Snyder's-Lance, Inc.
SNYDER'S-LANCE, INC. (Form: 10-Q, Received: 05/07/2013 16:45:52)
Table of Contents




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 30, 2013
Commission File Number 0-398
SNYDER’S-LANCE, INC.
(Exact name of registrant as specified in its charter)
 
North Carolina
(State or other jurisdiction of
incorporation or organization)
  
56-0292920
(I.R.S. Employer Identification No.)
 
13024 Ballantyne Corporate Place
Suite 900
Charlotte, North Carolina
  
28277
(Address of principal executive offices)
  
(Zip Code)
704-554-1421
(Registrant’s telephone number, including area code)
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 ¨
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 ¨
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.
 
 
Large accelerated filer  þ
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨         No þ
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 April 25, 2013 , was 69,161,527 shares.



Table of Contents

SNYDER'S-LANCE, INC. AND SUBSIDIARIES

INDEX

   
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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SNYDER'S-LANCE, INC. AND SUBSIDIARIES

INDEX

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,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify our forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Factors that could cause these differences include, but are not limited to, the risks and uncertainties set forth in Part II, "Item 1A. Risk Factors" and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 29, 2012, and those described from time to time in our other reports filed with the Securities and Exchange Commission.
Caution should be taken not to place undue reliance on our forward-looking statements, which reflect our management's expectations 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.  

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
For the Quarters Ended March 30, 2013 and March 31, 2012
(in thousands, except per share data)
 
 
 
Quarter Ended
 
 
March 30, 2013
 
March 31, 2012
Net revenue
 
$
418,572

 
$
392,843

Cost of sales
 
273,776

 
265,460

Gross margin
 
144,796

 
127,383

 
 
 
 
 
Selling, general and administrative
 
110,996

 
110,703

Gain on sale of route businesses, net
 
(110
)
 
(9,287
)
Other income, net
 
(1,476
)
 
(89
)
Income before interest and income taxes
 
35,386

 
26,056

 
 
 
 
 
Interest expense, net
 
3,439

 
2,263

Income before income taxes
 
31,947

 
23,793

 
 
 
 
 
Income tax expense
 
12,039

 
9,469

Net income
 
19,908

 
14,324

Net income attributable to noncontrolling interests
 
65

 
111

Net income attributable to Snyder’s-Lance, Inc.
 
$
19,843

 
$
14,213

 
 
 
 
 
Basic earnings per share
 
$
0.29

 
$
0.21

Weighted average shares outstanding – basic
 
68,992

 
67,912

 
 
 
 
 
Diluted earnings per share
 
$
0.28

 
$
0.21

Weighted average shares outstanding – diluted
 
69,839

 
69,053

 
 
 
 
 
Cash dividends declared per share
 
$
0.16

 
$
0.16

See Notes to the Condensed Consolidated Financial Statements (Unaudited).



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SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
For the Quarters Ended March 30, 2013 and  March 31, 2012
(in thousands)
 
 
Quarter Ended
 
 
March 30, 2013
 
March 31, 2012
Net income
 
$
19,908

 
$
14,324

 
 
 
 
 
Net unrealized (losses)/gains on derivative instruments, net of income tax
 
(13
)
 
134

Foreign currency translation adjustment
 
(1,558
)
 
1,589

  Total other comprehensive (loss)/income
 
(1,571
)
 
1,723

 
 
 
 
 
Total comprehensive income
 
18,337

 
16,047

Comprehensive income attributable to noncontrolling interests, net of income tax of $38 and $30, respectively
 
(65
)
 
(111
)
  Total comprehensive income attributable to Snyder’s-Lance, Inc.
 
$
18,272

 
$
15,936

See Notes to Condensed Consolidated Financial Statements (Unaudited).



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SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of March 30, 2013 (Unaudited) and December 29, 2012  
(in thousands, except share data)
 
 
March 30, 2013
 
December 29, 2012
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
12,084

 
$
9,276

Accounts receivable, net of allowances of $2,780 and $2,159, respectively
 
150,418

 
141,862

Inventories
 
111,983

 
118,256

Deferred income taxes
 
12,091

 
11,625

Assets held for sale
 
22,009

 
11,038

Prepaid expenses and other current assets
 
28,442

 
28,676

Total current assets
 
337,027

 
320,733

 
 
 
 
 
Noncurrent assets:
 
 
 
 
Fixed assets, net of accumulated depreciation of $338,895 and $331,053, respectively
 
337,190

 
331,385

Goodwill
 
537,708

 
540,389

Other intangible assets, net
 
525,949

 
531,735

Other noncurrent assets
 
22,970

 
22,490

Total assets
 
$
1,760,844

 
$
1,746,732

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
Current portion of long-term debt
 
$
20,161

 
$
20,462

Accounts payable
 
57,453

 
54,791

Accrued compensation
 
23,850

 
31,037

Accrued selling and promotional costs
 
13,684

 
16,240

Income tax payable
 
578

 
1,263

Other payables and accrued liabilities
 
33,742

 
30,830

Total current liabilities
 
149,468

 
154,623

 
 
 
 
 
Noncurrent liabilities:
 
 
 
 
Long-term debt
 
520,911

 
514,587

Deferred income taxes
 
177,833

 
176,037

Other noncurrent liabilities
 
28,119

 
29,310

Total liabilities
 
876,331

 
874,557

 
 
 
 
 
Commitments and contingencies
 

 

 
 
 
 
 
Stockholders’ equity:
 
 
 
 
Common stock, 69,154,657 and 68,863,974 shares outstanding, respectively
 
57,627

 
57,384

Preferred stock, no shares outstanding
 

 

Additional paid-in capital
 
750,956

 
746,155

Retained earnings
 
59,647

 
50,847

Accumulated other comprehensive income
 
13,547

 
15,118

Total Snyder’s-Lance, Inc. stockholders’ equity
 
881,777

 
869,504

Noncontrolling interests
 
2,736

 
2,671

Total stockholders’ equity
 
884,513

 
872,175

Total liabilities and stockholders’ equity
 
$
1,760,844

 
$
1,746,732

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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SNYDER'S-LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Quarters Ended March 30, 2013 and  March 31, 2012
(in thousands)
 
 
Quarter Ended
 
 
March 30, 2013
 
March 31, 2012
Operating activities:
 
 
 
 
Net income
 
$
19,908

 
$
14,324

Adjustments to reconcile net income to cash from operating activities:
 
 
 
 
Depreciation and amortization
 
14,778

 
12,867

Stock-based compensation expense
 
1,181

 
1,008

Gain on sale of fixed assets, net
 
(510
)
 
(259
)
Gain on sale of route businesses
 
(110
)
 
(9,287
)
Changes in operating assets and liabilities
 
(7,772
)
 
1,928

Net cash provided by operating activities
 
27,475

 
20,581

 
 
 
 
 
Investing activities:
 
 
 
 
Purchases of fixed assets
 
(18,572
)
 
(13,782
)
Purchases of route businesses
 
(11,142
)
 
(21,712
)
Proceeds from sale of fixed assets
 
1,600

 
2,852

Proceeds from sale of route businesses
 
4,528

 
28,929

Net cash used in investing activities
 
(23,586
)
 
(3,713
)
 
 
 
 
 
Financing activities:
 
 
 
 
Dividends paid to stockholders
 
(11,043
)
 
(10,873
)
Issuances of common stock
 
4,567

 
2,282

Repurchases of common stock
 
(703
)
 
(322
)
Repayments of long-term debt
 
(8,652
)
 
(610
)
Net proceeds/(repayments) from revolving credit facilities
 
14,935

 
(5,899
)
Net cash used in financing activities
 
(896
)
 
(15,422
)
 
 
 
 
 
Effect of exchange rate changes on cash
 
(185
)
 
(138
)
 
 
 
 
 
Increase in cash and cash equivalents
 
2,808

 
1,308

Cash and cash equivalents at beginning of period
 
9,276

 
20,841

Cash and cash equivalents at end of period
 
$
12,084

 
$
22,149

 
 
 
 
 
Supplemental information:
 
 
 
 
Cash paid/(received) for income taxes, net of refunds of $30 and $12,283, respectively
 
$
10,196

 
$
(11,650
)
Cash paid for interest
 
$
2,700

 
$
1,231

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)



1.    BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Snyder’s-Lance, Inc. (the "Company") have been prepared in accordance with generally accepted accounting principles in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes included in our Form 10-K for the year ended December 29, 2012 , filed with the Securities and Exchange Commission on February 25, 2013. In our opinion, these condensed consolidated financial statements reflect all adjustments, consisting of only normal, recurring accruals, necessary to present fairly our condensed consolidated financial statements for the interim periods presented herein. The consolidated results of operations for the quarter ended March 30, 2013 , are not necessarily indicative of the results to be expected for the full year.
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 customer returns and promotions, 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.
Prior year amounts shown in the accompanying condensed consolidated financial statements have been reclassified for consistent presentation.
2.    NEW ACCOUNTING STANDARDS
In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated other Comprehensive Income. Under the standard, an entity is required to disclose items reclassified in their entirety out of accumulated other comprehensive income, the effect of the reclassification on each affected net income line item and for items that are not classified out of accumulated other comprehensive income in their entirety, a cross reference to other required U.S. GAAP disclosures. The requirements are effective for the first quarter of 2013. The Company adopted the requirements during the first quarter of 2013.
3.     BUSINESS ACQUISITIONS
2012 Acquisition
On October 11, 2012, we completed the acquisition of all of the issued and outstanding shares and membership interests of Snack Factory, LLC and certain affiliates ("Snack Factory"), for $343.4 million .
The following unaudited pro forma results for the quarter ended March 31, 2012, include estimates and assumptions regarding increased amortization of intangible assets related to the acquisition, increased interest expense related to debt acquired in order to fund the acquisition and the related 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, except per share data)
 
Quarter Ended March 31, 2012
Net revenue
 
$
413,988

Income before interest and income taxes
 
26,849

Net income attributable to Snyder's-Lance, Inc.
 
