Discontinued Operations

9 Months Ended

Feb. 27, 2022

Discontinued Operations and Disposal Groups [Abstract]

Discontinued OperationsAs discussed in Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies – Eat Smart Sale and Discontinued Operations, on December 13, 2021, we completed the Eat Smart Disposition. Eat Smart represented a component of the business within the Curation Foods segment and its sale represents a strategic shift in the Company going forward. Accordingly, concurrent with the execution of the Asset Purchase Agreement, Eat Smart meets the accounting requirements for reporting as discontinued operations for all periods presented.

The key components of income from discontinued operations for the three and nine months ended February 27, 2022 and February 28, 2021 were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	February 27, 2022		February 28, 2021		February 27, 2022		February 28, 2021
Product sales	$	13,559	$	93,092	$	186,755	$	277,699
Cost of product sales	13,720		87,844		181,555		256,918
Gross profit	(161)		5,248		5,200		20,781
Operating costs and expenses:
Research and development	103		719		1,918		2,120
Selling, general and administrative	1,058		7,086		13,350		21,258
Impairment of goodwill	—		—		32,057		—
Loss on sale of Eat Smart	4,354		—		4,354		—
Restructuring costs	86		677		1,519		9,940
Total operating costs and expenses	5,601		8,482		53,198		33,318
Operating loss	(5,762)		(3,234)		(47,998)		(12,537)
Dividend income	—		281		—		844
Interest expense	(204)		(1,239)		(2,682)		(3,717)
Other income (expense), net	—		—		—		(11,800)
Loss from discontinued operations before taxes	(5,966)		(4,192)		(50,680)		(27,210)
Income tax benefit	222		159		422		6,200
Loss from discontinued operations, net of tax	$	(5,744)	$	(4,033)	$	(50,258)	$	(21,010)

Cash used in operating activities by the Eat Smart business totaled $5.5 million and $1.8 million for the nine months ended February 27, 2022 and February 28, 2021, respectively. Cash provided by investing activities from the Eat Smart business totaled $117.8 million and $9.3 million for the nine months ended February 27, 2022 and February 28, 2021, respectively. Depreciation and amortization expense of the Eat Smart business totaled $0.3 million and $2.2 million for the three months ended February 27, 2022 and February 28, 2021, respectively. Depreciation and amortization expense of the Eat Smart business totaled $5.1 million and $6.9 million for the nine months ended February 27, 2022 and February 28, 2021, respectively. Capital expenditures of the Eat Smart business totaled $1.9 million and $3.6 million for the nine months ended February 27, 2022 and February 28, 2021, respectively.

Interest expense was allocated to discontinued operations based on the interest expense related to the amount of debt required to be paid down under the New Credit Agreements as a result of the Eat Smart Disposition.

There were no assets or liabilities of Eat Smart as of February 27, 2022. The carrying amounts of the major classes of assets and liabilities of the Eat Smart business included in assets and liabilities of discontinued operations are as follows (in thousands):


	May 30, 2021

ASSETS

Cash and cash equivalents	$	136
Accounts receivable, less allowance for credit losses	28,583
Inventories	6,587
Prepaid expenses and other current assets	2,312
Total current assets, discontinued operations	37,618

Investment in non-public company, fair value	45,100
Property and equipment, net	66,789
Operating lease right-of-use assets	13,347
Goodwill	35,470
Trademarks/tradenames, net	8,228
Customer relationships, net	2,260
Other assets	80
Total other assets, discontinued operations	171,274
Total assets, discontinued operations	$	208,892

LIABILITIES

Accounts payable	$	31,271
Accrued compensation	4,550
Other accrued liabilities	4,041
Current portion of lease liabilities	2,424
Deferred revenue	493

Total current liabilities, discontinued operations	42,779

Long-term lease liabilities	14,030

Other non-current liabilities	729
Non-current liabilities, discontinued operations	14,759
Total liabilities, discontinued operations	$	57,538