Business Acquisitions - (Tables)

6 Months Ended

Jul. 02, 2016

Schedule of Business Acquisitions, by Acquisition

The following is a summary of consideration transferred in the acquisition of Diamond:



	Conversion Calculation		Fair Value (in thousands)
Diamond common shares outstanding as of February 29, 2016	31,062,164
Multiplied by 0.775 as per the Merger Agreement	0.775
Total Snyder's-Lance common shares issued to Diamond stockholders	24,071,839
Multiplied by Snyder's-Lance closing stock price as of February 26, 2016	$	32.34
Total stock consideration for outstanding common shares			$	778,483
Cash consideration of $12.50 per Diamond common share outstanding as of February 29, 2016, including cash paid in lieu of fractional converted shares			388,318
Total cash and stock consideration to stockholders			$	1,166,801
Fair value of replacement cash awards and stock-based awards attributable to pre-acquisition service, including awards that accelerated vesting at acquisition date due to change in control provisions ⁽¹⁾			28,211
Repayment of Diamond’s outstanding debt due to change in control provisions ⁽²⁾			651,044
Liability for value of Dissenters' merger consideration ⁽³⁾			12,418
Total fair value of consideration transferred			$	1,858,474
Effective settlement of accounts payable owed by us to Diamond at acquisition date			(1,295		)
Total purchase consideration			$	1,857,179

⁽¹⁾ The fair value of the Snyder's-Lance replacement cash awards, settled common stock, restricted share awards, restricted unit awards and stock options was calculated as of February 29, 2016 using conversion terms outlined in the Merger Agreement. The closing stock price on February 26, 2016, the last trading day before closing, was used in the fair valuation of settled common stock, restricted share awards and restricted unit awards. The fair value of the stock options was estimated using the Black-Scholes valuation model utilizing the assumptions noted below:



Assumptions used for the valuation of replacement Snyder's-Lance stock options:
Stock price as of February 26, 2016	$32.34
Post-conversion exercise price	$11.75 - $80.24
Average expected volatility	31.18%
Expected dividend yield	1.98%
Weighted average risk-free interest rate	0.33%
Weighted average expected life	0.3 years
Black-Scholes weighted average value per option	$15.22

The expected volatility of the Snyder’s-Lance stock price was based on average historical volatility which was based on observations and a duration consistent with the expected life assumption. The weighted average expected life of the option was calculated using the simplified method by using the vesting term of the option and the option expiration date. The risk-free interest rate was based on U.S. treasury securities with maturities equal to the expected life of the option.

⁽²⁾ Repayment of Diamond’s outstanding debt was required as part of the consideration to be transferred due to change in control provisions which are triggered upon acquisition. The repayment amount was calculated as of February 29, 2016 by taking Diamond’s outstanding long-term debt and current portion of long-term debt of $633.2 million plus accrued interest of $9.0 million and a prepayment penalty of $8.8 million.

⁽³⁾Estimate of merger consideration unpaid and owed to certain Diamond stockholders that would otherwise have received $12.50 in cash and 0.775 shares of Snyder’s-Lance common stock for each share of Diamond common stock held (see 'Appraisal Proceedings' within Note 15).

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of the stock options was estimated using the Black-Scholes valuation model utilizing the assumptions noted below:



Assumptions used for the valuation of replacement Snyder's-Lance stock options:
Stock price as of February 26, 2016	$32.34
Post-conversion exercise price	$11.75 - $80.24
Average expected volatility	31.18%
Expected dividend yield	1.98%
Weighted average risk-free interest rate	0.33%
Weighted average expected life	0.3 years
Black-Scholes weighted average value per option	$15.22

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The acquisition was accounted for as a business combination. Management has used its best estimate in the allocation of the purchase price to assets acquired and liabilities assumed based on the estimated preliminary fair value of such assets and liabilities. The following table summarizes the preliminary allocation of assets acquired and liabilities assumed as part of the acquisition:



	Preliminary Allocation		Measurement Period Adjustments			Preliminary Allocation
(in thousands)	As of April 2, 2016		Quarter Ended July 2, 2016			As of July 2, 2016
Cash and cash equivalents	$	28,945	$	—		$	28,945
Accounts receivable	77,445		412			77,857
Inventories	168,089		(10,667		)	157,422
Prepaid expenses and other current assets	12,111		1,666			13,777
Fixed assets	136,340		(7,644		)	128,696
Goodwill	868,443		3,381			871,824
Other intangible assets	902,500		12,100			914,600
Equity investments	8,607		4,337			12,944
Other long term assets	1,018		(45		)	973
Total assets acquired	2,203,498		3,540			2,207,038

Accounts payable, and other current liabilities, including payable to growers	134,715		894			135,609
Deferred income tax liability	191,425		1,110			192,535
Other long term liabilities	20,179		1,536			21,715
Total liabilities assumed	346,319		3,540			349,859

Net assets acquired⁽¹⁾	$	1,857,179	$	—		$	1,857,179

⁽¹⁾ Net assets acquired include the effective settlement of $1.3 million in accounts payable owed by us to Diamond at the time of the acquisition.

Business Acquisition, Pro Forma Information

The following unaudited pro forma consolidated financial information has been prepared as if the acquisition of Diamond had taken place at the beginning of 2015. These unaudited pro forma results include estimates and assumptions regarding increased amortization of intangible assets related to the acquisition, reduced interest expense related to lower interest rates associated with the new combined debt and the related income tax effects. Pro forma results are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated, or that may result in the future for various reasons, including the potential impact of revenue and cost synergies on the business.



	Quarter Ended				Six Months Ended
(in thousands, except per share data)	July 2, 2016		July 4, 2015		July 2, 2016		July 4, 2015
Net revenue	$	609,500	$	609,335	$	1,201,879	$	1,234,554
Net income/(loss) attributable to Snyder's-Lance, Inc.	19,681		$	25,050	$	43,392	$	(7,085	)