13,962

Weighted average diluted shares
 
69,053

Diluted earnings per share
 
$
0.20


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SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)


Merger and Integration Activities
On December 6, 2010, Lance, Inc. and Snyder’s of Hanover, Inc. completed a merger (“Merger”) to create Snyder’s-Lance, Inc.
In connection with this Merger, we converted our company owned distribution routes to an independent business owner ("IBO") distribution structure.
During the quarter ended March 31, 2012 , we incurred $1.5 million in severance costs and professional fees related to the Merger and integration activities, which are included in selling, general and administrative expenses on the Condensed Consolidated Statements of Income. There were no such costs incurred during the quarter ended March 30, 2013.
4.     EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income attributable to Snyder’s-Lance, Inc. by the weighted average number of 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, as determined pursuant to the treasury stock method.
For the quarter ended March 30, 2013 , approximately 417,000 shares were excluded from the calculation of diluted earnings per share because their effects were antidilutive. No shares were excluded from the calculation of diluted earnings per share for the quarter ended March 31, 2012 .
On May 3, 2013, an amendment to the Restated Articles of Incorporation of Snyder's-Lance, Inc. was approved at the annual meeting of stockholders to increase the number of authorized shares of common stock from 75,000,000 to 110,000,000 .
5.    STOCK-BASED COMPENSATION
Compensation expense related to equity-based incentive plans of $1.2 million and $1.0 million was recognized for the quarters ended March 30, 2013 , and March 31, 2012 , respectively. During the quarter ended March 30, 2013 , we issued 418,493 non-qualified stock options at a weighted-average exercise price of $25.56 per share and 115,737 restricted shares to employees. During the quarter ended March 31, 2012 , we issued 533,994 non-qualified stock options at a weighted-average exercise price of $22.41 per share and 123,867 restricted shares to employees.
For the quarters ended March 30, 2013 , and March 31, 2012 , we repurchased 27,490 and 14,336 shares, respectively, of common stock from employees to cover withholding taxes payable by employees upon the vesting of restricted stock.
In addition, we recorded $0.8 million and $0.2 million in incentive compensation expense for a performance-based cash incentive plan for the quarters ended March 30, 2013 , and March 31, 2012 , respectively.
6.     INVENTORIES
Inventories as of March 30, 2013 , and December 29, 2012 , consisted of the following:
(in thousands)
 
March 30, 2013
 
December 29, 2012
Finished goods
 
$
70,229

 
$
74,627

Raw materials
 
17,091

 
19,307

Maintenance parts, packaging and supplies
 
24,663

 
24,322

Total inventories
 
$
111,983

 
$
118,256


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SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)


7.     FIXED ASSETS
Fixed assets as of March 30, 2013 , and December 29, 2012 , consisted of the following:
(in thousands)
 
March 30, 2013
 
December 29, 2012
Land and land improvements
 
$
28,267

 
$
28,501

Buildings and building improvements
 
134,915

 
135,491

Machinery, equipment and computer systems
 
440,683

 
416,767

Trucks and automobiles
 
29,565

 
32,042

Furniture and fixtures
 
12,156

 
12,158

Construction in progress
 
33,333

 
41,257

 
 
$
678,919

 
$
666,216

Accumulated depreciation
 
(338,895
)
 
(331,053
)
 
 
340,024

 
335,163

Fixed assets held for sale
 
(2,834
)
 
(3,778
)
Fixed assets, net
 
$
337,190

 
$
331,385

Depreciation expense related to fixed assets was $12.4 million and $11.7 million during the quarters ended March 30, 2013 , and March 31, 2012 , respectively. There were no fixed asset impairment charges during the first quarter of 2013 or 2012 .
The closure of the Corsicana, Texas manufacturing facility was completed during the quarter ended March 31, 2012. Upon closure of the facility, many of the assets were relocated to other manufacturing locations. Expenses incurred as part of the relocation process were $1.4 million in the first quarter of 2012 and were included in cost of sales in the Condensed Consolidated Statements of Income. The land and building in Corsicana, Texas comprise the majority of the $2.8 million and $3.8 million of fixed assets held for sale in the Condensed Consolidated Balance Sheets as of March 30, 2013 , and December 29, 2012 , respectively.
During the fourth quarter of 2012, we made the decision to close our Cambridge, Ontario manufacturing facility in May 2013 in order to consolidate the operations of our two Canadian manufacturing facilities. In conjunction with this decision, an asset impairment charge of $2.5 million was recorded in the fourth quarter of 2012 as we intend to sell certain manufacturing equipment no longer deemed necessary for the operation of our Canadian manufacturing facility and the associated land and buildings during 2013.
8.     GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amount of goodwill for the quarter ended March 30, 2013 , are as follows:
(in thousands)
 
Carrying Amount    
Balance as of December 29, 2012
 
$
540,389

Goodwill acquired in the purchase of route businesses
 
3,603

Goodwill attributable to the sale of route businesses
 
(1,451
)
Change in goodwill reclassified to assets held for sale
 
(3,972
)
Change in foreign currency exchange rate
 
(861
)
Balance as of March 30, 2013
 
$
537,708


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SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)


As of March 30, 2013 , and December 29, 2012 , other intangible assets consisted of the following:
(in thousands)
 
    Gross
    Carrying
    Amount
 
Accumulated
Amortization
 
Net    
Carrying    
Amount    
As of March 30, 2013:
 
 
 
 
 
 
Customer and contractual relationships – amortized
 
$
148,956

 
$
(12,636
)
 
$
136,320

Non-compete agreement – amortized
 
100

 
(22
)
 
78

Reacquired rights – amortized
 
3,100

 
(641
)
 
2,459

Patents – amortized
 
8,600

 
(361
)
 
8,239

Routes – unamortized
 
16,792

 

 
16,792

Trademarks – unamortized
 
362,587

 
(526
)
 
362,061

Balance as of March 30, 2013
 
$
540,135

 
$
(14,186
)
 
$
525,949

 
 
 
 
 
 
 
As of December 29, 2012:
 
 
 
 
 
 
Customer and contractual relationships – amortized
 
$
148,956

 
$
(10,524
)
 
$
138,432

Non-compete agreement – amortized
 
100

 
(10
)
 
90

Reacquired rights – amortized
 
3,100

 
(544
)
 
2,556

Patents – amortized
 
8,600

 
(165
)
 
8,435

Routes – unamortized
 
20,161

 

 
20,161

Trademarks – unamortized
 
362,587

 
(526
)
 
362,061

Balance as of December 29, 2012
 
$
543,504

 
$
(11,769
)
 
$
531,735

Amortization expense related to intangibles was $2.4 million and $1.2 million for the quarters ended March 30, 2013 , and  March 31, 2012 , respectively.
Routes and trademarks are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. Although not amortized, they are reviewed for impairment as conditions change or at least on an annual basis. In the fourth quarter of 2012, we incurred $7.6 million in impairment charges on two of our trademarks. This impairment was necessary as we made a decision to replace a portion of the sales of these branded products with other, more recognizable, brands in our portfolio. The majority of our trademarks, including the two partially impaired trademarks, have a fair value which approximates the book value. Any changes in the use of these trademarks or the sales volumes of the associated products could result in an impairment charge. In addition, the valuation of trademarks acquired in the Snack Factory acquisition in the fourth quarter of 2012 assumes significant revenue growth in current and future years. Although we believe this rate of revenue growth is reasonable, any reduction in growth or growth expectations could result in impairment of the associated trademark.
The changes in the carrying amount of routes for the quarter ended March 30, 2013 , are as follows:
(in thousands)
 
Carrying Amount    
Balance of routes as of December 29, 2012
 
$
20,161

Purchases of route businesses, exclusive of goodwill acquired
 
7,540

Sales of route businesses
 
(2,967
)
Change in routes reclassified to assets held for sale
 
(7,942
)
Balance of routes as of March 30, 2013
 
$
16,792

For the quarters ended March 30, 2013 , and March 31, 2012 , we recorded net gains of $0.1 million and $9.3 million , respectively, from the sale of route businesses.

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SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)


Routes and associated goodwill allocated to assets held for sale represent assets available for sale in their present condition and for which actions to complete a sale have been initiated. As of March 30, 2013 , $12.9 million of route intangibles and $6.3 million of goodwill are included in assets held for sale in the Condensed Consolidated Balance Sheets. As of December 29, 2012 , $4.9 million in route intangibles and $2.3 million of goodwill were included in assets held for sale. The increase in assets held for sale is due to continued optimization and expansion of our IBO distribution network.
9 .     LONG-TERM DEBT
Long-term debt outstanding as of March 30, 2013 , and December 29, 2012 , consisted of the following:
(in thousands)
 
March 30, 2013
 
December 29, 2012
Revolving credit facilities
 
$
116,062

 
$
101,127

Other long-term debt
 
425,010

 
433,922

Total debt
 
541,072

 
535,049

Less current portion of long-term debt
 
(20,161
)
 
(20,462
)
Total long-term debt
 
$
520,911

 
$
514,587

Our primary credit agreement allows us to make revolving credit borrowings of up to $265 million through December 2015. As of March 30, 2013 , and December 29, 2012 , we had available $150 million and $165 million , respectively, of unused credit on this credit facility. The credit agreement requires us to comply with certain defined covenants. We are currently in compliance with all covenants.
Including the effect of interest rate swap agreements, the weighted average interest rate was 2.67% and 3.87% for the quarters ended March 30, 2013 , and March 31, 2012 , respectively. See Note 12 for further information on our interest rate swap agreements.
The fair value of outstanding debt, including current maturities, was approximately $550 million and $544 million for March 30, 2013 , and December 29, 2012 , respectively. The Level 2 fair value estimates were based on similar debt with comparable maturities, credit ratings and interest rates.
10.     INCOME TAXES
We have recorded gross unrecognized tax benefits as of March 30, 2013 , totaling $6.6 million and related interest and penalties of $2.4 million in other noncurrent liabilities on the Condensed Consolidated Balance Sheets. Of this total amount, $7.3 million would affect the effective tax rate if subsequently recognized. As of December 29, 2012 , we recorded gross unrecognized tax benefits totaling $6.0 million and related interest and penalties of $2.3 million in other noncurrent liabilities on the Condensed Consolidated Balance Sheets. We expect that certain income tax audits will be settled or various tax authorities’ statutes of limitations will expire during the next twelve months resulting in a potential $2.9 million reduction of the unrecognized tax benefit amount. We classify interest and penalties associated with income tax positions within income tax expense.
The effective tax rate decrease d from 39.8% for the first quarter of 2012 to 37.7% for the first quarter of 2013 . The decrease in the effective income tax rate was due to lower non-tax deductible expenses, primarily related to goodwill associated with the sale of route businesses.
11.     FAIR VALUE MEASUREMENTS
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 in which there is little or no market data available, which requires us to develop our own
assumptions.
We measure derivative instruments at fair value using Level 2 inputs. See Note 12 for additional information about our derivative instruments. The fair value of our outstanding debt is measured using Level 2 inputs and is disclosed in Note 9 to the condensed consolidated financial statements. There were no changes among the levels during the first quarter of 2013 .
The carrying amount of cash equivalents, receivables and accounts payable approximates fair value due to their short-term nature.

