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Value Creation Plan | 9 Months Ended
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Sep. 29, 2018
Restructuring And Related Activities [Abstract] |
Restructuring And Related Activities Disclosure [Text Block] | 3. Value Creation Plan Overview On October 7, 2016, the Company entered into a strategic partnership with Oaktree Capital Management L.P., a private equity investor (together wi th its affiliates, “Oaktree”), and, on that date, Oaktree invested $85.0 million through the purchase of cumulative, non-participating Series A Preferred Stock (the “Preferred Stock”) of the Company’s wholly-owned subsidiary, SunOpta Foods Inc. (“SunOpta Foods”) (see note 7). Following the strategic partnership, with the assistance of Oaktre e, the Company conducted a thorough review of its operations, management and governance, with the objective of maximizing the Company’s ability to deliver long-term value to its shareholders. As a product of this review, the Company developed a Value Crea tion Plan built on four pillars: portfolio optimization, operational excellence, go-to-market effectiveness and process sustainability. The Company engaged third-party management consulting firms to support the design and implementation of the Value Crea tion Plan. In 2016, measures taken under the Value Creation Plan included the closure of the Company’s San Bernardino, California, juice facility and the Company’s soy extraction facility in Heuvelton, New York. In 2017, further measures t aken under th e Value Creation Plan includ ed the exits from flexible resealable pouch and nutrition bar product lines and operat ions (see below; the consolidation of grain operations and related closure of a grain-handling facility in Moorhead, Minnesota; an d the consolidation o f roasted snack operations and related closure of the Company’s Wahpeton, North Dakota, roasting facility (which was completed in the second quarter of 2018). In addition, the Company made organizational changes within its management and executive teams, along with new leadership to many corporate, commercial and operational functions. The Company also added new employees in the areas of quality, sales, marketing, operations and engineering, and made capital investments at several of its manufacturing facilities to enhance food safety and production efficiencies. Flexible Resealable Pouch and Nutrition Bar Product Lines and Operations As the flexible resealable pouch and nutrition bar product lines and operations do not qualify for presentation as discontinued operations, operating results from these activities were reported in continuing operations on the consolidated statements of operations for the current and comparative periods. For the quarters ended September 29, 2018 and September 30, 2017, revenues from sales of these product lines were $0.0 million and $13.5 million, respectively, and for the three quarters ended September 29, 2018 and September 30, 2017, revenues were $3.1 million and $44.1 million, respectively. Revenues reported from these op erations for the quarter and three quarters ended September 29, 2018, related to the delivery of remaining inventories to customers under existing contracts at the time of exit. For the quarters ended September 29, 2018 and September 30, 2017, losses before income taxes from these operations were $0.0 million and $8.6 million, respectively. For the three quarters ended September 29, 2018 and September 30, 2017, losses before income taxes from these operations were $1.0 million and $12.9 million, respectively. For the three quarters ended September 29, 2018, the loss before income taxes from these operations included the recognition of the remaining lease obligation of $1.3 million related to the vacated nutrition bar processing facility. For the quarter and three quarters ended S eptember 30, 2017, losses before income taxes from these operations included impairment charges for inventory ($1.3 million) and long-lived assets ($4.5 million) related to the exit activities, as well as employee termination costs of $1.4 million. These operations are included in the Consumer Products operating segment. Costs Incurred Under the Value Creation Plan The following table summarizes costs incurred under the Value Creation Plan for the three quarters ended September 29, 2018 and September 30, 2017:
|  |  |  | (a) | (b) | (c) |
|  |  |  |  | Employee |  |
|  |  |  | Asset | recruitment, | Consulting |
|  |  |  | impairments | retention and | fees and |
|  |  |  | and facility | termination | temporary |
|  |  |  | closure costs | costs | labor costs | Total
|  |  |  | $ | $ | $ | $
September 29, 2018 |  |  |  |
Balance payable (receivable), December 30, 2017(1) | (700) | 4,427 | - | 3,727
Costs incurred and charged to expense | 1,867 | 600 | 410 | 2,877
Cash receipts (payments), net | 1,191 | (4,447) | (110) | (3,366)
Non-cash adjustments | (1,255) | - | - | (1,255)
Balance payable, September 29, 2018(1) | 1,103 | 580 | 300 | 1,983
September 30, 2017 |  |  |  |
Balance payable, December 31, 2016 | - | 1,803 | 1,657 | 3,460
