Cover Page
Cover Page - shares | 9 Months Ended | |
Feb. 27, 2022 | Apr. 04, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Feb. 27, 2022 | |
Document Transition Report | false | |
Entity File Number | 000-27446 | |
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 $0.001 per share | |
Trading Symbol | LNDC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 29,482,538 | |
Entity Central Index Key | 0001005286 | |
Current Fiscal Year End Date | --05-29 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Feb. 27, 2022 | May 30, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 1,854 | $ 1,159 |
Accounts receivable, less allowance for credit losses | 49,559 | 41,430 |
Inventories | 73,700 | 63,076 |
Prepaid expenses and other current assets | 6,924 | 5,038 |
Current assets, discontinued operations | 0 | 37,618 |
Total Current Assets | 132,037 | 148,321 |
Property and equipment, net | 123,209 | 112,770 |
Operating lease right-of-use assets | 8,796 | 7,480 |
Goodwill | 33,916 | 33,916 |
Trademarks/tradenames, net | 17,100 | 17,100 |
Customer relationships, net | 7,476 | 8,532 |
Other assets | 3,048 | 3,531 |
Other assets, discontinued operations | 0 | 171,274 |
Total Assets | 325,582 | 502,924 |
Current Liabilities: | ||
Accounts payable | 20,014 | 16,298 |
Accrued compensation | 9,757 | 7,754 |
Other accrued liabilities | 13,735 | 3,955 |
Current portion of lease liabilities | 5,045 | 1,465 |
Deferred revenue | 1,614 | 637 |
Line of credit | 39,900 | 29,000 |
Current liabilities, discontinued operations | 0 | 42,779 |
Total Current Liabilities | 90,065 | 101,888 |
Long-term debt, net | 79,598 | 164,902 |
Long-term lease liabilities | 10,342 | 9,581 |
Deferred taxes, net | 961 | 6,140 |
Other non-current liabilities | 544 | 2,870 |
Non-current liabilities, discontinued operations | 0 | 14,759 |
Total Liabilities | 181,510 | 300,140 |
Stockholders’ Equity: | ||
Common stock, $0.001 par value; 50,000 shares authorized; 29,482 and 29,333 shares issued and outstanding at February 27, 2022 and May 30, 2021, respectively | 29 | 29 |
Additional paid-in capital | 166,943 | 165,533 |
Retained earnings (accumulated deficit) | (22,188) | 38,580 |
Accumulated other comprehensive loss | (712) | (1,358) |
Total Stockholders’ Equity | 144,072 | 202,784 |
Total Liabilities and Stockholders’ Equity | $ 325,582 | $ 502,924 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Feb. 27, 2022 | May 30, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 29,482,000 | 29,333,000 |
Common stock, shares outstanding (in shares) | 29,482,000 | 29,333,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | |
Income Statement [Abstract] | ||||
Product sales | $ 53,074 | $ 44,690 | $ 138,158 | $ 126,629 |
Cost of product sales | 39,179 | 30,249 | 99,113 | 90,739 |
Gross profit | 13,895 | 14,441 | 39,045 | 35,890 |
Operating costs and expenses: | ||||
Research and development | 2,056 | 1,843 | 5,785 | 5,523 |
Selling, general and administrative | 9,725 | 8,134 | 27,207 | 27,968 |
Legal settlement charge | 0 | 0 | 0 | 1,763 |
Restructuring costs | 5,865 | 2,023 | 8,406 | 2,826 |
Total operating costs and expenses | 17,646 | 12,000 | 41,398 | 38,080 |
Operating loss | (3,751) | 2,441 | (2,353) | (2,190) |
Interest income | 20 | 13 | 66 | 31 |
Interest expense | (4,105) | (2,939) | (13,877) | (6,609) |
Loss on debt refinancing | 0 | (1,110) | 0 | (1,110) |
Other income (expense), net | 454 | 72 | 642 | 64 |
Net loss before tax | (7,382) | (1,523) | (15,522) | (9,814) |
Income tax benefit | 276 | 58 | 5,012 | 1,025 |
Net loss from continuing operations | (7,106) | (1,465) | (10,510) | (8,789) |
Loss from discontinued operations, net of tax | (5,744) | (4,033) | (50,258) | (21,010) |
Net loss | $ (12,850) | $ (5,498) | $ (60,768) | $ (29,799) |
Net loss per common share: | ||||
Net loss per common share - basic (in dollars per share) | $ (0.24) | $ (0.05) | $ (0.36) | $ (0.30) |
Loss from discontinued operations- basic (in dollars per share) | (0.19) | (0.14) | (1.71) | (0.72) |
Loss from discontinued operations- diluted (in dollars per share) | (0.19) | (0.14) | (1.71) | (0.72) |
Net loss per common share - diluted (in dollars per share) | (0.43) | (0.19) | (2.07) | (1.02) |
Diluted net loss per share: | ||||
Loss from continuing operations - diluted (in dollars per share) | (0.24) | (0.05) | (0.36) | (0.30) |
Loss from discontinued operations- diluted (in dollars per share) | (0.19) | (0.14) | (1.71) | (0.72) |
Total diluted net loss per share (in dollars per share) | $ (0.43) | $ (0.19) | $ (2.07) | $ (1.02) |
Shares used in per share computation: | ||||
Basic (in shares) | 29,482 | 29,323 | 29,459 | 29,282 |
Diluted (in shares) | 29,482 | 29,323 | 29,459 | 29,282 |
Other comprehensive income (loss), net of tax: | ||||
Net unrealized gain (losses) on interest rate swaps (net of tax effect of $(101), $(99), $(291), and $(327)) | $ 104 | $ 387 | $ 646 | $ 1,092 |
Other comprehensive income, net | 104 | 387 | 646 | 1,092 |
Total comprehensive loss | $ (12,746) | $ (5,111) | $ (60,122) | $ (28,707) |
Revenue from Contract with Customer, Product and Service [Extensible Enumeration] | Product [Member] | Product [Member] | Product [Member] | Product [Member] |
Cost, Product and Service [Extensible Enumeration] | Product [Member] | Product [Member] | Product [Member] | Product [Member] |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | |
Income Statement [Abstract] | ||||
Change in net unrealized gains (losses) on interest rate swap, tax | $ (101) | $ (99) | $ (291) | $ (327) |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at May. 31, 2020 | 29,224 | ||||
Beginning 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, net of shares withheld (in shares) | 18 | ||||
Issuance of stock under stock plans, net of shares withheld | 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, net of tax | 304 | 304 | |||
Ending balance (in shares) at Aug. 30, 2020 | 29,242 | ||||
Ending balance at Aug. 30, 2020 | 221,158 | $ 29 | 163,388 | 60,245 | (2,504) |
Beginning balance (in shares) at May. 31, 2020 | 29,224 | ||||
Beginning balance at May. 31, 2020 | 231,044 | $ 29 | 162,578 | 71,245 | (2,808) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (29,799) | ||||
Other comprehensive income, net of tax | 1,092 | ||||
Ending balance (in shares) at Feb. 28, 2021 | 29,323 | ||||
Ending balance at Feb. 28, 2021 | 204,624 | $ 29 | 164,865 | 41,446 | (1,716) |
Beginning balance (in shares) at Aug. 30, 2020 | 29,242 | ||||
Beginning 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, net of shares withheld (in shares) | 81 | ||||
Issuance of stock under stock plans, net of shares withheld | 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, net of tax | 401 | 401 | |||
Ending balance (in shares) at Nov. 29, 2020 | 29,323 | ||||
Ending balance at Nov. 29, 2020 | 208,938 | $ 29 | 164,068 | 46,944 | (2,103) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 0 | ||||
Issuance of stock under stock plans, net of shares withheld | 0 | ||||
Taxes paid by Company for employee stock plans | 0 | 0 | |||
Stock-based compensation | 797 | 797 | |||
Net loss | (5,498) | (5,498) | |||
Other comprehensive income, net of tax | 387 | 387 | |||
Ending balance (in shares) at Feb. 28, 2021 | 29,323 | ||||
Ending balance at Feb. 28, 2021 | 204,624 | $ 29 | 164,865 | 41,446 | (1,716) |
Beginning balance (in shares) at May. 30, 2021 | 29,333 | ||||
Beginning balance at May. 30, 2021 | 202,784 | $ 29 | 165,533 | 38,580 | (1,358) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 129 | ||||
Issuance of stock under stock plans, net of shares withheld | 0 | ||||
Taxes paid by Company for employee stock plans | (428) | (428) | |||
Stock-based compensation | 620 | 620 | |||
Net loss | (9,477) | (9,477) | |||
Other comprehensive income, net of tax | 366 | 366 | |||
Ending balance (in shares) at Aug. 29, 2021 | 29,462 | ||||
Ending balance at Aug. 29, 2021 | 193,865 | $ 29 | 165,725 | 29,103 | (992) |
Beginning balance (in shares) at May. 30, 2021 | 29,333 | ||||
Beginning balance at May. 30, 2021 | 202,784 | $ 29 | 165,533 | 38,580 | (1,358) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (60,768) | ||||
Other comprehensive income, net of tax | 646 | ||||
Ending balance (in shares) at Feb. 27, 2022 | 29,482 | ||||
Ending balance at Feb. 27, 2022 | 144,072 | $ 29 | 166,943 | (22,188) | (712) |
Beginning balance (in shares) at Aug. 29, 2021 | 29,462 | ||||
Beginning balance at Aug. 29, 2021 | 193,865 | $ 29 | 165,725 | 29,103 | (992) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 19 | ||||
Issuance of stock under stock plans, net of shares withheld | 0 | ||||
Taxes paid by Company for employee stock plans | (84) | (84) | |||
Stock-based compensation | 686 | 686 | |||
Net loss | (38,441) | (38,441) | |||
Other comprehensive income, net of tax | 176 | 176 | |||
Ending balance (in shares) at Nov. 28, 2021 | 29,481 | ||||
Ending balance at Nov. 28, 2021 | 156,202 | $ 29 | 166,327 | (9,338) | (816) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 1 | ||||
Issuance of stock under stock plans, net of shares withheld | 0 | ||||
Taxes paid by Company for employee stock plans | (6) | (6) | |||
Stock-based compensation | 622 | 622 | |||
Net loss | (12,850) | (12,850) | |||
Other comprehensive income, net of tax | 104 | 104 | |||
Ending balance (in shares) at Feb. 27, 2022 | 29,482 | ||||
Ending balance at Feb. 27, 2022 | $ 144,072 | $ 29 | $ 166,943 | $ (22,188) | $ (712) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Feb. 27, 2022 | Feb. 28, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (60,768) | $ (29,799) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Impairment of goodwill | 32,057 | 0 |
Depreciation, amortization of intangibles, debt costs and right-of-use assets | 14,488 | 14,808 |
Loss on disposal of property and equipment related to restructuring, net | 5,185 | 7,881 |
Deferred taxes | (5,471) | (7,307) |
Loss on sale of Eat Smart | 4,354 | 0 |
Stock-based compensation expense | 1,928 | 2,584 |
Provision (benefit) for expected credit losses | (14) | 284 |
Net loss on disposal of property and equipment held and used | 25 | 39 |
Change in investment in non-public company, fair value | 0 | 11,800 |
Loss on debt refinancing | 0 | 1,110 |
Other, net | (551) | (12) |
Changes in current assets and current liabilities: | ||
Accounts receivable, net | (7,525) | 6,345 |
Inventories | (11,910) | (10,468) |
Prepaid expenses and other current assets | (1,448) | 350 |
Accounts payable | 13,055 | 6,372 |
Accrued compensation | (3,849) | 2,184 |
Other accrued liabilities | (4,195) | 3,186 |
Deferred revenue | 204 | 1,243 |
Net cash (used in) provided by operating activities | (24,435) | 10,600 |
Cash flows from investing activities: | ||
Proceeds from sale of Eat Smart | 73,500 | 0 |
Sale of Investment in non-public company | 45,100 | 0 |
Purchases of property and equipment | (18,539) | (11,383) |
Proceeds from sales of property and equipment | 1,096 | 12,885 |
Net cash provided by investing activities | 101,157 | 1,502 |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 0 | 150,000 |
Payments on long-term debt | (86,376) | (114,095) |
Proceeds from lines of credit | 45,011 | 83,000 |
Payments on lines of credit | (34,111) | (119,400) |
Taxes paid by Company for employee stock plans | (518) | (297) |
Payments for debt issuance costs | (169) | (9,615) |
Net cash used in financing activities | (76,163) | (10,407) |
Net increase in cash, cash equivalents and restricted cash | 559 | 1,695 |
Cash, cash equivalents and restricted cash, beginning of period | 1,295 | 553 |
Cash, cash equivalents and restricted cash, end of period | 1,854 | 2,248 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchases of property and equipment on trade vendor credit | $ 1,765 | $ 1,124 |
Organization, Basis of Presenta
Organization, Basis of Presentation, and Summary of Significant Accounting Policies | 9 Months Ended |
Feb. 27, 2022 | |
