Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 29, 2017 | Jun. 25, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | INVENTURE FOODS, INC. | ||
Entity Central Index Key | 944,508 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 148.5 | ||
Entity Common Stock, Shares Outstanding | 19,687,912 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 26, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 776 | $ 2,319 |
Accounts receivable, net | 16,334 | 19,928 |
Inventories | 72,188 | 81,807 |
Other current assets | 3,216 | 6,262 |
Total current assets | 92,514 | 110,316 |
Property and equipment, net | 65,484 | 59,963 |
Goodwill | 14,985 | 23,286 |
Trademarks and other intangibles, net | 7,243 | 14,718 |
Deferred income tax asset | 1,228 | |
Other assets | 1,254 | 962 |
Total assets | 181,480 | 210,473 |
Current liabilities: | ||
Accounts payable | 29,462 | 35,983 |
Accrued liabilities | 9,533 | 8,629 |
Line of credit | 32,761 | |
Current portion of long-term debt | 82,380 | 1,826 |
Total current liabilities | 154,136 | 46,438 |
Long-term debt, less current portion | 83,300 | |
Line of credit | 25,951 | |
Deferred income tax liability | 1,376 | |
Other liabilities | 2,279 | 2,296 |
Total liabilities | 157,791 | 157,985 |
Commitments and contingencies (see Note 9) | ||
Stockholders' equity: | ||
Common stock, $.01 par value; 50,000 shares authorized; 20,040 and 19,979 shares issued and outstanding at December 31, 2016 and December 26, 2015, respectively | 200 | 200 |
Additional paid-in capital | 35,721 | 34,271 |
Retained earnings | (11,761) | 18,488 |
Total stockholders' equity before treasury stock | 24,160 | 52,959 |
Less: treasury stock, at cost: 368 shares at December 31, 2016 and December 26, 2015 | (471) | (471) |
Total stockholders' equity | 23,689 | 52,488 |
Total liabilities and stockholders' equity | $ 181,480 | $ 210,473 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Dec. 31, 2016 | Dec. 26, 2015 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares issued | 20,040 | 19,979 |
Common stock, shares outstanding | 20,040 | 19,979 |
Treasury stock, shares | 368 | 368 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
Net revenues | $ 63,365,000 | $ 66,529,000 | $ 69,263,000 | $ 69,855,000 | $ 68,664,000 | $ 69,865,000 | $ 66,422,000 | $ 77,607,000 | $ 73,746,000 | $ 72,556,000 | $ 71,852,000 | $ 67,509,000 | $ 269,012,000 | $ 282,558,000 | $ 285,663,000 |
Cost of revenues | 236,253,000 | 262,221,000 | 232,542,000 | ||||||||||||
Gross profit | 5,751,000 | 7,924,000 | 10,267,000 | 8,817,000 | 7,312,000 | 8,700,000 | 8,025,000 | (3,700,000) | 15,176,000 | 12,926,000 | 13,456,000 | 11,563,000 | 32,759,000 | 20,337,000 | 53,121,000 |
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 34,994,000 | 37,559,000 | 34,188,000 | ||||||||||||
Impairment of goodwill and intangible assets | 15,446,000 | 9,277,000 | |||||||||||||
Operating income (loss) | (18,897,000) | (1,266,000) | 1,774,000 | 708,000 | (1,645,000) | (533,000) | (2,192,000) | (22,129,000) | 5,980,000 | 5,356,000 | 4,432,000 | 3,165,000 | (17,681,000) | (26,499,000) | 18,933,000 |
Non-operating (income) expense: | |||||||||||||||
Interest expense | 9,874,000 | 6,330,000 | 2,604,000 | ||||||||||||
Income (loss) before income tax expense | (27,555,000) | (32,829,000) | 16,329,000 | ||||||||||||
Income tax (expense) benefit | 2,694,000 | (12,046,000) | 5,768,000 | ||||||||||||
Net Income (loss) | $ (26,389,000) | $ (2,564,000) | $ (278,000) | $ (1,018,000) | $ (2,460,000) | $ (1,737,000) | $ (1,951,000) | $ (14,635,000) | $ 3,408,000 | $ 3,084,000 | $ 2,472,000 | $ 1,597,000 | $ (30,249,000) | $ (20,783,000) | $ 10,561,000 |
Income (loss) per common share: | |||||||||||||||
Basic (in dollars per share) | $ (1.34) | $ (0.13) | $ (0.01) | $ (0.05) | $ (0.13) | $ (0.09) | $ (0.10) | $ (0.75) | $ 0.17 | $ 0.16 | $ 0.13 | $ 0.08 | $ (1.54) | $ (1.06) | $ 0.54 |
Diluted (in dollars per share) | $ (1.34) | $ (0.13) | $ (0.01) | $ (0.05) | $ (0.13) | $ (0.09) | $ (0.10) | $ (0.75) | $ 0.17 | $ 0.15 | $ 0.12 | $ 0.08 | $ (1.54) | $ (1.06) | $ 0.53 |
Weighted average number of common shares: | |||||||||||||||
Basic (in shares) | 19,672 | 19,671 | 19,628 | 19,603 | 19,610 | 19,594 | 19,566 | 19,581 | 19,564 | 19,530 | 19,468 | 19,437 | 19,644 | 19,588 | 19,500 |
Diluted (in shares) | 19,672 | 19,671 | 19,628 | 19,603 | 19,610 | 19,594 | 19,566 | 19,581 | 20,062 | 20,014 | 19,960 | 19,924 | 19,644 | 19,588 | 19,990 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net Income (loss) | $ (30,249,000) | $ (20,783,000) | $ 10,561,000 |
Change in fair value of interest rate swaps, net of tax | 62,000 | 110,000 | |
Settlement of interest rate swaps, net of tax | 72,000 | ||
Comprehensive income (loss) | $ (30,249,000) | $ (20,649,000) | $ 10,671,000 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total |
Balance at Dec. 28, 2013 | $ 198 | $ 30,960 | $ 28,710 | $ (244) | $ (471) | $ 59,153 |
Balance (in shares) at Dec. 28, 2013 | 19,845 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net Income (loss) | 10,561 | 10,561 | ||||
Change in fair value of interest rate swaps, net of tax | 110 | 110 | ||||
Stock-based compensation expense | 1,697 | 1,697 | ||||
Tax benefit from equity awards | 332 | 332 | ||||
Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes | $ 2 | 111 | 113 | |||
Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes (in shares) | 116 | |||||
Balance at Dec. 27, 2014 | $ 200 | 33,100 | 39,271 | (134) | (471) | 71,966 |
Balance (in shares) at Dec. 27, 2014 | 19,961 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net Income (loss) | (20,783) | (20,783) | ||||
Change in fair value of interest rate swaps, net of tax | 62 | 62 | ||||
Settlement of interest rate swaps, net of tax | $ 72 | 72 | ||||
Stock-based compensation expense | 1,489 | 1,489 | ||||
Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes | (318) | (318) | ||||
Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes (in shares) | 18 | |||||
Balance at Dec. 26, 2015 | $ 200 | 34,271 | 18,488 | (471) | $ 52,488 | |
Balance (in shares) at Dec. 26, 2015 | 19,979 | 19,979 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net Income (loss) | (30,249) | $ (30,249) | ||||
Stock-based compensation expense | 1,650 | 1,650 | ||||
Deferred tax asset shortfall from equity awards | (155) | (155) | ||||
Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes | (45) | (45) | ||||
Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes (in shares) | 61 | |||||
Balance at Dec. 31, 2016 | $ 200 | $ 35,721 | $ (11,761) | $ (471) | $ 23,689 | |
Balance (in shares) at Dec. 31, 2016 | 20,040 | 20,040 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Cash flows from operating activities: | |||
Net Income (loss) | $ (30,249,000) | $ (20,783,000) | $ 10,561,000 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation | 6,994,000 | 6,958,000 | 6,683,000 |
Amortization | 330,000 | 548,000 | 1,204,000 |
Deferred financing fee amortization | 1,489,000 | 960,000 | 159,000 |
Impairment of goodwill and intangible assets | 15,446,000 | 9,277,000 | |
Provision for bad debts | 87,000 | 229,000 | 17,000 |
Deferred income taxes | 2,604,000 | (6,868,000) | 1,876,000 |
Excess income tax benefit from stock-based compensation | (332,000) | ||
Stock-based compensation expense | 1,650,000 | 1,489,000 | 1,697,000 |
Debt extinguishment costs | 607,000 | ||
(Gain) Loss on disposition of equipment | (73,000) | 60,000 | 118,000 |
Contingent consideration revaluation | 267,000 | 261,000 | (2,998,000) |
Change in assets and liabilities: | |||
Accounts receivable | 3,506,000 | 2,265,000 | 1,183,000 |
Inventories | 9,619,000 | (16,592,000) | (22,103,000) |
Other assets and liabilities | 2,562,000 | (5,414,000) | 640,000 |
Accounts payable and accrued liabilities | (5,458,000) | 15,650,000 | 13,000 |
Net cash provided by (used in) operating activities | 8,774,000 | (11,353,000) | (1,282,000) |
Cash flows from investing activities: | |||
Purchase of property and equipment | (12,738,000) | (11,042,000) | (11,835,000) |
Proceeds from the sale of property and equipment | 126,000 | 36,000 | |
Purchase of Willamette Valley Fruit Company | (800,000) | ||
Purchase of Sin In A Tin | (158,000) | ||
Payment of contingent consideration for Willamette Valley Fruit Company | (340,000) | (230,000) | (450,000) |
Payment of contingent consideration for Sin In A Tin | (11,000) | (4,000) | |
Net cash used in investing activities | (12,963,000) | (11,240,000) | (13,243,000) |
Cash flows from financing activities: | |||
Net borrowings on U.S Bank line of credit | (18,802,000) | 15,579,000 | |
Net borrowings on Wells Fargo line of credit | 6,810,000 | 25,951,000 | |
Payments made on capital lease obligations | (19,000) | (1,450,000) | (334,000) |
Borrowings on term loans | 1,097,000 | 114,055,000 | 4,515,000 |
Repayments made on long term debt | (2,204,000) | (88,363,000) | (5,896,000) |
Payments of loan financing fees | (2,992,000) | (6,432,000) | (198,000) |
Settlement of interest rate swaps | (224,000) | ||
Proceeds from issuance of common stock under equity award plans | 187,000 | 31,000 | 320,000 |
Excess income tax benefit from stock-based compensation | 332,000 | ||
Payment of payroll taxes on stock-based compensation through shares withheld | (233,000) | (349,000) | (208,000) |
Net cash provided by financing activities | 2,646,000 | 24,417,000 | 14,110,000 |
Net increase (decrease) in cash and cash equivalents | (1,543,000) | 1,824,000 | (415,000) |
Cash and cash equivalents at beginning of year | 2,319,000 | 495,000 | 910,000 |
Cash and cash equivalents at end of year | 776,000 | 2,319,000 | 495,000 |
Supplemental disclosures of cash flow information: | |||
Cash paid during the period for interest | 8,324,000 | 4,794,000 | 1,950,000 |
Cash paid (refunded) during the period for income taxes | $ (3,702,000) | $ (681,000) | $ 3,144,000 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | 1. Operations and Summary of Significant Accounting Policies Description of Business Inventure Foods, Inc., a Delaware corporation (referred to herein as the “Company,” “Inventure Foods,” “we,” “our” or “us”), is a leading marketer and manufacturer of healthy/natural and indulgent specialty snack food brands with more than $269 million in annual net revenues for fiscal 2016. We specialize in two primary product categories: healthy/natural food products and indulgent specialty snack products. We sell our products nationally through a number of channels including: grocery stores, natural food stores, mass merchandisers, drug and convenience stores, club stores, value, vending, food service, industrial and international. Our goal is to have a diversified portfolio of brands, products, customers and distribution channels. In our healthy/natural food category, products include Rader Farms® frozen berries, Boulder Canyon® brand kettle cooked potato chips, other snack and food items, Willamette Valley Fruit Company TM brand frozen berries, Fresh Frozen TM brand frozen vegetables, fruits, biscuits and other frozen snacks, Jamba® brand blend-and-serve smoothie kits under license from Jamba Juice Company (“Jamba Juice”), Seattle’s Best Coffee® Frozen Coffee Blends brand blend-and-serve frozen coffee beverages under license from Seattle’s Best Coffee, LLC, Sin In A Tin TM chocolate pate and other frozen desserts and private label frozen fruit and healthy/natural snacks. In our indulgent specialty snack food category, products include T.G.I. Friday’s® brand snacks under license from T.G.I. Friday’s Inc. (“T.G.I. Friday’s”), Nathan’s Famous® brand snack products under license from Nathan’s Famous Corporation, Vidalia® brand snack products under license from Vidalia Brands, Inc., Poore Brothers® brand kettle cooked potato chips, Bob’s Texas Style® brand kettle cooked chips, and Tato Skins® brand potato snacks. We also manufacture private label snacks for certain grocery retail chains and co-pack products for other snack and cereal manufacturers. We operate in two segments: frozen products and snack products. The frozen products segment includes frozen fruits, vegetables, beverages and desserts for sale primarily to grocery stores, club stores and mass merchandisers. All products sold under our frozen products segment are considered part of the healthy/natural food category. The snack products segment includes potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products, popcorn and extruded products for sale primarily to snack food distributors and retailers. The products sold under our snack products segment include products considered part of the indulgent specialty snack food category, as well as products considered part of the healthy/natural food category. We operate manufacturing facilities in nine locations. Our frozen berry products are processed in our Lynden, Washington, Bellingham, Washington, Jefferson, Georgia and two Salem, Oregon facilities. Our frozen berry business grows, processes and markets premium berry blends, raspberries, blueberries and rhubarb and purchases blackberries, cherries, cranberries, strawberries and other fruits from a select network of fruit growers for resale. The fruit is processed, frozen and packaged for sale and distribution to wholesale customers. Our frozen vegetable products are processed in our Jefferson, Georgia, Thomasville, Georgia and Salem, Oregon facilities. Our frozen beverage products are packaged at our Bellingham, Washington and Jefferson, Georgia facilities. We also use third-party processors for certain frozen products and package certain frozen fruits and vegetables for other manufacturers. Our frozen desserts products are produced in our Pensacola, Florida and Salem, Oregon facilities. Our snack products are manufactured at our Phoenix, Arizona and Bluffton, Indiana facilities, as well as select third-party facilities for certain products. On April 23, 2015, we announced a voluntary product recall of certain varieties of the Company’s Fresh Frozen TM brand of frozen vegetables, as well as select varieties of our Jamba® “At Home” line of smoothie kits because our Jefferson, Georgia facility tested positive for Listeria monocytogenes. For a discussion of this product recall, refer to “Note 2 - Product Recall.” Strategic and Financial Review Process In July 2016, we announced that our Board had commenced a strategic and financial review of the Company with the objective to increase shareholder value. We engaged Rothschild Inc. to serve as our financial advisor and assist us in this process. We remain actively involved in this process and are continuing to pursue various strategic alternatives. As disclosed in our prior reports, no assurance can be given as to the outcome or timing of this process or that it will result in the consummation of any specific transaction. Going Concern Uncertainty We have incurred losses from operations in each of the quarterly periods since our product recall in April 2015. This fact, together with the projected near term outlook for our business and our inability to complete a strategic transaction by year end or demonstrate that such a transaction is imminent, raise substantial doubt about our ability to continue as a going concern. In reaching such conclusion, management considered the following specific conditions: · Our Term Loan Credit Facility and related governing documents contain requirements that, among other things, require us to comply with leverage ratio and fixed charge coverage ratio covenants by the end of the second quarter of fiscal 2017 and a minimum EBITDA target by the fiscal month ending April 30, 2017. The leverage ratio, measured at the end of our second fiscal quarter in 2017 must be 4.25:1, and the fixed charge coverage ratio, measured at the end of our second fiscal quarter in 2017 for the four quarterly periods then ended, must be 4.25:1. Absent the completion of a strategic transaction yielding sufficient cash proceeds (in addition to the proceeds received from the sale of our Fresh Frozen Foods assets in March 2017) to pay down debt, waivers or amendments by our lenders, or a refinancing of our debt we will not be able to comply with these covenants when required to do so. Failure to meet these covenants would result in a default under such credit facility and, to the extent the applicable lenders so elect, an acceleration of the Company’s existing indebtedness, causing such debt of approximately $122.1 million at December 31, 2016 (including $5.2 million of other equipment financing indebtedness that includes cross-default provisions) to be immediately due and payable. The Company does not have sufficient liquidity to repay all of its outstanding debt in full if such debt were accelerated. · Under our ABL Credit Facility, we are required to comply with a fixed charge coverage ratio if our liquidity as of the date of any determination is less than the greater of (i) 12.5% of the Maximum Revolver Amount ($50,000,000) and (ii) $6,125,000, subject to certain conditions. As of the date of this Form 10-K, we would not be able to comply with this ratio if our liquidity were to fall below the applicable threshold. · The Credit Facilities also require us to furnish our audited financial statements without a “going concern” uncertainty paragraph in the auditor’s opinion. Our consolidated financial statements for the fiscal year ended December 31, 2016 included herein contain a “going concern” explanatory paragraph. Under the Credit Facilities, a going concern opinion with respect to our audited financial statements is an event of default. The Company’s Board and management are in the process of exploring various strategic alternatives. We have obtained a temporary waiver of the going concern qualification until May 15, 2017 from each of the lenders under our Credit Facilities. There can be no assurance that we will be successful in our pursuit of any strategic transaction or that we will be able consummate a strategic transaction in time to address our financial covenant requirements and going concern qualification, or at all, or if we do complete a strategic transition it will be on commercially reasonable terms. As a result, our liquidity and ability to timely pay our obligations when due could be adversely affected. The accompanying consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about our ability to continue as a going concern, other than the reclassification of certain long-term debt and the related debt issuance costs to current liabilities and current assets, respectively. Our lenders may resist renegotiation or lengthening of payment and other terms through legal action or otherwise if we are unsuccessful in our efforts to complete a strategic transaction. If we are not able to timely, successfully or efficiently implement the strategies that we are pursuing, we may need to voluntarily seek protection under Chapter 11 of the U.S. Bankruptcy Code. Acquisitions We account for acquisitions using the acquisition method of accounting. The results of operations of our acquired businesses have been included in our consolidated results from their respective dates of acquisition. On September 29, 2014, we acquired the assets and intellectual property of a small boutique frozen desserts business, Sin In A Tin TM , for approximately $160,000 in cash. An additional amount of up to $0.5 million is payable to the seller in the form of an earn-out based on future net revenues attributable to Sin In A Tin TM products (see Note 3 “Acquisitions”). Principles of Consolidation The consolidated financial statements include the accounts of Inventure Foods and all of its wholly owned subsidiaries. All significant intercompany amounts and transactions have been eliminated. Our fiscal year ends on the last Saturday occurring in the month of December of each calendar year. Accordingly, the fiscal year end dates result in an additional week of results every five or six years. Fiscal 2016 commenced December 27, 2015 and ended December 31, 2016, resulting in a 53-week fiscal year. Fiscal 2015 commenced December 28, 2014 and ended December 26, 2015, resulting in a 52-week fiscal year. Fiscal 2014 commenced December 29, 2013 and ended December 27, 2014, resulting in a 52-week fiscal year. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates, including those related to accruals for customer programs and incentives, product returns, bad debts, income taxes, long-lived assets, inventories, stock-based compensation, interest rate swap valuations, accrued broker commissions and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. We classify our investments based upon an established fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are described as follows: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices in markets that are not considered to be active or financial instruments without quoted market prices, but for which all significant inputs are observable, either directly or indirectly. Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At December 31, 2016 and December 26, 2015, the carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximate fair values since they are short term in nature. The carrying value of the long-term debt approximates fair value based on the borrowing rates currently available to us for long-term borrowings with similar terms. The following table summarizes the valuation of our assets and liabilities measured at fair value on a recurring basis (in thousands) at the respective dates set forth below: December 31, 2016 December 26, 2015 Non-qualified Non-qualified Deferred Earn-out Deferred Earn-out Compensation Contingent Compensation Contingent Plan Consideration Plan Consideration Balance Sheet Classification Investments Obligation Investments Obligation Other assets Level 1 $ — $ $ — Accrued liabilities Level 3 — — Other liabilities Level 3 — — $ $ $ $ Considerable judgment is required in interpreting market data to develop the estimate of fair value of our assets and liabilities. Accordingly, the estimate may not be indicative of the amounts that we could realize in a current market exchange. The use of different market assumptions or valuation methodologies could have a material effect on the estimated fair value amounts. The Company’s non-qualified deferred compensation plan assets consist of money market and mutual funds invested in domestic and international marketable securities that are directly observable in active markets. The fair value measurement of the earn-out contingent consideration obligation relates to the acquisitions of Sin In A Tin TM in September 2014 and Willamette Valley Fruit Company in May 2013, and is included in accrued liabilities and other long-term liabilities in the consolidated balance sheets. The fair value measurement is based upon significant inputs not observable in the market. Changes in the value of the obligation are recorded as income or expense in our consolidated statements of operations. To determine the fair value, we valued the contingent consideration liability based on the expected probability weighted earn-out payments corresponding to the performance thresholds agreed to under the applicable purchase agreements. The expected earn-out payments were then present valued by applying a discount rate that captures a market participants view of the risk associated with the expected earn-out payments. In fiscal 2016 and 2015, we increased our estimate of the total earn-out expected to be achieved, which resulted in an increase in operating expenses of $0.3 million and $0.3 million during the years ended December 31, 2016 and December 26, 2015, respectively. A summary of the activity of the fair value of the measurements using unobservable inputs (Level 3 Liabilities) for the year ended December 31, 2016, is as follows (in thousands): Level 3 Balance at December 26, 2015 $ Earn-out compensation paid to Willamette Valley Fruit Company Earn-out compensation paid to Sin In A Tin Willamette Valley Fruit Company earn-out revaluation Sin In A Tin earn-out revaluation Balance at December 31, 2016 $ Derivative Financial Instruments We have utilized interest rate swaps in the management of our variable interest rate exposure and do not enter into derivatives for trading purposes. All derivatives are measured at fair value. Our interest rate swaps are classified as cash flow hedges. In fiscal 2015, the Company settled all existing interest rate swaps as part of our debt refinancing. As of December 31, 2016 and December 26, 2015 the Company did not have any interest rate swaps. Treasury Stock We record repurchases of our common stock, $.01 par value (“Common Stock”), as treasury stock at cost. We also record the subsequent retirement of these treasury shares at cost. The excess of the cost of the shares retired over their par value is allocated between additional paid-in capital and retained earnings. The amount recorded as a reduction of paid-in capital is based on such excess. Cash and Cash Equivalents We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Accounts Receivable Accounts receivable consist primarily of receivables from customers and distributors for products purchased. Receivables are generally past due when they are unpaid greater than thirty days. We determine any required reserves by considering a number of factors, including the length of time the accounts receivable have been outstanding and our loss history. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market. We identify slow moving or obsolete inventories and estimate appropriate write-down provisions related thereto. If actual market conditions are less favorable than those projected by management, additional inventory write downs may be required. In the ordinary course of business, we manage price and supply risk of commodities by entering into various short-term purchase arrangements with our vendors. Property and Equipment Property and equipment are recorded at cost. Cost includes expenditures for major improvements and replacements. Maintenance and repairs are charged to operations when incurred. When assets are retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the appropriate accounts, and the resulting gain or loss is recognized. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets, ranging from two to thirty years. We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use. Capitalized software costs are included in property, plant and equipment and amortized on a straight-line basis when placed into service over three to ten years. We evaluate the recoverability of property and equipment not held for sale by comparing the carrying amount of the asset or group of assets against the estimated undiscounted future cash flows expected to result from the use of the asset or group of assets and their eventual disposition, in accordance with relevant authoritative guidance. If the undiscounted future cash flows are less than the carrying value of the asset or group of assets being evaluated, an impairment loss is recorded. The loss is measured as the difference between the fair value and carrying value of the asset or group of assets being evaluated. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less cost to sell. The estimated fair value would be based on the best information available under the circumstances, including prices for similar assets or the results of valuation techniques, including the present value of expected future cash flows using a discount rate commensurate with the risks involved. Intangible Assets Goodwill and trademarks are reviewed for impairment annually or more frequently if impairment indicators arise. Goodwill, by reporting unit, is required to be tested for impairment between the annual tests if an event occurs or circumstances change that more-likely-than-not reduces the fair value of a reporting unit below its carrying value. We have concluded from our annual impairment testing performed in December there was impairment of the goodwill created in the acquisition of Fresh Frozen Foods in 2013. Due to declining sales from our Fresh Frozen business since the product recall the fair value of the reporting unit was determined to be below the carrying value. We performed the step 2 impairment test which resulted in no implied fair value of goodwill, and therefore we recognized a recognized an impairment charge of $8.3 million. Intangible assets with indefinite lives are required to be tested for impairment between the annual tests if an event occurs or circumstances change indicating that the asset might be impaired. In fiscal 2016, the Company The fair value of the Fresh Frozen trademark was determined to be 2.3 million based on a discounted cash flow approach, and therefore we recognized and impairment charge of $7.1 million. In 2015, as a result of the product recall (see Note 2 “Product Recall”) we concluded that the intangible asset related to the acquired customer relationships of Fresh Frozen Foods was fully impaired. Accordingly, the Company recorded an intangible asset impairment charge of $9.3 million. Management believes that each of our trademarks has the continued ability to generate cash flows indefinitely. Therefore, each of our trademarks has been determined to have an indefinite life. Management’s determination that our trademarks have indefinite lives includes an evaluation of historical cash flows and projected cash flows for each of these trademarks. In addition, there are no legal, regulatory, contractual, economic or other factors to limit the useful life of these trademarks. Management intends to renew each of these trademarks, which can be accomplished at little cost. Amortizable intangible assets are amortized using the straight-line method over their estimated useful lives, which is the estimated period over which economic benefits are expected to be provided. See Note 4 “Goodwill, Trademarks and Other Intangible Assets” for additional information. Self-Insurance Reserves We are partially self-insured for the purposes of providing health care benefits to employees covered by our insurance plan. The plan covers all full-time employees of the Company on the first day of the month after each such employee’s hiring date for salaried employees, and the first day of the month following the ninetieth day of service for hourly employees. The plan covers the employees’ dependents, if elected by each such employee. We have contracted with an insurance carrier for stop loss coverage that commences when $100,000 in claims is paid annually for a covered participant. In addition, we have contracted for aggregate stop loss insurance, which provides coverage after the maximum amount paid by us exceeds approximately $1.5 million. Estimated unpaid claims included in accrued liabilities are $0.4 million and $0.2 million at December 31, 2016 and December 26, 2015, respectively. These amounts represent management’s best estimate of amounts that have not been paid prior to the year-end dates. It is reasonably possible that the actual expense we will ultimately incur could differ from such estimates. Revenue Recognition In accordance with GAAP, we recognize operating revenues upon shipment of products to customers, provided title and risk of loss pass to our customers. In those instances where title and risk of loss does not pass until delivery, revenue recognition is deferred until delivery has occurred. Provisions and allowances for sales returns, promotional allowances, coupon redemption and discounts are also recorded as a reduction of revenues in our consolidated financial statements. These allowances are estimated based on a percentage of sales returns using historical and current market information. We record certain reductions to revenue for promotional allowances. There are several types of promotional allowances, such as off-invoice allowances, rebates and shelf space allowances. An off-invoice allowance is a reduction of the sales price that is directly deducted from the invoice amount. We record the amount of the deduction as a reduction to revenue when the transaction occurs. We record certain allowances for coupon redemptions, scan-back promotions and other promotional activities as a reduction to revenue. Anytime we offer consideration (cash or credit) as a trade advertising or promotional allowance to a purchaser of products at any point along the distribution chain, the amount is accrued and recorded as a reduction in revenue. Costs associated with obtaining shelf space (i.e., “slotting fees”) are accounted for as a reduction of revenue in the period in which we incur such costs. The accrued liabilities for these allowances are monitored throughout the time period covered by the coupon or promotion. Selling and Administrative Expenses Selling and administrative expenses include salaries and wages, bonuses and incentives, stock-based compensation expenses, employee related expenses, facility-related expenses, marketing and advertising expenses, depreciation of property and equipment, professional fees, amortization of intangible assets, provisions for losses on accounts receivable and other operating expenses. We recorded $0.5 million, $1.1 million and $1.4 million in fiscal 2016, 2015 and 2014, respectively, for advertising costs, which are included in selling, general and administrative expenses on the Consolidated Statements of Operations contained herein. These costs include various sponsorships, coupon administration and consumer advertising programs that we enter into throughout the year and are expensed as incurred. Our marketing programs also include selective event sponsorship designed to increase brand awareness and to provide opportunities to mass sample branded products. Also included in selling, general and administrative expense are costs and fees relating to the execution of in-store product demonstrations with club stores or grocery retailers, which were $2.0 million, $1.5 million and $1.7 million for the fiscal years 2016, 2015 and 2014, respectively. The cost of product used in the demonstrations, which is insignificant, and the fee we pay to the independent third-party providers who conduct the in-store demonstrations, are recorded as an expense when the event occurs. Product demonstrations are conducted by independent third-party providers designated by the various retailer or club chains. During the in-store demonstrations, the consumers in the stores receive small samples of our products. The consumers are not required to purchase our product in order to receive the sample. Shipping and Handling Shipping and handling costs are included in cost of revenues. We do not bill customers for freight. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A significant piece of objective negative evidence evaluated was the cumulative losses incurred in recent years. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future taxable income. In light of our continued losses, at December 31, 2016, we determined that our deferred tax liabilities were not sufficient to fully realize our deferred tax assets and, as a result, a valuation allowance of $12.6 million was recorded against our net deferred tax asset. In addition, the net deferred tax liability related to goodwill and other indefinite-lived assets was not used as a future source of income in the valuation allowance analysis. Accordingly, this deferred tax liability is recorded on our balance sheet. The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolutions of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more likely than not of being realized upon ultimate settlement. The Company believes that its income tax filing positions and deductions would be sustained upon examination; thus, the Company has not recorded any uncertain tax positions as of December 31, 2016. It is our policy to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We do not have any accrued interest or penalties associated with unrecognized tax benefits for the fiscal years 2016 and 2015. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The material jurisdictions that are subject to examination by tax authorities include the U.S. federal, Arizona, California, Georgia, Indiana and Oregon. Our U.S. federal income tax returns for fiscal 2013 through 2015 remain open to examination by the Internal Revenue Service. Our state tax returns for fiscal 2012 through 2015 remain open to examination by the state jurisdictions. Stock-Based Compensation Compensation expense for restricted stock and stock option awards is adjusted for estimated attainment thresholds and forfeitures and is recognized on a straight-line basis over the requisite period of the award, which is currently one to five years for restricted stock and one to five years for stock options. We estimate future forfeiture rates based on our historical experience. Compensation costs related to all stock-based payment arrangements, including employee stock options, are recognized in the financial statements based on the fair value method of accounting. Excess tax benefits related to stock-based payment arrangements are classified as cash inflows from financing activities and cash outflows from operating activities. See Note 10 “Stockholders’ Equity” for additional information. Earnings (Loss) Per Common Share Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings (loss) per share is calculated by including all dilutive common shares such as stock options and restricted stock. For the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014, there were 0.5 million, 0.6 million and 0.1 million shares of Common Stock, respectively, underlying stock options and restricted stock units that were not included in the computation of diluted earnings (loss) per share because inclusion of such shares would be antidilutive or because the exercise prices were greater than the average market price of Common Stock for the applicable period. Exercises of outstanding stock options or warrants are assumed to occur for purposes of calculating diluted earnings (loss) per share for periods in which their effect would not be anti-dilutive. Earnings (loss) per common share was computed as follows for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands, except per share data): December 31, December 26, December 27, 2016 2015 2014 Basic Earnings (Loss) Per Share: Net Income (loss) $ $ $ Weighted average number of common shares Earnings (Loss) per common share $ $ $ Diluted Earnings (Loss) Per Share: Net Income (loss) $ $ $ Weighted average number of common shares Incremental shares from assumed conversions of stock options and non-vested shares of restricted stock — — Adjust |
Product Recall
Product Recall | 12 Months Ended |
Dec. 31, 2016 | |
Product Recall | |
Product Recall | 2. Product Recall On April 23, 2015, we announced a voluntary product recall of certain varieties of the Company’s Fresh Frozen TM line of frozen vegetables, as well as select varieties of our Jamba® “At Home” line of smoothie kits because the Jefferson, Georgia facility tested positive for Listeria monocytogenes. During fiscal 2016, there were no product recall charges. The charges recorded in our consolidated statement of operations attributable to the recall for the year ended December 26, 2015 are summarized as follows (in thousands): Year Ended December 26, 2015 Net revenues $ — Cost of revenues (1) Gross profit Operating expenses: Selling, general & administrative expenses (2) Impairment of intangible asset (3) Operating loss Interest expense (4) Loss before income taxes Income tax benefit Net loss $ (1) Additional cost of revenues represents the provision for the write-down of inventory on hand and for additional costs estimated to be incurred related to the recall, including product expected to be returned from customers and consumers, partially offset by recall-related insurance recoveries. Through December 26, 2015, the Company has incurred an estimated $19.1 million of product recall charges. Additionally, during the year ended December 26, 2015, the Company incurred approximately $2.2 million of incremental production costs as a result of utilizing co-packers. These charges were partially offset by recall-related insurance recoveries of $4.2 million. (2) Additional selling, general and administrative costs consists of approximately $2.2 million for the year ended December 26, 2015 of professional fees associated with the recall. (3) Amount reflects a $9.3 million impairment charge recorded to write-off the carrying value of the Fresh Frozen customer relationships intangible asset. (4) Amount reflects interest expense and associated financing fees relating to the bridge loans entered into under the prior credit agreement with U.S. Bank National Association (“U.S. Bank”) dated November 8, 2013 (with all related loan documents, and as amended from time to time, the “Prior Credit Facility”) attributed to the Company’s voluntary product recall. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2016 | |
Acquisitions | |
Acquisitions | 3. Acquisitions Sin In A Tin On September 29, 2014, we acquired the assets and intellectual property of a small boutique frozen desserts business, Sin In A Tin™, for approximately $160,000 in cash. An additional amount of up to $0.5 million is payable to the seller in the form of an earn-out based on future net revenues attributable to Sin In A Tin™ products. At the time of acquisition, the contingent consideration was recorded at $0.2 million based on the fair value assessment. Additionally, we recorded $0.1 million of identifiable intangible assets and $0.1 million of net tangible assets that were assumed as a part of this acquisition based on their estimated fair values, and $0.2 million of residual goodwill. |
Goodwill, Trademarks and Other
Goodwill, Trademarks and Other Intangibles | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill, Trademarks, and Other Intangible Assets | |
Goodwill, Trademarks and Other Intangibles | 4. Goodwill, Trademarks, and Other Intangible Assets Goodwill, trademarks and other intangibles, net, consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): Estimated December 31, December 26, Useful Life 2016 2015 Goodwill: Inventure Foods $ $ Rader Farms Willamette Valley Fruit Company Fresh Frozen Foods — Sin In A Tin Goodwill $ $ Trademarks: Inventure Foods $ $ Rader Farms Willamette Valley Fruit Company Fresh Frozen Foods Sin In A Tin Other intangibles: Rader Farms - Customer relationship, gross carrying amount 10 years Rader Farms - Customer relationship, accum. amortization Willamette Valley Fruit Company - Customer relationship, gross carrying amount 10 years Willamette Valley Fruit Company - Customer relationship, accum. amortization Trademarks and other intangibles, net $ $ The trademarks, except for the Fresh Frozen Foods trademark, are deemed to have an indefinite useful life because they are expected to generate cash flows indefinitely. At December 31, 2016, in connection with the annual impairment test of the Fresh Frozen Foods trademark, it was determined that this trademark has a definite live of ten years. Therefore starting on January 1, 2017 the Fresh Frozen Foods trademark will be amortized over a ten year term. Amortization expense was $0.3 million, $0.5 million and $1.2 million for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014, respectively. As of December 31, 2016, we expect amortization expense on these intangible assets over the next five years to be as follows (in thousands): Amortization Years Ending, Expense 2017 $ 2018 2019 2020 2021 Thereafter Total $ Goodwill and trademarks are reviewed for impairment annually in the fourth fiscal quarter, or more frequently if impairment indicators arise. Goodwill is required to be tested for impairment between the annual tests if an event occurs or circumstances change that more-likely-than-not reduces the fair value of a reporting unit below its carrying value. Intangible assets with indefinite lives are required to be tested for impairment between the annual tests if an event occurs or circumstances change indicating that the asset might be impaired. In fiscal 2016, the Company recorded an impairment of goodwill related to the Fresh Frozen business of $8.3 million and an impairment of the Fresh Frozen Foods trademark of $7.1 million, due to continuing decreased net revenues since the product recall. In 2015, as a result of the product recall (see Note 2 “Product Recall”) we concluded that the intangible asset related to the acquired customer relationships of Fresh Frozen Foods was fully impaired and recorded an intangible asset impairment charge of $9.3 million. Other than the Fresh Frozen Foods trademarks and customer relationships, no impairments were determined through our testing for the years ended December 31, 2016 and December 26, 2015. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Accrued Liabilities. | |
Accrued Liabilities | 5. Accrued Liabilities Accrued liabilities consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): December 31, December 26, 2016 2015 Accrued payroll and payroll taxes $ Accrued royalties and commissions Accrued advertising and promotion Accrued berry purchase payments Accrued other Accrued liabilities $ $ |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2016 | |
Inventories | |
Inventories | 6. Inventories Inventories consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): December 31, December 26, 2016 2015 Finished goods $ $ Raw materials Inventories $ $ |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Property and equipment consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): December 31, December 26, Useful Lives 2016 2015 Buildings and improvements 20 - 30 years $ $ Equipment 7 - 15 years Land — Vehicles 4 - 5 years Furniture and office equipment 2 - 10 years Less accumulated depreciation and amortization $ $ The total cost of equipment and furniture and office equipment included in the table above held under capital lease obligations was $0.1 million as of December 31, 2016 and December 26, 2015. Depreciation expense, including amortization of property under capital leases, for fiscal years 2016, 2015 and 2014 was $7.0 million, $7.0 million and $6.7 million, respectively. |
Long-Term Debt and Line of Cred
Long-Term Debt and Line of Credit | 12 Months Ended |
Dec. 31, 2016 | |
Term Debt and Line of Credit | |
