UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K



[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 3130, ~~2016~~2017



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-398

SNYDER’S-LANCE, INC.

(Exact name of Registrant as specified in its charter)



North Carolina		56-0292920
(State of incorporation)		(I.R.S. Employer Identification Number)
13515 Ballantyne Corporate Place, Charlotte, North Carolina 28277
(Address of principal executive offices) (zip code)
Post Office Box 32368, Charlotte, North Carolina 28232-2368
(Mailing address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: (704) 554-1421

Securities Registered Pursuant to Section 12(b) of the Act:



Title of Each Class		Name of Each Exchange on Which Registered
$0.83-1/3 Par Value Common Stock		The NASDAQ Stock Market LLC

Securities Registered Pursuant to Section 12(g) of the Act: NONE

Indicate by checkmark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by checkmark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check One):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

The aggregate market value of shares of the Registrant’s $0.83-1/3 par value Common Stock, its only outstanding class of voting or nonvoting common equity, held by non-affiliates as of ~~July~~June 130, ~~2016~~2017, the last business day of the Registrant’s most recently completed second fiscal quarter, was $2,~~530~~603,~~743~~789,~~572~~780.

The number of shares outstanding of the Registrant’s $0.83-1/3 par value Common Stock, its only outstanding class of Common Stock, as of February 2123, ~~2017~~2018, was 9698,~~313~~320,~~948~~444 shares.

Documents Incorporated by Reference

The information that is required to be included in Part III of this Annual Report on Form 10-K is incorporated by reference to either a definitive proxy statement or an amendment to this Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission within 120 days after the end of the Registrant's fiscal year ended December 30, 2017.

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FORM 10-K

TABLE OF CONTENTS

		Page
PART I
	Cautionary Information About Forward-Looking Statements	1
Item 1	Business	1
Item 1A	Risk Factors	67
Item 1B	Unresolved Staff Comments	1315
Item 2	Properties	1316
Item 3	Legal Proceedings	1416
Item 4	Mine Safety Disclosures	16
	Executive Officers of the Company	17
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6	Selected Financial Data	1921
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2123
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	3741
Item 8	Financial Statements and Supplementary Data	3842
	Schedule II – Valuation and Qualifying Accounts	8691
	Report of Independent Registered Public Accounting Firm	8792
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	8994
Item 9A	Controls and Procedures	8994
Item 9B	Other Information	8994
PART III
Item 10	Directors, Executive Officers and Corporate Governance	95
Item 11	Executive Compensation	95
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	95
Item 13	Certain Relationships and Related Transactions and Director Independence	95
Item 14	Principal Accountant Fees and Services	95
PART IV
Item 15	Exhibits and Financial Statement Schedules	9195
Item 16	Form 10-K Summary	95101
	Signatures	95101
Exhibit 12	Ratio of Earnings to Fixed Charges
Exhibit 21	Subsidiaries of Snyder’s-Lance, Inc.
Exhibit 23.1	Consent of PricewaterhouseCoopers LLP
Exhibit 31.1	Section 302 Certification of the CEO
Exhibit 31.2	Section 302 Certification of the CFO
Exhibit 32	Section 906 Certification of the CEO and CFO

Note: ~~Items~~Portions of the Company's Amendment to Form 10-14K, which will be filed with the Securities and Exchange Commission within 120 days after the end of ~~Part~~the ~~III~~Registrant's fiscal year ended December 30, 2017, are incorporated byinto ~~reference~~Part toIII, ~~the~~Items ~~Proxy~~10, ~~Statement~~11, 12, 13, and ~~the~~14. Executive Officers of the Company is included in Part I of this ~~annual~~Form ~~report~~10-K.

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PART I

Cautionary Information About Forward-Looking Statements

This document includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying such statements. We use the words “anticipates,” “believes,” "continues," "could," "designed," “estimates,” “expects,” “forecasts,” "goal," "initiate," "intends," “may,” “objective,” "plan," "potential," "pursue," "should," "target," "will," "would," or the negative of any of these words or similar expressions to identify our forward-looking statements that represent our judgment about possible future events. In making these statements we rely on assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors, both positive and negative. Factors that could cause these differences include, but are not limited to, the factors set forth under Part I, Item 1A - Risk Factors.

Caution should be taken not to place undue reliance on our forward-looking statements, which reflect the expectations of management only as of the time such statements are made. Except as required by law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Item 1. Business

General

Snyder's-Lance, Inc., a North Carolina corporation incorporated in 1926, is aengaged ~~branded~~in ~~snack~~the ~~food~~manufacturing, ~~company~~distribution, ~~with~~marketing ~~operations~~and sale of snack food products in North America and Europe. These products include pretzels, sandwich crackers, kettle cooked chips, pretzel crackers, popcorn, nuts, potato chips, tortilla chips, cookies, restaurant style crackers, and other salty snacks. Our brands include Snyder’s of Hanover®, the market share leader in the pretzel category in the United States ("US"), and Lance®, which is the number one ranked sandwich cracker in the US, as well as Cape Cod® kettle cooked chips and Kettle Brand® potato chips, which combined make us the market leader in the kettle chips category in the US. In addition, Snack Factory® Pretzel Crisps® is the market share leader in deli snacks and Pop Secret® popcorn currently ~~rank~~ranks second in the USmicrowave inpopcorn ~~their~~category. ~~respective categories and~~ Late July® is the number one organic and non-genetically modified organism ("non-GMO") tortilla chip in the US. These products demonstrate our successful history of providing irresistible, high-quality snacks dating back over 100 years.

Snyder’s-Lance, Inc. is headquartered in Charlotte, North Carolina. References to “Snyder’s-Lance,” the “Company,” “we,” “us” or “our” refer to Snyder’s-Lance, Inc. and its subsidiaries, as the context requires.

Agreement and Plan of Merger

On December 18, 2017, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Campbell Soup Company, a New Jersey corporation (“Campbell”), and Twist Merger Sub, Inc., a North Carolina corporation and a wholly-owned subsidiary of Campbell (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and as a wholly-owned subsidiary of Campbell (the “Merger”). The parties anticipate that the Merger will close late in the first quarter of calendar year 2018.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of our common stock, $0.83-1/3 par value, outstanding immediately prior to the Effective Time will be converted into the right to receive an amount in cash equal to $50.00 per share, without interest and subject to any required tax withholding.

The Merger Agreement contains various representations, warranties and covenants by the Company and Campbell. The Merger Agreement requires the Company to call and hold a special shareholder meeting, which is scheduled for March 23, 2018, and requires our Board of Directors to recommend that the Company’s shareholders approve the Merger Agreement and the Merger, except our Board of Directors may, in certain circumstances, change its recommendation, subject to complying with specified notice and other conditions set forth in the Merger Agreement. Additionally, the Company agreed that, among other things, it will not (i) solicit, initiate, facilitate or encourage the submission of any Acquisition Proposal (as defined in the Merger Agreement) or any proposal or offer that may reasonably be expected to lead to an Acquisition Proposal or (ii) enter into, continue or otherwise participate in discussions or negotiations with, or disclose non-public information to, any third party relating to any Acquisition Proposal or any proposal or offer that may reasonably be expected to lead to an Acquisition Proposal. Subject to the terms of the Merger Agreement, prior to the approval of the Merger Agreement by the Company’s shareholders, the Company may, however, engage in negotiations or discussions with and provide non-public information to a third party that has made an unsolicited, bona fide, written Acquisition Proposal that our Board of Directors determines in good faith, after consultation with its outside legal

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counsel and financial advisor, constitutes, or could reasonably be expected to result in, a Superior Proposal (as defined in the Merger Agreement) and that failure to take such actions would be reasonably likely to be inconsistent with its fiduciary duties under applicable law.

Prior to the approval of the Merger Agreement by the Company’s shareholders, our Board of Directors may, upon receipt of a Superior Proposal, and in certain other circumstances set forth in the Merger Agreement, change its recommendation that the Company’s shareholders approve the Merger Agreement and the Merger, subject to complying with specified notice and other conditions set forth in the Merger Agreement, including, if requested by Campbell, negotiating in good faith with Campbell to make such revisions to the Merger Agreement in response to such Superior Proposal. If our Board of Directors changes its recommendation that the Company’s shareholders approve the Merger Agreement and the Merger, Campbell may terminate the Merger Agreement. In addition, prior to obtaining such shareholder approval, the Company may terminate the Merger Agreement to enter into a definitive agreement providing for a Superior Proposal, subject to payment of the termination fee described below and only following compliance with specified notice and other conditions set forth in the Merger Agreement, including giving Campbell the opportunity to propose changes to the Merger Agreement so that any such proposal would cease to constitute a Superior Proposal.

The Merger Agreement requires the Company and Campbell to use reasonable best efforts to take all actions necessary under applicable law to consummate the transactions contemplated by the Merger Agreement. The Merger Agreement contains certain termination rights for each of the Company and Campbell, including the right of each party to terminate the Merger Agreement if the Merger has not been consummated by the “end date” of September 18, 2018.

The Merger Agreement provides for the payment by the Company to Campbell of a termination fee in the amount of $149 million in the case of a termination of the Merger Agreement under certain circumstances described in the Merger Agreement, including if: (i) (a) the Merger Agreement is terminated by Campbell or the Company because the Merger is not consummated by the end date or the Company’s shareholders do not approve the Merger Agreement, or by Campbell because of a breach of a representation, warranty or covenant of the Company that would cause the related closing condition to be incapable of being satisfied or cured by the end date or, if curable, is not cured by the Company by the earlier of 30 days after receipt of written notice of such breach and three business days prior to the end date, (b) any person publicly discloses a bona fide Acquisition Proposal, which Acquisition Proposal had not been publicly withdrawn prior to the special meeting of the Company’s shareholders, and (c) within 12 months after such termination the Company enters into a definitive agreement with respect to any Acquisition Proposal, (ii) our Board of Directors changes its recommendation or (iii) the Company enters into definitive transaction documentation providing for a Superior Proposal.

Campbell will be required to pay the Company a termination fee of $198.6 million in the event the Merger Agreement is terminated by the Company, subject to certain limitations set forth in the Merger Agreement, if (i) there has been a breach of a representation, warranty or covenant of Campbell or Merger Sub that would cause the related closing condition to be incapable of being satisfied or cured by the end date or, if curable, is not cured by Campbell or Merger Sub by the earlier of 30 days after receipt of written notice of such breach and three business days prior to the end date, or (ii) the conditions to Campbell and Merger Sub’s obligations to consummate the closing have been satisfied or waived (other than those conditions that by their terms are to be satisfied by actions taken at the closing; provided that such conditions are then capable of being satisfied), Campbell has failed to consummate the Merger within two business days of the date the closing should have occurred and the Company has notified Campbell in writing that all of the conditions to closing have been satisfied (or waived) and it intends to terminate the Merger Agreement if Campbell and Merger Sub fail to consummate the transactions contemplated thereby within two business days.

The Merger Agreement has been approved by the boards of directors of each of the Company and Campbell. The obligations of the parties to consummate the Merger are subject to customary closing conditions, including, among others: approval of the Merger Agreement and Merger by holders of 75% of the outstanding shares of the our common stock; the accuracy of the representations and warranties of each party (subject to certain exceptions as set forth in the Merger Agreement); each of the parties having performed in all material respects all of their respective obligations under the Merger Agreement; and the absence of any injunctions or other legal restraints.

On December 18, 2017, certain trusts affiliated with Patricia A. Warehime, a member of our Board, and members of her immediate family, each such trust being a shareholder of the Company (collectively, the “Warehime Holders”), entered into a voting agreement with Campbell, pursuant to which the Warehime Holders agreed, among other things, to vote the shares of Company common stock over which they have voting power in favor of the approval of the Merger Agreement and the transactions contemplated thereby, including the Merger. As of February 16, 2018, the record date for the special meeting of our shareholders, the Warehime Holders owned 12,851,757 shares, or approximately 13.1% of the shares of our common stock outstanding and entitled to vote at the special meeting.

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Certain terms of the Merger Agreement and Voting Agreement are summarized, and the Merger Agreement and Voting Agreement have been filed as exhibits to the Current Report on Form 8-K filed by the Company on January 18, 2018.

Recent Acquisitions and Divestiture

In recent years, we have acquired several companies and brands as we seek future growth both organically as well as through acquisitions.

In October of 2012, we completed the acquisition of Snack Factory, LLC and certain of its affiliates ("Snack Factory"), which added a Core brand to our portfolio, Snack Factory^® Pretzel Crisps^®. The Snack Factory^® brand is known for its innovative flavor profiles, commitment to providing the highest-quality ingredients and a broadening base of passionate consumers. In June of 2014, we completed the acquisition of Baptista’s Bakery, Inc. ("Baptista's"), which is the sole manufacturer of our Snack Factory^® Pretzel Crisps^® products. In addition, Baptista's is an industry leader in the development, innovation and manufacturing of highly-differentiated snack foods, including organic, non-GMO, all natural and gluten-free products. In October of 2014, we made an additional investment in Late July Snacks, LLC ("Late July") which increased our total ownership interest to 80%. Late July is a leader in organic and non-GMO salty snacks and the investment supports our goal of having a stronger presence in "better-for-you" snacks.

On February 29, 2016, we completed the acquisition of all of the outstanding stock of Diamond Foods, Inc. ("Diamond Foods"). The strategic combination of Snyder's-Lance and Diamond Foods brought together two established companies with strong brands, and created an innovative, highly complementary and diversified portfolio of branded snacks. Diamond Foods was a leading snack food company with five brands, including: Kettle Brand® potato chips; KETTLE® Chips; Pop Secret® popcorn; Emerald® snack nuts; and Diamond of California® culinary nuts. The transaction expanded our footprint in "better-for-you" snacking, and increased our existing natural food channel presence. In addition, this transaction expanded and strengthened our distribution network in the US, and ~~will~~provided ~~provide~~ us with a platform for growth in the United Kingdom ("U.K.") and certain other countries within Europe. We are now even better positioned in the growing snack food industry, and we continue to see significant opportunities for both cost and revenue synergies, which we expect will enable us to deliver earnings accretion, and support further investment behind our brands. The integration of Diamond Foods is on track as we continue to achieve key milestones following the close of the acquisition.

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On September 1, 2016, we completed the acquisition of Metcalfe's Skinny Limited ("Metcalfe") by acquiring the remaining 74% interest. Metcalfe owns the U.K.'s leading premium ready-to-eat ("RTE") popcorn brand, and also incorporates a fast growing range of corn and rice cake products. The U.K. popcorn market is one of the fastest growing categories within the U.K. snack food industry, as consumers increasingly seek out "better-for-you" snacking options. The addition of a leading premium RTE popcorn brand, Metcalfe's skinny®, to the U.K.'s leading premium chip brand, KETTLE® Chips, reflects our plan to become a leading provider of premium snack foods in Europe.

On December 31, 2016, we completed the carve-out and sale of our culinary nuts business (comprised primarily of the Diamond of California^® brand, and the Stockton, CA facility; collectively "Diamond of California"). We had previously entered the culinary nuts business as a result of the Diamond Foods acquisition. This divestiture aligns with our strategy to focus more resources on growth opportunities for our snack food brands.

Products

We are engaged in the manufacturing, distribution, marketing and sale of snack food products. These products include pretzels, sandwich crackers, kettle cooked chips, pretzel crackers, ~~cookies~~popcorn, nuts, potato chips, tortilla chips, cookies, restaurant style crackers, ~~popcorn, nuts~~ and other salty snacks. Our products are packaged in various single-serve, multi-pack, family-size and party-size configurations. Our branded products are principally sold under trademarks owned by us. While the majority of our branded products are manufactured by us, certain branded products are contract manufactured, due to required expertise, ingredients or equipment, or increased demand.

We also sell Partner brand products, which consist of third-party branded products that we sell to ~~our~~ independent business owners ("IBO") through ~~our~~the national direct-store-delivery distribution network ("DSD network"), in order to broaden the portfolio of product offerings for ~~our~~the IBOs. In addition, we contract with other branded food manufacturers to produce their products and periodically sell certain semi-finished goods to other manufacturers.

Overall sales of our products are relatively consistent throughout the year, although demand for certain products may be influenced by holidays, changes in seasons, or other annual events. In ~~2016~~2017, ~~Branded~~Core branded products represented approximately 7873% of net revenue from continuing operations, while net revenue from Allied brand, Partner brand and Other products represented approximately 147%, ~~and 8~~13% ofand ~~net revenue~~7%, respectively. In ~~2015~~2016, ~~Branded~~Core branded products represented approximately 7270% of net revenue, while net revenue from Allied brand, Partner brand and Other products represented approximately 188%, 14% and 108%, respectively. In ~~2014~~2015, Branded products represented 7162% of net revenue, while net revenue from Allied brand, Partner brand and Other products represented 1910%, 18% and 10%, respectively. ~~While~~The ~~Partner~~decrease ~~brands~~each ~~will~~year ~~continue~~in toboth bePartner abrand ~~significant component of net revenue~~ and anOther ~~important~~products ~~focus~~is ~~within~~a ~~our~~result ~~business~~of ~~strategy,~~ the acquisition of the Diamond Foods ~~resulted~~core inbrands ~~additional~~and ~~revenue~~the ~~primarily~~shift ~~within~~in ~~the~~our ~~Branded~~strategic ~~product category~~direction.

~~Intellectual Property~~3

Trademarks that are important to our business are protected by registration or other means in the US and most other international markets where the related products are sold. We own various registered trademarks for use with our Branded products, including: Snyder’s of Hanover®; Lance®; Cape Cod®; Snack Factory® Pretzel Crisps®; Pop Secret®; Emerald®; Kettle Brand®; KETTLE® Chips; and Late July® (collectively, "Core" brands), and Metcalfe’s skinny®; Tom’s®; Archway®; Jays®; Stella D’oro®; Eatsmart SnacksTM; Krunchers!®; and O-Ke-Doke® (collectively, "Allied" brands) as well as a variety of other marks and designs. On a limited basis, we license trademarks for use on certain products that are classified as Branded products. Solely for convenience, trademarks and trade names referred to in this Annual Report on Form 10-K may appear without the ® or ™ symbols, but references are not intended to indicate, in any way, that we will not assert our rights to these trademarks and trade names to the fullest extent under applicable law.

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Intellectual Property

Trademarks that are important to our business are protected by registration or other means in the US and most other international markets where the related products are sold. We own various registered trademarks for use with our Branded products, including: Snyder’s of Hanover^®; Lance^®; Kettle Brand^®; Cape Cod^®; Snack Factory^®Pretzel Crisps^®;Pop Secret^®; KETTLE^®Chips; Emerald^®; and Late July^®(collectively, "Core" brands), and Tom’s^®; Jays^®; Archway^®; Stella D’oro^®; O-Ke-Doke^®; Metcalfe’s skinny^®; Krunchers!^®; and Eatsmart Snacks^TM(collectively, "Allied" brands) as well as a variety of other marks and designs. On a limited basis, we license trademarks for use on certain products that are classified as Branded products. Solely for convenience, trademarks and trade names referred to in this Annual Report on Form 10-K may appear without the ^® or ^™ symbols, but references are not intended to indicate, in any way, that we will not assert our rights to these trademarks and trade names to the fullest extent under applicable law.

Overall Strategy

Our goal is to ~~change~~deliver ~~the~~simple ~~way~~moments ~~the~~of ~~world~~happiness ~~snacks~~to ~~with better ingredients~~everyone, ~~quality and taste~~everywhere, asby weproviding ~~introduce~~uncompromisingly ~~new~~delicious ~~products~~snacks ~~and~~made ~~enter~~with ~~new~~simple ~~categories,~~ingredients. inWe ~~order~~believe tothat ~~reach~~snacks ~~more~~made ~~consumers~~with ~~and~~simple ~~broaden~~ingredients, ~~our~~are ~~customer~~simply ~~base~~better food. As we grow, we will remain focused on delivering margin expansion, through ~~the~~our ~~attainment~~Performance ofTransformation ~~expected~~Plan, ~~cost~~announced ~~synergies~~by ~~and~~us ~~ongoing~~in ~~enterprise~~April ~~wide~~2017 ~~cost~~(the ~~reduction~~“Transformation ~~efforts~~Plan”). We expect our growth will be a result of organic investments in our research and development capabilities, and inorganic growth through strategic acquisitions. During 2017, our goal is to invest in key strategic areas to bolster our product portfolio positioning and gain market share. These investments will include research and development, innovation, advertising, and retail activation.

Our strategy is built around five ~~key~~supporting ~~strategic~~ initiatives:

• ~~Build~~Optimize ~~premium,~~the ~~differentiated~~portfolio ~~brands - We are focused on premium and differentiated positioning~~ for ~~our~~growth ~~brands, and ensuring that we provide value~~ in ~~the~~wholesome ~~competitive~~natural ~~snack food marketplace~~snacks. ~~Our~~To ~~goal~~do isso towe ~~offer~~are ~~something~~focusing ~~unique~~on ~~and~~strengthening ~~fun to~~ our ~~consumers.~~core Webrand ~~execute this goal through continuous product~~ innovation bypipeline ~~leveraging our research~~ and ~~development~~bringing ~~capabilities, with support from~~ our ~~marketing~~existing ~~and advertising initiatives. In addition, we are consistently evaluating our portfolio for opportunities to reinvigorate our iconic~~ brands to ~~remain~~greater ~~ahead~~scale ~~of consumer trends. Our recent focus has been leveraging our innovation capabilities~~ to ~~expand~~more ~~the~~effectively ~~breadth of our “better-for-you” offerings~~compete. WeThis ~~finished~~involves ~~the~~exiting ~~year~~platforms with ~~over~~little ~~30%~~advantage ofor ~~our~~disadvantaged ~~retail~~scale ~~sales~~while ~~coming~~simultaneously ~~from~~evaluating ~~products~~new, ~~with~~scalable ~~"better-for-you"~~snack ~~defined~~markets ~~attributes,~~through ~~and~~both weorganic ~~expect~~growth ~~this~~and toinorganic ~~increase~~mergers inand ~~2017~~acquisitions.

• ~~Continuously~~Build ~~expand~~superior ~~retail~~brand ~~distribution~~preference. - We build brand preference by continuously elevating our focus on ~~expanding~~product ~~our~~taste ~~distribution~~and toquality, ~~reach~~increasing ~~more~~investments ~~consumers.~~in Weworld ~~support~~class ~~our~~marketing ~~growth~~vehicles, ~~through~~and ~~our~~renovating ~~DSD~~product ~~network,~~ingredients ~~direct~~around tothose ~~warehouse~~qualifications ~~network,~~most ~~and~~preferred ~~through~~by ~~exports~~our consumers. In parallel we aim to ~~international~~continuously ~~markets.~~increase ~~Our~~the ~~DSD~~sustainability, ~~network~~convenience, isand ~~supported~~functional byadvantage of our ~~IBO~~product ~~business partners~~packaging. InThese ~~order~~efforts towill ~~better~~complement ~~leverage~~ our ~~DSD~~focus ~~network,~~on webuilding ~~also~~improved ~~distribute~~price ~~third-party~~realization ~~Partner~~across ~~brand~~our ~~products~~portfolio ~~that~~consistent ~~provide~~with ~~efficiencies~~our ~~through~~value ~~increased scale~~proposition.

• ~~Lead~~Provide ~~with quality - Our core DNA is making sure that we provide~~ the ~~very~~right ~~best~~products, ~~quality~~ in ~~all~~the ofright ~~our~~places, ~~products~~at -the ~~day~~right ~~in and day out~~times. WeThe ~~believe~~DSD ~~that~~network ~~quality~~combined ~~can~~with ~~be a competitive advantage, and~~ our ~~organization~~direct ~~strives~~distribution tocapability ~~deliver~~allow ~~products~~us ~~with the finest ingredients. We will continue~~ to ~~invest~~offer in our ~~quality~~products ~~assurance~~in ~~capabilities~~a tobroad ~~ensure~~array ~~that~~of welarge ~~meet~~and ~~our~~fast ~~consumers~~growing ~~and~~ retail ~~partners’~~channels ~~expectations.~~where ~~Delivering~~consumers onprefer ~~this~~to ~~commitment~~shop. ~~will~~We ~~enable~~are usfocused toon ~~continuously~~growing ~~enhance~~in ~~our~~emerging ~~value~~channels ~~proposition~~ and ~~continue~~always todelivering ~~build further brand loyalty. We believe~~ our ~~market~~products on-~~leading~~time ~~share~~and ~~positions are a testament to this strategic focus~~in-full.

3• Pursue operational efficiencies. We are improving complexity by reducing manufacturing and distribution complexity and optimizing our product offering through stock keeping unit ("SKU") rationalization. In addition, we leverage zero-based-budgeting to eliminate non-critical expenses and implement proven technologies to improve operational performance.

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• ~~Fund~~Foster ~~the~~a ~~future~~diverse -culture Incentered ~~order~~on ~~to balance~~ our ~~investments~~values. toWe ~~drive~~believe ~~consistent~~that ~~organic~~a ~~growth,~~culture ~~while~~rich ~~also~~in ~~delivering~~diversity ~~greater~~of ~~shareholder value~~thought, ~~our~~experiences ~~team~~and isidentity ~~grounded~~yields in a ~~culture~~strong ofand ~~continuous~~resilient ~~improvement~~organization. ~~designed~~We toalso ~~drive~~seek ~~productivity, reduce costs, and expand margins,~~ to ~~increase~~build ~~returns~~a onsafe ~~invested~~and ~~capital.~~supporting ~~At Snyder's-Lance~~environment, weinvest ~~continuously~~in ~~challenge~~our ~~ourselves~~employees to bebuild ~~efficient,~~their ~~productive~~capabilities and toexperiences, doand ~~our~~recognize ~~best~~and toreward ~~drive~~everyone ~~non-value~~for ~~added~~their ~~costs out of the business~~contributions. ~~This~~We ~~mantra~~believe ~~throughout our entire organization drives a core belief~~ that bythis ~~achieving~~philosophy ~~these~~ultimately ~~goals~~benefits ~~we will better position~~ our ~~Company~~shareholders ~~for~~in ~~sustainable,~~the ~~long-term~~form ~~growth,~~of ~~while~~a ~~also~~higher ~~driving~~performing ~~increased shareholder value~~company.

• Invest in our people - We are focused on attracting, engaging, and growing our talent. We demonstrate our passion for our people by delivering programs and initiatives to support their personal and professional development, while also striving to recruit world-class talent to better enable our Company to execute on its long-term strategic plan. In addition, we have a pay-for-performance culture, where the organization is incentivized to deliver annual and long-term results that align with our goal of creating value for our shareholders. We believe that this philosophy encourages a culture of discipline and operational excellence, which benefits our stakeholders.

Research and Development

We consider research and development of new products to be a significant part of our overall strategy, and are committed to developing innovative, high-quality products that exceed consumer expectations. A team of professional product developers, including microbiologists, food scientists and culinary experts, work in collaboration with innovation, marketing, manufacturing and sales leaders, to develop products that meet changing consumer demands. Our research and development staff incorporates product ideas from all areas of our business in order to formulate new products. In addition to developing new products, the research and development staff routinely reformulates and improves existing products based on advances in ingredients and technology, and conducts value engineering to maintain competitive price points. We own a 60,000 square foot Research and Development Center in Hanover, Pennsylvania, where we conduct much of our research and development. In addition, we have a research and development facility adjacent to our production facility in Salem, Oregon. Our research and development costs were approximately $106.02 million, $610.20 million and $7.6.2 million in ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, respectively.

Marketing

Our marketing efforts are focused on building long-term brand equity through effective consumer marketing. In addition to volume building trade promotions to market our products, our advertising efforts utilize television, radio, print, digital, mobile and social media aimed at increasing consumer preference and usage of our brands. We also use consumer promotions, sponsorships and partnerships which include free trial offers, targeted coupons and on-package offers to generate trial usage and increase purchase frequency. These marketing efforts are an integral part of our overall strategy to grow our brands and reach more consumers in order to ~~enhance~~build ~~our~~superior ~~position~~brand ~~as a provider of premium, differentiated snacks~~preference.

We work with third-party information agencies, such as Information Resources, Inc. ("IRI"), Nielsen and other syndicated market data providers, to monitor the effectiveness of our marketing and measure product growth. All information regarding our brand market positions in the US included in this Annual Report on Form 10-K is from IRI and is based on retail dollar sales.

Distribution

We distribute snack food products throughout the US using ~~our~~the DSD network. ~~Our~~The DSD network is made up of ~~approximately~~over 3,200 routes that are primarily owned and operated by IBOs. We also ship products directly to third-party distributors in areas where ~~our~~the DSD network does not operate. Through our direct distribution network, we distribute products directly to retail customers or to third-party distributors using freight carriers or our own transportation fleet. In Europe, we sell our salty snack products through our sales personnel directly to national grocery, co-op and impulse store chains. In ~~2016~~2017, approximately 5655% of net revenue was generated by products distributed through ~~our~~the DSD network while the remaining 4445% was generated by products distributed through our direct distribution network. ~~As a result of the acquisition of Diamond Foods, the percentage of our net revenue generated by products distributed through our direct distribution network has increased.~~

In order to maintain and expand ~~our~~the DSD network, we routinely participate in certain ~~ongoing~~ route ~~business~~ purchase and ~~sales~~sale activities. These activities include the following:

• Acquisition of regional distributor businesses - As we expand ~~our~~the DSD network, we continue to look for potential regional distributor business acquisition targets in areas where we do not currently have ~~our~~a ~~own~~ DSD network. Upon acquisition, the acquired routes may be reengineered to include our products and retail locations and are then sold to a new or current IBO, as described below.

4• Reengineering of zones - Periodically, we undertake a route reengineering project for a particular geography or zone. The reasons for route reengineering projects vary, but are typically due to increased sales volume associated with new retail locations and/or the addition of new Branded or Partner brand products to the routes in that zone. In these cases, we repurchase all of the IBO routes in that zone. The repurchased routes are then reengineered, which normally results in the addition of new IBO routes (territories) because of the additional volume. Routes are then resold, usually to the original IBO, however, the original IBO has no obligation to repurchase. Upon completion, these route reengineering projects may result in modest net gains on the sale of route businesses due to the value added during the reengineering through additional volume and/or retail locations.


•	Sale of company-owned routes - Some routes remain company-owned primarily because they need additional sales volume in order to become sustainable routes for IBOs. As we build up the volume on these routes through increased distribution of our Branded and Partner brand products, we would sell these routes to IBOs which could result in gains.

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• ~~Reengineering~~IBO ofdefaults ~~zones~~ - ~~Periodically,~~There weare ~~undertake~~times awhen ~~route~~the ~~reengineering~~IBOs ~~project for a particular geography or zone. The reasons for route reengineering projects vary, but~~ are ~~typically~~not ~~due~~successful ~~to increased sales volume associated with new retail locations~~ and~~/or~~ the ~~addition~~IBO's ofdistributor ~~new~~agreement ~~Branded~~with orus ~~Partner~~is ~~brand products to the routes in that zone~~terminated. In these ~~cases~~instances, weif ~~repurchase all of~~ the existing IBO ~~route~~is ~~businesses~~unable into ~~that~~sell ~~zone.~~the ~~The repurchased~~ route ~~businesses~~to ~~are~~another ~~then~~third ~~reengineered~~party, ~~which~~we ~~normally~~may ~~results~~repurchase in the ~~addition~~route ofat ~~new~~a ~~IBO~~price ~~route~~defined ~~territories~~in ~~because of~~ the ~~additional~~distributor ~~volume~~agreement. ~~Route~~We ~~businesses~~generally ~~are~~put ~~then resold, usually to~~ the ~~original~~repurchased ~~IBO,~~route ~~however,~~up ~~the~~for ~~original~~sale ~~IBO~~to ~~has~~another nothird-party ~~obligation to repurchase~~IBO. ~~Upon~~The ~~completion,~~subsequent ~~these~~sales ~~route~~transaction ~~reengineering~~generally ~~projects~~results ~~usually result~~ in ~~modest~~a ~~net~~nominal ~~gains~~gain ~~on the sale of route businesses due to the value added during the reengineering through additional volume and/~~or ~~retail locations~~loss.

• Sale of company-owned routes - Some routes remain company-owned primarily because they need additional sales volume in order to become sustainable route businesses for IBOs. As we build up the volume on these routes through increased distribution of our Branded and Partner brand products, we may sell these route businesses to IBOs which could result in gains.

• IBO defaults - There are times when IBO route businesses are not successful and the IBO's distributor agreement with us is terminated due to a breach of the distributor agreement or default under the loan agreement. In these instances, if the existing IBO is unable to sell the route business to another third party, we may repurchase the route business at a price defined in the distributor agreement. We generally put the repurchased route business up for sale to another third-party IBO immediately. The subsequent sales transaction generally results in a nominal gain or loss.

Capital Expenditures

We have invested significant capital in our facilities to ensure sufficient capacity, efficient production, effective use of technology, excellent quality, and a positive working environment for our associates. In ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, we had capital expenditures of $7369.34 million, $5173.53 million and $7251.15 million, respectively. For ~~2017~~2018, we expect capital expenditures ofto ~~approximately~~be ~~$90~~in ~~million~~line towith ~~$100~~2017 ~~million~~expenditures. ~~The~~ ~~planned~~Capital ~~increase~~spending inwill ~~capital~~be ~~expenditures~~used ~~for 2017 is~~ to upgrade equipment, increase capacity at our manufacturing facilities, and ~~relocate~~is ~~the~~believed ~~production~~to ofbe ~~one~~adequate ofto maintain and support our ~~branded~~revenue ~~products~~growth over the next few years.

Customers

Through ~~our~~the DSD network, we sell our Branded and Partner brand products to IBOs that, in turn, sell to grocery/mass merchandisers, club stores, discount stores, convenience stores, food service establishments and various other retail customers, including drug stores, schools, military and government facilities and “up and down the street” outlets such as recreational facilities, offices and other independent retailers. In addition, we sell our Branded products directly to retail customers and third-party distributors, both in the US and abroad. We also contract with other branded food manufacturers to produce their products or provide semi-finished goods.

Substantially all of our revenue is from sales to customers in the US. Sales to our largest retail customer, Wal-Mart Stores, Inc. ("Wal-Mart"), either through IBOs or our direct distribution network, were approximately 13% of net revenue in 2017, 2016 and ~~13% and 14% of net revenue for~~ 2015 ~~and 2014, respectively~~. Our sales to Wal-Mart do not include sales of our products made to Wal-Mart by third-party distributors outside of ~~our~~the DSD network. Sales to these third-party distributors represent approximately 56% of our net revenue and may increase sales of our products to Wal-Mart by an amount we are unable to estimate. Our top ten retail customers accounted for approximately 5255% of our net revenue during ~~2016~~2017, excluding sales of our products made by third-party distributors~~, both in the US and abroad, who are outside our DSD network~~.

Raw Materials

The principal raw materials used to manufacture our products are flour, potatoes, oil, peanuts, other nuts, corn, sugar, chocolate, cheese and seasonings. The principal packaging supplies used are flexible film, cartons, trays, boxes and bags. These raw materials and supplies are normally available in adequate quantities in the commercial market and are generally contracted from three to twelve months in advance, depending on market conditions.

Competition and Industry

Our products are sold in highly competitive markets. Generally, we compete with companies engaged in the manufacturing, distribution, marketing and sale of snack food products, some of which have greater revenue and resources than we do. The principal methods of competition are price, service, product quality, product offerings and distribution. The methods of competition and our competitive position vary according to the geographic location, the particular product categories and the activities of our competitors.

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Environmental Matters

Our operations are subject to various federal, state and local laws and regulations with respect to environmental matters. We are not a party to any material proceedings arising under these laws or regulations for the periods covered by this Annual Report on Form 10-K. We believe we are in compliance with all material environmental regulations affecting our facilities and operations and that continued compliance will not have a material impact on our capital expenditures, earnings or competitive position.

Regulation

The manufacture and sale of snack food products is highly regulated. In the US our activities are subject to regulation by various federal government agencies, including the Food and Drug Administration, US Department of Agriculture, Federal Trade Commission, Department of Labor and Department of Commerce, as well as various state and local agencies. Our business is also regulated by similar agencies outside of the US.

Sustainability

We are committed to reducing the impact that our products and operations have on the environment. We work to minimize our environmental impact by implementing more sustainable business operations and doing more with less, as we remain committed to being a responsible corporate citizen. ~~Several~~ ~~of our manufacturing sites use solar or wind energy to generate the power needed to make our snacks.~~ At our bakery in Hanover, Pennsylvania, we own a solar farm that produces 3.5 megawatts of electricity that supplies 100% of the power needed at our ~~research~~R&D ~~and~~Center ~~development~~onsite ~~center on site~~ as well as approximately 30% of the power used by the bakery for production during the day. Our ~~kettle~~Kettle ~~chip~~Chip plant in Salem, Oregon captures solar energy ~~using~~by taking advantage of solar panels on the roof and is one of the largest solar installations in the northwest. The ~~kettle~~Kettle ~~chip~~Chip plant in Beloit, Wisconsin, which was the first LEED Gold Certified food manufacturing plant in the USUnited States, uses wind turbines to offset utility usage from the local power plant. In addition, our Supply Chain team has implemented improved recycling initiatives across the organization that now bring at least 25% of our manufacturing plants, including all of our pretzel bakeries, to landfill-free status. At our chip producing plants, we recycle the oil used in kettle chip production to vendors that convert it to biodiesel for use in many other applications.

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from the local power plant. In addition, our Supply Chain team has implemented improved recycling initiatives across the organization in order to strive to bring our manufacturing plants to landfill free operations and manufacturing. At our chip producing plants, we recycle the oil used in kettle chip production to vendors that convert it to other products like biodiesel for use in many other applications. We carry the focus on sustainability beyond production. Our headquarters facility implements a single stream waste vendor so that no matter which receptacle you use, everything that can be is sorted and recycled. We also implemented motion activated light sensors in our offices and manufacturing plants to make sure we only use light when a facility is occupied.

Employees

As of December 3130, ~~2016~~2017, we had approximately 65,~~100~~900 active employees located in the US and U.K. compared to approximately 56,~~000~~100 active employees ~~in the US,~~ as of ~~January~~December 231, 2016. None of our employees are covered by a collective bargaining agreement.

Available Information

Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, amendments to these reports, and exhibits are available on our Investor Relations website free of charge at www.snyderslance.com. All required reports are made available on the website as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission.

Item 1A. Risk Factors

In addition to the other information in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition or results of operations may be adversely affected by any of these risks. Additional risks and uncertainties, including risks that we do not presently know of or currently deem insignificant, may also impair our business, financial condition or results of operations.

Risks related to our Merger with Campbell

The failure to complete or delays in completing the merger with Campbell could adversely affect our business and our stock price.

Consummation of the merger with Campbell is subject to customary closing conditions, including approval by our shareholders. There can be no assurance that these conditions will be satisfactorily met or validly waived, or that our Company and Campbell will be able to successfully consummate the Merger, on the anticipated terms or at all. We will have incurred significant costs, including the diversion of management resources and transaction-related expenses for which we will receive little or no benefit, if the Merger is not consummated. Additionally, we may be required, in certain circumstances, to pay a termination fee of $149 million, as provided in the Merger Agreement. The Merger Agreement may be terminated by either party if the merger is not completed on or September 18, 2018. In addition, the Merger Agreement contains certain other termination rights for both us and Campbell. A failed transaction may result in negative publicity. Any of these events, individually or in combination, could have an adverse effect on our results of operations and financial condition.

The pending merger could adversely affect our business, financial results and operations, including our relationships with customers, vendors and employees.

The proposed merger with Campbell could cause material disruptions in and create uncertainty surrounding our business. This could affect our relationships with customers, vendors and employees, which could have an adverse effect on our business, financial results and operations. In particular, we could lose important personnel if some employees decide to leave in light of the proposed Merger. We could potentially lose customers or suppliers, or our customers or suppliers could modify their relationships with us in an adverse manner. In addition, we have devoted, and will continue to devote, significant management resources to complete the Merger. This may cause our business and operating results to suffer.

The Merger Agreement also places restrictions on how we conduct our business before the merger is completed. These restrictions could result in our inability to respond effectively, and in a timely manner, to competitive pressures, industry developments and future opportunities. This could harm our business, financial results and operations.

Risks related to our business

Our performance may be impacted by general economic conditions or an economic downturn.

An overall decline in economic activity could adversely impact our business and financial results. Economic uncertainty may reduce consumer spending as consumers make decisions on what to include in their food budgets. This could also result in a shift in consumer preference toward private label products. Shifts in consumer spending could result in increased pressure from competitors or customers that may require us to increase promotional spending or reduce the prices of some of our products and/or limit our ability to increase or maintain prices, which could lower our revenue and profitability.

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Instability in financial markets may impact our ability, or increase the cost, to enter into new credit agreements in the future. Additionally, it may weaken the ability of our customers, suppliers, IBOs, third-party distributors, banks, insurance companies and other business partners to perform their obligations in the normal course of business, which could expose us to losses or disrupt the supply of inputs we rely upon to conduct our business. If one or more of our key business partners fail to perform as expected or contracted for any reason, our business could be negatively impacted.

Volatility in the price or availability of the inputs we depend on, including raw materials, packaging, energy and labor, could adversely impact our financial results.