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-grade pharmaceutical products in syringes and vials. As a leading manufacturer of premium, injectable grade Hyaluronic Acid, Lifecore brings 36 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. 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, avocado products, olive oil and wine vinegars and technology which reports revenues for BreatheWay patented supply chain solutions. Eat Smart Sale and Discontinued Operations On December 13, 2021 (the “Closing Date”), Landec and Curation Foods (together, the “Sellers”), and Taylor Farms Retail, Inc. (“Taylor Farms” and together with the Sellers, the “Parties”) completed the sale (the “Eat Smart Disposition”) of Curation Foods’ Eat Smart business, including its salad and cut vegetable businesses (the “Business”), pursuant to the terms of an asset purchase agreement executed by the Parties on December 13, 2021 (the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, Taylor Farms acquired the Business for a purchase price of $73.5 million, subject to post-closing adjustments based upon negotiation of the net working capital balances at the Closing Date. As part of the Eat Smart Disposition, Taylor Farms acquired, among other assets and liabilities related to the Business, the manufacturing facility and warehouses (and corresponding equipment) located in Bowling Green, Ohio and Guadalupe, California, as well as inventory, accounts receivable, accounts payable, intellectual property and information related to the Business, and assumed certain liabilities and executory obligations under the Company’s and Curation Foods’ outstanding contracts related to the Business, in each case, subject to the terms of the Asset Purchase Agreement. Following the Eat Smart Disposition, Curation Foods retains its O Olive Oil & Vinegar (" O") and Yucatan Foods businesses and its rights and interests in BreatheWay, and the Company retains its Lifecore business. During the third quarter of its fiscal year, the Company used net proceeds from the Eat Smart Disposition to repay $67.9 million in borrowings under the Company’s existing credit agreements. The accounting requirements for reporting the Eat Smart business as a discontinued operation were met when the Eat Smart Disposition was completed on the Closing Date. Accordingly, the consolidated financial statements and notes to the consolidated financial statements reflect the results of the Eat Smart business as a discontinued operation for all periods presented. A loss of $4.4 million from the Eat Smart Disposition is included in Loss from discontinued operations, net of tax, within the Consolidated Statements of Comprehensive (Loss) Income during the three and nine months ended February 27, 2022. Refer to Note 9 - Discontinued Operations for additional information. 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 February 27, 2022, 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 30, 2021 (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 nine months ended February 27, 2022 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 material 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 by the 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; sales returns and credit losses; recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived and indefinite lived assets (including intangible assets), and inventory; 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 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 and Restricted Cash 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) February 27, 2022 May 30, 2021 February 28, 2021 May 31, 2020 Cash and cash equivalents $ 1,854 $ 1,159 $ 2,248 $ 360 Cash and cash equivalents, discontinued operations — 136 — — Restricted cash — — — 193 Cash, cash equivalents and restricted cash $ 1,854 $ 1,295 $ 2,248 $ 553 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) February 27, 2022 May 30, 2021 Finished goods $ 42,387 $ 40,204 Raw materials 26,644 16,644 Work in progress 4,669 6,228 Total $ 73,700 $ 63,076 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 no current economic conditions or forecasts that may affect future credit losses, the Company has determined that recent historical experience provides 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 Provision (benefit) for expected credit losses Write offs, Balance at Nine months ended February 27, 2022 $ 85 $ (14) $ (6) $ 65 Nine months ended February 28, 2021 $ 186 $ 284 $ (385) $ 85 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 - Investment in Non-public Company, the Company had a 26.9% ownership interest until it sold that interest on June 1, 2021. During the three and nine months ended February 28, 2021, the Company recognized revenues of $0.2 million and $0.4 million, respectively, from product sales to and license fees from Windset. This amount has been included in Product sales in the accompanying Consolidated Statements of Comprehensive (Loss) Income. The receivable balance of $0.1 million is included in Accounts receivable in the accompanying Consolidated Balance Sheets as of May 30, 2021. 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, $0.7 million and $1.9 million were recorded as Prepaid expenses and other current assets, and Other assets in the accompanying Consolidated Balance Sheets, respectively, as of February 27, 2022, and $0.7 million and $2.4 million, respectively, as of May 30, 2021. The Company records its term debt issuance costs as a contra-liability, and as such, $1.4 million and $4.1 million was recorded as Other accrued liabilities, and Long-term debt, net in the accompanying Consolidated Balance Sheets, respectively, as of February 27, 2022 and $1.4 million and $5.1 million, respectively, as of May 30, 2021. Financial Instruments The Company’s financial instruments are primarily composed of commercial-term trade payables, 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 Statements of Comprehensive (Loss) Income as impacted 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. During the third quarter of fiscal year 2021, the Company discontinued its hedge accounting prospectively since it was determined that the derivatives are no longer highly effective in offsetting changes in the net investment. The derivatives continue to be carried at fair value in the accompanying Consolidated Balance Sheets with changes in their fair values from the date of discontinued hedge accounting recognized in current period earnings in Other income (expense), net in the Consolidated Statements of Comprehensive (Loss) Income. Amounts previously accumulated in AOCL during the period of effectiveness will continue to be realized over the remaining term of the underlying forecasted debt payments as a component of AOCL in Stockholders’ Equity. Accumulated Other Comprehensive Loss Comprehensive income (loss) consists of two components, net loss and Other comprehensive income (loss) (“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. The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instruments. The components of AOCL, net of tax, are as follows: (In thousands) AOCL Balance as of May 30, 2021 $ (1,358) Amounts reclassified from OCI 646 Other comprehensive income, net $ 646 Balance as of February 27, 2022 $ (712) The Company expects to reclassify approximately $0.3 million into earnings in the next 12 months. Investment in Non-Public Company On February 15, 2011, the Company made an investment in Windset which is reported at fair value in the accompanying Consolidated Balance Sheets as of May 30, 2021. 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. On June 1, 2021, the Company sold all of its equity interest in Windset to the Newell Capital Corporation and Newell Brothers Investment 2 Corp. Assets Held for Sale In January 2020, the Company decided to seek to divest its Curation Foods salad dressing plant in Ontario, California (“Ontario”). During 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. 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 nine months ended February 28, 2021 , which is included in loss from discontinued operations within the Consolidated Statements of Comprehensive (Loss) Income. In June 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, C alifornia and Bowling Green, Ohio. In the first quarter of fiscal year 2021, the Company recognized an $8.8 million impairment loss, which is included in loss from discontinued operations 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, no gain or loss was recorded upon the sale. In May 2021 the Board of Directors approved a plan to sell Curation Foods’ Rock Hill, South Carolina distribution facil ity. The $0.5 million carrying value of this asset was included in current assets, discontinued operations on the Consolidated Balance Sheets as of May 30, 2021, and was classified as an asset held for sale. There was no impairment recorded in fiscal year 2021. The asset was sold on June 9, 2021 for gross proceeds of $1.1 million. A gain of $0.6 million was recorded upon the sale, which is included in loss from discontinued operations within the Consolidated Statements of Comprehensive (Loss) Income. As discussed in Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies – Eat Smart Sale and Discontinued Operations, during the third quarter of fiscal year 2022, the Company sold its Eat Smart business. As a result, the Company met the requirements of ASC 205-20, to report the results of the Eat Smart business as a discontinued operation. Accordingly, the carrying amounts of the major classes of assets and liabilities of the Eat Smart business included in assets and liabilities of discontinued operations as of May 30, 2021. See Note 9 – Discontinued Operations for additional discussion of the Discontinued Operations. 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 of 12 years, and trademarks/tradenames and goodwill with indefinite useful lives. Impairment Review of Goodwill and Indefinite-Lived Intangible Asset The Company tests its goodwill and trademarks with indefinite lives annually for impairment in the fiscal fourth quarter or earlier if there are indications during a different interim period that these assets may have become impaired. On a quarterly basis, the Company considers the need to update its most recent annual tests for impairment of its indefinite-lived intangible assets and goodwill, based on management’s assessment of changes in its business and other economic factors since the most recent annual evaluation. Such changes, if significant or material, could indicate a need to update the most recent annual tests for impairment of goodwill and indefinite-lived intangible assets during the current period. The results of these tests could lead to write-downs of the carrying values of these assets in the current period. With respect to goodwill, the Company has the option to first assess qualitative factors such as macro-economic conditions, industry and market environment, cost factors, overall financial performance of the Company, cash flow from operating activities, market capitalization, litigation, and stock price. If the result of a qualitative test indicates a potential for impairment of a reporting unit, a quantitative test is performed. The quantitative test compares the carrying amount of a reporting unit that includes goodwill to its fair value. The Company determines the fair value using both an income approach and a market approach. Under the income approach, fair value is determined based on estimated future cash flows, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company and the rate of return an outside investor could expect to earn. Under the market-based approach, information regarding the Company is utilized along with publicly available industry information to determine earnings multiples that are used to value the Company. