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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on April 11, 2016

Registration No. 333-                


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



AdvancePierre Foods Holdings, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  2000
(Primary Standard Industrial
Classification Code Number)
  26-3712208
(I.R.S. Employer
Identification Number)



9987 Carver Road
Blue Ash, Ohio 45242
(800) 969-2747
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Michael B. Sims
Executive Vice President and Chief Financial Officer
9987 Carver Road
Blue Ash, Ohio 45242
(800) 969-2747
(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Gregg A. Noel, Esq.
Jeffrey H. Cohen, Esq.
Jonathan Ko, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
(213) 687-5000

 

Michael Benjamin, Esq.
Merritt Johnson, Esq.
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022-6069
(212) 848-4000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

         If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:    o

         If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o



CALCULATION OF REGISTRATION FEE

       
 
Title of each class of securities
to be registered

  Proposed maximum
aggregate offering
price(1)(2)

  Amount of
registration fee

 

Common stock, par value $0.01 per share

  $100,000,000   $10,070

 

(1)
Includes offering price of shares of common stock that the underwriters have the option to purchase. See "Underwriting."

(2)
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

         The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated April 11, 2016

PRELIMINARY PROSPECTUS

            Shares

LOGO

AdvancePierre Foods Holdings, Inc.

Common Stock



        This is the initial public offering of shares of our common stock. We are selling        shares of our common stock and the selling stockholders identified in this prospectus are selling        shares of our common stock. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

        Prior to this offering, there has been no public market for our common stock. We currently expect that the initial public offering price of our common stock will be between $        and $        per share.

        We intend to apply to have our common stock listed on          under the symbol "        ."

        After the completion of this offering, funds managed by Oaktree Capital Management, L.P. ("Oaktree") will continue to own a majority of the voting power of all outstanding shares of our common stock. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of        . See "Principal and Selling Stockholders."



        Investing in our common stock involves risk. See "Risk Factors" beginning on page 16 to read about factors you should consider before buying shares of our common stock.



        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

       
 
 
  Per Share
  Total
 

Initial public offering price

                             
 

Underwriting discounts and commissions(1)

                             
 

Proceeds, before expenses, to us

                             
 

Proceeds, before expenses, to the selling stockholders

                             

 

(1)
See "Underwriting" for additional information regarding underwriting compensation.

        To the extent that the underwriters sell more than                shares of our common stock, the underwriters have the option to purchase up to an additional                shares from the selling stockholders at the initial public offering price, less the underwriting discounts and commissions, within 30 days of the date of this prospectus. We will not receive any proceeds from the exercise of the underwriters' option to purchase additional shares from the selling stockholders.

        The underwriters expect to deliver the shares against payment in New York, New York on or about                , 2016.

Barclays   Credit Suisse   Morgan Stanley



   

Prospectus dated                , 2016.


Table of Contents

        You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by or on behalf of us. Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. Neither we, the selling stockholders nor the underwriters are making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus or such other date stated in this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.



Table of Contents

 
  Page  

Market and Industry Data

    ii  

Trademarks, Service Marks and Trade Names

    ii  

Basis of Presentation

    ii  

Prospectus Summary

    1  

Risk Factors

    16  

Special Note Regarding Forward-Looking Statements

    35  

Use of Proceeds

    37  

Dividend Policy

    38  

Dilution

    39  

Capitalization

    41  

Selected Historical Consolidated Financial Data

    42  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    44  

Industry

    63  

Business

    64  

Management

    79  

Principal and Selling Stockholders

    102  

Certain Relationships and Related Party Transactions

    104  

Description of Certain Indebtedness

    109  

Description of Capital Stock

    113  

Shares Eligible for Future Sale

    121  

United States Federal Income Tax Considerations for Non-U.S. Holders

    124  

Underwriting

    127  

Legal Matters

    133  

Experts

    133  

Where You Can Find More Information

    133  

Index to Consolidated Financial Statements

    F-1  

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MARKET AND INDUSTRY DATA

        We obtained the industry, market and competitive position data used throughout this prospectus from internal company surveys and management estimates as well as from industry and general publications and research, surveys and studies conducted by third parties. We believe these internal company surveys and management estimates are reliable; however, no independent sources have verified such surveys and estimates. Third-party industry and general publications, research, studies and surveys generally state that the information contained therein has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, neither we nor the selling stockholders have independently verified any of the data from third-party sources and cannot guarantee its accuracy and completeness.

        Forecasts and other forward-looking information obtained from these sources involve risks and uncertainties and are subject to change based on various factors, including those discussed under "Risk Factors," "Special Note Regarding Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus.


TRADEMARKS, SERVICE MARKS AND TRADE NAMES

        We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business. In addition, our name, logo and website name and address are our service marks or trademarks. Some of the more important registered U.S. trademarks and trade names are AdvancePierre Foods®, Barber Foods®, Better Bakery®, Big AZ®, Drive Thru®, Fast Classics®, Fast Fixin'®, Hot 'n' Ready®, Landshire®, Pierre™, Pierre Signatures®, PB Jamwich®, The Pub®, Smart Picks® and Steak EZE®. Other trademarks, trade names and service marks appearing in this prospectus are the property of their respective holders.


BASIS OF PRESENTATION

        As used in this prospectus, unless otherwise noted or the context otherwise requires, (1) references to the "company," "we," "our," or "us" are to AdvancePierre Foods Holdings, Inc. and its consolidated subsidiaries, (2) references to "AdvancePierre" are to AdvancePierre Foods Holdings, Inc. exclusive of its subsidiaries, (3) references to "APF Holdco" are to Pierre Holdco, Inc., a direct wholly-owned subsidiary of AdvancePierre, and (4) references to "APF" are to AdvancePierre Foods, Inc., an indirect wholly-owned subsidiary of AdvancePierre and a direct subsidiary of APF Holdco.

        References to "fiscal 2015" are to the 52-week period ended January 2, 2016, references to "fiscal 2014" are to the 53-week period ended January 3, 2015, references to "fiscal 2013" are to the 52-week period ended December 28, 2013, references to "fiscal 2012" are to the 52-week period ended December 29, 2012 and references to "fiscal 2011" are to the 52-week period ended December 31, 2011. In this prospectus, financial data for fiscal 2015, fiscal 2014 and fiscal 2013, and balance sheet data as of January 2, 2016 and January 3, 2015, is derived from our audited consolidated financial statements included elsewhere in this prospectus and financial data for fiscal 2012 and fiscal 2011, and balance sheet data as of December 28, 2013, December 29, 2012 and December 31, 2011, is derived from our unaudited consolidated financial statements that are not included in this prospectus.

        References to "ready-to-eat sandwiches" means bun based sandwiches, breakfast sandwiches, stuffed pockets and sliced meat deli sandwiches and excludes hot dogs and wrap based sandwiches.

        Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Percentage amounts included in this prospectus have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this prospectus may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements and the related notes thereto included elsewhere in this prospectus. Certain other amounts that appear in this prospectus may not sum due to rounding.

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PROSPECTUS SUMMARY

        This summary highlights certain significant aspects of our business and this offering. This is a summary of information contained elsewhere in this prospectus, is not complete and does not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire prospectus, including the information presented under the sections entitled "Risk Factors" and "Special Note Regarding Forward-Looking Statements" and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus, before making a decision to invest in our common stock. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of certain factors such as those set forth in the sections entitled "Risk Factors" and "Special Note Regarding Forward-Looking Statements." When making an investment decision, you should also read the discussion under "Basis of Presentation" for the definition of certain terms used in this prospectus and other matters described in this prospectus.


Who We Are

        We are a leading national producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks. We hold the number one or number two market share position by sales or volume in nearly all our major product categories, with net sales of $1.6 billion in fiscal 2015. We offer a differentiated value proposition to our customers due to our scale, broad product portfolio, customization capabilities, national distribution and food safety track record.

        We market and distribute approximately 2,600 stock keeping units ("SKUs") across all day parts in multiple product categories, including: (1) ready-to-eat sandwiches, such as breakfast sandwiches, peanut butter and jelly ("PB&J") sandwiches and hamburgers; (2) sandwich components, such as fully-cooked hamburger and chicken patties and Philly steaks; and (3) other entrées and snacks, such as country fried steak, stuffed entrées, chicken tenders and cinnamon dough bites. In fiscal 2015, 67.4% of our net sales were attributable to the fast-growing ready-to-eat sandwiches and sandwich components categories. Our products are shipped frozen to our customers and sold under our commercial and retail brands, as well as private label and licensed brands.

        We control more steps within the production process than most of our competitors. This integrated approach allows us to add value throughout our processes, generate attractive margins and provides us with a significant competitive advantage. Our value-added processes include recipe formulation, pre-preparation by chopping, breading, seasoning and marinating, food preparation by baking, charring, frying and grilling, assembly and packaging. Our integrated bread and biscuit production capabilities are a key differentiator due to proprietary formulations that we believe produce superior tasting sandwiches.

        We sell to a diverse set of over 3,000 customers and have an average relationship tenure of approximately 20 years with our top 20 customers. We employ a customer-centric approach, which is rooted in market-leading research and development ("R&D") capabilities, product quality and customer service. We have dedicated marketing and sales teams for each of our channels to serve the specific needs of our customers. We enjoy "category captain" status in many of our product categories with our largest foodservice customers. In many cases, we collaborate with our customers to develop new products, customizing recipes and flavors in a cost efficient manner. We believe our customer-centric approach is a competitive advantage that helps our customers grow their businesses and, in turn, accelerates our organic growth and profitability.

        We sell our value-added products to the foodservice, retail and convenience channels, which correspond to our three core segments. We also sell our products in the industrial channel. We believe our diversification across these channels provides us with a stable revenue base through economic

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cycles. In fiscal 2015, 55.0% of our net sales were generated from our Foodservice segment, where our commercial brands are highly sought-after and trusted by chefs, cooks and other purchasers. In our Retail segment, in addition to selling our branded products, we also leverage our R&D capabilities to co-create exclusive products and packaging designs with our customers under their private label brands. In our Convenience segment, we are a leading supplier of ready-to-eat sandwiches and sandwich components to national and regional convenience chains and vending providers.

        We have an attractive financial profile with steady, organic volume growth, healthy margins, modest capital expenditures and limited working capital requirements. These characteristics enable our business to generate strong cash flows. Our earnings profile also benefits from a lean selling, general and administrative ("SG&A") cost structure and a scaled, efficient supply chain network. We intend to use these attributes to enhance stockholder value by paying regular dividends, reducing our indebtedness, strategically deploying our capital to fund organic growth opportunities and financing value-enhancing acquisitions.

        In fiscal 2015, we generated $1.6 billion in net sales, $37.1 million of net income and $260.2 million in Adjusted EBITDA. Our net sales and Adjusted EBITDA in fiscal 2015 reflect a compound annual growth rate ("CAGR") of 3.9% and 26.2%, respectively, since fiscal 2013. In fiscal 2015, we also generated $157.2 million of cash flow from operating activities. See "—Summary Historical Consolidated Financial Data" for a reconciliation of Adjusted EBITDA to net income.


Our Recent Performance and the APF Way

        During 2013 and 2014, our board of directors transformed our senior management by hiring John Simons as President and Chief Executive Officer and four of the seven other members of our current executive team. This new team has revamped our cost structure, budgeting tools and pricing methodology by implementing a continuous improvement program that we call the "APF Way." The APF Way uses a data-driven analytical framework to drive growth and profitability through improved commercial decision-making, excellence in sales and marketing and productivity in procurement, logistics and production.

        We believe the APF Way has fundamentally changed the cost structure of our business and has been a major factor in our recent volume, sales and profitability growth. Initially, we focused on reducing our cost structure by executing on productivity initiatives and re-aligning trade promotion allowances, resulting in $138.6 million in implemented annualized savings from 2013 to 2015. In addition, we eliminated approximately $100 million of sales associated with lower margin contracts. We have invested in new systems and processes that enable us to deliver continuous productivity savings and effectively manage margins and profitability. Our Adjusted EBITDA margin, which we calculate as Adjusted EBITDA divided by net sales, expanded from 10.9% in fiscal 2013 to 16.1% in fiscal 2015, even as our raw material costs rose significantly. Our net sales and volume grew at a CAGR of 8.6% and 3.6%, respectively, in our three core segments from fiscal 2013 to fiscal 2015. Going forward, we

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expect these investments and discipline will allow us to continue to deliver overall growth and attractive margins.

GRAPHIC


Our Segments

        We manage and report our operations in four segments with Foodservice, Retail and Convenience representing our core segments. Our fourth segment, Industrial, consists of sales to other food producers under short-term co-manufacturing agreements.

GRAPHIC

        Foodservice.    The foodservice industry supplies the diverse U.S. "food-away-from-home" industry. The foodservice industry had $232 billion of sales in 2015 and is expected to have 2.3% annual growth over the next five years. Our Foodservice customers include leading national and regional distributors, who then sell our products to end-customers such as restaurant operators, schools, healthcare providers, hospitality providers, the U.S. military and grocery deli counters. We supply 89 of the largest 100 school districts in the United States, directly and through distributors, and work closely with school districts to develop nutritious meal options with good quality and value. We also directly supply many national restaurant chains. We sell a diverse portfolio of products into the foodservice channel, including ready-to-eat sandwiches, such as breakfast sandwiches, PB&J sandwiches and hamburgers, sandwich components, such as fully-cooked hamburger and chicken patties and Philly steaks, and other entrées and snacks, such as country fried steak, stuffed entrées, chicken tenders and cinnamon dough bites. We primarily sell our products under our own commercial brands, which are highly sought-after and trusted by chefs, cooks and other purchasers. Commercial and private label brands accounted for 71.5% and 28.5%, respectively, of our Foodservice net sales for fiscal 2015.

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        Retail.    Frozen and refrigerated handhelds, which includes ready-to-eat sandwiches, accounted for $4.1 billion of industry-wide retail sales in 2015, with 5.3% annual growth since 2010. Within frozen and refrigerated handhelds, breakfast handhelds accounted for $1.2 billion of industry-wide retail sales in 2015, with 14.6% annual growth since 2010. We serve a wide array of retail customers including national and regional grocery chains, major warehouse club stores, mass retailers and dollar stores. Key products that we sell into the retail channel include ready-to-eat sandwiches, such as breakfast sandwiches, grilled chicken sandwiches and stuffed pockets, sandwich components, such as chicken patties and Philly steaks, and other entrées and snacks, such as stuffed chicken breasts. In addition to selling our branded products, we also leverage our R&D capabilities to co-create exclusive products and packaging designs with our Retail customers under their private label brands. For fiscal 2015, 69.4% of our Retail net sales were attributable to our retail brands, such as Barber, Pierre and Fast Fixin', 29.8% to private label brands and the rest to licensed brands.

        Convenience.    Industry-wide prepared food sales in the convenience channel were $42 billion in 2014, with approximately 8% annual growth since 2012. Our Convenience customers include national and regional convenience chains and vending providers. We partner with our Convenience customers to develop customized, ready-to-eat sandwiches, such as breakfast sandwiches and hamburgers, sandwich components, such as chicken patties, and other entrées and snacks, such as cinnamon dough bites. For fiscal 2015, 77.6% of our Convenience net sales were attributable to our retail brands, such as Big AZ, 21.6% to private label brands and the rest to licensed brands.

        Industrial.    In order to optimize capacity utilization across our production network, we opportunistically enter into short-term co-manufacturing agreements with other food producers, such as packaged food companies. Due to the lower margin nature of this business, we have strategically reduced our percentage of net sales generated by this segment from 15.7% in fiscal 2013 to 7.9% in fiscal 2015.


Our Strengths

        We believe the following strengths differentiate us from our competitors and will contribute to our ongoing success:

Leading Market Positions in Attractive, Growing Categories

        We hold the number one or number two market share position by sales or volume in nearly all of our major product categories and are well positioned to capitalize on growth in our markets. We are the number one player with market shares ranging from approximately 37% to 68% in our top five product categories, which represent 68% of our net sales in fiscal 2015. Within most of our major product categories, we are the only full-service operator of scale and compete against smaller, regional players with limited product breadth, production capacity and capabilities. We typically do not compete against large packaged food companies given our foodservice focus and the customization requirements of our customers.

        We produce over 600 million sandwiches per year and 67.4% of our net sales are related to ready-to-eat sandwiches and sandwich components. We are a leading provider of lunch and dinner

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sandwiches to the foodservice, retail and convenience channels. Our superior bread quality is an important purchase driver for our sandwiches and consistently beats our competitors in taste tests.

GRAPHIC

Long-Standing, Collaborative Customer Relationships Create a High Barrier to Entry

        Our strong customer relationships across a diverse set of customers provide a significant competitive advantage and create a high barrier to entry. For fiscal 2015, our top ten customers accounted for 53.4% of our net sales, with our two largest customers, U.S. Foods, Inc. and another leading national foodservice distributor, accounting for 12.0% and 13.6%, respectively, of our net sales in fiscal 2015. Our two largest customers collectively source over 1,800 SKUs from our portfolio and buy across multiple contracts for a diverse set of end-customers, making us an important supplier and giving us a stable and consistent revenue base.

        We have deep and collaborative relationships with an average tenure of approximately 20 years with our top 20 customers. We maintain our relationships through our segment-focused marketing teams and an experienced sales force of approximately 100 associates who work closely with customers to meet their needs. Our foodservice commercial brands are highly sought-after and trusted by chefs, cooks and other purchasers for their consistent food safety, premium quality and taste profile. Given our track record, we enjoy "category captain" status in many of our product categories. We produce approximately 2,600 SKUs for our customers, who source a high volume and a variety of products from us, making us an important supplier and partner. We expect to continue to have a competitive advantage as our customers focus on large scale suppliers in order to streamline and optimize their supply chains.

        We offer a differentiated value proposition to our customers due to our scale, broad product portfolio, customization capabilities, national distribution and food safety track record.

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Leader in On-Trend, Fast-to-Market New Product Development

        We believe our customer-centric approach, which is rooted in market-leading R&D capabilities, product quality and customer service, differentiates us from our competitors and has allowed us to accelerate our organic growth and improve our profitability. Our product innovation and R&D expertise span areas such as flavor development, recipe formulation, nutrition science, bakery science and food safety. In recent years, we have enhanced our new product development and customer insight capabilities and, in 2015, we opened a state-of-the-art 3,200 square foot R&D facility in West Chester, Ohio.

        The food industry today is characterized by rapidly changing menus and evolving consumer taste profiles. In this environment, our customers value our ability to co-create new products with flavor profiles that differentiate their offerings and successfully commercialize new products with speed and efficiency. We launched 543 new SKUs in the last three years, accounting for 12.7% of our net sales in fiscal 2015. Our innovation, sales force and marketing teams collaborate with customers to co-create highly customized products and are able to mobilize quickly to respond to customer requests.

Scale and Production Efficiency with a National Distribution Footprint

        We benefit from a national, scaled production, procurement and logistics network with low production, freight and warehousing costs. We believe our efficient cost structure provides a sustainable competitive advantage and enables us to offer a customized and varied set of products to our customers at competitive prices.

        We have two integrated bakery facilities which allow us to source approximately 60% of our bread in-house (excluding bread for our PB&J sandwiches). Our ten production facilities benefit from economies of scale, which when combined with our national distribution capabilities, differentiate us from our competitors and make us a valuable supplier for both national and regional customers. All of our facilities have achieved Safe Quality Food ("SQF") Level 3 food safety certification, the highest level of such certification from the Global Food Safety Initiative ("GFSI").

Attractive Financial Profile with Strong and Stable Free Cash Flow Conversion

        We have an attractive financial profile with steady, organic volume growth in our core segments, healthy Adjusted EBITDA margins, modest capital expenditures and limited working capital requirements.

        We are able to deliver attractive Adjusted EBITDA margins due to the high value-added nature of our products. Our margin profile is well protected given our ability to proactively adjust pricing frequently to reflect input cost movements with minimal lag time. Only 16.2% of our net sales in fiscal 2015 were subject to fixed price arrangements. We also have a lean and scalable cost structure. We plan to continue leveraging the APF Way to deliver operational productivity savings, improve our business mix and increase the effectiveness of our trade promotion allowances. Our business has relatively low capital expenditure requirements, with maintenance expenditures typically averaging approximately 1% of our net sales.

        Our financial profile has resulted in strong and stable Free Cash Flow (which we define as Adjusted EBITDA less purchases of property, plant and equipment). In fiscal 2015, we generated $224.3 million of Free Cash Flow. See "—Summary Historical Consolidated Financial Data" for a reconciliation of Free Cash Flow to net income.

Proven Acquisition Expertise

        We have a successful track record of sourcing, executing and integrating acquisitions, beginning with the combination of Pierre Foods, Inc., APF's predecessor, with Advance Food Company, Inc. and Advance Brands, LLC in 2010. Given our scale and breadth of capabilities, we believe we are well

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positioned to consolidate the fragmented industry in which we operate. We maintain a highly disciplined approach to acquisitions, focusing on opportunities that diversify our products, add production capabilities, expand production capacity and allow for meaningful synergy realization. In addition to realizing cost synergies, we leverage our sales teams to expand distribution of newly acquired brands and products and cross-sell across our channels to drive sales synergies.

        Since 2011, we have completed three accretive acquisitions, which contributed $166.4 million of incremental net sales in fiscal 2015. In June 2011, we acquired Barber Foods, LLC ("Barber Foods"), a producer of premium stuffed entrées, which strengthened our retail presence and expanded our chicken-based product offering. In January 2015, we acquired the wholesale business and production assets of Landshire, Inc. ("Landshire"), which broadened our portfolio of premium sandwiches to include sliced meat sandwiches and added incremental, margin-enhancing baking and assembly production capabilities. In April 2015, we acquired the business and production assets of Better Bakery, LLC ("Better Bakery") to expand into stuffed sandwiches, one of the largest ready-to-eat sandwich categories.

Talented Management Team with a Track Record of Driving Growth and Reducing Costs

        We have a deep bench of talented management led by our President and Chief Executive Officer John Simons, who has over 25 years of foodservice and retail experience. Since 2013, we have assembled an experienced management team through strategic hiring of key leaders and expanded organizational capabilities in R&D, sales and marketing. Our management team has an average of 25 years of expertise in the foodservice, retail and convenience industries and has demonstrated its ability to deliver on key strategic initiatives, which have transformed business performance. In the last two years, our management team's key accomplishments include implementation of the APF Way, successful integration of two value-enhancing acquisitions and significant margin improvement.


Our Strategy

Expand Our Market Leading Positions in Growing Channels and Categories

        We are focused on expanding our leadership position within our core segments of Foodservice, Retail and Convenience.

        The ready-to-eat breakfast sandwich category is a key growth opportunity for us, given the double digit annual growth in this category from 2012 to 2014. We hold the number one position with 46% market share in breakfast sandwiches sold in the convenience channel. We are also the largest supplier of private label breakfast sandwiches in the retail channel, with a 56% market share. Private label sales of retail frozen breakfast sandwiches are underpenetrated compared to the frozen food market and therefore we believe poised for significant growth. We will continue to leverage our sandwich expertise and customer relationships to grow our share in breakfast sandwiches in the retail channel and with foodservice distributors and schools.

        We believe we have multiple growth opportunities across our core segments. In Foodservice, we plan to expand distribution of our products to new customers, such as coffee shops, theaters, grocery deli counters and hospitality providers. In Retail, in addition to growing our sandwich business, we are launching product extensions for Barber Foods and Better Bakery and expanding distribution within rapidly growing dollar stores. In Convenience, we are expanding our breakfast product portfolio and launching Better Bakery products.

        We are also expanding our lineup of products to take advantage of recent consumer trends. We have successfully launched snacking-oriented products, such as crispy sausage snacks, PB&J snack bars and cinnamon dough bites, and better-for-you products, such as antibiotic, hormone-free fully-cooked burgers.

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Drive Growth Through Focus on Innovation

        Our product categories offer potential for value-added product innovation. We believe our innovation capabilities, combined with our investments in consumer insights and our ability to partner with customers to co-create products, will enable us to continue to introduce successful new products to drive sales growth and margin improvement across our portfolio.

        Our R&D team is focused on developing products in line with key consumer trends, such as breakfast sandwiches, better-for-you products and snacking-oriented products. Examples of products in our innovation pipeline include ready-to-eat breakfast sandwiches that meet the new K-12 nutrition guidelines, premium offerings for club stores and new limited time offers for key convenience store chain customers. We are also partnering with various customers to develop on-trend, protein-based snacks.

Deliver Attractive Margins through Dynamic Pricing and Leveraging the APF Way

        We believe we are well positioned to deliver attractive margins given the high value-added nature of our products, our dynamic pricing model and our ability to generate ongoing productivity savings by leveraging the APF Way. In addition, our focus on improving our product mix, leveraging our scalable organization structure and realizing synergies from acquisitions supports our margin profile. Under the APF Way, we are implementing multiple initiatives across the areas of production, procurement, commercial and logistics that we expect will deliver ongoing productivity savings and help offset potential operational headwinds and cost inflation.

Acquire Value-Enhancing Businesses

        We believe our scale and integration expertise allow us to make value-enhancing acquisitions. We operate in a highly fragmented industry with many opportunities to execute accretive transactions. Our integration expertise allows us to rapidly capture cost synergies and we are able to generate revenue synergies by leveraging existing customer relationships and marketing expertise to cross-sell products across channels. Our management team has an active pipeline of acquisition opportunities and maintains a regular dialogue with potential targets.

Return Capital and Reduce Debt

        We believe our capital structure and strong free cash flow enable us to invest in our business and reduce our indebtedness, creating value for our stockholders. We also expect to return capital to our stockholders through regular dividend payments. Upon the completion of this offering, we intend to pay a regular ongoing quarterly cash dividend of approximately $            per share. See "Dividend Policy" for additional details.

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Summary Risk Factors

        Our business is subject to numerous risks and uncertainties, including those highlighted in "Risk Factors" immediately following this prospectus summary. These risks include, but are not limited to, the following:

    The food industry in which we operate is highly competitive.

    Disruption of our supply chain could adversely affect our business, financial condition and operating results.

    Our top ten customers have historically accounted for a significant portion of our net sales.

    Most of our customers are not obligated to continue purchasing products from us.

    Increases in the prices of raw materials, particularly beef, poultry and pork, could reduce our operating margins.

    Changes in consumer eating habits could adversely affect our business, financial condition and operating results.

    If our products become contaminated or are mislabeled, we may be subject to product liability claims, product recalls and increased scrutiny by regulators, any of which could adversely affect our business.

    We are subject to extensive governmental regulations, which require significant compliance expenditures.

    We sell a large percentage of our products to schools, directly and through distributors, which subjects our sales volumes and, thus, our operating results, to seasonal variations.

    We may be unsuccessful at identifying, acquiring or integrating future acquisitions.

    Our high level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our floating-rate indebtedness and prevent us from meeting our obligations under our indebtedness.

    Oaktree will continue to have significant influence over us after this offering, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of key transactions, including a change of control.

    We will be a "controlled company" within the meaning of the rules of            . As a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.


Corporate Information

        AdvancePierre was incorporated in Delaware on December 5, 2008 as Pierre Foods Holding Corporation and changed its name to AdvancePierre Foods Holdings, Inc. on March 16, 2016. Our executive offices are located at 9987 Carver Road, Blue Ash, Ohio 45242, and our telephone number at that location is (800) 969-2747. We maintain a website at www.advancepierre.com. The information contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part.


Our Principal Stockholders

        Prior to the completion of this offering, funds managed by Oaktree (our "principal stockholders") beneficially owned approximately             % of our common stock. Oaktree is a leader among global investment managers specializing in alternative investments, with $97 billion in assets under

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management as of December 31, 2015. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 900 employees and offices in 17 cities worldwide.

        After the completion of this offering, our principal stockholders will beneficially own approximately            % of our common stock, or approximately            % of our common stock if the underwriters exercise in full their option to purchase additional shares from the selling stockholders. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of            and Oaktree will continue to have significant influence over us and decisions made by our stockholders and may have interests that differ from yours. See "Risk factors—Risks Related to this Offering and Ownership of Our Common Stock—Oaktree will continue to have significant influence over us after this offering, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of key transactions, including a change of control." We also intend to enter into a new stockholders agreement and an amended and restated registration rights agreement with our principal stockholders in connection with this offering. For more information regarding these agreements, see "Certain Relationships and Related Party Transactions—Stockholders Agreement" and "—Registration Rights Agreement."

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The Offering

Common stock offered by us

              shares

Common stock offered by the selling stockholders

 

            shares

Underwriters' option to purchase additional shares of common stock from the selling stockholders

 

            shares

Common stock to be outstanding immediately after this offering

 

            shares

Use of proceeds

 

We estimate that the net proceeds to us from our sale of shares of common stock in this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $            .

 

We intend to use the net proceeds from this offering for            . See "Use of Proceeds."

 

We will not receive any of the proceeds from the sale of shares of common stock by the selling stockholders in this offering.

Risk factors

 

See "Risk Factors" beginning on page 16 and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Dividend policy

 

We intend to pay a regular quarterly cash dividend of approximately $            per share on our common stock, subject to the discretion of our board of directors and our compliance with applicable law, and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our board of directors may deem relevant. Our ability to pay dividends on our common stock is limited by the covenants of our credit facilities and may be further restricted by the terms of any future debt or preferred securities. We do not currently believe that the restrictions contained in our credit facilities will impair our ability to pay regular quarterly cash dividends as described above. See "Dividend Policy" and "Description of Certain Indebtedness."

            ticker symbol

 

"            "

        The number of shares of our common stock to be outstanding immediately after the consummation of this offering is based on            shares of common stock outstanding as of January 2, 2016 and does not reflect approximately            shares of common stock that are reserved for future issuance under our 2009 Omnibus Equity Incentive Plan.

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        Unless we indicate otherwise or the context otherwise requires, all information in this prospectus:

    assumes (1) no exercise of the underwriters' option to purchase additional shares of our common stock from the selling stockholders and (2) an initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover of this prospectus;

    reflects a one-for-            stock split of our common stock, to be effected prior to the consummation of this offering; and

    assumes the effectiveness of our amended and restated certificate of incorporation immediately prior to the consummation of this offering.

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Summary Historical Consolidated Financial Data

        The following table summarizes our historical consolidated financial and other data for the periods and at the dates indicated. Our fiscal year is based on either a 52-week or 53-week period ending on the Saturday closest to each December 31.

        We have derived the summary historical consolidated financial data for the fiscal years ended January 2, 2016, January 3, 2015 and December 28, 2013, and the summary balance sheet data as of January 2, 2016 and January 3, 2015, from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the summary balance sheet data as of December 28, 2013 from our unaudited consolidated financial statements that are not included in this prospectus. The results of operations of the assets of Landshire, which we acquired in January 2015, and of Better Bakery, which we acquired in April 2015, are reflected in our results as of and from the date of such transactions.

        Our historical results are not necessarily indicative of future operating results. Because the data in this table is only a summary and does not provide all of the data contained in our consolidated financial statements, the information should be read in conjunction with "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

(in millions, except per share data)
  Fiscal
2015
  Fiscal
2014
  Fiscal
2013
 

Statement of Operations:

                   

Net sales

  $ 1,611.6   $ 1,577.6   $ 1,492.0  

Cost of goods sold

    1,158.2     1,227.1     1,144.3  

Distribution expenses

    96.5     99.3     95.3  

Restructuring expenses

    2.5     2.0     21.5  

Gross profit

    354.4     249.2     230.9  

Selling, general and administrative expenses

    196.2     167.6     160.5  

Impairment charges

            5.5  

Restructuring expenses

    2.2     5.3     10.2  

Other expense, net

    5.6     0.2     0.8  

Operating income

    150.4     76.1     53.9  

Interest expense

    104.4     105.6     104.6  

Income (loss) before income taxes

    46.0     (29.5 )   (50.7 )

Provision for income taxes

    8.9     8.4     6.3  

Net income (loss)

  $ 37.1   $ (37.9 ) $ (57.0 )

Per Share Data:

                   

Net income (loss) per share(1):

                   

Basic

  $ 28.0   $ (29.1 ) $ (44.3 )

Diluted

  $ 27.7   $ (29.1 ) $ (44.3 )

As adjusted net income (loss) per share(2):

                   

Basic

  $     $     $    

Diluted

  $     $     $    

Statement of Cash Flows:

                   

Cash flows provided by (used in):

                   

Operating activities

  $ 157.2   $ 22.9   $ 34.4  

Investing activities

    (108.3 )   (20.9 )   (11.8 )

Financing activities

    (44.5 )   (2.1 )   (22.5 )

Balance Sheet Data (at period end):

                   

Cash and cash equivalents

  $ 4.5   $ 0.1   $ 0.3  

Working capital(3)

    127.4     158.7     143.6  

Total assets(3)

    1,107.2     1,066.5     1,073.9  

Total debt

    1,269.6     1,305.2     1,298.9  

Total stockholders' deficit

    (427.2 )   (467.0 )   (427.4 )

Other Financial Data:

                   

Adjusted EBITDA(4)

  $ 260.2   $ 170.5   $ 163.3  

Free Cash Flow(4)

  $ 224.3   $ 149.5   $ 143.8  

(1)
Basic net income (loss) per share is calculated based upon the weighted average number of outstanding shares of common stock for the period, plus the effect of vested restricted shares. Diluted net income (loss) per share is

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    calculated consistent with the calculation of basic net income (loss) per share, plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. All of our unvested restricted stock awards were excluded from the computation of diluted net income (loss) per share for fiscal 2014 and fiscal 2013 because including them would have had an anti-dilutive effect due to our net loss position. There were no awards that could have diluted basic net income (loss) per share in the future that were not included in the computation of diluted net income (loss) per share in fiscal 2015 as all awards were dilutive.


Basic and diluted net income (loss) per share do not reflect the one-for-            stock split of our common stock to be effected immediately prior to the consummation of this offering.

(2)
As adjusted basic net income (loss) per share is calculated based upon the weighted average number of outstanding shares of common stock for the period, plus the effect of vested restricted shares. As adjusted diluted net income (loss) per share is calculated consistent with the calculation of as adjusted basic net income (loss) per share, plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. All of our unvested restricted stock awards were excluded from the computation of diluted net income (loss) per share for fiscal 2014 and fiscal 2013 because including them would have had an anti-dilutive effect due to our net loss position. There were no awards that could have diluted basic net income (loss) per share in the future that were not included in the computation of diluted net income (loss) per share in fiscal 2015 as all awards were dilutive.


As adjusted basic and diluted net income (loss) per share are calculated assuming (a) the one-for            stock split to be effected immediately prior to the consummation of this offering, (b) the sale by us of                         shares of common stock in this offering at the assumed initial public offering price of $              per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and our receipt of the estimated net proceeds from this offering after deducting the underwriting discounts and commissions and estimated offering expenses payable by us and (c) the application of the net proceeds from this offering as described under "Use of Proceeds" as of the beginning of the applicable period.


The weighted average shares of common stock outstanding includes shares of common stock sold by us in this offering and shares of common stock held by our existing stockholders.

(3)
Working capital is defined as current assets (excluding cash) minus current liabilities (excluding the current portion of debt). We retrospectively adopted the guidance under the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2015-17 "Balance Sheet Classification of Deferred Taxes" to simplify the classification of deferred taxes into non-current amounts. At January 3, 2015 we had a current deferred tax liability of $0.2 million that was reclassified as non-current. At December 28, 2013 we had a current deferred tax asset of $0.6 million that was reclassified as non-current.

(4)
Adjusted EBITDA represents income from continuing operations before interest expense, income tax expense, depreciation and amortization and certain non-cash, non-recurring and other adjustment items. Free Cash Flow represents our Adjusted EBITDA less purchases of property, plant and equipment. Adjusted EBITDA and Free Cash Flow are not financial measures calculated under U.S. generally accepted accounting principles ("GAAP") and do not comply with GAAP because they are adjusted to exclude certain cash and non-cash expenses. We believe Adjusted EBITDA and Free Cash Flow are useful tools because they are frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. However, our definitions of Adjusted EBITDA and Free Cash Flow may not be the same as similarly titled measures used by other companies.


Adjusted EBITDA and Free Cash Flow each have limitations as an analytical tool and should not be considered in isolation from, or as an alternative to, or more meaningful than, net income as determined in accordance with GAAP. Some of these limitations are:

Adjusted EBITDA does not reflect cash outlays for capital expenditures or future contractual commitments;

Adjusted EBITDA and Free Cash Flow do not reflect changes in, or cash requirements for, working capital;

Adjusted EBITDA and Free Cash Flow do not reflect interest expense, or the cash requirements necessary to service interest, or principal payments, on indebtedness;

Adjusted EBITDA and Free Cash Flow do not reflect income tax expense or the cash necessary to pay income taxes;

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Free Cash Flow do not reflect cash requirements for such replacements;

Adjusted EBITDA and Free Cash Flow exclude certain costs associated with reorganization and restructuring activities, business acquisitions and integration of acquired businesses;

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    Adjusted EBITDA and Free Cash Flow do not reflect non-cash stock based compensation expense and other non-cash items;

    Adjusted EBITDA and Free Cash Flow do not reflect costs associated with product recalls and other one-time and non-recurring expenses; and

    Adjusted EBITDA and Free Cash Flow do not reflect management fees and expense reimbursements paid to certain of our existing stockholders.

     Because of these limitations, you should rely primarily on net income as determined in accordance with GAAP and use Adjusted EBITDA and Free Cash Flow only as supplements. In evaluating Adjusted EBITDA and Free Cash Flow, you should be aware that in the future we may incur expenses similar to those for which adjustments are made in calculating Adjusted EBITDA and Free Cash Flow. Our presentation of Adjusted EBITDA and Free Cash Flow should not be construed as a basis to infer that our future results will be unaffected by unusual or non-recurring items.

     The following table shows the reconciliation of Adjusted EBITDA and Free Cash Flow from the most directly comparable GAAP measure, net income (loss):

(in millions)
  Fiscal
2015
  Fiscal
2014
  Fiscal
2013
 

Net income (loss)

  $ 37.1   $ (37.9 ) $ (57.0 )

Interest expense

    104.4     105.6     104.6  

Provision for income taxes

    8.9     8.4     6.3  

Depreciation and amortization expense

    62.9     58.0     57.3  

EBITDA

  $ 213.3   $ 134.1   $ 111.2  

Restructuring expenses(a)

    4.7     7.3     31.7  

Non-cash stock based compensation expense(b)

    17.2     2.7     2.5  

Sponsor fees and expenses(c)

    11.9     16.0     8.5  

Merger and acquisition expenses(d)

    6.2     0.7     0.7  

Product recalls(e)

    4.4         0.9  

Inventory step-up amortization(f)

    1.3          

Impairment charges(g)

            5.5  

Fair value adjustment to USDA commodity liability(h)

    (0.1 )   7.2     0.5  

Other

    1.3     2.5     1.8  

Adjusted EBITDA

  $ 260.2   $ 170.5   $ 163.3  

Purchases of property, plant and equipment

    (35.9 )   (21.0 )   (19.5 )

Free Cash Flow

  $ 224.3   $ 149.5   $ 143.8  

(a)
Represents costs associated with reorganization and restructuring activities, business acquisitions and integration of acquired businesses. Restructuring expenses primarily relate to costs associated with the closure of our Orange City, Iowa facility in fiscal 2013 and the restructure of the management team and consolidation of business unit operations in fiscal 2013 and fiscal 2014.

(b)
We expense employee stock grants and other stock-based compensation over the vesting period, based on the fair value of the award on the date of the grant or any subsequent modification date.

(c)
Represents quarterly management fees and expense reimbursements paid to affiliates of Oaktree and certain of our other existing stockholders. Upon consummation of this offering, we will pay Oaktree an aggregate success fee of $9.0 million pursuant to the management services agreement, which will be terminated.

(d)
Merger and acquisition expenses relate to the acquisitions of Barber Foods, Landshire and Better Bakery and costs associated with other unconsummated merger and acquisitions transactions during fiscal 2014 and fiscal 2015.

(e)
Represents costs associated with two product recalls, net of related reimbursements.

(f)
Represents the impact on our cost of goods sold associated with the sale of inventories that had been written up to fair values in excess of historical cost in connection with acquisition purchase accounting.

(g)
Non-cash charge associated with adjustment of carrying value of one of our trade names.

(h)
Represents valuation adjustments associated with the change in the United States Department of Agriculture ("USDA") stipulated value of commodity proteins pursuant to the USDA Commodity Reprocessing Program. We carry our net liability at a value equal to the USDA stipulated value which is updated annually.

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RISK FACTORS

        An investment in our common stock involves risk. You should carefully consider the following risks as well as the other information included in this prospectus, including "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus, before investing in our common stock. Any of the following risks could materially and adversely affect our business, financial condition or operating results. However, the selected risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or operating results. In such a case, the trading price of the common stock could decline and you may lose all or part of your investment in us.

Risks Related to Our Business

The food industry in which we operate is highly competitive, and our inability to compete successfully, or the effects of such competition, could adversely affect our business, financial condition and operating results.

        The food industry in which we operate is highly competitive. Numerous brands and products compete for shelf space and sales, with competition based primarily on product quality, total product portfolio, price, customer service, ability to meet customer demands, effective consumer marketing, promotional activities and the ability to identify and satisfy emerging consumer preferences. We compete with a significant number of companies of varying sizes, including a variety of regional and some national companies. Smaller players include American Food Group, CTI, Allied Specialty Foods, Devault Foods, Lopez Foods and JTM Food Group. In certain product categories such as ready-to-eat breakfast sandwiches and other entrées and snacks, we compete with larger players such as Hormel, Tyson-Hillshire, Nestle and Smuckers. Some of our competitors have substantially greater financial resources, name recognition, R&D capabilities and resources than us and we may be unable to compete successfully with any or all of these companies. In addition, when competitors with nationally branded products focus on price and promotion, the environment for private label products becomes more challenging because the price differential between private label products and branded products may become less significant. Competitive pressures or other factors could cause us to lose sales, which may require us to lower prices, increase the use of discounting or promotional programs, or increase marketing expenditures, each of which would adversely affect our margins and could result in a decrease in our operating results and profitability.

        In addition, any competitor could develop new or enhanced products that are superior to our products, increase their promotional spending or market and sell their products more successfully than we do. Our competitors could also offer lower prices to customers, which would potentially pressure us to lower prices to our customers and achieve additional cost savings to offset these reductions. We may be unable to change our cost structure and pricing practices rapidly enough or sufficiently to successfully compete in such an environment.

Disruption of our supply chain could adversely affect our business, financial condition and operating results.

        We use a variety of raw materials in our business. The primary raw materials used in our business are beef, poultry, pork, bread and breadings, cheese, eggs, seasonings, soy proteins, corn and packaging supplies. Damage or disruption to our raw material supply due to adverse weather conditions, climate change, crop conditions, natural disaster, fire, terrorism, pandemic, changes in governmental agricultural programs, strikes, import restrictions, transportation interruptions, increases in diesel fuel costs, contamination with mold or bacteria, water shortage, industrial accidents and other occupational health and safety issues (including the outbreak of food-borne illnesses) or other events beyond our control could impair our ability to produce and sell our products. A disruption in our supply chain may

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also require significant resources to restore. Failure to take adequate steps to mitigate the likelihood or potential impact of such disruptions, or to effectively manage such events if they occur, particularly when a product is sourced from a single supplier or location, could adversely affect our business, financial condition and operating results.

Our top ten customers have historically accounted for a significant portion of our net sales.

        During fiscal 2015, our top ten customers accounted for 53.4% of our net sales. In particular, our two largest customers, U.S. Foods, Inc. and another leading national foodservice distributor, accounted for 12.0% and 13.6%, respectively, of our net sales in fiscal 2015. While these foodservice distributors distribute our products to many end-consumers, the size and importance of these customers may allow them to exert pressure on us with respect to pricing terms, product quality and the introduction of new products, which may result in reduced margins. In addition, if, for any reason, one of our key customers were to purchase significantly less of our products in the future or were to terminate its purchases from us, or if for any reason we were unable to renew an existing contract with a key customer on terms favorable to us, or at all, and we were not able to sell our products to new customers at comparable or greater levels, our business, financial condition and operating results would suffer.

Most of our customers are not obligated to continue purchasing products from us.

        Most of our customers buy from us pursuant to individual purchase orders. Because such customers are not obligated to continue purchasing products from us, we cannot assure you that the volume or number of our customers' purchase orders will remain constant or increase or that we will be able to maintain our existing customer base. Significant decreases in the volume or number of our customers' purchase orders or our inability to retain or grow our current customer base may have a material adverse effect on our business, financial condition or operating results.

Increases in the prices of raw materials, particularly beef, poultry and pork, could reduce our operating margins.

        The primary raw materials used in our business are beef, poultry, pork, bread and breadings, cheese, eggs, seasonings, soy proteins, corn and packaging supplies, with beef, poultry and pork comprising the majority of our raw material costs for fiscal 2015. The supply and price of these raw materials are subject to market conditions and are influenced by other factors beyond our control, such as general economic conditions, unanticipated demand and damage or disruption to supply. Additionally, we typically do not have long-term contracts with our suppliers of beef, poultry and pork. Although our purchasing volume can sometimes provide an advantage when dealing with these suppliers, suppliers may not provide the products and supplies we need in the quantities and at the prices requested.

        While historically we have been able to pass along increases in the prices of raw materials to many of our customers, we may be unable to adjust the prices of our products to recover future increases in the prices of raw materials on a timely basis, or at all. In addition, some of our customers purchase products from us based on annually-renewed fixed price arrangements, which prevent us from recovering raw materials price increases from these customers during the life of those contracts. For example, when we sell our products to schools, we enter into firm fixed price sales contracts for the entire school year. These sales contracts do not typically have indexed price escalation formulas to account for economic fluctuations and as a result, we typically are unable to pass along increases in costs due to economic fluctuations to these customers. If prices for our raw materials, including beef, poultry and pork, were to increase significantly without a similar increase in the price of our products, our business, financial condition and operating results could be adversely affected.

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Deterioration of general economic conditions could harm our business, financial condition and operating results.

        Our business, financial condition and operating results may be adversely affected by changes in global or national economic conditions, including inflation, interest rates, availability of capital markets, consumer spending rates, energy availability and costs (including fuel surcharges) and the effects of governmental initiatives to manage economic conditions. Volatility in financial markets and deterioration of global or national economic conditions could adversely affect our business, financial condition and operating results in a variety of ways, including as follows:

    the financial stability of our customers and suppliers may be compromised, which could result in bad debts for us or non-performance by suppliers;

    consumers may shift purchases to lower-priced offerings or may forego certain purchases (such as food prepared away from home) altogether during economic downturns;

    decreased demand by our customers may adversely affect our sales volume;

    volatility in commodity and other input costs could adversely impact our operating results; and

    it may become more costly or difficult to obtain debt or equity financing to fund operations or investment opportunities, or to refinance our debt in the future, in each case on terms and within a time period acceptable to us.

Changes in consumer eating habits could adversely affect our business, financial condition and operating results.

        The food industry in general is subject to changing consumer trends, demands and preferences. For example, consumer eating habits could be affected by changes in attitudes regarding diet and health or new information regarding the health effects of consuming certain foods. Our success depends on our ability to predict, identify and interpret the tastes and dietary habits of consumers and to offer products that appeal to those preferences. If consumer eating habits change significantly, we may be required to modify or discontinue sales of certain of our products or develop and offer new products. There are inherent marketplace risks associated with new product or packaging introductions, including uncertainties about trade and consumer acceptance. If we do not succeed in offering products that consumers want to buy, our sales and market share will decrease, resulting in reduced profitability. If we are unable to accurately predict which shifts in consumer preferences will be long-lasting, or are unable to introduce new and improved products to satisfy those preferences, our sales will decline. In addition, given the variety of backgrounds and identities of consumers in our consumer base, we must offer a sufficient array of products to satisfy the broad spectrum of consumer preferences. As such, we must be successful in developing innovative products across a multitude of product categories.

        Additionally, changes in consumer eating habits may result in the enactment or amendment of laws and regulations that impact the ingredients and nutritional content of our food products, or laws and regulations requiring us to disclose the nutritional content of our food products. Compliance with these laws and regulations, as well as others regarding the ingredients and nutritional content of our food products, may be costly and time-consuming.

If our products become contaminated or are mislabeled, we may be subject to product liability claims, product recalls and increased scrutiny by regulators, any of which could adversely affect our business.

        Our products are vulnerable to contamination by organisms producing food-borne illnesses. These organisms are generally found in the environment, and, as such, there is a risk that as a result of food processing they could be found in our products. For example, e. coli is one of many food-borne pathogens commonly associated with food products. Once contaminated products have been shipped

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for distribution, illness and death may result if the pathogens are not eliminated by processing at the foodservice or consumer level. The risk can be reduced, but not eliminated, by use of good production practices and finished product testing. These risks are higher in raw or uncooked foods, which we also sell. Also, products purchased from others for re-packing or distribution may contain contaminants that we are unable to identify. We may also encounter the same risks if a third party tampers with our products or if our products are inadvertently mislabeled.

        We may need to recall our products if they become adulterated. For example, in July 2015, we issued voluntary recalls for certain frozen, raw, stuffed chicken entrées from our Barber Foods product line due to a salmonella illness outbreak, which was epidemiologically linked to raw poultry that was supplied to us from a third-party supplier and which resulted in a product contamination insurance policy claim of $15.0 million. Shipment of adulterated products, even if inadvertent, is a violation of law and may lead to product liability claims, product recalls and increased scrutiny by federal and state regulatory agencies, any of which could adversely affect our reputation, business, financial condition and operating results. In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our business, financial condition and operating results.

Adverse publicity about us and lack of confidence in our products based on alleged or actual reports of food-borne illnesses could negatively affect our reputation and affect our business.

        Maintaining a good reputation and public confidence in the safety of the products we distribute is critical to our business. Anything that damages our reputation, or the public's confidence in our products, whether or not justified, including adverse publicity about the quality, safety or integrity of our products, could quickly affect our net sales and profits. Reports, whether true or not, of food-borne illnesses or harmful bacteria (such as e. coli, bovine spongiform encephalopathy, hepatitis A, trichinosis, listeria or salmonella) and injuries caused by food tampering could severely harm our reputation or negatively affect the public's confidence in our products. In addition, instances of food-borne illnesses or food tampering or other concerns, even those unrelated to our products, may create adverse publicity which could adversely affect consumer demand and, as a result, our business, financial condition and operating results.

