UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended April 1,September 30, 2017

or

☐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)

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

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 ☒               No ☐

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 ☒               No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐               No ☒

As of May 9,November 6, 2017, the total number of shares outstanding of the registrant’s Common Stock was 19,687,91219,827,000 shares.

INVENTURE FOODS, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

Table of Contents

INVENTURE FOODS, INC. AND SUBSIDIARIES

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this Quarterly Report on Form 10-Q (“Form 10-Q”), including all documents incorporated by reference, contains “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-Q 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, inability to meet the financial covenants under our term loan and revolving credit facilities,facility, or in order to implement our business strategy, acquisition and divestiture-related risks, volatility of the market price of our common stock, par value $.01 per share (“Common Stock”), statements regarding the proposed transaction between the Company and Utz Quality Foods, LLC and the expected timetable for completing the transaction, and those other risks and uncertainties discussed herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2017 (“2016 Form 10-K”) and any subsequent Form 10-Q 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-Q 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 our 2016 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-Qs and Current Reports on Form 8-K 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 in the “Risk Factors” section of our 2016 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 — FINANCIAL INFORMATION

Item 1.Financial Statements.

INVENTURE FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

INVENTURE FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

INVENTURE FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

INVENTURE FOODS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.Organization and Summary of Significant Accounting Policies

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 $269 million in annual net revenues for fiscal 2016.

On September 22, 2017, the Company sold certain assets, properties and rights related to its frozen fruits, vegetable blends and beverages, and frozen desserts business (the “Frozen Fruit Business”) of the Company and its wholly owned subsidiaries, Rader Farms, Inc. (“Rader”) and Willamette Valley Fruit Company (“Willamette”),  to Oregon Potato Company (“OPC”) pursuant to an Asset Purchase Agreement, dated as of September 8, 2017, by and among the Company, Rader, Willamette, and OPC ( the “OPC Purchase Agreement”).  In accordance with the OPC Purchase Agreement, OPC acquired Rader’s and Willamette’s frozen fruit processing equipment assets, Sin In A Tin frozen desert processing equipment, certain real property and associated facilities located in Lynden, Washington, Bellingham, Washington, Salem, Oregon and Pensacola, Florida, and other intellectual property and inventory (the “Frozen Fruit Asset Sale”).

We specialize in two primary product categories: healthy/natural food products and indulgent specialty snack products.  We sell our products nationally 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 goal is to have a diversified portfolio of brands, products, customers and distribution channels.

In our healthy/natural food category, products include Rader Farms® frozen berries and frozen berry and vegetable blends, Boulder Canyon® brand kettle cooked potato chips, other snack and food items, and frozen side dishes, Willamette Valley Fruit CompanyTM brand frozen berries, fruits, biscuits and other frozen snacks, Jamba® brand blend-and-serve smoothie kits under license from Jamba Juice Company (“Jamba Juice”), Sin In A TinTM  chocolate pate and other frozen desserts and private label frozen fruithealthy/natural snacks and, healthy/natural snacks.prior to September 22, 2017, all of the products included in the Frozen Fruit Asset Sale.

In our indulgent specialty snack food category, products include T.G.I. Friday’s® brand snacks under license from T.G.I. Friday’s Inc. (“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® brand kettle cooked potato chips, Bob’s Texas Style® brand kettle cooked chips, and Tato Skins® brand potato snacks.  We also manufacture private label snacks for certain grocery retail chains and co-pack products for other snack manufacturers.

We operatePrior to the Frozen Fruit Asset Sale, we operated in two segments: frozen products and snack products.  In September 2017, the Company completed the Frozen Fruit Asset Sale, which consisted of the sale of our remaining operations of the frozen products segment. All products sold under our frozen products segment were considered part of the healthy/natural food category.   The frozen products segment includesincluded frozen fruits, fruit and vegetable blends, beverages, side dishes and desserts for sale primarily to 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 includes 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. The products sold under our snack products segment include products considered part of the indulgent specialty snack food category, as well as products considered part of the healthy/natural food category.