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. To determine the fair value of a reporting unit as part of its quantitative test, the Company uses a discounted cash flow ("DCF") method under the income approach, as it believes that this approach is the most reliable indicator of the fair value of its businesses and the fair value of their future earnings and cash flows. Under this approach, which requires significant judgments, the Company estimates the future cash flows of each reporting unit and discounts these cash flows at a rate of return that reflects their relative risk. The cash flows used in the DCF method are consistent with those the Company uses in its internal planning, which gives consideration to actual business trends experienced, and the broader business strategy for the long term. The other key estimates and factors used in the DCF method include, but are not limited to, future volumes, net sales and expense growth rates, and gross margin and gross margin growth rates. Changes in such estimates or the application of alternative assumptions could produce different results. For trademarks and other intangible assets with indefinite lives, the Company performs a quantitative analysis to test for impairment. When a quantitative test is performed, the estimated fair value of an asset is compared to its carrying amount. If the carrying amount of such asset exceeds its estimated fair value, an impairment charge is recorded for the difference between the carrying amount and the estimated fair value. The Company uses the income approach to estimate the fair value of its trademarks. This approach requires significant judgments in determining the royalty rates and the assets’ estimated cash flows as well as the appropriate discount rates applied to those cash flows to determine fair value. Changes in such estimates or the use of alternative assumptions could produce different results. During the three and nine months ended February 27, 2022, the Company recorded an impairment charge of $0 and $32.1 million, respectively, related Goodwill for the Eat Smart business. The impairment charge was primarily a result of an indication of a decrease in the fair market value of our Eat Smart business driven by lower market valuations for the Eat Smart business and a decrease in projected cash flows. This impairment charge is included in the loss from discontinued operations within the Consolidated Statements of Comprehensive (Loss) Income. 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 February 27, 2022 and May 30, 2021, 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. The investment in Windset was required to be measured at fair value on a recurring basis at May 30, 2021, and is included in other assets, discontinued operations in the accompanying Consolidated Balance Sheets. 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 May 30, 2021, related to Curation Foods’ distribution facility in Rock Hill, South Carolina the Company had $0.5 million in current assets, discontinued operations within the Consolidated Balance Sheet meeting the criteria of assets held for sale. These assets are recognized at the lower of cost or fair value less cost to sell using market approach. The fair value of these assets are classified as level 3 in the fair value hierarchy due to a mix of unobservable inputs utilized such as independent research in the market as well as actual quotes from market participants. The Company elected the fair value option of accounting for its investment in Windset. The calculation of fair value utilized significant unobservable inputs, including projected cash flows, growth rates, and discount rates. As a result, the Company’s investment in Windset was considered to be a Level 3 measurement investment. The Company sold its entire investment in Windset on June 1, 2021 for $45.1 million. No gain or loss was recorded upon the sale of the Company’s investment in Windset. In determining the fair value of the investment in Windset, the Company utilized the following significant unobservable inputs in the discounted cash flow models: February 27, 2022 Range May 30, 2021 Range Revenue growth rates N/A 7% (6.9%) Expense growth rates N/A 0% to 8% (5.5%) Discount rates N/A 10% 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 February 27, 2022 Fair Value at May 30, 2021 Assets: Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Current assets, discontinued operations Assets held for sale - nonrecurring $ — $ — $ — $ — $ — $ 515 Other assets, discontinued operations Investment in non-public company — — — — — 45,100 Total assets $ — $ — $ — $ — $ — $ 45,615 Liabilities: Interest rate swap contracts $ — $ 348 $ — $ — $ 1,736 $ — Total liabilities $ — $ 348 $ — $ — $ 1,736 $ — The following table reflects the fair value roll forward reconciliation of Level 3 assets and liabilities measured at fair value for the nine months ended February 27, 2022: (In thousands) Windset Investment Balance as of May 30, 2021 $ 45,100 Sale of Investment in non-public company (45,100) Balance as of February 27, 2022 $ — 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 or as the Company satisfies its performance obligations under a contract and control of the product is transferred to the customer. Lifecore Lifecore generates revenue from two integrated activities: CDMO and Fermentation. CDMO is comprised of aseptic and development services. Lifecore’s standard terms of sale are generally included in its contracts and purchase orders. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. Lifecore has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. Lifecore’s standard payment terms with its customers generally range from 30 days to 60 days. Aseptic Lifecore provides aseptic formulation and filling of syringes and vials with precisely formulated medical grade HA and non-HA materials for injectable products used for medical purposes. In instances wh |
Investment in Non-public Compan
Investment in Non-public Company | 9 Months Ended |
Feb. 27, 2022 | |
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 represented a 26.9% ownership interest in Windset. The Senior A preferred shares yielded a cash dividend of 7.5% annually. The dividend was payable within 90 days of each anniversary of the execution of the Windset Purchase Agreement. The non-voting junior preferred stock did not yield a dividend unless declared by the Board of Directors of Windset and no such dividend has been declared. 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 and nine months ended February 28, 2021, the Company recorded $0.3 million and $0.8 million in dividend income, respectively, which is included in loss from discontinued operations 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 nine months ended February 28, 2021 was a decrease of $0 and $11.8 million, respectively, and is included in loss from discontinued operations in the accompanying Consolidated Statements of Comprehensive (Loss) Income. On June 1, 2021, the Company and Curation Foods entered into and closed a Share Purchase Agreement (the “Purchase Agreement”) with Newell Capital Corporation and Newell Brothers Investment 2 Corp., as Purchasers (the “Purchasers”) and Windset, pursuant to which Curation Foods sold all of its equity interests of Windset to the Purchasers in exchange for an aggregate purchase price of $45.1 million. |
Stock-based Compensation and St
Stock-based Compensation and Stockholders' Equity | 9 Months Ended |
Feb. 27, 2022 | |
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 February 27, 2022, the Company granted 75,000 options to purchase shares of common stock and awarded 18,000 RSUs. During the nine months ended February 27, 2022, the Company granted 778,000 options to purchase shares of common stock and awarded 101,000 RSUs. As of February 27, 2022, the Company has reserved 3.8 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 dates and is recognized over the required service periods, generally the vesting period. The following table summarizes stock-based compensation by income statement line item: Three Months Ended Nine Months Ended (In thousands) February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Continuing operations: Cost of product sales $ 83 $ 141 177 $ 262 Research and development 51 49 151 175 Selling, general and administrative 488 641 1,575 2,120 Discontinued Operations: Cost of product sales — (34) 25 27 Total stock-based compensation $ 622 $ 797 $ 1,928 $ 2,584 As of February 27, 2022, there was $3.3 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 2.06 years for stock options and 1.39 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 nine months ended February 27, 2022, the Company did not purchase any shares on the open market. |
Diluted Earnings Per Share
Diluted Earnings Per Share | 9 Months Ended |
Feb. 27, 2022 | |
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 Nine Months Ended (In thousands, except per share amounts) February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Numerator: Net loss applicable to common stockholders $ (12,850) $ (5,498) $ (60,768) $ (29,799) Denominator: Weighted average shares for basic net loss per share 29,482 29,323 29,459 29,282 Effect of dilutive securities: Stock options and restricted stock units — — — — Weighted average shares for diluted net loss per share 29,482 29,323 29,459 29,282 Diluted net loss per share $ (0.43) $ (0.19) $ (2.07) $ (1.02) Due to the Company’s net loss for the three and nine months ended February 27, 2022 and February 28, 2021, the net loss per share includes only weighted average shares outstanding. For the three months ended February 27, 2022 and February 28, 2021, the computation of the diluted net loss per share excludes the impact of options to purchase 2.1 million and 2.4 million shares of common stock, respectively, as such impacts would be antidilutive for these periods. For the nine months ended February 27, 2022 and February 28, 2021, the computation of the diluted net loss per share excludes the impact of options to purchase 2.2 million and 2.2 million shares of common stock, respectively, as such impacts would be antidilutive for these periods. |
Income Taxes
Income Taxes | 9 Months Ended |
Feb. 27, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes from continuing operations for the nine months ended February 27, 2022 and February 28, 2021, was a benefit of $5.0 million and $1.0 million, respectively. The effective tax rate for the nine months ended February 27, 2022 and February 28, 2021 was 32% and 10%, respectively. The effective tax rate for the nine months ended February 27, 2022, was higher than the statutory federal income tax rate of 21% primarily due to the movement of the valuation allowance recorded against certain deferred tax assets, partially offset by the impact of state taxes. As of February 27, 2022 and May 30, 2021, the Company had unrecognized tax benefits of $0.9 million and $0.9 million, respectively. Included in the balance of unrecognized tax benefits as of February 27, 2022 and May 30, 2021, is $0.8 million and $0.9 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 February 27, 2022 and May 30, 2021. 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 significant. |
Debt
Debt | 9 Months Ended |
Feb. 27, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt, net consists of the following: (In thousands) February 27, 2022 May 30, 2021 Term loan $ 83,712 $ 170,000 Total principal amount of long-term debt 83,712 170,000 Less: unamortized debt issuance costs (4,114) (5,098) Total long-term debt, net of unamortized debt issuance costs 79,598 164,902 Less: current portion of long-term debt, net — — Long-term debt, net $ 79,598 $ 164,902 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 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 serves 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 Refinance Term Loan Credit Agreement also states that in the event of a prepayment of any amount other than the scheduled installments within twelve months after the closing date, a penalty will be assessed equal to the aggregate amount of interest that would have otherwise been payable from date of prepayment event until twelve months after the closing date plus 3% of the amount prepaid. 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 contain 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 incurred debt issuance costs from the lender and third-parties of $10.5 million. Concurrent with the close of the New Credit Agreements, the Company repaid all outstanding borrowings under the previous Credit Agreement, and terminated such previous Credit Agreement. In connection with the repayment of borrowings under such previous Credit Agreement, the Company recognized a loss in fiscal year 2021 of $1.1 million, as a result of the non-cash write-off of unamortized debt issuance costs related to the refinancing under the New Credit Agreements. As of February 27, 2022, $39.9 million was outstanding on the Refinance Revolver, at an interest rate of 3.00%. As of February 27, 2022, the Refinance Term Loan had an interest rate of 9.5%. As of February 27, 2022, the Company was in compliance with all financial covenants and had no events of default under the New Credit Agreements. 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 had the effect of changing the Company’s previous Term Loan obligation from a variable interest rate to a fixed 30-day LIBOR rate of 1.22%. The 2016 Swap matured in September 2021. 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 had the effect on the Company’s previous debt 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%. The 2018 Swap matured in September 2021. 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 had the effect on our previous debt 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 1.53%. The 2019 Swap will mature in November 2022. |
