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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a ~~non–accelerated~~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~~12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule ~~12b–2~~12b-2 of the Exchange Act). Yes ¨ No x

Under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), Annie’s, Inc. qualifies as an “emerging growth company,” as defined under the JOBS Act.

On ~~July~~October 15, 2012, the registrant had ~~17,060,111~~17,122,249 shares of common stock, par value $0.001 per share, outstanding.


	June 30,			March 31,			September 30,			March 31,
	2012			2012			2012			2012
ASSETS
CURRENT ASSETS:
Cash	$	5,102		$	562		$	14,629		$	562
Accounts receivable, net		7,388			11,870			11,708			11,870
Inventory		14,596			10,202			12,401			10,202
Deferred tax assets		1,995			1,995			1,995			1,995
Income tax receivable		2,870			164			1,743			164
Prepaid expenses and other current assets		1,604			1,252			2,503			1,252

Total current assets		33,555			26,045			44,979			26,045
Property and equipment, net		4,888			4,298			4,887			4,298
Goodwill		30,809			30,809			30,809			30,809
Intangible assets, net		1,161			1,176			1,146			1,176
Deferred tax assets, long-term		4,504			4,650			4,433			4,650
Deferred initial public offering costs		—			5,343			—			5,343
Other non-current assets		103			108			99			108

Total assets	$	75,020		$	72,429		$	86,353		$	72,429

LIABILITIES, CONVERTIBLE PREFERRED STOCK ANDSTOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	1,185		$	861		$	2,233		$	861
Related-party payable		—			1,305			—			1,305
Accrued liabilities		4,304			7,452			9,042			7,452

Total current liabilities		5,489			9,618			11,275			9,618
Credit facility		—			12,796			—			12,796
Convertible preferred stock warrant liability		—			2,157			—			2,157
Other non-current liabilities		956			921			992			921

Total liabilities		6,445			25,492			12,267			25,492

Convertible preferred stock		—			81,373			—			81,373
STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock		—			—			—			—
Common stock		17			1			17			1
Additional paid-in capital		105,256			4,392			106,982			4,392
Accumulated deficit		(36,698	)		(38,829	)		(32,913	)		(38,829	)

Total stockholders’ equity (deficit)		68,575			(34,436	)		74,086			(34,436	)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	75,020		$	72,429		$	86,353		$	72,429

See accompanying notes to the unaudited condensed consolidated financial statements


	Three Months Ended June 30,						Three Months Ended September 30,						Six Months Ended September 30,
	2012			2011			2012			2011			2012			2011
Net sales	$	34,293		$	28,610		$	46,686		$	38,872		$	80,979		$	67,482
Cost of sales		20,486			17,022			28,786			24,737			49,272			41,759

Gross profit		13,807			11,588			17,900			14,135			31,707			25,723
Operating expenses:
Selling, general and administrative		10,211			8,303			11,539			8,056			21,750			16,359

Income from operations		3,596			3,285			6,361			6,079			9,957			9,364
Interest expense		(40	)		(18	)		(40	)		(23	)		(80	)		(41	)
Other income (expense), net		49			(484	)		36			13			85			(471	)

Income before provision for income taxes		3,605			2,783			6,357			6,069			9,962			8,852
Provision for income taxes		1,474			971			2,572			2,453			4,046			3,424

Net income	$	2,131		$	1,812		$	3,785		$	3,616		$	5,916		$	5,428

Net income attributable to common stockholders	$	2,131		$	54		$	3,785		$	107		$	5,916		$	161

Net income per share attributable to common stockholders
—Basic	$	0.13		$	0.12		$	0.22		$	0.23		$	0.35		$	0.35

—Diluted	$	0.12		$	0.04		$	0.21		$	0.11		$	0.34		$	0.16

Weighted average shares of common stock outstanding used in computing net income per share attributable to common stockholders
—Basic		16,936,007			464,994			17,070,327			465,045			17,003,534			465,019

—Diluted		17,600,908			1,236,410			17,702,516			1,018,359			17,656,356			986,680

See accompanying notes to the unaudited condensed consolidated financial statements

Condensed Consolidated ~~Statements~~Statement of Convertible Preferred Stock and Stockholders’ Equity (Deficit)


	Convertible Preferred Stock														Additional Paid-in Capital				Accumulated Deficit				Total Stockholders’ Equity (Deficit)
	Convertible Preferred Stock						Preferred Stock				Common Stock											Convertible Preferred Stock							Preferred Stock							Common Stock							Additional Paid-in Capital				Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares			Amount			Shares		Amount		Shares		Amount									Shares					Amount				Shares			Amount				Shares			Amount		Additional Paid-in Capital							Total Stockholders’ Equity (Deficit)
Balance at March 31, 2012		12,281,553		$	81,373			—	$	—		483,242	$	1			$	4,392			$	(38,829			)		$	(34,436	)			12,281,553		$	81,373				—		$	—				483,242	Accumulated Deficit				$	1		$	4,392	$	(38,829	)	$	(34,436	)
Reclassification of convertible preferred stock warrant liability upon consummation of IPO		—			—			—		—		—		—				2,170				—				2,170				—			—				—			—				—				—			2,170			—		2,170
Conversion of convertible preferred stock into common stock upon consummation of IPO		(12,281,553	)		(81,373	)		—		—		15,221,571		15		81,358				—				81,373			(12,281,553	)			(81,373	)		—				—			15,221,571				15				81,358			—			81,373
Shares issued upon consummation of IPO		—			—			—		—		950,000		1		11,145				—				11,146			—				—			—				—			950,000				1				11,145			—			11,146
Exercise of stock options		—			—			—		—		342,105		—		1,774				—				1,774			—				—			—				—			403,243				—				2,204			—			2,204
Excess tax benefit from stock-based compensation		—			—			—		—		—		—		4,201				—				4,201			—				—			—				—			—				—				5,266			—			5,266
Net exercise of warrant to purchase shares of common stock												63,193		—		—				—				—																	63,193				—				—			—			—
Stock-based compensation		—			—			—		—		—		—		216				—				216			—				—			—				—			—				—				447			—			447
Net Income		—			—			—		—		—		—		—				2,131				2,131			—				—			—				—			—				—				—			5,916			5,916

Balance at June 30, 2012		—		$	—			—	$	—		17,060,111	$	17	$	105,256			$	(36,698	)		$	68,575
Balance at September 30, 2012																											—			$	—			—			$	—			17,121,249			$	17			$	106,982		$	(32,913	)	$	74,086

See accompanying notes to the unaudited condensed consolidated financial statements


	Three Months Ended June 30,						Six Months Ended September 30,
	2012			2011			2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	2,131		$	1,812		$	5,916		$	5,428
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		200			152			463			302
Stock-based compensation		216			106			447			239
Allowances for trade discounts and other		—			(670	)		(1,100	)		556
Inventory reserves		(112	)		—			(80	)		—
Excess tax benefit from stock-based compensation		(4,201	)		—			(5,266	)		—
Accretion of imputed interest on purchase of intangible asset		35			—			71			—
Change in fair value of convertible preferred stock warrant liability		13			518			13			538
Amortization of deferred financing costs		5			8			9			17
Deferred taxes		146			(332	)		217			(332	)
Changes in operating assets and liabilities:
Accounts receivable, net		4,482			5,017			1,262			2,652
Inventory		(4,282	)		(7,146	)		(2,119	)		(2,174	)
Income tax receivable		164			—			(149	)		—
Prepaid expenses, other current and non-current assets		(352	)		(61	)		4,092			(773	)
Accounts payable		284			(5,611	)		1,359			(7,887	)
Related-party payable		(1,305	)		47			(1,305	)		(3	)
Accrued expenses and other non-current liabilities		3,526			(515	)		5,426			1,190

Net cash provided by (used in) operating activities		950			(6,675	)		9,256			(247	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(735	)		(380	)		(1,009	)		(860	)

Net cash used in investing activities		(735	)		(380	)		(1,009	)		(860	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility		735			20,198			2,663			33,206
Payments to credit facility		(13,531	)		(16,774	)		(15,459	)		(33,206	)
Proceeds from common shares issued in initial public offering, net of issuance costs		11,146			—			11,146			—
Dividends paid								—			(1,519	)
Net repurchase of stock options		—			(602	)		—			(602	)
Excess tax benefit from stock-based compensation		4,201			—			5,266			—
Proceeds from exercises of stock options		1,774			—			2,204			10

Net cash provided by financing activities		4,325			2,822
Net cash provided by (used in) financing activities								5,820			(2,111	)

NET INCREASE (DECREASE) IN CASH		4,540			(4,233	)		14,067			(3,218	)
CASH—Beginning of period		562			7,333			562			7,333

CASH—End of period	$	5,102		$	3,100		$	14,629		$	4,115

NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchase of property and equipment funded through accounts payable	$	40		$	—		$	13		$	—
Conversion of convertible preferred stock into common stock	$	81,373		$	—		$	81,373		$	—

See accompanying notes to the unaudited condensed consolidated financial statements

Annie’s, Inc. (the “Company”), a Delaware corporation incorporated on April 28, 2004, is a natural and organic food company. The Company offers over 125 products in the following three product categories: meals; snacks; and dressings, condiments and other. The Company’s products are sold throughout the U.S. and Canada via a multi-channel distribution network that serves the mainstream grocery, mass merchandiser and natural retailer channels. The Company’s headquarters are located in Berkeley, California.