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Notes to the Condensed Consolidated Financial Statements (Unaudited)


12 .     DERIVATIVE INSTRUMENTS
We are exposed to certain risks relating to our ongoing business operations. We use derivative instruments to manage interest rate and foreign exchange risks.
The fair value of the derivative instrument liability in the Condensed Consolidated Balance Sheets using Level 2 inputs was as follows:  
(in thousands)
 
Balance Sheet Location
 
March 30, 2013
 
December 29, 2012
Interest rate swaps
 
Other payables and accrued liabilities
 
$
(7
)
 
$
(15
)
Interest rate swaps
 
Other noncurrent liabilities
 
(1,429
)
 
(1,575
)
  Foreign currency forwards
 
Other payables and accrued liabilities
 
(119
)
 

Total fair value of derivative instruments
 
 
 
$
(1,555
)
 
$
(1,590
)
Interest Rate Swaps
Our variable-rate debt obligations incur interest at floating rates based on changes in the Eurodollar rate and U.S. base rate interest. To manage exposure to changing interest rates, we selectively enter into interest rate swap agreements to maintain a desirable proportion of fixed to variable-rate debt. The fair value of interest rate swaps is determined utilizing a market approach model using the notional amount of the interest rate swaps and the observable inputs of time to maturity and interest rates. The notional amount of the interest rate swaps designated as hedging instruments as of March 30, 2013 , and December 29, 2012 , was $53.7 million and $54.3 million , respectively.
Foreign Currency Forwards
We have exposure to foreign exchange rate fluctuations through the operations of our Canadian subsidiary. A majority of the revenue of our Canadian operations is denominated in U.S. dollars and a substantial portion of its costs, such as raw materials and labor costs, are denominated in Canadian dollars. We enter into derivative forward contracts to mitigate a portion of this foreign exchange rate exposure. These contracts have maturities through December 2013 . The notional amount for foreign currency forwards was $16.5 million as of March 30, 2013 . There were no contracts outstanding at December 29, 2012 .
The changes in unrealized (losses)/gains, net of income tax, included in other comprehensive income due to fluctuations in interest rates and foreign exchange rates for the quarters ended March 30, 2013 , and March 31, 2012 were as follows:
 
 
Quarter Ended
(in thousands)
 
March 30, 2013
 
March 31, 2012
Interest rate swaps, net of income tax (expense)/benefit of ($43) and $23, respectively
 
$
69

 
$
(37
)
Foreign currency forwards, net of income tax benefit/(expense) of $37 and ($78), respectively
 
(82
)
 
171

Total change in unrealized (losses)/gains from derivative instruments, net of income tax (effective portion)
 
$
(13
)
 
$
134


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Notes to the Condensed Consolidated Financial Statements (Unaudited)


13.     COMMITMENTS AND CONTINGENCIES
Contractual Obligations
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 decreased from $158.5 million as of December 29, 2012 to $144.4 million as of March 30, 2013 , due primarily to ingredient usage during the quarter and the timing of new commitments. In addition, 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 currently contract from approximately three to twelve months in advance for all major ingredients and packaging.
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 $19.4 million as of March 30, 2013 , and $18.9 million as of December 29, 2012 .
Guarantees
We currently provide a partial guarantee for loans made to IBOs by third party financial institutions for the purchase of distribution routes and trucks. The outstanding aggregate balance on these loans was approximately $110.0 million as of March 30, 2013 , compared to approximately $109.7 million as of December 29, 2012 . The annual maximum amount of future payments we could be required to make under the guarantee 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 routes and trucks for which the loans are made. Accordingly, we have the ability to recover substantially all of the outstanding loan value upon default, and we have not recorded any liability associated with this guarantee.
Legal Matters
We are currently subject to various lawsuits and environmental matters arising in the normal course of business. In our opinion, such claims should not have a material effect upon our consolidated financial statements taken as a whole.
14.     RELATED PARTY TRANSACTIONS
We own 51% of Patriot Snacks Real Estate, LLC (“Patriot”) and consolidate its balance sheet and operating results into our consolidated financial statements. The remaining 49% is owned by an employee.
We own 80% of Michaud Distributors, Inc. (“Michaud”), which distributes our products in the northeastern United States, and consolidate its balance sheet and operating results into our condensed consolidated financial statements. The remaining 20% is owned by two employees. We have notes receivable from stockholders and employees of Michaud of $0.2 million as of March 30, 2013 and December 29, 2012 . The notes are unsecured, due upon demand, and bear interest at the best rate available to Michaud by its primary commercial lenders.
We own a noncontrolling equity interest in Late July Snacks LLC (“Late July”), an organic snack food company. This investment is reflected in other noncurrent assets on the Condensed Consolidated Balance Sheets. Equity earnings, which are not material, are included in other income, net on the Condensed Consolidated Statements of Income. We also manufacture products for Late July. Contract manufacturing revenue from Late July was approximately $0.8 million and $1.3 million during the first quarter of 2013 and 2012, respectively. Accounts receivable due from Late July totaled $0.4 million and $0.5 million at March 30, 2013 , and December 29, 2012 , respectively.
ARWCO Corporation, MAW Associates, LP and Warehime Enterprises, Inc. are significantly owned or controlled by the Chairman of the Board of Snyder’s-Lance, Inc. or direct family members. Among other unrelated business activities, these entities provide financing to IBOs for the purchase of trucks and routes. We have entered into loan service agreements with these related parties that allow us to repurchase certain distribution assets in the event an IBO defaults on a loan with the related party. We are required to repurchase the assets 30 days after default at the value as defined in the loan service agreement which should approximate fair market value. As of March 30, 2013 , there were outstanding loans made to IBOs by the related parties of approximately $34.2 million compared to $37.0 million in loans outstanding as of December 29, 2012 . Our Chairman of the Board also serves as an officer and/or director of these entities. Transactions with these related parties are primarily related to the collection and remittance of loan payments on notes receivable held by the related parties. We are reimbursed for certain overhead and administrative services associated with the services provided to these related parties. The receivables from, payables to and administrative fees from these entities are not significant for any period presented.

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Notes to the Condensed Consolidated Financial Statements (Unaudited)


A Connecticut warehouse used to support our distribution network is leased from a company partially owned by an employee. There were $0.1 million in lease payments made to this company during both the first quarter of 2013 and 2012 .
One of our directors, C. Peter Carlucci, Jr., is a member of Eckert Seamans Cherin & Mellott, LLC (“Eckert”), which serves as one of our outside legal firms. Expenses incurred for services provided by Eckert were $0.3 million in the first quarter of 2013 and $0.1 million in the first quarter of 2012 .
15 .     OTHER COMPREHENSIVE INCOME
Total comprehensive income attributable to Snyder's-Lance, Inc., determined as net income adjusted by total other comprehensive income, was $18.3 million and $15.9 million for the quarters ended March 30, 2013 , and March 31, 2012 , respectively. Total other comprehensive income presently consists of foreign currency translation adjustments and adjustments for our derivative financial instruments accounted for as cash flow hedges.
Amounts reclassified out of total other comprehensive income, net of tax, for the quarters ended March 30, 2013 , and March 31, 2012 , consisted of the following:
(in thousands)
 
Income Statement Location
 
March 30, 2013
 
March 31, 2012
Gains/(losses) on cash flow hedges reclassified out of total other comprehensive income:
 
 
 
 
 
 
Interest rate swaps, net of tax of $69 and $73, respectively
 
Interest expense, net
 
$
(111
)
 
$
(118
)
Foreign currency forwards, net of tax of $25 and ($39), respectively
 
Net revenue
 
(56
)
 
87

Foreign currency forwards, net of tax of $4 and ($1), respectively
 
Other income, net
 
(8
)
 
1

Total cash flow hedge reclassifications, net of tax
 
 
 
$
(175
)
 
$
(30
)
During the quarter ended March 30, 2013 , changes to the balance in accumulated other comprehensive income were as follows:
(in thousands)
 
Gains/(Losses) on Cash Flow Hedges
 
Foreign Currency Translation Adjustments
 
Total
Balance as of December 29, 2012
 
$
(842
)
 
$
15,960

 
$
15,118

Other comprehensive income/(loss) before reclassifications
 
162

 
(1,558
)
 
(1,396
)
(Losses)/income reclassified from comprehensive income
 
(175
)
 

 
(175
)
Net other comprehensive loss
 
(13
)
 
(1,558
)
 
(1,571
)
Balance as of March 30, 2013
 
$
(855
)
 
$
14,402

 
$
13,547

Income taxes on the foreign currency translation adjustment in other comprehensive income are not recognized because these earnings are considered to be permanently reinvested and, accordingly, no provision for U.S. federal and state income taxes are required.

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Notes to the Condensed Consolidated Financial Statements (Unaudited)


16.     SEGMENT REPORTING
We operate in one business segment: the manufacturing, distribution, marketing and sale of snack food products. We define business segments as components of an organization for which discrete financial information is available and operating results are evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM is the Company's President and Chief Executive Officer. Characteristics of our organization which were relied upon in making this determination include the similar nature of all of the products that we sell, the functional alignment of our organizational structure, and the reports that are regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.
Revenue by Product Category
Net revenue by product category was as follows:
 
 
Quarter Ended
(in thousands)
 
March 30, 2013
 
March 31, 2012
Branded
 
$
258,187

 
$
230,428

Partner brands
 
70,409

 
69,589

Private brands
 
68,681

 
70,097

Other
 
21,295

 
22,729

Net revenue
 
$
418,572

 
$
392,843

Significant Customers
Sales to our largest retailer, Wal-Mart Stores, Inc., were approximately 17% of net revenue for both the quarter ended March 30, 2013 , and March 31, 2012 . In addition, third-party distributors, which account for approximately 12% of sales, purchase and resell our products to retailers including Wal-Mart Stores, Inc. thereby increasing our sales attributable to Wal-Mart Stores, Inc. by an amount we are unable to estimate. Accounts receivable at March 30, 2013 , and December 29, 2012 , included receivables from Wal-Mart Stores, Inc. totaling $30.7 million and $25.9 million , respectively.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion provides an assessment of our financial condition, results of operations, and liquidity and capital resources and should be read in conjunction with the accompanying consolidated financial statements and 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 II, "Item 1A. Risk Factors" and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 29, 2012 , and those described from time to time in our other reports filed with the Securities and Exchange Commission.
Management’s discussion and analysis of our financial condition and results of operations are based on the condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. 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. The consolidated results of operations for the quarter ended March 30, 2013 , are not necessarily indicative of the results to be expected for the full year. 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 customer returns and promotions, 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.
Overview
During the first quarter of 2013 , we continued to implement our strategic plan, which provides for growth of our core branded products (Snyder's of Hanover ® pretzels, Lance ® sandwich crackers, Cape Cod ® kettle potato chips and Snack Factory ® Pretzel Crisps ® pretzel crackers) through expanded distribution, innovation and advertising. For our allied brands (Krunchers! ® , Jays ® , Tom's ® , Archway ® , Grande ® , Stella D'oro ® , O-Ke-Doke ® , EatSmart ® and Padrinos ® ), our primary focus was on improving profit margins through pricing strategies, enhanced packaging and product configuration. In addition, we continued to realize benefits from our acquisition of Snack Factory, LLC and certain affiliates ("Snack Factory"), which provided us with a fourth core branded product, Pretzel Crisps ® pretzel crackers. Snack Factory helped improve performance over the prior year first quarter by providing us with additional revenues and higher gross profit margins as a result of higher-priced premium products. Overall, the first quarter was highlighted by improved gross profit margins and significantly lower operating expenses as a percentage of net revenue when compared to the first quarter of 2012.
An overview of changes by income statement line item for the first quarter of 2013 as compared to 2012 is as follows:
Net revenue - Net revenue increased compared to the prior year, primarily due to increased revenue from branded products. The increase in net revenue from branded products was driven primarily by the acquisition of Snack Factory in the fourth quarter of 2012.
Gross margin - Improved manufacturing efficiencies and the greater mix of revenues from branded products increased gross margin as a percentage of revenue.
Selling, general and administrative - Significant reductions in selling, general and administrative expenses were recognized throughout 2012, primarily as a result of the completion of the independent business owner ("IBO") conversion and the realization of full synergies associated with the merger of Lance, Inc. and Snyder's of Hanover, Inc. ("Merger"). These reductions provided us with lower selling, general and administrative costs as a percentage of net revenue during the first quarter of 2013 as compared to the first quarter of 2012.
Gains on the sale of routes - We recorded net gains of $0.1 million from the sale of route businesses in the first quarter of 2013, compared to net gains of $9.3 million in the first quarter of 2012. Sales of route businesses were substantially lower compared to the prior year as the IBO conversion was completed in the second quarter of 2012. We do, however, continue to expect some gains on the sale of routes as we continue to optimize and expand our IBO distribution network.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Quarter Ended March 30, 2013 Compared to Quarter Ended March 31, 2012  
 
