Cover Page
Cover Page - shares | 6 Months Ended | |
Nov. 29, 2020 | Jan. 05, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 0-27446 | |
Entity Registrant Name | LANDEC CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 94-3025618 | |
Entity Address, Address Line One | 2811 Airpark Drive | |
Entity Address, City or Town | Santa Maria, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 93455 | |
City Area Code | 650 | |
Local Phone Number | 306-1650 | |
Title of 12(b) Security | Common stock, par value $0.001 per share | |
Trading Symbol | LNDC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Central Index Key | 0001005286 | |
Current Fiscal Year End Date | --05-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 29,323,153 | |
Document Period End Date | Nov. 29, 2020 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Shell Company | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Nov. 29, 2020 | May 31, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 2,491 | $ 360 |
Accounts receivable, less allowance for credit losses | 66,545 | 76,206 |
Inventories | 71,202 | 66,311 |
Prepaid expenses and other current assets | 13,949 | 14,230 |
Total Current Assets | 154,187 | 157,107 |
Investment in non-public company, fair value | 45,100 | 56,900 |
Property and equipment, net | 170,973 | 192,338 |
Operating leases | 21,070 | 25,321 |
Goodwill | 69,386 | 69,386 |
Trademarks/tradenames, net | 25,328 | 25,328 |
Customer relationships, net | 11,784 | 12,777 |
Other assets | 1,332 | 2,156 |
Total Assets | 499,160 | 541,313 |
Current Liabilities: | ||
Accounts payable | 60,892 | 51,647 |
Accrued compensation | 7,689 | 9,034 |
Other accrued liabilities | 12,715 | 9,978 |
Current portion of lease liabilities | 3,785 | 4,423 |
Deferred revenue | 644 | 352 |
Line of credit | 77,000 | 77,400 |
Current portion of long-term debt, net | 11,189 | 11,554 |
Total Current Liabilities | 173,914 | 164,388 |
Long-term debt, net | 82,000 | 101,363 |
Long-term lease liabilities | 22,206 | 26,378 |
Deferred taxes, net | 6,745 | 13,588 |
Other non-current liabilities | 5,357 | 4,552 |
Total Liabilities | 290,222 | 310,269 |
Stockholders’ Equity: | ||
Common stock, $0.001 par value; 50,000 shares authorized; 29,323 and 29,224 shares issued and outstanding at November 29, 2020 and May 31, 2020, respectively | 29 | 29 |
Additional paid-in capital | 164,068 | 162,578 |
Retained earnings | 46,944 | 71,245 |
Accumulated other comprehensive loss | (2,103) | (2,808) |
Total Stockholders’ Equity | 208,938 | 231,044 |
Total Liabilities and Stockholders’ Equity | $ 499,160 | $ 541,313 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Nov. 29, 2020 | May 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 50,000,000,000 | 50,000,000,000 |
Common stock, shares issued (in shares) | 29,323,000 | 29,224,000 |
Common stock, shares outstanding (in shares) | 29,323,000 | 29,224,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
Income Statement [Abstract] | ||||
Product sales | $ 130,904 | $ 142,593 | $ 266,547 | $ 281,307 |
Cost of product sales | 110,267 | 127,079 | 229,564 | 250,457 |
Gross profit | 20,637 | 15,514 | 36,983 | 30,850 |
Operating costs and expenses: | ||||
Research and development | 2,572 | 2,822 | 5,080 | 5,643 |
Selling, general and administrative | 16,106 | 18,728 | 34,009 | 35,623 |
Legal settlement charge | 1,763 | 0 | 1,763 | 0 |
Restructuring costs | 1,662 | 0 | 10,066 | 0 |
Total operating costs and expenses | 22,103 | 21,550 | 50,918 | 41,266 |
Operating loss | (1,466) | (6,036) | (13,935) | (10,416) |
Dividend income | 281 | 281 | 563 | 562 |
Interest income | 10 | 25 | 18 | 50 |
Interest expense, net | (3,039) | (2,169) | (6,148) | (4,244) |
Other (expense) income, net | (11,787) | (6) | (11,808) | (6) |
Net loss before tax | (16,001) | (7,905) | (31,310) | (14,054) |
Income tax benefit | 2,700 | 1,165 | 7,009 | 2,530 |
Net loss | $ (13,301) | $ (6,740) | $ (24,301) | $ (11,524) |
Net loss per common share: | ||||
Net loss per common share - basic (in dollars per share) | $ (0.45) | $ (0.23) | $ (0.83) | $ (0.40) |
Net loss per common share - diluted (in dollars per share) | $ (0.45) | $ (0.23) | $ (0.83) | $ (0.40) |
Net loss per common share: | ||||
Basic (in shares) | 29,280 | 29,155 | 29,261 | 29,147 |
Diluted (in shares) | 29,280 | 29,155 | 29,261 | 29,147 |
Other comprehensive income (loss), net of tax: | ||||
Net unrealized gain (loss) on interest rate swaps (net of tax effect of $(121), $(39), $(228), and $226) | $ 401 | $ 127 | $ 705 | $ (485) |
Other comprehensive income, net | 401 | 127 | 705 | (485) |
Total comprehensive loss | $ (12,900) | $ (6,613) | $ (23,596) | $ (12,009) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
Income Statement [Abstract] | ||||
Revenue from Contract with Customer, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Cost, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Change in net unrealized gains (losses) on interest rate swap, tax | $ (121) | $ (39) | $ (228) | $ 226 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Loss |
Balance (in shares) at May. 26, 2019 | 29,102 | ||||||
Balance at May. 26, 2019 | $ 270,144 | $ (274) | $ 29 | $ 160,341 | $ 109,710 | $ (274) | $ 64 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of stock under stock plans (in shares) | 44 | ||||||
Issuance of stock under stock plans | 0 | ||||||
Taxes paid by Company for employee stock plans | (55) | (55) | |||||
Stock-based compensation | 528 | 528 | |||||
Net loss | (4,784) | (4,784) | |||||
Other comprehensive income (loss), net of tax | (612) | (612) | |||||
Balance (in shares) at Aug. 25, 2019 | 29,146 | ||||||
Balance at Aug. 25, 2019 | $ 264,947 | $ 29 | 160,814 | 104,652 | (548) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | ||||||
Balance (in shares) at May. 26, 2019 | 29,102 | ||||||
Balance at May. 26, 2019 | $ 270,144 | $ (274) | $ 29 | 160,341 | 109,710 | $ (274) | 64 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (11,524) | ||||||
Other comprehensive income (loss), net of tax | (485) | ||||||
Balance (in shares) at Nov. 24, 2019 | 29,163 | ||||||
Balance at Nov. 24, 2019 | 259,076 | $ 29 | 161,556 | 97,912 | (421) | ||
Balance (in shares) at Aug. 25, 2019 | 29,146 | ||||||
Balance at Aug. 25, 2019 | 264,947 | $ 29 | 160,814 | 104,652 | (548) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of stock under stock plans (in shares) | 17 | ||||||
Issuance of stock under stock plans | 30 | 30 | |||||
Taxes paid by Company for employee stock plans | (75) | (75) | |||||
Stock-based compensation | 787 | 787 | |||||
Net loss | (6,740) | (6,740) | |||||
Other comprehensive income (loss), net of tax | 127 | 127 | |||||
Balance (in shares) at Nov. 24, 2019 | 29,163 | ||||||
Balance at Nov. 24, 2019 | 259,076 | $ 29 | 161,556 | 97,912 | (421) | ||
Balance (in shares) at May. 31, 2020 | 29,224 | ||||||
Balance at May. 31, 2020 | 231,044 | $ 29 | 162,578 | 71,245 | (2,808) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of stock under stock plans (in shares) | 18 | ||||||
Issuance of stock under stock plans | 0 | ||||||
Taxes paid by Company for employee stock plans | (82) | (82) | |||||
Stock-based compensation | 892 | 892 | |||||
Net loss | (11,000) | (11,000) | |||||
Other comprehensive income (loss), net of tax | 304 | 304 | |||||
Balance (in shares) at Aug. 30, 2020 | 29,242 | ||||||
Balance at Aug. 30, 2020 | 221,158 | $ 29 | 163,388 | 60,245 | (2,504) | ||
Balance (in shares) at May. 31, 2020 | 29,224 | ||||||
Balance at May. 31, 2020 | 231,044 | $ 29 | 162,578 | 71,245 | (2,808) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (24,301) | ||||||
Other comprehensive income (loss), net of tax | 705 | ||||||
Balance (in shares) at Nov. 29, 2020 | 29,323 | ||||||
Balance at Nov. 29, 2020 | 208,938 | $ 29 | 164,068 | 46,944 | (2,103) | ||
Balance (in shares) at Aug. 30, 2020 | 29,242 | ||||||
Balance at Aug. 30, 2020 | 221,158 | $ 29 | 163,388 | 60,245 | (2,504) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of stock under stock plans (in shares) | 81 | ||||||
Issuance of stock under stock plans | 0 | ||||||
Taxes paid by Company for employee stock plans | (215) | (215) | |||||
Stock-based compensation | 895 | 895 | |||||
Net loss | (13,301) | (13,301) | |||||
Other comprehensive income (loss), net of tax | 401 | 401 | |||||
Balance (in shares) at Nov. 29, 2020 | 29,323 | ||||||
Balance at Nov. 29, 2020 | $ 208,938 | $ 29 | $ 164,068 | $ 46,944 | $ (2,103) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Nov. 29, 2020 | Nov. 24, 2019 | |
Cash flows from operating activities: | ||
Consolidated net loss | $ (24,301) | $ (11,524) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation, amortization of intangibles and amortization of debt costs | 9,826 | 9,030 |
Stock-based compensation expense | 1,787 | 1,315 |
Deferred taxes | (7,070) | (2,624) |
Change in investment in non-public company, fair value | 11,800 | (200) |
Net gain on disposal of property and equipment held and used | (34) | (15) |
Loss on disposal of property and equipment related to restructuring, net | 6,005 | 406 |
Other, net | 21 | 206 |
Change in contingent consideration liability | 0 | (500) |
Pacific Harvest note receivable reserve | 0 | 1,202 |
Changes in current assets and current liabilities: | ||
Accounts receivable, net | 9,661 | (397) |
Inventories | (4,891) | (4,431) |
Prepaid expenses and other current assets | 1,539 | (554) |
Accounts payable | 10,539 | (6,105) |
Accrued compensation | (1,345) | (1,988) |
Other accrued liabilities | 4,627 | 1,145 |
Deferred revenue | 292 | 112 |
Net cash provided by (used in) operating activities | 18,456 | (14,922) |
Cash flows from investing activities: | ||
Proceeds from sales of property and equipment | 12,885 | 29 |
Purchases of property and equipment | (7,407) | (16,029) |
Proceeds from collections of notes receivable | 0 | 364 |
Net cash provided by (used in) investing activities | 5,478 | (15,636) |
Cash flows from financing activities: | ||
Taxes paid by Company for employee stock plans | (297) | (130) |
Payments on long-term debt | (20,062) | (5,062) |
Proceeds from lines of credit | 24,000 | 62,900 |
Payments on lines of credit | (24,400) | (53,400) |
Payments for debt issuance costs | (1,237) | (766) |
Proceeds from sale of common stock | 0 | 30 |
Proceeds from long-term debt | 0 | 27,500 |
Net cash (used in) provided by financing activities | (21,996) | 31,072 |
Net increase in cash and cash equivalents | 1,938 | 514 |
Cash and cash equivalents, beginning of period | 553 | 1,465 |
Cash and cash equivalents, end of period | 2,491 | 1,979 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchases of property and equipment on trade vendor credit | $ 1,526 | $ 3,174 |
Organization, Basis of Presenta
Organization, Basis of Presentation, and Summary of Significant Accounting Policies | 6 Months Ended |
Nov. 29, 2020 | |
Accounting Policies [Abstract] | |
Organization, Basis of Presentation, and Summary of Significant Accounting Policies | Organization, Basis of Presentation, and Summary of Significant Accounting Policies Organization Landec Corporation and its subsidiaries (“Landec” or the “Company”) design, develop, manufacture, and sell differentiated products for food and biomaterials markets, and license technology applications to partners. Landec’s biomedical company, Lifecore Biomedical, Inc. (“Lifecore”), is a fully integrated contract development and manufacturing organization (“CDMO”) that offers highly differentiated capabilities in the development, fill and finish of sterile, injectable pharmaceutical products in syringes and vials. As a leading manufacturer of premium, injectable-grade hyaluronic acid, Lifecore brings 35 years of expertise as a partner for global and emerging biopharmaceutical and biotechnology companies across multiple therapeutic categories to bring their innovations to market. Lifecore recognizes revenue in two different product categories: CDMO and Fermentation. Landec’s natural food company, Curation Foods, Inc. (“Curation Foods”) is focused on innovating and distributing plant-based foods with 100% clean ingredients to retail, club and foodservice channels throughout North America. Curation Foods is able to maximize product freshness through its geographically dispersed family of growers, refrigerated supply chain and patented BreatheWay packaging technology. Its products are sold in natural food, conventional grocery and mass retail stores, primarily in the United States and Canada. The company categorizes revenue in three categories, Fresh packaged salads and vegetables, Avocado Products, and Technology which reports revenues for BreatheWay patented supply chain solutions. Included in the Curation Foods segment and fresh packaged salads and vegetables revenue disaggregation is O Olive Oil & Vinegar (“ O ”), which is a premier producer of California specialty olive oils and wine vinegars. Also included in the Curation Foods segment are the dividends from, and Landec’s share of the change in the fair market value of the Company’s 26.9% investment ownership, of Windset, a leading edge grower of hydroponically grown produce. Basis of Presentation The accompanying unaudited consolidated financial statements of Landec have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made which are necessary to present fairly the financial position of the Company at November 29, 2020, and the results of operations and cash flows for all periods presented. Although Landec believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information normally included in financial statements and related footnotes prepared in accordance with GAAP have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial data should be reviewed in conjunction with the audited financial statements and accompanying notes included in Landec's Annual Report on Form 10-K for the fiscal year ended May 31, 2020 (the “Annual Report”). The Company’s fiscal year is the 52- or 53-week period that ends on the last Sunday of May with quarters within each year ending on the last Sunday of August, November, and February; however, in instances where the last Sunday would result in a quarter being 12-weeks in length, the Company’s policy is to extend that quarter to the following Sunday. A 14th week is included in the fiscal year every five or six years to realign the Company’s fiscal quarters with calendar quarters. The results of operations for the six months ended November 29, 2020 are not necessarily indicative of the results that may be expected for an entire fiscal year because there is some seasonality in Curation Foods’ business and the order patterns of Lifecore’s customers which may lead to significant fluctuations in Landec’s quarterly results of operations. Basis of Consolidation The consolidated financial statements are presented on the accrual basis of accounting in accordance with GAAP and include the accounts of Landec Corporation and its subsidiaries, Curation Foods and Lifecore. All inter-company transactions and balances have been eliminated. Arrangements that are not controlled through voting or similar rights are reviewed under the guidance for variable interest entities (“VIEs”). A company is required to consolidate the assets, liabilities, and operations of a VIE if it is determined to be the primary beneficiary of the VIE. An entity is a VIE and subject to consolidation, if by design: a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including equity holders, or b) as a group the holders of the equity investment at risk lack any one of the following three characteristics: (i) the power, through voting rights or similar rights to direct the activities of an entity that most significantly impact the entity’s economic performance, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity. The Company reviewed the consolidation guidance and concluded that the equity investment in the non-public company is not a VIE. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require management’s most significant and subjective judgments include revenue recognition; loss contingencies; allowance for sales returns and credit losses; self-insurance liabilities; recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived asset (including intangible assets), and inventory; the valuation of investments; and the valuation and recognition of stock-based compensation. These estimates involve the consideration of complex factors and require management to make judgments. The analysis of historical and future trends can require extended periods of time to resolve and are subject to change from period to period. The actual results may differ from management’s estimates. We determined that certain inputs used in the valuation of the investment in Windset were incorrect and should have resulted in a $1.8 million reduction in the Investment in non-public company, fair value balance at August 30, 2020. We determined that the impact of the error to previously issued financial statements was not material and have corrected the immaterial error in the current period financial statements. The impact of this correction was an increase to Other (expense) income of $1.8 million for the three-months ended November 29, 2020. There was no impact to the six months ended November 29, 2020. Cash and Cash Equivalents The Company records all highly liquid securities with three months or less from date of purchase to maturity as cash equivalents. Cash equivalents consist mainly of money market funds. The market value of cash equivalents approximates their historical cost given their short-term nature. Reconciliation of Cash and Cash Equivalents as presented on the Statements of Cash Flows The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows: (In thousands) November 29, 2020 May 31, 2020 November 24, 2019 May 26, 2019 Cash and cash equivalents $ 2,491 $ 360 $ 1,594 $ 1,080 Restricted cash — 193 385 385 Cash, cash equivalents and restricted cash $ 2,491 $ 553 $1,979 $ 1,465 The Company was required to maintain $0.0 million and $0.2 million of restricted cash at November 29, 2020 and May 31, 2020, respectively, related to certain collateral requirements for obligations under its workers' compensation programs. The restricted cash is included in Other assets in the Company’s accompanying Consolidated Balance Sheets. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consist of the following: (In thousands) November 29, 2020 May 31, 2020 Finished goods $ 36,325 $ 35,177 Raw materials 26,983 25,856 Work in progress 7,894 5,278 Total $ 71,202 $ 66,311 If the cost of the inventories exceeds their net realizable value, provisions are recorded currently to reduce them to net realizable value. The Company also records a provision for slow moving and obsolete inventories based on the estimate of demand for its products. Accounts Receivable, Sales Returns, and Allowance for Credit Losses The Company carries its accounts receivable at their face amounts less an allowance for estimated sales returns and credit losses. Sales return allowances are estimated based on historical sales return amounts. The Company uses the loss rate method to estimate its expected credit losses on trade accounts receivable and contract assets. In order to estimate expected credit losses, the Company assessed recent historical experience, current economic conditions and any reasonable and supportable forecasts to identify risk characteristics that are shared within the financial asset. These risk characteristics are then used to bifurcate the loss rate method into risk pools. The risk pools were determined based on the industries in which the Company operates. Historical credit loss for each risk pool is then applied to the current period aging as presented in the identified risk pools to determine the needed reserve allowance. At times when there are not current economic conditions or forecasts that may affect future credit losses, the Company has determined that recent historical experience provide the best basis for estimating credit losses. The information obtained from assessing historical experience, current economic conditions and reasonable and supportable forecasts were used to identify risk characteristics that can affect future credit loss experience. There were no significant risk characteristics identified in the review of historical experiences or in the review of estimates of current economic conditions and forecasts. Estimating credit losses based on risk characteristics requires significant judgment by management. Significant judgments include, but are not limited to: assessing current economic conditions and the extent to which they are relevant to the existing characteristics of the Company’s financial assets, the estimated life of financial assets, and the level of reliance on historical experience in light of economic conditions. The Company will continually review and update, when necessary, its historical risk characteristics that are meaningful to estimating credit losses, any new risk characteristics that arise in the natural course of business, and the estimated life of its financial assets. The changes in the Company’s allowance for sales returns and credit losses are summarized in the following table (in thousands): Balance at beginning of period Provisions for expected credit losses Write offs, net of recoveries Balance at end of period Six months ended November 29, 2020 $ 438 $ 102 $ (263) $ 277 Related Party Transactions The Company sells and licenses its BreatheWay® food packaging technology to Windset Holdings 2010 Ltd. (“Windset”), in which, as further described in Note 2, the Company has a 26.9% ownership interest. During the three months ended November 29, 2020 and November 24, 2019, the Company recognized revenues of $0.1 million and $0.1 million, respectively. During the six months ended November 29, 2020 and November 24, 2019, the Company recognized revenues of $0.3 million and $0.2 million, respectively. These amounts have been included in Product sales in the accompanying Consolidated Statements of Comprehensive (Loss) Income. The related receivable balances of $0.3 million and $0.5 million are included in Accounts receivable in the accompanying Consolidated Balance Sheets as of November 29, 2020 and May 31, 2020, respectively. All related party transactions are monitored quarterly by the Company and approved by the Audit Committee of the Board of Directors. Debt Issuance Costs The Company records its line of credit debt issuance costs as an asset, and as such, $1.6 million and $0.0 million were recorded as Prepaid expenses and other current assets, and Other assets in the accompanying Consolidated Balance Sheets, respectively, as of November 29, 2020, and $0.3 million and $0.5 million, respectively, as of May 31, 2020. The Company records its term debt issuance costs as a contra-liability, and as such, $0.8 million and $0.0 million was recorded as Current portion of long-term debt, and Long-term debt, net in the accompanying Consolidated Balance Sheets, respectively, as of November 29, 2020 and $0.4 million and $0.6 million, respectively, as of May 31, 2020. Financial Instruments The Company’s financial instruments are primarily composed of commercial-term trade payables, grower advances, notes receivable, debt instruments and derivative instruments. For short-term instruments, the historical carrying amount approximates the fair value of the instrument. The fair value of long-term debt and lines of credit approximates their carrying value. Cash Flow Hedges The Company has entered into interest rate swap agreements to manage interest rate risk. These derivative instruments may offset a portion of the changes in interest expense. The Company designates these derivative instruments as cash flow hedges. The Company accounts for its derivative instruments as either an asset or a liability and carries them at fair value in Other assets or Other non-current liabilities. The accounting for changes in the fair value of the derivative instrument depends on the intended use of the derivative instrument and the resulting designation. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the entire change in the fair value of the hedging instrument is recorded as a component of Accumulated other comprehensive loss (“AOCL”) in Stockholders’ Equity. Those amounts are subsequently reclassified to earnings in the same line item in the Consolidated Statement of Operations as impacted by the hedged item when the hedged item affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. Accumulated Other Comprehensive Loss Comprehensive income (loss) consists of two components, net loss and Other comprehensive (loss) income (“OCI”). OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as a component of stockholders’ equity but are excluded from net (loss) income. The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instrument accounted for as a cash flow hedge. The components of AOCL, net of tax, are as follows: (In thousands) AOCL Balance as of May 31, 2020 $ (2,808) Other comprehensive loss before reclassifications, net of tax effect (344) Amounts reclassified from OCI 1,049 Other comprehensive income, net $ 705 November 29, 2020 $ (2,103) The Company expects to reclassify approximately $1.7 million into earnings in the next 12 months. Investment in Non-Public Company On February 15, 2011, the Company made its initial investment in Windset which is reported as an Investment in non-public company, fair value, in the accompanying Consolidated Balance Sheets as of November 29, 2020 and May 31, 2020. The Company has elected to account for its investment in Windset under the fair value option. See Note 2 – Investment in Non-public Company, for further information. Assets Held for Sale In January 2020, the Company decided to divest Curation Foods’ salad dressing plant in Ontario, California (“Ontario”). In the third quarter of fiscal year 2020, the Company (1) designated the fixed assets of its office and manufacturing space located in Ontario, California, as assets held for sale, and (2) recognized a $10.9 million impairment loss. The remaining fair value of $2.6 million is included in Property and equipment, net within the Consolidated Balance Sheet as of May 31, 2020. Liabilities of $0.3 million and $2.9 million related to these assets are included in Current portion of lease liabilities and Long-term lease liabilities, respectively, within the Consolidated Balance Sheet as of May 31, 2020. In the first quarter of fiscal year 2021, the Company sold its interest in Ontario. The Company received net cash proceeds of $4.9 million in connection with the sale and recorded a gain of $2.8 million during the six months ended November 29, 2020, which is included in Restructuring costs within the Consolidated Statements of Comprehensive (Loss) Income. On June 25, 2020 the Board of Directors approved a plan to close Curation Foods’ underutilized manufacturing operations in Hanover, Pennsylvania (“Hanover”), sell the building and assets related thereto, and consolidate its operations into its manufacturing facilities in Guadalupe, California and Bowling Green, Ohio. The $17.2 million carrying value of these assets is included in Property and equipment, net on the consolidated Balance Sheets as of May 31, 2020, and was not classified as assets held for sale as the plan to sell was not finalized until subsequent to fiscal year end 2020. In the first quarter of fiscal year 2021, the Company recognized an $8.8 million impairment loss, which is included in Restructuring costs within the Consolidated Statements of Comprehensive (Loss) Income. During the second quarter of fiscal year 2021, the Company sold the Hanover building and assets related thereto for net proceeds of $8.0 million. Leases Under Topic 842, the Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is a quoted rate based on the understanding of what the Company's credit rating would be. Certain agreements may contain the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset. The Company, when reasonably certain to exercise the option, considers these options in determining the measurement of the lease. The Company's lease agreements do not contain any material residual value guarantees. The Company's lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company combines fixed payments for non-lease components with lease payments and accounts for them together as a single lease component which increases the amount of lease assets and liabilities. Payments under lease arrangements are primarily fixed; however, certain lease agreements contain variable payments, which are expensed as incurred and are not included in the operating lease assets and liabilities. These amounts primarily include payments affected by changes in price indices. Intangible Assets The Company’s intangible assets are comprised of customer relationships with a finite estimated useful life ranging from 11 years to 13 years, and trademarks/tradenames and goodwill with indefinite useful lives. Finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset (or asset group) may not be recoverable. Indefinite lived intangible assets are reviewed for impairment at least annually. For goodwill and other indefinite-lived intangible assets, the Company performs a qualitative impairment analysis in accordance with ASC 350-30-35. Business Interruption Insurance Recoveries In the third quarter of fiscal year 2019, the Company recalled five SKUs of Eat Smart single-serve Salad Shake-Ups!™. In the fourth quarter of fiscal year 2019, the Company submitted a product recall claim. During the three and six months ended November 24, 2019, the Company recognized $0.6 million and $3.0 million of business interruption insurance recoveries, respectively, related to those recalls. Amounts received on insurance recoveries related to business interruption are recorded as a reduction to Cost of product sales in the Consolidated Statements of Comprehensive (Loss) Income and are classified as operating cash flows. For the three and six months ended November 29, 2020, there were no business interruption insurance recovery claims. Fair Value Measurements The Company uses fair value measurement accounting for financial assets and liabilities and for financial instruments and certain other items measured at fair value. The Company has elected the fair value option for its investment in a non-public company. The Company has not elected the fair value option for any of its other eligible financial assets or liabilities. The accounting guidance established a three-tier hierarchy for fair value measurements, which prioritizes the inputs used in measuring fair value as follows: Level 1 – observable inputs such as quoted prices for identical instruments in active markets. Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data. Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions. As of November 29, 2020 and May 31, 2020, the Company held certain assets and liabilities that are required or it elected to be measured at fair value on a recurring basis, including its interest rate swap contracts and its minority interest investment in Windset. The fair value of the Company’s interest rate swap contracts is determined based on model inputs that can be observed in a liquid market, including yield curves, and is categorized as a Level 2 fair value measurement and is included in Other assets or Other non-current liabilities in the accompanying Consolidated Balance Sheets. As of November 29, 2020 and May 31, 2020, the Company held certain assets that were required to be measured at fair value on a non-recurring basis. The fair market value of the assets held for sale, less the costs to sell, was $0.0 million and $2.6 million as of November 29, 2020 and May 31, 2020, respectively. The fair market value of Ontario (classified as an asset held for sale) as of May 31, 2020, was based on third-party valuations, which primarily used the market approach, and the inputs utilized were comparable sales of similar assets, which are generally unobservable and are supported by little or no market data, and therefore were classified within Level 3. The Company has elected the fair value option of accounting for its investment in Windset. The calculation of fair value utilizes significant unobservable inputs, including projected cash flows, growth rates, and discount rates. As a result, the Company’s investment in Windset is considered to be a Level 3 measurement investment. The change in the fair value of the Company’s investment in Windset for the three and six months ended November 29, 2020, was due to the Company's 26.9% minority interest in the change in the fair market value of Windset during the period. In determining the fair value of the investment in Windset, the Company utilizes the following significant unobservable inputs in the discounted cash flow models: November 29, 2020 Range May 31, 2020 Range Revenue growth rates 7% (6.9)% 6% to 7% (6.4)% Expense growth rates 0% to 8% (5.5)% 6% to 8% (6.6)% Income tax rates 15% 15% Discount rates 11% 12% The revenue growth, expense growth, and income tax rate assumptions are considered to be the Company's best estimate of the trends in those items over the discount period. The discount rate assumption takes into account the risk-free rate of return, the market equity risk premium, and the company’s specific risk premium and then applies an additional discount for lack of liquidity of the underlying securities. The discounted cash flow valuation model used by the Company has the following sensitivity to changes in inputs and assumptions: (In thousands) Impact on value of investment in Windset as of November 29, 2020 10% increase in revenue growth rates $ 6,000 10% increase in expense growth rates $ (3,200) 10% increase in income tax rates $ (100) 10% increase in discount rates $ (1,300) Imprecision in estimating unobservable market inputs can affect the amount of gain or loss recorded for a particular position. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The following table summarizes the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring and nonrecurring basis: (In thousands) Fair Value at November 29, 2020 Fair Value at May 31, 2020 Assets: Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets held for sale - nonrecurring $ — $ — $ — $ — $ — $ 2,607 Investment in non-public company — — 45,100 — — 56,900 Total assets $ — $ — $ 45,100 $ — $ — $ 59,507 Liabilities: Interest rate swap contracts $ — $ 2,646 $ — $ — $ 3,578 $ — Total liabilities $ — $ 2,646 $ — $ — $ 3,578 $ — The following table reflects the fair value roll forward reconciliation of Level 3 assets and liabilities measured at fair value for the six months ended November 29, 2020: (In thousands) Investment in Windset Balance as of May 31, 2020 $ 56,900 Fair value change (11,800) Balance as of November 29, 2020 $ 45,100 Revenue Recognition The Company follows the five step, principles-based model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. Revenue, net of estimated allowances and returns, is recognized when the Company has completed its performance obligations under a contract and control of the product is transferred to the customer. Substantially all revenue is recognized at the time shipment is made or upon delivery as control of the product is transferred to the customer. Revenue for development service contracts are generally recognized based upon the labor hours expended relative to the total expected hours as a measure of progress to depict transfer of control of the service over time. The services are not distinct and are accounted for as a single performance obligation for each customer. For descriptions of the Company’s product offerings and segments refer to Note 11 – Business Segment Reporting in our annual report on Form 10-K for the year ended May 31, 2020. The Company’s standard terms of sale are generally included in its contracts, purchase orders, and invoices. As such, all revenue is considered revenue recognized from contracts with customers. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. The Company has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. The Company’s standard payment terms with its customers generally range from 30 days to 90 days. Certain customers may receive cash-based incentives (including: volume rebates, discounts, and promotions), which are accounted for as variable consideration to the Company’s performance obligations. The Company estimates these sales incentives based on the expected amount to be provided to its customers and reduces revenues recognized towards its performance obligations. The Company does not anticipate significant changes in its estimates for variable consideration. The Company disaggregates its revenue by segment product lines based on how it markets its products and reviews results of operations. The following tables disaggregate segment revenue by major product lines: (In thousands) Three Months Ended Six Months Ended Curation Foods: November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Fresh packaged salads and vegetables $ 92,423 $ 104,912 $ 188,601 $ 214,743 Avocado products 14,713 14,021 31,730 30,221 Technology 549 818 1,192 1,460 Total $ 107,685 $ 119,751 $ 221,523 $ 246,424 (In thousands) Three Months Ended Six Months Ended Lifecore: November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Contact development and manufacturing organization $ 18,259 $ 17,811 $ 34,747 $ 29,114 Fermentation 4,960 5,031 10,277 5,769 Total $ 23,219 $ 22,842 $ 45,024 $ 34,883 Contract Assets and Liabilities Contract assets primarily relate to the Company’s conditional right to consideration for work completed but not billed at the reporting date. The Company’s contract assets as of November 29, 2020 and May 31, 2020, were $8.9 million and $9.0 million, respectively. Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. The Company’s contract liabilities as of November 29, 2020 and May 31, 2020, were $0.3 million and $0.0 million, respectively. Revenue recognized during the three and six months ended November 29, 2020, that was included in the contract liability balance at the beginning of fiscal year 2021, was $0.0 million. Shipping and Handling Costs Amounts billed to third-party customers for shipping and handling are included as a component of revenues. Shipping and handling costs incurred are included as a component of cost of products sold and represent costs incurred to ship product from the processing facility or distribution center to the end consumer markets. Legal Contingencies In the ordinary course of business, the Company is involved in various legal proceedings and claims. The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal fees are expensed in the period in which they are incurred. Claims Alleging Unfair Labor Practices Curation Foods has been the target of a union organizing campaign which has included three unsuccessful attempts to unionize Curation Foods’ Guadalupe, California processing plant. The campaign has involved a union and over 100 former and current employees of Pacific Harvest, Inc. and Rancho Harvest, Inc. (collectively "Pacific Harvest"), Curation Foods’ former labor contractors at its Guadalupe, California processing facility, bringing legal actions before various state and federal agencies, the California Superior Court, and initiating over 100 individual arbitrations against Curation Foods and Pacific Harvest. The legal actions consisted of various claims, all of which were settled in fiscal year 2017. Under the settlement agreement, the plaintiffs were to be paid in three installments. The Company and Pacific Harvest each agreed to pay one half of the settlement payments. The Company paid the entire first two installments and Pacific Harvest agreed to reimburse the Company for its $2.1 million portion. As of May 31, 2020 , the outstanding balance of the receivable was $1.2 million. The Company makes ongoing estimates relating to the collectability of receivables. A reserve is established for any note when there is reasonable doubt that the principal or interest will be collected in full. The Company may write-off uncollectable receivables after collection |
Investment in Non-public Compan
Investment in Non-public Company | 6 Months Ended |
Nov. 29, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment in Non-public Company | Investment in Non-public Company On February 15, 2011, Curation Foods entered into a share purchase agreement (the “Windset Purchase Agreement”) with Windset. Pursuant to the Windset Purchase Agreement, Curation Foods purchased from Windset 150,000 Senior A preferred shares for $15.0 million and 201 common shares for $201. On July 15, 2014, Curation Foods increased its investment in Windset by purchasing from the Newell Capital Corporation an additional 68 common shares and 51,211 junior preferred shares of Windset for $11.0 million. After this purchase, the Company’s common shares represent a 26.9% ownership interest in Windset. The Senior A preferred shares yield a cash dividend of 7.5% annually. The dividend is payable within 90 days of each anniversary of the execution of the Windset Purchase Agreement. The non-voting junior preferred stock does not yield a dividend unless declared by the Board of Directors of Windset and no such dividend has been declared. The Shareholders’ Agreement between Curation Foods and Windset, as amended on March 15, 2017, includes a put and call option (the “Put and Call Option”), which can be exercised on or after March 31, 2022, whereby Curation Foods can exercise the put to sell its common, Senior A preferred shares, and junior preferred shares to Windset, or Windset can exercise the call to purchase those shares from Curation Foods, in either case, at a price equal to 26.9% of the fair market value of Windset’s common shares, plus the liquidation value of the preferred shares of $20.1 million ($15.0 million for the Senior A preferred shares and $5.1 million for the junior preferred shares). Under the terms of the arrangement with Windset, the Company is entitled to designate one of five members on the Board of Directors of Windset. The investment in Windset does not qualify for equity method accounting as the investment does not meet the criteria of in-substance common stock due to returns through the annual dividend on the non-voting senior preferred shares that are not available to the common stockholders. As the put and call options require all of the various shares to be put or called in equal proportions, the Company has deemed that the investment, in substance, should be treated as a single security for purposes of accounting. The fair value of the Company’s investment in Windset was determined utilizing the Windset Purchase Agreement’s put/call calculation for value and a discounted cash flow model based on projections developed by Windset that were reviewed by Landec, and considers the put and call conversion options. These features impact the duration of the cash flows utilized to derive the estimated fair values of the investment. These two discounted cash flow models’ estimate for fair value are then weighted. Assumptions included in these discounted cash flow models will be evaluated quarterly based on Windset’s actual and projected operating results to determine the change in fair value. During the three months ended November 29, 2020 and November 24, 2019, the Company recorded $0.3 million and $0.3 million, respectively, in dividend income. During the six months ended November 29, 2020 and November 24, 2019, the Company recorded $0.6 million and $0.6 million, respectively, in dividend income. The change in the fair market value of the Company’s investment in Windset for the three and six months ended November 29, 2020 and November 24, 2019, was a decrease of $11.8 million and an increase of $0.2 million, respectively, and is included in Other expenses (income) in the accompanying Consolidated Statements of Comprehensive (Loss) Income. The change in the fair market value of the Company's investment in Windset for the three and six months ended November 29, 2020 was primarily due to changes in the financial assumptions relating to EBITDA, non productive assets, and debt levels. |
Stock-based Compensation and St
Stock-based Compensation and Stockholders' Equity | 6 Months Ended |
Nov. 29, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation and Stockholders' Equity | Stock-based Compensation and Stockholders' Equity Stock-Based Compensation Activity The estimated fair value for stock options, which determines the Company’s calculation of stock-based compensation expense, is based on the Black-Scholes option pricing model. Restricted stock units (“RSUs”) are valued at the closing market price of the Company’s common stock on the grant date. The Company uses the straight-line method to recognize the fair value of stock-based compensation arrangements. During the three months ended November 29, 2020, the Company granted 21,000 options to purchase shares of common stock and awarded 82,000 RSUs. During the six months ended November 29, 2020, the Company granted 573,000 options to purchase shares of common stock and awarded 171,000 RSUs. As of November 29, 2020, the Company has reserved 4.1 million shares of common stock for future issuance under its current and former equity plans. Stock-Based Compensation Expense The Company’s stock-based awards include stock option grants and RSUs. The Company records compensation expense for stock-based awards issued to employees and directors in exchange for services provided based on the estimated fair value of the awards on their grant date and is recognized over the required service period, generally the vesting period. The following table summarizes stock-based compensation by income statement line item: Three Months Ended Six Months Ended (In thousands) November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Cost of sales $ 59 $ 82 182 56 Research and development 62 48 126 78 Selling, general and administrative 774 657 1,479 1,181 Total stock-based compensation $ 895 $ 787 1,787 1,315 As of November 29, 2020, there was $4.7 million of total unrecognized compensation expense related to unvested equity compensation awards granted under the Landec incentive stock plans. Total expense is expected to be recognized over the weighted-average period of 2.37 years for stock options and 1.55 years for RSUs. Stock Repurchase Plan On July 14, 2010, the Board of Directors of the Company approved the establishment of a stock repurchase plan, which allows for the repurchase of up to $10.0 million of the Company’s common stock. The Company may still repurchase up to $3.8 million of the Company’s common stock under the Company’s stock repurchase plan. The Company may repurchase its common stock from time to time in open market purchases or in privately negotiated transactions. The timing and actual number of shares repurchased is at the discretion of management of the Company and will depend on a variety of factors, including stock price, corporate and regulatory requirements, market conditions, the relative attractiveness of other capital deployment opportunities and other corporate priorities. The stock repurchase program does not obligate Landec to acquire any amount of its common stock and the program may be modified, suspended or terminated at any time at the Company's discretion without prior notice. During the six months ended November 29, 2020, the Company did not purchase any shares on the open market. |
Diluted Earnings Per Share
Diluted Earnings Per Share | 6 Months Ended |
Nov. 29, 2020 | |
Earnings Per Share [Abstract] | |
Diluted Earnings Per Share | Diluted Earnings Per Share The following table sets forth the computation of diluted earnings per share: Three Months Ended Six Months Ended (In thousands, except per share amounts) November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Numerator: Net loss applicable to common stockholders $ (13,301) $ (6,740) $ (24,301) $ (11,524) Denominator: Weighted average shares for basic net loss per share 29,280 29,155 29,261 29,147 Effect of dilutive securities: Stock options and restricted stock units — — — — Weighted average shares for diluted net loss per share 29,280 29,155 29,261 29,147 Diluted net loss per share $ (0.45) $ (0.23) $ (0.83) $ (0.40) |
Income Taxes
Income Taxes | 6 Months Ended |
Nov. 29, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the six months ended November 29, 2020 and November 24, 2019, was a benefit of $7.0 million and $2.5 million, respectively. The effective tax rate for the six months ended November 29, 2020 and November 24, 2019 was 22% and 18%, respectively. The effective tax rate for the six months ended November 29, 2020, was higher than the statutory federal income tax rate of 21% primarily due to the generation of federal & state R&D credits and impact of states taxes, partially offset by the movement of the valuation allowance recorded against certain deferred tax assets. As of November 29, 2020 and May 31, 2020, the Company had unrecognized tax benefits of $0.9 million and $0.8 million, respectively. Included in the balance of unrecognized tax benefits as of November 29, 2020 and May 31, 2020, is $0.8 million and $0.7 million, respectively, of tax benefits that, if recognized, would result in an adjustment to the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly within the next twelve months. The Company has elected to classify interest and penalties related to uncertain tax positions as a component of its provision for income taxes. The Company has accrued an insignificant amount of interest and penalties relating to the income tax on the unrecognized tax benefits as of November 29, 2020 and May 31, 2020. Due to tax attribute carryforwards, the Company is subject to examination for tax years 2017 forward for U.S. tax purposes. The Company is also subject to examination in various state jurisdictions for tax years 2015 forward, none of which were individually significant. |