The accompanying interim condensed consolidated balance sheets as of ~~June~~September 30, 2012 and March 31, 2012, interim condensed consolidated statements of convertible preferred stock and stockholders’ equity (deficit) as of September 30, 2012 and March 31, 2012, and the interim condensed consolidated statements of operations for the three and six months ended September 30, 2012 and 2011, and cash flows for the ~~three~~six months ended ~~June~~September 30, 2012 and 2011 are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, ~~they do not include all of the~~certain information and ~~notes required by~~footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP ~~for complete financial statements.~~have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Company’s Annual Report on Form 10-K filed with the SEC on June 8, 2012. The March 31, 2012 condensed consolidated balance sheet included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP for ~~complete~~audited financial statements.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly our financial position as of ~~June~~September 30, 2012 and results of our operations for the three and six months ended September 30, 2012 and 2011, and cash flows for the ~~three~~six months ended ~~June~~September 30, 2012 and 2011. The interim results for the ~~three~~six months ended ~~June~~September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending March 31, 2013.

The unaudited interim condensed consolidated financial statements include the accounts of the Company and its ~~wholly-owned~~wholly owned subsidiaries, Annie’s Homegrown, Inc., Annie’s Enterprises, Inc. and Napa Valley Kitchen, ~~Inc. and Annie’s Enterprises,~~ Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

On April 2, 2012, the Company closed its IPO, in which it sold 950,000 shares ~~and certain stockholders sold 4,800,000 shares of common stock~~ at aan offering price ~~to the public~~ of $19.00 per share. The aggregate amount of consideration for shares sold in the offering was $109.3 million. The shares sold by such stockholders included 750,000 additional shares purchased by the underwriters from certain of these stockholders pursuant to an option the underwriters held to cover overallotments of shares. The Company did not receive any proceeds from the sale of shares by the stockholders. The Companyshare and raised $11.1 million in net proceeds after deducting underwriting discounts and commissions of $1.3 million and other offering expenses of $5.6 million. In addition, certain of the Company’s stockholders, including funds administered by Solera Capital, LLC (“Solera”), sold 4.8 million shares at the $19.00 offering price in the IPO.

Immediately prior to the closing of the IPO, the outstanding shares of convertible preferred stock were automatically converted into 15,221,571 shares of common stock, the Company’s outstanding convertible preferred stock warrant was automatically converted into a common stock warrant to purchase a total of 80,560 shares of common stock and the related convertible preferred stock warrant liability was reclassified to additional paid-in capital.

~~Upon consummation of the IPO,~~Pursuant to our Amended and Restated Certificate of Incorporation or Charter and Amended and Restated Bylaws, ~~took effect. The Charter~~which became effective upon consummation of the IPO, the Company has authorized 35,000,000 shares of capital stock, 30,000,000 shares, par value $0.001 per share, of which are common ~~Stock~~stock and 5,000,000 shares, par value $0.001 per share, of which are preferred stock. NoAs of September 30, 2012, 17,121,249 shares of common stock were issued and outstanding and no shares of preferred stock were issued and ~~outstanding as of June 30, 2012.~~outstanding.

On August 6, 2012, the Company closed a secondary public offering, in which certain stockholders, including funds administered by Solera, sold 3,649,976 shares of common stock at an offering price of $39.25 per share. The Company did not receive any proceeds from the sale of shares by the selling stockholders. The offering expenses incurred by the Company were $0.7 million, including legal, accounting and printing costs and various other fees associated with the registration and sale of common stock sold in the secondary public offering.

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain 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 sales and expenses during the reported periods. Actual results could differ from those estimates.

Customers with 10% or more of the Company’s net sales consist of the following:


	Net Sales									Net Sales
	Customer A			Customer B			Customer C			Customer A			Customer B			Customer C
Three Months Ended June 30,
Three Months Ended September 30,
2012		28	%		9	%		10	%		27	%		13	%		14	%
2011		25	%		11	%		12	%		25	%		14	%		12	%
Six Months Ended September 30,
2012											27	%		11	%		12	%
2011											25	%		13	%		12	%

As of ~~June~~September 30, 2012, ~~two customers~~Customer A and Customer B represented ~~25%~~26% and ~~22%~~18%, respectively, of accounts receivable. The same two customers represented ~~45%~~21% and ~~21%~~45%, respectively, of accounts receivable as of March 31, 2012.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The carrying amounts of the Company’s financial instruments, including accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The carrying amount of the convertible preferred stock warrant liability at March 31, 2012 represented its estimated fair ~~value (Note 7).~~value. Upon consummation of the IPO on April 2, 2012, prior to the automatic conversion of the convertible preferred stock warrant into a common stock warrant, itthe estimated fair value was remeasured and the change in fair value was recorded as a non-cash charge in other income (expense), net and the related liability was reclassified to additional paid-in capital.

The Company capitalizes certain internal and external costs related to the development and enhancement of the Company’s internal-use software. Capitalized internal-use software development costs are included in property and equipment on the accompanying consolidated balance sheets. At ~~June~~September 30, 2012 and March 31, 2012, capitalized software development costs, net of accumulated amortization, totaled ~~$2.4~~$2.3 million and 2.0 million, respectively. As of ~~June~~September 30, 2012, of the ~~$2.4~~Company had $2.1 million capitalized software development costs, net of accumulated amortization ~~$2.2~~and $0.2 million ~~was~~ in construction in progress.

Shipping and handling costs are included in selling, general and administrative expenses in the consolidated statements of operations. Shipping and handling costs primarily consist of costs associated with moving finished products to customers, including costs associated with the Company’s distribution center, route delivery costs and the cost of shipping products to customers through third-party carriers. Shipping and handling costs recorded as a component of selling, general and administrative expenses were ~~$1.3~~$1.5 million and $1.1 million for the three months ended ~~June~~September 30, 2012 and 2011, respectively and were $2.8 million and $2.2 million for the six months ended September 30, 2012 and 2011, respectively.

Research and development costs primarily consist of consumer research, employee-related costs for personnel responsible for the research and development of new products, supplies and materials. Research and development costs recorded as a component of selling, general and administrative expenses were ~~$0.8~~$0.7 million and ~~$0.4~~$0.5 million for the three months ended ~~June~~September 30, 2012 and 2011, respectively and were $1.5 million and $0.9 million for the six months ended September 30, 2012 and 2011, respectively.

Advertising costs include the costs of producing advertisements and the costs of communicating advertisements. The costs of producing advertisements are expensed as ~~incurred.~~incurred and the costs of communicating advertising are expensed over the period of communication. Total advertising costs for the three months ended ~~June~~September 30, 2012 and 2011 included in selling, general and administrative expenses were $0.1 million and $0.3 million, respectively. Total advertising costs were $0.4 million and ~~$0.1~~$0.4 million for the six months ended September 30, 2012 and 2011, respectively.

Basic net income per share of common stock is calculated by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share of common stock is computed by giving effect to all potentially dilutive securities outstanding during the period. Potential common shares included those underlying our convertible preferred stock (using the if-converted method), stock options to purchase our common stock and restricted stock units (using the treasury stock method) and the warrant to purchase our common stock (using the treasury stock method). Performance share units were excluded from potential common shares since no shares were issuable as of ~~June~~September 30, 2012 and March 31, 2012. The performance share units vest based on achievement of specified percentage of targeted cumulative compounded earnings per share growth rate during the three-year period beginning April 1, 2012 and ending March 31, 2015.

