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Assets Held for Sale and Discontinued Operations

9 Months Ended

Jul. 31, 2024

Assets Held for Sale and Discontinued Operations

Assets Held for Sale and Discontinued Operations

11.Assets Held for Sale and Discontinued Operations

We completed the sale of our Fresh Cut business (formerly “RFG”) and related real estate to F&S Fresh Foods of Vineland, New Jersey, on August 15, 2024 for $83 million, subject to various closing adjustments. The Fresh Cut business represents substantially all of the business of the Prepared segment other than the guacamole business, which was retained. For more information, see Note 12.

During the nine-month period ended July 31, 2024, management has concluded that the Fresh Cut business meets the requirements to be classified as held for sale and discontinued operations. As a result, the financial results of that business are reported as discontinued operations in the accompanying statements of operations, and its assets and liabilities are reflected as amounts held for sale in the accompanying balance sheets. The Company's reporting segments have also been changed for the effects of the divestiture, as described in Note 2.

The following table presents the major classes of assets and liabilities of the Fresh Cut business that are classified as held for sale in the accompanying balance sheets (in thousands).


	July 31,		October 31,
	2024		2023

Accounts receivable, net	$	26,774	$	27,479
Inventories, net		7,349		7,859
Prepaid expenses and other current assets		987		2,195
Property, plant, and equipment, net		49,874		51,805
Operating lease right-of-use assets		28,942		29,676
Goodwill		9,162		18,442
Intangibles		5,047		5,423
Other assets		78		78
Total assets held for sale	$	128,213	$	142,957


Trade accounts payable	$	10,512	$	10,440
Accrued expenses		6,319		15,299
Current portion of operating leases		3,319		3,399
Current portion of long-term obligations and finance leases		411		773
Long-term operating leases, less current portion		25,695		28,065
Long-term obligations and finance leases, less current portion		806		1,002
Other long-term liabilities		192		228
Total liabilities held for sale	$	47,254	$	59,206

Goodwill related to our Prepared segment was allocated between our Fresh Cut and Guacamole businesses based on the relative fair value of the disposal group and the portion of the reporting unit to be retained as of the date of the assets held for sale determination.

The following table summarizes the results of operations of the Fresh Cut business that are being reported as discontinued operations (in thousands):


	Three months ended				Nine months ended
	July 31,				July 31,
	2024		2023		2024		2023

Net sales	$	88,586	$	99,019	$	258,958	$	278,870
Cost of sales		81,224		98,017		246,955		277,155
Gross profit		7,362		1,002		12,003		1,715
Selling, general and administrative		4,193		4,848		12,896		14,274
Impairment of goodwill		9,280		—		9,280		—
Operating loss		(6,111)		(3,846)		(10,173)		(12,559)
Interest expense		(23)		(27)		(77)		(95)
Other income, net		7		53		32		38
Loss from discontinued operations before income taxes		(6,127)		(3,820)		(10,218)		(12,616)
Income tax benefit		—		1,791		—		2,830
Net loss from discontinued operations	$	(6,127)	$	(2,029)	$	(10,218)	$	(9,786)

Due to the sale of our Fresh Cut business on August 15, 2024, we evaluated whether it was more likely than not that the carrying value of the Fresh Cut business exceeded its fair value. We performed an impairment analysis in which the fair value was estimated based on the arm’s length sale price. Accordingly, the Company recorded a goodwill impairment charge of $9.3 million during the quarter ended July 31, 2024.

Select cash flow information related to the Fresh Cut business follows (in thousands):


	Nine months ended
	July 31,
	2024		2023

Net cash used in operating activities	$	(7,071)	$	(13,551)
Net cash used in investing activities	$	(355)	$	(8,586)