Term Debt and Line of Credit | 8. Term Debt and Line of Credit ABL Credit Facility On November 18, 2015, the Company entered into a five-year revolving credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and the other lenders party thereto (with all related loan documents, and as amended from time to time, the “ABL Credit Facility”), replacing our Prior Credit Facility. All commitments under the Prior Credit Facility were terminated and all outstanding borrowings thereunder were repaid effective November 18, 2015. The remaining obligations of the Company and its subsidiaries under the Prior Credit Facility generally are limited to certain remaining contingent indemnification obligations. The ABL Credit Facility provides for a five-year, $50.0 million senior secured revolving credit facility. The ABL Credit Facility also provides that, under certain conditions, we may increase the aggregate principal amount of loans outstanding thereunder by up to $10.0 million. On November 18, 2015, we borrowed $21.9 million under the ABL Credit Facility. We used the initial borrowing under that facility, together with the proceeds from the Term Loan Credit Facility (described below) to repay all outstanding borrowings under the Prior Credit Facility (consisting of $101.1 million), to pay accrued interest with respect to such loans, and to fund the payment of certain fees and costs relating to the Credit Facilities. The ABL Credit Facility will mature, and the commitments thereunder will terminate, on November 17, 2020. The Company and all of its subsidiaries are borrowers under the ABL Credit Facility. Subject to certain exceptions, the obligations under the ABL Credit Facility are secured by a lien on substantially all of the assets of the Company including: (i) a perfected first priority pledge of all the equity interests of the Company, and (ii) a perfected first priority security interest in substantially all other tangible and intangible assets of the Company and its subsidiaries (including, but not limited, to accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). The obligations under the ABL Credit Facility are also guaranteed by each of the Company’s subsidiaries. Availability of borrowings under the ABL Credit Facility is subject to, among other things, a borrowing base calculation based upon a valuation of our eligible accounts and eligible inventory (including eligible finished goods, raw materials, and by-products inventory), each multiplied by an applicable advance rate or limit, and certain reserves and caps customary for financings of this type. If at any time the aggregate amounts outstanding under the ABL Credit Facility exceed the borrowing base then in effect, a prepayment of an amount sufficient to eliminate such excess is required to be made. Availability of borrowings under the ABL Credit Facility is also subject to a bring down of the representations and warranties in such Facility and the absence of any default thereunder (including any such default under our financial and other covenants in our Term Loan Credit Facility described below). Voluntary prepayments of revolving loans under the ABL Credit Facility are permitted at any time, in whole or in part, without premium or penalty. Borrowings under the ABL Credit Facility bear interest, at the Company’s option, at a base rate or LIBOR plus, in each case, an applicable margin. LIBOR is reset at the beginning of each selected interest period based on the LIBOR rate then in effect; provided that, if LIBOR is below zero, then such rate will be equal to zero plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of (i) the federal funds effective rate from time to time plus 0.50%, (ii) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%, and (iii) the prime lending rate announced from time to time by Wells Fargo. The applicable margin is subject to adjustment based on the Company’s Average Excess Availability (as defined in the ABL Credit Facility). Additionally, to maintain availability of funds under the ABL Credit Facility, we pay a monthly commitment fee of 0.25–0.375% per annum, depending on the average ABL Credit Facility balance, on the unused portion of the ABL Credit Facility. Ongoing extensions of credit under the ABL Credit Facility are subject to customary conditions, including sufficient availability under the borrowing base. The ABL Credit Facility also contains covenants that require the Company to, among other things, periodically furnish financial and other information to the various lenders. The ABL Credit Facility contains customary negative covenant and also requires the Company, together with its subsidiaries, to comply with a Fixed Charge Coverage Ratio (as defined in the ABL Credit Facility) upon exceeding certain minimum availability requirements. Events of default under the ABL Credit Facility include customary events such as a cross-default provision with respect to other material debt. As of December 31, 2016, the Company is in compliance with all covenants of the ABL Credit Facility, except for the requirement to deliver audited financial statements without a going concern opinion. We have obtained a temporary waiver of the going concern qualification until May 15, 2017 from the lenders under the ABL Credit Facility. We use the ABL Credit Facility, in part, to fund our seasonal working capital needs, which are affected by, among other things, the growing cycles of the fruits and vegetables we process, for capital expenditures and for other general corporate purposes. The vast majority of our fruit and vegetable inventories are produced during the harvesting and packing months of June through September and depleted through the remaining eight months. Accordingly, our need to draw funds under the ABL Credit Facility fluctuates significantly during the year. As of December 31, 2016, there was $32.8 million outstanding under the ABL Credit Facility and the net availability thereunder was $10.3 million. Term debt consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): December 31, December 26, 2016 2015 Term loan credit facility through November 2020 $ Equipment term loan, Goodyear, Arizona, due monthly through April 2021 Equipment term loan, Rader Farms, due monthly through August 2019 Equipment term loan, Willamette Valley Fruit Company, due monthly through August 2019 Capital lease obligations, primarily due September 2017 Long-term debt Less: deferred financing fees, net Less: current portion of long-term debt Long-term debt, less current portion $ — $ Annual maturities of long-term debt as of December 31, 2016 are as follows (in thousands): Capital Lease Year Obligations Debt 2017 $ $ 2018 2019 2020 2021 — Thereafter — — Subtotal Less: Amount representing interest — Total $ $ Term Loan Credit Facility Also on November 18, 2015 and concurrent with the execution of the ABL Credit Facility, Inventure Foods and certain of its subsidiaries entered into a five-year term loan credit agreement (the “Term Loan Credit Facility”), with BSP Agency, LLC, a Delaware limited liability company (“BSP”), as administrative agent, and the other lenders party thereto. The Term Loan Credit Facility provides for a $85.0 million senior secured term loan that matures on November 17, 2020. The Term Loan Credit Facility also provides that, under certain conditions, we may increase the aggregate principal amount of term loans outstanding thereunder by up to $25.0 million. As noted above, we used the proceeds of the Term Loan Credit Facility, together with certain proceeds of the ABL Credit Facility, to refinance the indebtedness under the Prior Credit Facility and to fund payment of certain fees and costs related to the Credit Facilities. Unlike amounts repaid under the ABL Credit Facility, any amounts we repay under the Term Loan Credit Facility may not be reborrowed. The Term Loan Credit Facility also matures on November 17, 2020. The Company and all of its subsidiaries are borrowers under the Term Loan Credit Facility. Subject to certain exceptions, the obligations under the Term Loan Credit Facility are secured by substantially all of the assets of the Company including: (i) a perfected first priority pledge of all the equity interests of the Company, and (ii) a perfected first priority security interest in substantially all other tangible and intangible assets of the Company (including, but not limited, to accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). Borrowings under the Term Loan Credit Facility bear interest, at the Company’s option, at a base rate or LIBOR plus, in each case, an applicable margin. LIBOR is reset at the beginning of each selected interest period based on the LIBOR rate then in effect; provided that, if LIBOR is below zero, then such rate will be equal to zero plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of (i) the federal funds effective rate from time to time plus 0.50%, (ii) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%, and (iii) the prime lending rate announced by Wells Fargo. The applicable margin is subject to adjustment based on the Company’s Total Leverage Ratio (as defined in the Term Loan Credit Facility). The Term Loan Credit Facility requires amortization in the form of quarterly scheduled principal payments of $212,500 per fiscal quarter from March 2016 to September 2020, with the remaining balance due on the maturity date of November 17, 2020. In addition to the scheduled quarterly principal payments, the Company is required to make mandatory principal payments out of Excess Cash Flow (as defined in the Term Loan Credit Facility) The Term Loan Credit Facility also contains affirmative and negative covenants that require the Company to, among other things, periodically furnish financial and other information to the various lenders. The Term Loan Credit Facility contains customary negative covenants and also requires the Company, together with its subsidiaries, to comply with a Fixed Charge Coverage Ratio (as defined in the Term Loan Credit Facility) and a Total Leverage Ratio (as defined in the Term Loan Credit Facility). On September 27, 2016, the Company entered into that certain Second Amendment to Credit Agreement with BSP, as the administrative agent, and the other lenders party thereto (the “Second Amendment”). The Second Amendment defers compliance with the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio covenants until the second quarter of fiscal 2017, requires the Company to comply with a minimum EBITDA covenant commencing with the fiscal month ending April 30, 2017, and increases the Base Rate Margin and the Libor Rate Margin thereunder by 100 basis points. The Second Amendment also amends the fees payable to the lenders in the event of prepayment and restricts the Company’s ability to raise Curative Equity (as defined in the Second Amendment) until the fourth quarter of fiscal 2017. Events of default under the Term Loan Credit Agreement include customary events such as a cross-default provision with respect to other material debt. As of December 31, 2016 the Company is in compliance with all covenants of the Term Loan Credit Agreement, except for the requirement to deliver audited financial statements without a going concern opinion. We have obtained a temporary waiver of the going concern qualification until May 15, 2017 from the lenders under the Term Loan Credit Facility. As of December 31, 2016, the amount outstanding under the Term Loan Credit Facility was $84.0 million and the interest rate payable was 9.0%. Voluntary prepayments of amounts outstanding under the term loan are subject to a 2% prepayment penalty. Equipment Loans In August 2015, we entered into an equipment term loan with Banc of America Leasing & Capital LLC for $3.1 million to finance new kettles and related equipment for our Goodyear, Arizona facility. The equipment term loan accrues interest at a rate of 3.07% and will be repaid over 60 recurring monthly payments commencing May 2016. In August 2014, we entered into two separate equipment term loans with Banc of America Leasing & Capital LLC; one for $2.6 million to finance equipment to be used at the Company’s Rader Farms facility, and the other for $1.9 million to finance equipment to be used at Willamette Valley Fruit Company. Both of these equipment term loans accrue interest at a rate of 2.35% and will be repaid over 60 recurring monthly payments commencing September 15, 2014. Debt Classification In accordance with FASB Accounting Standard Codification (“ASC”) 470-10-45 on Debt Presentation, all of the Company’s outstanding debt has been reclassified in the accompanying condensed consolidated balance sheet as a current liability as of December 31, 2016. Absent the Second Amendment, the Company would not have been in compliance with the Total Leverage Ratio covenant as of December 31, 2016. Unless we engage in a strategic transaction that enables us to pay down or refinance our debt, or we secure a waiver from our lenders or a further loan amendment to the Term Loan Credit Facility, we will not be in compliance with our financial covenants at the end of the second quarter of fiscal 2017. As previously announced, the Company commenced a comprehensive strategic and financial review of the Company’s operations and engaged Rothschild Inc. to serve as its financial advisor to assist the Company in this process, including the pursuit of value-enhancing initiatives including, a sale of the Company, a sale of assets of the Company or other strategic business combination, or other capital structure optimization opportunities. This comprehensive strategic and financial review remains ongoing as of the date of this Annual Report on Form 10-K. There can be no assurances that these efforts will result in a completion of a transaction or, if one is completed, that it will be on favorable terms. A default under the Term Loan Credit Facility would trigger a default under the ABL Credit Facility and certain of our equipment lease financing arrangements, as these facilities each contain cross-default provisions. As such, we reclassified all of our outstanding debt as a current liability. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Our future contractual obligations consist principally of long-term debt, operating leases, minimum commitments regarding third-party warehouse operations services, forward purchase agreements and remaining minimum royalty payments due licensors pursuant to brand licensing agreements. Leases During the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014, the rental expense from operating leases was $3.5 million, $2.8 million and $2.6 million, respectively. As of December 31, 2016, minimum rental commitments under non-cancellable operating leases were (in thousands): Operating Lease Year Obligations 2017 $ 2018 2019 2020 2021 Thereafter Total Purchase Agreements In order to mitigate the risks of volatility in commodity markets to which we are exposed, we have entered into forward purchase agreements with certain suppliers based on market prices, forward price projections and expected usage levels. Our purchase commitments for certain ingredients, packaging materials and energy are generally less than 12 months. Licensing We produce T.G.I. Friday’s® brand snacks, Tato Skins® brand potato crisps and Boulder Canyon® Authentic Foods Rice and Bean snacks utilizing a sheeting and frying process that includes technology that we license from a third party. Under the terms of this license agreement, we have a royalty-bearing, exclusive right license to use the technology in the United States, Canada, and Mexico until such time the parties mutually agree to terminate the agreement. Even though the patents for this technology expired in December 2006, in consideration for the use of this technology, we are required to make royalty payments on sales of products manufactured utilizing the technology until such termination date. However, should products substantially similar to Tato Skins®, O’Boisies® and Pizzarias® become available for any reason in the marketplace by any manufacturer other than us and such availability results in a sales decline of 10% or more, any royalty obligation for the respective products shall cease. We license the T.G.I. Friday’s® brand snacks trademark from T.G.I. Friday’s under a license agreement with a term expiring in December 2019, subject to automatic renewal for an additional five year term unless we provide notice of nonrenewal on or prior to July 1, 2019. Pursuant to the license agreement, we are required to make royalty payments on sales of T.G.I. Friday’s® brand snack products and are required to achieve certain minimum sales levels by certain dates during the contract term. We license the Jamba® brand trademark from Jamba Juice Company under a license agreement with a term expiring in 2035. Pursuant to the license agreement, we are required to make royalty payments on sales of Jamba® products, and are required to achieve certain minimum sales levels by certain dates during the contract term. We license the Nathan’s Famous® brand trademark from Nathan’s Famous Corporation under a license agreement with a term expiring in 2031. Pursuant to the license agreement, we are required to make royalty payments on sales of Nathan’s Famous® products, and are required to achieve certain minimum sales levels by certain dates during the contract term. We license the Vidalia® brand trademark from Vidalia Brands, Inc. under a license agreement with a term expiring January 2019. Pursuant to the license agreement, we are required to make royalty payments on sales of Vidalia® brand products during the contract term. We license the Seattle’s Best Coffee® brand trademark from Seattle’s Best Coffee LLC under a license agreement with a term expiring November 2017, which automatically extends for a five-year period upon meeting certain minimum sales targets. Pursuant to the license agreement, we are required to make royalty payments on sales of Seattle’s Best Coffee® brand products during the contract term. Legal Proceedings We are periodically a party to various lawsuits arising in the ordinary course of business. Management believes, based on discussions with legal counsel, that the resolution of any such lawsuits, individually and in the aggregate, will not have a material adverse effect on our financial position or results of operations. (see Note 13, “Legal Proceedings”) |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders’ Equity Our 2015 Equity Incentive Plan (the “2015 Plan”) was approved at our 2015 annual meeting of stockholders. The 2015 Plan replaces our Amended and Restated 2005 Equity Incentive Plan (the “2005 Plan”). Under the 2015 Plan, we are authorized to issue up to 1,400,560 shares of our Common Stock, which number may be increased by up to 250,000 shares subject to any option or award outstanding under the 2005 Plan that are canceled or forfeited for any reason. If any shares of our Common Stock subject to awards granted under the 2015 Plan are canceled, those shares will be available for future awards under such plan. The 2015 Plan expires in May 2025. Awards granted under the 2015 Plan may include: nonqualified stock options, incentive stock options, restricted stock, restricted stock units, performance shares, performance units, and other stock-based awards and cash-based awards. As of December 31, 2016, there were 956,088 shares of Common Stock available for awards under the 2015 Plan. Restricted Common Stock We have issued shares of restricted Common Stock in the form of restricted stock awards and restricted stock units as incentives to certain employees, officers and members of our board of directors (the “Board”). Restricted stock awards and restricted stock units granted to members of the Board are granted with a one-year service period. Restricted stock awards and restricted stock units granted to the Company’s officers vest over three years and typically contain performance restrictions that are required to be achieved over a three year measurement period in order for the shares to be released. The number of performance-based restricted stock ultimately released varies based on whether we achieve certain financial results. Restricted stock units granted to non-officer employees generally vest over three or five years. We record compensation expense each period based on the market price of our Common Stock at the time of grant and, for performance-based restricted stock awards and units, our estimate of the most probable number of shares that will ultimately be released. The related stock-based compensation expense is included in selling, general and administrative expenses. Additionally, the compensation expense is adjusted for our estimate of forfeitures. Recipients of restricted Common Stock are entitled to receive any dividends declared on our Common Stock and have voting rights, regardless of whether such shares have vested. During the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014, the total stock-based compensation expense from restricted Common Stock recognized in the financial statements was $1.5 million, $1.1 million and $1.1 million, respectively. There were no stock-based compensation costs which were capitalized. The following table summarizes activities related to restricted stock awards for the year ended December 31, 2016: Weighted Average Grant Number Date Fair Value Nonvested balance at December 26, 2015 $ Granted — $ — Vested and released $ Forfeited $ Nonvested balance at December 31, 2016 $ As of December 31, 2016 the total unrecognized costs related to non-vested restricted stock awards was $0.1 million, which is expected to be recognized over a weighted average period of less than one year. This expected compensation expense does not reflect any new awards, or modifications to existing awards, that could occur in the future. The following table summarizes activities related to restricted stock units for the year ended December 31, 2016: Weighted Average Grant Number Date Fair Value Nonvested balance at December 26, 2015 $ Granted $ Vested and released $ Forfeited $ Nonvested balance at December 31, 2016 $ As of December 31, 2016 the total unrecognized costs related to non-vested restricted stock units was $2.3 million, which is expected to be recognized over a weighted average period of 1.8 years. This expected compensation expense does not reflect any new awards, or modifications to existing awards, that could occur in the future. Stock Options Stock-based compensation expense from stock options recognized in the financial statements totaled $0.2 million, $0.4 million and $0.6 million for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014, respectively, which reduced income from operations accordingly. There were no stock-based compensation costs that were capitalized. The following table summarizes stock option activity during the year ended December 31, 2016: Aggregate Weighted Average Weighted Intrinsic Value Remaining Options Average (in-the-money Contractual Life Outstanding Exercise Price options) (in years) Outstanding at December 26, 2015 $ Granted — $ — Exercised $ Forfeited or expired $ Outstanding at December 31, 2016 $ $ As of December 31, 2016, the total unrecognized costs related to non-vested stock options granted were $0.2 million. We expect to recognize such costs in the financial statements over a weighted average period of 1.3 years. This expected compensation expense does not reflect any new awards, or modifications to existing awards, that could occur in the future. The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $9.85 as of December 31, 2016, which would have been received by the option holders had all option holders exercised options and sold the underlying shares on that date. The intrinsic value related to vested stock options outstanding was $2.8 million as of December 31, 2016 based on the exercise price and our closing stock price of $9.85 as of December 31, 2016. The following table summarizes information about stock options outstanding and exercisable at December 31, 2016: Weighted Average Remaining Weighted Weighted Contractual Average Average Range of Options Life Exercise Options Exercise Exercise Prices Outstanding (in years) Price Exercisable Price $ - $ $ $ $ - $ $ $ $ - $ $ $ $ - $ $ $ $ $ Prior to May 2008, all stock option grants had a five-year term. The fair value of these stock option grants is amortized to expense over the service period, generally five years for employees and one year for members of the Board. In May 2008, our Board approved a 10-year term for all future stock option grants, with service periods of five years for employees and one year for members of the Board. We issue new shares upon the exercise of stock options, as opposed to reissuing treasury shares. Preferred Stock We have authorized 50,000 shares preferred stock, $100 par value (“Preferred Stock”), none of which are outstanding. We may issue such shares of Preferred Stock in the future without stockholder approval. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | 11. Income Taxes In fiscal 2016 a valuation allowance of $12.6 million was recorded against our net deferred tax asset upon determining it is more likely than not that the deferred tax assets will not be realized . In addition, the net deferred tax liability related to goodwill and other indefinite-lived assets was not used as a future source of income in the valuation allowance analysis. Accordingly, this deferred tax liability is recorded on our balance sheet. The provision for income taxes consisted of the following for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): 2016 2015 2014 Current: Federal $ — $ $ State Deferred: Federal State Income tax expense (benefit) $ $ $ The income tax effects of temporary differences between financial and income tax reporting that give rise to the deferred income tax asset and liability are as follows as of December 31, 2016 and December 26, 2015 (in thousands): 2016 2015 Deferred Tax Asset Accounts receivable $ $ Charitable contributions carryover Federal credit carryover Inventories Accrued liabilities — State credit carryover Stock-based compensation Federal net operating loss carryforward Deferred rent State net operating loss carryforward Total Less: Valuation allowance — Deferred Tax Liability Accrued liabilities — Contingent consideration Depreciation and amortization Net deferred tax (liability) asset $ $ We had U.S. net operating loss carry forwards in the amount of $28.7 million at December 31, 2016 that will expire in tax years ending 2035 and 2036 and state net operating loss carry forwards in the amount of $27.7 million at December 31, 2016 that will expire in the tax years ending 2020 through 2036. Our alternative minimum tax credits of $0.2 million have no expiration date. Our other general business tax credits of $0.4 million at December 31, 2016 will expire in tax years ending 2025 through 2036. The following table provides a reconciliation between the amount determined by applying the statutory federal income tax rate to our income tax provision for fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): 2016 2015 2014 Expected expense at statutory rate of 34.0% $ $ $ Change resulting from: State tax provision, net Federal and state credits Domestic production benefits — — Change in valuation allowance — — Nondeductible expenses and other Income tax expense (benefit) $ $ $ Effective tax rate % % % |