The potential common shares from the convertible preferred stock warrant had an anti-dilutive effect on the earnings per share for the six months ended September 30, 2011, and the potential common shares from convertible preferred stock had an anti-dilutive effect on the earnings per share for the three and six months ended ~~June~~September 30, 2011, and, accordingly, were excluded from the calculation. Additionally, certain stock options to purchase our common stock had an anti-dilutive effect on the earnings per share for the periods presented, and were also excluded. Further, certain restricted stock units had an anti-dilutive effect on the earnings per share for the three and six months ended September 30, 2012 and were excluded.

Net income attributable to common stockholders during the three and six months ended ~~June~~September 30, 2011, was allocated using the two-class method. The two-class method is an earnings allocation method for calculating earnings per share when a company’s capital structure includes two or more classes of common stock or common stock and participating securities. Under this method, the Company reduced income from operations by the dividends paid to convertible preferred stockholders and the rights of the convertible preferred stockholders to participate in undistributed earnings. The undistributed earnings were allocated based on the relative percentage of weighted average shares of outstanding convertible preferred stock to the total number of weighted average shares of outstanding common and convertible preferred stock.

However, during the three months ended June 30, 2012, the Company did not allocate earnings using the two-class method because the earnings attributable to convertible preferred stockholders, prior to their conversion into common stockholders on April 2, 2012, were deemed not material.

During the ~~first quarter of the prior fiscal year,~~six months ended September 30, 2011, the Company corrected an error in the measurement of the convertible preferred stock warrant liability. The correction increased the fair value of the convertible preferred stock warrant liability by $0.9 million and decreased additional paid-in capital by $0.4 million with a corresponding increase in expense of $0.5 million, which was recorded in other income (expense), net in the accompanying statement of operations during the ~~three~~six months ended ~~June~~September 30, 2011. The correction was an accumulation of an error that should have been recorded in prior periods and would have increased net loss for fiscal 2009 by $44,000, increased net income by $79,000 for

fiscal 2010 and decreased net income by $0.6 million for fiscal 2011. Management had assessed the impact of this error and did not believe that it was material, either individually or in the aggregate, to any prior period financial statements or to the financial statements for the year ended March 31, 2012.


	June 30,		March 31,		September 30,		March 31,
	2012		2012		2012		2012
Raw materials	$	2,110	$	1,938	$	3,096	$	1,938
Work in process		2,055		754		725		754
Finished goods		10,431		7,510		8,580		7,510

Inventory	$	14,596	$	10,202	$	12,401	$	10,202


	June 30,			March 31,			September 30,			March 31,
	2012			2012			2012			2012
Equipment and automotive	$	1,701		$	1,730		$	1,876		$	1,730
Software		1,281			1,188			3,189			1,188
Leasehold improvements		566			566			566			566
Plates and dies		352			352			365			352

Total property and equipment		3,900			3,836			5,996			3,836
Less: Accumulated depreciation and amortization		(1,852	)		(1,719	)		(2,099	)		(1,719	)
Construction in progress		2,840			2,181			990			2,181

Property and equipment, net	$	4,888		$	4,298		$	4,887		$	4,298

The Company incurred depreciation expense of ~~$185,000~~$248,000 and ~~$150,000 during~~$433,000 for the three and six months ended ~~June~~September 30, 2012, respectively. The depreciation expense for the same periods in prior year was $147,000 and ~~2011,~~$297,000, respectively.


	June 30,			March 31,			September 30,			March 31,
	2012			2012			2012			2012
Product formulas	$	1,023		$	1,023		$	1,023		$	1,023
Other intangible assets		189			189			189			189

Total intangible assets		1,212			1,212			1,212			1,212
Less: accumulated amortization		(51	)		(36	)		(66	)		(36	)

Intangible assets, net	$	1,161		$	1,176		$	1,146		$	1,176

The Company incurred amortization expense of $15,000 and ~~$2,000~~$30,000 on its intangible assets during the three and six months ended ~~June~~September 30, ~~2012~~2012. The amortization expense for the same periods over the prior year was $3,000 and ~~2011,~~$5,000, respectively.

The estimated future amortization expense relating to intangible assets for the remainder of fiscal 2013, for each of the next five years through fiscal 2018 and thereafter is ~~$45,000,~~$30,000, $60,000 and $816,000, respectively.


	June 30,		March 31,		September 30,		March 31,
	2012		2012		2012		2012
Payroll and employee-related expenses	$	1,480	$	2,768	$	2,672	$	2,768
Accrued trade expenses		1,158		2,631		1,928		2,631
Inventory received not invoiced		845		531		3,542		531
Deferred rent		253		264		242		264
Brokerage commissions		317		382		313		382
Other accrued liabilities		251		876		345		876

Total accrued liabilities	$	4,304	$	7,452	$	9,042	$	7,452

~~The~~In December 2011, the Company ~~has~~entered into a ~~line of~~second amendment and restated credit agreement (the “Credit Agreement”) with Bank of America, N.A., which provides for revolving loans and letters of credit up to $20.0 million and is available to the Company ~~for a term~~ through August 2014. The Credit Agreement is ~~collateralized~~secured by substantially all of the Company’s assets.

Revolving advances under the Credit Agreement bear interest at the LIBOR plus ~~1.50 percentage points,~~1.5%, as defined. Weighted average interest was 1.5% for each of the three and ~~1.86%~~six months ended September 30, 2012. Weighted average interest was 1.8% and 2.2% for the three and six months ended ~~June~~September 30, ~~2012 and~~ 2011, respectively. As of ~~June~~September 30, 2012 and March 31, 2012, there was $20.0 million and $7.2 million, respectively, of availability for borrowings under the Credit Agreement. An unused line fee of 0.0625% per quarter is applied to the available balance unless the Company’s outstanding borrowings exceed half of the borrowing limit. Interest is payable monthly.

There are various financial and other covenants under the Credit Agreement. Financial covenants, as defined in the Credit Agreement, include a net income covenant, total liabilities to tangible net worth covenant and a minimum fixed charge coverage ~~covenant, through the term of the agreement.~~covenant. The Credit Agreement requires the Company to submit interim and annual financial statements by specified dates after each reporting period. The Company was in compliance with the financial covenants under the Credit Agreement as of ~~June~~September 30, ~~2012 and March 31,~~ 2012.

The Company had ~~a management~~an advisory services agreement with ~~Solera Capital, LLC, or~~ Solera, an affiliate of its principal stockholder, Solera Partners, L.P., to provide consulting and advisory services to the Company for a term ending on the later of: (i) March 5, 2014, or (ii) the date on which Solera and its affiliates cease to own at least 10% of the voting equity of the Company (including any successor thereto). The services to be provided under the agreement included (i) assisting in the raising of additional debt and equity capital from time to time for the Company, if deemed advisable by the ~~Board~~Company’s board of ~~Directors of the Company,~~directors, (ii) assisting the Company in its long-term strategic planning generally, and (iii) providing such other consulting and advisory services as the Company may reasonably request.

In consideration of Solera providing the services listed above, effective April 1, 2011, the Company was obliged to pay Solera an annual advisory fee of $600,000, payable quarterly. The Company was also obliged to reimburse Solera for out-of-pocket costs and expenses incurred by Solera on behalf of the Company. During the three and six months ended ~~June~~September 30, 2011, the Company incurred $150,000 and $300,000, respectively, for such consulting and advisory services. The advisory services agreement with Solera was terminated upon the consummation of the IPO and as such the Company paid Solera a one-time termination fee of $1.3 million in April 2012.

The Company ~~leases~~entered into a lease agreement (the “Lease”) for its headquarters at 1610 Fifth Street, Berkeley, California on November 15, 2010 with an initial term that expires in February 2016. On September 25, 2012, the Company entered into an amendment to the Lease (the “Lease Amendment”). The Lease Amendment provides (i) for reconfiguration of the sample storage area to additional office space to accommodate growth, and ~~other equipment under noncancelable operating leases~~(ii) the Company with a first option to extend the initial term of the lease for three years (the “First Option”) followed by a second option to extend the lease for an additional two years (the “Second Option and, together with the First Option, the “Option Periods”). The terms, covenants and conditions of the Lease, as amended, will continue to govern the Options Periods, except that the applicable monthly rent for the Option Periods will be equal to 95% of the fair market rental rate for the property, however, the monthly rent payable during the Option Periods will not be less than the monthly rent payable during the immediately preceding month of the initial term or First Option period, as applicable. The landlord is required to deliver to the Company a notice of the fair market rental rate for the property no later than August 1, 2015. If the Company does not agree with the proposed fair market rental rate, then the term of the lease will expire ~~through fiscal year~~at the end of the initial term in February 2016. In such event, the Company will have to reimburse to the landlord, an amount not to exceed 40% of the total tenant improvement allowance plus interest, as determined in accordance with the Lease. Concurrently with the execution of the Lease Amendment, the Company exercised the First Option to extend the initial lease for an additional three years to February 2019.