Debt
Debt | 6 Months Ended |
Nov. 29, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt, net consists of the following: (In thousands) November 29, 2020 May 31, 2020 Term loan $ 94,000 $ 114,000 Total principal amount of long-term debt 94,000 114,000 Less: unamortized debt issuance costs (811) (1,083) Total long-term debt, net of unamortized debt issuance costs 93,189 112,917 Less: current portion of long-term debt, net (11,189) (11,554) Long-term debt, net $ 82,000 $ 101,363 On September 23, 2016, the Company entered into a Credit Agreement (the "Credit Agreement") with JPMorgan, BMO, and City National Bank, as lenders (collectively, the “Lenders”), and JPMorgan as administrative agent, pursuant to which the Lenders provided the Company with a $100.0 million revolving line of credit (the “Revolver”) and a $50.0 million term loan facility (the “Term Loan”), guaranteed by each of the Company’s direct and indirect subsidiaries and secured by substantially all of the Company’s assets, with the exception of the Company’s investment in Windset. On November 30, 2018, the Company entered into the Fourth Amendment to the Credit Agreement, which increased the Term Loan to $100.0 million and the Revolver to $105.0 million. On October 25, 2019, the Company entered into the Sixth Amendment to the Credit Agreement, which increased the Term Loan to $120.0 million and decreased the revolver to $100.0 million. On March 19, 2020, the Company entered into the Seventh Amendment to the Credit Agreement (the "Seventh Amendment"), which among other changes, retroactively increased the maximum Total Leverage Ratio (as defined in the Credit Agreement as the ratio of the Company’s total indebtedness on such date to the Company’s consolidated EBITDA for the period of four consecutive fiscal quarters ended on or most recently prior to such date) to 5.75 to 1.00 for the fiscal quarter ended February 23, 2020, which decreases back to 5.00 to 1.00 for the fiscal quarter ending May 31, 2020. The maximum Total Leverage Ratio thereafter decreases by 25 basis points each subsequent fiscal quarter thereafter, until it reaches 3.50 for the fiscal quarter ending November 28, 2021, and then remains fixed through maturity. The Seventh Amendment also introduced additional financial covenants that remain in effect through May 31, 2020, including minimum cumulative monthly Unadjusted EBITDA thresholds and maximum capital expenditures, as well as additional reporting requirements and frequencies. Interest on both the Revolver and the Term Loan continued to be based upon the Company’s Total Leverage Ratio, at a per annum rate of either (i) the prime rate plus a spread of between 0.25% and 3.00% or (ii) the Eurodollar rate plus a spread of between 1.25% and 4.00% . The Seventh Amendment also provided for the acceleration of the maturity of the Term Loan from October 25, 2022 to September 23, 2021 if the Company fails to be in compliance with certain financial covenants. On July 15, 2020, the Company entered into the Eighth Amendment to the Credit Agreement (the “Eighth Amendment”), which among other things, (i) modified the definition of EBITDA to increase the limit on permitted exclusions for certain unusual, extraordinary or one-time cash items for each fiscal quarter ending on or after February 28, 2021, to a maximum of 20% of EBITDA, and (ii) restricted the Company from making Capital Expenditures over certain thresholds. Interest continues to be based on the Company’s Total Leverage Ratio, at a revised per annum Applicable Rate of either (i) the prime rate plus a spread of between 0.75% and 3.50% or (ii) the Eurodollar rate plus a spread of between 1.75% and 4.50%, plus, in each case, a commitment fee, as applicable, of between 0.15% and 0.55%, as further described in the Eighth Amendment. The Credit Agreement provided the Company the right to increase the Revolver commitments and/or the Term Loan commitments by obtaining additional commitments either from one or more of the Lenders or another lending institution at an amount of up to $10.0 million. Both the Revolver and the Term Loan were scheduled to mature on September 23, 2021, with the Term Loan requiring quarterly principal payments of $3.0 million and the remainder continuing to be due at maturity. The Credit Agreement contained customary financial covenants and events of default under which the obligation could be accelerated and/or the interest rate increased. As of November 29, 2020, the Company was in compliance with all financial covenants and events of default provisions under the Credit Agreement. As of November 29, 2020, $77.0 million was outstanding on the Revolver, at an interest rate of 4.65%. As further described in Note 9 - Subsequent Events, the Credit Agreement was terminated in connection with the refinancing of the Company's indebtedness subsequent to the balance sheet date. Derivative Instruments On November 1, 2016, the Company entered into an interest rate swap contract (the “2016 Swap”) with BMO at a notional amount of $50.0 million. The 2016 Swap has the effect of changing the Company’s Term Loan obligation from a variable interest rate to a fixed 30-day LIBOR rate of 1.22%. On June 25, 2018, the Company entered into an interest rate swap contract (the “2018 Swap”) with BMO at a notional amount of $30.0 million. The 2018 Swap has the effect of converting the first $30.0 million of the total outstanding amount of the Company’s 30-day LIBOR borrowings from a variable interest rate to a fixed 30-day LIBOR rate of 2.74%. On December 2, 2019, the Company entered into an interest rate swap contract (the "2019 Swap") with BMO at a notional amount of $110.0 million which decreases quarterly. The 2019 Swap has the effect of converting primarily all of the $110.0 million of the total outstanding amount of the Company's 30-day LIBOR borrowings from a variable interest rate to a fixed 30-day LIBOR rate of 1.526%. |
Business Segment Reporting
Business Segment Reporting | 6 Months Ended |
Nov. 29, 2020 | |
Segment Reporting [Abstract] | |
Business Segment Reporting | Business Segment Reporting The Company operates using three strategic reportable business segments, aligned with how the Chief Executive Officer, who is the chief operating decision maker (“CODM”), manages the business: the Curation Foods segment, the Lifecore segment, and the Other segment. The Curation Foods segment includes (i) four natural food brands, including activities to market and pack specialty packaged whole and fresh-cut fruits and vegetables under the Eat Smart or various private labels, sale of premium olive oil and vinegars under the O Olive Oil & Vinegar label, and the sale of avocado products under the Yucatan Foods and Cabo Fresh labels, (ii) BreatheWay ® activities, and (iii) activity related to our 26.9% investment in Windset. The Lifecore segment sells products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellular matrix of connective tissues in both animals and humans, and non-HA products for medical use primarily in the Ophthalmic, Orthopedic and other markets. The Other segment includes corporate general and administrative expenses (which includes costs associated with legal claims, including the Tanok compliance matters and related litigation, and Pacific litigation matter), non-Curation Foods and non-Lifecore interest expense, interest income, and income tax expenses. Corporate overhead is allocated between segments based on actual utilization and relative size. All of the Company's assets are located within the United States of America except for its Yucatan production facility located in Mexico. The Company’s international sales by geography are based on the billing address of the customer and were as follows: Three Months Ended Six Months Ended (In millions) November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Canada $ 13.7 $ 18.4 $ 30.2 $ 39.1 Belgium 2.8 3.1 6.7 3.1 Czech Republic 1.2 — 1.7 — Ireland 0.4 1.1 1.2 2.5 All Other Countries 1.6 2.0 2.8 3.4 Operations by business segment consisted of the following: (In thousands) Curation Foods Lifecore Other Total Three Months Ended November 29, 2020 Net sales $ 107,685 $ 23,219 $ — $ 130,904 Gross profit 10,163 10,474 — 20,637 Net (loss) income (12,383) 4,492 (5,410) (13,301) Depreciation and amortization 2,906 1,360 26 4,291 Dividend income 281 — — 281 Interest income — — 10 10 Interest expense 1,376 — 1,663 3,039 Income tax (benefit) expense (3,911) 1,419 (208) (2,700) Corporate overhead allocation 1,402 1,162 (2,564) — Six Months Ended November 29, 2020 Net sales $ 221,523 $ 45,024 $ — $ 266,547 Gross profit 21,507 15,476 — 36,983 Net (loss) income (20,654) 4,604 (8,251) (24,301) Depreciation and amortization 6,316 2,669 54 9,039 Dividend income 563 — — 563 Interest income — — 18 18 Interest expense 2,751 — 3,396 6,148 Income tax (benefit) expense (6,523) 1,454 (1,940) (7,009) Corporate overhead allocation 3,258 2,565 (5,823) — Three Months Ended November 24, 2019 Net sales $ 119,751 $ 22,842 $ — $ 142,593 Gross profit 6,890 8,624 — 15,514 Net (loss) income (8,348) 3,459 (1,851) (6,740) Depreciation and amortization 3,143 1,248 23 4,414 Dividend income 281 — — 281 Interest income 11 — 14 25 Interest expense 1,375 — 794 2,169 Income tax (benefit) expense (1,723) 919 (361) (1,165) Corporate overhead allocation 1,414 959 (2,373) — Six Months Ended November 24, 2019 Net sales $ 246,424 $ 34,883 $ — $ 281,307 Gross profit 19,712 11,138 — 30,850 Net (loss) income (10,519) 2,064 (3,069) (11,524) Depreciation and amortization 6,348 2,433 46 8,827 Dividend income 562 — — 562 Interest income 31 — 19 50 Interest expense 2,751 — 1,493 4,244 Income tax (benefit) expense (2,309) 454 (675) (2,530) Corporate overhead allocation 3,109 1,936 (5,045) — |
Restructuring Costs
Restructuring Costs | 6 Months Ended |
Nov. 29, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs During fiscal year 2020, the Company announced a restructuring plan to drive enhanced profitability, focus the business on its strategic assets and redesign the organization to be the appropriate size to compete and thrive. This includes a reduction-in-force, a reduction in leased office spaces, and the sale of non-strategic assets. In the first quarter of fiscal year 2021, the Company sold its interest in Ontario. The Company received net cash proceeds of $4.9 million in connection with the sale, and recorded a gain of $2.8 million which is included in Restructuring costs within the Consolidated Statements of Comprehensive (Loss) Income. See the Assets Held for Sale section within Note 1 for additional information. In the first quarter of fiscal year 2021, the Company recognized an $8.8 million impairment loss related to its Hanover building and related assets which were sold in the second quarter of fiscal year 2021. The loss is included in Restructuring costs within the Consolidated Statements of Comprehensive (Loss) Income. See the Assets Held for Sale section within Note 1 for additional information. In August 2020, the Company closed its leased Santa Clara, California office and entered into a sublease agreement. In the fourth quarter of fiscal year 2020 the Company closed its leased Los Angeles, California office and plans to sublease the office. For the three and six months ended November 29, 2020, other restructuring costs primarily related to consulting costs to execute the Company’s restructuring plan to drive enhanced profitability, focus the business on its strategic assets, and redesign the organization to be the appropriate size to compete and thrive. The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of (Loss) Income, by Business Segment: (in thousands) Curation Foods Lifecore Other Total Three Months Ended November 29, 2020 Asset write-off costs $ — $ — $ — $ — Employee severance and benefit costs 211 — — 211 Lease costs — — — — Other restructuring costs 1,295 — 156 1,451 Total restructuring costs $ 1,506 $ — $ 156 $ 1,662 (in thousands) Curation Foods Lifecore Other Total Six Months Ended November 29, 2020 Asset write-off costs $ 6,005 $ — $ — $ 6,005 Employee severance and benefit costs 1,115 — — 1,115 Lease costs — — — — Other restructuring costs 2,143 — 803 2,946 Total restructuring costs $ 9,263 $ — $ 803 $ 10,066 The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of (Loss) Income, by Business Segment, since inception of the restructuring plan in fiscal year 2020 through the six months ended November 29, 2020: Curation Foods Lifecore Other Total (in thousands) Asset write-off costs, net $ 18,667 $ — $ 418 $ 19,085 Employee severance and benefit costs 2,584 — 784 3,368 Lease costs 392 — 26 418 Other restructuring costs 3,166 — 1,314 4,480 Total restructuring costs $ 24,809 $ — $ 2,542 $ 27,351 The total expected cost related to the restructuring plan is approximately $29.0 million. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Nov. 29, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Debt Refinancing On December 31, 2020, the Company refinanced its existing Term Loan and Revolver by entering into two separate Credit Agreements (the "New Credit Agreements") with BMO Harris Bank N.A. ("BMO") and Goldman Sachs Specialty Lending Group, L.P. (“Goldman”) and Guggenheim Credit Services, LLC ("Guggenheim"), as lenders (collectively, the “Refinance Lenders”). Pursuant to the credit agreement related to the revolving credit facility, BMO has provided the Company, Curation Foods and Lifecore, as co-borrowers, with an up to $75.0 million revolving line of credit (the “Refinance Revolver”) and serves as administrative agent of the Refinance Revolver. Pursuant to the credit agreement related to the term loan, Goldman and Guggenheim have provided the Company, Curation Foods and Lifecore, as co-borrowers, with an up to $170.0 million term loan facility (split equally between Goldman and Guggenheim) (the “Refinance Term Loan”) and Goldman will serve as administrative agent of the Refinance Term Loan. The Refinance Revolver and Refinance Term Loan are guaranteed, and secured by, substantially all of the Company’s and the Company's direct and indirect subsidiaries' assets. The Refinance Term Loan matures on December 31, 2025. The Refinance Revolver matures on December 31, 2025 or, if the Refinance Term Loan remains outstanding on such date, ninety (90) days prior to the maturity date of the Refinance Term Loan (on October 2, 2025). The Refinance Term Loan provides for principal payments by the Company of 5% per annum, payable quarterly in arrears in equal installments, commencing on March 30, 2023, with the remainder due at maturity. Interest on the Refinance Revolver is based upon the Company’s average availability, at a per annum rate of either (i) LIBOR rate plus a spread of between 2.00% and 2.50% or (ii) base rate plus a spread of between 1.00% and 1.50%, plus a commitment fee, as applicable, of 0.375%. Interest on the Refinance Term Loan is at a per annum rate based on either (i) the base rate plus a spread of 7.50% or (ii) the LIBOR rate plus a spread of 8.50%. The New Credit Agreements provide the Company the right to increase the revolver commitments under the Refinance Revolver, subject to the satisfaction of certain conditions (including consent from BMO), by obtaining additional commitments from either BMO or another lending institution at an amount of up to $15.0 million. The New Credit Agreements contains customary financial covenants and events of default under which the obligations thereunder could be accelerated and/or the interest rate increased in specified circumstances. In connection with the New Credit Agreements, the Company estimated debt issuance costs from the lender and third-party of approximately $8.6 million. Concurrent with the close of the New Credit Agreements, the Company repaid all outstanding borrowings under the current Credit Agreement, and terminated the Credit Agreement. As of December 31, 2020, the Company had $150.0 million in borrowings outstanding under the Refinance Term Loan, and $36.0 million in borrowings outstanding under the Refinance Revolver. In connection with the repayment of borrowings under the Credit Agreement, the Company expects to recognize a loss in its third quarter of fiscal year 2021 of $1.2 million, primarily as a result of the non-cash write-off of unamortized debt issuance costs related to the refinancing under the New Credit Agreements. COVID-19 Pandemic There are many uncertainties regarding the current novel coronavirus (“COVID-19”) pandemic, including the scope of scientific and health issues, the anticipated duration of the pandemic, and the extent of local and worldwide social, political, and economic disruption it may cause. The COVID-19 pandemic as well as the actions taken in response to the pandemic, have had, and we believe will continue to have, significant adverse impacts on many aspects of the Company’s operations, directly and indirectly, including with respect to sales, customer behaviors, business and manufacturing operations, inventory, the Company’s employees, and the market generally, and the scope and nature of these impacts continue to evolve each day. The Company expects to continue to assess the evolving impact of the COVID-19 pandemic, and intends to continue to make adjustments to its responses accordingly. |