Our insurance and indemnification agreements may be inadequate to cover all the liabilities we may incur.

        We face the risk of exposure to product liability claims and adverse public relations in the event that our control procedures fail or are inadequate and the consumption of our products causes injury or illness. If a product liability claim is successful, our insurance may not be adequate to cover all liabilities we may incur, including harm to our reputation, and we may not be able to continue to maintain such insurance, or obtain comparable insurance at a reasonable cost, if at all. We generally seek contractual indemnification and insurance coverage from our suppliers, but this indemnification or insurance coverage is limited by the creditworthiness of the indemnifying party and their insurance carriers, if any, as well as the insured limits of any insurance provided by those suppliers. If we do not have adequate insurance or contractual indemnification available, product liability claims relating to contaminated, adulterated or mislabeled products could adversely affect our business, financial condition and operating results.

Adverse judgments or settlements resulting from legal proceedings in which we may be involved in the normal course of our business could reduce our profits or limit our ability to operate our business.

        In the normal course of our business, we are involved in various legal proceedings. The outcome of these proceedings cannot be predicted. If any of these proceedings were to be determined adversely to us or a settlement involving a payment of a material sum of money were to occur, it could materially

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and adversely affect our profits or ability to operate our business. Additionally, we could become the subject of future claims by third parties, including our employees, suppliers, customers, stockholders or regulators. Any significant adverse judgments or settlements would reduce our profits and could limit our ability to operate our business. Further, we may incur costs related to claims for which we have appropriate third-party indemnity or insurance, but such third parties or insurers may fail to fulfill their contractual obligations.

We market our products under a variety of brand names. The termination of, or failure to renew, a license agreement under which we sell branded products, or the reduction in value of one of our owned brand names or an underlying license, could negatively impact our ability to produce and sell our products.

        The market for our products depends to a significant extent upon the goodwill associated with the brand names under which our products are sold. We rely on copyright and trademark law to establish and protect our intellectual property rights, such as our brand names. We may be required from time to time to bring lawsuits against third parties to protect our intellectual property. Similarly, from time to time we may be party to proceedings in which third parties challenge our rights. Any lawsuits or other actions we bring to enforce our rights may not be successful, and we may in fact be found to infringe on the intellectual property rights of others. In addition to our own brand names, we have licenses or production agreements with third parties that own trademarks or trade names used in the marketing of some of our products. In the event that any such license or production agreement is terminated, we may lose the right to use, or have reduced rights to use, the intellectual property covered by such agreement. In such event, we might not be able to secure licenses to use alternative brand names or trade names in the marketing of our products, and our products may not be as attractive to customers. We may also sell certain assets, including brand names, from time to time in the ordinary course of business. In addition, certain events, including events beyond our control, could make certain of our brand names, or the brand names we license, less attractive to our customers, making our products less desirable as a result. Any loss in the value of a brand name or loss of a license for a brand name could adversely affect our business, financial condition and operating results.

We are subject to extensive governmental regulations, which require significant compliance expenditures.

        We are subject to extensive federal, state and local regulations. Our food processing facilities and products are subject to frequent inspection by the USDA, the Food and Drug Administration (the "FDA") and various state and local health and agricultural agencies. Applicable statutes and regulations governing food products include rules for labeling the content of specific types of foods, the nutritional value of that food and its serving size, as well as rules that protect against contamination of products by food-borne pathogens. Many jurisdictions also provide that food producers adhere to good production practices (the definition of which may vary by jurisdiction) with respect to production processes. Recently, the food safety practices and procedures in the meat processing industry have been subject to more intense scrutiny and oversight by the USDA and future outbreaks of diseases among cattle, poultry or pigs could lead to further governmental regulation. In addition, our production facilities and distribution centers are subject to various federal, state and local laws and regulations relating to workplace safety and workplace health. Failure to comply with all applicable laws and regulations could subject us to civil remedies, including fines, injunctions, product recalls or seizures and criminal sanctions, any of which could have a material adverse effect on our business, financial condition and operating results. Furthermore, compliance with current or future laws or regulations could require us to make material expenditures or otherwise adversely affect our business, financial condition and operating results.

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The failure to comply with our government contracts or applicable laws and regulations could result in, among other things, fines or other liabilities, and changes in procurement regulations could adversely affect our business, financial condition and operating results.

        Sales from our government customers are derived from sales to governmental departments and agencies, and schools, through various contracts. Sales to government customers are highly regulated. Noncompliance with contract provisions, government procurement regulations or other applicable laws or regulations could result in civil, criminal and administrative liability, including substantial monetary fines or damages, termination of government contracts or other customer contracts, and suspension, debarment or ineligibility from doing business with the government and other customers in the public segment. In addition, generally government contracts are terminable at any time for convenience of the contracting agency or upon default. The effect of any of these possible actions by any governmental department or agency could adversely affect our business, financial condition and operating results. In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our gross margins, which could adversely affect our business, financial condition and operating results.

Compliance with environmental regulations may result in significant costs and our failure to comply with environmental regulations may result in civil as well as criminal penalties, liability for damages and negative publicity.

        Our operations are subject to extensive and increasingly stringent regulations pertaining to the discharge of materials into the environment and the handling and disposition of wastes. Failure to comply with these regulations can have serious consequences for us, including criminal as well as civil and administrative penalties, requirements to install pollution or other controls or equipment, limitations on our operations, claims for remediation costs, as well as alleged personal injury or property damages and negative publicity. We are involved from time to time in administrative or legal proceedings relating to environmental and health and safety matters, and have incurred and will continue to incur capital and operating expenditures to avoid violations of these laws and regulations. Additional environmental requirements imposed in the future could require currently unanticipated investigations, assessments or expenditures, and may require us to incur significant additional costs. As the nature of these potential future changes is unknown, we cannot estimate the magnitude of any future costs and we have not accrued any reserve for any potential future costs.

Labor disruptions or increased labor costs could adversely affect our business, financial condition and operating results.

        As of January 2, 2016, we had approximately 4,000 employees. We consider our relations with our employees to be good. Although none of our employees are represented by a labor union or covered under a collective bargaining agreement, some employers in our industry have employees who belong to a union and there have been, from time to time, union organization attempts at our facilities. If some of our employees were to become unionized, it could adversely affect productivity, increase labor costs and increase the risk of work stoppages at our facilities. If a work stoppage were to occur, it could interfere with our operations and adversely affect our business, financial condition and operating results.

We sell a large percentage of our products to schools, directly and through distributors, which subjects our sales volumes and, thus, our operating results, to seasonal variations.

        Our quarterly operating results are affected by the seasonal fluctuations of our sales and operating income. We derived 16.2% of our consolidated net sales and 29.4% of our Foodservice segment net sales in fiscal 2015 from schools. Because schools comprise a significant portion of our customer base, sales of our products tend to be lower during the summer months. These lower sales volumes

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negatively impact our operating profits during the third quarter of each fiscal year. As a result of these fluctuations, we believe that comparisons of our net sales and operating income among different quarters within a single fiscal year are not necessarily meaningful and that they cannot be relied upon as indicators of our future performance. In the future, federal and state funding for school lunches may decrease due to budget cuts and, accordingly, there can be no assurance that schools will continue to purchase our products, directly from us or from distributors, at current levels or at all.

Any disruption of operations at one or more of our production facilities or distribution centers could adversely affect our business, financial condition and operating results.

        Our production and distribution network consists of ten production facilities and three distribution centers in the United States. Any disruption in, or the loss of operations at, one or more of these facilities, even on a short-term basis, could delay or postpone production or distribution of our products, which could adversely affect our business, financial condition and operating results. Such disruption could be caused by a number of different events, including:

    maintenance outages;

    regulatory actions;

    prolonged power failures;

    equipment failure;

    widespread contamination of our equipment;

    fires, floods, earthquakes or other natural disasters; or

    other events beyond our control.

        Any material malfunction or prolonged disruption in the operations of any of our facilities could prevent us from fulfilling orders to existing customers, and could limit our ability to sell products to new customers. Any of these events could adversely affect our business, financial condition and operating results.

Significant increases in the cost of distribution could adversely affect our business, financial condition and operating results.

        Our distribution costs include fuel for transportation and electricity for cold storage. Significant increases in these distribution costs could adversely affect our business, financial condition and operating results. We use a core group of contract carriers that have established rates based on mileage to regions or destination states. A fuel surcharge addendum is a component of all rates to offset the fluctuating price of diesel fuel, primarily to limit the contract carrier's exposure. If these surcharges rise significantly and we do not have effective hedges in place, or if we are unable to pass increased distribution costs on to our customers in the form of higher prices for our products, our business, financial condition and operating results could be adversely affected.

        In addition to in-house cold storage, we use commercial cold storage vendors to store our finished goods. A major component of cold storage operations expense is electricity cost. Although we try to minimize storage costs, any significant increase in electricity rates for the vendor are passed along to us in the form of higher storage rates. If our storage rates or electricity rates for in-house cold storage increase significantly, we may be unable to pass these costs on to our customers, which could adversely affect our business, financial condition and operating results.

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We depend upon the continued services of certain members of our senior management team, without whom our business operations could be significantly disrupted.

        Our success depends, in part, on the continued contributions of our executive officers and other key employees. Our management team has significant industry experience and could be difficult to replace. Any loss or extended interruption in the service of one or more of our senior officers could adversely affect our business, financial condition and operating results. Moreover, the market for qualified individuals may be highly competitive and we may not be able to attract and retain qualified personnel to replace or succeed members of our senior management or other key employees, should the need arise.

We may be unsuccessful at identifying, acquiring or integrating future acquisitions.

        From time to time, we opportunistically pursue acquisitions to diversify our products, add production capabilities, expand production capacity and allow for meaningful synergy realization. If we are unable to successfully identify, complete and integrate acquired businesses, or to realize anticipated cost savings, sales enhancements or other synergies, in a timely manner, our profitability could be adversely affected. Integration of an acquired business may be more difficult when we acquire a business in a market in which we have limited expertise and we may be unable to retain the loyalty and business of the customers of the acquired business. We could also face significantly greater competition in these markets than we face in our existing markets. A significant expansion of our business and operations, in terms of geography or magnitude, could strain our administrative and operational resources. Additionally, we may be unable to retain qualified management and other key personnel employed by acquired companies for any reason, including as a difficulties in the assimilation of different corporate cultures and business practices.

        We cannot assure you that we will be able to identify suitable acquisition opportunities, consummate any pending or future acquisitions or that we will realize any anticipated benefits from any such acquisitions.

We may be unable to realize anticipated cost savings or may incur additional or unexpected costs in order to realize them.

        As part of the APF Way, we initially focused on reducing our historically high cost structure by executing on productivity initiatives and re-aligning trade promotion allowances, resulting in $138.6 million in implemented annualized savings from 2013 to 2015. We are also currently implementing multiple incremental savings opportunities, across the areas of production, procurement, commercial and logistics, that we expect will deliver continuous productivity savings and help us effectively manage margins and profitability. However, cost savings expectations are inherently estimates that are difficult to predict and are necessarily speculative in nature, and we cannot provide assurance that we will achieve any of our expected cost savings. A variety of factors could cause us not to realize some or all of the expected cost savings, including, among others, delays in the anticipated timing of activities related to the APF Way, lack of sustainability in cost savings over time and unexpected costs associated with operating our business. We may be unable to realize all of these cost savings within the expected timeframe, or at all, and we may incur additional or unexpected costs in order to realize them.

        Our cost savings estimates are also based upon a number of assumptions and estimates that are in turn based on our analysis of the various factors which currently, and could in the future, impact our business. These assumptions and estimates are inherently uncertain and subject to significant business, operational, economic and competitive uncertainties and contingencies, including, among others, our anticipated business strategies, our marketing strategies, our product development and licensing strategies, our ability to anticipate and react to business trends, general economic conditions and other

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developments in our industry. The actual results of implementing the various cost savings initiatives may differ materially from our current estimates if any of these assumptions prove incorrect. Moreover, our continued efforts to implement the cost savings initiatives may divert management attention from the rest of our business and may preclude us from seeking attractive new product opportunities or pursuing other initiatives, any of which may materially and adversely affect our business.

Breaches of data security could adversely affect our business, financial condition and operating results.

        Our business involves the storage and transmission of proprietary information and sensitive or confidential data, including personal information of coworkers, customers and others. We have privacy and data security policies in place that are designed to prevent security breaches; however, breaches in security could expose us, our customers or other individuals to a risk of loss or misuse of this information, resulting in litigation and potential liability for us, as well as the loss of existing or potential customers and damage to our brand and reputation. In addition, the cost and operational consequences of implementing further data protection measures could be significant. Such breaches, costs and consequences could adversely affect our business, financial condition and operating results.

We rely heavily on technology in our business, and any technology disruption or delay in implementing new technology could adversely affect our business.

        Our ability to control costs and to maximize profits, as well as to serve customers effectively, depends on the reliability of our information technology systems and related data entry processes. We rely on software and other technology systems, some of which are managed by third-party service providers, to manage significant aspects of our business, including making purchases, processing orders, managing our warehouses, loading trucks in the most efficient manner and optimizing the use of storage space. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies and the loss of sales and customers, causing our business and operating results to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, power outages, systems failures, cyber-attacks and viruses. While we have invested and continue to invest in technology security initiatives and disaster recovery plans, these measures cannot fully insulate us from technology disruption that could result in adverse effects on our operations and profits.

        Information technology systems evolve rapidly and in order to compete effectively we are required to integrate new technologies in a timely and cost effective manner. If competitors implement new technologies before we do, allowing such competitors to provide lower priced or enhanced services of superior quality compared to those we provide, this could have an adverse effect on our operations and profits.

We are subject to risks associated with climate change and climate change regulation.

        There is increasing concern that a gradual increase in global average temperatures due to increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe, and an increase in the frequency and severity of natural disasters or other effects that are impossible to predict. Decreased agricultural productivity in certain regions as a result of changing weather patterns could limit availability or increase the cost of key agricultural commodities. For example, in 2012, the lack of adequate rainfall across more than half of the United States resulted in increased feed costs which impacted the price of meat domestically. Increased frequency or duration of extreme weather conditions could also impair production capabilities, disrupt our supply chain or impact demand for our products. International, federal, regional, state and local efforts to regulate greenhouse gas emissions are at various stages of consideration and implementation, and could result in increased energy, transportation and raw

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material costs. In addition, consumer concern about animal-based agriculture contributing to climate change could adversely affect demand for our products.

We are required to pay our existing owners for certain tax benefits, which amounts are expected to be material.

        We will enter into an income tax receivable agreement with our existing stockholders that will provide for the payment by us to our existing stockholders of 85% of the amount of cash savings, if any, in United States federal, state, local and foreign income tax that we and our subsidiaries actually realize (or are deemed to realize in the case of an early termination by us or a change of control, as discussed below under the heading "Certain Relationships and Related Party Transactions—Income Tax Receivable Agreement") as a result of the utilization of our net operating losses, tax basis and other tax attributes attributable to periods prior to this offering together with interest accrued at a rate of            from the date the applicable tax return is due (without extension) until paid.

        We expect that as a result of entering into the income tax receivable agreement, during its term, the payments that we may make under it could be material. Assuming no material changes in the relevant tax law, and that we earn sufficient taxable income to realize the full tax benefits subject to the income tax receivable agreement, we expect that future payments under the income tax receivable agreement will total between approximately $             million and $             million. Such amounts may differ materially from the amounts presented above based on various items.

        These payment obligations are our obligations and not obligations of our subsidiaries. The actual amount and utilization of net operating losses, tax basis and other tax attributes, as well as the amount and timing of any payments under the income tax receivable agreement, will vary depending upon a number of factors, including the amount, character and timing of our and our subsidiaries' taxable income in the future.

        Our counterparties under the income tax receivable agreement will not reimburse us for any benefits that are subsequently disallowed (although any future payments would be adjusted to the extent possible to reflect the result of such disallowance). As a result, in such circumstances, we could make payments under the income tax receivable agreement that are greater than our actual cash tax savings.

        If we undergo a change of control as defined in the income tax receivable agreement, the income tax receivable agreement will terminate and we will be required to make a payment equal to the present value of expected future payments under the income tax receivable agreement, which payment would be based on certain assumptions, including those relating to our future taxable income. Additionally, if we or a direct or indirect subsidiary transfers any asset to a corporation with which we do not file a consolidated tax return, we will be treated as having sold that asset for its fair market value in a taxable transaction for purposes of determining the cash savings in income tax under the income tax receivable agreement. Any such payment resulting from a change of control or asset transfer could be substantial and could exceed our actual cash tax savings.

Risks Related to Our Indebtedness

Our high level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our floating-rate indebtedness and prevent us from meeting our obligations under our indebtedness.

        As of January 2, 2016, we had $1.27 billion in aggregate indebtedness outstanding, and we had $125.4 million of additional borrowings available under our asset-based revolving loan facility (our

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"ABL facility"), after giving effect to $5.5 million of outstanding letters of credit. Our current level of indebtedness could have important consequences to us, including the following:

    requiring a substantial portion of cash flow from operations, which depends on many factors, some of which are not within our control, to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, working capital, capital expenditures, acquisitions and future business opportunities or to pay dividends;

    exposing us to the risk of increased interest rates because certain of our borrowings, including certain borrowings under our credit facilities, bear interest at floating rates;

    making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with our obligations could result in an event of default under the agreements governing our indebtedness;

    increasing our vulnerability to adverse economic, industry or competitive developments;

    restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

    subjecting us to restrictive covenants that may limit our flexibility in operating our business;

    limiting our ability to obtain additional financing to fund our operations, working capital, capital expenditures, product development, acquisitions, debt service requirements and future business opportunities or to pay dividends; and

    limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.

        In addition, if we are unable to service our high level of indebtedness, we may need to restructure or refinance all or a portion of our indebtedness, sell material assets or operations, or raise additional debt or equity capital. We may not be able to effect any of these actions on a timely basis, on commercially reasonable terms, or at all, and these actions may not be sufficient to meet our capital requirements. Our failure to make the required interest and principal payments on our indebtedness would result in an event of default under the agreement governing such indebtedness, which may result in the acceleration of some or all of our outstanding indebtedness.

        Although our credit facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions and, under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial, thereby exacerbating the risks associated with our high level of indebtedness.

Risks Related to this Offering and Ownership of Our Common Stock

No market currently exists for our common stock, and an active, liquid trading market for our common stock may not develop, which may cause our common stock to trade at a discount from the initial offering price and make it difficult for you to sell the common stock you purchase.

        Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in us will lead to the development of a trading market on                or otherwise or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have difficulty selling any of our common stock that you purchase. The initial public offering price for the shares will be determined by negotiations among us, the selling stockholders and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our common stock may decline below the initial offering price, and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all.

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You will incur immediate and substantial dilution in the net tangible book value (deficit) of the shares you purchase in this offering.

        Our existing stockholders have paid substantially less per share of our common stock than the price in this offering. The initial public offering price of our common stock will be substantially higher than the net tangible book value (deficit) per share of outstanding common stock prior to completion of the offering. After giving effect to our sale of                shares of common stock in this offering at the assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover of this prospectus, and after deducting underwriting discounts and commissions, and estimated offering expenses payable by us, and giving effect to the proceeds of this offering, our adjusted net tangible book value (deficit) as of January 2, 2016 would have been $             million, or $            per share. This represents an immediate increase in net tangible book value (or a decrease in net tangible book deficit) of $            per share to our existing stockholders and an immediate dilution in net tangible book value (deficit) of $            per share to investors purchasing shares of common stock in this offering at the assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. Dilution is the amount by which the offering price paid by purchasers of our common stock in this offering will exceed the adjusted net tangible book value (deficit) per share of our common stock upon completion of this offering.

        In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you. You may also experience additional dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our employees, executive officers and directors under our current and future stock incentive plans. See "Dilution."

We intend to pay regular dividends to our stockholders, but our ability to do so is subject to the discretion of our board of directors and may be limited by our financial condition, our credit facilities and Delaware law.

        Following the consummation of this offering, we intend to pay a regular quarterly cash dividend of approximately $            per share on our common stock. See "Dividend Policy." However, the payment of dividends will be at the discretion of our board of directors and our board of directors may, in its discretion, reduce or eliminate the payment of dividends. Our ability to pay dividends on our common stock will depend on many factors, including, among others, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our board of directors may deem relevant. Our ability to pay dividends on our common stock is also limited by the covenants of our credit facilities and may be further restricted by the terms of any future debt or preferred securities. Furthermore, Delaware law requires that our board of directors determine that we have adequate surplus prior to the declaration of dividends. While we do not currently believe that these restrictions will impair our ability to pay regular quarterly cash dividends, there can be no assurance that we will not need to reduce or eliminate the payment of dividends on our common stock in the future.

Our stock price may decline significantly following this offering, and you may not be able to resell your shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.

        The trading price of our common stock is likely to be volatile. The stock market recently has experienced extreme volatility. In some instances, this volatility often has been unrelated or disproportionate to the operating performance of particular companies. We, the selling stockholders

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and the underwriters will negotiate to determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price due to a number of factors such as those listed in "—Risks Related to Our Business" and the following:

    results of operations that vary from the expectations of securities analysts and investors;

    results of operations that vary from those of our competitors;

    changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors, and the publication of research reports regarding the same;

    changes in market valuations of, or earnings and other announcements by, companies serving our markets;

    declines in the market prices of stocks, trading volumes and company valuations generally;

    strategic actions by us or our competitors;

    changes in preferences of our customers;

    announcements by us, our competitors or our vendors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;

    changes in general economic or market conditions or trends in our industry, our markets or the economy as a whole;

    changes in business or regulatory conditions;

    future sales of our common stock or other securities;

    investor perceptions or the investment opportunity associated with our common stock relative to other investment alternatives;

    the public's response to press releases or other public announcements by us or third parties, including our filings with the Securities and Exchange Commission (the "SEC");

    changes in senior management or key personnel;

    announcements relating to litigation;

    guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

    the development and sustainability of an active trading market for our stock;

    changes in accounting principles; and

    other events or factors, including those resulting from production system failures and disruptions, natural disasters, war, acts of terrorism or responses to these events.

        These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.

        In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

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None of the proceeds from the sale of shares of common stock by the selling stockholders in this offering will be available to fund our operations or to pay dividends.

        We will not receive any proceeds from the sale of shares of common stock by the selling stockholders in this offering. The selling stockholders will receive all proceeds from the sale of such shares. Consequently, none of the proceeds from such sale will be available to fund our operations, capital expenditures or acquisition opportunities or to pay dividends. See "Use of Proceeds" and "Principal and Selling Stockholders."

If securities analysts do not publish research or reports about our business, publish inaccurate or unfavorable research or if they downgrade our stock or our sector, our common stock price and trading volume could decline.

        The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts ceases coverage of us or fail to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our common stock to decline.

        After this offering, the sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

        Upon consummation of this offering, we will have a total of                shares of common stock outstanding. Of the outstanding shares, the                shares (or                 shares if the underwriters exercise in full their option to purchase additional shares) sold in this offering by us and the selling stockholders will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the "Securities Act"), except that any shares held by our affiliates (as defined under Rule 144 of the Securities Act ("Rule 144")), including our principal stockholders and our directors and executive officers may be sold only in compliance with the limitations described in "Shares Eligible for Future Sale."

        The remaining                shares, representing        % of our total outstanding shares of common stock following this offering, will be "restricted securities" within the meaning of Rule 144 and subject to certain restrictions on resale following the consummation of this offering. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144, as described in "Shares Eligible for Future Sale."

        In connection with this offering, we, our directors and executive officers, the selling stockholders and holders of substantially all of our common stock prior to this offering have each agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives of the underwriters. See "Underwriting" for a description of these lock-up agreements.

        Following completion of this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act to register the shares of common stock issued or issuable under our

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2009 Omnibus Equity Incentive Plan. Any such Form S-8 registration statement will become effective automatically upon filing. We expect that the initial registration statement on Form S-8 will cover                shares of common stock. Once these shares are registered, they can be sold in the public market upon issuance, subject to Rule 144 limitations applicable to affiliates, vesting restrictions and the lock-up restrictions described under "Underwriting."

        Upon the expiration of the lock-up agreements described above, shares held by our principal stockholders, and our directors, officers, employees and other stockholders will be eligible for resale, subject to volume, manner of sale and other limitations under Rule 144.

        In addition, pursuant to an amended and restated registration rights agreement, we will grant to our principal stockholders an unlimited number of "demand" registration rights and to both our principal stockholders and the other existing stockholders party thereto customary "piggyback" registration rights. By exercising their registration rights and selling a large number of shares, our existing stockholders could cause the prevailing market price of our common stock to decline. Following completion of this offering, the shares covered by the registration rights agreement would represent approximately        % of our outstanding common stock (or        %, if the underwriters exercise in full their option to purchase additional shares). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See "Shares Eligible for Future Sale."

        As restrictions on resale end or if these stockholders exercise their registration rights, the market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

        Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.

        These provisions provide for, among other things:

    a classified board of directors with staggered three-year terms;

    the ability of our board of directors to issue one or more series of preferred stock;

    advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

    certain limitations on convening special stockholder meetings;

    the removal of directors only for cause and only upon the affirmative vote of the holders of at least 662/3% in voting power of all of the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class, if Oaktree and its affiliates beneficially own, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors; and

    that certain provisions may be amended only by the affirmative vote of at least 662/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class, if Oaktree and its affiliates beneficially own, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors.

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        These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party's offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. See "Description of Capital Stock."

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

        Our amended and restated certificate of incorporation will provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf of us, (2) action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders to us or our stockholders, (3) action asserting a claim against us or any of our directors, officers or stockholders arising pursuant to any provision of the Delaware General Corporation Law (the "DGCL") or our amended and restated certificate of incorporation or our amended and restated bylaws, or (5) action asserting a claim against us or any of our directors, officers or stockholders governed by the internal affairs doctrine.

        Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Oaktree will continue to have significant influence over us after this offering, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of key transactions, including a change of control.

        Oaktree exerts, and after this offering will continue to exert, significant influence over us. Immediately following this offering, our principal stockholders will beneficially own approximately        % of our common stock, or approximately        % if the underwriters exercise in full their option to purchase additional shares. As a result, Oaktree will have the ability to elect all of the members of our board of directors and thereby control our policies and operations, including, among other things, the appointment of management, future issuances of our common stock or other securities, the payment of dividends, if any, on our common stock, the incurrence or modification of debt by us, amendments to our amended and restated certificate of incorporation and amended and restated bylaws and the entering into extraordinary transactions.

        Oaktree may have interests that do not align with the interests of our other stockholders, including with regard to pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to our other stockholders. For example, Oaktree could cause us to make acquisitions that increase our indebtedness or to sell sales-generating assets. Oaktree will have effective control over our decisions to enter into such corporate transactions regardless of whether others believe that the transaction is in our best interests. Such control may have the effect of delaying, preventing or deterring a change of control of us, could deprive stockholders of an opportunity to receive a premium for their common stock as part of a sale of us and might ultimately affect the market price of our common stock. In addition, so long as our principal stockholders continue to own a significant amount of our voting power, even if such

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amount is less than 50%, Oaktree will continue to be able to strongly influence or effectively control our decisions and, so long as affiliates of Oaktree beneficially own at least 5% of our outstanding common stock, appoint individuals to our board of directors under a new stockholders agreement which we expect to adopt in connection with this offering. See "Certain Relationships and Related Party Transactions—Stockholders Agreement." The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of our common stock as part of a sale of us and ultimately might affect the market price of our common stock. See "Description of Capital Stock."

        Our principal stockholders or their respective investors are also in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Our amended and restated certificate of incorporation will provide that, to the fullest extent permitted by law, our principal stockholders, any of their affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have no duty to refrain from engaging in a corporate opportunity in the same or similar lines of business in which we or our affiliates now engage or propose to engage or otherwise competing with us or our affiliates. Our principal stockholders or their respective investors may also pursue acquisition opportunities that are complementary to our business and, as a result, those acquisition opportunities may not be available to us. Our principal stockholders will not be obligated to present any particular investment or business opportunity to us, even if such opportunity is of a character that could be pursued by us, and may pursue it for their own account or recommend to any other person any such investment opportunity.

We will be a "controlled company" within the meaning of the rules of                . As a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

        After completion of this offering, our principal stockholders will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of                . Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance requirements, including:

    the requirement that a majority of the board of directors consist of "independent directors" as defined under the rules of                 ;

    the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities;

    the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and

    the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.

        Following this offering, we intend to utilize these exemptions. As a result, we may not have a majority of independent directors, our Nominating and Corporate Governance Committee and our Compensation Committee will not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Additionally, we are only required to have one independent audit committee member upon the listing of our common stock on                , a majority of independent audit committee members within 90 days from the date of listing and all independent audit committee members within one year from the date of listing. Accordingly, you will not have the

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same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of                . Our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price

        In addition, on June 20, 2012, the SEC adopted Rule 10C-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") pertaining to compensation committee independence and the role and disclosure of compensation consultants and other advisers to the compensation committee.                has since adopted amendments to its existing listing standards to comply with provisions of Rule 10C-1 under the Exchange Act, and on January 11, 2013, the SEC approved such amendments. The amended listing standards require, among others, that:

    compensation committees be composed of fully independent directors, as determined pursuant to new and existing independence requirements;

    compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel and other committee advisers; and

    compensation committees be required to consider, when engaging compensation consultants, legal counsel or other advisers, certain independence factors, including factors that examine the relationship between the consultant or adviser's employer and us.

        As a "controlled company", we will not be subject to these compensation committee independence requirements.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a newly public company, and our management will be required to devote substantial time to new compliance matters, which could lower our profits or make it more difficult to run our business.

        As a newly public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We will also incur costs associated with the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), and related rules implemented by the SEC and                . We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. For example, these laws and regulations could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Our management and other personnel will devote a substantial amount of time to these compliance initiatives. As a result, management's attention may be diverted from other business concerns, which could harm our business and operating results. We will need to hire more employees in the future to comply with these requirements, which will increase our costs and expenses.

        Our management team and other personnel devote a substantial amount of time to new compliance initiatives and we may not successfully or efficiently manage our transition to a public company. To comply with the requirements of being a public company, including the Sarbanes-Oxley Act, we will need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff, which would require us to incur additional expenses and harm our results of operations.

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We identified material weaknesses in our internal controls over financial reporting during fiscal 2015. If we fail to maintain an effective system of internal controls over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.

        Our management is responsible for establishing and maintaining adequate internal controls over our financial reporting. In connection with the audit of our consolidated financial statements during fiscal 2015, our independent registered public accounting firm identified material weaknesses in our internal controls over financial reporting. The material weaknesses resulted in adjustments to our consolidated financial statements identified during the audit. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

        The identified material weaknesses relate to inadequate design and operation of controls, due to an insufficient complement of resources, over (1) the timely and appropriate interpretation and application of technical accounting matters, (2) the completeness and accuracy of disclosures included in our consolidated financial statements and (3) the completeness and accuracy of account reconciliations used to present financial information in our consolidated financial statements. These material weaknesses could result in a misstatement of the account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. These material weaknesses were identified primarily as a result of errors in our interpretation of accounting guidance relating to insurance recoveries, income statement presentation of merger and acquisition expenses and certain balance sheet classifications, which resulted in adjustments to our consolidated financial statements identified during the audit. The adjustments required us to reclassify certain amounts associated with two product recalls from net sales and cost of goods sold to other expense, net, to reclassify merger and acquisition expenses from non-operating to operating expenses, to reclassify book overdrafts from current liabilities to cash and cash equivalents and to reclassify certain amounts from long-term debt to current maturities of long-term debt. None of these adjustments impacted our net income for fiscal 2015, fiscal 2014 or fiscal 2013.

        Although our management has devoted and plans to continue to devote additional resources to investigating issues that arose during the audit of our consolidated financial statements, we cannot assure you that our remedial measures will be sufficient.

        Historically, as a private company, we were not required to comply with the internal control requirements of the Sarbanes-Oxley Act. As a public company, our management will be required to report on the effectiveness of our internal control over financial reporting beginning with our annual report for fiscal year 2017. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. If we discover that we have not remediated the material weaknesses described above, or we identify other material weaknesses or significant deficiencies in the future, there is a risk that we will not be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404 of the Sarbanes-Oxley Act. If this happens, we may not be able to file our periodic reports in a timely manner.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains "forward-looking statements." All statements, other than statements of historical facts included in this prospectus, including statements concerning our plans, objectives, goals, strategies, future events, future sales or performance, financing needs, plans or intentions relating to acquisitions, business trends and other information referred to under "Prospectus Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" are forward-looking statements. When used in this prospectus, the words "estimates," "expects," "contemplates", "anticipates," "projects," "plans," "intends," "believes," "forecasts," "may," "should" and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

        There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements contained in this prospectus. Such risks, uncertainties and other important factors include, among others, the risks, uncertainties and factors set forth above under "Risk Factors" and the following risks, uncertainties and factors:

    competition;

    disruption of our supply chain;

    the loss of or reduced purchasing by any of our major customers;

    increases in the prices of raw materials;

    deterioration of general economic conditions;

    changes in consumer eating habits;

    potential product liability claims and inadequacy of insurance and indemnification agreements in covering any successful claims;

    adverse publicity;

    exposure to legal proceedings or other claims;

    claims regarding our intellectual property rights or termination of our material licenses;

    failure to comply with government contracts or applicable laws and regulations;

    failure to comply with governmental and environmental regulations;

    labor disruptions;

    failure to retain members of our senior management team;

    inability to identify, complete and integrate acquired businesses;

    inability to realize anticipated cost savings or incurrence of additional costs in order to realize such cost savings;

    breaches of data security;

    disruptions in our information technology systems;

    the impact of our high level of indebtedness; and

    Oaktree controlling us.

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        There may be other factors that may cause our actual results to differ materially from the forward-looking statements, including factors disclosed under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

        We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements in this prospectus apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this prospectus. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

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USE OF PROCEEDS

        We estimate that we will receive gross proceeds from our sale of shares of common stock in this offering of approximately $             million, based on the assumed initial public offering price of $            per share, the midpoint of the estimated offering price range set forth on the cover of this prospectus. After deducting the underwriting discounts and commissions and estimated offering expenses payable by us, we expect to receive net proceeds from this offering of approximately $             million.

        We intend to use the net proceeds from this offering for                .

        We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders in this offering. See "Principal and Selling Stockholders."

        We will bear all costs, fees and expenses in connection with this offering, which are estimated to be $             million, except that we and the selling stockholders will pay the underwriting discounts and commissions on a pro rata basis, based on the number of shares of common stock being sold by us and the selling stockholders in this offering.

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DIVIDEND POLICY

        We intend to pay a regular quarterly cash dividend of approximately $            per share on our common stock, subject to the discretion of our board of directors and compliance with applicable law, and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our board of directors may deem relevant. Our ability to pay dividends on our common stock is limited by the covenants of our credit facilities and may be further restricted by the terms of any future debt or preferred securities. We do not currently believe that the restrictions contained in our credit facilities will impair our ability to pay regular quarterly cash dividends as described above.

        Because we are a holding company, our ability to pay dividends also depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur. In particular, the ability of our subsidiaries to distribute cash to us to pay dividends is limited by covenants in our credit facilities. See "Description of Certain Indebtedness" for a description of the restrictions on our ability to pay dividends.

        We did not declare or pay any dividends in fiscal 2015 or fiscal 2014 or between January 2, 2016 and the date of this prospectus.

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DILUTION

        If you invest in shares of our common stock in this offering, your investment in us will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock and the adjusted net tangible book value (deficit) per share of our common stock after this offering. Dilution results from the fact that the per share offering price of our common stock is substantially in excess of the book value (deficit) per share attributable to the shares of our common stock held by existing stockholders.

        Our net tangible book value (deficit) as of January 2, 2016 was $(969.0) million, or $             per share of our common stock. We calculate net tangible book value (deficit) per share by taking the amount of our total tangible assets, reduced by the amount of our total liabilities, and then dividing that amount by the total number of shares of common stock outstanding.

        After giving effect to our sale of            shares of common stock in this offering at the assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover of this prospectus, and after deducting underwriting discounts and commissions, and estimated offering expenses payable by us, and giving effect to the proceeds of this offering, our adjusted net tangible book value (deficit) as of January 2, 2016 would have been $             million, or $            per share. This represents an immediate increase in net tangible book value (or a decrease in net tangible book deficit) of $            per share to our existing stockholders and an immediate dilution in net tangible book value (deficit) of $            per share to investors purchasing shares of common stock in this offering at the assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus.

        The following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share

        $    

Net tangible book value (deficit) per share as of January 2, 2016

  $          

Increase in tangible book value (deficit) per share attributable to this offering

             

Adjusted net tangible book value (deficit) per share after this offering

             

Dilution per share to investors in this offering

        $    

        Dilution is determined by subtracting adjusted net tangible book value (deficit) per share of common stock after the offering from the initial public offering price per share of common stock.

        A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) our adjusted net tangible book value (deficit) per share by $            and dilution per share to investors purchasing shares of common stock in this offering by $            , assuming that the number of shares sold by us, as set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of            shares in the number of shares of common stock sold by us, as set forth on the cover page of this prospectus, would increase (decrease) our adjusted net tangible book value (deficit) per share by $            and dilution per share to investors purchasing shares of common stock in this offering by $            , assuming no change in the assumed initial public offering price and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

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        The following table summarizes, as of January 2, 2016, the total number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders and by new investors purchasing shares in this offering. As the table shows, new investors purchasing shares in this offering will pay an average price per share substantially higher than our existing stockholders paid. The table below assumes an initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover of this prospectus, for shares purchased in this offering and excludes underwriting discounts and commissions and estimated offering expenses payable by us:

 
   
   
  Total
Consideration
   
 
 
  Shares Purchased    
 
 
  Average
Price per
Share
 
 
  Number   %   Amount   %  

Existing stockholders

                                                                

New investors

                                                     

          100.0 %         100.0 %      

        Sales of shares of our common stock by the selling stockholders in this offering will reduce the number of shares of our common stock held by existing stockholders to                , or approximately        % of the total shares of common stock outstanding after this offering, and will increase the number of shares of our common stock held by new investors to            , or approximately        % of the total shares of common stock outstanding after this offering. If the underwriters were to fully exercise the underwriters' option to purchase                 additional shares of our common stock from the selling stockholders, the percentage of shares of our common stock held by existing stockholders would be        % and the percentage of shares of our common stock held by new investors would be        %.

        You may also experience additional dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our employees, executive officers and directors under our current and future stock incentive plans.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of January 2, 2016:

    on an actual basis, reflecting a one-for-            stock split of our common stock; and

    on an as adjusted basis to give effect to (1) the sale by us of            shares of common stock in this offering at the assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and our receipt of the estimated net proceeds from this offering after deducting the underwriting discounts and commissions and estimated offering expenses payable by us and (2) the use of proceeds from this offering.

        We will not receive any of the proceeds from the sale of            shares by the selling stockholders in this offering, including from any exercise by the underwriters of their option to purchase            additional shares from the selling stockholders.

        You should read this table in conjunction with the information contained in "Use of Proceeds," "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Description of Certain Indebtedness," as well as our consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

 
  As of January 2, 2016  
 
  Actual   As Adjusted  
 
  ($ in millions, except par
value and share
numbers)

 

Cash and cash equivalents

  $ 4.5   $    

Debt:

             

First lien term loan(1)

    897.3        

Second lien term loan(1)

    375.0        

ABL facility(2)

           

Capitalized lease obligations

    0.9        

Insurance premium financing

    1.6        

Total debt

  $ 1,274.8   $    

Stockholders' deficit:

             

Common stock, $0.01 par value, (        shares authorized and issued and outstanding, actual;        shares authorized and shares issued and outstanding, as adjusted, respectively)

           

Additional paid-in capital

    4.2        

Stockholder notes receivable

    (3.9 )      

Accumulated deficit

    (427.5 )      

Accumulated other comprehensive income

           

Total stockholders' equity (deficit)

    (427.2 )      

Total capitalization

  $ 847.6   $    

(1)
Includes unamortized original issue discount and current portion of long-term debt.

(2)
As of January 2, 2016, we had $125.4 million of additional borrowings available under our ABL facility.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        The following table sets forth our historical consolidated financial and other data for the periods and at the dates indicated. Our fiscal year is based on either a 52-week or 53-week period ending on the Saturday closest to each December 31.

        We have derived the selected historical consolidated financial data for the fiscal years ended January 2, 2016, January 3, 2015 and December 28, 2013, and the selected balance sheet data as of January 2, 2016 and January 3, 2015, from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the selected historical consolidated financial data for the fiscal years ended December 29, 2012 and December 31, 2011, and the selected balance sheet data as of December 28, 2013, December 29, 2012 and December 31, 2011, from our unaudited consolidated financial statements that are not included in this prospectus. The results of operations of Barber Foods, which we acquired in May 2011, and the assets of Landshire, which we acquired in January 2015, and of Better Bakery, which we acquired in April 2015, are reflected in our results as of and from the date of such transactions.

        Our historical results are not necessarily indicative of future operating results. The following table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

(in millions)
  Fiscal
2015
  Fiscal
2014
  Fiscal
2013
  Fiscal
2012
  Fiscal
2011
 

Statement of Operations:

                               

Net sales

  $ 1,611.6   $ 1,577.6   $ 1,492.0   $ 1,503.0   $ 1,412.3  

Cost of goods sold

    1,158.2     1,227.1     1,144.3     1,118.8     1,060.9  

Distribution expenses

    96.5     99.3     95.3     101.8     89.5  

Restructuring expenses

    2.5     2.0     21.5     40.0     1.7  

Gross profit

    354.4     249.2     230.9     242.4     260.2  

Selling, general and administrative expenses

    196.2     167.6     160.5     176.3     164.1  

Impairment charges

            5.5          

Restructuring expenses

    2.2     5.3     10.2     4.7     21.8  

Other expense, net

    5.6     0.2     0.8     1.7     (2.2 )

Operating income

    150.4     76.1     53.9     59.7     76.5  

Interest expense

    104.4     105.6     104.6     152.9     100.0  

Income (loss) before income taxes

    46.0     (29.5 )   (50.7 )   (93.2 )   (23.5 )

Provision for income taxes

    8.9     8.4     6.3     10.5     9.3  

Net income (loss)

  $ 37.1   $ (37.9 ) $ (57.0 ) $ (103.7 ) $ (32.8 )

Per Share Data:

                               

Net income (loss) per share(1):

                               

Basic

  $ 28.0   $ (29.1 ) $ (44.3 ) $ (78.9 ) $ (25.0 )

Diluted

  $ 27.7   $ (29.1 ) $ (44.3 ) $ (78.9 ) $ (25.0 )

As adjusted net income (loss) per share(2):

                               

Basic

  $     $     $     $     $    

Diluted

  $     $     $     $     $    

Statement of Cash Flows:

                               

Cash flows provided by (used in):

                               

Operating activities

  $ 157.2   $ 22.9   $ 34.4   $ 52.7   $ 36.2  

Investing activities

    (108.3 )   (20.9 )   (11.8 )   (42.9 )   (56.2 )

Financing activities

    (44.5 )   (2.1 )   (22.5 )   (10.9 )   19.4  

Balance Sheet Data (at period end):

                               

Cash and cash equivalents

  $ 4.5   $ 0.1   $ 0.3   $ 0.2   $ 1.4  

Working capital(3)

    127.4     158.7     143.6     153.1     154.0  

Total assets(3)

    1,107.2     1,066.5     1,073.9     1,147.9     1,173.7  

Total debt

    1,269.6     1,305.2     1,298.9     1,311.3     1,109.2  

Total stockholders' deficit

    (427.2 )   (467.0 )   (427.4 )   (374.3 )   (106.6 )

(1)
Basic net income (loss) per share is calculated based upon the weighted average number of outstanding shares of common stock for the period, plus the effect of vested restricted shares. Diluted net income

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    (loss) per share is calculated consistent with the calculation of basic net income (loss) per share, plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. All of our unvested restricted stock awards were excluded from the computation of diluted net income (loss) per share for fiscal 2014 and fiscal 2013 because including them would have had an anti-dilutive effect due to our net loss position. There were no awards that could have diluted basic net income (loss) per share in the future that were not included in the computation of diluted net income (loss) per share in fiscal 2015 as all awards were dilutive.


Basic and diluted net income (loss) per share do not reflect the one-for-            stock split of our common stock to be effected immediately prior to the consummation of this offering.

(2)
As adjusted basic net income (loss) per share is calculated based upon the weighted average number of outstanding shares of common stock for the period, plus the effect of vested restricted shares. As adjusted diluted net income (loss) per share is calculated consistent with the calculation of as adjusted basic net income (loss) per share, plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. All of our unvested restricted stock awards were excluded from the computation of diluted net income (loss) per share for fiscal 2014 and fiscal 2013 because including them would have had an anti-dilutive effect due to our net loss position. There were no awards that could have diluted basic net income (loss) per share in the future that were not included in the computation of diluted net income (loss) per share in fiscal 2015 as all awards were dilutive.


As adjusted basic and diluted net income (loss) per share are calculated assuming (a) the one-for            stock split to be effected immediately prior to the consummation of this offering, (b) the sale by us of                         shares of common stock in this offering at the assumed initial public offering price of $              per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and our receipt of the estimated net proceeds from this offering after deducting the underwriting discounts and commissions and estimated offering expenses payable by us and (c) the application of the net proceeds from this offering as described under "Use of Proceeds" as of the beginning of the applicable period.


The weighted average shares of common stock outstanding includes shares of common stock sold by us in this offering and shares of common stock held by our existing stockholders.

(3)
Working capital is defined as current assets (excluding cash) minus current liabilities (excluding the current portion of debt). We retrospectively adopted the guidance under FASB ASU No. 2015-17 "Balance Sheet Classification of Deferred Taxes" to simplify the classification of deferred taxes into non-current amounts. At January 3, 2015 and December 29, 2012, we had current deferred tax liabilities of $0.2 million and $1.0 million, respectively, that were reclassified as non-current. At December 28, 2013 and December 28, 2011, we had current deferred tax assets of $0.6 million and $3.4 million, respectively, that were reclassified as non-current.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

        The following discussion contains management's discussion and analysis of our financial condition and results of operations and should be read together with "Summary Historical Consolidated Financial Data," "Selected Historical Consolidated Financial Data" and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including but not limited to those described in the "Risk Factors" section of this prospectus. Actual results may differ materially from those contained in any forward-looking statements. You should read "Special Note Regarding Forward-Looking Statements" and "Risk Factors."

        We operate on a 52-week or 53-week fiscal year ending on the Saturday closest to December 31. The fiscal years ended January 2, 2016 ("fiscal 2015"), January 3, 2015 ("fiscal 2014") and December 28, 2013 ("fiscal 2013") were 52-week, 53-week and 52-week fiscal periods, respectively.

Overview

        We are a leading national producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks. We manage and report our operations in four segments with Foodservice, Retail and Convenience representing our core segments. Our fourth segment, Industrial, consists of sales to other food producers under short-term co-manufacturing arrangements. Foodservice is our largest segment and represented 55.0% of our net sales in fiscal 2015. We have dedicated marketing and sales teams for each of our channels to serve the specific needs of our customers.

        We market and distribute approximately 2,600 SKUs across all day parts in multiple product categories, including: (1) ready-to-eat sandwiches, such as breakfast sandwiches, PB&J sandwiches and hamburgers; (2) sandwich components, such as fully-cooked hamburger and chicken patties and Philly steaks; and (3) other entrées and snacks, such as country fried steak, stuffed entrées, chicken tenders and cinnamon dough bites. In fiscal 2015, 67.4% of our net sales were attributable to the fast-growing ready-to-eat sandwiches and sandwich components categories. Our products are shipped frozen to our customers and sold under our commercial and retail brands, as well as private label and licensed brands.

        In January 2015, we acquired the wholesale business and production assets of Landshire, an Illinois-based producer and marketer of a wide variety of sandwiches, including patties, subs, wedges, breakfast offerings and specialty items. In April 2015, we acquired the business and production assets of Better Bakery, a producer and marketer of high quality, premium stuffed sandwiches and other licensed products. These acquisitions added a complementary new set of premium products to our portfolio and provided us with additional sandwich assembly and bakery capacity.

Key Factors Affecting Our Results of Operations

        Key factors that have influenced our results of operations and may do so in the future include:

    Industry Trends.  The drivers underpinning growth in our end markets include increases in gross domestic product, employment levels and personal consumption expenditures. Growth in our industries is also driven by an increase in the number of restaurants and convenience stores, a continued shift toward value-added, convenient and easy-to-prepare foods and an increased frequency in dining out. We are well-positioned to benefit from these underlying growth trends, as well as emerging consumer preferences, given our product portfolio and segment orientation.

    Business Mix.  Our growth and profitability characteristics vary by product category and market segment. Therefore, changes in our mix may impact our profitability and growth profile. For example, to the extent that our mix shifts towards higher value-added products, such as breakfast sandwiches, our financial performance will be positively impacted. Further, our fourth segment,

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      Industrial, opportunistically sells to other food producers under short-term co-manufacturing agreements based on our available capacity in order to optimize our capacity utilization. Due to the lower margin nature of this business, we have strategically reduced our percentage of net sales generated by this segment from 15.7% in fiscal 2013 to 7.9% in fiscal 2015.

    Pricing Methodology.  Our pricing is driven by the value-added nature of our products, our market share position and our differentiated value proposition to our customers due to our scale, broad product portfolio, customization capabilities, national distribution and food safety track record. Our financial performance depends on our ability to price effectively with our customers. We proactively adjust pricing frequently in order to reflect input cost movements with minimal lag time. In early 2014, we re-engineered our pricing methodology and now utilize forward looking raw materials indices to set prices rather than trailing market indices. As a result, our pricing reflects our underlying raw materials costs in a more timely and accurate manner. Only 16.2% of our net sales in fiscal 2015 were subject to annually-renewed fixed price arrangements and we have a high level of flexibility to adjust pricing across the remainder of our business.