Business Segment Reporting
Business Segment Reporting | 9 Months Ended |
Feb. 27, 2022 | |
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 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 Curation Foods business includes (i) three natural food brands, including O Olive Oil & Vinegar, Yucatan Foods, and Cabo Fresh, and (ii) BreatheWay® activities. The Curation Foods segment includes sales of BreatheWay packaging to partners for fruit and vegetable products, sales of olive oils and wine vinegars under the O brand, and sales of avocado products under the brands Yucatan Foods and Cabo Fresh. In December 2021, the Company completed the Eat Smart Disposition. As a result, the Company met the requirements of ASC 205-20 to report the results of the Eat Smart business as discontinued operations. The operating results for the Eat Smart business, in all periods presented, have been reclassified to discontinued operations and are no longer reported in the Curation Foods business segment. See Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies – Eat Smart Sale and Discontinued Operations for further discussion. The Other segment includes corporate general and administrative expenses, 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 in Mexico. The Company’s international sales by geography are based on the billing address of the customer and were as follows, excluding discontinued operations: Three Months Ended Nine Months Ended (In millions) February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Switzerland $ 8.2 $ 1.6 $ 13.6 $ 2.4 Canada 3.0 2.7 9.5 8.3 Belgium — 6.0 — 12.6 All Other Countries 3.7 3.9 3.2 3.2 Operations by business segment consisted of the following: (In thousands) Lifecore Curation Foods Other Total Three Months Ended February 27, 2022 Net sales $ 34,808 $ 18,266 $ — $ 53,074 Gross profit 12,905 990 — 13,895 Net (loss) income from continuing operations 5,054 (5,848) (6,312) (7,106) Loss from discontinued operations, net of tax — (2,703) (3,041) (5,744) Depreciation and amortization 1,674 1,142 18 2,834 Interest income 18 — 2 20 Interest expense — 26 4,079 4,105 Income tax (benefit) expense 1,596 (1,867) (5) (276) Corporate overhead allocation 1,175 289 (1,464) — Nine Months Ended February 27, 2022 Net sales $ 81,707 $ 56,451 $ — $ 138,158 Gross profit 30,384 8,661 — 39,045 Net (loss) income from continuing operations 11,317 5,513 (27,340) (10,510) Loss from discontinued operations, net of tax — (47,217) (3,041) (50,258) Depreciation and amortization 4,894 3,095 70 8,059 Interest income 56 — 10 66 Interest expense — 301 13,576 13,877 Income tax (benefit) expense 3,574 (12,843) 4,257 (5,012) Corporate overhead allocation 3,389 778 (4,167) — Three Months Ended February 28, 2021 Net sales $ 27,225 $ 17,465 $ — $ 44,690 Gross profit 11,561 2,880 — 14,441 Net (loss) income from continuing operations 5,104 (394) (6,175) (1,465) Loss from discontinued operations, net of tax — (4,033) — (4,033) Depreciation and amortization 1,385 830 22 2,237 Interest income — — 13 13 Interest expense — 136 2,803 2,939 Income tax (benefit) expense 1,612 (1,614) (56) (58) Corporate overhead allocation 1,102 87 (1,189) — Nine Months Ended February 28, 2021 Net sales $ 72,248 $ 54,381 $ — $ 126,629 Gross profit 27,036 8,854 — 35,890 Net (loss) income from continuing operations 9,708 (1,346) (17,151) (8,789) Loss from discontinued operations, net of tax — (21,010) — (21,010) Depreciation and amortization 4,055 2,451 76 6,582 Interest income — — 31 31 Interest expense — 410 6,199 6,609 Income tax (benefit) expense 3,066 (2,095) (1,996) (1,025) Corporate overhead allocation 3,668 621 (4,289) — |
Restructuring Costs
Restructuring Costs | 9 Months Ended |
Feb. 27, 2022 | |
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. The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of Comprehensive (Loss) Income, by Business Segment, excluding discontinued operations: (in thousands) Curation Foods Lifecore Other Total Three Months Ended February 27, 2022 Asset write-off costs $ 3,693 $ — $ — $ 3,693 Employee severance and benefit costs — — — — Lease costs 1,583 — — 1,583 Other restructuring costs 68 271 250 589 Total restructuring costs $ 5,344 $ 271 $ 250 $ 5,865 (in thousands) Curation Foods Lifecore Other Total Nine Months Ended February 27, 2022 Asset write-off costs $ 3,693 $ — $ — $ 3,693 Employee severance and benefit costs — — — — Lease costs 2,049 — — 2,049 Other restructuring costs 68 271 2,325 2,664 Total restructuring costs $ 5,810 $ 271 $ 2,325 $ 8,406 Asset write-off costs Asset write-off costs are costs related to impairment or disposal of property and equipment as part of 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. These costs are included in restructuring costs within the Consolidated Statements of Statements of Comprehensive (Loss) Income. The Company leases its main office located in Santa Maria, California (the “Santa Maria Office”). During the fiscal quarter ended February 27, 2022 the Company approved a plan to explore opportunities to sub lease its Santa Maria Office. The Santa Maria Office assets, included as lease hold improvements within property and equipment, net, has been designated as held for use within the Consolidated Balance Sheets as of February 27, 2022, as no finalized plan for disposition existed at the balance sheet date. The Company recognized a $5.3 million impairment loss, which is included in Restructuring costs within the Consolidated Statements of Statements of Comprehensive (Loss) Income ($3.7 million included in asset write-off costs related to lease hold improvements impairment and $1.6 million included in lease costs related to right-of-use asset impairment). The Company expects to complete the sublease plan within the next 12 months. Employee severance and benefit costs Employee severance and benefit costs are costs incurred as a result of reduction-in-force driven by our restructuring plan and closure of offices and facilities. These costs were driven primarily by the closure of our San Rafael, California office, Santa Clara, California office, and Los Angeles, California office. Lease Costs 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. As noted in the Asset write-off costs section, the Company approved a plan to explore opportunities to sub lease its Santa Maria Office and expects to complete the sublease plan within the next 12 months. Other restructuring costs Other restructuring costs are primarily related to consulting costs incurred in connection with the execution of 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, since inception of the restructuring plan in fiscal year 2020 through the nine months ended February 27, 2022, excluding discontinued operations: Curation Foods Lifecore Other Total (in thousands) Asset write-off costs, net $ 7,552 $ — $ 418 $ 7,970 Employee severance and benefit costs 188 — 784 972 Lease costs 2,195 — 26 2,221 Other restructuring costs 102 271 4,687 5,060 Total restructuring costs $ 10,037 $ 271 $ 5,915 $ 16,223 The total expected cost related to the restructuring plan is approximately $20.0 million. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Feb. 27, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued OperationsAs discussed in Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies – Eat Smart Sale and Discontinued Operations, on December 13, 2021, we completed the Eat Smart Disposition. Eat Smart represented a component of the business within the Curation Foods segment and its sale represents a strategic shift in the Company going forward. Accordingly, concurrent with the execution of the Asset Purchase Agreement, Eat Smart meets the accounting requirements for reporting as discontinued operations for all periods presented. The key components of income from discontinued operations for the three and nine months ended February 27, 2022 and February 28, 2021 were as follows (in thousands): Three Months Ended Nine Months Ended February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Product sales $ 13,559 $ 93,092 $ 186,755 $ 277,699 Cost of product sales 13,720 87,844 181,555 256,918 Gross profit (161) 5,248 5,200 20,781 Operating costs and expenses: Research and development 103 719 1,918 2,120 Selling, general and administrative 1,058 7,086 13,350 21,258 Impairment of goodwill — — 32,057 — Loss on sale of Eat Smart 4,354 — 4,354 — Restructuring costs 86 677 1,519 9,940 Total operating costs and expenses 5,601 8,482 53,198 33,318 Operating loss (5,762) (3,234) (47,998) (12,537) Dividend income — 281 — 844 Interest expense (204) (1,239) (2,682) (3,717) Other income (expense), net — — — (11,800) Loss from discontinued operations before taxes (5,966) (4,192) (50,680) (27,210) Income tax benefit 222 159 422 6,200 Loss from discontinued operations, net of tax $ (5,744) $ (4,033) $ (50,258) $ (21,010) Cash used in operating activities by the Eat Smart business totaled $5.5 million and $1.8 million for the nine months ended February 27, 2022 and February 28, 2021, respectively. Cash provided by investing activities from the Eat Smart business totaled $117.8 million and $9.3 million for the nine months ended February 27, 2022 and February 28, 2021, respectively. Depreciation and amortization expense of the Eat Smart business totaled $0.3 million and $2.2 million for the three months ended February 27, 2022 and February 28, 2021, respectively. Depreciation and amortization expense of the Eat Smart business totaled $5.1 million and $6.9 million for the nine months ended February 27, 2022 and February 28, 2021, respectively. Capital expenditures of the Eat Smart business totaled $1.9 million and $3.6 million for the nine months ended February 27, 2022 and February 28, 2021, respectively. Interest expense was allocated to discontinued operations based on the interest expense related to the amount of debt required to be paid down under the New Credit Agreements as a result of the Eat Smart Disposition. There were no assets or liabilities of Eat Smart as of February 27, 2022. The carrying amounts of the major classes of assets and liabilities of the Eat Smart business included in assets and liabilities of discontinued operations are as follows (in thousands): May 30, 2021 ASSETS Cash and cash equivalents $ 136 Accounts receivable, less allowance for credit losses 28,583 Inventories 6,587 Prepaid expenses and other current assets 2,312 Total current assets, discontinued operations 37,618 Investment in non-public company, fair value 45,100 Property and equipment, net 66,789 Operating lease right-of-use assets 13,347 Goodwill 35,470 Trademarks/tradenames, net 8,228 Customer relationships, net 2,260 Other assets 80 Total other assets, discontinued operations 171,274 Total assets, discontinued operations $ 208,892 LIABILITIES Accounts payable $ 31,271 Accrued compensation 4,550 Other accrued liabilities 4,041 Current portion of lease liabilities 2,424 Deferred revenue 493 Total current liabilities, discontinued operations 42,779 Long-term lease liabilities 14,030 Other non-current liabilities 729 Non-current liabilities, discontinued operations 14,759 Total liabilities, discontinued operations $ 57,538 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Feb. 27, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events 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 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) | 9 Months Ended |