Business Segments and Significa
Business Segments and Significant Customers | 12 Months Ended |
Dec. 31, 2016 | |
Business Segments and Significant Customers | |
Business Segments and Significant Customers | 12. Business Segments and Significant Customers For the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014, Costco was the only customer accounting for more than 10% of our total net revenue. Costco accounted for $52.2 million, or 19% of our total net revenue; $66.4 million, or 23% of our total net revenue; and $75.3 million, or 26% or our total net revenue; for fiscal 2016, 2015 and 2014, respectively. Our operations consist of two reportable segments: frozen products and snack products. The frozen products segment produces frozen fruits, vegetables, beverages and desserts for sale primarily to grocery stores, club stores and mass merchandisers. The snack products segment produces potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products, popcorn and extruded products for sale primarily to snack food distributors and retailers. Our reportable segments offer different products and services. The majority of our revenues are attributable to external customers in the United States. We also sell to external customers internationally; however, the revenues attributable to such customers are immaterial. All of our assets are located in the United States. All products sold under our frozen products segment are considered part of the healthy/natural food category. The products sold under our snack products segment include products considered part of the indulgent specialty snack food category, as well as products considered part of the healthy/natural food category. For fiscal 2016, 2015 and 2014, net revenues of our healthy/natural food category totaled $230.8 million, $238.1 million and $236.6 million, respectively. For fiscal 2016, 2015 and 2014, net revenues of our indulgent specialty snack food category totaled $38.2 million, $44.5 million and $49.1 million, respectively. The accounting policies of our reportable segments are the same as those described in Note 1 “Operations and Summary of Significant Accounting Policies.” We do not allocate assets, selling, general and administrative expenses, income taxes or other income and expense to our reportable segments. The following tables present information about our reportable segments for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): Frozen Snack Products Products Consolidated 2016 Net revenues from external customers $ $ $ Depreciation and amortization included in segment gross profit Segment gross profit Goodwill 2015 Net revenues from external customers $ $ $ Depreciation and amortization included in segment gross profit Segment gross profit Goodwill 2014 Net revenues from external customers $ $ $ Depreciation and amortization included in segment gross profit Segment gross profit Goodwill The following table reconciles our reportable segment gross profit to our consolidated income before income tax provision for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): December 31, December 26, December 27, 2016 2015 2014 Segment gross profit $ $ $ Unallocated amounts: Operating expenses Impairment of goodwill and intangible assets — Interest expense Income (loss) before income tax provision $ $ $ The table below presents information about revenues for each group of similar products within our reportable segments for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): ` 2016 2015 2014 % of Net % of Net % of Net Net Revenue Revenues Net Revenue Revenues Net Revenue Revenues Snack Products: Indulgent Specialty Snacks (1) $ % $ % $ % Healthy/Natural Snacks (2) % % % Total Snack % % % Frozen Products: Berries, Beverages, Blends and Desserts % % % Vegetables % % % Total Frozen % % % Consolidated $ % $ % $ % (1) Indulgent Specialty Snacks includes T.G.I. Friday’s® brand snacks under license from T.G.I. Friday’s, Nathan’s Famous® brand snack products under license from Nathan’s Famous Corporation, Vidalia® brand snack products under license from Vidalia Brands, Inc., Poore Brothers® kettle cooked potato chips, Bob’s Texas Style® kettle cooked chips, and Tato Skins® brand potato snacks. (2) Healthy/Natural Snacks includes Boulder Canyon® Authentic Foods brand kettle cooked potato chips and private label healthy/natural snacks. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2016 | |
Legal Proceedings | |
Legal Proceedings | 13. Legal Proceedings We are periodically a party to various lawsuits arising in the ordinary course of business. Management believes, based on discussions with legal counsel, that the resolution of any such lawsuits, individually and in the aggregate, will not have a material adverse effect on our financial position or results of operations. Indemnification Request On or about February 17, 2016, the Company received a letter from one of its commercial customers requesting indemnity with respect to a lawsuit threatened against the customer in Florida alleging that certain kettle chip products sold by the customer and manufactured by the Company were improperly labeled as “natural.” On March 7, 2016, the Company informed the commercial customer that the Company had no obligation to indemnify the commercial customer with respect to the matter. Litigation On April 4, 2016, a purported class action captioned Westmoreland County Employee Retirement Fund (“Westmoreland”) v. Inventure Foods Inc. et al., Case No. CV2016-002718, was filed in the Superior Court in Maricopa County, Arizona. Additional defendants are the Company’s Chief Executive Officer and Chief Financial Officer, and the underwriters of the secondary securities offering that closed September 14, 2014 (the “September 2014 Offering”). The class action complaint, which was amended a second time on March 27, 2017, alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act and focuses on the conditions at the Company’s former frozen food facility in Jefferson, Georgia. Westmoreland seeks certification as a class action, unspecified compensatory damages, rescission or a rescissory measure of damages, attorneys’ fees and costs, and other relief deemed appropriate by the court. The Company, its Chief Executive Officer, its Chief Financial Officer and the September 2014 Offering underwriters have not yet responded to the second amended complaint. The Company is vigorously defending against the claims. On November 10, 2016, the Center for Environment Health (“CEH”), represented by Howard Hirsch of Lexington Law Group, filed a lawsuit against Company under the California Safe Drinking Water and Toxic Enforcement Act (known as “Proposition 65”) (the “Act”). CEH contends that the Company’s potato-based chip products contain amounts of acrylamide in excess of what is permitted under the Act. An Inventure retailer, Bristol Farms, demanded indemnity in relation to the litigation. The Company has answered the complaint and intends to vigorously defend the lawsuit. On November 14, 2016, Michelle Blair (represented by Matthew Armstrong of Armstrong Law Firm LLC and Stuart Cochran of Cochran Law PLLC) filed a putative class action against the Company in St. Louis City Circuit Court. Ms. Blair purports to represent a class of consumers who purchased one of nine Boulder Canyon brand products listing “evaporated cane juice” as an ingredient. Ms. Blair contends that the use of “evaporated cane juice” was misleading because evaporated cane juice is sugar. In the complaint, Ms. Blair advances claims for violation of Missouri’s Merchandising Practices Act, Mo. Rev. Stat. § 407.020, et seq. and 15 C.S.R. 60-8.020, et seq., and unjust enrichment. On February 3, 2017, the Company removed the action to the Eastern District of Missouri. Plaintiff dismissed the removed action without prejudice and refiled a substantially similar complaint in the Southern District of Illinois. The new complaint is brought by Ms. Blair and a new plaintiff, Shannah Burton, and asserts a nationwide putative class. The Company intends to vigorously defend the lawsuit. On March 9, 2017, a verified stockholder derivative complaint was filed under seal in the U.S. District Court for the District of Arizona, Case No. 2:17-cv-00727, against certain of its current and former officers and directors—Terry McDaniel, Steve Weinberger, Timothy A. Cole, Ashton D. Asensio, Macon Bryce Edmonson, Paul J. Lapadat, Harold S. Edwards, David I. Meyers, and Itzhak Reichman. The lawsuit also names the Company as a nominal defendant. The under seal complaint focuses on the conditions at the Company’s former frozen food facility in Jefferson, Georgia and the Company’s 2015 and 2016 proxy statements. The plaintiff purports to derivatively assert on behalf of the Company claims for alleged violation of Section 14(a) of the Exchange Act, breach of fiduciary duty, waste of corporate assets and unjust enrichment. According to the complaint, the plaintiff seeks an unspecified award of actual or compensatory damages in favor of the Company; an order directing the Company to take certain actions concerning its corporate governance and internal procedures, including putting forward certain proposals concerning its corporate governance policies and amendments to the Company’s Bylaws and Articles of Incorporation for a stockholder vote; an award of extraordinary equitable and/or injunctive relief concerning the defendants’ trading activities or their assets; restitution from defendants to Inventure consisting of a disgorgement of all profits, benefits and other compensation obtained by defendants; costs and disbursements of the action, including attorneys, accountant and experts’ fees, costs and expenses; and other and further relief as the court deems just and proper. The Company intends to vigorously defend the lawsuit. On March 27, 2017, a purported class action captioned Glenn Schoenfeld v. Inventure Foods, Inc., et al.,Case No. 2:17-cv-00910, was filed in the U.S. District Court for the District of Arizona purportedly on behalf of all persons and entities that acquired Inventure securities between March 3, 2016 and March 16, 2017. The Company’s Chief Executive Officer and Chief Financial Officer are also named as defendants. The complaint, which focuses on the conditions of the Company’s former frozen food facility in Jefferson, Georgia, asserts claims for alleged violation of Sections 10(b) and 20(a) of the Exchange Act in connection with the Company’s press releases and SEC filings between March 3, 2016 and March 16, 2017. Mr. Schoenfeld seeks certification as a class action, unspecified compensatory damages, attorneys’ fees, costs and expenses incurred in the action, and other relief deemed appropriate by the court. The Company intends to vigorously defend the lawsuit. Pre-Lawsuit Notifications and Demands On July 11, 2016, the Company received a pre-lawsuit notification and demand from Farbod Nikravesh (represented by Barbara Rohr of Faruqi & Faruqi), who purported to represent a class of purchasers of Boulder Canyon brand products advertised as “All Natural.” The Company removed the challenged language (“All Natural”) from its packaging before receiving the letter. Mr. Farbod expressed intent to file a class action under California’s consumer protection statutes. The parties resolved the matter on a confidential basis with no lawsuit being filed. On July 11, 2016, the Company received a pre-lawsuit notification and demand from Maryanne McGuiness and Christine Sellers (represented by Tim Howard of Howard & Associates), who purported to represent a class of purchasers of Boulder Canyon kettle chips advertised as “All Natural” and “Non-GMO.” The Company removed the “All Natural” language from its packaging before receiving the letter. The claimants expressed intent to file a class action under Florida’s consumer protection statutes. The parties resolved the matter on a confidential basis with no lawsuit being filed. On October 27, 2016, the Company received a pre-lawsuit notification and demand from Halunen Law on behalf of an unidentified client who purported to represent several classes of purchasers of the Company’s TGI Friday’s Onion Rings products. The law firm alleges that the labeling on the product is misleading because by calling the product onion rings, reasonable consumers would believe that the products contain onion or onion flavoring, while they allegedly do not contain onions or onion flavoring. On November 14, 2016, the Company responded to the letter informing the Halunen Law firm that the products do contain onion and providing copies of various packages for the product with ingredient lists showing onion powder as an ingredient. On February 13, 2017, the Company provided the Halunen Law firm with a declaration verifying that the produce contains and has always contained onions and requested that the Halulen Law Firm confirm that the matter is concluded. The Company has not received further communication from the Halunen Law Firm. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions | |
Related Party Transactions | 14. Related Party Transactions We lease 840 acres of farming land in Whatcom County, Washington, of which 696 acres are leased from the Uptrails Group LLC, which is owned by three members of the Rader family. Our processing and storage facilities are located on the land leased from the Uptrails Group LLC. One of the three members, Brad Rader, was employed by us until his resignation in January 2016 and one of the other members, Sue Rader, was a former owner of Rader Farms. This operating lease commenced on the acquisition date and was extended in October 2012 through May 17, 2027. Lease payments are $43,500 per month through May 17, 2017 at which time they increase to $52,200 for the duration of the term of the lease. Effective from January 2013 until December 2015, a member of our Board served as Chief Executive Officer of Bland Farms, Inc., the parent company of Vidalia Brands, Inc., with whom we have a broker agreement and a license to sell our Vidalia® brand snack product. |
Accounts Receivable Allowance
Accounts Receivable Allowance | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Receivable Allowance | |
Accounts Receivable Allowance | 15. Accounts Receivable Allowance Changes to the allowance for doubtful accounts during the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 are summarized below (in thousands): Balance at Charges beginning of (Reductions) to (Write-offs) Balance at end Period Expense Collections of period Fiscal 2016 $ $ Fiscal 2015 $ $ Fiscal 2014 $ $ |
Concentrations of Credit Risk
Concentrations of Credit Risk | 12 Months Ended |
Dec. 31, 2016 | |
Concentrations of Credit Risk | |
Concentrations of Credit Risk | 16. Concentrations of Credit Risk The Company maintains amounts on account with financial institutions, which at times may exceed federally insured limits. The Company has not experienced any losses on such accounts. Our primary concentration of credit risk is related to certain trade accounts receivable. In the normal course of business, we extend unsecured credit to our customers. We investigate a customer’s credit worthiness before extending credit. At December 31, 2016 and December 26, 2015, three customers accounted for 28% of accounts receivable. |
Deferred Compensation Plans
Deferred Compensation Plans | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Compensation Plans | |
Deferred Compensation Plans | 17. Deferred Compensation Plans We have contributory 401(k) plans covering substantially all of our employees. We may contribute amounts not in excess of the lesser of the maximum deductions allowable for income tax purposes or a specific percentage of our operating profits, as defined in the plan. We made contributions totaling $0.6 million during each of the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014. We also sponsor a trusteed, nonqualified savings plan for employees whose contributions to a tax qualified 401(k) plan would be limited by provisions of the Internal Revenue Code. The plan allows participants to defer receipt of a portion of their salary and incentive compensation. The plan was amended in 2009, and we no longer match any employee contributions to this plan. Participants earn a return on their deferred compensation based on investment earnings of participant-selected mutual funds. Deferred compensation, including accumulated earnings on the participant-directed investment selections, is distributable in cash at participant-specified dates or upon retirement, death, disability or termination of employment. At December 31, 2016 and December 26, 2015, the plan’s assets and our liability to participants in the deferred compensation plans was $0.6 million and $0.6 million, respectively, and is recorded in other assets and other liabilities in the Consolidated Balance Sheets. |
Quarterly Financial Data (unaud
Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data (unaudited) | |
Quarterly Financial Data (unaudited) | 18. Quarterly Financial Data (unaudited) The following table sets forth selected unaudited consolidated quarterly financial information for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): Fiscal 2016 First Second Third Fourth Quarter Quarter Quarter Quarter (13 weeks) (13 weeks) (13 weeks) (14 weeks) Net revenues $ $ $ $ Gross profit Operating income (loss) Net loss $ $ $ $ Loss per common share: Basic $ $ $ $ Diluted $ $ $ $ Weighted average number of common shares: Basic Diluted Fiscal 2015 First Second Third Fourth Quarter Quarter Quarter Quarter (13 weeks) (13 weeks) (13 weeks) (13 weeks) Net revenues $ $ $ $ Gross profit Operating loss Net loss $ $ $ $ Loss per common share: Basic $ $ $ $ Diluted $ $ $ $ Weighted average number of common shares: Basic Diluted Fiscal 2014 First Second Third Fourth Quarter Quarter Quarter Quarter (13 weeks) (13 weeks) (13 weeks) (13 weeks) Net revenues $ $ $ $ Gross profit Operating income Net income $ $ $ $ Earnings per common share: Basic $ $ $ $ Diluted $ $ $ $ Weighted average number of common shares: Basic Diluted |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Event. | |
Subsequent Event | 19. Subsequent Events On March 23, 2017, the Company sold certain assets, properties and rights of our wholly owned subsidiary, Fresh Frozen Foods, to The Pictsweet Company (“Pictsweet”) pursuant to an Asset Purchase Agreement, dated as of such date, by and among the Company, Fresh Frozen Foods and Pictsweet (the “Purchase Agreement”). In accordance with the Purchase Agreement, Pictsweet acquired Fresh Frozen Food’s frozen food processing equipment assets, certain real property and associated plants located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property and inventory. As consideration for the acquisition, Pictsweet paid the Company $23.7 million in cash. The net proceeds from this transfer were $19.5 million, after payment of professional fees and other transaction expenses, and were used to pay down amounts outstanding under the ABL Credit Facility and the Term Loan Credit Facility. As of December 31, 2016 total assets and total liabilities related to the Fresh Frozen Foods business was $32.2 million and $2 million respectively. The following unaudited pro forma consolidated results of operations (in thousands, except per share data) assumes the Fresh Frozen Foods sale occurred as of the beginning of the earliest period presented. The unaudited pro forma results include estimates and assumptions regarding decreased interest expense related to debt paid down in connection with the sale and the related tax effects. The pro forma results are not necessarily indicative of the actual results that would have occurred had the acquisition been completed as of the beginning of each of the periods presented, nor are they necessarily indicative of future consolidated results. The pro forma net loss for fiscal 2016 includes $12.6 million related to the valuation allowance recorded against our net deferred tax assets. The deferred tax assets include net operating losses from the Fresh Frozen business that will remain with the Company after the sale. December 31, December 26, December 28, 2016 2015 2014 Net revenues As reported $ $ $ pro forma $ $ $ Net (loss) income As reported $ $ $ pro forma $ $ $ Diluted (loss) earnings per share As reported $ $ $ pro forma $ $ $ |
Organization and Summary of S27
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Summary of Significant Accounting Policies | |
