ACQUISITIONS ACQUISITIONS (Notes)

9 Months Ended

Apr. 29, 2017

Business Combinations [Abstract]

ACQUISITIONS [Text Block]

ACQUISITIONS

Wholesale Segment - Wholesale Distribution Acquisitions

Nor-Cal Produce, Inc. On March 31, 2016 the Company acquired all of the outstanding equity securities of Nor-Cal Produce, Inc. ("Nor-Cal") and an affiliated entity as well as certain real estate. Nor-Cal is a distributor of conventional and organic produce and other fresh products in Northern California, with primary operations located in West Sacramento, California. Total cash consideration related to this acquisition was approximately $67.8 million.

The fair value of the identifiable intangible assets acquired was determined by using an income approach. The identifiable intangible assets include customer relationships of $30.3 million, a tradename with an estimated fair value of $1.0 million, and a non-compete with an estimated fair value of $0.5 million, which are being amortized on a straight-line basis over estimated useful lives of approximately thirteen years, five years, and five years, respectively. Significant assumptions utilized in the income approach were based on company-specific and market participant information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance. The goodwill of $36.5 million represents the future economic benefits expected to arise that could not be individually identified and separately recognized. During the second quarter of fiscal 2017, the Company recorded a $2.9 million adjustment to the opening balance sheet which decreased goodwill and deferred income tax liabilities. During the third quarter of fiscal 2017, the Company recorded a $0.1 million adjustment to the opening balance sheet, which decreased goodwill and liabilities, and completed the final net working capital adjustment resulting in cash received of $0.8 million by the Company, which also decreased goodwill and the total purchase price.

During the third quarter of fiscal 2017, the Company finalized its purchase accounting related to the Nor-Cal acquisition. The following table summarizes the consideration paid for the acquisition and the amounts of assets acquired and liabilities assumed as of the acquisition date:

(in thousands)	Preliminary as of July 30, 2016		Adjustments in Current Fiscal Year			Final Opening Balance Sheet as of April 29, 2017
Accounts receivable	$	8,483	$	—		$	8,483
Inventories	1,902		—			1,902
Property and equipment	10,029		—			10,029
Other assets	125		—			125
Customer relationships	30,300		—			30,300
Tradename	1,000		—			1,000
Non-compete	500		—			500
Goodwill	40,342		(3,825		)	36,517
Total assets	$	92,681	$	(3,825	)	$	88,856
Liabilities	24,101		(3,028		)	21,073
Total purchase price	$	68,580	$	(797	)	$	67,783

Haddon House Food Products, Inc. On May 13, 2016 the Company acquired all of the outstanding equity securities of Haddon House Food Products, Inc. (“Haddon”) and certain affiliated entities and real estate. Haddon is a distributor and merchandiser of natural and organic and gourmet ethnic products throughout the Eastern United States. Haddon has a diverse, multi-channel customer base including conventional supermarkets, gourmet food stores and independently owned product retailers. Total cash consideration related to this acquisition was approximately $217.5 million.

The value of the identifiable intangible assets acquired was determined by using an income approach. The identifiable intangible assets include customer relationships with an estimated fair value of $62.7 million, the Haddon tradename with an estimated fair value of $0.7 million, non-compete agreements with an estimated fair value of $0.7 million, and a trademark asset related to Haddon owned branded product lines with an estimated fair value of $2.0 million. The customer relationship intangible asset is currently being amortized on a straight-line basis over an estimated useful life of approximately thirteen years, the Haddon tradename is being amortized over an estimated useful life of approximately three years, the non-compete agreements that the Company received from the owners of Haddon are being amortized over the five-year term of the agreements, and the Haddon trademark asset associated with its branded product lines is estimated to have an indefinite useful life. Significant assumptions utilized in the income approach were based on company-specific and market participant information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance. The goodwill of $43.6 million represents the future economic benefits expected to arise that could not be individually identified and separately recognized.

While the Company is still completing the final purchase accounting adjustments, material changes are not expected to the amounts recorded in the consolidated financial statements as of April 29, 2017. During the second quarter of fiscal 2017, the Company recorded a reduction to goodwill of approximately $1.6 million related to finalizing the net working capital adjustment. The following table summarizes the consideration paid for the acquisition and the amounts of assets acquired and liabilities assumed as of the acquisition date:

(in thousands)	Preliminary as of July 30, 2016		Adjustments in Current Fiscal Year			Preliminary as of April 29, 2017
Accounts receivable	$	40,434	$	(300	)	$	40,134
Other receivable	3,621		—			3,621
Inventories	46,138		302			46,440
Prepaid expenses and other current assets	1,645		99			1,744
Property and equipment	54,501		—			54,501
Other assets	280		—			280
Customer relationships	62,700		—			62,700
Tradename	700		—			700
Non-compete	700		—			700
Other intangible assets	2,000		—			2,000
Goodwill	45,851		(2,266		)	43,585
Total assets	$	258,570	$	(2,165	)	$	256,405
Liabilities	39,510		(600		)	38,910
Total purchase price	$	219,060	$	(1,565	)	$	217,495

Gourmet Guru, Inc. On August 10, 2016, the Company acquired all of the outstanding equity securities of Gourmet Guru, Inc. ("Gourmet Guru"). Gourmet Guru is a distributor and merchandiser of fresh and organic food focusing on new and emerging brands. Total cash consideration related to this acquisition was approximately $10.0 million, subject to certain customary post-closing adjustments. During the second quarter of fiscal 2017, the Company recorded a reduction to goodwill of approximately $0.1 million related to finalizing the net working capital adjustment. During the third quarter of fiscal 2017, the Company recorded a $0.5 million adjustment to the opening balance sheet, which increased goodwill and accrued expenses and decreased property and equipment. The fair value of identifiable intangible assets acquired was determined by using an income approach. The identifiable intangible asset recorded based on a provisional valuation consisted of customer lists of $1.0 million, which are being amortized on a straight-line basis over an estimated useful life of approximately two years. The goodwill of $10.1 million represents the future economic benefits expected to arise that could not be individually identified and separately recognized.

Cash paid for Nor-Cal, Haddon and Gourmet Guru was financed through borrowings under the Company’s amended and restated revolving credit facility. Acquisition costs have been expensed as incurred within "operating expenses" in the Condensed Consolidated Statements of Income. Acquisition costs were de minimus during the third quarter and the first 39 weeks of fiscal 2017. Acquisition costs were $0.9 million and $1.9 million for the third quarter and the first 39 weeks of fiscal 2016, respectively. The results of the acquired businesses' operations have been included in the consolidated financial statements since the applicable date of acquisitions. Operations for these acquisitions have been combined with the Company's existing wholesale distribution business and therefore results are not separable from the rest of the wholesale distribution business.