Rent expense for ~~non-cancellable~~non-cancelable operating leases with scheduled rent increases is recognized on a straight-line basis over the lease term. Rent expense for the three and six months ended ~~June~~September 30, 2012 was $120,000 and $239,000, respectively. Rent expense for the three and six months ended September 30, 2011 was $120,000 and ~~$160,000,~~$280,000, respectively.

Future minimum lease payments under the noncancelable operating lease as of ~~June~~September 30, 2012 are as follows (in thousands):


	Lease Payments		Lease Payments
Nine Months Ending March 31, 2013	$	412
Six Months Ending March 31, 2013			$	278
Fiscal Year Ending March 31:
2014		563		601
2015		557		621
2016		476		638
2017				638
2018				638
2019				585

Total future minimum lease payments	$	2,008	$	3,999

The Company has material non-cancelable purchase commitments, directly or through contract manufacturers, to purchase ingredients to be used in the future to manufacture its products. As of ~~June~~September 30, 2012, the Company’s purchase commitments totaled ~~$13.1~~$16.3 million, which will substantially be incurred within a year.

The Company has an agreement with its contract warehousing company that includes minimum overhead fees of $200,000 annually beginning April 1, 2012 through June 2015. The expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations.

In the normal course of business, the Company enters into contracts that contain a variety of representations and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations, and, accordingly, the Company believes that the estimated fair value of these indemnification obligations is minimal and has not accrued any amounts for these obligations.

From time to time, the Company is subject to claims and assessments in the ordinary course of business. The Company is not currently a party to any litigation matter that, individually or in the aggregate, is expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

~~In connection with a prior term loan, the Company had issued a warrant to Hercules Technology II, L.P. (“Hercules”) for the purchase of 80,560~~The outstanding shares of ~~Series A 2005 Convertible Preferred Stock at an exercise price~~convertible preferred stock, immediately prior to the closing of ~~$8.07 per share. The warrant was immediately exercisable on~~ the ~~date of issuance and was scheduled to expire at the earlier of five years from a qualifying IPO of the Company’s common stock or April 1, 2018. Upon the consummation of the Company’s~~ IPO on April 2, 2012, the warrant became a warrant to purchase 80,560 shares of our common stock and the related convertible preferred stock warrant liability was reclassified to additional paid-in capital. On April 12, 2012, Hercules exercised the warrant to purchase 80,560 shares of our common stock by surrendering 17,367 shares to pay for the exercise. As a result, the Company issued Hercules 63,193were automatically converted into 15,221,571 shares of common stock.

~~As of April 2, 2012,~~ During the ~~Company measured the fair value of the outstanding convertible preferred stock warrant using an option pricing method with several possible distribution outcomes depending on the timing~~three and ~~kind of liquidity event utilizing the following assumptions:~~

~~Remaining Contractual Life~~~~. The Company derived the remaining contractual life based on the remaining term through actual exercise on April 12, 2012.~~

~~Risk-Free Interest Rate~~~~. The risk-free interest rate was based upon U.S. Treasury zero-coupon issues with remaining terms similar to the expected term of the warrant.~~

~~Volatility~~. Since prior to the IPO the Company was a private entity with no historical data regarding the volatility of its preferred stock, the expected volatility used was based upon the volatility of a group of similar entities, referred to as “guideline” companies. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size.

~~Dividend Yield.~~ Although the Company in the past declared dividends, no future dividends are expected to be available to benefit the warrant holder, and, accordingly, the Company used an expected dividend yield of zero in the valuation model.

~~Prior to April 2, 2012, the Company categorized~~six months ended September 30, 2011, the convertible preferred ~~stock warrant liability~~stockholders received a cash dividend of $0.097 per share, or approximately $1.5 million in the aggregate, as a ~~Level 3 financial liability since there was no market activity for the underlying shares~~result of ~~the 2005 Convertible Preferred Stock. The following table sets forth a summary of the changes~~participating in the ~~fair value of~~common stock dividend. No dividend was declared or paid during the ~~Company’s Level 3 financial liabilities (in thousands):~~three and six months ended September 30, 2012.

The Company’s certificate of incorporation authorized 5,000,000 shares of preferred stock, $0.001 par value per share. As of ~~June~~September 30, 2012, no certificate of designations defining the rights and preferences of the preferred stock had been filed and no shares of preferred stock were outstanding.

As of ~~June~~September 30, 2012 and March 31, 2012, the Company’s certificate of incorporation authorized 30,000,000 and 24,000,000 shares of common stock, $0.001 par value per share, respectively, of which ~~17,060,111~~17,121,249 and 483,242 shares were issued and outstanding, respectively. Each share of the common stock has the right to one vote. The holders of common stock are also entitled to receive dividends ~~whenever~~out of funds ~~are~~ legally available therefor and if, as and when or if declared by the ~~Board~~Company’s board of ~~Directors.~~directors. During the three and six months ended September 30, 2011, the Company declared and paid common shareholders a cash dividend of $0.097 per share, or $45,000 in the aggregate. No dividends were declared or paid during the three and six months ended ~~June~~September 30, 2012.

The Company has adopted performance incentive plans (2004 Stock Option Plan and Omnibus Incentive Plan together “Plans”) under which nonqualified stock options, restricted stock units and performance share units are granted to eligible employees, officers and directors. The Company has also granted non-plan performance based option awards to certain key management. Options granted under Plans to date generally vest over a two- to five-year period from the date of grant. Vested options can be exercised and generally expire ten years after the grant date. The restricted stock units granted to employees vest 50% on the second anniversary of the grant date, and the remaining 50% on the third anniversary of the grant date, provided continuance of the employment with the Company. The performance share units granted to employees vest based on achievement of required cumulative compounded earnings per share growth during the three-year period beginning at the first fiscal quarter beginning after the grant date and ending March 31, 2015. Stock-based compensation expense included in selling, general and administrative expenses was $231,000 and $133,000 for the three months ended September 30, 2012 and 2011, respectively, and was $447,000 and $239,000 for the six months ended September 30, 2012 and 2011, respectively.

The following table summarizes the activity of stock options during the six months ended September 30, 2012:

The following table summarizes the activity of unvested restricted stock units and performance share units during the six months ended September 30, 2012:

As of September 30, 2012, there was $3.4 million of total unrecognized compensation cost related to unvested share-based compensation arrangements which is expected to be recognized over a weighted average period of 3.2 years.

We recognized income tax expense of ~~$1.4~~$2.6 million and $4.0 million for the three and six months ended ~~June~~September 30, 2012, compared to ~~$1.0~~$2.5 million and $3.4 million in the same ~~period~~periods last year. The ~~estimated~~ effective tax rate was ~~40.9%~~40.6% for the ~~three~~six months ended ~~June~~September 30, 2012, compared to ~~34.9%~~38.7% in the same period last year. The effective tax rate is based on a projection of our annual fiscal year results. Our effective tax rate for the ~~three~~six months ended ~~June~~September 30, 2012 was higher than the effective tax rate for the ~~three~~six months ended ~~June~~September 30, 2011 largely due to a tax benefit recorded during the ~~three~~six months ended ~~June~~September 30, 2011 related to an increase in the tax rate applied for deferred tax assets due to an increase in the federal and state tax rates.

In addition, during the three and six months ended ~~June~~September 30, 2012, we recognized ~~$11.8~~$2.3 million and $14.1 million of tax deductions associated with stock option exercises. As of ~~June~~September 30, 2012, ~~$11.4~~$2.1 million and $13.5 million of these tax deductions are considered “excess” stock compensation related deductions, resulting in a reduction in taxes payable of ~~$1.3~~$3.8 million, recording a tax refund receivable of ~~$2.9~~$1.4 million, with a corresponding increase in additional paid in capital of ~~$4.2~~$5.3 million. We will recognize the remaining ~~$0.4~~$0.2 million of stock compensation related deductions as a reduction in taxes payable in future periods as we generate state taxable income.

The Company files consolidated tax returns for federal income taxes as well as for state income taxes in various state jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. These audits include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and local tax laws. The Company is potentially subject to U.S. federal, state and local income tax examinations for years 2005 and beyond.

The Company does not have any unrecognized tax positions as of ~~June~~September 30, 2012 that if recognized would affect the annual effective tax rate. No interest or penalties have been accrued for any period presented. Based on the Company’s assessment, including past experience and complex judgments about future events, the Company does not expect that changes in the liability for unrecognized tax benefits during the next twelve months will have a significant impact on its financial position or results of operations.