Description of Business | Description of Business Inventure Foods, Inc., a Delaware corporation (referred to herein as the “Company,” “Inventure Foods,” “we,” “our” or “us”), is a leading marketer and manufacturer of healthy/natural and indulgent specialty snack food brands with more than $269 million in annual net revenues for fiscal 2016. We specialize in two primary product categories: healthy/natural food products and indulgent specialty snack products. We sell our products nationally through a number of channels including: grocery stores, natural food stores, mass merchandisers, drug and convenience stores, club stores, value, vending, food service, industrial and international. Our goal is to have a diversified portfolio of brands, products, customers and distribution channels. In our healthy/natural food category, products include Rader Farms® frozen berries, Boulder Canyon® brand kettle cooked potato chips, other snack and food items, Willamette Valley Fruit Company TM brand frozen berries, Fresh Frozen TM brand frozen vegetables, fruits, biscuits and other frozen snacks, Jamba® brand blend-and-serve smoothie kits under license from Jamba Juice Company (“Jamba Juice”), Seattle’s Best Coffee® Frozen Coffee Blends brand blend-and-serve frozen coffee beverages under license from Seattle’s Best Coffee, LLC, Sin In A Tin TM chocolate pate and other frozen desserts and private label frozen fruit and healthy/natural snacks. In our indulgent specialty snack food category, products include T.G.I. Friday’s® brand snacks under license from T.G.I. Friday’s Inc. (“T.G.I. Friday’s”), Nathan’s Famous® brand snack products under license from Nathan’s Famous Corporation, Vidalia® brand snack products under license from Vidalia Brands, Inc., Poore Brothers® brand kettle cooked potato chips, Bob’s Texas Style® brand kettle cooked chips, and Tato Skins® brand potato snacks. We also manufacture private label snacks for certain grocery retail chains and co-pack products for other snack and cereal manufacturers. We operate in two segments: frozen products and snack products. The frozen products segment includes frozen fruits, vegetables, beverages and desserts for sale primarily to grocery stores, club stores and mass merchandisers. All products sold under our frozen products segment are considered part of the healthy/natural food category. The snack products segment includes potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products, popcorn and extruded products for sale primarily to snack food distributors and retailers. The products sold under our snack products segment include products considered part of the indulgent specialty snack food category, as well as products considered part of the healthy/natural food category. We operate manufacturing facilities in nine locations. Our frozen berry products are processed in our Lynden, Washington, Bellingham, Washington, Jefferson, Georgia and two Salem, Oregon facilities. Our frozen berry business grows, processes and markets premium berry blends, raspberries, blueberries and rhubarb and purchases blackberries, cherries, cranberries, strawberries and other fruits from a select network of fruit growers for resale. The fruit is processed, frozen and packaged for sale and distribution to wholesale customers. Our frozen vegetable products are processed in our Jefferson, Georgia, Thomasville, Georgia and Salem, Oregon facilities. Our frozen beverage products are packaged at our Bellingham, Washington and Jefferson, Georgia facilities. We also use third-party processors for certain frozen products and package certain frozen fruits and vegetables for other manufacturers. Our frozen desserts products are produced in our Pensacola, Florida and Salem, Oregon facilities. Our snack products are manufactured at our Phoenix, Arizona and Bluffton, Indiana facilities, as well as select third-party facilities for certain products. On April 23, 2015, we announced a voluntary product recall of certain varieties of the Company’s Fresh Frozen TM brand of frozen vegetables, as well as select varieties of our Jamba® “At Home” line of smoothie kits because our Jefferson, Georgia facility tested positive for Listeria monocytogenes. For a discussion of this product recall, refer to “Note 2 - Product Recall.” |
Strategic and Financial Review Process | Strategic and Financial Review Process In July 2016, we announced that our Board had commenced a strategic and financial review of the Company with the objective to increase shareholder value. We engaged Rothschild Inc. to serve as our financial advisor and assist us in this process. We remain actively involved in this process and are continuing to pursue various strategic alternatives. As disclosed in our prior reports, no assurance can be given as to the outcome or timing of this process or that it will result in the consummation of any specific transaction. |
Going Concern Uncertainty | Going Concern Uncertainty We have incurred losses from operations in each of the quarterly periods since our product recall in April 2015. This fact, together with the projected near term outlook for our business and our inability to complete a strategic transaction by year end or demonstrate that such a transaction is imminent, raise substantial doubt about our ability to continue as a going concern. In reaching such conclusion, management considered the following specific conditions: · Our Term Loan Credit Facility and related governing documents contain requirements that, among other things, require us to comply with leverage ratio and fixed charge coverage ratio covenants by the end of the second quarter of fiscal 2017 and a minimum EBITDA target by the fiscal month ending April 30, 2017. The leverage ratio, measured at the end of our second fiscal quarter in 2017 must be 4.25:1, and the fixed charge coverage ratio, measured at the end of our second fiscal quarter in 2017 for the four quarterly periods then ended, must be 4.25:1. Absent the completion of a strategic transaction yielding sufficient cash proceeds (in addition to the proceeds received from the sale of our Fresh Frozen Foods assets in March 2017) to pay down debt, waivers or amendments by our lenders, or a refinancing of our debt we will not be able to comply with these covenants when required to do so. Failure to meet these covenants would result in a default under such credit facility and, to the extent the applicable lenders so elect, an acceleration of the Company’s existing indebtedness, causing such debt of approximately $122.1 million at December 31, 2016 (including $5.2 million of other equipment financing indebtedness that includes cross-default provisions) to be immediately due and payable. The Company does not have sufficient liquidity to repay all of its outstanding debt in full if such debt were accelerated. · Under our ABL Credit Facility, we are required to comply with a fixed charge coverage ratio if our liquidity as of the date of any determination is less than the greater of (i) 12.5% of the Maximum Revolver Amount ($50,000,000) and (ii) $6,125,000, subject to certain conditions. As of the date of this Form 10-K, we would not be able to comply with this ratio if our liquidity were to fall below the applicable threshold. · The Credit Facilities also require us to furnish our audited financial statements without a “going concern” uncertainty paragraph in the auditor’s opinion. Our consolidated financial statements for the fiscal year ended December 31, 2016 included herein contain a “going concern” explanatory paragraph. Under the Credit Facilities, a going concern opinion with respect to our audited financial statements is an event of default. The Company’s Board and management are in the process of exploring various strategic alternatives. We have obtained a temporary waiver of the going concern qualification until May 15, 2017 from each of the lenders under our Credit Facilities. There can be no assurance that we will be successful in our pursuit of any strategic transaction or that we will be able consummate a strategic transaction in time to address our financial covenant requirements and going concern qualification, or at all, or if we do complete a strategic transition it will be on commercially reasonable terms. As a result, our liquidity and ability to timely pay our obligations when due could be adversely affected. The accompanying consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about our ability to continue as a going concern, other than the reclassification of certain long-term debt and the related debt issuance costs to current liabilities and current assets, respectively. Our lenders may resist renegotiation or lengthening of payment and other terms through legal action or otherwise if we are unsuccessful in our efforts to complete a strategic transaction. If we are not able to timely, successfully or efficiently implement the strategies that we are pursuing, we may need to voluntarily seek protection under Chapter 11 of the U.S. Bankruptcy Code. |
Acquisitions | Acquisitions We account for acquisitions using the acquisition method of accounting. The results of operations of our acquired businesses have been included in our consolidated results from their respective dates of acquisition. On September 29, 2014, we acquired the assets and intellectual property of a small boutique frozen desserts business, Sin In A Tin TM , for approximately $160,000 in cash. An additional amount of up to $0.5 million is payable to the seller in the form of an earn-out based on future net revenues attributable to Sin In A Tin TM products (see Note 3 “Acquisitions”). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Inventure Foods and all of its wholly owned subsidiaries. All significant intercompany amounts and transactions have been eliminated. Our fiscal year ends on the last Saturday occurring in the month of December of each calendar year. Accordingly, the fiscal year end dates result in an additional week of results every five or six years. Fiscal 2016 commenced December 27, 2015 and ended December 31, 2016, resulting in a 53-week fiscal year. Fiscal 2015 commenced December 28, 2014 and ended December 26, 2015, resulting in a 52-week fiscal year. Fiscal 2014 commenced December 29, 2013 and ended December 27, 2014, resulting in a 52-week fiscal year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates, including those related to accruals for customer programs and incentives, product returns, bad debts, income taxes, long-lived assets, inventories, stock-based compensation, interest rate swap valuations, accrued broker commissions and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. We classify our investments based upon an established fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are described as follows: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices in markets that are not considered to be active or financial instruments without quoted market prices, but for which all significant inputs are observable, either directly or indirectly. Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At December 31, 2016 and December 26, 2015, the carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximate fair values since they are short term in nature. The carrying value of the long-term debt approximates fair value based on the borrowing rates currently available to us for long-term borrowings with similar terms. The following table summarizes the valuation of our assets and liabilities measured at fair value on a recurring basis (in thousands) at the respective dates set forth below: December 31, 2016 December 26, 2015 Non-qualified Non-qualified Deferred Earn-out Deferred Earn-out Compensation Contingent Compensation Contingent Plan Consideration Plan Consideration Balance Sheet Classification Investments Obligation Investments Obligation Other assets Level 1 $ — $ $ — Accrued liabilities Level 3 — — Other liabilities Level 3 — — $ $ $ $ Considerable judgment is required in interpreting market data to develop the estimate of fair value of our assets and liabilities. Accordingly, the estimate may not be indicative of the amounts that we could realize in a current market exchange. The use of different market assumptions or valuation methodologies could have a material effect on the estimated fair value amounts. The Company’s non-qualified deferred compensation plan assets consist of money market and mutual funds invested in domestic and international marketable securities that are directly observable in active markets. The fair value measurement of the earn-out contingent consideration obligation relates to the acquisitions of Sin In A Tin TM in September 2014 and Willamette Valley Fruit Company in May 2013, and is included in accrued liabilities and other long-term liabilities in the consolidated balance sheets. The fair value measurement is based upon significant inputs not observable in the market. Changes in the value of the obligation are recorded as income or expense in our consolidated statements of operations. To determine the fair value, we valued the contingent consideration liability based on the expected probability weighted earn-out payments corresponding to the performance thresholds agreed to under the applicable purchase agreements. The expected earn-out payments were then present valued by applying a discount rate that captures a market participants view of the risk associated with the expected earn-out payments. In fiscal 2016 and 2015, we increased our estimate of the total earn-out expected to be achieved, which resulted in an increase in operating expenses of $0.3 million and $0.3 million during the years ended December 31, 2016 and December 26, 2015, respectively. A summary of the activity of the fair value of the measurements using unobservable inputs (Level 3 Liabilities) for the year ended December 31, 2016, is as follows (in thousands): Level 3 Balance at December 26, 2015 $ Earn-out compensation paid to Willamette Valley Fruit Company Earn-out compensation paid to Sin In A Tin Willamette Valley Fruit Company earn-out revaluation Sin In A Tin earn-out revaluation Balance at December 31, 2016 $ |
Derivative Financial Instruments | Derivative Financial Instruments We have utilized interest rate swaps in the management of our variable interest rate exposure and do not enter into derivatives for trading purposes. All derivatives are measured at fair value. Our interest rate swaps are classified as cash flow hedges. In fiscal 2015, the Company settled all existing interest rate swaps as part of our debt refinancing. As of December 31, 2016 and December 26, 2015 the Company did not have any interest rate swaps. |
Treasury Stock | Treasury Stock We record repurchases of our common stock, $.01 par value (“Common Stock”), as treasury stock at cost. We also record the subsequent retirement of these treasury shares at cost. The excess of the cost of the shares retired over their par value is allocated between additional paid-in capital and retained earnings. The amount recorded as a reduction of paid-in capital is based on such excess. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable Accounts receivable consist primarily of receivables from customers and distributors for products purchased. Receivables are generally past due when they are unpaid greater than thirty days. We determine any required reserves by considering a number of factors, including the length of time the accounts receivable have been outstanding and our loss history. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. |
Inventories | Inventories Inventories are stated at the lower of cost (first-in, first-out) or market. We identify slow moving or obsolete inventories and estimate appropriate write-down provisions related thereto. If actual market conditions are less favorable than those projected by management, additional inventory write downs may be required. In the ordinary course of business, we manage price and supply risk of commodities by entering into various short-term purchase arrangements with our vendors. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Cost includes expenditures for major improvements and replacements. Maintenance and repairs are charged to operations when incurred. When assets are retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the appropriate accounts, and the resulting gain or loss is recognized. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets, ranging from two to thirty years. We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use. Capitalized software costs are included in property, plant and equipment and amortized on a straight-line basis when placed into service over three to ten years. We evaluate the recoverability of property and equipment not held for sale by comparing the carrying amount of the asset or group of assets against the estimated undiscounted future cash flows expected to result from the use of the asset or group of assets and their eventual disposition, in accordance with relevant authoritative guidance. If the undiscounted future cash flows are less than the carrying value of the asset or group of assets being evaluated, an impairment loss is recorded. The loss is measured as the difference between the fair value and carrying value of the asset or group of assets being evaluated. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less cost to sell. The estimated fair value would be based on the best information available under the circumstances, including prices for similar assets or the results of valuation techniques, including the present value of expected future cash flows using a discount rate commensurate with the risks involved. |
Intangible Assets | Intangible Assets Goodwill and trademarks are reviewed for impairment annually or more frequently if impairment indicators arise. Goodwill, by reporting unit, is required to be tested for impairment between the annual tests if an event occurs or circumstances change that more-likely-than-not reduces the fair value of a reporting unit below its carrying value. We have concluded from our annual impairment testing performed in December there was impairment of the goodwill created in the acquisition of Fresh Frozen Foods in 2013. Due to declining sales from our Fresh Frozen business since the product recall the fair value of the reporting unit was determined to be below the carrying value. We performed the step 2 impairment test which resulted in no implied fair value of goodwill, and therefore we recognized a recognized an impairment charge of $8.3 million. Intangible assets with indefinite lives are required to be tested for impairment between the annual tests if an event occurs or circumstances change indicating that the asset might be impaired. In fiscal 2016, the Company The fair value of the Fresh Frozen trademark was determined to be 2.3 million based on a discounted cash flow approach, and therefore we recognized and impairment charge of $7.1 million. In 2015, as a result of the product recall (see Note 2 “Product Recall”) we concluded that the intangible asset related to the acquired customer relationships of Fresh Frozen Foods was fully impaired. Accordingly, the Company recorded an intangible asset impairment charge of $9.3 million. Management believes that each of our trademarks has the continued ability to generate cash flows indefinitely. Therefore, each of our trademarks has been determined to have an indefinite life. Management’s determination that our trademarks have indefinite lives includes an evaluation of historical cash flows and projected cash flows for each of these trademarks. In addition, there are no legal, regulatory, contractual, economic or other factors to limit the useful life of these trademarks. Management intends to renew each of these trademarks, which can be accomplished at little cost. Amortizable intangible assets are amortized using the straight-line method over their estimated useful lives, which is the estimated period over which economic benefits are expected to be provided. See Note 4 “Goodwill, Trademarks and Other Intangible Assets” for additional information. |
Self-Insurance Reserves | Self-Insurance Reserves We are partially self-insured for the purposes of providing health care benefits to employees covered by our insurance plan. The plan covers all full-time employees of the Company on the first day of the month after each such employee’s hiring date for salaried employees, and the first day of the month following the ninetieth day of service for hourly employees. The plan covers the employees’ dependents, if elected by each such employee. We have contracted with an insurance carrier for stop loss coverage that commences when $100,000 in claims is paid annually for a covered participant. In addition, we have contracted for aggregate stop loss insurance, which provides coverage after the maximum amount paid by us exceeds approximately $1.5 million. Estimated unpaid claims included in accrued liabilities are $0.4 million and $0.2 million at December 31, 2016 and December 26, 2015, respectively. These amounts represent management’s best estimate of amounts that have not been paid prior to the year-end dates. It is reasonably possible that the actual expense we will ultimately incur could differ from such estimates. |
Revenue Recognition | Revenue Recognition In accordance with GAAP, we recognize operating revenues upon shipment of products to customers, provided title and risk of loss pass to our customers. In those instances where title and risk of loss does not pass until delivery, revenue recognition is deferred until delivery has occurred. Provisions and allowances for sales returns, promotional allowances, coupon redemption and discounts are also recorded as a reduction of revenues in our consolidated financial statements. These allowances are estimated based on a percentage of sales returns using historical and current market information. We record certain reductions to revenue for promotional allowances. There are several types of promotional allowances, such as off-invoice allowances, rebates and shelf space allowances. An off-invoice allowance is a reduction of the sales price that is directly deducted from the invoice amount. We record the amount of the deduction as a reduction to revenue when the transaction occurs. We record certain allowances for coupon redemptions, scan-back promotions and other promotional activities as a reduction to revenue. Anytime we offer consideration (cash or credit) as a trade advertising or promotional allowance to a purchaser of products at any point along the distribution chain, the amount is accrued and recorded as a reduction in revenue. Costs associated with obtaining shelf space (i.e., “slotting fees”) are accounted for as a reduction of revenue in the period in which we incur such costs. The accrued liabilities for these allowances are monitored throughout the time period covered by the coupon or promotion. |
Selling and Administrative Expenses | Selling and Administrative Expenses Selling and administrative expenses include salaries and wages, bonuses and incentives, stock-based compensation expenses, employee related expenses, facility-related expenses, marketing and advertising expenses, depreciation of property and equipment, professional fees, amortization of intangible assets, provisions for losses on accounts receivable and other operating expenses. We recorded $0.5 million, $1.1 million and $1.4 million in fiscal 2016, 2015 and 2014, respectively, for advertising costs, which are included in selling, general and administrative expenses on the Consolidated Statements of Operations contained herein. These costs include various sponsorships, coupon administration and consumer advertising programs that we enter into throughout the year and are expensed as incurred. Our marketing programs also include selective event sponsorship designed to increase brand awareness and to provide opportunities to mass sample branded products. Also included in selling, general and administrative expense are costs and fees relating to the execution of in-store product demonstrations with club stores or grocery retailers, which were $2.0 million, $1.5 million and $1.7 million for the fiscal years 2016, 2015 and 2014, respectively. The cost of product used in the demonstrations, which is insignificant, and the fee we pay to the independent third-party providers who conduct the in-store demonstrations, are recorded as an expense when the event occurs. Product demonstrations are conducted by independent third-party providers designated by the various retailer or club chains. During the in-store demonstrations, the consumers in the stores receive small samples of our products. The consumers are not required to purchase our product in order to receive the sample. |
