Acquisition

On August 3, 2011, the Company acquired Glutino, for total consideration of $66,307, subject to a final working capital determination. In conjunction with this acquisition, the Company incurred $2,754 for acquisition related costs which were expensed in the current period. Glutino is a leading manufacturer and marketer of innovative, premium-priced, gluten-free foods sold under the Glutino and Gluten-Free Pantry brands. Glutino offers a wide range of shelf-stable and frozen gluten free products, including snack foods, frozen baked goods, frozen entrees and baking mixes throughout North America. The gluten-free market is complementary with the Company's corporate vision of creating a health and wellness innovation platform that builds brands targeted at highly motivated consumer needs. This acquisition was funded through borrowings under the Company's Revolver under its Amended Credit Facility (each as defined below).

The Company accounted for the acquisition pursuant to ASC No. 805, Business Combinations. Accordingly, it recorded net assets and liabilities acquired at their fair values. The purchase price allocation, subject to final adjustment as valuations and tax impacts are expected to be finalized in the fourth quarter of 2011, is as follows:



Cash	$	533
Accounts receivable	5,871
Inventories	7,989
Prepaid assets	415
Property and equipment, net	5,714
Other assets	69
Intangible assets	39,566
Goodwill	19,506
Total assets acquired	79,663
Accounts payable, accrued expenses and other liabilities	4,927
Deferred taxes and other	8,429
Total liabilities assumed	13,356
Net assets acquired	$	66,307

Acquired intangible assets have estimated useful lives of between 9 and 11 years. The goodwill associated with Glutino is a result of acquiring and retaining workforces and expected synergies from integrating their operations into the Company. Approximately $7,000 of goodwill is expected to be deductible for tax purposes.

The following unaudited pro forma financial information presents the combined results of the Company and Glutino as though the acquisition had been consummated as of the beginning of the periods presented, for the periods indicated below:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Net sales	$	75,792	$	72,578	$	221,426	$	215,013
Net income (loss)	1,040		1,928		7,477		(128,493		)
Basic and Diluted income (loss) per share	$	0.02	$	0.03	$	0.13	$	(2.07	)

Included in the pro forma results is the interest expense related to the increased borrowings under the revolver related to the acquisition, a one-time charge to reflect the estimated fair value of finished goods acquired and the amortization expense of the fair value of the finite-lived intangible assets, as though the acquisition had been consummated as of the beginning of the periods presented. Also included in the pro forma results is $2,617 and $2,754 of acquisition related costs, pertaining mostly to legal and investment fees, for the three and nine months ended September 30, 2011, respectively.

The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the periods indicated nor is it necessarily indicative of future operating results. The pro forma information does not give effect to any potential net sales enhancements or operating efficiencies that could result from the acquisition.