Feb. 27, 2022 | |
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 February 27, 2022, 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 |
Fiscal Period | 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 nine months ended February 27, 2022 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 material 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 by the Company is not a 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; sales returns and credit losses; recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived and indefinite lived assets (including intangible assets), and inventory; 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. |
Inventories | InventoriesIf 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 | 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 no current economic conditions or forecasts that may affect future credit losses, the Company has determined that recent historical experience provides 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 |
Related Party Transactions | Related Party TransactionsAll related party transactions are monitored quarterly by the Company and approved by the Audit Committee of the Board of Directors. |
Debt Issuance Costs | Debt Issuance CostsThe Company records its line of credit debt issuance costs as an asset |
Financial Instruments | Financial Instruments The Company’s financial instruments are primarily composed of commercial-term trade payables, 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 Statements of Comprehensive (Loss) Income as impacted 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. During the third quarter of fiscal year 2021, the Company discontinued its hedge accounting prospectively since it was determined that the derivatives are no longer highly effective in offsetting changes in the net investment. The derivatives continue to be carried at fair value in the accompanying Consolidated Balance Sheets with changes in their fair values from the date of discontinued hedge accounting recognized in current period earnings in Other income (expense), net in the Consolidated Statements of Comprehensive (Loss) Income. Amounts previously accumulated in AOCL during the period of effectiveness will continue to be realized over the remaining term of the underlying forecasted debt payments as a component of AOCL in Stockholders’ Equity. Accumulated Other Comprehensive Loss |
Investment in Non-Public Company | Investment in Non-Public CompanyOn February 15, 2011, the Company made an investment in Windset which is reported at fair value in the accompanying Consolidated Balance Sheets as of May 30, 2021. The Company has elected to account for its investment in Windset under the fair value option. |
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 of 12 years, and trademarks/tradenames and goodwill with indefinite useful lives. Impairment Review of Goodwill and Indefinite-Lived Intangible Asset The Company tests its goodwill and trademarks with indefinite lives annually for impairment in the fiscal fourth quarter or earlier if there are indications during a different interim period that these assets may have become impaired. On a quarterly basis, the Company considers the need to update its most recent annual tests for impairment of its indefinite-lived intangible assets and goodwill, based on management’s assessment of changes in its business and other economic factors since the most recent annual evaluation. Such changes, if significant or material, could indicate a need to update the most recent annual tests for impairment of goodwill and indefinite-lived intangible assets during the current period. The results of these tests could lead to write-downs of the carrying values of these assets in the current period. With respect to goodwill, the Company has the option to first assess qualitative factors such as macro-economic conditions, industry and market environment, cost factors, overall financial performance of the Company, cash flow from operating activities, market capitalization, litigation, and stock price. If the result of a qualitative test indicates a potential for impairment of a reporting unit, a quantitative test is performed. The quantitative test compares the carrying amount of a reporting unit that includes goodwill to its fair value. The Company determines the fair value using both an income approach and a market approach. Under the income approach, fair value is determined based on estimated future cash flows, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company and the rate of return an outside investor could expect to earn. Under the market-based approach, information regarding the Company is utilized along with publicly available industry information to determine earnings multiples that are used to value the Company. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. To determine the fair value of a reporting unit as part of its quantitative test, the Company uses a discounted cash flow ("DCF") method under the income approach, as it believes that this approach is the most reliable indicator of the fair value of its businesses and the fair value of their future earnings and cash flows. Under this approach, which requires significant judgments, the Company estimates the future cash flows of each reporting unit and discounts these cash flows at a rate of return that reflects their relative risk. The cash flows used in the DCF method are consistent with those the Company uses in its internal planning, which gives consideration to actual business trends experienced, and the broader business strategy for the long term. The other key estimates and factors used in the DCF method include, but are not limited to, future volumes, net sales and expense growth rates, and gross margin and gross margin growth rates. Changes in such estimates or the application of alternative assumptions could produce different results. For trademarks and other intangible assets with indefinite lives, the Company performs a quantitative analysis to test for impairment. When a quantitative test is performed, the estimated fair value of an asset is compared to its carrying amount. If the |
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 February 27, 2022 and May 30, 2021, 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. The investment in Windset was required to be measured at fair value on a recurring basis at May 30, 2021, and is included in other assets, discontinued operations in the accompanying Consolidated Balance Sheets. 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. |
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 or as the Company satisfies its performance obligations under a contract and control of the product is transferred to the customer. Lifecore Lifecore generates revenue from two integrated activities: CDMO and Fermentation. CDMO is comprised of aseptic and development services. Lifecore’s standard terms of sale are generally included in its contracts and purchase orders. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. Lifecore has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. Lifecore’s standard payment terms with its customers generally range from 30 days to 60 days. Aseptic Lifecore provides aseptic formulation and filling of syringes and vials with precisely formulated medical grade HA and non-HA materials for injectable products used for medical purposes. In instances where our customers contract with us to aseptically fill syringes or vials with our HA, the goods are not distinct in the context of the contract. Lifecore recognizes revenue for these products at the point in time when legal title to the product is transferred to the customer, which is at the time that shipment is made or upon delivery of the product. Development Services Lifecore provides product development services to assist its customers in obtaining regulatory approval for the commercial sale of their drug product. These services include activities such as technology development, material component changes, analytical method development, formulation development, pilot studies, stability studies, process validation and production of materials for use within clinical studies. The Company’s customers benefit from the expertise of its scientists who have extensive experience performing such tasks. Each of the promised goods and services are not distinct in the context of the contract as the goods and services are highly interdependent and interrelated. The services described above are significantly affected by each other because Lifecore would not be able to fulfill its promise by transferring each of the goods or services independently. Revenues generated from development services arrangements are recognized over time as Lifecore is creating an asset without an alternate use as it is unique to the customer. Furthermore, the Company has an enforceable right to payment for the performance completed to date for its costs incurred in satisfying the performance obligation plus a reasonable profit margin. For each of the development activities performed by Lifecore as described above, labor is the primary input (i.e., labor costs represent the majority of the costs incurred in the completion of the services). The Company determined that labor hours are the best measure of progress as it most accurately depicts the effort extended to satisfy the performance obligation over time. Fermentation Lifecore manufactures and sells pharmaceutical-grade sodium hyaluronate (“HA”) in bulk form to its customers. The HA produced is distinct as customers are able to utilize the product provided under HA supply contracts when they obtain control. Lifecore recognizes revenue for these products at the point in time when legal title to the product is transferred to the customer, which is at the time that shipment is made or upon delivery of the product to our customer. During the third fiscal quarter, we entered into one bill-and-hold arrangement with a customer under which $1.5 million of product sales were recognized in the three and nine months ended February 27, 2022. Revenue for bill-and-hold arrangements is recognized when control transfers to the customer, even though the customer does not have physical possession of the goods. Control transfers when the bill-and-hold arrangement has been determined to have substantive reason, the product is identified as belonging to the customer, the product is ready for physical transfer to the customer and the product cannot be used or directed to another customer. Curation Foods Curation Foods’ standard terms of sale, both prior to and following the Eat Smart Disposition, are generally included in its contracts and purchase orders. Revenue is recognized at the time shipment is made or upon delivery as control of the product is transferred to the customer. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. Curation Foods has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. Curation Foods’ 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 Curation Foods’ performance obligations. Curation Foods 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 has not historically had and does not anticipate significant changes in its estimates for variable consideration. |
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. |
Organization, Basis of Presen_3
Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Feb. 27, 2022 | |
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) February 27, 2022 May 30, 2021 February 28, 2021 May 31, 2020 Cash and cash equivalents $ 1,854 $ 1,159 $ 2,248 $ 360 Cash and cash equivalents, discontinued operations — 136 — — Restricted cash — — — 193 Cash, cash equivalents and restricted cash $ 1,854 $ 1,295 $ 2,248 $ 553 |
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) February 27, 2022 May 30, 2021 Finished goods $ 42,387 $ 40,204 Raw materials 26,644 16,644 Work in progress 4,669 6,228 Total $ 73,700 $ 63,076 |
Schedule of 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 Provision (benefit) for expected credit losses Write offs, Balance at Nine months ended February 27, 2022 $ 85 $ (14) $ (6) $ 65 Nine months ended February 28, 2021 $ 186 $ 284 $ (385) $ 85 |
