OMEGA PROTEIN CORP

NOTE SIGNIFICANT ACCOUNTING POLICIES 

 

two

two

’s principal operating subsidiary, is the successor to a business conducted since Omega Protein produces and markets a variety of products produced from menhaden (a herring-like species of fish found in commercial quantities in the U.S. coastal waters of the Atlantic Ocean and Gulf of Mexico), including specialty fish meal, crude and refined fish oils and fish solubles. Omega Protein’s fish meal products are primarily used as a protein ingredient in animal feed for swine, aquaculture and household pets. Fish oil is used primarily for animal and aquaculture feeds, as well as additives to human food products and dietary supplements. Omega Protein’s fish solubles are sold primarily to bait manufacturers and for use as an organic fertilizer. The animal nutrition segment’s business is seasonal in nature and generally has higher revenues during the quarter of each fiscal year. A portion of Omega Protein’s production is transferred to the human nutrition segment where it is further processed and sold. Omega Shipyard owns and operates a dry-dock facility in Moss Point, Mississippi that is used to provide shore side maintenance for Omega Protein’s fishing fleet.

’s” branded product and “Bioriginal” names. Bioriginal has primary product lines: specialty oils, protein products and other nutraceutical ingredients. Bioriginal is comprised primarily of subsidiaries: Bioriginal Food & Science Corp. (“Bioriginal Food & Science”), Wisconsin Specialty Protein, L.L.C. (“WSP”) and Cyvex Nutrition, Inc. (“Cyvex”). Bioriginal Food & Science, acquired by the Company in and headquartered in Saskatoon, Canada with additional operations in the Netherlands, is a supplier of plant and marine based specialty oils to the food and nutraceutical industries. WSP, acquired by the Company in is a manufacturer and marketer of specialty dairy proteins and other related products headquartered in Madison, Wisconsin and operates a production facility in Reedsburg, Wisconsin. Cyvex is located in Irvine, California and is a supplier for the food and nutraceutical industries.

10

10

01

X.

the Company’s Annual Report on Form -K for the year ended The year-end condensed balance sheet data was derived from audited financial statements, but does include all disclosures required by accounting principles generally accepted in the United States of America. Additionally, certain amounts applicable to the prior period have been reclassified to conform to the current classification.

’s consolidated financial position as of and the results of its operations for the month and month periods ended and and its cash flows for the month periods ended and Quarterly operating results are necessarily indicative of the results that be expected for the year ending

The components of accumulated other comprehensive gain (loss) included in stockholders’ equity are as follows:

Changes in Accumulated Other Comprehensive Loss by Component

For the Nine Months Ended in thousands)

Changes in Accumulated Other Comprehensive Loss by Component

For the Nine Months Ended in thousands)

In the

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 

(“ASU”) - , which amends ASC The purpose of this ASU is to better align accounting rules with a company’s risk management activities and financial reporting for hedging relationships, better reflect economic results of hedging in financial statements, simplify hedge accounting requirements and improve the disclosures of hedging arrangements. The amendment should be applied using the modified retrospective transition method. ASU - is effective for annual periods beginning after and interim periods within those annual periods, with early adoption permitted. The Company currently plans to adopt the requirements of the new standard in the quarter of and does expect it to have a significant impact on its

consolidated results of operations, financial position and related disclosures.

In the

FASB issued

ASU -  . ASU - requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service cost/credit and actuarial gain/loss, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are presented separately in the income statementASU - is effective for fiscal years and interim periods beginning after and early adoption is permitted. The Company does expect the adoption of ASU - to have a material impact on its

consolidated results of operations, financial position and related disclosures.

December 2016,

606,

. The amendments allow entities to make quantitative disclosures about remaining performance obligations in certain cases and require entities that use any of the new or previously existing optional exemptions to expand their qualitative disclosures. The amendments also make additional technical corrections and improvements to the new revenue standard. The guidance will be effective with the same date and transition requirements as those in ASC

606

January 1, 2018.

’s impact on its consolidated results of operations and financial condition. The Company has conducted contract reviews of the most significant contracts in both its Animal Nutrition and Human Nutrition segments. For the majority of the Company’s revenue arrangements, transactions are accounted for under industry-specific guidance that will be superseded by the ASC and generally consist of a single performance obligation to transfer promised goods. Additionally, there are expanded disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers which the Company is also developing as it works through the project plan.

not

606

2014

09.

January 1, 2018.

the FASB issued ASU -

 

 ASU - was issued as part of the FASB’s simplification initiative and affects all entities that issue share-based payment awards to their employees. ASU - covers accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company prospectively adopted the provisions of ASU - effective which decreased the provision for income taxes by million and relocated the million excess tax benefit of equity compensation transactions cash flow from financing to operating on the condensed consolidated statement of cash flows as compared to the presentation for the months ended

February 2016,

2016

02,

, which is intended to improve the reporting of leasing transactions to provide users of financial statements with more decision-useful information. ASU - will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The Company will adopt ASU - on and is assessing its potential impact on the Company’s consolidated results of operations, financial position and related disclosures.

In the

FASB issued

ASU -, which amended existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as non-current on the balance sheet.  The Company retrospectively adopted the provisions of ASU - effective

which

netted the previously reported million current deferred tax asset with the previously reported million long-term deferred tax liability into a recasted million long-term deferred tax liability.

’s Canadian-based subsidiaries (“Bioriginal Food & Science Canada”). Monetary assets and liabilities denominated in foreign currencies are translated into U.S. Dollars at exchange rates in effect at the balance sheet date. Non-monetary items are translated at rates of exchange in effect when the assets were acquired or obligations incurred. Revenue and expenses are translated at average rates in effect in the period of the transaction. Foreign exchange gains and losses are included in the consolidated statement of comprehensive income.

’s Netherlands-based subsidiaries (“Bioriginal Food & Science Europe”). The operations of these subsidiaries are considered self-sustaining and their financial statements are translated into U.S. Dollars using the current rate method. Under this method, all assets and liabilities are translated to U.S. Dollars at exchange rates in effect at the balance sheet date and all revenue and expenses are translated at rates in effect at the time of the transactions. Exchange gains and losses arising from this translation, representing the net unrealized foreign currency translation gain (loss) on the Company's net investment in its self-sustaining subsidiaries, are recorded in the accumulated other comprehensive income (loss) component of stockholders' equity. Adjustments to the accumulated other comprehensive income (loss) account are recorded in the consolidated statement of comprehensive income until realized through an addition or reduction in the Company's net investment in such operations.

September 2017

$0.3

provider related to downtime at of its Gulf of Mexico production facilities in The proceeds were calculated based on lost inventory production. Given that the Company experienced a slight decrease in production as a result of the downtime, some of which would have been sold in the proceeds related to lost inventory production were recognized as an increase in revenues.