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net income per share of common stock for the periods presented, because including them would have been anti-dilutive:


	Three Months Ended June 30,				Three Months Ended September 30,				Six Months Ended September 30,
	2012		2011		2012		2011		2012		2011
Convertible preferred stock		—		15,221,571		—		15,221,571		—		15,221,571
Options to purchase common stock		2,562		68,164		2,562		167,314		2,562		167,314
Restricted stock units						6,256		—		6,256		—
Convertible preferred stock warrant		—		80,560		—		—		—		80,560

Total		2,562		15,370,295		8,818		15,388,885		8,818		15,469,445

A reconciliation of the basic and diluted net income per share attributable to common stockholders is as follows (in thousands except share and per share amounts):


	Three Months Ended June 30,				Three Months Ended September 30,				Six Months Ended September 30,
	2012		2011		2012		2011		2012		2011
Net income per share:
Net income	$	2,131	$	1,812	$	3,785	$	3,616	$	5,916	$	5,428
Less: Dividends paid to convertible preferred stockholders						—		1,474		—		1,474
Less: Income attributable to convertible preferred stockholders		—		1,758		—		2,035		—		3,793

Net income attributable to common stockholders—basic and diluted	$	2,131	$	54	$	3,785	$	107	$	5,916	$	161

Weighted average shares of common stock outstanding used in computing net income attributable to common stockholders—basic		16,936,007		464,994		17,070,327		465,045		17,003,534		465,019
Potential dilutive options		659,040		771,416		625,684		509,794		646,468		521,661
Potential dilutive convertible preferred stock warrant						—		43,520		—		—
Potential dilutive restricted stock units		5,861		—		6,505		—		6,354		—

Weighted average shares of common stock outstanding used in computing net income attributable to common stockholders—diluted		17,600,908		1,236,410		17,702,516		1,018,359		17,656,356		986,680

Net income per share attributable to common stockholders
—Basic	$	0.13	$	0.12	$	0.22	$	0.23	$	0.35	$	0.35

—Diluted					$	0.21	$	0.11	$	0.34	$	0.16
	$	0.12	$	0.04

The Company’s net sales by geographic ~~areas,~~area, based on the location to where the product was shipped, are summarized as follows (in thousands):


	Three Months Ended June 30,				Three Months Ended September 30,				Six Months Ended September 30,
	2012		2011		2012		2011		2012		2011
United States	$	33,148	$	27,764	$	44,423	$	37,532	$	77,571	$	65,296
Canada		1,145		846		2,263		1,340		3,408		2,186

	$	34,293	$	28,610	$	46,686	$	38,872	$	80,979	$	67,482


	Three Months Ended June 30,				Three Months Ended September 30,				Six Months Ended September 30,
	2012		2011		2012		2011		2012		2011
Meals	$	14,667	$	10,452	$	21,869	$	16,724	$	36,536	$	27,176
Snacks		13,463		11,898		19,146		16,338		32,609		28,236
Dressings, condiments and other		6,163		6,260		5,671		5,810		11,834		12,070

	$	34,293	$	28,610	$	46,686	$	38,872	$	80,979	$	67,482

On July 17, 2012, the Company filed a registration statement on Form S-1 under the Securities Act with the SEC (the “S-1 Registration Statement”) for a secondary public offering of common stock of the Company. Certain stockholders, including Solera and certain other affiliates, intend to sell 3,173,892 shares of common stock in the offering. The Company will not receive any proceeds from the sale of shares by the stockholders. The underwriters have an option to purchase a maximum of 476,084 additional shares from the stockholders to cover overallotments of shares. The Company will not receive any proceeds from the exercise of the underwriters’ option to purchase additional shares. The estimated offering expenses payable by the Company are $0.7 million, which includes legal, accounting and printing costs and various other fees associated with the registration of common stock.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended March 31, 2012 (“fiscal 2012”) included in our Annual Report on Form 10-K filed with the SEC on June 8, 2012. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,( the “Exchange Act”). These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those in our Form 10-K discussed in the section titled “Risk Factors.” The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Annie’s, Inc. is a rapidly growing natural and organic food company with a widely recognized brand, offering consumers great-tasting products in large packaged foods categories. We sell premium products made from high-quality ingredients at affordable prices. We have the #1 natural and organic market position in four product lines: macaroni and cheese, snack crackers, fruit snacks and graham crackers.

Our loyal and growing consumer following has enabled us to migrate from our natural and organic roots to a brand sold across the mainstream grocery, mass merchandiser and natural retailer channels. We offer over 125 products and are present in over 25,000 retail locations in the United States and Canada.

Our net sales are derived primarily from the sale of meals, snacks, dressings, condiments and other products under the Annie’s Homegrown and Annie’s Naturals brand names. We have experienced strong growth, driven by our meals and snacks categories, resulting from our focus on supporting our best-selling items and the introduction of new products in these categories. We have reduced our offerings in our dressings and condiments product lines and discontinued our cereal product line in the fourth quarter of fiscal 2012, which ~~has~~ resulted in nolow or negative growth in that category. However, excluding our cereal product line, the dressings, condiments and other category grew modestly. Sales are reported net of estimated sales and promotion incentives, slotting, customer discounts and spoils.

Gross profit is net of cost of sales, which consists of the costs of ingredients in the manufacture of products, contract manufacturing fees, packaging costs and in-bound freight charges. Ingredients account for the largest portion of the cost of sales followed by contract manufacturing fees and packaging.

Our selling, general and administrative expenses consist primarily of marketing and advertising expenses, freight and warehousing, wages, related payroll and employee benefit expenses, including stock-based compensation, commissions to outside sales representatives, legal and professional fees, travel expenses, other facility related costs, such as rent and depreciation, and consulting expenses. The primary components of our marketing and advertising expenses include trade advertising, samples, consumer events, sales data, consumer research and search engine and digital advertising.

Net sales growth continues to be driven by increased penetration of mainstream grocery and mass merchandiser channels, product innovation, increased brand awareness and greater consumer demand for natural and organic food products. In the ~~second half of fiscal~~twelve months ended September 30, 2012, ~~through our first quarter of the fiscal year ending March 31, 2013 (“fiscal 2013”),~~ we have experienced acceleration in consumer trends for many of our products. We also have benefited from improved placement in the mainstream grocery channel, which we believe has resulted in increased sales of our products. Our net sales growth has been primarily driven by volume; however, we have demonstrated the ability to execute price increases as needed to maintain margins, driven by our strong brand loyalty and perceived value relative to the competition.

We purchase finished products from independent contract manufacturers. We have long standing, strategic relationships with many of our contract manufacturers and suppliers of organic ingredients. We enter either directly or through contract manufacturers into ~~purchase commitments~~forward pricing contracts with certain ~~suppliers for key ingredients that represent approximately half our cost of goods sold.~~ingredient suppliers. This practice provides us with significant visibility into our cost structure over the next six to twelve months. In fiscal 2012, our contracted ingredients represented approximately 48% of our material costs and 25% of our cost of sales. Over the past 18 months, we have experienced increased costs for many of our inputs and expect these higher costs to continue throughout the remainder of our fiscal ~~2013.~~year ending March 31, 2013 (“fiscal 2013”). We ~~have been successful in maintaining~~strive to maintain or ~~improving~~improve gross margins despite ~~the~~ increasing commodity ~~cost environment~~costs through a combination of cost management and price increases. We actively manage our input and production costs through ~~a combination of~~ commodity management practices, vendor negotiation, productivity improvements and cost reductions in our supply chain. We invest significant time and effort to achieve permanent cost reductions in our supply chain. To drive these initiatives, we have begun to selectively invest capital in equipment located at our contract manufacturers to drive down costs, improve throughput and improve product quality.

Selling, general and administrative expenses have increased as a result of the investment we have made in building our organization and adding headcount to support our growth and operating as a public company. Many of our selling, general and administrative expenses are variable with volume including freight and warehouse expenses and commissions paid to our sales brokers. In addition, we continue to make investments in marketing to drive trial of our products and promote awareness of our brand and in research and development to support our robust innovation pipeline. Starting in fiscal 2012, we incurred incremental expense related to getting ready to operate as a public company. We expect to incur approximately $2 million in incremental expense annually related to being a public company.