Organization, Basis of Presen_2
Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Nov. 29, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements of Landec have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made which are necessary to present fairly the financial position of the Company at November 29, 2020, and the results of operations and cash flows for all periods presented. Although Landec believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information normally included in financial statements and related footnotes prepared in accordance with GAAP have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial data should be reviewed in conjunction with the audited financial statements and accompanying notes included in Landec's Annual Report on Form 10-K for the fiscal year ended May 31, 2020 (the “Annual Report”). The Company’s fiscal year is the 52- or 53-week period that ends on the last Sunday of May with quarters within each year ending on the last Sunday of August, November, and February; however, in instances where the last Sunday would result in a quarter being 12-weeks in length, the Company’s policy is to extend that quarter to the following Sunday. A 14th week is included in the fiscal year every five or six years to realign the Company’s fiscal quarters with calendar quarters. The results of operations for the six months ended November 29, 2020 are not necessarily indicative of the results that may be expected for an entire fiscal year because there is some seasonality in Curation Foods’ business and the order patterns of Lifecore’s customers which may lead to significant fluctuations in Landec’s quarterly results of operations. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements are presented on the accrual basis of accounting in accordance with GAAP and include the accounts of Landec Corporation and its subsidiaries, Curation Foods and Lifecore. All inter-company transactions and balances have been eliminated. Arrangements that are not controlled through voting or similar rights are reviewed under the guidance for variable interest entities (“VIEs”). A company is required to consolidate the assets, liabilities, and operations of a VIE if it is determined to be the primary beneficiary of the VIE. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require management’s most significant and subjective judgments include revenue recognition; loss contingencies; allowance for sales returns and credit losses; self-insurance liabilities; recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived asset (including intangible assets), and inventory; the valuation of investments; and the valuation and recognition of stock-based compensation. These estimates involve the consideration of complex factors and require management to make judgments. The analysis of historical and future trends can require extended periods of time to resolve and are subject to change from period to period. The actual results may differ from management’s estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company records all highly liquid securities with three months or less from date of purchase to maturity as cash equivalents. Cash equivalents consist mainly of money market funds. The market value of cash equivalents approximates their historical cost given their short-term nature. |
Restricted Cash | The Company was required to maintain $0.0 million and $0.2 million of restricted cash at November 29, 2020 and May 31, 2020, respectively, related to certain collateral requirements for obligations under its workers' compensation programs. The restricted cash is included in Other assets in the Company’s accompanying Consolidated Balance Sheets. |
Inventories | Inventories Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consist of the following: (In thousands) November 29, 2020 May 31, 2020 Finished goods $ 36,325 $ 35,177 Raw materials 26,983 25,856 Work in progress 7,894 5,278 Total $ 71,202 $ 66,311 If the cost of the inventories exceeds their net realizable value, provisions are recorded currently to reduce them to net realizable value. The Company also records a provision for slow moving and obsolete inventories based on the estimate of demand for its products. |
Accounts Receivable and Sales Returns and Allowance for Credit Losses | Accounts Receivable, Sales Returns, and Allowance for Credit Losses The Company carries its accounts receivable at their face amounts less an allowance for estimated sales returns and credit losses. Sales return allowances are estimated based on historical sales return amounts. The Company uses the loss rate method to estimate its expected credit losses on trade accounts receivable and contract assets. In order to estimate expected credit losses, the Company assessed recent historical experience, current economic conditions and any reasonable and supportable forecasts to identify risk characteristics that are shared within the financial asset. These risk characteristics are then used to bifurcate the loss rate method into risk pools. The risk pools were determined based on the industries in which the Company operates. Historical credit loss for each risk pool is then applied to the current period aging as presented in the identified risk pools to determine the needed reserve allowance. At times when there are not current economic conditions or forecasts that may affect future credit losses, the Company has determined that recent historical experience provide the best basis for estimating credit losses. The information obtained from assessing historical experience, current economic conditions and reasonable and supportable forecasts were used to identify risk characteristics that can affect future credit loss experience. There were no significant risk characteristics identified in the review of historical experiences or in the review of estimates of current economic conditions and forecasts. Estimating credit losses based on risk characteristics requires significant judgment by management. Significant judgments include, but are not limited to: assessing current economic conditions and the extent to which they are relevant to the existing characteristics of the Company’s financial assets, the estimated life of financial assets, and the level of reliance on historical experience in light of economic conditions. The Company will continually review and update, when necessary, its historical risk characteristics that are meaningful to estimating credit losses, any new risk characteristics that arise in the natural course of business, and the estimated life of its financial assets. The changes in the Company’s allowance for sales returns and credit losses are summarized in the following table (in thousands): Balance at beginning of period Provisions for expected credit losses Write offs, net of recoveries Balance at end of period Six months ended November 29, 2020 $ 438 $ 102 $ (263) $ 277 |
Related Party Transactions | Related Party Transactions The Company sells and licenses its BreatheWay® food packaging technology to Windset Holdings 2010 Ltd. (“Windset”), in which, as further described in Note 2, the Company has a 26.9% ownership interest. During the three months ended November 29, 2020 and November 24, 2019, the Company recognized revenues of $0.1 million and $0.1 million, respectively. During the six months ended November 29, 2020 and November 24, 2019, the Company recognized revenues of $0.3 million and $0.2 million, respectively. These amounts have been included in Product sales in the accompanying Consolidated Statements of Comprehensive (Loss) Income. The related receivable balances of $0.3 million and $0.5 million are included in Accounts receivable in the accompanying Consolidated Balance Sheets as of November 29, 2020 and May 31, 2020, respectively. |
Debt Issuance Costs | Debt Issuance Costs The Company records its line of credit debt issuance costs as an asset, and as such, $1.6 million and $0.0 million were recorded as Prepaid expenses and other current assets, and Other assets in the accompanying Consolidated Balance Sheets, respectively, as of November 29, 2020, and $0.3 million and $0.5 million, respectively, as of May 31, 2020. The Company records its term debt issuance costs as a contra-liability, and as such, $0.8 million and $0.0 million was recorded as Current portion of long-term debt, and Long-term debt, net in the accompanying Consolidated Balance Sheets, respectively, as of November 29, 2020 and $0.4 million and $0.6 million, respectively, as of May 31, 2020. |
Financial Instruments | Financial Instruments The Company’s financial instruments are primarily composed of commercial-term trade payables, grower advances, notes receivable, debt instruments and derivative instruments. For short-term instruments, the historical carrying amount approximates the fair value of the instrument. The fair value of long-term debt and lines of credit approximates their carrying value. Cash Flow Hedges The Company has entered into interest rate swap agreements to manage interest rate risk. These derivative instruments may offset a portion of the changes in interest expense. The Company designates these derivative instruments as cash flow hedges. The Company accounts for its derivative instruments as either an asset or a liability and carries them at fair value in Other assets or Other non-current liabilities. The accounting for changes in the fair value of the derivative instrument depends on the intended use of the derivative instrument and the resulting designation. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the entire change in the fair value of the hedging instrument is recorded as a component of Accumulated other comprehensive loss (“AOCL”) in Stockholders’ Equity. Those amounts are subsequently reclassified to earnings in the same line item in the Consolidated Statement of Operations as impacted by the hedged item when the hedged item affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. Accumulated Other Comprehensive Loss Comprehensive income (loss) consists of two components, net loss and Other comprehensive (loss) income (“OCI”). OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as a component of stockholders’ equity but are excluded from net (loss) income. The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instrument accounted for as a cash flow hedge. The components of AOCL, net of tax, are as follows: (In thousands) AOCL Balance as of May 31, 2020 $ (2,808) Other comprehensive loss before reclassifications, net of tax effect (344) Amounts reclassified from OCI 1,049 Other comprehensive income, net $ 705 November 29, 2020 $ (2,103) The Company expects to reclassify approximately $1.7 million into earnings in the next 12 months. |
Investment in Non-Public Company | Investment in Non-Public CompanyOn February 15, 2011, the Company made its initial investment in Windset which is reported as an Investment in non-public company, fair value, in the accompanying Consolidated Balance Sheets as of November 29, 2020 and May 31, 2020. The Company has elected to account for its investment in Windset under the fair value option. |
Assets Held for Sale | Assets Held for Sale In January 2020, the Company decided to divest Curation Foods’ salad dressing plant in Ontario, California (“Ontario”). In the third quarter of fiscal year 2020, the Company (1) designated the fixed assets of its office and manufacturing space located in Ontario, California, as assets held for sale, and (2) recognized a $10.9 million impairment loss. The remaining fair value of $2.6 million is included in Property and equipment, net within the Consolidated Balance Sheet as of May 31, 2020. Liabilities of $0.3 million and $2.9 million related to these assets are included in Current portion of lease liabilities and Long-term lease liabilities, respectively, within the Consolidated Balance Sheet as of May 31, 2020. In the first quarter of fiscal year 2021, the Company sold its interest in Ontario. The Company received net cash proceeds of $4.9 million in connection with the sale and recorded a gain of $2.8 million during the six months ended November 29, 2020, which is included in Restructuring costs within the Consolidated Statements of Comprehensive (Loss) Income. On June 25, 2020 the Board of Directors approved a plan to close Curation Foods’ underutilized manufacturing operations in Hanover, Pennsylvania (“Hanover”), sell the building and assets related thereto, and consolidate its operations into its manufacturing facilities in Guadalupe, California and Bowling Green, Ohio. The $17.2 million carrying value of these assets is included in Property and equipment, net on the consolidated Balance Sheets as of May 31, 2020, and was not classified as assets held for sale as the plan to sell was not finalized until subsequent to fiscal year end 2020. In the first quarter of fiscal year 2021, the Company recognized an $8.8 million impairment loss, which is included in Restructuring costs within the Consolidated Statements of Comprehensive (Loss) Income. During the second quarter of fiscal year 2021, the Company sold the Hanover building and assets related thereto for net proceeds of $8.0 million. |
Leases | Leases Under Topic 842, the Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is a quoted rate based on the understanding of what the Company's credit rating would be. Certain agreements may contain the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset. The Company, when reasonably certain to exercise the option, considers these options in determining the measurement of the lease. The Company's lease agreements do not contain any material residual value guarantees. The Company's lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company combines fixed payments for non-lease components with lease payments and accounts for them together as a single lease component which increases the amount of lease assets and liabilities. Payments under lease arrangements are primarily fixed; however, certain lease agreements contain variable payments, which are expensed as incurred and are not included in the operating lease assets and liabilities. These amounts primarily include payments affected by changes in price indices. |
Intangible Assets | Intangible Assets The Company’s intangible assets are comprised of customer relationships with a finite estimated useful life ranging from 11 years to 13 years, and trademarks/tradenames and goodwill with indefinite useful lives. Finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset (or asset group) may not be recoverable. Indefinite lived intangible assets are reviewed for impairment at least annually. For goodwill and other indefinite-lived intangible assets, the Company performs a qualitative impairment analysis in accordance with ASC 350-30-35. |