Our financial results could be adversely impacted by changes in the cost or availability of raw materials and packaging. While we often obtain substantial commitments for future delivery of certain raw materials, continued long-term increases in the costs of raw materials and packaging, including but not limited to cost increases due to the tightening of supply, could adversely affect our financial results.

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Our transportation and logistics system is dependent upon gasoline and diesel fuel, and our manufacturing operations depend on natural gas. While we may enter into forward purchase contracts to reduce the volatility associated with some of these costs, continued long-term changes in the cost or availability of these energy sources could adversely impact our financial results.

Our continued growth requires us to hire, retain and develop a highly skilled workforce and talented management team. Our financial results could be adversely affected by increased costs due to increased competition for employees, higher employee turnover or increased employee benefit costs.

We operate in the highly competitive food industry.

Price competition and industry consolidation could adversely impact our financial results. The sales of most of our products are subject to significant competition primarily through promotional discounting and other price cutting techniques by competitors, some of whom are significantly larger with greater resources. In addition, there is continuing consolidation in the snack food industry and in retail outlets for snack foods, either of which could increase competition. Significant competition increases the possibility that we could lose one or more major customers, lose existing product authorizations at customer locations, lose market share and/or shelf space, increase expenditures or reduce selling prices, which could have an adverse impact on our business or financial results.

Price increases for our products that we initiate may negatively impact our financial results if not properly implemented or accepted by our customers. Future price increases, such as those made in order to offset increased input costs, may reduce our overall sales volume, which could reduce our revenue and operating profit. We may be unable to implement price increases driven by higher input costs on a timely basis or at all, either of which may reduce our operating profit. Additionally, if market prices for certain inputs decline significantly below the prices we are required by contract to pay, customer pressure to reduce the prices for our products could lower our revenue and operating profit.

Changes in our top retail customer relationships could impact our revenue and profitability.

We are exposed to risks resulting from several large retail customers that account for a significant portion of our revenue. Our top ten retail customers accounted for approximately 5255% of our net revenue during ~~2016~~2017, excluding sales of our products made by third-party distributors who are outside of ~~our~~the DSD network, with our largest retail customer, Wal-Mart, representing approximately 13% of our 2017, 2016 and 2015 net revenue. The loss of one or more of our large retail customers could adversely affect our financial results. These customers typically make purchase decisions based on a combination of price, service, product quality, product offerings, consumer demand, as well as distribution capabilities and generally do not enter into long-term contracts. In addition, these significant retail customers may change their business practices related to inventories, product displays, logistics or other aspects of the customer-supplier relationship. Our results of operations could be adversely affected if revenue from one or more of these customers is significantly reduced or if the cost of complying with customers’ demands is significant. If receivables from one or more of these customers become uncollectible, our financial results may be adversely impacted.

We may be unable to maintain our profitability in the face of a consolidating retail environment.

As the retail grocery industry continues to consolidate and our retail customers grow larger and become more sophisticated, our retail customers may demand lower pricing and increased promotional programs. Further, these customers are reducing their inventories and increasing their emphasis on products that hold either the number one or number two market position and private label products. If we fail to use our sales and marketing expertise to maintain our category leadership positions to respond to these trends, or if we lower our prices or increase promotional support of our products and are unable to increase the volume of our products sold, our profitability and financial condition may be adversely affected.

Demand for our products may be adversely affected by changes in consumer preferences and tastes or if we are unable to innovate or market our products effectively.

We are a consumer products company operating in highly competitive markets and rely on continued demand for our products. To generate revenue and profits, we must sell products that appeal to our customers and consumers. Any significant changes in consumer preferences or any inability on our part to anticipate or react to such changes could result in reduced demand for our products and erosion of our competitive and financial position. Our success depends on our ability to respond to consumer trends, including concerns of consumers regarding health and wellness, obesity, product attributes and ingredients. In addition, changes in product category consumption or consumer demographics could result in reduced demand for our products. Consumer preferences may shift due to a variety of factors, including the aging of the general population, changes in social trends, or changes in travel, vacation or leisure activity patterns. Any of these changes may reduce consumers’ willingness to purchase our products and negatively impact our financial results.8

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Our continued success also is dependent on product innovation, including maintaining a robust pipeline of new products, and the effectiveness of advertising and promotional campaigns, marketing programs and product packaging. Although we devote significant resources to meet this goal, there can be no assurance as to the continued ability to develop and launch successful new products or variants of existing products, or to effectively execute advertising and promotional campaigns and marketing programs.

Tax matters, including changes in tax laws and rates, disagreements with taxing authorities and imposition of new taxes, could adversely impact our results of operations and financial condition.

In December 2017, the United States enacted tax reform legislation (“Tax Act”). The Tax Act implements many new US domestic and international tax provisions. Many aspects of the Tax Act are unclear, and although additional clarifying guidance is expected to be issued in the future (by the Internal Revenue Service (“IRS”), the US Treasury Department or via a technical correction law change), it may not be clarified for some time. In addition, many US states have not yet updated their laws to take into account the new federal legislation. As a result, we have not yet been able to determine the full impact of the new laws on our results of operations and financial condition. It is possible that Tax Act, or interpretations under it, could change and could have an adverse effect on us, and such effect could be material.

In addition, foreign jurisdictions may also enact tax legislation that could significantly affect our ongoing operations. For example, foreign tax authorities could impose rate changes along with additional corporate tax provisions that would disallow or tax perceived base erosion or profit shifting. Aspects of the Tax Act may lead foreign jurisdictions to respond by enacting additional tax legislation that is unfavorable to us.

Adverse changes in the underlying profitability or financial outlook of our operations in several jurisdictions could lead to changes in the ability to realize our deferred tax assets and result in a charge to our income tax provision. Additionally, changes in tax laws in the US or in other countries where we have significant operations could materially affect deferred tax assets and liabilities and our income tax provision.

We are also subject to tax audits by governmental authorities. Although we believe our tax estimates are reasonable, if a taxing authority disagrees with the positions we have taken, we could face additional tax liabilities, including interest and penalties. Unexpected results from one or more such tax audits could significantly adversely affect our income tax provision and our results of operations.

The decision by British voters to exit the European Union may further negatively impact our operations.

The June 2016 referendum by British voters to exit the European Union (“Brexit”) caused uncertainty in global markets and resulted in a sharp decline in the value of the British pound, as compared to the US dollar and other currencies. As the U.K. negotiates its exit from the European Union, volatility in exchange rates and in U.K. interest rates may continue. In the near term, a weaker British pound compared to the US dollar during a reporting period causes local currency results of our U.K. operations to be translated into fewer US dollars; a weaker British pound compared to other currencies increases the cost of goods imported into our U.K. operations and may decrease the profitability of our U.K. operations; and a higher U.K. interest rate may have a dampening effect on the U.K. economy. In the longer term, any impact from Brexit on our U.K. operations will depend, in part, on the outcome of tariff, trade, regulatory and other negotiations. However, as a result of weakening demand, whether a function of Brexit or consumer preference, we recognized impairment charges of $46.3 million and $11.8 million against our European goodwill and KETTLE® Chips U.K. trademark, respectively during 2017. Further erosion of such operations, whether by consumer demand or the impact of Brexit could result in additional impairments related to our U.K. operations.

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Our results may be adversely affected by the failure to execute acquisitions and divestitures successfully.

Our ability to meet our objectives with respect to the acquisition of new businesses or the divestiture of existing businesses may depend in part on our ability to identify suitable buyers and sellers, negotiate favorable financial terms and other contractual terms, and obtain all necessary regulatory approvals. If we pursue strategic acquisitions, divestitures, or joint ventures, we may incur significant costs and may not be able to consummate the transactions or obtain financing. Potential risks of acquisitions also include the inability to integrate acquired businesses efficiently into our existing operations; diversion of management's attention from other business concerns; potential loss of key employees and/or customers of acquired businesses; potential assumption of unknown liabilities; the inability to implement promptly an effective control environment; potential impairment charges if purchase assumptions are not achieved or market conditions decline; and the risks inherent in entering markets or lines of business with which we have limited or no prior experience. Acquisitions outside the US may present unique challenges and increase our exposure to risks associated with foreign operations, including foreign currency risks and risks associated with local regulatory agencies.

Future acquisitions also could result in potentially dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our financial results. In the event we enter into strategic transactions or relationships, our financial results may differ from expectations. We may not be able to achieve expected returns and other benefits as a result of potential acquisitions or divestitures.

Potential risks for any future divestitures, if any, include the inability to separate divested businesses or business units from our Company effectively and efficiently and to reduce or eliminate associated overhead costs. We are reliant on Diamond of California to ~~provide certain back office services under the Transaction Services Agreement, production of our products under the Facilities Use Agreement, and the~~ supply of walnuts under ~~the~~a Supply Agreement. Failure of Diamond of California to provide ~~services or~~ quality products under ~~any~~this ofarrangement ~~these arrangements~~ could adversely affect our financial results.

Our business or financial results may be negatively affected if acquisitions or divestitures are not successfully implemented or completed.

The loss of key personnel could have an adverse effect on our financial results and growth prospects.

There are risks associated with our ability to retain key employees. If certain key employees terminate their employment, it could negatively impact manufacturing, sales, marketing or development activities. In addition, we may not be able to locate suitable replacements for key employees or offer employment to potential replacements on acceptable terms.

Failure to effectively execute and accomplish our strategy could adversely affect our financial results.

We utilize several operating strategies to increase revenue and improve operating performance. If we are unsuccessful due to unplanned events, our ability to manage change or unfavorable market conditions, our financial performance could be adversely affected.

Concerns with the safety and quality of certain food products or ingredients could cause consumers to avoid our products.

We could be adversely affected if consumers in our principal markets lose confidence in the safety and quality of certain products or ingredients. Negative publicity about these concerns, whether or not valid, may discourage consumers from buying our products or cause disruptions in production or distribution of our products and negatively impact our business and financial results.

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If our products become adulterated, misbranded or mislabeled, we might need to recall those items and we may experience product liability claims if consumers are injured or become sick.

We may need to recall some of our products if they become adulterated or if they are mislabeled, and may also be liable if the consumption of any of our products causes injury to consumers. A widespread recall could result in significant losses due to the costs of a recall, the destruction of product inventory, and lost sales due to the unavailability of the affected product for a period of time. A significant product recall or product liability claim could also result in adverse publicity, damage to our reputation, and a loss of consumer confidence in the safety and/or quality of our products, ingredients or packaging. Such a loss of confidence could occur even in the absence of a recall or a major product liability claim. We also may become involved in lawsuits and legal proceedings if it is alleged that the consumption of any of our products causes injury or illness. A product recall or an adverse result in any such litigation could have an adverse effect on our operating and financial results. We may also lose customer confidence for our entire Branded portfolio as a result of any such recall or proceeding.

Disruption of our supply chain could have an adverse impact on our business and financial results.

Our ability to manufacture and sell our products may be impaired by damage or disruption to our manufacturing or distribution capabilities, or to the capabilities of our suppliers or contract manufacturers, due to factors that are hard to predict or beyond our control, such as adverse weather conditions, natural disasters, fire, pandemics or other events. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, may adversely affect our business or financial results, particularly in circumstances where a product or ingredient is sourced from a single supplier or ~~location.~~

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location. In addition, in light of recent transportation industry legislation, the number of freight carriers could decrease and create carrier shortages and higher freight costs.

We may be adversely impacted by inadequacies in, or security breaches of, our information technology systems.

We increasingly rely on information technology systems to conduct our business. These systems can enhance efficiency and business processes but also present risks of unauthorized access to our networks or data centers. If unauthorized parties gain access to our systems, they could obtain and exploit confidential business, customer, or employee information and harm our competitive position. In addition, these information systems may experience damage, failures, interruptions, errors, inefficiencies, attacks or suffer from fires or natural disasters, any of which could have an adverse effect on our business and financial results if not adequately mitigated by our security measures and disaster recovery plans.

Furthermore, with multiple information technology systems as a result of acquisitions, we may encounter difficulties assimilating or integrating data. In addition, we are currently in the process of consolidating systems which could provide additional security or business disruption risks which could have an adverse impact on our business and financial results.

Improper use or misuse of social media may have an adverse effect on our business and financial results.

Consumers are moving away from traditional means of electronic mail towards new forms of electronic communication, including social media. We support new ways of sharing data and communicating with customers using methods such as social networking. However, misuse of social networking by individuals, customers, competitors, or employees may result in unfavorable media attention which could negatively affect our business. Further, our competitors are increasingly using social media networks to market and advertise products. If we are unable to compete in this environment it could adversely affect our financial results.

~~Our~~The DSD network relies on a significant number of IBOs, and such reliance could affect our ability to efficiently and profitably distribute and market products, maintain existing markets and expand business into other geographic markets.

~~Our~~The DSD network relies on ~~approximately~~over 2,~~700~~800 IBOs for the sale and distribution of Branded and Partner brand products. IBOs must make a commitment of capital and/or obtain financing to purchase a route business and other equipment to conduct their business. Certain financing arrangements, through third-party lending institutions, are made available to IBOs and require us to repurchase a route business if the IBO defaults on their loan and we then are required to collect any shortfall from the IBO, to the extent possible. The inability of IBOs, in the aggregate, to make timely payments could require write-offs of accounts receivable or increased provisions made against accounts receivable, either of which could adversely affect our financial results.

The ability to maintain a DSD network depends on a number of factors, many of which are outside of our control. Some of these factors include: (i) the level of demand for the brands and products which are available in a particular distribution area; (ii) the ability to price products at levels competitive with those offered by competing producers; and (iii) the ability to deliver products in the quantity and at the time ordered by IBOs and retail customers. There can be no assurance that we will be able to mitigate the risks related to all or any of these factors in any of our current or prospective geographic areas of distribution. To the extent that any of these factors have an adverse effect on our relationships with IBOs, thus limiting maintenance and expansion of the sales market, our revenue and financial results may be adversely impacted.

9Identifying new IBOs can be time-consuming and any resulting delay may be disruptive and costly to the business. There also is no assurance that we will be able to maintain current distribution relationships or establish and maintain successful relationships with IBOs in new geographic distribution areas. There is the possibility that we will have to incur significant expenses to attract and maintain IBOs in one or more geographic distribution areas. The occurrence of any of these factors could result in increased expense or a significant decrease in sales volume through the DSD network and harm our business and financial results.

A disruption in the operation of the DSD network could negatively affect our results of operations, financial condition and cash flows.

We believe that the DSD network is a significant competitive advantage. A material negative change in our relationship with the IBOs could materially and negatively affect our financial condition, results of operations, cash flows, and ability to operate and conduct our business. In addition, litigation or one or more adverse rulings by courts or regulatory or governmental bodies regarding the DSD network, including actions or decisions that could affect the independent contractor classifications of the IBOs, or an adverse judgment against us for actions taken by the IBOs could materially and negatively affect our financial condition, results of operations, cash flows, and ability to operate and conduct our business.

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Identifying new IBOs can be time-consuming and any resulting delay may be disruptive and costly to the business. There also is no assurance that we will be able to maintain current distribution relationships or establish and maintain successful relationships with IBOs in new geographic distribution areas. There is the possibility that we will have to incur significant expenses to attract and maintain IBOs in one or more geographic distribution areas. The occurrence of any of these factors could result in increased expense or a significant decrease in sales volume through our DSD network and harm our business and financial results.

A disruption in the operation of our DSD network could negatively affect our results of operations, financial condition and cash flows.

We believe that our DSD network is a significant competitive advantage. A material negative change in our relationship with the IBOs could materially and negatively affect our financial condition, results of operations, cash flows, and ability to operate and conduct our business. In addition, litigation or one or more adverse rulings by courts or regulatory or governmental bodies regarding our DSD network, including actions or decisions that could affect the independent contractor classifications of the IBOs, or an adverse judgment against us for actions taken by the IBOs could materially and negatively affect our financial condition, results of operations, cash flows, and ability to operate and conduct our business.

Continued success depends on the protection of our trademarks and other proprietary intellectual property rights.

We maintain numerous trademarks and other intellectual property rights, which are important to our success and competitive position, and the loss of or our inability to enforce trademark and other proprietary intellectual property rights could harm our business. We devote substantial resources to the establishment and protection of our trademarks and other proprietary intellectual property rights on a worldwide basis. Efforts to establish and protect trademarks and other proprietary intellectual property rights may not be adequate to prevent imitation of products by others or to prevent others from seeking to block sales of our products. In addition, the laws and enforcement mechanisms of some foreign countries may not allow for the protection of proprietary rights to the same extent as in the US and other countries.

Impairment in the carrying value of goodwill or other intangible assets could have an adverse impact on our financial results.

The net carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities, and the net carrying value of other intangibles represents the fair value of trademarks, customer relationships, route intangibles and other acquired intangibles. Pursuant to generally accepted accounting principles in the US ("GAAP"), we are required to perform impairment tests on our goodwill and indefinite-lived intangible assets annually, or at any time when events occur, which could impact the value of our reporting unit or our indefinite-lived intangibles. These values depend on a variety of factors, including the success of our business, market conditions, earnings growth and expected cash flows. Impairments to goodwill and other intangible assets may be caused by factors outside our control, such as increasing competitive pricing pressures, changes in discount rates based on changes in cost of capital or lower than expected sales and profit growth rates. In addition, if we see the need to consolidate certain brands, we could experience impairment of our trademark intangible assets. During 2017, we recognized impairment charges of $46.3 million and $58.4 million for goodwill and trademarks, respectively. Significant and unanticipated changes in our business could require aadditional non-cash ~~charge~~charges for impairment in a future period which may significantly affect our financial results in the period of such charge.

A significant portion of our outstanding shares of common stock is controlled by a few individuals, and their interests may conflict with those of other ~~stockholders~~shareholders.

As of December 3118, ~~2016~~2017, Patricia A. Warehime beneficially owned in the aggregate approximately 1014.5% of our outstanding common stock based upon a Schedule 13D/A filed on January 22, 2018 by Mrs. Warehime. Mrs. Warehime serves as one of our directors. As a result, Mrs. Warehime may be able to exercise significant influence over us and certain matters requiring approval of our ~~stockholders~~shareholders, including the approval of significant corporate transactions, such as a merger or other sale of our company or its assets. This could limit the ability of our other ~~stockholders~~shareholders to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control of our Company. In addition, Mrs. Warehime may have actual or potential interests that diverge from the interests of our other ~~stockholders~~shareholders.

On December 18, 2017, the Warehime Holders entered into a voting agreement with Campbell, pursuant to which the Warehime Holders agreed, among other things, to vote the shares of Company common stock over which they have voting power in favor of the approval of the Merger Agreement and the transactions contemplated thereby, including the Merger. As of February 16, 2018, the record date for the special meeting of our shareholders, the Warehime Holders owned 12,851,757 shares, or approximately 13.1% of the shares of our common stock outstanding and entitled to vote at the special meeting.

New regulations or legislation could adversely affect our business and financial results.

Food production and marketing are highly regulated by a variety of federal, state and other governmental agencies. New or increased government regulation of the food industry, including but not limited to areas related to food safety, chemical composition, production processes, traceability, product quality, packaging, labeling, school lunch guidelines, promotions, marketing and advertising (particularly such communications that are directed toward children), product recalls, records, storage and distribution could adversely impact our results of operations by increasing production costs or restricting our methods of operation and distribution. These regulations may address food industry or societal factors, such as obesity, nutritional and environmental concerns and diet trends.

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We are subject to increasing legal complexity and could be party to litigation that may adversely affect our business.

Increasing legal complexity may continue to affect our operations and results in material ways. We are or could be subject to legal proceedings that may adversely affect our business, including class actions, administrative proceedings, government investigations, employment and personal injury claims, disputes with current or former suppliers, claims by current or former IBOs, and intellectual property claims (including claims that we infringed another party’s trademarks, copyrights, or patents). Inconsistent standards imposed by governmental authorities can adversely affect our business and increase our exposure to litigation. Litigation involving ~~our~~the independent contractor classification of ~~our~~the IBOs, as well as litigation related to disclosure made by us in connection therewith, if determined adversely, could increase costs, negatively impact our business prospects and the business prospects of ~~our~~the IBOs and subject us to incremental liability for their actions. We are also subject to the legal and compliance risks associated with privacy, data collection, protection and management, in particular as it relates to information we collect from our employees, as well as information we collect when we provide products to customers, IBOs and retailers.

~~We may fail to realize the anticipated benefits and cost savings we expect to realize from our acquisition of Diamond Foods, which could adversely affect the value of our common stock.~~12

~~The~~Table ~~success~~ of our acquisition of Diamond Foods will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining Diamond Foods’ business with ours. Our ability to realize these anticipated benefits and cost savings is subject to many risks, including but not limited to:Contents

•data ~~Our~~collection, ~~ability~~protection toand ~~continue~~management, in particular as it relates to ~~combine~~information ~~Diamond~~we ~~Foods’~~collect ~~business~~from ~~with~~our ~~ours;~~employees, as well as information we collect when we provide products to customers, IBOs and retailers.

• Whether our combined businesses will perform as expected.

If we are not able to combine Diamond Foods’ business with ours successfully within the anticipated time frame, or at all, the anticipated cost savings and other benefits of the acquisition may not be realized fully, or at all, or may take longer to realize than expected, and we may not perform as expected and the value of our common stock may be adversely affected.

We may not be able to successfully execute our international expansion strategies.

We plan to drive additional growth and profitability through international distribution channels. Consumer demand, behavior, taste and purchasing trends may differ in international markets and, as a result, sales of our products may not be successful or meet expectations, or the margins on those sales may be less than currently anticipated. We may also face difficulties integrating foreign business operations with our current sourcing, distribution, information technology systems and other operations. Any of these challenges could hinder our success in new markets or new distribution channels. There can be no assurance that we will successfully complete any planned international expansion or that any new business will be profitable or meet our expectations.

Our foreign operations pose additional risks to our business.

We operate our business and market our products internationally. Our foreign operations are subject to the risks described above, as well as risks related to fluctuations in currency values, foreign currency exchange controls, compliance with foreign laws, compliance with applicable US laws, including the Foreign Corrupt Practices Act, and other economic or political uncertainties. International sales are subject to risks related to general economic conditions, imposition of tariffs, quotas, trade barriers and other restrictions, enforcement of remedies in foreign jurisdictions and compliance with applicable foreign laws, and other economic and political uncertainties. All of these risks could result in increased costs or decreased revenues, which could adversely affect our financial results.

11We may not realize the benefits that we expect from our Transformation Plan.

In April 2017, we announced the Transformation Plan, our plan to significantly improve our financial performance by focusing on the following six areas: (i) reduce direct spending and accelerate zero-based budgeting to improve indirect costs, (ii) reduce manufacturing and distribution network complexity and improve productivity, (iii) reduce business complexity through SKU rationalization and ongoing portfolio maintenance, (iv) improve trade spend productivity and effectiveness and optimize brand assortment, (v) reset working/non-working ratios and increase investment in our core branded portfolio and (vi) elevate the performance of the existing IBOs and DSD network. As a part of the plan, on June 26, 2017, our Board of Directors approved the closure of our manufacturing facility in Perry, Florida and an incremental reduction in workforce across the organization. In 2017, we have eliminated approximately 300 jobs. The full scope of the Transformation Plan and specific actions to be taken are currently being developed by senior management and our Board of Directors.

The successful design and implementation of the Transformation Plan present significant challenges, many of which are beyond our control. In addition, the Transformation Plan may not advance our business strategy as expected. Events and circumstances, such as financial or strategic difficulties, delays, and unexpected costs may occur that could result in our not realizing all or any of the anticipated benefits or our not realizing the anticipated benefits on our expected timetable. If we are unable to realize the anticipated financial performance of the Transformation Plan, our ability to fund other initiatives may be adversely affected. Any failure to implement the Transformation Plan in accordance with our expectations could adversely affect our financial condition, results of operations, and cash flows.

In addition, the complexity of the Transformation Plan requires a substantial amount of management and operational resources. Our management team must successfully implement administrative and operational changes necessary to achieve the anticipated benefits of the Transformation Plan. These and related demands on our resources may divert the organization's attention from existing core businesses, integrating financial or other systems, have adverse effects on existing business relationships with suppliers and customers, and impact employee morale. As a result, our financial condition, results of operations, or cash flows may be adversely affected.

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Risks related to our substantial indebtedness

We have substantial debt, which could adversely affect our financial health, our ability to obtain financing in the future, react to changes in our business, and make payments on our debt.

As of ~~January~~December 230, ~~2016~~2017 we had an aggregate principal amount of $~~388 million of outstanding debt, which increased to approximately $~~1.31 billion as of ~~December 31, 2016. The increase in our~~ outstanding debt ~~was the result of our acquisition of Diamond Foods~~. Our substantial debt could have important consequences to holders of our common stock, including the following:


•	Our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements, acquisitions or general corporate purposes may be impaired in the future


•	A substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes


•	We are exposed to the risk of increased interest rates because a substantial portion of our borrowings are at variable rates


•	It may be more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness


•	We may be more vulnerable to general adverse economic and industry conditions


•	We may be at a competitive disadvantage compared to our competitors with less debt or comparable debt at more favorable interest rates and they, as a result, may be better positioned to withstand economic downturns


•	Our ability to refinance indebtedness may be limited or the associated costs may increase


•	Our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or we may be prevented from carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins or our business

The agreements and instruments governing our debt contain restrictions and limitations that could significantly impact our ability to operate our business.

Our credit facilities contain covenants that, among other things, restrict our ability to do the following:


•	Dispose of assets


•	Incur additional indebtedness (including guarantees of additional indebtedness)


•	Pay dividends and make certain payments


•	Create liens on assets


•	Make investments (including joint ventures)


•	Engage in mergers, consolidations or sales of all or substantially all of our assets


•	Engage in certain transactions with affiliates


•	Change the business conducted by us


•	Amend specific debt agreements

Our ability to comply with these provisions in future periods will depend on our ongoing financial and operating performance, which in turn will be subject to economic conditions and to financial, market and competitive factors, many of which are beyond our control. Our ability to comply with these provisions in future periods will also depend substantially on the pricing of our products, our success at implementing cost reduction initiatives and our ability to successfully implement our overall business strategy.

The restrictions under the terms of our credit facilities may prevent us from taking actions that we believe would be in the best interest of our business, and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted. We may also incur future debt obligations that might subject us to additional restrictive covenants that could affect our financial and operational flexibility. We cannot assure you that we will be granted waivers or amendments to these agreements if for any reason we are unable to comply with these agreements or that we will be able to refinance our debt on terms acceptable to us, or at all.

Our ability to comply with the covenants and restrictions contained in our credit facilities may be affected by economic, financial and industry conditions beyond our control. The breach of any of these covenants or restrictions could result in a default under our credit facilities that would permit the applicable lenders or note holders, as the case may be, to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. In any such case, we may be unable to borrow under and may not be able to repay the amounts due under our credit facilities. This could have serious consequences to our financial condition and results of operations and could cause us to become bankrupt or insolvent.

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Our ability to generate the significant amount of cash needed to pay interest and principal on our debt facilities and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control.

Our ability to make scheduled payments on, or to refinance our obligations under our debt will depend on our financial and operating performance. This, in turn, will be subject to prevailing economic and competitive conditions and to the financial and business factors, many of which may be beyond our control, as described under “Risk Factors-Risks Related to Our Business” above.

If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital or restructure our debt. In the future, our cash flow and capital resources may not be sufficient for payments of interest on and principal of our debt, and such alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

We cannot be assured that we will be able to refinance any of our indebtedness or obtain additional financing, particularly because of our anticipated high levels of debt and the debt incurrence restrictions imposed by the agreements governing our debt, as well as prevailing market conditions. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our credit facilities restrict our ability to dispose of assets and use the proceeds from any such dispositions. As a result, we cannot assure you we will be able to consummate those sales, or if we do, what the timing of the sales will be, or whether the proceeds that we realize will be adequate to meet the debt service obligations when due.

We are exposed to interest rate volatility, which could negatively impact our financial results.

We are exposed to interest rate volatility since the interest rates associated with portions of our debt are variable. While we mitigate a portion of this volatility by entering into interest rate swap agreements, those agreements could lock our interest rates above the market rates. As a result, an increase in interest rates, whether because of an increase in market interest rates or a decrease in our creditworthiness, would increase the cost of servicing our debt and could materially reduce our profitability and cash flows.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

Our corporate headquarters is located in Charlotte, North Carolina. We have additional administrative offices in Hanover, Pennsylvania supporting ~~our~~the DSD network and in Norwich, England supporting our European operations. Our manufacturing operations are located in Charlotte, North Carolina; Hanover, Pennsylvania; Franklin, Wisconsin; Goodyear, Arizona; Columbus, Georgia; Jeffersonville, Indiana; Hyannis, Massachusetts; ~~Perry, Florida;~~ Ashland, Ohio; Salem, Oregon; Beloit, Wisconsin; Norwich, England; Wednesbury, England and Van Buren, Indiana. Additionally, our research and development centers are located in Hanover, Pennsylvania and Salem, Oregon.

The map above illustrates some of the products manufactured at each facility.

We also lease or own over 100 warehouses as well as numerous stockrooms, sales offices and administrative offices throughout the US to support our operations and DSD network. In addition, we lease warehousing facilities in Snetterton, England.

The facilities and properties that we own, lease and operate are maintained in good condition and are believed to be suitable and adequate for our present needs. We believe that we have sufficient production capacity or the ability to increase capacity to meet anticipated demand in ~~2017~~2018.

Item 3. Legal Proceedings

~~IBO~~Information ~~Litigation~~regarding legal proceedings is available in Note 17, Commitments and Contingencies, to the consolidated financial statements in this report.

Roxberry, et. al, v. S-L Distribution Company, LLC

On July 25, 2016, plaintiffs comprised of IBOs filed a putative class action against Snyder’s-Lance, Inc. and our distribution subsidiary, S-L Distribution Company, Inc. in the Eastern District Court of Tennessee. The case was transferred to the Middle District of Pennsylvania. The lawsuit seeks statewide class certification on behalf of a class comprised of IBOs in Tennessee, and nationwide certification for the Federal law collective action. The plaintiffs allege that they were misclassified as independent contractors and should be considered employees. We believe we have strong defenses to all the claims that have been asserted against us. At this time, no demand has been made, and we cannot reasonably estimate the possible loss or range of loss, if any, from this lawsuit.

Scheurer v. S-L Distribution Company, LLC

On December 8, 2016, plaintiff served a putative class action on behalf of all similarly situated IBOs in New Jersey against our distribution subsidiary, S-L Distribution Company, LLC. Plaintiff is a former IBO whose distribution agreement was terminated pursuant to the re-engineering and buyback of routes in New Jersey in 2011, resulting from the merger of Snyder’s of Hanover, Inc. and Lance, Inc. The lawsuit seeks statewide class certification on behalf of a class comprised of IBOs in New Jersey for alleged violations of the New Jersey Franchise Practices Act ("NJFPA") relative to various terminations of the distributor agreement. We believe we have strong defenses to all the claims that have been asserted against us. At this time, no demand has been made, and we cannot reasonably estimate the possible loss or range of loss, if any, from this lawsuit.

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Merger-related Litigation

On November 10, 2015, a putative class action lawsuit was filed on behalf of Diamond Foods' stockholders in the Court of Chancery of the State of Delaware. The complaint names as defendants Diamond Foods, the members of Diamond Foods’ board of directors, Snyder’s-Lance, Shark Acquisition Sub I, Inc., a Delaware corporation and a wholly-owned subsidiary of Snyder’s-Lance (“Merger Sub I”) and Shark Acquisition Sub II, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Snyder’s-Lance (“Merger Sub II”). The complaint generally alleges, among other things, that the members of Diamond Foods’ board of directors breached their fiduciary duties to Diamond Foods’ stockholders in connection with negotiating, entering into and approving the merger agreement with Snyder’s-Lance, Inc. The complaint additionally alleges that Snyder’s-Lance, Merger Sub I and Merger Sub II aided and abetted such breaches of fiduciary duties. The complaint sought injunctive relief, including the enjoinment of the merger, certain other declaratory and equitable relief, damages, costs and fees. An amended complaint was filed on December 21, 2015. The amended complaint adds further allegations related to the merger process and disclosures contained in the Registration Statement on Form S-4 filed by Snyder’s-Lance on November 25, 2015. On January 15, 2016, plaintiff filed a motion for expedited proceedings requesting a preliminary injunction and expedited discovery, which the Court denied on February 3, 2016. Plaintiff also filed a books and records demand case in North Carolina, which the court subsequently dismissed with prejudice. On January 19, 2016, another action was filed in the court of chancery in the state of Delaware similar to the above matter. On October 24, 2016, plaintiff filed a second amended complaint, which modified some of plaintiff's allegations, including now expressly seeking a quasi-appraisal remedy or rescissory damages. Defendants moved to dismiss the second amended complaint on December 22, 2016. On February 3, 2017, plaintiffs moved to consolidate the two Delaware cases, which defendants did not oppose, and which the Court granted on February 3, 2017. On February 24, 2017, the parties filed a stipulated proposed order of dismissal, seeking voluntary dismissal of the Delaware litigation with prejudice as to the named plaintiffs and without prejudice as to the putative class. The court granted the stipulated order of dismissal on February 27, 2017.

California Labor Code Litigation

Former employee Patricia Sparks filed a putative class action lawsuit against Diamond Foods on November 25, 2015 in San Francisco Superior Court alleging Diamond Foods’ violation of the California Labor Code by failing to include on wage statements the start date of the pay period and by failing to include on wage statements the name and address of the legal entity that is the employer. Plaintiff amended her complaint on January 4, 2016 to add a claim for penalties under California’s Private Attorneys General Act based on the same underlying violations. Diamond Foods timely answered the First Amended Complaint on March 7, 2016. The parties attended the initial case management conference on May 2, 2016 and a further case management conference occurred on August 1, 2016. We accrued $8.3 million associated with this outstanding claim in the Diamond Foods opening balance sheet as that represented our best estimate of the probable liability at that time. We determined such accrual by estimating the aggregate potential penalties that we believed it was probable could be assessed under the applicable California laws, which are strict liability penalties. On September 19, 2016, the parties to this litigation reached a tentative settlement pursuant to which we have agreed to pay $0.7 million on a class wide basis. We signed a memorandum of understanding reflecting this preliminary settlement amount. The parties submitted a settlement agreement to the court and the court granted preliminary approval of the settlement. As a result, we have recorded a measurement period adjustment to reduce the opening balance sheet accrual. Accordingly this settlement amount did not impact our Consolidated Statements of Income for the year ended December 31, 2016.

Employment Tax Audit by the California Employment Development Department

On February 22, 2016, the company received notice from the Employment Development Department of the State of California (“EDD”) that S-L Distribution Company, Inc. (“SLD”) had been selected for an employment tax audit. An onsite audit was conducted April 27, 2016, of payroll records for 2015 as a general matter. In addition, the auditor examined the Forms 1099Misc that the company had issued. The audit is still outstanding and will confirm whether the IBOs who received 1099s are bona-fide contractors within the definition of an employer/employee relationship under the relevant statutes and regulations in California. If the auditor issues an unfavorable determination and finds that the IBOs are actually employees, such a finding could have a material adverse impact on our operations in California and potentially the other jurisdictions where the company utilizes IBO business partners. At this time we cannot reasonably estimate the possible loss or range of loss, if any, from this audit, nor are we able to quantify the likelihood of a positive determination from the auditor.

Evaporated Cane Juice Litigation

A putative class action suit was filed against Late July on September 18, 2013, and is pending in the US District Court for the Northern District of California. The action accuses Late July of violating federal and state law by using the term "evaporated cane juice" ("ECJ") in the ingredients list on its products' labels. The plaintiffs' complaint alleges ECJ is not the common and usual name for the ingredient at issue and is misleading. The complaint attempts to state claims for violation of California's Unfair Competition Law, California's False Advertising Law, California's Consumers Legal Remedies Act, and unjust enrichment. Late July filed a motion to dismiss the complaint on November 27, 2013, based on the primary jurisdiction doctrine, lack of standing, and failure to state a claim.

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On May 22, 2014, the Court stayed the action, applying the doctrine of primary jurisdiction, due to the FDA's ongoing consideration of the issue of using the term ECJ on food labels. On May 26, 2016, the FDA issued its guidance for industry on the topic. As a result, the stay was lifted on July 22, 2016. On August 31, 2016, plaintiffs filed an amended complaint that, among other things, relies on the FDA's recently issued guidance. Late July filed a motion to dismiss such amended complaint, and a hearing on that motion was held on February 16, 2017. At this time, we cannot reasonably estimate the possible loss or range of loss, if any, from this lawsuit.

Other

We are currently subject to other lawsuits and environmental matters arising in the normal course of business. In our opinion, such matters should not have a material effect upon our consolidated financial statements taken as a whole.

Item 4. Mine Safety Disclosures

Not applicable.

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Executive Officers of the Company

Information about each of our executive officers, as defined in Rule 3b-7 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of February 522, ~~2017~~2018, is as follows:

Name	Age	Information About Officers	Hire Date
Carl E. Lee, Jr.	57	President and Chief Executive Officer of Snyder's-Lance, Inc. since May 2013; President and Chief Operating Officer of Snyder’s-Lance, Inc. from December 2010 to May 2013; President and Chief Executive Officer of Snyder’s of Hanover, Inc. from 2005 to December 2010.	2005
Brian J. Driscoll	59	President and Chief Executive Officer of Snyder's-Lance, Inc. since June 2017; Interim President and Chief Executive Officer of Snyder’s-Lance, Inc. from April 2017 to June 2017; President and Chief Executive Officer of Diamond Foods, Inc. from May 2012 to February 2016; Chief Executive Officer of Hostess Brands from June 2010 to March 2012; Various senior management positions at Kraft Foods, Inc. from 2002 to June 2010, including President, Sales, Customer Service and Logistics, Kraft North America from 2007 to 2010. Mr. Driscoll has also served as a director on multiple company boards including Snyder’s-Lance, Inc., beginning in February 2016 and Diamond Foods, Inc. from May 2012 to February 2016.	2017
Alexander W. Pease	4546	Executive Vice President and Chief Financial Officer of Snyder’s-Lance, Inc. since November 2016; Principal of McKinsey and Company from 2015 to 2016; Senior Vice President and Chief Financial Officer of Enpro Industries from 2011 to 2015; Principal of McKinsey and Company from 2007 to 2011.	2016
Rodrigo F. Troni Pena	50	Senior Vice President and Chief Marketing Officer of Snyder's-Lance, Inc. since December 2013; Senior Vice President, Birds Eye at Pinnacle Foods from May 2010 to November 2013.	2013
Andrea Frohning	48	Senior Vice President and Chief Human Resources Officer of Snyder's-Lance, Inc. since March 2016; Vice President Human Resources of Crane Co. from 2013 to 2016; Vice President Human Resources of Hubbell Electrical Systems, Hubbell Inc. from 2009 to 2013.	2016
Frank B. Schuster	50	President, DSD Division of Snyder’s-Lance, Inc. since February 2016; Senior Vice President and Chief Sales Officer of Snyder’s-Lance, Inc. from October 2015 to February 2016; Senior Vice President, Sales Division of Snyder's-Lance, Inc. from December 2010 to October 2015; Senior Vice President, Sales Division of Lance, Inc. from June 2009 to December 2010.	2009
John T. Maples	58	Chief Customer Officer, Direct Sales of Snyder's-Lance, Inc. since July 2017; Vice President & General Manager, Direct Sales at Snyder’s-Lance, Inc. from January 2015 to January 2016. Senior Vice President of Sales Strategy at ConAgra Foods from June 2012 to December 2014. Chief Marketing Officer at Primo Water from March 2011 to May 2012. Various roles with PepsiCo from June 1982 to February 2011 including Senior Vice President of Sales and Business Development for PepsiCo in Wal-Mart and Sam’s Club and Vice President of Channel Sales for Quaker Oats. Mr. Maples has also served as a member of the board of directors of Delta Dental of Illinois since 2003.	2015
Margaret E. Wicklund	56	Vice President, Corporate Controller, Principal Accounting Officer and Assistant Secretary of Snyder’s-Lance, Inc. since December 2010.	1992
Gail Sharps Myers	48	Senior Vice President, Chief Legal Officer, General Counsel and Secretary of Snyder's-Lance, Inc. since January 2015; Senior Vice President, Deputy General Counsel, Chief Compliance Counsel and Assistant Secretary of US Foods, Inc. from 2014 to 2015, Senior Vice President, Deputy General Counsel and Secretary of US Foods, Inc. from 2011 to 2014; Vice President Business Law and Assistant Secretary of US Foods, Inc. from 2009 to 2011.	2015
Gail Sharps Myers	47	Senior Vice President, General Counsel and Secretary of Snyder's-Lance, Inc. since January 2015; Senior Vice President, Deputy General Counsel, Chief Compliance Counsel and Assistant Secretary of US Foods, Inc. from 2014 to 2015, Senior Vice President, Deputy General Counsel and Secretary of US Foods from 2011 to 2014; Vice President Business Law and Assistant Secretary of US Foods, Inc. from 2009 to 2011.	2015
Margaret E. Wicklund	57	Senior Vice President, Corporate Controller, Principal Accounting Officer and Assistant Secretary of Snyder’s-Lance, Inc. since December 2010. She has held various positions in Snyder’s-Lance, Inc. and, Lance, Inc. in her over 25 years of service to the Company.	1992
Andrea Frohning	47	Chief Human Resources Officer of Snyder's-Lance, Inc. since March 2016; Vice President Human Resources of Crane Co. from 2013 to 2016; Vice President Human Resources of Hubbell Electrical Systems, Hubbell Inc. from 2009 to 2013.	2016

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

~~Our~~Market ~~$0.83-1/3~~for ~~par~~Registrant’s ~~value~~Capital ~~Common~~ Stock ~~trades under the symbol "LNCE" on the NASDAQ Global Select Market. We had 4,916 stockholders of record as of February 23, 2017.~~

~~The~~Our ~~following~~$0.83-1/3 ~~table~~par ~~sets~~value ~~forth~~Common ~~the~~Stock ~~high~~trades ~~and~~under ~~low~~the ~~intraday~~symbol ~~sale~~"LNCE" ~~price~~on ~~quotations~~the ~~and~~NASDAQ ~~dividend~~Global ~~information~~Select ~~for~~Market. ~~each~~We ~~interim~~had ~~period~~4,599 shareholders of ~~the~~record ~~years~~as ~~ended~~of ~~December 31,~~February ~~2016 and January 2~~22, ~~2016:~~ 2018.