 
 
 
 
 
Favorable/
 
 
Quarter Ended
 
(Unfavorable)
(in thousands)
 
March 30, 2013
 
March 31, 2012
 
Variance
Net revenue
 
$
418,572

 
100.0
 %
 
$
392,843

 
100.0
 %
 
$
25,729

 
6.5
 %
Cost of sales
 
273,776

 
65.4
 %
 
265,460

 
67.6
 %
 
(8,316
)
 
(3.1
)%
Gross margin
 
144,796

 
34.6
 %
 
127,383

 
32.4
 %
 
17,413

 
13.7
 %
Selling, general and administrative
 
110,996

 
26.5
 %
 
110,703

 
28.2
 %
 
(293
)
 
(0.3
)%
Gain on sale of route businesses, net
 
(110
)
 
 %
 
(9,287
)
 
(2.4
)%
 
(9,177
)
 
(98.8
)%
Other income, net
 
(1,476
)
 
(0.4
)%
 
(89
)
 
 %
 
1,387

 
nm

Income before interest and income taxes
 
35,386

 
8.5
 %
 
26,056

 
6.6
 %
 
9,330

 
35.8
 %
Interest expense, net
 
3,439

 
0.8
 %
 
2,263

 
0.6
 %
 
(1,176
)
 
(52.0
)%
Income tax expense
 
12,039

 
2.9
 %
 
9,469

 
2.4
 %
 
(2,570
)
 
(27.1
)%
Net income
 
$
19,908

 
4.8
 %
 
$
14,324

 
3.6
 %
 
$
5,584

 
39.0
 %
nm - not meaningful

Net Revenue
Net revenue by product category for the quarter ended March 30, 2013 , and March 31, 2012 , was as follows:
 
 
 
 
 
 
 
 
 
 
Favorable/
 
 
Quarter Ended
 
(Unfavorable)
(in thousands)
 
March 30, 2013
 
March 31, 2012
 
Variance
Branded
 
$
258,187

 
61.7
%
 
$
230,428

 
58.7
%
 
$
27,759

 
12.0
 %
Partner brands
 
70,409

 
16.8
%
 
69,589

 
17.7
%
 
820

 
1.2
 %
Private brands
 
68,681

 
16.4
%
 
70,097

 
17.8
%
 
(1,416
)
 
(2.0
)%
Other
 
21,295

 
5.1
%
 
22,729

 
5.8
%
 
(1,434
)
 
(6.3
)%
Net revenue
 
$
418,572

 
100.0
%
 
$
392,843

 
100.0
%
 
$
25,729

 
6.5
 %
Net revenue increase d $25.7 million , or 6.5% , for the quarter ended March 30, 2013 , compared to the quarter ended March 31, 2012 . The increase in net revenue compared to the prior year was driven by the acquisition of Snack Factory.
Compared to the quarter ended March 31, 2012 , net revenue from our branded products increased approximately 12.0% . The majority of this increase was due to the acquisition of Snack Factory. Net revenue from branded products was also positively impacted by revenue growth in the core brands. Combined net revenue from core branded products, excluding Snack Factory, increased approximately 6% after adjusting for the impact of the completed IBO conversion and we achieved market share growth in each of our core brands. The increase in revenue from core branded products was partially offset by volume declines in our allied branded products. The implementation of price increases, primarily to cover increased commodity costs, in the first quarter across many of our branded products resulted in lower volume realization.
Partner brand net revenue increased 1.2% compared to the prior year first quarter. Both volume and price were relatively constant with the prior year.
Net revenue from private brand products declined $1.4 million , or 2.0% , in the first quarter of 2013 when compared to the first quarter of 2012. Throughout 2012, our private brand revenue declined due to the planned loss of certain retailers in order to obtain a better mix of revenue across our customer base. Despite this intentional reduction, net revenue from private brand products has mostly recovered as we obtained new sources of revenue to replace the revenue declines.
Other revenue declined $1.4 million , or 6.3% , from the first quarter of 2012 to the first quarter of 2013 primarily because of the loss of certain contract manufactured goods produced in the prior year, partially offset by additional contract business obtained.


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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Gross Margin
Gross margin increase d $17.4 million during the first quarter of 2013 compared to the first quarter of 2012 and increase d from 32.4% to 34.6% as a percentage of net revenue. The overall increase in gross margin as well as the increase in gross margin as a percentage of net revenue was driven by improved manufacturing efficiencies, increased selling prices and a higher mix of branded products when compared to the first quarter of 2012.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increase d $0.3 million in the first quarter of 2013 compared to the first quarter of 2012 , but decrease d 1.7% as a percentage of net revenue. The continued decrease as a percentage of net revenue is primarily driven by lower infrastructure costs and compensation and benefit expenses due to the conversion to an IBO distribution structure and synergies recognized as a result of our completion of Merger and integration activities. In addition, during the first quarter of 2012, we recognized $1.5 million of severance charges and professional fees associated with the Merger and integration activities. These activities were completed in 2012 and no such charges were incurred in the first quarter of 2013. For the remainder of 2013, we anticipate increased selling, general and administrative expenses as a percentage of net revenue when compared to the first quarter of 2013 due to higher advertising and marketing expenditures to support our branded products.

Gain on the Sale of Route Businesses, Net
During the first quarter of 2013, we recognized $0.1 million in gains on the sale of route businesses compared with gains of $9.3 million during the first quarter of 2012. The decrease was due to completion of activities associated with the IBO conversion during the second quarter of 2012. Although we continue to purchase and sell route businesses, we do not expect significant gains from this activity throughout 2013.
Other Income, Net
We recognized other income of $1.5 million in the first quarter of 2013 compared with $0.1 million in the first quarter of 2012. The increase is primarily due to additional gains on foreign exchange rates associated with our Canadian subsidiary and gains on the sale of fixed assets.
Interest Expense, Net
Interest expense increase d $1.2 million during the first quarter of 2013 compared to the first quarter of 2012 as a result of higher outstanding long-term debt during the quarter. The additional $325 million of long-term debt incurred in the fourth quarter of 2012 and used to fund the Snack Factory acquisition increased interest expense by $1.7 million in the first quarter of 2013 when compared to the first quarter of 2012.
Income Tax Expense
The effective income tax rate decrease d to 37.7% for the first quarter of 2013 from 39.8% for the first quarter of 2012 . The decrease in the effective income tax rate was due to lower non-tax deductible expenses, primarily related to goodwill associated with the sale of route businesses. We expect the lower effective tax rate to continue through the remainder of the year.
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 working capital requirements, capital expenditures for fixed assets, purchases of route businesses, acquisitions and dividends. We believe we have sufficient liquidity available to enable us to meet these demands.
We have a universal shelf registration statement that, subject to our ability to consummate a transaction on acceptable terms, provides the flexibility to sell up to $250 million of debt or equity securities, which is effective through February 27, 2015.
We permanently reinvest earnings from our Canadian subsidiary. As of March 30, 2013 , $6.8 million of our cash and cash equivalents balance is held by our Canadian subsidiary and cannot be repatriated without unfavorable tax consequences.
Operating Cash Flows
Cash flow provided by operating activities increase d $6.9 million in the first quarter of 2013 when compared to the first quarter of 2012 . The increase was largely driven by additional net income from business operations in 2013 . These additional operating cash inflows in the first quarter of 2013 were partially offset by a significant reduction in cash inflows associated with income taxes. In the first quarter of 2012 , there was a significant cash inflow from income tax refunds received.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Investing Cash Flows
Cash used in investing activities in the first quarter of 2013 totaled $23.6 million compared with cash used in investing activities of $3.7 million in the first quarter of 2012 . Capital expenditures for fixed assets, principally manufacturing equipment, increased from $13.8 million in the first quarter of 2012 to $18.6 million in the first quarter of 2013 . We continue to project capital expenditures of approximately $78 million to $83 million for the full year, which is higher than our normal rate of capital expenditures necessary to maintain equipment and operate the business. The additional capital expenditures are being used to upgrade equipment, enhance capacity and provide innovative new product capabilities. These expenditures were partially offset by proceeds received from the sale of fixed assets of $1.6 million in the first quarter of 2013 , as compared to $2.9 million in the first quarter of 2012 .
Proceeds from the sale of route businesses generated cash flows of $4.5 million in the first quarter of 2013 ; however, these proceeds were more than offset by purchases of route businesses of $11.1 million . This is compared to proceeds of $28.9 million , mostly offset by purchases of $21.7 million , in the first quarter of 2012 . We anticipate additional proceeds from the sale of route businesses in the second quarter as we continue to optimize and expand our IBO distribution network. By the end of the year, proceeds from the sale of route businesses are expected to exceed purchases.
Financing Cash Flows
Net cash used in financing activities of $0.9 million in the first quarter of 2013 was principally due to net proceeds from credit facilities of $14.9 million , which were more than offset by long-term debt repayments of $8.7 million and dividend payments of $11.0 million. As we continue throughout 2013, we plan to utilize cash provided by operations to repay the current portion of long-term debt and reduce the balance on our revolving credit facilities.
On May 3, 2013 , our Board of Directors declared a quarterly cash dividend of $0.16 per share payable on May 30, 2013 to stockholders of record on May 22, 2013 .
Debt
Additional borrowings available under our primary credit facility totaled $150.0 million as of March 30, 2013 . We have complied with all financial covenants contained in the credit agreement. 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 $19.4 million as of March 30, 2013 .
Contractual Obligations
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 $144.4 million as of March 30, 2013 compared to $158.5 million as of December 29, 2012 . The decrease was primarily associated with ingredient usage during the quarter and the timing of new commitments. In addition, 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 currently contract from approximately three to twelve months in advance for all major ingredients and packaging.
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.
Market Risks
The principal market risks that may adversely impact result of operations and financial position relate to ingredient, packaging and energy costs, interest and foreign exchange rates, and credit risks.
See the "Contractual Obligations" section above for a discussion of market risks associated with ingredient, packaging and energy costs.
Our variable-rate debt obligations incur interest at floating rates based on changes in the Eurodollar rate and U.S. base rate interest. To manage exposure to changing interest rates, we selectively enter into interest rate swap agreements to maintain a desirable proportion of fixed to variable-rate debt. While these interest rate swap agreements fixed a portion of the interest rate at a predictable level, pre-tax interest expense would have been $0.2 million lower without these swaps during the first quarter of 2013 .