      We price our products through price list, index pricing and annually-renewed fixed price arrangements, which accounted for 76.1%, 7.7% and 16.2%, respectively, of our net sales in fiscal 2015.

      o
      Price List Arrangements.  Our price list arrangements generally allow us to proactively update prices to reflect anticipated raw material prices, competitive dynamics and marketing strategies, subject to contractual limits on frequency and minimum notice requirements.

      o
      Index Pricing Arrangements.  Under these arrangements, we pass-through actual increases or decreases in raw material or conversion costs to our customers.

      o
      Fixed Pricing Arrangements.  These arrangements guarantee customers a fixed price for products for a contractually-set period of time, usually 12 months. Our fixed prices for the agreed upon contractual term are based on forward looking raw materials indices and reflect expected raw material costs over the term of the contract.

    Raw Material Costs.  Raw material costs typically comprise 69.2% of our cost of goods sold, with beef, poultry and pork accounting for 47.3% of our cost of goods sold, and other raw materials, such as bread and breadings, cheese, eggs, seasonings, soy proteins and packing, comprising the remainder. Raw material costs fluctuate due to changing market conditions and changing consumer preferences. Our results of operations will continue to depend on our ability to manage raw material cost movements through forward purchase orders, strategic sourcing, non-cancelable contracts and by passing on such cost increases to customers.

    APF Way.  Our APF Way continuous improvement program has revamped our cost structure, budgeting tools and pricing methodology. The APF Way uses a data-driven analytical framework to drive growth and profitability through improved commercial decision-making, excellence in sales and marketing and productivity in procurement, logistics and production. We expect the APF Way will continue to be a key factor in our performance.

Components of Our Results of Operations

        Net Sales.    Net sales consist of gross sales, which vary as a result of changes in volume and pricing, less certain costs that we manage as part of our trade promotion allowances, including:

    Cash discounts, returns and other allowances; and

    Trade promotion allowances, which include the cost of temporary price reductions, as well as our customers' costs for promotional displays and advertising space in store circulars.

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        Gross Profit.    Gross profit is calculated as net sales less cost of goods sold, distribution expenses and restructuring expenses associated with our production and distribution network. For a discussion of restructuring expenses, see "Restructuring expenses" below.

        Cost of goods sold.    Cost of goods sold includes the following:

    Raw materials costs, including costs for proteins, such as beef, poultry, pork and other food ingredients such as bread and breadings, cheese, eggs, seasonings and soy proteins;

    Packaging supply costs, including costs for corrugated fiberboard and plastic packaging materials; and

    Conversion costs, which represent all costs necessary to convert raw materials into finished product. Conversion costs include direct and indirect labor and plant overhead such as equipment rent, natural gas and other utilities, insurance, property taxes and depreciation. We periodically enter into hedging contracts to manage fluctuations in our natural gas costs, the effect of which is reflected in cost of goods sold.

        Distribution expenses.    We primarily use third-party logistics providers to transport our products (1) among our ten production facilities, (2) from our production facilities to our distribution centers and (3) from our distribution centers and our production facilities to our customers. Our freight and distribution costs are influenced by diesel fuel costs as well as capacity within the industry. We periodically enter into hedging contracts to manage fluctuations in diesel fuel costs, the effect of which is reflected in distribution expenses. Distribution expense also includes our warehousing costs related to our leased facility in Enid, Oklahoma and the third-party logistics providers we utilize in Cincinnati, Ohio and Rockmart, Georgia.

        Selling, General and Administrative Expense.    Selling, general and administrative expense includes the following:

    Sales and marketing expenses, including salaries, wages and incentives for our sales and marketing personnel, broker commissions, sales-related travel and entertainment expenses and other marketing and advertising expenses. Our marketing programs also include costs relating to the execution of in-store product demonstrations, trade shows and samples provided to prospective customers;

    R&D expenses, including salaries, wages and incentives for our internal R&D personnel, and direct costs for external research and line testing;

    General and administrative expenses, including salaries, wages and incentives for our management and general administrative personnel, depreciation of non-production property and equipment, amortization of intangible assets, information technology licensing and maintenance costs, insurance, travel and other operating expenses;

    Stock-based compensation expense related to restricted stock awards granted to employees and directors. For a discussion of stock-based compensation expense, see "Critical Accounting Policies and Estimates—Stock-Based Compensation";

    Management, advisory and consulting fees and expense reimbursements paid to Oaktree, and prior to September 30, 2015, to Maine Street Holdings, Inc. ("MSH"), a management company controlled by our minority stockholders. Upon consummation of this offering, we will pay Oaktree an aggregate success fee of $9.0 million pursuant to the management services agreement, which will be terminated; and

    Professional fees to service providers including accounting and legal. As a newly public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, which will be reflected as selling, general and administrative expenses.

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        Restructuring expenses.    From time to time, we initiate restructuring activities in order to integrate acquired businesses, improve the efficiency of our production and distribution network and consolidate and reorganize our management and support functions. For example:

    In fiscal 2012, we commenced the closure of our Orange City, Iowa production facility and consolidation of its activities into our network, all of which was substantially completed in fiscal 2013;

    In fiscal 2013, we undertook various initiatives intended to improve our commercial effectiveness and reduce operating costs. These initiatives continued into fiscal 2014 and fiscal 2015 and included: (1) consolidation of business unit leadership and shared service teams in our Cincinnati, Ohio area facilities and closure of our administrative office located in Edmond, Oklahoma; (2) reorganization of our senior leadership team; and (3) implementation of staffing reductions and facilities closures in production, logistics and commercial operations. The cost to implement these initiatives was incurred primarily in fiscal 2014; and

    In fiscal 2015, we integrated the assets acquired from Landshire and Better Bakery and reconfigured production lines at our plant in Portland, Maine to re-launch our Barber stuffed entrées.

        Expenses associated with restructuring initiatives affecting our production and distribution network are reflected as a separate cost component in determining gross profit. Expenses associated with restructuring initiatives affecting our selling, marketing and general administration functions are a separate cost component in determining operating income.

        Provision for income taxes.    We are subject to U.S. federal income taxes and income taxes in certain states. However, we have favorable tax attributes, such as significant tax-deductible depreciation and amortization and U.S. federal and state net operating loss carryovers ("NOLs"), which resulted in minimal income tax expense and cash paid for income tax during fiscal 2015, fiscal 2014 and fiscal 2013, and we expect to have minimal income tax expense and cash paid for income tax in 2016. The majority of our income tax expense consists of non-cash provisions for deferred tax liabilities.

Key Performance Indicators

        Key performance indicators that we use to manage our business and evaluate our financial results and operating performance include:

        Net Sales.    We evaluate net sales on a consolidated basis and in each segment as a measure of volume growth, pricing effectiveness, business optimization and trade promotion allowance management.

        Adjusted EBITDA.    Adjusted EBITDA represents income from continuing operations before interest expense, income tax expense and depreciation and amortization, as well as certain non-cash, non-recurring and other adjustment items. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. In addition, targets for Adjusted EBITDA are among the measures we use to evaluate our management's performance for purposes of determining their compensation. Adjusted EBITDA also corresponds to a similarly titled metric in our credit agreements (although our credit agreements permit us to adjust for certain additional non-cash, non-recurring and other adjustment items, including the annualized benefits of acquisition synergies, operation productivity projects and restructuring activities initiated during such period as if such projects had been initiated at the beginning of such period). Under our credit agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and returning capital to stockholders is tied to ratios based on Consolidated EBITDA (as defined in our credit agreements).

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        Free Cash Flow.    Free Cash Flow represents our Adjusted EBITDA less purchases of property, plant and equipment. We believe that the presentation of Free Cash Flow is useful to investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours.

        Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See "Prospectus Summary—Summary Historical Consolidated Financial Data" for additional information including reconciliations to the most comparable GAAP measures.

Consolidated Results of Operations

        Our consolidated results of operations for fiscal 2015, fiscal 2014 and fiscal 2013 are as follows:

(in millions)
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Net sales

  $ 1,611.6   $ 1,577.6   $ 1,492.0  

Cost of goods sold

    1,158.2     1,227.1     1,144.3  

Distribution expenses

    96.5     99.3     95.3  

Restructuring expenses

    2.5     2.0     21.5  

Gross profit

    354.4     249.2     230.9  

Selling, general and administrative expenses

    196.2     167.6     160.5  

Impairment charges

            5.5  

Restructuring expenses

    2.2     5.3     10.2  

Other expense, net. 

    5.6     0.2     0.8  

Operating income

    150.4     76.1     53.9  

Interest expense

    104.4     105.6     104.6  

Income (loss) before income taxes

    46.0     (29.5 )   (50.7 )

Provision for income taxes

    8.9     8.4     6.3  

Net income (loss)

  $ 37.1   $ (37.9 ) $ (57.0 )

    Fiscal 2015 compared to Fiscal 2014

        Net sales.    Net sales for fiscal 2015 were $1,611.6 million, an increase of $34.0 million, or 2.2%, compared to $1,577.6 million of net sales for fiscal 2014. Excluding the factors outlined below, our net sales increased by $74.0 million, or 4.7%, in fiscal 2015 compared to fiscal 2014 driven by increased volume, more effective trade promotion allowance management and a series of strategic pricing actions. The factors referred to above that impacted our net sales are:

    acquisitions increased net sales by $48.9 million;

    the absence of a 53rd week adversely affected net sales by $31.4 million; and

    the elimination of sales under lower margin contracts, in our Industrial segment, reduced net sales by $57.4 million.

        Gross profit.    Gross profit for fiscal 2015 increased by $105.2 million to $354.4 million, or 22.0% of net sales, compared to $249.2 million, or 15.8% of net sales, for fiscal 2014, reflecting an increase of 620 basis points. Gross profit improved primarily due to more effective trade promotion allowance management and other productivity improvements, positive price realization, net of raw material and

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other input cost movements and contributions from acquisitions. The following table outlines the factors that impacted our gross profit:

 
  Change in
Gross Profit
(in millions)
  Change in
Gross Profit
Margin
(in basis points)
 

Productivity improvements

  $ 71.9     430  

Pricing, net of inflation

    33.2     150  

Acquisitions

    10.1     0  

53rd week

    (4.9 )   10  

Other factors

    (5.1 )   30  

  $ 105.2     620  

        Selling, general and administrative expenses.    Selling, general and administrative expenses for fiscal 2015 were $196.2 million, or 12.2% of net sales, compared with $167.6 million, or 10.6% of net sales, for fiscal 2014. The $28.6 million increase was primarily due to increases in non-cash stock compensation expense, performance-based cash compensation expense, salaries and benefits and marketing expenses. Non-cash stock compensation expense increased by $14.5 million principally as a result of an increase in the fair value liability for previously existing restricted stock grants related to an increase in our stock valuation that was primarily a function of our improved business performance and a corresponding increase in our Adjusted EBITDA for the trailing twelve months. Performance-based cash compensation expense under our incentive plans increased by $7.3 million due to improved business performance. Salaries and benefits increased by $4.6 million due to higher average wage rates, higher medical costs and increased staffing levels across our sales, marketing, quality and R&D teams. These increases were partially offset by a $4.1 million decrease in management, advisory and consulting fees and expense reimbursements paid to Oaktree and MSH as a result of lower reimbursements and the expiration of MSH's management services agreement on September 30, 2015.

        Other expense, net.    Other expense, net for fiscal 2015 consisted primarily of $6.2 million of acquisition expenses and $1.2 million of loss on disposal of property, plant and equipment, partially offset by $2.0 million of income associated with a product recall claim, net of deductibles, under our product contamination insurance policy.

        Interest expense.    Interest expense was $104.4 million for fiscal 2015, a decrease of $1.2 million, or 1.1%, compared to $105.6 million for fiscal 2014. This decrease was due to lower average outstanding borrowings under our credit facilities.

        Income tax provision.    We paid minimal cash for income tax in both fiscal 2015 and fiscal 2014 as a result of our favorable tax attributes. Income tax expense for fiscal 2015 was $8.9 million compared to $8.4 million for fiscal 2014. In both fiscal 2015 and fiscal 2014, our income tax provision related to recognition of deferred income tax liabilities. Deferred tax benefits from our NOLs are currently subject to a valuation allowance.

        Net income (loss).    Net income for fiscal 2015 was $37.1 million, an increase of $75.0 million, compared with a net loss of $37.9 million for fiscal 2014. This improvement in net income was a result of the factors discussed above.

    Fiscal 2014 compared to Fiscal 2013

        Net sales.    Net sales for fiscal 2014 were $1,577.6 million, an increase of $85.6 million, or 5.7%, compared to $1,492.0 million for fiscal 2013. Excluding the factors outlined below, our net sales increased by $102.6 million, or 6.9%, in fiscal 2014 compared to fiscal 2013 driven by increased volume,

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more effective trade promotion allowance management and a series of strategic pricing actions. The factors referred to above that impacted our net sales are:

    the addition of a 53rd week increased net sales by $31.4 million; and

    the elimination of sales under lower margin contracts, in our Industrial segment, reduced net sales by $48.4 million.

        Gross profit.    Gross profit for fiscal 2014 increased by $18.3 million to $249.2 million, or 15.8% of net sales, compared to $230.9 million, or 15.5% of net sales, for fiscal 2013, reflecting an increase of 30 basis points. Gross profit improved primarily due to more effective trade promotion allowance management and other productivity improvements, partially offset by negative price realization, net of raw material and other input cost movements. The following table outlines the impact of the factors that impacted our gross profit:

 
  Change in
Gross Profit
(in millions)
  Change in
Gross Profit
Margin
(in basis points)
 

Productivity improvements

  $ 44.7     270  

Pricing, net of inflation

    (26.5 )   (250 )

53rd week

    4.9     0  

Other factors

    (4.8 )   10  

  $ 18.3     30  

        Selling, general and administrative expenses.    Selling, general and administrative expenses for fiscal 2014 were $167.6 million, or 10.6% of net sales, compared with $160.5 million, or 10.8% of net sales, for fiscal 2013. The $7.1 million increase was primarily due to increases in management, advisory and consulting fees and expense reimbursements paid to Oaktree and MSH and performance-based cash compensation expense. Management, advisory and consulting fees and expense reimbursements paid to Oaktree and MSH increased by $7.6 million as a result of Oaktree engaging third-party consultants, on our behalf, to provide consulting and other advisory services to us in connection with the implementation of the APF Way. Performance-based cash compensation expense under our incentive plans also increased by $5.8 million due to improved business performance. These increases were partially offset by a reduction in outside professional fees and services and other selling and marketing costs.

        Other expense, net.    Other expense, net was not a significant factor in either fiscal 2014 or fiscal 2013.

        Interest expense.    Interest expense was $105.6 million for fiscal 2014, an increase of $1.0 million, or 1.0%, compared to $104.6 million for fiscal 2013. This increase was due to higher average outstanding borrowings under our ABL facility.

        Income tax provision (benefit).    We paid minimal cash for income tax in both fiscal 2014 and fiscal 2013 as a result of our favorable tax attributes. Income tax expense for fiscal 2014 was $8.4 million compared to an income tax provision of $6.3 million in fiscal 2013. In both fiscal 2014 and fiscal 2013, our income tax expense related to recognition of deferred income tax liabilities. Deferred tax benefits from our NOLs are currently subject to a valuation allowance.

        Net income (loss).    Net loss for fiscal 2014 was $37.9 million, a reduction of $19.1 million, compared with a net loss of $57.0 million for fiscal 2013. This improvement in net income was a result of the factors discussed above.

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Segment Results

        Our consolidated results of operations for fiscal 2015, fiscal 2014 and fiscal 2013 are as follows:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Net Sales

                   

Foodservice

  $ 886.1   $ 829.6   $ 740.9  

Retail

    396.0     399.6     379.0  

Convenience

    201.8     159.7     138.6  

Industrial

    127.7     188.7     233.5  

Total

  $ 1,611.6   $ 1,577.6   $ 1,492.0  

Operating Income

                   

Foodservice

  $ 134.3   $ 70.6   $ 56.7  

Retail

    28.5     13.5     6.4  

Convenience

    29.8     18.2     14.8  

Industrial

    2.8     2.0     1.6  

Unallocated corporate expenses

    (45.0 )   (28.2 )   (25.6 )

Total

  $ 150.4   $ 76.1   $ 53.9  

        Foodservice.    Foodservice net sales for fiscal 2015 were $886.1 million, an increase of $56.5 million, or 6.4%, compared to $829.6 million for fiscal 2014. Excluding the factors outlined below, Foodservice net sales increased by $71.0 million, or 8.5%, in fiscal 2015 compared to fiscal 2014 driven by increased volume with certain customers, more effective trade promotion allowance management and a series of strategic pricing actions. Foodservice volume increased primarily with schools and national restaurant chains, partially offset by a small decrease in volume with certain foodservice distributors. In fiscal 2015, the following factors also impacted our Foodservice net sales:

    acquisitions increased Foodservice net sales by $2.5 million; and

    the absence of a 53rd week adversely affected Foodservice net sales by $16.9 million.

        Foodservice operating income for fiscal 2015 increased by $63.7 million to $134.3 million, or 15.2% of net sales, compared to $70.6 million, or 8.5% of net sales, for fiscal 2014. Foodservice operating income margin improved primarily due to more effective trade promotion allowance management and other productivity improvements and positive price realization, net of raw material and other input cost movements.

        Foodservice net sales for fiscal 2014 were $829.6 million, an increase of $88.7 million, or 12.0%, compared to $740.9 million for fiscal 2013. Excluding the impact of an additional 53rd week in fiscal 2014, Foodservice net sales increased by $71.8 million, or 9.7%, in fiscal 2014 compared to fiscal 2013 driven by increased volume with schools, national restaurant chains and other foodservice distributors, more effective trade promotion allowance management and a series of strategic pricing actions. In fiscal 2014, the addition of a 53rd week increased net sales by $16.9 million. Foodservice operating income for fiscal 2014 increased by $13.9 million to $70.6 million, or 8.5% of net sales, compared to $56.7 million, or 7.7% of net sales, for fiscal 2013. Foodservice operating income margin improved primarily due to more effective trade promotion allowance management and other productivity improvements, partially offset by negative price realization, net of raw material and other input cost movements.

        Retail.    Retail net sales for fiscal 2015 were $396.0 million, a decrease of $3.6 million, or 0.9%, compared to $399.6 million for fiscal 2014. Excluding the factors outlined below, Retail net sales decreased by $10.9 million, or 2.7%, in fiscal 2015 compared to fiscal 2014 driven by a temporary decline in sales of stuffed entrées following a product recall during fiscal 2015, partially offset by

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increased private label sandwich volume, more effective trade promotion allowance management and a series of strategic pricing actions. In fiscal 2015, the following factors also impacted our Retail net sales:

    acquisitions increased Retail net sales by $14.8 million; and

    the absence of a 53rd week adversely affected Retail net sales by $7.6 million.

        Retail operating income for fiscal 2015 increased by $15.0 million to $28.5 million, or 7.2% of net sales, compared to $13.5 million, or 3.4% of net sales, for fiscal 2014. Retail operating income margin improved primarily due to more effective trade promotion allowance management and other productivity improvements and positive price realization, net of raw material and other input cost movements.

        Retail net sales for fiscal 2014 were $399.6 million, an increase of $20.6 million, or 5.4%, compared to $379.0 million for fiscal 2013. Excluding the impact of an additional 53rd week in fiscal 2014, Retail net sales increased by $13.0 million, or 3.4%, in fiscal 2014 compared to fiscal 2013 driven by increased volume of private label sandwiches and other entrées and branded stuffed entrées, more effective trade promotion allowance management and a series of strategic pricing actions. These were partially offset by the impact of a strategic SKU rationalization as part of the APF Way that was substantially executed during the fourth quarter of fiscal 2013. In fiscal 2014, the addition of a 53rd week increased net sales by $7.6 million. Retail operating income for fiscal 2014 increased by $7.1 million to $13.5 million, or 3.4% of net sales, compared to $6.4 million, or 1.7% of net sales, for fiscal 2013. Retail operating income margin improved primarily due to SKU rationalization, more effective trade promotion allowance management and other productivity improvements, partially offset by negative price realization, net of raw material and other input cost movements.

        Convenience.    Convenience net sales for fiscal 2015 were $201.8 million, an increase of $42.1 million, or 26.4%, compared to $159.7 million for fiscal 2014. Excluding the factors outlined below, Convenience net sales increased by $14.0 million, or 8.8%, in fiscal 2015 compared to fiscal 2014 driven by increased volume across our main product categories as a result of new customers and existing customers opening new locations, more effective trade promotion allowance management and a series of strategic pricing actions. In fiscal 2015, the following factors also impacted our Convenience net sales:

    acquisitions increased Convenience net sales by $31.5 million; and

    the absence of a 53rd week adversely affected Convenience net sales by $3.2 million.

        Convenience operating income for fiscal 2015 increased by $11.6 million to $29.8 million, or 14.8% of net sales, compared to $18.2 million, or 11.4% of net sales, for fiscal 2014. Convenience operating income margin improved primarily due to more effective trade promotion allowance management and other productivity improvements and positive price realization, net of raw material and other input cost movements.

        Convenience net sales for fiscal 2014 were $159.7 million, an increase of $21.1 million, or 15.2%, compared to $138.6 million for fiscal 2013. Excluding the impact of an additional 53rd week in fiscal 2014, Convenience net sales increased by $17.8 million, or 12.8%, in fiscal 2014 compared to fiscal 2013 driven primarily by increased volume in sandwiches and sandwich components as a result of new customers and existing customers opening new locations, more effective trade promotion allowance management and a series of strategic pricing actions. In fiscal 2014, the addition of a 53rd week increased net sales by $3.2 million. Convenience operating income for fiscal 2014 increased by $3.4 million to $18.2 million, or 11.4% of net sales, compared to $14.8 million, or 10.7% of net sales, for fiscal 2013. Convenience operating income margin improved primarily due to more effective trade promotion allowance management and other productivity improvements, partially offset by negative price realization, net of raw material and other input cost movements.

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        Industrial.    Industrial net sales for fiscal 2015 were $127.7 million, a decrease of $61.0 million, or 32.3%, compared to $188.7 million for fiscal 2014. Industrial net sales decreased primarily due to the elimination of lower margin contracts and the absence of a 53rd week in fiscal 2015. This decrease was partially offset by a series of strategic pricing actions. Industrial operating income increased by $0.8 million to $2.8 million, or 2.2% of net sales, compared to $2.0 million, or 1.1% of net sales, for fiscal 2014. Industrial operating income margin improved primarily due to the elimination of lower margin contracts and pricing actions to recover historical cost inflation.

        Industrial net sales for fiscal 2014 were $188.7 million, a decrease of $44.8 million, or 19.2%, compared to $233.5 million for fiscal 2013. Industrial net sales decreased primarily due to the elimination of lower margin contracts, which was partially offset by a series of strategic pricing actions and the addition of a 53rd week in fiscal 2014. Industrial operating income increased by $0.4 million to $2.0 million, or 1.1% of net sales, compared to $1.6 million, or 0.7% of net sales, for fiscal 2013. Industrial operating income margin improved primarily due to the elimination of lower margin contracts and pricing actions to recover cost inflation.

Non-GAAP Financial Measures

        Adjusted EBITDA and Free Cash Flow for fiscal 2015, fiscal 2014 and fiscal 2013 are as follows:

(in millions)
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Adjusted EBITDA

  $ 260.2   $ 170.5   $ 163.3  

Free Cash Flow

  $ 224.3   $ 149.5   $ 143.8  

        Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See "Prospectus Summary—Summary Historical Consolidated Financial Data" for additional information including reconciliations to the most comparable GAAP measure.

Quarterly Results and Seasonality

        Our quarterly operating results are affected by the seasonal fluctuations of our net sales and operating income. Sales to schools accounted for 16.2% of our consolidated net sales and 29.4% of our Foodservice segment net sales in fiscal 2015. Because schools comprise a significant portion of our customer base, sales of our products tend to be lower during the summer months and rise significantly during the autumn "back to school" period. In addition, seasonal fluctuations in the demand for beef and other proteins tend to cause seasonal variations in our cost for these raw materials, which tend to rise in the winter and spring and decline during the summer months. The seasonality factors can cause our operating results and usage of cash for working capital requirements to fluctuate during the fiscal year, with our working capital balances typically rising in the first three quarters of the year.

        The following table sets forth unaudited financial information for each fiscal quarter during fiscal 2015 and fiscal 2014. The unaudited quarterly information includes all normal recurring adjustments that we consider necessary for a fair statement of the information shown. This information should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this prospectus.

 
  Fiscal Quarter Ended  
(In millions)
  Jan. 2,
2016
13 Weeks
  Oct. 3,
2015
13 Weeks
  Jul. 4,
2015
13 Weeks
  Apr. 4,
2015
13 Weeks
  Jan. 3,
2015
14 Weeks
  Sep. 27,
2014
13 Weeks
  Jun. 28,
2014
13 Weeks
  Mar. 29,
2014
13 Weeks
 

Net sales

  $ 386.0   $ 407.2   $ 391.9   $ 426.5   $ 440.1   $ 406.3   $ 356.2   $ 375.0  

Gross profit

    95.7     87.7     83.8     87.2     67.9     63.7     59.1     58.5  

Net income (loss)

    11.7     12.6     2.3     10.5     (7.1 )   (4.2 )   (13.5 )   (13.1 )

Adjusted EBITDA

    68.9     68.4     61.2     61.7     51.3     45.2     39.4     34.6  

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        The following table shows the reconciliation of Adjusted EBITDA from the most directly comparable GAAP measure, net income (loss):

 
  Fiscal Quarter Ended  
(in millions)
  Jan. 2,
2016
(13 Weeks)
  Oct. 3,
2015
(13 Weeks)
  Jul. 4,
2015
(13 Weeks)
  Apr. 4,
2015
(13 Weeks)
  Jan. 3,
2015
(14 Weeks)
  Sep. 27,
2014
(13 Weeks)
  Jun. 28,
2014
(13 Weeks)
  Mar. 29,
2014
(13 Weeks)
 

Net income (loss)

  $ 11.7   $ 12.6   $ 2.3   $ 10.5   $ (7.1 ) $ (4.2 ) $ (13.5 ) $ (13.1 )

Interest expense

    25.7     26.0     26.2     26.5     27.9     25.9     26.0     25.8  

Provision for income taxes

    2.9     3.0     0.5     2.5     1.5     1.0     3.0     2.9  

Depreciation and amortization expense

    16.5     15.9     16.3     14.2     15.4     14.2     14.2     14.2  

EBITDA

    56.8     57.5     45.3     53.7     37.7     36.9     29.7     29.8  

Restructuring expenses(a)

    1.0     1.8     1.0     0.9     2.1     1.4     2.4     1.4  

Non-cash stock based compensation expense(b)

    8.5     1.5     6.6     0.6     1.3     0.4     0.5     0.5  

Sponsor fees and expenses(c)

    0.8     1.6     4.2     5.3     3.6     4.3     5.7     2.4  

Merger and acquisition expenses(d)

    1.2     0.5     3.8     0.7     0.7              

Product recalls(e)

    0.7     3.7             (0.6 )   0.1     0.4     0.1  

Inventory step-up amortization(f)

        0.5     0.4     0.4                  

Fair value adjustment to USDA commodity liability(g)

        0.4     (0.5 )       6.0     1.2          

Other

    (0.1 )   0.9     0.4     0.1     0.5     0.9     0.7     0.4  

Adjusted EBITDA

  $ 68.9   $ 68.4   $ 61.2   $ 61.7   $ 51.3   $ 45.2   $ 39.4   $ 34.6  

(a)
Represents costs associated with reorganization and restructuring activities, business acquisitions, integration of acquired businesses and implementation of the APF Way. Restructuring expenses primarily relate to costs associated with the restructure of the management team and consolidation of business unit operations in fiscal 2014.

(b)
We expense employee stock grants and other stock-based compensation over the vesting period, based on the fair value of the award on the date of the grant or any subsequent modification date.

(c)
Represents quarterly management fees and expense reimbursements paid to affiliates of Oaktree and certain of our other existing stockholders. Upon consummation of this offering, we will pay Oaktree an aggregate success fee of $9.0 million pursuant to the management services agreement, which will be terminated.

(d)
Merger and acquisition expenses relate to the acquisitions of Landshire and Better Bakery, and costs associated with other unconsummated transactions during fiscal 2015 and fiscal 2014

(e)
Represents costs associated with two product recalls, net of related reimbursements.

(f)
Represents the impact on our cost of goods sold associated with the sale of inventories that had been written up to fair values in excess of historical cost in connection with acquisition purchase accounting.

(g)
Represents valuation adjustments associated with the change in the USDA stipulated value of commodity proteins pursuant to the USDA Commodity Reprocessing Program. We carry our net liability at a value equal to the USDA stipulated value which is updated annually.

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Liquidity and Capital Resources

    Overview

        We have historically financed our liquidity requirements through internally generated funds, borrowings under our ABL facility and the issuance of other indebtedness.

        We expect to invest approximately $35.0 million for capital expenditures in fiscal 2016. Of this $35.0 million, we expect to invest approximately $17.4 million for routine maintenance of our production facilities and information technology infrastructure, with the remaining capital expected to be used for other discretionary investments to support growth, innovation and productivity of our operations.

        As of January 2, 2016, we had $1.27 billion in principal outstanding under our credit facilities with final maturities in 2017, and we had an additional $125.4 million available for borrowing under our ABL facility, which matures in January 2017. For a detailed description of our indebtedness, see "Description of Certain Indebtedness." Our credit facilities contain a number of covenants imposing significant restrictions on our business. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. The restrictions these covenants place on us include limitations on our ability to incur additional indebtedness or issue preferred stock, pay dividends or make distributions on our capital stock or repurchase our capital stock or to make other restricted payments, make certain investments, create liens on our assets, enter into transactions with affiliates, transfer and sell assets, merge, consolidate or sell all or substantially all of our assets, and create restrictions on dividends or other payments by our restricted subsidiaries.

        As economic conditions permit, we will consider opportunities to refinance or otherwise reduce our indebtedness on favorable terms. Any further potential reduction of indebtedness or refinancing could require significant use of our liquidity and capital resources. We do not have sufficient capital resources in place currently to repay our term loans when they mature, and plan to refinance these obligations as well as our ABL facility before they come due. Our ability to refinance our credit facilities and any future indebtedness will be impacted by many factors, including our credit rating, the liquidity of the overall capital markets and the current state of the economy. We may not be able to access the capital markets on a timely basis, on commercially reasonable terms or at all. If we are unable to refinance our credit facilities, it would have a material adverse impact on our business and financial condition.

        Our principal sources of funds following this offering are anticipated to be cash flows from operating activities and available borrowings under our ABL facility. We believe that we will generate cash flows from operating activities and secure sufficient financing to provide us with sufficient liquidity and capital resources for us to meet our current and future financial obligations, including our scheduled principal and interest payments, as well as to provide funds for working capital, capital expenditures, anticipated dividends and other anticipated needs. We may also decide to access the debt and equity markets to fund large acquisitions or pursue large capital expenditure projects not currently contemplated or to reduce our cost of capital.

        Our cash flows for the past three fiscal years are as follows:

(in millions)
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Cash flows provided by (used in):

                   

Operating activities

  $ 157.2   $ 22.9   $ 34.4  

Investing activities

    (108.3 )   (20.9 )   (11.8 )

Financing activities

    (44.5 )   (2.1 )   (22.5 )

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    Cash Flows for Fiscal 2015 compared to Fiscal 2014

        Operating Activities.    Cash flows provided by operating activities for fiscal 2015 increased $134.3 million compared to fiscal 2014. The increase in cash flows provided by operating activities was primarily due to a $75.0 million increase in net income and a $39.4 million increase in cash from changes in working capital. As we increased our focus on working capital management as part of the implementation of the APF Way, we had lower working capital requirements due to faster collections of accounts receivable, extended payment terms with suppliers and reduced inventory costs as a result of lower raw material costs.

        Investing Activities.    Cash used in investing activities for fiscal 2015 increased by $87.4 million compared to fiscal 2014 primarily due to $72.5 million of cash used for acquisitions. In addition, our capital expenditures increased by $14.9 million, of which $10.2 million was for building improvements and equipment associated with integration of acquired businesses.

        Financing Activities.    Cash used in financing activities for fiscal 2015 increased by $42.3 million compared to fiscal 2014 primarily due to a $43.2 million reduction in borrowings under our ABL facility and a $2.0 million increase in amounts spent on share repurchases and loans to employees for income tax elections. This increase was partially offset by a $2.8 million decrease in long-term debt repayments driven by the timing of scheduled amortization payments in fiscal 2015 versus fiscal 2014.

    Cash Flows for Fiscal 2014 compared to Fiscal 2013

        Operating Activities.    Cash flows provided by operating activities for fiscal 2014 decreased $11.5 million compared to fiscal 2013 primarily due to a $26.2 million increase in cash used by working capital. We had higher working capital requirements primarily due to increased raw material costs, which increased our inventory and accounts receivables. This was partially offset by a $19.1 million decrease in net loss, which included a $5.5 million non-cash impairment charge for a trade name for which we re-evaluated the expected useful life in fiscal 2013.

        Investing Activities.    Cash used in investing activities for fiscal 2014 increased by $9.1 million compared to fiscal 2013 primarily due to the fact that we did not have any asset sales in fiscal 2014. In fiscal 2013, we received $7.7 million of cash proceeds from the sale of property, plant and equipment primarily related to the sale of our Orange City, Iowa production facility. In addition, our capital expenditures increased by $1.5 million.

        Financing Activities.    Cash used in financing activities for fiscal 2014 decreased by $20.3 million compared to fiscal 2013. The decrease in cash used in financing activities was primarily due to a $23.4 million increase in borrowings under our ABL facility and a $2.3 million decrease in amounts spent on share repurchases and loans to employees for personal income tax elections related to stock-based compensation. This decrease was partially offset by a $4.8 million increase in long-term debt principal payments. In fiscal 2013, we also received $1.0 million in cash proceeds from the sale of stock to a senior executive.

Contractual Obligations

        We have obligations to make future payments for goods and services under certain contractual arrangements. These contractual obligations secure the future rights to various assets and services to be used in the normal course of our operations. In accordance with applicable accounting rules, the future rights and obligations pertaining to firm commitments, such as operating lease obligations, are not reflected as assets or liabilities in the accompanying consolidated balance sheet. The long-term debt obligations are our principal payments on cash debt service obligations. Operating lease obligations are the future minimum rental payments required under the operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of January 2, 2016.

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        The following table summarizes these long term debt and operating lease contractual obligations as of January 2, 2016, and the estimated timing and effect that such obligations are expected to have on our liquidity and cash flows in future periods (in millions):

 
  Total   2016   2017   2018   2019   2020   Thereafter  

Long term debt obligations

  $ 1,272.3   $ 22.7   $ 1,249.6                  

Capital lease obligations(1)

    43.5     2.9     2.6     2.4     2.4     2.4     30.8  

Operating lease obligations

    10.5     3.3     2.8     1.6     0.8     0.4     1.6  

Interest payments related to long term debt(2)

    133.1     86.6     46.5                  

Earn-out consideration(3)

    19.6     9.9     6.5     3.2              

Total contractual cash obligations(4)

    1,479.0     125.4     1,308.0     7.2     3.2     2.8     32.4  

(1)
Includes the interest component of the capital lease payments.

(2)
Includes payments on our floating-rate debt based on rates as of January 2, 2016, assuming we elect floating-rate interest payments for future periods and that the floating-rate does not increase above the floor specified in our credit facilities.

(3)
We made an acquisition in 2015 which provides for the potential payment of earn-out consideration over a two year period.

(4)
Excludes amounts payable to Oaktree under the management services agreement, including an aggregate success fee of $9.0 million payable upon consummation of this offering.

Off-Balance Sheet Arrangements

        As of January 2, 2016, we did not have any off-balance sheet obligations.

Critical Accounting Policies and Estimates

        The preparation of financial statements in conformity with GAAP requires the appropriate application of certain accounting policies, many of which require us to make estimates, judgments and assumptions about future events and their impact on amounts reported in the financial statements and related notes. Since future events and the impact of those events cannot be determined with certainty, the actual results will inevitably differ from our estimates. These differences could be material to the financial statements.

        We believe our application of accounting policies, and the estimates and assumptions inherently required therein, are reasonable. These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change. Historically, our application of accounting policies has been appropriate, and actual results have not differed materially from those determined using necessary estimates.

        The following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

        Revenue Recognition.    We record revenue from sales of food products at the time title transfers. Standard shipping terms for domestic customers are freight on board ("FOB") destination. Based on these terms, title passes at the time the product is delivered to the customer. For the majority of our Canadian customers, shipping terms are FOB shipping point. Based on these terms, title passes at the time the product departs from our plant or warehouse. Revenue is recognized as the net amount to be received by us after deductions for estimated discounts, product returns, and other allowances. These estimates, for which the estimation methodology has been consistently applied during the periods presented, are based on historical trends and expected future payments. See also "—Promotions" below.

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        Goodwill and Other Intangibles.    Other intangibles include recipes, customer relationships, non-competition agreements, licensing agreements, water and sewer usage permits and certain trade names and trademarks. Assets acquired and liabilities assumed in connection with business combinations are recorded in accordance with ASC 805, "Accounting for Business Combinations." Where amounts are recorded on a provisional basis we consider the need for measurement period adjustments based upon additional information through the end of the measurement period, not to exceed one year. In accordance with ASC 350, "Intangibles—Goodwill and Other," we are required to test recorded goodwill and intangibles with indefinite lives for impairment at least annually. We test annually for impairment at the end of the third quarter; however, these tests are performed more frequently when events or changes in circumstances indicate the carrying amount may not be recoverable. Indicators of impairment are reviewed on a quarterly basis to determine if an impairment test is deemed necessary.

        Goodwill is tested annually for impairment using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair values of our reporting units to their respective carrying values. If the fair value exceeds the carrying value, the second step is not necessary. However, if the carrying amount of a reporting unit exceeds its implied fair value, the second step is performed to determine the amount, if any, of impairment loss to recognize. The second step compares the implied fair value of goodwill to its carrying value. If the carrying amount of goodwill exceeds its fair value, an impairment loss is recognized in the amount equal to the excess. Our annual goodwill impairment analyses, which were completed as of October 3, 2015, September 27, 2014, and September 28, 2013 did not result in any impairment charges.

        Indefinite lived intangible assets other than goodwill are evaluated annually, or more frequently when events or changes in circumstances indicate the carrying amount may not be recoverable, for impairment. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The fair values of trademarks and trade names are determined using a royalty rate method based on expected revenues by trademark or trade name. Our annual evaluations of indefinite-lived intangibles did not indicate impairment in fiscal 2015, fiscal 2014 or fiscal 2013, except as noted below.

        During the third quarter of fiscal 2013, the remaining useful life of one of our trade names was evaluated to determine whether events and circumstances continue to support an indefinite useful life. It was determined that an indefinite life was no longer appropriate. This conclusion was based on our expectations of the trade name's contributions to our future cash flows considering factors such as current long-term market outlook, plans for ongoing trade name support and promotion, and strength of the trade name. We expect the remaining useful life of this trade name to be fifteen years. Accordingly, we began amortizing this trade name beginning in September 2013. The change from an indefinite life to a fifteen-year useful life constituted a triggering event under ASC 350. We tested this trade name for impairment as of September 2013 based on financial forecasts and the expected useful life of fifteen years. Per the results of this valuation analysis, the carrying value of the trade name exceeded its fair value by $5.5 million and accordingly, we recorded this amount as "Impairment charges."

        No indicators of impairment were noted from the date of the tests to the respective fiscal year-ends that would have required management to test goodwill and indefinite lived intangible assets for impairment again.

        In addition, all other intangible assets with finite lives are reviewed for impairment in accordance with ASC 360. Our amortizable intangible assets are amortized using straight line and accelerated amortization methods in order to allocate expected benefits derived from the assets over the estimated useful lives of such assets. During fiscal 2015, fiscal 2014 and fiscal 2013, we noted no changes in circumstances that would have indicated that carrying amounts of amortizable assets may not be recoverable. Accordingly, no impairment was recorded during the respective periods.

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        Promotions.    Trade promotions are an important component of the sales and marketing of our products. Promotion costs include amounts paid to encourage retailers to offer temporary price reductions for the sale of our products to consumers, to obtain favorable display positions in their stores and to obtain shelf space. Promotional expenses associated with rebates, marketing promotions, and special pricing arrangements are recorded as a reduction of revenues at the time the sale is recorded. Certain of these expenses are estimated based on historical trends, expected future payments to be made under these programs and expected future customer deductions to be taken under these programs, and the estimation methodology has been consistently applied during the periods presented. We believe the estimates recorded in our consolidated financial statements are reasonable estimates of the liability under these programs

        USDA Commodity Program.    Under the provisions of the USDA Commodity Program, we receive government donated raw materials and process them into finished food products for sale to schools. The USDA Commodity Program provides that, among other things, we bear the risk of loss, spoilage or obsolescence associated with donated food materials and finished goods produced using donated food. Obligations under the USDA Commodity Reprocessing Program and the related inventory are recorded at the USDA stipulated value of the donated commodity raw materials at the date we take possession of the raw materials. Upon delivery of finished product to qualifying school customers, the inventory and associated liability are reduced and netted. As a result, revenues and cost of goods sold related to sales under the USDA Commodity Program are recorded exclusive of the value of the donated raw materials.

        Self-insurance.    We are self-insured for certain employee medical benefits and workers' compensation benefits. We maintain stop-loss coverage in order to limit our exposure to any significant level of employee medical and workers' compensation claims. Self-insurance expenses are accrued based on estimates of the aggregate liability for uninsured claims incurred using historical claims experience, and the estimation methodology has been consistently applied during the periods presented.

        Income Taxes.    The provision for income taxes is determined using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. We record a valuation allowance to reduce our deferred tax assets to an amount that is more likely than not to be realized. We follow accounting guidance related to accounting for uncertainty in income taxes to record uncertainties and judgments in the application of complex tax regulations.

        Stock-Based Compensation.    We account for restricted stock awards granted to employees and directors using a fair-value based method, under which we measure the cost of employee services received in exchange for an award of restricted stock based on the grant-date fair value of the award, and recognize the cost of the services over the vesting periods of the awards. We have determined that liability classification of these awards is appropriate until the point that the award has been vested for a sufficient period of time to allow the holder to fully bear the risks and rewards of ownership (generally six months). At this point, the award is reclassified from liabilities to equity. Under the liability method, we periodically further adjust liability and expense to recognize increases in the fair value of our restricted stock awards.

        We are a private company with no active market for our common stock. The fair value of our restricted stock awards is estimated using a market-comparable approach based on an estimate of our enterprise value, subtracting our debt net of cash, and applying an applicable non-marketability discount considering restrictions on transferability and estimated time to a liquidity event. We calculate our enterprise value by applying market benchmark multiples to our Adjusted EBITDA for the trailing twelve months as of the end of the most recent quarter for which a determination is made. Annually, in addition to our market approach to calculating fair value discussed above, we perform an income approach in the form of a discounted cash flow model. The results of our valuation analyses under the

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market and income approaches are compared for reasonableness. The dates of our valuations have not always coincided with the dates of restricted share grants. In such instances, our estimates have been based on the most recent valuation of our restricted stock and our assessment of additional objective and subjective factors we believed were relevant as of the grant date.

        We estimated the fair value of our restricted stock at various dates considering the most recently available valuations of our common stock and our assessment of additional objective and subjective factors that we believed were relevant, including:

    our stage of development and execution of our business strategy;

    external market conditions affecting the food industry, and trends within the food industry;

    our financial position, including our debt obligations outstanding, and our historical and forecasted performance and operating results;

    the lack of an active public market for our common stock;

    the likelihood of achieving a liquidity event, such as an initial public offering or a sale of all or substantially all of our business, in light of prevailing market conditions;

    prices paid in redemption of our restricted stock;

    analysis of comparable valuations of similar companies in the food industry; and

    historical and projected enterprise values and trading multiples of guideline public companies.

        There are significant judgements and estimates inherent in these valuations, such as assumptions regarding our future operating performance and the time to complete a liquidity event for restricted stockholders. If we had made different assumptions, our stock-based compensation expense, net income and net income per share could have been different.

        During fiscal 2015, we granted restricted shares with weighted average fair values per share as follows:

Grants Made During Quarter Ended
  Number of
Restricted Shares
Granted
  Weighted Average
Fair Value of
Common Stock per
Share on Date of
Grant
 

April 4, 2015

    4,250   $ 75  

July 4, 2015

    1,550     75  

October 3, 2015

    4,000     275  

January 2, 2016

    6,000     275  

        As of January 2, 2016, the fair value of our restricted shares was determined to be $505 per share, resulting in a corresponding increase to carrying value of the liability and associated compensation expense. There were no grants awarded at that share price in fiscal 2015.

        The estimated fair value of our restricted stock increased significantly during fiscal 2015 as a result of a significant improvement in our operating results, which increased the enterprise value of our business, as well as a significant reduction in our outstanding debt obligations.

        The improvement in our operating results was principally the result of strategic pricing and operational productivity cost savings initiatives, which are expected to continue to benefit future results. In addition, two strategic acquisitions that we integrated into our business by mid-year made a significant incremental contribution to our operating results. The purchase prices of these acquisitions were funded from cash flows from operating activities, resulting in no increase in debt. Our operating cash flows were further enhanced by improved working capital management. As such, we were able to significantly reduce our outstanding debt primarily during the last two months of fiscal 2015.

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        The increase in fair value from $75 to $275 per share was primarily driven by an increase in Adjusted EBITDA for the trailing twelve months ended July 4, 2015 to $219.3 million. Partially offsetting the positive impact of improved profitability on the fair value determination was an increase in our debt, net of cash, to $1,386.9 million.

        The increase in fair value from $275 to $505 was driven by an additional increase in Adjusted EBITDA for the trailing twelve months ended January 2, 2016 to $260.2 million per share, updates to the implied multiple of earnings applied to Adjusted EBITDA based on current market activity and our achieved growth, adjustment of the non-marketability discount to reflect a reduced time horizon for a potential liquidity event and a reduction in debt, net of cash, to $1,293.8 million.

Recent Accounting Pronouncements

    Pronouncements we adopted

        In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes." The new guidance eliminates the requirement to separate deferred income tax liabilities and assets into current and non-current amounts. The amendments will require that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The updated guidance will be effective for fiscal years beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted, and the amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We adopted the guidance retrospectively in fiscal 2015 in order to simplify the classification of deferred taxes into non-current amounts. At January 3, 2015, we had a current deferred tax liability of $0.2 million that was reclassified as non-current. At December 28, 2013, we had a current deferred tax asset of $0.6 million that was reclassified as non-current.

        In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments." The new guidance eliminates the requirement to retrospectively account for adjustments to provisional amounts recognized in a business combination. Under the ASU, the adjustments to the provisional amounts will be recognized in the reporting period in which the adjustment amounts are determined. The updated guidance will be effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption is permitted, and the ASU should be applied prospectively. We have adopted this guidance and determined there was no impact on fiscal 2015.

    Pronouncements we are evaluating

        In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." The new guidance changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The updated guidance will be effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted for all entities for financial statements that have not been previously issued. We have evaluated the impact, which will result in reductions of long-term assets of $11.6 million and $18.7 million as of January 2, 2016 and January 3, 2015, respectively.

        In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." The new guidance will require lessees to recognize the assets and liabilities that arise from leases in the balance sheet, including operating leases. The updated guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. We are in the process of evaluating this guidance.

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        In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory," which requires entities to measure most inventory "at the lower of cost and net realizable value," thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The ASU will not apply to inventories that are measured by using either the last-in, first-out (LIFO) method or the retail inventory method (RIM). The updated guidance will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. We are in the process of evaluating this guidance.

        In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. We are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements and footnote disclosures. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted.

Quantitative and Qualitative Disclosure About Market Risk

        We are exposed to certain market risks as part of our on-going business operations. We are exposed to market risk stemming from changes in interest rates and commodity prices. Changes in these factors could cause fluctuations in our financial condition, results of operations and cash flows. To manage these risks, we own certain derivative financial instruments as described below.

        Interest Rate Risk.    Borrowings under our credit facilities bear interest at floating rates based on LIBOR or the lender's base rate, in each case plus an applicable borrowing margin. For floating-rate debt, interest rate changes generally do not affect the fair market value of our indebtedness but may impact our earnings and cash flows, assuming other factors are held constant. As of January 2, 2016, we had $1,272.3 million of floating-rate debt represented by borrowings under our credit facilities and up to $125.4 million of floating-rate borrowings available under our credit facilities. Interest on our floating-rate debt is based on a fixed margin over a variable LIBOR benchmark, subject to a minimum of 1.25%. As of January 2, 2016, the LIBOR benchmark was 0.61%. If the benchmark LIBOR interest rate were to increase by 1%, our annual interest payments under our credit facilities would increase by $4.6 million.

        Foreign Exchange Rate Risk.    Almost all of our sales are denominated an invoiced in U.S. dollars and, thus, our financial results are not subject to material foreign currency exchange risks.

        Commodity Price Risk.    Certain raw materials that we use in our food processing operations are susceptible to commodity price changes. Increases in the prices of certain commodity products could result in higher overall production costs. The primary raw materials used in our food processing operations are beef, poultry, pork, bread and breadings, cheese, eggs, seasonings, soy proteins and packaging supplies. We attempt to manage this risk through forward purchase orders, non-cancelable contracts and by passing on such cost increases to customers. In addition, we periodically enter into swap agreements to mitigate our exposure to fluctuations in prices of natural gas and diesel fuel. There were no derivative contracts outstanding at January 2, 2016.

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INDUSTRY

        Our business is diversified across the U.S. foodservice, retail and convenience channels. Within these industries, we participate in attractive, growing categories that benefit from positive consumer trends. The drivers underpinning our growth include increases in gross domestic product, employment levels and personal consumption expenditures. Our growth is also driven by an increase in the number of restaurants and convenience stores, a continued shift toward value-added, convenient and easy-to-prepare foods and an increased frequency in dining out.

    Foodservice

        The foodservice industry supplies the diverse U.S. "food-away-from-home" industry. The foodservice industry had $232 billion of sales in 2015 and is expected to have 2.3% annual growth over the next five years. End-customers in this industry include restaurant operators, schools, healthcare providers, hospitality providers, the U.S. military and grocery deli counters that are serviced through national and regional distributors and redistributors such as Sysco Corporation and U.S. Foods, Inc. Food prepared away from home accounted for 49% of the total food dollars spent by consumers in 2015 with 6.0% annual growth since 2010, outpacing overall food expenditure growth.

        The foodservice industry includes the large and stable $10.3 billion U.S. school market. This market has expanded given the 4% annual growth over the last ten years in meals served for breakfast and in meals served during the summer months.

