XML 34 R23.htm IDEA: XBRL DOCUMENT v3.22.4
Correction of Error in Previously Reported Fiscal Year 2022 Interim Financial Statements (Unaudited)
 12 Months Ended
May 29, 2022
Accounting Changes and Error Corrections [Abstract]  
Correction of Error in Previously Reported Fiscal Year 2022 Interim Financial Statements (Unaudited) Correction of Error in Previously Reported Fiscal Year 2022 Interim Financial Statements (Unaudited)
This note is repeated, unchanged, from what previously was reported in Note 1 - Correction of Error in Previously Reported Fiscal Year 2022 Annual Financial Statements to our consolidated financial statements included in Part IV, Item 15 of the Annual Report on Form 10-K. The Company is restating (the “Prior Restatement”) its previously issued (i) unaudited consolidated balance sheets as of February 27, 2022 and May 30, 2021, (ii) unaudited consolidated statements of comprehensive (loss) income for the three and nine months ended February 27, 2022, (iii) unaudited consolidated statement of cash flows for the nine months ended February 27, 2022, (iv) unaudited consolidated statement of changes in stockholders' equity, and (v) unaudited Note 4, Note 7, Note 8, and Note 9 to the consolidated financial statements, in each case, as previously reported in our Quarterly Report on Form 10-Q for the period ended February 27, 2022 (the “Prior Q3 Interim Financial Statements”). We assessed the materiality of this error in accordance with the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 99, Materiality and have concluded that the Q3 Interim Prior Financial Statements should be restated.
This restatement reflected in the tables below results from corrections by us primarily related to:
(i) the classification of certain expenses and the recording of accruals related to the Company’s recent disposition activities and the Company’s corporate transition of Landec Corporation to Lifecore Biomedical, which were previously classified as restructuring expenses from continuing operations in our Prior Q3 Interim Financial Statements, but which the Company intends to correct to classify as selling, general and administrative expenses, and cost of goods sold within continuing operations;
(ii) the treatment of the fees received and costs incurred by the Company pursuant to the transition services agreement related to the sale of the Curation Foods’ Eat Smart business (the “TSA”), for which the Company had previously recognized the net of the TSA fees received and costs incurred as loss on sale of Eat Smart within discontinued operations, but for which the Company intends to correct to classify the TSA fees received by the Company within transition services income and the TSA costs incurred by the Company as selling, general and administrative expenses within continuing operations; and
(iii) the classification of certain costs and expenses related to the Company’s recent disposition activities and the Company’s corporate transition of Landec Corporation to Lifecore Biomedical, which were previously classified as loss on sale of Eat Smart within discontinued operations, but which the Company intends to correct to classify as selling, general and administrative expenses within continuing operations.
The effects of this error on our previously reported February 27, 2022 and May 30, 2021 consolidated balance sheets as presented in the Company’s fiscal year 2022 third quarter Form 10-Q are as follows:
 As reportedAs restated
(in thousands)February 27, 2022AdjustmentFebruary 27, 2022
LIABILITIES AND STOCKHOLDERS’ EQUITY
Other accrued liabilities$13,735 $348 $14,083 
Total Current Liabilities90,065 348 90,413 
Total Liabilities181,510 348 181,858 
Retained earnings (accumulated deficit)(22,188)(348)(22,536)
Total Stockholders’ Equity144,072 (348)143,724 
Total Liabilities and Stockholders’ Equity$325,582 $— $325,582 
 As reportedAs restated
(in thousands)May 30, 2021AdjustmentMay 30, 2021
ASSETS
Property and equipment, net
$112,770 $7,516 $120,286 
Operating lease right-of-use assets7,480 9,618 17,098 
Other assets, discontinued operations171,274 (17,134)154,140 
Total Assets502,924 — 502,924 
LIABILITIES
Current portion of lease liabilities1,465 135 1,600 
Current liabilities, discontinued operations42,779 (135)42,644 
Total Current Liabilities101,888 — 101,888 
Long-term lease liabilities9,581 10,778 20,359 
Non-current liabilities, discontinued operations
14,759 (10,778)3,981 
Total Liabilities$300,140 $— $300,140 
The effects of this error on our previously reported fiscal year 2022 interim consolidated statements of comprehensive (loss) income for the three-month period ended February 27, 2022 are as follows:

 As reportedAs restated
(in thousands, except per share amounts)February 27, 2022AdjustmentFebruary 27, 2022
Product sales$53,074 $— $53,074 
Cost of product sales
39,179 675 39,854 
Gross profit13,895 (675)13,220 
Operating costs and expenses:
Research and development2,056 — 2,056 
Selling, general and administrative9,725 6,625 16,350 
Restructuring cost5,865 (595)5,270 
Total operating costs and expenses17,646 6,030 23,676 
Operating loss
(3,751)(6,705)(10,456)
Interest income20 — 20 
Interest expense(4,105)— (4,105)
Transition services income
— 5,473 5,473 
Other income (expense), net454 — 454 
Net loss from continuing operations before taxes(7,382)(1,232)(8,614)
Income tax benefit276 37 313 
Net loss from continuing operations(7,106)(1,195)(8,301)
Loss from discontinued operations, net of tax(5,744)959 (4,785)
Net loss$(12,850)$(236)$(13,086)
Basic and diluted net loss per share:
Loss from continuing operations$(0.24)$(0.04)$(0.28)
Loss from discontinued operations(0.19)0.03 (0.16)
Total basic and diluted net loss per share$(0.43)$(0.01)$(0.44)
Other comprehensive income (loss), net of tax:
Net unrealized gain (losses) on interest rate swaps (net of tax effect)$104 $— $104 
Other comprehensive income (loss), net of tax104 — 104 
Total comprehensive loss$(12,746)$(236)$(12,982)
The effects of this error on our previously reported fiscal year 2022 interim consolidated statements of comprehensive (loss) income for the nine-month period ended February 27, 2022 are as follows:

 As reportedAs restated
(in thousands, except per share amounts)February 27, 2022AdjustmentFebruary 27, 2022
Product sales$138,158 $— $138,158 
Cost of product sales
99,113 787 99,900 
Gross profit39,045 (787)38,258 
Operating costs and expenses:
Research and development5,785 — 5,785 
Selling, general and administrative27,207 6,906 34,113 
Restructuring costs8,406 (876)7,530 
Total operating costs and expenses41,398 6,030 47,428 
Operating loss
(2,353)(6,817)(9,170)
Interest income66 — 66 
Interest expense(13,877)— (13,877)
Transition services income
— 5,473 5,473 
Other income (expense), net642 — 642 
Net loss from continuing operations before taxes(15,522)(1,344)(16,866)
Income tax benefit5,012 14 5,026 
Net loss from continuing operations(10,510)(1,330)(11,840)
Loss from discontinued operations, net of tax(50,258)982 (49,276)
Net loss$(60,768)$(348)$(61,116)
Basic and diluted net loss per share:
Loss from continuing operations$(0.36)$(0.05)$(0.41)
Loss from discontinued operations(1.71)0.03 (1.68)
Total basic and diluted net loss per share$(2.07)$(0.02)$(2.09)
Other comprehensive income (loss), net of tax:
Net unrealized gain (losses) on interest rate swaps (net of tax effect)$646 $— $646 
Other comprehensive income (loss), net of tax646 — 646 
Total comprehensive loss$(60,122)$(348)$(60,470)
The effects of this error on our previously reported fiscal year 2022 consolidated statements of changes in stockholders' equity for the nine-month period ended February 27, 2022 are as follows:

As reportedAs reportedAdjustmentAs restatedAs restated
 
Retained
Earnings (Accumulated Deficit)
Total
Stockholders’
Equity
Retained
Earnings (Accumulated Deficit)
Total
Stockholders’
Equity
(In thousands)
Balance at May 30, 2021$38,580 $202,784 $— $38,580 $202,784 
Net loss(9,477)(9,477)(32)(9,509)(9,509)
Balance at August 29, 202129,103 193,865 (32)29,071 193,833 
Net loss(38,441)(38,441)(80)(38,521)(38,521)
Balance at November 28, 2021(9,338)156,202 (112)(9,450)156,090 
Net loss(12,850)(12,850)(236)(13,086)(13,086)
Balance at February 27, 2022$(22,188)$144,072 $(348)$(22,536)$143,724 
The effects of this error on our previously reported fiscal year 2022 consolidated statements of cash flows for the nine-month period ended February 27, 2022 are as follows:

 As reportedAs restated
(in thousands)February 27, 2022AdjustmentFebruary 27, 2022
Cash flows from operating activities:
Net loss$(60,768)$(348)$(61,116)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Impairment of goodwill32,057 — 32,057 
Depreciation, amortization of intangibles, debt costs and right-of-use assets14,488 — 14,488 
Loss on disposal of property and equipment related to restructuring, net5,185 — 5,185 
Deferred taxes(5,471)— (5,471)
Loss on sale of Eat Smart
4,354 (4,119)235 
Stock-based compensation expense1,928 — 1,928 
Net loss on disposal of property and equipment held and used25 — 25 
Provision (benefit) for expected credit losses(14)— (14)
Other, net(551)— (551)
Changes in current assets and current liabilities:
Accounts receivable, net(7,525)— (7,525)
Inventories(11,910)— (11,910)
Prepaid expenses and other current assets(1,448)— (1,448)
Accounts payable13,055 452 13,507 
Accrued compensation(3,849)1,822 (2,027)
Other accrued liabilities(4,195)4,125 (70)
Deferred revenue204 458 662 
Net cash (used in) provided by operating activities(24,435)2,390 (22,045)
Cash flows from investing activities:
Proceeds from sale of Eat Smart73,500 — 73,500 
Sale of Investment in non-public company45,100 — 45,100 
Purchases of property and equipment(18,539)— (18,539)
Proceeds from sales of property and equipment1,096 — 1,096 
Eat Smart sale net working capital adjustment and cash sale expenses— (2,390)(2,390)
Net cash provided by investing activities101,157 (2,390)98,767 
Net cash used in financing activities(76,163)— (76,163)
Net increase in cash, cash equivalents and restricted cash559 — 559 
Cash, cash equivalents and restricted cash, beginning of period1,295 — 1,295 
Cash, cash equivalents and restricted cash, end of period$1,854 $— $1,854 
The effects of this error on our previously reported fiscal year 2022 diluted earnings per share for the three- and nine-month periods ended February 27, 2022 as presented in the Company’s fiscal year 2022 third quarter Form 10-Q Note 4 - Diluted Earnings per share are as follows:

Three Months EndedNine Months Ended
 As reportedAs restatedAs reportedAs restated
(in thousands, except per share amounts)February 27, 2022AdjustmentFebruary 27, 2022February 27, 2022AdjustmentFebruary 27, 2022
Numerator:
Net loss$(12,850)$(236)$(13,086)$(60,768)$(348)$(61,116)
Denominator:
Weighted average shares for diluted net loss per share29,482 29,482 29,482 29,459 29,459 29,459 
Diluted net loss per share$(0.43)$(0.01)$(0.44)$(2.07)$(0.02)$(2.09)
The effects of this error on our previously reported fiscal year 2022 operations by business segment for the three- and nine-month periods ended February 27, 2022 as presented in the Company’s fiscal year 2022 third quarter Form 10-Q Note 7 - Business Segment Reporting are as follows:
(In Thousands)LifecoreCuration FoodsOtherTotal
Three Months Ended February 27, 2022
Gross profit, as reported$12,905 $990 $— $13,895 
Adjustment— (675)— (675)
Gross profit, as restated12,905 315 — 13,220 
Net income (loss) from continuing operations, as reported5,054 (5,848)(6,312)(7,106)
Adjustment— (1,195)— (1,195)
Net income (loss) from continuing operations, as restated5,054 (7,043)(6,312)(8,301)
Loss from discontinued operations, as reported— (2,703)(3,041)(5,744)
Adjustment— 959 — 959 
Loss from discontinued operations, as restated— (1,744)(3,041)(4,785)
Nine Months Ended February 27, 2022
Gross profit, as reported$30,384 $8,661 $— $39,045 
Adjustment— (787)— (787)
Gross profit, as restated30,384 7,874 — 38,258 
Net income (loss) from continuing operations, as reported11,317 5,513 (27,340)(10,510)
Adjustment— (1,330)— (1,330)
Net income (loss) from continuing operations, as restated11,317 4,183 (27,340)(11,840)
Loss from discontinued operations, as reported— (47,217)(3,041)(50,258)
Adjustment— 982 — 982 
Loss from discontinued operations, as restated— (46,235)(3,041)(49,276)

