Commitments and Contingencies

Accruals and the Potential Effect of Litigation

Liabilities related to legal proceedings are recorded when it is probable that a liability has been incurred and the associated amount can be reasonably estimated. Where the estimated amount of loss is within a range of amounts and no amount within the range is a better estimate than any other amount, the low end of the range is accrued.

As additional information becomes available, the potential liabilities related to these matters are reassessed and the estimates revised, if necessary. These accrued liabilities are subject to change in the future based on new developments in each matter, or changes in circumstances, which could have a material effect on the Company’s financial condition and results of operations.

From time to time, the Company is subject to various other legal actions, lawsuits, claims and proceedings related to products, employment, environmental regulations, and other matters incidental to its businesses.

Based upon information presently known, the Company does not believe that the ultimate resolution of such matters will have a material effect on the Company’s financial position, although the final resolution of such matters could have a material effect on its results of operations or cash flows in the period of resolution.

Lease Commitments

Operating Leases

The Company leases facilities for its headquarters, manufacturing, and distribution, under noncancelable operating lease arrangements. As of December 31, 2017, the Company’s total future minimum lease payments under these operating leases were $2.6 million.

Rent expense under all operating leases was $2.0 million for the year ended December 31, 2017, $0.3 million (Successor) for November 4, 2016 through December 31, 2016 and $1.3 million (Predecessor) for the period January 1, 2016 through November 3, 2016, compared to $0.4 million for the year ended December 31, 2015 (Predecessor).

Future minimum lease payments under operating leases were as follows:



(In thousands)
2018	$	2,042
2019	568
2020	—
2021	—
2022	—
Thereafter	—

Capital Leases

The Company entered into a bond-lease agreement with the Development Authority of Columbus, Georgia on December 1, 2013, which was amended in December, 2016. The bond-lease transaction required the company to exchange its property to the taxing jurisdiction for tax-exempt bonds issued in the name of the Company and not to exceed $18 million. As the issuer and holder of the bonds, the Company is not required to make lease payments. On December 16, 2013, the Company received an ad valorem tax agreement from the Columbus, Georgia Board of Tax Assessors granting tax abatement for the real and personal property located at the Company’s Columbus, Georgia bakery through 2023. The Company has elected to use the right of setoff under Accounting Standards Codification 210-20 to net the asset and the liability.

The Company has a capital lease obligation of $0.6 million for the lease located on its Southbridge, Massachusetts bakery facility. The base term of the lease is through February 2021.

Future minimum lease payments under capital leases were as follows:



(In thousands)
2018	$	200
2019	200
2020	200
2021	33
2022	—
Thereafter	—

Contractual Commitments

The Company is a party to various long-term arrangements through advance purchase contracts to lock in prices for certain high-volume raw materials and packaging components for normal product production requirements. These advance purchase arrangements are contractual agreements and can only be canceled with a termination penalty that is based upon the current market price of the commodity at the time of cancellation. These agreements qualify for the “normal purchase” exception under accounting standards; and the purchases under these contracts are included as a component of cost of goods sold.

Contractual commitments were as follows:



(In millions)	Total Committed		Commitments within 1 year		Commitments beyond 1 year
Ingredients	$	64.2	$	61.2	$	3.0
Packaging	35.4		35.4		—

Letters of Credit

The Company is a party to Letter of Credit arrangements to provide for the issuance of standby letters of credit in the amount of $2.2 million and $1.7 million. The arrangements support the collateral requirements for insurance. The Letters of Credit are 100% secured through our Revolver.