    Retail

        Frozen and refrigerated handhelds, which includes ready-to-eat sandwiches, accounted for $4.1 billion of industry-wide retail sales in 2015, with 5.3% annual growth since 2010. Within frozen and refrigerated handhelds, breakfast handhelds accounted for $1.2 billion of industry-wide retail sales in 2015, with 14.6% annual growth since 2010.

        In the retail industry, private label sales across all food categories represented $124 billion of sales in 2015, with 3% annual growth since 2013, outpacing growth in national brands. This growth is largely driven by a shift in consumer attitudes and improved quality and assortment of private label product offerings.

        The retail industry includes national and regional grocery chains, major warehouse club stores, mass retailers and dollar stores. Dollar stores are showing particularly strong growth and generated $67 billion of sales in 2015, with approximately 5% annual growth since 2010. Grocery sales accounted for 22.4% of dollar store aggregate sales in 2015, up from 8.9% of sales in 2010.

    Convenience

        The convenience industry includes national and regional convenience chains and vending providers. Growth in this channel is driven by the number of convenience stores, which have grown 15% from 2002 to 2014 to more than 152,000 stores. Prepared food is growing rapidly in the convenience channel as consumers increasingly seek "on-the-go" meal and snacks and trade down from quick service restaurants. Prepared food sales in the convenience channel were $42 billion in 2014, with approximately 8% annual growth since 2012.

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BUSINESS

Our Company

        We are a leading national producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks. We hold the number one or number two market share position by sales or volume in nearly all our major product categories, with net sales of $1.6 billion in fiscal 2015. We offer a differentiated value proposition to our customers due to our scale, broad product portfolio, customization capabilities, national distribution and food safety track record.

        We market and distribute approximately 2,600 SKUs across all day parts in multiple product categories, including: (1) ready-to-eat sandwiches, such as breakfast sandwiches, PB&J sandwiches and hamburgers; (2) sandwich components, such as fully-cooked hamburger and chicken patties and Philly steaks; and (3) other entrées and snacks, such as country fried steak, stuffed entrées, chicken tenders and cinnamon dough bites. In fiscal 2015, 67.4% of our net sales were attributable to the fast-growing ready-to-eat sandwiches and sandwich components categories. Our products are shipped frozen to our customers and sold under our commercial and retail brands, as well as private label and licensed brands.

        We control more steps within the production process than most of our competitors. This integrated approach allows us to add value throughout our processes, generate attractive margins and provides us with a significant competitive advantage. Our value-added processes include recipe formulation, pre-preparation by chopping, breading, seasoning and marinating, food preparation by baking, charring, frying and grilling, assembly and packaging. Our integrated bread and biscuit production capabilities are a key differentiator due to proprietary formulations that we believe produce superior tasting sandwiches.

        We sell to a diverse set of over 3,000 customers and have an average relationship tenure of approximately 20 years with our top 20 customers. We employ a customer-centric approach, which is rooted in market-leading R&D capabilities, product quality and customer service. We have dedicated marketing and sales teams for each of our channels to serve the specific needs of our customers. We enjoy "category captain" status in many of our product categories with our largest foodservice customers. In many cases, we collaborate with our customers to develop new products, customizing recipes and flavors in a cost efficient manner. We believe our customer-centric approach is a competitive advantage that helps our customers grow their businesses and, in turn, accelerates our organic growth and profitability.

        We sell our value-added products to the foodservice, retail and convenience channels, which correspond to our three core segments. We also sell our products in the industrial channel. We believe our diversification across these channels provides us with a stable revenue base through economic cycles. In fiscal 2015, 55.0% of our net sales were generated from our Foodservice segment, where our commercial brands are highly sought-after and trusted by chefs, cooks and other purchasers. In our Retail segment, in addition to selling our branded products, we also leverage our R&D capabilities to co-create exclusive products and packaging designs with our customers under their private label brands. In our Convenience segment, we are a leading supplier of ready-to-eat sandwiches and sandwich components to national and regional convenience chains and vending providers.

        We have an attractive financial profile with steady, organic volume growth, healthy margins, modest capital expenditures and limited working capital requirements. These characteristics enable our business to generate strong cash flows. Our earnings profile also benefits from a lean SG&A cost structure and a scaled, efficient supply chain network. We intend to use these attributes to enhance stockholder value by paying regular dividends, reducing our indebtedness, strategically deploying our capital to fund organic growth opportunities and financing value-enhancing acquisitions.

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        In fiscal 2015, we generated $1.6 billion in net sales and $260.2 million in Adjusted EBITDA representing a CAGR of 3.9% and 26.2%, respectively, since fiscal 2013. In fiscal 2015, we generated $37.1 million of net income and $157.2 million of cash flow from operating activities. See "Prospectus Summary—Summary Historical Consolidated Financial Data" for a reconciliation of Adjusted EBITDA to net income.

Our History

        In September 2010, Pierre Foods, Inc. combined with Advance Food Company, Inc. and Advance Brands, LLC to become AdvancePierre Foods, Inc., our wholly-owned indirect subsidiary. Pierre Foods, Inc., Advance Food Company, Inc. and Advance Brands, LLC were previously privately owned and operated and held leading market share positions in their core product categories. Pierre Foods, Inc. was founded in 1946 in Cincinnati, Ohio, and held leading market positions in handheld sandwiches and other value-added meals and snacks, serving the foodservice, retail and convenience channels. Advance Food Company, Inc. was a family owned business founded in 1973 in Enid, Oklahoma, and was a leading developer, producer and marketer of a wide variety of value-added, portion controlled and ready-to-serve products serving the foodservice channel. Advance Brands, LLC was formed in 2001 and was a leader in producing convenient chicken and beef products serving the retail channel.

        In May 2011, we acquired Barber Foods, a leading producer and marketer of stuffed chicken breasts. The acquisition of Barber Foods expanded our retail presence and further diversified our portfolio to include chicken-based products.

        In January 2015, we acquired the wholesale business and production operations of Landshire, an Illinois-based producer of premium frozen, ready-to-eat sandwiches. In April 2015, we acquired the business and production assets of Better Bakery, a producer of premium handcrafted stuffed sandwiches. Through these acquisitions, we further expanded our high growth and high margin sandwich portfolio while demonstrating our position as the leading platform in the industry with the ability to consolidate the fragmented industry in which we operate, integrate acquisitions successfully and generate meaningful sales and cost synergies.

Our Recent Performance and the APF Way

        During 2013 and 2014, our board of directors transformed our senior management by hiring John Simons as President and Chief Executive Officer and four of the seven other members of our current executive team. This new team has revamped our cost structure, budgeting tools and pricing methodology by implementing a continuous improvement program that we call the "APF Way." The APF Way uses a data-driven analytical framework to drive growth and profitability through improved commercial decision-making, excellence in sales and marketing and productivity in procurement, logistics and production.

        We believe the APF Way has fundamentally changed the cost structure of our business and has been a major factor in our recent volume, sales and profitability growth. Initially, we focused on reducing our cost structure by executing on productivity initiatives and re-aligning trade promotion allowances, resulting in $138.6 million in implemented annualized savings from 2013 to 2015. In addition, we eliminated approximately $100 million of sales associated with lower margin contracts. We have invested in new systems and processes that enable us to deliver continuous productivity savings and effectively manage margins and profitability. Our Adjusted EBITDA margin, which we calculate as Adjusted EBITDA divided by net sales, expanded from 10.9% in fiscal 2013 to 16.1% in fiscal 2015, even as our raw material costs rose significantly. Our net sales and volume grew at a CAGR of 8.6% and 3.6%, respectively, in our three core segments from fiscal 2013 to fiscal 2015. Going forward, we

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expect these investments and discipline will allow us to continue to deliver overall growth and attractive margins.

GRAPHIC

Our Segments

        We manage and report our operations in four segments with Foodservice, Retail and Convenience representing our core segments. Our fourth segment, Industrial, consists of sales to other food producers under short-term co-manufacturing agreements.

GRAPHIC

        Foodservice.    Our Foodservice customers include leading national and regional distributors, who then sell our products to end-customers such as restaurant operators, schools, healthcare providers, hospitality providers, the U.S. military and grocery deli counters. We supply 89 of the largest 100 school districts in the United States, directly and through distributors, and work closely with school districts to develop nutritious meal options with good quality and value. We also directly supply many national restaurant chains.

        We sell a diverse portfolio of products into the foodservice channel, including ready-to-eat sandwiches, such as breakfast sandwiches, PB&J sandwiches and hamburgers, sandwich components, such as fully-cooked hamburger and chicken patties and Philly steaks, and other entrées and snacks, such as country fried steak, stuffed entrées, chicken tenders and cinnamon dough bites. We primarily sell our products under our own commercial brands, which are highly sought-after and trusted by chefs, cooks and other purchasers. For fiscal 2015, 71.5% of our Foodservice net sales were attributable to our own commercial brands, such as The Pub, Advance, Steak-Eze, Philly Freedom and Smart Picks, and 28.5% to private label brands.

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        As foodservice operators attempt to differentiate and broaden their product offerings, they are more frequently working with solution-oriented partners with strong new product development capabilities and national distribution scale, such as ourselves.

        Retail.    We serve a wide array of retail customers including national and regional grocery chains, major warehouse club stores, mass retailers and dollar stores.

        Key products that we sell into the retail channel include ready-to-eat sandwiches, such as breakfast sandwiches, grilled chicken sandwiches and stuffed pockets, sandwich components, such as chicken patties and Philly steaks, and other entrées and snacks, such as stuffed chicken breasts. In addition to selling our branded products, we also leverage our R&D capabilities to co-create exclusive products and packaging designs with our Retail customers under their private label brands. For fiscal 2015, 69.4% of our Retail net sales were attributable to our retail brands, such as Barber, Pierre and Fast Fixin', 29.8% to private label brands and the rest to licensed brands.

        Convenience.    The convenience channel represents an important outlet for our ready-to-eat sandwiches and includes sales to vending providers. We currently sell to approximately 68,000 convenience locations in the United States and are the largest supplier of ready-to-eat sandwiches to vending providers. We currently sell to approximately 100,000 vending locations in the United States.

        We partner with our Convenience customers to develop customized, ready-to-eat sandwiches, such as breakfast sandwiches and hamburgers, sandwich components, such as chicken patties, and other entrées and snacks, such as cinnamon dough bites. We are able to meet specific demands from our Convenience customers by providing private label brand products and innovative new products. For fiscal 2015, 77.6% of our Convenience net sales were attributable to our retail brands, such as Big AZ, 21.6% to private label brands and the rest to licensed brands.

        Industrial.    In order to optimize capacity utilization across our production network, we opportunistically enter into short-term co-manufacturing agreements with other food producers, such as packaged food companies. Due to the lower margin nature of this business, we have strategically reduced our percentage of net sales generated by this segment from 15.7% in fiscal 2013 to 7.9% in fiscal 2015.

        For additional financial information about our segments, see our audited consolidated financial statements included elsewhere in this prospectus.

Our Products

        We market and distribute a broad range of great-tasting products across all day parts in multiple product categories, including: (1) ready-to-eat sandwiches, such as breakfast sandwiches, PB&J sandwiches and hamburgers; (2) sandwich components, such as fully-cooked hamburger and chicken patties and Philly steaks; and (3) other entrées and snacks, such as country fried steak, stuffed entrées, chicken tenders, crispy sausage snacks and cinnamon dough bites. We market and distribute approximately 2,600 SKUs across all day parts to a diverse mix of customers in our Foodservice, Retail, Convenience and Industrial segments. Many of our products have been customized to fit specific customer needs. In fiscal 2015, 67.4% of our net sales were attributable to the fast-growing ready-to-eat sandwiches and sandwich components categories. Our products are shipped frozen to our customers and sold under our commercial and retail brands, as well as private label and licensed brands.

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GRAPHIC

        Ready-to-Eat Sandwiches.    We are the largest manufacturer of ready-to-eat lunch and dinner sandwiches. We produce over 600 million sandwiches per year, which are shipped frozen to our customers. We possess vertically integrated bakery, production and assembly capabilities which differentiate us from our competitors and support high margins in this product category. Our superior bread quality is an important purchase driver for our sandwiches and consistently beats our competitors in taste tests. Our ready-to-eat sandwiches are sold under a variety of our own brands, such as Big AZ, Pierre, Landshire and Better Bakery, licensed brands and several leading private label brands.

        Sandwich Components.    We are a leading producer of great-tasting sandwich components, such as fully-cooked hamburger patties (sold under The Pub brand), Philly steaks (sold under the Steak-EZE brand), pork rib patties, chicken patties, meatballs and fajita steaks. All of our sandwich components are also offered under leading private label distributor brands in our Foodservice segment and leading private label brands.

        Other Entrées and Snacks.    We are a leading producer of convenient entrées and snacks, including stuffed entrées (sold under the Barber Foods brand), country fried steak (sold under the Advance brand), chicken tenders (sold under the Fast Fixin' brand), crispy sausage snacks and cinnamon dough bites.

        The following table summarizes our net sales by product category for fiscal 2015, fiscal 2014 and fiscal 2013:

(in millions)
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Net sales in our core segments

                   

Sandwiches

  $ 408.7   $ 352.3   $ 304.2  

Sandwich components

    572.0     509.4     464.4  

Other entrées and snacks

    503.2     527.1     489.9  

Total

  $ 1,483.9   $ 1,388.8   $ 1,258.5  

Net sales in our Industrial segment

                   

Sandwiches

  $ 46.4   $ 59.7   $ 84.3  

Sandwich components

    59.0     101.4     110.6  

Other entrées and snacks

    22.3     27.7     38.6  

Total

  $ 127.7   $ 188.8   $ 233.5  

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Our Strengths

        We believe the following strengths differentiate us from our competitors and will contribute to our ongoing success:

    Leading Market Positions in Attractive, Growing Categories

        We hold the number one or number two market share position by sales or volume in nearly all of our major product categories and are well positioned to capitalize on growth in our markets. We are the number one player with market shares ranging from approximately 37% to 68% in our top five product categories, which represent 68% of our net sales in fiscal 2015. Within most of our major product categories, we are the only full-service operator of scale and compete against smaller, regional players with limited product breadth, production capacity and capabilities. We typically do not compete against large packaged food companies given our foodservice focus and the customization requirements of our customers.

        We produce over 600 million sandwiches per year and 67.4% of our net sales are related to ready-to-eat sandwiches and sandwich components. We are a leading provider of lunch and dinner sandwiches to the foodservice, retail and convenience channels. Our superior bread quality is an important purchase driver for our sandwiches and consistently beats our competitors in taste tests.

GRAPHIC

    Long-Standing, Collaborative Customer Relationships Create a High Barrier to Entry

        Our strong customer relationships across a diverse set of customers provide a significant competitive advantage and create a high barrier to entry. For fiscal 2015, our top ten customers accounted for 53.4% of our net sales, with our two largest customers, U.S. Foods, Inc. and another leading national foodservice distributor, accounting for 12.0% and 13.6%, respectively, of our net sales in fiscal 2015. Our two largest customers collectively source over 1,800 SKUs from our portfolio and

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buy across multiple contracts for a diverse set of end-customers, making us an important supplier and giving us a stable and consistent revenue base.

        We have deep and collaborative relationships with an average tenure of approximately 20 years with our top 20 customers. We maintain our relationships through our segment-focused marketing teams and an experienced sales force of approximately 100 associates who work closely with customers to meet their needs. Our foodservice commercial brands are highly sought-after and trusted by chefs, cooks and other purchasers for their consistent food safety, premium quality and taste profile. Given our track record, we enjoy "category captain" status in many of our product categories. We produce approximately 2,600 SKUs for our customers, who source a high volume and a variety of products from us, making us an important supplier and partner. We expect to continue to have a competitive advantage as our customers focus on large scale suppliers in order to streamline and optimize their supply chains.

        We offer a differentiated value proposition to our customers due to our scale, broad product portfolio, customization capabilities, national distribution and food safety track record.

    Leader in On-Trend, Fast-to-Market New Product Development

        We believe our customer-centric approach, which is rooted in market-leading R&D capabilities, product quality and customer service, differentiates us from our competitors and has allowed us to accelerate our organic growth and improve our profitability. Our product innovation and R&D expertise span areas such as flavor development, recipe formulation, nutrition science, bakery science and food safety. In recent years, we have enhanced our new product development and customer insight capabilities and, in 2015, we opened a state-of-the-art 3,200 square foot R&D facility in West Chester, Ohio.

        The food industry today is characterized by rapidly changing menus and evolving consumer taste profiles. In this environment, our customers value our ability to co-create new products with flavor profiles that differentiate their offerings and successfully commercialize new products with speed and efficiency. We launched 543 new SKUs in the last three years, accounting for approximately 12.7% of our net sales in fiscal 2015. Our innovation, sales force and marketing teams collaborate with customers to co-create highly customized products and are able to mobilize quickly to respond to customer requests.

    Scale and Production Efficiency with a National Distribution Footprint

        We benefit from a national, scaled production, procurement and logistics network with low production, freight and warehousing costs. We believe our efficient cost structure provides a sustainable competitive advantage and enables us to offer a customized and varied set of products to our customers at competitive prices.

        We have two integrated bakery facilities which allow us to source approximately 60% of our bread in-house (excluding bread for our PB&J sandwiches). Our ten production facilities benefit from economies of scale, which when combined with our national distribution capabilities, differentiate us from our competitors and make us a valuable supplier for both national and regional customers. All of our facilities have achieved SQF Level 3 food safety certification, the highest level of such certification from GFSI.

    Attractive Financial Profile with Strong and Stable Free Cash Flow Conversion

        We have an attractive financial profile with steady, organic volume growth in our core segments, healthy Adjusted EBITDA margins, modest capital expenditures and limited working capital requirements.

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        We are able to deliver attractive Adjusted EBITDA margins due to the high value-added nature of our products. Our margin profile is well protected given our ability to proactively adjust pricing frequently to reflect input cost movements with minimal lag time. Only 16.2% of our net sales in fiscal 2015 were subject to fixed price arrangements. We also have a lean and scalable cost structure. We plan to continue leveraging the APF Way to deliver operational productivity savings, improve our business mix and increase the effectiveness of our trade promotion allowances. Our business has relatively low capital expenditure requirements, with maintenance expenditures typically averaging approximately 1% of our net sales.

        Our financial profile has resulted in strong and stable Free Cash Flow (which we define as Adjusted EBITDA less purchases of property, plant and equipment). In fiscal 2015, we generated $224.3 million of Free Cash Flow. See "Prospectus Summary—Summary Historical Consolidated Financial Data" for a reconciliation of Free Cash Flow to net income.

    Proven Acquisition Expertise

        We have a successful track record of sourcing, executing and integrating acquisitions, beginning with the combination of Pierre Foods, Inc., APF's predecessor, with Advance Food Company, Inc. and Advance Brands, LLC in 2010. Given our scale and breadth of capabilities, we believe we are well positioned to consolidate the fragmented industry in which we operate. We maintain a highly disciplined approach to acquisitions, focusing on opportunities that diversify our products, add production capabilities, expand production capacity and allow for meaningful synergy realization. In addition to realizing cost synergies, we leverage our sales teams to expand distribution of newly acquired brands and products and cross-sell across our channels to drive sales synergies.

        Since 2011, we have completed three accretive acquisitions, which contributed $166.4 million of incremental net sales in fiscal 2015. In June 2011, we acquired Barber Foods, a producer of premium stuffed entrées, which strengthened our retail presence and expanded our chicken-based product offering. In January 2015, we acquired the assets of Landshire, which broadened our portfolio of premium sandwiches to include sliced meat sandwiches and added incremental, margin-enhancing baking and assembly production capabilities. In April 2015, we acquired the assets of Better Bakery to expand into stuffed sandwiches, one of the largest ready-to-eat sandwich categories.

    Talented Management Team with a Track Record of Driving Growth and Reducing Costs

        We have a deep bench of talented management led by our President and Chief Executive Officer John Simons, who has over 25 years of foodservice and retail experience. Since 2013, we have assembled an experienced management team through strategic hiring of key leaders and expanded organizational capabilities in R&D, sales and marketing. Our management team has an average of 25 years of expertise in the foodservice, retail and convenience industries and has demonstrated its ability to deliver on key strategic initiatives, which have transformed business performance. In the last two years, our management team's key accomplishments include implementation of the APF Way, successful integration of two value-enhancing acquisitions and significant margin improvement.

Our Strategy

    Expand Our Market Leading Positions in Growing Channels and Categories

        We are focused on expanding our leadership position within our core segments of Foodservice, Retail and Convenience.

        The ready-to-eat breakfast sandwich category is a key growth opportunity for us, given the double digit annual growth in this category from 2012 to 2014. We hold the number one position with 46% market share in breakfast sandwiches sold in the convenience channel. We are also the largest supplier of private label breakfast sandwiches in the retail channel, with a 56% market share. Private label sales

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of retail frozen breakfast sandwiches are underpenetrated compared to the frozen food market and therefore we believe poised for significant growth. We will continue to leverage our sandwich expertise and customer relationships to grow our share in breakfast sandwiches in the retail channel and with foodservice distributors and schools.

        We believe we have multiple growth opportunities across our core segments. In Foodservice, we plan to expand distribution of our products to new customers, such as coffee shops, theaters, grocery deli counters and hospitality providers. In Retail, in addition to growing our sandwich business, we are launching product extensions for Barber Foods and Better Bakery and expanding distribution within rapidly growing dollar stores. In Convenience, we are expanding our breakfast product portfolio and launching Better Bakery products.

        We are also expanding our lineup of products to take advantage of recent consumer trends. We have successfully launched snacking-oriented products, such as crispy sausage snacks, PB&J snack bars and cinnamon dough bites, and better-for-you products, such as antibiotic, hormone-free fully-cooked burgers.

    Drive Growth Through Focus on Innovation

        Our product categories offer potential for value-added product innovation. We believe our innovation capabilities, combined with our investments in consumer insights and our ability to partner with customers to co-create products, will enable us to continue to introduce successful new products to drive sales growth and margin improvement across our portfolio.

        Our R&D team is focused on developing products in line with key consumer trends, such as breakfast sandwiches, better-for-you products and snacking-oriented products. Examples of products in our innovation pipeline include ready-to-eat breakfast sandwiches that meet the new K-12 nutrition guidelines, premium offerings for club stores and new limited time offers for key convenience store chain customers. We are also partnering with various customers to develop on-trend, protein-based snacks.

    Deliver Attractive Margins through Dynamic Pricing and Leveraging the APF Way

        We believe we are well positioned to deliver attractive margins given the high value-added nature of our products, our dynamic pricing model and our ability to generate ongoing productivity savings by leveraging the APF Way. In addition, our focus on improving our product mix, leveraging our scalable organization structure and realizing synergies from acquisitions supports our margin profile. Under the APF Way, we are implementing multiple initiatives across the areas of production, procurement, commercial and logistics, that we expect will deliver ongoing productivity savings and help offset potential operational headwinds and cost inflation.

    Acquire Value-Enhancing Businesses

        We believe our scale and integration expertise allow us to make value-enhancing acquisitions. We operate in a highly fragmented industry with many opportunities to execute accretive transactions. Our integration expertise allows us to rapidly capture cost synergies and we are able to generate revenue synergies by leveraging existing customer relationships and marketing expertise to cross-sell products across channels. Our management team has an active pipeline of acquisition opportunities and maintains a regular dialogue with potential targets.

    Return Capital and Reduce Debt

        We believe our capital structure and strong free cash flow enable us to invest in our business and reduce our indebtedness, creating value for our stockholders. We also expect to return capital to our stockholders through regular dividend payments. Upon the completion of this offering, we intend to

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pay a regular ongoing quarterly cash dividend of approximately $            per share. See "Dividend Policy" for additional details.

Our Customers

        We have a few large customers that account for a significant portion of our sales. U.S. Foods, Inc. and another leading national foodservice distributor accounted for 12.0% and 13.6%, respectively, of our net sales in fiscal 2015. Our two largest customers source over 1,800 SKUs from our portfolio and buy across multiple contracts for a diverse set of end-customers, making us an important supplier and giving us a stable and consistent sales base.

        No other customer accounted for more than 10% of our net sales in fiscal 2015, fiscal 2014 or fiscal 2013. Cumulatively, our top ten customers accounted for 53.4%, 54.7% and 54.6% of our net sales in fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

        Customers located in the United States account for almost all of our net sales. Sales to customers located outside of the United States totaled $15.4 million, $20.0 million and $22.7 million in fiscal 2015, fiscal 2014 and fiscal 2013, respectively. None of our long-lived assets were located outside of the United States during fiscal 2015, fiscal 2014 or fiscal 2013.

Our Sales and Distribution Functions

        We maintain sales and distribution functions to support sales within our three core segments. We have approximately 140 employees within our segment-specific sales and marketing teams and also rely on our 17 member customer service team. In addition, our 42 member demand management team manages customer forecasts, orders, deliveries and feedback.

        Foodservice.    We employ approximately 30 marketing professionals, 75 direct sales representatives and 14 national and regional brokers to service our diverse set of foodservice customers. We have a Foodservice-specific go-to-market team that enables us to develop tailored marketing and sales solutions for our customers. Our marketing and sales teams directly interact with major participants in the foodservice distribution chain, including distributors, redistributors, contract management companies, group purchasing organizations and large end-use operators. We service the majority of our foodservice customers through distributors but also ship directly to select foodservice customers including large school districts, select national restaurant chains and the U.S. military.

        Retail.    We employ approximately 15 marketing professionals, 15 direct sales representatives and 41 national and regional brokers to service our retail customers. Our sales and marketing teams are designed to provide direct support to our top retail customers to facilitate responsive and rapid product development, in addition to effective in-store promotion planning and execution. For smaller customers, we work closely with our network of broker sales teams to meet customer needs. Most retail customers either pick up products at our distribution centers or request that we deliver products to their distribution centers. Some smaller customers, however, receive shipments through redistributors that pick up products from our distribution centers.

        Convenience.    We employ four marketing professionals, nine direct sales representatives and nine national and regional brokers to service our convenience customers. We have designed our sales and marketing teams to provide direct support to our top convenience customers to facilitate responsive and rapid product development, in addition to effective in-store promotion planning and execution. For smaller customers, we work closely with our network of broker sales teams and distributors that deliver products to stores. The majority of large convenience customers receive products through distributors, while smaller convenience customers often receive products through national and regional distributors.

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        In addition to the above, we have two sales representatives who work within our Industrial segment and are responsible for sourcing business to fill any excess capacity identified within our production facilities.

        Our distribution centers are located in Enid, Oklahoma, Cincinnati, Ohio and Rockmart, Georgia. Approximately 34% of our volume is picked up at our production facilities or distribution centers by our customers. For the remainder of our volume, we utilize third-party logistics providers to deliver products to customer and redistributor warehouses.

Our R&D Capabilities

        In recent years, we have enhanced our new product development and customer insight capabilities and, in 2015, we opened a state-of-the-art 3,200 square foot R&D facility in West Chester, Ohio. Our R&D expertise spans the spectrum of food development, from meat technology and flavor development to production and processing ingredients, bakery science and nutrition formulation.

        In addition, our customer-centric model allows us to quickly respond to customer requests, particularly as we co-develop products with our customers to bring new ideas to the market. We station satellite R&D teams in our production facilities where they can directly leverage the facilities' capabilities when developing and scaling new products. Our in-house R&D team is based in West Chester, Ohio and consists of over 50 professionals including chefs, food scientists and food development experts who are focused on new product development, product-quality improvements, productivity improvements and package development.

        We introduced 179, 172 and 192 new SKUs in fiscal 2015, fiscal 2014 and fiscal 2013, respectively. New products released during fiscal 2015, fiscal 2014 and fiscal 2013 accounted for 12.7% of our net sales in fiscal 2015. Our R&D expenditures totaled $6.6 million, $6.0 million and $4.7 million for fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

        Our R&D team is currently focused on developing on-trend products, such as handheld breakfast sandwiches and better-for-you and snacking-oriented products. Examples of projects in our innovation pipeline include ready-to-eat breakfast sandwiches that meet the new K-12 nutrition guidelines, premium offerings for club stores and new limited time offers for key convenience store chain customers. We are also partnering with various customers to develop on-trend, protein-based snacks.

Our Properties

        Our production and distribution network consists of ten production facilities and three strategically located distribution centers in the United States. Our production facilities include two integrated bakery facilities which allow us to source approximately 60% of our bread in-house (excluding bread for our PB&J sandwiches).

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        We own and operate the following ten production facilities, which are used to produce products sold in all four of our segments:

Facility Location
  Operations Performed   SQF
Certification
  Square
Footage
 

Enid, OK

  Food processing   Level 3     230,000  

Enid, OK

  Food processing   Level 3     169,000  

Enid, OK

  Food processing   Level 3     76,000  

Enid, OK

  Food processing   Level 3     44,500  

West Chester, OH

  Food processing   Level 3     223,000  

Portland, ME

  Food processing   Level 3     250,000  

Caseyville, IL

  Sandwich assembly and bakery   Level 3     70,000  

Easley, SC

  Sandwich assembly and bakery   Level 3     61,300  

Amherst, OH

  Sandwich assembly   Level 3     115,700  

Claremont, NC

  Sandwich assembly   Level 3     188,000  

        The lenders under our credit facilities have a lien on all of our owned properties. See "Description of Certain Indebtedness."

        We lease our distribution center in Enid, Oklahoma and have contracted for warehouse space in our distribution centers in Cincinnati, Ohio and Rockmart, Georgia. In 2012, we sold our distribution center in Enid, Oklahoma and entered into a long-term lease with the buyer through a sale leaseback transaction. We also lease our corporate headquarters in Blue Ash, Ohio.

Our Ingredients and Packaging

        We believe that the ingredients and packaging used to produce our products are readily available through multiple sources. Our ingredients primarily include beef, poultry, pork, bread and breadings, cheese, eggs, seasonings, soy proteins, corn and packaging supplies. Packaging materials account for a significantly smaller portion of our costs of goods sold than our ingredients. We enter into various purchasing arrangements with certain suppliers, including suppliers of protein, seasoning and packing supplies, in order to mitigate the impact of commodity cost fluctuations. We have not historically entered into any hedging agreements for our ingredients or packaging supplies.

Quality and Food Safety

        We believe that quality and food safety are paramount. As a result, we have developed, implemented and enforced a robust quality and food safety program.

        All of our production facilities' quality control teams are independent and report directly to our corporate quality and food safety team, a central function comprised of approximately 17 employees under the Senior Vice President, Quality, who reports directly to our Chief Executive Officer. This creates strong accountability at the senior level for the quality and safety of our products. We have approximately 175 salaried and hourly quality control employees who are located at our production facilities.

        We have implemented the SQF program at all of our facilities. SQF is a fully integrated food safety and quality management protocol designed by GFSI specifically for the food sector. The SQF code offers a comprehensive methodology to manage food safety and quality simultaneously. SQF certification by GFSI provides an independent and external validation that a product, process or service complies with international, regulatory and other specified standards. All of our production facilities have achieved SQF Level 3 food safety certification, the highest level of such certification from GFSI. We also maintain systems in all of our factories that verify and validate compliance with federal, state and local regulations.

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        We source the raw materials used in our products from a variety of high quality USDA-regulated suppliers and we believe high quality raw material are available from multiple sources. In order to protect the quality and safety of our products, we regularly inspect our suppliers' production facilities and delivered products.

        As part of our quality and food safety program, our professionals continuously work with the applicable regulatory agencies, including the USDA and the FDA, the academic community, trade associations and our industry partners to stay informed of emerging issues and improve our quality and food safety program.

        Despite our commitment to quality and food safety, we have previously issued recalls for our products. See "Risk Factors—Risks Related to Our Business—If our products become contaminated or are mislabeled, we may be subject to product liability claims, product recalls and increased scrutiny by regulators, any of which could adversely affect our business."

Competition

        We face competition in each of our respective product categories and end markets. Although we operate in a highly competitive industry, we believe that the breadth and depth of our product portfolio and product quality have resulted in strong market share positions. Within most of our major product categories, we are the only full-service operator of scale and compete against smaller, regional players with limited product breadth, production capacity and production capabilities. We typically do not compete against large packaged food companies given our foodservice focus and the customization requirements of our customers. Smaller players include American Food Group, CTI, Allied Specialty Foods, Devault Foods, Lopez Foods and JTM Food Group. In certain product categories such as breakfast sandwiches and entrées and snacks, we compete with larger players such as Hormel, Hillshire, Nestle and Smuckers.

        We compete on the basis of, among other things, product quality, total product portfolio, price, customer service, ability to meet customer demands, effective consumer marketing, promotional activities and the ability to identify and satisfy emerging consumer preferences.

Information Systems

        We operate a single enterprise resource planning ("ERP") system for all of our facilities for operations, procurement, receiving, warehousing, inventory management and order processing. We also have an integrated suite of supporting financial, demand planning and material requirements planning ("MRP") software modules that are effectively integrated into our core ERP platform. This enterprise-wide systems platform provides us with four key advantages. First, it provides us with real-time financial and operational reports that enable rapid decision-making and execution. Second, we efficiently process orders and ship to our customers on a "one order, one invoice" basis. Third, we can efficiently and cost-effectively manage the forecasting, production and inventory complexity associated with our portfolio of approximately 2,600 SKUs. Finally, our common information technology allows us to integrate acquisitions and achieve synergies quickly.

Employees

        We have approximately 4,000 employees as of January 2, 2016 with approximately 840 salaried employees and the remainder paid on an hourly basis. None of our employees are unionized. While there have been various union organization attempts at our facilities, we have not had any material work stoppages or lockouts and believe that we have good relations with our employees. See "Risk Factors—Risks Related to Our Business—Labor disruptions or increased labor costs could adversely affect our business, financial condition and operating results."

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Government, Legal and Regulatory

    Food Safety, Product Identity, Branding and Labeling

        We are subject to extensive regulation, including, among others, the Federal Meat Inspection Act of 1906, the Food, Drug and Cosmetic Act of 1938, the Poultry Products Inspection Act of 1957, the Nutrition Labeling and Education Act of 1990, the USDA HACCP Mega-Reg of 1996, the Public Health Security and Bioterrorism Preparedness & Response Act of 2002, the Food Safety Modernization Act of 2011 and other rules and regulations promulgated by the FDA, the United States Department of Agriculture and the sub-branches of these regulatory bodies pertaining to the production and introduction of human foods to commerce. These comprehensive and evolving regulatory programs govern, among other things, the manufacturing, composition, ingredients, labeling, packaging and safety of food, including compliance with specific current good manufacturing practice regulations. In addition, the Nutrition Labeling and Education Act of 1990 prescribes the format and content of certain specific information required to appear on the labels of food products.

        In addition to complying with federal laws and regulations pertaining to food production, we are also required to comply with local municipality (city and county) as well as state regulations, including the registration and licensing of our plants, enforcement by state health agencies of various state standards and inspection of our facilities.

        Compliance with federal, state and local regulation is costly and time-consuming, but one of our top priorities. Regulatory enforcement actions for violations of federal, state and local regulations may include seizure and condemnation of products, mandatory or voluntary product recalls, cease and desist orders, injunctions and monetary-civil-criminal penalties. We believe that our practices are sufficient to maintain compliance with applicable government regulations, although there can be no assurances in this regard. It is also possible that new laws or regulations, or changes in the enforcement of existing requirements, might require us to change our compliance programs, incur additional costs or result in unexpected liabilities that could be significant.

    Employee Safety Regulations

        We are subject to certain health and safety regulations, including regulations issued pursuant to the Occupational Safety and Health Act. These regulations require us to comply with certain manufacturing, health and safety standards to protect our employees from accidents.

    Environmental Regulations

        We are subject to federal, state and local environmental regulations and requirements, including those governing discharges to air and water, the management of hazardous substances, the disposal of solid and hazardous wastes and the remediation of contamination. Failure to comply with these regulations can have serious consequences for us, including criminal as well as civil and administrative penalties, limitations on our operations, claims for remediation costs, as well as alleged personal injury or property damages and negative publicity. We are involved from time to time in administrative or legal proceedings relating to environmental and health and safety matters, and have incurred and will continue to incur capital and operating expenditures to avoid violations of these laws and regulations.

        Based on current information, we do not believe that any costs we may incur relating to environmental matters will have a material adverse effect on our business, financial position or results of operations. However, there can be no guarantee that newly discovered information, more stringent enforcement of or changes in environmental requirements, or other unanticipated events will not result in significant costs.

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Insurance

        We maintain general liability and product liability, product contamination, property, worker's compensation, business interruption, director and officer and other insurance in amounts and on terms that we believe are customary for companies similarly situated. In addition, we maintain excess insurance where we reasonably believe it is cost effective.

Legal Proceedings

        From time to time, we may be party to litigation that arises in the ordinary course of our business. While it is not feasible to predict or determine the ultimate outcome of these matters, we believe that any ultimate liability with respect to any pending litigation will not adversely affect our business, financial condition and operating results.

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MANAGEMENT

        Below is a list of our executive officers and directors and their respective ages and a brief account of the business experience of each of them.

Name
  Age   Position

John N. Simons, Jr. 

  55   Chief Executive Officer, President and Director

Michael B. Sims

  57   Chief Financial Officer, Vice President, Treasurer and Secretary

James L. Clough

  54   President, Foodservice

Steven D. Booker

  55   President, Retail

Tony Schroder

  49   President, Convenience

George F. Chappelle, Jr. 

  54   Senior Vice President, Supply Chain

John W. (Bill) Theis, III

  49   Senior Vice President, Quality

Bernie Panchot

  57   Senior Vice President, Research and Development

Margaret M. Cannella

  64   Director

Celeste A. Clark, Ph.D. 

  62   Director

Peter C. Dillingham

  52   Director

Dean Hollis

  55   Chairman of the Board

Stephen A. Kaplan

  57   Director

Gary L. Perlin

  64   Director

Matthew C. Wilson

  40   Director

        John N. Simons, Jr.    John N. Simons, Jr. became our Chief Executive Officer, President and a member of our board of directors in October 2013. Prior to joining us, Mr. Simons was the managing member of Fir Hill Ventures, LLC. Prior to his leadership at Fir Hill Ventures, Mr. Simons served in a variety of leadership roles in agribusiness, food and consumer products at Gregory Mountain Products, Swift & Company, Inc., ConAgra Foods, Inc. and Cargill, Inc. Mr. Simons was President and Chief Executive Officer of Gregory Mountain Products from 2006 to 2009, President and Chief Executive Officer of Swift & Company, Inc. from 2002 to 2005 and President and Chief Operating Officer of ConAgra Foods' red meat division from 1999 to 2002. Prior to joining ConAgra Foods, Mr. Simons held a variety of general manager roles at Cargill, Inc. in the United States, Canada and Australia from 1991 to 1999. Mr. Simons previously served on the board of LiveNation Entertainment, Inc. from 2005 to 2007, where he chaired the compensation committee and served on its audit committee. Mr. Simons holds a Bachelor of Arts in Economics and Political Science from Stanford University and a Master of Business Administration from Harvard University.

        Michael B. Sims.    Michael B. Sims became our Chief Financial Officer in February 2012. Prior to joining us, Mr. Sims spent more than two decades in accounting, financial operations, investor relations and corporate development roles with Chiquita Brands International, Inc., the last two and a half years as Senior Vice President and Chief Financial Officer. Prior to joining Chiquita, Mr. Sims served in the audit department of Ernst & Young. Mr. Sims presently serves on the board of directors for the Dan Beard Council, Boy Scouts of America. Mr. Sims holds a Bachelor of Science degree in Accounting from Indiana University and is a Certified Public Accountant.

        James L. Clough.    James L. Clough became our President, Foodservice in July 2013. In this role, Mr. Clough is responsible for developing the business strategy, and leading the sales, marketing and finance functions, for our foodservice business. Prior to joining us, Mr. Clough served as President, Foodservice at Schwan's Food Service Inc. from June 2010 to July 2013. Prior to joining Schwan's Food, Mr. Clough was President of Fresh Start Bakeries, as well as in senior leadership positions for Bunge Foods Group, Heinz Foodservice and ConAgra Foods. Mr. Clough presently serves on the board of directors for Kwik Trip, Inc. and is also the chairman of the audit committee. He also serves on the board of the School Nutrition Foundation. Mr. Clough previously served on the board of directors of the International Foodservice Manufacturers Association and the Global Child Nutrition Foundation.

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Mr. Clough received his Bachelor of Science degree in Industrial Management from the University of Akron and a Master's degree in Liberal Arts from Baker University. Mr. Clough is also accredited by the School Nutrition Association as a School Nutrition Specialist.

        Steven D. Booker.    Steven D. Booker became our President, Retail in November 2015. Prior to joining us, Mr. Booker served as Senior Vice President, Customer Development at ConAgra Foods from June 2014 to November 2015. In this role, Mr. Booker led the customer development team, which spanned ConAgra Foods' branded and private label businesses and was focused on the successful execution of business initiatives with U.S. retailers. Prior to this role, Mr. Booker served as Senior Vice President, Private Brand Sales and Vice President and General Manager, Frozen at ConAgra Foods. Mr. Booker holds a Bachelor of Science degree in Business Administration with a concentration in Marketing from California Polytechnic State University at San Luis Obispo.

        Tony Schroder.    Tony Schroder became our President, Convenience in September 2010. In this role, Mr. Schroder oversees our convenience segment. Mr. Schroder joined us as a production supervisor in February 1991 and has served in various capacities prior to his current position. Mr. Schroder has served as our Senior Vice President of Sales and as a Group Vice President of Sales, Marketing and Product Development for the vending, convenience and warehouse retail divisions. Mr. Schroder has also worked within our other business segments in a variety of national and sales management positions. Mr. Schroder previously served on the board of directors of the National Automatic Merchandising Association (NAMA) and is a NAMA Certified Executive, a designation awarded to distinguished professionals in the field. Mr. Schroder holds a Bachelor of Arts degree in Business Management from Northern Kentucky University.

        George F. Chappelle, Jr.    George F. Chappelle, Jr. became our Senior Vice President, Supply Chain in January 2014. Prior to joining us, Mr. Chappelle served as Chief Operating Officer of Vi-Jon, Inc. from January to December 2013 and as Chief Operating Officer of Solo Cup Co. from October 2009 to September 2012. Prior to joining Solo Cup Co., Mr. Chappelle worked for H.J. Heinz Company and Sara Lee Corporation, most recently as Chief Supply Chain Officer for the North American Division of Sara Lee. Mr. Chappelle began his career with The Gillette Company. Mr. Chappelle holds a Bachelor of Science degree from Westfield State University and a Master of Science degree from Lesley University.

        John W. (Bill) Theis, III.    John W. (Bill) Theis, III became our Senior Vice President, Quality in June 2012. In this role, Mr. Theis oversees quality, food safety and regulatory compliance. Mr. Theis also oversees ongoing education of our employees in the areas of HACCP food safety and quality, Good Manufacturing Practices and Allergen Controls. Prior to joining us, Mr. Theis was a director of quality and technical services at The Wornick Company from 2009 to 2012, responsible for the delivery of stable-shelf and frozen food products to the U.S. Department of Defense, foreign military and commercial customers. Mr. Theis began his career at The Procter & Gamble Company and spent more than 20 years in various roles in research and development, manufacturing and quality assurance. Mr. Theis holds a Bachelor of Science degree in Chemical Engineering from University of Cincinnati.

        Bernie Panchot.    Bernie Panchot became our Senior Vice President, Research and Development in August 2014. Ms. Panchot joined us as a Vice President, Research and Development in December 2008. Ms. Panchot brings over 35 years of food industry experience to us. Prior to joining us, Ms. Panchot served in a variety of positions with Koch Foods, Sarah Lee Corporation and ConAgra Foods. Ms. Panchot previously served on the board of directors for the Nutrition Council of Greater Cincinnati. Ms. Panchot holds a Bachelor of Science degree in Food Science and Technology from Oregon State University.

        Margaret M. Cannella.    Margaret M. Cannella has served as our director since 2008. Ms. Cannella currently serves as an Adjunct Professor in the Heilbrunn Center for Value Investing at Columbia

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Business School, teaching courses in leveraged financing and credit markets. In 2009, after 30 years in investment banking in the U.S., Europe and Asia, Ms. Cannella retired from JPMorgan Chase & Co. as Managing Director and Head of Global Credit Research. Ms. Cannella previously served as Head of U.S. Equity and Credit Research at JPMorgan. In these roles, Ms. Cannella was a member of the operating committee for global markets, chaired JPMorgan's capital market strategy function and represented JPMorgan on regulatory and self-regulatory bodies. Prior to joining JPMorgan in 1998, Ms. Cannella was a Managing Director at Citigroup Inc., ultimately responsible for Global Research. Ms. Cannella presently serves on the board of directors of Watford Re Ltd., an affiliate of Arch Capital Group Ltd., where she chairs the investment committee. Ms. Cannella also serves as an independent trustee of the Schroder Funds, where she is a member of the audit committee. Ms. Cannella has previously served on the board of directors of Avolon Aircraft Holdings, Inc., where she chaired the nominations and corporate governance committee, and as a member of the Wilshire Mutual Funds, where she chaired the investment committee. Ms. Cannella holds an undergraduate degree from Princeton University in East Asian Studies and an M.B.A. degree in Finance from Columbia Business School.

        Celeste A. Clark, Ph.D.    Celeste A. Clark, Ph.D. has served as our director since February 2016. Dr. Clark served as the Senior Vice President of Global Public Policy and External Relations for Kellogg Company, and was a member of Kellogg's global executive leadership team. Dr. Clark also served as Kellogg's Chief Sustainability Officer and President of the Kellogg Corporate Citizenship Fund, the company's philanthropic entity. Dr. Clark provided leadership for Kellogg's worldwide communications, nutrition science and regulatory programs, and corporate social responsibility functions. Dr. Clark presently serves on the board of directors of Mead Johnson Nutrition Company where she serves on the risk and compliance, and science and technology committees, and was also a member of the nominating and governance committee. Dr. Clark served as a director and member of the nominating and governance and compensation committees of Diamond Foods, Inc. She is a board member and chair of the nominating and governance committee of AAA-Michigan. She is also a Trustee of the W.K. Kellogg Foundation where she serves on the audit and board development committees. Dr. Clark is the principal of Abraham Clark Consulting, LLC and an adjunct professor at Michigan State University in the Department of Food Science and Human Nutrition. Dr. Clark is a member of several professional organizations including the American Society of Nutrition, National Academy of Nutrition and Dietetics, and The Links, Incorporated, and various local and civic organizations. Dr. Clark holds a bachelor's degree from Southern University, a master's degree from Iowa State University and a doctorate from Michigan State University.

        Peter C. Dillingham.    Peter C. Dillingham has served as our director since 2014. Mr. Dillingham was appointed to our board of directors by certain of our existing stockholders pursuant to our existing stockholders agreement, which will terminate automatically upon the consummation of this offering. Mr. Dillingham is the former Chief Operating Officer of Advance Food Company and served in that role from March 2000 to September 2010. Mr. Dillingham also served as our Senior Vice President, Sales Operations from October 2010 to June 2013. Mr. Dillingham presently serves as Chairman of No Man's Land Foods, LLC and on the boards of REVx Technologies, Inc. and Denny Price YMCA. Mr. Dillingham also serves as President of A & P Holdings, LLC and Denny Price YMCA. Mr. Dillingham has previously served on the board of directors of Cherokee Strip Community Foundation, Loaves & Fishes of Northwest Oklahoma and Leadership Oklahoma. Mr. Dillingham holds a Bachelor of Science degree in Petroleum Engineering from Colorado School of Mines.

        Dean Hollis.    Dean Hollis has served as our director since 2008. Mr. Hollis is the former President and Chief Operating Officer of the Consumer Foods Division of ConAgra Foods and served in that role from December 2005 to July 2008. During Mr. Hollis' 21 years with ConAgra Foods, he held many executive level positions, including Executive Vice President, Retail Products; President, Grocery Foods; President, Frozen Foods; President, Specialty Foods; and President, Gilardi Foods. Currently,

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Mr. Hollis is a senior advisor for Oaktree. Mr. Hollis previously served on the board of directors of Diamond Foods, Inc., where he served on the audit and nominating and governance committees. Mr. Hollis also previously served on the board of directors of Boulder Brands, Inc., where he served as Chair of the board of directors and on the audit committee. Mr. Hollis also served on the board of directors of Landec Corporation, where he chaired the compensation committee. Dean has several privately held businesses and investments, ranging from transportation services, to specialized retail. Mr. Hollis is a graduate of Stetson University. Mr. Hollis also currently serves as Chair of the Board of Trustees of Brownell Talbot College Preparatory School.

        Stephen A. Kaplan.    Stephen A. Kaplan has served as our director since 2008. Mr. Kaplan is a Principal and the former head of Oaktree's Global Principal Group. He joined Oaktree in 1995, having previously served as a managing director of TCW and portfolio manager in the TCW Special Credits Group. Prior to joining TCW in 1993, Mr. Kaplan was a Partner with the law firm of Gibson, Dunn & Crutcher and responsible for that firm's East Coast bankruptcy and workout practice. As an attorney, Mr. Kaplan specialized in transactions involving the purchase and sale of companies undergoing financial restructurings. He presently serves on the boards of Oaktree Capital Group, LLC, Regal Entertainment Group and Townsquare Media, Inc. Mr. Kaplan previously served on the boards of Alliance HealthCare Services, Inc., Genco Shipping and Trading Ltd. and General Maritime Corporation. In addition, he currently serves on the boards of several private companies and nonprofit organizations, including the UCLA Jonsson Comprehensive Cancer Center Foundation and the New York University School of Law Foundation. Mr. Kaplan graduated with a B.S. degree in political science summa cum laude from the State University of New York at Stony Brook and a J.D. from the New York University School of Law.

        Gary L. Perlin.    Gary L. Perlin has served as our director since March 2016. Mr. Perlin is the retired Chief Financial Officer of Capital One Financial Corporation and served in that role from July 2003 to May 2013. Mr. Perlin also advised the U.S. Department of the Treasury as Special Government Employee from February 2014 to June 2014. Mr. Perlin currently serves on the board of directors of Abt Associates, Inc., where he serves as Chairman of the human capital and compensation committee. Mr. Perlin also currently serves on the boards of State Farm Mutual Automobile Insurance Company, where he chairs the audit committee, and State Farm Bank, FSB, where he chairs the credit committee. Mr. Perlin previously served on the board of directors of Avolon Holdings, Ltd., where he chaired the audit committee and risk committee. Mr. Perlin was educated at the Georgetown University School of Foreign Service with a degree in International Affairs, the London School of Economics with an M.Sc. in Economics, and earned an M.P.A., Economics and Public Policy, from Princeton University's Woodrow Wilson School of Public and International Affairs.