The effects of this error on our previously reported fiscal year 2022 restructuring costs for the three- and nine-month periods ended February 27, 2022 as presented in the Company’s fiscal year 2022 third quarter Form 10-Q Note 8 - Restructuring Costs are as follows:

(In thousands)
Three Months Ended February 27, 2022
Lifecore
Curation Foods
Other
Total
Total restructuring costs, as reported
$271 $5,344 $250 $5,865 
Adjustment
(271)(124)(200)(595)
Total restructuring costs, as restated
$— $5,220 $50 $5,270 

(In thousands)
Nine Months Ended February 27, 2022
Lifecore
Curation Foods
Other
Total
Total restructuring costs, as reported
$271 $5,810 $2,325 $8,406 
Adjustment
(271)(124)(481)(876)
Total restructuring costs, as restated
$— $5,686 $1,844 $7,530 
The effects of this error on our previously reported May 30, 2021 carrying amounts of the major classes of assets and liabilities of the Eat Smart business included in assets and liabilities of discontinued operations as presented in the Company’s fiscal year 2022 third quarter Form 10-Q Note 9 - Discontinued Operations are as follows:

 As reportedAs restated
(in thousands)May 30, 2021AdjustmentMay 30, 2021
ASSETS
Property and equipment, net
$66,789 $(7,516)$59,273 
Operating lease right-of-use assets13,347 (9,618)3,729 
Other assets, discontinued operations171,274 (17,134)154,140 
LIABILITIES
Current portion of lease liabilities2,424 (135)2,289 
Current liabilities, discontinued operations42,779 (135)42,644 
Long-term lease liabilities14,030 (10,778)3,252 
Non-current liabilities, discontinued operations
14,759 (10,778)3,981 

The effects of this error on our previously reported fiscal year 2022 components of loss from discontinued operations for the three-month period ended February 27, 2022 as presented in the Company’s fiscal year 2022 third quarter Form 10-Q Note 9 - Discontinued Operations are as follows:

 As reportedAs restated
(in thousands)February 27, 2022AdjustmentFebruary 27, 2022
Operating costs and expenses:
Loss on sale of Eat Smart$4,354 $(4,119)$235 
Restructuring cost86 3,123 3,209 
Total operating costs and expenses5,601 (996)4,605 
Operating loss
(5,762)996 (4,766)
Income tax benefit222 (37)185 
Loss from discontinued operations, net of tax$(5,744)$959 $(4,785)

The effects of this error on our previously reported fiscal year 2022 components of loss from discontinued operations for the nine-month period ended February 27, 2022 as presented in the Company’s fiscal year 2022 third quarter Form 10-Q Note 9 - Discontinued Operations are as follows:

 As reportedAs restated
(in thousands)February 27, 2022AdjustmentFebruary 27, 2022
Operating costs and expenses:
Loss on sale of Eat Smart$4,354 $(4,119)$235 
Restructuring cost1,519 3,123 4,642 
Total operating costs and expenses53,198 (996)52,202 
Operating loss
(47,998)996 (47,002)
Income tax benefit422 (14)408 
Loss from discontinued operations, net of tax$(50,258)$982 $(49,276)