Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 01, 2017 | Aug. 07, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | INVENTURE FOODS, INC. | |
Entity Central Index Key | 944,508 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 1, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 19,785,934 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 01, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 3,007 | $ 776 |
Accounts receivable, net of allowance for doubtful accounts of $160 and $160 at July 1, 2017 and December 31, 2016, respectively | 16,929 | 16,334 |
Inventories | 44,325 | 72,188 |
Other current assets | 2,607 | 3,216 |
Total current assets | 66,868 | 92,514 |
Property and equipment, net of accumulated depreciation of $53,960 and $53,116 at July 1, 2017 and December 31, 2016, respectively | 52,069 | 65,484 |
Goodwill | 14,985 | 14,985 |
Trademarks and other intangibles, net | 4,749 | 7,243 |
Other assets | 1,326 | 1,254 |
Total assets | 139,997 | 181,480 |
Current liabilities: | ||
Accounts payable | 25,959 | 29,462 |
Accrued liabilities | 8,367 | 9,533 |
Line of credit | 19,949 | 32,761 |
Current portion of term debt | 71,051 | 82,380 |
Total current liabilities | 125,326 | 154,136 |
Deferred income tax liability | 3,353 | 1,376 |
Other liabilities | 2,065 | 2,279 |
Total liabilities | 130,744 | 157,791 |
Commitments and contingencies (see Note 7) | ||
Stockholders' equity: | ||
Common stock, $.01 par value; 50,000 shares authorized; 20,154 and 20,040 shares issued and outstanding at July 1, 2017 and December 31, 2016, respectively | 202 | 200 |
Additional paid-in capital | 36,339 | 35,721 |
Accumulated deficit | (26,817) | (11,761) |
Total stockholders' equity before treasury stock | 9,724 | 24,160 |
Less: treasury stock, at cost: 368 shares at July 1, 2017 and December 31, 2016 | (471) | (471) |
Total stockholders' equity | 9,253 | 23,689 |
Total liabilities and stockholders' equity | $ 139,997 | $ 181,480 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jul. 01, 2017 | Dec. 31, 2016 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 160 | $ 160 |
Property and equipment, net of accumulated depreciation | $ 53,960 | $ 53,116 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares issued | 20,154 | 20,040 |
Common stock, shares outstanding | 20,154 | 20,040 |
Treasury stock, shares | 368 | 368 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jun. 25, 2016 | Jul. 01, 2017 | Jun. 25, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net revenues | $ 51,356 | $ 57,797 | $ 100,974 | $ 114,977 |
Cost of revenues | 41,244 | 48,094 | 82,348 | 95,994 |
Gross profit | 10,112 | 9,703 | 18,626 | 18,983 |
Operating expenses: | ||||
Selling, general and administrative expenses | 8,668 | 7,609 | 15,924 | 14,763 |
Operating income | 1,444 | 2,094 | 2,702 | 4,220 |
Non-operating expense: | ||||
Interest expense | 2,425 | 1,967 | 4,787 | 3,968 |
Income (loss) from continuing operations before income tax expense | (981) | 127 | (2,085) | 252 |
Income tax expense | (11) | (66) | (113) | (114) |
Net income (loss) from continuing operations | (992) | 61 | (2,198) | 138 |
Net income (loss) from discontinued operations | 75 | (339) | (12,858) | (1,434) |
Net loss | $ (917) | $ (278) | $ (15,056) | $ (1,296) |
Income (loss) per common share: | ||||
Basic income (loss) from continuing operations (in dollars per share) | $ (0.05) | $ 0.01 | $ (0.11) | $ 0.01 |
Basic loss from discontinued operations (in dollars per share) | (0.02) | (0.66) | (0.08) | |
Basic loss (in dollars per share) | (0.05) | (0.01) | (0.77) | (0.07) |
Diluted income (loss) from continuing operations (In dollars per share) | (0.05) | 0.01 | (0.11) | 0.01 |
Diluted loss from discontinued operations (in dollars per share) | (0.02) | (0.66) | (0.08) | |
Diluted loss (in dollars per share) | $ (0.05) | $ (0.01) | $ (0.77) | $ (0.07) |
Weighted average number of common shares: | ||||
Basic (in shares) | 19,741 | 19,628 | 19,708 | 19,616 |
Diluted (in shares) | 19,741 | 19,902 | 19,708 | 19,881 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2017 | Jun. 25, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (15,056) | $ (1,296) |
Net income (loss) from discontinued operations | (12,858) | (1,434) |
Net income (loss) from continuing operations | (2,198) | 138 |
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities: | ||
Depreciation | 2,956 | 2,943 |
Amortization | 164 | 165 |
Deferred financing fee amortization | 939 | 687 |
Provision for bad debts | 32 | |
Deferred income taxes | 1,977 | |
Stock-based compensation expense | 819 | 740 |
(Gain) on disposition of equipment | (58) | |
Changes in assets and liabilities: | ||
Accounts receivable | (2,954) | (3,048) |
Inventories | 11,543 | 6,577 |
Other assets and liabilities | 434 | 2,285 |
Accounts payable and accrued liabilities | 2,698 | 852 |
Net cash provided by operating activities - continuing operations | 16,378 | 11,313 |
Net cash provided by (used in) operating activities - discontinued operations | (6,725) | 489 |
Net cash provided by operating activities | 9,653 | 11,802 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (925) | (7,759) |
Payment of contingent consideration for Willamette Valley Fruit Company | (230) | (340) |
Payment of contingent consideration for Sin In A Tin | (7) | (3) |
Net cash used in investing activities - continuing operations | (1,162) | (8,102) |
Net cash provided by (used in) investing activities - discontinued operations | 19,149 | (900) |
Net cash provided by (used in) investing activities | 17,987 | (9,002) |
Cash flows from financing activities: | ||
Net borrowings on Wells Fargo line of credit | (12,812) | (3,261) |
Payments made on capital lease obligations | (9) | (10) |
Borrowings on term loans | 31 | 1,097 |
Repayments made on long term debt | (12,176) | (653) |
Payment of loan financing fees | (244) | (1,050) |
Proceeds from issuance of common stock under equity award plans | 187 | |
Payment of payroll taxes on stock-based compensation through shares withheld | (199) | (226) |
Net cash used in financing activities - continuing operations | (25,409) | (3,916) |
Net cash used in financing activities | (25,409) | (3,916) |
Net increase (decrease) in cash and cash equivalents | 2,231 | (1,116) |
Cash and cash equivalents at beginning of year period | 776 | 2,319 |
Cash and cash equivalents at end of year period | 3,007 | 1,203 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 4,247 | 4,060 |
Cash paid (refunded) during the period for income taxes | $ 59 | $ (3,377) |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 01, 2017 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies Inventure Foods, Inc., a Delaware corporation (referred to herein as the “Company,” “Inventure Foods,” “we,” “our” or “us”), is a leading marketer and manufacturer of healthy/natural and indulgent specialty snack food brands with more than $269 million in annual net revenues for fiscal 2016. We specialize in two primary product categories: healthy/natural food products and indulgent specialty snack products. We sell our products nationally through a number of channels including: grocery stores, natural food stores, mass merchandisers, drug and convenience stores, club stores, value, vending, food service, industrial and international. Our goal is to have a diversified portfolio of brands, products, customers and distribution channels. In our healthy/natural food category, products include Rader Farms® frozen berries and frozen berry and vegetable blends, Boulder Canyon® brand kettle cooked potato chips, other snack and food items and frozen side dishes, Willamette Valley Fruit Company TM brand frozen berries, fruits, biscuits and other frozen snacks, Jamba® brand blend-and-serve smoothie kits under license from Jamba Juice Company (“Jamba Juice”), Sin In A 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 manufacturers. We operate in two segments: frozen products and snack products. The frozen products segment includes frozen fruits, fruit and vegetable blends, beverages, side dishes and desserts for sale primarily to grocery stores, club stores and mass merchandisers. All products sold under our frozen products segment are considered part of the healthy/natural food category. The snack products segment includes potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products, popcorn and extruded products for sale primarily to snack food distributors and retailers. The products sold under our snack products segment include products considered part of the indulgent specialty snack food category, as well as products considered part of the healthy/natural food category. We operate manufacturing facilities in seven locations. Our frozen berry products are processed in our Lynden, Washington, Bellingham, Washington and two Salem, Oregon facilities. Our frozen berry business grows, processes and markets premium berry blends, raspberries, blueberries and rhubarb and purchases blackberries, cherries, cranberries, strawberries and other fruits from a select network of fruit growers for resale. The fruit is processed, frozen and packaged for sale and distribution to wholesale customers. Our frozen beverage products, including fruit and vegetable blends and frozen side dishes, are packaged at our Bellingham, Washington facility. We also use third-party processors for certain frozen products and package certain frozen fruits and vegetables for other manufacturers. Our frozen desserts products are produced in our Pensacola, Florida and Salem, Oregon facilities. Our snack products are manufactured at our Phoenix, Arizona and Bluffton, Indiana facilities, as well as select third-party facilities for certain products. Our fiscal year ends on the last Saturday occurring in the month of December of each calendar year. Accordingly, the second quarter of fiscal 2017 commenced April 2, 2017 and ended July 1, 2017. Strategic and Financial Review Process In July 2016, we announced that our Board of Directors (“Board”) had commenced a strategic and financial review of the Company with the objective to increase shareholder value. We engaged Rothschild Inc. to serve as our financial advisor and assist us in this process. We remain actively involved 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 voluntary product recall in April 2015 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. This fact, together with the projected near term outlook for our business and our inability to complete a strategic transaction (other than the Fresh Frozen Asset Sale) by year end or demonstrate that such a transaction is imminent, raise substantial doubt about our ability to continue as a going concern. We reported this going concern conclusion in our 2016 Form 10-K, together with the following specific conditions considered by management in reaching such conclusion: · Our five-year, $85.0 million term loan credit agreement with BSP Agency, LLC (“BSP”), as administrative agent, and the other lenders party thereto (the “BSP Lenders”) (with all related loan documents, and as amended from time to time, the “Term Loan Credit Facility”) requires us to, among other things, comply with Total Leverage Ratio and Fixed Charge Coverage Ratio (each as defined in the Term Loan Credit Facility) covenants by the end of the second quarter of fiscal 2017 and a minimum EBITDA target covenant (the “EBITDA Covenant”) by the month ended April 30, 2017, which target we did not meet (the “EBITDA Covenant Default”) and, as discussed below, we received temporary waivers of such default. The Total 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 1.1:1. We previously reported that absent the completion of a strategic transaction yielding sufficient cash proceeds (in addition to the proceeds received from the sale of certain assets, properties and rights of our wholly owned subsidiary, Fresh Frozen Foods, Inc. (now known as Inventure – GA, Inc.) (“Fresh Frozen Foods”) in March 2017) to pay down debt, waivers or amendments by our lenders, or a refinancing of our debt, we would 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 $97.2 million at July 1, 2017 (including $4.5 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. · Our five-year, $50.0 million revolving credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and the other lenders party thereto (the “Wells Fargo Lenders”) (with all related loan documents, and as amended from time to time, the “ABL Credit Facility” and, together with the Term Loan Credit Facility, the “Credit Facilities”), requires us to, among other things, comply with a Fixed Charge Coverage Ratio (as defined in the ABL Credit Facility) if our liquidity as of the date of any determination is less than the greater of (i) 12.5% of the Maximum Revolver Amount and (ii) $6.125 million, subject to certain conditions. As of the date this Form 10-Q was filed with the SEC, we would not be able to comply with the Fixed Charge Coverage Ratio covenant if our liquidity were deemed to have fallen 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 in our 2016 Form 10-K contained 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 “Going Concern Covenant Default”). As of the date our 2016 Form 10-K was filed with the SEC, we obtained a temporary waiver of the Going Concern Covenant Default until May 15, 2017 from the applicable lenders under the Credit Facilities. · On May 10, 2017, we entered into a Limited Waiver and Third Amendment to the Credit Agreement with the BSP Lenders (the “Term Loan Third Amendment”). Under the terms of the Term Loan Third Amendment, the BSP Lenders granted the Company (i) an extension of the temporary waiver of the Going Concern Covenant Default from May 15, 2017 to July 17, 2017, and (ii) a temporary waiver of the EBITDA Covenant Default until July 