Shipping and Handling | Shipping and Handling Shipping and handling costs are included in cost of revenues. We do not bill customers for freight. |
Income Taxes | Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A significant piece of objective negative evidence evaluated was the cumulative losses incurred in recent years. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future taxable income. In light of our continued losses, at December 31, 2016, we determined that our deferred tax liabilities were not sufficient to fully realize our deferred tax assets and, as a result, a valuation allowance of $12.6 million was recorded against our net deferred tax asset. In addition, the net deferred tax liability related to goodwill and other indefinite-lived assets was not used as a future source of income in the valuation allowance analysis. Accordingly, this deferred tax liability is recorded on our balance sheet. The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolutions of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more likely than not of being realized upon ultimate settlement. The Company believes that its income tax filing positions and deductions would be sustained upon examination; thus, the Company has not recorded any uncertain tax positions as of December 31, 2016. It is our policy to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We do not have any accrued interest or penalties associated with unrecognized tax benefits for the fiscal years 2016 and 2015. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The material jurisdictions that are subject to examination by tax authorities include the U.S. federal, Arizona, California, Georgia, Indiana and Oregon. Our U.S. federal income tax returns for fiscal 2013 through 2015 remain open to examination by the Internal Revenue Service. Our state tax returns for fiscal 2012 through 2015 remain open to examination by the state jurisdictions. |
Stock-Based Compensation | Stock-Based Compensation Compensation expense for restricted stock and stock option awards is adjusted for estimated attainment thresholds and forfeitures and is recognized on a straight-line basis over the requisite period of the award, which is currently one to five years for restricted stock and one to five years for stock options. We estimate future forfeiture rates based on our historical experience. Compensation costs related to all stock-based payment arrangements, including employee stock options, are recognized in the financial statements based on the fair value method of accounting. Excess tax benefits related to stock-based payment arrangements are classified as cash inflows from financing activities and cash outflows from operating activities. See Note 10 “Stockholders’ Equity” for additional information. |
Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings (loss) per share is calculated by including all dilutive common shares such as stock options and restricted stock. For the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014, there were 0.5 million, 0.6 million and 0.1 million shares of Common Stock, respectively, underlying stock options and restricted stock units that were not included in the computation of diluted earnings (loss) per share because inclusion of such shares would be antidilutive or because the exercise prices were greater than the average market price of Common Stock for the applicable period. Exercises of outstanding stock options or warrants are assumed to occur for purposes of calculating diluted earnings (loss) per share for periods in which their effect would not be anti-dilutive. Earnings (loss) per common share was computed as follows for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands, except per share data): December 31, December 26, December 27, 2016 2015 2014 Basic Earnings (Loss) Per Share: Net Income (loss) $ $ $ Weighted average number of common shares Earnings (Loss) per common share $ $ $ Diluted Earnings (Loss) Per Share: Net Income (loss) $ $ $ Weighted average number of common shares Incremental shares from assumed conversions of stock options and non-vested shares of restricted stock — — Adjusted weighted average number of common shares Earnings (Loss) per common share $ $ $ |
Subsequent Events | Subsequent Events Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. We recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing the financial statements. Our financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are filed. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU”) to the FASB’s Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. In May 2014, the FASB issued new guidance related to revenue recognition. This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective at the beginning of our 2018 fiscal year and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. As of December 31, 2016, we have not evaluated the impact of this new accounting standard on our financial statements. In August 2014, FASB issued an ASU requiring an entity to perform a going concern assessment by evaluating its ability to meet its obligations for a look-forward period of one year from the financial statement issuance date. Disclosures are required if it is probable an entity will be unable to meet its obligations within the look-forward period. Incremental substantial doubt disclosure is required if the probability is not mitigated by management’s plans. The guidance is effective for all entities for the first annual period ending after December 15, 2016 and interim periods thereafter. Early application is permitted. We adopted this ASU for the year ended December 31, 2016 and the Company’s evaluation determined that there is substantial doubt about our ability to continue as a going concern. As such, disclosures have been made in accordance with this ASU. As the guidance only impacts disclosure, the adoption of this guidance did not have any impact on our financial condition, results of operations and cash flows. In April 2015, the FASB issued an ASU to simplify the presentation of debt issuance costs. This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this ASU. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, and is applied retrospectively. We adopted this ASU in the first quarter of fiscal 2016. The adoption of this ASU reduced our other assets and long-term debt, less current portion, by $7.0 million and $5.4 million as of December 31, 2016 and December 26, 2015, respectively. In July 2015, the FASB issued an ASU to simplify the measurement of inventory. This ASU requires inventory to be subsequently measured using the lower of cost and net realizable value, thereby eliminating the market value approach. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” This ASU is effective for reporting periods beginning after December 15, 2016 and is applied prospectively. Early adoption is permitted. We will adopt this ASU in the first quarter of fiscal 2017 and do not anticipate the adoption to have a material impact on our financial statements and disclosure. In November 2015, the FASB issued an ASU that simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities to be offset and presented as a single noncurrent amount on the balance sheet. This ASU is effective for reporting periods beginning after December 15, 2016 and can be applied either retrospectively or prospectively. We adopted this ASU in the third quarter of fiscal 2016 on a retrospective basis. Therefore, our December 26, 2015 deferred tax asset of $3.8 million and deferred tax liability of $2.6 million are now presented as a single noncurrent deferred tax asset of $1.2 million. In February 2016, the FASB issued new guidance related to accounting for leases. The new standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. As of December 31, 2016, we have not evaluated the impact of this new accounting standard on our financial statements. In March 2016, the FASB issued an ASU intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments will be recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits are currently recorded in equity and as financing activity under the current rules. This guidance is effective for reporting periods beginning after December 15, 2016. We will adopt this ASU in the first quarter of fiscal 2017 and do not anticipate the adoption to have a material impact on our financial statements and disclosure. |
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Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Summary of Significant Accounting Policies | |
Summary of the valuation assets and liabilities measured at fair value on a recurring basis | The following table summarizes the valuation of our assets and liabilities measured at fair value on a recurring basis (in thousands) at the respective dates set forth below: December 31, 2016 December 26, 2015 Non-qualified Non-qualified Deferred Earn-out Deferred Earn-out Compensation Contingent Compensation Contingent Plan Consideration Plan Consideration Balance Sheet Classification Investments Obligation Investments Obligation Other assets Level 1 $ — $ $ — Accrued liabilities Level 3 — — Other liabilities Level 3 — — $ $ $ $ |
Summary of the activity of the fair value of the measurements using unobservable inputs (Level 3 Liabilities) | A summary of the activity of the fair value of the measurements using unobservable inputs (Level 3 Liabilities) for the year ended December 31, 2016, is as follows (in thousands): Level 3 Balance at December 26, 2015 $ Earn-out compensation paid to Willamette Valley Fruit Company Earn-out compensation paid to Sin In A Tin Willamette Valley Fruit Company earn-out revaluation Sin In A Tin earn-out revaluation Balance at December 31, 2016 $ |
Schedules of basic and diluted earnings (loss) per common share | Earnings (loss) per common share was computed as follows for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands, except per share data): December 31, December 26, December 27, 2016 2015 2014 Basic Earnings (Loss) Per Share: Net Income (loss) $ $ $ Weighted average number of common shares Earnings (Loss) per common share $ $ $ Diluted Earnings (Loss) Per Share: Net Income (loss) $ $ $ Weighted average number of common shares Incremental shares from assumed conversions of stock options and non-vested shares of restricted stock — — Adjusted weighted average number of common shares Earnings (Loss) per common share $ $ $ |
Product Recall (Tables)
Product Recall (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Product Recall | |
Schedule of impacts in statement of operations attributable to the product recall | The charges recorded in our consolidated statement of operations attributable to the recall for the year ended December 26, 2015 are summarized as follows (in thousands): Year Ended December 26, 2015 Net revenues $ — Cost of revenues (1) Gross profit Operating expenses: Selling, general & administrative expenses (2) Impairment of intangible asset (3) Operating loss Interest expense (4) Loss before income taxes Income tax benefit Net loss $ (1) Additional cost of revenues represents the provision for the write-down of inventory on hand and for additional costs estimated to be incurred related to the recall, including product expected to be returned from customers and consumers, partially offset by recall-related insurance recoveries. Through December 26, 2015, the Company has incurred an estimated $19.1 million of product recall charges. Additionally, during the year ended December 26, 2015, the Company incurred approximately $2.2 million of incremental production costs as a result of utilizing co-packers. These charges were partially offset by recall-related insurance recoveries of $4.2 million. (2) Additional selling, general and administrative costs consists of approximately $2.2 million for the year ended December 26, 2015 of professional fees associated with the recall. (3) Amount reflects a $9.3 million impairment charge recorded to write-off the carrying value of the Fresh Frozen customer relationships intangible asset. (4) Amount reflects interest expense and associated financing fees relating to the bridge loans entered into under the prior credit agreement with U.S. Bank National Association (“U.S. Bank”) dated November 8, 2013 (with all related loan documents, and as amended from time to time, the “Prior Credit Facility”) attributed to the Company’s voluntary product recall. |
Goodwill, Trademarks and Othe30
Goodwill, Trademarks and Other Intangibles (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill, Trademarks, and Other Intangible Assets | |
Schedule of goodwill, trademarks and other intangibles, net | Goodwill, trademarks and other intangibles, net, consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): Estimated December 31, December 26, Useful Life 2016 2015 Goodwill: Inventure Foods $ $ Rader Farms Willamette Valley Fruit Company Fresh Frozen Foods — Sin In A Tin Goodwill $ $ Trademarks: Inventure Foods $ $ Rader Farms Willamette Valley Fruit Company Fresh Frozen Foods Sin In A Tin Other intangibles: Rader Farms - Customer relationship, gross carrying amount 10 years Rader Farms - Customer relationship, accum. amortization Willamette Valley Fruit Company - Customer relationship, gross carrying amount 10 years Willamette Valley Fruit Company - Customer relationship, accum. amortization Trademarks and other intangibles, net $ $ |
Schedule of expected amortization expense on intangible assets | As of December 31, 2016, we expect amortization expense on these intangible assets over the next five years to be as follows (in thousands): Amortization Years Ending, Expense 2017 $ 2018 2019 2020 2021 Thereafter Total $ |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accrued Liabilities. | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): December 31, December 26, 2016 2015 Accrued payroll and payroll taxes $ Accrued royalties and commissions Accrued advertising and promotion Accrued berry purchase payments Accrued other Accrued liabilities $ $ |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventories | |
Schedule of inventories | Inventories consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): December 31, December 26, 2016 2015 Finished goods $ $ Raw materials Inventories $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment | |
Schedule of property and equipment | Property and equipment consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): December 31, December 26, Useful Lives 2016 2015 Buildings and improvements 20 - 30 years $ $ Equipment 7 - 15 years Land — Vehicles 4 - 5 years Furniture and office equipment 2 - 10 years Less accumulated depreciation and amortization $ $ |
Long-Term Debt and Line of Cr34
Long-Term Debt and Line of Credit (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Term Debt and Line of Credit | |
Schedule term debt | Term debt consisted of the following as of December 31, 2016 and December 26, 2015 (in thousands): December 31, December 26, 2016 2015 Term loan credit facility through November 2020 $ Equipment term loan, Goodyear, Arizona, due monthly through April 2021 Equipment term loan, Rader Farms, due monthly through August 2019 Equipment term loan, Willamette Valley Fruit Company, due monthly through August 2019 Capital lease obligations, primarily due September 2017 Long-term debt Less: deferred financing fees, net Less: current portion of long-term debt Long-term debt, less current portion $ — $ |
Schedule of annual maturities of long-term debt | Annual maturities of long-term debt as of December 31, 2016 are as follows (in thousands): Capital Lease Year Obligations Debt 2017 $ $ 2018 2019 2020 2021 — Thereafter — — Subtotal Less: Amount representing interest — Total $ $ |
Commitments and Contingencies_
Commitments and Contingencies: (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Schedule of minimum rental commitments under non-cancelable leases | As of December 31, 2016, minimum rental commitments under non-cancellable operating leases were (in thousands): Operating Lease Year Obligations 2017 $ 2018 2019 2020 2021 Thereafter Total |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity | |
Schedule of restricted share awards activity | Weighted Average Grant Number Date Fair Value Nonvested balance at December 26, 2015 $ Granted — $ — Vested and released $ Forfeited $ Nonvested balance at December 31, 2016 $ |
Summary of restricted stock units activity | Weighted Average Grant Number Date Fair Value Nonvested balance at December 26, 2015 $ Granted $ Vested and released $ Forfeited $ Nonvested balance at December 31, 2016 $ |
Summary of stock option activity | Aggregate Weighted Average Weighted Intrinsic Value Remaining Options Average (in-the-money Contractual Life Outstanding Exercise Price options) (in years) Outstanding at December 26, 2015 $ Granted — $ — Exercised $ Forfeited or expired $ Outstanding at December 31, 2016 $ $ |
Summary of stock options outstanding and exercisable | Weighted Average Remaining Weighted Weighted Contractual Average Average Range of Options Life Exercise Options Exercise Exercise Prices Outstanding (in years) Price Exercisable Price $ - $ $ $ $ - $ $ $ $ - $ $ $ $ - $ $ $ $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of the provision for income taxes | The provision for income taxes consisted of the following for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): 2016 2015 2014 Current: Federal $ — $ $ State Deferred: Federal State Income tax expense (benefit) $ $ $ |
Schedule of income tax effects of temporary differences between financial and income tax reporting that give rise to the deferred income tax asset and liability | The income tax effects of temporary differences between financial and income tax reporting that give rise to the deferred income tax asset and liability are as follows as of December 31, 2016 and December 26, 2015 (in thousands): 2016 2015 Deferred Tax Asset Accounts receivable $ $ Charitable contributions carryover Federal credit carryover Inventories Accrued liabilities — State credit carryover Stock-based compensation Federal net operating loss carryforward Deferred rent State net operating loss carryforward Total Less: Valuation allowance — Deferred Tax Liability Accrued liabilities — Contingent consideration Depreciation and amortization Net deferred tax (liability) asset $ $ |
Schedule of reconciliation between the amount determined by applying the statutory federal income tax rate to the income tax provision | The following table provides a reconciliation between the amount determined by applying the statutory federal income tax rate to our income tax provision for fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): 2016 2015 2014 Expected expense at statutory rate of 34.0% $ $ $ Change resulting from: State tax provision, net Federal and state credits Domestic production benefits — — Change in valuation allowance — — Nondeductible expenses and other Income tax expense (benefit) $ $ $ Effective tax rate % % % |
Business Segments and Signifi38
Business Segments and Significant Customers (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Segments and Significant Customers | |
Schedule of information by reportable segments | The following tables present information about our reportable segments for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): Frozen Snack Products Products Consolidated 2016 Net revenues from external customers $ $ $ Depreciation and amortization included in segment gross profit Segment gross profit Goodwill 2015 Net revenues from external customers $ $ $ Depreciation and amortization included in segment gross profit Segment gross profit Goodwill 2014 Net revenues from external customers $ $ $ Depreciation and amortization included in segment gross profit Segment gross profit Goodwill |
Schedule of reconciliation of reportable segment gross profit to consolidated income before income tax provision | The following table reconciles our reportable segment gross profit to our consolidated income before income tax provision for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): December 31, December 26, December 27, 2016 2015 2014 Segment gross profit $ $ $ Unallocated amounts: Operating expenses Impairment of goodwill and intangible assets — Interest expense Income (loss) before income tax provision $ $ $ |
Accounts Receivable Allowance (
Accounts Receivable Allowance (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Receivable Allowance | |
Summary of changes to the allowance for doubtful accounts | Changes to the allowance for doubtful accounts during the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 are summarized below (in thousands): Balance at Charges beginning of (Reductions) to (Write-offs) Balance at end Period Expense Collections of period Fiscal 2016 $ $ Fiscal 2015 $ $ Fiscal 2014 $ $ |
Quarterly Financial Data (una40
Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data (unaudited) | |
Schedule of quarterly financial data | The following table sets forth selected unaudited consolidated quarterly financial information for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands): Fiscal 2016 First Second Third Fourth Quarter Quarter Quarter Quarter (13 weeks) (13 weeks) (13 weeks) (14 weeks) Net revenues $ $ $ $ Gross profit Operating income (loss) Net loss $ $ $ $ Loss per common share: Basic $ $ $ $ Diluted $ $ $ $ Weighted average number of common shares: Basic Diluted Fiscal 2015 First Second Third Fourth Quarter Quarter Quarter Quarter (13 weeks) (13 weeks) (13 weeks) (13 weeks) Net revenues $ $ $ $ Gross profit Operating loss Net loss $ $ $ $ Loss per common share: Basic $ $ $ $ Diluted $ $ $ $ Weighted average number of common shares: Basic Diluted Fiscal 2014 First Second Third Fourth Quarter Quarter Quarter Quarter (13 weeks) (13 weeks) (13 weeks) (13 weeks) Net revenues $ $ $ $ Gross profit Operating income Net income $ $ $ $ Earnings per common share: Basic $ $ $ $ Diluted $ $ $ $ Weighted average number of common shares: Basic Diluted |
Subsequent Events (Tables)
Subsequent Events (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Event. | |
Schedule of unaudited pro forma consolidated results of operations | The following unaudited pro forma consolidated results of operations (in thousands, except per share data) assumes the Fresh Frozen Foods sale occurred as of the beginning of the earliest period presented. The unaudited pro forma results include estimates and assumptions regarding decreased interest expense related to debt paid down in connection with the sale and the related tax effects. The pro forma results are not necessarily indicative of the actual results that would have occurred had the acquisition been completed as of the beginning of each of the periods presented, nor are they necessarily indicative of future consolidated results. The pro forma net loss for fiscal 2016 includes $12.6 million related to the valuation allowance recorded against our net deferred tax assets. The deferred tax assets include net operating losses from the Fresh Frozen business that will remain with the Company after the sale. December 31, December 26, December 28, 2016 2015 2014 Net revenues As reported $ $ $ pro forma $ $ $ Net (loss) income As reported $ $ $ pro forma $ $ $ Diluted (loss) earnings per share As reported $ $ $ pro forma $ $ $ |
Operations and Summary of Signi
Operations and Summary of Significant Accounting Policies (Details) | Sep. 29, 2014USD ($) | Dec. 31, 2016USD ($)item | Dec. 26, 2015 | Dec. 27, 2014 |