Business Interruption Insurance Recoveries | Business Interruption Insurance Recoveries In the third quarter of fiscal year 2019, the Company recalled five SKUs of Eat Smart single-serve Salad Shake-Ups!™. In the fourth quarter of fiscal year 2019, the Company submitted a product recall claim. During the three and six months ended November 24, 2019, the Company recognized $0.6 million and $3.0 million of business interruption insurance recoveries, respectively, related to those recalls. Amounts received on insurance recoveries related to business interruption are recorded as a reduction to Cost of product sales in the Consolidated Statements of Comprehensive (Loss) Income and are classified as operating cash flows. For the three and six months ended November 29, 2020, there were no business interruption insurance recovery claims. |
Fair Value Measurements | Fair Value Measurements The Company uses fair value measurement accounting for financial assets and liabilities and for financial instruments and certain other items measured at fair value. The Company has elected the fair value option for its investment in a non-public company. The Company has not elected the fair value option for any of its other eligible financial assets or liabilities. The accounting guidance established a three-tier hierarchy for fair value measurements, which prioritizes the inputs used in measuring fair value as follows: Level 1 – observable inputs such as quoted prices for identical instruments in active markets. Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data. Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions. As of November 29, 2020 and May 31, 2020, the Company held certain assets and liabilities that are required or it elected to be measured at fair value on a recurring basis, including its interest rate swap contracts and its minority interest investment in Windset. The fair value of the Company’s interest rate swap contracts is determined based on model inputs that can be observed in a liquid market, including yield curves, and is categorized as a Level 2 fair value measurement and is included in Other assets or Other non-current liabilities in the accompanying Consolidated Balance Sheets. As of November 29, 2020 and May 31, 2020, the Company held certain assets that were required to be measured at fair value on a non-recurring basis. The fair market value of the assets held for sale, less the costs to sell, was $0.0 million and $2.6 million as of November 29, 2020 and May 31, 2020, respectively. The fair market value of Ontario (classified as an asset held for sale) as of May 31, 2020, was based on third-party valuations, which primarily used the market approach, and the inputs utilized were comparable sales of similar assets, which are generally unobservable and are supported by little or no market data, and therefore were classified within Level 3. The Company has elected the fair value option of accounting for its investment in Windset. The calculation of fair value utilizes significant unobservable inputs, including projected cash flows, growth rates, and discount rates. As a result, the Company’s investment in Windset is considered to be a Level 3 measurement investment. The change in the fair value of the Company’s investment in Windset for the three and six months ended November 29, 2020, was due to the Company's 26.9% minority interest in the change in the fair market value of Windset during the period. In determining the fair value of the investment in Windset, the Company utilizes the following significant unobservable inputs in the discounted cash flow models: November 29, 2020 Range May 31, 2020 Range Revenue growth rates 7% (6.9)% 6% to 7% (6.4)% Expense growth rates 0% to 8% (5.5)% 6% to 8% (6.6)% Income tax rates 15% 15% Discount rates 11% 12% The revenue growth, expense growth, and income tax rate assumptions are considered to be the Company's best estimate of the trends in those items over the discount period. The discount rate assumption takes into account the risk-free rate of return, the market equity risk premium, and the company’s specific risk premium and then applies an additional discount for lack of liquidity of the underlying securities. The discounted cash flow valuation model used by the Company has the following sensitivity to changes in inputs and assumptions: (In thousands) Impact on value of investment in Windset as of November 29, 2020 10% increase in revenue growth rates $ 6,000 10% increase in expense growth rates $ (3,200) 10% increase in income tax rates $ (100) 10% increase in discount rates $ (1,300) Imprecision in estimating unobservable market inputs can affect the amount of gain or loss recorded for a particular position. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The following table summarizes the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring and nonrecurring basis: (In thousands) Fair Value at November 29, 2020 Fair Value at May 31, 2020 Assets: Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets held for sale - nonrecurring $ — $ — $ — $ — $ — $ 2,607 Investment in non-public company — — 45,100 — — 56,900 Total assets $ — $ — $ 45,100 $ — $ — $ 59,507 Liabilities: Interest rate swap contracts $ — $ 2,646 $ — $ — $ 3,578 $ — Total liabilities $ — $ 2,646 $ — $ — $ 3,578 $ — The following table reflects the fair value roll forward reconciliation of Level 3 assets and liabilities measured at fair value for the six months ended November 29, 2020: (In thousands) Investment in Windset Balance as of May 31, 2020 $ 56,900 Fair value change (11,800) Balance as of November 29, 2020 $ 45,100 |
Revenue Recognition | Revenue Recognition The Company follows the five step, principles-based model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. Revenue, net of estimated allowances and returns, is recognized when the Company has completed its performance obligations under a contract and control of the product is transferred to the customer. Substantially all revenue is recognized at the time shipment is made or upon delivery as control of the product is transferred to the customer. Revenue for development service contracts are generally recognized based upon the labor hours expended relative to the total expected hours as a measure of progress to depict transfer of control of the service over time. The services are not distinct and are accounted for as a single performance obligation for each customer. For descriptions of the Company’s product offerings and segments refer to Note 11 – Business Segment Reporting in our annual report on Form 10-K for the year ended May 31, 2020. The Company’s standard terms of sale are generally included in its contracts, purchase orders, and invoices. As such, all revenue is considered revenue recognized from contracts with customers. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. The Company has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. The Company’s standard payment terms with its customers generally range from 30 days to 90 days. Certain customers may receive cash-based incentives (including: volume rebates, discounts, and promotions), which are accounted for as variable consideration to the Company’s performance obligations. The Company estimates these sales incentives based on the expected amount to be provided to its customers and reduces revenues recognized towards its performance obligations. The Company does not anticipate significant changes in its estimates for variable consideration. The Company disaggregates its revenue by segment product lines based on how it markets its products and reviews results of operations. The following tables disaggregate segment revenue by major product lines: (In thousands) Three Months Ended Six Months Ended Curation Foods: November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Fresh packaged salads and vegetables $ 92,423 $ 104,912 $ 188,601 $ 214,743 Avocado products 14,713 14,021 31,730 30,221 Technology 549 818 1,192 1,460 Total $ 107,685 $ 119,751 $ 221,523 $ 246,424 (In thousands) Three Months Ended Six Months Ended Lifecore: November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Contact development and manufacturing organization $ 18,259 $ 17,811 $ 34,747 $ 29,114 Fermentation 4,960 5,031 10,277 5,769 Total $ 23,219 $ 22,842 $ 45,024 $ 34,883 Contract Assets and Liabilities Contract assets primarily relate to the Company’s conditional right to consideration for work completed but not billed at the reporting date. The Company’s contract assets as of November 29, 2020 and May 31, 2020, were $8.9 million and $9.0 million, respectively. Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. The Company’s contract liabilities as of November 29, 2020 and May 31, 2020, were $0.3 million and $0.0 million, respectively. Revenue recognized during the three and six months ended November 29, 2020, that was included in the contract liability balance at the beginning of fiscal year 2021, was $0.0 million. |
Shipping and Handling Costs | Shipping and Handling Costs Amounts billed to third-party customers for shipping and handling are included as a component of revenues. Shipping and handling costs incurred are included as a component of cost of products sold and represent costs incurred to ship product from the processing facility or distribution center to the end consumer markets. |
Legal Contingencies | Legal Contingencies In the ordinary course of business, the Company is involved in various legal proceedings and claims. The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal fees are expensed in the period in which they are incurred. |
Recent Accounting Guidance | Recent Accounting Guidance Recently Adopted Pronouncements Cloud Computing Arrangements In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”), which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. The Accounting Standards Update generally aligns the guidance on recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. ASU 2018-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted. The Company adopted ASU 2018-15 on June 1, 2020, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The guidance eliminates, adds, and modifies certain disclosure requirements for fair value measurements. Entities will no longer have to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU 2018-13 on June 1, 2020, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements. As required by ASU 2018-13, the Company included additional disclosures in the Fair Value Measurement section related to the range and weighted average rates used to develop significant inputs for the Level 3 investment. Financial Instruments – Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held. Effective June 1, 2020, the Company adopted ASC 326 using the transition method introduced by ASU 2016-13. The adoption of ASC 326 did not have a material impact on our consolidated financial statements. Under ASC 326, the Company changed its policy for assessing credit losses to include consideration of a broader range of information to estimate credit losses over the life of its financial assets. As of November 29, 2020 the financial assets of the Company within the scope of the assessment comprised of trade accounts receivable, contract assets, and deposits. See the Accounts Receivable and Sales Returns and Allowance for Credit Losses section within Note 1 for further discussion of the Company's accounting for credit losses. |
Organization, Basis of Presen_3
Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Nov. 29, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows: (In thousands) November 29, 2020 May 31, 2020 November 24, 2019 May 26, 2019 Cash and cash equivalents $ 2,491 $ 360 $ 1,594 $ 1,080 Restricted cash — 193 385 385 Cash, cash equivalents and restricted cash $ 2,491 $ 553 $1,979 $ 1,465 |
Schedule of Inventories | Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consist of the following: (In thousands) November 29, 2020 May 31, 2020 Finished goods $ 36,325 $ 35,177 Raw materials 26,983 25,856 Work in progress 7,894 5,278 Total $ 71,202 $ 66,311 |
Financing Receivable, Allowance for Credit Loss | The changes in the Company’s allowance for sales returns and credit losses are summarized in the following table (in thousands): Balance at beginning of period Provisions for expected credit losses Write offs, net of recoveries Balance at end of period Six months ended November 29, 2020 $ 438 $ 102 $ (263) $ 277 |
Accumulated Other Comprehensive Income (Loss) | The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instrument accounted for as a cash flow hedge. The components of AOCL, net of tax, are as follows: (In thousands) AOCL Balance as of May 31, 2020 $ (2,808) Other comprehensive loss before reclassifications, net of tax effect (344) Amounts reclassified from OCI 1,049 Other comprehensive income, net $ 705 November 29, 2020 $ (2,103) |
Schedule of Effect of Significant Unobservable Inputs for Investment | In determining the fair value of the investment in Windset, the Company utilizes the following significant unobservable inputs in the discounted cash flow models: November 29, 2020 Range May 31, 2020 Range Revenue growth rates 7% (6.9)% 6% to 7% (6.4)% Expense growth rates 0% to 8% (5.5)% 6% to 8% (6.6)% Income tax rates 15% 15% Discount rates 11% 12% |
Schedule of Sensitivity Analysis of Fair Value, Transferor's Interests in Transferred Financial Assets | The discounted cash flow valuation model used by the Company has the following sensitivity to changes in inputs and assumptions: (In thousands) Impact on value of investment in Windset as of November 29, 2020 10% increase in revenue growth rates $ 6,000 10% increase in expense growth rates $ (3,200) 10% increase in income tax rates $ (100) 10% increase in discount rates $ (1,300) |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring and nonrecurring basis: (In thousands) Fair Value at November 29, 2020 Fair Value at May 31, 2020 Assets: Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets held for sale - nonrecurring $ — $ — $ — $ — $ — $ 2,607 Investment in non-public company — — 45,100 — — 56,900 Total assets $ — $ — $ 45,100 $ — $ — $ 59,507 Liabilities: Interest rate swap contracts $ — $ 2,646 $ — $ — $ 3,578 $ — Total liabilities $ — $ 2,646 $ — $ — $ 3,578 $ — |
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table reflects the fair value roll forward reconciliation of Level 3 assets and liabilities measured at fair value for the six months ended November 29, 2020: (In thousands) Investment in Windset Balance as of May 31, 2020 $ 56,900 Fair value change (11,800) Balance as of November 29, 2020 $ 45,100 |
Disaggregation of Revenue | The Company disaggregates its revenue by segment product lines based on how it markets its products and reviews results of operations. The following tables disaggregate segment revenue by major product lines: (In thousands) Three Months Ended Six Months Ended Curation Foods: November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Fresh packaged salads and vegetables $ 92,423 $ 104,912 $ 188,601 $ 214,743 Avocado products 14,713 14,021 31,730 30,221 Technology 549 818 1,192 1,460 Total $ 107,685 $ 119,751 $ 221,523 $ 246,424 (In thousands) Three Months Ended Six Months Ended Lifecore: November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Contact development and manufacturing organization $ 18,259 $ 17,811 $ 34,747 $ 29,114 Fermentation 4,960 5,031 10,277 5,769 Total $ 23,219 $ 22,842 $ 45,024 $ 34,883 |
Stock-based Compensation and _2
Stock-based Compensation and Stockholders' Equity (Tables) | 6 Months Ended |
Nov. 29, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table summarizes stock-based compensation by income statement line item: Three Months Ended Six Months Ended (In thousands) November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Cost of sales $ 59 $ 82 182 56 Research and development 62 48 126 78 Selling, general and administrative 774 657 1,479 1,181 Total stock-based compensation $ 895 $ 787 1,787 1,315 |
Diluted Earnings Per Share (Tab
Diluted Earnings Per Share (Tables) | 6 Months Ended |
Nov. 29, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Diluted Net Income Per Share | The following table sets forth the computation of diluted earnings per share: Three Months Ended Six Months Ended (In thousands, except per share amounts) November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Numerator: Net loss applicable to common stockholders $ (13,301) $ (6,740) $ (24,301) $ (11,524) Denominator: Weighted average shares for basic net loss per share 29,280 29,155 29,261 29,147 Effect of dilutive securities: Stock options and restricted stock units — — — — Weighted average shares for diluted net loss per share 29,280 29,155 29,261 29,147 Diluted net loss per share $ (0.45) $ (0.23) $ (0.83) $ (0.40) |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Nov. 29, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt, net consists of the following: (In thousands) November 29, 2020 May 31, 2020 Term loan $ 94,000 $ 114,000 Total principal amount of long-term debt 94,000 114,000 Less: unamortized debt issuance costs (811) (1,083) Total long-term debt, net of unamortized debt issuance costs 93,189 112,917 Less: current portion of long-term debt, net (11,189) (11,554) Long-term debt, net $ 82,000 $ 101,363 |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 6 Months Ended |