17, 2017. The Term Loan Third Amendment also required that the Company comply with the EBITDA Covenant commencing with the fiscal month ending June 30, 2017, measured over the 12-months then ended, and increased the Company’s prepayment fees in the event of a payment or prepayment of principal under the Term Loan Credit Facility (excluding regularly scheduled principal payments). · On May 15, 2017, we entered into a First Amendment to Credit Agreement and Limited Waiver, effective as of May 12, 2017, with the Wells Fargo Lenders (the “ABL First Amendment”). Under the terms of the ABL First Amendment, the Wells Fargo Lenders granted the Company an extension of the temporary waiver of the Going Concern Covenant Default from May 15, 2017 to July 17, 2017. In addition, the terms of the ABL First Amendment provided for, among other things, (i) an increase in the Company’s Applicable Margin for Base Rate and Libor Rate Loans (as such terms are defined in the ABL Credit Facility) effective May 1, 2017 by 100 basis points, (ii) additional financial and collateral reporting obligations and projection requirements, (iii) the immediate right of the Agent (as defined in the ABL Credit Agreement) or the Wells Fargo Lenders to exercise all rights and remedies under the ABL Credit Facility (in lieu of waiting until the earlier of ten business days after the date on which financial statements are required to be delivered for an applicable fiscal month), and (iv) the elimination of the right to issue curative equity. · On July 17, 2017, we entered into a letter agreement with BSP and the BSP Lenders (the “BSP Letter Agreement”). Under the terms of the BSP Letter Agreement, the BSP Lenders granted the Company (i) a further extension of the temporary waiver of the Going Concern Covenant Default from July 17, 2017 to July 24, 2017, and (ii) a temporary waiver of the financial covenants the Company was required to comply with under the Term Loan Credit Facility (the “Term Loan Financial Covenant Default”) until July 24, 2017. · On July 17, 2017, we also entered into a Second Amendment to Credit Agreement (the “ABL Second Amendment”) with Wells Fargo and the Wells Fargo Lenders. Under the terms of the ABL Second Amendment, the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from July 17, 2017 to July 24, 2017. In addition, the ABL Second Amendment provided for, among other things, additional reporting obligations, a reduced revolver commitment over a period of time ($49.0 million prior to the effective date of the ABL Second Amendment; $40.0 million from and after the ABL Second Amendment date through August 1, 2017; and $35.0 million from and after August 1, 2017), and adjusted advance rates. · On July 20, 2017, we entered into a Limited Waiver and Fourth Amendment to Credit Agreement with BSP and the BSP Lenders (the “Term Loan Fourth Amendment”). Under the terms of the Term Loan Fourth Amendment, the BSP Lenders agreed to (i) a further extension of the temporary waiver of the Going Concern Covenant Default from July 24, 2017 to August 31, 2017, and (ii) a temporary waiver of the Term Loan Financial Covenant Default until August 31, 2017. In addition, the BSP Lenders agreed to provide $5.0 million of additional financing to the Company in the form of a term loan, payable in equal monthly installments of $12,500 commencing on September 30, 2017, with the balance due and payable on November 17, 2020, which is the maturity date of the Term Loan Credit Facility. The net proceeds of this new $5.0 million loan may be used for working capital purposes, subject to certain restrictions in the Term Loan Credit Facility, and is subject to the terms and conditions of the Term Loan Credit Facility. · On July 20, 2017, we also entered into a Third Amendment to Credit Agreement (the “ABL Third Amendment”) with Wells Fargo and the Wells Fargo Lenders. Under the terms of the ABL Third Amendment, the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from July 24, 2017 to August 31, 2017. As previously disclosed, the Company’s Board and management continue to explore various strategic alternatives. There can be no assurance that we will be successful in our pursuit of any strategic transaction or that we will be able consummate a strategic 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 condensed consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about our ability to continue as a going concern, other than the reclassification of certain long-term debt and the related debt issuance costs to current liabilities and current assets, respectively. Our lenders may resist renegotiation or lengthening of payment and other terms through legal action or otherwise if we are unsuccessful in our efforts to complete a strategic transaction. If we are not able to timely, successfully or efficiently implement the strategies that we are pursuing, we may need to seek voluntarily protection under Chapter 11 of the U.S. Bankruptcy Code. Basis of Presentation The condensed consolidated financial statements for the fiscal quarter ended July 1, 2017 are unaudited and include the accounts of Inventure Foods and all of its wholly owned subsidiaries. All significant intercompany amounts and transactions have been eliminated. The condensed consolidated financial statements, including the December 31, 2016 consolidated balance sheet data which was derived from audited financial statements, have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary in order to make the condensed consolidated financial statements not misleading. A description of our accounting policies and other financial information is included in the audited financial statements filed with our 2016 Form 10-K. The results of operations for the fiscal quarter ended July 1, 2017 are not necessarily indicative of the results expected for the full year. Discontinued Operations 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, 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 facilities located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property and inventory (the “Fresh Frozen Asset Sale”). As consideration for the acquisition, Pictsweet paid the Company $23.7 million in cash. The net proceeds from the Fresh Frozen Asset Sale were $19.5 million, after payment of professional fees and other transaction expenses, and were used to pay down amounts outstanding under the Credit Facilities. The results of operations for the Fresh Frozen Foods business have been classified as discontinued operations for all periods presented. As required by the terms of the Purchase Agreement, we have changed the name of our Fresh Frozen Foods subsidiary to Inventure – GA, Inc. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. We classify our investments based upon an established fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or 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 July 1, 2017 and December 31, 2016, 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 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 at the respective dates set forth below (in thousands): July 1, 2017 December 31, 2016 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 $ 704 $ — $ 650 $ — Accrued liabilities Level 3 — (263) — (270) Other liabilities Level 3 — (1,291) — (1,521) $ 704 $ (1,554) $ 650 $ (1,791) 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. A summary of the activity of the fair value of the measurements using unobservable inputs (Level 3 liabilities) for the six months ended July 1, 2017 is as follows (in thousands): Level 3 Balance at December 31, 2016 $ 1,791 Earn-out compensation paid to Willamette Valley Fruit Company (230) Earn-out compensation paid to Sin In A Tin (7) Balance at July 1, 2017 $ 1,554 Income Taxes Income tax expense was $11,000 for the fiscal quarter ended July 1, 2017, compared to a tax expense of $0.1 million for the fiscal quarter ended June 25, 2016. Our effective tax rate was (1.1)% and 52.2% for the fiscal quarters ended July 1, 2017 and June 25, 2016, respectively. Income tax expense was $0.1 million for the six months ended July 1, 2017, compared to a tax expense of $0.1 million for the six months ended June 25, 2016. Our effective tax rate was (5.4)% and 45.1% for the six months ended July 1, 2017 and June 25, 2016, respectively. Income tax expense for the fiscal quarter and six months ended July 1, 2017 was impacted by the full valuation allowance which was initially recorded in the fourth quarter of 2016. Therefore, income tax expenses was a result of certain state minimum taxes and deferred tax liabilities not subject to the valuation allowance. Loss Per Common Share Basic loss per common share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. Diluted loss per share is calculated by including all dilutive common shares, such as stock options and restricted stock. Unvested restricted stock grants that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, require loss per share to be presented pursuant to the two-class method. However, the application of this method would have no effect on basic and diluted loss per common share and is therefore not presented. For the fiscal quarter and six months ended July 1, 2017, diluted loss per share is the same as basic loss per share, as the inclusion of potentially issuable Common Stock would be antidilutive. During the fiscal quarter and six months ended July 1, 2017, 0.6 million shares of Common Stock underlying stock options and restricted stock units were not included in the computation of diluted earnings (loss) per share because inclusion of such shares would be antidilutive. For the fiscal quarter and six months ended June 25, 2016, 0.3 million shares of Common Stock underlying stock options and restricted stock units were not included in the computation of diluted earnings (loss) per share because inclusion of such shares would be antidilutive. Exercises of outstanding stock options are assumed to occur for purposes of calculating diluted earnings per share for periods in which their effect would not be antidilutive. Loss per common share was computed as follows for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands, except per share data): Quarter Ended Six Months Ended July 1, June 25, July 1, June 25, 2017 2016 2017 2016 Basic Earnings (Loss) Per Share: Net income (loss) from continuing operations $ (992) $ 61 $ (2,198) $ 138 Net income (loss) from discontinued operations 75 (339) (12,858) (1,434) Net loss $ (917) $ (278) $ (15,056) $ (1,296) Weighted average number of common shares 19,741 19,628 19,708 19,616 Loss per common share $ (0.05) $ (0.01) $ (0.77) $ (0.07) Diluted Earnings (Loss) Per Share: Net income (loss) from continuing operations $ (992) $ 61 $ (2,198) $ 138 Net income (loss) from discontinued operations 75 (339) (12,858) (1,434) Net loss $ (917) $ (278) $ (15,056) $ (1,296) Weighted average number of common shares 19,741 19,628 19,708 19,616 Incremental shares from assumed conversions of stock options and non-vested shares of restricted stock — 274 — 265 Adjusted weighted average number of common shares 19,741 19,902 19,708 19,881 Loss per common share $ (0.05) $ (0.01) $ (0.77) $ (0.07) 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. 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 9 - Stockholders’ Equity” for additional information. Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (the “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 July 1, 2017, we have not evaluated the impact of this new accounting standard on our financial statements. In July 2015, the FASB issued an ASU to simplify the measurement of inventory. This ASU requires inventory to be subsequently measured using the lower of cost and net realizable value, thereby eliminating the market value approach. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” This ASU is effective for reporting periods beginning after December 15, 2016 and is applied prospectively. Early adoption is permitted. We adopted this guidance in the first quarter of fiscal 2017, and it had no impact on our financial statements and disclosure. In February 2016, the FASB issued new guidance related to accounting for leases. The new standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. As of July 1 2017, we have not evaluated the impact of this new accounting standard on our financial statements. In March 2016, the FASB issued an ASU intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments will be recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits are currently recorded in equity and as financing activity under the current rules. This guidance is effective for reporting periods beginning after December 15, 2016. We adopted this guidance in the first quarter of fiscal 2017, and the adoption did not have a material impact on our financial statements and disclosure. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jul. 01, 2017 | |
Discontinued Operations | |