2016 Interim Periods	HighPrice		LowPrice		DividendPaid
First quarter (13 weeks ended April 2, 2016)	$	36.20	$	27.93	$	0.16
Second quarter (13 weeks ended July 2, 2016)	34.12		28.92		0.16
Third quarter (13 weeks ended October 1, 2016)	36.61		32.99		0.16
Fourth quarter (13 weeks ended December 31, 2016)	38.99		33.18		0.16
2015 Interim Periods	HighPrice		LowPrice		DividendPaid
First quarter (13 weeks ended April 4, 2015)	$	32.83	$	28.82	$	0.16
Second quarter (13 weeks ended July 4, 2015)	33.04		28.98		0.16
Third quarter (13 weeks ended October 3, 2015)	35.98		31.32		0.16
Fourth quarter (13 weeks ended January 2, 2016)	39.10		32.00		0.16

The following table sets forth the high and low intraday sale price quotations and dividend information for each interim period of the years ended December 30, 2017 and December 31, 2016:

On February 8, 2017, our Board of Directors declared a quarterly cash dividend of $0.16 per share payable on March 3, 2017 to stockholders of record on February 23, 2017. Our Board of Directors will consider the amount of future cash dividends on a quarterly basis.



2017 Interim Periods	High Price		Low Price		Dividend Paid
First quarter (13 weeks ended April 1, 2017)	$	40.69	$	36.71	$	0.16
Second quarter (13 weeks ended July 1, 2017)	40.85		31.03		0.16
Third quarter (13 weeks ended September 30, 2017)	39.52		33.83		0.16
Fourth quarter (13 weeks ended December 30, 2017)	50.67		33.70		0.16

2016 Interim Periods	High Price		Low Price		Dividend Paid
First quarter (13 weeks ended April 2, 2016)	$	36.20	$	27.93	$	0.16
Second quarter (13 weeks ended July 2, 2016)	34.12		28.92		0.16
Third quarter (13 weeks ended October 1, 2016)	36.61		32.99		0.16
Fourth quarter (13 weeks ended December 31, 2016)	38.99		33.18		0.16

InOn ~~conjunction~~February 7, ~~with~~2018, our ~~acquisition~~Board of ~~Diamond~~Directors ~~Foods,~~declared ~~we entered into~~ a ~~new~~quarterly ~~senior~~cash ~~unsecured~~dividend ~~credit~~of ~~agreement~~$0.16 asper ~~amended~~share ~~(the~~payable ~~“Credit Agreement”)~~ on ~~December 16~~March 2, ~~2015~~2018 ~~with~~to ~~the~~shareholders ~~term~~of ~~lenders~~record ~~and~~on ~~Bank~~February ~~of America~~22, N2018.~~A.,~~ asOur ~~administrative~~Board ~~agent. The Credit Agreement restricts our payment~~ of ~~cash~~Directors ~~dividends~~will ~~and~~consider ~~repurchases~~the ofamount ~~our common stock if, after payment~~ of ~~any~~future ~~such~~cash dividends oron ~~any~~a ~~such~~quarterly ~~repurchases of our common stock, our consolidated stockholders’ equity would be less than $500 million~~basis. ~~As of December 31, 2016, our consolidated stockholders’ equity was $1,875.7 million and we were in compliance with this covenant.~~

~~The~~We ~~following~~entered ~~table~~into ~~presents~~a ~~information~~senior unsecured credit agreement as amended (the “Credit Agreement”) on December 16, 2015 with ~~respect~~the toterm lenders and Bank of America, N.A., as administrative agent. The Credit Agreement restricts our payment of cash dividends and repurchases of our common stock ~~made~~if, ~~during~~after ~~the~~payment ~~fourth quarter~~ of ~~2016,~~any bysuch usdividends or any such repurchases of our ~~“affiliated~~common ~~purchasers”~~stock, asour ~~defined~~consolidated instockholders’ ~~Rule~~equity ~~10b-18(a)(~~would be less than $500 million. As of December 30, 2017, our consolidated stockholders’ equity was $2,022.3) ~~under~~million ~~the~~and ~~Exchange~~we ~~Act:~~were in compliance with this covenant.

Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
October 2, 2016 - October 31, 2016	—	—		—	—
November 1, 2016 - November 30, 2016	—	—		—	—
December 1, 2016 - December 31, 2016	1,159	$	38.34	—	—
Total	1,159	$	38.34	—	—

Issuer Purchases of Equity Securities

The following table presents information with respect to repurchases of our common stock made during the fourth quarter of 2017, by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act:



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
October 1, 2017 - October 31, 2017	3,951	$	38.81	—	—
November 1, 2017 - November 30, 2017	66	35.98		—	—
December 1, 2017 - December 30, 2017	—	—		—	—
Total	4,017	$	38.76	—	—

⁽¹⁾ Represents shares withheld by us pursuant to provisions in agreements with recipients of restricted stock granted under our equity compensation plans that allow us to withhold the number of shares with a fair value equal to the tax withholding due upon vesting of the restricted shares.

⁽²⁾ At this time the board of directors has not authorized management to repurchase any of our common stock in the market.

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~~Item 6. Selected~~The ~~Financial~~following ~~Data~~table provides information concerning our outstanding equity compensation arrangements as of December 30, 2017.

The following table sets forth selected historical financial data for the five-year period ended December 31, 2016. The selected financial data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited financial statements. The prior year amounts have been reclassified as necessary for consistent presentation.



Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities available for future issuance under equity compensation plans, excluding securities reflected in column (a) (c)
Equity compensation plans approved by stockholders⁽¹⁾	3,238,525	$	33.23	1,837,570
Equity compensation plans not approved by stockholders⁽²⁾⁽³⁾	833,113	10.86		—
Total	4,071,638	$	28.65	1,837,570

Results of Operations (in thousands):	2016			2015			2014			2013			2012
Net revenue (1) (2) (3) (4) (5)	$	2,109,227		$	1,656,399		$	1,620,920		$	1,504,332		$	1,362,911
Cost of sales	1,345,437			1,077,110			1,042,458			963,073			872,316
Gross profit	763,790			579,289			578,462			541,259			490,595
Gross margin	36.2		%	35.0		%	35.7		%	36.0		%	36.0		%
Income before income taxes (6) (7) (8) (9) (10)	67,123			79,603			91,508			87,900			79,408
Income from continuing operations	41,803			50,718			59,217			55,603			45,489
(Loss)/income from discontinued operations, net of income tax (11) (12)	(27,100		)	—			133,316			23,481			14,021
Net income attributable to Snyder’s-Lance, Inc.	$	14,885		$	50,685		$	192,591		$	78,720		$	59,085
Average Number of Common SharesOutstanding (in thousands):
Basic	91,873			70,487			69,966			69,102			68,131
Diluted	92,891			71,142			70,656			69,877			68,964
Per Share of Common Stock:
Basic earnings per share from continuing operations	$	0.46		$	0.72		$	0.84		$	0.80		$	0.66
Basic (loss)/earnings per share from discontinued operations	(0.29		)	—			1.90			0.33			0.20
Total basic earnings per share	$	0.17		$	0.72		$	2.74		$	1.13		$	0.86
Diluted earnings per share from continuing operations	$	0.45		$	0.71		$	0.84		$	0.79		$	0.65
Diluted (loss)/earnings per share from discontinued operations	(0.29		)	—			1.88			0.33			0.20
Total diluted earnings per share	$	0.16		$	0.71		$	2.72		$	1.12		$	0.85
Dividends declared per common share	$	0.64		$	0.64		$	0.64		$	0.64		$	0.64
Financial Status at Year-end (in thousands):
Total assets (13) (14) (15)	$	3,834,076		$	1,810,704		$	1,849,056		$	1,752,758		$	1,733,201
Long-term debt, net of current portion (13) (15)	$	1,245,959		$	372,301		$	437,233		$	478,671		$	512,681
Total debt (13) (15)	$	1,294,959		$	380,842		$	445,794		$	495,962		$	533,143

(1) Includes the Lance, Inc. 2003 Key Employee Stock Plan, which was approved by the stockholders on April 24, 2003, the Lance, Inc. 2007 Key Employee Stock Plan, as amended, which was approved by the stockholders on May 4, 2010, the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan, which was approved by the stockholders on May 3, 2012, and the Snyder’s-Lance, Inc. 2016 Key Employee Incentive Plan, which was approved by the stockholders on May 4, 2016.

(2) Includes the Snyder’s of Hanover, Inc. Non-qualified Stock Option Plan, as amended on September 30, 2010. Outstanding options under the plan were assumed by the Company in connection with the merger.

(3) Includes the Diamond Foods, Inc. 2005 Equity Incentive Plan which was approved by Diamond stockholders on March 10, 2005 and the 2015 Equity Incentive Plan which was approved by Diamond stockholders on January 13, 2015. Outstanding options under the plan were assumed by the Company in connection with the acquisition.

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Return to Shareholders Performance Graph

This graph and table compares the yearly percentage change in the cumulative total shareholder return on the Company’s common stock against the cumulative total shareholder return or the Russell 2000 Index and a group of the Company’s peers for the five-year period commencing on the last trading day of the Company’s fiscal year 2012 and ending on the Company’s last trading day of fiscal 2017. The graph and table assumes that $100 was invested on December 29, 2012 in the Company’s common stock, in the Russell 2000 Index and in a portfolio of companies in the peer group. The value in each consecutive year includes share price appreciation and assumes that dividends paid were reinvested.



	12/2012		12/2013		12/2014		12/2015		12/2016		12/2017
Snyder's-Lance, Inc.	$	100	$	125	$	133	$	155	$	177	$	235
Russell 2000 Index	100		141		148		142		172		198
Peer Group	100		130		140		165		176		170

The peer group consists of Campbell Soup Co., ConAgra Foods, Inc., Flowers Foods, Inc. General Mills, Inc., J&J Snack Foods Corp., Kellogg Co., Mondelez International, Inc., The Hain Celestial Group, Inc. and the J.M Smucker Company.

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Item 6. Selected Financial Data

The following table sets forth selected historical financial data for the five-year period ended December 30, 2017. The selected financial data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited financial statements. The prior year amounts have been reclassified as necessary for consistent presentation.




Results of Operations (in thousands):	2017			2016			2015			2014			2013
Net revenue ^{(1) (2) (3)}	$	2,226,837		$	2,109,227		$	1,656,399		$	1,620,920		$	1,504,332
Cost of sales	1,426,666			1,345,437			1,077,110			1,042,458			963,073
Gross profit	800,171			763,790			579,289			578,462			541,259
Gross margin	35.9		%	36.2		%	35.0		%	35.7		%	36.0		%

Income before income taxes ^{(4) (5) (6) (7) (8)}	1,263			67,123			79,603			91,508			87,900
Income from continuing operations, net of tax ⁽⁹⁾	147,407			41,803			50,718			59,217			55,603
Income/(loss) from discontinued operations, net of income tax ^{(10) (11) (12)}	1,936			(27,100		)	—			133,316			23,481
Net income attributable to Snyder’s-Lance, Inc.	$	148,492		$	14,885		$	50,685		$	192,591		$	78,720

Average Number of Common Shares Outstanding (in thousands):
Basic	96,594			91,873			70,487			69,966			69,102
Diluted	97,467			92,891			71,142			70,656			69,877

Per Share of Common Stock:
Basic earnings per share from continuing operations	$	1.51		$	0.46		$	0.72		$	0.84		$	0.80
Basic earnings/(loss) per share from discontinued operations	0.02			(0.29		)	—			1.90			0.33
Total basic earnings per share	$	1.53		$	0.17		$	0.72		$	2.74		$	1.13

Diluted earnings per share from continuing operations	$	1.50		$	0.45		$	0.71		$	0.84		$	0.79
Diluted earnings/(loss) per share from discontinued operations	0.02			(0.29		)	—			1.88			0.33
Total diluted earnings per share	$	1.52		$	0.16		$	0.71		$	2.72		$	1.12

Dividends declared per common share	$	0.64		$	0.64		$	0.64		$	0.64		$	0.64

Financial Status at Year-end (in thousands):
Total assets ^{(13) (14)}	$	3,618,337		$	3,834,076		$	1,810,704		$	1,849,056		$	1,752,758
Long-term debt, net of current portion ⁽¹³⁾	$	1,025,533		$	1,245,959		$	372,301		$	437,233		$	478,671
Total debt⁽¹³⁾	$	1,074,533		$	1,294,959		$	380,842		$	445,794		$	495,962

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Footnotes:


(1)	2016 net revenue included $443 million of incremental net revenue attributable to the acquisition of Diamond Foods.


(2)	2015 net revenue increased compared to 2014, in part due to the full year impact of the acquisition of Baptista's Bakery and consolidation of Late July, which occurred in June 2014 and October 2014, respectively. The increase was partially offset by approximately $30 million of net revenue generated during 2014 as a result of the fifty-third week.


(3)	2014 net revenue increased compared to 2013 approximately $30 million, as a result of the fifty-third week and $44 million as a result of the acquisition of Baptista's in June 2014 and the consolidation of the results of Late July subsequent to our additional investment in October 2014.

(4) ~~2013~~2017 ~~net~~pretax ~~revenue~~income ~~increased~~was ~~compared~~impacted toby ~~2012,~~approximately in$104.7 ~~part~~million ~~due~~of togoodwill ~~the~~and ~~full~~intangible ~~year~~asset ~~impact~~impairments, approximately $30 million of costs associated with the ~~acquisition~~Transformation plan, and approximately $9 million of ~~Snack~~costs ~~Factory,~~related ~~which~~to ~~occurred~~the intransfer ~~October~~of ~~2012~~production of the Emerald products.

(5) ~~2012~~2016 ~~net~~pretax ~~revenue~~income ~~included~~was impacted by approximately $3066 million asof atransaction ~~result~~and integration related expenses due to the acquisition of ~~acquisitions~~Diamond Foods, ~~including~~approximately $11 million of additional cost of sales due to the step-up of inventory from the acquisition of ~~Snack~~Diamond ~~Factory~~Foods, approximately $5 million for the loss on prepayment of debt, and approximately $4 million in ~~October~~asset ~~2012~~impairments primarily related to the transfer of production location for certain products.

(6) ~~2016~~2015 pretax income was impacted by approximately $668 million ofin transaction ~~and integration~~ -related ~~expenses~~fees ~~due~~associated towith the pending acquisition of Diamond Foods, approximately $1112 million ofin ~~additional~~asset ~~cost~~impairment ofcharges ~~sales~~primarily ~~due~~related to the ~~step-up~~transfer of ~~inventory~~production ~~from~~location ~~the acquisition of Diamond Foods, approximately $5 million~~ for ~~the~~certain ~~loss~~products ~~on prepayment of debt,~~ and approximately $46 million in ~~asset~~settlements ~~impairments primarily related to the transfer~~ of ~~production location for~~ certain ~~products~~litigation.

(7) ~~2015~~2014 pretax income was impacted by ~~approximately~~a $8gain ~~million~~on inthe ~~transaction-related~~revaluation ~~fees~~of ~~associated~~our ~~with~~prior ~~the~~equity ~~pending~~investment ~~acquisition~~in ofLate ~~Diamond~~July ~~Foods,~~of approximately $1217 million, ~~in asset~~ impairment charges ~~primarily related to the transfer~~ of ~~production~~approximately ~~location~~$13 ~~for~~million ~~certain products~~ and approximately $64 million inof ~~settlements~~expense ofassociated ~~certain~~with ~~litigation~~our margin improvement and restructuring plan.

(8) ~~2014~~2013 pretax income was impacted by acertain ~~gain~~self-funded onmedical ~~the~~claims ~~revaluation~~that ofresulted ~~our~~in ~~prior~~approximately ~~equity~~$5 ~~investment~~million in ~~Late~~incremental ~~July~~expenses ofas ~~approximately~~well ~~$17~~as ~~million,~~ impairment charges of approximately $132 million ~~and~~associated ~~approximately~~with $4one ~~million~~ of ~~expense associated with~~ our ~~margin improvement and restructuring plan~~trademarks.

(9) ~~2013~~2017 ~~pretax~~income from continuing operations, net of income ~~was~~tax ~~impacted~~included bya ~~certain~~$162.4 ~~self-funded~~million ~~medical~~income ~~claims~~tax ~~that~~benefit ~~resulted~~for inthe ~~approximately~~provisional $5tax ~~million~~impacts inrelated ~~incremental~~to ~~expenses~~a asone-time ~~well~~transition astax ~~impairment~~and ~~charges~~the revaluation of ~~approximately~~the $2deferred ~~million~~tax ~~associated~~balances ~~with~~as ~~one~~a result of ~~our~~the ~~trademarks~~Tax Act enacted in December 2017.

(10) ~~2012~~2016 ~~pretax~~loss ~~income~~from ~~included~~discontinued ~~the~~operations, ~~impact~~net of ~~approximately~~income ~~$4 million in severance costs and professional fees related to the Snyder's-Lance Merger and integration activities~~tax, ~~approximately~~included $9a ~~million in impairment charges offset by approximately~~ $2233 million inpretax ~~gains~~loss on the sale of ~~route~~Diamond ~~businesses~~of ~~associated with the IBO conversion~~California.

(11) ~~2016~~2014 ~~loss~~income from discontinued operations, net of income tax, included a $33223 million pretax ~~loss~~gain on the sale of ~~Diamond~~Private ~~of California~~Brands.

(12) ~~2014~~2013 income from discontinued operations, net of income tax, ~~included~~is athe ~~$223~~operating ~~million~~activities ~~pretax~~of ~~gain~~our onPrivate ~~the~~Brands, ~~sale~~which ofwere ~~Private~~sold ~~Brands~~in 2014.


(13)	2016 total assets includes $2.2 billion acquired from Diamond Foods, and total debt increased due to the issuance of $1.1 billion of debt in conjunction with the Diamond Foods acquisition.


(14)	2014 total assets increased from 2013 primarily due to the acquisition of Baptista's and Late July, partially offset by the sale of Private Brands.

(15) We adopted ASU No. 2015-03 in the first quarter of 2016 which had the effect of retrospectively presenting debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. As such, debt issuance costs are presented as a reduction of long-term debt in the Consolidated Balance Sheets and removed from other noncurrent assets.22

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand Snyder's-Lance, Inc., our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and accompanying notes to the financial statements. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed under Part I, Item 1A—Risk Factors and other sections in this Annual Report on Form 10-K.

MD&A is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Future events and their effects cannot be determined with absolute certainty. Therefore, management’s determination of estimates and judgments about the carrying values of assets and liabilities requires the exercise of judgment in the selection and application of assumptions based on various factors, including historical experience, current and expected economic conditions and other factors believed to be reasonable under the circumstances. We routinely evaluate our estimates, including those related to sales and promotional allowances, customer returns, allowances for doubtful accounts, inventory valuations, useful lives of fixed assets and related impairment, long-term investments, hedge transactions, goodwill and intangible asset valuations and impairments, incentive compensation, income taxes, self-insurance, contingencies and litigation. Actual results may differ from these estimates under different assumptions or conditions.

Executive Summary

~~2016~~2017 was ana ~~exciting~~ year ~~for~~of transition and transformation within our Company. ~~Coming~~ ~~into~~We ~~2016,~~began wethe ~~were~~year ~~focused~~with ona ~~growing~~disappointing ~~our~~first ~~distribution~~quarter ~~footprint~~caused ~~and~~by ~~our~~the ~~Core~~convergence ~~brand~~of ~~revenue~~category ~~and~~softness, ~~market~~lower ~~share~~net ~~and~~price ~~returning~~realization, ~~our~~unfavorable ~~Snyder's~~mix, ofcost ~~Hanover~~headwinds ~~brand~~and ~~back~~certain toexecution ~~growth~~lapses, aswhich ~~well~~stalled asour ~~growing~~earnings ~~our~~momentum, ~~"better-for-you"~~pressured ~~portfolio. We~~our ~~were~~full ~~successful~~year inoutlook ~~achieving~~and ~~all~~exposed ofunderlying ~~these~~cost ~~goals~~inefficiencies. ~~Our~~ ~~growth~~The ~~strategy~~results ~~for~~of ~~our~~the ~~Core~~first ~~brands~~quarter ~~continues~~and tothe ~~focus~~issues ~~on quality~~identified, ~~innovation~~resulted ~~and~~in ~~expanded~~our ~~distribution.~~Board Weof ~~are~~Directors ~~achieving~~and ~~our~~senior ~~goals~~management ~~regarding~~team ~~the~~conducting ~~mix~~a comprehensive review of ~~"better-for-you"~~our ~~products~~Company's ~~relative~~operations. toThis ~~our~~comprehensive ~~entire~~review ~~portfolio,~~had ~~with~~the ~~31%~~goal of significantly improving our ~~2016~~financial ~~revenue~~performance ~~coming~~to ~~from~~deliver ~~products~~greater ~~considered~~value to beour ~~"better-for-you"~~shareholders. ~~and~~As a result of this review, we ~~expect~~initiated tothe ~~increase~~Transformation ~~this~~Plan ~~percentage~~focused inon ~~2017.~~six key areas:

On• ~~February~~SG&A ~~29,~~Expense ~~2016, we completed the acquisition of all of the outstanding stock of Diamond Foods~~Efficiency. ~~The~~ ~~acquisition~~Reduce ofdirect ~~Diamond~~spending ~~Foods significantly changed our capital structure~~ and ~~debt~~accelerate ~~profile. Diamond Foods stockholders received 0.775 shares of Snyder's~~zero-~~Lance common stock and $12.50 in cash for each Diamond Foods share, for a total purchase price of approximately $1.86 billion,~~ based onbudgeting ~~the closing price of our common stock on February 26, 2016, the last trading day prior~~ to ~~the~~improve ~~closing~~indirect ~~date and including our repayment of approximately $651 million of Diamond Foods' indebtedness, accrued interest and related fees~~costs. The strategic combination of Snyder's-Lance and Diamond Foods brought together two established companies with strong brands and created an innovative, highly complementary and diversified portfolio of branded snacks, including: Kettle Brand® potato chips; KETTLE® Chips; Pop Secret® popcorn; Emerald® snack nuts; and Diamond of California® culinary nuts. The transaction expanded our footprint in "better-for-you" snacking and increased our existing natural food channel presence. In addition, this transaction expanded and strengthened our national distribution network, and provided a platform for growth in the U.K. and across Europe. We believe we are now even better positioned in the growing snack food industry, and we continue to see significant opportunities for both cost and revenue synergies, which we expect to deliver earnings accretion and support further investment behind our brands.

On• ~~September~~Manufacturing 1,and ~~2016,~~Supply weChain ~~completed the acquisition of Metcalfe by acquiring the remaining 74% interest~~Productivity. ~~Metcalfe~~Reduce ~~owns~~manufacturing ~~the U.K.'s leading premium RTE popcorn brand,~~ and ~~also~~distribution ~~incorporates~~network acomplexity ~~fast growing range of corn~~ and ~~rice~~improve ~~cake products~~productivity. The U.K. popcorn market is one of the fastest growing categories within the U.K. snack food industry, as consumers increasingly seek out "better-for-you" snacking options. The addition of a leading premium RTE popcorn brand, Metcalfe’s skinny®, to the U.K.'s leading premium chip brand, KETTLE® Chips, reflects our plan to become a leading provider of premium snack foods in Europe.

In• ~~addition~~Product toand ~~these~~Portfolio ~~strategic~~Optimization. ~~acquisitions,~~Reduce ~~on December 31, 2016, we completed the sale of our Diamond of California culinary nuts~~ business~~. The~~ ~~sale~~complexity ofthrough ~~Diamond~~SKU ofrationalization ~~California aligns with our strategy to focus more resources on the growth opportunities for our snack food brands,~~ and ~~provides~~ongoing ~~proceeds~~portfolio ~~to reduce our overall debt and invest in other strategic transactions~~maintenance.

21• Price Realization. Improve trade spend productivity and effectiveness and optimize brand assortment.


•	Marketing Investment Optimization. Reset working/non-working ratios and increase investment in our core branded portfolio.


•	Channel Execution Excellence. Elevate the performance of the existing IBOs and DSD network.

We are anticipating that the Transformation Plan will result in 14% operating profit margin (on an adjusted basis) and an incremental operating income of $175 million improvement to our operating income by 2020. During 2017, the initial actions taken under the plan included the closure of our Perry, Florida manufacturing facility, reductions in workforce across the organization, and initial steps in the process of SKU rationalization. In 2018, we expect to take additional steps to achieve all of the key areas outlined above.

Agreement and Plan of Merger

On December 18, 2017, we entered into the Merger Agreement with Campbell and Merger Sub, pursuant to which Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and as a wholly-owned subsidiary of Campbell. The parties anticipate that the Merger will close late in the first quarter of calendar year 2018.

Subject to the terms and conditions of the Merger Agreement, at the Effective Time, each share of our common stock, $0.83-1/3 par value, outstanding immediately prior to the Effective Time will be converted into the right to receive an amount in cash equal to $50.00 per share, without interest and subject to any required tax withholding.

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~~2016~~The ~~Performance~~Merger Agreement contains various representations, warranties and covenants by the Company and Campbell. The Merger Agreement requires the Company to call and hold a special shareholder meeting, which is scheduled for March 23, 2018, and requires our Board of Directors to recommend that the Company’s shareholders approve the Merger Agreement and the Merger, except our Board of Directors may, in certain circumstances, change its recommendation, subject to complying with specified notice and other conditions set forth in the Merger Agreement. Additionally, the Company agreed that, among other things, it will not (i) solicit, initiate, facilitate or encourage the submission of any Acquisition Proposal or any proposal or offer that may reasonably be expected to lead to an Acquisition Proposal or (ii) enter into, continue or otherwise participate in discussions or negotiations with, or disclose non-public information to, any third party relating to any Acquisition Proposal or any proposal or offer that may reasonably be expected to lead to an Acquisition Proposal. Subject to the terms of the Merger Agreement, prior to the approval of the Merger Agreement by the Company’s shareholders, the Company may, however, engage in negotiations or discussions with and provide non-public information to a third party that has made an unsolicited, bona fide, written Acquisition Proposal that our Board of Directors determines in good faith, after consultation with its outside legal counsel and financial advisor, constitutes, or could reasonably be expected to result in, a Superior Proposal and that failure to take such actions would be reasonably likely to be inconsistent with its fiduciary duties under applicable law.

~~Overall~~Prior to the approval of the Merger Agreement by the Company’s shareholders, ~~net~~our ~~revenue~~Board ~~increased~~of Directors may, upon receipt of a Superior Proposal, and in ~~2016~~certain ~~compared~~other tocircumstances ~~2015~~set forth in the Merger Agreement, ~~primarily~~change ~~due~~its torecommendation ~~increased~~that ~~revenue~~the ~~associated~~Company’s shareholders approve the Merger Agreement and the Merger, subject to complying with specified notice and other conditions set forth in the ~~contribution~~Merger ofAgreement, ~~Diamond~~including, ~~Foods~~if requested by Campbell, asnegotiating ~~well~~in asgood ~~strong~~faith ~~Core~~with ~~Brand~~Campbell ~~revenue~~to ~~growth~~make such revisions to the Merger Agreement in response to such Superior Proposal. If our ~~legacy~~Board ~~Snyder'~~of Directors changes its recommendation that the Company’s~~-Lance~~ ~~business~~shareholders approve the Merger Agreement and the Merger, ~~despite~~Campbell ~~headwinds~~may ~~coming~~terminate the Merger Agreement. In addition, prior to obtaining such shareholder approval, the Company may terminate the Merger Agreement to enter into ~~2016~~a ~~due~~definitive agreement providing for a Superior Proposal, subject to: payment of the termination fee described below and only following compliance with specified notice and other conditions set forth in the Merger Agreement, including giving Campbell the opportunity to propose changes to the Merger Agreement so that any such proposal would cease to constitute a Superior Proposal.

•The ~~Declines~~Merger ~~related~~Agreement requires the Company and Campbell to ~~strategic~~use ~~changes~~reasonable atbest ~~our~~efforts ~~largest~~to ~~customer~~take ~~which~~all ~~impacted~~actions ~~space,~~necessary ~~displays~~under ~~and~~applicable ~~store~~law ~~inventory~~to ~~levels~~consummate ~~for~~the transactions contemplated by the Merger Agreement. The Merger Agreement contains certain ~~branded~~termination ~~products;~~rights for each of the Company and Campbell, including the right of each party to terminate the Merger Agreement if the Merger has not been consummated by the “end date” of September 18, 2018.

•The ~~Overall~~Merger ~~slow~~Agreement ~~growth~~provides for the payment by the Company to Campbell of a termination fee in the ~~snack~~amount ~~food~~of ~~industry~~$149 million in the case of a termination of the Merger Agreement under certain circumstances described in the Merger Agreement, including if: (i) (a) the Merger Agreement is terminated by Campbell or the Company because the Merger is not consummated by the end date or the Company’s shareholders do not approve the Merger Agreement, or by Campbell because of a breach of a representation, warranty or covenant of the Company that would cause the related closing condition to be incapable of being satisfied or cured by the end date or, if curable, is not cured by the Company by the earlier of 30 days after receipt of written notice of such breach and three business days prior to the end date, (b) any person publicly discloses a bona fide Acquisition Proposal, which ~~led~~Acquisition Proposal had not been publicly withdrawn prior to ~~declines~~the inspecial ~~revenue~~meeting ~~from~~of ~~partner~~the ~~brand~~Company’s ~~products~~shareholders, and ~~certain~~(c) ~~branded~~within ~~products~~12 months after such termination the Company enters into a definitive agreement with respect to any Acquisition Proposal, (ii) our Board of Directors changes its recommendation or (iii) the Company enters into definitive transaction documentation providing for a Superior Proposal.

~~Our~~Campbell ~~2016~~will ~~results~~be ~~were~~required ~~also~~to ~~impacted~~pay the Company a termination fee of $198.6 million in the event the Merger Agreement is terminated by the ~~following:~~Company, subject to certain limitations set forth in the Merger Agreement, if (i) there has been a breach of a representation, warranty or covenant of Campbell or Merger Sub that would cause the related closing condition to be incapable of being satisfied or cured by the end date or, if curable, is not cured by Campbell or Merger Sub by the earlier of 30 days after receipt of written notice of such breach and three business days prior to the end date, or (ii) the conditions to Campbell and Merger Sub’s obligations to consummate the closing have been satisfied or waived (other than those conditions that by their terms are to be satisfied by actions taken at the closing; provided that such conditions are then capable of being satisfied), Campbell has failed to consummate the Merger within two business days of the date the closing should have occurred and the Company has notified Campbell in writing that all of the conditions to closing have been satisfied (or waived) and it intends to terminate the Merger Agreement if Campbell and Merger Sub fail to consummate the transactions contemplated thereby within two business days.

• Transaction and integration related expenses - We incurred $66.3 million in transaction and integration related expenses in selling, general and administrative expense related to the acquisition of Diamond Foods during 2016, compared to $7.7 million in 2015.24

• Inventory step-up - As a result of the acquisition of Diamond Foods, we were required to step-up the value of the acquired inventory to fair value. This resulted in $11.3 million in additional cost of sales during the year, or a 0.5% impact on gross margin.

• Amortization expense - We acquired $355.3 million of customer relationships intangibles in the Diamond Foods acquisition. Although $19.9 million of this balance was disposed of in the Diamond of California divestiture, we recognized in continuing operations $14.0 million of incremental amortization expense in 2016, compared to 2015.

• Impairment charges - During 2016, we made the decision to move the production of certain products to improve operational efficiency. As a result, we recognized a total of $3.7 million of fixed asset impairment charges in 2016.

• Incentive compensation expense - Excluding accelerated stock-based compensation expense associated with the Diamond Foods transaction and integration, we incurred 0.3% of incremental expense as a percentage of net revenue in 2016, compared to 2015, primarily due to lower attainment of incentive targets in 2015.

• Promotional spending - We increased promotional spending as a percentage of revenue during 2016 for our legacy Snyder's-Lance Core brands, which resulted in approximately $27 million of additional promotional expense compared to 2015, or 1.3% lower gross margin compared to 2015.

• Interest expense - In order to complete the acquisition of Diamond Foods, we borrowed $1.13 billion in long-term debt, which significantly increased our outstanding debt throughout the year and resulted in $21.8 million in incremental interest expense in 2016, compared to 2015.

In spite of these challenges in 2016, we were able grow market share in all of our legacy Snyder's-Lance Core brands. A discussion of the trends for each of our Core brands is included below:

• Despite a slight revenue decline from Snyder's of Hanover® in 2016, compared to 2015, we were able to undertake a renovation of the brand during 2016, including television advertising, digital media, as well as aggressive coupon programs. Our commitment to the brand enabled Snyder’s of Hanover® to return to revenue growth in the fourth quarter of 2016, continue to grow market share during the year and maintain a substantial lead over our closest competitor in the category.

• Net revenue from our Lance® sandwich crackers increased in 2016, compared to the prior year primarily due to distribution gains in the club channel. The Lance® sandwich cracker brand also gained market share throughout the year.

• Snack Factory® Pretzel Crisps® experienced mid-single-digit revenue growth as well as market share growth in the deli snacks category in 2016, primarily through expanded distribution in the grocery channel.

• We continued to grow sales with existing customers as well as expand the distribution of our Cape Cod® kettle cooked chips in 2016, which resulted in mid-single-digit revenue growth compared to 2015 and increased market share for the Cape Cod® brand in a growing kettle chip category.

• Late July® continued to expand distribution and gain market share in the grocery and natural channels, leading to double-digit revenue growth in 2016.

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•The ~~For~~Merger Agreement has been approved by the ~~acquired~~boards ~~Diamond~~of ~~Foods~~directors ~~brands,~~of ~~Kettle~~each ~~Brand®~~of the Company and ~~Emerald®~~Campbell. ~~grew~~The ~~market~~obligations ~~share~~of the parties to consummate the Merger are subject to customary closing conditions, ~~while~~including, ~~Pop~~among ~~Secret®~~others: ~~experienced~~approval aof ~~slight~~the ~~reduction~~Merger Agreement and Merger by holders of 75% of the outstanding shares of the our common stock; the accuracy of the representations and warranties of each party (subject to certain exceptions as set forth in ~~market~~the ~~share~~Merger Agreement); each of the parties having performed in all material respects all of their respective obligations under the Merger Agreement; and the absence of any injunctions or other legal restraints.

AsOn weDecember 18, ~~move~~2017, the Warehime Holders entered into ~~2017,~~a wevoting ~~plan~~agreement with Campbell, pursuant to ~~substantially~~which ~~complete~~the Warehime Holders agreed, among other things, to vote the ~~integration~~shares of ~~Diamond~~Company ~~Foods~~common ~~and~~stock ~~continue~~over towhich ~~grow~~they ~~our~~have ~~business~~voting ~~both~~power ~~domestically~~in ~~and~~favor ~~abroad~~of asthe weapproval ~~focus~~of onthe ~~quality,~~Merger ~~innovation~~Agreement and ~~expanded~~the ~~distribution~~transactions ~~while~~contemplated ~~"changing~~thereby, including the ~~way~~Merger. As of February 16, 2018, the ~~world~~record ~~snacks~~date ~~with~~for ~~better~~the ~~ingredients~~special meeting of our shareholders, ~~quality~~the ~~and~~Warehime ~~taste~~Holders owned 12,851,757 shares, or approximately 13.~~" Some~~1% ~~items~~of tothe ~~note~~shares ~~for~~of our ~~2017~~common ~~business~~stock ~~outlook~~outstanding ~~are~~and asentitled ~~follows:~~to vote at the special meeting.

•Certain Weterms ~~expect~~of tothe ~~continue~~Merger toAgreement ~~make~~and ~~investments~~Voting inAgreement ~~marketing~~are summarized, and ~~advertising,~~the Merger Agreement and ~~promotional~~Voting ~~spending~~Agreement tohave ~~support~~been ~~our~~filed ~~Core~~as ~~brands~~exhibits ~~and~~to ~~our~~the ~~new~~Current ~~innovation~~Report inon Form 8-K filed by the ~~first~~Company ~~half~~on ofJanuary ~~2017~~18, 2018.

•See We“Item ~~expect~~1A. toRisk ~~continue~~Factors - Risks Relating to ~~introduce~~our ~~new~~Merger ~~innovation,~~with ~~including~~Campbell” ~~Cape~~for ~~Cod®~~a ~~Thins,~~description ~~Wholey~~of ~~Cheese!TM,~~certain ~~and~~risks ~~"better-for-you"~~related ~~multi-packs~~to the proposed Merger.

~~• We expect our weighted average diluted share count to be approximately 98 million shares for fiscal~~ 2017, ~~compared to 92.9 million shares for fiscal 2016, which will impact our diluted earnings per share.~~Performance

•Overall, ~~The~~net ~~first~~revenue ~~quarter~~increased ofin 2017 ~~will~~compared ~~include~~to 2016 due to the ~~full~~incremental ~~impact~~revenue associated with the contribution of the legacy Diamond Foods ~~acquisition,~~brands ~~which~~as ~~was~~we ~~acquired~~did onnot ~~February~~own ~~29,~~Diamond Foods for the first nine weeks of 2016 and growth in all our legacy Snyder's-Lance core brands. Our 2017 results were also impacted by the following:

23• Transaction and integration related expenses - We incurred $3.0 million in transaction and integration related expenses in selling, general and administrative expense related to the acquisition of Diamond Foods during 2017, compared to $66.3 million in 2016.


•	Goodwill and tradename impairments - We recognized $104.7 million in non-cash impairment charges to our U.K. goodwill and certain tradenames.


•	Transformation Plan charges and expenses - We incurred $29.6 million in charges related to the Transformation Plan.

•

Emerald move and required packaging changes - We incurred $9.1 million related to relocating production from Stockton, California, and associated professional fees due to our divestiture of the Diamond of California business. In addition, we incurred higher than normal manufacturing costs due to the inefficiencies caused by the ramping up of Emerald production capacity in our new Charlotte, North Carolina facility.


•	Merger Agreement with Campbell - We incurred $2.1 million in charges related to the anticipated acquisition by Campbell.


•	Service and distribution costs - Our service and distribution costs were higher than the prior year due to carrier capacity issues in the trucking industry and higher fuel costs as compared to 2016. These issues resulted in service and distribution costs being 0.9% of net revenue higher than the prior year.


•	Incentive compensation expense - As a result of our performance, our annual cash incentive award achieved lower attainment levels in the year, resulting in $15 million lower incentive compensation expense as compared to the prior year.


•	US Tax Reform - As a result of the 2017 Tax Act, we recorded a one-time benefit in income taxes of $162.4 million primarily from the revaluation of our deferred tax balances.

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In spite of the operational challenges in 2017, our Core brands had strong performance in the marketplace during the year. A discussion of the trends for each of our Core brands is included below:


•	Our Snyder's of Hanover^® products improved its substantial lead over our closest competitor in the category during the year. The pretzel category improved slightly throughout the year and our growth outpaced the category.


•	Our Lance^® branded sandwich crackers also gained market share throughout 2017 and increased its substantial market share leadership position. The sandwich crackers category as a whole was flat during the year as our growth was offset by declines from other competitors.


•	Combined, our Kettle Brand^®and Cape Cod^® branded chips hold a dominant share of the kettle chips market. Both brands grew in terms of dollars and market share in a category that declined during the year.


•	During 2017, Snack Factory^® Pretzel Crisps^® became the market leader in deli snacks. In a growing category, our products outpaced the category to take the number one position.


•	Our Pop Secret^® branded microwave popcorn faced a challenging year in a declining category. While we maintained our position as the second largest microwave popcorn brand, our brands lost market share in the current year.


•	Our KETTLE Chips^® in the U.K. faced strong competitive and economic headwinds during the year as consumers preference shifted towards private label products. As a result, our branded products declined in market share.


•	Our operational challenges with our Emerald^® branded products lead to our inability to fulfill certain customer orders during the second half of the year. As a result, we lost sales and market share in a flat category.


•	The double-digit growth in our Late July^®products drove growth in the category. Our products gained market share as our growth outpaced the category growth during the year.