The following table sets forth items included in our consolidated statements of operations in dollars and as a percentage of net sales for the periods presented:


	Thee Months Ended June 30,						% of Net Sales						Three Months Ended September 30,						% of Net Sales						Six Months Ended September 30,						% of Net Sales
	2012			2011			2012			2011			2012			2011			2012			2011			2012			2011			2012			2011
	(in thousands, except for percentages)												(in thousands, except for percentages)
Net sales	$	34,293		$	28,610			100.0	%		100.0	%	$	46,686		$	38,872			100.0	%		100.0	%	$	80,979		$	67,482			100.0	%		100.0	%
Cost of sales		20,486			17,022			59.7	%		59.5	%		28,786			24,737			61.7	%		63.6	%		49,272			41,759			60.8	%		61.9	%

Gross profit		13,807			11,588			40.3	%		40.5	%		17,900			14,135			38.3	%		36.4	%		31,707			25,723			39.2	%		38.1	%
Operating expenses:
Selling, general and administrative expenses		10,211			8,303			29.8	%		29.0	%		11,539			8,056			24.7	%		20.7	%		21,750			16,359			26.9	%		24.2	%

Total operating expenses		10,211			8,303			29.8	%		29.0	%		11,539			8,056			24.7	%		20.7	%		21,750			16,359			26.9	%		24.2	%

Income from operations		3,596			3,285			10.5	%		11.5	%		6,361			6,079			13.6	%		15.6	%		9,957			9,364			12.3	%		13.9	%
Interest expense		(40	)		(18	)		(0.1	)%		(0.1	)%		(40	)		(23	)		(0.1	)%		(0.1	)%		(80	)		(41	)		(0.1	)%		(0.1	)%
Other income (expense), net		49			(484	)		0.1	%		(1.7	)%		36			13			0.1	%		0.0	%		85			(471	)		0.1	%		(0.7	)%

Income before provision for income taxes		3,605			2,783			10.5	%		9.7	%		6,357			6,069			13.6	%		15.6	%		9,962			8,852			12.3	%		13.1	%
Provision for income taxes		1,474			971			4.3	%		3.4	%		2,572			2,453			5.5	%		6.3	%		4,046			3,424			5.0	%		5.1	%

Net income	$	2,131		$	1,812			6.2	%		6.3	%	$	3,785		$	3,616			8.1	%		9.3	%	$	5,916		$	5,428			7.3	%		8.0	%

Three Months Ended ~~June~~September 30, 2012 Compared to Three Months Ended ~~June~~September 30, 2011


	Three Months Ended June 30,				Change						% of Net Sales						Three Months Ended September 30,				Change						% of Net Sales
	2012		2011		$			%			2012			2011			2012		2011		$			%			2012			2011
	(in thousands, except for percentages)																(in thousands, except for percentages)
Meals	$	14,667	$	10,452	$	4,215			40.3	%		42.8	%		36.5	%	$	21,869	$	16,724	$	5,145			30.8	%		46.9	%		43.0	%
Snacks		13,463		11,898		1,565			13.2	%		39.2	%		41.6	%		19,146		16,338		2,808			17.2	%		41.0	%		42.0	%
Dressings, condiments and other		6,163		6,260		(97	)		(1.5	)%		18.0	%		21.9	%		5,671		5,810		(139	)		(2.4	)%		12.1	%		15.0	%

Net sales	$	34,293	$	28,610	$	5,683			19.9	%		100.0	%		100.0	%	$	46,686	$	38,872	$	7,814			20.1	%		100.0	%		100.0	%

Net sales increased ~~$5.7~~$7.8 million, or ~~19.9%~~20.1%, to ~~$34.3~~$46.7 million during the three months ended ~~June~~September 30, 2012 compared to ~~$28.6~~$38.9 million during the three months ended ~~June~~September 30, 2011. This increase reflects an increase in net sales of meals and snacks of ~~$4.2~~$5.1 million and ~~$1.6~~$2.8 million, respectively, offset by a slight decrease in dressings, condiments and other of $0.1 million. The increase in meals was predominantly driven by strong growth in the macaroni and cheese product line with a ~~modest increase~~benefit from organic and made with organic frozen pizza ~~which we~~products. Organic frozen pizza first shipped in January ~~2012. We experienced growth across all of our snack product lines.~~2012 and made with organic frozen pizza first shipped this quarter. The ~~growth~~increase in snacks was ~~more modest relative~~primarily due to ~~prior quarters because of channel mix.~~growth in our snack mix, fruit snacks, grahams and crackers product lines. The slight decrease in dressings, condiments and other was attributable to the discontinuation of ~~cereal.~~our cereal product line. Excluding our cereal product line, the dressings, condiments and other category grew ~~by $0.5 million.~~modestly. Distribution gains and our mainline placement initiatives also contributed to net sales growth, primarily in the mainstream grocery channel. The net sales increase was primarily driven by volume with slightly higher average selling prices adding modest growth.


	Three Months Ended June 30,						Change					Three Months Ended September 30,						Change
	2012			2011			$		%			2012			2011			$		%
	(in thousands, except for percentages)											(in thousands, except for percentages)
Cost of sales	$	20,486		$	17,022		$	3,464		20.4	%	$	28,786		$	24,737		$	4,049		16.4	%

Gross profit	$	13,807		$	11,588		$	2,219		19.1	%	$	17,900		$	14,135		$	3,765		26.6	%

Gross margin %		40.3	%		40.5	%							38.3	%		36.4	%

Gross profit increased ~~$2.2~~$3.8 million, or ~~19.1%~~26.6%, to ~~$13.8~~$17.9 million for the three months ended ~~June~~September 30, 2012 from ~~$11.6~~$14.1 million for the three months ended ~~June~~September 30, 2011. Gross margin ~~decreased 0.2~~increased 1.9 percentage points to ~~40.3%~~38.3% from ~~40.5%~~36.4% during the three months ended ~~June~~September 30, 2012 compared to the three months ended ~~June~~September 30, 2011. The increase in gross profit was primarily driven by the increase in net sales. The ~~slight decrease~~increase in gross margin resulted from ~~higher commodity costs,~~price increases and the cumulative impact of various cost reduction initiatives, which were partially offset by ~~price increases and cost reduction initiatives.~~higher commodity costs.


	Three Months Ended June 30,				Change					Three Months Ended September 30,				Change
	2012		2011		$		%			2012		2011		$		%
	(in thousands, except for percentages)									(in thousands, except for percentages)
Operating expenses:
Selling, general and administrative expenses	$	10,211	$	8,303	$	1,908		23.0	%	$	11,539	$	8,056	$	3,483		43.2	%

Selling, general and administrative expenses increased ~~$1.9~~$3.5 million, or ~~23.0%~~43.2%, to ~~$10.2~~$11.5 million during the three months ended ~~June~~September 30, 2012 from ~~$8.3~~$8.0 million during the three months ended ~~June~~September 30, 2011. This increase was due primarily to an increase in payroll expense resulting from increased headcount to support our

growth and operations as a public company. Additionally, public company related expenses impacted selling, general and administrative expenses during the three months ended September 30, 2012 compared with the three months ended September 30, 2011. Further, during the three months ended September 30, 2012, we incurred $0.7 million including legal, accounting and printing costs and various other fees associated with the registration and sale of common stock in the secondary public offering by certain stockholders including Solera. We did not receive any proceeds from the sale of shares by the selling stockholders. As a percentage of net sales, selling, general and administrative expenses increased 4.0 percentage points to 24.7% during the three months ended September 30, 2012 from 20.7% during the three months ended September 30, 2011.

As a result of the factors above, income from operations increased $0.3 million, or 4.6%, to $6.4 million during the three months ended September 30, 2012, from $6.1 million during the three months ended September 30, 2011. Income from operations as a percentage of net sales decreased 2.0 percentage points to 13.6% in the three months ended September 30, 2012, from 15.6% in the three months ended September 30, 2011.

Interest expense during the three months ended September 30, 2012 primarily related to non-cash imputed interest expense related to financing of product formulas intangible asset acquired in fiscal 2012. Interest expense during the three months ended September 30, 2011 consisted of expense related to borrowings on our revolving line of credit.

Other income (expense), net during the three months ended September 30, 2012 consisted of royalty income. Other income (expense), net during the three months ended September 30, 2011 primarily reflects royalty income partially offset by non-cash charge of $20,000 related to the increase in the fair value of our convertible preferred stock warrant liability.

Our effective tax rate was 40.5% for the three months ended September 30, 2012, compared to 40.4% in the same period last year. The effective tax rate is based on a projection of our annual fiscal year results. Our effective tax rate for the three months ended September 30, 2012 was higher than the effective tax rate for the three months ended September 30, 2011 largely due to a tax benefit recorded during the three months ended September 30, 2011 related to an increase in the tax rate applied for deferred tax assets due to an increase in the federal and state tax rates.