Schedule of Accumulated Other Comprehensive Loss | The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instruments. The components of AOCL, net of tax, are as follows: (In thousands) AOCL Balance as of May 30, 2021 $ (1,358) Amounts reclassified from OCI 646 Other comprehensive income, net $ 646 Balance as of February 27, 2022 $ (712) |
Schedule of Effect of Significant Unobservable Inputs for Investment | In determining the fair value of the investment in Windset, the Company utilized the following significant unobservable inputs in the discounted cash flow models: February 27, 2022 Range May 30, 2021 Range Revenue growth rates N/A 7% (6.9%) Expense growth rates N/A 0% to 8% (5.5%) Discount rates N/A 10% |
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 February 27, 2022 Fair Value at May 30, 2021 Assets: Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Current assets, discontinued operations Assets held for sale - nonrecurring $ — $ — $ — $ — $ — $ 515 Other assets, discontinued operations Investment in non-public company — — — — — 45,100 Total assets $ — $ — $ — $ — $ — $ 45,615 Liabilities: Interest rate swap contracts $ — $ 348 $ — $ — $ 1,736 $ — Total liabilities $ — $ 348 $ — $ — $ 1,736 $ — |
Schedule of Assets 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 nine months ended February 27, 2022: (In thousands) Windset Investment Balance as of May 30, 2021 $ 45,100 Sale of Investment in non-public company (45,100) Balance as of February 27, 2022 $ — |
Schedule of Disaggregation of Revenue | The Company disaggregates its revenue by segment based on how it markets its products and services and reviews results of operations. The following tables disaggregate segment revenue by major product lines and services: (In thousands) Three Months Ended Nine Months Ended Lifecore: February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Contact development and manufacturing organization $ 24,799 $ 18,628 $ 63,951 $ 53,374 Fermentation 10,009 8,597 17,756 18,874 Total $ 34,808 $ 27,225 $ 81,707 $ 72,248 (In thousands) Three Months Ended Nine Months Ended Curation Foods: February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Avocado products $ 15,676 $ 15,378 $ 48,018 $ 47,107 Olive oil and wine vinegars 2,168 1,647 7,016 5,642 Technology 422 440 1,417 1,632 Total $ 18,266 $ 17,465 $ 56,451 $ 54,381 |
Stock-based Compensation and _2
Stock-based Compensation and Stockholders' Equity (Tables) | 9 Months Ended |
Feb. 27, 2022 | |
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 Nine Months Ended (In thousands) February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Continuing operations: Cost of product sales $ 83 $ 141 177 $ 262 Research and development 51 49 151 175 Selling, general and administrative 488 641 1,575 2,120 Discontinued Operations: Cost of product sales — (34) 25 27 Total stock-based compensation $ 622 $ 797 $ 1,928 $ 2,584 |
Diluted Earnings Per Share (Tab
Diluted Earnings Per Share (Tables) | 9 Months Ended |
Feb. 27, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Diluted Net Income Per Share | The following table sets forth the computation of diluted earnings per share: Three Months Ended Nine Months Ended (In thousands, except per share amounts) February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Numerator: Net loss applicable to common stockholders $ (12,850) $ (5,498) $ (60,768) $ (29,799) Denominator: Weighted average shares for basic net loss per share 29,482 29,323 29,459 29,282 Effect of dilutive securities: Stock options and restricted stock units — — — — Weighted average shares for diluted net loss per share 29,482 29,323 29,459 29,282 Diluted net loss per share $ (0.43) $ (0.19) $ (2.07) $ (1.02) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Feb. 27, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt, net consists of the following: (In thousands) February 27, 2022 May 30, 2021 Term loan $ 83,712 $ 170,000 Total principal amount of long-term debt 83,712 170,000 Less: unamortized debt issuance costs (4,114) (5,098) Total long-term debt, net of unamortized debt issuance costs 79,598 164,902 Less: current portion of long-term debt, net — — Long-term debt, net $ 79,598 $ 164,902 |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 9 Months Ended |
Feb. 27, 2022 | |
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, excluding discontinued operations: Three Months Ended Nine Months Ended (In millions) February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Switzerland $ 8.2 $ 1.6 $ 13.6 $ 2.4 Canada 3.0 2.7 9.5 8.3 Belgium — 6.0 — 12.6 All Other Countries 3.7 3.9 3.2 3.2 |
Schedule of Segment Reporting Information, by Segment | Operations by business segment consisted of the following: (In thousands) Lifecore Curation Foods Other Total Three Months Ended February 27, 2022 Net sales $ 34,808 $ 18,266 $ — $ 53,074 Gross profit 12,905 990 — 13,895 Net (loss) income from continuing operations 5,054 (5,848) (6,312) (7,106) Loss from discontinued operations, net of tax — (2,703) (3,041) (5,744) Depreciation and amortization 1,674 1,142 18 2,834 Interest income 18 — 2 20 Interest expense — 26 4,079 4,105 Income tax (benefit) expense 1,596 (1,867) (5) (276) Corporate overhead allocation 1,175 289 (1,464) — Nine Months Ended February 27, 2022 Net sales $ 81,707 $ 56,451 $ — $ 138,158 Gross profit 30,384 8,661 — 39,045 Net (loss) income from continuing operations 11,317 5,513 (27,340) (10,510) Loss from discontinued operations, net of tax — (47,217) (3,041) (50,258) Depreciation and amortization 4,894 3,095 70 8,059 Interest income 56 — 10 66 Interest expense — 301 13,576 13,877 Income tax (benefit) expense 3,574 (12,843) 4,257 (5,012) Corporate overhead allocation 3,389 778 (4,167) — Three Months Ended February 28, 2021 Net sales $ 27,225 $ 17,465 $ — $ 44,690 Gross profit 11,561 2,880 — 14,441 Net (loss) income from continuing operations 5,104 (394) (6,175) (1,465) Loss from discontinued operations, net of tax — (4,033) — (4,033) Depreciation and amortization 1,385 830 22 2,237 Interest income — — 13 13 Interest expense — 136 2,803 2,939 Income tax (benefit) expense 1,612 (1,614) (56) (58) Corporate overhead allocation 1,102 87 (1,189) — Nine Months Ended February 28, 2021 Net sales $ 72,248 $ 54,381 $ — $ 126,629 Gross profit 27,036 8,854 — 35,890 Net (loss) income from continuing operations 9,708 (1,346) (17,151) (8,789) Loss from discontinued operations, net of tax — (21,010) — (21,010) Depreciation and amortization 4,055 2,451 76 6,582 Interest income — — 31 31 Interest expense — 410 6,199 6,609 Income tax (benefit) expense 3,066 (2,095) (1,996) (1,025) Corporate overhead allocation 3,668 621 (4,289) — |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 9 Months Ended |
Feb. 27, 2022 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Costs | The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of Comprehensive (Loss) Income, by Business Segment, excluding discontinued operations: (in thousands) Curation Foods Lifecore Other Total Three Months Ended February 27, 2022 Asset write-off costs $ 3,693 $ — $ — $ 3,693 Employee severance and benefit costs — — — — Lease costs 1,583 — — 1,583 Other restructuring costs 68 271 250 589 Total restructuring costs $ 5,344 $ 271 $ 250 $ 5,865 (in thousands) Curation Foods Lifecore Other Total Nine Months Ended February 27, 2022 Asset write-off costs $ 3,693 $ — $ — $ 3,693 Employee severance and benefit costs — — — — Lease costs 2,049 — — 2,049 Other restructuring costs 68 271 2,325 2,664 Total restructuring costs $ 5,810 $ 271 $ 2,325 $ 8,406 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 nine months ended February 27, 2022, excluding discontinued operations: Curation Foods Lifecore Other Total (in thousands) Asset write-off costs, net $ 7,552 $ — $ 418 $ 7,970 Employee severance and benefit costs 188 — 784 972 Lease costs 2,195 — 26 2,221 Other restructuring costs 102 271 4,687 5,060 Total restructuring costs $ 10,037 $ 271 $ 5,915 $ 16,223 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Feb. 27, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations | The key components of income from discontinued operations for the three and nine months ended February 27, 2022 and February 28, 2021 were as follows (in thousands): Three Months Ended Nine Months Ended February 27, 2022 February 28, 2021 February 27, 2022 February 28, 2021 Product sales $ 13,559 $ 93,092 $ 186,755 $ 277,699 Cost of product sales 13,720 87,844 181,555 256,918 Gross profit (161) 5,248 5,200 20,781 Operating costs and expenses: Research and development 103 719 1,918 2,120 Selling, general and administrative 1,058 7,086 13,350 21,258 Impairment of goodwill — — 32,057 — Loss on sale of Eat Smart 4,354 — 4,354 — Restructuring costs 86 677 1,519 9,940 Total operating costs and expenses 5,601 8,482 53,198 33,318 Operating loss (5,762) (3,234) (47,998) (12,537) Dividend income — 281 — 844 Interest expense (204) (1,239) (2,682) (3,717) Other income (expense), net — — — (11,800) Loss from discontinued operations before taxes (5,966) (4,192) (50,680) (27,210) Income tax benefit 222 159 422 6,200 Loss from discontinued operations, net of tax $ (5,744) $ (4,033) $ (50,258) $ (21,010) There were no assets or liabilities of Eat Smart as of February 27, 2022. The carrying amounts of the major classes of assets and liabilities of the Eat Smart business included in assets and liabilities of discontinued operations are as follows (in thousands): May 30, 2021 ASSETS Cash and cash equivalents $ 136 Accounts receivable, less allowance for credit losses 28,583 Inventories 6,587 Prepaid expenses and other current assets 2,312 Total current assets, discontinued operations 37,618 Investment in non-public company, fair value 45,100 Property and equipment, net 66,789 Operating lease right-of-use assets 13,347 Goodwill 35,470 Trademarks/tradenames, net 8,228 Customer relationships, net 2,260 Other assets 80 Total other assets, discontinued operations 171,274 Total assets, discontinued operations $ 208,892 LIABILITIES Accounts payable $ 31,271 Accrued compensation 4,550 Other accrued liabilities 4,041 Current portion of lease liabilities 2,424 Deferred revenue 493 Total current liabilities, discontinued operations 42,779 Long-term lease liabilities 14,030 Other non-current liabilities 729 Non-current liabilities, discontinued operations 14,759 Total liabilities, discontinued operations $ 57,538 |
Organization, Basis of Presen_4
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Narrative (Details) | Jun. 09, 2021USD ($) | Jun. 01, 2021USD ($) | Sep. 02, 2020USD ($)plaintiff | Feb. 27, 2022USD ($)productrevenue | Feb. 28, 2021USD ($) | Nov. 29, 2020USD ($) | Aug. 30, 2020USD ($) | Feb. 27, 2022USD ($)productrevenue | Feb. 28, 2021USD ($) | May 30, 2021USD ($) | May 31, 2020USD ($) | Dec. 13, 2021USD ($) | May 31, 2021 | Nov. 03, 2020USD ($) | Jul. 15, 2014 |
Related Party Transaction [Line Items] | |||||||||||||||
Number of product category | product | 2 | 2 | |||||||||||||
Number of revenue category | revenue | 3 | 3 | |||||||||||||
Repayments of borrowings under credit agreement | $ 67,900,000 | ||||||||||||||
Loss on sale of Eat Smart | 4,354,000 | $ 0 | |||||||||||||
Debt issuance cost, current portion | $ 1,400,000 | 1,400,000 | $ 1,400,000 | ||||||||||||
Debt issuance cost, noncurrent portion | 4,100,000 | 4,100,000 | 5,100,000 | ||||||||||||
Cash flow hedge expected to be reclassified within twelve months | 300,000 | ||||||||||||||
Proceeds from sales of property and equipment | 1,096,000 | 12,885,000 | |||||||||||||
Gain on sale of property | (25,000) | (39,000) | |||||||||||||
Sale of Investment in non-public company | 45,100,000 | 0 | |||||||||||||
Revenue recognized included in the contract liability | 0 | 200,000 | |||||||||||||
Deferred revenue | 1,614,000 | 1,614,000 | 637,000 | ||||||||||||
Former owner, plaintiff | plaintiff | 1 | ||||||||||||||
Insurance recoveries | $ 1,600,000 | ||||||||||||||
Transferred at Point in Time | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Revenue recognized included in the contract liability | 1,500,000 | 1,500,000 | |||||||||||||