Discontinued Operations | 2. On March 23, 2017, the Company sold certain assets, properties and rights of our wholly owned subsidiary, Fresh Frozen Foods, to Pictsweet pursuant to 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 facilities located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property and inventory. As consideration for the acquisition, Pictsweet paid the Company $23.7 million in cash. The Fresh Frozen business was part of the Company’s frozen products segment. The net proceeds from the Fresh Frozen Asset Sale were $19.5 million, after payment of professional fees and other transaction expenses, and were used to pay down amounts outstanding under the Credit Facilities. As of December 31, 2016, total assets and total liabilities related to the Fresh Frozen Foods business were $32.2 million and $2 million, respectively. The activity included in discontinued operations in the fiscal quarter ended July 1, 2017, related to the changes in estimated accruals that were settled during the period. The results of operations for the Fresh Frozen Foods business have been classified as discontinued operations for all periods presented. The summary comparative financial results of the Fresh Frozen Foods business, included within discontinued operations, were as follows (in thousands): Quarter Ended Six Months Ended July 1, 2017 June 25, 2016 July 1, 2017 June 25, 2016 Net revenues $ 58 $ 11,467 $ 8,735 $ 24,141 Cost of revenues 8 10,902 8,602 24,040 Gross profit 50 565 133 101 Operating expenses: Selling, general and administrative expenses 39 884 669 1,839 Operating income (loss) 11 (319) (536) (1,738) Loss (gain) on sale of Fresh Frozen Foods (64) — 10,082 — Interest expense, net — 354 331 708 Income (loss) before income taxes 75 (673) (10,949) (2,446) Income tax expense (benefit) — (334) 1,909 (1,012) Net income (loss) from discontinued operations $ 75 $ (339) $ (12,858) $ (1,434) |
Inventories
Inventories | 6 Months Ended |
Jul. 01, 2017 | |
Inventories | |
Inventories | 3. Inventories Inventories consisted of the following as of July 1, 2017 and December 31, 2016 (in thousands): July 1, December 31, 2017 2016 Finished goods $ 17,210 $ 27,661 Raw materials 27,115 44,527 Inventories $ 44,325 $ 72,188 |
Goodwill, Trademarks and Other
Goodwill, Trademarks and Other Intangibles | 6 Months Ended |
Jul. 01, 2017 | |
Goodwill, Trademarks, and Other Intangible Assets | |
Goodwill, Trademarks and Other Intangibles | 4. Goodwill, Trademarks and Other Intangibles Goodwill, trademarks and other intangibles, net, consisted of the following as of July 1, 2017 and December 31, 2016 (in thousands): Estimated July 1, December 31, Useful Life 2017 2016 Goodwill: Inventure Foods $ 5,986 $ 5,986 Rader Farms 5,630 5,630 Willamette Valley Fruit Company 3,147 3,147 Sin In A Tin 222 222 Goodwill $ 14,985 $ 14,985 Trademarks: Inventure Foods $ 896 $ 896 Rader Farms 1,070 1,070 Willamette Valley Fruit Company 740 740 Fresh Frozen Foods — 2,330 Sin In A Tin 123 123 Other intangibles: Rader Farms - Customer relationship, gross carrying amount 10 years 100 100 Rader Farms - Customer relationship, accum. amortization (100) (96) Willamette Valley Fruit Company - Customer relationship, gross carrying amount 10 years 3,200 3,200 Willamette Valley Fruit Company - Customer relationship, accum. amortization (1,280) (1,120) Trademarks and other intangibles, net $ 4,749 $ 7,243 Our amortization expense related to these intangibles was $82,000 and $83,000 for the fiscal quarters ended July 1, 2017 and June 25, 2016, respectively. For the six months ended July 1, 2017 and June 25, 2016, amortization expense totaled $164,000 and $165,000, respectively. The trademarks are deemed to have an indefinite useful life because they are expected to generate cash flows indefinitely. Goodwill and trademarks are reviewed for impairment annually in the fourth fiscal quarter, or more frequently if impairment indicators arise. We believe the carrying values of our goodwill and intangible assets are not impaired as of July 1, 2017. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jul. 01, 2017 | |
Accrued Liabilities. | |
Accrued Liabilities | 5. Accrued Liabilities Accrued liabilities consisted of the following as of July 1, 2017 and December 31, 2016 (in thousands): July 1, December 31, 2017 2016 Accrued payroll and payroll taxes $ 2,965 $ 1,756 Accrued royalties and commissions 917 1,621 Accrued advertising and promotion 1,052 1,465 Accrued berry purchase payments 1,010 1,908 Accrued other 2,423 2,783 Accrued liabilities $ 8,367 $ 9,533 |
Term Debt and Line of Credit
Term Debt and Line of Credit | 6 Months Ended |
Jul. 01, 2017 | |
Term Debt and Line of Credit | |
Term Debt and Line of Credit | 6. Term Debt and Line of Credit ABL Credit Facility On November 18, 2015, the Company entered into the ABL Credit Facility. 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. Borrowings under the ABL Credit Facility bear interest, at the Company’s option, at a base rate or the London interbank offered rate (“LIBOR”) plus, in each case, an applicable margin. The ABL Credit Facility will mature, and the commitments thereunder will terminate, on November 17, 2020. Events of default under the ABL Credit Facility include customary events such as a cross-default provision with respect to other material debt. The ABL Credit Facility requires us to, among other things, comply with a Fixed Charge Coverage Ratio (as defined in the ABL Credit Facility) if our liquidity as of the date of any determination is less than the greater of (i) 12.5% of the Maximum Revolver Amount and (ii) $6.125 million, subject to certain conditions. As of the date this Form 10-Q was filed with the SEC, we would not be able to comply with the Fixed Charge Coverage Ratio covenant if our liquidity were deemed to have fallen below the applicable threshold. On May 15, 2017, the Company entered into the ABL First Amendment, pursuant to which the Wells Fargo Lenders granted the Company an extension of the temporary waiver of the Going Concern Covenant Default from May 15, 2017 to July 17, 2017. In addition, the terms of the ABL First Amendment provided for, among other things, (i) an increase in the Company’s Applicable Margin for Base Rate and Libor Rate Loans (as such terms are defined in the ABL Credit Facility) effective May 1, 2017 by 100 basis points, (ii) additional financial and collateral reporting obligations and projection requirements, (iii) the immediate right of the Agent (as defined in the ABL Credit Agreement) or the Wells Fargo Lenders to exercise all rights and remedies under the ABL Credit Facility (in lieu of waiting until the earlier of ten business days after the date on which financial statements are required to be delivered for an applicable fiscal month), and (iv) the elimination of the right to issue curative equity. On July 17, 2017, the Company entered into the ABL Second Amendment with Wells Fargo and the Wells Fargo Lenders, pursuant to which the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from July 17, 2017 to July 24, 2017. In addition, the ABL Second Amendment provided for, among other things, additional reporting obligations, a reduced revolver commitment over a period of time ($49.0 million prior to the effective date of the ABL Second Amendment; $40.0 million from and after the ABL Second Amendment date through August 1, 2017; and $35.0 million from and after August 1, 2017), and adjusted advance rates. On July 20, 2017, the Company entered into the ABL Third Amendment with Wells Fargo and the Wells Fargo Lenders, pursuant to which the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from July 24, 2017 to August 31, 2017. Absent the ABL Second Amendment and the ABL Third Amendment, the Going Concern Covenant Default would have been reinstated, and the Company would have been in default under the ABL Credit Facility as of the date this Form 10-Q was filed with the SEC. As of July 1, 2017, there was $19.9 million outstanding under the ABL Credit Facility and the net availability thereunder was $6.9 million. Term debt consisted of the following as of July 1, 2017 and December 31, 2016 (in thousands): July 1, December 31, 2017 2016 Term loan credit facility through November 2020 $ 72,727 $ 84,150 Equipment term loan, Goodyear, Arizona, due monthly through April 2021 2,459 2,759 Equipment term loan, Rader Farms, due monthly through August 2019 1,160 1,420 Equipment term loan, Willamette Valley Fruit Company, due monthly through August 2019 861 1,054 Capital lease obligations, primarily due May 2022 66 44 Long-term debt 77,273 89,427 Less: deferred financing fees, net (6,222) (7,047) Less: current portion of long-term debt (71,051) (82,380) Long-term debt, less current portion $ — $ — Term Loan Credit Facility Also on November 18, 2015 and concurrent with the execution of the ABL Credit Facility, the Company entered into the Term Loan Credit Facility. 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. 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. 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 and a Total Leverage Ratio. The first Fixed Charge Coverage Ratio and Total Leverage Ratio measurement period was the end of the first quarter of fiscal 2016. On March 9, 2016, the Company entered into that certain First Amendment to Credit Agreement, with BSP, as administrative agent, and the BSP Lenders (the “Term Loan First Amendment”). The Term Loan First Amendment amended the Term Loan Credit Facility to defer the Company’s obligation to comply with the Total Leverage Ratio until the end of the third quarter of fiscal 2016. On September 27, 2016, the Company entered into that certain Second Amendment to Credit Agreement with BSP, as administrative agent, and the BSP Lenders (the “Term Loan Second Amendment”). The Term Loan Second Amendment deferred compliance with the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio covenants until the second quarter of fiscal 2017, required the Company to comply with the EBITDA Covenant commencing with the month ended April 30, 2017, and increased the Base Rate Margin and the Libor Rate Margin (each as defined in the Term Loan Credit Facility) thereunder by 100 basis points. The Term Loan Second Amendment also amended 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 Term Loan Second Amendment) until the fourth quarter of fiscal 2017. We did not meet the EBITDA Covenant (the “EBITDA Covenant Default”). On May 10, 2017, the Company entered into the Term Loan Third Amendment, pursuant to which the lenders granted the Company (i) an extension of the temporary waiver of the Going Concern Covenant Default from May 15, 2017 to July 17, 2017, and (ii) a temporary waiver of the EBITDA Covenant Default, until July 17, 2017. The Term Loan Third Amendment also required that the Company comply with the EBITDA Covenant commencing with the fiscal month ending June 30, 2017, measured over the 12-months then ended, and increased the Company’s prepayment fees in the event of a payment or prepayment of principal under the Term Loan Credit Facility (excluding regularly scheduled principal payments). On July 17, 2017, the Company entered into the BSP Letter Agreement, pursuant to which the BSP Lenders granted the Company (i) a further extension of the temporary waiver of the Going Concern Covenant Default from July 17, 2017 to July 24, 2017, and (ii) a temporary waiver of the Term Loan Financial Covenant Default until July 24, 2017. On July 20, 2017, the Company entered into the Term Loan Fourth Amendment, pursuant to which the BSP Lenders agreed to (i) a further extension of the temporary waiver of the Going Concern Covenant Default from July 24, 2017 to August 31, 2017, and (ii) a temporary waiver of the Term Loan Financial Covenant Default until August 31, 2017. In addition, the BSP Lenders agreed to provide $5.0 million of additional financing to the Company in the form of a term loan, payable in equal monthly installments of $12,500 commencing on September 30, 2017, with the balance due and payable on November 17, 2020, which is the maturity date of the Term Loan Credit Facility. The net proceeds of the $5.0 million loan may be used for working capital purposes, subject to certain restrictions in the Term Loan Credit Facility, and is subject to the terms and conditions of the Term Loan Credit Facility. Absent the BSP Letter Agreement and the Term Loan Fourth Amendment, the Going Concern Covenant Default would have been reinstated, and the Company would have been in default under the Term Loan Credit Facility as of the date this Form 10-Q was filed with the SEC. 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 July 1, 2017 and December 31, 2016. Absent the Term Loan Third Amendment, the Company would not have been in compliance with the Total Leverage Ratio and Fixed Charge Ratio covenants as of July 1, 2017. Further, absent the BSP Letter Agreement and the Term Loan Fourth Amendment, the Company would not have been in compliance with the financial covenants under the Term Loan Credit Facility as of the date this Form 10-Q was filed with the SEC. 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 as of August 31, 2017 (as required by the Term Loan Fourth Amendment). 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 this Form 10-Q was filed with the SEC. 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 either the Term Loan Credit Facility or ABL Credit Facility would trigger a default under the other Credit Facility and certain of our equipment lease financing arrangements, as these facilities each contain cross-default provisions. As such, we classified all of our outstanding debt as a current liability. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 01, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. Contractual 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 to licensors pursuant to brand licensing 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. 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. 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 answered and moved to dismiss the second amended complaint. On August 8, 2017, the court granted in part and denied in part the motion to dismiss, which was converted to a motion for judgment on the pleadings. The Company intends to vigorously defend 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 the 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. A retailer of the Company, 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, as well as a putative class of Illinois and Missouri purchasers. Ms. Burton alleges claims under the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. Ann. 505/2, et seq. Both plaintiffs also assert claims for unjust enrichment and breach of express warranty. On April 24, 2017, the Company filed a motion to dismiss the complaint. 