WeOn September 22, 2017, we entered into a License and Distribution Agreement with OPC (the “OPC License Agreement”), pursuant to which the Company granted OPC an exclusive, revocable license to use certain Boulder Canyon Authentic Foods trademarks in connection with the manufacture, distribution, sale, advertising and promotion of conventional and organic frozen riced vegetable products and bowls consisting of fruit, vegetables and grains in agreed upon distribution channels, as set forth in the OPC License Agreement.  The OPC License Agreement has a term of three years and requires OPC to pay the Company a royalty of 3% of OPC’s Gross Sales (as defined in the OPC License Agreement) during the term of such agreement.

Following the Frozen Fruit Asset Sale, we operate manufacturing facilities in seventhree locations. Our frozen berry products are processed in our Lynden, Washington, Bellingham, Washington and two Salem, Oregon facilities.  Our frozen berry business grows, processes and markets premium berry blends, raspberries, blueberries and rhubarb and purchases blackberries, cherries, cranberries, strawberries and other fruits from a select network of fruit growers for resale.  The fruit is processed, frozen and packaged for sale and distribution to wholesale customers.  Our frozen beverage products, including fruit and vegetable blends and frozen side dishes, are packaged at our Bellingham, Washington facility.  We also use third-party processors for certain frozen products and package certain frozen fruits and vegetables for other manufacturers.  Our frozen desserts products are produced in our Pensacola, Florida and Salem, Oregon facilities.  Our snack products are manufactured at our Phoenix, Arizona and Bluffton, Indiana facilities, as well as select third-party facilities for certain products.

Our fiscal year ends on the last Saturday occurring in the month of December of each calendar year.  Accordingly, the firstthird quarter of fiscal 2017 commenced January 1,July 2, 2017 and ended April 1,September 30, 2017.

Strategic and Financial Review Process

In July 2016, we announced that our Board of Directors (“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

On March 23, 2017, the Company soldcertain  assets, properties and rights (the “Fresh Frozen Foods Business”) of our wholly owned subsidiary, Fresh Frozen Foods, Inc. (“Fresh Frozen Foods”), to The Pictsweet Company (“Pictsweet”) pursuant to an Asset Purchase Agreement, dated as of such date, among the Company, Fresh Frozen Foods and Pictsweet (the “Pictsweet Purchase Agreement”).  In accordance with the Pictsweet Purchase Agreement, Pictsweet acquired Fresh Frozen Foods’ frozen food processing equipment assets, certain real property and associated facilities located in this processJefferson, Georgia and are continuingThomasville, Georgia, and other intellectual property and inventory (the “Fresh Frozen Asset Sale”).  As consideration for the acquisition, Pictsweet paid the Company $23.7 million in cash.  The net proceeds from the Fresh Frozen Asset Sale were $19.5 million, after payment of professional fees and other transaction expenses, and were used to pursue various strategic alternatives.  As disclosed in our prior reports, no assurance can be given aspay down amounts outstanding under the Credit Facilities (defined below).

On September 22, 2017, the Company sold the Frozen Fruit Business of the Company and its wholly owned subsidiaries, Rader and Willamette, to OPC pursuant to the outcome or timingOPC Purchase Agreement.  In accordance with the OPC Purchase Agreement, OPC acquired Rader’s and Willamette’s frozen fruit processing equipment assets, Sin In A Tin frozen desert processing equipment, certain real property and associated facilities located in Lynden, Washington, Bellingham, Washington, Salem, Oregon and Pensacola, Florida, and other intellectual property and inventory.  As consideration for the acquisition, OPC paid the Company $50.0 million in cash.  The net proceeds from the Frozen Fruit Asset Sale were $38.9 million, after payment of this process or that itprofessional fees and transaction and other expenses, and were used to repay in full the indebtedness under the ABL Credit Facility (defined below) and to pay down indebtedness under the Term Loan Credit Facility (defined below), as required under such Credit Facilities.  On September 22, 2017, $2.0 million of the net proceeds were held in escrow to be released upon final determination of the working capital adjustment. 