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

We have exposure to foreign exchange rate fluctuations through the operations of our Canadian subsidiary. A majority of the revenue of our Canadian operations is denominated in U.S. dollars and a substantial portion of its costs, such as raw materials and direct labor, are denominated in Canadian dollars. We entered into a series of derivative forward contracts to mitigate a portion of this foreign exchange rate exposure. These contracts have maturities through December 2013. Foreign currency fluctuations, net of the effect of derivative forward contracts, favorably impacted first quarter 2013 pre-tax earnings by $0.3 million as compared to the first quarter of 2012 .
We do not have or use market risk sensitive instruments for trading or speculative purposes. See Note 12 to our condensed consolidated financial statements for additional information about our derivative instruments.
We are exposed to credit risks related to our accounts receivable. We perform ongoing credit evaluations of our customers to minimize the potential exposure. For the quarters ended March 30, 2013 , and March 31, 2012 , net bad debt expense was $0.9 million and $0.3 million , respectively. Allowances for doubtful accounts were $2.8 million at March 30, 2013 and $2.2 million at December 29, 2012 .

Item 3.  Quantitative and Qualitative Disclosure About Market Risk
Quantitative and qualitative disclosures about market risks are included under "Market Risks" in Item 2 above, "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Item 4. Controls and Procedures
As of the end of the period covered by this report, and pursuant to Rule 13a – 15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), we conducted an evaluation under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a – 15(e) of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 30, 2013 .
There have been no changes in our internal control over financial reporting during the quarter ended March 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 

21


SNYDER'S-LANCE, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION
Item 1.  Legal Proceedings
We are currently subject to various 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 1A.  Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 29, 2012 .
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Our revolving credit agreement restricts our payment of cash dividends and repurchases of our common stock if, after payment of any such dividends or any such repurchases of our common stock, our consolidated stockholders’ equity would be less than $200 million . As of March 30, 2013 , our consolidated stockholders’ equity was $884.5 million and we were in compliance with this covenant. The private placement agreement for $100 million of senior notes assumed as part of the Merger and the new term loan acquired to fund the acquisition of Snack Factory have provisions no more restrictive than the revolving credit agreement.
The following table presents information with respect to purchases of common stock of the Company made during the quarter ended March 30, 2013 , by the Company or any “affiliated purchaser” of the Company 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 (1)
December 30, 2012 -- January 31, 2013
 
412

 
$
24.65

 

 
184,722

February 1, 2013 -- February 28, 2013
 
27,078

 
25.56

 

 
157,644

March 1, 2013 -- March 30, 2013
 

 

 

 
157,644

Total
 
27,490

 
$
25.55

 

 
157,644

(1)
In November 2011, the Board of Directors authorized the repurchase of up to 200,000 shares of common stock from employees. The purpose of the repurchase program is to permit the Company to acquire shares of common stock from employees to cover withholding taxes payable by employees upon the vesting of shares of restricted stock. The repurchase program expires in February 2014. All of the shares reflected in the table were repurchased pursuant to the repurchase program.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4.  Mine Safety Disclosures
Not applicable.
Item 5.  Other Information
Not applicable.

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SNYDER'S-LANCE, INC. AND SUBSIDIARIES

Item 6. Exhibits
Exhibit Index
 
 
No.
Description
 
 
 
 
3.1
Restated Articles of Incorporation of Snyder's-Lance, Inc. as amended through April 17, 1998, incorporated herein by reference to Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for the twelve weeks ended June 13, 1998 (File No. 0-398).
 
 
 
 
3.2
Articles of Amendment to Amended and Restated Articles of Incorporation of Snyder's-Lance, Inc., incorporated herein by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on December 6, 2010 (File No. 0-398).
 
 
 
 
3.3
Bylaws of Snyder's-Lance, Inc., as amended through December 6, 2010, incorporated herein by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on December 6, 2010 (File No. 0-398).
 
 
 
 
10.1*
Transition Services and Retirement Agreement, dated as of January 8, 2013, between the Registrant and David V. Singer, incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on January 14, 2013 (File No. 0-398).
 
 
 
 
10.2*
Snyder's-Lance, Inc. Annual Performance Incentive Plan for Officers and Key Managers, dated February 7, 2013, as amended, filed herewith.
 
 
 
 
10.3*
Snyder's-Lance, Inc. Long-Term Performance Incentive Plan for Officers and Key Managers, dated February 7, 2013, as amended, filed herewith.
 
 
 
 
10.4*
Snyder's-Lance, Inc. 2008 Director Stock Plan (as amended and restated), dated February 8, 2013, filed herewith.
 
 
 
 
10.5*
Chairman of the Board Compensation Letter, dated February 8, 2013, as amended, between the Registrant and Michael A. Warehime, filed herewith.
 
 
 
 
10.6*
Restricted Stock Unit Award Agreement, dated as of February 22, 2013, between the Registrant and David V. Singer, filed herewith.
 
 
 
 
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
 
 
 
 
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
 
 
 
 
32
Certification pursuant to Rule 13a-14(b), as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
 
 
 
101
The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements.

* Management contract.

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Table of Contents

SNYDER'S-LANCE, INC. AND SUBSIDIARIES

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
SNYDER’S-LANCE, INC.
 
 
 
 
 
 
Dated: May 7, 2013
By:
 
/s/ Rick D. Puckett
 
 
 
Rick D. Puckett
 
 
 
Executive Vice President, Chief Financial Officer and Treasurer

24


SNYDER’S-LANCE, INC.
Exhibit 10.2


Annual Performance Incentive Plan for Officers and Key Managers

Purposes and Introduction . The Annual Performance Incentive Plan for Officers and Key Managers (the “Plan”) provides the framework for establishing annual Performance Cash Awards under the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan (the “Incentive Plan”). Except as otherwise expressly defined herein, capitalized terms shall be as defined in the Incentive Plan. The primary purposes of the Plan are to:

Motivate behaviors that lead to the successful achievement of specific sales, financial and operations goals that support Snyder’s-Lance, Inc. stated business strategy and to align participants’ interests with those of stockholders.
Emphasize link between participants’ performance and rewards for meeting predetermined, specific goals.
Focus participant’s attention on operational effectiveness from both an earnings and an investment perspective.
Promote the performance orientation at Snyder’s-Lance, Inc. and communicate to employees that greater responsibility carries greater rewards.

Plan Year . The period over which performance will be measured is the Company’s fiscal year (the “Plan Year”).

Eligibility and Participation . Eligibility in the Plan is limited to Officers and Key Managers of Snyder’s-Lance, Inc. who are key to Snyder’s-Lance, Inc. success. The Compensation Committee of the Board of Directors (the “Compensation Committee”) will review and approve for each Plan Year the participants nominated by the Chief Executive Officer. Participation in one year does not guarantee participation in a following year, but instead will be reevaluated and determined on an annual basis. Participants in the Plan for a Plan Year may not participate in any other annual incentive plan (e.g., sales incentives, etc.) offered by Snyder’s-Lance, Inc. or its affiliates for that Plan Year.
    
Target Incentives Awards . Each participant will be assigned a Target Incentive expressed as a percentage of his or her base salary. Participants may be assigned Target Incentives by position, by salary level or based on other factors as determined by the Compensation Committee. Target Incentives will be reevaluated at least every other year, if not annually. If the job responsibility of a position changes during the year, or base salary is increased significantly, the Target Incentive shall be revised as appropriate. Target Incentives will be communicated to each participant as close to the beginning of the year as practicable, in writing. Final awards will be calculated by multiplying each participant’s Target Incentive by the appropriate percentage (based on performance for the year, as described below).

Performance Goals and Award Funding . For each Plan Year, the Compensation Committee will establish the applicable Performance Goals and formula, including Threshold, Target and Maximum performance levels. If more than one Performance Goal applies for a Plan year, the

1




Compensation Committee will establish the relative weighting of the Performance Goals. For awards intended to be Qualified Performance-Based Awards, the Compensation Committee will establish the Performance Goals in a manner consistent with that intent. Award funding levels will be determined based on actual performance as follows:

 
Threshold
Target
Maximum
Award Level Funded
TBD
100%
TBD

The Threshold and Maximum funding levels will be determined by the Compensation Committee each year. Percent of payout will be determined on a straight line basis from Threshold to Target and from Target to Maximum. There will be no payout unless the Threshold for the applicable Performance Goal is reached. Threshold, Target and Maximum levels will be defined at the beginning of each Plan Year for each Performance Goal. The Performance Goals and formula will be communicated to each participant as soon as practicable after they have been established. Final Target Incentive Awards will be calculated after the Compensation Committee has reviewed the Company’s audited financial statements for the Plan Year and determined the performance level achieved. The following definitions for the terms Maximum, Target and Threshold should help set the goals for each year, as well as evaluate the payouts:

Maximum : Excellent; deserves an above-market incentive
Target : Normal or expected performance; deserves market-level incentive
Threshold : Lowest level of performance deserving payment above base salary; deserves below-market incentive

Form and Timing of Payments . Final award payments for a Plan Year will be made in cash as soon as practicable after award amounts are approved by the Compensation Committee, but not more than 75 days after the end of the Plan Year. All awards will be rounded to the nearest $100.

Change in Status . An employee hired into an eligible position during the Plan Year may participate in the Plan for the balance of the Plan Year on a pro rata basis.

Certain Terminations of Employment . In the event a participant voluntarily terminates employment (other than Retirement) or is terminated involuntarily during the Plan Year, any award will be forfeited. In the event of death, Disability or Retirement during the Plan Year, the award will be paid on a pro rata basis based on the actual performance determined after the end of the Plan Year. In the event of any termination of employment after the end of the Plan Year (including death, Disability, Retirement, voluntary termination or involuntary termination for any reason), any award will be determined based on actual performance and paid at the same time as awards are paid to all other participants. “Retirement” is defined under the Incentive Plan to mean the participant’s termination of employment with the Company either (i) after attainment of age 65 or (ii) after attainment of age 55 with the prior consent of the Compensation Committee.

Change In Control . In the event of a Change in Control, pro rata payouts will be made at target for the year-to-date, based on the number of days in the Plan Year preceding the closing of the Change in Control transaction. Payouts will be made within 30 days after the relevant transaction has been closed.

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Withholding . The Company shall withhold from award payments any Federal, foreign, state or local income or other taxes required to be withheld.

Communications . Progress reports should be made to participants quarterly showing the year-to-date performance results and the percentage of Target Incentives that would be earned if results remain at that level for the entire year.

Executive Officers . Notwithstanding any provisions to the contrary above, participation, Target Incentive Awards and pro-rations for executive officers, including the Chief Executive Officer, shall be approved by the Compensation Committee.

Stockholder Approval . The Plan and the awards hereunder are made pursuant to the Incentive Plan, which was most recently approved by the Company’s stockholders at the Annual Meeting of Stockholders held on May 3, 2012.