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. The case has since been unsealed and is captioned Robert Hutton Derivatively on Behalf of Inventure Foods, Inc. v. Terry McDaniel et al., Case No. 2:17-cv-00727. The named defendants include certain of the Company’s 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 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 Certificate 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 Foods 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 defendants have moved to dismiss the complaint or, in the alternative, stay the matter pending resolution of the putative class action brought by Westmoreland (identified above) is resolved. Oral argument on the motion to dismiss is set for August 30, 2017. The defendants intend to vigorously defend the lawsuit. On March 27, 2017, a putative securities class action was filed by Glenn Schoenfeld in the U.S. District Court for the District of Arizona, Case No. 2:17-cv-00910, against the Company, its Chief Executive Officer, and its Chief Financial Officer (the “Schoenfeld Lawsuit”). On April 27, 2017, John Robinson filed a putative securities class action in the U.S. District Court for the District of Arizona, Case No. 2:17-cv-01258, against the Company, its Chief Executive Officer, and its Chief Financial Officer (the “Robinson Lawsuit”). On June 23, 2017, the court consolidated the Robinson Lawsuit with the Schoenfeld Lawsuit, and the caption was changed to In re Inventure Foods, Inc. Securities Litigation, Case No. 2:17-cv-0910. On June 27, 2017, the court appointed lead plaintiffs and lead counsel. Lead plaintiffs’ consolidated amended complaint is due August 26, 2017. The original complaints in the Schoenfeld Lawsuit and Robinson Lawsuit were purportedly filed on behalf of all persons and entities that acquired the Company’s securities between March 3, 2016 and March 16, 2017, and asserted claims for alleged violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and focused on the Company’s internal controls over accounting and financial reporting, its statements of operations for fiscal year 2015, and public statements in press releases and SEC filings between March 3, 2016 and March 16, 2017. Mr. Schoenfeld sought 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. Mr. Robinson sought certification as a class action, unspecified damages, prejudgment and post-judgment interest, reasonable attorneys’ fees, expert fees and other costs, and such other and further relief as the court may deem just and proper. The Company intends to vigorously defend the consolidated lawsuit . |
Business Segments
Business Segments | 6 Months Ended |
Jul. 01, 2017 | |
Business Segments and Significant Customers | |
Business Segments and Significant Customers | 8. Business Segments Our operations consist of two reportable segments: frozen products and snack products. The frozen products segment includes frozen fruits, fruit and vegetable blends, beverages, side dishes 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 the fiscal quarters ended July 1, 2017 and June 25, 2016, net revenues of our healthy/natural food category totaled $41.2 million and $47.9 million, respectively. For the fiscal quarters ended July 1, 2017 and June 25, 2016, net revenues of our indulgent specialty snack food category totaled $10.1 million and $9.9 million, respectively. For the six months ended July 1, 2017 and June 25, 2016, net revenues of our healthy/natural food category totaled $81.9 million and $95.2 million, respectively. For the six months ended July 1, 2017 and June 25, 2016, net revenues of our indulgent specialty snack food category totaled $19.0 million and $19.8 million, respectively. We do not allocate assets, selling, general and administrative expenses, income taxes or other income and expense to our reportable segments. The following table presents information about our reportable segments for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands): Frozen Snack Products Products Consolidated Quarter Ended July 1, 2017 Net revenues from external customers $ 20,692 $ 30,664 $ 51,356 Depreciation and amortization included in segment gross profit 225 576 801 Segment gross profit 3,607 6,505 10,112 Quarter Ended June 25, 2016 Net revenues from external customers $ 30,312 $ 27,485 $ 57,797 Depreciation and amortization included in segment gross profit 241 534 775 Segment gross profit 4,283 5,420 9,703 Six Months Ended July 1, 2017 Net revenues from external customers $ 44,154 $ 56,820 $ 100,974 Depreciation and amortization included in segment gross profit 451 1,155 1,606 Segment gross profit 8,348 10,278 18,626 Six Months Ended June 25, 2016 Net revenues from external customers $ 62,608 $ 52,369 $ 114,977 Depreciation and amortization included in segment gross profit 522 1,041 1,563 Segment gross profit 9,068 9,915 18,983 The following table reconciles reportable segment gross profit to our consolidated income (loss) from continuing operations before income taxes for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands): Quarter Ended Six Months Ended July 1, June 25, July 1, June 25, 2017 2016 2017 2016 Segment gross profit $ 10,112 $ 9,703 $ 18,626 $ 18,983 Unallocated amounts: Operating expenses (8,668) (7,609) (15,924) (14,763) Interest expense (2,425) (1,967) (4,787) (3,968) Income (loss) from continuing operations before income tax expense $ (981) $ 127 $ (2,085) $ 252 The table below presents information about revenues for each group of similar products within our reportable segments for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands): Quarter Ended July 1, 2017 Quarter Ended June 25, 2016 % of Net % of Net Net Revenue Revenues Net Revenue Revenues Frozen Products: Berries, blends, beverages and desserts $ 20,475 39.9 % $ 30,312 52.4 % Riced Vegetables 217 0.4 % — — % Total Frozen 20,692 40.3 % 30,312 52.4 % Snack Products: Indulgent specialty snacks (1) 10,106 19.7 % 9,873 17.1 % Healthy/natural snacks (2) 20,558 40.0 % 17,612 30.5 % Total snack $ 30,664 59.7 % $ 27,485 47.6 % Consolidated $ 51,356 100.0 % $ 57,797 100.0 % Six Months Ended July 1, 2017 Six Months Ended June 25, 2016 % of Net % of Net Net Revenue Revenues Net Revenue Revenues Frozen Products: Berries, beverages, blends and desserts $ 43,553 43.2 % $ 62,608 54.5 % Vegetables 601 0.6 % — — % Total frozen 44,154 43.8 % 62,608 54.5 % Snack Products: Indulgent specialty snacks (1) 19,033 18.8 % 19,799 17.2 % Healthy/natural snacks (2) 37,787 37.4 % 32,570 28.3 % Total snack $ 56,820 56.2 % $ 52,369 45.5 % Consolidated $ 100,974 100.0 % $ 114,977 100.0 % (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® brand kettle cooked potato chips, Bob’s Texas Style® brand kettle cooked chips, and Tato Skins® brand potato snacks. (2) Healthy/natural snacks includes Boulder Canyon® brand kettle cooked potato chips, other snack and food items and private label healthy/natural snacks. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jul. 01, 2017 | |
Stockholders' Equity | |
Stockholders' Equity | 9. Stockholders’ Equity The Company’s 2015 Equity Incentive Plan (the “2015 Plan”) was approved at our 2015 annual meeting of stockholders. 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 Amended and Restated 2005 Equity Incentive 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. 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. The 2015 Plan has a term of ten years and expires in May 2025. As of July 1, 2017, there were 552,886 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. 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 conditions 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 awards and units that ultimately vest depend 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 (i) the market price of our Common Stock at the time of grant, and (ii) 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 stock awards are entitled to receive any dividends declared on our Common Stock and have voting rights, regardless of whether such shares have vested. Recipients of restricted stock units have no voting rights or rights to receive cash dividends with respect to restricted stock unit awards until shares of Common Stock are issued in settlement of such awards. During the fiscal quarters ended July 1, 2017 and June 25, 2016, the total stock-based compensation expense from restricted Common Stock recognized in the financial statements was $0.4 million and $0.3 million, respectively. During the six months ended July 1, 2017 and June 25, 2016, the total stock-based compensation expense from restricted common stock recognized in the financial statements was $0.7 million and $0.7 million, respectively. There was no stock-based compensation costs capitalized. The following table summarizes activities related to restricted stock awards for the six months ended July 1, 2017: Weighted Average Grant Number Date Fair Value Nonvested balance at December 31, 2016 8,333 $ 12.78 Granted — $ — Vested and released (8,333) $ 12.78 Forfeited — $ — Nonvested balance at July 1, 2017 — $ — As of July 1, 2017, there was no unrecognized costs related to non-vested restricted stock awards. The following table summarizes activities related to restricted stock units for the six months ended July 1, 2017: Weighted Average Grant Number Date Fair Value Nonvested balance at December 31, 2016 541,346 $ 8.40 Granted 485,554 $ 4.05 Vested and released (159,910) $ 9.16 Forfeited (39,208) $ 10.26 Nonvested balance at July 1, 2017 827,782 $ 5.62 As of July 1, 2017, the total unrecognized costs related to non-vested restricted stock units was $3.4 million, which is expected to be recognized over a weighted average period of 2.1 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 $0.1 million and $0.1 million for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016, respectively. There was no stock-based compensation costs capitalized. The following table summarizes stock option activity during the six months ended July 1, 2017: Aggregate Weighted Average Weighted Intrinsic Value Remaining Options Average (in-the-money Contractual Life Outstanding Exercise Price options) (in years) Outstanding at December 31, 2016 567,602 $ 5.23 Granted — $ — Exercised — $ — Forfeited or expired (13,687) $ 10.37 Outstanding at July 1, 2017 $ 5.10 $ 473,948 As of July 1, 2017, the total unrecognized costs related to non-vested stock options granted were $0.1 million. We expect to recognize such costs in the financial statements over a weighted average period of 1.2 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 the closing price of $4.31 of our Common Stock as of July 1, 2017, 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 $0.5 million as of July 1, 2017 based on the exercise price and closing price of $4.31 of our Common Stock as of July 1, 2017. The following table summarizes information about stock options outstanding and exercisable at July 1, 2017: Weighted Average Remaining Weighted Weighted Contractual Average Average Range of Options Life Exercise Options Exercise Exercise Prices Outstanding (in years) Price Exercisable Price $ - $ 1.86 138,600 1.3 $ 1.75 138,600 $ 1.75 $ - $ 4.16 156,450 3.1 $ 3.55 156,450 $ 3.55 $ - $ 7.21 213,400 5.4 $ 6.88 191,300 $ 6.84 $ - $ 13.21 45,465 6.3 $ 12.36 34,465 $ 12.37 553,915 $ 5.10 520,815 $ 4.86 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. |
Organization and Summary of S15
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 01, 2017 | |
Organization 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 and frozen berry and vegetable blends, Boulder Canyon® brand kettle cooked potato chips, other snack and food items and frozen side dishes, Willamette Valley Fruit Company TM brand frozen berries, fruits, biscuits and other frozen snacks, Jamba® brand blend-and-serve smoothie kits under license from Jamba Juice Company (“Jamba Juice”), Sin In A 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 manufacturers. We operate in two segments: frozen products and snack products. The frozen products segment includes frozen fruits, fruit and vegetable blends, beverages, side dishes and desserts for sale primarily to grocery stores, club stores and mass merchandisers. All products sold under our frozen products segment are considered part of the healthy/natural food category. The snack products segment includes potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products, popcorn and extruded products for sale primarily to snack food distributors and retailers. The products sold under our snack products segment include products considered part of the indulgent specialty snack food category, as well as products considered part of the healthy/natural food category. We operate manufacturing facilities in seven locations. Our frozen berry products are processed in our Lynden, Washington, Bellingham, Washington and two Salem, Oregon facilities. Our frozen berry business grows, processes and markets premium berry blends, raspberries, blueberries and rhubarb and purchases blackberries, cherries, cranberries, strawberries and other fruits from a select network of fruit growers for resale. The fruit is processed, frozen and packaged for sale and distribution to wholesale customers. Our frozen beverage products, including fruit and vegetable blends and frozen side dishes, are packaged at our Bellingham, Washington facility. We also use third-party processors for certain frozen products and package certain frozen fruits and vegetables for other manufacturers. Our frozen desserts products are produced in our Pensacola, Florida and Salem, Oregon facilities. Our snack products are manufactured at our Phoenix, Arizona and Bluffton, Indiana facilities, as well as select third-party facilities for certain products. Our fiscal year ends on the last Saturday occurring in the month of December of each calendar year. Accordingly, the second quarter of fiscal 2017 commenced April 2, 2017 and ended July 1, 2017. |
