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Acquisition (Tables)

9 Months Ended

Oct. 05, 2013

Schedule of Identified Assets Acquired and Liabilities Assumed

The following table summarizes the consideration paid for the Hostess Acquired Assets and liabilities assumed based on the estimated fair value at the acquisition date (amounts in thousands and are preliminary):


Fair value of consideration transferred:
Cash consideration transferred	$	355,000

Recognized amounts of identifiable assets acquired and liabilities assumed:
Property, plant, and equipment	$	162,599
Identifiable intangible asset — trademarks		193,000
Financial assets		661

Net recognized amounts of identifiable assets acquired	$	356,260

Gain on legal settlement		(1,400	)

Net recognized amounts of identifiable assets acquired and gain on settlement	$	354,860

Goodwill	$	140

Summary of Potential Payment of Holdback Amount

The table below reflects the potential payments under each scenario (amounts in thousands):


	February 23, 2013 – November 20, 2013		November 21, 2013 – February 18, 2014		February 19, 2014 – May 19, 2014		May 20, 2014 – August 17, 2014
Co-pack decision	$	10,000	$	7,500	$	5,000	$	—
Bakery decision	$	10,000	$	10,000	$	7,500	$	5,000

Fair Value of Stock Consideration

The table below outlines the determination of fair value and provides the assumptions used in the calculation:


Restriction lapse year	2012			2013			2014			2015			2016			Total
Value of Flowers shares issued (thousands)	$	25,000		$	10,000		$	5,000		$	5,000		$	5,000		$	50,000
Implied fair value of restricted shares (thousands)	$	23,626		$	9,154		$	4,447		$	4,363		$	4,297		$	45,887
Exercise price (per share)	$	13.65		$	13.65		$	13.65		$	13.65		$	13.65
Expected term (yrs)		0.37			1.00			2.00			3.00			4.00
Volatility (%)		25.0	%		25.0	%		25.0	%		25.0	%		25.0	%
Risk-free rate (%)		0.1	%		0.2	%		0.2	%		0.3	%		0.4	%
Dividend yield (%)		3.0	%		3.0	%		3.0	%		3.0	%		3.0	%

Pro Forma Consolidated Results of Operations

The following unaudited pro forma consolidated results of operations have been prepared as if the acquisitions of Lepage and the Acquired Hostess Assets occurred at the beginning of fiscal 2012. Unaudited pro forma consolidated results of operations for the Sara Lee and Earthgrains asset acquisitions are not included because the company determined that they are immaterial. Hostess filed for bankruptcy and ceased operations in November 2012. As a result, there were no sales related to the Acquired Hostess Assets for fiscal 2013 and no information to include in the pro forma presentation below. Lepage has been included in our consolidated financial statements since the acquisition in July 2012. The pro forma is as follows (amounts in thousands, except per share data):


	For the Twelve Weeks Ended October 6, 2012		For the Forty Weeks Ended October 6, 2012
Sales:
As reported	$	717,282	$	2,297,049
Pro forma	$	913,524	$	3,064,400
Net income:
As reported	$	31,231	$	97,554
Pro forma	$	29,193	$	91,625
Basic net income per common share:
As reported	$	0.15	$	0.48
Pro forma	$	0.14	$	0.44
Diluted net income per common share:
As reported	$	0.15	$	0.47
Pro forma	$	0.14	$	0.44

Lepage Bakeries Inc

Schedule of Identified Assets Acquired and Liabilities Assumed

The following table summarizes the consideration transferred to acquire Lepage and the amounts of identified assets acquired and liabilities assumed based on the fair value at the acquisition date (amounts in thousands):


Fair value of consideration transferred:
Cash	$	318,605
Deferred payment obligations		17,663
Flowers Foods, Inc. common stock		45,887

Total fair value of consideration transferred	$	382,155

Recognized amounts of identifiable assets acquired and liabilities assumed:
Financial assets	$	11,658
Inventories		4,537
Property, plant, and equipment		59,970
Assets held for sale — Distributor routes		16,098
Identifiable intangible assets		256,400
Deferred income taxes, net		(1,137	)
Financial liabilities		(16,181	)

Net recognized amounts of identifiable assets acquired	$	331,345

Goodwill	$	50,810

Schedule of Intangible Assets Subject to Amortization

The following table presents the intangible assets subject to amortization (amounts in thousands, except amortization periods):


	Amount		Weighted average amortization years
Customer relationships	$	69,000		25.0
Non-compete agreements		2,400		4.0

	$	71,400		24.3

Sara Lee and Earthgrains acquisition of trademark licenses

Schedule of Identified Assets Acquired and Liabilities Assumed

The following table summarizes the consideration paid to acquire these licenses and the amounts of identified assets acquired and liabilities assumed based on the estimated fair value at the acquisition date (amounts in thousands and are preliminary):


Fair value of consideration transferred:
Cash consideration transferred	$	49,950
Contingently refundable consideration (the “holdback”)		(7,600	)

Total consideration, net	$	42,350

Recognized amounts of identifiable assets acquired and liabilities assumed:
Property, plant, and equipment	$	6,476
Identifiable intangible asset — distribution rights		25,790
Identifiable intangible asset — trademarks		79,500
Identifiable intangible asset — customer relationships		12,000
Deferred income taxes, net		(31,345	)

Net recognized amounts of identifiable assets acquired	$	92,421

Bargain purchase gain	$	50,071