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

and

six

months ended

November 26, 2017,

have been reclassified to discontinued operations and are

longer reported as a separate segment.

Beginning in fiscal year

2019,

the Company realigned the management of its business and 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				Six Months Ended
	November 25, 2018		November 26, 2017		November 25, 2018		November 26, 2017
Canada	$	20.3	$	17.3	$	40.2	$	35.6
Belgium	$	0.5	$	0.5	$	2.5	$	2.7
Ireland	$	1.2	$	0.8	$	2.3	$	1.6
Denmark	$	—	$	0.5	$	0.2	$	0.7
Switzerland	$	0.5	$	—	$	0.6	$	—
Mexico	$	0.1	$	0.2	$	0.1	$	0.3
All Other Countries	$	0.6	$	1.1	$	1.1	$	1.2

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

	Natural Foods			Biomaterials		Other			Total
Three Months Ended November 25, 2018
Net sales	$	109,466		$	15,446	$	—		$	124,912
International sales	$	20,367		$	2,842	$	—		$	23,209
Gross profit	$	10,915		$	5,678	$	—		$	16,593
Net (loss) income from continuing operations	$	(418	)	$	1,298	$	(1,464	)	$	(584	)
Depreciation and amortization	$	2,196		$	978	$	139		$	3,313
Dividend income	$	412		$	—	$	—		$	412
Interest income	$	30		$	—	$	3		$	33
Interest expense, net (1)	$	276		$	—	$	470		$	746
Income tax (benefit) expense	$	(50	)	$	432	$	(105	)	$	277

Six Months Ended November 25, 2018
Net sales	$	221,517		$	28,063	$	—		$	249,580
International sales	$	40,480		$	6,558	$	—		$	47,038
Gross profit	$	24,285		$	8,645	$	—		$	32,930
Net income (loss) from continuing operations	$	1,349		$	751	$	(2,495	)	$	(395	)
Depreciation and amortization	$	4,236		$	1,954	$	268		$	6,458
Dividend income	$	825		$	—	$	—		$	825
Interest income	$	61		$	—	$	18		$	79
Interest expense, net (1)	$	863		$	—	$	641		$	1,504
Income tax expense (benefit)	$	612		$	250	$	(520	)	$	342

Three Months Ended November 26, 2017
Net sales	$	108,348		$	14,113	$	—		$	122,461
International sales	$	17,749		$	2,675	$	—		$	20,424
Gross profit	$	9,704		$	5,217	$	—		$	14,921
Net (loss) income from continuing operations	$	(435	)	$	1,260	$	(411	)	$	414
Depreciation and amortization	$	1,958		$	910	$	112		$	2,980
Dividend income	$	412		$	—	$	—		$	412
Interest income	$	18		$	—	$	24		$	42
Interest expense, net	$	—		$	—	$	480		$	480
Income tax (benefit) expense	$	(95	)	$	374	$	(114	)	$	165

Six Months Ended November 26, 2017
Net sales	$	211,965		$	26,277	$	—		$	238,242
International sales	$	35,923		$	6,174	$	—		$	42,097
Gross profit	$	24,984		$	8,739	$	—		$	33,723
Net income (loss) from continuing operations	$	3,166		$	1,105	$	(1,502	)	$	2,769
Depreciation and amortization	$	3,930		$	1,775	$	229		$	5,934
Dividend income	$	825		$	—	$	—		$	825
Interest income	$	28		$	—	$	45		$	73
Interest expense, net	$	—		$	—	$	884		$	884
Income tax expense	$	1,002		$	347	$	126		$	1,475

(

)

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

six

months ended

November 25, 2018

and

November 26, 2017,

sales to the Company’s top

five

customers accounted for

45%

and

49%

of sales, respectively. The Company’s top

two

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

17%

respectively, of revenues for the

six

months ended

November 25, 2018,

and

19%

and

18%,

respectively, for the

six

months ended

November 26, 2017.