods contingent consideration liability offset by estimated Jamba litigation settlement costs and fees associated with the Company’s secondary offering.  The net impact of these items reduced fiscal 2014 SG&A expenses in fiscal 2014 by $1.9 million.  Excluding the impact of these items (as discussed below in “Non-GAAP Data and Reconciliations”), SG&A expenses***expenses decreased $0.7 million to $35.4 million in fiscal 2015 compared to $36.1 million in the prior fiscal year and as a percentage of net revenues remained flat at 12.5%, compared to 12.6% in the prior fiscal year.

***See “Non-GAAP Data and Reconciliations” below for information on the calculation of SG&A expenses exclusive of product recall costs.

Impairment of Goodwill and Intangible Asset.  In fiscal 2015, as a result of the product recall we concluded that the intangible asset related to the acquired customer relationships of Fresh Frozen Foods was fully impaired.  Accordingly, we recorded an intangible asset impairment charge of $9.3 million in the first quarter of fiscal 2015.

Interest Expense.Net interest expense increased $3.7 million, to $6.3 million, in fiscal 2015 compared to $2.6 million in fiscal 2014.  This increase was primarily due to higher debt balances associated with the Credit Facilities entered into in November 2015 and the write off of deferred financing fees of $0.5 million and settlement of interest rate swaps of $0.1 million associated with the repayment of our prior credit agreement with U.S. Bank dated November 8, 2013 (with all related loan documents, and as amended from time to time, the “PriorPrior Credit Facility”)Facility and higher interest rate charges associated with two previous bridge loans entered into with U.S. Bank under the Prior Credit Facility to help fund the cost of the voluntary product recall.