Nov. 29, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The Company’s international sales by geography are based on the billing address of the customer and were as follows: Three Months Ended Six Months Ended (In millions) November 29, 2020 November 24, 2019 November 29, 2020 November 24, 2019 Canada $ 13.7 $ 18.4 $ 30.2 $ 39.1 Belgium 2.8 3.1 6.7 3.1 Czech Republic 1.2 — 1.7 — Ireland 0.4 1.1 1.2 2.5 All Other Countries 1.6 2.0 2.8 3.4 |
Schedule of Segment Reporting Information, by Segment | Operations by business segment consisted of the following: (In thousands) Curation Foods Lifecore Other Total Three Months Ended November 29, 2020 Net sales $ 107,685 $ 23,219 $ — $ 130,904 Gross profit 10,163 10,474 — 20,637 Net (loss) income (12,383) 4,492 (5,410) (13,301) Depreciation and amortization 2,906 1,360 26 4,291 Dividend income 281 — — 281 Interest income — — 10 10 Interest expense 1,376 — 1,663 3,039 Income tax (benefit) expense (3,911) 1,419 (208) (2,700) Corporate overhead allocation 1,402 1,162 (2,564) — Six Months Ended November 29, 2020 Net sales $ 221,523 $ 45,024 $ — $ 266,547 Gross profit 21,507 15,476 — 36,983 Net (loss) income (20,654) 4,604 (8,251) (24,301) Depreciation and amortization 6,316 2,669 54 9,039 Dividend income 563 — — 563 Interest income — — 18 18 Interest expense 2,751 — 3,396 6,148 Income tax (benefit) expense (6,523) 1,454 (1,940) (7,009) Corporate overhead allocation 3,258 2,565 (5,823) — Three Months Ended November 24, 2019 Net sales $ 119,751 $ 22,842 $ — $ 142,593 Gross profit 6,890 8,624 — 15,514 Net (loss) income (8,348) 3,459 (1,851) (6,740) Depreciation and amortization 3,143 1,248 23 4,414 Dividend income 281 — — 281 Interest income 11 — 14 25 Interest expense 1,375 — 794 2,169 Income tax (benefit) expense (1,723) 919 (361) (1,165) Corporate overhead allocation 1,414 959 (2,373) — Six Months Ended November 24, 2019 Net sales $ 246,424 $ 34,883 $ — $ 281,307 Gross profit 19,712 11,138 — 30,850 Net (loss) income (10,519) 2,064 (3,069) (11,524) Depreciation and amortization 6,348 2,433 46 8,827 Dividend income 562 — — 562 Interest income 31 — 19 50 Interest expense 2,751 — 1,493 4,244 Income tax (benefit) expense (2,309) 454 (675) (2,530) Corporate overhead allocation 3,109 1,936 (5,045) — |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 6 Months Ended |
Nov. 29, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of (Loss) Income, by Business Segment: (in thousands) Curation Foods Lifecore Other Total Three Months Ended November 29, 2020 Asset write-off costs $ — $ — $ — $ — Employee severance and benefit costs 211 — — 211 Lease costs — — — — Other restructuring costs 1,295 — 156 1,451 Total restructuring costs $ 1,506 $ — $ 156 $ 1,662 (in thousands) Curation Foods Lifecore Other Total Six Months Ended November 29, 2020 Asset write-off costs $ 6,005 $ — $ — $ 6,005 Employee severance and benefit costs 1,115 — — 1,115 Lease costs — — — — Other restructuring costs 2,143 — 803 2,946 Total restructuring costs $ 9,263 $ — $ 803 $ 10,066 The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of (Loss) Income, by Business Segment, since inception of the restructuring plan in fiscal year 2020 through the six months ended November 29, 2020: Curation Foods Lifecore Other Total (in thousands) Asset write-off costs, net $ 18,667 $ — $ 418 $ 19,085 Employee severance and benefit costs 2,584 — 784 3,368 Lease costs 392 — 26 418 Other restructuring costs 3,166 — 1,314 4,480 Total restructuring costs $ 24,809 $ — $ 2,542 $ 27,351 |
Organization, Basis of Presen_4
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Immaterial Correction of Error (Details) - Windset Investment - Error Correction, Other - Revision of Prior Period, Reclassification, Adjustment - USD ($) $ in Millions | 3 Months Ended | |
Nov. 29, 2020 | Aug. 30, 2020 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Reduction in investment in Windset | $ 1.8 | |
Increase in other (expense) income | $ 1.8 |
Organization, Basis of Presen_5
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents (Details) - USD ($) $ in Thousands | Nov. 29, 2020 | May 31, 2020 | Nov. 24, 2019 | May 26, 2019 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 2,491 | $ 360 | $ 1,594 | $ 1,080 |
Restricted cash | 0 | 193 | 385 | 385 |
Cash, cash equivalents and restricted cash | $ 2,491 | $ 553 | $ 1,979 | $ 1,465 |
Organization, Basis of Presen_6
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Nov. 29, 2020 | May 31, 2020 | Nov. 24, 2019 | May 26, 2019 |
Accounting Policies [Abstract] | ||||
Restricted cash | $ 0 | $ 193 | $ 385 | $ 385 |
Organization, Basis of Presen_7
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Components of Inventories (Details) - USD ($) $ in Thousands | Nov. 29, 2020 | May 31, 2020 |
Accounting Policies [Abstract] | ||
Finished goods | $ 36,325 | $ 35,177 |
Raw materials | 26,983 | 25,856 |
Work in progress | 7,894 | 5,278 |
Total | $ 71,202 | $ 66,311 |
Organization, Basis of Presen_8
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Allowance for Credit Loss Rollforward (Details) $ in Thousands | 6 Months Ended |
Nov. 29, 2020USD ($) | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | $ 438 |
Provisions for expected credit losses | 102 |
Write offs, net of recoveries | (263) |
Ending balance | $ 277 |
Organization, Basis of Presen_9
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | May 31, 2020 | Jul. 15, 2014 | |
Windset | ||||||
Related Party Transaction [Line Items] | ||||||
Investment ownership percentage | 26.90% | 26.90% | 26.90% | |||
Windset | ||||||
Related Party Transaction [Line Items] | ||||||
Related accounts receivable | $ 0.3 | $ 0.3 | $ 0.5 | |||
Cost of sales | Windset | ||||||
Related Party Transaction [Line Items] | ||||||
Revenue from related parties | $ 0.1 | $ 0.1 | $ 0.3 | $ 0.2 |
Organization, Basis of Prese_10
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Debt Issuance Cost (Details) - USD ($) $ in Millions | Nov. 29, 2020 | May 31, 2020 |
Debt Instrument [Line Items] | ||
Current portion | $ 0.8 | $ 0.4 |
Noncurrent portion | 0 | 0.6 |
Prepaid Expenses and Other Current Assets | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | 1.6 | 0.3 |
Other Assets | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | $ 0 | $ 0.5 |
Organization, Basis of Prese_11
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Nov. 29, 2020 | Aug. 30, 2020 | Nov. 24, 2019 | Aug. 25, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||
Balance | $ 221,158 | $ 231,044 | $ 264,947 | $ 270,144 | $ 231,044 | $ 270,144 |
Other comprehensive income, net | 401 | 304 | 127 | (612) | 705 | (485) |
Balance | 208,938 | 221,158 | $ 259,076 | $ 264,947 | 208,938 | $ 259,076 |
AOCL | ||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||
Balance | $ (2,808) | (2,808) | ||||
Other comprehensive loss before reclassifications, net of tax effect | (344) | |||||
Amounts reclassified from OCI | 1,049 | |||||
Other comprehensive income, net | 705 | |||||
Balance | $ (2,103) | $ (2,103) |
Organization, Basis of Prese_12
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Financial Instruments Additional Information (Details) $ in Millions | 6 Months Ended |
Nov. 29, 2020USD ($) | |
Accounting Policies [Abstract] | |
Cash flow hedge expected to be reclassified within twelve months | $ 1.7 |
Organization, Basis of Prese_13
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Assets Held For Sale (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Nov. 29, 2020 | Aug. 30, 2020 | Feb. 23, 2020 | Nov. 29, 2020 | Nov. 24, 2019 | May 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, net | $ 170,973 | $ 170,973 | $ 192,338 | |||
Proceeds from sales of property and equipment | 12,885 | $ 29 | ||||
Gain on sale of property | 34 | $ 15 | ||||
Salad Dressing Plant In Ontario, California | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Impairment of assets held for sale | $ 10,900 | |||||
Property and equipment, net | 2,600 | |||||
Operating and finance lease, current | 300 | |||||
Operating and finance lease, noncurrent | 2,900 | |||||
Proceeds from sales of property and equipment | 4,900 | |||||
Gain on sale of property | $ 2,800 | |||||
Manufacturing Operations in Hanover, Pennsylvania | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Impairment of assets held for sale | $ 8,800 | |||||
Property and equipment, net | $ 17,200 | |||||
Proceeds from sale of property held for sale | $ 8,000 |
Organization, Basis of Prese_14
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Intangible Assets (Details) - Customer Relationships | 6 Months Ended |
Nov. 29, 2020 | |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 11 years |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 13 years |
Organization, Basis of Prese_15
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Partial Self-Insurance on Employee Health and Workers Compensation Plans (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 24, 2019USD ($) | Feb. 24, 2019product | Nov. 29, 2020insuranceRecoveryClaims | Nov. 24, 2019USD ($) | |
Accounting Policies [Abstract] | ||||
Number of recalled products | product | 5 | |||
Business interruption insurance recoveries | $ | $ 0.6 | $ 3 | ||
Number of business interruption insurance recovery claims | insuranceRecoveryClaims | 0 |
Organization, Basis of Prese_16
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Fair Value Measurements Additional Information (Details) - USD ($) $ in Thousands | Nov. 29, 2020 | May 31, 2020 | Jul. 15, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets held for sale - nonrecurring | $ 0 | $ 2,600 | |
Windset | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investment ownership percentage | 26.90% | 26.90% | |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets held for sale - nonrecurring | $ 0 | 0 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets held for sale - nonrecurring | $ 0 | $ 2,607 |
Organization, Basis of Prese_17
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Significant Unobservable Inputs Used in Discounted Cash Flow Models for Investment (Details) - Windset | 6 Months Ended | 12 Months Ended |
Nov. 29, 2020 | May 31, 2020 | |
Revenue growth rates | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0.07 | |
Revenue growth rates | Minimum | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0.06 | |
Revenue growth rates | Maximum | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0.07 | |
Revenue growth rates | Weighted Average | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0.069 | 0.064 |
Expense growth rates | Minimum | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0 | 0.06 |
Expense growth rates | Maximum | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0.08 | 0.08 |
Expense growth rates | Weighted Average | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0.055 | 0.066 |
Income tax rates | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0.15 | 0.15 |
Discount rates | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Measurement input | 0.11 | 0.12 |
Organization, Basis of Prese_18
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Assumptions for Investment Used in Discounted Cash Flow Models (Details) $ in Thousands | Nov. 29, 2020USD ($) |
Accounting Policies [Abstract] | |
10% increase in revenue growth rates | $ 6,000 |
10% increase in expense growth rates | (3,200) |
10% increase in income tax rates | (100) |
10% increase in discount rates | $ (1,300) |
Organization, Basis of Prese_19
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | Nov. 29, 2020 | May 31, 2020 |
Assets: | ||
Assets held for sale - nonrecurring | $ 0 | $ 2,600 |
Level 1 | ||
Assets: | ||
Assets held for sale - nonrecurring | 0 | 0 |
Investment in non-public company | 0 | 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Interest rate swap contracts | 0 | 0 |
Total liabilities | 0 | 0 |
Level 2 | ||
Assets: | ||
Assets held for sale - nonrecurring | 0 | 0 |
Investment in non-public company | 0 | 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Interest rate swap contracts | 2,646 | 3,578 |
Total liabilities | 2,646 | 3,578 |
Level 3 | ||
Assets: | ||
Assets held for sale - nonrecurring | 0 | 2,607 |
Investment in non-public company | 45,100 | 56,900 |
Total assets | 45,100 | 59,507 |
Liabilities: | ||
Interest rate swap contracts | 0 | 0 |
Total liabilities | $ 0 | $ 0 |
Organization, Basis of Prese_20
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Fair Value Reconciliation of Level 3 (Details) $ in Thousands | 6 Months Ended |
Nov. 29, 2020USD ($) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance | $ 56,900 |
Balance | 45,100 |
Windset Investment | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance | 56,900 |
Fair value change | (11,800) |
Balance | $ 45,100 |
Organization, Basis of Prese_21
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 130,904 | $ 142,593 | $ 266,547 | $ 281,307 |
Curation Foods | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 107,685 | 119,751 | 221,523 | 246,424 |
Curation Foods | Fresh packaged salads and vegetables | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 92,423 | 104,912 | 188,601 | 214,743 |
Curation Foods | Avocado products | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 14,713 | 14,021 | 31,730 | 30,221 |
Curation Foods | Technology | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 549 | 818 | 1,192 | 1,460 |
Lifecore | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 23,219 | 22,842 | 45,024 | 34,883 |
Lifecore | Contact development and manufacturing organization | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 18,259 | 17,811 | 34,747 | 29,114 |
Lifecore | Fermentation | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 4,960 | $ 5,031 | $ 10,277 | $ 5,769 |
Organization, Basis of Prese_22
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Nov. 29, 2020 | May 31, 2020 | |
Accounting Policies [Abstract] | ||
Contract assets | $ 8.9 | $ 9 |
Contract liabilities | 0.3 | $ 0 |
Revenue recognized included in the contract liability | $ 0 |
Organization, Basis of Prese_23
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Legal Contingencies Additional Information (Details) $ in Millions | Nov. 03, 2020USD ($) | Sep. 02, 2020USD ($) | Nov. 29, 2020USD ($)attemptsToUnionizeplaintiff | May 31, 2020USD ($) |
Loss Contingencies [Line Items] | ||||
Unsuccessful attempts to unionize | attemptsToUnionize | 3 | |||
Loss contingency, estimated probable loss | $ 1.8 | |||
Legal Actions Against Curation Foods | Curation Foods | ||||
Loss Contingencies [Line Items] | ||||
Number of individual arbitrations | plaintiff | 100 | |||
Regulatory permitting at Tanok facility in Mexico | ||||
Loss Contingencies [Line Items] | ||||
Damages sought | $ 80 | $ 10 | ||
Pacific Harvest | Discrimination and Wrongful Termination and Wage and Hour Claims | ||||
Loss Contingencies [Line Items] | ||||
Reimbursement payable | $ 2.1 | |||
Litigation repayment receivable | $ 1.2 | |||
Litigation repayment receivable, allowance for credit loss | $ 1.2 | |||
Indemnification receivable | $ 1.2 |
Investment in Non-public Comp_2
Investment in Non-public Company (Details) - USD ($) | Jul. 15, 2014 | Feb. 15, 2011 | Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 |
Dividend income | $ 281,000 | $ 281,000 | $ 563,000 | $ 562,000 | ||
Senior A Preferred Stock | ||||||
Dividend percentage rate | 7.50% | |||||
Windset | ||||||
Investment ownership percentage | 26.90% | 26.90% | 26.90% | |||
Dividend income | $ 300,000 | 300,000 | $ 600,000 | 600,000 | ||
Windset | Other Income | ||||||
Change in market value of company's investment | (11,800,000) | $ 200,000 | (11,800,000) | $ 200,000 | ||
Curation Foods | Windset | ||||||
Payments to acquire investments | $ 11,000,000 | |||||
Time frame to be paid after anniversary | 90 days | |||||