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Results of Operations

Year Ended December 3130, ~~2016~~2017 Compared to Year Ended ~~January~~December 231, 2016

(in millions)	~~2016~~2017					~~2015~~2016					Favorable/(Unfavorable)Variance
Net revenue	$	2,~~109~~226.28		100.0	%	$	12,~~656~~109.42		100.0	%	$	~~452~~117.86		275.36	%
Cost of sales	1,~~345~~426.46			6364.81	%	1,~~077~~345.14			6563.08	%	(~~268~~81.32		)	(246.90	)%
Gross profit	~~763~~800.82			3635.29	%	~~579~~763.38			3536.02	%	~~184~~36.54			314.8	%
Selling, general and administrative	594.0			28.2	%	464.5			28.0	%	(129.5		)	(27.9	)%
Selling, general and administrative expenses	643.9			28.9	%	594.0			28.2	%	(49.9		)	(8.4	)%
Transaction and integration related expenses	~~66.~~3.0			30.1	%	766.73			03.51	%	~~(58~~63.63		)	~~(761~~95.05	)%
Settlement of certain litigation	—			—	%	5.7			0.3	%	5.7			100.0	%
Impairment charges	114.8			5.2	%	4.5			0.2	%	(110.3		)	(2,451.1	)%
Impairment charges	4.5			0.2	%	12.0			0.7	%	7.5			62.5	%
Other operating (income), net	—			—	%	(5.6		)	(0.3	)%	(5.6		)	100.0	%
Other income, net	(5.5		)	(0.3	)%	(1.1		)	—	%	4.4			400.0	%
Operating income	38.5			1.7	%	104.6			5.0	%	(66.1		)	(63.2	)%
Income before interest and income taxes	104.5			5.0	%	90.5			5.5	%	14.0			15.5	%
Other (income)/expense, net	(1.5		)	(0.1	)%	0.1			—	%	1.6			nm
Loss on early extinguishment of debt	4.7			0.2	%	—			—	%	(4.7		)	(100.0	)%
Income before interest and income taxes	40.0			1.8	%	104.5			5.0	%	(64.5		)	(61.7	)%
Interest expense, net	32.7			1.6	%	10.9			0.7	%	(21.8		)	(200.0	)%
Loss on early extinguishment of debt	—			—	%	4.7			0.2	%	4.7			100.0	%
Income tax expense	25.3			1.2	%	28.9			1.7	%	3.6			12.5	%
Interest expense, net	38.8			1.8	%	32.7			1.6	%	(6.1		)	(18.7	)%
Income from continuing operations	41.8			2.0	%	50.7			3.1	%	(8.9		)	(17.6	)%
Income tax (benefit)/expense	(146.2		)	(6.6	)%	25.3			1.2	%	171.5			nm
Loss from discontinued operations, net of income tax	(27.1		)	(1.3	)%	—			—	%	(27.1		)	(100.0	)%
Income from continuing operations	147.4			6.6	%	41.8			2.0	%	105.6			252.6	%
Net income	$	14.7		0.7	%	$	50.7		3.1	%	$	(36.0	)	(71.0	)%
Income/(loss) from discontinued operations, net of income tax	1.9			0.1	%	(27.1		)	(1.3	)%	29.0			nm
Net income	$	149.3		6.7	%	$	14.7		0.7	%	$	134.6		915.6	%

nm = not meaningful

Net Revenue

Net revenue by product category was as follows:

(in millions)	~~2016~~2017				~~2015~~2016				Favorable/(Unfavorable)Variance
Branded	$	~~1,638.3~~	~~77.7~~	%	$	~~1,190.2~~	~~71.9~~	%	$	~~448.1~~		~~37.6~~	%
Partner brand	300.4		14.2	%	300.5		18.1	%	(0.1		)	—	%
Core brand	$	1,613.7	72.5	%	$	1,478.6	70.1	%	$	135.1		9.1	%
Other	170.5		8.1	%	165.7		10.0	%	4.8			2.9	%
Allied brand	163.4		7.3	%	159.7		7.6	%	$	3.7		2.3	%
Net revenue	$	2,109.2	100.0	%	$	1,656.4	100.0	%	$	452.8		27.3	%
Total Branded	1,777.1		79.8	%	1,638.3		77.7	%	$	138.8		8.5	%
Partner brand	291.6		13.1	%	300.4		14.2	%	(8.8		)	(2.9	)%
Other	158.1		7.1	%	170.5		8.1	%	(12.4		)	(7.3	)%
Net revenue	$	2,226.8	100.0	%	$	2,109.2	100.0	%	$	117.6		5.6	%

~~Prior~~Net ~~year~~revenue ~~Partner~~increased ~~brand~~$117.6 ~~revenues~~million, ~~from~~or ~~the~~5.6%, ~~sale~~in of2017, ~~Kettle~~compared ~~Brand®~~to ~~potato~~2016, ~~chips~~primarily ~~are~~due ~~now~~to ~~classified~~increased asrevenue ~~Branded~~associated ~~revenues~~with asthe acontribution ~~result~~ of ~~the~~ Diamond Foods ~~acquisition~~. ~~For~~Approximately ~~2015,~~3% weof ~~have~~the ~~reclassified~~revenue ~~$34.8~~increase ~~million~~relates ofto ~~Partner~~the ~~brand~~incremental revenue ~~associated~~from ~~with~~the ~~Kettle~~acquisition ~~Brand®~~of ~~potato~~Diamond ~~chips~~Foods togiven ~~Branded~~that ~~revenue~~we todid benot ~~consistent~~own ~~with~~Diamond ~~current~~Foods ~~year~~for ~~presentation.~~the first nine weeks of 2016.

~~Net~~Our core brand net revenue increased $~~452~~135.81 million, or 279.31%, ~~in 2016~~ compared to ~~2015,~~2016. ~~primarily~~The ~~due~~incremental ~~to increased~~ revenue ~~associated~~from ~~with~~ the ~~contribution~~first nine weeks of ~~Diamond~~2017 ~~Foods. Excluding~~from the ~~revenue~~acquired ~~increase from~~ Diamond Foods, ~~overall~~core ~~net~~brands ~~revenue~~accounted ~~increased~~approximately ~~0.6~~5% asof ~~increased~~the ~~Branded~~increase. The ~~revenue~~legacy ~~was~~Snyder's-Lance ~~partially~~brands ~~offset~~growth bywas adriven ~~decrease~~by in the ~~Other~~following: ~~revenue category.~~

24• Snack Factory® and Late July® brands have experienced significant growth and strong market share gains in the current year due to expanded distribution and increased volumes across our sales channels.


•	Snyder's of Hanover^® and Cape Cod^® brands were both up mid-single digits, driven by new product introductions and increased distribution.

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~~The~~• ~~following~~Lance® ~~table~~branded ~~reflects~~products ~~revenue~~are byup ~~product~~mid-single ~~category~~digits ~~adjusted~~with ~~for~~volume ~~incremental~~increases ~~revenue~~more ~~attributable~~than tooffsetting ~~Diamond~~slight ~~Foods~~distribution ~~and~~losses ~~compares~~during ~~net revenue excluding~~ the ~~Diamond Foods contribution for 2016 to net revenue for 2015:~~year.

(in millions)	2016 Net Revenue		Incremental Diamond Foods Net Revenue		2016 Net Revenue excluding Diamond Foods (1)		2015 Net Revenue		Favorable/(Unfavorable)Variance
Branded	$	1,638.3	$	430.2	$	1,208.1	$	1,190.2	$	17.9		1.5	%
Partner brand	300.4		—		300.4		300.5		(0.1		)	—	%
Other	170.5		13.3		157.2		165.7		(8.5		)	(5.1	)%
Net revenue	$	2,109.2	$	443.5	$	1,665.7	$	1,656.4	$	9.3		0.6	%

For the legacy Diamond Foods brands, all brands were up year-over-year compared to 2016, due to the incremental revenue from the first nine weeks of the year. However, the incremental revenue was partially offset by decreases in revenue in comparable periods due to the following:

~~(1)~~• ~~The~~Pop ~~non-GAAP~~Secret® ~~measure~~branded ~~and~~products ~~related~~experienced ~~comparisons~~volume indeclines ~~the~~due ~~table~~changing ~~above~~consumer ~~should~~preferences ~~be considered in addition to, not as a substitute for, our net revenue disclosure, as well as other measures of financial performance reported in accordance with GAAP,~~ and ~~may~~less ~~not~~effective bepromotional ~~comparable~~spending towhich ~~similarly~~more ~~titled~~than ~~measures~~offset ~~used~~slight bydistribution ~~other~~gains ~~companies.~~during ~~Our management believes~~ the ~~presentation of 2016 Net Revenue excluding Diamond Foods is useful for providing increased transparency and assisting investors in understanding our ongoing operating performance~~year.

~~Branded~~• ~~net~~Emerald® ~~revenue~~branded ~~increased~~product ~~$448.1 million, or 37.6%, compared to 2015, primarily due to incremental~~ revenue ~~from Diamond Foods. Branded net revenue, excluding Diamond Foods,~~ was upnegatively ~~$17.9 million~~impacted, orparticularly ~~1.5%,~~in ~~compared~~the tosecond ~~2015. Overall~~half ~~Branded volume increased approximately 5% during 2016 and all~~ of ~~our Core brands increased market share in~~ the ~~IRI~~year, ~~covered~~as ~~channels. The~~we ~~volume~~were ~~increase~~unable ~~was~~to ~~partially~~meet ~~offset~~customer bydemand ~~lower net price realization~~ due to ~~additional~~the ~~investments~~transition inof ~~promotional~~production ~~spending necessary~~ to ~~drive sales in a highly competitive environment. Net revenue from~~ our ~~legacy Core brands increased by more than 2% as 3-5% growth in Lance®~~Charlotte, ~~Snack~~NC ~~Factory®~~facility. ~~Pretzel~~These ~~Crisps®,~~production ~~and~~shortfalls ~~Cape~~were ~~Cod®,~~substantially ~~and~~resolved ~~greater than 10% growth in Late July® was partially offset~~ by ~~a slight decline in net revenue from Snyder's of Hanover®. However, Snyder's of Hanover® net revenue showed marked improvement in~~ the ~~second~~end ~~half~~ of the year ~~due to the brand renovation efforts undertaken in the first half of the year, including the successful Pretzels Baby® marketing and advertising campaign~~.

~~Partner~~• ~~brand~~Kettle ~~net~~Brand® ~~revenue~~chips ~~declined slightly~~ in ~~2016~~the ~~compared~~US toand ~~2015~~KETTLE asChips® ~~volume~~in ~~declines~~the ~~for~~U.K. ~~certain~~had ~~Partner~~slight ~~brand~~volume ~~products~~declines ~~were~~as ~~substantially~~a ~~offset~~result byof ~~volume~~category ~~increases~~softness inand ~~other~~competitive ~~Partner brands~~challenges.

~~Other~~Allied branded products net revenue, ~~excluding~~increased ~~Diamond Foods, decreased~~ $83.57 million, or 52.13%, ~~due~~compared to 2016. This increase is primarily due to our acquisition of the ~~planned~~remaining ~~exit~~74% ofinterest ~~certain~~in ~~contract~~Metcalfe ~~manufacturing~~on ~~agreements~~September 1, as2016. ~~well~~The asincrease ~~increased~~from ~~Branded~~this ~~production~~incremental atrevenue ~~certain~~was ~~manufacturing~~partially ~~facilities~~offset ~~which~~by ~~limited~~declines ~~the~~across ~~capacity~~many ~~for~~of ~~contract~~our ~~manufacturing~~Allied brands.

Partner brand net revenue decreased $8.8 million, or 2.9%, compared to 2016, primarily due to volume declines for certain partner brand products. Other net revenue decreased $12.4 million, or 7.3%, compared to 2016, due primarily to the planned exit of certain contract manufacturing agreements and the loss of certain contract manufactured products. We expect this trend to continue in the near term as our strategic priorities are focused on our branded products.

Gross Profit

Gross profit increased $~~184~~36.54 million, ~~and~~but 1decreased 0.23% as a percentage of net revenue compared to ~~2015~~2016. The dollar increase in gross ~~margin~~profit was due to increased sales volume primarily due to the acquisition of Diamond Foods. ~~The~~and ~~increase~~volume increases in ~~gross~~legacy ~~profit~~Snyder's-Lance asbranded arevenue. ~~percentage~~2017 ofgross ~~net~~profit ~~revenue~~margin ~~in 2016~~ was ~~due~~negatively toimpacted ~~lower~~by ~~input~~$7.2 ~~costs,~~million ~~increased~~of ~~productivity~~expense atrelated ~~our~~to ~~manufacturing~~the ~~facilities~~Transformation Plan, and a$6.7 ~~higher~~million ~~mix~~ of ~~Branded~~discrete ~~sales,~~expenses ~~which~~related ~~typically~~to ~~have~~relocating aproduction ~~higher~~from ~~gross~~Stockton, ~~margin~~California, ~~than~~due ~~Partner~~to ~~brand~~our ordivestiture ~~Other~~of ~~sales. These~~the ~~increases~~Diamond ~~were~~of ~~partially~~California ~~offset~~business, byand ~~increased~~higher ~~investment~~than innormal ~~promotional~~manufacturing ~~spending~~costs ~~compared~~due to ~~2015, to support~~ the ~~growth~~inefficiencies ofcaused ~~our~~by ~~Core brands, as well as~~ the ~~inventory~~ramping ~~step-~~up of ~~$11.3~~Emerald ~~million~~production ~~required~~capacity ~~for~~in ~~purchase~~our ~~accounting~~new ~~associated~~Charlotte, ~~with~~North ~~the~~Carolina ~~Diamond~~facility. ~~Foods~~In ~~acquisition. The~~addition, the increase in promotional spending as a percentage of revenue, ~~excluding Diamond Foods,~~ resulted in approximately ~~$27~~1.05% ~~million~~lower ofgross ~~additional~~profit ~~promotional~~margin ~~expense~~for 2017 compared to ~~2015,~~2016. orThese ~~approximately~~challenges 1were partially offset by manufacturing efficiencies across our production facilities and scrap reductions. Gross profit in 2016 was negatively impacted by an $11.3% ~~lower~~million ~~gross~~inventory ~~profit~~step-up asrecognized ain ~~percentage~~the ofprior ~~revenue~~year ~~for~~on ~~2016,~~inventory ~~compared~~acquired toin ~~2015~~the acquisition of Diamond Foods.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $~~129~~49.59 million in ~~2016~~2017, compared to ~~2015~~2016, and increased 0.27% as a percentage of net revenue. The increase in selling, general and administrative expenses was primarily due to additional expenses attributable to Diamond Foods and increases variable costs related to volume increases in legacy Snyder's-Lance branded revenue. ~~The~~ ~~increase~~In addition, in ~~selling~~2017, we incurred $13.5 million of expense related to the Transformation Plan, $2.3 million of expense related to costs associated with the Stockton TSA and associated professional fees due to our divestiture of the Diamond of California business, and $2.1 million in charges related to the anticipated acquisition by Campbell. In addition, we incurred $7.1 million of expenses related to the retirement of our former president and chief executive officer. This amount includes $3.7 million of retirement agreement expenses and $3.4 million of non-cash stock-based compensation expenses which resulted from the modification of certain non-vested awards previously granted to him. Selling, general and administrative expenses as a percentage of revenue ~~was~~were flat excluding the items above due to ~~increased~~higher ~~investments~~distribution inexpenses ~~marketing~~from ~~and~~carrier ~~advertising~~shortages toand ~~support~~rising ~~our~~fuel ~~Branded products~~costs, asoffset ~~well~~by aslower ~~higher~~ incentive compensation ~~expense~~expenses due to ~~improved~~lower ~~operating~~attainment ~~performance. These~~for ~~increases~~our ~~were~~performance-based ~~largely~~awards ~~offset~~and bylower ~~synergies~~salary ~~realized~~costs indue ~~conjunction~~to ~~with~~ the ~~integration~~reductions ofin ~~Diamond~~workforce ~~Foods~~ as ~~well~~a aspart ~~other~~of ~~margin~~the ~~enhancement~~Transformation ~~initiatives~~Plan.

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Transaction and Integration Related Expenses

We recognized $~~66.~~3.0 million in Diamond Foods transaction and integration related expenses during 2017, compared to $66.3 million in 2016. ~~These~~The costs incurred in 2017 included legal and other professional fees and idle facility lease costs. The 2016 expenses in continuing operations included $17.5 million of severance and retention benefits and $16.4 million of accelerated stock-based compensation, which related primarily to change in control provisions and severance agreements with Diamond Foods personnel. The remaining 2016 costs include investment banking fees as well as other professional fees and legal costs associated with the acquisition and integration of Diamond Foods. ~~We recognized $7.7 million of Diamond Foods related transaction expenses during 2015 for professional fees and legal costs associated with the acquisition.~~

~~Settlement of certain litigation~~28

~~During~~Table ~~2015,~~of we recognized $5.7 million in expense associated with settlements reached in our "all-natural" and IBO class action lawsuits. See Note 16 to the consolidated financial statements included in Item 8 for additional information related to these settlements. There were no significant litigation settlements in 2016.Contents

Impairment Charges

~~Impairment~~We ~~charges~~recognized of $4114.58 million ~~were~~in ~~recorded~~impairment charges during ~~2016~~2017, compared to $124.05 million during ~~2015~~2016. ~~During~~ ~~2016,~~Our we2017 ~~sold~~charges ~~the~~include ~~Diamond~~$46.3 ofmillion ~~California~~related ~~business which included certain tangible assets (see Note 3~~ to ~~the~~goodwill ~~consolidated financial statements included~~ in ~~Item~~our 8European ~~for~~reporting ~~further~~unit ~~information).~~and ~~In connection with this transaction, we recorded impairment of~~ $258.34 million ~~for~~related to certain ~~machinery~~of ~~and~~our ~~equipment~~trademarks. weFor ~~retained~~additional information, ~~but~~see no“Critical ~~longer~~Accounting ~~have~~Estimates” ~~the~~in ~~ability~~this todiscussion ~~use~~and analysis. WeThe ~~also~~total ~~incurred~~ impairment ~~charges~~charge ofalso includes $18.49 million ~~related to the discontinuation~~ of ~~manufacturing~~asset ~~certain~~impairment ~~products.~~expense ~~During~~as ~~2015,~~a weresult ~~made~~of ~~the~~our ~~decision~~Transformation toPlan. ~~move~~The ~~the~~remaining ~~production~~$1.2 million of ~~certain~~impairment ~~products~~charges ~~and~~in ~~provide~~2017 ~~additional~~are ~~packaging~~related ~~alternatives~~ to ~~improve~~manufacturing ~~operational~~assets ~~efficiency,~~that ~~which~~no ~~resulted~~longer inhad ~~fixed~~business ~~asset impairment charges of $11~~use.~~5 million in 2015.~~

During 2016, we recorded impairment of $2.3 million for certain machinery and equipment we retained after the sale of Diamond of California, but no longer had the ability to use. We also incurred impairment charges of $1.4 million related to the discontinuation of manufacturing certain products. In addition, in 2016, we recorded $0.8 million of impairments related to route businesses ~~compared to $0~~.~~5 million in 2015.~~

Other Operating Income, Net

WeOur ~~recognized~~ other operating income ofnetted ~~$5.5~~to ~~million~~zero in ~~2016~~2017 primarily due to anet gains on route businesses of $42.3 million ~~insurance~~offset ~~settlement~~by ~~related to~~ a ~~business~~loss ~~interruption~~of ~~claim~~sale ~~that~~of ~~resulted~~property ~~from~~and anequipment ~~unexpected~~of ~~production~~$1.4 ~~outage~~million inand ~~the~~an ~~fourth~~early ~~quarter~~termination of ~~2015.~~a ~~Other~~capital ~~income~~lease infee ~~2015~~ of $10.18 million ~~primarily consisted of $1~~.9 ~~million~~Net ~~in net~~ gains on the sale of route businesses in 2017 consisted of $9.4 million in gains, partially offset by $0.7.1 million ofin ~~expense~~losses. ~~associated~~The ~~with~~majority of the ~~derecognition~~route ofbusiness ~~our~~sales ~~cumulative~~in ~~translation~~2017 ~~adjustment~~were due to route reengineering projects that were initiated in order to maximize the ~~liquidation~~efficiency of ~~our~~route ~~Canadian~~territories ~~subsidiary~~for the IBOs.

~~During~~We ~~2016~~recognized $5.6 million of other operating income, wenet ~~also~~in ~~recognized~~2016 primarily due to a $14.3 million ininsurance ~~net~~settlement ~~gains~~related onto ~~the~~a ~~sale~~business ofinterruption ~~route~~claim ~~businesses.~~that ~~Net~~resulted ~~gains~~from onan unexpected production outage in the ~~sale~~fourth quarter of ~~route~~2015. ~~businesses~~In inaddition, during 2016, ~~consisted~~we ofalso recognized $51.53 million in net gains ~~and~~on ~~$4.2~~the ~~million~~sale inof ~~losses~~route businesses. ~~For~~Net ~~2015, net~~ gains on the sale of route businesses in 2016 consisted of $35.35 million in gains, ~~and~~partially offset by $1.4.2 million in losses. The majority of the route business sales in 2016 were due to route reengineering projects that were initiated in order to maximize the efficiency of route territories for the IBOs. The majority of the net gains on the sale of route business during 2015 were due to the decision to sell certain route businesses that were previously Company-owned as well as route reengineering projects.

~~Loss~~Other on(Income)/Expense, ~~Early Extinguishment of Debt~~Net

InWe ~~February~~recognized ofother ~~2016,~~income ~~using~~of ~~available~~$1.5 ~~borrowings~~million ~~from~~in ~~our~~2017 ~~existing~~primarily ~~credit~~due ~~facilities,~~to wethe ~~repaid~~proceeds ~~our~~from ~~$100~~a ~~million~~class ~~private~~action ~~placement~~insurance ~~senior~~settlement ~~notes,~~of ~~which~~$0.8 ~~were~~million ~~due~~and ~~in June 2017~~$0.6 ~~The~~million ~~total~~of ~~repayment~~net ~~was~~equity ~~approximately~~income ~~$106~~from ~~million,~~our ~~and~~interests ~~resulted~~ in aYellow ~~loss~~Chips onHolding ~~early~~B.V. ~~extinguishment~~and ofNatural ~~approximately~~Food ~~$4.7~~Works ~~million~~Group, LLC.

Interest Expense, Net

Interest expense increased $216.81 million during ~~2016~~2017 compared to ~~2015~~2016. The increase in net interest expense was the result of additional debt obtained to finance the acquisition of Diamond Foods and somewhat higher interest rates on outstanding debt.

Income Tax (Benefit) / Expense

The effective income tax rate ~~increased~~was a benefit of 11,567.5% in 2017, compared to expense of 37.7% in 2016. ~~from~~In 362017, the effective income tax rate was favorably impacted by the enactment of the Tax Act, which included numerous changes to many aspects of U.3S. corporate income taxation by, among other things, lowering the corporate income tax rate from 35% into ~~2015~~21%, implementing a territorial tax system and imposing a one-time transition tax on deemed repatriated earning of foreign subsidiaries. ~~The~~As ~~increase~~a inresult, we have recognized a net tax benefit of $162.4 million for the provisional tax impacts related to the one-time transition tax and the revaluation of deferred tax balances for the year ended December 30, 2017. In 2016, the effective income tax rate is in ~~2016~~excess ~~was~~of the statutory rate primarily due to non-deductible Diamond Foods related transaction costs in 2016.

Income/(Loss) from Discontinued Operations, Net of Income Tax

~~Loss~~Income from discontinued operations, net of income tax, included in ~~2016~~2017 was primarily ~~due~~a toresult ~~the~~of ~~loss on~~ the ~~sale~~pretax out-of-period ~~Diamond~~adjustment of ~~California,~~$2.6 ~~partially~~million ~~offset~~for ~~by income generated by discontinued operations prior to~~ the ~~sale. See~~walnut ~~Note~~price 3liability toduring the ~~consolidated financial statements included in Item 8 for additional information related to this sale~~year. ~~There~~ ~~were no discontinued operations in 2015.~~

26Loss from discontinued operations, net of income tax, included in 2016 was primarily due to the loss on the sale of Diamond of California, partially offset by income generated by discontinued operations prior to the sale.

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Year Ended ~~January~~December 231, 2016 ~~(52 weeks)~~ Compared to Year Ended January 32, ~~2015 (53 weeks)~~2016

(in millions)	~~2015~~2016					~~2014~~2015					Favorable/(Unfavorable)Variance
Net revenue	$	12,~~656~~109.42		100.0	%	$	1,~~620~~656.94		100.0	%	$	35452.58		227.23	%
Cost of sales	1,~~077~~345.14			6563.08	%	1,~~042~~077.41			6465.30	%	(34268.73		)	(324.39	)%
Gross profit	~~579~~763.38			3536.02	%	~~578~~579.53			35.70	%	0184.85			031.18	%
Selling, general and administrative	464.5			28.0	%	478.5			29.5	%	14.0			2.9	%
Selling, general and administrative expenses	594.0			28.2	%	464.5			28.0	%	(129.5		)	(27.9	)%
Transaction-related expenses	7.7			0.5	%	—			—	%	(7.7		)	(100.0	)%
Transaction and integration related expenses	66.3			3.1	%	7.7			0.5	%	(58.6		)	(761.0	)%
Settlements of certain litigation	~~5.7~~—			~~0.3~~—	%	—5.7			—0.3	%	(5.7		)	(100.0	)%
Impairment charges	124.05			0.72	%	1312.0			0.87	%	17.05			762.75	%
Gain on the revaluation of prior equity investment	—			—	%	(16.6		)	(1.0	)%	(16.6		)	(100.0	)%
Other operating income, net	(5.6		)	(0.3	)%	(1.2		)	—	%	4.4			366.7	%
Other income, net	(1.1		)	—	%	(1.3		)	(0.1	)%	(0.2		)	(15.4	)%
Operating income	104.6			5.0	%	90.6			5.5	%	14.0			15.5	%
Income before interest and income taxes	90.5			5.5	%	104.9			6.5	%	(14.4		)	(13.7	)%
Other expense, net	0.1			—	%	0.1			—	%	—			—	%
Interest expense, net	10.9			0.7	%	13.4			0.8	%	2.5			18.7	%
Income before interest and income taxes	104.5			5.0	%	90.5			5.5	%	14.0			15.5	%
Income tax expense	28.9			1.7	%	32.3			2.0	%	3.4			10.5	%
Loss on early extinguishment of debt	4.7			0.2	%	—			—	%	(4.7		)	nm
Income from continuing operations	50.7			3.1	%	59.2			3.7	%	(8.5		)	(14.4	)%
Interest expense, net	32.7			1.6	%	10.9			0.7	%	(21.8		)	(200.0	)%
Income from discontinued operations, net of income tax	—			—	%	133.3			8.2	%	(133.3		)	(100.0	)%
Income tax expense	25.3			1.2	%	28.9			1.7	%	3.6			12.5	%
Net income	$	50.7		3.1	%	$	192.5		11.9	%	$	(141.8	)	(73.7	)%
Income from continuing operations	41.8			2.0	%	50.7			3.1	%	(8.9		)	(17.6	)%
Loss from discontinued operations, net of income tax	(27.1		)	(1.3	)%	—			—	%	(27.1		)	nm
Net income	$	14.7		0.7	%	$	50.7		3.1	%	$	(36.0	)	(71.0	)%

nm = not meaningful

Net Revenue

Net revenue by product category was as follows:

(in millions)	~~2015~~2016				~~2014~~2015				Favorable/(Unfavorable)Variance
Branded	$	~~1,190.2~~	~~71.9~~	%	$	~~1,154.7~~	~~71.2~~	%	$	~~35.5~~		~~3.1~~	%
Partner brand	300.5		18.1	%	306.2		18.9	%	(5.7		)	(1.9	)%
Core brand	$	1,478.6	70.1	%	$	1,032.5	62.3	%	$	446.1		43.2	%
Other	165.7		10.0	%	160.0		9.9	%	5.7			3.6	%
Allied brand	159.7		7.6	%	157.7		9.6	%	2.0			1.3	%
Net revenue	$	1,656.4	100.0	%	$	1,620.9	100.0	%	$	35.5		2.2	%
Total Branded	1,638.3		77.7	%	1,190.2		71.9	%	448.1			37.6	%
Partner brand	300.4		14.2	%	300.5		18.1	%	(0.1		)	—	%
Other	170.5		8.1	%	165.7		10.0	%	4.8			2.9	%
Net revenue	$	2,109.2	100.0	%	$	1,656.4	100.0	%	$	452.8		27.3	%

~~Previous~~Net ~~Partner~~revenue ~~brand~~increased ~~revenues~~$452.8 ~~from~~million, ~~the~~or ~~sale~~27.3%, ofin ~~Kettle~~2016 ~~Brand®~~compared ~~potato~~to ~~chips~~2015, ~~are~~primarily ~~now~~due ~~classified~~to asthe ~~Branded~~increased ~~revenues~~revenue asassociated awith ~~result~~the contribution of ~~the~~ Diamond Foods ~~acquisition~~. ~~For~~Excluding ~~2015~~the ~~and~~revenue ~~2014,~~increase wefrom ~~have~~Diamond ~~reclassified~~Foods, ~~$34.8~~overall ~~million~~net ~~and~~revenue ~~$33~~increased 0.86%, ~~million~~as ofincreased ~~Partner~~Total ~~brand~~Branded revenue ~~associated~~was ~~with~~partially ~~Kettle~~offset ~~Brand®~~by ~~potato~~a ~~chips~~decrease toin ~~Branded revenue to be consistent with~~ the ~~2016~~Other ~~presentation~~revenue category.

~~Net revenue increased $35.5 million, or 2.2%, in 2015 compared to 2014, primarily due to acquisitions, which was partially offset by the additional week of revenue recognized in 2014.~~ 30

Table of Contents

The following table reflects revenue by product category adjusted for ~~amounts~~incremental revenue attributable to ~~the~~Diamond ~~53rd~~Foods ~~week~~ and compares ~~2015~~ net revenue excluding the Diamond Foods contribution for 2016 to ~~2014~~net ~~Adjusted~~revenue ~~Net~~for ~~Revenue~~2015:

(in millions)	~~2015~~2016 Net Revenue		~~2014~~Incremental Diamond Foods Net Revenue		~~Estimated~~2016 ~~53rd~~Net ~~week~~Revenue excluding Diamond Foods (1)		~~2014~~2015 ~~Adjusted~~ Net Revenue ~~(1)~~		Favorable/(Unfavorable)Variance
Branded	$	~~1,190.2~~	$	~~1,154.7~~	$	~~21.2~~	$	~~1,133.5~~	$	~~56.7~~		~~5.0~~	%
Partner brand	300.5		306.2		5.9		300.3		0.2			0.1	%
Core brand	$	1,478.6	$	430.2	$	1,048.4	$	1,032.5	$	15.9		1.5	%
Other	165.7		160.0		3.3		156.7		9.0			5.7	%
Allied brand	159.7		—		159.7		157.7		$	2.0		1.3	%
Net revenue	$	1,656.4	$	1,620.9	$	30.4	$	1,590.5	$	65.9		4.1	%
Total Branded	$	1,638.3	$	430.2	$	1,208.1	$	1,190.2	$	17.9		1.5	%
Partner brand	300.4		—		300.4		300.5		(0.1		)	—	%
Other	170.5		13.3		157.2		165.7		(8.5		)	(5.1	)%
Net revenue	$	2,109.2	$	443.5	$	1,665.7	$	1,656.4	$	9.3		0.6	%

(1) The non-GAAP ~~measures~~measure and related comparisons in the table above should be considered in addition to, not as a substitute for, our net revenue disclosure, as well as other measures of financial performance reported in accordance with GAAP, and may not be comparable to similarly titled measures used by other companies. Our management believes the presentation of ~~2014~~2016 ~~Adjusted~~ Net Revenue excluding Diamond Foods is useful for providing increased transparency and assisting investors in understanding ~~the~~our ongoing operating performance ~~of our Company~~.

~~Branded~~Core brand net revenue increased $35446.51 million, or 343.12%, compared to ~~2014~~2015, primarily due to incremental ~~Late July®~~ revenue ~~resulting~~ from ~~the~~Diamond ~~consolidation~~Foods. ofCore ~~Late~~brand ~~July®~~net ~~beginning~~revenue, atexcluding ~~the~~Diamond ~~end of October 2014~~Foods, aswas ~~well~~up as$15.9 ~~revenue~~million, ~~growth~~or in1.5% ~~our~~compared ~~other~~to ~~Core brands~~2015. ~~Revenue~~Core ~~from~~ branded ~~products~~volume increased by approximately ~~$56.7 million, or 5.0~~6% inand ~~2015,~~allied ~~when~~branded ~~excluding~~volume ~~our~~decreased ~~estimate~~by ofapproximately ~~the~~1% ~~53rd week~~ in ~~2014~~2016. ~~Revenue~~All ~~growth~~of ~~from~~ our Core brands, ~~excluding~~increased ~~the~~market ~~impact~~share ofin ~~Late~~the ~~July®,~~IRI ~~was~~covered ~~led~~channels. byThe ~~double~~volume ~~digit~~increase ~~revenue~~was ~~increases~~partially inoffset ~~Cape~~by ~~Cod®~~lower ~~branded~~net ~~products~~price asrealization ~~well~~due asto ~~revenue~~additional ~~increases~~investments in ~~our~~promotional ~~Snack~~spending ~~Factory®~~necessary ~~Pretzel~~to ~~Crisps®~~drive ~~and~~sales ~~Lance®~~in ~~branded~~a ~~products.~~highly ~~Our~~competitive ~~Cape~~environment. ~~Cod®~~Net ~~kettle~~revenue ~~cooked~~from ~~chips~~our ~~experienced~~legacy ~~strong~~Core ~~volume~~brands ~~growth and~~ increased ~~market~~by ~~share~~more ~~when~~than ~~compared~~2% toas ~~2014,~~3-5% ~~due to~~ growth in ~~core~~Lance®, ~~markets and continued expanded distribution. We also continued to experience revenue and market share growth in~~ Snack Factory® Pretzel Crisps®~~. Our~~, ~~Lance®~~and ~~branded~~Cape ~~products performed well compared to 2014~~Cod®, ~~with increased revenue~~ and ~~market~~greater ~~share~~than ~~driven~~10% ingrowth ~~part by distribution gains~~ in ~~the~~Late ~~second~~July® ~~half~~was ~~of the year. These revenue increases were~~ partially offset by a slight ~~revenue~~decline ~~declines~~in ~~from~~net ~~our~~revenue from Snyder’'s of Hanover®. ~~branded products in 2015~~However, ~~compared~~Snyder's ~~to 2014, after excluding the impact~~ of ~~the~~Hanover® ~~53rd~~net ~~week~~revenue inshowed ~~2014. The~~marked ~~volume~~improvement ~~decline was primarily due to overall softness~~ in the ~~pretzel category in the~~ second half of ~~2015.~~the ~~Revenue~~year ~~from~~due ~~our~~to ~~Allied~~the ~~branded~~brand ~~products~~renovation ~~was~~efforts ~~down~~undertaken in ~~2015~~the ~~compared~~first tohalf ~~2014,~~of ~~after adjusting for~~ the ~~53rd week~~year, ~~primarily~~including ~~due~~the toPretzels ~~volume~~Baby® ~~declines~~marketing inand ~~certain~~advertising ~~salty product lines~~campaign.

~~Partner~~Allied brand net revenue increased 02.1%0 inmillion, ~~2015~~or 1.3% compared to ~~2014 after adjusting for the 53rd week. During the second half of~~ 2015, weprimarily ~~experienced~~due ~~volume~~to ~~declines~~our asacquisition ~~a result~~ of ~~lower~~the ~~promotional~~remaining ~~activities~~74% ~~for~~interest ~~many~~ of the ~~Partner~~Metcalfe ~~brands~~business ~~that~~on weSeptember ~~sell~~1, ~~through our DSD distribution network~~2016.

~~Other~~Partner ~~revenue,~~brand ~~which~~net ~~primarily consists of~~ revenue ~~from~~declined ~~contract~~slightly ~~manufactured~~in ~~products,~~2016 ~~increased~~compared ~~$5.7~~to ~~million, or 3.6%, from~~ 2015 toas ~~2016,~~volume ~~and~~declines ~~was up $9.0 million, or 5.7%, after adjusting~~ for ~~the~~certain ~~53rd~~Partner ~~week~~brand inproducts ~~2014.~~were ~~The~~substantially ~~increase was primarily due to a full year of revenue from Baptista's, which was acquired in June of 2014. However, this increase was partially~~ offset by avolume ~~reduction~~increases in ~~orders~~other ~~from~~Partner ~~Shearer's Foods LLC as part of our manufacturing and supply agreement, as well as lost revenue due to a power outage at one of our major manufacturing facilities~~brands.

Other net revenue, excluding Diamond Foods, decreased $8.5 million, or 5.1%, due primarily to the planned exit of certain contract manufacturing agreements, as well as increased Branded production at certain manufacturing facilities which limited the capacity for contract manufacturing.

Gross Profit

Gross profit increased $0184.85 million, ~~but~~and ~~declined 0~~1.72% as a percentage of net revenue compared to ~~2014~~2015. The dollar increase in gross margin was due to increased sales volume ~~compared~~primarily due to the ~~prior~~acquisition ~~year~~of Diamond Foods. The ~~decline~~increase in gross profit as a percentage of net revenue in 2016 was ~~primarily~~due ~~the~~to ~~result~~lower input costs, increased productivity at our manufacturing facilities, and a higher mix of Branded sales, which typically have a higher gross margin than Partner brand or Other sales. These increases were partially offset by increased investment in promotional spending compared to 2015, to support the growth of our ~~new~~Core ~~product~~brands, ~~offerings~~as ~~and~~well ~~generate~~as ~~volume~~the inventory step-up of $11.3 million required for ~~our~~purchase ~~Branded~~accounting ~~products~~associated with the Diamond Foods acquisition. The increase in promotional spending as a percentage of revenue, ~~during~~excluding ~~2015~~Diamond Foods, resulted in approximately $1327.50 million of additional promotional expense compared to ~~2014~~2015, or approximately 01.83% lower gross profit as a percentage of revenue for ~~2015,~~2016 compared to ~~2014~~2015.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ~~decreased~~increased $14129.05 million in ~~2015~~2016, compared to ~~2014~~2015, and ~~decreased~~increased 10.52% as a percentage of net revenue. The ~~decrease~~increase in selling, general and administrative expenses ~~compared to 2014~~ was primarily due to ~~cost~~additional ~~reduction~~expenses ~~efforts~~attributable ~~associated~~to ~~with~~Diamond ~~our~~Foods. ~~margin~~The ~~improvement~~increase in selling, general and ~~restructuring~~administrative ~~plan,~~expenses ~~declines~~as a percentage of revenue was due to increased investments in ~~fuel~~marketing and ~~freight~~advertising ~~costs~~to support our Branded products, ~~lower~~as well as higher incentive compensation expense ~~and~~due ~~less~~to ~~marketing~~improved ~~and~~operating ~~advertising costs~~performance. These ~~reductions~~increases were ~~partially~~largely offset by asynergies ~~full~~realized ~~year~~in conjunction with the integration of ~~Baptista's~~Diamond ~~and~~Foods ~~Late~~as ~~July~~well ~~expense~~as other margin enhancement initiatives.

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Transaction-related Expenses

We recognized $766.73 million ofin Diamond Foods ~~related~~ transaction and integration related expenses during ~~2015~~2016. These expenses in continuing operations included $17.5 million of severance and retention benefits and $16.4 million of accelerated stock-based compensation, which related primarily to change in control provisions and severance agreements with Diamond Foods personnel. The remaining costs include investment banking fees as well as other professional fees and legal costs associated with the acquisition and integration of Diamond Foods. ~~There~~ ~~were~~We norecognized $7.7 million of Diamond Foods related transaction expenses ~~recognized~~during in2015 ~~2014~~for professional fees and legal costs associated with the acquisition.

Settlement of Certain Litigation

During 2015, we recognized $5.7 million in expense associated with settlements reached in our "all-natural" and IBO class action lawsuits. ~~See~~ ~~Note 16 to the consolidated financial statements included in Item 8 for additional information related to these settlements.~~ There were no significant litigation settlements in ~~2014~~2016.

Impairment Charges

Impairment charges of $124.05 million were recorded during ~~2015~~2016, compared to $1312.0 million during ~~2014~~2015. During 2016, we sold the Diamond of California business which included certain tangible assets (see Note 4 to the consolidated financial statements included in Item 8 for further information). In connection with this transaction, we recorded impairment of $2.3 million for certain machinery and equipment we retained, but no longer have the ability to use. We also incurred impairment charges of $1.4 million related to the discontinuation of manufacturing certain products. During 2015, we made the decision to move the production of certain products and provide additional packaging alternatives to improve operational efficiency~~. As a result~~, wewhich ~~recognized~~resulted in fixed asset impairment charges of $11.5 million in 2015~~, compared to $5~~.7 ~~million in asset impairment charges in 2014.~~ In addition, in ~~2015~~2016, we recorded $0.58 million of impairments related to route businesses compared to $30.75 million in ~~2014. We also recorded $3.6 million in trademark impairments in 2014, while no trademark impairments were necessary in~~ 2015.

