2. Acquisition

Effective May 28, 2013, we enhanced our berry purchase and freezing capabilities by acquiring Willamette Valley Fruit Company, LLC, one of the Pacific Northwest’s leading processors of high-quality berry products, for a cash purchase price of $9.3 million. Up to an additional $3.0 million in purchase price consideration may be due if certain performance thresholds are met during the period of up to seven years following the closing.

Under the terms of the agreement we acquired substantially all of the berry processing equipment assets, including a new Individually Quick Frozen (“IQF”) tunnel, and other intellectual property and inventory rights. We also entered into leases of the land and buildings containing the purchased assets. We believe that the WVFC Acquisition enhances our berry purchasing and freezing capabilities and that the synergies from combining WVFC’s berry processing capabilities with Inventure’s Frozen products segment operations will elevate our ability to meet the growing consumer demand for frozen fruit.

The following table summarizes the purchase price and the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition and provides certain supplemental cash flow information (in thousands):

Purchase price paid as:
Cash and borrowings on revolving line of credit				$	8,472
Holdback consideration				800
Contingent consideration				2,400
Total purchase price				11,672
Fair value of net assets acquired:
Inventory	$	1,272
Property and equipment	3,335
Identifiable intangible assets	3,940
Current liabilities	(22		)
Total fair value of net assets acquired				8,525
Excess purchase price over fair value of net assets acquired (“goodwill”)				$	3,147

Under the acquisition method of accounting, the purchase price as shown in the table above is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over fair value of net assets acquired was recorded as goodwill. The purchase price was allocated using the information currently available, and we may adjust the purchase price allocation after obtaining more information regarding, among other things, asset valuations and revisions of preliminary estimates. We expect the purchase price allocation to be finalized by the end of the year. We may accrue additional charges in connection with the WVFC Acquisition, but the amounts cannot be reasonable estimated at present. The estimated values of current liabilities were based upon their historical costs on the date of acquisition due to their short-term nature.

Identified intangible assets acquired in the WVFC Acquisition totaled $3.9 million and consist of the following (in thousands):

Customer relationships	$	3,200
Trademark	740
Intangible assets, net at June 29, 2013	$	3,940

Amortization expense of the acquired customer relationships is determined using the straight-line method over an estimated economic life of 10 years. Amortization expense is estimated to be as follows (in thousands):

Years Ending,
2013	$	160
2014	320
2015	320
2016	320
2017	320
Thereafter	1,760
Total	$	3,200

Goodwill of $3.1 million represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed from WVFC, and was recorded entirely in our Frozen products segment. None of the goodwill is tax deductible.

The following unaudited pro forma consolidated results of operations (in thousands, except per share data) assumes the WVFC Acquisition occurred as of the beginning of the prior year. The pro forma results are not necessarily indicative of the actual results that would have occurred had the acquisition been completed as of the beginning of each of the periods presented, nor are they necessarily indicative of future consolidated results.

		Quarter Ended				Six Months Ended
		June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Net revenues	As reported	$	53,677	$	48,016	$	102,214	$	95,036
	Pro forma	$	56,884	$	51,247	$	108,645	$	101,707

Net income	As reported	$	1,407	$	1,623	$	2,463	$	3,345
	Pro forma	$	1,564	$	1,637	$	2,706	$	3,374

Diluted earnings per share	As reported	$	0.07	$	0.08	$	0.13	$	0.17
	Pro forma	$	0.08	$	0.08	$	0.14	$	0.17