        Matthew C. Wilson.    Matthew C. Wilson has served as our director since 2008. Mr. Wilson is a Managing Director who has been with Oaktree since November 2007. He began serving as a Co-Portfolio Manager within the Global Principal Group since 2014, and maintains responsibility for the U.S. Global Principal team and all of its investment activities. Mr. Wilson leads Oaktree's investing efforts in the consumer sector where he is responsible for sourcing, analyzing and executing transactions as well as monitoring portfolio companies in the food and beverage, retail/restaurant and consumer products sectors. Mr. Wilson worked at H.I.G. Capital, LLC from 2003 to 2007, where he was a founding member of Bayside Capital, Inc., a firm focused on special situations and credit-oriented investments. From 1999 to 2001, he worked at J.H. Whitney & Co., in its middle market buyout group. Mr. Wilson began his career in the Investment Banking division at Merrill Lynch & Co. where he worked from 1997 to 1999. He currently serves as Chairman of Agro Merchants Group, LLC and Quiksilver, Inc., and on the board of Glam Squad, Inc. Mr. Wilson previously served on the boards of Billabong International Ltd., Diamond Foods, Inc. and the Bridge Direct, Inc. He is also Chairman of the Board of Trustees of The Children's Bureau of Los Angeles. Mr. Wilson earned a B.A. degree with distinction in economics and history from the University of Virginia and an M.B.A. from the Harvard Business School.

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Composition of our Board of Directors

        Our business and affairs are managed under the direction of our board of directors. Our board of directors currently consists of eight directors. Upon completion of this offering, our amended and restated certificate of incorporation will provide for a classified board of directors, with two directors in Class I (expected to be            and            ), three directors in Class II (expected to be            ,            and            ) and three directors in Class III (expected to be            ,            and            ). Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. See "Description of Capital Stock—Anti-Takeover Effects of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law—Classified Board of Directors." In addition, we intend to enter into a new stockholders agreement with our principal stockholders in connection with this offering. This agreement will grant Oaktree the right to designate nominees to our board of directors, subject to the maintenance of specified ownership requirements. See "Certain Relationships and Related Party Transactions—Stockholders Agreement."

        Under our amended and restated certificate of incorporation, our board of directors will consist of no fewer than five and no more than eleven directors, with the exact number of directors determined from time to time by resolution of our board of directors. Any vacancies or newly created directorships may be filled only by the affirmative vote of a majority of our directors then in office, even if less than a quorum, or by a sole remaining director, subject to our new stockholders agreement with respect to the director designation rights of Oaktree. With respect to any vacancy of an Oaktree-designated director, Oaktree will have the right to designate a new director for election by a majority of the remaining directors then in office. Each director will hold office until his or her successor has been duly elected and qualified or until his or her earlier death, resignation or removal.

        We expect our board of directors to determine that            are independent as defined in the federal securities laws and the        rules.

Background and Experience of Directors

        When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy its oversight responsibilities effectively in light of our business and structure, our board of directors focused primarily on each person's background and experience as reflected in the information discussed in each of the directors' individual biographies set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. In particular, the members of our board of directors considered the following important characteristics, among others: (1) Mr. Simons, our Chief Executive Officer and President, has extensive experience in the food industry through his leadership positions with agribusiness, food and consumer products companies; (2) Mr. Kaplan and Mr. Wilson have significant financial, investment and operational experience from their involvement in Oaktree's investments in numerous portfolio companies and have played active roles in overseeing those businesses; (3) Ms. Cannella has extensive capital markets knowledge and significant financial and business experience; (4) Dr. Clark has extensive experience with board governance, compliance and risk management, nutritional science and regulatory affairs; (5) Mr. Dillingham has significant experience in the food industry; (6) Mr. Hollis has significant executive level experience in the food industry and extensive experience with public companies; and (7) Mr. Perlin has significant financial, business and public company experience. Our board of directors also considered how Mr. Simons' role as our Chief Executive Officer and President would provide valuable information about the status of our day-to-day operations and bring a management perspective to the deliberations of our board of directors.

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Board Leadership Structure

        Our board of directors will be led by Mr. Hollis, our Non-Executive Chairman. The Chief Executive Officer position is separate from the Chairman position. We believe that the separation of the Chairman and Chief Executive Officer positions is appropriate corporate governance for us at this time.

Role of Board in Risk Oversight

        Our board of directors has extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular reporting by the Audit Committee. The Audit Committee represents our board of directors by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements, the surveillance of administrative and financial controls and our compliance with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal and internal audit functions, the Audit Committee reviews and discusses all significant areas of our business and summarizes for our board of directors all areas of risk and the appropriate mitigating factors. In addition, our board of directors receives periodic detailed operating performance reviews from management.

Controlled Company Exception

        After the completion of this offering, our principal stockholders will continue to beneficially own more than 50% of our common stock and voting power. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of            .

        Under            corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance standards, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities, (3) the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities and (4) the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. Following this offering, we intend to utilize these exemptions. As a result, following this offering, we may not have a majority of independent directors on our board of directors (although we expect our board of directors to determine that            qualify as independent directors under the corporate governance standards of            ); and we will not have a nominating and corporate governance committee or a compensation committee that is composed entirely of independent directors. In addition, our nominating and corporate governance committee and our compensation committee will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of            . In the event that we cease to be a "controlled company," we will be required to comply with these provisions within the transition periods specified in the corporate governance rules of             .

Board Committees

        After the completion of this offering, the standing committees of our board of directors will consist of an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.

        Our Chief Executive Officer and other executive officers will regularly report to the non-executive directors and the Audit Committee, the Compensation Committee and the Nomination and Corporate Governance Committee to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls. We believe that the

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leadership structure of our board of directors provides appropriate risk oversight of our activities given the controlling interests held by our principal stockholders.

Audit Committee

        The members of our Audit Committee are Ms. Cannella and Mr. Wilson. Upon the completion of this offering, we expect to have an Audit Committee consisting of                (Chairman) ,                 and                . We expect our board of directors to determine that                and                qualify as independent directors under the corporate governance standards of            and the independence requirements of Rule 10A-3 of the Exchange Act. We expect a third new independent member to be placed on the Audit Committee within one year of the completion of this offering so that all of our Audit Committee members will be independent as such term is defined in Rule 10A-3(b)(i) under the Exchange Act and under            . Our board of directors has determined that            qualifies as an "audit committee financial expert" as such term is defined in Item 407(d)(5) of Regulation S-K.

        The purpose of the Audit Committee will be to prepare the audit committee report required by the SEC to be included in our proxy statement and to assist our board of directors in overseeing and monitoring (1) the quality and integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent registered public accounting firm's qualifications and independence, (4) the performance of our internal audit function and (5) the performance of our independent registered public accounting firm.

        Upon the completion of this offering, our board of directors will adopt a new written charter for the Audit Committee, which will be available on our website. The information contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part.

Compensation Committee

        The members of our Compensation Committee are Mr. Hollis and Mr. Wilson. Upon the completion of this offering, we expect to have a Compensation Committee, consisting of                (Chairman),                 and                .

        The purpose of the Compensation Committee is to assist our board of directors in discharging its responsibilities relating to (1) setting our compensation program and compensation of our executive officers and directors, (2) monitoring our incentive and equity-based compensation plans and (3) preparing the compensation committee report required to be included in our proxy statement under the rules and regulations of the SEC.

        Our board of directors will adopt a written charter for the Compensation Committee which will be available on our website upon completion of this offering. The information contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part.

Nominating and Corporate Governance Committee

        Upon the completion of this offering, we expect to have a Nominating and Corporate Governance Committee consisting of                 (Chairman),                and                . The purpose of our Nominating and Corporate Governance Committee will be to assist our board of directors in discharging its responsibilities relating to (1) identifying individuals qualified to become new board members, consistent with criteria approved by our board of directors, (2) reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that our board of directors select, the director nominees for the next annual meeting of stockholders, (3) identifying board members qualified to fill vacancies on any board committee and recommending that our board of directors appoint the identified member or members to the applicable

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committee, (4) reviewing and recommending to our board of directors corporate governance guidelines applicable to us, (5) overseeing the evaluation of our board of directors and management and (6) handling such other matters that are specifically delegated to the committee by our board of directors from time to time.

        Our board of directors will adopt a written charter for the Nominating and Corporate Governance Committee which will be available on our website upon completion of this offering. The information contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part.

Compensation Committee Interlocks and Insider Participation

        None of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our board of directors or compensation committee.

Code of Ethics

        Upon the completion of this offering, our board of directors will adopt a code of business conduct and ethics that is applicable to all of our employees, officers and directors, including our chief executive and senior financial officers. The code of business conduct and ethics will be available on our website. The information contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part.

Compensation Discussion and Analysis

Compensation Program Objectives and Design

        Our compensation objectives include: (1) attracting and retaining top talent; (2) motivating and rewarding the performance of senior executives in support of achievement of strategic, financial, and operating performance objectives; and (3) aligning our executives' interests with our investors.

Elements of Compensation

        The components of compensation for our named executive officers are:

    Base salary;

    Cash incentive compensation in the form of annual performance bonus (also called our Management Incentive Plan);

    Equity compensation under our 2009 Omnibus Equity Incentive Plan;

    Post-termination severance payments in limited circumstances; and

    Benefit plan participation at the same levels provided to employees generally.

Base Salary

        Base salaries are intended to compensate our named executive officers and all other salaried employees for their basic services performed for us on an annual basis. In setting base salaries, we take into account the employee's experience, the functions and responsibilities of the positions, salaries for similar positions within our peer group and for competitive positions in the food industry generally and any other factor relevant to that particular job. We generally aim to pay at the median of our peer group for each position, but do not confine ourselves to this practice if other factors, such as experience, warrant a lower or higher base salary. Base salaries may be adjusted from time to time based on named executive performance or changes in job responsibilities. Our Chief Executive Officer

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recommends to the Compensation Committee the base salaries for his direct reports. The Chief Executive Officer's base salary is set by the Compensation Committee, and is approved by our board of directors.

Cash Incentive Compensation

        APF maintains four incentive-based compensation plans: the Management Incentive Plan, the Sales Incentive Plan, the Gainsharing Plan and the Profit Sharing Plan, as further described in the table below:


Incentive Compensation Plans

Incentive Compensation Plan
  Participants
(#)
  Total Targets
(2015)
  Metrics
Management Incentive Plan     122   $ 5.1 million   150% funding @ $250 million EBITDA
(NEOs)
125% funding @ $250 million EBITDA
(Others)
100% funding @ $240 million EBITDA
(NEOs & Others)
  75% funding @ $230 million EBITDA
(NEOs & Others)
  50% funding @ $220 million EBITDA
(NEOs & Others)

Sales Incentive Plan

 

 

83

 

$

4.2 million

 

Sales Associates
    70% Individual Results
    20% Business Unit Results
    10% Company Results


Sales VPs in Foodservice and Retail
    50% Sales Team Results
    25% Business Unit Results
    25% Company Results

Gainsharing Plan

 

 

321

 

$

1.4 million

 

Funded by product cost performance within location or group.

Payouts then tied to local targets for safety, quality and customer service

Profit Sharing Plan

 

 

282

 

$

1.5 million

 

100% funding @ $250 million EBITDA
75% funding @ $240 million EBITDA
50% funding @ $230 million EBITDA

        Payouts under each of the incentive compensation plans listed above are based on fiscal (calendar) year performance, and are scheduled to be made in February of each year for the prior fiscal year. Employees must remain on the payroll until the respective plan payment dates to remain eligible for a payout. New hires in January or February are eligible for full 12 months of bonus consideration; associates hired between March 1 and September 30 are eligible for a pro-rated bonus in that fiscal year; associates hired between October 1 and December 31 are not eligible for bonus participation until the following full fiscal year. If funded, awards for the Management Incentive Plan, the Gainsharing Plan and the Profit Sharing Plan are based 75% on financial performance and 25% on individual performance.

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        All of our named executive officers participate in the Management Incentive Plan. We pay cash incentives to our named executive officers each February for performance during the prior year. The Compensation Committee evaluates these executives' achievement of specific performance goals with strong emphasis on their contributions to overall company performance in addition to their individual business or function. Bonus amounts are determined based on the Compensation Committee's assessment of a number of quantitative and qualitative factors. The target performance levels of the incentive plan performance metrics are challenging but achievable with strong performance, whereas the maximum performance levels represent stretch goals.

Equity Compensation under our 2009 Omnibus Equity Incentive Plan

        Our 2009 Omnibus Equity Incentive Plan (the "2009 Plan") allows for the following types of equity awards: stock options, share appreciation rights, restricted shares, deferred shares, performance shares and other share-based awards. Our employees, directors and consultants constitute eligible participants under the terms of our 2009 Plan. Under our 2009 Plan, we provide our employees, directors and consultants with equity compensation in the form of restricted stock awards to further align our executives' interests with those of our stockholders.

        The Compensation Committee considers it in the best interests of our stockholders to encourage the continued attention and dedication of our senior executive officers to their assigned duties without distraction in the event of a change in control. Therefore, in the event of a "Change in Control" of the company, the vesting of a portion of restricted stock grants under our 2009 Plan will accelerate and such grants will become immediately vested pursuant to the award agreements thereunder. See "Potential Payments Upon Termination or Change in Control" below for additional information.

Post-termination Severance Payments

        For the reasons stated in "Equity Compensation under our 2009 Omnibus Equity Incentive Plan," we provide all of our named executive officers with post-termination severance payments in the event of either termination by us without "Cause" or termination by an executive under limited circumstances in connection with a change in control. See "Employment Agreements" for additional information. We provide other executives and employees with certain other post-termination benefits. See "Other Change in Control and Severance Arrangements" for additional information.

Benefit Plan Participation: 401(k) Plan and Other Benefits

        We provide various other benefits and compensation-related programs to our named executive officers and other employees, which allow us to provide a full and comprehensive compensation package. This full package of compensation elements is important to our objectives to attract, retain and incent high-quality employees. The elements of our compensation program not otherwise discussed above are:

    A 401(k) plan in which we match up to 100% of the participant deferrals up to 3% of the participant's compensation, plus 50% of the amount of the participant's deferrals between 3% and 5% of the participant's compensation, up to a maximum company contribution of 4% of the employee's pay (up to the Internal Revenue Code annual covered compensation limit);

    Medical and dental insurance for which we pay approximately 75% of the premiums;

    Life and Accidental Death and Dismemberment insurance paid for by us;

    Short-Term Disability insurance paid for by us; and

    Long-Term Disability benefit which is a voluntary benefit for general employees (employee paid). For named executives, the benefit is paid for by us. Additionally, we provide a supplemental Long-Term Disability benefit to our named executives.

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        In establishing and providing the plans noted above, we use outside benefits consultants for 401(k), medical, dental and other employee benefits plan design. Each of the outside consultants provides advice not less than annually about the plan designs for similar manufacturing companies across the United States. As with other elements of compensation, we strive to provide competitive benefits to attract high quality executives. We believe that the benefits noted in this section generally are competitive with all similarly situated manufacturers and competitors with exceptions made where we believe necessary based on the communities where we are located.

        We do not sponsor a defined benefit pension plan for salaried employees.

Summary Compensation Table

        The following table summarizes the compensation of our named executive officers for the fiscal year ended January 2, 2016 to the extent they served as executive officers in such year.

Name and Principal Position
  Fiscal
Year
  Salary   Bonus(2)   Stock
Awards(3)
  All other
Compensation(4)
  Total  

John N. Simons, Jr.
President and CEO

    FY 2015   $ 550,000   $ 1,000,000   $ 700,000   $ 245,201   $ 2,495,201  

Michael B. Sims
CFO

    FY 2015   $ 420,000   $ 410,000   $ 137,500   $ 11,154   $ 978,654  

George F. Chappelle, Jr.
SVP, Supply Chain

    FY 2015   $ 425,000   $ 400,000   $ 206,250   $ 11,161   $ 1,042,411  

James L. Clough
President, Foodservice

    FY 2015   $ 385,000   $ 360,000   $ 206,250   $ 11,108   $ 962,358  

Tony Schroder
President, Convenience Business Unit

    FY 2015   $ 250,000   $ 325,000   $   $   $ 575,000  

Thomas Lavan
Former President, Retail(1)

    FY 2015   $ 215,769   $ 200,000   $   $ 154,956   $ 570,725  

(1)
Mr. Lavan separated from service effective October 8, 2015. See "Potential Payments Upon Termination or Change in Control—Thomas Lavan Separation" for additional information.

(2)
Bonuses accrued in connection with performance during fiscal 2015 were paid in February 2016, except for Messrs. Schroder and Lavan, each of whom received a supplemental bonus in the amount of $100,000 in August 2015. See "Employment Agreements" below for additional information.

(3)
The amounts included in this column represent the grant date fair value of stock awards computed in accordance with FASB ASC Topic 718, which on January 23, 2015, August 14, 2015 and October 29, 2015 were $75 per share, $275 per share and $275 per share, respectively. For each named executive officer, the amounts included in this column comprise restricted stock that vests as to one-third of the underlying shares on each of the first three anniversaries of the grant date, subject to the named executive officer's continued employment or service through each applicable vesting date. The valuation assumptions used in calculating the grant date fair value of this restricted stock is set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Stock-Based Compensation."

(4)
For Mr. Simons, this amount comprises relocation expenses pursuant to his employment agreement ($87,784), an income tax gross-up payment in connection with such relocation expenses pursuant to Mr. Simons' employment agreement and an action of the Compensation Committee ($80,000), charges incurred in connection with Mr. Simons' personal use of a Delta Private Jets Card for two one-way trips (the amount shown is the total expense for two personal one-way trips, the charges

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    for which were incurred and billed to the company on an all-inclusive basis as a function of jet category and flight duration ($53,500), 401(k) plan company match ($10,600), non-private airfare charges incurred for personal trips ($8,593), hotel expenses ($2,558), and miscellaneous perquisites and personal benefits that do not exceed the greater of $25,000 or 10% of the total amount of Mr. Simons' perquisites and personal benefits (comprising life insurance premiums, parking and ground transportation, meals, and telecommunications costs) (collectively, $2,166). For Mr. Sims, this amount comprises 401(k) plan company match ($10,600) and life insurance premiums ($554). For Mr. Chappelle, this amount comprises 401(k) plan company match ($10,600) and life insurance premiums ($561). For Mr. Clough, this amount comprises 401(k) company match ($10,600) and life insurance premiums ($508). For Mr. Schroder, total "All Other Compensation" income was below $10,000. For Mr. Lavan, this amount comprises a partial debt forgiveness in connection with his separation ($92,273), a portion of the $275,000 in separation payments payable over 52 weeks beginning on October 8, 2015 ($46,538), 401(k) company match costs ($9,596); career transition services coverage ($3,500); eight weeks of COBRA continuation coverage beginning on October 8, 2015 ($1,833); vacation payout ($853) and life insurance premiums ($363); see "Potential Payments Upon Termination or Change in Control—Thomas Lavan Separation" for additional information.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in Fiscal Year 2015

Employment Agreements

        John N. Simons, Jr. (Chief Executive Officer).    APF entered into an employment agreement with Mr. Simons effective as of September 30, 2013. Pursuant to his employment agreement, Mr. Simons is entitled to a base salary of $550,000 and an annual bonus ranging from 0% to 200% of his base salary, with a target of 50%, determined according to overall company EBITDA. Mr. Simons received an equity award in connection with entry into his employment agreement and became eligible to participate in our 401(k) plan, health insurance, short-term and long-term disability insurance, life insurance and other employee benefit plans with the terms and conditions of those plans, as may be amended from time to time. Mr. Simons' employment agreement contains benefits to be paid in the event of resignation for "Good Reason" (as defined below) or termination by APF for reasons other than "Cause" (as defined below), death or disability. Under such circumstances and contingent upon Mr. Simons signing and not revoking a comprehensive release of claims substantially in a form provided by APF, Mr. Simons would receive: (1) a severance payment equal to 1.5 times his then-current base salary; plus (2) 1.5 times the average of the two annual bonuses paid to him with respect to the immediately preceding two years (or, if such termination occurs after the first complete year but before the second complete year following his commencement of employment, 1.5 times the average of the actual bonus paid with respect to the first full fiscal year commencing with his employment and the bonus that would have been paid for the then-current fiscal year had performance been met at the 100% achievement level); plus (3) COBRA continuation coverage until the earlier of (a) 18 months following the date of his termination of employment or (b) the date on which he obtains other medical plan coverage, whether from another employer or elsewhere. Also under the terms of Mr. Simons' employment agreement, upon the occurrence of any "Change in Control" (as defined below), his outstanding equity, annual bonus and long-term incentive awards will immediately vest (and not be subject to forfeiture for any reason) in a manner to enable him to fully participate in such Change in Control transaction and, to the extent any vested options granted on or after the effective date of his employment agreement survive such Change in Control, will remain vested and exercisable in accordance with their original terms (including in connection with a termination of his employment with the company).

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        For purposes of Mr. Simons' employment agreement,

    "Cause" means the conviction or commission of or the entry of a guilty plea or plea of no contest to any felony or to any other crime involving moral turpitude.

    "Change in Control" means (1) the acquisition by certain persons (as further defined in Mr. Simons' employment agreement) of beneficial ownership of 50% or greater of either (a) the then-outstanding shares of common stock or other equity interest of us or (b) the combined voting power of the then-outstanding voting securities of us entitled to vote generally in the election of directors; (2) individuals who, as of the effective date of Mr. Simons' employment agreement, constitute our board of directors cease for any reason to constitute a majority thereof, other than the election of replacement directors by a vote of at least a majority of incumbent directors; (3) the consummation of a merger or consolidation or sale or other disposition of all or substantially all of our assets, unless following such business transaction (a) all or substantially all of the individuals and entities who were the beneficial owners of the outstanding equity interest and outstanding voting securities immediately prior to such business transaction beneficially own, directly or indirectly, 50% or more of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from the business transaction in substantially the same proportion as their ownership immediately prior to such business transaction; and (b) at least a majority of the members of the board of directors of the corporation resulting from such business transaction were members of the incumbent board at the time of the execution of the initial agreement, or of the action of the board of directors, providing for such business transaction; or (4) the approval by our stockholders of a complete liquidation or dissolution of us.

    "Good Reason" means the occurrence of any of the following events, if Mr. Simons provides the company with adequate notice as provided in his agreement: (1) a diminution in Mr. Simons' base salary or target bonus, except for any reduction not to exceed 10% of his salary or target bonus if such reduction is applicable to all executive officers; (2) the failure to pay any compensation required under the terms of his employment agreement; (3) a material diminution in Mr. Simons' authority, duties or responsibilities; (4) a relocation of Mr. Simons' primary business office by greater than 50 miles from such office as of the effective date of his employment agreement; (5) a requirement that Mr. Simons report to a person or entity other than the board of either APF or us; or (6) any other action or inaction that constitutes a material breach by APF of Mr. Simons' employment agreement (as it may be amended from time to time).

        Michael B. Sims (Chief Financial Officer).    APF entered into an employment agreement with Mr. Sims on February 2, 2012. Pursuant to his employment agreement, Mr. Sims is entitled to a base salary of $400,000, which APF increased to $420,000 in 2014, and an annual bonus ranging from 0% to 100% of his base salary, with a target of 50%, determined according to performance targets established by us. Mr. Sims received an equity award in connection with entry into his employment agreement and became eligible to participate in our 401(k) plan, health insurance, short-term and long-term disability insurance, life insurance and other employee benefit plans with the terms and conditions of those plans, as may be amended from time to time. Mr. Sims' employment agreement contains benefits to be paid in connection with his termination (1) by APF for any reason other than "Cause" or by disability that continues for greater than 6 months; or (2) by him within 3 months following a "Change in Control" as a result of (a) a material reduction in his then-current base salary or bonus level; (b) a change in office location requiring a relocation from the state of Ohio or in excess of 100 miles; (c) a change resulting in the material diminution of his then-current job description and responsibilities; or (d) a material change in reporting relationship (in each case, provided he adhere to certain notice requirements). Under such circumstances and contingent upon Mr. Sims signing and not revoking a comprehensive

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release of claims substantially in a form provided by us, Mr. Sims would receive salary continuation payments for 12 months (which payments would reduce any severance due to him under any other company severance plan, program or arrangement).

        George F. Chappelle, Jr. (Senior Vice President, Supply Chain).    APF entered into an employment agreement with Mr. Chappelle on December 24, 2013. Pursuant to his employment agreement, Mr. Chappelle is entitled to a base salary of $425,000 and an annual bonus ranging from 0% to 100% of his base salary, with a target of 50%, determined according to performance targets established by us. Mr. Chappelle received an equity award in connection with entry into his employment agreement and became eligible to participate in our 401(k) plan, health insurance, short-term and long-term disability insurance, life insurance and other employee benefit plans with the terms and conditions of those plans, as may be amended from time to time. Mr. Chappelle's employment agreement contains benefits to be paid in connection with his termination (1) by APF for any reason other than "Cause" or by disability that continues for greater than 6 months; or (2) by him within 3 months following a "Change in Control" as a result of (a) a material reduction in his then-current base salary or bonus level; (b) a change resulting in the material diminution of his then-current job description and responsibilities; or (c) a material change in reporting relationship (in each case, provided he adhere to certain notice requirements). Under such circumstances and contingent upon Mr. Chappelle's signing and not revoking a comprehensive release of claims substantially in a form provided by us, Mr. Chappelle would receive salary continuation payments for 12 months (which payments would reduce any severance due to him under any other company severance plan, program or arrangement).

        James L. Clough (President, Foodservice).    APF entered into an employment agreement with Mr. Clough effective as of June 18, 2013. Pursuant to his employment agreement, Mr. Clough is entitled to a base salary of $385,000 and an annual bonus ranging from 0% to 100% of his base salary, with a target of 50%, determined according to performance targets established by us. Mr. Clough received an equity award in connection with entry into his employment agreement and became eligible to participate in our 401(k) plan, health insurance, short-term and long-term disability insurance, life insurance and other employee benefit plans with the terms and conditions of those plans, as may be amended from time to time. Mr. Clough's employment agreement contains benefits to be paid in connection with his termination (1) by APF for any reason other than "Cause" or by disability that continues for greater than 6 months; or (2) by him within 3 months following a "Change in Control" as a result of (a) a material reduction in his then-current base salary or bonus level; or (b) a change resulting in the material diminution of his then-current job description and responsibilities (in each case, provided he adhere to certain notice requirements). Under such circumstances and contingent upon Mr. Clough's signing and not revoking a comprehensive release of claims substantially in a form provided by us, Mr. Clough would receive salary continuation payments for 12 months (which payments would reduce any severance due to him under any other company severance plan, program or arrangement).

        APF entered into a Relocation Repayment Agreement with Mr. Clough effective as of October 14, 2014. Pursuant to the agreement, APF loaned Mr. Clough $100,000 to facilitate his physical relocation on short notice in furtherance of his service to APF. The Relocation Repayment Agreement contained a loan forgiveness feature in the event Mr. Clough remained with APF for a minimum of three years and a partial payment acceleration feature in the event of certain company liquidity transactions. The Relocation Repayment Agreement remained in effect as of January 2, 2016 but was subsequently terminated in connection with an amendment to Mr. Clough's employment agreement, as further described under "Events After Fiscal End."

        Tony Schroder (President, Convenience).    APF entered into an employment agreement with Mr. Schroder effective as of March 9, 2015. Pursuant to his employment agreement, Mr. Schroder is entitled to a base salary of $250,000 and participation in the Management Incentive Plan with an annual target of 50% of his base salary. Mr. Schroder's employment agreement contains benefits to be

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paid in connection with his termination (1) by APF for any reason other than "Cause" or by disability that continues for greater than 6 months; or (2) by him within 3 months following a "Change in Control" as a result of (a) a material reduction in his then-current base salary or bonus level; (b) a change resulting in the material diminution of his then-current job description and responsibilities; (c) a material change in reporting relationship; or (d) a relocation of his office more than 50 miles from his then-current office that requires relocation of his then-current home (in each case, provided he adhere to certain notice requirements). Under such circumstances and contingent upon Mr. Schroder's signing and not revoking a comprehensive release of claims substantially in a form provided by us, Mr. Schroder would receive salary continuation payments for 12 months (which payments would reduce any severance due to him under any other company severance plan, program or arrangement).

        Thomas Lavan (President, Retail).    APF entered into an employment agreement with Mr. Lavan effective as of November 4, 2013. Pursuant to his employment agreement, Mr. Lavan was entitled to a base salary of $275,000 and an annual bonus ranging from 0% to 100% of his base salary, with a target of 50%, determined according to performance targets established by us. Mr. Lavan received an equity award in connection with entry into his employment agreement and became eligible to participate in our 401(k) plan, health insurance, short-term and long-term disability insurance, life insurance and other employee benefit plans with the terms and conditions of those plans as may be amended from time to time. Mr. Lavan's employment agreement contained benefits to be paid in connection with his termination (1) by APF for any reason other than "Cause" or by disability that continues for greater than 6 months; or (2) by him within 3 months following a "Change in Control" as a result of (a) a material reduction in his then-current base salary or bonus level; (b) a change resulting in the material diminution of his then-current job description and responsibilities; or (c) a material change in reporting relationship (in each case, provided he adhere to certain notice requirements). Under such circumstances and contingent upon Mr. Lavan's signing and not revoking a comprehensive release of claims substantially in a form provided by us, Mr. Lavan would receive salary continuation payments for 12 months (which payments would reduce any severance due to him under any other company severance plan, program or arrangement). Mr. Lavan experienced a separation from service on October 8, 2015 that enabled him to receive the separation benefits described in this paragraph. See "Potential Payments Upon Termination or Change in Control—Thomas Lavan Separation" for additional information.

        For purposes of each of the above employment agreements (excluding Mr. Simons' employment agreement),

    "Cause" means one or more of the following events: (1) any material breach of each respective named executive officer's employment agreement by him; (2) willful violation by him of any law, rule or regulation, which violation results, or could reasonably be expected to result, in material harm to the business or reputation of us; or (3) the conviction or commission of or entry of a guilty plea or pleas of no contest to any felony or to any other crime involving moral turpitude.

    "Change in Control" means the sale or other transfer of us to an "Independent Third Party" or a group of Independent Third Parties pursuant to which such party or parties acquire (1) capital stock of us possessing the voting power under normal circumstances (without regard to the occurrence of any contingency) to elect a majority of our board of directors (whether by merger, consolidation or sale or transfer of our capital stock) or (2) all or substantially all of our assets determined on a consolidated basis.

    "Independent Third Party" means any person or entity who, immediately prior to the contemplated transaction, does not own in excess of 5% of the common stock on a fully-diluted basis (a "5% Owner"), who is not controlling, controlled by or under common control with any such 5% Owner and who is not the spouse or descendant (by birth or adoption) of any such 5% Owner or a trust for the benefit of such 5% Owner and/or such other persons.

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Other Change of Control and Severance Agreements

        Our current approach to severance is as follows: salaried employees who are involuntarily terminated for reasons other than cause will receive the following benefits: (1) salary continuation for a defined severance period (the "Severance Period") based on the employee's position with us; (2) continuation of medical and dental benefits for two months at no cost to the employee; and (3) career transition / outplacement services for the Severance Period. Severance Periods are calculated as follows:


Standard Severance Approach

Rank
  Description of Position   Salary
Continuation
Period
  Reduced
COBRA
Premium(1)
  Career
Transition /
Outplacement
Benefits
Tier 1   Vice Presidents, Directors, and Plant Managers   26 weeks   Yes   26 weeks
Tier 2   BU and Functional Staff Managers   16 weeks   Yes   16 weeks
Tier 3   Exempt individual contributors   12 weeks   Yes   12 weeks
Tier 4   Non-exempt / Administrative   8 weeks   Yes   8 weeks

(1)
If the participant is actively enrolled in healthcare coverage prior to his/her termination as provided above, and timely elects COBRA coverage, he/she will only be responsible for the active employee rate for each eligible benefit for a period of two months following termination. The participant will be responsible for 100% of the COBRA rate following such two month period.

        A select group of employees participates in APF's Special Enhanced Severance Plan (the "Enhanced Severance Plan"). The Enhanced Severance Plan provides benefits to participants who, within 26 weeks following a Change in Control (as defined below), either APF terminates for reasons other than "Cause" (as defined below) or who resign as the result of the occurrence of any of the following events without the participant's consent: (1) a material reduction in the participant's base salary or bonus level; (2) a material reduction in the participant's responsibilities; (3) a material adverse change in reporting relationship; or (4) a relocation of Participant's workplace more than 50 miles from the current location; provided that participant notifies APF in writing no more than 60 days following any such event, that such event has not been cured by APF within 30 days thereafter, and that the participant signs and timely returns, and does not revoke, a Confidential Separation Agreement and General Release of Claims form in a form provided by APF. None of our named executive officers participate in the Enhanced Severance Plan. The Enhanced Severance Plan's benefits are as follows:


Enhanced Severance Plan Benefits

Rank
  Description of Position   Salary
Continuation
Period
  Reduced
COBRA
Premium(1)
  Career
Transition /
Outplacement
Benefits
Tier 1   Critical VP or Director level   39 weeks   Yes   3 months
Tier 2   Critical Management   26 weeks   Yes   3 months
Tier 3   Critical Operational   16 weeks   Yes   1 month

(1)
If the participant is actively enrolled in healthcare coverage prior to his/her termination/resignation, and timely elects COBRA coverage, he/she will only be responsible for the active employee rate for each eligible benefit for the duration of the salary continuation period. The participant will be responsible for 100% of the COBRA rate following the salary continuation period.

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        For purposes of the Enhanced Severance Plan,

    "Cause" means (1) willful violation by a participant of any law, rule, regulation or material company policy, which violation results, or could reasonably be expected to result, in material harm to the business or reputation of APF; or (2) the participant's conviction or commission of or the entry of a guilty plea or plea of no contest to any felony or to any other crime involving moral turpitude.

    "Change in Control" means a transaction with an "Independent Third Party" or group of Independent Third Parties pursuant to which such party or parties acquire (1) capital stock of APF or us possessing the voting power under normal circumstances (without regard to the occurrence of any contingency) to elect a majority of APF's or our board of directors (whether by merger, consolidation or sale or transfer of APF's of our capital stock) or (2) all or substantially all of our assets determined on a consolidated basis.

    "Independent Third Party" means any person or entity who, immediately prior to the contemplated transaction, does not own, directly or indirectly (including through affiliates), in excess of 5% of the common stock of APF or us on a fully-diluted basis (a "5% Owner"), who is not controlling, controlled by or under common control with any such 5% Owner and who is not the spouse or descendant (by birth or adoption) of any such 5% Owner or a trust for the benefit of such 5% Owner and/or such other persons; provided, however, that an "Independent Third Party" shall not include any subsidiary of us.

Grants of Plan-Based Awards in Fiscal 2015

        The following table presents, for each of the named executive officers, information concerning each grant of an equity award made during the fiscal year ended January 2, 2016. This information supplements the information about these awards set forth in the Summary Compensation Table.


Grants of Plan-Based Awards

Name
  Grant
Date
  All Other Stock
Awards:
Number of
Shares of Stock
or Units (#)(1)
  All Other Option
Awards: Number
of Securities
Underlying
Options(#)
  Exercise or
Base Price
of Option
Awards
(/Sh)
  Grant Date
Fair Value
of Stock
and Option
Awards(2)
 

John N. Simons, Jr.

    1/23/15     2,000       $   $ 150,000  

    8/14/15     1,000       $   $ 275,000  

    10/29/15     1,000       $   $ 275,000  

Michael B. Sims

    8/14/15     500       $   $ 137,500  

George F. Chappelle, Jr.

    8/14/15     750       $   $ 206,250  

James L. Clough

    8/14/15     750       $   $ 206,250  

Tony Schroder

              $   $  

Thomas Lavan(3)

              $   $  

(1)
The amounts set forth in this column refer to grants of restricted stock of the company. Each grant of restricted stock will vest as to one-third of the underlying shares on each of the first three anniversaries of the grant date, subject to the named executive officer's continued employment or service through each applicable vesting date.

(2)
The amounts set forth in this column are the full grant date fair value of the awards reported in the previous columns determined pursuant to FASB ASC Topic 718. The valuation assumptions used in calculating the grant date fair value of this restricted stock is set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Stock-Based Compensation." Material terms of plan-based awards,

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    including criteria used in determining amounts payable and vesting of awards, are further discussed under "Compensation Discussion and Analysis" above.

(3)
Mr. Lavan separated from service effective October 8, 2015. See "Potential Payments Upon Termination or Change in Control—Thomas Lavan Separation" for additional information.

Outstanding Equity Awards at 2015 Fiscal Year End

        The following table sets forth information regarding outstanding stock options and stock awards held by our named executive officers as of the end of the fiscal year ended January 2, 2016.


Outstanding Equity Awards at Fiscal Year-End

 
   
  Stock Awards  
Name
  Note   Number of
Shares or
Units of Stock
that Have Not
Vested (#)
  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
  Equity Incentive
Plan Awards:
Number of
Unearned
Shares, or Units
or Other Rights
That have Not
Vested
  Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
have Not
Vested(7)
 

John N. Simons, Jr.

    (1 )           5,833   $    

    (2 )           1,000   $    

    (3 )           1,000   $    

Michael B. Sims

    (1 )           1,000   $    

    (2 )           500   $    

George F. Chappelle, Jr.

    (4 )           2,500   $    

    (5 )           1,000   $    

    (2 )           750   $    

James L. Clough

    (1 )           3,000   $    

    (2 )           750   $    

Tony Schroder

    (1 )           666   $    

Thomas Lavan(6)

                    $  

(1)
Restricted stock awards granted on November 11 2013. These awards vest one third of the underlying shares on each of November 11 2014, November 11 2015 and November 11 2016.

(2)
Restricted stock awards granted on August 14, 2015. These awards vest one third of the underlying shares on each of August 14, 2016, August 14, 2017 and August 14, 2018.

(3)
Restricted stock awards granted on October 29, 2015. These awards vest one third of the underlying shares on each of October 29, 2016, October 29, 2017 and October 29, 2018.

(4)
Restricted stock award granted on December 23 2013. This award vests one third of the underlying shares on each of December 23 2014, December 23 2015 and December 23 2016.

(5)
Restricted stock award granted on September 10 2014. This award vests one third of the underlying shares on each of September 10 2015, September 10 2016 and September 10 2017.

(6)
Mr. Lavan separated from service effective October 8, 2015. All unvested restricted stock Mr. Lavan held as of October 8, 2015 was forfeited. See "Potential Payments Upon Termination or Change in Control—Thomas Lavan Separation" for additional information.

(7)
The market price for our common stock is based on the assumed initial public offering price of $            per share, the midpoint of the price range on the cover page of this prospectus.

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Stock Vested in Fiscal 2015

        The following table presents, for each of the named executive officers, the number of shares of our common stock (1) acquired upon the exercises of stock options and (2) the restrictions on which lapsed, respectively, during the fiscal year ended January 2, 2016 and the aggregate value realized upon the exercises or vesting thereof. The Company has no outstanding stock options.


Stock Vested in Fiscal 2015

 
  Stock Awards  
Name
  Number of Shares
Acquired on Vesting (#)
  Value Realized on
Vesting(1)
 

John N. Simons, Jr.

    7,833   $ 1,754,075  

Michael B. Sims

    3,333   $ 449,975  

George F. Chappelle, Jr.

    3,000   $ 825,000  

James L. Clough

    3,000   $ 825,000  

Tony Schroder

    667   $ 183,425  

Thomas Lavan

    2,334   $ 408,450  

(1)
Value realized on vesting is based on the fair market value of the company (unless otherwise stated) common stock on the date of vesting, multiplied by the number of shares covered by the award.

Non-Equity Incentive Plan Awards

        Our named executive officers received awards under the Management Incentive Plan. See "Compensation Discussion and Analysis—Cash incentive compensation" and column (d) of the Summary Compensation Table for additional information.

Nonqualified Deferred Compensation for Fiscal 2015

        None of our named executive officers have received nonqualified deferred compensation from us or our subsidiaries or affiliates at any time.

Pension Benefits for Fiscal 2015

        None of our named executive officers are currently in a defined benefit plan sponsored by us or our subsidiaries or affiliates.

Events After Fiscal Year End

        On March 24, 2016, Mr. Clough and APF entered into an amendment to Mr. Clough's employment agreement. The amendment terminated the Relocation Repayment Agreement described in "Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in Fiscal Year 2015—Employment Agreements" above. In consideration of such termination, the amendment contains a comparable contingent payment feature stating that if Mr. Clough voluntarily terminates employment with APF prior to the three year anniversary of the original loan, or is terminated for Cause (as defined in his employment agreement) prior to such date, Mr. Clough will pay APF $100,000. The amendment contains a partial acceleration feature comparable to that within the Relocation Repayment Agreement.

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Potential Payments Upon Termination or Change in Control

Thomas Lavan Separation

        Mr. Lavan separated from service on October 8, 2015. Pursuant to his separation agreement, Mr. Lavan received or will receive $473,459 in cash and non-cash consideration, comprising (1) $275,000 in salary continuation payments, payable in equal installments on regular company payroll dates commencing on the first regularly scheduled payroll date following October 8, 2015; (2) debt forgiveness in the amount of $92,273 pertaining to two promissory notes Mr. Lavan and the company executed in connection with two elections Mr. Lavan made under Section 83(b) of the Code; (3) a $100,000 payment in consideration for Mr. Lavan's Management Incentive Plan award for 2015, to be paid concurrent with the final payment of his salary continuation provided he has continued to meet all obligations under the terms of his separation agreement as of such time; (4) $1,833 corresponding to eight weeks of COBRA continuation coverage beginning on October 8, 2015; (5) $853 corresponding to his earned but unused vacation accrual as of the date of his separation from service; and (6) $3,500 corresponding to three months of career transition services, which commenced by November 7, 2015. In exchange for the consideration stated above, Mr. Lavan (1) acknowledged his continuing obligations under his previously executed Confidentiality Agreement; (2) entered into a one-year non-competition obligation; and (3) entered into a one-year non-interference obligation. Also in connection with his separation, we repurchased 3,500 shares of company stock (the "repurchased shares") from Mr. Lavan at a repurchase price of $275 per share, for a gross payment of $962,500, of which $89,884 was used to repay outstanding obligations pursuant to the two promissory notes described above, resulting in a net payment of $872,616. The repurchased shares comprise the first two-thirds to vest of a grant of 3,500 shares of restricted stock awarded to Mr. Lavan on November 4, 2013 (the remaining, unvested one-third to be forfeited for no consideration) plus the first one-third to vest of a grant of 3,500 shares of restricted stock awarded to Mr. Lavan on April 23, 2014 (the remaining, unvested two-thirds to be forfeited for no consideration).

Other Payments Upon Termination or Change in Control

        The following table provides potential payments that may be made to each named executive officer upon termination and/or a change in control as defined and pursuant to each executive's executive employment letter. In order to receive severance benefits under their respective employment agreements, each of our named executive officers must sign and timely return, and not revoke, a comprehensive release of claims and demonstrate continued compliance with the confidentiality, non-compete, non-solicitation and/or non-interference provisions of his employment agreement, as applicable. None of our named executive officers participate in the Enhanced Severance Plan. The amounts shown in the table below assume that the executive was terminated on January 2, 2016 and that the effective date of the change in control was January 2, 2016, and do not include amounts (if any) in which the named executive officer had already vested as of January 2, 2016. The amounts shown below are hypothetical payments calculated using the assumptions required under applicable regulations, and do not represent actual payments to any named executive officer. The actual compensation to be paid can only be determined at the time of a named executive officer's termination of employment or upon a change in control, as applicable.

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Potential Payments Upon Termination or Change in Control: CEO

Name
  Benefit   Payable Upon
Termination
Without Cause
or With Good
Reason, Death
or Disability
(Without
Change in
Control)(1)
  Payable Upon
Change in
Control(2)
  Payable Upon
Termination
Without Cause
or With Good
Reason (With
Change in
Control)(3)
 

John N. Simons, Jr

  Cash   $ 1,781,250 (4) $ 1,000,000 (5) $ 2,781,250  

  Equity   $   $ 2,945,665 (6) $ 2,704,075  

  Perquisites / Benefits   $ 18,134 (7) $   $ 18,134  

  Tax Reimbursement   $   $ 0 (8) $ 0  

  Total   $ 1,799,334   $ 3,945,665   $ 5,503,459  

(1)
Please see "Employment Agreements" above for a definition of "Cause" and "Good Reason."

(2)
Under the terms of Mr. Simons' employment agreement, upon the occurrence of any "Change in Control" (as defined in his employment agreement), his outstanding equity, annual bonus and long-term incentive awards will immediately vest (and not be subject to forfeiture for any reason) in a manner to enable him to fully participate in such Change in Control transaction and, to the extent any vested options granted on or after the effective date of his employment agreement survive such Change in Control, will remain vested and exercisable in accordance with their original terms (including in connection with a termination of his employment with the company). See "Employment Agreements" above for additional information. In addition, in the event of a "Change in Control" under the 2009 Plan, the vesting of Mr. Simons' restricted stock grants would accelerate and such grants would become immediately vested in full. For purposes of Mr. Simons' awards agreements under the 2009 Plan, a "Change in Control" means the sale or other transfer of us to an Independent Third Party (as defined below) or "group" (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of Independent Third Parties pursuant to which such party or parties acquire (1) capital stock of us possessing the voting power under normal circumstances (without regard to the occurrence of any contingency) to elect a majority of our board of directors (whether by merger, consolidation or sale or transfer of our capital stock) or (2) all or substantially all of our assets determined on a consolidated basis. "Independent Third Party" means any person or entity who, immediately prior to the contemplated transaction, does not own in excess of 5% of the common stock on a fully-diluted basis (a "5% Owner"), who is not controlling, controlled by or under common control with any such 5% Owner and who is not the spouse or descendant (by birth or adoption) of any such 5% Owner or a trust for the benefit of such 5% Owner and/or such other persons.

(3)
Mr. Simons' employment agreement does not explicitly provide for separate benefits upon a termination without "Cause" or with "Good Reason" in connection with a "Change in Control." The benefits specified in this column assume simultaneous application of the "Cause" / "Good Reason" and the "Change in Control" provisions of Mr. Simons' employment agreement.

(4)
Payment equal to Mr. Simons' base salary ($550,000) multiplied by 1.5, plus the average of Mr. Simons' 2014 annual bonus payment ($275,000) and 2015 annual bonus payment ($1,000,000) multiplied by 1.5, pursuant to the terms of his employment agreement.

(5)
Payment equal to Mr. Simons' 2015 annual bonus payment pursuant to the terms of his employment agreement.

(6)
Represents the value of accelerated vesting of 5,833 shares of restricted stock, valued at $505 per share as of January 2, 2016.

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(7)
Represents payment by us of COBRA premiums with respect to health and welfare plan coverage for him (and his dependents, if covered under such plan as of the date of termination) for 18 months.

(8)
Represents a "gross-up" payment under Sections 280G and 4999 of the Code such that, after his payment of any excise taxes imposed by Section 4999 of the Code or any similar such taxes in connection with his receipt of an excess parachute payment (including any interest or penalties imposed with respect to such taxes), Mr. Simons retains an additional amount equal to any such excise taxes or similar taxes imposed upon the termination- or change-in-control-related payments.

Name
  Benefit   Payable Upon a
Change in Control(1)
  Payable Upon Termination
(a) Without Cause;
(b) Upon Disability or
Death; or (c) with Good
Reason within 3 Months
after a Change in
Control(2)
 

Michael B. Sims

  Cash   $   $ 420,000 (3)

  Equity   $ 505,000 (4) $ 505,000 (4)

  Perquisites / Benefits   $   $ 2,015 (5)

  Tax Reimbursement   $   $  

  Total   $ 505,000   $ 927,015  

George F. Chappelle, Jr.

  Cash   $   $ 425,000 (3)

  Equity   $ 1,767,500 (4) $ 1,767,500 (4)

  Perquisites / Benefits   $   $ 2,889 (5)

  Tax Reimbursement   $   $  

  Total   $ 1,767,500   $ 2,195,389  

James L. Clough

  Cash   $   $ 385,000 (3)

  Equity   $ 1,515,000 (4) $ 1,515,000 (4)

  Perquisites / Benefits   $   $ 2,886 (5)

  Tax Reimbursement   $   $  

  Total   $ 1,515,000   $ 1,902,886  

Tony Schroder

  Cash   $   $ 250,000 (3)

  Equity   $ 336,330 (4) $ 336,330 (4)

  Perquisites / Benefits   $   $ 2,863 (5)

  Tax Reimbursement   $   $  

  Total   $ 336,330   $ 589,193  

Thomas Lavan(6)

  Cash   $   $  

  Equity   $   $  

  Perquisites / Benefits   $   $  

  Tax Reimbursement   $   $  

  Total   $   $  

(1)
In the event of a "Change in Control" under the 2009 Plan, the vesting of Messrs. Sims, Chappelle, Clough, Schroder and Lavan's restricted stock grants would accelerate and such grants would become immediately vested in full. For purposes of the respective awards agreements under the 2009 Plan, a "Change in Control" means the sale or other transfer of us to an Independent Third Party (as defined below) or "group" (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of Independent Third Parties pursuant to which such party or parties acquire (1) capital stock of us possessing the voting power under normal circumstances (without regard to the occurrence of any contingency) to elect a majority of our board of directors (whether by merger, consolidation or sale or transfer of us capital stock) or (2) all or substantially all of our assets determined on a consolidated basis. "Independent Third Party" means any person or entity who, immediately prior to the contemplated transaction, does not own in excess of 5% of the

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    common stock on a fully-diluted basis (a "5% Owner"), who is not controlling, controlled by or under common control with any such 5% Owner and who is not the spouse or descendant (by birth or adoption) of any such 5% Owner or a trust for the benefit of such 5% Owner and/or such other persons.

(2)
Please see "Employment Agreements" above for a definition of "Cause" (subject to footnote 4, below), the events that constitute good reason, and "Change in Control."

