9 .	Business Segment Reporting

Prior to

May 2018,

the Company managed its business operations through

three

strategic reportable business segments: Packaged Fresh Vegetables, Food Export, and Biomaterials. These segments were based upon the information reported to the Chief Executive Officer, who is the chief operating decision maker ("CODM"). However, in

May 2018,

the Company discontinued its Food Export business segment. As a result, the Company met the requirements of ASC

205

and ASC

360

to report the results of the Food Export business segment as discontinued operations. The operating results for the Food Export business segment, for the

three

months ended

August 27, 2017,

have been reclassified to discontinued operations and are

longer reported as a separate segment.

Beginning in fiscal year

2019,

the Company now has

three

strategic reportable business segments: the Natural Foods segment, the Biomaterials segment, and the Other segment. Our Natural Foods business is comprised of our historical Packaged Fresh Vegetables and BreatheWay® activities, our

olive oils and wine vinegars business and our new Now Planting

refrigerated soups business. Our Natural Foods segment includes activities to market and pack specialty packaged whole and fresh-cut fruit and vegetables, the majority of which incorporate the BreatheWay specialty packaging for the retail grocery, club store and food services industry and are sold under the Eat Smart

and GreenLine

brands. The Natural Foods segment also includes sales of BreatheWay packaging to partners for fruit and vegetable products, sales of olive oils and wine vinegars under our

brand and sales of soups under our Now Planting brand. The Biomaterials segment sells products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellular matrix of connective tissues in both animals and humans, and non-HA products for medical use primarily in the Ophthalmic, Orthopedic and other markets. The Other segment includes corporate general and administrative expenses, non-Natural Foods and non-Biomaterials interest income and income tax expenses. All of the assets of the Company are located within the United States of America.

The Company’s international sales by geography are based on the billing address of the customer and were as follows (in millions):

	Three Months Ended
	August 26, 2018		August 27, 2017
Canada	$	19.9	$	18.0
Belgium	$	2.0	$	2.2
Ireland	$	1.1	$	0.8
Denmark	$	0.2	$	0.1
Switzerland	$	0.1	$	—
Mexico	$	0.1	$	0.1
All Other Countries	$	0.4	$	0.5

Operations by business segment consisted of the following (in thousands):

Three Months Ended August 26, 2018	Natural Foods		Biomaterials			Other			Total
Net sales	$	112,051	$	12,617		$	—		$	124,668
International sales	$	20,112	$	3,716		$	—		$	23,828
Gross profit	$	13,370	$	2,967		$	—		$	16,337
Net income (loss) from continuing operations	$	1,768	$	(547	)	$	(1,031	)	$	190
Depreciation and amortization	$	2,095	$	976		$	74		$	3,145
Dividend income	$	413	$	—		$	—		$	413
Interest income	$	31	$	—		$	15		$	46
Interest expense, net (1)	$	587	$	—		$	171		$	758
Income tax expense (benefit)	$	663	$	(182	)	$	(417	)	$	64

Three Months Ended August 27, 2017
Net sales	$	103,617	$	12,164		$	—		$	115,781
International sales	$	18,174	$	3,499		$	—		$	21,673
Gross profit	$	15,280	$	3,522		$	—		$	18,802
Net income (loss) from continuing operations	$	3,821	$	(155	)	$	(1,311	)	$	2,355
Depreciation and amortization	$	2,052	$	865		$	37		$	2,954
Dividend income	$	413	$	—		$	—		$	413
Interest income	$	11	$	—		$	20		$	31
Interest expense, net	$	—	$	—		$	404		$	404
Income tax expense (benefit)	$	1,096	$	(27	)	$	241		$	1,310

(

)

Beginning in

first

quarter of fiscal

2019,

the Company began allocating interest expense to its reportable segments in information provided to its CODM to enhance visibility into how financing activities impact the discrete financial results.

During the

three

months ended

August 26, 2018

and

August 27, 2017,

sales to the Company’s top

five

customers accounted for

48%

and

47%

of sales, respectively. The Company’s top

two

customers, Costco Wholesale Corporation and Wal-Mart Stores, Inc., from the Natural Foods segment, accounted for

19%

and

18%,

respectively, of revenues for the

three

months ended

August 26, 2018,

and

18%

for both for the

three

months ended

August 27, 2017.

The Company expects that, for the foreseeable future, a limited number of customers

may

continue to account for a significant portion of its revenues.