Liquidation value of preferred shares | 20,100,000 | 20,100,000 | ||||
Curation Foods | Windset | Junior Preferred Shares | ||||||
Preferred stock investment, dividends declared | 0 | 0 | ||||
Liquidation value of preferred shares | 5,100,000 | 5,100,000 | ||||
Curation Foods | Windset | Senior A Preferred Stock | ||||||
Liquidation value of preferred shares | $ 15,000,000 | $ 15,000,000 | ||||
Curation Foods | Windset | Senior A Preferred Stock | ||||||
Investment In non-public company shares (in shares) | 150,000 | |||||
Payments to acquire investments | $ 15,000,000 | |||||
Curation Foods | Windset | Common Stock | ||||||
Investment In non-public company shares (in shares) | 68 | 201 | ||||
Payments to acquire investments | $ 201,000 | |||||
Curation Foods | Windset | Junior Preferred Shares | ||||||
Investment In non-public company shares (in shares) | 51,211 |
Stock-based Compensation and _3
Stock-based Compensation and Stockholders' Equity - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Nov. 29, 2020 | Nov. 29, 2020 | Jul. 14, 2010 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted options (in shares) | 21,000 | 573,000 | |
Shares for future issuance (in shares) | 4,100,000 | 4,100,000 | |
Unrecognized compensation expense | $ 4,700,000 | $ 4,700,000 | |
Repurchase plan authorized amount (up to) | $ 3,800,000 | $ 3,800,000 | $ 10,000,000 |
Treasure shares acquired (in shares) | 0 | ||
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Awarded (in shares) | 82,000 | 171,000 | |
Weighted-average period (in years) | 1 year 6 months 18 days | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average period (in years) | 2 years 4 months 13 days |
Stock-based Compensation and _4
Stock-based Compensation and Stockholders' Equity - Compensation by Income Statement Location (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 895 | $ 787 | $ 1,787 | $ 1,315 |
Cost of sales | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 59 | 82 | 182 | 56 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 62 | 48 | 126 | 78 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 774 | $ 657 | $ 1,479 | $ 1,181 |
Diluted Earnings Per Share - Di
Diluted Earnings Per Share - Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Nov. 29, 2020 | Aug. 30, 2020 | Nov. 24, 2019 | Aug. 25, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
Numerator: | ||||||
Consolidated net loss | $ (13,301) | $ (11,000) | $ (6,740) | $ (4,784) | $ (24,301) | $ (11,524) |
Denominator: | ||||||
Weighted average shares for basic net loss per share (in shares) | 29,280 | 29,155 | 29,261 | 29,147 | ||
Effect of dilutive securities: | ||||||
Stock options and restricted stock units (in shares) | 0 | 0 | 0 | 0 | ||
Weighted average shares for diluted net loss per share (in shares) | 29,280 | 29,155 | 29,261 | 29,147 | ||
Diluted net loss per share (in dollars per share) | $ (0.45) | $ (0.23) | $ (0.83) | $ (0.40) |
Diluted Earnings Per Share - Na
Diluted Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
Employee Stock Option | ||||
Class of Stock [Line Items] | ||||
Amount of securities excluded from computation of earnings per share (in shares) | 3.2 | 2.3 | 2.3 | 2.5 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | May 31, 2020 | |
Income Tax Disclosure [Abstract] | |||||
Income tax benefit | $ (2,700) | $ (1,165) | $ (7,009) | $ (2,530) | |
Effective tax rate | 22.00% | 18.00% | |||
Unrecognized tax benefits | 900 | $ 900 | $ 800 | ||
Unrecognized tax benefits that would result in an adjustment to effective tax rate | $ 800 | $ 800 | $ 700 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Nov. 29, 2020 | May 31, 2020 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 94,000 | $ 114,000 |
Less: unamortized debt issuance costs | (811) | (1,083) |
Total long-term debt, net of unamortized debt issuance costs | 93,189 | 112,917 |
Current portion of long-term debt, net | (11,189) | (11,554) |
Long-term debt, net | 82,000 | 101,363 |
Term loan | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 94,000 | $ 114,000 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Jul. 15, 2020 | Oct. 25, 2019USD ($) | Nov. 29, 2020USD ($) | May 31, 2020USD ($) | Feb. 23, 2020 | Dec. 02, 2019USD ($) | Nov. 30, 2018USD ($) | Jun. 25, 2018USD ($) | Nov. 01, 2016USD ($) | Sep. 23, 2016USD ($) |
Debt Instrument [Line Items] | ||||||||||
Term loan facility | $ 93,189,000 | $ 112,917,000 | ||||||||
BMO | Interest Rate Swap | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate swap contract notional amount | $ 110,000,000 | $ 30,000,000 | $ 50,000,000 | |||||||
LIBOR | BMO | Interest Rate Swap | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 1.526% | 2.74% | 1.22% | |||||||
Credit Agreement With JPMorgan Chase, BMO Harris Bank, and City National Bank | Term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Term loan facility | $ 50,000,000 | |||||||||
Fourth Amendment | Term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Term loan facility | $ 100,000,000 | |||||||||
Sixth Amendment | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Covenant, leverage ratio | 5 | |||||||||
Sixth Amendment | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Additional commitment amount (up to) | $ 10,000,000 | |||||||||
Sixth Amendment | Term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Term loan facility | 120,000,000 | |||||||||
Periodic payment | 3,000,000 | |||||||||
Seventh Amendment | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Covenant, leverage ratio | 5.75 | |||||||||
Quarterly decrease in leverage ratio | 0.25 | |||||||||
Final fixed leverage ratio | 3.50 | |||||||||
Seventh Amendment | Minimum | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 0.25% | |||||||||
Seventh Amendment | Minimum | Eurodollar | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 1.25% | |||||||||
Seventh Amendment | Maximum | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 3.00% | |||||||||
Seventh Amendment | Maximum | Eurodollar | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 4.00% | |||||||||
Eighth Amendment | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt agreement, percentage of EBITDA | 20.00% | |||||||||
Eighth Amendment | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Commitment fee percentage | 0.15% | |||||||||
Eighth Amendment | Minimum | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 0.75% | |||||||||
Eighth Amendment | Minimum | Eurodollar | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 1.75% | |||||||||
Eighth Amendment | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Commitment fee percentage | 0.55% | |||||||||
Eighth Amendment | Maximum | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 3.50% | |||||||||
Eighth Amendment | Maximum | Eurodollar | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 4.50% | |||||||||
Revolver | Credit Agreement With JPMorgan Chase, BMO Harris Bank, and City National Bank | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Revolving line of credit | $ 100,000,000 | |||||||||
Revolver | Fourth Amendment | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Revolving line of credit | $ 105,000,000 | |||||||||
Revolver | Sixth Amendment | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Revolving line of credit | $ 100,000,000 | |||||||||
Revolver | Sixth Amendment | Eurodollar | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit outstanding | $ 77,000,000 | |||||||||
Line of credit facility, interest rate | 4.65% |
Business Segment Reporting - Na
Business Segment Reporting - Narrative (Details) | 6 Months Ended | ||
Nov. 29, 2020segmentbrand | Nov. 24, 2019 | Jul. 15, 2014 | |
Revenue, Major Customer [Line Items] | |||
Number of operating segments | segment | 3 | ||
Number of natural food brands | brand | 4 | ||
Windset | |||
Revenue, Major Customer [Line Items] | |||
Investment ownership percentage | 26.90% | 26.90% | |
Sales Revenue, Net | Customer Concentration Risk | Top Five Customers | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk percentage | 49.00% | 44.00% | |
Sales Revenue, Net | Customer Concentration Risk | Curation Foods | Costco | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk percentage | 15.00% | 13.00% | |
Sales Revenue, Net | Customer Concentration Risk | Curation Foods | Wal-mart | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk percentage | 18.00% | 18.00% |
Business Segment Reporting - Sa
Business Segment Reporting - Sales by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
Segment Reporting Information [Line Items] | ||||
Product sales | $ 130,904 | $ 142,593 | $ 266,547 | $ 281,307 |
Canada | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 13,700 | 18,400 | 30,200 | 39,100 |
Belgium | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 2,800 | 3,100 | 6,700 | 3,100 |
Czech Republic | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 1,200 | 0 | 1,700 | 0 |
Ireland | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 400 | 1,100 | 1,200 | 2,500 |
All Other Countries | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | $ 1,600 | $ 2,000 | $ 2,800 | $ 3,400 |
Business Segment Reporting - Op
Business Segment Reporting - Operations by Business Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Nov. 29, 2020 | Aug. 30, 2020 | Nov. 24, 2019 | Aug. 25, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | |
Segment Reporting Information [Line Items] | ||||||
Net sales | $ 130,904 | $ 142,593 | $ 266,547 | $ 281,307 | ||
Gross profit | 20,637 | 15,514 | 36,983 | 30,850 | ||
Consolidated net loss | (13,301) | $ (11,000) | (6,740) | $ (4,784) | (24,301) | (11,524) |
Depreciation and amortization | 4,291 | 4,414 | 9,039 | 8,827 | ||
Dividend income | 281 | 281 | 563 | 562 | ||
Interest income | 10 | 25 | 18 | 50 | ||
Interest expense | 3,039 | 2,169 | 6,148 | 4,244 | ||
Income tax benefit | (2,700) | (1,165) | (7,009) | (2,530) | ||
Corporate overhead allocation | 0 | 0 | 0 | 0 | ||
Curation Foods | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 107,685 | 119,751 | 221,523 | 246,424 | ||
Gross profit | 10,163 | 6,890 | 21,507 | 19,712 | ||
Consolidated net loss | (12,383) | (8,348) | (20,654) | (10,519) | ||
Depreciation and amortization | 2,906 | 3,143 | 6,316 | 6,348 | ||
Dividend income | 281 | 281 | 563 | 562 | ||
Interest income | 0 | 11 | 0 | 31 | ||
Interest expense | 1,376 | 1,375 | 2,751 | 2,751 | ||
Income tax benefit | (3,911) | (1,723) | (6,523) | (2,309) | ||
Corporate overhead allocation | 1,402 | 1,414 | 3,258 | 3,109 | ||
Lifecore | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 23,219 | 22,842 | 45,024 | 34,883 | ||
Gross profit | 10,474 | 8,624 | 15,476 | 11,138 | ||
Consolidated net loss | 4,492 | 3,459 | 4,604 | 2,064 | ||
Depreciation and amortization | 1,360 | 1,248 | 2,669 | 2,433 | ||
Dividend income | 0 | 0 | 0 | 0 | ||
Interest income | 0 | 0 | 0 | 0 | ||
Interest expense | 0 | 0 | 0 | 0 | ||
Income tax benefit | 1,419 | 919 | 1,454 | 454 | ||
Corporate overhead allocation | 1,162 | 959 | 2,565 | 1,936 | ||
Other | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 0 | 0 | 0 | 0 | ||
Gross profit | 0 | 0 | 0 | 0 | ||
Consolidated net loss | (5,410) | (1,851) | (8,251) | (3,069) | ||
Depreciation and amortization | 26 | 23 | 54 | 46 | ||
Dividend income | 0 | 0 | 0 | 0 | ||
Interest income | 10 | 14 | 18 | 19 | ||
Interest expense | 1,663 | 794 | 3,396 | 1,493 | ||
Income tax benefit | (208) | (361) | (1,940) | (675) | ||
Corporate overhead allocation | $ (2,564) | $ (2,373) | $ (5,823) | $ (5,045) |
Restructuring Costs - Narrative
Restructuring Costs - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 30, 2020 | Feb. 23, 2020 | Nov. 29, 2020 | Nov. 24, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Proceeds from sales of property and equipment | $ 12,885 | $ 29 | ||
Gain on sale of property | 34 | $ 15 | ||
Expected restructuring costs | 29,000 | |||
Salad Dressing Plant In Ontario, California | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Proceeds from sales of property and equipment | 4,900 | |||
Gain on sale of property | $ 2,800 | |||
Impairment of assets held for sale | $ 10,900 | |||
Manufacturing Operations in Hanover, Pennsylvania | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of assets held for sale | $ 8,800 |
Restructuring Costs - Schedule
Restructuring Costs - Schedule of Restructuring Related Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 18 Months Ended | ||
Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | Nov. 24, 2019 | Nov. 29, 2020 | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | $ 1,662 | $ 0 | $ 10,066 | $ 0 | $ 27,351 |
Asset write-off costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 6,005 | 19,085 | ||
Employee severance and benefit costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 211 | 1,115 | 3,368 | ||
Lease costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 418 | ||
Other restructuring costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 1,451 | 2,946 | 4,480 | ||
Curation Foods | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 1,506 | 9,263 | 24,809 | ||
Curation Foods | Asset write-off costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 6,005 | 18,667 | ||
Curation Foods | Employee severance and benefit costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 211 | 1,115 | 2,584 | ||
Curation Foods | Lease costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 392 | ||
Curation Foods | Other restructuring costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 1,295 | 2,143 | 3,166 | ||
Lifecore | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 0 | ||
Lifecore | Asset write-off costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 0 | ||
Lifecore | Employee severance and benefit costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 0 | ||
Lifecore | Lease costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 0 | ||
Lifecore | Other restructuring costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 0 | ||
Other | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 156 | 803 | 2,542 | ||
Other | Asset write-off costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 418 | ||
Other | Employee severance and benefit costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 784 | ||
Other | Lease costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | 0 | 0 | 26 | ||
Other | Other restructuring costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring costs | $ 156 | $ 803 | $ 1,314 |
Subsequent Events (Details)
Subsequent Events (Details) | Dec. 31, 2020USD ($)creditAgreements | Feb. 23, 2021USD ($) | Nov. 29, 2020USD ($) | May 31, 2020USD ($) |
Subsequent Event [Line Items] | ||||
Debt issuance costs | $ 811,000 | $ 1,083,000 | ||
Long-term debt | $ 94,000,000 | $ 114,000,000 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Number of credit agreements after refinance | creditAgreements | 2 | |||
Subsequent Event | Forecast [Member] | ||||
Subsequent Event [Line Items] | ||||
Loss on debt refinancing | $ 1,200,000 | |||
Subsequent Event | Line of Credit | ||||
Subsequent Event [Line Items] | ||||
Debt issuance costs | $ 8,600,000 | |||
Subsequent Event | Revolver | BMO | ||||
Subsequent Event [Line Items] | ||||
Revolving line of credit | $ 75,000,000 | |||
Commitment fee percentage | 0.375% | |||
Line of credit facility, additional borrowing limit | $ 15,000,000 | |||
Line of credit facility, remaining borrowing capacity | $ 36,000,000 | |||
Subsequent Event | Revolver | BMO | Line of Credit | LIBOR | Minimum | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 2.00% | |||
Subsequent Event | Revolver | BMO | Line of Credit | LIBOR | Maximum | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 2.50% | |||
Subsequent Event | Revolver | BMO | Line of Credit | Base Rate | Minimum | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Subsequent Event | Revolver | BMO | Line of Credit | Base Rate | Maximum | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
Subsequent Event | Term loan | Goldman | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, face amount | $ 170,000,000 | |||
Long-term debt | $ 150,000,000 | |||
Subsequent Event | Term loan | Goldman | LIBOR | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 8.50% | |||
Subsequent Event | Term loan | Goldman | Base Rate | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 7.50% | |||
Subsequent Event | Term loan | Goldman | Line of Credit | ||||
Subsequent Event [Line Items] | ||||
Line of credit, quarterly principal payments | 5.00% |