(3)
For each named executive officer (other than Mr. Simons), represents 12 months of salary continuation payments. See "Employment Agreements" for additional information.

(4)
Represents the value of accelerated vesting of restricted stock, valued at $505 per share as of January 2, 2016, in the following amounts: for Mr. Sims, 1,000 shares; for Mr. Chappelle, 3,500 shares; for Mr. Clough, 3,000 shares; for Mr. Schroder, 666 shares; and for Mr. Lavan, 0 shares.

(5)
Represents payment by us of COBRA premiums with respect to health and welfare plan coverage for each named executive officer (and his dependents, if covered under such plan as of the date of termination) for 8 weeks.

(6)
Mr. Lavan separated from service effective October 8, 2015. See "Potential Payments Upon Termination or Change in Control—Thomas Lavan Separation" for additional information.

Compensation of Directors

        Directors who are also executive officers do not receive any additional compensation for serving as members of our board of directors or any committee of our board of directors. Each non-employee director is eligible for reimbursement for his expenses incurred in connection with attendance at our board of directors meetings in accordance with our policy. Additionally, non-employee directors are compensated as follows:

        Quarterly Cash Retainers.    Ms. Canella is our only director who receives cash compensation. Ms. Canella receives an annual retainer of $35,000 paid on a quarterly basis.

        Board Meeting Attendance Fees.    Non-employee directors do not receive any additional compensation for their attendance at our board of directors meetings.

        The following table presents, for each of the directors, the compensation and/or fees received by such director during the fiscal year ended January 2, 2016.


Director Compensation

Name(1)
  Fees Paid or
Earned in Cash
  Stock Awards(2)   Total  

Margaret M. Cannella

  $ 35,000   $   $ 35,000  

Dean Hollis

  $   $ 275,000   $ 275,000  

Peter C. Dillingham

  $   $   $  

Stephen A. Kaplan(4)

  $   $   $  

Matthew C. Wilson(4)

  $   $   $  

(1)
Mr. Simons is excluded from this table because he is an executive officer.

(2)
Discretionary award granted to Mr. Hollis in consideration for extensive services provided during fiscal 2015. The amounts included in this column represent the grant date fair value of stock awards computed in accordance with FASB ASC Topic 718, which on October 26, 2015 was $275 per share. The amounts included in this column comprise a grant of 1,000 shares of restricted stock that vests as to one-third of the underlying shares on each of the first three anniversaries of the grant date, subject to the director's continued service through each applicable vesting date. The valuation assumptions used in calculating the grant date fair value of this restricted stock is set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Stock-Based Compensation."

(3)
Director receives no compensation of any kind.

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PRINCIPAL AND SELLING STOCKHOLDERS

        The following table sets forth information with respect to the beneficial ownership of our common stock by (1) each individual or entity known by us to beneficially own more than 5% of our outstanding common stock, (2) each of our named executive officers, (3) each of our directors, (4) all of our directors and our executive officers as a group and (5) each of the selling stockholders.

        Beneficial ownership is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Shares of common stock that a person has the right to acquire within 60 days of the date of this prospectus are deemed to be outstanding and beneficially owned by such person, but are not deemed outstanding for purposes of computing the percentage of beneficial ownership for any other person. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have the sole voting and investment power with respect to all common shares that they beneficially own, subject to community property laws where applicable. The number of shares and percentages of beneficial ownership prior to this offering set forth below are based on            shares of our common stock outstanding as of January 2, 2016 and            shares of our common stock outstanding following this offering.

        Except as otherwise indicated in the footnotes below, the address of each beneficial owner is c/o AdvancePierre Foods Holdings, Inc., 9987 Carver Road, Blue Ash, Ohio 45242.

 
   
   
   
  Shares of Common Stock
Beneficially Owned After this
Offering
 
 
  Shares of Common
Stock Beneficially
Owned Prior to this
Offering
   
  Assuming No
Exercise of the
Underwriters'
Option
  Assuming Full
Exercise of the
Underwriter's
Option
 
 
  Shares of
Common
Stock Being
Offered
 
Name of Beneficial Owner
  Number   %   Number   %   Number   %  

5% Stockholders and Other Selling Stockholders:

                                           

Funds managed by Oaktree Capital Management, L.P.(1)

                                           

Named Executive Officers and Directors:

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

John N. Simons, Jr. 

                                           

Michael B. Sims

                                           

James L. Clough

                                           

Tony Schroder

                                           

George F. Chappelle, Jr. 

                                           

Thomas Lavan

                                           

Margaret M. Cannella

                                           

Celeste A. Clark, Ph.D. 

                                           

Peter C. Dillingham

                                           

Dean Hollis

                                           

Stephen A. Kaplan

                                           

Gary L. Perlin

                                           

Matthew C. Wilson

                                           

All directors and executive officers as a group (16 individuals)

                                           

*
Less than one percent.

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(1)
OCM Principal Opportunities Fund IV Delaware, L.P. ("POF IV Delaware") holds the shares of the Company's common stock. The general partner of POF IV Delaware is OCM Principal Opportunities Fund IV Delaware GP Inc. ("POF IV Delaware GP"). The general partner of POF IV Delaware GP is OCM Principal Opportunities Fund IV, L.P. ("POF IV"). The general partner of POF IV is OCM Principal Opportunities Fund IV GP, L.P. ("POF IV GP"). The general partner of POF IV GP is POF IV GP LTD. ("POF IV GP LTD"). The sole shareholder of POF IV GP LTD is Oaktree Fund GP I, L.P. ("GP I"), and the sole director of POF IV GP LTD is OCM LP. The general partner of GP I is Oaktree Capital I, L.P. ("Capital I"). The general partner of OCM LP is Oaktree Holdings, Inc. ("Holdings Inc."). The general partner of Capital I is OCM Holdings I, LLC ("Holdings I"). The managing member of Holdings I is Oaktree Holdings, LLC ("Holdings LLC"). The managing member of Holdings LLC and the sole shareholder of Holdings Inc. is Oaktree Capital Group, LLC ("OCG"). The duly elected manager of OCG is Oaktree Capital Group Holdings GP, LLC ("OCGH GP"). OCGH GP is managed by an executive committee consisting of Howard S. Marks, Bruce A. Karsh, Jay S. Wintrob, John B. Frank, Stephen A. Kaplan, David M. Kirchheimer and Sheldon M. Stone (the "OCGH GP Members"). In such capacity, the OCGH GP Members may be deemed to have indirect beneficial ownership of the shares of the Company's common stock held by POF IV Delaware. Each OCGH GP Member disclaims beneficial ownership of the shares of the Company's common stock held by POF IV Delaware.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Registration Rights Agreement

        We are currently party to a registration rights agreement with our principal stockholders and certain other existing stockholders. In connection with this offering, we will enter into an amended and restated registration rights agreement with our principal stockholders and the same existing stockholders. The existing registration rights agreement grants, and the amended and restated registration rights agreement will grant, to our principal stockholders an unlimited number of "demand" registration rights and to both our principal stockholders and the other existing stockholders party thereto customary "piggyback" registration rights. The registration rights agreement also provides that we will pay certain expenses relating to such registrations and indemnify our principal stockholders and the existing stockholders party thereto against certain liabilities which may arise under the Securities Act.

Stockholders Agreement

        We are currently party to a stockholders agreement with our principal stockholders and certain other existing stockholders, including members of management who hold shares of our common stock. The existing stockholders agreement contains agreements among the parties with respect to, among other things, preemptive rights with respect to certain issuances of our equity securities, transfer restrictions, come-along rights, bring-along rights and rights of first refusal. The existing stockholders agreement also contains agreements with respect to the election of our directors. The existing stockholders agreement will terminate automatically upon the consummation of this offering.

        In connection with this offering, we will enter into a new stockholders agreement with our principal stockholders. This agreement will grant our principal stockholders the right to nominate to our board of directors a number of designees equal to: (1) at least a majority of the total number of directors comprising our board of directors at such time as long as affiliates of Oaktree beneficially own at least 50% of the shares of our common stock entitled to vote generally in the election of our directors; (2) at least 40% of the total number of directors comprising our board of directors at such time as long as affiliates of Oaktree beneficially own at least 40% but less than 50% of the shares of our common stock entitled to vote generally in the election of our directors; (3) at least 30% of the total number of directors comprising our board of directors at such time as long as affiliates of Oaktree beneficially own at least 30% but less than 40% of the shares of our common stock entitled to vote generally in the election of our directors; (4) at least 20% of the total number of directors comprising our board of directors at such time as long as affiliates of Oaktree beneficially own at least 20% but less 30% of the shares of our common stock entitled to vote generally in the election of our directors; and (5) at least 10% of the total number of directors comprising our board of directors at such time as long as affiliates of Oaktree beneficially own at least 5% but less than 20% of the shares of our common stock entitled to vote generally in the election of our directors. For purposes of calculating the number of directors that our principal stockholders are entitled to nominate pursuant to the formula outlined above, any fractional amounts would be rounded up to the nearest whole number and the calculation would be made on a pro forma basis, taking into account any increase in the size of our board of directors (e.g., one and one quarter (11/4) directors shall equate to two directors). In addition, in the event a vacancy on our board of directors is created by the death, disability, retirement or resignation of an Oaktree director designee, Oaktree shall, to the fullest extent permitted by law, have the right to have the vacancy filled by a new Oaktree director-designee.

Management Services Agreement with Oaktree

        We are currently party to a management services agreement with Oaktree pursuant to which Oaktree provides us with ongoing management, advisory and consulting services. In consideration for

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the services provided, we are required to pay Oaktree an aggregate annual advisory fee of $3.0 million. We are also required to reimburse Oaktree for certain out-of-pocket expenses incurred with respect to the performance of services, including fees and expenses paid by Oaktree on our behalf to third-party consultants, who were engaged to provide consulting and other advisory services to us in connection with certain performance improvement projects. We paid $11.6 million, $13.1 million and $3.6 million in combined fees and expenses to Oaktree in fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

        Upon consummation of this offering, we will pay Oaktree an aggregate success fee of $9.0 million pursuant to the management services agreement, which will be terminated.

Second Lien Term Loan

        Oaktree and its affiliates are participating lenders under our second lien term loan. $31.7 million and $31.6 million aggregate principal amount of our second lien term loan was owed to Oaktree and its affiliates at January 2, 2016 and January 3, 2015, respectively. At January 2, 2016 and January 3, 2015, interest accrued to Oaktree and its affiliates was $0.7 million and $0.7 million, respectively. Related party interest for Oaktree and its affiliates was $3.1 million, $3.1 million and $2.9 million for fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

Loans to Executive Officer to Pay Income Taxes

        As a privately owned company, we have from time to time made loans, evidenced by promissory notes, to our employees to assist them in paying income taxes triggered by restricted share grants and concurrent elections under Section 83(b) of the Internal Revenue Code, which result in immediate recognition of compensation for income tax purposes associated with the grants. The employee loans typically have terms of seven years and the annual interest rate on the employee loans for each year varies based on the mid-term adjusted applicable federal rate. The employee loans are secured by all shares issued to the respective employee under our 2009 Omnibus Equity Incentive Plan. As of January 2, 2016 and January 3, 2015, the annual interest rates on the loans ranged from 0.95% to 2.04%.

        During fiscal 2015, the maximum amounts outstanding, including accrued interest, under loans to Mr. Simons, Mr. Sims, Mr. Clough, Mr. Booker, Mr. Schroder, Mr. Chappelle, Mr. Theis, Ms. Panchot and Mr. Hollis were $799,349, $730,865, $340,841, $539,439, $71,985, $314,824, $24,400, $51,295 and $205,068, respectively. During fiscal 2014, the maximum amounts outstanding, including accrued interest, under loans to Mr. Simons, Mr. Sims, Mr. Clough, Mr. Schroder, Mr. Chappelle, Mr. Theis, Ms. Panchot and Mr. Hollis were $449,421, $659,147, $237,787, $70,751, $212,459, $23,957, $18,435 and $73,279, respectively. During fiscal 2013, the maximum amounts outstanding, including accrued interest, under loans to Mr. Simons, Mr. Sims, Mr. Clough, Mr. Schroder, Mr. Chappelle, Mr. Theis, Ms. Panchot and Mr. Hollis were $441,544, $647,859, $233,620, $69,522, $172,725, $23,537, $18,139 and $71,995, respectively.

        In March 2016, Mr. Simons, Mr. Sims, Mr. Clough, Mr. Booker, Mr. Schroder, Mr. Chappelle, Mr. Theis, Ms. Panchot and Mr. Hollis repaid their loans in full. We will no longer make loans to Mr. Simons, Mr. Sims, Mr. Clough, Mr. Booker, Mr. Schroder, Mr. Chappelle, Mr. Theis, Ms. Panchot and Mr. Hollis or our other executive officers or directors.

Indemnification Agreements

        Prior to the completion of this offering, we will enter into indemnification agreements with each of our executive officers and directors, as described under "Description of Capital Stock—Limitations on Liability and Indemnification of Officers and Directors."

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Income Tax Receivable Agreement

        Following our initial public offering, we expect to be able to utilize net operating losses, tax basis and other tax attributes that arose prior to the initial public offering, assuming generation of future income. These net operating loss carryforwards, depreciation and amortization deductions in respect of tax basis and other tax attributes will reduce the amount of tax that we and our subsidiaries would otherwise be required to pay in the future.

        We will enter into an income tax receivable agreement with our existing stockholders that will provide for the payment by us to our existing stockholders of 85% of the amount of cash savings, if any, in U.S. federal, state, local, and foreign income tax that we and our subsidiaries actually realize (or are deemed to realize in the case of an early termination by us or a change of control, as discussed below) as a result of the utilization of our net operating losses, tax basis and other tax attributes attributable to periods prior to this offering together with interest accrued at a rate of          from the date the applicable tax return is due (without extension) until paid.

        For purposes of the income tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had we not been able to utilize the tax benefits subject to the income tax receivable agreement. The term of the income tax receivable agreement will commence upon consummation of this offering and will continue until all relevant tax benefits have been utilized or have expired.

        Our counterparties under the income tax receivable agreement will not reimburse us for any benefits that are subsequently disallowed (although any future payments would be adjusted to the extent possible to reflect the result of such disallowance). As a result, in such circumstances we could make payments under the income tax receivable agreement that are greater than our actual cash tax savings.

        While the actual amount and timing of any payments under the income tax receivable agreement will vary depending upon a number of factors, including the amount, character and timing of our and our subsidiaries' taxable income in the future, we expect that during the term of the income tax receivable agreement, the payments that we may make could be material. Assuming no material changes in the relevant tax law, and that we earn sufficient taxable income to realize the full tax benefits subject to the income tax receivable agreement, we expect that future payments under the income tax receivable agreement will total between approximately $          million and $          million. Such amounts may differ materially from the amounts presented above based on various items.

        If we undergo a change of control, the income tax receivable agreement will terminate, and we will be required to make a payment equal to the present value of future payments under the income tax receivable agreement, which payment would be based on certain assumptions (the "valuation assumptions"), including those relating to our future taxable income. Additionally, if we or a direct or indirect subsidiary transfers any asset to a corporation with which we do not file a consolidated tax return, we will be treated as having sold that asset in a taxable transaction for purposes of determining the cash savings in income tax under the income tax receivable agreement. Any such payment resulting from a change of control or asset transfer could be substantial and could exceed our actual cash tax savings.

        The income tax receivable agreement provides that in the event that we breach any of our material obligations under it, whether as a result of our failure to make any payment when due (subject to a specified cure period), failure to honor any other material obligation under it or by operation of law as a result of the rejection of it in a case commenced under the United States Bankruptcy Code or otherwise, then all our payment and other obligations under the income tax receivable agreement will be accelerated and will become due and payable, applying the same valuation assumptions discussed above, including those relating to our future taxable income. Such payments could be substantial and

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could exceed our actual cash tax savings. Additionally, we generally have the right to terminate the income tax receivable agreement. If we terminate the income tax receivable agreement, our payment and other obligations under the income tax receivable agreement will be accelerated and will become due and payable, also applying the valuation assumptions discussed above. Such payments could be substantial and could exceed our actual cash tax savings.

        Because we are a holding company with no operations of our own, our ability to make payments under the income tax receivable agreement is dependent on the ability of our subsidiaries to make distributions to us. Our credit agreements restrict the ability of our subsidiaries to make distributions to us, which could affect our ability to make payments under the income tax receivable agreement. In addition, our ability to make payments under the income tax receivable agreement may be further restricted by the terms of any future debt or preferred securities. To the extent that we are unable to make payments under the income tax receivable agreement for any reason, such payments will be deferred and will accrue interest at a rate of          per annum until paid.

Policies and Procedures for Related Person Transactions

        Prior to the completion of this offering, all related party transactions had to be presented to and approved by our Chief Executive Officer and Chief Financial Officer, as well as our Audit Committee if the transaction was material.

        Our board of directors recognizes the fact that transactions with related persons present a heightened risk of conflicts of interests and improper valuation (or the perception thereof). In connection with this offering, our board of directors will adopt a written policy on transactions with related persons that is in conformity with the requirements upon issuers having publicly-held common stock that is listed on            . Under the new policy:

    any related person transaction, and any material amendment or modification to a related person transaction, must be reviewed and approved or ratified by a committee of our board of directors composed solely of independent directors who are disinterested or by the disinterested members of our board of directors; and

    any employment relationship or transaction involving an executive officer and any related compensation must be approved by the Compensation Committee or recommended by the Compensation Committee to our board of directors for its approval.

        In connection with the review and approval or ratification of a related person transaction:

    management must disclose to the committee or disinterested directors, as applicable, the name of the related person and the basis on which the person is a related person, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person's direct or indirect interest in, or relationship to, the related person transaction;

    management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction complies with the terms of our agreements governing our material outstanding indebtedness that limit or restrict our ability to enter into a related person transaction;

    management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction will be required to be disclosed in our applicable filings under the Securities Act or the Exchange Act, and related rules, and, to the extent required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with such Acts and related rules; and

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    management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction constitutes a "personal loan" for purposes of Section 402 of the Sarbanes-Oxley Act.

        In addition, the related person transaction policy provides that the committee or disinterested directors, as applicable, in connection with any approval or ratification of a related person transaction involving a non-employee director or director nominee, should consider whether such transaction would compromise the director or director nominee's status as an "independent," "outside," or "non-employee" director, as applicable, under the rules and regulations of the SEC,            and Internal Revenue Code.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

        We summarize the principal terms of some of the agreements governing our indebtedness below. The following summaries are not complete descriptions of all of the terms of such agreements.

First Lien Term Loan

        On October 10, 2012, our wholly owned indirect subsidiary, APF, and our wholly owned direct subsidiary, APF Holdco, entered into a first-lien credit agreement with Deutsche Bank Trust Company Americas, as administrative agent, and the lenders from time to time party thereto, providing for a first-lien term loan in an aggregate amount of $925 million. As of January 2, 2016, $894.9 million was outstanding under our first lien term loan.

Maturity; Prepayments

        Our first lien term loan will mature on July 10, 2017. Principal repayments of approximately $2.31 million are payable quarterly with the balance due at maturity.

        Subject to certain exceptions, our first lien term loan is subject to mandatory prepayment and reduction in an amount equal to:

    the net cash proceeds of any incurrence of indebtedness by APF or any of its restricted subsidiaries, other than indebtedness permitted to be incurred or issued under our first lien term loan;

    the net cash proceeds of certain specified asset sales, dispositions by APF and its restricted subsidiaries and certain casualty events, in each case, subject to certain reinvestment provisions; and

    50% of annual excess cash flow (as defined in our first lien term loan) for any fiscal year (stepping-down to 25% and 0% upon achievement of certain leverage ratio targets).

        APF may prepay our first lien term loan at any time and from time to time, in whole or in part, without premium or penalty.

Guarantees; Security

        The obligations of APF under our first lien term loan are guaranteed by each of its direct and indirect wholly owned domestic subsidiaries (other than subsidiaries of foreign subsidiaries, immaterial subsidiaries, unrestricted subsidiaries and certain other exceptions). Our first lien term loan and the guarantees thereunder are secured by liens granted by APF and the guarantors in (1) all of the capital stock of all direct domestic subsidiaries, (2) 65% of the capital stock of each direct foreign subsidiary, and (3) substantially all other tangible and intangible assets, subject in each case to certain exceptions. The liens securing our first lien term loan (1) have priority over the liens securing our second lien term loan with respect to the Term Loan Priority Collateral and the ABL Priority Collateral (each as defined in the Intercreditor Agreement, dated as of October 10, 2012), (2) have priority over the liens securing our ABL facility with respect to the Term Loan Priority Collateral and (3) are second in priority with respect to the ABL Priority Collateral.

Interest; Fees

        Our first lien term loan bears interest equal to the alternative base rate plus 3.50% per annum, with an alternative base rate floor of 2.25%, or LIBOR plus 4.50% per annum, with a LIBOR floor of 1.25%, based on a periodic election of the interest rate by APF. At January 2, 2016, the interest rate for all borrowings on our first lien term loan was 5.75%.

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        APF pays customary fees in respect of our first lien term loan.

Covenants

        Our first lien term loan contains a number of covenants that, among other things, limit or restrict the ability of APF Holdco and its restricted subsidiaries to: (1) dispose of certain assets; (2) incur or guarantee additional indebtedness; (3) enter into a new line of business; (3) make dividends and other restricted payments (including redemption of APF's stock, prepayments of subordinated obligations and making investments); (4) incur or maintain liens; (5) modify certain terms of their organizational documents or certain debt instruments; (6) permit restrictions on a restricted subsidiary's ability to pay dividends, make intercompany loans or otherwise transfer assets to APF or any of its restricted subsidiaries; or (7) engage in certain transactions with affiliates. Our first lien term loan also restricts the ability of APF Holdco and its restricted subsidiaries to engage in mergers or the sale of substantially all of its assets.

Events of Default

        Our first lien term loan contains a number of events of default including non-payment of principal, interest or fees, violation of covenants, material inaccuracy of representations or warranties, cross payment default and cross acceleration to certain other material indebtedness, certain bankruptcy events, certain ERISA events, invalidity of guarantees or security interests, material judgments and change of control.

2012 Second Lien Term Loan

        On October 10, 2012, our wholly owned indirect subsidiary, APF, and our wholly owned direct subsidiary, APF Holdco, entered into a second-lien credit agreement with Deutsche Bank Trust Company Americas, as administrative agent, and the lenders from time to time party thereto, providing for a second-lien term loan in an aggregate amount of $375 million. As of January 2, 2016, $372.3 million was outstanding under our second lien term loan.

Maturity; Prepayments

        Our second lien term loan will mature on October 10, 2017.

        Subject to certain exceptions, our second lien term loan is subject to mandatory prepayment and reduction in an amount equal to:

    the net cash proceeds of any incurrence of indebtedness by APF or any of its restricted subsidiaries, other than indebtedness permitted to be incurred or issued under our second lien term loan;

    the net cash proceeds of certain specified asset sales, dispositions by APF and its restricted subsidiaries and certain casualty events, in each case, subject to certain reinvestment provisions; and

    50% of annual excess cash flow (as defined in our first lien term loan) for any fiscal year (stepping-down to 25% and 0% upon achievement of certain leverage ratio targets).

        APF may prepay our second lien term loan at any time and from time to time, in whole or in part, subject to a 1% prepayment premium with respect to any prepayment made prior to October 10, 2016.

Guarantees; Security

        The obligations of APF under our second lien term loan are guaranteed by each of its direct and indirect wholly owned domestic subsidiaries (other than subsidiaries of foreign subsidiaries, immaterial

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subsidiaries, unrestricted subsidiaries and certain other exceptions). Our second lien term loan and the guarantees thereunder are secured by liens granted by APF and the guarantors in (1) all of the capital stock of all direct domestic subsidiaries, (2) 65% of the capital stock of each direct foreign subsidiary and (3) substantially all other tangible and intangible assets, subject in each case to certain exceptions. The liens securing our second lien term loan (1) are second in priority with respect to the Term Loan Priority Collateral and (2) are third in priority with respect to the ABL Priority Collateral.

Interest; Fees

        Our second lien term loan bears interest equal to the alternative base rate plus 7.25% per annum, with an alternative base rate floor of 2.25%, or LIBOR plus 8.25% per annum, with a LIBOR floor of 1.25%, based on a periodic election of the interest rate by APF. At January 2, 2016, the interest rate for all borrowings on our second lien term loan was 9.5%.

        APF pays customary fees in respect of our second lien term loan.

Covenants

        Our second lien term loan contains a number of covenants that, among other things, limit or restrict the ability of APF Holdco and its restricted subsidiaries to: (1) dispose of certain assets; (2) incur or guarantee additional indebtedness; (3) enter into a new line of business; (3) make dividends and other restricted payments (including redemption of APF's stock, prepayments of subordinated obligations and making investments); (4) incur or maintain liens; (5) modify certain terms of their organizational documents or certain debt instruments; (6) permit restrictions on a restricted subsidiary's ability to pay dividends, make intercompany loans or otherwise transfer assets to APF or any of its restricted subsidiaries; or (7) engage in certain transactions with affiliates. Our second lien term loan also restricts the ability of APF Holdco and its restricted subsidiaries to engage in mergers or the sale of substantially all of its assets.

Events of Default

        Our second lien term loan contains a number of events of default including non-payment of principal, interest or fees, violation of covenants, material inaccuracy of representations or warranties, cross payment default and cross acceleration to certain other material indebtedness, certain bankruptcy events, certain ERISA events, invalidity of guarantees or security interests, material judgments and change of control.

ABL Facility

        On October 10, 2012, our wholly owned indirect subsidiary, APF, entered into a second amended and restated credit agreement with Wells Fargo Capital Finance, LLC, as administrative agent, and the lenders from time to time party thereto, providing for an asset-based senior secured revolving loan facility for aggregate maximum borrowings (subject to availability under a borrowing base) of up to $150 million to APF. $30 million of our ABL facility is available for the issuance of letters of credit. As of January 2, 2016, APF had no outstanding borrowings and $5.5 million of letters of credit outstanding under our ABL facility. There was available capacity under our ABL facility of $125.4 million at January 2, 2016.

Maturity; Prepayments

        The maturity date of our ABL facility is January 10, 2017.

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        Subject to certain exceptions, our ABL facility is subject to mandatory prepayment in amounts equal to the amount by which certain outstanding extensions of credit exceed the lesser of the borrowing base and the commitments then in effect.

Guarantees; Security

        The obligations of APF under our ABL facility are guaranteed by each of its direct and indirect wholly owned domestic subsidiaries (other than subsidiaries of foreign subsidiaries, immaterial subsidiaries, unrestricted subsidiaries and certain other exceptions). Our ABL facility and the guarantees thereunder are secured by security interests in (1) all of the capital stock of all direct domestic subsidiaries, (2) 65% of the capital stock of each direct foreign subsidiary and (3) substantially all other tangible and intangible assets, subject in each case to certain exceptions. The liens securing our ABL facility (1) have priority over the liens securing our first lien term loan and our second lien term loan with respect to the ABL Priority Collateral and (2) are third in priority with respect to the Term Loan Priority Collateral.

Interest; Fees

        APF can periodically elect to pay interest on outstanding borrowings under the APF Facility at an alternative base rate plus a margin ranging from 0.75% to 1.25% per annum or LIBOR plus a margin ranging from 1.75% to 2.25% per annum, in each case, depending on APF's average excess availability under our ABL facility. Our ABL facility also carries a fronting fee with respect to letters of credit of 0.125% per annum and an used commitment fee of 0.375% per annum.

        APF pays other customary fees in respect of our ABL facility.

Covenants

        Our ABL facility contains a number of covenants that, among other things, limit or restrict the ability of APF and its restricted subsidiaries to: (1) dispose of certain assets; (2) incur or guarantee additional indebtedness; (3) enter into a new line of business; (3) make dividends and other restricted payments (including redemption of APF's stock, prepayments of subordinated obligations and making investments); (4) incur or maintain liens; (5) modify certain terms of their organizational documents or certain debt instruments; (6) permit restrictions on a restricted subsidiary's ability to pay dividends, make intercompany loans or otherwise transfer assets to APF or any of its restricted subsidiaries; or (7) engage in certain transactions with affiliates. Our ABL facility also restricts the ability of APF to engage in mergers or the sale of substantially all of its assets. In addition, under our ABL facility, if availability under our ABL facility falls below a specified threshold for a certain period of time, the borrowers are required to comply with a minimum fixed charge coverage ratio of 1.0:1.0.

Events of Default

        Our ABL facility contains a number of events of default including non-payment of principal, interest or fees, violation of covenants, material inaccuracy of representations or warranties, cross payment default and cross acceleration to certain other material indebtedness, certain bankruptcy events, certain ERISA events, invalidity of guarantees or security interests, material judgments and change of control.

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DESCRIPTION OF CAPITAL STOCK

        In connection with this offering, we will amend and restate our certificate of incorporation and our bylaws. The following is a description of the material terms of, and is qualified in its entirety by, our amended and restated certificate of incorporation and amended and restated bylaws, each of which will be in effect upon the consummation of this offering, the forms of which are filed as exhibits to the registration statement of which this prospectus is a part.

        Our purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the DGCL. Upon the consummation of this offering, our authorized capital stock will consist of            shares of common stock, par value $0.01 per share, and                shares of preferred stock, par value $0.01 per share. No shares of preferred stock will be issued or outstanding immediately after the public offering contemplated by this prospectus. Unless our board of directors determines otherwise, we will issue all shares of our capital stock in uncertificated form.

Common Stock

        Holders of our common stock are entitled to one vote for each share held of record on all matters to which stockholders are entitled to vote generally, including the election or removal of directors. The holders of our common stock do not have cumulative voting rights in the election of directors.

        Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our common stock will be entitled to receive pro rata our remaining assets available for distribution. Holders of our common stock do not have preemptive, subscription or conversion rights. The common stock will not be subject to further calls or assessment by us. There will be no redemption or sinking fund provisions applicable to the common stock. All shares of our common stock that will be outstanding at the time of the completion of the offering will be fully paid and non-assessable. The rights, powers, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may authorize and issue in the future.

Preferred Stock

        Our amended and restated certificate of incorporation will authorize our board of directors to establish one or more series of preferred stock (including convertible preferred stock). Unless required by law or by                , the authorized shares of preferred stock will be available for issuance without further action by you. Our board of directors is able to determine, with respect to any series of preferred stock, the powers (including voting powers), preferences and relative participations, optional or other special rights, and the qualifications, limitations or restrictions thereof, of that series, including, without limitation:

    the designation of the series;

    the number of shares of the series, which our board of directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);

    whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;

    the dates at which dividends, if any, will be payable;

    the redemption rights and price or prices, if any, for shares of the series;

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    the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;

    the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs;

    whether the shares of the series will be convertible into shares of any other class or series, or any other security, of us or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;

    restrictions on the issuance of shares of the same series or of any other class or series; and

    the voting rights, if any, of the holders of the series.

        We could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of you might believe to be in your best interests or in which you might receive a premium for your common stock over the market price of the common stock. Additionally, the issuance of preferred stock may adversely affect the holders of our common stock by restricting dividends on the common stock, diluting the voting power of the common stock or subordinating the liquidation rights of the common stock. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our common stock.

Dividends

        The DGCL permits a corporation to declare and pay dividends out of "surplus" or, if there is no "surplus," out of its net profits for the fiscal year in which the dividend is declared or the preceding fiscal year. "Surplus" is defined as the excess of the net assets of the corporation over the amount determined to be the capital of the corporation by the board of directors. The capital of the corporation is typically calculated to be (and cannot be less than) the aggregate par value of all issued shares of capital stock. Net assets equals the fair value of the total assets minus total liabilities. The DGCL also provides that dividends may not be paid out of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.

        Declaration and payment of any dividend will be subject to the discretion of our board of directors. The time and amount of dividends will be dependent upon our financial condition, operations, cash requirements and availability, debt repayment obligations, capital expenditure needs and restrictions in our debt instruments, industry trends, the provisions of Delaware law affecting the payment of distributions to stockholders and any other factors our board of directors may consider relevant. See "Dividend Policy."

Anti-Takeover Effects of Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law

        Our amended and restated certificate of incorporation, amended and restated bylaws and the DGCL, which are summarized in the following paragraphs, contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of us by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including those

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attempts that might result in a premium over the prevailing market price for the shares of common stock held by stockholders.

    Authorized but Unissued Capital Stock

        Delaware law does not require stockholder approval for any issuance of authorized shares. However, the listing requirements of                 , which would apply if and so long as our common stock remains listed on                , require stockholder approval of certain issuances equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of common stock. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.

        Our board of directors may generally issue preferred shares on terms calculated to discourage, delay or prevent a change of control of us or the removal of our management. Moreover, our authorized but unissued shares of preferred stock will be available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans.

        One of the effects of the existence of unissued and unreserved common stock or preferred stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.

    Classified Board of Directors

        Our amended and restated certificate of incorporation will provide that our board of directors will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with the directors serving three-year terms. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board of directors. Our amended and restated certificate of incorporation and amended and restated bylaws will provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by our board of directors.

    Removal of Directors; Vacancies

        Under the DGCL, unless otherwise provided in a certificate of incorporation, directors serving on a classified board may be removed by the stockholders only for cause. Our amended and restated certificate of incorporation will provide that directors may be removed with or without cause upon the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class; provided, however, at any time when Oaktree and its affiliates beneficially own, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors, directors may only be removed for cause, and only by the affirmative vote of holders of at least 662/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class. In addition, our amended and restated certificate of incorporation will provide that, subject to the rights granted to one or more series of preferred stock then outstanding or the rights granted under the stockholders agreement with our principal stockholders, any vacancies on our board of directors will be filled only by the affirmative vote of a majority of the remaining directors, even if less than a quorum, by a sole remaining director or by the stockholders; provided, however, at any time when Oaktree and its affiliates beneficially own, in the

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aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors, any newly created directorship on our board of directors that results from an increase in the number of directors and any vacancy occurring in our board of directors may only be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director (and not by stockholders). With respect to any vacancy of an Oaktree-designated director, Oaktree will have the right to designate a new director for election by a majority of the remaining directors then in office.

    No Cumulative Voting

        Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation specifically authorizes cumulative voting. Our amended and restated certificate of incorporation will not authorize cumulative voting. Therefore, stockholders holding a majority in voting power of the shares of our stock entitled to vote generally in the election of directors will be able to elect all our directors.

    Special Stockholder Meetings

        Our amended and restated certificate of incorporation will provide that special meetings of our stockholders may be called at any time only by or at the direction of our board of directors or the chairman of our board of directors; provided, however, at any time when Oaktree and its affiliates beneficially own, in the aggregate, at least 40% in voting power of our stock entitled to vote generally in the election of directors, special meetings of our stockholders shall also be called by our board of directors or the chairman of our board of directors at the request of Oaktree and its affiliates. Our amended and restated bylaws will prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of our Company.

    Requirements for Advance Notification of Director Nominations and Stockholder Proposals

        Our amended and restated bylaws will establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of our board of directors. In order for any matter to be "properly brought" before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder's notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our amended and restated bylaws will also specify requirements as to the form and content of a stockholder's notice. Our amended and restated bylaws will allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to influence or obtain control of us.

    Stockholder Action by Written Consent

        Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless our amended and restated certificate of incorporation provides

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otherwise. Our amended and restated certificate of incorporation will preclude stockholder action by written consent at any time when Oaktree and its affiliates beneficially own, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors.

    Supermajority Provisions

        Our amended and restated certificate of incorporation and amended and restated bylaws will provide that our board of directors is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, our bylaws without a stockholder vote in any matter not inconsistent with the laws of the State of Delaware or our amended and restated certificate of incorporation. For as long as Oaktree and its affiliates beneficially own, in the aggregate, at least 40% in voting power of our stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our stockholders will require the affirmative vote of a majority in voting power of the outstanding shares of our stock present in person or represented by proxy and entitled to vote on such amendment, alteration, rescission or repeal. At any time when Oaktree and its affiliates beneficially own, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our stockholders will require the affirmative vote of the holders of at least 662/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class.

        The DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation's certificate of incorporation, unless the certificate of incorporation requires a greater percentage.

        Our amended and restated certificate of incorporation will provide that at any time when Oaktree and its affiliates beneficially own, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors, the following provisions in our amended and restated certificate of incorporation may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least 662/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class:

    the provision requiring a 662/3% supermajority vote for stockholders to amend our bylaws;

    the provisions providing for a classified board of directors (the election and term of our directors);

    the provisions regarding resignation and removal of directors;

    the provisions regarding competition and corporate opportunities;

    the provisions regarding entering into business combinations with interested stockholders;

    the provisions regarding stockholder action by written consent;

    the provisions regarding calling special meetings of stockholders;

    the provisions regarding filling vacancies on our board of directors and newly created directorships;

    the provisions eliminating monetary damages for breaches of fiduciary duty by a director; and

    the amendment provision requiring that the above provisions be amended only with a 662/3% supermajority vote.

        The combination of the classification of our board of directors, the lack of cumulative voting and the supermajority voting requirements will make it more difficult for our existing stockholders to replace our board of directors as well as for another party to obtain control of us by replacing our

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board of directors. Because our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management.

        These provisions may have the effect of deterring hostile takeovers, delaying, or preventing changes in control of our management or us, such as a merger, reorganization or tender offer. These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of us. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions are also intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. Such provisions may also have the effect of preventing changes in management.

Dissenters' Rights of Appraisal and Payment

        Under the DGCL, with certain exceptions, our stockholders will have appraisal rights in connection with a merger or consolidation of us. Pursuant to the DGCL, stockholders who properly request and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.

Stockholders' Derivative Actions

        Under the DGCL, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of our shares at the time of the transaction to which the action relates or such stockholder's stock thereafter devolved by operation of law.

Exclusive Forum

        Our amended and restated certificate of incorporation will provide that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf of us, (2) action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, creditors or other constituents, (3) action asserting a claim against us or any of our directors or officers arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or our amended and restated bylaws, or (4) action asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of our company shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. However, the enforceability of similar forum provisions in other companies' certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be unenforceable.

Conflicts of Interest

        Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Our amended and restated certificate of incorporation will, to the maximum extent permitted from time to time by Delaware law, renounce any interest or expectancy that we have in, or right to be offered an

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opportunity to participate in, specified business opportunities that are from time to time presented to our officers, directors or stockholders or their respective affiliates, other than those officers, directors, stockholders or affiliates who are our or our subsidiaries' employees. Our amended and restated certificate of incorporation will provide that, to the fullest extent permitted by law, each of Oaktree or any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have no duty to refrain from (1) engaging in a corporate opportunity in the same or similar lines of business in which we or our affiliates now engage or propose to engage or (2) otherwise competing with us or our affiliates. In addition, to the fullest extent permitted by law, in the event that Oaktree or any of its affiliates or any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself or its or his affiliates or for us or our affiliates, such person will have no duty to communicate or offer such transaction or business opportunity to us or any of our affiliates and they may take any such opportunity for themselves or offer it to another person or entity. Our amended and restated certificate of incorporation will not renounce our interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of the company. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for us unless we would be permitted to undertake the opportunity under our amended and restated certificate of incorporation, we have sufficient financial resources to undertake the opportunity and the opportunity would be in line with our business.

Limitations on Liability and Indemnification of Officers and Directors

        The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties, subject to certain exceptions. Our amended and restated certificate of incorporation will include a provision that eliminates the personal liability of directors for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions is to eliminate the rights of us and our stockholders, through stockholders' derivative suits on our behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director.

        Our amended and restated bylaws will provide that we must generally indemnify, and advance expenses to, our directors and officers to the fullest extent authorized by the DGCL. We also are expressly authorized to carry directors' and officers' liability insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification and advancement provisions and insurance are useful to attract and retain qualified directors and executive officers.

        The limitation of liability, indemnification and advancement provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

        There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

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        Prior to the completion of this offering, we will enter into indemnification agreements with each of our directors and executive officers pursuant to which we will agree to indemnify them to the fullest extent permitted by Delaware law.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or controlling persons pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Transfer Agent and Registrar

        The transfer agent and registrar for our common stock is                .

Listing

        We intend to apply to list our shares of common stock on                under the trading symbol "            ."

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SHARES ELIGIBLE FOR FUTURE SALE

General

        Prior to this offering, there has not been a public market for our common stock, and we cannot predict what effect, if any, market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of common stock, including shares issued upon the exercise of outstanding options, in the public market, or the perception that such sales could occur, could materially and adversely affect the market price of our common stock and could impair our future ability to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate. See "Risk Factors—Risks Related to this Offering and Ownership of Our Common Stock—Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our common stock to decline."

        Upon the consummation of this offering, we will have                shares of common stock outstanding. Of these shares, only the                shares of common stock (or                 shares if the underwriters exercise in full their option to purchase additional shares) sold in this offering by the selling stockholders and us will be freely tradable without registration under the Securities Act and without restriction by persons other than our "affiliates" (as defined under Rule 144). The                shares of common stock held by our principal stockholders, certain of our directors and officers and other existing stockholders after this offering will be "restricted" securities under the meaning of Rule 144 and may not be sold in the absence of registration under the Securities Act, unless an exemption from registration is available, including the exemptions pursuant to Rule 144 and Rule 701 under the Securities Act. In addition,                shares of our common stock will be eligible for sale upon vesting of restricted shares granted under our 2009 Omnibus Equity Incentive Plan. Of these restricted shares,                 will have vested at or prior to the closing of this offering,                 will vest over the next            years and                will vest subject to performance conditions. Furthermore,                shares of common stock are reserved for future issuance under our 2009 Omnibus Equity Incentive Plan.

Rule 144

        In general, under Rule 144, as currently in effect, a person (or persons whose shares are aggregated) who is not deemed to be or have been one of our affiliates for purposes of the Securities Act at any time during 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate, is entitled to sell such shares without registration, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of a prior owner other than an affiliate, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144.

        In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates, who have met the six month holding period for beneficial ownership of "restricted shares" of our common stock, are entitled to sell within any three-month period, a number of shares that does not exceed the greater of:

    1% of the number of shares of our common stock then outstanding, which will equal approximately                shares immediately after this offering; or

    the average reported weekly trading volume of our common stock on                during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

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        Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. The sale of these shares, or the perception that sales will be made, could adversely affect the price of our common stock after this offering because a great supply of shares would be, or would be perceived to be, available for sale in the public market.

Rule 701

        In general, under Rule 701 as currently in effect, any of our employees, directors, officers, consultants or advisors who purchase shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering are entitled to sell such shares 90 days after the effective date of this offering in reliance on Rule 144, in the case of affiliates, without having to comply with the holding period requirements of Rule 144 and, in the case of non-affiliates, without having to comply with the public information, holding period, volume limitation or notice filing requirements of Rule 144. However, substantially all Rule 701 shares are subject to lock-up agreements as described below and under "Underwriting" and will become eligible for sale upon the expiration of the restrictions set forth in those agreements.

Lock-Up Agreements

        We, our directors and executive officers, holders of substantially all of our outstanding stock (including the selling stockholders) have agreed that, subject to certain exceptions, for a period of 180 days after the date of this prospectus, we and they will not directly or indirectly, without the prior written consent of each of Barclays Capital Inc. and Credit Suisse Securities (USA) LLC (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of our common stock (including, without limitation, shares of our common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of our common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for shares of our common stock or sell or grant options, rights or warrants with respect to any shares of our common stock or securities convertible into or exchangeable for common stock (other than the grant of options pursuant to stock option plans existing on the date of this prospectus), (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of our common stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or other securities, in cash or otherwise, (3) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of our common stock or securities convertible, exercisable or exchangeable into common stock or any of our other securities, or (4) publicly disclose the intention to do any of the foregoing. Barclays Capital Inc. and Credit Suisse Securities (USA) LLC in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time. See "Underwriting."

Registration Rights

        We are currently party to a registration rights agreement with our principal stockholders and certain other existing stockholders. In connection with this offering, we will enter into an amended and restated registration rights agreement with our principal stockholders and the same existing stockholders. The existing registration rights agreement grants, and the amended and restated registration rights agreement will grant, to our principal stockholders an unlimited number of "demand" registration rights and to both our principal stockholders and the other existing stockholders party thereto customary "piggyback" registration rights. The registration rights agreement also provides

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that we will pay certain expenses relating to such registrations and indemnify our principal stockholders and the members of management party thereto against certain liabilities which may arise under the Securities Act.

        Following completion of this offering, the shares covered by the registration rights agreement would represent approximately        % of our outstanding common stock (or         %, if the underwriters exercise in full their option to purchase additional shares). These shares also may be sold under Rule 144, depending on their holding period and subject to Rule 144 limitations applicable to affiliates and the lock-up restrictions described above and under "Underwriting."

        For additional information, see "Certain Relationships and Related Party Transactions—Registration Rights Agreement."

Form S-8 Registration Statement

        Following completion of this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act to register the shares of common stock issued or issuable under our 2009 Omnibus Equity Incentive Plan. Any such Form S-8 registration statement will become effective automatically upon filing. We expect that the initial registration statement on Form S-8 will cover                shares of common stock. Once these shares are registered, they can be sold in the public market upon issuance, subject to Rule 144 limitations applicable to affiliates, vesting restrictions and the lock-up restrictions described above and under "Underwriting."

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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

        The following is a summary of United States federal income tax considerations generally applicable to the ownership and disposition of shares of our common stock by a non-U.S. holder (as defined below) that purchases shares of our common stock pursuant to this offering and holds such common stock as a "capital asset" within the meaning of the Internal Revenue Code of 1986, as amended (the "Code"). This discussion is based on currently existing provisions of the Code, applicable United States Treasury regulations promulgated thereunder, judicial decisions, and rulings and pronouncements of the United States Internal Revenue Service (the "IRS") all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or subject to different interpretation. This discussion does not address all the tax consequences that may be relevant to specific holders in light of their particular circumstances or to holders subject to special treatment under United States federal income tax laws (such as financial institutions, insurance companies, tax-exempt organizations, controlled foreign corporations, passive foreign investment companies, retirement plans, partnerships and their partners, dealers in securities, brokers, United States expatriates, persons who have acquired shares of our common stock as compensation or otherwise in connection with the performance of services, or persons who have acquired shares of our common stock as part of a straddle, hedge, conversion transaction or other integrated investment). This discussion does not address the state, local, or foreign tax, the Medicare tax imposed on certain investment income or United States federal estate or alternative minimum tax consequences relating to the ownership and disposition of shares of our common stock. Prospective investors should consult their tax advisors regarding the United States federal tax consequences of owning and disposing shares of our common stock, as well as the applicability and effect of any state, local or foreign tax laws.

        As used in this discussion, the term "non-U.S. holder" refers to a beneficial owner of our common stock that is not, for United States federal income tax purposes, any of the following:

    an individual who is a citizen or resident of the United States;

    a corporation (or other entity or arrangement taxable as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia;

    any entity or arrangement treated as a partnership for United States federal income tax purposes;

    an estate the income of which is subject to United States federal income tax regardless of its source; or

    a trust (a) if a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions, or (b) that has in effect a valid election under applicable Treasury regulations to be treated as a United States person.

        If a partnership or other entity or arrangement treated as a partnership for United States federal income tax purposes holds shares of our common stock, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partnership that holds shares of our common stock and any partner who owns an interest in such a partnership should consult their tax advisors regarding the United States federal income tax consequences of an investment in our common stock.

        You should consult your tax advisors concerning the particular United States federal income tax consequences to you of the purchase, ownership, and disposition of our common stock as well as the consequences to you arising under the laws of any other applicable taxing jurisdiction in light of your particular circumstances.

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Distributions on Common Stock

        If we make a distribution of cash or other property (other than certain distributions of our stock) in respect of shares of our common stock, the distribution generally will be treated as a dividend to the extent of our current or accumulated earnings and profits as determined under United States federal income tax principles. Any portion of a distribution that exceeds our current and accumulated earnings and profits generally will be treated first as a tax-free return of capital, on a share-by-share basis, to the extent of the non-U.S. holder's tax basis in our common stock, and, to the extent such portion exceeds the non-U.S. holder's tax basis in our common stock, the excess will be treated as gain from the disposition of the common stock, the tax treatment of which is discussed below under "—Sale, Exchange or Other Taxable Disposition."

        The gross amount of dividends paid to a non-U.S. holder with respect to shares of our common stock generally will be subject to United States federal withholding tax at a rate of 30%, unless (1) an applicable income tax treaty reduces or eliminates such tax, and the non-U.S. holder certifies that it is eligible for the benefits of such treaty in the manner described below, or (2) the dividends are effectively connected with the non-U.S. holder's conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment maintained by the non-U.S. holder in the United States) and the non-U.S. holder satisfies certain certification and disclosure requirements. In the latter case, a non-U.S. holder generally will be subject to United States federal income tax with respect to such dividends on a net income basis at regular graduated United States federal income tax rates in the same manner as a United States person (as defined under the Code). Additionally, a non-U.S. holder that is a corporation may be subject to a branch profits tax equal to 30% (or such lower rate as may be specified by an applicable income tax treaty) of its effectively connected earnings and profits for the taxable year, as adjusted for certain items.

        A non-U.S. holder that wishes to claim the benefit of an applicable income tax treaty with respect to dividends on shares of our common stock will be required to provide the applicable withholding agent with a valid IRS Form W-8BEN or W-8BEN-E (or other applicable form) and certify under penalties of perjury that such holder (1) is not a United States person (as defined under the Code) and (2) is eligible for the benefits of such treaty, and the withholding agent must not have actual knowledge or reason to know that the certification is incorrect. This certification must be provided to the applicable withholding agent prior to the payment of dividends and may be required to be updated periodically. A non-U.S. holder eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

        Prospective investors, and in particular prospective investors engaged in a United States trade or business, are urged to consult their tax advisors regarding the United States federal income tax consequences of owning our common stock.

Sale, Exchange or Other Taxable Disposition

        Generally, a non-U.S. holder will not be subject to United States federal income tax on gain realized upon the sale, exchange, or other taxable disposition of shares of our common stock unless (1) the gain is effectively connected with such non-U.S. holder's conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States), (2) such non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year of the sale, exchange or other taxable disposition and certain other conditions are satisfied or (3) we are or become a "United States real property holding corporation" (as defined in section 897(c) of the Code) at any time during the shorter of the five-year period ending on the date of disposition or the non-U.S.

