Earn-out Liability Acquisition of Orchard Valley Harvest, Inc.

9 Months Ended

Mar. 29, 2012

Earn-out Liability Acquisition of Orchard Valley Harvest, Inc. [Abstract]

Earn-out Liability Acquisition of Orchard Valley Harvest, Inc.

Note 3 — Earn-out Liability — Acquisition of Orchard Valley Harvest, Inc.

Under terms of the Purchase Agreement by and between us and OVH dated May 5, 2010 (the “Purchase Agreement”), consideration of $7,579 ($5,079 of which was earned in calendar 2010 and $2,500 of which was earned in calendar 2011) was earned by OVH, which is in addition to the $32,887 cash purchase price paid. The period for measuring potential earn-out payments ended during the second quarter of fiscal 2012 and no further earn-out periods remain.

The following table summarizes the earn-outs that have been achieved under the terms of the Purchase Agreement. Net retail sales include packaged sales to the consumer distribution channel. Net sales are comprised of net retail sales plus sales of bulk products.

Earn-out Measurement	Earn-out Payment		Date of Payment		Earn-out Not Achieved
Calendar 2010 net retail sales greater than $25,500	$	79		Q3 2011 & Q2 2012		—
Calendar 2010 net sales greater than $41,500 and calendar 2010 net retail sales greater than $36,500		5,000		Q3 2011 & Q2 2012		—
Calendar 2011 net retail sales greater than $43,000		2,500		Q3 2012		—
Calendar 2010 and calendar 2011 net retail sales greater than $105,000		—		—		2,500
Total	$	7,579				2,500

The two earn-out measurements based upon calendar 2010 net sales and net retail sales were both achieved in calendar 2010. Under terms of the Purchase Agreement, we paid $4,135 of this amount during the third quarter of fiscal 2011 and $944 of this amount during the second quarter of fiscal 2012. The earn-out measurement based upon calendar 2011 net retail sales was also achieved. Accordingly, we paid $2,500 during the third quarter of fiscal 2012. The earn-out measurement based on combined calendar 2010 and calendar 2011 net retail sales was not achieved and therefore will not be paid out.

Payments of $5,837 not exceeding the acquisition date fair value of contingent consideration are recorded as cash outflows from financing activities, $4,135 during the first thirty-nine weeks of fiscal 2011 and $1,702 during the first thirty-nine weeks of fiscal 2012. Payments of $1,742 exceeding the acquisition date fair value are recorded as a decrease in the operating activities section of the consolidated statement of cash flows for the thirty-nine weeks ended March 29, 2012.

The change in the fair value measurement of the earn-out liability during fiscal 2012 was not material.