~~Gain~~Other onOperating ~~the~~Income, ~~Revaluation of Prior Equity Investment~~Net

~~During~~We ~~2014,~~recognized weother ~~recognized~~operating aincome of $165.6 million ~~gain~~in on2016 ~~the~~primarily ~~revaluation~~due ofto ~~our~~a ~~prior 18~~$4.7%3 ~~equity~~million ~~investment~~insurance settlement related to a business interruption claim that resulted from an unexpected production outage in ~~Late~~the ~~July.~~fourth ~~Because~~quarter of ~~our~~2015. ~~purchase~~In ofaddition, aduring ~~controlling~~2016, ~~interest~~we also recognized $1.3 million in ~~Late~~net ~~July,~~gains on the ~~equity~~sale of route businesses. Net gains on the ~~entire~~sale ~~entity~~of ~~was~~route ~~increased~~businesses toin ~~fair~~2016 ~~value,~~consisted ~~which~~of ~~resulted~~$5.5 million in agains, partially offset by $164.62 million ~~increase~~in losses. The majority of the route business sales in 2016 were due to route reengineering projects that were initiated in order to maximize the ~~value~~efficiency of ~~our~~route ~~prior~~territories ~~investment~~for the IBOs.

Other ~~Income~~operating income in 2015 of $1.3 million primarily consisted of $1.9 million in net gains on the sale of route businesses, ~~Net~~partially offset by loss on sale of fixed assets. For 2015, net gains on the sale of route businesses consisted of $3.3 million in gains, partially offset by $1.4 million in losses. The majority of the net gains on the sale of route business during 2015 were due to the decision to sell certain route businesses that were previously Company-owned as well as route reengineering projects.

~~Other~~Loss ~~income decreased from $1.3 million in 2014 to $1.1 million in 2015. Other income in 2015 of $1.1 million primarily consisted of $1.9 million in net gains~~ on ~~the~~Early ~~sale~~Extinguishment of route businesses, partially offset by $0.7 million of expense associated with the derecognition of our cumulative translation adjustment due to the liquidation of our Canadian subsidiary. Other income in 2014 principally consisted of $1.1 million in net gains on the sale of route businesses.Debt

~~Net~~In ~~gains~~February ~~on the sale~~ of ~~route~~2016, ~~businesses~~using inavailable ~~2015~~borrowings ~~consisted~~from ofour ~~$3.3~~existing ~~million~~credit ~~in gains and $1.4 million in losses. For 2014~~facilities, ~~net~~we ~~gains~~repaid onour ~~the sale of route businesses consisted of~~ $~~3.3~~100 million inprivate ~~gains~~placement ~~and~~senior ~~$2.2~~notes, ~~million~~which ~~in losses. The majority of the net gains on the sale of route business during 2015~~ were due ~~to the decision to sell certain route businesses that were previously Company-owned as well as route reengineering projects that were initiated~~ in ~~order~~June ~~to maximize the efficiency of route territories for the IBOs~~2017. The ~~majority~~total ofrepayment ~~the~~was ~~route~~approximately ~~business~~$106 ~~sales~~million, ~~activity~~and resulted in ~~2014~~a ~~was~~loss ~~due~~on toearly ~~the~~extinguishment ~~resale~~ of ~~routes~~$4.7 ~~purchased because of IBO defaults or route reengineering projects~~million.

Interest Expense, Net

Interest expense ~~decreased~~increased $221.58 million during ~~2015~~2016, compared to ~~2014~~2015. The ~~decrease~~increase ~~was due to lower debt levels~~ in ~~2015,~~net asinterest ~~well~~expense aswas athe ~~$0.8~~result ~~million write-off~~ of ~~previously~~additional ~~capitalized~~ debt ~~issuance~~obtained ~~costs~~to ~~that~~finance ~~occurred~~the inacquisition ~~2014~~of ~~due~~Diamond ~~to debt refinancing~~Foods.

Income Tax Expense

The effective income tax rate increased to 3637.37% in ~~2015~~2016 from 3536.3% in ~~2014~~2015. The increase in the effective income tax rate in ~~2015~~2016 was primarily due to non-deductible Diamond Foods related transaction costs in ~~late 2015~~2016.

~~Income~~Loss from Discontinued Operations, Net of Income Tax

~~Income~~Loss from discontinued operations, net of income tax, included in ~~2014~~2016 iswas primarily due to the ~~gain~~loss ~~recognized~~on asthe asale ~~result~~of Diamond of ~~the~~California, ~~completion~~partially ofoffset by income generated by discontinued operations prior to the sale. ofSee ~~Private~~Note ~~Brands~~4 to the consolidated financial statements included in Item 8 for additional information related to this sale. There were no discontinued operations in 2015.

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Liquidity and Capital Resources

Liquidity

Liquidity represents our ability to generate sufficient cash flows from operating activities to meet our obligations as well as our ability to obtain appropriate financing. Therefore, liquidity should not be considered separately from capital resources that consist primarily of current and potentially available funds for use in achieving our objectives. Currently, our liquidity needs arise primarily from acquisitions, working capital requirements, capital expenditures for fixed assets and dividends. We believe we have sufficient liquidity available to enable us to meet these demands throughout the next twelve months as well as over the long-term.

Cash Flows

The following table sets forth a summary of our cash flows for each of the past three years:

(in thousands)	~~2016~~2017			~~2015~~2016			~~2014~~2015
Net cash provided by/(used in):
Operating activities	$	~~261~~196,~~199~~859		$	~~146~~267,~~154~~369		$	13146,~~025~~154
Investing activities	(150,~~116,861~~477		)	(441,~~026~~117,113		)	99(44,~~035~~026		)
Financing activities	~~853~~(264,~~008~~946		)	~~(98~~846,~~396~~838		)	(9098,~~767~~396		)
Effect of exchange rate changes on cash	~~(1,042~~636		)	—(1,042		)	—
Net (decrease)/increase in cash and cash equivalents	$	(3,696	)	$	3,732		$	21,293
Net (decrease)/increase	$	(16,974	)	$	(3,948	)	$	3,732

We adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting in the first quarter of 2017. As a result, excess tax benefits for share-based payments, which were previously presented as a financing cash flow, are now reflected in operating cash flows. We elected to adopt this provision of the accounting standard prospectively, which resulted in income tax benefit of $6.9 million included in operating activities in 2017.

Additionally, we early adopted ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments and ASU No. 2016-18, Restricted Cash in the first quarter of 2017. These amendments are required to be adopted retrospectively. The impact of adopting ASU No. 2016-15 was a reclassification of $6.2 million cash outflows from operating activities to financing activities for the penalty recognized on early extinguishment of our private placement senior notes during 2016. The adoption of ASU No. 2016-18 resulted in reclassifications of $0.3 million cash inflows from investing activities to operating activities for each of the years 2017 and 2016.

Operating Cash Flows

Cash ~~flow~~ provided by operating activities ~~increased~~decreased $~~115~~70.05 million in ~~2016~~2017, compared to ~~2015~~2016. ~~Operating~~ ~~cash~~In ~~flows increased approximately $42 million~~2017, ~~due~~there towere ancertain ~~increase~~negative inworking ~~the~~capital ~~payable~~trends toincluding ~~growers~~increased ~~balance~~inventory ~~from~~for ~~the~~promotional ~~time~~events ofand ~~the~~a ~~Diamond~~decrease ~~Foods~~in ~~acquisition~~accrued toincentive ~~the~~compensation, ~~time~~which ofwas ~~the~~partially ~~divestiture~~offset ofby ~~Diamond~~increased ofaccounts ~~California~~payable. We ~~also~~The ~~paid~~majority ~~considerably~~of ~~less~~the ~~income~~positive ~~taxes~~working capital in 2016, ~~because~~was weassociated ~~used~~with ~~net~~a ~~operating~~reduction ~~losses acquired~~ in ~~the~~ Diamond Foods ~~acquisition~~related ~~to offset most current taxes payable. In addition~~inventory, ~~depreciation~~the ~~and~~increase ~~amortization was $28.9 million higher~~ in ~~2016,~~the ~~due~~payable ~~primarily~~ to ~~the additional intangible and fixed assets associated with the Diamond Foods acquisition~~growers, ~~and~~as ~~stock~~well ~~based~~as ~~compensation~~an ~~was~~increase ~~$21.0 million higher~~ in ~~2016,~~accounts ~~due to acceleration of vesting for former Diamond Foods personnel~~payable.

Cash flow provided by operating activities increased $~~133~~121.12 million in ~~2015~~2016, compared to ~~2014~~2015. ~~The~~This ~~increase~~includes inthe ~~net~~aforementioned $6.2 million reclassification from cash ~~provided~~outflows byfrom operating activities ~~was~~to ~~primarily~~repayments ~~driven~~of bylong-term ~~taxes~~debt ~~paid~~within infinancing ~~2014~~activities. Operating cash flows increased approximately $42 million, due to ~~the~~an ~~gain~~increase onin the ~~sale~~payable ofto ~~Private~~growers ~~Brands.~~balance ~~Approximately~~from ~~$127~~the ~~million~~time inof ~~income~~the ~~taxes~~Diamond ~~related~~Foods acquisition to the ~~gain~~time onof the ~~sale~~divestiture of ~~Private~~Diamond ~~Brands~~of ~~were paid in 2014~~California. ~~Excluding~~We ~~the~~also ~~payment~~paid ofconsiderably ~~these~~less income taxes in 2016, ~~net~~because ~~cash~~we ~~provided~~used bynet operating ~~activities~~losses ~~was~~acquired ~~favorable~~in bythe ~~approximately~~Diamond $6Foods ~~million~~acquisition ~~from~~to ~~2014,~~offset ~~compared~~most tocurrent ~~2015~~taxes payable.

Investing Cash Flows

Cash ~~used~~provided by investing activities totaled $~~1,116~~50.95 million in ~~2016~~2017, compared ~~with~~to cash used in investing activities of $441,117.01 million in ~~2015~~2016. The increase in cash ~~used~~provided inby investing activities was primarily driven by the 2016 acquisition of Diamond Foods, which accounted for approximately $1.0 billion of the ~~increase~~cash used in 2016. In addition, we had proceeds from the sale of Diamond of California in 2017, which accounted for $119.7 million of the increase.

Capital expenditures for fixed assets, principally manufacturing equipment, ~~increased~~decreased ~~from~~to $5169.54 million in ~~2015~~2017 tofrom $73.3 million in 2016~~, primarily due to additional capital expenditures necessary to support the acquired Diamond Foods business, of which approximately $0~~.5 ~~million related to discontinued operations.~~ Purchases of route businesses, net of sales, resulted in cash ~~outflows~~inflows of $2.67 million in ~~2016~~2017, compared to net cash ~~inflows~~outflows of $42.86 million in ~~2015~~2016. The majority of the net cash outflows generated from the purchase of routes, net of proceeds from route sales, in 2016 were due to restructuring certain routes at the end of 2016, which we ~~have~~had not sold as of the ~~year~~ end of 2016.

Cash used by investing activities totaled $441,117.01 million in ~~2015~~2016, compared with ~~cash provided by investing activities of~~ $9944.0 million in ~~2014~~2015. ~~The~~This ~~significant~~includes ~~decrease~~a inreclassification ~~cash provided by investing activities was due to the proceeds received from the sale~~ of ~~Private Brands in 2014 of~~ $~~430 million, which was partially offset by cash used for the acquisition of Baptista's and our additional investment in Late July totaling $262~~0.3 million. ~~Capital~~cash ~~expenditures~~inflows ~~for fixed assets, principally manufacturing equipment, decreased~~ from ~~$72.1~~investing ~~million~~activities ~~in 2014~~ to ~~$51.5~~operating ~~million~~activities in ~~2015.~~2016 ~~The decrease from 2014 to 2015 was~~ due to ~~additional capital expenditures in 2014 used to upgrade equipment and enhance capacity, while~~ the ~~capital~~adoption ~~expenditures in 2015 were primarily used to maintain our machinery and equipment and support revenue growth. Proceeds from the sale~~ of ~~route~~ASU businesses, net of purchases, generated cash inflows of $4.8 million in 2015, compared to net cash inflows of $1.0 million in 2014. The majority of the net cash inflows generated from the sale of routes in 2015 were due to the decision to sell certain route businesses that were previously Company-owned.

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No. 2016-18, Restricted Cash as discussed in Note 3, New Accounting Standards. The increase in cash used in investing activities was primarily driven by the acquisition of Diamond Foods, which accounted for approximately $1.0 billion of the increase.

Capital expenditures for fixed assets, principally manufacturing equipment, increased from $51.5 million in 2015 to $73.3 million in 2016, primarily due to additional capital expenditures necessary to support the acquired Diamond Foods business, of which approximately $0.5 million related to discontinued operations. Purchases of route businesses, net of sales, resulted in cash outflows of $2.6 million in 2016, compared to net cash inflows of $4.8 million in 2015. The majority of the net cash outflows generated from the purchase of routes, net of proceeds from route sales, in 2016 were due to restructuring certain routes at the end of 2016, which we had not sold as of the end of 2016.

Financing Cash Flows

Net cash ~~provided~~used byin financing activities of $~~853~~264.09 million in ~~2016~~2017, was ~~principally~~primarily ~~due~~attributable to ~~proceeds~~repayments ~~from the issuance~~ of long-term debt ofand ~~$1.13~~net ~~billion~~repayments ~~that~~on ~~were used primarily to fund~~ the ~~acquisition~~revolving ofcredit ~~Diamond~~facility ~~Foods. This significant cash inflow was partially offset by dividends paid~~ of $57221.61 million and ~~repayments~~dividends ofpaid ~~long-term debt~~ of $~~438~~62.~~6 million. In addition we received net proceeds from our revolving credit facility of $227.~~0 million. ~~This~~These ~~compared to~~ cash ~~used~~outflows inwere ~~financing~~partially ~~activities~~offset ofby ~~$98.4~~net ~~million~~proceeds ~~in 2015, which was principally due to dividends paid~~ of $4528.20 million, asfrom ~~well~~the asissuance ~~debt repayments~~ of ~~$57.5~~common ~~million.~~stock ~~Cash~~upon ~~used~~the inexercise ~~financing activities in 2014 was $90.8 million, primarily due to dividends paid~~ of ~~$44.9~~employee ~~million~~stock ~~as well as debt repayments of $50~~options.4 ~~million.~~

OnNet ~~February~~ cash provided by financing activities of $846.8, ~~2017~~million in 2016, ~~our~~was ~~Board~~principally due to proceeds from the issuance of ~~Directors~~long-term ~~declared~~debt aof ~~quarterly~~$1.13 billion that were used primarily to fund the acquisition of Diamond Foods. This significant cash ~~dividend~~inflow was partially offset by dividends paid of $057.166 ~~per~~million ~~share~~and ~~payable~~repayments onof ~~March~~ long-term debt of $444.8 million. Included in the 2016 repayments of long-term debt are $6.2 million of cash outflows reclassified from operating cash flows, due to the adoption of ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments as discussed in Note 3, ~~2017~~New Accounting Standards. In addition we received net proceeds from our revolving credit facility of $227.0 million. This compared to ~~stockholders~~cash used in financing activities of ~~record~~$98.4 onmillion ~~February~~in 232015, ~~2017~~which was principally due to dividends paid of $45.2 million, as well as debt repayments of $57.5 million.

On February 7, 2018, our Board of Directors declared a quarterly cash dividend of $0.16 per share payable on March 2, 2018 to shareholders of record on February 22, 2018.

Debt

Unused and available borrowings were $~~148~~320.0 million under our existing credit facilities at December 3130, ~~2016~~2017, as compared to $~~375~~148.0 million at ~~January~~December 231, 2016. Under certain circumstances and subject to certain conditions, we have the option to increase available credit under the Credit Agreement by up to $200 million during the life of the facility. We also maintain standby letters of credit in connection with our self-insurance reserves for casualty claims. The total amount of these letters of credit was $129.60 million as of December 3130, ~~2016~~2017.

In February of 2016, using available borrowings from our existing credit facilities and cash on hand, we repaid our $100 million private placement senior notes which were due in June 2017. The total repayment was approximately $106 million, and resulted in a loss on early extinguishment of approximately $4.7 million.

Credit Agreement

In conjunction with our acquisition of Diamond Foods, we entered into a senior unsecured credit agreement with the term lenders party thereto (the "Term Lenders") and Bank of America, N.A., as administrative agent ("Credit Agreement"). Under the Credit Agreement, the Term Lenders provided (i) senior unsecured term loans in an original aggregate principal amount of $830 million maturing five years after the funding date (the “Senior Five Year Term Loans”) and (ii) senior unsecured term loans in an original aggregate principal amount of $300 million maturing ten years after the funding date (the “Senior Ten Year Term Loans”). The $1.13 billion in proceeds from the Credit Agreement were used to finance, in part, the cash component of the acquisition consideration, to repay indebtedness of Diamond Foods and Snyder's-Lance, and to pay certain fees and expenses incurred in connection with the acquisition.

Loans outstanding under the Credit Agreement bear interest, at our option, either at (i) a Eurodollar rate plus an applicable margin specified in the Credit Agreement or (ii) a base rate plus an applicable margin specified in the Credit Agreement. The applicable margin added to the Eurodollar rate or base rate, as the case may be, is subject to adjustment after the end of each fiscal quarter based on changes in the Company’s adjusted total net debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio.

The outstanding principal amount of the Senior Five Year Term Loans is payable in equal quarterly installments of $10.4 million on the last business day of each quarter. These payments began in the second quarter of 2016 and continue through December 2020. The remaining unamortized balance is payable in February 2021. The outstanding principal amount of the Senior Ten Year Term Loans is payable in quarterly principal installments of $15.0 million beginning in the second quarter of 2021 and continuing through December 2025. The remaining unamortized balance is payable in February 2026. The Credit Agreement also contains optional prepayment provisions.34

Our obligations under the Credit Agreement are guaranteed by all of our existing and future direct and indirect wholly-owned domestic subsidiaries other than any such subsidiaries that, taken together, do not represent more than 10.0% of the total domestic assets or domestic revenues of the Company and its wholly-owned domestic subsidiaries. The Credit Agreement contains customary representations, warranties and covenants. The financial covenants include a maximum total debt to EBITDA ratio of 4.75 to 1.00 for the first two quarters following the acquisition and decreasing over the period of the loan to 3.50 to 1.00 in the eighth quarter following the acquisition. For the year ended December 31, 2016 the maximum ratio allowed was 4.25 to 1.00, and our total debt to EBITDA ratio was 4.17 to 1.00. It should be noted that this ratio removes the earnings of Diamond of California but not the cash received shortly after year end. We received the cash consideration of $118.6 million for the sale of Diamond of California on January 3, 2017, which we used to repay a portion of our indebtedness, resulting in a decrease of our debt to EBITDA ratio to 3.80. We are in compliance and expect to remain in compliance with this covenant for the remainder of 2017.

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The ~~financial~~outstanding ~~covenants~~principal ~~also~~amount ~~include~~of athe ~~minimum~~Senior ~~interest~~Five ~~coverage~~Year ~~ratio~~Term ofLoans ~~2.50~~is topayable ~~1.00.~~in Asequal quarterly installments of ~~December~~$10.4 ~~31,~~million ~~2016,~~on ~~our~~the ~~interest~~last ~~coverage~~business ~~ratio~~day ~~was~~of 6each quarter.~~51. We~~ ~~are~~These ~~currently~~payments began in ~~compliance~~the ~~and~~second ~~expect~~quarter toof ~~remain~~2016 inand ~~compliance~~continue ~~with~~through ~~this~~December ~~covenant~~2020. ~~Other~~ ~~covenants~~The ~~include,~~remaining ~~but~~unamortized ~~are~~balance ~~not~~is ~~limited~~payable ~~to,~~in ~~limitations~~February ~~on:~~2021. ~~(i)~~The ~~liens,~~outstanding ~~(ii)~~principal ~~dispositions~~amount of ~~assets,~~the ~~(iii)~~Senior ~~mergers~~Ten ~~and~~Year ~~consolidations,~~Term ~~(iv)~~Loans ~~loans~~is ~~and~~payable ~~investments,~~in ~~(v)~~quarterly ~~subsidiary~~principal ~~indebtedness,~~installments ~~(vi)~~of ~~transactions with affiliates and (vii) certain dividends and distributions~~$15.0 ~~The~~million ~~Credit~~beginning ~~Agreement~~in ~~contains~~the ~~customary~~second ~~events~~quarter of ~~default,~~2021 ~~including a cross default provision~~ and ~~change~~continuing ofthrough ~~control~~December ~~provisions~~2025. IfThe anremaining ~~event~~unamortized ofbalance ~~default occurs and~~ is ~~continuing,~~payable wein ~~may~~February be2026. ~~required~~The toCredit ~~repay~~Agreement ~~all~~also ~~amounts~~contains ~~outstanding~~optional ~~under~~prepayment ~~the Credit Agreement~~provisions.

~~Total~~Our ~~interest~~obligations ~~expense~~ under the Amended and Restated Credit Agreement are guaranteed by all ~~credit~~of ~~agreements~~our ~~for~~existing ~~2016~~and future direct and indirect wholly-owned domestic subsidiaries other than any such subsidiaries that, ~~2015~~taken together, do not represent more than 10% of the total domestic assets or domestic revenues of the Company and ~~2014~~its ~~was~~wholly-owned ~~$32~~domestic subsidiaries.9 ~~million~~The Amended and Restated Credit Agreement contains customary representations, ~~$11~~warranties and covenants.1 ~~million~~The financial covenants pursuant to the Amended and Restated Credit Agreement included a maximum total debt to EBITDA ratio, as defined in the Amended and ~~$13~~Restated Credit Agreement ("Original EBITDA Covenant Ratio").4 ~~million~~On May 8, ~~respectively~~2017, we amended our Amended and Restated Credit Agreement to extend the maximum total debt to EBITDA ratio covenant ("May 2017 Amended EBITDA Covenant Ratio"). Such EBITDA ratios were as follows:



	Original EBITDA Covenant Ratio	May 2017 Amended EBITDA Covenant Ratio
Second and Third Quarters 2016	4.75	N/A
Fourth Quarter 2016 and First Quarter 2017	4.25	N/A
Second Quarter 2017	4.00	4.25
Third Quarter 2017	3.75	4.25
Fourth Quarter 2017 and First Quarter 2018	3.50	4.25
Second Quarter 2018	3.50	4.00
Third Quarter 2018	3.50	3.75
Fourth Quarter 2018 and Thereafter to Maturity	3.50	3.50

In addition to the EBITDA ratio, the financial covenants also include a minimum interest coverage ratio of 2.50 to 1.00. We are currently in compliance and expect to remain in compliance with this covenant. Other covenants include, but are not limited to, limitations on: (i) liens, (ii) dispositions of assets, (iii) mergers and consolidations, (iv) loans and investments, (v) subsidiary indebtedness, (vi) transactions with affiliates and (vii) certain dividends and distributions. The Credit Agreement contains customary events of default, including a cross default provision and change of control provisions. If an event of default occurs and is continuing, we may be required to repay all amounts outstanding under the Credit Agreement.

Total interest expense under all credit agreements for 2017, 2016 and 2015 was $39.3 million, $32.9 million, and $11.1 million, respectively.

Contractual Obligations

We lease certain facilities and equipment under contracts classified as operating leases. Total rental expense, excluding discontinued operations, was $42.7 million, $37.6 million inand ~~2016,~~ $27.2 million in ~~2015~~2017, 2016 and ~~$25.3~~2015, ~~million in 2014~~respectively.

In order to mitigate the risks of volatility in commodity markets to which we are exposed, we have entered into forward purchase agreements with certain suppliers based on market prices, forward price projections and expected usage levels. Purchase commitments for certain ingredients, packaging materials and energy totaled $~~157~~226.23 million and $97157.2 million as of December 3130, ~~2016~~2017 and ~~January~~December 231, 2016, respectively. ~~The increase in purchase commitments was due to incremental Diamond Foods commitments.~~ In addition to these commitments, we have contracts for certain ingredients and packaging materials where we have secured a fixed price but do not have a minimum purchase quantity. We generally contract from approximately three months to twelve months in advance for certain major ingredients and packaging. We also have a licensing contract which totaled $~~13.~~9.6 million as of December 31, ~~2016~~2017, and continues through 2020.

We have contracts to receive services from syndicated market data providers through 2023. Our commitment for these services ranges from $4.6 million to $5.3 million per year, throughout the life of the contracts and totals $3127.60 million as of December 3130, ~~2016~~2017.

~~Contractual obligations as of December 31, 2016 were:~~ 35

(in thousands)			Payments Due by Period
	Total		2017		2018-2019		2020-2021		Thereafter
Purchase commitments	$	202,740	$	166,032	$	19,030	$	10,397	$	7,281
Debt, including interest payable (1)	1,482,036		89,390		519,637		521,411		351,598
Capital lease, including interest	4,580		1,647		2,600		333		—
Operating lease obligations	114,753		21,097		33,209		21,341		39,106
Accrued long-term incentive plan	7,077		2,427		4,650		—		—
Unrecognized tax benefits (2)	5,196		—		—		—		—
Other liabilities (3)	22,395		—		—		—		—
Total contractual obligations	$	1,838,777	$	280,593	$	579,126	$	553,482	$	397,985

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Contractual obligations as of December 30, 2017 were:



(in thousands)			Payments Due by Period
(in thousands)	Total		2018		2019-2020		2021-2022		Thereafter
Purchase commitments	$	262,988	$	235,758	$	15,264	$	9,496	$	2,470
Debt, including interest payable⁽¹⁾	1,225,029		84,169		366,582		527,821		246,457
Capital lease, including interest	915		671		244		—		—
Operating lease obligations	106,654		22,374		33,426		17,924		32,930
Accrued long-term incentive plan	3,783		1,300		1,424		1,059		—
Unrecognized tax benefits⁽²⁾	4,094		—		—		—		—
Other liabilities⁽³⁾	23,378		—		—		—		—
Total contractual obligations	$	1,626,841	$	344,272	$	416,940	$	556,300	$	281,857

⁽¹⁾ Variable interest will be paid in future periods based on the outstanding balance at that time.

⁽²⁾Unrecognized tax benefits relate to uncertain tax positions recorded under accounting guidance that we have adopted and include associated interest and penalties. As we are not able to reasonably estimate the timing of the payments or the amount by which the liability will increase or decrease over time, the related balances have not been reflected in the "Payments Due by Period" section of the table.

(3) Amounts represent future cash payments to satisfy certain noncurrent liabilities recorded on our Consolidated Balance Sheets, including the short-term portion of these long-term liabilities. Included in these noncurrent liabilities on our Consolidated Balance Sheets as of December 3130, ~~2016~~2017 were $1718.34 million in accrued insurance liabilities and $5.10 million in other liabilities. As the specific payment dates for these liabilities is unknown, the related balances have not been reflected in the "Payments Due by Period" section of the table.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity or cash flows.

We currently provide a partial guarantee for loans made to IBOs by certain third-party financial institutions for the purchase of route businesses. The outstanding aggregate balance on these loans was approximately $~~154~~177.12 million as of December 3130, ~~2016~~2017 compared to approximately $~~139~~154.31 million as of ~~January~~December 231, 2016. The $1423.81 million increase in the guarantee was primarily due to new IBO loans as a result of zone restructuring and sale of additional routes. The annual maximum amount of future payments we could be required to make under the guarantees equates to 25% of the outstanding loan balance on the first day of each calendar year plus 25% of the amount of any new loans issued during such calendar year. These loans are collateralized by the route businesses for which the loans are made. Accordingly, we have the ability to recover substantially all of the outstanding loan value upon default, and our liability associated with this guarantee is not material.

Critical Accounting Estimates

Preparing the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We believe the following estimates and assumptions to be critical accounting estimates. These estimates and assumptions may be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and may have a material impact on our financial condition or operating performance. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

We recognize revenue when title and risk of loss passes to our customers. Allowances for sales returns, stale products, promotions and discounts are recorded as reductions of revenue in the consolidated financial statements. The timing of revenue recognition varies based on the types of products sold and the distribution method.

Revenue for products sold to IBOs in ~~our~~the DSD network is recognized when the IBO purchases the inventory from our warehouses or the products are shipped to the stockroom. Revenue for products sold to retail customers through routes operated by our associates is recognized when the product is delivered to the customer.

Revenue for products shipped directly to customers from our warehouses is recognized based on the shipping terms listed on the shipping documentation. Products shipped with terms FOB shipping point are recognized as revenue at the time the product leaves our warehouses. Products shipped with terms FOB destination are recognized as revenue based on the anticipated receipt date by the customer.

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We allow certain customers to return products under agreed upon circumstances. We record a returns allowance for damaged products and other products not sold by the expiration date on the product label. This allowance is estimated based on a percentage of historical sales returns and current market information.

We record certain reductions to revenue for promotional allowances. There are several different types of promotional allowances such as off-invoice allowances, rebates and shelf space allowances. An off-invoice allowance is a reduction to the sales price that is directly deducted from the invoice amount. We record the amount of the deduction as a reduction to revenue when the transaction occurs. Rebates are offered to retail customers based on the quantity of product purchased over a period of time. Based on the nature of these allowances, the exact amount of the rebate is not known at the time the product is sold to the customer. An estimate of the expected rebate amount is recorded as a reduction to revenue at the time of the sale and a corresponding accrued liability is recorded. The accrued liability is monitored throughout the time period covered by the promotion, and is based on historical information and the progress of the customer against the target amount. We also record certain allowances for coupon redemptions, scan-back promotions and other promotional activities as a reduction to revenue. The accrued liabilities for these allowances are monitored throughout the time period covered by the coupon or promotion.

Shelf space allowances are capitalized and amortized over the lesser of twelve months or the life of the agreement and recorded as a reduction to revenue. Capitalized shelf space allowances are evaluated for impairment on an ongoing basis.

Total allowances for sales returns, rebates, coupons, scan-backs and other promotional activities recorded in the Consolidated Balance Sheets was $3943.8 million and $2539.48 million as of December 31 30, ~~2016~~2017 and ~~January 2~~December 31, 2016~~, respectively~~. ~~The increase related to incremental Diamond Foods promotional allowances.~~

33As further discussed in Note 3, we have adopted ASC 606, Revenue from Contracts with Customers, on December 31, 2017, the first day of our fiscal 2018. See Note 3 for additional information.

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Allowance for Doubtful Accounts

The determination of the allowance for doubtful accounts is based on management’s estimate of uncollectible accounts receivable. We record a general reserve based on analysis of historical data and aging of accounts receivable. In addition, management records specific reserves for receivable balances that are considered at higher risk due to known facts regarding the customer. The assumptions for this determination are reviewed quarterly to ensure that business conditions or other circumstances are consistent with the assumptions. The allowance for doubtful accounts was $12.36 million and $01.93 million as of December 3130, ~~2016~~2017 and ~~January~~December 231, 2016, respectively. ~~The increase in the allowance for doubtful accounts from 2015 to 2016 was primarily due to additional accounts receivable associated with the acquisition of Diamond Foods.~~

Self-Insurance Reserves

We maintain reserves for the self-funded portions of employee medical insurance benefits. Our portion of employee medical claims is limited to $0.4 million per participant annually by stop-loss insurance coverage. The accrual for incurred but not reported medical insurance claims was $34.92 million and $3.89 million in ~~2016~~2017 and ~~2015~~2016, respectively.

We maintain self-insurance reserves for workers’ compensation and auto liability for individual losses up to the deductibles which are currently $0.8 million per individual loss for workers' compensation, $0.5 million for auto liability per accident and $0.3 million for auto physical damage per accident. In addition, certain general and product liability claims are self-funded for individual losses up to the $0.58 million insurance deductible. Claims in excess of the deductible are fully insured up to $100 million per occurrence and in the aggregate. We evaluate input from a third-party actuary in the estimation of the casualty insurance obligation on an annual basis. In determining the ultimate loss and reserve requirements, we use various actuarial assumptions, including compensation trends, health care cost trends and discount rates. In ~~2016~~2017, we used a discount rate of 2.0%, the same rate used in ~~2015~~2016, based on treasury rates over the estimated future payout period.

We also use historical information for claims frequency and severity in order to establish loss development factors. For ~~2016~~2017 and ~~2015~~2016, we had accrued liabilities related to the retained risks of $1718.34 million and $1617.23 million, respectively, included in the accruals for casualty insurance claims in our Consolidated Balance Sheets. The liabilities related to our casualty insurance claims were partially offset by estimated reimbursements for amounts in excess of our deductibles associated with these claims of $4.69 million and $54.26 million for ~~2016~~2017 and ~~2015~~2016, respectively, which are included in other noncurrent assets in our Consolidated Balance Sheets.

Impairment Analysis of Goodwill and Intangible Assets

Goodwill is tested for impairment on an annual basis, and between annual tests if indicators of potential impairment exist, for each identified reporting unit using a fair-value-based approach. As ~~part~~Consistent ofwith ~~our~~the ~~2016~~prior year analysis, we ~~identified~~have two reporting units, North America and Europe.

The annual impairment analysis of goodwill requires us to project future financial performance, including revenue and profit growth, fixed asset and working capital investments, income tax rates and our weighted average cost of capital. These projections rely upon historical performance, anticipated market conditions and forward-looking business plans.

The North America and Europe impairment analysis of goodwill was performed using a discounted cash flow model, as of December 31, 2016, and assumed a combined average annual revenue growth of approximately 3.1% and 4.9%, respectively during the valuation period. The 4.9% combined annual growth for Europe is only 3.1% when excluding the increased revenue from 2016 to 2017, which is substantially higher due to two additional months of KETTLE® Chips revenue and eight additional months of revenue from our Metcalfe acquisition. We also assumed a 3% terminal growth rate for each reporting unit. This compares to a combined average annual revenue growth of approximately 3.5% and a terminal growth rate of 3% used in the impairment analysis as of January 2, 2016, which was done using only one reporting unit as the UK operations had not been acquired at that time.37

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WeAs ~~use~~ a ~~combination~~result of ~~internal~~the decrease in actual and ~~external~~forecasted ~~data~~net torevenue ~~develop~~and ~~the~~operating ~~weighted~~income ~~average~~in ~~cost~~our ofEuropean ~~capital~~reporting unit, ~~which~~as ~~was~~well ~~7.0%~~as ~~and~~the ~~7.5%~~narrow ~~for~~difference ~~North~~between ~~America~~estimated fair value and ~~Europe,~~carrying ~~respectively,~~value ~~for~~as ~~2016. For~~of our ~~2015~~2016 ~~goodwill impairment~~ analysis, we ~~used~~performed an ~~8.0%~~interim ~~weighted~~impairment ~~average~~analysis ~~cost~~on ~~of capital for~~ the ~~test~~goodwill of ~~our~~the ~~one~~European reporting unit~~. The~~ ~~decrease~~as inof ~~the~~September ~~weighted~~30, ~~average~~2017. ~~cost~~The ofimpairment ~~capital~~analysis inof ~~2016~~goodwill was ~~primarily~~performed ~~due~~using toa ~~the~~discounted ~~growth~~cash offlow ~~our~~model ~~Company~~and inassumed ~~the~~a ~~past~~combined ~~year. Significant~~average ~~investments~~annual inrevenue ~~fixed~~growth ~~assets~~of ~~and~~approximately ~~working~~1.4% ~~capital~~during ~~to support~~ the ~~assumed~~valuation ~~revenue~~period. ~~growth~~We ~~are~~also ~~estimated~~assumed ~~and~~a ~~factored~~1.5% ~~into~~terminal ~~the~~growth ~~analysis.~~rate Iffor the ~~assumed~~reporting ~~revenue~~period. ~~growth~~This iscompares ~~not~~to ~~achieved,~~a ~~anticipated~~combined ~~investments~~average inannual ~~fixed~~revenue ~~assets~~growth ~~and~~of ~~working~~approximately ~~capital~~3.1% ~~could~~and bea ~~reduced.~~terminal Asgrowth rate of ~~December~~3.0% ~~31,~~used ~~2016,~~in the ~~goodwill~~ impairment analysis ~~resulted~~as inof ~~our~~December ~~North~~31, ~~America~~2016. ~~reporting~~We ~~unit~~use ~~having~~ a ~~fair~~combination ~~value substantially in excess~~ of ~~its~~internal ~~carrying value,~~ and ~~our~~external ~~European~~data ~~reporting~~to ~~unit~~develop ~~with~~the ~~excess~~weighted ~~fair~~average ~~value~~cost ~~over~~of ~~carrying~~capital, ~~value~~which ofwas ~~approximately 15%~~7.5% ~~Even~~for ~~with~~Europe. aThis ~~significant~~assumption ~~amount~~remained ofunchanged ~~excess~~from ~~fair~~the ~~value~~previous ~~over~~analysis. ~~carrying~~Significant ~~value,~~investments ~~major~~in ~~changes~~fixed inassets ~~assumptions~~and orworking ~~changes~~capital into ~~conditions~~support ~~could~~the ~~result~~assumed inrevenue agrowth ~~goodwill~~are ~~impairment~~estimated ~~charge~~and infactored into the ~~future~~analysis. We ~~performed~~If athe ~~sensitivity~~assumed ~~analysis~~revenue ongrowth ~~our~~is ~~weighted~~not ~~average~~achieved, ~~cost~~anticipated ofinvestments ~~capital~~in fixed assets and weworking ~~determined~~capital ~~that~~could abe 50reduced. ~~basis~~At ~~point~~September ~~increase~~30, in2017, the ~~weighted~~goodwill ~~average~~impairment ~~cost~~analysis ofresulted ~~capital~~in ~~would~~impairment ~~not~~indicated ~~have~~for ~~resulted~~our inEuropean ~~any~~reporting ofunit. ~~our~~As ~~reporting~~described ~~units'~~in ~~implied~~Note ~~fair~~3, ~~value~~we ~~being~~adopted ~~less~~ASU ~~than~~2017-04 ~~their~~in ~~carrying~~the ~~value~~current year. ~~Additionally~~As such, awe 50calculated ~~basis~~the ~~point~~impairment ~~decrease~~as in the ~~terminal~~excess ~~growth~~fair ~~rate~~value ~~used~~over ~~for~~carrying ~~each~~value of the reporting unit. ~~would~~We ~~also~~recognized ~~not~~a ~~have~~non-cash ~~resulted~~impairment incharge ~~either~~ of ~~our~~$46.3 ~~reporting~~million ~~units'~~as ~~implied~~of ~~fair~~September ~~value~~30, ~~being less than their carrying value~~2017.

~~Our~~For ~~trademarks~~the ~~are~~year ~~valued~~end ~~using~~European ~~the~~impairment ~~relief-from-royalty~~analysis ~~method~~of ~~under~~goodwill, ~~the~~we ~~income~~used ~~approach,~~a ~~which~~discounted ~~requires~~cash usflow tomodel, ~~estimate~~as ~~unobservable~~of ~~factors~~December ~~such~~30, as2017, and assumed a ~~royalty~~combined ~~rate~~average ~~and~~annual ~~discount~~revenue growth rate ~~and~~of ~~identify~~approximately ~~relevant~~1.7%. ~~projected~~The ~~revenue~~increase of 0.3% Infrom ~~2016~~the ~~and~~September ~~2015~~30, ~~there~~2017 ~~were~~analysis nois ~~impairments~~attributable ~~recorded~~to ~~for~~a ~~our~~slight ~~trademarks~~increase in anticipated inflation in the European market. We ~~recorded~~assumed ~~impairment~~a ~~charges~~terminal growth rate of $31.65%, ~~million~~which inis ~~2014~~consistent ~~for~~with ~~certain~~the ~~trademarks~~previous analysis. In ~~addition~~We use a combination of internal and external data to develop the ~~$550.7~~weighted ~~million~~average ~~acquired~~cost inof capital, which was 8.0% for the ~~Diamond~~European ~~Foods~~reporting ~~acquisition~~unit, ~~certain~~which ~~trade~~is ~~names~~a ~~with~~0.5% aincrease ~~total~~from ~~book~~the ~~value~~September of30, ~~$12~~2017 analysis.9 ~~million~~The asincrease is attributable to an increase in the currency risk premium for the U.K. As of December 31 30, ~~2016~~2017, ~~currently~~the ~~have~~goodwill aimpairment ~~fair~~analysis ~~value~~resulted ~~which~~in ~~exceeds~~our ~~the~~European ~~book~~reporting ~~value~~unit byhaving a fair value less than 15% higher than the carrying value. ~~The~~We ~~trademarks~~performed ~~related~~sensitivity toanalysis ~~the~~on ~~acquisition~~our weighted average cost of ~~Diamond~~capital ~~Foods~~and ~~remain~~we ~~reasonably~~determined ~~close~~that toa ~~fair~~50 ~~value. Any~~basis ~~adverse~~point ~~changes~~increase in the ~~use~~weighted average cost of ~~these~~capital ~~trademarks~~would orindicate additional impairment of approximately $6 million. A 50 basis point decrease in the ~~sales~~terminal ~~volumes~~growth ofrate used for the ~~associated~~European ~~products~~reporting ~~could~~unit ~~result~~would not have resulted in anthe ~~impairment~~implied ~~charge~~fair invalue being less than the ~~future~~carrying value.