Governance . The Compensation Committee is ultimately responsible for the administration and governance of the Plan. Actions requiring Compensation Committee approval include final determination of plan eligibility and participation, identification of performance measures, performance objectives and final award determination. The Compensation Committee may adjust any award due to extraordinary events such as acquisitions, dispositions, discontinued operations, required accounting adjustments or similar events, all as specified in Section 11(d) of the Incentive Plan; provided, however, that the Compensation Committee shall at all times be required to exercise this discretionary power in a manner, and subject to such limitations, as will permit all payments under the Plan to “covered employees,” as defined in Section 162(m) of the Internal Revenue Code, to continue to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code. In addition, under the Incentive Plan, the Compensation Committee retains the discretion to reduce any award amount from the amount otherwise determined under the applicable formula. Subject to the foregoing, the decisions of the Compensation Committee shall be conclusive and binding on all participants.

AMENDED AND APPROVED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF THE CORPORATION ON FEBRUARY 7, 2013


3



SNYDER’S-LANCE, INC.
Exhibit 10.3


Long-Term Performance Incentive Plan for Officers and Key Managers

Purposes and Introduction . The Long-Term Performance Incentive Plan for Officers and Key Managers (the “Plan”) provides for Stock Options, Restricted Stock and Performance Awards under the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan (the “Incentive Plan”). Except as otherwise expressly defined herein, capitalized terms shall be as defined in the Incentive Plan. The primary purposes of the Plan are to:

Align officers’ and managers’ interests with those of stockholders by linking a substantial portion of compensation to the price of the Company’s Common Stock and to the Company’s financial performance based on performance measures as described below.
Provide a way to attract and retain key executives and managers who are critical to the Company’s future success.
Provide competitive total compensation for executives and managers commensurate with Company performance.

Plan Year and Performance Periods . Awards shall be made under the Plan for each fiscal year of the Company (the “Plan Year”) as determined by the Compensation Committee of the Board of Directors (the “Compensation Committee”). As described below, a portion of the awards for a Plan Year may be made in the form of Performance Awards which become earned and payable based on attainment of specified performance conditions measured over a specified period of one or more years that includes the applicable Plan Year (the “Performance Period”).

Eligibility and Participation . Eligibility in the Plan is limited to Executive Officers and Key Managers who are key to the Company’s success as reviewed and approved on an annual basis. The Compensation Committee will review and approve participants nominated by the Chief Executive Officer. An employee hired or promoted into an eligible position during a Plan Year will not participate in the Plan for that Plan Year, except to the extent otherwise determined by the Compensation Committee. Participation in the Plan for a Plan Year does not guarantee participation in the Plan for any subsequent Plan Year, but instead will be reevaluated and determined on an annual basis.

Target Incentive . Each participant will be assigned a Target Incentive for a Plan Year, stated as a percent of base salary or such other amount as determined by the Compensation Committee. The amount of the Target Incentive will be delivered in the form of one or more awards as described below.

Awards . The Target Incentive for a Plan Year will be divided among an award of Nonqualified Stock Options, an award of Restricted Stock and a Performance Award (or such other forms of awards as permitted under the Incentive Plan), as determined by the Compensation Committee. Unless and until changed by the Compensation Committee, these percentages are as

1



follows: Nonqualified Stock Options – 25% of the Target Incentive (the “Stock Option Incentive”); Restricted Stock – 25% of the Target Incentive (the “Restricted Stock Incentive”); and Performance Award – 50% of the Target Incentive (the “Performance Award Incentive”). The following provides additional details about the terms of these awards, unless and until changed by the Compensation Committee:

1.      Stock Options . The number of Stock Options awarded to each participant for a Plan Year will equal the dollar value of the participant’s Stock Option Incentive divided by the Black-Scholes value of the Stock Options, with the result rounded up to the nearest multiple of three shares. The grant date for Stock Options will be the date during the Plan Year specified by the Compensation Committee upon approval of the awards and the exercise price will be the Fair Market Value of the Common Stock, which is the closing price of the Common Stock, on the grant date. Each Stock Option will vest in three substantially equal annual installments beginning one year after the grant date and the term of each Stock Option will be ten years.

2.      Restricted Stock . The number of shares of Restricted Stock awarded to each participant for a Plan Year will equal the dollar value of the participant’s Restricted Stock Incentive divided by the closing price of the Common Stock on the grant date, with the results rounded up to the nearest multiple of three shares. The grant date for Restricted Stock will be the date during the Plan Year specified by the Compensation Committee upon approval of the awards and the value shall be the Fair Market Value of the Common Stock on the grant date. Each award of Restricted Stock will vest in three substantially equal annual installments beginning one year after the grant date.

3.      Performance Awards . The Performance Award awarded to each participant for a Plan Year will have a Target value equal to the Performance Award Incentive. The Compensation Committee will establish the applicable Performance Period, Performance Goals and formula, including Threshold, Target and Maximum performance levels (to the extent applicable), for the Performance Award. The Target amount of the Performance Award for a participant will equal the Performance Award Incentive. If more than one Performance Goal applies for a Plan Year, the Compensation Committee will establish the relative weighting of the Performance Goals. For awards intended to be Qualified Performance-Based Awards, the Compensation Committee will establish the Performance Goals in a manner consistent with that intent. Award funding levels will be determined based on actual performance over the Performance Period as follows:

 
Threshold
Target
Maximum
Award Level Funded
TBD
100%
TBD

The Threshold and Maximum funding levels will be determined by the Compensation Committee at the time the terms of the Performance Award are established. Percent of payout will be determined on a straight line basis from Threshold to Target and from Target to Maximum, and may be subject to further adjustment as specified in the formula established by the Compensation Committee (e.g., based on attainment of a specified level of relative total stockholder return). There will be no payout unless the Threshold for the applicable Performance Goal is reached. Threshold,

2



Target and Maximum levels will be defined at the beginning of each Plan Year for the applicable Performance Goal. The Performance Goals and formula for a Performance Period will be communicated to each participant as soon as practicable after they have been established. Final Performance Awards will be calculated after the Compensation Committee has reviewed the Company’s audited financial statements for the Performance Period and determined the performance level achieved. The following definitions for the terms Maximum, Target and Threshold should help set the goals for each year, as well as evaluate the payouts:

Maximum : Excellent; deserves an above-market incentive
Target : Normal or expected performance; deserves market-level incentive
Threshold : Lowest level of performance deserving payment above base salary; deserves below-market incentive

Progress reports should be made to participants annually, showing performance results. Performance Awards for a Performance Period will be payable in cash as soon as practicable following the Performance Period after the performance level has been determined and approved by the Compensation Committee. All awards will be rounded to the nearest $100.
 
Certain Termination of Employment . Unless and until the Compensation Committee determines otherwise, the following provides the impact of a participant’s termination of employment on awards made under the Plan:

1.     Stock Options. In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily or in the event of death, Disability or Retirement, vesting and the post-termination exercise period for Stock Options will be as follows:
Voluntary termination (other than Retirement) : Vested Stock Options will remain exercisable for a period of 90 days following the date of termination (or, if earlier, the original expiration date of the option); unvested Stock Options will be forfeited as of the date of termination.

Involuntary termination : Vested Stock Options will remain exercisable for a period of 90 days following the date of termination (or, if earlier, the original expiration date of the option); unvested Stock Options will be forfeited as of the date of termination.

Death : Stock Options will remain exercisable for a period of one year following the date of death (or, if earlier, the original expiration date of the option); unvested Stock Options will become fully vested as of the date of termination.

Disability : Vested Stock Options will remain exercisable through the original expiration date of the option; unvested Stock Options will become fully vested as of the date of termination.




3



Retirement : Vested Stock Options will remain exercisable for a period of three years following retirement (or, if earlier, the original expiration date of the option); unvested Stock Options will continue to vest for a period of six months after Retirement and any remaining unvested Stock Options will be forfeited as of such date.

2.     Restricted Stock. In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily or in the event of death, Disability or Retirement, vesting for Restricted Stock will be as follows:

Voluntary termination (other than Retirement) : Unvested Restricted Stock will be forfeited as of the date of termination.

Involuntary termination : Unvested Restricted Stock will be forfeited as of the date of termination.

Death : Unvested Restricted Stock will become fully vested on the date of such event.

Disability : Unvested Restricted Stock will become fully vested on the date of such event.

Retirement : Unvested Restricted Stock will become vested pro rata based on the number of full months elapsed on the date of such event since the award date and any remaining unvested Restricted Stock will be forfeited as of such date.

3.     Performance Awards. In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily during or after the end of a Performance Period but before the applicable award payment date, the participant shall not receive any Performance Award hereunder.

In the event of a participant’s death or Disability before the end of a Performance Period, any Performance Award will be determined on and prorated to the date of such event based on target performance and paid out all in cash as soon as administratively practicable (but in no event more than 75 days) after the date of such event. In the event of a participant’s death or Disability on or after the end of the Performance Period but before the applicable award payment date, any Performance Award will be determined based on actual performance and paid out all in cash on or about the applicable award payment date.
  
If the event of a participant’s Retirement during or after the end of the Performance Period but before the applicable award payment date, any Performance Award will be determined based on actual performance, pro rated for the portion of the Performance Period worked through Retirement, and paid out all in cash on or about the applicable award payment date.
“Retirement” is defined under the Incentive Plan to mean the participant’s termination of employment with the Company either (i) after attainment of age 65 or (ii) after attainment of age 55 with the prior consent of the Compensation Committee.


4



Change in Control . In the event of a Change in Control, (i) unvested Stock Options and unvested Restricted Stock will vest as provided in the Incentive Plan upon the closing of the Change in Control transaction and (ii) for outstanding Performance Awards, pro rata payouts will be made all in cash at target through the closing date with such proration based on the number of days in the Performance Period preceding the closing of the Change in Control transaction. Payouts will be made within 30 days after the relevant transaction has been closed.

Withholding . The Company shall withhold from awards any Federal, foreign, state or local income or other taxes required to be withheld, as and when so required.

Executive Officers . Notwithstanding any provisions to the contrary above, participation, awards and pro-rations for Executive Officers, including the Chief Executive Officer, shall be approved by the Compensation Committee.
Stockholder Approval

Stockholder Approval . The Plan and the awards hereunder are made pursuant to the Incentive Plan, which was most recently approved by the Company’s stockholders at the Annual Meeting of Stockholders held on May 3, 2012.

Governance . The Compensation Committee is ultimately responsible for the administration and governance of the Plan. Actions requiring Compensation Committee approval include final determination of plan eligibility and participation, identification of types of awards provided, performance measures and performance objectives and final award determinations. The Compensation Committee may adjust any award due to extraordinary events such as acquisitions, dispositions, discontinued operations, required accounting adjustments or similar events, all as specified in Section 11(d) of the Incentive Plan; provided, however, that the Compensation Committee shall at all times be required to exercise this discretionary power in a manner, and subject to such limitations, as will permit all payments under the Plan to “covered employees,” as defined in Section 162(m) of the Internal Revenue Code, to continue to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code. In addition, under the Incentive Plan, the Compensation Committee retains the discretion to reduce any award amount from the amount otherwise determined under the applicable formula. Subject to the foregoing, the decisions of the Compensation Committee shall be conclusive and binding on all participants.
  
AMENDED AND APPROVED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF THE CORPORATION ON FEBRUARY 7, 2013.