In addition, during the three months ended September 30, 2012, we recognized $2.3 million of tax deductions associated with stock option exercises. As of September 30, 2012, $2.1 million of these tax deductions are considered “excess” stock compensation related deductions, resulting in a reduction in taxes payable of $3.8 million, recording a tax refund receivable of $1.4 million, with a corresponding increase in additional paid in capital of $5.3 million. We will recognize the remaining $0.2 million of stock compensation related deductions as a reduction in taxes payable in future periods as we generate state taxable income.

As a result of the factors above, net income increased $0.2 million, or 4.7%, to $3.8 million for the three months ended September 30, 2012 from $3.6 million for the three months ended September 30, 2011.

Six Months Ended September 30, 2012 Compared to Six Months Ended September 30, 2011

Net sales increased $13.5 million, or 20.0%, to $81.0 million during the six months ended September 30, 2012 compared to $67.5 million during the six months ended September 30, 2011. This increase reflects an increase in net sales of meals and snacks of $9.3 million and $4.4 million, respectively, offset by a slight decrease in dressings, condiments and other of $0.2 million. The increase in meals was predominantly driven by strong growth in the macaroni and cheese product line with a benefit from organic and made with organic frozen pizza products. Organic frozen pizza first shipped in January 2012 and made with organic pizza first shipped this quarter. The increase in snacks was primarily due to growth in our fruit snacks, grahams, crackers and snack mix product lines. The slight decrease in dressings, condiments and other was attributable to the discontinuation of our cereal product line. Excluding our cereal product line, the dressings, condiments and other category grew modestly. Distribution gains

and our mainline placement initiatives also contributed to net sales growth, primarily in the mainstream grocery channel. The net sales increase was primarily driven by volume with slightly higher average selling prices adding modest growth.

Gross profit increased $6.0 million, or 23.3%, to $31.7 million for the six months ended September 30, 2012 from $25.7 million for the six months ended September 30, 2011. Gross margin increased 1.1 percentage points to 39.2% from 38.1% during the six months ended September 30, 2012 compared to the six months ended September 30, 2011. The increase in gross profit was primarily driven by the increase in net sales. The increase in gross margin resulted from price increases and the cumulative benefit of various cost reduction initiatives, which were partially offset by higher commodity costs.

Selling, general and administrative expenses increased $5.4 million, or 33.0%, to $21.8 million during the six months ended September 30, 2012 from $16.4 million during the six months ended September 30, 2011. This increase was due primarily to an increase in payroll expense resulting from increased headcount to support our growth and ~~operating~~operations as a public company. ~~In addition, during the three months ended June 30, 2012, we made additional investments in~~

~~research and development to support our innovation pipeline compared with the three months ended June 30, 2011.~~ Additionally, public company related expenses impacted selling, general and administrative expenses during the ~~three~~six months ended ~~June~~September 30, 2012 compared with the ~~three~~six months ended ~~June~~September 30, 2011. Further, during the six months ended September 30, 2012, we incurred $0.7 million including legal, accounting and printing costs and various other fees associated with the registration and sale of common stock in the secondary public offering by certain stockholders including Solera. We did not receive any proceeds from the sale of shares by the selling stockholders. As a percentage of net sales, selling, general and administrative expenses increased ~~0.8~~2.7 percentage points to ~~29.8%~~26.9% during the ~~three~~six months ended ~~June~~September 30, 2012 from ~~29.0%~~24.2% during the ~~three~~six months ended ~~June~~September 30, 2011.


	Three Months Ended June 30,						Change					Six Months Ended September 30,						Change
	2012			2011			$		%			2012			2011			$		%
	(in thousands, except for percentages)											(in thousands, except for percentages)
Income from operations	$	3,596		$	3,285		$	311		9.5	%	$	9,957		$	9,364		$	593		6.3	%

Income from operations as a percentage of net sales		10.5	%		11.5	%							12.3	%		13.9	%

As a result of the factors above, income from operations increased ~~$0.3~~$0.6 million, or ~~9.5%~~6.3%, to ~~$3.6~~$10.0 million during the ~~three~~six months ended ~~June~~September 30, 2012, from ~~$3.3~~$9.4 million during the ~~three~~six months ended ~~June~~September 30, 2011. Income from operations as a percentage of net sales decreased ~~1.0~~1.6 percentage ~~point~~points to ~~10.5%~~12.3% in the ~~three~~six months ended ~~June~~September 30, 2012, from ~~11.5%~~13.9% in the ~~three~~six months ended ~~June~~September 30, 2011.

Interest expense ~~increased slightly~~ during the ~~three~~six months ended ~~June~~September 30, 2012 ~~compared to the three months ended June 30, 2011 due~~primarily related to non-cash imputed interest expense related to financing of product formulas intangible asset acquired in fiscal 2012. Interest expense during the six months ended September 30, 2011 consisted of expense related to borrowings on our revolving line of credit.

Other income (expense), net during the ~~three~~six months ended ~~June~~September 30, 2012 primarily reflects royalty income partially offset by non-cash charge of $13,000 related to the increase in the fair value of the convertible preferred stock warrant on April 2, 2012, prior to its conversion into a common stock warrant. Other income (expense), net during the ~~three month~~six months ended ~~June~~September 30, 2011 primarily reflects a non-recurring, non-cash ~~out-of-period~~out of period charge of $0.5 million related to the increase in the fair value of our convertible preferred stock warrant liability offset by royalty income.


	Three Months Ended June 30,						Change				Six Months Ended September 30,						Change
	2012			2011			$		%		2012			2011			$		%
	(in thousands, except for percentages)										(in thousands, except for percentages)
Provision for income taxes	$	1,474		$	971		$	503		nm	$	4,046		$	3,424		$	622		nm

Effective tax rate		40.9	%		34.9	%						40.6	%		38.7	%

Our ~~estimated~~ effective tax rate was ~~40.9%~~40.6% for the ~~three~~six months ended ~~June~~September 30, 2012, compared to ~~34.9%~~38.7% in the same period last year. The effective tax rate is based on a projection of our annual fiscal year results. Our effective tax rate for the ~~three~~six months ended ~~June~~September 30, 2012 was higher than the effective tax rate for the ~~three~~six months ended ~~June~~September 30, 2011 largely due to a tax benefit recorded during the ~~three~~six months ended ~~June~~September 30, 2011 related to an increase in the tax rate applied for deferred tax assets due to an increase in the federal and state tax rates.

In addition, during the ~~three~~six months ended ~~June~~September 30, 2012, we recognized ~~$11.8~~$14.1 million of tax deductions associated with stock option exercises. As of ~~June~~September 30, 2012, ~~$11.4~~$13.5 million of these tax deductions are considered “excess” stock compensation related deductions, resulting in a reduction in taxes payable of ~~$1.3~~$3.8 million, recording a tax refund receivable of ~~$2.9~~$1.4 million, with a corresponding increase in additional paid in capital of ~~$4.2~~$5.3 million. We will recognize the remaining ~~$0.4~~$0.2 million of stock compensation related deductions as a reduction in taxes payable in future periods as we generate state taxable income.

As a result of the factors above, net income increased ~~$0.3~~$0.5 million, or ~~17.6%~~9.0%, to ~~$2.1~~$5.9 million for the ~~three~~six months ended ~~June~~September 30, 2012 from ~~$1.8~~$5.4 million for the ~~three~~six months ended ~~June~~September 30, 2011.

Historically, we have experienced greater net sales in the second and fourth fiscal quarters than in the first and third fiscal quarters due to our customers’ merchandising and promotional activities around the back-to-school and spring seasons. Concurrently, inventory levels and working capital requirements increase during the first and third fiscal quarters of each fiscal year to support higher levels of net sales in the subsequent quarters. We anticipate that this seasonal impact on our net sales and working capital is likely to continue. Accordingly, our results of operations for any particular quarter are not indicative of the results we expect for the full year.