~~Our~~We ~~route~~performed ~~intangible~~our ~~assets~~annual ~~are~~analysis ~~valued~~for ~~by comparing~~ the ~~current~~goodwill ~~fair~~associated ~~market~~with ~~value~~the ~~for~~North ~~the~~American ~~route~~reporting ~~assets~~unit toas ~~the~~of ~~associated~~December ~~book~~30, ~~value~~2017. ~~The~~We ~~fair~~used ~~market~~a ~~value~~discounted iscash ~~computed~~flow ~~using~~model ~~the~~and ~~route~~assumed ~~sales~~a combined average ~~for~~annual ~~each~~revenue ~~route~~growth ~~multiplied~~rate byof ~~the~~approximately ~~market~~2.1%, ~~multiple~~which ~~for~~is ~~the~~a ~~area~~decrease inof ~~which~~1.0% from the ~~route~~prior isyear ~~located~~analysis. We ~~recognized~~assumed ~~route~~a ~~intangible~~terminal ~~asset~~growth ~~impairments~~rate of $02.~~8 million~~0%, $which also represents a decrease of 1.0% from the prior year analysis.5 ~~million~~We use a combination of internal and ~~$3.7~~external ~~million~~data to develop the weighted average cost of incapital, ~~2016~~which was 7.0% for the North American reporting unit, ~~2015~~consistent ~~and~~with ~~2014~~the prior year analysis. As of December 30, ~~respectively~~2017, asthe goodwill impairment analysis resulted in our North American reporting unit having a ~~result~~fair value substantially in excess of ~~this~~its ~~analysis~~carrying value. ~~Many~~ ofWe performed sensitivity analysis on our ~~route~~weighted ~~territories~~average cost of capital and we determined that a 50 basis point increase in the weighted average cost of capital would not have resulted in our North American reporting units' implied fair ~~values~~value ~~that~~being ~~approximate~~less ~~book~~than the carrying value. ~~Any~~ ~~economic~~Additionally, ~~declines~~a or50 ~~other~~basis ~~adverse~~point ~~changes~~decrease ~~such~~in asthe ~~decreased~~terminal ~~demand~~growth rate used for ~~our~~the ~~products~~North inAmerican ~~those~~reporting ~~areas~~unit ~~could~~would ~~result~~also not have resulted in ~~future~~the ~~impairment~~implied ~~charges~~fair value being less than the carrying value.

~~Other~~Indefinite-lived intangible assets are also tested for impairment on an annual basis, ~~primarily~~and ~~customer~~between tests if indicators of potential impairment exist. Our trademarks are valued using the relief-from-royalty method under the income approach, which requires us to estimate unobservable factors such as a royalty rate and ~~contractual~~discount ~~relationships~~rate and ~~patents~~identify relevant projected revenue. As of December 31, ~~are~~2016, ~~tested~~we ~~for~~identified ~~impairment~~$563.6 ifmillion ~~events~~of ortrademarks ~~changes~~which had a fair value which was reasonably close to the carrying value, of which $550.7 million related to trademarks acquired as a part of the acquisition of Diamond Foods during the first quarter of 2016. As a result of the decrease in ~~circumstances~~current ~~indicate~~year ~~that~~net itsales isand ~~more~~the ~~likely~~impact ~~than~~on ~~not~~future ~~that~~projections in our Pop Secret, Emerald, and KETTLE Chips (U.K.) branded products, as well as the narrow difference between estimated fair value isand ~~less~~carrying ~~than~~value ~~book~~as ~~value.~~of Noour ~~event-driven~~annual test, we performed an interim impairment ~~assessments~~analysis ~~were~~of ~~deemed~~those ~~necessary~~trademarks ~~for~~as ~~2016~~of September 30, ~~2015~~2017. orThe ~~2014~~tables below compare the assumptions used in the third quarter’s analysis to the last annual analysis.

~~Route~~Assumptions ~~Intangible~~as ~~Purchase~~of the third quarter and ~~Sale~~last ~~Transactions~~annual analysis:

We purchase and sell route businesses as a part of maintenance of our DSD network. Route businesses subject to purchase and sale transactions represent integrated sets of inputs, activities and processes that are capable of being conducted and managed for the purpose of providing a return directly to the IBOs and meet the definition of a business in accordance with ASC 805, Business Combinations. Upon acquisition of a route business, we allocate the purchase price based on the fair value of the indefinite-lived route intangible, representing our perpetual and exclusive distribution right in the route territory, with any excess purchase price attributed to goodwill. We recognize a gain or a loss on the sale of a route business upon completion of the sales transaction and signing of the relevant documents. Gain or loss on sale is determined by comparing the basis of the route business sold, which includes a relative fair value allocation of goodwill in accordance with ASC 350, Intangibles-Goodwill and Other, to the proceeds received from the IBO. For 2016, 2015 and 2014, we recognized net gains on the sale of route businesses of $1.3 million, $1.9 million and $1.1 million, respectively. Net gains on the sale of route businesses in 2016 consisted of $5.5 million in gains and $4.2 million in losses. Net gains on the sale of route businesses in 2015 consisted of $3.3 million in gains and $1.4 million in losses. For 2014, net gains on the sale of route businesses consisted of $3.3 million in gains and $2.2 million in losses. 38

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	September 30, 2017						December 31, 2016
	Emerald®		Pop Secret®		KETTLE® Chips (U.K.)		Emerald®		Pop Secret®		KETTLE® Chips (U.K.)
Annual revenue growth during valuation period	1.1	%	(2.0	)%	1.2	%	1.9	%	0.7	%	2.8	%
Terminal growth rate	1.0	%	1.0	%	1.5	%	2.0	%	1.0	%	2.0	%
WACC	7.0	%	7.0	%	7.5	%	7.0	%	7.0	%	7.5	%
Royalty rate	1.5	%	7.0	%	6.0	%	1.0	%	8.0	%	6.0	%

We calculated the impairment as the excess fair value over carrying value of each trademark. We recognized a non-cash impairment charge of $58.4 million as of September 30, 2017 for Pop Secret and KETTLE Chips (U.K.). As a result of this interim analysis, no impairment of the Emerald trademark was recognized.

For our indefinite-lived intangible assets annual impairment analysis, we valued our trademarks using the relief-from-royalty method under the income approach, which requires us to estimate unobservable factors such as a royalty rate and discount rate and identify relevant projected revenue. As of December 30, 2017 we identified $160.2 million of trademarks which had a fair value which exceeds the carrying value by less than 15%. This includes our KETTLE Chips (U.K.) and Pop Secret tradenames. Any adverse changes in the use of these trademarks or the sales volume of the associated products could result in an impairment charge in the future. The difference between the fair value and carrying value of our Emerald tradename is greater than 15% as of December 30, 2017.

Our route intangible assets are valued by comparing the current fair market value for the route assets to the associated carrying value. The fair market value is computed using the route sales average for each route or group of routes multiplied by the market multiple for the area in which the route is located. As a result of the analysis, we recognized no route intangible asset impairments in 2017 and recognized impairment charges of $0.8 million and $0.5 million in 2016 and 2015, respectively. Many of our route territories have fair values that approximate carrying value. Any economic declines or other adverse changes such as decreased demand for our products in those areas could result in future impairment charges.

Our definite-lived intangible assets, primarily customer and contractual relationships and patents, are tested for impairment if events or changes in circumstances indicate that it is more likely than not that fair value is less than carrying value. No event-driven impairment assessments were deemed necessary for 2017, 2016 or 2015.

Route Intangible Purchase and Sale Transactions

We purchase and sell routes as a part of the DSD network. Routes subject to purchase and sale transactions represent integrated sets of inputs, activities and processes that are capable of being conducted and managed by IBOs for the purpose of providing a return directly to the IBOs. However, they do not meet the definition of a business for accounting purposes in accordance with ASU 2017-01, Clarifying the Definition of a Business which we adopted in the fourth quarter of 2017 as discussed in Note 3. Upon acquisition of a route, we allocate the entire purchase price to an indefinite-lived route intangible, representing the perpetual and exclusive distribution right in the route (territory). We recognize a gain or a loss on the sale of a route upon completion of the sales transaction and signing of the relevant documents. Gain or loss on sale is determined by comparing the basis of the route sold, which will be comprised primarily of the associated indefinite-lived intangible, to the proceeds received from the IBO. For 2017, 2016 and 2015, we recognized net gains on the sale of route businesses of $2.3 million, $1.3 million and $1.9 million, respectively. Net gains on the sale of route businesses in 2017 consisted of $9.4 million in gains, partially offset by $7.1 million in losses. Net gains on the sale of route businesses in 2016 consisted of $5.5 million in gains, partially offset by $4.2 million in losses. For 2015, net gains on the sale of route businesses consisted of $3.3 million in gains, partially offset by $1.4 million in losses.

Impairment Analysis of Fixed Assets

Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets or asset groups to be held and used is measured by a comparison of the carrying amount of an asset or asset group to future net cash flows expected to be generated by the asset or asset group. If such assets or asset groups are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets or asset groups exceeds the fair value of the assets or asset groups. There were $310.71 million in fixed asset impairment charges recorded during ~~2016~~2017, compared to $113.57 million during ~~2015~~2016, and $511.75 million during ~~2014~~2015.

Equity-Based Incentive Compensation Expense

Determining the fair value of share-based awards at the grant date requires judgment, including estimating the expected term, expected stock price volatility, risk-free interest rate and expected dividends. Judgment is required in estimating the amount of share-based awards that are expected to be forfeited before vesting. In addition, our long-term equity incentive plans require assumptions and projections of future operating results and financial metrics. Actual results may differ from these assumptions and projections, which could have a material impact on our financial results. Information regarding assumptions can be found in Note 6 to the consolidated financial statements included in Item 8.

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share-based awards that are expected to be forfeited before vesting. In addition, our long-term equity incentive plans require assumptions and projections of future operating results and financial metrics. Actual results may differ from these assumptions and projections, which could have a material impact on our financial results. Information regarding assumptions can be found in Note 8 to the consolidated financial statements included in Item 8.

Discontinued Operations Presentation

In order to be reported within discontinued operations, our disposal of a component or group of components must represent a strategic shift that will have a major effect on our operations and financial results. Discontinued Operations are reported when a component of an entity (“component”) that can be clearly distinguished operationally, and for financial reporting purposes from the rest of the entity meets the threshold for reporting in discontinued operations, provided that a) the component meets the “held for sale” criteria; b) the operations and cash flows of the component have been, or will be, eliminated from the ongoing operations of the entity as a result of the disposal transaction; and c) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction. In the Consolidated Statements of Income, income from discontinued operations is reported separately from income and expenses from continuing operations and prior periods are presented on a comparable basis. In the Consolidated Balance Sheets, the assets and liabilities of discontinued operations are presented separately from assets and liabilities of continuing operations and prior periods are presented on a comparable basis. Many provisions of reporting discontinued operations involve judgment in determining whether results from operations, assets and liabilities will be reported as continuing or discontinued operations. As a result of the sale of Diamond of California, revenues and expenses that no longer continued after the sale of Diamond of California, and where we had no substantial continuing involvement, were reclassified to discontinued operations in the Consolidated Statements of Income. :


•	the component meets the “held for sale” criteria;


•	the operations and cash flows of the component have been, or will be, eliminated from the ongoing operations of the entity as a result of the disposal transaction; and


•	the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

In the Consolidated Statements of Income, income from discontinued operations is reported separately from income and expenses from continuing operations and prior periods are presented on a comparable basis. In the Consolidated Balance Sheets, the assets and liabilities of discontinued operations are presented separately from assets and liabilities of continuing operations and prior periods are presented on a comparable basis. Many provisions of reporting discontinued operations involve judgment in determining whether results from operations, assets and liabilities will be reported as continuing or discontinued operations. As a result of the sale of Diamond of California, revenues and expenses that no longer continued after the sale of Diamond of California, and where we had no substantial continuing involvement, were reclassified to discontinued operations in the Consolidated Statements of Income.

Provision for Income Taxes

Our effective tax rate is based on the level and mix of income of our separate legal entities, statutory tax rates, business credits available in the various jurisdictions in which we operate and permanent tax differences. Significant judgment is required in evaluating tax positions that affect the annual tax rate. We recognize the effect of income tax positions only if these positions are more likely than not of being sustained. We adjust these liabilities in light of changing facts and circumstances, such as the progress of a tax audit.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. We estimate valuation allowances on deferred tax assets for the portions that we do not believe will be fully utilized based on projected earnings and usage. In ~~accordance~~Deferred ~~with Accounting Standards Update ("ASU") No. 2015-17, deferred~~ tax assets and liabilities, along with related valuation allowances, are netted by tax jurisdiction and classified as noncurrent on the balance sheet. ~~During the fourth quarter of 2015, we elected to early-adopt ASU No. 2015-17, and the changes to deferred tax assets and liabilities were applied retrospectively.~~

~~Applicable~~US ~~U.S.~~Tax income taxes are provided on earnings of certain foreign subsidiaries in the periods in which they are no longer considered indefinitely reinvested. In the event that management elects for any reason in the future to repatriate some or all of the foreign earnings that were previously deemed to be indefinitely reinvested outside of the United States, we would incur additional tax expense upon such repatriation.Reform

~~New~~On ~~Accounting~~December ~~Standards~~22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law. The Tax Act made numerous changes to many aspects of U.S. corporate income taxation by, among other things, lowering the US corporate income tax rate from 35% to 21%, implementing a territorial tax system and imposing a one-time transition tax on deemed repatriated earning of foreign subsidiaries. As a result of the Tax Act, the Company revalued its net deferred tax liabilities to reflect the tax rate expected to apply in the years in which the temporary differences are expected to reverse. This resulted in an approximate $123.2 million tax benefit. The Tax Act provides a dividends received deduction for any future dividends from non-U.S. subsidiaries to their U.S. parent company. The Tax Act also imposes a one-time deemed repatriation of accumulated post-1986 foreign earnings which have not been previously taxed. The Company recorded a provisional estimate for this transition tax of approximately $7.5 million. Through the third quarter of 2017 the Company had recorded taxes of approximately $46.7 million on the amount of basis difference in foreign subsidiaries which is not indefinitely reinvested. In the fourth quarter of 2017 the Company has recorded a benefit to reflect the reduced rate at which any remaining basis difference will be taxed.

~~See~~The ~~Note~~SEC 2staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act and allows the registrant to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. We have recognized a net tax benefit of $162.4 million for the provisional tax impacts related to the one-time transition tax and the revaluation of deferred tax balances and included these estimates in our consolidated financial statements ~~included~~for the year ended December 30, 2017. We are in ~~Item 8~~the ~~for~~process aof ~~summary~~analyzing the impact of ~~new~~the ~~accounting~~various ~~standards~~provisions of the Tax Act. The ultimate impact may materially differ from these provisional

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amounts due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the Tax Act. We expect to complete our analysis within the measurement period in accordance with SAB 118. See Note 13, Income Taxes, for further details on the impact of the Tax Act.

New Accounting Standards

See Note 3 to the consolidated financial statements included in Item 8 for a summary of new accounting standards.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain commodity, interest rate, and foreign currency risks as part of our ongoing business operations. We may use derivative financial instruments, where appropriate, to manage some of these risks related to interest rates. We do not use derivatives for trading purposes.

Commodity Risk

We purchase certain raw materials that are subject to price volatility caused by weather, market conditions, growing and harvesting conditions, governmental actions and other factors beyond our control. Our most significant raw material requirements include flour, potatoes, oil, peanuts, other nuts, corn, sugar, chocolate, cheese and seasonings. We also purchase packaging materials that are subject to price volatility. In the normal course of business, in order to mitigate the risks of volatility in commodity markets to which we are exposed, we enter into forward purchase agreements with certain suppliers based on market prices, forward price projections and expected usage levels. Amounts committed under these forward purchase agreements are discussed in Note 1617 to the consolidated financial statements in Item 8.

Interest Rate Risk

Our variable-rate debt obligations incur interest at floating rates based on changes in the Eurodollar rate and US base rate interest. To manage exposure to changing interest rates, we selectively enter into interest rate swap agreements to maintain a desired proportion of fixed to variable-rate debt. See Note 1415 to the consolidated financial statements in Item 8 for further information related to our interest rate swap agreements. While these interest rate swap agreements fixed a portion of the interest rate at a predictable level, pre-tax interest expense would have been $1.02 million ~~lower without these swaps during 2016~~, $1.30 million, ~~lower without these swaps during 2015~~ and $0.6 million lower without these swaps during ~~2014~~2017, 2016 and 2015, respectively. Including the effect of the interest rate swap agreement, the weighted average interest rate was 23.9541% and 32.1495%, respectively, as of December 3130, ~~2016~~2017 and ~~January~~December 231, 2016. A 10% increase in the Eurodollar rate would not have significantly impacted interest expense during ~~2016~~2017.

Credit Risk

We are exposed to credit risks related to our accounts and notes receivable. We perform ongoing credit evaluations of our customers to minimize the potential exposure. For ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, net bad debt expense was $01.57 million, $10.15 million and $1.61 million, respectively. Allowances for doubtful accounts were $2.6 million and $1.3 million as of December 3130, ~~2016,~~2017 and ~~$0.9 million as of January~~December 231, 2016, respectively.

Foreign Currency Exchange Risk

We have operations outside the US with foreign currency denominated assets and liabilities, primarily in the U.K. Because we have foreign currency denominated assets and liabilities, financial exposure may result, primarily from the timing of transactions and the movement of exchange rates. Our risks pertaining to Brexit are discussed in Part I, Item1A - Risk Factors.

For our US operations, our sales of finished goods and purchases of raw materials and supplies from outside the US are predominantly denominated in US dollars. However, certain revenues and expenses have been, and are expected to be, subject to the effect of foreign currency fluctuations, and these fluctuations may have an impact on operating results.

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Item 8. Financial Statements and Supplementary Data

SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Consolidated Statements of Income

For the Fiscal Years Ended December 3130, ~~2016 (52 weeks)~~2017, ~~January~~December 231, 2016 ~~(52 weeks)~~ and January 32, ~~2015 (53 weeks)~~2016

(in thousands, except per share data)	~~2016~~2017			~~2015~~2016			~~2014~~2015
Net revenue	$	2,~~109~~226,~~227~~837		$	12,~~656~~109,~~399~~227		$	1,~~620~~656,~~920~~399
Cost of sales	1,~~345~~426,~~437~~666			1,~~077~~345,~~110~~437			1,~~042~~077,~~458~~110
Gross profit	~~763~~800,~~790~~171			~~579~~763,~~289~~790			~~578~~579,~~462~~289
Selling, general and administrative	593,957			464,534			478,532
Selling, general and administrative expenses	643,865			593,957			464,534
Transaction and integration related expenses	663,~~272~~002			766,~~702~~272			—7,702
Settlements of certain litigation	—			~~5,675~~—			—5,675
Impairment charges	4114,~~466~~783			114,~~997~~466			1311,~~047~~997
Gain on the revaluation of prior equity investment	—			—			(16,608		)
Other operating expense/(income), net	7			(5,554		)	(1,251		)
Other income, net	(5,390		)	(1,075		)	(1,359		)
Operating income	38,514			104,649			90,632
Income before interest and income taxes	104,485			90,456			104,850
Other (income)/expense, net	(1,514		)	164			176
Loss on early extinguishment of debt	4,749			—			—
Income before interest and income taxes	40,028			104,485			90,456
Interest expense, net	32,613			10,853			13,342
Loss on early extinguishment of debt	—			4,749			—
Income before income taxes	67,123			79,603			91,508
Interest expense, net	38,765			32,613			10,853
Income tax expense	25,320			28,885			32,291
Income before income taxes	1,263			67,123			79,603
Income from continuing operations	41,803			50,718			59,217
Income tax (benefit)/expense	(146,144		)	25,320			28,885
(Loss)/income from discontinued operations, net of income tax	(27,100		)	—			133,316
Income from continuing operations	147,407			41,803			50,718
Net income	14,703			50,718			192,533
Income/(loss) from discontinued operations, net of income tax	1,936			(27,100		)	—
Net (loss)/income attributable to non-controlling interests	(182		)	33			(58		)
Net income	149,343			14,703			50,718
Net income attributable to Snyder’s-Lance, Inc.	$	14,885		$	50,685		$	192,591
Net income/(loss) attributable to non-controlling interests	851			(182		)	33
Net income attributable to Snyder’s-Lance, Inc.	$	148,492		$	14,885		$	50,685
Amounts attributable to Snyder's-Lance, Inc.:
Continuing operations	$	41146,~~985~~556		$	5041,~~685~~985		$	5950,~~275~~685
Discontinued operations	~~(27~~1,~~100~~936		)	—(27,100		)	~~133,316~~—
Net income attributable to Snyder's-Lance, Inc.	$	14148,~~885~~492		$	5014,~~685~~885		$	~~192~~50,~~591~~685
Basic earnings per share:
Continuing operations	$	01.4651		$	0.7246		$	0.8472
Discontinued operations	(0.2902		)	—(0.29		)	~~1.90~~—
Total basic earnings per share	$	01.1753		$	0.7217		$	20.7472
Diluted earnings per share:
Continuing operations	$	01.4550		$	0.7145		$	0.8471
Discontinued operations	(0.2902		)	—(0.29		)	~~1.88~~—
Total diluted earnings per share	$	01.1652		$	0.7116		$	20.7271
Dividends declared per common share	$	0.64		$	0.64		$	0.64

See Notes to the consolidated financial statements.

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SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the Fiscal Years Ended December 3130, ~~2016 (52 weeks)~~2017, ~~January~~December 231, 2016 ~~(52 weeks)~~ and January 32, ~~2015 (53 weeks)~~2016

(in thousands)	~~2016~~2017			~~2015~~2016			~~2014~~2015
Net income	$	14149,~~703~~343		$	5014,~~718~~703		$	~~192~~50,~~533~~718
Net unrealized (gain)/loss on derivative instruments, net of income tax expense/(benefit) of $4,447, ($247), and $186	(6,953		)	360			(304		)
Net unrealized gain/(loss) on derivative instruments, net of income tax (expense)/benefit of $(1,224), ($4,447), and $247	1,557			6,953			(360		)
Foreign currency translation adjustment	2418,~~300~~517			(~~737~~24,300		)	~~11,482~~737
Total other comprehensive loss/(income)	17,347			(377		)	11,178
Total other comprehensive income/(loss)	20,074			(17,347		)	377
Total comprehensive (loss)/income	(2,644		)	51,095			181,355
Total comprehensive income/(loss)	169,417			(2,644		)	51,095
Comprehensive (loss)/income attributable to non-controlling interests	(182		)	33			(58		)
Comprehensive income/(loss) attributable to non-controlling interests	851			(182		)	33
Total comprehensive (loss)/income attributable to Snyder’s-Lance, Inc.	$	(2,462	)	$	51,062		$	181,413
Total comprehensive income/(loss) attributable to Snyder’s-Lance, Inc.	$	168,566		$	(2,462	)	$	51,062

See Notes to the consolidated financial statements.

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SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

As of December 3130, ~~2016~~2017 and ~~January~~December 231, 2016

(in thousands, except share data)	~~2016~~2017			~~2015~~2016
ASSETS
Current assets:
Cash and cash equivalents	$	3518,~~409~~703		$	3935,~~105~~409
Restricted cash	~~714~~446			~~966~~714
Accounts receivable, net of allowances of $1,290 and $917, respectively	210,723			131,339
Accounts receivable, net of allowances of $2,567 and $1,290, respectively	219,267			210,723
Receivable from sale of Diamond of California	~~118,577~~—			—118,577
Inventories, net	~~173~~189,~~456~~889			~~110~~173,~~994~~456
Prepaid income taxes and income taxes receivable	5,~~744~~899			25,~~321~~744
Assets held for sale	1918,~~568~~945			1519,~~678~~568
Prepaid expenses and other current assets	2730,~~666~~242			2127,~~210~~666
Total current assets	~~591~~483,~~857~~391			~~321~~591,~~613~~857
Noncurrent assets:
Fixed assets, net	~~501~~492,~~884~~437			~~401~~501,~~465~~884
Goodwill	1,~~318~~282,~~362~~372			~~539~~1,~~119~~318,362
Other intangible assets, net	1,~~373~~301,~~800~~228			~~528~~1,~~658~~373,800
Other noncurrent assets	4858,~~173~~909			1948,~~849~~173
Total assets	$	3,~~834~~618,~~076~~337		$	13,~~810~~834,~~704~~076
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	49,000		$	849,~~541~~000
Accounts payable	99111,~~249~~971			5499,~~207~~249
Accrued compensation	4431,~~901~~568			2644,~~196~~901
Accrued casualty insurance claims	43,~~266~~571			4,~~262~~266
Accrued marketing, selling and promotional costs	5057,~~179~~774			1850,~~806~~179
Other payables and accrued liabilities	4745,~~958~~797			3247,~~248~~958
Total current liabilities	~~295~~299,~~553~~681			~~144~~295,~~260~~553
Noncurrent liabilities:
Long-term debt, net	1,~~245~~025,~~959~~533			~~372~~1,~~301~~245,959
Deferred income taxes, net	~~378~~234,~~236~~878			~~157~~378,~~591~~236
Accrued casualty insurance claims	1314,~~049~~831			1113,~~931~~049
Other noncurrent liabilities	2521,~~609~~125			1725,~~034~~609
Total liabilities	1,~~958~~596,~~406~~048			~~703~~1,~~117~~958,406
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.83 1/3 par value. 110,000,000 shares authorized; 96,242,784 and 70,968,054 shares outstanding, respectively	80,199			59,138
Common stock, $0.83 1/3 par value. 110,000,000 shares authorized; 97,857,940 and 96,242,784 shares outstanding, respectively	81,545			80,199
Preferred stock, $1.00 par value. 5,000,000 shares authorized; no shares outstanding	—			—
Additional paid-in capital	1,~~598~~636,~~678~~500			~~791~~1,~~428~~598,678
Retained earnings	~~195~~282,~~733~~259			~~238~~195,~~314~~733
Accumulated other comprehensive loss	(17,977		)	(630		)
Accumulated other comprehensive income/(loss)	2,097			(17,977		)
Total Snyder’s-Lance, Inc. stockholders’ equity	12,~~856~~002,~~633~~401			1,~~088~~856,~~250~~633
Non-controlling interests	19,~~037~~888			19,~~337~~037
Total stockholders’ equity	12,~~875~~022,~~670~~289			1,~~107~~875,~~587~~670
Total liabilities and stockholders’ equity	$	3,~~834~~618,~~076~~337		$	13,~~810~~834,~~704~~076

See Notes to the consolidated financial statements.

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SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

For the Fiscal Years Ended December 3130, ~~2016 (52 weeks)~~2017, ~~January~~December 231, 2016 ~~(52 weeks)~~ and January 32, ~~2015 (53 weeks)~~2016

(in thousands, except share and per share data)	Shares		CommonStock			AdditionalPaid-inCapital			RetainedEarnings			AccumulatedOtherComprehensiveIncome/(Loss)			Non-controllingInterests			Total
Balance, December 28, 2013	69,891,890		$	58,241		$	765,172		$	85,146		$	10,171		$	(830	)	$	917,900
Total comprehensive income/(loss)									192,591			(11,178		)	(58		)	181,355
Acquisition of remaining interest in Patriot Snacks Real Estate, LLC						(937		)							787			(150		)
Tax effect of transaction with non-controlling interests						198												198
Establish non-controlling interest in Late July															19,405			19,405
Dividends paid to stockholders ($0.64 per share)									(44,925		)							(44,925		)
Amortization of stock options						2,906												2,906
Stock options exercised, including $1,051 tax benefit	428,285		357			7,510												7,867
Issuance and amortization of restricted stock, net of cancellations	132,472		110			3,373												3,483
Repurchases of common stock	(46,561	)	(39		)	(1,292		)										(1,331		)
Balance, January 3, 2015	70,406,086		$	58,669		$	776,930		$	232,812		$	(1,007	)	$	19,304		$	1,086,708
Total comprehensive income									50,685			377			33			51,095
Dividends paid to stockholders ($0.64 per share)									(45,183		)							(45,183		)
Amortization of stock options						2,194												2,194
Stock options exercised, including $2,326 tax benefit	496,828		414			9,772												10,186
Issuance and amortization of restricted stock, net of cancellations	88,983		75			3,348												3,423
Repurchases of common stock	(23,843	)	(20		)	(816		)										(836		)
Balance, January 2, 2016	70,968,054		$	59,138		$	791,428		$	238,314		$	(630	)	$	19,337		$	1,107,587
Total comprehensive income/(loss)									14,885			(17,347		)	(182		)	(2,644		)
Dividends paid to stockholders ($0.64 per share)									(57,466		)							(57,466		)
Dividends paid to non-controlling interests															(118		)	(118		)
Issuance of common stock and stock-based awards assumed in the Diamond Foods acquisition	24,363,738		20,302			780,685												800,987
Amortization of stock options, restricted units and performance-based restricted units						21,642												21,642
Stock options exercised and restricted units vested (net of shares surrendered for tax withholding), including $910 tax benefit	897,875		748			2,897												3,645
Issuance and amortization of restricted shares, net of cancellations	106,457		89			4,917												5,006
Repurchases of common stock	(93,340	)	(78		)	(2,891		)										(2,969		)
Balance, December 31, 2016	96,242,784		$	80,199		$	1,598,678		$	195,733		$	(17,977	)	$	19,037		$	1,875,670
Total comprehensive income/(loss)									148,492			20,074			851			169,417
Dividends paid to stockholders ($0.64 per share)									(61,966		)							(61,966		)
Amortization of stock options, restricted units and performance-based restricted units						9,502												9,502
Stock options exercised and restricted units vested (net of shares surrendered for tax withholding)	1,363,436		1,136			25,983												27,119
Issuance and amortization of restricted shares, net of cancellations	298,236		249			4,139												4,388
Repurchases of common stock	(46,516	)	(39		)	(1,802		)										(1,841		)
Balance, December 30, 2017	97,857,940		$	81,545		$	1,636,500		$	282,259		$	2,097		$	19,888		$	2,022,289

See Notes to the consolidated financial statements.

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SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Fiscal Years Ended December 30, 2017, December 31, 2016 and January 2, 2016

(in thousands)	~~2016~~2017			~~2015~~2016			~~2014~~2015
Operating activities:
Net income	$	14149,~~703~~343		$	5014,~~718~~703		$	~~192~~50,~~533~~718
Adjustments to reconcile net income to cash from operating activities:
Depreciation and amortization	9996,~~251~~911			7099,~~379~~251			6570,~~164~~379
Stock-based compensation expense	2613,~~648~~890			526,~~616~~648			65,~~529~~616
Loss on sale of fixed assets, net	~~141~~1,437			~~420~~141			~~1,304~~420
Gain on sale of Private Brands, excluding transaction costs	—			—			(229,322		)
(Gain)/loss on disposal of Diamond of California	(3,069		)	32,645			—
Loss on sale of Diamond of California	32,645			—			—
Gain on sale of route businesses	(2,255		)	(1,341		)	(1,913		)
Gain on the purchase of additional interest in Late July	—			—			(16,608		)
Loss on early extinguishment of debt	—			4,749			—
Gain on sale of route businesses, net	(1,341		)	(1,913		)	(1,109		)
Impairment charges	114,783			4,466			11,997
Gain on write-off of debt premium	(1,341		)	—			—
Derecognition of cumulative translation adjustment	—			—			737
Impairment charges	4,466			11,997			13,047
Deferred income taxes	(153,963		)	24,811			2,433
Derecognition of cumulative translation adjustment	—			737			—
Provision for doubtful accounts	1,733			472			1,104
Deferred income taxes	24,811			2,433			(19,499		)
Provision for doubtful accounts	472			1,104			1,600
Changes in operating assets and liabilities, excluding business acquisitions, and foreign currency translation adjustments:
Accounts receivable	(346,~~047~~487		)	(634,~~349~~047		)	1(6,~~368~~349		)
Inventory	2(15,~~036~~663		)	52,~~242~~036			(75,~~131~~242		)
Other current assets	~~2,861~~(941		)	2,~~463~~861			52,~~972~~463
Accounts payable	219,~~762~~629			(221,~~468~~762		)	3(2,~~135~~468		)
Payable to growers	~~41,948~~—			—41,948			—
Other accrued liabilities	18(7,~~312~~378		)	618,~~970~~312			~~(149~~6,970		)
Other noncurrent assets	6(3,~~531~~596		)	~~709~~6,531			~~3,741~~709
Other noncurrent liabilities	12,~~341~~485			(1,~~904~~421		)	(71,~~550~~904		)
Net cash provided by operating activities	~~261~~196,~~199~~859			~~146~~267,~~154~~369			13146,~~025~~154
Investing activities:
Purchases of fixed assets	(7369,~~261~~429		)	(5173,~~468~~261		)	(7251,~~056~~468		)
Purchases of route businesses	(4253,~~206~~907		)	(2242,~~568~~206		)	(2122,~~359~~568		)
Proceeds from sale of fixed assets and insurance recoveries	1,409			1,776			2,122
Purchases of equity method investments	(1,500		)	—			—
Proceeds from sale of route businesses	39,619			27,408			22,400
Proceeds from sale of fixed assets and insurance recoveries	544			1,409			1,776
Proceeds from sale of investments	—			826			—
Proceeds from sale of route businesses	56,584			39,619			27,408
Proceeds from sale of discontinued operations	—			—			430,017
Proceeds from sale of investments	1,090			—			826
Business acquisitions, net of cash acquired	(1,042,674		)	—			(262,323		)
Proceeds from sale of discontinued operations	119,658			—			—
Changes in restricted cash	252			—			234
Business acquisitions, net of cash acquired	(2,563		)	(1,042,674		)	—
Net cash (used in)/provided by investing activities	(1,116,861		)	(44,026		)	99,035
Net cash provided by/(used in) investing activities	50,477			(1,117,113		)	(44,026		)
Financing activities:
Dividends paid to stockholders and non-controlling interests	(5761,~~584~~966		)	(4557,~~183~~584		)	(4445,~~925~~183		)
Acquisition of remaining interest in Patriot Snacks Real Estate, LLC	—			—			(150		)
Debt issuance costs	(2,441		)	(6,047		)	(5,065		)
Debt issuance costs	(6,047		)	(5,065		)	(1,854		)
Issuances of common stock	27,970			10,096			7,862
Issuances of common stock	10,096			7,862			6,816
Excess tax benefits from stock-based compensation	—			910			2,326
Excess tax benefits from stock-based compensation	910			2,326			1,051
Share repurchases, including shares surrendered for tax withholding	(2,692		)	(10,330		)	(836		)
Share repurchases, including shares surrendered for tax withholding	(10,330		)	(836		)	(1,331		)
Payments on capital leases	(4,817		)	(2,412		)	—
Payments on capital leases	(2,412		)	—			—
Repayments of long-term debt	(49,000		)	(444,795		)	(7,500		)
Proceeds from issuance of long-term debt	~~1,130,000~~—			—1,130,000			—
Repayments of long-term debt	(438,625		)	(7,500		)	(15,374		)
Repayments of revolving credit facility	(365,500		)	(120,000		)	(50,000		)
Net proceeds from/(repayments of) existing credit facilities	227,000			(50,000		)	(35,000		)
Proceeds from revolving credit facility	193,500			347,000			—
Net cash provided by/(used in) financing activities	853,008			(98,396		)	(90,767		)
Net cash (used in)/provided by financing activities	(264,946		)	846,838			(98,396		)
Effect of exchange rate changes on cash	~~(1,042~~636		)	—(1,042		)	—
(Decrease)/increase in cash and cash equivalents	(3,696		)	3,732			21,293
Net (decrease)/increase	(16,974		)	(3,948		)	3,732
Cash and cash equivalents at beginning of fiscal year	39,105			35,373			14,080
Cash, cash equivalents and restricted cash at beginning of fiscal year	36,123			40,071			36,339
Cash and cash equivalents at end of fiscal year	$	35,409		$	39,105		$	35,373
Cash, cash equivalents and restricted cash at end of fiscal year	$	19,149		$	36,123		$	40,071
Non-cash investing activities:
Proceeds from the sale of discontinued operations, not yet received, less transaction costs, not yet paid	$	125,772		$	—		$	—
(Increase)/decrease in fixed asset expenditures included in accounts payable	$	(508	)	$	(215	)	$	712
Proceeds from the sale of discontinued operations, not yet received, less transaction costs, not yet paid	$	800		$	125,772		$	—
Non-cash financing activities:
Common stock and stock-based compensation issued for business acquisitions (Note 4)	$	800,987		$	—		$	—
Common stock and stock-based compensation issued for business acquisitions (Note 5)	$	—		$	800,987		$	—
Supplemental information:
Cash paid for income taxes, net of refunds of $2,000, $2,608 and $381, respectively	$	9,582		$	23,068		$	160,906
Cash paid for income taxes, net of refunds of $676, $2,000 and $2,608, respectively	$	5,458		$	9,582		$	23,068
Cash paid for interest	$	3036,~~894~~831		$	1130,~~523~~894		$	1311,~~798~~523

See Notes to the consolidated financial statements.

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SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the Fiscal Years Ended December 3130, ~~2016~~2017, ~~January~~December 231, 2016 and January 32, ~~2015~~2016

NOTE 1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operations

We are engaged in the manufacturing, distribution, marketing and sale of snack food products. These products include pretzels, sandwich crackers, kettle cooked chips, pretzel crackers, ~~cookies~~popcorn, nuts, potato chips, tortilla chips, cookies, restaurant style crackers, ~~popcorn, nuts~~ and other salty snacks. Our products are packaged in various single-serve, multi-pack, family-size and party-size configurations. Our Branded products are principally sold under the Snyder’s of Hanover®, Lance®, Cape Cod®, Snack Factory® Pretzel Crisps®, Pop Secret®, Emerald®, Kettle Brand®, KETTLE® Chips, Late July®, Metcalfe’s skinny®, Tom’s®, Archway®, Jays®, Stella D’oro®, Eatsmart SnacksTM, Krunchers!® and O-Ke-Doke® and other brand names.

We also sell Partner brand products, which consist of third-party branded products that we sell to ~~our~~the independent business owners ("IBO") through our national direct-store-delivery distribution network ("DSD network"), in order to broaden the portfolio of product offerings for ~~our~~the IBOs. In addition, we contract with other branded food manufacturers to produce their products and periodically sell certain semi-finished goods to other manufacturers.

We distribute snack food products throughout the United States ("US") using ~~our~~the DSD network. ~~Our~~The DSD network is made up of ~~approximately~~over 3,200 routes that are primarily owned and operated by IBOs. We also ship products directly to third-party distributors in areas where ~~our~~the DSD network does not operate. Through our direct distribution network, we distribute products directly to retail customers or to third-party distributors using freight carriers or our own transportation fleet.

Through ~~our~~the DSD network, we sell our Branded and Partner brand products to IBOs that distribute to grocery/mass merchandisers, club stores, discount stores, convenience stores, food service establishments and various other retail customers, including drug stores, schools, military and government facilities and “up and down the street” outlets such as recreational facilities, offices and other independent retailers. In addition, we sell our Branded products directly to retail customers and third-party distributors. In the United Kingdom ("U.K.") and certain other countries within Europe, we sell our salty snack products through our sales personnel ~~directly~~and through third-party distributors to national grocery, co-op and impulse store chains.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Snyder’s-Lance, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to current year presentation. We have elected to separately disclose other operating (income)/expense, ~~including~~net ~~debt~~and ~~issuance~~other ~~cost~~(income)/expense, ~~balances~~net. asIn ~~described~~addition, ~~further~~we have included the caption operating income on our Consolidated Statements of Income. The items included in ~~Note~~other 2operating (income)/expense, ~~have~~net ~~been~~include: ~~reclassified~~gains toor ~~conform~~losses toon ~~current~~sale ~~year~~of ~~presentation~~property, plant and equipment; gains or losses on sale of route businesses; and royalty income. The items included in other (income)/expense, net include: foreign exchange gains or losses and equity income or losses from nonconsolidated entities. These reclassifications had no effect on previously reported results of operations or retained earnings.

The Company's fiscal year ends on the Saturday closest to December 31 and, as a result, a 53rd week is added every fifth or sixth year. The Company's 2017, 2016 and 2015 fiscal years each contained 52 weeks and ended on December 30, 2017, December 31, 2016 and January 2, 2016, respectively. ~~Fiscal year 2014 contained 53 weeks and ended on January 3, 2015.~~

Discontinued Operations Presentation

~~Effective~~In ~~for the years beginning January 4, 2015, in~~ order to be reported within discontinued operations, our disposal of a component or group of components must represent a strategic shift that will have a major effect on our operations and financial results. We aggregate the results of operations for discontinued operations into a single line item in the income statement. General corporate overhead is not allocated to discontinued operations.

As discussed in Note 3, amounts included in the Consolidated Statements of Income for prior periods have been reclassified to separate amounts related to discontinued operations from continuing operations. Accordingly, unless otherwise stated, amounts disclosed within the notes to the consolidated financial statements exclude amounts related to discontinued operations. The Consolidated Statements of Cash Flows were not adjusted for presentation of discontinued operations, but certain items are disclosed in Note 3 to the consolidated financial statements. 47

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As discussed in Note 4, amounts included in the Consolidated Statements of Income for prior periods have been reclassified to separate amounts related to discontinued operations from continuing operations. Accordingly, unless otherwise stated, amounts disclosed within the notes to the consolidated financial statements exclude amounts related to discontinued operations. The Consolidated Statements of Cash Flows were not adjusted for presentation of discontinued operations, but certain items are disclosed in Note 4 to the consolidated financial statements.

