NOTE BACQUISITIONS

On July 13, 2015, the Company acquired Applegate Farms, LLC (Applegate) of Bridgewater, New Jersey for a final purchase price of $774.1 million in cash. The purchase price was funded by the Company with cash on hand and by utilizing short-term financing.

Applegate® is the No. 1 brand in natural and organic value-added prepared meats and this acquisition will allow the Company to expand the breadth of its protein offerings to provide consumers more choice in that fast growing category.

The acquisition was accounted for as a business combination using the acquisition method. The Company obtained an independent appraisal. A final allocation of the purchase price to the acquired assets, liabilities, and goodwill is presented in the table below.

(in thousands)
Accounts receivable	$	25,574
Inventory		22,212
Prepaid and other assets		2,916
Property, plant and equipment		3,463
Intangible assets		275,900
Goodwill		488,353
Current liabilities		(23,420)
Deferred taxes		(20,935)

Purchase price	$	774,063

Goodwill is calculated as the excess of the purchase price over the fair value of the net assets recognized. The goodwill recorded as part of the acquisition primarily reflects the value of the potential to expand presence in the natural and organic channels and the supply chain for natural and organic products. A portion of the goodwill balance is expected to be deductible for income tax purposes. The goodwill and intangible assets have been allocated to the Refrigerated Foods segment.

Operating results for this acquisition have been included in the Company’s Consolidated Statements of Operations from the date of acquisition and are reflected in the Refrigerated Foods segment. Pro forma results are not presented, as the acquisition was not considered material to the consolidated Company.

On May 2, 2016, subsequent to the end of the second quarter, the Company entered into a definitive agreement to acquire Justin’s, LLC (Justin’s) for a preliminary purchase price of $286.0 million. The transaction is structured to provide an ongoing cash flow benefit as a result of tax amortization of the stepped-up basis of assets, the net present value of which is approximately $70.0 million.

Justin’s is a pioneer in nut butter-based snacking and this acquisition will allow the Company to enhance its presence in the specialty natural and organic nut butter category, complementing the Company’s SKIPPY peanut butter products.

Operating results for this acquisition will be included in the Company’s Consolidated Statements of Operations from the date of acquisition (i.e. beginning in the third quarter) and will be reflected in the Grocery Products segment.