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Acquisitions (Tables) | 12 Months Ended
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Jan. 03, 2015
Changes to Goodwill by Acquisition | The table below presents the changes to goodwill by acquisition from December 29, 2012 to December 28, 2013 (amounts in thousands):
|  | Modesto |  |  | Acquired Hostess Assets |  |  | Lepage |  |  | Other |  |  | Total |
Working capital adjustments |  | $ | — |  |  | $ | — |  |  | $ | 315 |  |  | $ | — |  |  | $ | 315 |
Acquisition-related tax adjustments |  |  | — |  |  |  | — |  |  |  | (1,016 | ) |  |  | — |  |  |  | (1,016 | )
Adjustment to assets held for sale |  |  | — |  |  |  | — |  |  |  | 63 |  |  |  | — |  |  |  | 63 |
Adjustment for accrued liabilities |  |  | — |  |  |  | — |  |  |  | 2,394 |  |  |  | — |  |  |  | 2,394 |
Adjustment to property, plant and equipment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,123 |  |  |  | 1,123 |
Acquisitions during fiscal 2013 |  |  | 4,209 |  |  |  | 5,419 |  |  |  | — |  |  |  | — |  |  |  | 9,628 |
Change in goodwill during fiscal 2013 |  | $ | 4,209 |  |  | $ | 5,419 |  |  | $ | 1,756 |  |  | $ | 1,123 |  |  | $ | 12,507 |
The table below presents the changes to goodwill by acquisition from December 28, 2013 to January 3, 2015 (amounts in thousands):
|  | Acquired Hostess Assets |
Adjustment for spare parts and final fair value assessment |  | $ | (3,503 | )
Adjustment to property, plant and equipment |  |  | 6,683 |
Change in goodwill during fiscal 2014 |  | $ | 3,180 |
Summary of Potential Payment of Holdback Amount | The table below reflects the potential payments to us 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 fiscal 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 | Unaudited pro forma consolidated results of operations for the Sara Lee California 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 (the “Hostess Shutdown”). As a result, there were no sales related to the Acquired Hostess Assets for fiscal 2013 because of the Hostess Shutdown and there is no data to include in the pro forma presentation below. The acquisitions’ results from operations were included in our Consolidated Statements of Income during fiscal 2014 and, as a result, no pro forma data is presented (amounts in thousands, except per share data):
|  | Fiscal 2013 |  |  | Fiscal 2012 |
|  | 52 weeks |  |  | 52 weeks |
Sales: |  |  |  |  |  |  |  |
As reported |  | $ | 3,732,616 |  |  | $ | 3,031,124 |
Pro forma |  | $ | 3,732,616 |  |  | $ | 3,887,498 |
Net income: |  |  |  |  |  |  |  |
As reported |  | $ | 230,894 |  |  | $ | 136,121 |
Pro forma |  | $ | 227,076 |  |  | $ | 128,464 |
Basic net income per common share: |  |  |  |  |  |  |  |
As reported |  | $ | 1.11 |  |  | $ | 0.66 |
Pro forma |  | $ | 1.09 |  |  | $ | 0.62 |
Diluted net income per common share: |  |  |  |  |  |  |  |
As reported |  | $ | 1.09 |  |  | $ | 0.66 |
Pro forma |  | $ | 1.07 |  |  | $ | 0.61 |
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 fair value at the acquisition date (amounts in thousands):
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 |
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 |  |  | (17,076 | )
Net recognized amounts of identifiable assets acquired |  | $ | 330,450 |
Goodwill |  | $ | 51,705 |
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 |
Acquired Hostess Bread Asset |
Changes to Goodwill by Acquisition | The table below presents the changes to goodwill from December 28, 2013 to January 3, 2015 for the Acquired Hostess Bread Assets (amounts in thousands):
Goodwill reported on December 28, 2013 for the Acquired Hostess Bread Assets |  | $ | 5,419 |
Changes in goodwill for spare parts and final fair value adjustments |  |  | (3,503 | )
Changes in goodwill for property, plant and equipment final fair value adjustments |  |  | 6,683 |
Net changes to goodwill |  | $ | 3,180 |
Final Acquired Hostess Bread Assets goodwill |  | $ | 8,599 |
Schedule of Identified Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid for the Acquired Hostess Bread Assets and liabilities assumed based on the fair value at the acquisition date (amounts in thousands):
Fair value of consideration transferred: |  |  |  |
Cash consideration transferred |  | $ | 355,342 |
Recognized amounts of identifiable assets acquired and liabilities assumed: |  |  |  |
Property, plant, and equipment |  | $ | 153,990 |
Identifiable intangible asset — trademarks |  |  | 189,000 |
Financial assets |  |  | 5,153 |
Net recognized amounts of identifiable assets acquired |  | $ | 348,143 |
Gain on legal settlement |  |  | (1,400 | )
Net recognized amounts of identifiable assets acquired and gain on settlement |  | $ | 346,743 |
Goodwill |  | $ | 8,599 |

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