Business Combinations

We account for business combinations under the provisions of Accounting Standards Codification ("ASC") Topic 805-10, Business Combinations ("ASC 805-10"), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the US ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the periods reported. Examples include sales and promotional allowances, customer returns, allowances for doubtful accounts, inventory valuations, useful lives of fixed assets and related impairment, long-term investments, hedge transactions, goodwill and intangible asset valuations and impairments, incentive compensation, income taxes, self-insurance, contingencies and litigation. Actual results may differ from these estimates under different assumptions or conditions.

Non-controlling Interests

We own 80% of Late July Snacks, LLC (“Late July”) and consolidate its balance sheet and operating results into our consolidated financial statements. The associated non-controlling interest is classified as equity, with the consolidated net income adjusted to exclude the net income or loss attributable to the non-controlling interest.

Revenue Recognition

Revenue for products sold to IBOs in ~~our~~the DSD network is recognized when the IBO purchases the inventory from our warehouses or the products are shipped to the stockroom. Revenue for products sold to retail customers through routes operated by company associates is recognized when the product is delivered to the customer.

We record certain reductions to revenue for promotional allowances. There are several different types of promotional allowances such as off-invoice allowances, rebates and shelf space allowances. An off-invoice allowance is a reduction to the sales price that is directly deducted from the invoice amount. We record the amount of the deduction as a reduction to revenue when the transaction occurs. Rebates are offered to retail customers based on the quantity of product purchased over a period of time. Based on the nature of these allowances, the exact amount of the rebate is not known at the time the product is sold to the customer. An estimate of the expected rebate is recorded as a reduction to revenue at the time of the sale and a corresponding accrued liability is recorded. The accrued liability is monitored throughout the time period covered by the promotion, and is based on historical information and the progress of the customer against the target amount. We also record certain allowances for coupon redemptions, scan-back promotions and other promotional activities. These promotions are estimated and recorded as a reduction toof revenue at the time the associated sale. The accrued liabilities for these allowances are monitored throughout the time period covered by the coupon or promotion.

Total allowances for sales returns, rebates, coupons, scan-backs and other promotional activities recorded in the Consolidated Balance Sheets was $39.8 million and $25.4 million as of December 31, 2016 and January 2, 2016, respectively.48

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Total allowances for sales returns, rebates, coupons, scan-backs and other promotional activities recorded in the Consolidated Balance Sheets was $43.8 million and $39.8 million as of December 30, 2017 and December 31, 2016, respectively.

Allowance for Doubtful Accounts

Fair Value

We have classified assets and liabilities required to be measured at fair value into the fair value hierarchy as set forth below:



Level 1	-	Quoted prices in active markets for identical assets and liabilities.
Level 2	-	Observable inputs other than quoted prices for identical assets and liabilities.
Level 3	-	Unobservable inputs for which there is little or no market data available, which requires us to develop our own assumptions.

See Note 1314 for more information on fair value measurements.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Restricted Cash

Restricted cash represents cash and cash equivalents which can only be used for retention of certain employees.

Inventories

Inventories are valued at the lower of cost or net realizable value using the first-in first-out (FIFO) method.

Fixed Assets

Depreciation of fixed assets is computed using the straight-line method over the estimated useful lives of long-term depreciable assets. Leasehold improvements are depreciated over the estimated life of the improvement or the life of the lease, whichever is shorter. Estimated lives are based on historical experience, maintenance practices, technological changes and future business plans. The following table summarizes the majority of our estimated useful lives of long-term depreciable assets:



	Useful Life
Buildings and building improvements	10-45 years
Land improvements	10-20 years
Machinery, equipment and computer systems	3-20 years
Furniture and fixtures	3-12 years
Trucks, trailers and automobiles	3-10 years

Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets or asset groups to be held and used is measured by a comparison of the carrying amount of an asset or asset group to future net cash flows expected to be generated by the asset or asset group. If such assets or asset groups are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets or asset groups exceeds the fair value of the assets or asset groups. Assets held for sale are reported at the lower of the carrying amount or fair value less cost to sell.

Route Intangible Purchase and Sale Transactions

We purchase and sell ~~route~~routes ~~businesses~~ as a part of ~~maintenance~~the ~~of our~~ DSD network. ~~Route~~Routes ~~businesses~~ subject to purchase and sale transactions represent integrated sets of inputs, activities and processes that are capable of being conducted and managed by IBOs for the purpose of providing a return directly to the IBOs. ~~and~~However, they do not meet the definition of a business for accounting purposes in accordance with ~~FASB~~Accounting ~~ASC~~Standards ~~805~~Update ("ASU") 2017-01, Clarifying the Definition of a Business ~~Combinations~~which we adopted in the fourth quarter of 2017 as discussed in Note 3. Upon acquisition of a route ~~business~~, we allocate the purchase price ~~based~~to onan ~~the fair value of the~~ indefinite-lived route intangible, representing our perpetual and exclusive distribution right in the route ~~territory, with any excess purchase price attributed to goodwill~~. We recognize a gain or a loss on the sale of a route ~~business~~ upon completion of the sales transaction and signing of the relevant documents. Gain or loss on the sale is determined by comparing the basis of the route ~~business~~ sold, which ~~includes~~will abe ~~relative~~comprised ~~fair~~primarily ~~value allocation~~ of ~~goodwill~~the inassociated ~~accordance with FASB ASC 350, Intangibles~~indefinite-~~Goodwill~~lived ~~and Other~~intangible, to the proceeds received from the IBO.

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Goodwill and Other Intangible Assets

Goodwill is tested for impairment on an annual basis, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach.

We are required to evaluate and determine our reporting units for purposes of performing the annual impairment analysis of goodwill. AsOur a2017 ~~result~~and ~~of the Diamond Foods, Inc. ("Diamond Foods") acquisition, our~~ 2016 ~~analysis~~analyses identified two reporting units, North America and Europe. The annual impairment analysis of goodwill and other indefinite-lived intangible assets also requires us to project future financial performance, including revenue and profit growth, fixed asset and working capital investments, income tax rates and our weighted average cost of capital. These projections rely upon historical performance, anticipated market conditions and forward-looking business plans.

Goodwill determined at the time of an acquisition represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill is attributable to the general reputation, assembled workforce, acquisition synergies and the expected future cash flows of the business.

Our trademarks are valued using the relief-from-royalty method under the income approach, which requires us to estimate a royalty rate, identify relevant projected revenue, and select an appropriate discount rate. Our route intangible assets are valued by comparing the current fair market value for the route assets to the associated book value. The fair market value is computed using the route sales average for each route or group of routes multiplied by the market multiple for the area in which the route is located. Other intangible assets, primarily customer and contractual relationships and patents, are tested for impairment if events or changes in circumstances indicate that it is more likely than not that fair value is less than book value.

Amortizable intangible assets are amortized using the straight-line method over their estimated useful lives, which is the period over which economic benefits are expected to be provided.

Equity Method Investments

Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheets. Under this method of accounting, our share of the net earnings or losses of the investee is included in other income, net on our Consolidated Statements of Income. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. Our equity method investments totaled $11.7 million and $8.4 million as of December 31 30, ~~2016. We~~2017 ~~had~~and ~~no equity method investments as of January 2~~December 31, 2016, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. We estimate valuation allowances on deferred tax assets for the portions that we do not believe will be fully utilized based on projected earnings and usage. InDeferred ~~accordance with Accounting Standards Update ("ASU") No. 2015-17, deferred~~ tax assets and liabilities, along with related valuation allowances, are netted by tax jurisdiction and classified as noncurrent on the balance sheet.

AUS ~~portion~~Tax of the cumulative earnings of certain foreign subsidiaries is considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal and state income taxes is required. It is not practicable to determine the amount of unrecognized deferred tax liability related to the unremitted earnings. Applicable U.S. income taxes are provided on earnings of certain foreign subsidiaries in the periods in which they are no longer considered indefinitely reinvested. In the event that management elects for any reason in the future to repatriate some or all of the foreign earnings that were previously deemed to be indefinitely reinvested outside of the United States, we would incur additional tax expense upon such repatriation.Reform

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law. The Tax Act made numerous changes to many aspects of U.S. corporate income taxation by, among other things, lowering the US corporate income tax rate from 35% to 21%, implementing a territorial tax system and imposing a one-time transition tax on deemed repatriated earning of foreign subsidiaries. As a result of the Tax Act, the Company revalued its net deferred tax liabilities to reflect the tax rate expected to apply in the years in which the temporary differences are expected to reverse. This resulted in an approximate $123.2 million tax benefit. The Tax Act provides a dividends received deduction for any future dividends from non-U.S. subsidiaries to their U.S. parent company. The Tax Act also imposes a one-time deemed repatriation of accumulated post-1986 foreign earnings which have not been previously taxed. The Company recorded a provisional estimate for this transition tax of approximately $7.5 million. Through the third quarter of 2017 the Company had recorded taxes of approximately $46.7 million on the amount of basis difference in foreign subsidiaries which is not indefinitely reinvested. In the fourth quarter of 2017 the Company has recorded a benefit to reflect the reduced rate at which any remaining basis difference will be taxed.

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The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act and allows the registrant to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. We have recognized a net tax benefit of $162.4 million for the provisional tax impacts related to the one-time transition tax and the revaluation of deferred tax balances and included these estimates in our consolidated financial statements for the year ended December 30, 2017. We are in the process of analyzing the impact of the various provisions of the Tax Act. The ultimate impact may materially differ from these provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the Tax Act. We expect to complete our analysis within the measurement period in accordance with SAB 118. See Note 13, Income Taxes, for further details on the impact of the Tax Act.

Employee and Non-Employee Stock-Based Compensation Arrangements

We account for stock option awards based on the fair value-method using the Black-Scholes model. Compensation expense for stock options is recognized using straight-line attribution over the vesting period, which is usually three years, and is adjusted for a forfeiture rate based on historical and estimated future experience.

Compensation expense for restricted shares and restricted units is recognized over the vesting period, which is generally three years, based on the closing stock price on the grant date. Restricted shares receive or accrue the same dividend as common shares outstanding. Non-employee restricted units receive or accrue a non-forfeitable dividend equivalent that is added to the number of units available to vest and is equal to the dividends paid on common shares outstanding.

The fair value of market condition, performance-based restricted units granted to our employees is estimated on the date of grant using a Monte Carlo valuation model, which requires the input of subjective assumptions. The risk free interest rate is based on rates of US Treasury issues with a remaining life equal to the expected life of the performance-based restricted units. The time to maturity reflects the remaining performance period at the grant date. The expected volatility is based on the historical volatility of our common stock over the expected life as we ~~feel~~believe this is a reasonable estimate of future volatility.

Compensation expense for performance-based restricted units is recognized using straight-line attribution over the performance period, which is approximately three years, and is adjusted for a forfeiture rate based on historical and estimated future experience. Performance-based restricted units receive or accrue a forfeitable dividend equivalent that is added to the number of units available to vest and is equal to the dividends paid on common shares outstanding.

Self-Insurance Reserves

We maintain self-insurance reserves for workers’ compensation and auto liability for individual losses up to the deductibles which are currently $0.8 million per individual loss for workers' compensation, $0.5 million for auto liability per accident and $0.3 million for auto physical damage per accident. In addition, certain general and product liability claims are self-funded for individual losses up to the $0.58 million insurance deductible. Claims in excess of the deductible are fully insured up to $100 million per occurrence and in the aggregate. We evaluate input from a third-party actuary in the estimation of the casualty insurance obligation on an annual basis. In determining the ultimate loss and reserve requirements, we use various actuarial assumptions, including compensation trends, healthcare cost trends and discount rates. In ~~2016~~2017, we used a discount rate of 2.0%, the same rate used in ~~2015~~2016, based on treasury rates over the estimated future payout period.

We also use historical information for claims frequency and severity in order to establish loss development factors. ~~For~~As ~~2016~~of December 30, 2017 and ~~2015~~December 31, 2016, we had accrued liabilities related to the retained risks of $1718.34 million and $1617.23 million, respectively, included in the accruals for casualty insurance claims in our Consolidated Balance Sheets. The liabilities related to our casualty insurance claims were partially offset by estimated reimbursements for amounts in excess of our deductibles associated with these claims of $4.69 million and $54.26 million for ~~2016~~2017 and ~~2015~~2016, respectively, which are included in other noncurrent assets in our Consolidated Balance Sheets.

Derivative Financial Instruments

We are exposed to certain interest rate risks as part of our ongoing business operations and may use derivative financial instruments, where appropriate, to manage these risks. If we elect to do so, and if the instrument meets certain criteria, management designates its derivatives as cash flow hedges. For designated cash flow hedges, the effective portion of the change in fair value is included in accumulated other comprehensive income, net of related tax effects, with the corresponding asset or liability recorded in the Consolidated Balance Sheets. The ineffective portion of the gain or loss, if any, is immediately recognized in the same caption where the hedged items are recognized in the Consolidated Statements of Income. We do not use derivatives for speculative purposes.

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Consolidated Balance Sheets. The ineffective portion of the gain or loss, if any, is immediately recognized in the same caption where the hedged items are recognized in the Consolidated Statements of Income. We do not use derivatives for speculative purposes.

Earnings Per Share

Basic earnings per share from continuing and discontinued operations is computed by dividing income from continuing and discontinued operations attributable to Snyder's-Lance, respectively, by the weighted average number of common shares outstanding during each period.

Diluted earnings per share gives effect to all securities representing potential common shares that were dilutive and outstanding during the period. In the calculation of diluted earnings per share, the denominator includes the number of additional common shares that would have been outstanding if our outstanding dilutive stock options had been exercised pursuant to the treasury stock method, or if our outstanding dilutive restricted units or performance-based restricted units had vested and converted to common stock. Anti-dilutive shares are excluded from the dilutive earnings calculation. No adjustment to reported net income is required when computing diluted earnings per share.

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Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and are treated as a separate class of securities in calculating earnings per share pursuant to the two-class method. We have granted and expect to continue to grant restricted shares with non-forfeitable rights to dividends and restricted units with non-forfeitable rights to dividend equivalents. We include these awards in our calculation of basic and diluted earnings per share using the two-class method when we have undistributed income after considering the effect of dividends declared during the period.

Advertising Costs

Advertising costs (except production costs) are expensed as incurred. Advertising production costs are expensed in the period that the advertisement first takes place or when a decision has been made to not use the advertisement. Advertising costs included in selling, general and administrative expenses on the Consolidated Statements of Income were $5459.78 million, $3154.87 million and $3431.18 million during ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, respectively.

Research and Development

We conduct research and development for the purpose of developing innovative, high-quality products that exceed consumer expectations. Our efforts include the use of professional product developers such as microbiologists, food scientists and culinary experts who all work in collaboration with innovation, marketing, manufacturing and sales leaders to develop products to meet changing consumer demands as well as formulate new products. In addition to developing new products, the research and development staff routinely reformulates and improves existing products based on advances in ingredients and technology, and conducts value engineering to maintain competitive price points. Our research and development costs were approximately $106.02 million, $610.20 million and $7.6.2 million in ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, respectively, and are included in cost of sales in the Consolidated Statements of Income.

Shipping and Handling Costs

We do not bill customers separately for shipping and handling of product. These costs are included as part of selling, general and administrative expenses on the Consolidated Statements of Income. Shipping and handling costs were $~~152~~179.49 million, $~~112~~152.64 million and $~~114~~112.56 million during ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, respectively.

Loss Contingencies

Various legal actions, claims, and other contingencies arise in the normal course of our business. Specific reserves are provided for loss contingencies to the extent we conclude that a loss is both probable and reasonably estimable. We use a case-by-case evaluation of the underlying data and update our evaluation as further information becomes known. Legal costs are expensed as incurred.

Foreign Currency Translation

The functional currency of our foreign operations is the applicable local currency, the British ~~Pound~~pound and Euro. The functional currency is translated into US dollars for balance sheet accounts using currency exchange rates in effect as of the balance sheet date, and for revenue and expense accounts using an average exchange rate in effect during the applicable period.

NOTE 2. ~~NEW~~ MERGER ~~ACCOUNTING~~AGREEMENT ~~STANDARDS~~WITH CAMPBELL SOUP COMPANY

On ~~April~~December 1018, ~~2014~~2017, ~~the~~we ~~Financial~~entered ~~Accounting~~into ~~Standards~~an ~~Board~~Agreement ~~("FASB") issued ASU No. 2014-08, Reporting Discontinued Operations~~ and ~~Disclosures~~Plan of ~~Disposals~~Merger ~~of Components of an Entity, which changed~~ (the ~~criteria~~“Merger ~~for~~Agreement”) ~~determining~~to ~~which disposals can~~ be ~~presented~~acquired asby ~~discontinued~~the ~~operations~~Campbell ~~and~~Soup ~~modified~~Company ~~related disclosure requirements~~("Campbell"). ~~This~~At ~~accounting standard has~~ the ~~impact~~time of ~~reducing~~ the ~~frequency of disposals reported as discontinued operations~~merger, byeach ~~requiring~~of ~~such~~our ashares ~~disposal~~of to$0.83-1/3 ~~represent~~par avalue ~~strategic~~common ~~shift~~stock ~~that has or~~ will ~~have~~be aconverted ~~major~~into effect on an entity’s operations and financial results. However, existing provisions that prohibited an entity from reporting a discontinued operation if it had certain continuing cash flows or involvement with the ~~component~~right ~~after~~to ~~disposal~~receive ~~were eliminated by this standard~~$50.00. The ~~ASU~~approximate ~~also~~final ~~expands~~purchase ~~the~~price ~~disclosures~~is ~~for~~expected ~~discontinued operations and requires new disclosures related~~ to ~~individually~~be ~~significant disposals that do not qualify as discontinued operations~~$4. We9 ~~adopted~~billion ~~this~~and ~~guidance~~represents ~~prospectively~~a ~~beginning~~total ~~January~~enterprise 4value, ~~2015. The~~including ~~ASU~~debt, ~~was~~of ~~applied~~approximately to$6.0 ~~2016 divestiture information discussed in Note 3~~billion.

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides for a single five-step model to be applied to all revenue from contracts with customers. The guidance also requires improved disclosures to help users of the financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of ASU No. 2014-09 by one year, to December 15, 2017 for interim and annual reporting periods beginning after that date. The FASB will permit early adoption of the standard, but not before the original effective date of December 15, 2016.52

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InThe ~~2016,~~obligations of the ~~FASB~~parties ~~issued~~to ~~final~~consummate ~~amendments~~the ~~clarifying~~transaction under the ~~implementation~~Merger ~~guidance~~Agreement ~~for~~are ~~principal~~subject ~~versus~~to ~~agent~~customary ~~considerations~~closing conditions. Among those conditions, ~~identifying~~we ~~performance~~are ~~obligations~~required to call and hold a special shareholder meeting and it is required that our Board of Directors recommend that our shareholders approve the ~~accounting~~Merger Agreement. Our Board of ~~intellectual~~Directors ~~property~~has ~~licenses~~made such recommendation in the definitive proxy statement filed with the SEC on February 20, 2018 in advance of the shareholder meeting to be held on March 23, 2018. In ~~addition~~connection with the Merger Agreement, certain trusts affiliated with Patricia A. Warehime, a member of our Board, and members of her immediate family, each such trust being a shareholder of the ~~FASB~~Company ~~introduced~~(collectively, ~~practical~~the ~~expedients~~“Warehime ~~related~~Holders”), entered into a voting agreement with Campbell, pursuant to ~~disclosures~~which the Warehime Holders agreed, among other things, to vote the shares of ~~remaining~~Company ~~performance~~common ~~obligations~~stock over which they have voting power in favor of the approval of the merger agreement and the transactions contemplated thereby, asincluding ~~well~~the asmerger. ~~other~~As ~~amendments~~of February 16, 2018, the record date for the special meeting, the Warehime Holders owned 12,851,757 shares, or approximately 13.1% of the shares of Company common stock outstanding and entitled to ~~guidance~~vote onat ~~collectability~~the special meeting. The transactions contemplated by the Merger Agreement are subject to the satisfaction or waiver of certain customary conditions, ~~non~~including the approval of the Merger Agreement by our shareholders, expiration (or earlier termination) of the waiting period under the Hart-~~cash~~Scott-Rodino ~~consideration~~Antitrust ~~and~~Improvements Act of 1976, as amended, which was satisfied on February 2, 2018 when the ~~presentation~~waiting period was terminated, the absence of ~~sales~~any legal prohibitions, the accuracy of the representations and ~~other~~warranties ~~similar~~of ~~taxes~~the parties, and compliance by the parties with their respective obligations under the Merger Agreement. Assuming all conditions are met, we expect this transaction will close late in the first quarter of 2018.

~~The~~Under ~~impact~~certain ofcircumstances ~~adopting~~defined within the ~~new~~Merger ~~standard~~Agreement, onin ~~our~~the ~~net~~event ~~revenue~~that ~~and~~we ~~operating~~terminate ~~income~~the isMerger ~~not~~Agreement, ~~expected~~we towould be ~~material. We~~required ~~also~~to dopay ~~not~~a ~~expect~~termination afee ~~material~~in ~~impact~~the toamount ~~our~~of ~~balance~~$149.0 ~~sheet~~million. ~~The~~ ~~immaterial~~In ~~impact~~the ofevent ~~adopting~~that ~~ASU~~Campbell ~~No.~~terminates ~~2014-09~~the ~~primarily~~agreement, ~~relates~~subject to certain limitation set forth in the ~~following:~~Merger Agreement, they would be required to pay a termination fee of $198.6 million.

•Four ~~Slotting~~putative ~~fees~~class action lawsuits related to the proposed Merger were filed by purported shareholders of the Company. These lawsuits (together, ~~which~~the ~~are~~“Actions”) ~~currently~~captioned ~~amortized~~Shaev ~~over~~v. Snyder’s-Lance, Inc., et al. (Case No.3:18-cv-00039) (the ~~lesser~~“Shaev ofAction”), ~~their~~Sciabacucchi ~~arrangement~~v. ~~term~~Snyder’s-Lance, orInc., 12et ~~months~~al. (Case No. 3:18-cv-00049-RJCDCK) (the “Sciabacucchi Action”), ~~but~~Kendall ~~under~~v. Snyder’s-Lance, Inc., et al. (Case No. 3:18-cv-00051) (the ~~new~~“Kendall ~~standard~~Action”), ~~these~~and ~~slotting~~Daniel ~~fees~~v. ~~will~~Snyder’s-Lance, beInc., ~~recorded~~et al. (Case No. 3:18-cv-00058) (the “Daniel Action”) were filed in the United States District Court for the Western District of North Carolina on January 25, 2018, January 29, 2018, January 30, 2018, and January 31, 2018, respectively. The Actions name as defendants the Company and the members of the Company’s Board, and allege that the defendants filed a ~~reduction~~materially incomplete and misleading proxy statement on Schedule 14A in violation of Sections 14(a) and 20(a) of the ~~transaction~~Exchange ~~price~~Act ~~when~~of 1934, as amended (the ~~product~~“Exchange isAct”) ~~sold~~and SEC Rule 14a-9. ~~This~~Additionally, ~~could~~the ~~lead~~Sciabacucchi toAction names Campbell as a ~~difference~~defendant, and alleges that Campbell violated Section 20(a) of the Exchange Act. The Kendall Action seeks to enjoin the shareholder vote on the proposed merger, and the Shaev, Sciabacucchi, and Daniel Actions seek to enjoin the defendants from proceeding with or consummating the proposed merger or, in the ~~timing~~event ofthe ~~recognizing~~merger ~~revenue~~is consummated, request that the Court issue an order rescinding the merger and/or awarding rescissory damages. Additionally, the Shaev and Kendall Actions seek that the Court direct defendants to account for alleged damages, and all the Actions seek attorneys’ and expert fees and expenses. The Company believes these Actions are without merit.

•In ~~Licensing~~the fourth quarter of ~~promotional~~2017, ~~materials~~we incurred $2.1 million of professional fees associated with this transaction. During the first quarter of 2018 through the time of closing, we expect to ~~distributors~~incur ~~would~~approximately be$50 amillion ~~separate~~to $60 million of additional expenses for additional professional fees and costs related to the merger. Under the terms of the change in control provisions of our incentive compensation awards and the terms of the Merger Agreement, all time-based, unvested equity awards will vest immediately and all performance-based ~~obligation~~awards ~~under~~will vest pro-rata at the ~~new~~higher ~~standard.~~of Weactual ~~believe~~or ~~that~~target ~~this~~attainment. isThis ~~immaterial~~will result in approximately $20 million to $25 million of additional expense recorded at the ~~context~~time of ~~our~~close ~~contracts~~due to this acceleration.

•NOTE ~~Contract manufacturing arrangements are recognized as revenue when product is delivered to the customer~~3. NEW IfACCOUNTING any of our contracts create an asset without an alternative use and an enforceable right to payment, then we would recognize revenue over time under the new standard. The right to payment is not enforceable under the contracts we have currently assessed.STANDARDS

WeRecently plan to adopt ASC Topic 606, Revenue from Contracts with Customers, on December 31, 2017, the first day of our fiscal year 2018. The guidance permits the use of either a full retrospective or modified retrospective transition method. We are currently evaluating the method of adoption but believe that we will apply the modified retrospective approach. Adopted

On ~~April~~January 75, ~~2015,~~2017 the Financial Accounting Standards Board (“FASB”) issued ASU ~~No. 2015~~2017-0301, ~~Simplifying~~Clarifying the ~~Presentation~~Definition of ~~Debt~~a ~~Issuance Costs~~Business. WeThis ~~adopted~~accounting ~~this~~standard ~~change~~clarifies inthe ~~accounting~~definition ~~principle~~of ina business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the new guidance, an entity first ~~quarter~~determines whether substantially all of ~~fiscal~~the ~~year~~fair ~~2016~~value ~~which~~of ~~requires~~the ~~retrospective~~gross ~~application. This~~assets ~~ASU~~acquired ~~requires~~is ~~that~~concentrated ~~debt~~in ~~issuance~~a ~~costs~~single ~~related~~identifiable toasset or a ~~recognized~~group ~~debt~~of ~~liability~~similar beidentifiable ~~presented~~assets. inIf this threshold is met, the ~~balance~~assets ~~sheet~~are asnot considered a ~~direct~~business ~~deduction~~for ~~from~~the purpose of allocating the ~~carrying~~purchase ~~amount~~price. ofIf ~~that~~it ~~debt~~is ~~liability~~not ~~consistent~~met, ~~with~~the ~~debt~~entity ~~discounts.~~then ~~This~~evaluates ~~revised~~whether ~~guidance~~the isset ~~effective~~meets ~~for~~the ~~annual~~requirements ~~reporting~~that ~~periods~~a ~~beginning~~business ~~after~~include, ~~December~~at 15a minimum, ~~2015~~an input and ~~related~~a ~~interim~~substantive ~~periods,~~process ~~with~~that ~~early~~together ~~adoption~~significantly ~~permitted~~contribute to the ability to create outputs. InUnder ~~August~~the ~~2015~~new guidance, the ~~FASB~~purchase ~~issued~~or ~~ASU~~sale ~~No.~~of ~~2015-15,~~a ~~Presentation~~route ~~and~~will ~~Subsequent~~no ~~Measurement~~longer ofbe ~~Debt~~considered ~~Issuance~~the ~~Costs~~purchase ~~Associated~~or ~~with~~sale ~~Line-~~of~~-Credit~~ ~~Arrangements,~~a ~~which~~business ~~clarified~~for accounting purposes due to the fact that ~~debt~~the ~~issuance~~perpetual ~~costs~~and ~~related~~exclusive todistribution ~~line-of-credit~~rights ~~arrangements~~(a ~~can~~route) berepresent ~~presented~~substantially inall of the ~~balance~~fair ~~sheet~~value asof any given acquisition from or disposition to an ~~asset~~IBO. ~~and~~There ~~amortized~~has ~~over~~been no change to our relationships or interactions with the ~~term~~IBOs. ofHowever, under the ~~line-of-credit~~new ~~arrangement.~~guidance, ~~The~~we ~~following~~will ~~table~~no ~~summarizes~~longer allocate any of the ~~adjustments~~purchase ~~made~~price to ~~conform~~goodwill ~~prior~~upon ~~period~~acquisition ~~classifications~~of toa ~~the~~route ~~new~~and ~~guidance:~~we will no longer

	January 2, 2016
(in thousands)	As Filed			Reclass			As Adjusted
Other noncurrent assets	$	27,403		$	(7,554	)	$	19,849
Long-term debt, net	$	(379,855	)	$	7,554		$	(372,301	)

On July 22, 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This ASU requires that inventory be measured at the lower of cost or net realizable value. The amendments in this update do not apply to inventory measured using the last-in, first-out method or the retail inventory method. This revised guidance is effective for annual reporting periods beginning after December 15, 2016 and related interim periods, with early adoption permitted. The Company early adopted this standard in the first quarter of 2016. The adoption of ASU 2015-11 had no impact on our consolidated financial statements.

On September 25, 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. This ASU simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. This revised guidance is effective for annual reporting periods beginning after December 15, 2015, and related interim periods. The amendments in the update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of the update with early application permitted for financial statements not yet issued. We have adopted this guidance and have applied it as presented in Note 4.

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Onperform ~~February 25, 2016, the FASB issued ASU No. 2016-02, Leases. This ASU requires us to recognize~~ a ~~lease~~relative ~~liability~~fair ~~for the obligation to make lease payments, measured at the present~~ value onallocation ~~a discounted basis, and a right-~~of~~-use~~ ~~(“ROU”)~~goodwill ~~asset~~upon ~~for the right to use the underlying asset for the duration of the lease term, measured at the lease liability amount adjusted for lease prepayments, lease incentives received and initial direct costs~~divestitures. ~~The~~ ~~lease~~We ~~liability~~have ~~and~~adopted ~~ROU~~this ~~asset~~accounting ~~are~~standard ~~recognized~~prospectively ~~in the balance sheet~~ at the ~~commencement~~beginning of the ~~lease. For~~fourth ~~income~~quarter ~~statement~~of ~~purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance~~2017. ~~Operating~~ ~~leases~~Although ~~will~~we ~~result in straight line expense while finance leases~~ will ~~result~~no inlonger ahave ~~front-loaded~~goodwill ~~expense~~allocated ~~pattern. Classification will be based~~ on ~~criteria~~future ~~that~~route ~~are~~acquisitions ~~largely~~or ~~similar to those applied in current lease accounting. ASU 2016-02 is effective for annual reporting periods~~divestitures, ~~including~~we ~~interim~~will ~~periods~~continue ~~within~~to ~~those~~record ~~periods,~~gains ~~beginning after December 15, 2018,~~ and ~~requires~~losses ~~the~~associated ~~use~~with ~~of a modified retrospective approach for leases that exist or are entered into after~~ the ~~beginning~~sale of ~~the earliest comparative period presented in the financial statements~~routes. ~~Early~~ ~~application~~The ofimpact ~~the~~from ~~ASU~~adopting ~~is permitted. We are currently evaluating~~ the ~~impact this accounting~~ standard ~~will~~is ~~have~~disclosed onin ~~our~~Note ~~consolidated financial statements~~11, ~~but~~Goodwill ~~believe that there will be assets~~ and ~~liabilities~~Other ~~recognized~~Intangible onAssets, ~~our consolidated balance sheet~~ and anis ~~immaterial~~not ~~impact~~material onto our consolidated ~~statement~~financial ~~of income~~statements.

On ~~March~~November 3017, 2016, the FASB issued ASU No. 2016-0918, ~~Improvements~~Restricted toCash. ~~Employee~~This ~~Share~~accounting standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-~~Based~~of-period ~~Payment~~and ~~Accounting~~end-of-period total amounts shown on the statement of cash flows. The ~~updated~~new guidance is effective for interim and annual reporting periods beginning after December 15, ~~2016,~~2017 and early adoption is permitted. The ~~updated~~amendment ~~guidance~~should ~~includes~~be ~~multiple~~adopted ~~provisions~~retrospectively. ~~intended~~We toearly ~~simplify~~adopted ~~various~~this ~~aspects~~guidance in the first quarter of 2017 and the ~~accounting~~adoption ~~for~~resulted ~~share-based~~in ~~payments~~reclassifications of $0.3 Wemillion ~~plan~~cash inflows from investing activities to ~~adopt~~operating ~~the~~activities ~~accounting~~for ~~standard~~each inof the ~~first~~twelve ~~quarter~~months ofended December 30, 2017 and ~~the~~December ~~impact~~31, to2016 ~~our~~and ~~consolidated~~no ~~financial~~reclassifications ~~statements~~for ~~will~~the betwelve asmonths ~~follows:~~ended January 2, 2016.

•The ~~Excess~~following ~~tax~~table ~~benefits~~provides ~~for~~a ~~share-based~~reconciliation ~~payments~~of ~~will~~cash, becash ~~recorded~~equivalents ~~as an adjustment to income tax expense~~ and ~~reflected~~restricted ~~in operating~~ cash ~~flows~~reported ~~after~~within ~~adoption~~the ofConsolidated ~~this~~Balance ~~accounting~~Sheets ~~standard.~~that ~~Excess~~sum ~~tax~~to ~~benefits~~the ~~are~~total ~~currently~~of ~~recorded~~the ~~through~~same ~~income~~such ~~tax~~amounts ~~receivable~~shown ~~and~~in ~~equity,~~the ~~and~~Consolidated ~~presented~~Statement asof aCash ~~financing cash flow~~Flows.

• The guidance allows the employer to withhold up to the maximum statutory tax rates in the applicable jurisdictions without triggering liability accounting. The Company's accounting treatment of outstanding equity awards will not be impacted by its adoption of this provision of the accounting standard.



(in thousands)	December 30, 2017		December 31, 2016		January 2, 2016
Cash and cash equivalents	$	18,703	$	35,409	$	39,105
Restricted cash	446		714		966
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows	$	19,149	$	36,123	$	40,071

•On ~~The~~August ~~guidance~~26, ~~allows~~2016, ~~for~~the aFASB ~~policy~~issued ~~election~~ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. This accounting standard is intended to ~~account~~eliminate ~~for~~diversity ~~forfeitures~~in aspractice ~~they~~in ~~occur~~how ~~rather~~certain ~~than~~cash onreceipts anand ~~estimated~~cash ~~basis~~payments are presented and classified in the statement of cash flows. The ~~Company~~updated ~~does~~guidance ~~not~~is ~~plan~~effective tofor ~~make~~interim ~~this~~and ~~election~~annual reporting periods beginning after December 15, 2017, and ~~will~~early ~~continue~~adoption is permitted. We adopted this guidance in the first quarter of 2017 and the impact on our Consolidated Statements of Cash Flows was a reclassification of $6.2 million cash outflows from operating activities to ~~account~~repayments of long-term debt within financing activities for ~~forfeitures~~the ontwelve anmonths ~~estimated~~ended ~~basis~~December 31, 2016.

OnThe ~~August~~table ~~26,~~below ~~2016,~~summarizes the ~~FASB~~impact ~~issued~~on ~~ASU~~the ~~No.~~Statement ~~2016-15, Classification~~ of ~~Certain~~ Cash ~~Receipts~~Flows and Cash Payments. This accounting standard is intended to eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for ~~interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. We are planning to adopt this new guidance in~~ the ~~first~~twelve ~~quarter~~months of ~~fiscal year 2017 and do not expect the adoption to have a material impact on our consolidated financial statements~~2016.

On October 24, 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. This accounting standard is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The updated guidance indicates that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs instead of when the asset has been sold to an outside party. The updated guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, and early adoption is permitted. We are currently evaluating the impact this accounting standard will have on our consolidated financial statements.



(in thousands)	Previous Classification			Impact			Current Classification
Operating activities:
Gain on write-off of debt premium	$	(1,341	)	$	1,341		$	—
Loss on early extinguishment of debt	—			4,749			4,749
Other noncurrent liabilities	1,341			80			1,421
Net cash provided by operating activities	261,199			6,170			267,369

Financing activities:
Repayments of long-term debt	(438,625		)	(6,170		)	(444,795		)
Net cash provided by financing activities	$	853,008		$	(6,170	)	$	846,838

On November 17, 2016, the FASB issued ASU No. 2016-18, Restricted Cash. This accounting standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new guidance is effective for interim and annual reporting periods beginning after December 15, 2017 and early adoption is permitted. The amendment should be adopted retrospectively. We plan to early adopt this new guidance in the first quarter of fiscal year 2017 and do not expect the adoption to have a material impact on our consolidated financial statements.54

On January 5, 2017 the FASB issued ASU 2017-01, Clarifying the Definition of a Business. This accounting standard clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted. We are currently evaluating the impact this accounting standard will have on our consolidated financial statements.

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On ~~January~~March 2630, ~~2017~~2016, the FASB issued ASU ~~2017~~No. 2016-0409, ~~Simplifying~~Improvements ~~the Test for Goodwill Impairment. This accounting standard simplifies how an entity is required~~ to ~~test~~Employee ~~goodwill~~Share-Based ~~for~~Payment impairment by eliminating step 2 from the goodwill impairment test, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amountAccounting. Instead, entities should perform annual or interim goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the excess of carrying amount over the fair value of the respective reporting unit. The updated guidance is effective for ~~annual or~~ interim ~~goodwill~~and ~~impairment~~annual ~~tests~~reporting inperiods ~~fiscal years~~ beginning after December 15, ~~2019~~2016. ~~Early~~The ~~application~~updated ofguidance ~~the~~includes ~~ASU~~multiple isprovisions ~~permitted~~intended ~~for~~to ~~interim~~simplify orvarious ~~annual~~aspects ~~goodwill~~of ~~impairment~~the ~~tests~~accounting ~~performed~~for onshare-based ~~testing dates after January 1, 2017~~payments. We ~~are~~adopted ~~currently~~the ~~evaluating~~accounting ~~whether~~standard wein ~~will~~the ~~early~~first ~~adopt~~quarter ~~this standard as part~~ of ~~our~~ 2017 ~~annual~~ and ~~interim impairment tests. As this standard is prospective in nature,~~ the impact to our consolidated financial statements byare ~~not~~as performing step 2 to measure the amount of any potential goodwill impairment will depend on various factors. However, the elimination of step 2 will reduce the complexity and cost of the subsequent measurement of goodwill.follows:

•

Excess tax benefits for share-based payments were previously recognized through income tax receivable and equity, and presented as a financing cash flow. As a result of adopting this accounting standard, excess tax benefits for share-based payments are recognized as an adjustment to income tax expense and reflected in operating cash flows. We elected to adopt this provision of the accounting standard prospectively which resulted in income tax benefit of $6.9 million for the year ended December 30, 2017.


•	The guidance allows the employer to withhold up to the maximum statutory tax rates in the applicable jurisdictions without triggering liability accounting. Our accounting treatment of outstanding equity awards was not impacted by our adoption of this provision of the accounting standard.


•	The guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. We did not make this election, and continue to account for forfeitures on an estimated basis.

On January 26, 2017 the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This accounting standard simplifies how an entity is required to test goodwill for impairment by eliminating step 2 from the goodwill impairment test, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. Instead, entities should perform annual or interim goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the excess of carrying amount over the fair value of the respective reporting unit. The guidance is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption of the ASU is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this standard in the second quarter of 2017 and applied its guidance in our goodwill impairment testing procedures performed during the third and fourth quarters of 2017, as discussed further in Note 11.

Not Yet Adopted

We have completed our review of customer contracts and do not expect a material impact to our balance sheet. The immaterial impact of adopting ASU No. 2014-09 primarily relates to the following:


•	Coupon liabilities will commence when control of the goods are transferred to the customer rather than when the coupon is distributed, which will accelerate the recognition of coupon expense under the new standard.


•	Contract manufacturing arrangements are recognized as revenue when product is delivered to the customer. If any of our contracts create an asset without an alternative use and an enforceable right to payment, then we would recognize revenue at the time of production rather than shipment under the new standard. The right to payment is enforceable under certain contracts.

We have adopted ASC Topic 606, Revenue from Contracts with Customers, on December 31, 2017, the first day of our fiscal 2018. We applied the modified retrospective approach and the impact of adoption was not material.

On October 24, 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. This accounting standard is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The updated guidance indicates that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs instead of when the asset has been sold to an outside party. The updated guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, and early adoption is permitted. The amendments are to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of the adoption. We

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have adopted ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, on December 31, 2017, the first day of our fiscal 2018. There was no impact of adoption to the financial statements.

On May 10, 2017 the FASB issued ASU No. 2017-09, Scope of Modification Accounting. This accounting standard provides clarity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. According to this accounting standard, an entity should account for the effects of a modification unless the fair value, vesting conditions, and classification of the modified award are the same as the original award. The updated guidance is effective for annual reporting periods, and interim reporting periods within those annual reporting periods, beginning after December 15, 2017. We have adopted ASU No. 2017-09, Scope of Modification Accounting, on December 31, 2017, the first day of our fiscal 2018. There was no impact of adoption to the financial statements.