Strategic and Financial Review Process | Strategic and Financial Review Process In July 2016, we announced that our Board of Directors (“Board”) had commenced a strategic and financial review of the Company with the objective to increase shareholder value. We engaged Rothschild Inc. to serve as our financial advisor and assist us in this process. We remain actively involved 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 voluntary product recall in April 2015 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. This fact, together with the projected near term outlook for our business and our inability to complete a strategic transaction (other than the Fresh Frozen Asset Sale) by year end or demonstrate that such a transaction is imminent, raise substantial doubt about our ability to continue as a going concern. We reported this going concern conclusion in our 2016 Form 10-K, together with the following specific conditions considered by management in reaching such conclusion: · Our five-year, $85.0 million term loan credit agreement with BSP Agency, LLC (“BSP”), as administrative agent, and the other lenders party thereto (the “BSP Lenders”) (with all related loan documents, and as amended from time to time, the “Term Loan Credit Facility”) requires us to, among other things, comply with Total Leverage Ratio and Fixed Charge Coverage Ratio (each as defined in the Term Loan Credit Facility) covenants by the end of the second quarter of fiscal 2017 and a minimum EBITDA target covenant (the “EBITDA Covenant”) by the month ended April 30, 2017, which target we did not meet (the “EBITDA Covenant Default”) and, as discussed below, we received temporary waivers of such default. The Total 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 1.1:1. We previously reported that absent the completion of a strategic transaction yielding sufficient cash proceeds (in addition to the proceeds received from the sale of certain assets, properties and rights of our wholly owned subsidiary, Fresh Frozen Foods, Inc. (now known as Inventure – GA, Inc.) (“Fresh Frozen Foods”) in March 2017) to pay down debt, waivers or amendments by our lenders, or a refinancing of our debt, we would 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 $97.2 million at July 1, 2017 (including $4.5 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. · Our five-year, $50.0 million revolving credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and the other lenders party thereto (the “Wells Fargo Lenders”) (with all related loan documents, and as amended from time to time, the “ABL Credit Facility” and, together with the Term Loan Credit Facility, the “Credit Facilities”), requires us to, among other things, comply with a Fixed Charge Coverage Ratio (as defined in the ABL Credit Facility) if our liquidity as of the date of any determination is less than the greater of (i) 12.5% of the Maximum Revolver Amount and (ii) $6.125 million, subject to certain conditions. As of the date this Form 10-Q was filed with the SEC, we would not be able to comply with the Fixed Charge Coverage Ratio covenant if our liquidity were deemed to have fallen 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 in our 2016 Form 10-K contained 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 “Going Concern Covenant Default”). As of the date our 2016 Form 10-K was filed with the SEC, we obtained a temporary waiver of the Going Concern Covenant Default until May 15, 2017 from the applicable lenders under the Credit Facilities. · On May 10, 2017, we entered into a Limited Waiver and Third Amendment to the Credit Agreement with the BSP Lenders (the “Term Loan Third Amendment”). Under the terms of the Term Loan Third Amendment, the BSP Lenders granted the Company (i) an extension of the temporary waiver of the Going Concern Covenant Default from May 15, 2017 to July 17, 2017, and (ii) a temporary waiver of the EBITDA Covenant Default until July 17, 2017. The Term Loan Third Amendment also required that the Company comply with the EBITDA Covenant commencing with the fiscal month ending June 30, 2017, measured over the 12-months then ended, and increased the Company’s prepayment fees in the event of a payment or prepayment of principal under the Term Loan Credit Facility (excluding regularly scheduled principal payments). · On May 15, 2017, we entered into a First Amendment to Credit Agreement and Limited Waiver, effective as of May 12, 2017, with the Wells Fargo Lenders (the “ABL First Amendment”). Under the terms of the ABL First Amendment, the Wells Fargo Lenders granted the Company an extension of the temporary waiver of the Going Concern Covenant Default from May 15, 2017 to July 17, 2017. In addition, the terms of the ABL First Amendment provided for, among other things, (i) an increase in the Company’s Applicable Margin for Base Rate and Libor Rate Loans (as such terms are defined in the ABL Credit Facility) effective May 1, 2017 by 100 basis points, (ii) additional financial and collateral reporting obligations and projection requirements, (iii) the immediate right of the Agent (as defined in the ABL Credit Agreement) or the Wells Fargo Lenders to exercise all rights and remedies under the ABL Credit Facility (in lieu of waiting until the earlier of ten business days after the date on which financial statements are required to be delivered for an applicable fiscal month), and (iv) the elimination of the right to issue curative equity. · On July 17, 2017, we entered into a letter agreement with BSP and the BSP Lenders (the “BSP Letter Agreement”). Under the terms of the BSP Letter Agreement, the BSP Lenders granted the Company (i) a further extension of the temporary waiver of the Going Concern Covenant Default from July 17, 2017 to July 24, 2017, and (ii) a temporary waiver of the financial covenants the Company was required to comply with under the Term Loan Credit Facility (the “Term Loan Financial Covenant Default”) until July 24, 2017. · On July 17, 2017, we also entered into a Second Amendment to Credit Agreement (the “ABL Second Amendment”) with Wells Fargo and the Wells Fargo Lenders. Under the terms of the ABL Second Amendment, the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from July 17, 2017 to July 24, 2017. In addition, the ABL Second Amendment provided for, among other things, additional reporting obligations, a reduced revolver commitment over a period of time ($49.0 million prior to the effective date of the ABL Second Amendment; $40.0 million from and after the ABL Second Amendment date through August 1, 2017; and $35.0 million from and after August 1, 2017), and adjusted advance rates. · On July 20, 2017, we entered into a Limited Waiver and Fourth Amendment to Credit Agreement with BSP and the BSP Lenders (the “Term Loan Fourth Amendment”). Under the terms of the Term Loan Fourth Amendment, the BSP Lenders agreed to (i) a further extension of the temporary waiver of the Going Concern Covenant Default from July 24, 2017 to August 31, 2017, and (ii) a temporary waiver of the Term Loan Financial Covenant Default until August 31, 2017. In addition, the BSP Lenders agreed to provide $5.0 million of additional financing to the Company in the form of a term loan, payable in equal monthly installments of $12,500 commencing on September 30, 2017, with the balance due and payable on November 17, 2020, which is the maturity date of the Term Loan Credit Facility. The net proceeds of this new $5.0 million loan may be used for working capital purposes, subject to certain restrictions in the Term Loan Credit Facility, and is subject to the terms and conditions of the Term Loan Credit Facility. · On July 20, 2017, we also entered into a Third Amendment to Credit Agreement (the “ABL Third Amendment”) with Wells Fargo and the Wells Fargo Lenders. Under the terms of the ABL Third Amendment, the Wells Fargo Lenders granted the Company a further extension of the temporary waiver of the Going Concern Covenant Default from July 24, 2017 to August 31, 2017. As previously disclosed, the Company’s Board and management continue to explore various strategic alternatives. There can be no assurance that we will be successful in our pursuit of any strategic transaction or that we will be able consummate a strategic 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 condensed consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about our ability to continue as a going concern, other than the reclassification of certain long-term debt and the related debt issuance costs to current liabilities and current assets, respectively. Our lenders may resist renegotiation or lengthening of payment and other terms through legal action or otherwise if we are unsuccessful in our efforts to complete a strategic transaction. If we are not able to timely, successfully or efficiently implement the strategies that we are pursuing, we may need to seek voluntarily protection under Chapter 11 of the U.S. Bankruptcy Code. |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements for the fiscal quarter ended July 1, 2017 are unaudited and include the accounts of Inventure Foods and all of its wholly owned subsidiaries. All significant intercompany amounts and transactions have been eliminated. The condensed consolidated financial statements, including the December 31, 2016 consolidated balance sheet data which was derived from audited financial statements, have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary in order to make the condensed consolidated financial statements not misleading. A description of our accounting policies and other financial information is included in the audited financial statements filed with our 2016 Form 10-K. The results of operations for the fiscal quarter ended July 1, 2017 are not necessarily indicative of the results expected for the full year. |
Discontinued Operations | Discontinued Operations 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, 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 facilities located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property and inventory (the “Fresh Frozen Asset Sale”). As consideration for the acquisition, Pictsweet paid the Company $23.7 million in cash. The net proceeds from the Fresh Frozen Asset Sale were $19.5 million, after payment of professional fees and other transaction expenses, and were used to pay down amounts outstanding under the Credit Facilities. The results of operations for the Fresh Frozen Foods business have been classified as discontinued operations for all periods presented. As required by the terms of the Purchase Agreement, we have changed the name of our Fresh Frozen Foods subsidiary to Inventure – GA, Inc. |
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 July 1, 2017 and December 31, 2016, 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 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 at the respective dates set forth below (in thousands): July 1, 2017 December 31, 2016 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 $ 704 $ — $ 650 $ — Accrued liabilities Level 3 — (263) — (270) Other liabilities Level 3 — (1,291) — (1,521) $ 704 $ (1,554) $ 650 $ (1,791) 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. A summary of the activity of the fair value of the measurements using unobservable inputs (Level 3 liabilities) for the six months ended July 1, 2017 is as follows (in thousands): Level 3 Balance at December 31, 2016 $ 1,791 Earn-out compensation paid to Willamette Valley Fruit Company (230) Earn-out compensation paid to Sin In A Tin (7) Balance at July 1, 2017 $ 1,554 |
Income Taxes | Income Taxes Income tax expense was $11,000 for the fiscal quarter ended July 1, 2017, compared to a tax expense of $0.1 million for the fiscal quarter ended June 25, 2016. Our effective tax rate was (1.1)% and 52.2% for the fiscal quarters ended July 1, 2017 and June 25, 2016, respectively. Income tax expense was $0.1 million for the six months ended July 1, 2017, compared to a tax expense of $0.1 million for the six months ended June 25, 2016. Our effective tax rate was (5.4)% and 45.1% for the six months ended July 1, 2017 and June 25, 2016, respectively. Income tax expense for the fiscal quarter and six months ended July 1, 2017 was impacted by the full valuation allowance which was initially recorded in the fourth quarter of 2016. Therefore, income tax expenses was a result of certain state minimum taxes and deferred tax liabilities not subject to the valuation allowance. |