On October 25, 2017, the Company entered into an Agreement and Plan of Merger (the “Utz Merger Agreement”) with Utz Quality Foods, LLC, a Delaware limited liability company (“Utz”), and Heron Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”).  Pursuant to the Utz Merger Agreement, and upon the terms and subject to the conditions described therein, Merger Sub will result(and Utz will cause Merger Sub to) commence a tender offer (the “Offer”) to purchase any and all of the Company’s outstanding shares of common stock, par value $0.01 per share, at a price per share of $4.00, net to the seller in cash, without interest and subject to any required withholding of taxes.  Following the consummation of any specific transaction.the Offer, subject to the satisfaction or waiver of certain customary conditions set forth in the Utz Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of Utz (the “Utz Merger”).

Since entering into the Utz Merger Agreement on October 25, 2017, we have ceased our efforts to explore other strategic alternatives. There can be no assurance that we will be able consummate the Utz Merger or the transactions contemplated by the Utz Merger Agreement in time to address our financial covenant requirements and going concern qualification, or at all, or if we do complete the Utz Merger or another strategic transaction it will be on commercially reasonable terms.

In determining to proceed with entering into the Utz Merger Agreement, the Company’s board of directors considered a number of factors, including the following:

Going Concern Uncertainty

We have incurred losses from operations in each of the quarterly periods since our voluntary product recall in April 2015 of certain varieties of the Company’s Fresh FrozenTM brand of frozen vegetables, as well as select varieties of our Jamba® “At Home” line of smoothie kits.  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 and the Frozen Fruit Asset Sale)by the end of our fiscal year end2016 or demonstrate that such a transaction iswas imminent, raiseraised substantial doubt about our ability to continue as a going concern.  In reaching suchconcern as of the end of our 2016 fiscal year.  We reported this going concern conclusion management consideredin our 2016 Form 10-K filed with the SEC on March 31, 2017, together with the following specific conditions: conditions considered by management at such time in reaching such conclusion:

The Company’s Board and management are continuing

Since we entered into the Utz Merger Agreement on October 25, 2017, we have ceased our efforts to explore variousother strategic alternatives.  There can be no assurance that we will be successful in our pursuit of any strategic transaction or that we will be able consummate a strategic transactionthe Utz Merger or the transactions contemplated by the Utz Merger Agreement in time to address our financial covenant requirements and going concern qualification, or at all, or if we do complete athe Utz Merger or another strategic transitiontransaction 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 condensed 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.

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 seek voluntarilyvoluntary protection under Chapter 11 of the U.S. Bankruptcy Code.

Basis of Presentation

The condensed consolidated financial statements for the fiscal quarter ended April 1,September 30, 2017 are unaudited and include the accounts of Inventure Foods and all of its wholly owned subsidiaries. All significant intercompany amounts and transactions have been eliminated. The condensed consolidated financial statements, including the December 31, 2016 consolidated balance sheet data which was derived from audited financial statements, have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”).  In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary in order to make the condensed consolidated financial statements not misleading. A description of our accounting policies and other financial information is included in the audited financial statements filed with our 2016 Form 10-K. The results of operations for the fiscal quarter ended April 1,September 30, 2017 are not necessarily indicative of the results expected for the full year.  Changes to the classification of certain prior year amounts on the cash flow statement were made to reflect current year classification between deferred income taxes and change in other assets and liabilities. 

Discontinued Operations

On March 23, 2017, the Company soldcertain  assets, properties and rights of our wholly owned subsidiary, its Fresh Frozen Foods Business to The Pictsweet Company (“Pictsweet”) pursuant to an Assetthe Pictsweet Purchase Agreement, dated as of such date, among the Company, Fresh Frozen Foods and Pictsweet (the “Purchase Agreement”).Agreement.  In accordance with the Pictsweet Purchase Agreement, Pictsweet acquired Fresh Frozen Food’sFoods’ frozen food processing equipment assets, certain real property and associated facilities located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property and inventory (the “Fresh Frozen Asset Sale”).inventory.  As consideration for thethis acquisition, Pictsweet paid the Company $23.7 million in cash.  The net proceeds from the Fresh Frozen Asset Sale were $19.5 million, after payment of professional fees and other transaction expenses, andwhich were used to pay down amounts outstanding under the Credit Facilities.  The results of operations for the Fresh Frozen Foods businessBusiness have been classified as discontinued operations for all periods presented.  The assets and liabilities that were included in the Fresh Frozen Asset Sale have been presented as held for sale as of December 31, 2016.  As required by the terms of the Pictsweet Purchase Agreement, we have changed the name of our Fresh Frozen Foods subsidiary from Fresh Frozen Foods, Inc. to Inventure – GA, Inc.

