Discontinued Operations

6 Months Ended

Nov. 27, 2022

Discontinued Operations and Disposal Groups [Abstract]

As discussed in Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies – Eat Smart Sale and Discontinued Operations, on December 13, 2021, we completed the Eat Smart Disposition. Eat Smart represented a component of the business within the Curation Foods segment and its sale represents a strategic shift in the Company going forward. Accordingly, concurrent with the execution of the Asset Purchase Agreement, Eat Smart meets the accounting requirements for reporting as discontinued operations for all periods presented.

The key components of income from discontinued operations for the three and six months ended November 27, 2022 and November 28, 2021 were as follows (in thousands):


	Three Months Ended		Six Months Ended
	November 28, 2021		November 28, 2021
Product sales	$	86,040	$	173,196
Cost of product sales	87,763		167,835
Gross profit	(1,723)		5,361
Operating costs and expenses:
Research and development	862		1,815
Selling, general and administrative	5,823		12,292
Impairment of goodwill	32,057		32,057
Loss on sale of Eat Smart	—		—
Restructuring costs	705		1,433
Total operating costs and expenses	39,447		47,597
Operating loss	(41,170)		(42,236)
Dividend income	—		—
Interest expense	(1,239)		(2,478)
Other income (expense), net	—		—
Loss from discontinued operations before taxes	(42,409)		(44,714)
Income tax benefit (expense)	(261)		200
Loss from discontinued operations, net of tax	$	(42,670)	$	(44,514)

Cash used in operating activities by the Eat Smart business totaled $4.4 million for the six months ended November 28, 2021. Cash provided by investing activities from the Eat Smart business totaled $44.4 million for the six months ended November 28, 2021. Depreciation and amortization expense of the Eat Smart business totaled $5 million for the six months ended November 28, 2021. Capital expenditures of the Eat Smart business totaled $1.8 million for the six months ended November 28, 2021. There was no cash used, provided by, nor any capital expenditures of, the Eat Smart business for the six months ended November 27, 2022.

Interest expense was allocated to discontinued operations based on the interest expense related to the amount of debt required to be paid down under the New Credit Agreements as a result of the Eat Smart Disposition.

There were no assets or liabilities of Eat Smart as of November 27, 2022 or May 29, 2022.