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holder's holding period for our common stock and either (a) our common stock has ceased to be traded on an established securities market prior to the beginning of the calendar year in which the sale, exchange or other taxable disposition occurs, or (b) the non-U.S. holder owns (actually or constructively) more than five percent of our common stock at some time during the shorter of the five-year period ending on the date of disposition or such holder's holding period for our common stock. Although there can be no assurances in this regard, we believe that we are not a United States real property holding corporation, and we do not expect to become a United States real property holding corporation.

        Generally, gain described in clause (1) of the immediately preceding paragraph will be subject to tax on a net income basis at regular graduated United States federal income tax rates in the same manner as if the non-U.S. holder were a United States person (as defined under the Code). A non-U.S. holder that is a corporation may also be subject to a branch profits tax equal to 30% (or at such lower rate as may be specified by an applicable income tax treaty) of its effectively connected earnings and profits for the taxable year, as adjusted for certain items. An individual non-U.S. holder described in clause (2) of the immediately preceding paragraph will be required to pay (subject to applicable income tax treaties) a flat 30% tax on the gain derived from the sale, exchange or other taxable disposition, which may be offset by certain United States source capital losses, even though the individual is not considered a resident of the United States.

Information Reporting and Backup Withholding

        A non-U.S. holder generally will be required to comply with certain certification procedures to establish that such non-U.S. holder is not a United States person (as defined under the Code) in order to avoid backup withholding with respect to dividends or the proceeds of a disposition of shares of our common stock. In addition, we are required to annually report to the IRS and a non-U.S. holder the amount of any distributions paid to such non-U.S. holder, regardless of whether we actually withheld any tax. Copies of the information returns reporting such distributions and the amount withheld, if any, may also be made available to the tax authorities in the country in which a non-U.S. holder resides under the provisions of an applicable income tax treaty. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or credit against such non-U.S. holder's U.S. federal income tax liability, provided that certain required information is timely provided to the IRS.

Foreign Account Tax Compliance Act

        Withholding at a rate of 30% is required on dividends in respect of, and, after December 31, 2018, gross proceeds from the sale or other disposition of, shares of our common stock held by or through certain foreign financial institutions (including investment funds), unless such institution enters into an agreement with the United States Treasury Department to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain United States persons and by certain non-United States entities that are wholly or partially owned by United States persons and to withhold on certain payments. An intergovernmental agreement between the United States and an applicable foreign country, or future Treasury regulations, may modify these requirements. Accordingly, the entity through which our common stock is held will affect the determination of whether such withholding is required. Similarly, dividends in respect of, and gross proceeds from the sale or other disposition of, shares of our common stock held by an investor that is a non-financial foreign entity that does not qualify under certain exemptions will be subject to withholding at a rate of 30%, unless such entity either (1) certifies that such entity does not have any "substantial United States owners" or (2) provides certain information regarding the entity's "substantial United States owners." Prospective investors should consult their tax advisors regarding the possible implications of these rules on their investment in our common stock.

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UNDERWRITING

        Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC are acting as representatives of the several underwriters. Under the terms of an underwriting agreement, which will be filed as an exhibit to the registration statement, each of the underwriters named below has severally agreed to purchase from us and the selling stockholders the respective number of common stock shown opposite its name below:

Underwriters
  Number of
Shares
 

Barclays Capital Inc. 

                  

Credit Suisse Securities (USA) LLC

       

Morgan Stanley & Co. LLC

       

Total

       

        The underwriting agreement provides that the underwriters' obligation to purchase shares of common stock depends on the satisfaction of the conditions contained in the underwriting agreement including:

    the representations and warranties made by us and the selling stockholders to the underwriters are true;

    there is no material change in our business or the financial markets; and

    we and the selling stockholders deliver customary closing documents to the underwriters.

        The underwriting agreement provides that the underwriters must purchase all of the shares of common stock offered hereby (other than those shares of common stock covered by their option to purchase additional shares as described below), if any of the shares are purchased.

Commissions and Expenses

        The following table summarizes the underwriting discounts and commissions we and the selling stockholders will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares. The underwriting fee is the difference between the initial price to the public and the amount the underwriters pay to us and the selling stockholders for the shares.

 
  Us   Selling Stockholders  
 
  No Exercise   Full Exercise   No Exercise   Full Exercise  

Per Share

  $                $                $                $               

Total

  $     $     $     $    

        Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC have advised us that the underwriters propose to offer the shares of common stock directly to the public at the public offering price on the cover of this prospectus and to selected dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $            per share. After the offering, the representatives may change the offering price and other selling terms.

        The expenses of the offering that are payable by us and the selling stockholders are estimated to be approximately $            (excluding underwriting discounts and commissions). We have agreed to pay expenses incurred by the selling stockholders in connection with the offering, other than the underwriting discounts and commissions. We have agreed to reimburse the underwriters for expense relating to clearance of this offering with the Financial Industry Regulatory Authority up to $            .

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Option to Purchase Additional Shares

        The selling stockholders have granted the underwriters an option exercisable for 30 days after the date of this prospectus to purchase, from time to time, in whole or in part, up to an aggregate of            shares from the selling stockholders at the public offering price less underwriting discounts and commissions. This option may be exercised to the extent the underwriters sell more than                shares in connection with this offering. To the extent that this option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase its pro rata portion of these additional shares based on the underwriter's percentage underwriting commitment in the offering as indicated in the table at the beginning of this Underwriting Section.

Lock-Up Agreements

        We, our directors and executive officers, holders of substantially all of our outstanding stock (including the selling stockholders) have agreed that, subject to certain exceptions, for a period of 180 days after the date of this prospectus, we and they will not directly or indirectly, without the prior written consent of each of Barclays Capital Inc. and Credit Suisse Securities (USA) LLC (1) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of our common stock (including, without limitation, shares of our common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of our common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for shares of our common stock or sell or grant options, rights or warrants with respect to any shares of our common stock or securities convertible into or exchangeable for common stock (other than the grant of options pursuant to stock option plans existing on the date of this prospectus), (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of our common stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or other securities, in cash or otherwise, (3) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of our common stock or securities convertible, exercisable or exchangeable into common stock or any of our other securities or (4) publicly disclose the intention to do any of the foregoing.

        Barclays Capital Inc. and Credit Suisse Securities (USA) LLC in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time. When determining whether or not to release shares of our common stock and our other securities from lock-up agreements, Barclays Capital Inc. and Credit Suisse Securities (USA) LLC will consider, among other factors, the holder's reasons for requesting the release, the number of shares of our common stock and our other securities for which the release is being requested and market conditions at the time. At least three business days before the effectiveness of any release or waiver of any of the restrictions described above with respect to one of our officers or directors, Barclays Capital Inc. and Credit Suisse Securities (USA) LLC will notify us of the impending release or waiver and we have agreed to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver, except where the release or waiver is effected solely to permit a transfer of shares of our common stock or other securities that is not for consideration and where the transferee has agreed in writing to be bound by the same terms as the lock-up agreements described above to the extent and for the duration that such terms remain in effect at the time of transfer.

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Offering Price Determination

        Prior to this offering, there has been no public market for our common stock. The initial public offering price was negotiated between the representatives and us. In determining the initial public offering price of our common stock, the representatives considered:

    the history and prospects for the industry in which we compete;

    our financial information;

    the ability of our management and our business potential and earning prospects;

    the prevailing securities markets at the time of this offering; and

    the recent market prices of, and the demand for, publicly traded shares of generally comparable companies.

Indemnification

        We and the selling stockholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

Stabilization, Short Positions and Penalty Bids

        The underwriters may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Exchange Act:

    Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

    A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriters in excess of the number of shares they are obligated to purchase is not greater than the number of shares that they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through their option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

    Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions.

    Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

        These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in

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the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on                 or otherwise and, if commenced, may be discontinued at any time.

        Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters make any representation that the underwriters will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

Electronic Distribution

        A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations.

        Other than the prospectus in electronic format, the information on any underwriter's or selling group member's website and any information contained in any other website maintained by an underwriter or selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors.

Listing

        We intend to apply to list our shares of common stock on                under the trading symbol "            ."

Stamp Taxes

        If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

Other Relationships

        The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for us and our affiliates, for which they received or may in the future receive customary fees and expenses.

        In the ordinary course of their various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities or instruments of the issuer or its affiliates. If the underwriters or their affiliates have a lending relationship with us, certain of those underwriters or their affiliates routinely hedge, and certain

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other of those underwriters or their affiliates may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, the underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the shares of common stock offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the shares of common stock offered hereby. The underwriters and certain of their affiliates may also communicate independent investment recommendations, market color or trading ideas or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

Selling Restrictions

        This prospectus does not constitute an offer to sell to, or a solicitation of an offer to buy from, anyone in any country or jurisdiction (1) in which such an offer or solicitation is not authorized, (2) in which any person making such offer or solicitation is not qualified to do so or (3) in which any such offer or solicitation would otherwise be unlawful. No action has been taken that would, or is intended to, permit a public offer of the shares of common stock or possession or distribution of this prospectus or any other offering or publicity material relating to the shares of common stock in any country or jurisdiction (other than the United States) where any such action for that purpose is required.

European Economic Area

        In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State") an offer to the public of any common stock which are the subject of the offering contemplated herein may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

    to legal entities which are qualified investors as defined under the Prospectus Directive;

    by the underwriters to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives of the underwriters for any such offer; or

    in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of common stock shall result in a requirement for us, the selling stockholders or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

        Each person in a Relevant Member State who receives any communication in respect of, or who acquires any common stock under, the offers contemplated here in this prospectus will be deemed to have represented, warranted and agreed to and with each underwriter, the selling stockholders and us that:

    it is a qualified investor as defined under the Prospectus Directive; and

    in the case of any common stock acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (1) the common stock acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is

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      defined in the Prospectus Directive, or in the circumstances in which the prior consent of the representatives of the underwriters has been given to the offer or resale or (2) where common stock have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of such common stock to it is not treated under the Prospectus Directive as having been made to such persons.

        For the purposes of this representation and the provision above, the expression an "offer of common stock to the public" in relation to any common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any common stock to be offered so as to enable an investor to decide to purchase or subscribe for the common stock, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

United Kingdom

        This prospectus has only been communicated or caused to have been communicated and will only be communicated or caused to be communicated as an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act of 2000 (the "FSMA")) as received in connection with the issue or sale of the common stock in circumstances in which Section 21(1) of the FSMA does not apply to us. All applicable provisions of the FSMA will be complied with in respect to anything done in relation to the common stock in, from or otherwise involving the United Kingdom.

Notice to Residents of Canada

        The shares of common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares of common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

        Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

        Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts ("NI 33-105"), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

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LEGAL MATTERS

        The validity of the shares of common stock offered by this prospectus will be passed upon for us and the selling stockholders by Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, California. Certain legal matters relating to this offering will be passed upon for the underwriters by Shearman & Sterling LLP, New York, New York.


EXPERTS

        The financial statements as of January 2, 2016 and January 3, 2015 and for each of the three years in the period ended January 2, 2016 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.


WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered by this prospectus. This prospectus is a part of the registration statement and does not contain all of the information set forth in the registration statement and its exhibits and schedules, portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information about us and our common stock, you should refer to the registration statement and its exhibits and schedules. Statements in this prospectus about the contents of any contract, agreement or other document are not necessarily complete and in each instance that a copy of such contract, agreement or document has been filed as an exhibit to the registration statement, we refer you to the copy that we have filed as an exhibit.

        When we complete this offering, we will also be required to file annual, quarterly and special reports and other information with the SEC. Our filings with the SEC will be available to the public on the SEC's website at http://www.sec.gov. Those filings are also available free of charge to the public on, or accessible through, our corporate website under the heading "Investors," at http://www.advancepierre.com. The information we file with the SEC or contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part. You may also read and copy, at SEC prescribed rates, any document we file with the SEC, including the registration statement (and its exhibits) of which this prospectus is a part, at the SEC's Public Reference Room located at 100 F Street, N.E., Washington D.C. 20549. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of AdvancePierre Foods Holdings, Inc.:

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive income (loss), stockholders' deficit and of cash flows present fairly, in all material respects, the financial position of AdvancePierre Foods Holdings, Inc. and its subsidiaries at January 2, 2016 and January 3, 2015, and the results of their operations and their cash flows for each of the three years in the period ended January 2, 2016 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for current deferred income tax assets and liabilities in 2015.

/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
April 11, 2016

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ADVANCEPIERRE FOODS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share amounts)

 
  Fiscal Year Ended  
 
  January 2,
2016
  January 3,
2015
  December 28,
2013
 
 
  52 Weeks   53 Weeks   52 Weeks  

Net sales

  $ 1,611,611   $ 1,577,627   $ 1,491,998  

Cost of goods sold

    1,158,218     1,227,053     1,144,333  

Distribution expenses

    96,527     99,329     95,339  

Restructuring expenses

    2,492     2,046     21,444  

Gross profit

    354,374     249,199     230,882  

Selling, general and administrative expenses

    196,169     167,596     160,442  

Impairment charges

            5,497  

Restructuring expenses

    2,248     5,265     10,249  

Other expense, net

    5,550     259     780  

Operating income

    150,407     76,079     53,914  

Interest expense:

   
 
   
 
   
 
 

Third party interest

    91,187     92,628     91,957  

Related party interest

    3,124     3,177     2,910  

Amortization of loan origination fees and original issue discount

    10,066     9,828     9,738  

Income (loss) before income tax provision

    46,030     (29,554 )   (50,691 )

Income tax provision

    8,919     8,389     6,356  

Net income (loss)

  $ 37,111   $ (37,943 ) $ (57,047 )

Other comprehensive income (loss), net of tax:

                   

Change in fair value of derivatives

    2,294     (2,294 )    

Other comprehensive income (loss)

    2,294     (2,294 )    

Comprehensive income (loss)

  $ 39,405   $ (40,237 ) $ (57,047 )

Net income (loss) per common share

                   

Weighted average common shares outstanding—basic

    1,325,218     1,302,087     1,287,743  

Net income (loss) per common share—basic

  $ 28.00   $ (29.14 ) $ (44.30 )

Weighted average common shares outstanding—diluted

    1,342,079     1,302,087     1,287,743  

Net income (loss) per common share—diluted

  $ 27.65   $ (29.14 ) $ (44.30 )

   

See accompanying notes to consolidated financial statements

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ADVANCEPIERRE FOODS HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

 
  January 2,
2016
  January 3,
2015
 

Assets

             

Current Assets:

             

Cash and cash equivalents

  $ 4,505   $ 97  

Accounts receivable, net of allowance $15

    82,618     99,249  

Inventories

    183,536     189,733  

Donated food value of USDA commodity inventory

    31,590     25,561  

Prepaid expenses and other current assets

    11,201     12,411  

Total current assets

    313,450     327,051  

Property, plant and equipment, net

    237,922     219,394  

Other Assets:

             

Goodwill

    299,708     275,262  

Other intangibles, net

    242,110     223,318  

Deferred loan origination fees

    11,557     18,653  

Other

    2,483     2,810  

Total other assets

    555,858     520,043  

Total assets

  $ 1,107,230   $ 1,066,488  

Liabilities and Shareholders' Deficit

             

Current Liabilities:

             

Current maturities of long-term debt

  $ 24,721   $ 11,736  

Trade accounts payable

    43,896     67,709  

Accrued payroll and payroll taxes

    24,235     19,917  

Accrued interest

    20,028     20,980  

Accrued advertising and promotion

    25,289     13,504  

Accrued obligations under USDA commodity program

    30,541     28,525  

Other accrued liabilities

    37,548     17,665  

Total current liabilities

    206,258     180,036  

Long-term debt:

             

Long-term debt, net of current maturities

    1,213,136     1,261,861  

Related party debt

    31,772     31,644  

    1,244,908     1,293,505  

Deferred income taxes

    42,750     35,292  

Other long-term liabilities

    40,541     24,693  

Total liabilities

    1,534,457     1,533,526  

Commitments and contingencies (see notes 22 and 23)

             

Stockholders' Deficit:

             

Common stock—$0.01 par value, 10,000,000 shares authorized, 1,339,561 and 1,318,146 issued and outstanding at January 2, 2016 and January 3, 2015, respectively

    13     13  

Additional paid-in capital

    4,187     2,411  

Stockholder notes receivable

    (3,884 )   (2,514 )

Accumulated deficit

    (427,543 )   (464,654 )

Accumulated other comprehensive loss

        (2,294 )

Total stockholders' deficit

    (427,227 )   (467,038 )

Total liabilities and stockholders' deficit

  $ 1,107,230   $ 1,066,488  

   

See accompanying notes to consolidated financial statements

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ADVANCEPIERRE FOODS HOLDINGS, INC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(In thousands, except share amounts)

 
  Common Stock    
   
   
  Accumulated
Other
Comprehensive
Loss
   
 
 
  Additional
Paid-In
Capital
  Stockholder
Notes
Receivable
  Accumulated
Deficit
  Total
Stockholders'
Deficit
 
 
  Shares   Amount  

Balance at December 29, 2012

    1,289,921   $ 13   $ 802   $ (5,471 ) $ (369,664 ) $   $ (374,320 )

Net loss

                      (57,047 )       (57,047 )

Stock-based compensation

    20,871         2,502                 2,502  

Capital contribution

    11,843         5,592                 5,592  

Redemption of stock

    (45,993 )       (7,299 )               (7,299 )

Issuance of stock

    20,000         1,000                 1,000  

Reclassification of stock-based compensation from equity to liability awards

              (589 )               (589 )

Stockholder notes:

                                           

Interest

                  (28 )           (28 )

Issuance

                  (1,067 )           (1,067 )

Retirement

                  3,905             3,905  

Balance at December 28, 2013

    1,296,642   $ 13   $ 2,008   $ (2,661 ) $ (426,711 ) $   $ (427,351 )

Net loss

                      (37,943 )       (37,943 )

Stock-based compensation

    21,504         2,744                 2,744  

Capital contribution

    8,979         449                 449  

Redemption of stock

    (8,979 )       (449 )               (449 )

Change in fair value of derivatives

                          (2,294 )   (2,294 )

Reclassification of stock-based compensation from equity to liability awards

              (2,341 )               (2,341 )

Stockholder notes:

                                           

Interest

                  (44 )           (44 )

Issuance

                  (413 )           (413 )

Retirement

                  604             604  

Balance at January 3, 2015

    1,318,146   $ 13   $ 2,411   $ (2,514 ) $ (464,654 ) $ (2,294 ) $ (467,038 )

Net income

                      37,111         37,111  

Stock-based compensation

    24,915         17,198                 17,198  

Redemption of stock

    (3,500 )       (320 )               (320 )

Change in fair value of derivatives

                          2,294     2,294  

Reclassification of stock-based compensation from equity to liability awards

              (15,102 )               (15,102 )

Stockholder notes:

                                           

Interest

                  (50 )           (50 )

Issuance

                  (1,497 )           (1,497 )

Retirement

                  177             177  

Balance at January 2, 2016

    1,339,561   $ 13   $ 4,187   $ (3,884 ) $ (427,543 ) $   $ (427,227 )

   

See accompanying notes to consolidated financial statements

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ADVANCEPIERRE FOODS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 
  Fiscal Year Ended  
 
  January 2,
2016
  January 3,
2015
  December 28,
2013
 
 
  52 Weeks   53 Weeks   52 Weeks  

Cash flows from operating activities

                   

Net income (loss)

  $ 37,111   $ (37,943 ) $ (57,047 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

                   

Depreciation and amortization charges

    62,857     58,005     57,337  

Impairment charges

            5,497  

Amortization of loan origination fees and original issue discount

    10,066     9,828     9,738  

Loss (gain) on disposal of property, plant and equipment

    1,223     36     (440 )

Deferred income tax provision

    7,458     8,058     5,782  

Stock-based compensation expense

    17,198     2,744     2,502  

Forgiveness of notes receivable from stockholders

    87     604     3,905  

Changes in operating assets and liabilities (excluding amounts from acquisitions):

                   

Accounts receivable

    18,945     (4,841 )   2,531  

Inventories

    14,298     (25,006 )   6,197  

Prepaid expenses and other current assets

    4,509     4,555     9,515  

Cash overdrafts, accounts payable and accrued liabilities

    (16,573 )   7,051     (10,235 )

Other

    67     (231 )   (843 )

Net cash provided by operating activities

    157,246     22,860     34,439  

Cash flows used in investing activities

                   

Purchases of property, plant and equipment

    (35,861 )   (21,006 )   (19,513 )

Net cash used in acquisitions

    (72,483 )        

Proceeds from sale of property, plant and equipment

    42     81     7,739  

Net cash used in investing activities

    (108,302 )   (20,925 )   (11,774 )

Cash flows used in financing activities

                   

Loan origination fees

            (423 )

Repayments on term loans and capital leases

    (13,466 )   (16,257 )   (11,477 )

Borrowings on revolving line of credit

    419,336     439,642     421,489  

Repayments on revolving line of credit

    (448,036 )   (425,100 )   (430,350 )

Redemption of stock

    (963 )       (1,707 )

Issuance of stockholder notes receivable, net of retirements           

    (1,407 )   (413 )   (1,067 )

Issuance of stock

            1,000  

Net cash used in financing activities

    (44,536 )   (2,128 )   (22,535 )

Net increase (decrease) in cash and cash equivalents

    4,408     (193 )   130  

Cash and cash equivalents, beginning of period

    97     290     160  

Cash and cash equivalents, end of period

  $ 4,505   $ 97   $ 290  

Supplemental Cash Flow Information:

                   

Cash paid (received) during the period for:

                   

Interest, net

  $ 94,928   $ 94,681   $ 95,212  

Income taxes paid (refunded), net

    1,850     (59 )   (358 )

Significant non-cash transactions:

   
 
   
 
   
 
 

Accounts payable for construction in progress

    1,982     1,358     301  

Insurance premiums financed

    3,266     4,288     4,543  

Capital leases

    305     839     300  

   

See accompanying notes to consolidated financial statements

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

1. BASIS OF PRESENTATION

        Description of Business.    AdvancePierre Foods Holdings, Inc. (the "Company") is a leading national producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks. The Company sells its value-added products to the foodservice, retail, convenience and industrial channels that correspond to its reportable segments. The Company markets and distributes a broad line of products in multiple product categories including ready-to-eat sandwiches, such as breakfast sandwiches, peanut butter and jelly ("PB&J") sandwiches and hamburgers; sandwich components, such as fully-cooked hamburger and chicken patties and Philly steaks; and other entrées and snacks, such as country fried steak, stuffed entrées, chicken tenders and cinnamon dough bites.

        OCM Principal Opportunities Fund IV L.P. ("OCM") is the Company's majority shareholder. AdvancePierre Foods, Inc. ("APF") is a wholly-owned indirect subsidiary of the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Principles of Consolidation.    The accompanying consolidated financial statements include the Company and its subsidiaries. All intercompany transactions have been eliminated.

        Use of Estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include estimates of fair values for inventory, goodwill, other intangible assets and other long-lived assets, in addition to accounting estimates of sales discounts and promotional allowances, sales-in-transit, self-insurance reserves, fair value of restricted shares and useful lives assigned to intangible assets and property, plant and equipment. Actual results could differ from those estimates.

        Fiscal Year.    The Company operates on a 52-week or 53-week fiscal year ending on the Saturday closest to December 31. The fiscal year ended January 2, 2016 ("fiscal 2015") and December 28, 2013 ("fiscal 2013") were 52-week fiscal periods. The fiscal year ended January 3, 2015 ("fiscal 2014") was a 53-week fiscal period. The fiscal year ending December 31, 2016 ("fiscal 2016") will be a 52-week fiscal period.

        Cash and Cash Equivalents.    For financial statement presentation purposes, the Company presents book overdrafts, principally outstanding checks in excess of cash on hand in accounts with the same financial institution and with a legal right of offset, as book overdrafts. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At January 2, 2016 and January 3, 2015, the Cash and cash equivalent balance included book overdrafts of $4,588 and $3,334, respectively. At both January 2, 2016 and January 3, 2015 the Company had no cash equivalents.

        Cash in domestic bank accounts is insured by the Federal Deposit Insurance Corporation ("FDIC"). From time to time the Company deposits cash in interest-bearing domestic bank accounts that may not be fully insured by the FDIC.

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Accounts Receivable.    Allowances for doubtful accounts are maintained against accounts receivable for estimated losses resulting from the inability of customers to make required payments. These allowances are based on both recent trends of certain customers estimated to be a greater credit risk as well as general trends of the entire customer pool. Accounts are written off against the allowance when it becomes evident collection will not occur.

        Concentration of Credit Risk and Significant Customers.    Trade accounts receivable potentially subject the Company to concentrations of credit risk. The Company performs periodic credit evaluations of its customers' financial conditions and generally does not require collateral. The Company encounters a certain amount of credit risk as a result of a concentration of receivables among a few significant customers. Aggregate sales to the Company's two largest customers, which operate in the Foodservice segment, represented approximately 13.6% and 12.0% of net sales in fiscal 2015, 12.9% and 12.2% of net sales in fiscal 2014, and 13.1% and 11.8% of net sales in fiscal 2013. If the Company should lose either of the above mentioned customers, it would have a material adverse effect on the Company's results. Accounts receivable included $13,520 and $25,087 from these two customers as of January 2, 2016 and January 3, 2015, respectively.

        Inventories.    Inventories are stated at the lower of cost (first-in, first-out) or market. Cost for inventory is composed of purchase price of raw materials plus conversion costs. The Company records reserves to reduce the carrying values of inventories to expected realizable value after considering expected disposition of the inventory, and if applicable, expected sales price and incremental costs to sell.

        Property, Plant and Equipment.    Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs which do not significantly extend the useful lives of assets are charged to operations whereas additions and betterments, including interest costs incurred during construction, which was not material for the fiscal years presented, are capitalized.

        Depreciation of property, plant and equipment is provided over the estimated useful lives of the respective assets on the straight-line basis. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the terms of the respective leases. Property under capital leases is amortized over the terms of the respective leases. When property, plant and equipment are retired or sold, the cost and related accumulated depreciation are removed from the accounts with any gain or loss recognized in Other expense, net.

        In accordance with ASC 360, "Property, Plant and Equipment," ("ASC 360") when changes in circumstances indicate that carrying amounts may not be recoverable, the Company evaluates the recoverability of property, plant, and equipment not held for sale by comparing the carrying amount of the asset or group of assets against the estimated undiscounted future cash flows expected to result from the use of the asset or group of assets and their eventual disposition. If the undiscounted future cash flows are less than the carrying value of the asset or group of assets being evaluated, an impairment loss is recorded. The loss is measured as the difference between the fair value and carrying value of the asset or group of assets being evaluated. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less cost to sell. The estimated fair value is based on the best information available under the circumstances, including prices for similar assets or the results of

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

valuation techniques, including the present value of expected future cash flows using a discount rate commensurate with the risks involved.

        Capitalized Internal-use Software Costs.    Capitalized costs include external consulting fees and payroll and payroll-related costs for employees in the Company's information technology groups who are directly associated with, and who devote time to, the Company's internal-use software projects during the application development stage. Capitalization begins when the planning stage is complete and the Company commits resources to the software project. Amortization of the asset commences when the software is complete and placed in service. The Company amortizes completed internal-use software over the estimated useful lives of the internal-use computer software on a straight-line basis.

        Goodwill and Other Intangibles.    Other intangibles include recipes, customer relationships, non-competition agreements, licensing agreements, water and sewer usage permits and certain trade names and trademarks.

        In accordance with ASC 350, "Intangibles—Goodwill and Other," ("ASC 350") the Company is required to test recorded goodwill and intangibles with indefinite lives for impairment at least annually. The Company tests annually for impairment at the end of the third quarter; however, these tests are performed more frequently when events or changes in circumstances indicate the carrying amount may not be recoverable. Indicators of impairment are reviewed on a quarterly basis to determine if an impairment test is deemed necessary. Goodwill is tested annually for impairment using a two-step process. The first step consists of comparing the fair value of the Company's reporting units to their respective carrying value. If the fair value exceeds the carrying value, the second step is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine the amount, if any, of impairment loss to recognize. The second step compares the implied fair value of goodwill to its carrying value. If the carrying amount of goodwill exceeds its fair value, an impairment loss is recognized in the amount equal to the excess. The Company's annual goodwill impairment analysis, which was completed as of October 3, 2015, September 27, 2014 and September 28, 2013 did not result in an impairment charge.

        Indefinite lived intangible assets other than goodwill are evaluated annually, or more frequently when events or changes in circumstances indicate the carrying amount may not be recoverable, for impairment. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The fair values of trademarks and trade names are determined using a royalty rate method based on expected revenues by trademark or trade name. The Company's annual evaluations of indefinite-lived intangibles did not indicate impairment in either fiscal 2015 or fiscal 2014. The Company has evaluated the useful life of its indefinite-lived asset and has concluded that it continues to meet such criteria.

        During the third quarter of fiscal 2013, the remaining useful life of one of the Company's trade names was evaluated to determine whether events and circumstances continue to support an indefinite useful life. It was determined that an indefinite life was no longer appropriate. This conclusion was based on our expectations of the trade name's contributions to our future cash flows considering factors such as current long-term market outlook, plans for ongoing trade name support and promotion, and strength of the trade name. The Company expects the remaining useful life of this trade name to be fifteen years. Accordingly, the Company began amortizing this trade name beginning in September

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

2013. The change from an indefinite life to a fifteen year useful life constituted a triggering event under ASC 350. The Company tested this trade name for impairment as of September 2013 based on financial forecasts and the expected useful life of fifteen years. Per the results of this valuation analysis, the carrying value of the trade name exceeded its fair value by $5,497 and accordingly, the Company recorded this amount as Impairment charges in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) ("consolidated statements of operations").

        No indicators of impairment were noted from the date of the tests to the respective fiscal year-ends that would have required management to test goodwill and indefinite lived intangible assets for impairment again.

        In addition, all other intangible assets with finite lives are reviewed for impairment in accordance with ASC 360. The Company's amortizable intangible assets are amortized using straight-line and accelerated amortization methods in order to allocate expected benefits derived from the assets over the estimated useful lives of such assets. During the fiscal years ended January 2, 2016, January 3, 2015 and December 28, 2013, the Company's management noted no changes in circumstances that would have indicated carrying amounts of amortizable assets may not be recoverable. Accordingly, no impairment was recorded during the respective fiscal years.

        Deferred Loan Origination Fees.    Deferred loan origination fees associated with the Company's revolving credit facility and long-term debt are amortized based on the term of the respective loan agreements. All amortization expense related to deferred loan origination fees is included in interest expense. In connection with refinancing transactions, the Company evaluates debt on a creditor by creditor basis to assess whether the refinancing transaction results in a modification or an extinguishment with the issuance of new debt. Existing deferred loan origination fees are expensed or carried over and fees associated with the refinancing transaction are expensed or capitalized as appropriate under ASC 470, "Modifications and Extinguishments" ("ASC 470").

        Revenue Recognition.    The Company records revenues from sales of its food products at the time title transfers. Standard shipping terms for domestic customers are FOB destination point. Based on these terms, title passes at the time the product is delivered to the customer. For the majority of the Company's international customers, shipping terms are FOB shipping point. Based on these terms, title passes at the time the product departs from the Company's plant or warehouse. Revenue is recognized as the net amount to be received by the Company after deductions for estimated discounts, product returns, and other allowances. These estimates are based on historical trends and expected future payments (see also Advertising and Promotions below).

        Cost of Goods Sold.    The Company's cost of goods sold includes the following: raw material costs, manufacturing labor, manufacturing overhead including depreciation expense, manufacturing warehousing costs and shipping and handling costs related to the movement of finished goods from manufacturing locations to sales distribution centers and to customers.

        Advertising and Promotions.    The Company expenses advertising costs as incurred. These costs are included in Selling, general and administrative expenses. Advertising expense for fiscal 2015, fiscal 2014 and fiscal 2013 was $1,523, $986 and $1,760 respectively. Promotional expenses associated with rebates, marketing promotions, and special pricing arrangements are recorded as a reduction of net sales at the

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

time the sale is recorded. Certain of these expenses are estimated based on historical trends, expected future payments to be made under these programs and expected future customer deductions to be taken under these programs. The Company believes the estimates recorded in the consolidated financial statements are reasonable estimates of the liability under these programs.

        USDA Commodity Program.    The Company participates in the USDA Commodity Reprocessing Program (the "USDA Commodity Program") which provides food and nutrition assistance to schools. Under the provisions of the USDA Commodity Program, the Company receives government donated raw materials and processes them into finished food products for sale to schools. The USDA Commodity Program provides that, among other things, the Company bears the risk of loss, spoilage or obsolescence associated with donated food materials and finished goods produced using donated food. Obligations under the USDA Commodity Program and the related inventory are recorded at the USDA stipulated value of the donated commodity raw materials at the date the Company takes possession of the raw materials. Upon delivery of finished product to qualifying school customers, the inventory and associated liability are reduced and netted. As a result, revenues and cost of goods sold related to sales under the USDA Commodity Program are recorded exclusive of the value of the donated raw material product.

        Stock-Based Compensation.    The Company's compensation structure includes a stock-based incentive program that allows for the issuance of stock options, performance stock and restricted stock. Only the program for restricted stock is currently utilized. The Company records compensation expense related to stock-based compensation in accordance with ASC 718, "Compensation—Stock Compensation." See Note 16.

        Research and Development.    The Company expenses research and development costs, consisting of employee costs, supplies, travel, and production costs associated with product testing, as incurred. These costs are included in Selling, general and administrative expenses. Research and development expense for fiscal 2015, fiscal 2014 and fiscal 2013 was $6,551, $5,991 and $4,714 respectively.

        Distribution Expenses.    The Company expenses distribution costs as incurred. These costs include warehousing, fulfillment and freight costs.

        Self-Insurance.    The Company is self-insured for certain employee medical benefits and workers' compensation benefits. The Company maintains stop-loss coverage in order to limit its exposure to any significant level of employee medical and workers' compensation claims. Self-insurance expenses are accrued based on estimates of the aggregate liability for uninsured claims incurred using historical claims experience.

        Income Taxes.    The provision for income taxes is determined using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. The Company records a valuation allowance to reduce its deferred tax assets to an amount that is more likely than not to be realized. The Company follows accounting guidance related to accounting for uncertainty in income taxes to record uncertainties and judgments in the application of complex tax regulations (refer to Note 10 for more information).

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Fair Value Accounting.    The Company accounts for derivative financial instruments at fair value, as required by ASC 820 "Fair Value Measurement" ("ASC 820"). The Company has elected not to adopt fair value accounting for any assets or liabilities that are not required to be reported at fair value.

        Derivative Financial Instruments.    The Company holds derivative financial instruments from time to time including diesel fuel swap agreements, natural gas swap agreements, and forward foreign currency exchange contracts. The Company does not hold or issue derivative financial instruments for trading purposes. Changes in the fair value of derivative financial instruments that are effective as hedges are recorded in other comprehensive income ("OCI"). Deferred gains or losses are reclassified from OCI to the consolidated statements of operations in the same period as the gains or losses from the underlying transactions, including contract terminations, are recorded and are generally recognized in earnings. Changes in fair value that do not qualify for hedge accounting are immediately recognized in earnings.

        Contingent Consideration.    The Company has a liability associated with contingent consideration for the earn out payments related to a business acquisition as discussed in Note 3. The fair value of the contingent consideration is measured on a quarterly basis with any changes recognized in earnings in accordance with ASC 805 "Business Combinations" ("ASC 805"). The Company is required to make payments under the acquisition agreement based on the achievement of contractual minimum volumes. The Company has determined the fair value based on its assessment is highly likely that these minimum volumes will be achieved and accordingly has recorded the liability based on the net present value of the maximum payment amount stipulated in the contract.

        Liquidity and Capital Resources.    As of January 2, 2016, the Company had $1,272,250 in principal outstanding under its first lien term loan and second lien term loan which mature on July 10, 2017 and October 10, 2017, respectively, and an additional $125,443 available for borrowing under its $175,000 revolving credit facility which matures on January 10, 2017. As discussed in Note 9, the Company's term loans and revolving credit facility contain a number of non-financial covenants imposing significant restrictions on the Company's business, including certain limitations on incurrence of additional indebtedness, investments, sales of assets and payments to the Company's stockholders. The Company's term loans and revolving credit facility also require mandatory prepayments under certain circumstances. As economic conditions permit, we will consider opportunities to refinance or otherwise reduce our indebtedness on favorable terms. Any further potential reduction of indebtedness or refinancing could require significant use of our liquidity and capital resources.

        The Company does not have sufficient capital resources in place currently to repay its term loans when they mature, and plans to refinance these obligations as well as its revolving credit facility before they come due. The Company believes that it will generate cash flows from operating activities and secure sufficient financing to provide it with sufficient liquidity and capital resources to meet its current and future financial obligations, including its scheduled principal and interest payments, as well as to provide funds for working capital, capital expenditures, and other needs. While the Company believes it will be able to refinance its revolving credit facility, first lien term loan and second lien term loan, there can be no assurances that it can do so or whether it can do so on terms that will be favorable. If the Company is unable to renew its revolving credit facility or refinance its first and second lien term

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

loans prior to maturity, it would have a material adverse impact on the business and financial condition of the Company.

    New Accounting Pronouncements.

    Pronouncements adopted by the Company.

        In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-17, "Balance Sheet Classification of Deferred Taxes". The new guidance eliminates the requirement to separate deferred income tax liabilities and assets into current and non-current amounts. The amendments will require that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The updated guidance will be effective for fiscal years beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted, and the amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company adopted the guidance retrospectively in fiscal 2015 in order to simplify the classification of deferred taxes into non-current amounts. At January 3, 2015, the Company had a current deferred tax liability of $167 that was reclassified as non-current. At December 28, 2013, we had a current deferred tax asset of $624 that was reclassified as non-current. See Note 10.

        In September 2015, the FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments". The new guidance eliminates the requirement to retrospectively account for adjustments to provisional amounts recognized in a business combination. Under the ASU, the adjustments to the provisional amounts will be recognized in the reporting period in which the adjustment amounts are determined. The updated guidance will be effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption is permitted, and the ASU should be applied prospectively. The Company has adopted this guidance and determined there was no impact on fiscal 2015.

    Pronouncements under consideration by the Company.

        In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs". The new guidance changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The updated guidance will be effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted for all entities for financial statements that have not been previously issued. The Company has evaluated the impact, which will result in reductions of long-term assets and liabilities of $11,557 and $18,653 as of January 2, 2016 and January 3, 2015, respectively.

        In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)". The new guidance will require lessees to recognize the assets and liabilities that arise from leases in the balance sheet, including operating leases. The updated guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. The Company is in the process of evaluating this guidance.

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory", which requires entities to measure most inventory "at the lower of cost and net realizable value," thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The ASU will not apply to inventories that are measured by using either the last-in, first-out (LIFO) method or the retail inventory method (RIM). The updated guidance will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. The Company is in the process of evaluating this guidance.

        In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted.

3. ACQUISITIONS

        On January 30, 2015 the Company acquired the wholesale business and production assets of Landshire, Inc. ("Landshire"), a manufacturer and marketer of sandwich products, and on April 24, 2015 acquired the business and production assets of Better Bakery, LLC ("Better Bakery"), a producer of high quality, premium stuffed sandwiches and other licensed products. The acquisitions bring a new set of premium products to the Company's portfolio that complement and increase its existing product offerings, and provide the Company with additional capacity for increased sandwich and bakery production. The sellers of Landshire entered into an agreement with the Company for an ongoing supply of product whereby the seller can earn additional acquisition consideration upon meeting certain volume thresholds.

        The purchase prices for the acquisitions were funded by cash payments and in the case of Landshire estimated earn out payments to be paid in cash over three years based on volume performance under the supply agreement. The Company expects to make all additional consideration payments included in the acquisition agreement and therefore, has valued the liability as the net present value of the payment stream.

 
  Landshire   Better
Bakery
 

Cash

  $ 41,552   $ 30,931  

Other accrued liabilities

    19,293      

Purchase price

  $ 60,845   $ 30,931  

        In connection with these acquisitions, the Company performed valuations of the acquired assets and assumed liabilities. Intangible assets identified in the valuation included customer relationships,

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

3. ACQUISITIONS (Continued)

trade names and trademarks, and non-competition agreements. Fair values were derived using Level 3 inputs, as defined by ASC 820. Such assets and liabilities include tangible and intangible assets whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Unobservable inputs were developed based on the best information available, which in some instances included the Company's own data.

        The acquisitions were recorded in accordance with ASC 805. The net purchase prices were allocated to assets acquired and liabilities assumed based on estimated fair values at the date of the acquisitions as follows:

 
  Landshire   Better
Bakery
 

Current assets

  $ 4,763   $ 5,704  

Property, plant and equipment

    12,037     2,115  

Other intangibles

    30,100     20,400  

Goodwill

    14,506     9,940  

Assumed liabilities

    (561 )   (7,228 )

Net assets acquired

  $ 60,845   $ 30,931  

        The Company assumed liabilities of $561 and $7,228 for Landshire and Better Bakery, respectively. The assumed liability for Better Bakery is primarily related to an onerous broker contract, the amount of which was determined in reference to prevailing market brokerage rates for the Company and projected future sales under the contract. $20,800 and $10,400 was assigned to customer relationships with useful lives of 15 years for Landshire and Better Bakery, respectively. $8,600 and $9,600 was assigned to amortizable trade names and trademarks with weighted average useful lives of 19 years and 17 years for Landshire and Better Bakery, respectively. $700 and $400 was assigned to non-competition agreements with useful lives of 3 years and 4 years for Landshire and Better Bakery, respectively. The goodwill arising from the acquisitions consists largely of the synergies and economies of scale expected from combining the acquired businesses and integrating them into the Company, as well as the assembled workforce, and is deductible for tax purposes. The Company charged to Other expense, net $645 and $480 of acquisition related legal and professional fees expenses for Landshire and Better Bakery, respectively.

        The following data table presents summarized pro forma results of the Company had the acquisitions occurred on December 29, 2013 (unaudited):

 
  Fiscal 2015   Fiscal 2014  

Net sales

  $ 1,619,214   $ 1,641,920  

Net income (loss)

    38,785     (38,568 )

        The 2015 pro forma net income includes $1,879 of non-recurring expenses of which $927 related to manufacturing start up inefficiencies and $952 related to severance, professional fees, travel and contract exit costs. The Company's consolidated net sales includes $40,646 and $8,220 for Landshire and Better Bakery, respectively, since the date of acquisition and net income of $7,768 for Landshire and net loss of $148 for Better Bakery since the date of acquisition.

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

4. ACCOUNTS RECEIVABLE

        Accounts receivable consisted of the following:

 
  January 2, 2016   January 3, 2015  

Trade accounts receivable

  $ 72,161   $ 97,145  

Other receivables

    11,577     3,129  

Reserves for discounts and allowances

    (1,120 )   (1,025 )

  $ 82,618   $ 99,249  

        As of January 2, 2016, other receivables included $9,398 for the Company's product contamination insurance policy claim related to the recall of stuffed chicken breast products that occurred in fiscal 2015. The $9,398 recognized under a loss contingency model is related primarily to the claim for net sales reductions due to product returns, marketing expense to support post-recall sales, and administrative expense due to professional fees and travel. The amount recorded represents the amount expected to be collected under the policy. The full amount of the insurance claim filed is $14,969, of which $1,000 is subject to self-insurance retention, $1,396 was received in fiscal 2015, and $3,175 represents amounts claimed under the business interruption section of the Company's contamination insurance policy which has been evaluated under a gain contingency model with no amounts recorded as of January 2, 2016. Of the $11,794 recorded in fiscal 2015, $6,244, $196, $1,670 and $3,654 were recorded to Cost of goods sold, Distribution expenses, Selling, general and administrative expenses, and Other expense, net, respectively.

5. INVENTORIES

        Inventories by major classification are as follows:

 
  January 2, 2016   January 3, 2015  

Finished goods

  $ 136,762   $ 125,605  

Raw materials

    48,894     64,269  

Work in process

    2,330     3,278  

Reserves for excess and obsolete inventory

    (4,450 )   (3,419 )

  $ 183,536   $ 189,733  

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

6. PROPERTY, PLANT AND EQUIPMENT

        The major components of and useful lives assigned in accordance with Company policy to property, plant and equipment are as follows:

 
  Useful Life
(years)
  January 2,
2016
  January 3,
2015
 

Land

  n/a   $ 5,396   $ 5,066  

Land improvements

  5     4,594     3,702  

Buildings

  20 - 30     146,930     129,010  

Machinery and equipment

  5 - 15     195,561     173,114  

Software

  3 - 5     18,229     15,175  

Furniture and fixtures

  3 - 10     2,421     1,914  

Vehicles

  2 - 5     1,302     1,015  

Construction in progress

  n/a     7,749     7,098  

        382,182     336,094  

Less: accumulated depreciation and amortization

       
144,260
   
116,700
 

      $ 237,922   $ 219,394  

        Net book value of internally developed software costs included in software above was $5,777 and $5,876 as of January 2, 2016 and January 3, 2015, respectively. Depreciation of capitalized internal-use computer software costs included in depreciation expense below for fiscal 2015, fiscal 2014 and fiscal 2013 was $3,153 and $2,876 and $2,512 respectively.

        Depreciation expense for fiscal 2015, fiscal 2014 and fiscal 2013 was $31,149, $28,182 and $26,740 respectively.

7. GOODWILL AND OTHER INTANGIBLES

        The carrying amount of goodwill and other intangibles are as follows:

 
  January 2, 2016  
 
  Weighted
Avg.
Useful Life
(In yrs.)
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net
Carrying
Amount
 

Amortizable intangibles

                       

Formulas

  10   $ 10,307   $ 6,784   $ 3,523  

Trade name and trademarks

  12     106,092     36,263     69,829  

Non-compete

  4     2,309     1,220     1,089  

Customer relationships

  14     270,610     133,035     137,575  

        389,318     177,302     212,016  

Indefinite-lived intangibles

                       

Trade name and trademarks

        27,175         27,175  

Water and sewer usage permits

        2,919         2,919  

        419,412     177,302     242,110  

Goodwill

        299,708         299,708  

      $ 719,120   $ 177,302   $ 541,818  

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

7. GOODWILL AND OTHER INTANGIBLES (Continued)

 
  January 3, 2015  
 
  Weighted
Avg.
Useful Life
(In yrs.)
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net
Carrying
Amount
 

Amortizable intangibles

                       

Formulas

  10   $ 10,307   $ 5,766   $ 4,541  

Trade name and trademarks

  10     87,892     28,378     59,514  

Non-compete

  5     1,209     978     231  

Customer relationships

  14     239,410     110,472     128,938  

        338,818     145,594     193,224  

Indefinite-lived intangibles

                       

Trade name and trademarks

        27,175         27,175  

Water and sewer usage permits

        2,919         2,919  

        368,912     145,594     223,318  

Goodwill

        275,262         275,262  

      $ 644,174   $ 145,594   $ 498,580  

        Amortization expense related to other intangibles was $31,708, $29,823 and $30,597 for fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

        At January 2, 2016, expected future amortization expense for other intangibles was as follows:

Fiscal Year
  Amortization
Expense
 

2016

  $ 31,001  

2017

    29,028  

2018

    26,481  

2019

    22,992  

2020

    21,495  

Thereafter

    81,019  

  $ 212,016  

        The carrying amounts of goodwill by segment (there was no goodwill associated with the Industrial segment) are as follows:

 
  Foodservice   Retail   Convenience   Total  

Balance at December 28, 2013 and January 3, 2015

  $ 187,136   $ 46,236   $ 41,890   $ 275,262  

Fiscal 2015 acquisitions

    1,272     11,462     11,712     24,446  

Balance at January 2, 2016

  $ 188,408   $ 57,698   $ 53,602   $ 299,708  

        There were no accumulated goodwill impairment losses.

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

8. DERIVATIVE FINANCIAL INSTRUMENTS

        Periodically, the Company enters into swap agreements to mitigate its exposure to fluctuations in prices of natural gas and diesel fuel and designates the agreements as cash flow hedges. The Company recognizes all derivatives on its Consolidated Balance Sheets at fair value.

        Diesel Fuel Risk.    The Company uses independent freight carriers to deliver its products. These carriers charge the Company a basic rate per mile that is subject to a mileage surcharge for diesel fuel price increases. In fiscal 2014, the Company entered into a variable to fixed rate commodity swap agreement with a financial counterparty to manage the fluctuations in fuel costs. The Company hedged approximately 60% of its diesel fuel requirements. The Company used the hedge agreements to mitigate the variability in monthly cash flows attributable to fuel surcharge rate changes caused by changes in U.S. No 2 Diesel Retail pricing, and not to speculate on the future price level of diesel fuel. The hedging instruments consisted of a series of financially settled fixed forward contracts with expiration dates ranging up to twelve months. The net amount paid or received upon monthly settlements is recorded as an adjustment to freight expense, while the effective change in fair value is recorded as a component of Accumulated Other Comprehensive Income (Loss) ("AOCI") in the equity section of the Consolidated Balance Sheets. As of January 2, 2016, no contracts were outstanding and therefore, the Company had no deferred net loss included in AOCI related to the diesel hedge.

        Natural Gas Risk.    The Company utilizes multiple providers of natural gas. In fiscal 2014, the Company entered into a series of variable to fixed rate commodity swap agreements with a financial counterparty to manage the fluctuations in natural gas costs. The Company hedged approximately 40% of its natural gas requirements. The Company used the hedge agreements to mitigate the variability in monthly cash flows attributable to natural gas price changes caused by changes in NYMEX pricing, and not to speculate on the future price level of natural gas. The hedging instruments consisted of a series of financially settled fixed forward contracts with expiration dates ranging up to twelve months. The net amount paid or received upon monthly settlements is recorded as an adjustment to utilities expense, while the effective change in fair value is recorded as a component of AOCI in the equity section of the Consolidated Balance Sheets. As of January 2, 2016, no contracts were outstanding and therefore, the Company had no deferred net loss included in AOCI related to the natural gas hedge.