Organization Consolidation and Summary of Significant Accounting Policies | ||||
Minimum annual net revenues | $ | $ 269,000,000 | |||
Number of product categories | item | 2 | |||
Number of reporting units | item | 2 | |||
Number of locations in which manufacturing facilities are operated | item | 9 | |||
Length of fiscal year | 371 days | 364 days | 364 days | |
Maximum | ||||
Organization Consolidation and Summary of Significant Accounting Policies | ||||
Number of years after which fiscal year end dates will result in an additional week | 6 years | |||
Minimum | ||||
Organization Consolidation and Summary of Significant Accounting Policies | ||||
Number of years after which fiscal year end dates will result in an additional week | 5 years | |||
Sin In A Tin | ||||
Organization Consolidation and Summary of Significant Accounting Policies | ||||
Cash purchase price | $ | $ 160,000 | |||
Maximum additional purchase price consideration for meeting certain performance thresholds | $ | $ 500,000 | $ 500,000 |
Organization and Summary of S43
Organization and Summary of Significant Accounting Policies - Going Concerns Uncertainty (Details) - Going Concerns | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Leverage ratio | 4.25 |
Fixed charge coverage ratio | 4.25 |
Default amount | $ 122,100,000 |
Equipment Financing Debt | |
Default amount | $ 5,200,000 |
ABL Credit Facility | |
Percentage of maximum revolver amount | 12.50% |
ABL Credit Facility | Minimum | |
Maximum Revolver Amount | $ 50,000,000 |
ABL Credit Facility | Maximum | |
Threshold Limit For Liquidity Amount | $ 6,125,000 |
Organization and Summary of S44
Organization and Summary of Significant Accounting Policies - Fair Value and Income Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | Sep. 29, 2014 | |
Assets: | ||||
Non-qualified Deferred Compensation Plan Investments | $ 650 | $ 564 | ||
Liabilities: | ||||
Earn-out contingent consideration obligation | (1,791) | (1,875) | ||
Increase in operating expenses due to change in amount of contingent consideration liability | 300 | 300 | ||
Income Taxes | ||||
Income tax benefit | (2,694) | 12,046 | $ (5,768) | |
Deferred tax asset valuation allowance | 12,600 | |||
Fair Value, Inputs, Level 1 | Other Assets | ||||
Assets: | ||||
Non-qualified Deferred Compensation Plan Investments | 650 | 564 | ||
Level 3 | Accrued Liabilities | ||||
Liabilities: | ||||
Earn-out contingent consideration obligation | (270) | (376) | ||
Level 3 | Other Liabilities | ||||
Liabilities: | ||||
Earn-out contingent consideration obligation | (1,521) | $ (1,499) | ||
Fresh Frozen Foods | Level 3 | ||||
Liabilities: | ||||
Changes in fair value of earn-out contingent consideration obligation | (11) | |||
Willamette Valley Fruit Company | Level 3 | ||||
Liabilities: | ||||
Changes in fair value of earn-out contingent consideration obligation | 247 | |||
Sin In A Tin | ||||
Liabilities: | ||||
Maximum additional purchase price consideration for meeting certain performance thresholds | $ 500 | $ 500 |
Organization and Summary of S45
Organization and Summary of Significant Accounting Policies - Fair Value Unobservable Inputs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 26, 2015 | |
Fair value of the measurements using unobservable inputs (Level 3 Liabilities) | ||
Contingent consideration | $ 1,791 | $ 1,875 |
Level 3 | ||
Fair value of the measurements using unobservable inputs (Level 3 Liabilities) | ||
Balance at beginning of period | 1,875 | |
Balance at end of period | 1,791 | |
Willamette Valley Fruit Company | Level 3 | ||
Fair value of the measurements using unobservable inputs (Level 3 Liabilities) | ||
Earn-out compensation paid | (340) | |
Changes in fair value of earn-out contingent consideration obligation | 247 | |
Sin In A Tin | Level 3 | ||
Fair value of the measurements using unobservable inputs (Level 3 Liabilities) | ||
Earn-out compensation purchased | 20 | |
Fresh Frozen Foods | Level 3 | ||
Fair value of the measurements using unobservable inputs (Level 3 Liabilities) | ||
Changes in fair value of earn-out contingent consideration obligation | $ (11) |
Operations and Summary of Sig46
Operations and Summary of Significant Accounting Policies - Intangible Assets (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($)item | Dec. 26, 2015USD ($) | Dec. 27, 2014USD ($) | Sep. 29, 2014USD ($) | |
Accounts Receivable | ||||
Period after which receivables will be past due, minimum | 30 days | |||
Intangible Assets | ||||
Number of reporting units | item | 2 | |||
Goodwill | $ 14,985 | $ 23,286 | $ 23,286 | |
Impairment of goodwill and intangible assets | $ 15,446 | 9,277 | ||
Minimum | ||||
Accounts Receivable | ||||
Estimated useful lives of assets | 2 years | |||
Maximum | ||||
Accounts Receivable | ||||
Estimated useful lives of assets | 30 years | |||
Inventure Foods | ||||
Intangible Assets | ||||
Trademarks | $ 896 | 896 | ||
Goodwill | $ 5,986 | $ 5,986 | ||
Software Development [Member] | Minimum | ||||
Accounts Receivable | ||||
Estimated useful lives of assets | 3 years | |||
Software Development [Member] | Maximum | ||||
Accounts Receivable | ||||
Estimated useful lives of assets | 10 years | |||
Fresh Frozen Foods | ||||
Intangible Assets | ||||
Goodwill | $ 0 | |||
Impairment of goodwill | 8,300 | |||
Sin In A Tin | ||||
Intangible Assets | ||||
Goodwill | $ 200 | |||
Trade Names | Fresh Frozen Foods | ||||
Intangible Assets | ||||
Trademarks | $ 2,300 |
Organization and Summary of S47
Organization and Summary of Significant Accounting Policies - Stock-based Compensations and Accounting Standards Update (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
New Accounting Pronouncement or Change in Accounting Principle, Retrospective Adjustments | |||
Other assets | $ 1,254,000 | $ 962,000 | |
Long term debt | 83,300,000 | ||
Deferred Tax | |||
Deferred tax assets | 1,228,000 | ||
Deferred tax liabilities | 1,376,000 | ||
Deferred income tax asset | 1,228,000 | ||
Self-Insurance Reserves | |||
Annual claims threshold per covered participant for stop loss coverage | 100,000 | ||
Aggregate claims threshold for stop loss coverage | 1,500,000 | ||
Estimated unpaid claims included in accrued liabilities | 400,000 | 200,000 | |
Selling and Administrative Expenses | |||
Advertising costs included in selling, general and administration expenses | 500,000 | 1,100,000 | $ 1,400,000 |
Costs and fees relating to execution of in-store product demonstrations | 2,000,000 | 1,500,000 | $ 1,700,000 |
Accounting Standards Update ("ASU") 2015-03 - Simplifying the Presentation of Debt Issuance Costs | Retrospective early adoption | |||
New Accounting Pronouncement or Change in Accounting Principle, Retrospective Adjustments | |||
Other assets | (7,000,000) | (5,400,000) | |
Long term debt | $ (7,000,000) | (5,400,000) | |
Adjustments for New Accounting Pronouncement | |||
Deferred Tax | |||
Deferred tax assets | 3,800,000 | ||
Deferred tax liabilities | $ 2,600,000 | ||
Stock Options | Minimum | |||
New Accounting Pronouncement or Change in Accounting Principle, Retrospective Adjustments | |||
Requisite period of the award over which stock based compensation award expenses are recognized | 1 year | ||
Stock Options | Maximum | |||
New Accounting Pronouncement or Change in Accounting Principle, Retrospective Adjustments | |||
Requisite period of the award over which stock based compensation award expenses are recognized | 5 years | ||
Restricted Stock | Minimum | |||
New Accounting Pronouncement or Change in Accounting Principle, Retrospective Adjustments | |||
Requisite period of the award over which stock based compensation award expenses are recognized | 1 year | ||
Restricted Stock | Maximum | |||
New Accounting Pronouncement or Change in Accounting Principle, Retrospective Adjustments | |||
Requisite period of the award over which stock based compensation award expenses are recognized | 5 years |
Organization and Summary of S48
Organization and Summary of Significant Accounting Policies - Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Income (loss) per common share: | |||||||||||||||
Anti-dilutive options excluded from computation of diluted earnings per share (in shares) | 500 | 600 | 100 | ||||||||||||
Basic Earnings (Loss) Per Share: | |||||||||||||||
Net loss | $ (26,389,000) | $ (2,564,000) | $ (278,000) | $ (1,018,000) | $ (2,460,000) | $ (1,737,000) | $ (1,951,000) | $ (14,635,000) | $ 3,408,000 | $ 3,084,000 | $ 2,472,000 | $ 1,597,000 | $ (30,249,000) | $ (20,783,000) | $ 10,561,000 |
Weighted average number of common shares | 19,672 | 19,671 | 19,628 | 19,603 | 19,610 | 19,594 | 19,566 | 19,581 | 19,564 | 19,530 | 19,468 | 19,437 | 19,644 | 19,588 | 19,500 |
Earning per common share (in dollars per share) | $ (1.34) | $ (0.13) | $ (0.01) | $ (0.05) | $ (0.13) | $ (0.09) | $ (0.10) | $ (0.75) | $ 0.17 | $ 0.16 | $ 0.13 | $ 0.08 | $ (1.54) | $ (1.06) | $ 0.54 |
Diluted Earnings (Loss) Per Share: | |||||||||||||||
Net loss | $ (30,249,000) | $ (20,783,000) | $ 10,561,000 | ||||||||||||
Weighted average number of common shares | 19,672 | 19,671 | 19,628 | 19,603 | 19,610 | 19,594 | 19,566 | 19,581 | 19,564 | 19,530 | 19,468 | 19,437 | 19,644 | 19,588 | 19,500 |
Incremental shares from assumed conversions of stock options and non-vested shares of restricted stock | 490 | ||||||||||||||
Adjusted weighted average number of common shares | 19,672 | 19,671 | 19,628 | 19,603 | 19,610 | 19,594 | 19,566 | 19,581 | 20,062 | 20,014 | 19,960 | 19,924 | 19,644 | 19,588 | 19,990 |
Earnings per common share (in dollars per share) | $ (1.34) | $ (0.13) | $ (0.01) | $ (0.05) | $ (0.13) | $ (0.09) | $ (0.10) | $ (0.75) | $ 0.17 | $ 0.15 | $ 0.12 | $ 0.08 | $ (1.54) | $ (1.06) | $ 0.53 |
Product Recall (Details)
Product Recall (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Product recall costs recorded | $ 0 | ||||||||||||||
Net revenues | $ 63,365,000 | $ 66,529,000 | $ 69,263,000 | $ 69,855,000 | $ 68,664,000 | $ 69,865,000 | $ 66,422,000 | $ 77,607,000 | $ 73,746,000 | $ 72,556,000 | $ 71,852,000 | $ 67,509,000 | 269,012,000 | $ 282,558,000 | $ 285,663,000 |
Cost of revenues | 236,253,000 | 262,221,000 | 232,542,000 | ||||||||||||
Gross profit | 5,751,000 | 7,924,000 | 10,267,000 | 8,817,000 | 7,312,000 | 8,700,000 | 8,025,000 | (3,700,000) | 15,176,000 | 12,926,000 | 13,456,000 | 11,563,000 | 32,759,000 | 20,337,000 | 53,121,000 |
Operating expenses | |||||||||||||||
Selling, general and administrative expenses | 34,994,000 | 37,559,000 | 34,188,000 | ||||||||||||
Operating income (loss) | (18,897,000) | (1,266,000) | 1,774,000 | 708,000 | (1,645,000) | (533,000) | (2,192,000) | (22,129,000) | 5,980,000 | 5,356,000 | 4,432,000 | 3,165,000 | (17,681,000) | (26,499,000) | 18,933,000 |
Interest expense | 9,874,000 | 6,330,000 | 2,604,000 | ||||||||||||
Loss before income taxes | (27,555,000) | (32,829,000) | 16,329,000 | ||||||||||||
Income tax benefit | (2,694,000) | 12,046,000 | (5,768,000) | ||||||||||||
Net loss | $ (26,389,000) | $ (2,564,000) | $ (278,000) | $ (1,018,000) | $ (2,460,000) | $ (1,737,000) | $ (1,951,000) | $ (14,635,000) | $ 3,408,000 | $ 3,084,000 | $ 2,472,000 | $ 1,597,000 | $ (30,249,000) | (20,783,000) | $ 10,561,000 |
Voluntary Product Recall | |||||||||||||||
Cost of revenues | 17,142,000 | ||||||||||||||
Gross profit | (17,142,000) | ||||||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative expenses | 2,174,000 | ||||||||||||||
Impairment of intangible asset | 9,277,000 | ||||||||||||||
Operating income (loss) | (28,593,000) | ||||||||||||||
Interest expense | 1,476,000 | ||||||||||||||
Loss before income taxes | (30,069,000) | ||||||||||||||
Income tax benefit | 11,034,000 | ||||||||||||||
Net loss | (19,035,000) | ||||||||||||||
Total charges for the product recall | 19,100,000 | ||||||||||||||
Incremental production costs due to utilizing co-packers | 2,200,000 | ||||||||||||||
Recall-related insurance recoveries | 4,200,000 | ||||||||||||||
Customer Relationships | Voluntary Product Recall | |||||||||||||||
Operating expenses | |||||||||||||||
Impairment of intangible asset | 9,300,000 | ||||||||||||||
Selling, General and Administrative Expenses | Voluntary Product Recall | |||||||||||||||
Operating expenses | |||||||||||||||
Professional fees | $ 2,200,000 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) | Sep. 29, 2014 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 |
Fair value of net assets acquired: | ||||
Goodwill | $ 14,985,000 | $ 23,286,000 | $ 23,286,000 | |
Inventure Foods | ||||
Fair value of net assets acquired: | ||||
Goodwill | 5,986,000 | $ 5,986,000 | ||
Fresh Frozen Foods | ||||
Fair value of net assets acquired: | ||||
Goodwill | 0 | |||
Sin In A Tin | ||||
Acquisition | ||||
Maximum additional purchase price consideration for meeting certain performance thresholds | $ 500,000 | $ 500,000 | ||
Purchase price paid as: | ||||
Cash purchase price | 160,000 | |||
Contingent consideration | 200,000 | |||
Fair value of net assets acquired: | ||||
Identifiable tangible assets | 100,000 | |||
Identifiable intangible assets | 100,000 | |||
Goodwill | $ 200,000 |
Goodwill, Trademarks and Othe51
Goodwill, Trademarks and Other Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Goodwill, trademarks and other intangible assets | |||
Goodwill | $ 14,985 | $ 23,286 | $ 23,286 |
Impairment of goodwill and intangible assets | 15,446 | 9,277 | |
Other intangibles: | |||
Total trademarks and other intangibles, net | 7,243 | 14,718 | |
Amortization expense related to intangibles | 300 | 500 | $ 1,200 |
Estimated amortization expense | |||
2,017 | 324 | ||
2,018 | 320 | ||
2,019 | 320 | ||
2,020 | 320 | ||
2,021 | 320 | ||
Thereafter | 480 | ||
Total | 2,084 | ||
Other asset impairment charges | 0 | 0 | |
Inventure Foods | |||
Goodwill, trademarks and other intangible assets | |||
Goodwill | 5,986 | 5,986 | |
Trademarks | 896 | 896 | |
Rader Farms | |||
Goodwill, trademarks and other intangible assets | |||
Goodwill | 5,630 | 5,630 | |
Trademarks | $ 1,070 | 1,070 | |
Rader Farms | Customer Relationships | |||
Other intangibles: | |||
Estimated useful life | 10 years | ||
Intangible assets, gross | $ 100 | 100 | |
Accumulated amortization | (96) | (86) | |
Willamette Valley Fruit Company | |||
Goodwill, trademarks and other intangible assets | |||
Goodwill | 3,147 | 3,147 | |
Trademarks | $ 740 | 740 | |
Willamette Valley Fruit Company | Customer Relationships | |||
Other intangibles: | |||
Estimated useful life | 10 years | ||
Intangible assets, gross | $ 3,200 | 3,200 | |
Accumulated amortization | (1,120) | (800) | |
Fresh Frozen Foods | |||
Goodwill, trademarks and other intangible assets | |||
Goodwill | 8,301 | ||
Trademarks | 9,475 | ||
Impairment of goodwill | 8,300 | ||
Fresh Frozen Foods | Customer Relationships | |||
Goodwill, trademarks and other intangible assets | |||
Impairment of intangible asset | 9,300 | ||
Fresh Frozen Foods | Trademarks and Trade Names | |||
Goodwill, trademarks and other intangible assets | |||
Impairment of intangible asset | $ 7,100 | ||
Other intangibles: | |||
Estimated useful life | 10 years | ||
Estimated amortization expense | |||
Total | $ 2,330 | ||
Sin In A Tin | |||
Goodwill, trademarks and other intangible assets | |||
Goodwill | 222 | 222 | |
Trademarks | $ 123 | $ 123 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 26, 2015 |
Accrued Liabilities. | ||
Accrued payroll and payroll taxes | $ 1,756 | $ 1,114 |
Accrued royalties and commissions | 1,621 | 1,081 |
Accrued advertising and promotion | 1,465 | 820 |
Accrued berry purchase payments | 1,908 | 3,096 |
Accrued other | 2,783 | 2,518 |
Total accrued liabilities | $ 9,533 | $ 8,629 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 26, 2015 |
Inventories | ||
Finished goods | $ 27,661 | $ 32,731 |
Raw materials | 44,527 | 49,076 |
Total inventories | $ 72,188 | $ 81,807 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Property and equipment | |||
Property and equipment, gross | $ 118,600 | $ 106,291 | |
Less accumulated depreciation and amortization | (53,116) | (46,328) | |
Property and equipment, net | 65,484 | 59,963 | |
Total cost of equipment and furniture and office equipment held under capital lease obligations | 100 | 100 | |
Depreciation expense, including amortization of property under capital leases | $ 6,994 | 6,958 | $ 6,683 |
Minimum | |||
Property and equipment | |||
Useful Lives | 2 years | ||
Maximum | |||
Property and equipment | |||
Useful Lives | 30 years | ||
Building and Building Improvements [Member] | |||
Property and equipment | |||
Property and equipment, gross | $ 22,453 | 22,922 | |
Building and Building Improvements [Member] | Minimum | |||
Property and equipment | |||
Useful Lives | 20 years | ||
Building and Building Improvements [Member] | Maximum | |||
Property and equipment | |||
Useful Lives | 30 years | ||
Equipment [Member] | |||
Property and equipment | |||
Property and equipment, gross | $ 86,782 | 74,572 | |
Equipment [Member] | Minimum | |||
Property and equipment | |||
Useful Lives | 7 years | ||
Equipment [Member] | Maximum | |||
Property and equipment | |||
Useful Lives | 15 years | ||
Land [Member] | |||
Property and equipment | |||
Property and equipment, gross | $ 1,001 | 1,001 | |
Vehicles [Member] | |||
Property and equipment | |||
Property and equipment, gross | $ 238 | 387 | |
Vehicles [Member] | Minimum | |||
Property and equipment | |||
Useful Lives | 4 years | ||
Vehicles [Member] | Maximum | |||
Property and equipment | |||
Useful Lives | 5 years | ||
Furniture and Office Equipment [Member] | |||
Property and equipment | |||
Property and equipment, gross | $ 8,126 | $ 7,409 | |
Furniture and Office Equipment [Member] | Minimum | |||
Property and equipment | |||
Useful Lives | 2 years | ||
Furniture and Office Equipment [Member] | Maximum | |||
Property and equipment | |||
Useful Lives | 10 years |
Long-Term Debt and Line of Cr55
Long-Term Debt and Line of Credit (Details) | Sep. 27, 2016 | Nov. 18, 2015USD ($) | Aug. 31, 2015USD ($)item | Aug. 30, 2014USD ($)item | Dec. 31, 2016USD ($)item | Dec. 26, 2015USD ($) | Dec. 27, 2014USD ($) |
Long-term debt and line of credit | |||||||
Number of equipment term loans entered in August 2014 | item | 2 | ||||||
Long-term debt | $ 89,427,000 | $ 90,539,000 | |||||
Less deferred financing fees, net | (7,047,000) | (5,413,000) | |||||
Less current portion of long-term debt | (82,380,000) | (1,826,000) | |||||
Long-term debt, less current portion | 83,300,000 | ||||||
Outstanding credit facility | 25,951,000 | ||||||
Annual maturities of capital lease obligations | |||||||
2,017 | 21,000 | ||||||
2,018 | 16,000 | ||||||
2,019 | 7,000 | ||||||
2,020 | 5,000 | ||||||
Subtotal | 49,000 | ||||||
Less: Amount representing interest | (5,000) | ||||||
Total | 44,000 | ||||||
Annual maturities of debt | |||||||
2,016 | 2,364,000 | ||||||
2,017 | 2,405,000 | ||||||
2,018 | 2,126,000 | ||||||
2,019 | 82,263,000 | ||||||
2,020 | 225,000 | ||||||
Total | 89,383,000 | ||||||
Net interest expense | |||||||
Interest expense, net | (9,874,000) | (6,330,000) | $ (2,604,000) | ||||
Senior Secured Term Loan Due Quarterly Through November 2020 | |||||||
Long-term debt and line of credit | |||||||
Long-term debt | $ 85,000,000 | $ 84,150,000 | 85,000,000 | ||||
Debt instrument term | 5 years | ||||||
Amount increase of maximum borrowing capacity | $ 25,000,000 | ||||||
Periodic frequency of payment | quarterly | ||||||
Periodic principal payment | $ 212,500 | ||||||
Percentage of Penalty on Voluntary Prepayments | 2.00% | ||||||
Annual maturities of capital lease obligations | |||||||
Interest rate (as a percent) | 9.00% | ||||||
Senior Secured Term Loan Due Quarterly Through November 2020 | Base Rate | |||||||
Long-term debt and line of credit | |||||||
Variable rate basis | The base rate is a fluctuating interest rate equal to the highest of (i) the federal funds effective rate from time to time plus 0.50%, (ii) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%, and (iii) the prime lending rate announced by Wells Fargo | ||||||
Senior Secured Term Loan Due Quarterly Through November 2020 | London Interbank Offered Rate (LIBOR) [Member] | |||||||
Long-term debt and line of credit | |||||||
Variable rate basis | LIBOR | ||||||
Equipment Term Loan For Good year Due Monthly Through April 2021 [Member] | |||||||
Long-term debt and line of credit | |||||||
Long-term debt | $ 2,759,000 | 2,055,000 | |||||
Equipment Term Loan For Rader Farms Facilities Due Monthly Through August 2019 | |||||||
Long-term debt and line of credit | |||||||
Long-term debt | $ 1,420,000 | 1,972,000 | |||||
Maximum borrowing capacity | $ 2,600,000 | ||||||
Annual maturities of capital lease obligations | |||||||
Stated interest rate (as a percent) | 2.35% | ||||||
Number of monthly payments | item | 60 | ||||||
Equipment Term Loan For Willamette Valley Fruit Company Due Monthly Through August 2019 | |||||||
Long-term debt and line of credit | |||||||
Long-term debt | $ 1,054,000 | 1,464,000 | |||||
Maximum borrowing capacity | $ 1,900,000 | ||||||
Annual maturities of capital lease obligations | |||||||
Stated interest rate (as a percent) | 2.35% | ||||||
Number of monthly payments | item | 60 | ||||||
Equipment Term Loan B Due Monthly Through September 2020 | |||||||
Long-term debt and line of credit | |||||||
Maximum loan used to finance new kettles and related equipment in Goodyear, Arizona facility | $ 3,100,000 | ||||||
Annual maturities of capital lease obligations | |||||||
Stated interest rate (as a percent) | 3.07% | ||||||
Number of monthly payments | item | 60 | ||||||
Capital lease obligations, primarily due September 2017 | |||||||
Long-term debt and line of credit | |||||||
Long-term debt | $ 44,000 | $ 48,000 | |||||
Wells Fargo Bank National Association And Other Lenders Party | Senior Secured Revolving Credit Facility | |||||||
Long-term debt and line of credit | |||||||
Long-term debt | $ 21,900,000 | 32,800,000 | |||||
Debt instrument term | 5 years | ||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||
Amount increase of maximum borrowing capacity | 10,000,000 | ||||||
Capacity borrowing availability | $ 10,300,000 | ||||||
Wells Fargo Bank National Association And Other Lenders Party | Senior Secured Revolving Credit Facility | Base Rate | |||||||
Long-term debt and line of credit | |||||||
Variable rate basis | base rate is a fluctuating interest rate equal to the highest of (i) the federal funds effective rate from time to time plus 0.50%, (ii) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%, and (iii) the prime lending rate announced from time to time by Wells Fargo | ||||||
Wells Fargo Bank National Association And Other Lenders Party | Senior Secured Revolving Credit Facility | London Interbank Offered Rate (LIBOR) [Member] | |||||||
Long-term debt and line of credit | |||||||
Variable rate basis | LIBOR | ||||||
Wells Fargo Bank National Association And Other Lenders Party | Senior Secured Revolving Credit Facility | Minimum | |||||||
Long-term debt and line of credit | |||||||
Commitment fee percentage | 0.25% | ||||||
Wells Fargo Bank National Association And Other Lenders Party | Senior Secured Revolving Credit Facility | Maximum | |||||||
Long-term debt and line of credit | |||||||
Commitment fee percentage | 0.375% | ||||||
BSP Agency, LLC, a Delaware limited liability company | Senior Secured Term Loan Due Quarterly Through November 2020 | Base Rate | |||||||
Long-term debt and line of credit | |||||||
Variable rate basis | Base Rate | ||||||
Basis points added to base rate (as a percent) | 100.00% | ||||||
BSP Agency, LLC, a Delaware limited liability company | Senior Secured Term Loan Due Quarterly Through November 2020 | London Interbank Offered Rate (LIBOR) [Member] | |||||||