Windset | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Investment ownership percentage | 26.90% | ||||||||||||||
Sale of Investment in non-public company | $ 45,100,000 | ||||||||||||||
Eat Smart | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Consideration for disposition | $ 73,500,000 | ||||||||||||||
Loss on sale of Eat Smart | 4,400,000 | 4,400,000 | |||||||||||||
Windset | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Investment ownership percentage | 26.90% | ||||||||||||||
Gain (loss) on investment | $ 0 | ||||||||||||||
Regulatory Permitting At Tanok Facility In Mexico | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Damages sought | $ 10,000,000 | ||||||||||||||
Unbilled Revenues | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Contract with customer, assets | 13,900,000 | 13,900,000 | 10,600,000 | ||||||||||||
Deferred revenue | 1,600,000 | 1,600,000 | 900,000 | ||||||||||||
Eat Smart | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Goodwill, impairment loss | 0 | $ 32,100,000 | |||||||||||||
Minimum | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Loss contingency, minimum amount of damages | $ 80,000,000 | ||||||||||||||
Customer relationships, net | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Useful life (in years) | 12 years | ||||||||||||||
Salad Dressing Plant In Ontario, California | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Impairment of assets held for sale | $ 10,900,000 | ||||||||||||||
Proceeds from sales of property and equipment | 4,900,000 | ||||||||||||||
Gain on sale of property | 2,800,000 | ||||||||||||||
Manufacturing Operations in Hanover, Pennsylvania | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Impairment of assets held for sale | $ 8,800,000 | ||||||||||||||
Manufacturing Operations in Hanover, Pennsylvania | Asset reclassification from property and equipment to other current assets | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Gain on sale of property | $ 0 | ||||||||||||||
Proceeds from sale of property held-for-sale | $ 8,000,000 | ||||||||||||||
Rock Hill South Carolina Distribution Facility | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Impairment of assets held for sale | 0 | ||||||||||||||
Proceeds from sales of property and equipment | $ 1,100,000 | ||||||||||||||
Gain on sale of property | $ 600,000 | ||||||||||||||
Assets held for sale | 500,000 | ||||||||||||||
Prepaid Expenses and Other Current Assets | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Debt issuance costs | 700,000 | $ 700,000 | 700,000 | ||||||||||||
Other Assets | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Debt issuance costs | $ 1,900,000 | $ 1,900,000 | 2,400,000 | ||||||||||||
Windset | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Related accounts receivable | $ 100,000 | ||||||||||||||
Cost of product sales | Windset | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Revenue from related parties | $ 200,000 | $ 400,000 |
Organization, Basis of Presen_5
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents (Details) - USD ($) $ in Thousands | Feb. 27, 2022 | May 30, 2021 | Feb. 28, 2021 | May 31, 2020 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 1,854 | $ 1,159 | $ 2,248 | $ 360 |
Cash and cash equivalents, discontinued operations | 0 | 136 | 0 | 0 |
Restricted cash | 0 | 0 | 0 | 193 |
Cash, cash equivalents and restricted cash | $ 1,854 | $ 1,295 | $ 2,248 | $ 553 |
Organization, Basis of Presen_6
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Components of Inventories (Details) - USD ($) $ in Thousands | Feb. 27, 2022 | May 30, 2021 |
Accounting Policies [Abstract] | ||
Finished goods | $ 42,387 | $ 40,204 |
Raw materials | 26,644 | 16,644 |
Work in progress | 4,669 | 6,228 |
Total | $ 73,700 | $ 63,076 |
Organization, Basis of Presen_7
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Allowance for Credit Loss Rollforward (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Feb. 27, 2022 | Feb. 28, 2021 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 85 | $ 186 |
Provision (benefit) for expected credit losses | (14) | 284 |
Write offs, net of recoveries | (6) | (385) |
Balance at end of period | $ 65 | $ 85 |
Organization, Basis of Presen_8
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Feb. 27, 2022 | Nov. 28, 2021 | Aug. 29, 2021 | Feb. 28, 2021 | Nov. 29, 2020 | Aug. 30, 2020 | Feb. 27, 2022 | Feb. 28, 2021 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Other comprehensive income, net of tax | $ 104 | $ 176 | $ 366 | $ 387 | $ 401 | $ 304 | $ 646 | $ 1,092 |
AOCL | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Beginning balance | $ (1,358) | (1,358) | ||||||
Amounts reclassified from OCI | 646 | |||||||
Other comprehensive income, net of tax | 646 | |||||||
Ending balance | $ (712) | $ (712) |
Organization, Basis of Presen_9
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Significant Unobservable Inputs Used in Discounted Cash Flow Models for Investment (Details) - Windset | 12 Months Ended |
May 30, 2021 | |
Revenue growth rates | Minimum | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 0.07 |
Revenue growth rates | Maximum | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 0.069 |
Expense growth rates | Minimum | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 0 |
Expense growth rates | Maximum | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 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 |
Discount rates | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 0.10 |
Organization, Basis of Prese_10
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | Feb. 27, 2022 | May 30, 2021 |
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 | 348 | 1,736 |
Total liabilities | 348 | 1,736 |
Level 3 | ||
Assets: | ||
Assets held for sale - nonrecurring | 0 | 515 |
Investment in non-public company | 0 | 45,100 |
Total assets | 0 | 45,615 |
Liabilities: | ||
Interest rate swap contracts | 0 | 0 |
Total liabilities | $ 0 | $ 0 |
Organization, Basis of Prese_11
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Fair Value Reconciliation of Level 3 (Details) - Windset Investment $ in Thousands | 9 Months Ended |
Feb. 27, 2022USD ($) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 45,100 |
Sale of Investment in non-public company | (45,100) |
Ending balance | $ 0 |
Organization, Basis of Prese_12
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 53,074 | $ 44,690 | $ 138,158 | $ 126,629 |
Lifecore | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 34,808 | 27,225 | 81,707 | 72,248 |
Lifecore | Contact development and manufacturing organization | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 24,799 | 18,628 | 63,951 | 53,374 |
Lifecore | Fermentation | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 10,009 | 8,597 | 17,756 | 18,874 |
Curation Foods | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 18,266 | 17,465 | 56,451 | 54,381 |
Curation Foods | Avocado products | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 15,676 | 15,378 | 48,018 | 47,107 |
Curation Foods | Olive oil and wine vinegars | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 2,168 | 1,647 | 7,016 | 5,642 |
Curation Foods | Technology | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 422 | $ 440 | $ 1,417 | $ 1,632 |
Investment in Non-public Comp_2
Investment in Non-public Company (Details) - USD ($) | Jun. 01, 2021 | Jul. 15, 2014 | Feb. 15, 2011 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 |
Schedule of Investments [Line Items] | ||||||
Sale of investment in non-public company | $ 45,100,000 | $ 0 | ||||
Senior A Preferred Stock | ||||||
Schedule of Investments [Line Items] | ||||||
Dividend percentage rate | 7.50% | |||||
Windset | ||||||
Schedule of Investments [Line Items] | ||||||
Investment ownership percentage | 26.90% | |||||
Dividend income | $ 300,000 | 800,000 | ||||
Sale of investment in non-public company | $ 45,100,000 | |||||
Windset | Other Nonoperating Income (Expense) | ||||||
Schedule of Investments [Line Items] | ||||||
Change in market value of company's investment | $ 0 | $ 11,800,000 | ||||
Curation Foods | Windset | ||||||
Schedule of Investments [Line Items] | ||||||
Payments to acquire investments | $ 11,000,000 | |||||
Time frame to be paid after anniversary | 90 days | |||||
Curation Foods | Windset | Junior Preferred Shares | ||||||
Schedule of Investments [Line Items] | ||||||
Preferred stock investment, dividends declared | $ 0 | |||||
Curation Foods | Windset | Senior A Preferred Stock | ||||||
Schedule of Investments [Line Items] | ||||||
Investment in non-public company shares (in shares) | 150,000 | |||||
Payments to acquire investments | $ 15,000,000 | |||||
Curation Foods | Windset | Common Stock | ||||||
Schedule of Investments [Line Items] | ||||||
Investment in non-public company shares (in shares) | 68 | 201 | ||||
Payments to acquire investments | $ 201,000 | |||||
Curation Foods | Windset | Junior Preferred Shares | ||||||
Schedule of Investments [Line Items] | ||||||
Investment in non-public company shares (in shares) | 51,211 | |||||
Curation Foods | Newell Capital | ||||||
Schedule of Investments [Line Items] | ||||||
Sale of investment in non-public company | $ 45,100,000 |
Stock-based Compensation and _3
Stock-based Compensation and Stockholders' Equity - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Feb. 27, 2022 | Feb. 27, 2022 | Jul. 14, 2010 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted options (in shares) | 75,000 | 778,000 | |
Shares for future issuance (in shares) | 3,800,000 | 3,800,000 | |
Unrecognized compensation expense | $ 3.3 | $ 3.3 | |
Repurchase plan authorized amount (up to) | $ 3.8 | $ 3.8 | $ 10 |
Stock repurchased during period (in shares) | 0 | ||
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Awarded (in shares) | 18,000 | 101,000 | |
Weighted-average period (in years) | 1 year 4 months 20 days | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average period (in years) | 2 years 21 days |
Stock-based Compensation and _4
Stock-based Compensation and Stockholders' Equity - Summary of Stock-based Compensation by Income Statement Line Item (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 622 | $ 797 | $ 1,928 | $ 2,584 |
Cost of product sales | Continuing operations: | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 83 | 141 | 177 | 262 |
Cost of product sales | Discontinued Operations: | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 0 | (34) | 25 | 27 |
Research and development | Continuing operations: | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 51 | 49 | 151 | 175 |
Selling, general and administrative | Continuing operations: | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 488 | $ 641 | $ 1,575 | $ 2,120 |
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 | 9 Months Ended | ||||||
Feb. 27, 2022 | Nov. 28, 2021 | Aug. 29, 2021 | Feb. 28, 2021 | Nov. 29, 2020 | Aug. 30, 2020 | Feb. 27, 2022 | Feb. 28, 2021 | |
Numerator: | ||||||||
Net loss applicable to common stockholders | $ (12,850) | $ (38,441) | $ (9,477) | $ (5,498) | $ (13,301) | $ (11,000) | $ (60,768) | $ (29,799) |
Denominator: | ||||||||
Weighted average shares for basic net loss per share (in shares) | 29,482 | 29,323 | 29,459 | 29,282 | ||||
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) | 29,482 | 29,323 | 29,459 | 29,282 | ||||
Diluted net loss per share (in dollars per share) | $ (0.43) | $ (0.19) | $ (2.07) | $ (1.02) |
Diluted Earnings Per Share - Na
Diluted Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | |
Employee Stock Option | ||||
Class of Stock [Line Items] | ||||
Amount of securities excluded from computation of earnings per share (in shares) | 2.1 | 2.4 | 2.2 | 2.2 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | May 30, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Income tax benefit | $ 276 | $ 58 | $ 5,012 | $ 1,025 | |
Effective tax rate | 32.00% | 10.00% | |||
Unrecognized tax benefits | 900 | $ 900 | $ 900 | ||
Unrecognized tax benefits that would result in an adjustment to effective tax rate | $ 800 | $ 800 | $ 900 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Feb. 27, 2022 | May 30, 2021 |
Debt Disclosure [Abstract] | ||
