Item 2.02 Results of Operations and Financial Condition.
On January 2, 2020, Landec Corporation (the "Company") issued a press release
announcing its consolidated financial results for the second quarter of fiscal
year 2020. The press release is furnished herewith as Exhibit 99.1.
The information in this Current Report, including Exhibit 99.1, is being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise
subject to the liabilities of that Section. The information in this Current
Report, including Exhibit 99.1, shall not be incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such a filing.
Item 2.05 Costs Associated with Exit or Disposal Activities.
On January 2, 2020, the Company announced that it had completed a strategic
review of its Curation Foods, Inc. ("Curation Foods") business to focus the
business on its strategic assets and redesign the organization to be the
appropriate size to compete and thrive. To accomplish these goals, the Company
will consolidate its Curation Foods' R&D and centralized business activities
into its Innovation Center headquarters in Santa Maria, CA. As a result, the
Company will close its leased Santa Clara, CA office and its leased Los Angeles,
CA office, which was acquired in the Yucatan Foods acquisition. The Company
expects to close these locations permanently by the end of fiscal 2020. The
Company previously sold its San Rafael, CA office on December 24, 2019, for $2.4
million, net of commissions. The sale resulted in a loss of $0.4 million which
was included in general and administrative expenses during the second quarter.
In addition, the Company will sell its yet to be operational salad dressing
plant in Ontario, CA. The Company expects to finalize the sale during the second
half of fiscal 2020. The Company is unable to estimate the expected financial
impact from the sale at this time.
The Company has also taken action to right size and redesign the Curation Foods
organization so that it is appropriate for the Company's size, focusing on
strategic initiatives, developing and elevating internal talent and reducing
headcount.
As a result of these actions, the Company expects to incur pre-tax restructuring
and related charges in the range of $2.0 to 2.5 million during fiscal 2020 of
which approximately $1.2 to $1.5 million will be cash and $0.8 to $1.0 million
non-cash. This range includes the $0.4 million loss related to the completed
sale of the San Rafael, CA office which was recognized during the second
quarter. Of the remaining total amount of pre-tax restructuring and related
expense, approximately $1.2 to $1.5 million is for employee and severance
related expenses and approximately $0.4 to $0.6 million for lease exit costs.
These amounts exclude any potential financial impact from the sale of the
Ontario, CA plant which the Company is currently unable to estimate.
The Company expects that these actions will deliver approximately $3.7 million
in annual savings and are anticipated to be completed by the end of fiscal 2020.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Principal Financial and Accounting Officer Changes
On December 27, 2019, the Company announced that Greg Skinner was resigning from
his position as Executive Vice President of Finance and Administration and Chief
Financial Officer of the Company, effective as of January 8, 2020.
Effective as of January 8, 2020, the Board of Directors of the Company promoted
Brian McLaughlin, Chief Financial Officer of Curation Foods, Inc. ("Curation
Foods") and Vice President of the Company to the position of interim Chief
Financial Officer and Vice President of Finance and Administration of the
Company.
Mr. McLaughlin (age 65) has been the Chief Financial Officer of Curation Foods
since August 2015 and Vice President of the Company since October 2019. Mr.
McLaughlin was Chief Financial Officer for Organicgirl from 2010 until August
2015. Prior to that he was Chief Financial Officer for EuroFresh Farms from 2008
until 2009, and Chief Financial Officer for Driscoll's, Inc. from 2006 until
2007. From 1996 until 2006, Mr. McLaughlin served as Chief Financial Officer of
Fresh Express, Inc.
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On December 27, 2019, the Company issued a press release announcing the events
described above. A copy of the press release is attached hereto as Exhibit 99.2
and incorporated by reference herein.
Named Executive Officer Termination
On January 2, 2020, Parker Javid was terminated from his positions as Chief
Customer and Sales Officer for Curation Foods and Vice President of the Company.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1 Press Release dated January 2, 2020 regarding financial results.
99.2 Press Release announcing officer changes
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