        The fair value of derivative instruments reported in the Consolidated Balance Sheets within Other accrued liabilities are as follows:

 
  January 3,
2015
 

Diesel fuel swap

  $ 2,002  

Natural gas swap

    292  

  $ 2,294  

F-19


Table of Contents


ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

8. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

        The effects of derivative instruments on the consolidated statements of operations for fiscal 2015, fiscal 2014 and fiscal 2013 are as follows:

 
  Gain (Loss)
Recognized in OCI
  Loss Reclassified
from AOCI into Income
 
 
  Fiscal
2015
  Fiscal
2014
  Fiscal
2013
  Fiscal
2015
  Fiscal
2014
  Fiscal
2013
 

Diesel fuel swap

  $ 2,002   $ (2,002 ) $   $ (2,946 ) $ (64 ) $ 21  

Natural gas swap

    292     (292 )       (427 )   (87 )    

  $ 2,294   $ (2,294 ) $   $ (3,373 ) $ (151 ) $ 21  

        Within the consolidated statements of operations, the diesel fuel swap is recorded in Distribution expenses and the natural gas swap is recorded in Cost of goods sold. In fiscal 2015, fiscal 2014 and fiscal 2013 no tax impact is reflected as any impact would be offset with a valuation allowance (see Note 10).

        The Company entered into master netting agreements with a financial counterparty where they entered into commodity swap agreements that permitted the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event was allowed. The amounts under the master netting agreements were immaterial.

9. FINANCING ARRANGEMENTS

        Debt consisted of the following:

 
  January 2,
2016
  January 3,
2015
 

2012 First Lien Term Loan, with floating interest rates, maturing July 10, 2017 net of original issue discount of $2,399 and $3,869 at January 2, 2016 and January 3, 2015, respectively

  $ 894,851   $ 902,631  

2012 Second Lien Term Loan, with floating interest rates, maturing October 10, 2017, net of original issue discount of $2,438 and $3,810 at January 2, 2016 and January 3, 2015, respectively

   
340,562
   
339,190
 

2012 Second Lien Term Loan held by related party, with floating interest rates, maturing October 10, 2017, net of original issue discount of $228 and $356 at January 2, 2016 and January 3, 2015, respectively

   
31,772
   
31,644
 

Revolving line of credit, maximum borrowings of $175,000 in fiscal 2015 and $150,000 in fiscal 2014 with floating interest rates, maturing January 10, 2017

   
   
28,705
 

Capitalized lease obligations maturing through fiscal 2018

    861     992  

Insurance premium financing

    1,583     2,079  

Total debt

    1,269,629     1,305,241  

Less: current maturities

   
(24,721

)
 
(11,736

)

Long-term debt

  $ 1,244,908   $ 1,293,505  

F-20


Table of Contents


ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

9. FINANCING ARRANGEMENTS (Continued)

        In connection with the 2012 issuance of a $925,000 first lien term loan (the "First Lien Term Loan") and a $375,000 second lien term loan (the "Second Lien Term Loan") (collectively, "Term Loans"), the Company paid $30,925 in aggregate financing fees; $26,839 were capitalized and amortized over the lives of the new loans. The First Lien Term Loan and the Second Lien Term Loan were issued with original issue discounts of $6,938 and $7,500, respectively. After considering the impact of the amortization of original issue discount and deferred financing fees, the effective interest rates for the First Lien Term Loan and the Second Lien Term Loan were 6.51% and 10.55%, respectively, at the issue date.

        Borrowings under the Term Loans are subject to a variable rate interest determined based on either a LIBOR or bank base rate, plus a margin, as follows:

 
  Applicable Margins  
 
  LIBOR
Loans
  Bank Base
Rate Loans
 

First Lien Term Loan

    4.50 %   3.50 %

Second Lien Term Loan

    8.25 %   7.25 %

        LIBOR borrowings are subject to a minimum, or floor, LIBOR rate of 1.25%. Bank base rate borrowings are subject to the prime rate plus margin. During both fiscal 2015 and fiscal 2014, the Company's debt was subject to LIBOR loan margins. At both January 2, 2016 and January 3, 2015, the interest rate for borrowings on the First Lien Term Loan was 5.75% and for the Second Lien Term Loan was 9.50%. Borrowings on the First Lien Term Loan are collateralized by a first-priority security interest in substantially all of the Company's assets except for accounts receivable, inventory and cash and cash equivalents that serve as first-priority collateral for the revolving facility, on which the First Lien Term Loan maintains a second-priority interest. Borrowings on the Second Lien Term Loan are collateralized by a second-priority security interest in substantially all of the Company's assets except for accounts receivable, inventory and cash and cash equivalents that serve as first-priority collateral for the revolving line of credit, on which the Second Lien Term Loan maintains a third-priority interest.

        The First Lien Term Loan requires mandatory prepayments upon the occurrence of certain defined events, including, but not limited to, dispositions of property, plant and equipment, depreciation of appraised value of property, plant and equipment, extraordinary cash receipts, and receipt of proceeds from certain gain contingencies. In addition, the First Lien Term Loan requires mandatory prepayment of amounts equal to Excess Cash Flow (as defined in the Credit Agreement governing the First Lien Term Loan). No mandatory prepayments were required or made in fiscal 2014. For fiscal 2015, a mandatory prepayment related to Excess Cash Flow of $13,407 was made on April 6 2016.

        Pursuant to the Term Loans, the Company is required to satisfy non-financial covenants including, but not limited to, restrictions on incurrence of indebtedness and liens, declaration and payment of distributions, making fundamental changes to the business and disposing of assets. The Company was in compliance with all such covenants as of January 2, 2016 and January 3, 2015. The Company is currently not subject to financial maintenance covenants except under certain conditions which have not been met.

F-21


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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

9. FINANCING ARRANGEMENTS (Continued)

        During fiscal 2014, the revolving line of credit facility had a maximum borrowing limit of $150,000. In fiscal 2015, the maximum borrowing limit was increased to $175,000 and the maximum borrowing base limits were further subject to a borrowing base limitation derived from applying defined calculations to inventory and accounts receivable balances.

        At January 2, 2016 and January 3, 2015, availability under the facility was as follows:

 
  January 2,
2016
  January 3,
2015
 

Borrowing base limitation

  $ 130,941   $ 147,104  

Less: outstanding letters of credit

    5,498     6,953  

Less: revolving line of credit advances

        28,705  

Net availability

  $ 125,443   $ 111,446  

        At January 3, 2015, the interest rate for borrowings on the revolving line of credit was 4.00% (base rate 3.25% plus 0.75% margin).

        Future maturities of total debt excluding capital leases, were as follows as of January 2, 2016:

Fiscal Year
   
 

2016

  $ 24,136  

2017

    1,249,697  

    1,273,833  

Less: amounts representing interest resulting from amortization of original issue discount

    (5,065 )

  $ 1,268,768  

10. INCOME TAXES

        Income tax provision consists of the following components:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Federal income tax provision

                   

Current

  $ 870   $   $  

Deferred

    6,517     7,333     5,163  

Net federal income tax provision

    7,387     7,333     5,163  

State income tax provision

   
 
   
 
   
 
 

Current

    591     331     574  

Deferred

    941     725     619  

Net state income tax provision

    1,532     1,056     1,193  

Income tax provision

  $ 8,919   $ 8,389   $ 6,356  

F-22


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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

10. INCOME TAXES (Continued)

        Actual income tax provision differs from amounts computed by applying a statutory federal income tax rate to reported income (loss). The following are reconciliations to the reported income tax provision:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  
 
  Amount   Percent
of Pre-tax
Income
  Amount   Percent
of Pre-tax
Income
  Amount   Percent
of Pre-tax
Income
 

Income tax provision (benefit) computed at statutory rate

  $ 16,109     35.0 % $ (10,344 )   35.0 % $ (17,823 )   35.0 %

Permanent book/tax difference:

                                     

Stock-based compensation

    5,501     12.0 %   67     (0.2 )%   486     (1.0 )%

Other permanent differences

    199     0.4 %   205     (0.7 )%   272     (0.5 )%

State and local income tax

    2,814     6.1 %   (12,021 )   40.7 %   (2,908 )   5.7 %

Change in valuation allowance

    (15,812 )   (34.4 )%   30,545     (103.4 )%   26,251     (51.8 )%

Other

    108     0.2 %   (63 )   0.2 %   78     (0.1 )%

Income tax provision

  $ 8,919     19.4 % $ 8,389     (28.4 )% $ 6,356     (12.5 )%

        The approximate tax effect of each type of temporary difference that gave rise to the Company's deferred income tax assets and liabilities as of January 2, 2016 follows:

 
  Assets   Liabilities   Total  

Inventory cost capitalization and reserves

  $ 4,789   $   $ 4,789  

Other reserves and accruals

    4,209     (940 )   3.269  

Basis difference in property, plant and equipment

        (16,794 )   (16,794 )

Amortization of intangible assets

        (23,261 )   (23,261 )

Federal net operating loss carryforwards

    76,678         76,678  

State net operating loss carryforwards

    11,153         11,153  

Alternative minimum tax carryforward

   
1,502
   
   
1,502
 

State income tax credit

    10,100         10,100  

Other

   
307
   
(803

)
 
(496

)

Total deferred assets and liabilities

    108,738     (41,798 )   66,940  

Valuation allowance

    (109,690 )       (109,690 )

Net deferred tax assets and liabilities

  $ (952 ) $ (41,798 ) $ (42,750 )

F-23


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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

10. INCOME TAXES (Continued)

        The approximate tax effect of each type of temporary difference that gave rise to the Company's deferred income tax assets and liabilities as of January 3, 2015 follows:

 
  Assets   Liabilities   Total  

Inventory cost capitalization and reserves

  $ 5,380   $   $ 5,380  

Other reserves and accruals

    3,920     (1,109 )   2,811  

Basis difference in property, plant and equipment

        (14,205 )   (14,205 )

Amortization of intangible assets

        (17,620 )   (17,620 )

Federal net operating loss carryforwards

    88,873         88,873  

State net operating loss carryforwards

    13,521         13,521  

Alternative minimum tax carryforward

    632         632  

State income tax credit

    10,100         10,100  

Other

    1,850     (242 )   1,608  

Total deferred assets and liabilities

    124,276     (33,176 )   91,100  

Valuation allowance

    (126,392 )       (126,392 )

Net deferred tax assets and liabilities

  $ (2,116 ) $ (33,176 ) $ (35,292 )

        As of January 2, 2016, the Company had net operating losses ("NOL") carryforwards of $215,694 and $168,101 for federal and state purposes, respectively. Federal NOL carryforwards expire between 2030 and 2034 and state NOL carryforwards expire between 2020 and 2034.

        In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment. At each reporting date, the Company considers both negative and positive evidence that impacts the assessment of the realization of deferred tax assets. Through the current reporting period, the Company continues to have objective negative evidence of cumulative operating losses. Management currently believes that the realization of deferred tax assets does not meet the more likely than not threshold. The amount of deferred tax assets considered realizable, however, could be increased in the near term if estimates of future taxable income during the carryforward period are increased.

        The following shows the activity in the valuation allowance for deferred tax assets:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Balance at beginning of period

  $ 126,392   $ 94,952   $ 68,701  

Additions

        31,440     26,251  

Deductions

    (16,702 )        

Balance at end of period

  $ 109,690   $ 126,392   $ 94,952  

        $890 of deductions during fiscal 2015 and $895 of additions during fiscal 2014 have been recorded in OCI.

F-24


Table of Contents


ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

10. INCOME TAXES (Continued)

        Net deferred tax assets and federal income tax expense in future years can be significantly affected by changes in enacted tax laws and rates or by unexpected adverse events that would impact management's conclusions as to the ultimate realizability of deferred tax assets.

        The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. As of January 2, 2016, the Company's federal and state tax returns for fiscal 2011 through fiscal 2014 remain open under the relevant statutes.

        Management believes that substantially all tax positions taken and expected to be taken and reflected in the consolidated financial statements at January 2, 2016 and January 3, 2015 are more likely than not to be sustained, based upon the technical merits, upon examination. As a result, no material amounts were recorded to reverse the impact of tax benefits as of January 2, 2016 and January 3, 2015.

11. STOCKHOLDERS' EQUITY

        During fiscal 2013, the Company received $1,000 in proceeds from the sale of stock to a senior executive.

        Concurrent with the restricted stock grants discussed in Note 16, employees and other recipients made elections under section 83(b) of the Internal Revenue Code, which resulted in immediate recognition of compensation for federal income tax purposes associated with the grants. The Company issued loans to the recipients, evidenced by promissory notes (the "Stockholder Notes"), for an amount approximately equal to their individual tax liability related to the 83(b) elections. The Stockholder Notes are secured by all shares issued to the respective recipients under the Company's 2009 Omnibus Equity Incentive Plan (the "Equity Incentive Plan") or any other equity incentive plan. In addition, the Stockholder Notes have recourse in the event of default by the recipient. Interest is charged on the outstanding balance at the mid-term applicable federal rate in effect at the issue date. As of January 2, 2016 and January 3, 2015, the interest rates on the Stockholder Notes ranged from 0.95% to 2.04%. The outstanding balance of $3,884 and $2,514, including principal and accrued interest, at January 2, 2016 and January 3, 2015, respectively, was classified as a reduction of stockholders' equity. The interest on Stockholder Notes of $50, $44, and $28 in fiscal 2015, fiscal 2014, and fiscal 2013, respectively is included in Related party interest in the consolidated statements of operations.

12. LEASED PROPERTIES

        The Company leases certain plant, property and equipment under leases classified as capital leases. The leases have original terms ranging from one to six years. The assets covered under these leases have carrying values of approximately $861 and $938 as of January 2, 2016 and January 3, 2015, respectively.

        The Company also leases cold storage space, machinery and equipment and real estate classified as operating leases with terms that are effective for varying periods through fiscal 2025. Certain of these leases have remaining renewal clauses, exercisable at the Company's option.

F-25


Table of Contents


ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

12. LEASED PROPERTIES (Continued)

        At January 2, 2016, the Company had minimum rental payments required under operating and capital leases as follows:

 
  Minimum Rental
Payments
 
Fiscal Year
  Operating
Leases
  Capital
Leases
 

2016

  $ 3,336   $ 603  

2017

    2,819     277  

2018

    1,647     2  

2019

    784      

2020

    448      

Thereafter

    1,638      

  $ 10,672     882  

Less: amount representing interest

          21  

Present value of minimum lease payments under capital leases

        $ 861  

        Rental expense was as follows:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Real estate

  $ 1,994   $ 1,795   $ 1,582  

Cold storage

    3,931     2,919     4,316  

Equipment

    4,107     3,278     3,023  

Total

  $ 10,032   $ 7,992   $ 8,921  

        During fiscal 2012, the Company sold its Enid, OK cold storage facility with a net book value of $12,587 to an unrelated third party ("Enid DC Transaction"). Net proceeds from this sale were $25,704. Concurrent with this sale, the Company entered into an agreement to lease the property back from the purchaser over a minimum lease term of twenty years. The lease agreement contains provisions that, under certain conditions, may require the Company or a successor lessee to provide financial assurances that may be deemed to be collateral for sale-leaseback accounting purposes. As a result of these provisions, the Enid DC Transaction did not qualify for sale-leaseback accounting treatment in fiscal 2012. Accordingly, the Company maintains the real estate and related building and equipment on the January 2, 2016 and January 3, 2015 Consolidated Balance Sheets, respectively, and cash proceeds from the sale have been recorded in Other long-term liabilities, net of the current portion of $603, recorded in Other accrued liabilities. The lease agreement does not have a stated rate of interest. The implicit interest rate is 7.12% over the term of the agreement.

F-26


Table of Contents


ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

12. LEASED PROPERTIES (Continued)

        Future payments under the agreement are as follows as of January 2, 2016:

Fiscal Year
  Required Payments  

2016

  $ 2,309  

2017

    2,332  

2018

    2,356  

2019

    2,379  

2020

    2,403  

Thereafter

    30,782  

    42,561  

Less amounts representing interest:

    18,324  

  $ 24,237  

        During fiscal 2014, the Company closed its administrative office in Edmond, OK but has a remaining obligation for the rental of the facility. At January 2, 2016 and January 3, 2015 this obligation was $71 and $237, respectively. Also during fiscal 2014, the Company entered into an operating lease for additional office space in Cincinnati, OH. A portion of the rent was abated at the start of the lease term. ASC 840—"Leases" ("ASC 840") states that lease payments should be charged to expense on a straight-line basis over the lease term. Accordingly, the Company recorded rent expense during fiscal 2015 and fiscal 2014 and an obligation for the deferred payments. At January 2, 2016 and January 3, 2015, this obligation was $342 and $197, respectively.

13. OTHER LONG-TERM LIABILITIES

        During fiscal 2015, the Company made business acquisitions as discussed in Note 3. A component of the purchase price for one of the acquisitions related to contingent consideration for earn out payments based on achieving minimum annual volume targets. At January 2, 2016, the fair value of the liability for the earn out payments was $19,628 with $9,956 classified in Other accrued liabilities and $9,672 classified in Other long-term liabilities. The Company assumed an onerous broker contract in one of the acquisitions. At January 2, 2016, the liability for this contract was $6,821 and was recorded in Other long-term liabilities.

14. RESTRUCTURING AND OTHER EXPENSE, NET

        During the past three years, the Company has initiated a number of restructuring programs, incurring expenses to integrate acquired businesses, improve the efficiency of its manufacturing and distribution network, and consolidate and reorganize its management and support teams.

        As discussed in Note 3, during fiscal 2015, the Company made two business acquisitions and incurred $1,887 in expense in connection with the integration of the related operations. $927 of this expense was charged to gross profit and related primarily to reconfiguration of production lines and associated ramp up inefficiencies. $960 of this expense was charged to operating income and these expenses were composed of travel and meals, legal and professional fees, facility closing costs and related severance.

        During fiscal 2015, the Company incurred $1,191 in expense that was charged to gross profit and related to reconfiguration of production lines at its Portland, ME manufacturing facility.

F-27


Table of Contents


ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

14. RESTRUCTURING AND OTHER EXPENSE, NET (Continued)

        During fiscal 2013, the Company undertook various initiatives intended to improve its commercial effectiveness and reduce operating costs, the execution of which continued in both fiscal 2014 and fiscal 2015. These initiatives include:

    Consolidation of business unit leadership and shared service teams in its Cincinnati, OH area facilities and closure of its administrative office located in Edmond, OK.

    Reorganization of its senior leadership team.

    Implementation of staffing reductions and facilities closures in its manufacturing, logistics and commercial operations.

        In connection with the above named initiatives, the Company recorded $1,662, $6,842 and $2,495 in expenses related primarily to severance costs, relocation and recruiting costs, and professional fees in fiscal 2015, fiscal 2014 and fiscal 2013, respectively. In fiscal 2015, $374 and $1,288 of this expense was charged to gross profit and operating income, respectively. In fiscal 2014, $1,614 and $5,228 of this expense was charged to gross profit and operating income, respectively. In fiscal 2013, the entire expense was charged to operating income.

        During fiscal 2013, in connection with the reorganization, the Company recorded $7,359 in expenses related primarily to severance costs and debt forgiveness on Shareholder Notes. $308 and $7,051 of this expense was charged to gross profit and operating income, respectively

        During fiscal 2014, and fiscal 2013, the Company incurred $37 and $703, respectively in expense charged to operating income in connection with the integration of the operations of the former Pierre Foods, Inc., Advance Food Company, Advance Brands, LLC and Barber Foods, LLC. In fiscal 2013, these expenses were composed of consulting and professional service fees, facility consolidations, and employee-related costs such as severance, relocation, and outplacement.

        During fiscal 2012, the Company completed a comprehensive analysis of its manufacturing capacity and footprint and decided to close the Orange City, IA facility, consolidating its activities among existing facilities. In connection with the idling of the production line and the facility closure, the Company incurred $432 and $20,742 in expense charged to gross profit in fiscal 2014 and fiscal 2013, respectively. In fiscal 2013, these expenses were composed of $18,527 in costs associated with reconfiguration of production lines and related ramp up inefficiencies and $2,215 in warehousing and transportation costs.

        All the above initiatives are complete as of January 2, 2016. The Company expects that the related cash payments will be substantially completed within fiscal 2016.

        The following table summarizes the classification of restructuring costs in the consolidated statements of operations:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  
 
  Gross
Profit
  Operating
Income
  Gross
Profit
  Operating
Income
  Gross
Profit
  Operating
Income
 

Initiatives prior to 2013

  $   $   $ 432   $ 37   $ 21,136     7,754  

2013 initiatives

    374     1,288     1,614     5,228     308     2,495  

2015 initiatives

    2,118     960                  

Totals

  $ 2,492   $ 2,248   $ 2,046   $ 5,265   $ 21,444   $ 10,249  

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Table of Contents


ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

14. RESTRUCTURING AND OTHER EXPENSE, NET (Continued)

        The following table reflects the activity regarding accrued liabilities for the Company's restructuring expenses as the result of the above initiatives. The accrued liabilities are included in Other accrued liabilities and Other long term liabilities in the consolidated balance sheets. The Company did not record any restructuring expenses directly attributable to its reportable segments.

 
  Total  

Balance at December 29, 2012

  $ 3,548  

Accruals

    31,693  

Payments, net

    (31,889 )

Balance at December 28, 2013

  $ 3,352  

Accruals

    7,311  

Payments, net

    (10,096 )

Balance at January 3, 2015

  $ 567  

Accruals

    4,740  

Payments, net

    (4,811 )

Balance at January 2, 2016

  $ 496  

        Other expenses, net in fiscal 2015 are composed primarily of professional fees associated with merger and acquisition activity, and costs associated with a recall of stuffed chicken breasts (refer to Note 4 for more information).

15. EMPLOYEE BENEFITS

        The Company maintains a 401(k) retirement plan for employees which provides that the Company will make a matching contribution. For fiscal 2015, fiscal 2014 and fiscal 2013, the Company matched 100% for the first 3% of the employees' salary and 50% for the next 2%. The Company's contributions expensed under the plans were approximately $4,606, $4,415 and $3,795 for fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

        The Company provides employee health insurance benefits through self-insurance group medical plans. The Company's contributions expensed for the self-insured group medical plans were approximately $22,251, $18,784 and $19,219 for fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

16. STOCK-BASED COMPENSATION

        Effective January 15, 2009, the Company's board of directors adopted the Equity Incentive Plan for the purpose of providing additional incentive to selected employees, directors and consultants whose contributions are essential to the growth and success of the Company's business. The Equity Incentive Plan provides that the Company may grant options, share appreciation rights, restricted shares, deferred shares, performance shares, unrestricted shares, other share-based awards or any combination of the foregoing awards. Awards under the Equity Incentive Plan are limited to 225,000 shares of the Company's common stock, subject to adjustment as provided in the Equity Incentive Plan document. The Equity Incentive Plan provides for board of directors' discretion in determining vesting periods, contractual lives and option exercise prices for each award issuance under the Equity Incentive Plan. Pursuant to the First Amended and Restated Stockholders' Agreement by and among the Company and its Stockholders and the individual award agreements, transfer of shares awarded under the Equity Incentive Plan is restricted.

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

16. STOCK-BASED COMPENSATION (Continued)

        During fiscal 2015, fiscal 2014 and fiscal 2013, the Company granted 15,800, 10,250 and 50,500 restricted shares, respectively, to key employees. The restricted shares vest over a three-year or four-year period with equal proportion of the shares vesting at the anniversary date of the grant in each of the three or four years in the vesting period. The fair value was estimated at the grant dates using an estimate of the enterprise value of the Company subtracting its debt net of cash, and applying an applicable liquidity discount. The enterprise value estimate was calculated by applying market benchmark multiples to our Adjusted EBITDA for the trailing twelve months as of the end of the most recent quarter for which a determination is made, and the corresponding amount was compared annually with the Company's estimated future discounted cash flows.

        The following table summarizes the share activity during fiscal 2015, fiscal 2014 and fiscal 2013:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  
 
  Shares   Weighted
Average
Grant Date
Fair Value
per Share
  Shares   Weighted
Average
Grant Date
Fair Value
per Share
  Shares   Weighted
Average
Grant Date
Fair Value
per Share
 

Total Restricted Shares:

                                     

Balance at beginning of year

    83,238   $ 74.24     81,901   $ 85.22     172,051   $ 145.91  

Granted

    15,800     201.58     10,250     50.00     50,500     50.00  

Forfeited

    (3,500 )   50.00     (1,000 )   50.00            

Repurchased

    (3,500 )   50.00     (7,913 )   211.95     (140,650 )   143.86  

Balance at end of year

    92,038   $ 97.95     83,238   $ 74.24     81,901   $ 90.28  

Vested Restricted Shares:

                                     

Balance at beginning of year

    37,663   $ 91.22     24,072   $ 138.44     143,851   $ 131.31  

Vested

    24,915     70.68     21,504     82.79     20,871     224.09  

Forfeited

                               

Repurchased

    (3,500 )   50.00     (7,913 )   211.95     (140,650 )   143.86  

Balance at end of year

    59,078   $ 85.00     37,663   $ 91.22     24,072   $ 138.44  

Unvested shares at end of year

    32,960   $ 121.14     45,575   $ 60.21     57,829   $ 70.24  

Shares available for grant

    18,549           27,349           36,599        

        During fiscal 2015, the Company granted restricted shares with weighted average fair values per share as follows:

Grants Made During Quarter Ended
  Number of
Restricted Shares
Granted
  Weighted Average
Fair Value of
Common Stock per
Share on Date of
Grant
 

April 4, 2015

    4,250   $ 75  

July 4, 2015

    1,550     75  

October 3, 2015

    4,000     275  

January 2, 2016

    6,000     275  

        The fair value of the restricted shares was determined contemporaneously with the grants.

        Compensation expense, included in Selling, general and administrative expenses, associated with all outstanding stock awards, including credits for stock forfeitures, was $17,198, $2,744 and $2,502 for fiscal 2015, fiscal 2014 and fiscal 2013, respectively. As of January 2, 2016, total unrecognized minimum compensation cost was approximately $8,386 related to unvested stock-based compensation arrangements granted under the Equity Incentive Plan. This cost is expected to be recognized over the next four fiscal years.

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

16. STOCK-BASED COMPENSATION (Continued)

        During fiscal 2013 and fiscal 2015, the Company repurchased terminated employees' vested stock with cash of $1,707 and $963, respectively. These shares were retired upon repurchase. In addition, in fiscal 2013 and fiscal 2014, OCM and Maine purchased terminated employees' vested stock with cash of $5,592 and $449, respectively. These purchases were reflected as a Capital contribution with related Redemption of stock in the Company's Consolidated Statements of Stockholders' Deficit. As of January 2, 2016 and January 3, 2015, the Company has a liability to the holders of those grants of $17,393 and $2,934, respectively. This liability is included in Other accrued liabilities in the Consolidated Balance Sheet as stockholders may resign at will or through termination which would result in the Company's likely call of the stock.

        Restricted stock issued under the Equity Incentive Plan provides the Company with the right to call the stock upon certain events, including the termination of employment. The exercise of this right has prevented the holders from bearing the risks and rewards of ownership in cases where employment is terminated. Therefore, the Company has determined that liability classification of these awards is appropriate until the point that the award has been vested for a sufficient period of time to allow the holder to fully bear the risks and rewards of ownership (generally six months).

        At this point, the award is reclassified from liabilities to equity.

        Under the liability method, the Company is required to recognize a liability based on the stock award's fair value at each reporting period with reference to its vesting schedule. The fair value of the restricted stock was $50 as of December 29, 2012 and December 28, 2013, and increased to $75 and $505 as of January 3, 2015 and January 2, 2016, respectively. As such, additional compensation expense and the liability recognized was adjusted.

17. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

        Fair value is the amount that would be received from the sale of an asset or paid for transfer of a liability in an orderly transaction between market participants, i.e., an exit price. To estimate an exit price, a three-level hierarchy is used. The three-level hierarchy for fair value measurements is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or a liability as follows:

        Level 1—Valuation is based upon unadjusted quoted prices for identical assets or liabilities in active markets.

        Level 2—Valuation is based upon quoted prices for similar assets or liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments.

        Level 3—Valuation is based upon other unobservable inputs that are significant to the fair value measurements and are developed based on the best information available, which in some instances included the Company's own data.

        In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

17. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

        The Company's non-derivative financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables and long-term debt. The estimated fair values of the financial instruments have been determined by the Company using available market information and appropriate valuation techniques. Considerable judgment is required, however, to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

        At January 2, 2016 and January 3, 2015, excluding the Term Loans, the book values of each of the non-derivative financial instruments recorded in the Company's Consolidated Balance Sheets are considered representative of fair value due to variable interest rates, short terms to maturity and/or short length of time outstanding.

        The Company recorded a liability of $2,294 to recognize the fair value of the Company's derivative instruments as of January 3, 2015. The carrying value of the Company's First Lien Term Loan was $894,851 and $902,631 at January 2, 2016 and January 3, 2015, respectively. The carrying value of the Company's Second Lien Term Loan was $375,000 at January 2, 2016 and January 3, 2015.

        The Company recorded a liability of $19,293 at the time of acquisition to recognize the fair value of its contingent consideration related to the volume earn out from the 2015 acquisitions. Other than the accretion of the liability due to passage of time, there has been no change in the underlying assumptions used to calculate the fair value of the earn out since the acquisition date.

        The following table summarizes the fair value measurement of the Company's Term Loans, derivatives and contingent consideration:

 
  January 2, 2016   January 3, 2015  
 
  Level 2   Level 3   Level 2   Level 3  

Derivatives

  $   $   $ 2,294   $  

Term Loans:

                         

First Lien Term Loan

        895,007         900,834  

Second Lien Term Loan

        367,500         364,219  

Contingent consideration

      $ 19,628          

18. TRANSACTIONS WITH RELATED PARTIES

        Oaktree Capital Management, L.P. ("Oaktree"), provides certain management, advisory and consulting services to the Company pursuant to a Management Services Agreement effective September 30, 2010. Oaktree is the management company for OCM. Prior to September 30, 2015, Maine Street Holdings, Inc ("Maine") also provided certain management, advisory and consulting services to the Company pursuant to a Management Services Agreement effective September 30, 2010. Maine is controlled by the Company's minority owners. In consideration for the services provided, the Company was required to pay a quarterly management fee of $750, in advance, to both Oaktree and Maine. The Company was also required to reimburse Oaktree and Maine for certain out-of-pocket expenses incurred with respect to the performance of services. The Company recorded

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

18. TRANSACTIONS WITH RELATED PARTIES (Continued)

$11,566 and $2,250 in combined fees and expenses to Oaktree and Maine, respectively, in fiscal 2015, $13,111 and $3,000 in combined fees and expenses to Oaktree and Maine, respectively, in fiscal 2014, and $3,576 and $3,000 in combined fees and expenses to Oaktree and Maine, respectively, in fiscal 2013, all of these combined fees and expenses are included in Selling, general and administrative expenses. Under the Management Services Agreement, in the event of consummation of an initial registered public offering of the equity securities or equity interests of the Company or a sale of all or substantially all of the assets of the Company, the Company will pay Oaktree an aggregate success fee in an amount equal to three times the annual management fee. The Company is not required to make any further payments to Maine.

        Oaktree and its affiliates are holders of the Second Lien Term Loan. At both January 2, 2016 and January 3, 2015, Oaktree and its affiliates held $31,772 and $31,644 of the carrying value of the Second Term Loan. Interest accrued to Oaktree and its affiliates was $692 and $726 as of January 2, 2016 and January 3, 2015, respectively, and is included in Accrued interest in the accompanying Consolidated Balance Sheets. The Company recorded Interest expense of $3,074, $3,133 and $2,882 during fiscal 2015, fiscal 2014 and fiscal 2013, respectively, on debt held by Oaktree and its affiliates.

        The Company and its Audit Committee have adopted written procedures which restrict and govern related party transactions. Pursuant to those procedures, any related party transaction that would be required to be reported in this report must first be presented to and approved by the Company's Chief Executive Officer and Chief Financial Officer, and if the transaction is material, also by the Audit Committee before the Company makes a binding commitment to the related party.

19. EARNINGS PER COMMON SHARE

        Basic earnings per share is calculated based upon the weighted average number of outstanding common shares for the period, plus the effect of vested shares. Diluted earnings per share is calculated consistent with the basic earnings per share calculation plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. All of the Company's unvested restricted stock awards were excluded from the computation of diluted net income (loss) per share for fiscal 2014 and fiscal 2013 because including them would have had an anti-dilutive effect due to the net loss position of the Company. There were no awards that could have diluted basic earnings per share in the future that were not included in the computation of diluted earnings per share in fiscal 2015 as all awards were dilutive.

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Net income (loss)

  $ 37,111   $ (37,943 ) $ (57,047 )

Weighted average shares outstanding—Basic

    1,325,218     1,302,087     1,287,743  

Potential effect of unvested restricted stock

    16,861          

Weighted average Shares outstanding—Diluted

    1,342,079     1,302,087     1,287,743  

Net income (loss) per common share—Basic

  $ 28.00   $ (29.14 ) $ (44.30 )

Net income (loss) per common share—Diluted

  $ 27.65   $ (29.14 ) $ (44.30 )

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

20. SEGMENT INFORMATION

        The Company operates in four reportable segments: Foodservice, Retail, Convenience and Industrial.

        The Foodservice segment supplies the diverse US "food-away-from-home" industry. The Company's foodservice customers include leading national and regional distributors with whom we have long-standing and collaborative relationships. The Company supplies to 89 of the largest 100 school districts, working closely with schools to develop nutritious meal options with good quality and value. The Company's diverse portfolio of products includes ready-to-eat sandwiches, such as breakfast sandwiches and PB&J sandwiches, sandwich components, such as Philly steaks and fully-cooked hamburger-patties, and other entrées and snacks, such as country-fried steak, stuffed entrées and chicken tenders.

        The Retail segment supplies national and regional grocery chains, major warehouse club stores, mass retailers and dollar stores. The Company sells both branded and private label ready-to-eat sandwiches, such as grilled chicken sandwiches and stuffed pockets, sandwich components, such as chicken patties and Philly steaks and other entrées and snacks such as, stuffed chicken breasts.

        The Convenience segment customers include national and regional convenience chains and vending providers. In the Convenience segment, the Company sells customized ready-to-eat sandwiches, such as breakfast sandwiches and burgers, sandwich components, such as chicken patties and other entrées and snacks, such as cinnamon dough bites.

        The Industrial segment primarily supplies other food producers, such as packaged food companies under short-term co-manufacturing agreements.

        Segment performance is evaluated by the Company's chief operating decision maker ("CODM") and is based on net sales and operating income. Unallocated corporate income (expense) includes executive management, finance and legal functions and refinancing related charges.

        The following summarizes Net sales and Operating income by reportable segments:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Net sales

                   

Foodservice

  $ 886,095   $ 829,563   $ 740,854  

Retail

    395,941     399,621     378,970  

Convenience

    201,845     159,659     138,623  

Industrial

    127,730     188,784     233,551  

Total

  $ 1,611,611   $ 1,577,627   $ 1,491,998  

Operating income

                   

Foodservice

  $ 134,287   $ 70,592   $ 56,663  

Retail

    28,543     13,488     6,418  

Convenience

    29,776     18,230     14,806  

Industrial

    2,767     1,998     1,626  

Unallocated corporate expenses, net

    (44,966 )   (28,229 )   (25,599 )

Total

  $ 150,407   $ 76,079   $ 53,914  

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

20. SEGMENT INFORMATION (Continued)

        The Company has not disclosed total asset balances or depreciation and amortization amounts by segment because this information is not regularly reviewed by the Company's CODM.

        The following summarizes Net sales by product category:

 
  Fiscal 2015   Fiscal 2014   Fiscal 2013  

Net sales

                   

Sandwiches

  $ 455,107   $ 412,009   $ 388,579  

Sandwich components

    630,928     610,780     574,998  

Other entrées and snacks

    525,576     554,838     528,421  

Total

  $ 1,611,611   $ 1,577,627   $ 1,491,998  

21. QUARTERLY RESULTS (unaudited)

        The following summarizes the Company's fiscal 2015 quarterly financial data:

 
  Fiscal Quarter Ended  
 
  April 4,
2015
  July 4,
2015
  October 3,
2015
  January 2,
2016
 
 
  13 Weeks   13 Weeks   13 Weeks   13 Weeks  

Net sales

  $ 426,509   $ 391,878   $ 407,170   $ 386,054  

Gross profit

    87,154     83,814     87,718     95,688  

Net income

    10,529     2,260     12,635     11,687  

Net income per common share

                         

Basic

  $ 7.97   $ 1.71   $ 9.54   $ 8.78  

Weighted average shares outstanding—Basic

    1,321,053     1,323,569     1,324,885     1,331,367  

Diluted

  $ 7.84   $ 1.67   $ 9.38   $ 8.67  

Weighted average shares outstanding—Diluted

    1,343,632     1,350,924     1,346,849     1,349,690  

        The following summarizes the Company's fiscal 2014 quarterly financial data:

 
  Fiscal Quarter Ended  
 
  March 29
2014
  June 28,
2014
  September 27,
2014
  January 3,
2015
 
 
  13 Weeks   13 Weeks   13 Weeks   14 Weeks  

Net sales

  $ 375,026   $ 356,164   $ 406,328   $ 440,109  

Gross profit

    58,501     59,102     63,731     67,865  

Net loss

    (13,106 )   (13,574 )   (4,176 )   (7,087 )

Net loss per common share

                         

Basic

  $ (10.10 ) $ (10.44 ) $ (3.21 ) $ (5.41 )

Weighted average shares outstanding—Basic

    1,297,822     1,300,074     1,300,840     1,309,669  

Diluted

  $ (10.10 ) $ (10.44 ) $ (3.21 ) $ (5.41 )

Weighted average shares outstanding—Diluted

    1,297,822     1,300,074     1,300,840     1,309,669  

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ADVANCEPIERRE FOODS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share and per share amounts)

22. LEGAL PROCEEDINGS AND CONTINGENCIES

        In October, 2012, in response to Sunland, Inc.'s peanut butter recall, the Company decided to initiate a voluntary recall of all products that had the potential to be contaminated with Salmonella. The Company recalled select frozen products including peanut butter and jelly sandwiches, peanut butter and jelly graham cracker sandwiches and peanut butter cup products all produced at its Easley, SC factory. The Company filed claims against Sunland Inc. to recover $1,242 of expenses incurred during fiscal 2012 in addition to sales interruption and other continuing or incidental losses for which the Company had not completed an estimate. In October 2013, Sunland, Inc. filed for bankruptcy under Chapter 7. In August 2014, the bankruptcy trustee filed motions seeking approval of the settlements reached with the insurance company and recall claimants for a buy-back of the insurance policy and payments to creditors on their recall claims. The Bankruptcy Court approved the agreements, and the Company recovered $775 from its claim against Sunland, Inc.

        The Company evaluates contingencies based upon the best available information. The Company believes it has recorded appropriate liabilities to the extent necessary in cases where the outcome of such liabilities is considered probable and reasonably estimable, and that its assessment of contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from management's estimates, future earnings will be charged or credited accordingly.

        As part of its ongoing operations in the food processing industry, the Company is subject to extensive federal, state, and local regulations and its food processing facilities and food products are subject to frequent inspection, audits and inquiries by the USDA, the FDA, and various local health and agricultural agencies and by federal, state, and local agencies responsible for the enforcement of environmental, labor, and other laws and regulations. The Company is also involved in various legal actions arising in the normal course of business. These matters are continuously being evaluated and, in some cases, are being contested by the Company and the outcome is not predictable. Consequently, an estimate of the possible loss or range of loss associated with these actions cannot be made.

23. RISKS AND UNCERTAINTIES

        The Company is subject to risks and uncertainties inherent in the food processing industry, many of which are outside the Company's control, including raw material, energy and fuel costs, interest rates and general economic conditions. Commodity-based raw materials, including beef, chicken and pork, flour, seasonings, soy, and corrugate represent a significant portion of the Company's total annual expenditures. Unexpected or sustained increases in commodity prices underlying the Company's primary raw materials could materially increase the Company's cost of operations. Management continually monitors changes in the operating environment and takes action to mitigate the impact of adverse changes, including implementing price increases, productivity and cost savings initiatives and deferral or elimination of discretionary spend.

24. SUBSEQUENT EVENTS

        The Company has considered subsequent events through April 11, 2016, the date the consolidated financial statements were available to be issued.

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                Shares

LOGO

AdvancePierre Foods Holdings, Inc.

Common Stock



Prospectus

                        , 2016



Barclays   Credit Suisse   Morgan Stanley



        Through and including                        , 2016 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligations to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.


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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

        The following table sets forth the expenses payable by the Registrant expected to be incurred in connection with the issuance and distribution of common stock being registered hereby (other than underwriting discounts and commissions). All of such expenses are estimates, except for the Securities and Exchange Commission ("SEC") registration fee, the Financial Industry Regulatory Authority ("FINRA") filing fee and The New York Stock Exchange listing fee.

SEC registration fee

  $ 10,070  

FINRA filing fee

    15,500  

                    listing fee

      *

Printing fees and expenses

      *

Registrar and transfer agent fees

      *

Accounting fees and expenses

      *

Miscellaneous

      *

Total

  $   *

*
To be filed by amendment.

Item 14.    Indemnification of Directors and Officers.

        Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL") allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our amended and restated certificate of incorporation will provide for this limitation of liability. We will enter into indemnification agreements with our director nominees that provide for us to indemnify them to the fullest extent permitted by Delaware law.

        Section 145 of the DGCL, or Section 145, provides, among other things, that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. A Delaware corporation may indemnify any persons who were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the

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corporation must indemnify him or her against the expenses (including attorneys' fees) which such officer or director has actually and reasonably incurred.

        Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify such person under Section 145.

        Our amended and restated bylaws will provide that we must indemnify, and advance expenses to, our directors and officers to the full extent authorized by the DGCL.

        The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our amended and restated certificate of incorporation, our amended and restated bylaws, agreement, vote of stockholders or disinterested directors or otherwise. Notwithstanding the foregoing, we shall not be obligated to indemnify a director or officer in respect of a proceeding (or part thereof) instituted by such director or officer, unless such proceeding (or part thereof) has been authorized by our board of directors pursuant to the applicable procedure outlined in the amended and restated bylaws.

        Section 174 of the DGCL provides, among other things, that a director, who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption, may be held jointly and severally liable for such actions. A director who was either absent when the unlawful actions were approved or dissented at the time may avoid liability by causing his or her dissent to such actions to be entered in the books containing the minutes of the meetings of the board of directors at the time such action occurred or immediately after such absent director receives notice of the unlawful acts.

        We expect to maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors and officers.

        The underwriting agreement provides for indemnification by the underwriters of us, our officers and directors and the selling stockholders, and by us and the selling stockholders of the underwriters, for certain liabilities arising under the Securities Act or otherwise in connection with this offering.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or controlling persons pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 15.    Recent Sales of Unregistered Securities.

        Within the past three years, the Registrant has granted or issued the following securities of the Registrant which were not registered under the Securities Act of 1933, as amended (the "Securities Act"). All of these shares were issued without registration in reliance on the exemptions afforded by Section 4(a)(2) of the Securities Act and/or Rule 701 promulgated thereunder. No sales involved underwriters, underwriting discounts or commissions or public offerings of securities of the Registrant.

        Between January 2, 2016 and the date of this registration statement, the Registrant granted an aggregate of 2,650 restricted shares of common stock to certain employees and directors pursuant to the Registrant's 2009 Omnibus Equity Incentive Plan.

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        During the fiscal year ended January 2, 2016, the Registrant granted an aggregate of 15,800 restricted shares of common stock to certain employees and directors pursuant to the Registrant's 2009 Omnibus Equity Incentive Plan.

        During the fiscal year ended January 3, 2015, the Registrant granted an aggregate of 10,250 restricted shares of common stock to certain employees pursuant to the Registrant's 2009 Omnibus Equity Incentive Plan.

        During the fiscal year ended December 23, 2013, the Registrant granted an aggregate of 50,500 restricted shares of common stock to certain employees and directors pursuant to the Registrant's 2009 Omnibus Equity Incentive Plan.

        On September 30, 2013, the Registrant sold 20,000 shares of common stock to the Simons Family Trust (a trust for the benefit of John N. Simons, Jr. and his family) for $1 million.

Item 16.    Exhibits and Financial Statement Schedules.

        (a)   Exhibits. See the Exhibit Index immediately following the signature page hereto, which is incorporated by reference as if fully set forth herein.

Item 17.    Undertakings.

        (1)   The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

        (2)   Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

        (3)   The undersigned Registrant hereby undertakes that:

            (A)  For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

            (B)  For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cincinnati, Ohio, on April 11, 2016.

    ADVANCEPIERRE FOODS HOLDINGS, INC.

 

 

By:

 

/s/ JOHN N. SIMONS, JR.

        Name:   John N. Simons, Jr.
        Title:   Chief Executive Officer and President


POWER OF ATTORNEY

        The undersigned directors and officers of AdvancePierre Foods Holdings, Inc. hereby constitute and appoint John N. Simons, Jr. and Michael Sims and each of them, any of whom may act without joinder of the other, the individual's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the person and in his or her name, place and stead, in any and all capacities, to sign this Registration Statement and any or all amendments, including post-effective amendments to the Registration Statement, including a prospectus or an amended prospectus therein and any Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462 under the Securities Act, and all other documents in connection therewith to be filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact as agents or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on April 11, 2016.

Signature
 
Capacity

 

 

 
/s/ JOHN N. SIMONS, JR.

John N. Simons, Jr.
  Chief Executive Officer and President; Director (Principal Executive Officer)

/s/ MICHAEL SIMS

Michael Sims

 

Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)

/s/ MARGARET M. CANNELLA

Margaret M. Cannella

 

Director

/s/ CELESTE A. CLARK, PH.D.

Celeste A. Clark, Ph.D.

 

Director

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Signature
 
Capacity

 

 

 
/s/ PETER C. DILLINGHAM

Peter C. Dillingham
  Director

/s/ DEAN HOLLIS

Dean Hollis

 

Chairman of the Board

/s/ STEPHEN A. KAPLAN

Stephen A. Kaplan

 

Director

/s/ GARY PERLIN

Gary Perlin

 

Director

/s/ MATTHEW C. WILSON

Matthew C. Wilson

 

Director

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EXHIBIT INDEX

Exhibit   Description
  1.1 * Form of Underwriting Agreement
        
  3.1 * Form of Amended and Restated Certificate of Incorporation of the Registrant
        
  3.2 * Form of Amended and Restated Bylaws of the Registrant
        
  4.1 * Form of Stock Certificate for Common Stock
        
  5.1 * Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
        
  10.1 * Form of Amended and Restated Registration Rights Agreement by and among the Registrant and the other parties named therein
        
  10.2 * Form of Stockholders Agreement by and among the Registrant and the other parties named therein
        
  10.3 * Form of Indemnification Agreement by and between the Registrant and each of its directors and executive officers
        
  10.4 * Form of Tax Receivable Agreement by and among the Registrant and the other parties named therein
        
  10.5 * First-Lien Credit Agreement, dated as of October 10, 2012, among Pierre Holdco, Inc., AdvancePierre Foods, Inc., the lenders party thereto from time to time and Deutsche Bank Trust Company Americas, as administrative agent.
        
  10.6 * Second-Lien Credit Agreement, dated as of October 10, 2012, among Pierre Holdco, Inc., AdvancePierre Foods, Inc., the lenders party thereto from time to time and Deutsche Bank Trust Company Americas, as administrative agent.
        
  10.7 * Second Amended and Restated Credit Agreement, dated as of October 10, 2012, among Pierre Holdco, Inc., AdvancePierre Foods, Inc., the lenders party thereto from time to time and Wells Fargo Capital Finance,  LLC, as administrative agent.
        
  10.8 * Employment Agreement entered into and effective as of September 30, 2013 by and between John Simons and AdvancePierre Foods, Inc.
        
  10.9 * Employment Agreement entered into and effective as of February 28, 2012 by and between Michael Sims and AdvancePierre Foods, Inc.
        
  10.10 * Employment Agreement entered into and effective as of March 9, 2015 by and between Anthony Schroder and AdvancePierre Foods, Inc.
        
  10.11 * Employment Agreement entered into and effective as of June 18, 2013 by and between James Clough and AdvancePierre Foods, Inc.
        
  10.12 * Relocation Repayment Agreement entered into and effective as of October 14, 2014 by and between James Clough and AdvancePierre Foods, Inc.
        
  10.13 * Amendment No. 1 to Employment Agreement entered into by and between James Clough and AdvancePierre Foods, Inc., effective March 24, 2016
        
  10.14 * Employment Agreement entered into and effective as of January 20, 2013 by and between George Chappelle and AdvancePierre Foods, Inc.
        
  10.15 * Employment Agreement entered into and effective as of November 4, 2013 by and between Thomas Lavan and AdvancePierre Foods, Inc.
 
   

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Exhibit   Description
  10.16 * Release and Separation Agreement entered into and effective as of October 8, 2015 by and between Thomas Lavan and AdvancePierre Foods, Inc.
        
  10.17 * Pierre Foods Holding Corporation 2009 Omnibus Equity Incentive Plan
        
  10.18 * Amendment No. 1 to Pierre Foods Holding Corporation 2009 Omnibus Equity Incentive Plan, effective as of January 23, 2014
        
  10.19 * Form of Pierre Foods Holding Corporation 2009 Omnibus Equity Incentive Plan Restricted Share Award Agreement
        
  10.20 * AdvancePierre Foods, Inc. Special Enhanced Severance Plan
        
  10.21 * AdvancePierre Foods, Inc. 401(k) Retirement Plan, amended and restated effective as of January 1, 2012
        
  10.22 * Amendment for the Final 415 Regulations to AdvancePierre Foods, Inc. 401(k) Retirement Plan, effective as of July 1, 2007
        
  10.23 * Amendment for EACA and/or QACA Provisions to AdvancePierre Foods, Inc. 401(k) Retirement Plan, dated January 9, 2012
        
  10.24 * Amendment for HEART and WRERA to AdvancePierre Foods, Inc. 401(k) Retirement Plan, dated January 9, 2012
        
  10.25 * Amendment for the Pension Protection Act and HEART Act to AdvancePierre Foods, Inc. 401(k) Retirement Plan, dated January 9, 2012
        
  10.26 * Amendment No. 1 to AdvancePierre Foods, Inc. 401(k) Retirement Plan, effective as of October 1, 2012
        
  10.27 * Amendment No. 2 to AdvancePierre Foods, Inc. 401(k) Retirement Plan, effective as of January 1, 2014
        
  21.1   List of Subsidiaries
        
  23.1   Consent of PricewaterhouseCoopers LLP
        
  23.2 * Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1)
        
  24   Power of Attorney (included on signature page of this Registration Statement)

*
To be filed by amendment

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