Long-term debt | $ 83,712 | $ 170,000 |
Less: unamortized debt issuance costs | (4,114) | (5,098) |
Total long-term debt, net of unamortized debt issuance costs | 79,598 | 164,902 |
Less: current portion of long-term debt, net | 0 | 0 |
Long-term debt, net | $ 79,598 | $ 164,902 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Dec. 31, 2020USD ($)creditAgreement | May 30, 2021USD ($) | Feb. 27, 2022USD ($) | Dec. 02, 2019USD ($) | Jun. 25, 2018USD ($) | Nov. 01, 2016USD ($) |
Debt Instrument [Line Items] | ||||||
Number of credit agreements | creditAgreement | 2 | |||||
Debt issuance costs | $ 5,098,000 | $ 4,114,000 | ||||
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 | 1.53% | 2.74% | 1.22% | |||
Refinance Revolver | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 170,000,000 | |||||
Line of credit facility, quarterly payment, percent of principal | 5.00% | |||||
Percent of prepayment penalty | 3.00% | |||||
Debt issuance costs | $ 10,500,000 | |||||
Refinance Revolver | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 8.50% | |||||
Refinance Revolver | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 7.50% | |||||
Refinance Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate, stated percentage | 9.50% | |||||
Revolving Credit Facility | Refinance Revolver | ||||||
Debt Instrument [Line Items] | ||||||
Revolving line of credit | $ 75,000,000 | |||||
Commitment fee percentage | 0.375% | |||||
Line of credit facility, accordion feature, increase limit | $ 15,000,000 | |||||
Write off of deferred debt issuance costs | $ 1,100,000 | |||||
Revolving Credit Facility | Refinance Revolver | Eurodollar | ||||||
Debt Instrument [Line Items] | ||||||
Long-term line of credit | $ 39,900,000 | |||||
Revolver interest rate | 3.00% | |||||
Revolving Credit Facility | Refinance Revolver | Minimum | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 2.00% | |||||
Revolving Credit Facility | Refinance Revolver | Minimum | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.00% | |||||
Revolving Credit Facility | Refinance Revolver | Maximum | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 2.50% | |||||
Revolving Credit Facility | Refinance Revolver | Maximum | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.50% |
Business Segment Reporting - Na
Business Segment Reporting - Narrative (Details) | 9 Months Ended | |
Feb. 27, 2022segmentbrand | Feb. 28, 2021 | |
Revenue, Major Customer [Line Items] | ||
Number of operating segments | segment | 3 | |
Number of natural food brands | brand | 3 | |
Sales Revenue, Net | Customer Concentration Risk | Customer One | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 10.00% | 10.00% |
Sales Revenue, Net | Customer Concentration Risk | Customer One | Lifecore | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 17.00% | 20.00% |
Sales Revenue, Net | Customer Concentration Risk | Customer Two | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 10.00% | 10.00% |
Sales Revenue, Net | Customer Concentration Risk | Customer Two | Lifecore | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 13.00% | 12.00% |
Accounts Receivable | Customer Concentration Risk | Customer One | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 10.00% | 10.00% |
Accounts Receivable | Customer Concentration Risk | Customer One | Lifecore | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 25.00% | 19.00% |
Accounts Receivable | Customer Concentration Risk | Customer Two | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 10.00% | 10.00% |
Accounts Receivable | Customer Concentration Risk | Customer Two | Lifecore | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 19.00% | 12.00% |
Business Segment Reporting - Sa
Business Segment Reporting - Sales by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | |
Segment Reporting Information [Line Items] | ||||
Product sales | $ 53,074 | $ 44,690 | $ 138,158 | $ 126,629 |
Switzerland | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 8,200 | 1,600 | 13,600 | 2,400 |
Canada | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 3,000 | 2,700 | 9,500 | 8,300 |
Belgium | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 0 | 6,000 | 0 | 12,600 |
All Other Countries | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | $ 3,700 | $ 3,900 | $ 3,200 | $ 3,200 |
Business Segment Reporting - Op
Business Segment Reporting - Operations by Business Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 53,074 | $ 44,690 | $ 138,158 | $ 126,629 |
Gross profit | 13,895 | 14,441 | 39,045 | 35,890 |
Net (loss) income from continuing operations | (7,106) | (1,465) | (10,510) | (8,789) |
Loss from discontinued operations, net of tax | (5,744) | (4,033) | (50,258) | (21,010) |
Depreciation and amortization | 2,834 | 2,237 | 8,059 | 6,582 |
Interest income | 20 | 13 | 66 | 31 |
Interest expense | 4,105 | 2,939 | 13,877 | 6,609 |
Income tax (benefit) expense | (276) | (58) | (5,012) | (1,025) |
Corporate overhead allocation | 0 | 0 | 0 | 0 |
Lifecore | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 34,808 | 27,225 | 81,707 | 72,248 |
Gross profit | 12,905 | 11,561 | 30,384 | 27,036 |
Net (loss) income from continuing operations | 5,054 | 5,104 | 11,317 | 9,708 |
Loss from discontinued operations, net of tax | 0 | 0 | 0 | 0 |
Depreciation and amortization | 1,674 | 1,385 | 4,894 | 4,055 |
Interest income | 18 | 0 | 56 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Income tax (benefit) expense | 1,596 | 1,612 | 3,574 | 3,066 |
Corporate overhead allocation | 1,175 | 1,102 | 3,389 | 3,668 |
Curation Foods | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 18,266 | 17,465 | 56,451 | 54,381 |
Gross profit | 990 | 2,880 | 8,661 | 8,854 |
Net (loss) income from continuing operations | (5,848) | (394) | 5,513 | (1,346) |
Loss from discontinued operations, net of tax | (2,703) | (4,033) | (47,217) | (21,010) |
Depreciation and amortization | 1,142 | 830 | 3,095 | 2,451 |
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 26 | 136 | 301 | 410 |
Income tax (benefit) expense | (1,867) | (1,614) | (12,843) | (2,095) |
Corporate overhead allocation | 289 | 87 | 778 | 621 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 | 0 |
Net (loss) income from continuing operations | (6,312) | (6,175) | (27,340) | (17,151) |
Loss from discontinued operations, net of tax | (3,041) | 0 | (3,041) | 0 |
Depreciation and amortization | 18 | 22 | 70 | 76 |
Interest income | 2 | 13 | 10 | 31 |
Interest expense | 4,079 | 2,803 | 13,576 | 6,199 |
Income tax (benefit) expense | (5) | (56) | 4,257 | (1,996) |
Corporate overhead allocation | $ (1,464) | $ (1,189) | $ (4,167) | $ (4,289) |
Restructuring Costs - Schedule
Restructuring Costs - Schedule of Restructuring Related Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 33 Months Ended |
Feb. 27, 2022 | Feb. 27, 2022 | Feb. 27, 2022 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | $ 5,865 | $ 8,406 | $ 16,223 |
Asset write-off costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 3,693 | 3,693 | 7,970 |
Employee severance and benefit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 0 | 0 | 972 |
Lease costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 1,583 | 2,049 | 2,221 |
Other restructuring costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 589 | 2,664 | 5,060 |
Curation Foods | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 5,344 | 5,810 | 10,037 |
Curation Foods | Asset write-off costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 3,693 | 3,693 | 7,552 |
Curation Foods | Employee severance and benefit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 0 | 0 | 188 |
Curation Foods | Lease costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 1,583 | 2,049 | 2,195 |
Curation Foods | Other restructuring costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 68 | 68 | 102 |
Lifecore | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 271 | 271 | 271 |
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 | 271 | 271 | 271 |
Other | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 250 | 2,325 | 5,915 |
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 | $ 250 | $ 2,325 | $ 4,687 |
Restructuring Costs - Narrative
Restructuring Costs - Narrative (Details) $ in Millions | 3 Months Ended |
Feb. 27, 2022USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | $ 20 |
Santa Maria Office | Restructuring Cost | |
Restructuring Cost and Reserve [Line Items] | |
Impairment of assets held for sale | 5.3 |
Santa Maria Office - Leasehold improvements | Restructuring Cost | |
Restructuring Cost and Reserve [Line Items] | |
Impairment of assets held for sale | 3.7 |
Santa Maria Office - Right of Use Asset | Restructuring Cost | |
Restructuring Cost and Reserve [Line Items] | |
Impairment of assets held for sale | $ 1.6 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | May 30, 2021 | May 31, 2020 | |
ASSETS | ||||||
Cash and cash equivalents | $ 0 | $ 0 | $ 0 | $ 0 | $ 136 | $ 0 |
Total current assets, discontinued operations | 0 | 0 | 37,618 | |||
Other assets | 0 | 0 | 171,274 | |||
LIABILITIES | ||||||
Total current liabilities, discontinued operations | 0 | 0 | 42,779 | |||
Non-current liabilities, discontinued operations | 0 | 0 | 14,759 | |||
Discontinued Operations: | Eat Smart Business | ||||||
Disposal Group, Including Discontinued Operation, Income Statement | ||||||
Product sales | 13,559 | 93,092 | 186,755 | 277,699 | ||
Cost of product sales | 13,720 | 87,844 | 181,555 | 256,918 | ||
Gross profit | (161) | 5,248 | 5,200 | 20,781 | ||
Operating costs and expenses: | ||||||
Research and development | 103 | 719 | 1,918 | 2,120 | ||
Selling, general and administrative | 1,058 | 7,086 | 13,350 | 21,258 | ||
Impairment of goodwill | 0 | 0 | 32,057 | 0 | ||
Loss on sale of Eat Smart | 4,354 | 0 | 4,354 | 0 | ||
Restructuring costs | 86 | 677 | 1,519 | 9,940 | ||
Total operating costs and expenses | 5,601 | 8,482 | 53,198 | 33,318 | ||
Operating loss | (5,762) | (3,234) | (47,998) | (12,537) | ||
Dividend income | 0 | 281 | 0 | 844 | ||
Interest expense | (204) | (1,239) | (2,682) | (3,717) | ||
Other income (expense), net | 0 | 0 | 0 | (11,800) | ||
Loss from discontinued operations before taxes | (5,966) | (4,192) | (50,680) | (27,210) | ||
Income tax benefit | 222 | 159 | 422 | 6,200 | ||
Loss from discontinued operations, net of tax | $ (5,744) | $ (4,033) | $ (50,258) | $ (21,010) | ||
ASSETS | ||||||
Cash and cash equivalents | 136 | |||||
Accounts receivable, less allowance for credit losses | 28,583 | |||||
Inventories | 6,587 | |||||
Prepaid expenses and other current assets | 2,312 | |||||
Total current assets, discontinued operations | 37,618 | |||||
Investment in non-public company, fair value | 45,100 | |||||
Property and equipment, net | 66,789 | |||||
Operating lease right-of-use assets | 13,347 | |||||
Goodwill | 35,470 | |||||
Other assets | 80 | |||||
Total other assets, discontinued operations | 171,274 | |||||
Total assets, discontinued operations | 208,892 | |||||
LIABILITIES | ||||||
Accounts payable | 31,271 | |||||
Accrued compensation | 4,550 | |||||
Other accrued liabilities | 4,041 | |||||
Current portion of lease liabilities | 2,424 | |||||
Deferred revenue | 493 | |||||
Total current liabilities, discontinued operations | 42,779 | |||||
Long-term lease liabilities | 14,030 | |||||
Other non-current liabilities | 729 | |||||
Non-current liabilities, discontinued operations | 14,759 | |||||
Total liabilities, discontinued operations | 57,538 | |||||
Discontinued Operations: | Eat Smart Business | Trademarks/tradenames, net | ||||||
ASSETS | ||||||
Intangible assets, non-current | 8,228 | |||||
Discontinued Operations: | Eat Smart Business | Customer relationships, net | ||||||
ASSETS | ||||||
Intangible assets, non-current | $ 2,260 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - Eat Smart Business - Discontinued Operations: - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2022 | Feb. 28, 2021 | Feb. 27, 2022 | Feb. 28, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash used in operating activities | $ 5.5 | $ 1.8 | ||
Cash provided by investing activities | 117.8 | 9.3 | ||
Depreciation and amortization expense | $ 0.3 | $ 2.2 | 5.1 | 6.9 |
Capital expenditures | $ 1.9 | $ 3.6 |