5



SNYDER’S-LANCE, INC.
Exhibit 10.4


2008 DIRECTOR STOCK PLAN
(AS AMENDED AND RESTATED)

1.    Purpose and Duration of the Plan. The purpose of the Plan is to enable the Corporation to attract and retain persons of exceptional ability to serve as Directors and to further align the interests of Directors and stockholders in enhancing the value of the Common Stock and to encourage such Directors to remain with and to devote their best efforts to the Corporation.

The Corporation establishes this Plan effective as of April 25, 2008, subject to approval by the Corporation’s stockholders prior to that date. The Plan shall remain in effect until the earlier of (i) the date that no additional shares of Common Stock are available for issuance under the Plan, (ii) the date that the Plan has been terminated in accordance with Section 9 or (iii) the close of business on May 31, 2013. Upon the Plan becoming effective, no further awards shall be made under the Lance, Inc. 2003 Director Stock Plan.

2.    Definitions:

For purposes of the Plan, the following terms shall have the following meanings:

Annual Award ” means a number of shares of Restricted Stock up to and including 4,000 shares, as the Board shall establish from time to time, awarded under the provisions of Section 5(a) below.

Award Date ” means the 20th day of the month next following an annual stockholders meeting; provided, however , that (i) with respect to an Initial Award, “Award Date” means the 20th day of the month next following the date the Non-Employee Director commences service as a Non-Employee Director and (ii) with respect to the annual stockholders meeting held in 2013 or any Initial Award for the month of that annual meeting, the “Award Date” means the 7th business day following that annual meeting.

Board ” means the Board of Directors of the Corporation.

Change in Control ” means “Change in Control” as defined under the Lance, Inc. 2003 Key Employee Stock Plan, as the same may be amended from time to time, or any successor plan thereto.

Common Stock ” means the Common Stock, $.83-1/3 par value, of the Corporation and any other stock or securities resulting from the adjustment thereof or substitution therefor as described in Section 6 below.

Corporation ” means Snyder’s-Lance, Inc., a North Carolina corporation, and its successors and assigns.





Effective Date ” means April 25, 2008 subject to approval by the stockholders of the Corporation.

Fair Market Value ” of a share of Common Stock on a particular date, shall be (i) if such Common Stock is listed on a national securities exchange or a foreign securities exchange or traded on The NASDAQ Stock Market, the closing sale price of the Common Stock on said date on the national securities exchange, the foreign securities exchange or The NASDAQ Stock Market on which the Common Stock is principally traded, or, if no sales occur on said date, then on the next preceding date on which there were such sales of Common Stock, or (ii) if the Common Stock shall not be listed on a national securities exchange or a foreign securities exchange or traded on The NASDAQ Stock Market, the mean between the closing bid and asked prices last reported by the National Association of Securities Dealers, Inc. for the over-the-counter market on said date or, if no bid and asked prices are reported on said date, then on the next preceding date on which there were such quotations, or (iii) if at any time quotations for the Common Stock shall not be reported by the National Association of Securities Dealers, Inc. for the over-the-counter market and the Common Stock shall not be listed on any national securities exchange or any foreign securities exchange or traded on The NASDAQ Stock Market, the fair market value based on quotations for the Common Stock by market makers or other securities dealers as determined by the Board in such manner as the Board may deem reasonable.

Initial Award ” means a number of shares of Restricted Stock up to and including 4,000 shares, as the Board shall establish from time to time, awarded under the provisions of Section 5(b) below.

Non-Employee Director ” means an individual who is a member of the Board, but who is not an employee of the Corporation or any of its subsidiaries.

Plan ” means the Snyder’s-Lance, Inc. 2008 Director Stock Plan as set forth herein, as the same may be amended from time to time.

Restricted Stock ” means the Common Stock awarded to a Non-Employee Director pursuant to Section 5 of the Plan that is subject to the vesting restrictions set forth in Section 5.

3.    Administration. The Board shall be responsible for administering the Plan. The Board shall have all of the powers necessary to enable it to properly carry out its duties under the Plan. Not in limitation of the foregoing, the Board shall have the power to construe and interpret the Plan and to determine all questions that shall arise thereunder. The Board shall have such other and further specified duties, powers, authority and discretion as are elsewhere in the Plan either expressly or by necessary implication conferred upon it. The Board may appoint such agents as it may deem necessary for the effective performance of its duties, and may delegate to such agents such powers and duties as the Board may deem expedient or appropriate that are not inconsistent with the intent of the Plan. The decision of the Board upon all matters within its scope of authority shall be final and conclusive on all persons, except to the extent otherwise provided by law.


2



4.    Shares Available. The maximum number of shares of Common Stock that may delivered under the Plan shall equal 200,000. Such shares shall be subject to adjustment or substitution pursuant to Section 6 below. If any shares of Restricted Stock awarded hereunder are canceled, lapse or forfeited in accordance with the provisions of Section 5 below, then such shares shall again be available for delivery under the Plan. Shares delivered under the Plan may be original issue shares or shares purchased in the open market or otherwise, all as determined by the Chief Financial Officer of the Corporation (or the Chief Financial Officer’s designee) from time to time.

5.    Restricted Stock Awards.

(a)     Annual Awards . Each Non-Employee Director serving on the Award Date shall automatically be granted an Annual Award.

(b)     Initial Awards . Each Non-Employee Director first elected after June 1 and before December 31 of any year shall automatically receive an Initial Award on the 20th day of the month next following the date the Non-Employee Director commences service as a Non-Employee Director.

(c)     No Fractional Shares . In no event shall the Corporation be obligated to issue fractional shares under this Section, but instead shall pay any such fractional share in cash based on the Fair Market Value of the Common Stock on the Award Date.

(d)     Vesting . Except as otherwise provided in this Section 5(d), shares of Restricted Stock shall become vested on the date that is 12 months after the applicable Award Date (the “Vesting Date”). If the Non-Employee Director ceases to serve as a Non-Employee Director before the Vesting Date due to the Non-Employee Director’s death, or if there is a Change in Control prior to the Vesting Date, then the shares shall become fully vested as of the date of such death or Change in Control, as applicable. If the Non-Employee Director ceases to serve as a Non-Employee Director for any reason other than death before the Vesting Date, then the shares shall vest on a pro-rata basis at a rate one-twelfth (1/12) for each month the Non-Employee Director serves as a Non-Employee Director after the applicable Award Date. Any shares not vested according to the preceding sentence shall be forfeited as of the date of such cessation of services. For purposes of pro-rata vesting, a Non-Employee Director shall be credited with a full month of service if the Non-Employee Director serves for one day during the applicable month. A Non-Employee Director may not sell, transfer or otherwise dispose of any such shares of Restricted Stock until they become vested; however, the Non-Employee Director shall have the right to receive dividends with respect to the shares and to vote the shares prior to vesting.

6.    Adjustments in Authorized Shares. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Corporation, any reorganization (whether or not such reorganization comes within the definition of such term in Internal Revenue Code Section 368) or any partial or complete liquidation of the Corporation, such adjustment shall be made in the number and class of shares of Common Stock which may be delivered under the

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Plan, as may be determined to be appropriate and equitable by the Board, in its sole discretion, to prevent dilution or enlargement of rights.

7.    Resales of Shares. The Corporation may impose such restrictions on the sale or other disposition of shares issued under this Plan as the Board deems necessary to comply with applicable securities laws. Certificates for shares issued under this Plan may bear such legends as the Corporation deems necessary to give notice of such restrictions.

8.    Compliance With Law and Other Conditions. No shares shall be issued under this Plan prior to compliance by the Corporation, to the satisfaction of its counsel, with any applicable laws. The Corporation shall not be obligated to (but may in its discretion) take any
action under applicable federal or state securities laws (including registration or qualification of the Plan or the Common Stock) necessary for compliance therewith in order to permit the issuance of shares hereunder, except for actions (other than registration or qualification) that may be taken by the Corporation without unreasonable effort or expense and without the incurrence of any material exposure to liability.

9.    Amendment, Modification and Termination of the Plan. The Board shall have the right and power at any time and from time to time to amend the Plan in whole or in part and at any time to terminate the Plan; provided , however , that an amendment to the Plan may be conditioned on the approval of the stockholders of the Corporation if and to the extent the Board determines that stockholder approval is necessary or appropriate. No termination, amendment, or modification of the Plan shall adversely affect in any material way any Restricted Stock award previously granted under the Plan, without the written consent of the affected Non-Employee Director.

10.    Miscellaneous. The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the State of North Carolina. The Plan shall be binding on the Corporation and any successor in interest of the Corporation.

Amended: February 8, 2013

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Exhibit 10.5



13024 Ballantyne Corporate Place
Harris Building Suite 900
Charlotte, NC 28277
(704) 554-1421

February 8, 2013





Michael A. Warehime
Snyder’s-Lance, Inc.
1250 York Street
Hanover, PA 17331

Re: Compensation

Dear Mike,

This is to confirm that pursuant to the Agreement and Plan of Merger dated as of July 21, 2010, as amended, among Lance, Inc., Lima Merger Corp. and Snyder’s of Hanover, Inc., your compensation for serving as Chairman of the Board of Snyder’s-Lance, Inc. has been set for 2013 as the same as for 2012 and as specified in my letter to you of February 9, 2012.

Very truly yours,

/s/ David V. Singer

David V. Singer
Chief Executive Officer







Exhibit 10.6
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG    

RESTRICTED STOCK UNIT
AWARD AGREEMENT


THIS RESTRICTED STOCK UNIT AWARD AGREEMENT , entered into this 22 nd day of February, 2013 (the “Grant Date”), by and between Snyder’s-Lance, Inc., a North Carolina corporation (the “Company”), and David V. Singer (“Executive”);

STATEMENT OF PURPOSE

The Company and Executive have entered into a Transitional Services and Retirement Agreement dated January 8, 2013 (the “Transitional Services Agreement”). As provided by Section 2(c) of the Transitional Services Agreement, the Company is making an award to Executive of a number of “Restricted Stock Units” as part of Executive’s 2013 long-term incentive award in accordance with, and subject to, the terms and conditions of this Agreement.

This award is made under the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan (the “Plan”) and constitutes a share-settled “Restricted Unit Grant” under the Plan. A Prospectus describing the Plan has been previously furnished. The Plan is available upon request and its terms and provisions are incorporated herein by reference. When used herein, the terms which are defined in the Plan shall have the meanings given to them in the Plan, as modified herein (if applicable).

NOW, THEREFORE , in consideration of the Statement of Purpose and of the mutual covenants and agreements herein set forth and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive do hereby agree as follows:

1.     Definitions . As used in this Agreement, unless the context expressly indicates otherwise, the following terms have the following meanings:

Cause ” shall be as defined in the Employment Agreement.

Disability ” shall be as defined in the Employment Agreement.

Dividend Units ” as defined in Section 3(a) below means certain additional Restricted Stock Units credited in connection with certain dividend equivalent rights.

Employment Agreement ” means the Executive Employment Agreement between the Company and Executive dated May 11, 2005, as subsequently amended


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Restricted Stock Unit ” means a right to receive one share of Common Stock at such time, and in accordance with such terms and conditions, as set forth in this Agreement. Restricted Stock Units include Dividend Units.