Loss Per Common Share | Loss Per Common Share Basic loss per common share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. Diluted loss per share is calculated by including all dilutive common shares, such as stock options and restricted stock. Unvested restricted stock grants that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, require loss per share to be presented pursuant to the two-class method. However, the application of this method would have no effect on basic and diluted loss per common share and is therefore not presented. For the fiscal quarter and six months ended July 1, 2017, diluted loss per share is the same as basic loss per share, as the inclusion of potentially issuable Common Stock would be antidilutive. During the fiscal quarter and six months ended July 1, 2017, 0.6 million shares of Common Stock underlying stock options and restricted stock units were not included in the computation of diluted earnings (loss) per share because inclusion of such shares would be antidilutive. For the fiscal quarter and six months ended June 25, 2016, 0.3 million shares of Common Stock underlying stock options and restricted stock units were not included in the computation of diluted earnings (loss) per share because inclusion of such shares would be antidilutive. Exercises of outstanding stock options are assumed to occur for purposes of calculating diluted earnings per share for periods in which their effect would not be antidilutive. Loss per common share was computed as follows for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands, except per share data): Quarter Ended Six Months Ended July 1, June 25, July 1, June 25, 2017 2016 2017 2016 Basic Earnings (Loss) Per Share: Net income (loss) from continuing operations $ (992) $ 61 $ (2,198) $ 138 Net income (loss) from discontinued operations 75 (339) (12,858) (1,434) Net loss $ (917) $ (278) $ (15,056) $ (1,296) Weighted average number of common shares 19,741 19,628 19,708 19,616 Loss per common share $ (0.05) $ (0.01) $ (0.77) $ (0.07) Diluted Earnings (Loss) Per Share: Net income (loss) from continuing operations $ (992) $ 61 $ (2,198) $ 138 Net income (loss) from discontinued operations 75 (339) (12,858) (1,434) Net loss $ (917) $ (278) $ (15,056) $ (1,296) Weighted average number of common shares 19,741 19,628 19,708 19,616 Incremental shares from assumed conversions of stock options and non-vested shares of restricted stock — 274 — 265 Adjusted weighted average number of common shares 19,741 19,902 19,708 19,881 Loss per common share $ (0.05) $ (0.01) $ (0.77) $ (0.07) |
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. 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 9 - Stockholders’ Equity” for additional information. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (the “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 July 1, 2017, we have not evaluated the impact of this new accounting standard on our financial statements. In July 2015, the FASB issued an ASU to simplify the measurement of inventory. This ASU requires inventory to be subsequently measured using the lower of cost and net realizable value, thereby eliminating the market value approach. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” This ASU is effective for reporting periods beginning after December 15, 2016 and is applied prospectively. Early adoption is permitted. We adopted this guidance in the first quarter of fiscal 2017, and it had no impact on our financial statements and disclosure. In February 2016, the FASB issued new guidance related to accounting for leases. The new standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. As of July 1 2017, we have not evaluated the impact of this new accounting standard on our financial statements. In March 2016, the FASB issued an ASU intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments will be recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits are currently recorded in equity and as financing activity under the current rules. This guidance is effective for reporting periods beginning after December 15, 2016. We adopted this guidance in the first quarter of fiscal 2017, and the adoption did not have a material impact on our financial statements and disclosure. |
Organization and Summary of S16
Organization and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
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 at the respective dates set forth below (in thousands): July 1, 2017 December 31, 2016 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 $ 704 $ — $ 650 $ — Accrued liabilities Level 3 — (263) — (270) Other liabilities Level 3 — (1,291) — (1,521) $ 704 $ (1,554) $ 650 $ (1,791) |
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 six months ended July 1, 2017 is as follows (in thousands): Level 3 Balance at December 31, 2016 $ 1,791 Earn-out compensation paid to Willamette Valley Fruit Company (230) Earn-out compensation paid to Sin In A Tin (7) Balance at July 1, 2017 $ 1,554 |
Schedules of basic and diluted earnings (loss) per common share | Loss per common share was computed as follows for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands, except per share data): Quarter Ended Six Months Ended July 1, June 25, July 1, June 25, 2017 2016 2017 2016 Basic Earnings (Loss) Per Share: Net income (loss) from continuing operations $ (992) $ 61 $ (2,198) $ 138 Net income (loss) from discontinued operations 75 (339) (12,858) (1,434) Net loss $ (917) $ (278) $ (15,056) $ (1,296) Weighted average number of common shares 19,741 19,628 19,708 19,616 Loss per common share $ (0.05) $ (0.01) $ (0.77) $ (0.07) Diluted Earnings (Loss) Per Share: Net income (loss) from continuing operations $ (992) $ 61 $ (2,198) $ 138 Net income (loss) from discontinued operations 75 (339) (12,858) (1,434) Net loss $ (917) $ (278) $ (15,056) $ (1,296) Weighted average number of common shares 19,741 19,628 19,708 19,616 Incremental shares from assumed conversions of stock options and non-vested shares of restricted stock — 274 — 265 Adjusted weighted average number of common shares 19,741 19,902 19,708 19,881 Loss per common share $ (0.05) $ (0.01) $ (0.77) $ (0.07) |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Discontinued Operations | |
Schedule of comparative financial results of Fresh Frozen Foods Business included in discontinued operations | Quarter Ended Six Months Ended July 1, 2017 June 25, 2016 July 1, 2017 June 25, 2016 Net revenues $ 58 $ 11,467 $ 8,735 $ 24,141 Cost of revenues 8 10,902 8,602 24,040 Gross profit 50 565 133 101 Operating expenses: Selling, general and administrative expenses 39 884 669 1,839 Operating income (loss) 11 (319) (536) (1,738) Loss (gain) on sale of Fresh Frozen Foods (64) — 10,082 — Interest expense, net — 354 331 708 Income (loss) before income taxes 75 (673) (10,949) (2,446) Income tax expense (benefit) — (334) 1,909 (1,012) Net income (loss) from discontinued operations $ 75 $ (339) $ (12,858) $ (1,434) |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Inventories | |
Schedule of inventories | Inventories consisted of the following as of July 1, 2017 and December 31, 2016 (in thousands): July 1, December 31, 2017 2016 Finished goods $ 17,210 $ 27,661 Raw materials 27,115 44,527 Inventories $ 44,325 $ 72,188 |
Goodwill, Trademarks and Othe19
Goodwill, Trademarks and Other Intangibles (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
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 July 1, 2017 and December 31, 2016 (in thousands): Estimated July 1, December 31, Useful Life 2017 2016 Goodwill: Inventure Foods $ 5,986 $ 5,986 Rader Farms 5,630 5,630 Willamette Valley Fruit Company 3,147 3,147 Sin In A Tin 222 222 Goodwill $ 14,985 $ 14,985 Trademarks: Inventure Foods $ 896 $ 896 Rader Farms 1,070 1,070 Willamette Valley Fruit Company 740 740 Fresh Frozen Foods — 2,330 Sin In A Tin 123 123 Other intangibles: Rader Farms - Customer relationship, gross carrying amount 10 years 100 100 Rader Farms - Customer relationship, accum. amortization (100) (96) Willamette Valley Fruit Company - Customer relationship, gross carrying amount 10 years 3,200 3,200 Willamette Valley Fruit Company - Customer relationship, accum. amortization (1,280) (1,120) Trademarks and other intangibles, net $ 4,749 $ 7,243 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Accrued Liabilities. | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following as of July 1, 2017 and December 31, 2016 (in thousands): July 1, December 31, 2017 2016 Accrued payroll and payroll taxes $ 2,965 $ 1,756 Accrued royalties and commissions 917 1,621 Accrued advertising and promotion 1,052 1,465 Accrued berry purchase payments 1,010 1,908 Accrued other 2,423 2,783 Accrued liabilities $ 8,367 $ 9,533 |
Term Debt and Line of Credit (T
Term Debt and Line of Credit (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Term Debt and Line of Credit | |
Schedule term debt | Term debt consisted of the following as of July 1, 2017 and December 31, 2016 (in thousands): July 1, December 31, 2017 2016 Term loan credit facility through November 2020 $ 72,727 $ 84,150 Equipment term loan, Goodyear, Arizona, due monthly through April 2021 2,459 2,759 Equipment term loan, Rader Farms, due monthly through August 2019 1,160 1,420 Equipment term loan, Willamette Valley Fruit Company, due monthly through August 2019 861 1,054 Capital lease obligations, primarily due May 2022 66 44 Long-term debt 77,273 89,427 Less: deferred financing fees, net (6,222) (7,047) Less: current portion of long-term debt (71,051) (82,380) Long-term debt, less current portion $ — $ — |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Business Segments and Significant Customers | |
Schedule of information by reportable segments | The following table presents information about our reportable segments for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands): Frozen Snack Products Products Consolidated Quarter Ended July 1, 2017 Net revenues from external customers $ 20,692 $ 30,664 $ 51,356 Depreciation and amortization included in segment gross profit 225 576 801 Segment gross profit 3,607 6,505 10,112 Quarter Ended June 25, 2016 Net revenues from external customers $ 30,312 $ 27,485 $ 57,797 Depreciation and amortization included in segment gross profit 241 534 775 Segment gross profit 4,283 5,420 9,703 Six Months Ended July 1, 2017 Net revenues from external customers $ 44,154 $ 56,820 $ 100,974 Depreciation and amortization included in segment gross profit 451 1,155 1,606 Segment gross profit 8,348 10,278 18,626 Six Months Ended June 25, 2016 Net revenues from external customers $ 62,608 $ 52,369 $ 114,977 Depreciation and amortization included in segment gross profit 522 1,041 1,563 Segment gross profit 9,068 9,915 18,983 |
Schedule of reconciliation of reportable segment gross profit to consolidated income before income tax provision | The following table reconciles reportable segment gross profit to our consolidated income (loss) from continuing operations before income taxes for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands): Quarter Ended Six Months Ended July 1, June 25, July 1, June 25, 2017 2016 2017 2016 Segment gross profit $ 10,112 $ 9,703 $ 18,626 $ 18,983 Unallocated amounts: Operating expenses (8,668) (7,609) (15,924) (14,763) Interest expense (2,425) (1,967) (4,787) (3,968) Income (loss) from continuing operations before income tax expense $ (981) $ 127 $ (2,085) $ 252 |
Schedule of revenues for each group of similar products within reportable segments | The table below presents information about revenues for each group of similar products within our reportable segments for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands): Quarter Ended July 1, 2017 Quarter Ended June 25, 2016 % of Net % of Net Net Revenue Revenues Net Revenue Revenues Frozen Products: Berries, blends, beverages and desserts $ 20,475 39.9 % $ 30,312 52.4 % Riced Vegetables 217 0.4 % — — % Total Frozen 20,692 40.3 % 30,312 52.4 % Snack Products: Indulgent specialty snacks (1) 10,106 19.7 % 9,873 17.1 % Healthy/natural snacks (2) 20,558 40.0 % 17,612 30.5 % Total snack $ 30,664 59.7 % $ 27,485 47.6 % Consolidated $ 51,356 100.0 % $ 57,797 100.0 % Six Months Ended July 1, 2017 Six Months Ended June 25, 2016 % of Net % of Net Net Revenue Revenues Net Revenue Revenues Frozen Products: Berries, beverages, blends and desserts $ 43,553 43.2 % $ 62,608 54.5 % Vegetables 601 0.6 % — — % Total frozen 44,154 43.8 % 62,608 54.5 % Snack Products: Indulgent specialty snacks (1) 19,033 18.8 % 19,799 17.2 % Healthy/natural snacks (2) 37,787 37.4 % 32,570 28.3 % Total snack $ 56,820 56.2 % $ 52,369 45.5 % Consolidated $ 100,974 100.0 % $ 114,977 100.0 % (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® brand kettle cooked potato chips, Bob’s Texas Style® brand kettle cooked chips, and Tato Skins® brand potato snacks. (2) Healthy/natural snacks includes Boulder Canyon® brand kettle cooked potato chips, other snack and food items and private label healthy/natural snacks. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Stockholders' Equity | |
Schedule of restricted share awards activity | Weighted Average Grant Number Date Fair Value Nonvested balance at December 31, 2016 8,333 $ 12.78 Granted — $ — Vested and released (8,333) $ 12.78 Forfeited — $ — Nonvested balance at July 1, 2017 — $ — |
Summary of restricted stock units activity | Weighted Average Grant Number Date Fair Value Nonvested balance at December 31, 2016 541,346 $ 8.40 Granted 485,554 $ 4.05 Vested and released (159,910) $ 9.16 Forfeited (39,208) $ 10.26 Nonvested balance at July 1, 2017 827,782 $ 5.62 |
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 31, 2016 567,602 $ 5.23 Granted — $ — Exercised — $ — Forfeited or expired (13,687) $ 10.37 Outstanding at July 1, 2017 $ 5.10 $ 473,948 |
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 $ - $ 1.86 138,600 1.3 $ 1.75 138,600 $ 1.75 $ - $ 4.16 156,450 3.1 $ 3.55 156,450 $ 3.55 $ - $ 7.21 213,400 5.4 $ 6.88 191,300 $ 6.84 $ - $ 13.21 45,465 6.3 $ 12.36 34,465 $ 12.37 553,915 $ 5.10 520,815 $ 4.86 |
Operations and Summary of Signi
Operations and Summary of Significant Accounting Policies (Details) $ in Millions | 6 Months Ended | |||
Jul. 01, 2017segmentitemlocation | Jul. 01, 2017productitemlocation | Jul. 01, 2017itemlocation | Dec. 31, 2016USD ($) | |
Organization Consolidation and Summary of Significant Accounting Policies | ||||
Minimum annual net revenues | $ | $ 269 | |||
Number of product categories | product | 2 | |||
Number of reporting units | 2 | 2 | ||
Number of locations in which manufacturing facilities are operated | location | 7 | 7 | 7 | |
Number of manufacturing facilities in Salem, Oregon | item | 2 | 2 | 2 |