On August 28, 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. The objective of this accounting standard is to better align hedge accounting with an organization’s risk management activities in the financial statements. For our cash flow hedges of variable interest rate risk, the new guidance will allow the variability in cash flows attributable to the contractually specified interest rate to be designated as the hedged risk. The new guidance also requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported, thus eliminating the separate presentation of hedge ineffectiveness. The updated guidance is effective for annual reporting periods, and interim reporting periods within those annual reporting periods, beginning after December 15, 2018. Early adoption is permitted. We plan to adopt this standard in the first quarter of 2019 and do not expect a material impact to the financial statements upon adoption.

On February 25, 2016, the FASB issued ASU No. 2016-02, Leases. This ASU requires us to recognize a lease liability for the obligation to make lease payments, measured at the present value on a discounted basis, and a right-of-use (“ROU”) asset for the right to use the underlying asset for the duration of the lease term, measured at the lease liability amount adjusted for lease prepayments, lease incentives received and initial direct costs. The lease liability and ROU asset are recognized in the balance sheet at the commencement of the lease. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight line expense while finance leases will result in a front-loaded expense pattern. Classification will be based on criteria that are largely similar to those applied in current lease accounting. ASU 2016-02 is effective for annual reporting periods, including interim periods within those periods, beginning after December 15, 2018, and requires the use of a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period presented in the financial statements. Early application of the ASU is permitted. We are in the process of evaluating lease accounting software and developing an inventory of our lease arrangements in order to determine the impact this accounting standard will have on our financial statements. Based on our assessment to date, we expect this guidance will have a material impact on our balance sheet due to the amount of our lease commitments, but we are unable to quantify the impact at this time.

Other amendments to GAAP in the US that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

~~NOTE 3. DISCONTINUED OPERATIONS~~56

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NOTE 4. DISCONTINUED OPERATIONS

Sale of Diamond of California

On November 28, 2016, we entered into a definitive agreement to sell our culinary nuts business (comprised primarily of the Diamond of California® brand and the Stockton, CA facility; collectively "Diamond of California"). The sale of Diamond of California ~~represents~~represented a strategic shift in our business ~~that will have a significant impact on our operations~~ and ~~financial results, and~~ aligns with the Company's strategy to focus more resources on the growth opportunities for our snack food brands. On December 31, 2016, we completed the sale for estimated net proceeds of $128.6 million, consisting of $118.6 million of cash and $10 million in a promissory note. ~~The~~ ~~purchase~~As ~~price~~of isDecember ~~subject~~31, to2016, ~~normal~~we had a receivable due from the purchaser recorded in receivable from sale of Diamond of California on our Consolidated Balance Sheet. We received the cash proceeds from the sale of Diamond of California on January 3, 2017. During 2017, we finalized the calculation of working capital ~~adjustments~~in asaccordance ~~well~~with asthe asale ~~post~~agreement ~~closing~~which ~~adjustment~~had an immaterial impact to ~~working~~discontinued ~~capital~~operations. Also ~~based~~during on2017, we adjusted our walnut price liability to reflect the final prices contained within the California Department of Food and Agriculture Walnut/Raisin/Prune Report State Summary - 2016 Crop Year. In addition, ~~which~~in is2017, ~~expected~~we toidentified beand ~~completed~~recorded ina ~~the~~pretax ~~fourth~~out-of-period ~~quarter~~correction of ~~2017~~$2. ~~The~~6 ~~purchase~~million ~~price~~($1.7 ismillion ~~net~~after oftax) anto ~~estimated~~reduce ~~liability~~the ofwalnut ~~$2.6~~price ~~million~~liability which related to ~~walnut~~an ~~pricing. This~~error ~~estimate~~recorded ~~will~~in ~~likely~~the ~~change~~fourth ~~each~~ quarter ~~throughout~~of ~~2017~~2016. ~~until~~We concluded that the ~~final~~correction ~~walnut~~of ~~price~~the iserror ~~determined~~was innot ~~the~~material ~~fourth~~to ~~quarter~~these or our previously issued financial statements.

We received the cash proceeds from the sale of Diamond of California on January 3, 2017. As of December 31, 2016, we had a receivable due from the purchaser recorded in receivable from sale of Diamond of California on our Consolidated Balance Sheets. The promissory note is due on June 30, 2025. Interest on the principal balance in this promissory note accrues at a rate per annum equal to the 30-day LIBOR rate, plus 3.00%, provided that in no event shall the applicable rate exceed 6.00% per annum. The note is recorded within other noncurrent assets on our ~~consolidated~~Consolidated ~~balance~~Balance ~~sheet~~Sheets.

As a result of the sale of Diamond of California, revenues and expenses that no longer continued after the sale of Diamond of California, and where we had no substantial continuing involvement, were reclassified to discontinued operations in the Consolidated Statements of Income.

For 2017 and 2016, income statement amounts associated with discontinued operations were as follows:

(in thousands)	~~2016~~2017			2016
Net revenue	$	~~204,443~~—		$	204,443
Cost of sales	~~156,008~~—			156,008
Gross profit	~~48,435~~—			48,435
Selling, general and administrative	~~33,638~~—			33,638
Loss on sale of Diamond of California	32,645
(Gain) loss on sale of Diamond of California	(3,069		)	32,645
Loss from discontinued operations before income taxes	(17,848		)
Income (loss) from discontinued operations before income taxes	3,069			(17,848		)
Income tax expense	91,~~252~~133			9,252
Loss from discontinued operations, net of income tax	$	(27,100	)
Income (loss) from discontinued operations, net of income tax	$	1,936		$	(27,100	)

The discontinued operations pretax income activity for 2017 generated income tax expense of $1.1 million, for an effective tax rate of 36.9%. The discontinued operations pretax loss activity for 2016 generated income tax expense of $9.2 million, for an effective tax rate of (51.8)%. The tax expense for 2016 is generated by the sale of Diamond of California, which included sale of goodwill which had no tax basis and for which no deferred tax liability was recorded.

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During 2016, we recorded a pretax loss in discontinued operations of approximately $32.6 million on the sale of Diamond of California, which was calculated as follows:



(in thousands)	Total
Net proceeds	$	128,577

Less carrying value of net assets transferred:
Transaction related expenses	2,805
Net working capital	31,874
Pension liability and other long-term assets and liabilities, net	(11,071		)
Fixed assets, net	19,695
Goodwill ⁽¹⁾	48,845
Other intangible assets, net	69,074
Loss on sale of Diamond of California	$	(32,645	)

⁽¹⁾The component of goodwill included in the carrying amount of net assets transferred was based on the fair value of Diamond of California relative to the fair value of the remaining business within its reporting unit in accordance with FASB ASC 350, Intangibles - Goodwill and Other.

The following table provides depreciation, amortization, capital expenditures, sale proceeds, and significant operating ~~noncash~~non-cash items of discontinued operations for 2017 and 2016.

(in thousands)	2017	~~2016~~		2016
Cash flows from discontinued operating activities
Depreciation and amortization	$	$—	~~4,467~~	$	4,467
Stock-based compensation expense	—	~~2,101~~		2,101
Loss on sale of Diamond of California		32,645
(Gain)/loss on sale of Diamond of California	(3,069		)	32,645
Payable to growers (1)	—	~~41,948~~		41,948
Cash flows from discontinued investing activities
Capital expenditures	$	$—	~~514~~	$	514
Non-cash discontinued investing activities
Proceeds from sale of discontinued operations	119,658			—
Proceeds from the sale of discontinued operations, not yet received, less transaction costs, not yet paid		$	125,772
Non-cash discontinued investing activities
Proceeds from the sale of discontinued operations, not yet received, less transaction costs, not yet paid	$	800		$	125,772

⁽¹⁾ The operating cash inflow generated by the increase in payable to growers from $38.3 million acquired on February 29, 2016 to $80.3 million sold in the disposition of Diamond of California on December 31, 2016.

As a result of the sale of Diamond of California, we had a significant amount of stock-based compensation awards that accelerated vesting at the sale date due to change in control provisions. We recognized $1.3 million in stock-based compensation expense from awards that vested due to acceleration clauses within employment agreements with employees who were terminated as part of the sale.

In connection with the sale of Diamond of California, we entered into a Supply Agreement ("Walnut Supply Agreement") to procure walnuts from the purchaser for an initial term of five years subsequent to the sale transaction, which will be used in the manufacture of Emerald^® branded products. Under this agreement, the purchaser has the right to match third party offers for sale of such walnuts to us.

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Additionally, we entered into a Transition Services Agreement ("Stockton TSA") and a Facility Use Agreement ("Stockton FUA"), both effective immediately subsequent to the sale transaction, to facilitate the orderly transfer of Emerald® and Pop Secret® business operations to Company-owned facilities. The Stockton TSA ~~stipulates~~stipulated certain finance, accounting, sales, marketing, human resources, information technology, supply chain, manufacturing, and other general services to be provided between us and the purchaser, during an initial term of 120 days, with extension provisions if necessitated. The Stockton FUA ~~has~~had an initial term of six months, with extension provisions if necessitated, and ~~provides~~provided us with the right to access Diamond of California's Stockton, CA manufacturing facility, for the purpose of manufacturing certain Emerald® branded products. Permitted uses under this agreement include use of certain equipment and storage of inventories related to the Emerald® production process. Services under the Stockton TSA and the Stockton FUA are completed at this time. We also entered into a contract manufacturing agreement with the purchaser to manufacture certain products for us throughout 2017. At this time, the contract manufacturing agreement has ended.

~~Sale~~NOTE of5. BUSINESS ~~Private Brands~~ACQUISITIONS

On2017 May 6, 2014, we entered into a definitive agreement to sell two of our US subsidiaries as well as certain assets of our Canadian subsidiary, which included the exclusive rights to manufacture and sell the majority of our Private brand products and certain contract manufactured products (collectively “Private Brands”) to Shearer’s Foods, LLC (“Shearer’s”). The manufacturing facilities associated with the sale were located in Burlington, Iowa and Guelph, Ontario. On June 30, 2014, we completed the sale of Private Brands for $430 million in cash with after-tax proceeds of approximately $303 million. Acquisitions

AsAcquisition ~~a result~~ of ~~the~~Cornpoppers sale of Private Brands, revenues and expenses that no longer continued after the sale of Private Brands, and where we had no substantial continuing involvement, were reclassified to discontinued operations in the Consolidated Statements of Income. All prior period results were retrospectively adjusted to ensure comparability and consistent presentation of continuing and discontinued operations.Limited

~~For~~On ~~2014~~September 25, ~~income~~2017, ~~statement~~we ~~amounts~~acquired ~~associated~~Cornpoppers ~~with~~Limited ~~discontinued~~("Cornpoppers") ~~operations~~for ~~were~~approximately $2.6 asmillion, ~~follows:~~of which $2.1 million has been allocated to goodwill. Cornpoppers is a U.K. popcorn manufacturer supplying branded and private label popcorn products to retailers and wholesalers.

(in thousands)	2014
Net revenue	$	124,256
Cost of sales	94,396
Gross profit	29,860
Selling, general and administrative	11,886
Gain on sale of Private Brands	(222,963		)
Other expense, net	205
Income from discontinued operations before income taxes	240,732
Income tax expense	107,416
Income from discontinued operations, net of income tax	$	133,316

Acquisition of Natural Food Works Group, LLC

~~During~~On ~~2014~~February 17, 2017, we ~~recorded~~made a $1.5 ~~pretax~~million investment ~~gain~~for approximately 23% of the ownership in ~~discontinued~~Natural ~~operations~~Food ofWorks ~~approximately~~Group, ~~$223~~LLC, ~~million~~an onexperienced ~~the~~food ~~sale~~manufacturer ofspecializing ~~Private~~in ~~Brands,~~natural ~~which~~and ~~was~~organic ~~calculated~~products. asWe ~~follows:~~are accounting for this investment under the equity method.

(in thousands)	Total
Cash proceeds	$	430,017
Less carrying value of net assets transferred:
Transaction related expenses	6,359
Total current assets	40,219
Fixed assets, net	39,123
Goodwill (1)	141,404
Other intangible assets, net	2,938
Total liabilities	(11,883		)
Derecognition of cumulative translation adjustment (2)	(11,106		)
Gain on sale of Private Brands	$	222,963

(1) The component of goodwill included in the carrying amount of net assets transferred was based on the fair value of Private Brands relative to the fair value of the remaining business in accordance with FASB ASC 350, Intangibles - Goodwill and Other.

(2) The majority of our cumulative translation adjustment at that time was derecognized as a result of the sale of Private Brands due to the sale of substantially all of the assets and liabilities of our Canadian subsidiary. We have no remaining operations in Canada.

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Income tax expense recognized on the sale of domestic operations in 2014 was approximately $86 million. The total effective tax rate on discontinued operations is higher than the statutory rate of 35% primarily due to the disposal of goodwill allocated to discontinued operations which has no tax basis and for which no deferred tax liability was recorded. The total tax expense associated with the sale of the Canadian assets was approximately $16 million.

As the sale of Private Brands was completed on the first day of the third quarter of 2014, there were no remaining assets or liabilities associated with discontinued operations as of December 31, 2016 or January 2, 2016.

In connection with the sale of Private Brands, we entered into a manufacturing and supply agreement with Shearer's (the "Supply Agreement") to contract manufacture certain products as requested by Shearer's for an initial term of two years subsequent to the sale transaction for which we have realized revenue and incurred expenses from the products sold to Shearer's. Under the Supply Agreement, certain manufacturing facilities that were not included in the disposal group continued to produce certain products for Shearer’s. Accordingly, previous revenues earned for the production and sale of these products were not included in discontinued operations given the continued involvement and length of the Supply Agreement.

NOTE 4. BUSINESS ACQUISITIONS

2016 Acquisitions

OnAcquisition ~~October 27, 2015, we entered into an Agreement and Plan~~ of ~~Merger and Reorganization (the “Merger Agreement”) with~~ Diamond Foods. Diamond Foods was a leading snack food company that possessed five brands, including: Kettle Brand® potato chips; KETTLE® Chips; Pop Secret® popcorn; Emerald® snack nuts; and Diamond of California® culinary nuts. Pursuant to the Merger Agreement, we agreed to acquire all of the issued and outstanding shares of common stock of Diamond Foods in a cash and stock transaction, including our repayment of $651.0 million of Diamond Foods’ indebtedness, accrued interest and related fees. The acquisition was subject to the approval of our stockholders of the issuance of our shares and the approval of the stockholders of Diamond Foods of the adoption of the Merger Agreement.

On February 2629, 2016, ~~our~~we ~~stockholders~~acquired ~~approved~~Diamond ~~the~~Foods, ~~issuance~~Inc. of("Diamond ~~our~~Foods") ~~shares~~for $1,857.2 million in a cash and ~~the~~stock ~~stockholders~~transaction, including our repayment of $651.0 million of Diamond Foods’ ~~adopted~~indebtedness, ~~the~~accrued ~~Merger~~interest ~~Agreement~~and related fees. ~~The~~Diamond ~~acquisition~~Foods, ~~closed~~a onleading ~~February 29~~snack food company that possessed five brands, ~~2016~~including: Kettle Brand® potato chips; KETTLE® Chips; Pop Secret® popcorn; Emerald® snack nuts; and, ~~pursuant~~Diamond toof ~~the~~California® ~~Merger~~culinary ~~Agreement~~nuts. As a result of the acquisition, Diamond Foods became our wholly-owned subsidiary. We also obtained 26% of the outstanding shares of Metcalfe's Skinny Limited ("Metcalfe"), owner of Metcalfe's skinny®, a premium ready-to-eat ("RTE") popcorn brand in the U.K., which is described below.

At the effective time of the acquisition of Diamond Foods, each share of Diamond Foods common stock that was issued and outstanding immediately prior to the effective time (other than (i) treasury shares held by Diamond Foods, (ii) shares owned by Snyder’s-Lance or any of our subsidiaries and (iii) shares that were owned by stockholders who had perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) were cancelled and converted into the right to receive $12.50 in cash and 0.775 shares of Snyder’s-Lance common stock, par value $0.83-1/3 per share. Additionally, at the effective time of the acquisition of Diamond Foods, all of its outstanding stock-based compensation awards, then comprised of restricted shares, ~~have~~restricted ~~ceased~~units, ~~trading~~performance-based onrestricted ~~the~~units, ~~NASDAQ~~and stock ~~exchange~~options, converted to replacement Snyder's-Lance awards or were settled with merger consideration. The fair value of the replacement awards, whether vested or unvested, was included in the purchase price to the extent that pre-acquisition services had been rendered. The purchase price also included the fair value of accelerated vesting for awards that vested at the acquisition date due to change in control provisions. The remainder of the fair value of the unvested outstanding replacement awards is being recognized as compensation expense over the applicable future vesting period in the periods following the acquisition date.

Additionally, at the effective time of the acquisition, all outstanding Diamond Foods stock-based compensation awards, then comprised of restricted shares, restricted units, performance-based restricted units, and stock options, converted to replacement Snyder's-Lance awards or were settled with merger consideration as described within the Registration Statement on Form S-4 we filed with the SEC on January 20, 2016. The fair value of the replacement awards, whether vested or unvested, was included in the purchase price to the extent that pre-acquisition services have been rendered. The purchase price also included the fair value of accelerated vesting for awards that vested at the acquisition date, due to change in control provisions. The remainder of the fair value of the unvested outstanding replacement awards will be recorded as compensation expense over the applicable future vesting period in the periods following the acquisition date.59

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



	Conversion Calculation		Fair Value (in thousands)
Diamond Foods common shares outstanding as of February 29, 2016	31,062,164
Multiplied by 0.775 per the Merger Agreement	0.775
Total Snyder's-Lance common shares issued to Diamond Foods 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 Foods 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 Foods’ 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 Foods 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 US treasury securities with maturities equal to the expected life of the option.

⁽²⁾ Repayment of Diamond Foods’ outstanding debt was required as part of the consideration to be transferred due to change in control provisions that were triggered upon acquisition. The repayment amount was calculated as of February 29, 2016 by taking Diamond Foods’ outstanding long-term debt and current portion of long-term debt of $633.2 million and adding 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 Foods stockholders as of the acquisition date that would have otherwise received $12.50 in cash and 0.775 shares of Snyder’s-Lance common stock for each share of Diamond Foods common stock held, ~~(see~~which ~~'Appraisal Proceedings' within Note 16). This~~ was paid during ~~the third quarter of~~ 2016.

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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 fair value of such assets and liabilities. The following table summarizes the allocation of assets acquired and liabilities assumed as part of the acquisition:

	Preliminary Allocation		Measurement Period Adjustments			Purchase Price Allocation
(in thousands)	Purchase Price Allocation
(in thousands)	As of April 2, 2016					As of December 31, 2016
Cash and cash equivalents	$	22,340
Cash and cash equivalents	$	28,945	$	(6,605	)	$	22,340
Accounts receivable	78,991
Accounts receivable	77,445		1,546			78,991
Inventories	156,712
Inventories	168,089		(11,377		)	156,712
Prepaid expenses and other current assets	13,575
Prepaid expenses and other current assets	12,111		1,464			13,575
Fixed assets	128,210
Fixed assets	136,340		(8,130		)	128,210
Goodwill	831,228
Goodwill	868,443		(37,215		)	831,228
Other intangible assets	950,294
Other intangible assets	902,500		47,794			950,294
Equity investments	12,595
Equity investments	8,607		3,988			12,595
Other long term assets	973
Other long term assets	1,018		(45		)	973
Total assets acquired	2,194,918
Total assets acquired	2,203,498		(8,580		)	2,194,918
Accounts payable, and other current liabilities, including payable to growers	121,635
Accounts payable, and other current liabilities, including payable to growers	134,715		(13,080		)	121,635
Deferred income tax liability, net	194,413
Deferred income tax liability	191,425		2,988			194,413
Other long term liabilities	21,691
Other long term liabilities	20,179		1,512			21,691
Total liabilities assumed	337,739
Total liabilities assumed	346,319		(8,580		)	337,739
Net assets acquired (1)	$	1,857,179
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 Foods at the time of the acquisition.

As of December 31, 2016, the purchase price allocation iswas considered complete. Of the estimated $950.3 million of acquired intangible assets, $355.3 million were assigned to customer relationships and ~~will~~is bebeing amortized over 20 years. The remaining value of acquired intangible assets of $595.0 million was assigned to trademarks, which are not subject to amortization because they have indefinite lives. The increase in the carrying value of assets to fair value as a result of purchase price adjustments is not deductible for income tax purposes.

During the fourth quarter, we recorded a $6.6 million correction to adjust cash and accounts payable on the opening balance sheet. This adjustment is immaterial, with no overall impact on the full year consolidated financial statements.

Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill is attributable to the general reputation, assembled workforce, acquisition synergies and the expected future cash flows of Diamond Foods' business.

We ~~have~~ recorded a net deferred tax liability of $194.4 million related to the acquisition of Diamond Foods. We recorded deferred tax liabilities of $384.6 million relating primarily to basis differences in identified intangible assets acquired, which includes $49.2 million related to un-repatriated foreign earnings, based on management’s assessment of the amount of earnings not considered to be indefinitely reinvested. We recorded a deferred tax asset of $190.2 million, of which $143.7 million was recorded for federal and state net operating loss carryforwards, and a further $9.4 million for other federal and state tax credit carryforwards. AIn addition, a valuation allowance of $10.7 million has been recorded, based on management’s assessment of the ability to utilize these deferred tax assets.

56Transaction and integration related expenses associated with the acquisition of Diamond Foods were approximately $3.0 million, $66.3 million and $7.7 million for 2017, 2016 and 2015, respectively, and are included in a separate line in the Consolidated Statements of Income. The costs incurred in 2017 included legal and other professional fees and idle facility lease costs. Transaction and integration expenses in continuing operations for 2016, include $17.5 million of severance and retention benefits, and $16.4 million of accelerated stock-based compensation, which was recognized due to the change in control and severance agreements for the Diamond Foods executive team. The remaining costs were primarily investment banking fees, as well as other professional and legal fees associated with completion of the acquisition, and subsequent integration of Diamond Foods.

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~~Transaction and integration related expenses associated with the acquisition of~~ Diamond Foods' results were ~~approximately $66.3 million and $7.7 million for 2016 and 2015, respectively, and are~~ included in aour ~~separate line in the~~ Consolidated Statements of Income. ~~Transaction~~from ~~and~~February ~~integration expenses in continuing operations for 2016~~29, ~~include $17~~2016.5 ~~million~~We ofrecognized ~~severance~~incremental ~~and~~Diamond ~~retention~~Foods ~~benefits,~~net ~~and~~revenue of $16443.45 million ~~of accelerated stock-based compensation, which was recognized due to the change~~ in ~~control~~2016. ~~and~~A ~~severance~~portion ~~agreements~~of ~~for the~~ Diamond Foods ~~executive~~revenue ~~team.~~was ~~The~~eliminated ~~remaining~~in ~~costs~~consolidation ~~were~~because ~~primarily~~it ~~investment~~was ~~banking~~sold ~~fees,~~to ~~as well as~~ other ~~professional~~Snyder's-Lance ~~and~~subsidiaries ~~legal~~for ~~fees~~distribution ~~associated~~through ~~with completion of~~ the ~~acquisition,~~DSD ~~and~~network. ~~subsequent~~As ~~integration~~a result of ~~Diamond~~progress ~~Foods.~~we Wehave ~~recognized~~made ~~$7.7~~integrating ~~million of~~ Diamond Foods, ~~related~~it ~~transaction~~is ~~expenses~~impracticable ~~during~~to ~~2015~~disclose ~~for~~separately ~~professional~~Diamond ~~fees~~Foods' ~~and~~contributions ~~legal~~to ~~costs~~income ~~associated~~before ~~with~~income ~~the~~taxes ~~acquisition~~in 2016.

Diamond Foods' results were included in our Consolidated Statements of Income from February 29, 2016. We recognized incremental Diamond Foods net revenue of $443.5 million in 2016. A portion of Diamond Foods revenue was eliminated in consolidation because it was sold to other Snyder's-Lance subsidiaries for distribution through our DSD network.

As a result of progress we have made integrating Diamond Foods, it is impracticable to disclose separately Diamond Foods' contributions to income before income taxes in 2016.

The following unaudited pro forma consolidated financial information has been prepared, as if the acquisition of Diamond Foods 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.



(in thousands)	2016		2015
Net revenue ⁽¹⁾	$	2,443,284	$	2,469,732
Net income attributable to Snyder's-Lance, Inc. ⁽¹⁾	$	64,027	$	75,498

⁽¹⁾The unaudited pro forma consolidated financial information does not reflect the sale of Diamond of California.

The unaudited pro forma consolidated financial information for 2016 and 2015 included increased amortization expense of $2.1 million and $10.0 million, respectively, as a result of acquired intangible assets. In addition, the unaudited pro forma consolidated financial information for 2016 and 2015 included reduced interest expense related to debt of $1.3 million and $13.0 million, respectively. This reduction is due to the lower interest rates associated with our new combined debt, as more fully described in Note 1112.

We also included a reduction in cost of goods sold of $15.9 million in the unaudited pro forma consolidated financial information for 2016, related to the elimination of the inventory step-up recorded during the year in connection with the Diamond Foods acquisition. We included additional cost of goods sold in the unaudited pro forma financial information for 2015 of $15.6 million. The net incremental expense represents the financial impact of the inventory step-up recorded in connection with the Diamond Foods acquisition.

For 2016, we included a reduction in non-recurring transaction-related expenses of $50.2 million, which were directly related to the Diamond Foods acquisition. These transaction-related expenses, and additional transaction-related expenses incurred prior to the end of 2015, were included as additional expenses of $60.4 million in the unaudited pro forma consolidated financial information for the first quarter of 2015.

Acquisition of Metcalfe's Skinny Limited

In January 2016, Diamond Foods obtained 26% of the outstanding shares of Metcalfe, which we acquired in the Diamond Foods’ transaction. On September 1, 2016, we completed the acquisition of Metcalfe's ~~Skinny Limited ("Metcalfe")~~ by acquiring the remaining 74% interest for approximately $9.7 million. Metcalfe is the ~~U.K.~~owner of Metcalfe's ~~leading~~ ~~ready-to-eat~~skinny®, ~~("RTE")~~a premium RTE popcorn brand in the U.K., in addition to a growing range of corn and rice cake products. ~~The U.K. popcorn market is one of the fastest growing categories within the U.K. snack food industry, as consumers increasingly seek out "better-for-you" snacking options.~~

Because of our purchase of athe ~~controlling~~remaining 74% interest in Metcalfe, the equity of the entire entity was increased to fair value, which resulted in the revaluation of our prior 26% interest. However, as this 26% interest was ~~recently~~ recorded at fair value in the Diamond Foods opening balance sheet on February 29, 2016, the revaluation did not result in a significant gain or loss. The fair value of 100% of Metcalfe was determined to be $13.2 million, of which $1.65 million was preliminarily allocated to current assets, $7.02 million to goodwill, $8.8 million to other intangible assets and $4.23 million to total liabilities. Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. Prior to our acquisition of the remaining 74% of Metcalfe, our share of income for the period subsequent to February 29, 2016, was not material and was included in other income, net, in the Consolidated Statements of Income. Subsequent to our acquisition of the remaining 74% of Metcalfe on September 1, 2016, Metcalfe's results were consolidated into our Consolidated Statements of Income. Net revenue and net income from Metcalfe for the period subsequent to acquisition of the remaining 74% was not material.

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Prior to our acquisition of the remaining 74% of Metcalfe, our share of income for the period subsequent to February 29, 2016, was not material and was included in other income, net, in the Consolidated Statements of IncomeNOTE 6. ~~Subsequent~~PERFORMANCE toTRANSFORMATION our acquisition of the remaining 74% of Metcalfe on September 1, 2016, Metcalfe's results were consolidated into our Consolidated Statements of Income. Net revenue and net income from Metcalfe for the period subsequent to acquisition of the remaining 74% was not material.PLAN

~~2014~~As ~~Acquisitions~~announced on April 17, 2017, our Board of Directors and senior management team have been conducting a comprehensive review of our Company’s operations with the goal of significantly improving our financial performance to deliver greater value to shareholders. As a result of this review, we have initiated a Performance Transformation Plan (the "Transformation Plan") focused on six key areas:

~~Late~~• ~~July~~SG&A Expense Efficiency. Reduce direct spending and accelerate zero-based budgeting to improve indirect costs.

On• ~~October 30,~~Manufacturing ~~2014,~~and weSupply ~~made~~Chain ~~an additional investment in Late July Snacks, LLC ("Late July") of approximately $59~~Productivity.5 ~~million~~Reduce ~~which~~manufacturing ~~increased our total ownership interest from approximately 18.7% to 80.0%. Late July is the industry leader for organic~~ and ~~non-GMO~~distribution ~~tortilla~~network ~~chips~~complexity and ~~sells~~improve ~~a variety of other baked and salty snacks with particular focus on organic and non-GMO snacks~~productivity. The investment supports our goal of having a stronger presence in healthier snacks. Concurrent with the transaction, we also established a $6.0 million line of credit between the Company and Late July, of which $3.9 million was drawn by Late July in order to repay certain obligations.

~~Although~~• ~~our~~Product ~~ownership interest is only 80%, we were required to value 100% of the assets~~ and ~~liabilities. Accordingly,~~Portfolio ~~the purchase price allocation below shows the value of the assets and liabilities acquired at 100%, with an adjustment for the noncontrolling interest (20~~Optimization.~~0%)~~ ~~and~~Reduce ~~the~~business ~~value~~complexity ofthrough ~~our~~stock ~~prior~~keeping ~~equity~~unit ~~interest~~ (~~18.7%~~"SKU") inrationalization ~~order~~and toongoing ~~reconcile~~portfolio ~~to the purchase price~~maintenance.

(in thousands)	Purchase Price Allocation
Cash and cash equivalents	$	698
Restricted Cash	1,200
Accounts receivable	1,719
Inventories	1,596
Prepaid expenses and other current assets	104
Fixed assets	127
Goodwill	56,604
Other intangible assets	41,100
Other non-current assets	295
Total assets acquired	103,443
Accounts payable	2,097
Other non-current liabilities	475
Total liabilities assumed	2,572
Net assets acquired at 100.0%	100,871
Less: Noncontrolling interest	19,405
Less: Value of prior equity investment	18,101
Net assets acquired	$	63,365


•	Price Realization. Improve trade spend productivity and effectiveness and optimize brand assortment.

Of• ~~the~~Marketing ~~$41.1~~Investment ~~million of acquired intangible assets, $20~~Optimization.8 ~~million~~Reset was assigned to customer relationships, which will be amortized over their useful life of 20 years, and $20.3 million to trademarks which are believed to have an indefinite useful life. The customer relationships were valued using the multiworking/non-~~period~~working ~~excess~~ratios earnings method, an income approach which required us to estimate projected revenues associated with customers we believe will be successfully retained post-acquisition, reduced for contributory asset charges and ~~taxes. The~~increase ~~trademarks~~investment ~~were~~in ~~valued~~our ~~using~~core ~~the~~branded ~~relief-from-royalty method under the income approach, which required us to estimate a royalty rate, identify relevant projected revenue, and select an appropriate discount rate~~portfolio.

58• Channel Execution Excellence. Elevate the performance of the existing IBO and DSD network.

As part of the plan, on June 26, 2017, our Board of Directors approved the closure of our manufacturing facility in Perry, Florida and an incremental reduction in workforce across the organization which continued into the third and fourth quarters of 2017. To date, we have eliminated approximately 300 jobs. The production of products previously manufactured in the Perry facility has been relocated to facilities with available capacity. A liability of $1.2 million is included in accrued compensation on the Condensed Consolidated Balance Sheet as of December 30, 2017.

During the year ended December 30, 2017, changes to the balance related to the Transformation Plan were as follows:



(in thousands)	Severance and Related Costs ⁽¹⁾			Asset Impairments			Professional Fees			Other ⁽²⁾			Total
Liability balance, December 31, 2016	$	—		$	—		$	—		$	—		$	—
Charges	9,011			8,859			7,278			4,454			29,602
Cash spent	(7,420		)	—			(7,278		)	(309		)	(15,007		)
Non-cash settlements/adjustments	(440		)	(8,859		)	—			(4,145		)	(13,444		)
Liability balance, December 30, 2017	$	1,151		$	—		$	—		$	—		$	1,151

⁽¹⁾This represents only the accrued severance and related costs for the Transformation Plan. This does not include all severance accrued as of December 31, 2016 or December 30, 2017.

⁽²⁾This primarily represents write off of certain materials and packaging associated with our elimination of certain SKU items.

The following table summarizes recognized charges related to the Transformation Plan in 2017:



(in thousands)	Year ended
(in thousands)	December 30, 2017
Cost of sales	$	7,223
Selling, general, and administrative	13,520
Impairment charges	8,859
Total	$	29,602

The full scope of the Transformation Plan and specific actions to be taken continue to be developed by senior management and our Board of Directors. These plans will evolve over the course of the Transformation Plan. At this point in time, we cannot reasonably estimate the future expenses and cash payments, nor their timing other than those outlined above. The Transformation Plan is targeting completion in 2020. We are anticipating that the Transformation Plan will result in 14% operating profit margin (on an adjusted basis) and an incremental operating income of $175 million improvement to our operating income by 2020. These targets are based on our adjusted results, as approved by our Board of Directors and may not align with our GAAP results. As of December 30, 2017, we have achieved incremental operating income and are on pace with where we expected to be at this point in time.

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~~Because~~NOTE of our purchase of a controlling interest in Late July, the equity of the entire entity was increased to fair value, which resulted in a $16.6 million increase in value of our prior investment. This $16.6 million, which represents the difference in the book value of our 18.7~~% equity investment in Late July at the transaction date compared to the fair value of that equity interest, was recognized as a gain in our Consolidated Statements of Income~~. ~~The~~ ~~calculation~~EARNINGS ofPER ~~this gain is as follows:~~SHARE

(in thousands)	Gain Calculation
Fair value of 18.7% ownership in Late July	$	18,101
Balance of prior equity investment in Late July	1,493
Gain on the revaluation of prior equity investment	$	16,608

The fair value of the percentage of assets acquired (61.3%) is deductible for income tax purposes, while the remaining assets did not receive a step-up in tax basis. Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill is attributable to the general reputation, assembled workforce, acquisition synergies and the expected future cash flows of the business.

Late July's results were included in our Consolidated Statements of Income beginning October 30, 2014. External net revenue from Late July of $3.9 million was included for 2014. Late July contributions to income before income taxes for the period subsequent to the acquisition were immaterial to 2014. We incurred pre-tax acquisition-related transaction and other costs of approximately $0.4 million in selling, general and administrative expense in 2014.

Baptista's

On June 13, 2014, we completed the acquisition of Baptista's Bakery, Inc. ("Baptista's") and related assets for approximately $204 million. The purchase price included the effective settlement of $2.6 million in accounts payable owed by us to Baptista's at the time of the acquisition. Baptista’s is an industry leader in snack food development and innovation, the manufacturer of our fast growing Snack Factory® Pretzel Crisps® brand and has unique capabilities consistent with our innovation plans.

The following table summarizes the purchase price allocation among the assets acquired and liabilities assumed:

(in thousands)	Purchase Price Allocation
Cash and cash equivalents	$	2,028
Accounts receivable	5,717
Inventories	9,222
Prepaid expenses and other current assets	318
Fixed assets	103,141
Goodwill	88,320
Other intangible assets	3,900
Total assets acquired	212,646
Current portion of long-term debt	333
Accounts payable	7,517
Accrued compensation	1,227
Other payables and accrued liabilities	1,217
Long-term debt	667
Total liabilities assumed	10,961
Net assets acquired	$	201,685

Of the $3.9 million of acquired intangible assets, $2.7 million was assigned to developed technology, $0.6 million to a non-compete agreement and $0.6 million to customer relationships. We incurred pre-tax acquisition-related transaction and other costs of approximately $0.4 million in selling, general and administrative expense in 2014. The fair value of all assets acquired is deductible for income tax purposes.

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Baptista's results were included in our Consolidated Statements of Income beginning June 13, 2014. The majority of Baptista's net revenue is internal and therefore eliminated in consolidation. In addition, profit margins on this internal net revenue are deferred and not realized until the products are sold to third party customers. External net revenue from Baptista’s of $40.5 million was included for 2014. Baptista’s contribution to income before income taxes for 2014, was approximately $5 million.

NOTE 5. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share using the two-class method, for income from continuing operations:

(in thousands, except per share data)

~~2016~~2017

~~2015~~2016

~~2014~~2015

Basic EPS:

Income from continuing operations

41146,~~985~~556

5041,~~685~~985

5950,~~275~~685

Less: Income from continuing operations allocated to participating securities

—472

~~137~~—

~~186~~137

Income from continuing operations allocated to common shares

41146,~~985~~084

5041,~~548~~985

5950,~~089~~548

Weighted average shares outstanding – Basic

9196,~~873~~594

7091,~~487~~873

6970,~~966~~487

Earnings per share – Basic

01.4651

0.7246

0.8472

Diluted EPS:

Weighted average shares outstanding – Basic

9196,~~873~~594

7091,~~487~~873

6970,~~966~~487

Effect of dilutive stock options, restricted units and performance-based restricted units on shares outstanding

~~1,018~~873

~~655~~1,018

~~690~~655

Weighted average shares outstanding – Diluted

9297,~~891~~467

7192,~~142~~891

7071,~~656~~142

Earnings per share – Diluted

01.4550

0.7145

0.8471

~~Basic~~There ~~and~~were ~~diluted~~approximately ~~loss~~2.0 ~~per~~million ~~share~~and ~~from~~1.3 ~~discontinued~~million ~~operations~~stock ~~for~~options ~~2016~~and ~~were~~restricted ~~each~~units ~~$0.29. There~~excluded ~~were~~from nothe ~~discontinued~~calculation ~~operations~~of ~~for 2015. Basic and~~ diluted earnings per share ~~from~~for 2017 ~~discontinued~~and ~~operations~~2016, ~~for~~respectively, ~~2014~~because their effects were $1anti-dilutive.90 ~~and~~There ~~$1.88,~~were ~~respectively~~no anti-dilutive shares in 2015.

~~There~~ ~~were~~NOTE ~~approximately 1~~8.~~3 million stock options and restricted units excluded from the calculation of diluted earnings per share for 2016 because their effects were anti~~ STOCK-~~dilutive. There~~BASED ~~were no anti-dilutive shares in 2015 and 2014.~~ COMPENSATION

~~NOTE~~Total stock-based incentive expense recorded in the Consolidated Statements of Income was $13.9 million, $24.5 million and $5.6 million for 2017, 2016 and 2015, respectively. ~~STOCK~~ In addition, we recorded $0.3 million, $3.8 million and $1.1 million in incentive compensation expense for performance-~~BASED~~based ~~COMPENSATION~~cash incentives in 2017, 2016 and 2015, respectively.

~~Total~~On ~~stock-based~~April ~~incentive~~11, ~~expense~~2017, ~~recorded~~Carl inE. ~~the~~Lee, ~~Consolidated~~Jr. ~~Statements~~retired offrom ~~Income~~his ~~was~~positions ~~$24.5~~as ~~million,~~President ~~$5.6~~and ~~million~~Chief Executive Officer and ~~$6.4~~a ~~million~~member ~~for~~of ~~2016~~the Board of Directors of our Company, ~~2015~~ as well as from his positions as an officer and/or ~~2014,~~director ~~respectively~~of each of our subsidiaries. InAs ~~addition~~part of Mr. Lee's retirement agreement, wecertain ~~recorded~~of ~~$3.8~~his ~~million~~stock based compensation awards were modified, ~~$1.1~~which ~~million~~resulted ~~and~~in the recognition of an additional $13.84 million inof ~~incentive~~stock-based compensation expense ~~for~~during ~~performance-based~~2017, ~~cash~~which ~~incentives~~is included in ~~2016, 2015~~the ~~and~~amounts ~~2014, respectively~~above.

Key Employee Incentive Plans

On May 4, 2016, at the Annual Meeting of Stockholders, the 2016 Key Employee Incentive Plan (the “Plan”) was approved. The Plan authorizes the grant of incentive stock options, non-qualified stock options, stock appreciation rights (SARs), restricted stock and performance equity awards, and expires in May 2022. The Plan also authorizes other awards denominated in monetary units or shares of common stock payable in cash or shares of common stock. The Plan provides for up to 4.0 million of securities available for future issuance, of which only 0.7 million can be used for restricted stock or performance share awards. Including shares carried over from the 2012 Key Employee Incentive Plan, as of December 3130, ~~2016~~2017, there were approximately 1.0.7 million of restricted shares and 31.68 million of other securities available for future issuance under the 2016 Plan. ~~In addition there were approximately 1.5 million shares available under the prior Diamond Foods stock plan for awards granted to former Diamond Foods' employees prior to the acquisition.~~

Long-term Incentive Plans

Under our long-term incentive plan, approximately 150 key employees are granted performance-based cash awards, performance-based restricted units, stock options and restricted shares. The amount of awards issued to employees is approved by the Board of Directors.

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Diamond Foods Replacement Awards

The acquisition of Diamond Foods, as discussed further in Note 45, resulted in a significant amount of prior Diamond Foods stock-based compens

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