Retirement Date ” shall be as defined in the Transitional Services Agreement.

Transitional Services Period ” shall be as defined in the Transitional Services Agreement.

2.     Award of Restricted Stock Units . Effective as of the Grant Date, Executive is awarded 27,474 Restricted Stock Units, subject to the terms and conditions of this Agreement.

3.     Dividend Equivalents; No Voting Rights .

(a)     Dividend Equivalents . If a cash dividend is paid with respect to the Common Stock, Executive shall be credited as of the applicable dividend payment date with an additional number of whole and fractional Restricted Stock Units (the “Dividend Units”) equal to (A) the total cash dividend Executive would have received had the Restricted Stock Units (and any previously credited Dividend Units with respect thereto) been actual shares of Common Stock divided by (B) the Fair Market Value of a share of Common Stock as of the applicable dividend payment date. All Dividend Units shall become part of the aggregate Restricted Stock Units award hereunder when credited to Executive, and therefore shall be subject to all of the terms and conditions of this Agreement, including without limitation the vesting and payment provisions set forth in Sections 4 and 5 below.

(b)     No Voting Rights . Executive shall have no voting rights with respect to the Restricted Stock Units.

4.     Vesting .

(a)     General . Subject to the provisions of Section 4(b) below, the Restricted Stock Units shall vest and become payable in three equal annual installments as follows:

    
Date
Portion of Award That Vests
First Anniversary of Grant Date................
33-1/3%
Second Anniversary of Grant Date............
33-1/3%
Third Anniversary of Grant Date...............
33-1/3%



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If the number of Restricted Stock Units as of the first two vesting dates is a fractional number (e.g., due to the crediting of Dividend Units), the number of Restricted Stock Units vested and payable as of such date shall be the whole number of Restricted Stock Units that are vested as of such date (and any fractional Restricted Stock Units otherwise vested as of such date shall remain part of the unvested Restricted Stock Units). If the number of vested Restricted Stock Units as of the final vesting date is a fractional number, then the number of vested Restricted Stock Units as of such date shall be rounded up to the next whole unit. In no event shall fractional Restricted Stock Units be payable under the Agreement.

(b)     Termination of Employment Prior To Vesting . If Executive’s employment with the Company and its Subsidiaries terminates prior to the above vesting dates, then the Restricted Stock Units shall become vested or be forfeited as follows:

(i)
Death . If Executive dies, any unvested Restricted Stock Units that have not been previously forfeited pursuant to Section 4(b)(iv) below shall become fully (100%) vested and immediately payable.

(ii)
Termination upon Retirement Date . If Executive’s employment with the Company and its Subsidiaries terminates upon the Retirement Date, then any unvested Restricted Stock Units shall continue to become vested and payable in accordance with the schedule set forth in Section 4(a) above, provided that Executive complies with the post-employment covenants set forth in the Employment Agreement.

(iii)
Termination without Cause during Transitional Services Period . If Executive’s employment with the Company and its Subsidiaries is terminated by the Company without Cause, including termination due to Executive’s Disability, during the Transitional Services Period, then any unvested Restricted Stock Units shall continue to become vested and payable in accordance with the schedule set forth in Section 4(a) above, provided that Executive complies with the post-employment covenants set forth in the Employment Agreement.

(iv)
Any Other Termination of Employment . If Executive’s employment with the Company and its Subsidiaries terminates before the Retirement Date for any reason other than as set forth above, then any unvested Restricted Stock Units as of the date of such termination of employment shall be immediately cancelled and forfeited.

5.     Payment of Vested Restricted Stock Units .

(a)     Time of Payment . Except in case of death, payment of vested Restricted Stock Units shall be made pursuant to the schedule set forth in Section 4(a) above. Any vested Restricted Stock Units payable as of a vesting date under Section 4(a) above shall be paid on or as soon as administratively practicable (and in no event later than 60

3


days) after the applicable vesting date. In case of death under Section 4(b)(i) above, payment shall be made as soon as administratively practicable (and in no event later than 60 days) after the date of death.

(b)     Form of Payment . Payment of any vested Restricted Stock Units shall be made by delivery of one share of Common Stock for each such Restricted Stock Unit then payable.

(c)     Compliance With Securities Laws . The shares of Common Stock shall be delivered to Executive, pursuant to Section 5(b) above, unless counsel for the Company reasonably determines that such issuance will violate applicable federal or state securities laws and the Company has taken all reasonable steps necessary to avoid any such violation. The Company agrees to use commercially reasonable efforts to ensure that such shares are issued to Executive on a timely basis as provided herein. The certificates for shares of Common Stock delivered under this Agreement may be subject to such stop-transfer orders and other restrictions as the Compensation Committee may reasonably determine are required under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed, and any applicable federal or state securities law. The Compensation Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

6.     No Limitation on Company Rights . The existence of the Agreement shall not affect or restrict in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, other debentures, preferred or prior preference stocks, the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding.

7.     Assignment of Agreement or Benefits Hereunder .

(a)     Successors . The Company will require any successor (whether via a Change in Control, direct or indirect, by purchase, merger, consolidation, or otherwise) of the Company to expressly assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

(b)     Assignment by Executive . This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If Executive should die while any amount is still payable to Executive hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive’s estate. Executive’s rights hereunder shall not otherwise be assignable. In that regard, no part of any amounts granted or payable hereunder

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shall, prior to actual payment, (i) be subject to seizure, attachment, garnishment or sequestration for the payment of debts, judgments, alimony or separate maintenance owed by Executive or any other person, (ii) be transferable by operation of law in the event of Executive’s or any person’s bankruptcy or insolvency or (iii) be transferable to a spouse as a result of a property settlement or otherwise.

8.     Notices . Any notice which either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax or by mail, postage prepaid, to such address and directed to such person(s) as the Company may notify Executive from time to time; and to Executive, at his address as shown on the records of the Company from time to time, or at such other address as Executive, by notice to the Company, may designate in writing from time to time.

9.     Contractual Rights to Benefits . This Agreement establishes in Executive a right to the benefits to which Executive is entitled hereunder. However, except as expressly stated herein, nothing herein contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company to segregate, earmark or otherwise set aside any funds or other assets, in trust or otherwise, to provide for any payments to be made or required hereunder. This Agreement is intended to be an unfunded general asset promise for a select, highly compensated member of the Company’s management and, therefore, is intended to be exempt from the substantive provisions of the Employee Retirement Income Security Act of 1974, as amended.

10.     Entire Agreement . This Agreement, together with the Plan, represents the entire agreement between the parties with respect to the subject matter hereof, and supersedes all prior discussions, negotiations, and agreements concerning the subject matter hereof. This Agreement may only be amended by a written instrument signed by both parties. In case of any conflict between the terms of this Agreement and the Plan, the terms of the Plan shall control.

11.     Tax Matters .

(a)     Executive’s Responsibility for Taxes . Regardless of any action the Company takes with respect to any or all income tax, payroll tax or other tax-related withholding (“Tax-Related Items”), Executive acknowledges that the ultimate liability for all Tax-Related Items owed by Executive is and remains Executive’s responsibility and that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the grant of Restricted Stock Units, including the grant and vesting the Restricted Stock Units, the subsequent sale of shares of Common Stock acquired upon the vesting of the Restricted Stock Units and the receipt of any dividends; and (ii) does not commit to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate Executive’s liability for Tax-Related Items.

(b)     Tax Withholding . In the event the Company reasonably determines that it must withhold any Tax-Related Items as a result of the award hereunder, Executive

5


agrees as a condition of the grant of the Restricted Stock Units to make arrangements reasonably satisfactory to the Company to enable it to satisfy all withholding requirements, including, but not limited to, withholding any applicable Tax-Related Items from the payment of the Restricted Stock Units. If Executive does not make such arrangements, Executive authorizes the Company to fulfill its withholding obligations by all legal means, including, but not limited to: withholding Tax-Related Items from Executive’s wages, salary or other cash compensation; withholding Tax-Related Items from the cash proceeds, if any, received upon sale of any shares received in payment for the Restricted Stock Units; and at the time of payment, withholding shares of Common Stock sufficient to meet minimum withholding obligations for Tax-Related Items. The Company may refuse to issue and deliver shares of Common Stock in payment of any vested Restricted Stock Units if Executive fails to comply with his withholding obligations hereunder . In that regard, consistent with the provisions of the Plan, Executive may satisfy such withholding requirements by causing the Company to withhold shares of Common Stock otherwise payable hereunder sufficient to meet minimum withholding obligations for Tax-Related Items.    

(c)     Compliance with Section 409A of the Code . This Agreement is intended to comply with Section 409A of the Code, to the extent applicable. Notwithstanding any provisions herein to the contrary, this Agreement shall be interpreted, operated , and administered consistent with this intent.

12.     Severability . In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Agreement, and this Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.

13.     Applicable Law . To the extent not preempted by the laws of the United States, the laws of the State of North Carolina shall be the controlling law in all matters relating to this Agreement. Each party (i) consents to the personal jurisdiction of any state or federal court located in Charlotte, North Carolina (and any corresponding appellate court) in any proceeding arising out of or relating to this Agreement or the Executive’s employment by the Company, (ii) waives any venue or inconvenient forum defense to any proceeding maintained in such courts and (iii) except as otherwise provided in this Agreement, agrees not to bring any proceeding arising out of or relating to this Agreement or the Executive’s employment by the Company in any other court.

14.     Execution . This Agreement is hereby executed in duplicate originals, one of which is being retained by each of the parties hereto.

[SIGNATURES ON NEXT PAGE]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized officer and Executive has hereunto set his hand, all as of the day and year first above written.


SNYDER’S-LANCE, INC.

By /s/ Kevin A. Henry            
Kevin A. Henry, Senior Vice President and Chief Human Resources Officer
            
“Company”


/s/ David V. Singer            
David V. Singer

“Executive”
 

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EXHIBIT 31.1
MANAGEMENT CERTIFICATION
I, Carl E. Lee, Jr., certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Snyder’s-Lance, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 

  Date: May 7, 2013
 
/s/ Carl E. Lee, Jr.
Carl E. Lee, Jr.
President and Chief Executive Officer




EXHIBIT 31.2
MANAGEMENT CERTIFICATION
I, Rick D. Puckett, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Snyder’s-Lance, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2013
 
/s/ Rick D. Puckett
Rick D. Puckett
Executive Vice President, Chief Financial Officer and Treasurer




EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Snyder’s-Lance, Inc. (the “Company”) on Form 10-Q for the period ended March 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Carl E. Lee, Jr., President and Chief Executive Officer of the Company, and Rick D. Puckett, Executive Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to Snyder’s-Lance, Inc. and will be retained by Snyder’s-Lance, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
 
/s/ Carl E. Lee, Jr.
 
 
 
/s/ Rick D. Puckett
Carl E. Lee, Jr.
 
 
 
Rick D. Puckett
President and Chief Executive Officer
 
 
 
Executive Vice President, Chief Financial
May 7, 2013
 
 
 
Officer and Treasurer
 
 
 
 
May 7, 2013