Organization and Summary of S25
Organization and Summary of Significant Accounting Policies - Going Concerns Uncertainty (Details) | Jul. 20, 2017USD ($) | Jul. 17, 2017USD ($) | May 17, 2017 | May 15, 2017 | Sep. 27, 2016 | Nov. 18, 2015USD ($) | Jul. 01, 2017USD ($) |
Going Concerns | |||||||
Leverage ratio | 4.25 | ||||||
Fixed charge coverage ratio | 1.1 | ||||||
Default amount | $ 97,200,000 | ||||||
Going Concerns | BSP Agency, LLC, a Delaware limited liability company | |||||||
Debt instrument term | 5 years | ||||||
Maximum borrowing capacity | $ 85,000,000 | ||||||
Equipment Financing Debt | Going Concerns | |||||||
Default amount | $ 4,500,000 | ||||||
ABL Credit Facility | |||||||
Percentage of maximum revolver amount | 12.50% | ||||||
ABL Credit Facility | Wells Fargo Bank National Association And Other Lenders Party | |||||||
Number of business day waiver | 10 days | ||||||
ABL Credit Facility | Going Concerns | |||||||
Debt instrument term | 5 years | ||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||
Percentage of maximum revolver amount | 12.50% | ||||||
ABL Credit Facility | Going Concerns | Wells Fargo Bank National Association And Other Lenders Party | |||||||
Number of business day waiver | 10 days | ||||||
ABL Credit Facility | Prior to amendment | |||||||
Maximum Revolver Amount | $ 49,000,000 | ||||||
ABL Credit Facility | After amendment through August 1, 2017 | |||||||
Maximum Revolver Amount | 40,000,000 | ||||||
ABL Credit Facility | From and after August 1, 2017 | |||||||
Maximum Revolver Amount | $ 35,000,000 | ||||||
ABL Credit Facility | Maximum | |||||||
Threshold Limit For Liquidity Amount | $ 6,125,000 | ||||||
ABL Credit Facility | Maximum | Going Concerns | |||||||
Threshold Limit For Liquidity Amount | 6,125,000 | ||||||
Senior Secured Term Loan Due Quarterly Through November 2020 | |||||||
Maximum borrowing capacity | $ 85,000,000 | ||||||
Senior Secured Term Loan Due Quarterly Through November 2020 | Wells Fargo Bank National Association And Other Lenders Party | |||||||
Debt instrument term | 5 years | ||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||
Amount increase of maximum borrowing capacity | 10,000,000 | ||||||
Senior Secured Term Loan Due Quarterly Through November 2020 | BSP Agency, LLC, a Delaware limited liability company | |||||||
Amount increase of maximum borrowing capacity | $ 5,000,000 | $ 25,000,000 | $ 25,000,000 | ||||
Term loan, monthly installment | $ 12,500 | ||||||
Installments | monthly | ||||||
Net borrowings on U.S Bank line of credit | $ 5,000,000 | ||||||
Base Rate | ABL Credit Facility | Wells Fargo Bank National Association And Other Lenders Party | |||||||
Basis points added to base rate (as a percent) | 1.00% | ||||||
Base Rate | ABL Credit Facility | Going Concerns | Wells Fargo Bank National Association And Other Lenders Party | |||||||
Basis points added to base rate (as a percent) | 1.00% | ||||||
Base Rate | Senior Secured Term Loan Due Quarterly Through November 2020 | BSP Agency, LLC, a Delaware limited liability company | |||||||
Basis points added to base rate (as a percent) | 1.00% |
Organization and Summary of S26
Organization and Summary of Significant Accounting Policies - Discontinued Operations (Details) - Fresh Frozen Foods $ in Millions | Mar. 23, 2017USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Consideration received | $ 23.7 |
Proceeds from sale of Fresh Frozen | $ 19.5 |
Organization and Summary of S27
Organization and Summary of Significant Accounting Policies - Fair Value and Income Tax (Details) - USD ($) $ in Thousands | Jul. 01, 2017 | Dec. 31, 2016 |
Assets: | ||
Non-qualified Deferred Compensation Plan Investments | $ 704 | $ 650 |
Liabilities: | ||
Earn-out contingent consideration obligation | (1,554) | (1,791) |
Fair Value, Inputs, Level 1 | Other Assets | ||
Assets: | ||
Non-qualified Deferred Compensation Plan Investments | 704 | 650 |
Level 3 | Accrued Liabilities | ||
Liabilities: | ||
Earn-out contingent consideration obligation | (263) | (270) |
Level 3 | Other Liabilities | ||
Liabilities: | ||
Earn-out contingent consideration obligation | $ (1,291) | $ (1,521) |
Organization and Summary of S28
Organization and Summary of Significant Accounting Policies - Fair Value Unobservable Inputs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jun. 25, 2016 | Jul. 01, 2017 | Jun. 25, 2016 | |
Income Taxes | ||||
Income tax expense | $ (11) | $ (66) | $ (113) | $ (114) |
Effective tax rate (as a percent) | (1.10%) | 52.20% | (5.40%) | 45.10% |
Earn out Compensation due | ||||
Fair value of the measurements using unobservable inputs (Level 3 Liabilities) | ||||
Balance at beginning of period | $ 1,791 | |||
Balance at end of period | $ 1,554 | 1,554 | ||
Earn out Compensation due | Willamette Valley Fruit Company | ||||
Fair value of the measurements using unobservable inputs (Level 3 Liabilities) | ||||
Earn-out compensation paid | (230) | |||
Earn out Compensation due | Sin In A Tin | ||||
Fair value of the measurements using unobservable inputs (Level 3 Liabilities) | ||||
Earn-out compensation paid | $ (7) |
Organization and Summary of S29
Organization and Summary of Significant Accounting Policies - Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jun. 25, 2016 | Jul. 01, 2017 | Jun. 25, 2016 | |
Income (loss) per common share: | ||||
Anti-dilutive options excluded from computation of diluted earnings per share (in shares) | 600 | 300 | 600 | 300 |
Basic Earnings (Loss) Per Share: | ||||
Net income (loss) from continuing operation | $ (992) | $ 61 | $ (2,198) | $ 138 |
Net income (loss) from discontinued operations | 75 | (339) | (12,858) | (1,434) |
Net loss | $ (917) | $ (278) | $ (15,056) | $ (1,296) |
Weighted average number of common shares | 19,741 | 19,628 | 19,708 | 19,616 |
Loss per common share (in dollars per share) | $ (0.05) | $ (0.01) | $ (0.77) | $ (0.07) |
Diluted Earnings (Loss) Per Share: | ||||
Net income (loss) from continuing operation | $ (992) | $ 61 | $ (2,198) | $ 138 |
Net income (loss) from discontinued operations | 75 | (339) | (12,858) | (1,434) |
Net loss | $ (917) | $ (278) | $ (15,056) | $ (1,296) |
Weighted average number of common shares | 19,741 | 19,628 | 19,708 | 19,616 |
Incremental shares from assumed conversions of stock options and non-vested shares of restricted stock | 274 | 265 | ||
Adjusted weighted average number of common shares | 19,741 | 19,902 | 19,708 | 19,881 |
Loss per common share (in dollars per share) | $ (0.05) | $ (0.01) | $ (0.77) | $ (0.07) |
Organization and Summary of S30
Organization and Summary of Significant Accounting Policies - Stock-based Compensations and Accounting Standards Update (Details) - Restricted Stock | 6 Months Ended |
Jul. 01, 2017 | |
Minimum | |
Stock Options and Stock-Based Compensation | |
Requisite period of the award over which stock based compensation award expenses are recognized | 1 year |
Maximum | |
Stock Options and Stock-Based Compensation | |
Requisite period of the award over which stock based compensation award expenses are recognized | 5 years |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Thousands | Mar. 23, 2017 | Jul. 01, 2017 | Jun. 25, 2016 | Jul. 01, 2017 | Jun. 25, 2016 | Dec. 31, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Total assets | $ 139,997 | $ 139,997 | $ 181,480 | |||
Total liabilities | 130,744 | 130,744 | 157,791 | |||
Operating expenses: | ||||||
Net income (loss) from discontinued operations | 75 | $ (339) | (12,858) | $ (1,434) | ||
Fresh Frozen Foods | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Consideration received | $ 23,700 | |||||
Proceeds from sale of Fresh Frozen | $ 19,500 | |||||
Total assets | 32,200 | |||||
Total liabilities | $ 2,000 | |||||
Comparative financial results | ||||||
Net revenues | 58 | 11,467 | 8,735 | 24,141 | ||
Cost of revenues | 8 | 10,902 | 8,602 | 24,040 | ||
Gross profit | 50 | 565 | 133 | 101 | ||
Operating expenses: | ||||||
Selling, general and administrative expenses | 39 | 884 | 669 | 1,839 | ||
Operating income (loss) | 11 | (319) | (536) | (1,738) | ||
Loss (gain) on sale of Fresh Frozen Foods | (64) | 10,082 | ||||
Interest expense, net | 354 | 331 | 708 | |||
Income (loss) before income taxes | 75 | (673) | (10,949) | (2,446) | ||
Income tax expenses (benefit) | (334) | 1,909 | (1,012) | |||
Net income (loss) from discontinued operations | $ 75 | $ (339) | $ (12,858) | $ (1,434) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jul. 01, 2017 | Dec. 31, 2016 |
Inventories | ||
Finished goods | $ 17,210 | $ 27,661 |
Raw materials | 27,115 | 44,527 |
Total inventories | $ 44,325 | $ 72,188 |
Goodwill, Trademarks and Othe33
Goodwill, Trademarks and Other Intangibles (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017 | Jun. 25, 2016 | Jul. 01, 2017 | Jun. 25, 2016 | Dec. 31, 2016 | |
Goodwill, trademarks and other intangible assets | |||||
Goodwill | $ 14,985,000 | $ 14,985,000 | $ 14,985,000 | ||
Other intangibles: | |||||
Total trademarks and other intangibles, net | 4,749,000 | 4,749,000 | 7,243,000 | ||
Amortization expense related to intangibles | 82,000 | $ 83,000 | 164,000 | $ 165,000 | |
Inventure Foods | |||||
Goodwill, trademarks and other intangible assets | |||||
Goodwill | 5,986,000 | 5,986,000 | 5,986,000 | ||
Inventure Foods | Trademarks | |||||
Goodwill, trademarks and other intangible assets | |||||
Trademarks | 896,000 | 896,000 | 896,000 | ||
Rader Farms | |||||
Goodwill, trademarks and other intangible assets | |||||
Goodwill | 5,630,000 | $ 5,630,000 | 5,630,000 | ||
Rader Farms | Customer Relationships | |||||
Other intangibles: | |||||
Estimated useful life | 10 years | ||||
Intangible assets, gross | 100,000 | $ 100,000 | 100,000 | ||
Accumulated amortization | (100,000) | (100,000) | (96,000) | ||
Rader Farms | Trademarks | |||||
Goodwill, trademarks and other intangible assets | |||||
Trademarks | 1,070,000 | 1,070,000 | 1,070,000 | ||
Willamette Valley Fruit Company | |||||
Goodwill, trademarks and other intangible assets | |||||
Goodwill | 3,147,000 | $ 3,147,000 | 3,147,000 | ||
Willamette Valley Fruit Company | Customer Relationships | |||||
Other intangibles: | |||||
Estimated useful life | 10 years | ||||
Intangible assets, gross | 3,200,000 | $ 3,200,000 | 3,200,000 | ||
Accumulated amortization | (1,280,000) | (1,280,000) | (1,120,000) | ||
Willamette Valley Fruit Company | Trademarks | |||||
Goodwill, trademarks and other intangible assets | |||||
Trademarks | 740,000 | 740,000 | 740,000 | ||
Fresh Frozen Foods | Trademarks | |||||
Goodwill, trademarks and other intangible assets | |||||
Trademarks | 2,330,000 | ||||
Sin In A Tin | |||||
Goodwill, trademarks and other intangible assets | |||||
Goodwill | 222,000 | 222,000 | 222,000 | ||
Sin In A Tin | Trademarks | |||||
Goodwill, trademarks and other intangible assets | |||||
Trademarks | $ 123,000 | $ 123,000 | $ 123,000 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jul. 01, 2017 | Dec. 31, 2016 |
Accrued Liabilities. | ||
Accrued payroll and payroll taxes | $ 2,965 | $ 1,756 |
Accrued royalties and commissions | 917 | 1,621 |
Accrued advertising and promotion | 1,052 | 1,465 |
Accrued berry purchase payments | 1,010 | 1,908 |
Accrued other | 2,423 | 2,783 |
Accrued liabilities | $ 8,367 | $ 9,533 |
Term Debt and Line of Credit (D
Term Debt and Line of Credit (Details) | Jul. 20, 2017USD ($) | Jul. 17, 2017USD ($) | May 15, 2017 | Sep. 27, 2016 | May 31, 2016 | Nov. 18, 2015USD ($) | Sep. 15, 2014 | Jul. 01, 2017USD ($) | Dec. 31, 2016USD ($) | Aug. 29, 2015USD ($) | Aug. 30, 2014USD ($)location |
Long-term debt and line of credit | |||||||||||
Long-term debt | $ 77,273,000 | $ 89,427,000 | |||||||||
Less: deferred financing fees, net | (6,222,000) | (7,047,000) | |||||||||
Less: current portion of long-term debt | (71,051,000) | (82,380,000) | |||||||||
Senior Secured Term Loan Due Quarterly Through November 2020 | |||||||||||
Long-term debt and line of credit | |||||||||||
Long-term debt | 72,727,000 | 84,150,000 | |||||||||
Maximum borrowing capacity | $ 85,000,000 | ||||||||||
Equipment Term Loan, Goodyear, Due Monthly Through March 2021 | |||||||||||
Long-term debt and line of credit | |||||||||||
Long-term debt | 2,459,000 | 2,759,000 | |||||||||
Equipment Term Loan For Rader Farms Facilities Due Monthly Through August 2019 | |||||||||||
Long-term debt and line of credit | |||||||||||
Long-term debt | 1,160,000 | 1,420,000 | |||||||||
Equipment Term Loan For Willamette Valley Fruit Company Due Monthly Through August 2019 | |||||||||||
Long-term debt and line of credit | |||||||||||
Long-term debt | 861,000 | 1,054,000 | |||||||||
Capital lease obligations, primarily due May 2022 | |||||||||||
Long-term debt and line of credit | |||||||||||
Long-term debt | $ 66,000 | $ 44,000 | |||||||||
ABL Credit Facility | |||||||||||
Long-term debt and line of credit | |||||||||||
Percentage of maximum revolver amount | 12.50% | ||||||||||
ABL Credit Facility | Maximum | |||||||||||
Long-term debt and line of credit | |||||||||||
Threshold Limit For Liquidity Amount | $ 6,125,000 | ||||||||||
Wells Fargo Bank National Association And Other Lenders Party | |||||||||||
Long-term debt and line of credit | |||||||||||
Capacity borrowing availability | 6,900,000 | ||||||||||
Outstanding credit facility | 19,900,000 | ||||||||||
Wells Fargo Bank National Association And Other Lenders Party | Senior Secured Term Loan Due Quarterly Through November 2020 | |||||||||||
Long-term debt and line of credit | |||||||||||
Debt instrument term | 5 years | ||||||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||||||
Amount increase of maximum borrowing capacity | 10,000,000 | ||||||||||
Wells Fargo Bank National Association And Other Lenders Party | ABL Credit Facility | |||||||||||