Costs incurred and charged to expense | 10,111 | 9,312 | 15,804 | 35,227
Cash payments | (3,843) | (7,324) | (17,276) | (28,443)
Non-cash adjustments | (6,468) | 567 | - | (5,901)
Balance payable (receivable), September 30, 2017 | (200) | 4,358 | 185 | 4,343
(1) Balance payable was included in accounts payable and accrued liabilities and balance receivable was included in accounts receivable on the consolidated balance sheet. (a) Asset impairments and facility closure costs For the three quarters ended September 29, 2018, costs incurred included the remaining lease obligation related to the vacated nutrition bar processing facility, and an additional impairment loss related to the Wahpeton roasting facility to reflect net proceeds of $0.7 million received on the sale of the facility. Net cash receipts also included proceeds on the sale of nutrition bar equipment of $0.7 million. Balance payable as at September 29, 2018, represents the remaining nutrition bar facility lease obligation, which extends until Decemb er 2020. For the three quarters ended September 30, 2017, costs incurred included the impairment charges for inventory and long-lived assets related to the exit from flexible resealable pouch and nutrition bar product lines and operations (as described above), a s well as $3.7 million paid in the aggregate for the early buyout of the San Bernardino equipment leases and closure costs related to the San Bernardino facility prior to its disposal to the landlord. In exchange for the San Bernardino assets, the facilit y landlord released the Company from its remaining property lease obligation and paid proceeds of $0.2 million in December 2017. (b) Employee recruitment, retention and termination costs Represents third-party recruiting fees incurred to identify and retain new employees; reimbursement of relocation costs for new employees; retention and signing bonuses accrued for certain existing and new employees; and severance benefits, net of forfeitures of stock-based awards, and legal co sts related to employee termination s. Retention bonuses were paid out in the first quarter of 2018 to employees who remained employed by the Company through December 31, 2017, or other specified dates. Certain employees were entitled to pro-rata payouts of their retention bonuses if their employment terminated earlier than their retention payment date. (c) Consulting fees and temporary labor costs Represents the cost for third-party consultants and temporary labor engaged to support the design and imple mentation of the Value Creation Plan, which efforts were substantially completed during fiscal 2017, as well as other professional fees incurred in the connection with the plan. The following table summarizes costs incurred since the inception of the Valu e Creation Plan to September 29, 2018:
|  |  |  |  | Employee |  |
|  |  |  | Asset | recruitment, | Consulting |
|  |  |  | impairments | retention and | fees and |
|  |  |  | and facility | termination | temporary |
|  |  |  | closure costs | costs | labor costs | Total
|  |  |  | $ | $ | $ | $
Costs incurred and charged to expense | 35,155 | 14,981 | 20,979 | 71,115
Cash payments, net | (9,555) | (14,824) | (20,679) | (45,058)
Non-cash adjustments | (24,497) | 423 | - | (24,074)
Balance payable, September 29, 2018 | 1,103 | 580 | 300 | 1,983
For the quarters and three quarters ended September 29, 2018 and September 30, 2017, costs incurred and charged to expense were recorded in the consolidated statement of operations as follows:
|  |  |  | Quarter ended | Three quarters ended
|  |  |  | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017
|  |  |  | $ | $ | $ | $
Cost of goods sold(1) | - | 1,287 | 100 | 1,921
Selling, general and administrative expenses(2) | - | 2,400 | 613 | 20,839
Other expense(3) | 43 | 6,569 | 2,164 | 12,467
|  |  |  | 43 | 10,256 | 2,877 | 35,227
(1) F acility closure costs, including inventory write-downs, recorded in cost of goods sold were allocated to the Consumer Products operating segment. (2) Consulting/professional fees and temporary labor costs, and employee recruitment, relocation and retention costs recorded in selling, general and administrative expenses were allocated to Corporate Services. (3) For the quarter ended September 29, 2018, asset impairment, lease obligation and employee termination costs recorded in other expense were allocate d as follows: Raw Material Sourcing and Supply operating segment - $nil (September 30, 2017 – $0.2 million); Consumer Products operating segment - $nil (September 30, 2017 – $6.4 million); and Corporate Services - $0.0 (September 30, 2017 – $0.0 million). For the three quarters ended September 29, 2018, asset impairment, lease obligation and employee termination costs recorded in other expense were allocated as follows: Raw Material Sourcing and Supply operating segment - $0.7 million (September 30, 2017 – $0.2 million); Consumer Products o perating segment - $1.3 million (September 30, 2017 – $11.2 million); and Corporate Services - $0.2 million (September 30, 2017 – $1.1 million).

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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