Long-term debt and line of credit | |||||||
Variable rate basis | Libor | ||||||
Syndicate Of Lenders Led By U.S. Bank Member | Senior Secured Term Loan due Quarterly through November 2018 | |||||||
Long-term debt and line of credit | |||||||
Repayment of senior debts | $ 101,100,000 | ||||||
LIBOR Below Zero | Senior Secured Term Loan Due Quarterly Through November 2020 | London Interbank Offered Rate (LIBOR) [Member] | |||||||
Long-term debt and line of credit | |||||||
Variable rate basis | 0 | ||||||
LIBOR Below Zero | Wells Fargo Bank National Association And Other Lenders Party | Senior Secured Revolving Credit Facility | London Interbank Offered Rate (LIBOR) [Member] | |||||||
Long-term debt and line of credit | |||||||
Variable rate basis | 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Commitments | |||
Rental expense under operating leases | $ 3,500 | $ 2,800 | $ 2,600 |
Loss Contingency [Abstract] | |||
Maximum period for purchase commitments for certain ingredients, packaging materials and energy | 12 months | ||
Minimum rental commitments under non-cancellable operating leases | |||
2,017 | $ 2,313 | ||
2,018 | 1,746 | ||
2,019 | 1,660 | ||
2,020 | 1,444 | ||
2,021 | 1,253 | ||
Thereafter | 6,770 | ||
Total | $ 15,186 | ||
License Agreement for Sheeting and Frying Process Technology [Member] | |||
Commitments | |||
Threshold percentage of sales decline due to availability of similar product, for release from royalty obligations | 10.00% | ||
License Agreement with Seattles Best Coffee LLC [Member] | |||
Commitments | |||
Extension period of license subject to meeting of certain sales targets | 5 years |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Weighted Average Grant Date Fair Value Per Share | |||
Preferred stock, shares authorized | 50,000 | ||
Preferred stock, par value (in dollars per share) | $ 100 | ||
Preferred stock, shares outstanding | 0 | ||
Equity Incentive 2015 Plan | |||
Weighted Average Grant Date Fair Value Per Share | |||
Number of shares available for awards | 956,088 | ||
Number of shares authorized | 1,400,560 | ||
Number of additional shares available for future issuance | 250,000 | ||
Restricted Stock | |||
Number of Shares | |||
Nonvested at the beginning of the period (in shares) | 88,166 | ||
Vested, including shares withheld to cover taxes (in shares) | (61,163) | ||
Forfeited (in shares) | (18,670) | ||
Nonvested at the end of the period (in shares) | 8,333 | 88,166 | |
Weighted Average Grant Date Fair Value Per Share | |||
Nonvested at the beginning of the period (in dollars per share) | $ 8.25 | ||
Vested, including shares withheld to cover taxes (in dollars per share) | 7.96 | ||
Forfeited (in dollars per share) | 7.20 | ||
Nonvested at the end of the period (in dollars per share) | $ 12.78 | $ 8.25 | |
Additional disclosures | |||
Stock-based compensation expense | $ 1,500,000 | $ 1,100,000 | $ 1,100,000 |
Stock-based compensation costs which were capitalized | 0 | ||
Unrecognized costs related to non-vested stock awards granted | $ 100,000 | ||
Restricted Stock | Minimum | |||
Shareholders equity | |||
Vesting period | 1 year | ||
Restricted Stock | Maximum | |||
Shareholders equity | |||
Vesting period | 5 years | ||
Additional disclosures | |||
Weighted average period for recognition of unrecognized compensation costs | 1 year | ||
Restricted Stock Units RSU | |||
Number of Shares | |||
Nonvested at the beginning of the period (in shares) | 302,113 | ||
Granted (in shares) | 328,368 | ||
Vested, including shares withheld to cover taxes (in shares) | (78,947) | ||
Forfeited (in shares) | (10,188) | ||
Nonvested at the end of the period (in shares) | 541,346 | 302,113 | |
Weighted Average Grant Date Fair Value Per Share | |||
Nonvested at the beginning of the period (in dollars per share) | $ 10.40 | ||
Granted (in dollars per share) | 7.09 | ||
Vested, including shares withheld to cover taxes (in dollars per share) | 10.21 | ||
Forfeited (in dollars per share) | 11.18 | ||
Nonvested at the end of the period (in dollars per share) | $ 8.40 | $ 10.40 | |
Additional disclosures | |||
Unrecognized costs related to non-vested stock awards granted | $ 2,300,000 | ||
Weighted average period for recognition of unrecognized compensation costs | 1 year 9 months 18 days | ||
Restricted Stock Units RSU | Employees | Minimum | |||
Shareholders equity | |||
Vesting period | 3 years | ||
Restricted Stock Units RSU | Employees | Maximum | |||
Shareholders equity | |||
Vesting period | 5 years | ||
restricted stock awards and units | Officers | Maximum | |||
Shareholders equity | |||
Vesting period | 3 years | ||
restricted stock awards and units | Directors | Minimum | |||
Shareholders equity | |||
Vesting period | 1 year | ||
Stock Options | |||
Weighted Average Grant Date Fair Value Per Share | |||
Expiration term of awards | 10 years | ||
Options Outstanding | |||
Outstanding at the beginning of the period (in shares) | 644,602 | ||
Forfeited or expired (in shares) | (38,000) | ||
Exercised (in shares) | (39,000) | ||
Outstanding at the end of the period (in shares) | 567,602 | 644,602 | |
Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 5.30 | ||
Forfeited or expired (in dollars per share) | 4.92 | ||
Exercised (in dollars per share) | 6.67 | ||
Outstanding at the end of the period (in dollars per share) | $ 5.23 | $ 5.30 | |
Aggregate Intrinsic Value (in-the-money option) | |||
Intrinsic value related to options outstanding | $ 2,767,532 | ||
Closing stock price (in dollars per share) | $ 9.85 | ||
Intrinsic value related to vested options outstanding | $ 2,800,000 | ||
Weighted Average Remaining Contractual Life | |||
Weighted Average Remaining Contractual Life | 4 years 4 months 28 days | ||
Additional disclosures | |||
Stock-based compensation expense | $ 200,000 | $ 400,000 | $ 600,000 |
Stock-based compensation costs which were capitalized | 0 | ||
Unrecognized costs related to non-vested stock options awards granted | $ 200,000 | ||
Weighted average period for recognition of unrecognized compensation costs | 1 year 3 months 18 days | ||
Stock Options | Minimum | |||
Shareholders equity | |||
Vesting period | 1 year | ||
Stock Options | Maximum | |||
Shareholders equity | |||
Vesting period | 5 years | ||
Stock Options | Employees | |||
Shareholders equity | |||
Vesting period | 5 years | ||
Stock Options | Directors | |||
Shareholders equity | |||
Vesting period | 1 year | ||
Stock Options Prior to May 2008 | |||
Weighted Average Grant Date Fair Value Per Share | |||
Expiration term of awards | 5 years | ||
Stock Options Prior to May 2008 | Employees | |||
Shareholders equity | |||
Vesting period | 5 years | ||
Stock Options Prior to May 2008 | Directors | |||
Shareholders equity | |||
Vesting period | 1 year |
Stockholders' Equity - Exercise
Stockholders' Equity - Exercise Price (Details) - Stock Options | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Shareholders' Equity | |
Options Outstanding (in shares) | shares | 567,602 |
Weighted Average Remaining Contractual Life | 4 years 4 months 24 days |
Weighted Average Exercise Price (in dollars per share) | $ 5.23 |
Options Exercisable (in shares) | shares | 486,102 |
Weighted Average Exercise Price (in dollars per share) | $ 4.75 |
Intrinsic value | |
Intrinsic value related to options outstanding | $ | $ 2,767,532 |
Intrinsic value related to vested options outstanding | $ | $ 2,800,000 |
Closing stock price (in dollars per share) | $ 9.85 |
Exercise Price Range From Dollars 1.70 to Dollars 3.20 | |
Shareholders' Equity | |
Exercise price, low end of range (in dollars per share) | 1.70 |
Exercise price, high end of range (in dollars per share) | $ 2.40 |
Options Outstanding (in shares) | shares | 173,600 |
Weighted Average Remaining Contractual Life | 1 year 10 months 24 days |
Weighted Average Exercise Price (in dollars per share) | $ 1.88 |
Options Exercisable (in shares) | shares | 173,600 |
Weighted Average Exercise Price (in dollars per share) | $ 1.88 |
Exercise Price Range From Dollars 3.44 to Dollars 6.55 | |
Shareholders' Equity | |
Exercise price, low end of range (in dollars per share) | 3.44 |
Exercise price, high end of range (in dollars per share) | $ 6.55 |
Options Outstanding (in shares) | shares | 218,550 |
Weighted Average Remaining Contractual Life | 4 years 7 months 6 days |
Weighted Average Exercise Price (in dollars per share) | $ 5.04 |
Options Exercisable (in shares) | shares | 198,250 |
Weighted Average Exercise Price (in dollars per share) | $ 4.88 |
Exercise Price Range From Dollars 7.21 to Dollars 12.78 | |
Shareholders' Equity | |
Exercise price, low end of range (in dollars per share) | 7.21 |
Exercise price, high end of range (in dollars per share) | $ 12.78 |
Options Outstanding (in shares) | shares | 153,800 |
Weighted Average Remaining Contractual Life | 6 years 6 months |
Weighted Average Exercise Price (in dollars per share) | $ 8.17 |
Options Exercisable (in shares) | shares | 92,600 |
Weighted Average Exercise Price (in dollars per share) | $ 7.89 |
Exercise Price Range From Dollars 13.21 to Dollars 13.21 | |
Shareholders' Equity | |
Exercise price, low end of range (in dollars per share) | 13.21 |
Exercise price, high end of range (in dollars per share) | $ 13.21 |
Options Outstanding (in shares) | shares | 21,652 |
Weighted Average Remaining Contractual Life | 7 years 6 months |
Weighted Average Exercise Price (in dollars per share) | $ 13.21 |
Options Exercisable (in shares) | shares | 21,652 |
Weighted Average Exercise Price (in dollars per share) | $ 13.21 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Income Taxes | |||
Deferred tax asset valuation allowance | $ 12,600 | ||
Current: | |||
Federal | $ (4,372) | $ 3,217 | |
State | 90 | (493) | 408 |
Total current provision for income taxes | 90 | (4,865) | 3,625 |
Deferred: | |||
Federal | 2,279 | (6,683) | 2,124 |
State | 325 | (498) | 19 |
Total deferred provision for income taxes | 2,604 | (7,181) | 2,143 |
Income tax expense (benefit) | 2,694 | (12,046) | $ 5,768 |
Deferred Tax Asset | |||
Accounts receivable | 59 | 34 | |
Charitable contributions carryover | 114 | 75 | |
Federal credit carryover | 428 | 411 | |
Inventories | 761 | 633 | |
Accrued liabilities | 532 | ||
State credit carryover | 108 | 94 | |
Stock-based compensation | 649 | 580 | |
Federal net operating loss carryforward | 9,687 | 4,874 | |
Deferred rent | 42 | 92 | |
State net operating loss carryforward | 1,174 | 405 | |
Total | 13,554 | 7,198 | |
Less: Valuation allowance | (12,578) | ||
Net deferred tax asset | 976 | 7,198 | |
Deferred Tax Liability | |||
Accrued liabilities | (111) | ||
Contingent consideration | (913) | (1,004) | |
Depreciation and amortization | (1,439) | (4,855) | |
Gross deferred tax liability | (2,352) | (5,970) | |
Deferred tax assets | $ 1,228 | ||
Net deferred tax liability | (1,376) | ||
Operating loss carry forwards and tax credits | |||
U.S. net operating loss carry forwards with expiration in 2035 and 2036 | 28,700 | ||
State net operating loss carry forwards expiring in 2020 through 2036 | 27,700 | ||
Alternative minimum tax credits with no expiration | 200 | ||
Other general business tax credits expiring 2025 through 2036 | $ 400 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Reconciliation between the amount determined by applying the statutory federal income tax rate to the income tax provision | |||
Expected expense at statutory rate | $ (9,369) | $ (11,162) | $ 5,552 |
Change resulting from: | |||
State tax provision, net | (756) | (976) | 434 |
Federal and state credits | (6) | 116 | (167) |
Domestic Production benefits | (322) | ||
Change in valuation allowance | 12,579 | ||
Nondeductible expenses and other | 246 | (24) | 271 |
Income tax expense (benefit) | $ 2,694 | $ (12,046) | $ 5,768 |
Effective income tax rate reconciliation | |||
Effective tax rate (as a percent) | 9.80% | 36.70% | 35.30% |
Business Segments and Signifi61
Business Segments and Significant Customers (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Business segments and significant customers | |||||||||||||||
Total net revenue | $ 63,365,000 | $ 66,529,000 | $ 69,263,000 | $ 69,855,000 | $ 68,664,000 | $ 69,865,000 | $ 66,422,000 | $ 77,607,000 | $ 73,746,000 | $ 72,556,000 | $ 71,852,000 | $ 67,509,000 | $ 269,012,000 | $ 282,558,000 | $ 285,663,000 |
Sales Revenue, Goods, Net [Member] | Customer Concentration Risk [Member] | Costco [Member] | |||||||||||||||
Business segments and significant customers | |||||||||||||||
Total net revenue | $ 52,200,000 | $ 66,400,000 | $ 75,300,000 | ||||||||||||
Concentration risk (as a percent) | 19.00% | 23.00% | 26.00% |
Business Segments and Signifi62
Business Segments and Significant Customers - Reportable Segments Information (Details) | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016USD ($) | Sep. 24, 2016USD ($) | Jun. 25, 2016USD ($) | Mar. 26, 2016USD ($) | Dec. 26, 2015USD ($) | Sep. 26, 2015USD ($) | Jun. 27, 2015USD ($) | Mar. 28, 2015USD ($) | Dec. 27, 2014USD ($) | Sep. 27, 2014USD ($) | Jun. 28, 2014USD ($) | Mar. 29, 2014USD ($) | Dec. 31, 2016USD ($)item | Dec. 26, 2015USD ($) | Dec. 27, 2014USD ($) | |
Business segments revenue by products | |||||||||||||||
Number of reportable segments | item | 2 | ||||||||||||||
Net revenues from external customers | $ 63,365,000 | $ 66,529,000 | $ 69,263,000 | $ 69,855,000 | $ 68,664,000 | $ 69,865,000 | $ 66,422,000 | $ 77,607,000 | $ 73,746,000 | $ 72,556,000 | $ 71,852,000 | $ 67,509,000 | $ 269,012,000 | $ 282,558,000 | $ 285,663,000 |
Depreciation and amortization included in segment gross profit | 4,126,000 | 4,746,000 | 4,636,000 | ||||||||||||
Segment gross profit | 5,751,000 | 7,924,000 | 10,267,000 | 8,817,000 | 7,312,000 | 8,700,000 | 8,025,000 | (3,700,000) | 15,176,000 | 12,926,000 | 13,456,000 | 11,563,000 | 32,759,000 | 20,337,000 | 53,121,000 |
Goodwill | 14,985,000 | 23,286,000 | 23,286,000 | 14,985,000 | 23,286,000 | 23,286,000 | |||||||||
Reconciliation of reportable segment gross profit to consolidated income before income tax provision | |||||||||||||||
Segment gross profit | 5,751,000 | $ 7,924,000 | $ 10,267,000 | $ 8,817,000 | 7,312,000 | $ 8,700,000 | $ 8,025,000 | $ (3,700,000) | 15,176,000 | $ 12,926,000 | $ 13,456,000 | $ 11,563,000 | 32,759,000 | 20,337,000 | 53,121,000 |
Operating expenses | 34,994,000 | 37,559,000 | 34,188,000 | ||||||||||||
Impairment of goodwill and intangible assets | 15,446,000 | 9,277,000 | |||||||||||||
Interest expense, net | (9,874,000) | (6,330,000) | (2,604,000) | ||||||||||||
Income (loss) before income tax expense | (27,555,000) | (32,829,000) | 16,329,000 | ||||||||||||
Frozen Products | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | 160,550,000 | 167,166,000 | 179,518,000 | ||||||||||||
Depreciation and amortization included in segment gross profit | 1,933,000 | 2,336,000 | 2,103,000 | ||||||||||||
Segment gross profit | 15,067,000 | 2,729,000 | 32,329,000 | ||||||||||||
Goodwill | 8,999,000 | 17,300,000 | 17,300,000 | 8,999,000 | 17,300,000 | 17,300,000 | |||||||||
Reconciliation of reportable segment gross profit to consolidated income before income tax provision | |||||||||||||||
Segment gross profit | 15,067,000 | 2,729,000 | 32,329,000 | ||||||||||||
Snack Products | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | 108,462,000 | 115,392,000 | 106,145,000 | ||||||||||||
Depreciation and amortization included in segment gross profit | 2,193,000 | 2,410,000 | 2,533,000 | ||||||||||||
Segment gross profit | 17,692,000 | 17,608,000 | 20,792,000 | ||||||||||||
Goodwill | $ 5,986,000 | $ 5,986,000 | $ 5,986,000 | 5,986,000 | 5,986,000 | 5,986,000 | |||||||||
Reconciliation of reportable segment gross profit to consolidated income before income tax provision | |||||||||||||||
Segment gross profit | 17,692,000 | 17,608,000 | 20,792,000 | ||||||||||||
Berries Beverage Blends and Desserts Product | Frozen Products | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | 112,099,000 | 121,632,000 | 118,473,000 | ||||||||||||
Vegetables Product | Frozen Products | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | 48,451,000 | 45,534,000 | 61,045,000 | ||||||||||||
Indulgent Specialty Snacks Product | Snack Products | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | 38,187,000 | 44,482,000 | 49,091,000 | ||||||||||||
Healthy And Natural Food Product | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | 230,800,000 | 238,100,000 | 236,600,000 | ||||||||||||
Healthy Natural Snacks Product | Snack Products | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | $ 70,275,000 | $ 70,910,000 | $ 57,054,000 |
Business Segments and Signifi63
Business Segments and Significant Customers - Net Revenues from External Customers (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | $ 63,365,000 | $ 66,529,000 | $ 69,263,000 | $ 69,855,000 | $ 68,664,000 | $ 69,865,000 | $ 66,422,000 | $ 77,607,000 | $ 73,746,000 | $ 72,556,000 | $ 71,852,000 | $ 67,509,000 | $ 269,012,000 | $ 282,558,000 | $ 285,663,000 |
Percentage of net revenue | 100.00% | 100.00% | 100.00% | ||||||||||||
Frozen Products | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | $ 160,550,000 | $ 167,166,000 | $ 179,518,000 | ||||||||||||
Percentage of net revenue | 59.70% | 59.20% | 62.80% | ||||||||||||
Frozen Products | Berries Beverage Blends and Desserts Product | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | $ 112,099,000 | $ 121,632,000 | $ 118,473,000 | ||||||||||||
Percentage of net revenue | 41.70% | 43.10% | 41.50% | ||||||||||||
Frozen Products | Vegetables Product | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | $ 48,451,000 | $ 45,534,000 | $ 61,045,000 | ||||||||||||
Percentage of net revenue | 18.00% | 16.10% | 21.30% | ||||||||||||
Snack Products | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | $ 108,462,000 | $ 115,392,000 | $ 106,145,000 | ||||||||||||
Percentage of net revenue | 40.30% | 40.80% | 37.20% | ||||||||||||
Snack Products | Indulgent Specialty Snacks Product | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | $ 38,187,000 | $ 44,482,000 | $ 49,091,000 | ||||||||||||
Percentage of net revenue | 14.20% | 15.70% | 17.20% | ||||||||||||
Snack Products | Healthy Natural Snacks Product | |||||||||||||||
Business segments revenue by products | |||||||||||||||
Net revenues from external customers | $ 70,275,000 | $ 70,910,000 | $ 57,054,000 | ||||||||||||
Percentage of net revenue | 26.10% | 25.10% | 20.00% |
Legal Proceedings (Details)
Legal Proceedings (Details) | 12 Months Ended |
Dec. 31, 2016item | |
Barbara Rohr of Faruqi & Faruqi | |
Legal proceedings | |
Number of lawsuits | 0 |
Tim Howard Of Howard & Associates | |
Legal proceedings | |
Number of lawsuits | 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - Land in Lynden, Washington | 12 Months Ended |
Dec. 31, 2016USD ($)aitem | |
Uptrails Group LLC [Member] | |
Related Party Transactions: | |
Area of land | a | 696 |
Number of members of Rader family who own the related party | item | 3 |
Lease payments per month | $ | $ 43,500 |
Monthly rental expense under operating leases after May 17, 2017 | $ | $ 52,200 |
Rader Farms | |
Related Party Transactions: | |
Area of land | a | 840 |
Accounts Receivable Allowance66
Accounts Receivable Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Changes to allowance for doubtful accounts | |||
Balance at beginning of period | $ 94 | $ 106 | $ 219 |
Charges (Reductions) to Expense | 87 | 229 | 17 |
(Write-offs) Collections | (21) | (241) | (130) |
Balance at end of period | $ 160 | $ 94 | $ 106 |
Concentrations of Credit Risk (
Concentrations of Credit Risk (Details) - Three Largest Major Customers [Member] | 12 Months Ended |
Dec. 31, 2016item | |
Concentrations of Credit Risk | |
Number of customers | 3 |
Accounts Receivable [Member] | Credit Concentration Risk [Member] | |
Concentrations of Credit Risk | |
Concentration risk (as a percent) | 28.00% |
Deferred Compensation Plans (De
Deferred Compensation Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Deferred Compensation Plans | |||
Contributions made | $ 0.6 | $ 0.6 | $ 0.6 |
Liability to participants recorded in other liabilities | $ 0.6 | $ 0.6 |
Quarterly Financial Data (una69
Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | |
Quarterly Financial Data (unaudited) | |||||||||||||||
Net revenues | $ 63,365,000 | $ 66,529,000 | $ 69,263,000 | $ 69,855,000 | $ 68,664,000 | $ 69,865,000 | $ 66,422,000 | $ 77,607,000 | $ 73,746,000 | $ 72,556,000 | $ 71,852,000 | $ 67,509,000 | $ 269,012,000 | $ 282,558,000 | $ 285,663,000 |
Gross profit | 5,751,000 | 7,924,000 | 10,267,000 | 8,817,000 | 7,312,000 | 8,700,000 | 8,025,000 | (3,700,000) | 15,176,000 | 12,926,000 | 13,456,000 | 11,563,000 | 32,759,000 | 20,337,000 | 53,121,000 |
Operating income (loss) | (18,897,000) | (1,266,000) | 1,774,000 | 708,000 | (1,645,000) | (533,000) | (2,192,000) | (22,129,000) | 5,980,000 | 5,356,000 | 4,432,000 | 3,165,000 | (17,681,000) | (26,499,000) | 18,933,000 |
Net loss | $ (26,389,000) | $ (2,564,000) | $ (278,000) | $ (1,018,000) | $ (2,460,000) | $ (1,737,000) | $ (1,951,000) | $ (14,635,000) | $ 3,408,000 | $ 3,084,000 | $ 2,472,000 | $ 1,597,000 | $ (30,249,000) | $ (20,783,000) | $ 10,561,000 |
Income (loss) per common share: | |||||||||||||||
Basic (in dollars per share) | $ (1.34) | $ (0.13) | $ (0.01) | $ (0.05) | $ (0.13) | $ (0.09) | $ (0.10) | $ (0.75) | $ 0.17 | $ 0.16 | $ 0.13 | $ 0.08 | $ (1.54) | $ (1.06) | $ 0.54 |
Diluted (in dollars per share) | $ (1.34) | $ (0.13) | $ (0.01) | $ (0.05) | $ (0.13) | $ (0.09) | $ (0.10) | $ (0.75) | $ 0.17 | $ 0.15 | $ 0.12 | $ 0.08 | $ (1.54) | $ (1.06) | $ 0.53 |
Weighted average number of common shares: | |||||||||||||||
Basic (in shares) | 19,672 | 19,671 | 19,628 | 19,603 | 19,610 | 19,594 | 19,566 | 19,581 | 19,564 | 19,530 | 19,468 | 19,437 | 19,644 | 19,588 | 19,500 |
Diluted (in shares) | 19,672 | 19,671 | 19,628 | 19,603 | 19,610 | 19,594 | 19,566 | 19,581 | 20,062 | 20,014 | 19,960 | 19,924 | 19,644 | 19,588 | 19,990 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Mar. 23, 2017 | Dec. 31, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 |
Subsequent Event | ||||||||||||||||
Total assets | $ 181,480,000 | $ 210,473,000 | $ 181,480,000 | $ 210,473,000 | ||||||||||||
Total liabilities | 157,791,000 | 157,985,000 | 157,791,000 | 157,985,000 | ||||||||||||
Valuation allowance | 12,578,000 | 12,578,000 | ||||||||||||||
Net revenues | 63,365,000 | $ 66,529,000 | $ 69,263,000 | $ 69,855,000 | 68,664,000 | $ 69,865,000 | $ 66,422,000 | $ 77,607,000 | $ 73,746,000 | $ 72,556,000 | $ 71,852,000 | $ 67,509,000 | 269,012,000 | 282,558,000 | $ 285,663,000 | |
Net revenues pro forma | 220,880,000 | 237,024,000 | 224,619,000 | |||||||||||||
Net Income (loss) | $ (26,389,000) | $ (2,564,000) | $ (278,000) | $ (1,018,000) | $ (2,460,000) | $ (1,737,000) | $ (1,951,000) | $ (14,635,000) | $ 3,408,000 | $ 3,084,000 | $ 2,472,000 | $ 1,597,000 | (30,249,000) | (20,783,000) | 10,561,000 | |
Net Income pro forma | $ (18,660,000) | $ (327,000) | $ 7,324,000 | |||||||||||||
Diluted (in dollars per share) | $ (1.34) | $ (0.13) | $ (0.01) | $ (0.05) | $ (0.13) | $ (0.09) | $ (0.10) | $ (0.75) | $ 0.17 | $ 0.15 | $ 0.12 | $ 0.08 | $ (1.54) | $ (1.06) | $ 0.53 | |
Diluted earnings per share pro forma | $ (0.95) | $ (0.02) | $ 0.37 | |||||||||||||
Fresh Frozen Foods | ||||||||||||||||
Subsequent Event | ||||||||||||||||
Total assets | $ 32,200,000 | $ 32,200,000 | ||||||||||||||
Total liabilities | 2,000,000 | 2,000,000 | ||||||||||||||
Valuation allowance | $ 12,600,000 | $ 12,600,000 | ||||||||||||||
Fresh Frozen Foods | Subsequent Event | ||||||||||||||||
Subsequent Event | ||||||||||||||||
Proceeds from sale of assets | $ 23,700,000 | |||||||||||||||
Proceeds from sale of assets, net | $ 19,500,000 |