Long-term debt and line of credit | |||||||||||
Number of business day waiver | 10 days | ||||||||||
Wells Fargo Bank National Association And Other Lenders Party | ABL Credit Facility | Base Rate | |||||||||||
Long-term debt and line of credit | |||||||||||
Basis points added to base rate (as a percent) | 1.00% | ||||||||||
BSP Agency, LLC, a Delaware limited liability company | Senior Secured Term Loan Due Quarterly Through November 2020 | |||||||||||
Long-term debt and line of credit | |||||||||||
Term loan, monthly installment | $ 12,500 | ||||||||||
Installments | monthly | ||||||||||
Net borrowings on U.S Bank line of credit | $ 5,000,000 | ||||||||||
Amount increase of maximum borrowing capacity | $ 5,000,000 | $ 25,000,000 | $ 25,000,000 | ||||||||
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 | |||||||||||
Basis points added to base rate (as a percent) | 1.00% | ||||||||||
Variable rate basis | base rate | base rate | |||||||||
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 | LIBOR | |||||||||
Banc of America Leasing and Capital LLC | |||||||||||
Long-term debt and line of credit | |||||||||||
Number of manufacturing facilities containing equipment used to secure credit | location | 2 | ||||||||||
Banc of America Leasing and Capital LLC | Equipment Term Loan, Goodyear, Due Monthly Through March 2021 | |||||||||||
Long-term debt and line of credit | |||||||||||
Debt instrument term | 60 months | ||||||||||
Stated interest rate (as a percent) | 3.07% | 3.07% | |||||||||
Banc of America Leasing and Capital LLC | Equipment Term Loan, Goodyear, Due Monthly Through March 2021 | Maximum | |||||||||||
Long-term debt and line of credit | |||||||||||
Term loan amount | $ 3,100,000 | ||||||||||
Banc of America Leasing and Capital LLC | Equipment Term Loan For Rader Farms Facilities Due Monthly Through August 2019 | |||||||||||
Long-term debt and line of credit | |||||||||||
Debt instrument term | 60 months | ||||||||||
Term loan amount | $ 2,600,000 | ||||||||||
Stated interest rate (as a percent) | 2.35% | 2.35% | |||||||||
Banc of America Leasing and Capital LLC | Equipment Term Loan For Willamette Valley Fruit Company Due Monthly Through August 2019 | |||||||||||
Long-term debt and line of credit | |||||||||||
Debt instrument term | 60 months | ||||||||||
Term loan amount | $ 1,900,000 | ||||||||||
Stated interest rate (as a percent) | 2.35% | 2.35% | |||||||||
Prior to amendment | ABL Credit Facility | |||||||||||
Long-term debt and line of credit | |||||||||||
Maximum Revolver Amount | $ 49,000,000 | ||||||||||
After amendment through August 1, 2017 | ABL Credit Facility | |||||||||||
Long-term debt and line of credit | |||||||||||
Maximum Revolver Amount | 40,000,000 | ||||||||||
From and after August 1, 2017 | ABL Credit Facility | |||||||||||
Long-term debt and line of credit | |||||||||||
Maximum Revolver Amount | $ 35,000,000 |
Business Segments - Reportable
Business Segments - Reportable Segments Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jul. 01, 2017USD ($) | Jun. 25, 2016USD ($) | Jul. 01, 2017segment | Jul. 01, 2017item | Jul. 01, 2017 | Jul. 01, 2017USD ($) | Jun. 25, 2016USD ($) | |
Business segments revenue by products | |||||||
Number of reportable segments | 2 | 2 | |||||
Net revenues from external customers | $ 51,356 | $ 57,797 | $ 100,974 | $ 114,977 | |||
Percentage of net revenue | 100.00% | 100.00% | 100.00% | 100.00% | |||
Depreciation and amortization included in segment gross profit | $ 801 | $ 775 | 1,606 | $ 1,563 | |||
Segment gross profit | 10,112 | 9,703 | 18,626 | 18,983 | |||
Reconciliation of reportable segment gross profit to consolidated income before income tax provision | |||||||
Segment gross profit | 10,112 | 9,703 | 18,626 | 18,983 | |||
Operating expenses | 8,668 | 7,609 | 15,924 | 14,763 | |||
Operating expenses | 8,668 | 7,609 | 15,924 | 14,763 | |||
Interest expense | (2,425) | (1,967) | (4,787) | (3,968) | |||
Income (loss) from continuing operations before income tax expense | (981) | 127 | (2,085) | 252 | |||
Frozen Products | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | $ 20,692 | $ 30,312 | 44,154 | $ 62,608 | |||
Percentage of net revenue | 40.30% | 52.40% | 43.80% | 54.50% | |||
Depreciation and amortization included in segment gross profit | $ 225 | $ 241 | 451 | $ 522 | |||
Segment gross profit | 3,607 | 4,283 | 8,348 | 9,068 | |||
Reconciliation of reportable segment gross profit to consolidated income before income tax provision | |||||||
Segment gross profit | 3,607 | 4,283 | 8,348 | 9,068 | |||
Snack Products | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | $ 30,664 | $ 27,485 | 56,820 | $ 52,369 | |||
Percentage of net revenue | 59.70% | 47.60% | 56.20% | 45.50% | |||
Depreciation and amortization included in segment gross profit | $ 576 | $ 534 | 1,155 | $ 1,041 | |||
Segment gross profit | 6,505 | 5,420 | 10,278 | 9,915 | |||
Reconciliation of reportable segment gross profit to consolidated income before income tax provision | |||||||
Segment gross profit | 6,505 | 5,420 | 10,278 | 9,915 | |||
Berries, Blends, Beverage and Desserts Product | Frozen Products | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | $ 20,475 | $ 30,312 | 43,553 | $ 62,608 | |||
Percentage of net revenue | 39.90% | 52.40% | 43.20% | 54.50% | |||
Vegetables | Frozen Products | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | 601 | ||||||
Percentage of net revenue | 0.60% | ||||||
Riced Vegetables | Frozen Products | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | $ 217 | ||||||
Percentage of net revenue | 0.40% | ||||||
Indulgent Specialty Snacks Product | Snack Products | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | $ 10,106 | $ 9,873 | 19,033 | $ 19,799 | |||
Percentage of net revenue | 19.70% | 17.10% | 18.80% | 17.20% | |||
Healthy And Natural Food Product | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | $ 41,200 | $ 47,900 | 81,900 | $ 95,200 | |||
Healthy Natural Snacks Product | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | 19,000 | 19,800 | |||||
Healthy Natural Snacks Product | Snack Products | |||||||
Business segments revenue by products | |||||||
Net revenues from external customers | $ 20,558 | $ 17,612 | $ 37,787 | $ 32,570 | |||
Percentage of net revenue | 40.00% | 30.50% | 37.40% | 28.30% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 01, 2017 | Jun. 25, 2016 | Jul. 01, 2017 | Jun. 25, 2016 | Dec. 31, 2016 | |
Equity Incentive 2015 Plan | |||||
Weighted Average Grant Date Fair Value Per Share | |||||
Number of shares available for awards | 552,886 | 552,886 | |||
Expiration term of awards | 10 years | ||||
Equity Incentive 2015 Plan | Maximum | |||||
Weighted Average Grant Date Fair Value Per Share | |||||
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) | 8,333 | ||||
Vested, including shares withheld to cover taxes (in shares) | (8,333) | ||||
Nonvested at the end of the period (in shares) | 8,333 | ||||
Weighted Average Grant Date Fair Value Per Share | |||||
Nonvested at the beginning of the period (in dollars per share) | $ 12.78 | ||||
Vested, including shares withheld to cover taxes (in dollars per share) | $ 12.78 | ||||
Nonvested at the end of the period (in dollars per share) | $ 12.78 | ||||
Additional disclosures | |||||
Stock-based compensation costs which were capitalized | $ 0 | ||||
Unrecognized costs related to non-vested stock options awards granted | $ 0 | $ 0 | |||
Restricted Stock | Minimum | |||||
Shareholders equity | |||||
Vesting period | 1 year | ||||
Restricted Stock | Maximum | |||||
Shareholders equity | |||||
Vesting period | 5 years | ||||
Restricted Stock Units RSU | |||||
Number of Shares | |||||
Nonvested at the beginning of the period (in shares) | 541,346 | ||||
Granted (in shares) | 485,554 | ||||
Vested, including shares withheld to cover taxes (in shares) | (159,910) | ||||
Forfeited (in shares) | (39,208) | ||||
Nonvested at the end of the period (in shares) | 827,782 | 827,782 | 541,346 | ||
Weighted Average Grant Date Fair Value Per Share | |||||
Nonvested at the beginning of the period (in dollars per share) | $ 8.40 | ||||
Granted (in dollars per share) | 4.05 | ||||
Vested, including shares withheld to cover taxes (in dollars per share) | 9.16 | ||||
Forfeited (in dollars per share) | 10.26 | ||||
Nonvested at the end of the period (in dollars per share) | $ 5.62 | $ 5.62 | $ 8.40 | ||
Additional disclosures | |||||
Unrecognized costs related to non-vested stock awards granted | $ 3,400,000 | $ 3,400,000 | |||
Weighted average period for recognition of unrecognized compensation costs | 2 years 1 month 6 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 | |||||
Additional disclosures | |||||
Stock-based compensation expense | $ 400,000 | $ 300,000 | $ 700,000 | $ 700,000 | |
restricted stock awards and units | Officers | |||||
Shareholders equity | |||||
Vesting period | 3 years | ||||
restricted stock awards and units | Directors | |||||
Shareholders equity | |||||
Vesting period | 1 year | ||||
Stock Options | |||||
Options Outstanding | |||||
Outstanding at the beginning of the period (in shares) | 567,602 | ||||
Forfeited or expired (in shares) | (13,687) | ||||
Outstanding at the end of the period (in shares) | 553,915 | 553,915 | 567,602 | ||
Weighted Average Exercise Price | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 5.23 | ||||
Forfeited or expired (in dollars per share) | 10.37 | ||||
Outstanding at the end of the period (in dollars per share) | $ 5.10 | $ 5.10 | $ 5.23 | ||
Aggregate Intrinsic Value (in-the-money option) | |||||
Intrinsic value related to options outstanding | $ 473,948 | $ 473,948 | |||
Closing stock price (in dollars per share) | $ 4.31 | $ 4.31 | |||
Intrinsic value related to vested options outstanding | $ 500,000 | $ 500,000 | |||
Weighted Average Remaining Contractual Life | |||||
Weighted Average Remaining Contractual Life | 3 years 9 months 18 days | ||||
Additional disclosures | |||||
Stock-based compensation expense | 100,000 | $ 100,000 | $ 100,000 | $ 100,000 | |
Stock-based compensation costs which were capitalized | 0 | ||||
Unrecognized costs related to non-vested stock options awards granted | $ 100,000 | $ 100,000 | |||
Weighted average period for recognition of unrecognized compensation costs | 1 year 2 months 12 days | ||||
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 | |||||
Amortization period for fair value of stock options granted (in years) | 5 years | ||||
Stock Options Prior to May 2008 | Directors | |||||
Shareholders equity | |||||
Amortization period for fair value of stock options granted (in years) | 1 year | ||||
Stock Options after May 2008 | |||||
Weighted Average Grant Date Fair Value Per Share | |||||
Expiration term of awards | 10 years | ||||
Stock Options after May 2008 | Employees | |||||
Shareholders equity | |||||
Vesting period | 5 years | ||||
Stock Options after May 2008 | Directors | |||||
Shareholders equity | |||||
Vesting period | 1 year |
Stockholders' Equity - Exercise
Stockholders' Equity - Exercise Price (Details) | 6 Months Ended |
Jul. 01, 2017USD ($)$ / sharesshares | |
Shareholders' Equity | |
Options Outstanding (in shares) | shares | 553,915 |
Weighted Average Remaining Contractual Life | 3 years 9 months 18 days |
Weighted Average Exercise Price (in dollars per share) | $ 5.10 |
Options Exercisable (in shares) | shares | 520,815 |
Weighted Average Exercise Price (in dollars per share) | $ 4.86 |
Stock Options | |
Intrinsic value | |
Intrinsic value related to options outstanding | $ | $ 473,948 |
Intrinsic value related to vested options outstanding | $ | $ 500,000 |
Closing stock price (in dollars per share) | $ 4.31 |
Stock Options | Exercise Price Range From Dollars 1.70 to Dollars 1.86 | |
Shareholders' Equity | |
Exercise price, low end of range (in dollars per share) | 1.70 |
Exercise price, high end of range (in dollars per share) | $ 1.86 |
Options Outstanding (in shares) | shares | 138,600 |
Weighted Average Remaining Contractual Life | 1 year 3 months 18 days |
Weighted Average Exercise Price (in dollars per share) | $ 1.75 |
Options Exercisable (in shares) | shares | 138,600 |
Weighted Average Exercise Price (in dollars per share) | $ 1.75 |
Stock Options | Exercise Price Range From Dollars 2.4 to Dollars 4.16 | |
Shareholders' Equity | |
Exercise price, low end of range (in dollars per share) | 2.40 |
Exercise price, high end of range (in dollars per share) | $ 4.16 |
Options Outstanding (in shares) | shares | 156,450 |
Weighted Average Remaining Contractual Life | 3 years 1 month 6 days |
Weighted Average Exercise Price (in dollars per share) | $ 3.55 |
Options Exercisable (in shares) | shares | 156,450 |
Weighted Average Exercise Price (in dollars per share) | $ 3.55 |
Stock Options | Exercise Price Range From Dollars 4.28 to Dollars 7.21 | |
Shareholders' Equity | |
Exercise price, low end of range (in dollars per share) | 4.28 |
Exercise price, high end of range (in dollars per share) | $ 7.21 |
Options Outstanding (in shares) | shares | 213,400 |
Weighted Average Remaining Contractual Life | 5 years 4 months 24 days |
Weighted Average Exercise Price (in dollars per share) | $ 6.88 |
Options Exercisable (in shares) | shares | 191,300 |
Weighted Average Exercise Price (in dollars per share) | $ 6.84 |
Stock Options | Exercise Price Range From Dollars 7.61 to Dollars 13.21 | |
Shareholders' Equity | |
Exercise price, low end of range (in dollars per share) | 7.61 |
Exercise price, high end of range (in dollars per share) | $ 13.21 |
Options Outstanding (in shares) | shares | 45,465 |
Weighted Average Remaining Contractual Life | 6 years 3 months 18 days |
Weighted Average Exercise Price (in dollars per share) | $ 12.36 |
Options Exercisable (in shares) | shares | 34,465 |
Weighted Average Exercise Price (in dollars per share) | $ 12.37 |