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

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.  We classify our investments

based upon an established fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or

Income Taxes

Income tax expense was $0.1 million$10,000  for the fiscal quarter ended April 1,September 30, 2017, compared to a tax benefit of $0.1$1.3 million for the fiscal quarter ended March 26,September 24, 2016.  Our effective tax rate was (9.3)(0.2)% and 38.1%42.9% for the fiscal quarters ended April 1,September 30, 2017 and March 26,September 24, 2016, respectively.

Income tax expense was $31,000 for the nine months ended September 30, 2017, compared to a tax benefit of $2.8 million for the nine months ended September 24, 2016.  Our effective tax rate was (0.3)% and 36.0% for the nine months ended September 30, 2017 and September 24, 2016, respectively.

Income tax expense for the fiscal quarter and nine months ended April 1,September 30, 2017 was impacted by the full valuation allowance which was initially recorded in the fourth quarter of 2016.  Therefore, income tax expenses was a result of certain state minimum taxes and deferred tax liabilities not subject to the valuation allowance.

Loss Per Common Share

Basic loss per common share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period.  Diluted loss per share is calculated by including all dilutive common shares, such as stock options and restricted stock.  Unvested restricted stock grants that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, require loss per share to be presented pursuant to the two-class method.  However, the application of this method would have no effect on basic and diluted loss per common share and is therefore not presented. 

For the fiscal quarter and nine months ended April 1,September 30, 2017, diluted loss per share is the same as basic loss per share, as the inclusion of potentially issuable Common Stock would be antidilutive. During the fiscal quarter and nine months ended April 1,September 30, 2017, 0.6 million shares of Common Stock underlying stock options and restricted stock units were not included in the computation of diluted earnings (loss) per share because inclusion of such shares would be antidilutive.  For the fiscal quarter and nine months ended March 26,September 24, 2016, 0.30.5 million shares of Common Stock underlying stock options and restricted stock units were not included in the computation of diluted earnings (loss) per share because inclusion of such shares would be antidilutive.  Exercises of outstanding stock options are assumed to occur for purposes of calculating diluted earnings per share for periods in which their effect would not be antidilutive. 

Loss per common share was computed as follows for the fiscal quarters and nine months ended April 1,September 30, 2017 and March 26,September 24, 2016 (in thousands, except per share data):

In July 2015, the FASB issued an ASU to simplify the measurement of inventory.  This ASU requires inventory to be subsequently measured using the lower of cost and net realizable value, thereby eliminating the market value approach. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.”  This ASU is effective for reporting periods beginning after December 15, 2016 and is applied prospectively. Early adoption is permitted. We adopted this guidance in the first quarter of fiscal 2017, and it had no impact on our financial statements and disclosure.

In February 2016, the FASB issued new guidance related to accounting for leases. The new standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted.  As of April 1September 30, 2017, we have not evaluated the impact of this new accounting standard on our financial statements.

In March 2016, the FASB issued an ASU intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments will be recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits are currently recorded in equity and as financing activity under the current rules. This guidance is effective for reporting periods beginning after December 15, 2016. We adopted this guidance in the first quarter of fiscal 2017, and the adoption did not have a material impact on our financial statements and disclosure.

2.Discontinued Operations

On March 23, 2017, the Company soldcertain assets, properties and rights of our wholly owned subsidiary, its Fresh Frozen Foods Business, to Pictsweet pursuant to the Pictsweet Purchase Agreement.  In accordance with the Pictsweet Purchase Agreement, Pictsweet acquired Fresh Frozen Food’sFoods’ frozen food processing equipment assets, certain real property and associated facilities located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property and inventory.  As consideration for the acquisition, Pictsweet paid the Company $23.7 million in cash. The Fresh Frozen businessFoods Business was part of the Company’s frozen products segment.  The net proceeds from the Fresh Frozen Asset Sale were $19.5 million, after payment of professional fees and other transaction expenses, andwhich were used to pay down amounts outstanding

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