	June 30,		March 31,		September 30,		March 31,
	2012		2012		2012		2012
	(in thousands)				(in thousands)
Cash	$	5,102	$	562	$	14,629	$	562
Accounts receivable, net		7,388		11,870		11,708		11,870
Accounts payable, related-party payable and accrued liabilities		5,489		9,618		11,275		9,618
Working capital⁽¹⁾		28,066		16,427
Working capital(1)						33,704		16,427

Our principal sources of liquidity are our cash and accounts receivable, as well as cash flows from operations. Additionally, we have a line of credit with Bank of America, N.A., which provides for revolving loans and letters of credit up to $20.0 million and is available to us through August 2014. We believe that our cash and accounts receivable and potential cash flows from operations will be sufficient to satisfy our currently anticipated cash requirements through at least the next twelve months. We have historically generated cash from our operations, however, there can be no assurance that our operations will continue to generate cash flows in the future. We use cash generated from our operations to fund our ongoing operations including business expansion and growth.

The following table sets forth, for the periods indicated, our beginning balance of cash, net cash flows provided by (used in) operating, investing and financing activities and our ending balance of cash:


	June 30,			June 30,			Six Months Ended September 30,
	2012			2011			2012			2011
	(in thousands)						(in thousands)
Cash at beginning of period	$	562		$	7,333		$	562		$	7,333
Net cash provided (used in) by operating activities		950			(6,675	)
Net cash provided by (used in) operating activities								9,256			(247	)
Net cash used in investing activities		(735	)		(380	)		(1,009	)		(860	)
Net cash used in financing activities		4,325			2,822
Net cash provided by (used in) financing activities								5,820			(2,111	)

Cash at end of period	$	5,102		$	3,100		$	14,629		$	4,115

Operating activities provided ~~$1.0~~$9.3 million of cash during the ~~three~~six months ended ~~June~~September 30, 2012, primarily due to our net income of ~~$2.1~~$5.9 million, which included ~~net~~ non-cash charges of $0.5 ~~million.~~million for depreciation and amortization, $0.4 million for stock-based compensation and a $1.1 million reduction in allowances for trade discounts and other. Changes in operating asset and liability accounts provided an additional ~~$2.5~~$8.6 million of net cash, which was comprised of a ~~$4.5 million decrease in accounts receivable, a $3.5~~$5.4 million increase in accrued expenses, ~~offset by~~ a ~~$4.3~~$4.1 million increase in ~~inventory~~prepaid expenses, other current and non-current assets, a $1.4 million increase in accounts payable and a $1.3 million decrease in ~~related-party payable,~~accounts receivable, partially offset by a $2.1 million increase in inventory, other current and non-current assets and a $1.3 million decrease in related party-payable, resulting from the termination of our advisory services agreement ~~with Solera effective~~ upon ~~the~~ consummation of our IPO. This increase in cash was offset by the excess tax benefit from stock-based compensation of ~~$4.2~~$5.3 million.

Operating activities used ~~$6.7~~$0.2 million of cash during the ~~three~~six months ended ~~June~~September 30, 2011, primarily due to our net income of ~~$1.8~~$5.4 million, which included net non-cash ~~benefit~~charges of ~~$0.2~~$1.3 million. Changes in operating asset and liability accounts used ~~$8.3~~$7.0 million of net cash during the ~~three~~six months ended ~~June~~September 30, 2011.

Cash used in investing activities related to purchases of property and equipment during the ~~three~~six months ended ~~June~~September 30, 2012 and 2011 was ~~$0.7~~$1.0 million and ~~$0.4~~$0.9 million, respectively.

Cash provided by financing activities totaled ~~$4.3~~$5.8 million during the ~~three~~six months ended ~~June~~September 30, 2012, comprised of:

Cash ~~provided by~~used in financing activities totaled ~~$2.8~~$2.1 million during the ~~three~~six months ended ~~June~~September 30, 2011, ~~including net proceeds~~which consisted of ~~$3.4~~$1.5 million ~~received from borrowings under our credit facility offset by~~in cash dividend payments ofmade to stockholders and $0.6 million to repurchase certain stock options.

In December 2011, we entered into a second amended and restated credit agreement (the “Credit Agreement”) with Bank of America, N.A., which provides for revolving loans and letters of credit up to $20.0 million and is available to us through August 2014. The Credit Agreement is secured by a lien on substantially all of our assets.

Revolving advances under the Credit Agreement bear interest at the LIBOR plus 1.50%, as defined. Weighted average interest was 1.5% for each of the three and six months ended September 30, 2012. Weighted average interest was 1.8% and 2.2% for the three and six months ended September 30, 2011, respectively. As of September 30, 2012 and March 31, 2012, there was $20.0 million and $7.2 million, respectively, of availability for borrowings under the Credit Agreement. An unused line fee of 0.0625% per quarter is applied to the available balance unless our outstanding borrowing exceeds half of the borrowing limit. Interest is payable monthly.

There are various financial and other covenants under the Credit Agreement. Financial covenants, as defined in the Credit Agreement, include a net income covenant, total liabilities to tangible net worth covenant and a minimum fixed charge coverage covenant. The Credit Agreement requires us to submit interim and annual financial statements by specified dates after each reporting period. We were in compliance with the financial covenants under the Credit Agreement as of September 30, 2012.

The following table summarizes our contractual obligations as of ~~June~~September 30, 2012:


	Payments Due by Period
	Total			Less Than One Year		1-3 Years			3-5 Years			More than Five Years			Payments Due by Period
				Less Than One Year		1-3 Years		Total				More than Five Years			Less Than One Year				1-3 Years			3-5 Years			More than Five Years
	Total		(in thousands)															(in thousands)
Rent obligations(1)	$	1,964		$	524	$	1,440		3-5 Years	$	—		$	—		$	3,999			$	577		$	1,241		$	1,277		$	904
Equipment lease obligations(2)		44			25		19			—			—			38				25			13			—			—

Total operating lease obligations		2,008			549		1,459			—			—			4,037				602			1,254			1,277			904
Purchase commitments(3)		13,064			12,792		272			—			—			16,330				16,092			238			—			—
Warehousing overheads obligations(4)		600			200		400									550				200			350

Total	$	15,672		$	13,541	$	2,131		$	—		$	—		$	20,917			$	16,894		$	1,842		$	1,277		$	904

We do not have any off-balance sheet arrangements or any holdings in variable interest entities.

During the first ~~quarter~~six months of the prior fiscal year, we corrected an error in ~~the~~our measurement of ~~our~~the convertible preferred stock warrant liability. The correction increased the fair value of the convertible preferred stock warrant liability by $0.9 million and decreased additional paid-in capital by $0.4 million with a corresponding increase in expense of $0.5 million, which was recorded in other income (expense), net in the statement of operations during the ~~three~~six months ended ~~June~~September 30, 2011. The correction was an accumulation of an error that should have been recorded in prior periods and would have increased net loss for fiscal 2009 by $44,000, increased net income by $79,000 for fiscal 2010 and decreased net income by $0.6 million for fiscal 2011. Management had assessed the impact of this error and did not believe that it was material, either individually or in the aggregate, to any prior period financial statements or to the financial statements for the year ended March 31, 2012.

Our Form 10-K for fiscal 2012, filed with the SEC on June 8, 2012, provides a detailed discussion of the market risks affecting our operations. We believe our exposure to these market risks did not change materially during the three and six months ended ~~June~~September 30, 2012.

We maintain disclosure controls and procedures and internal controls that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our ~~Interim~~ Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Our management, including our disclosure committee, Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as required by Rules 13a-15(e) and 15d-15(e) of the ~~Securities~~ Exchange ~~Act of 1934, as amended.~~Act. Based on this review, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of ~~June~~September 30, 2012.

~~There were no~~During the three months ended September 30, 2012, we made changes into our internal control over financial reporting ~~identified~~(as defined in ~~connection with the evaluation required by paragraph (d) of~~ Exchange Act Rules ~~13a-15 or 15d-15 that occurred during our last fiscal quarter~~13a-15(f) and 15d-15(f)) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Those changes were the installation of an integrated enterprise resource planning system to replace our legacy system.

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

From time to time, we are subject to ~~claims and assessments~~a variety of legal proceedings in the ordinary course of our business. We are not currently a party to any ~~litigation matter~~legal proceeding that, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.

No cash dividends were paid during the three months ended June 30, 2012 and 2011. Although we have paid cash dividends on our capital stock from time to time in the past, we currently expect to retain all future earnings for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. The declaration and payment of any dividends in the future will be determined by our board of directors, in its discretion, and will depend on a number of factors, including our earnings, capital requirements, overall financial condition and contractual restrictions, including under our revolving credit facility and other indebtedness we may incur.

On April 2, 2012, we closed our IPO, in which we sold 950,000 shares and certain stockholders sold 4,800,000 shares of common stock at a price to the public of $19.00 per share. The aggregate amount of consideration for shares sold in the offering was $109.3 million. The shares sold by such stockholders included 750,000 additional shares purchased by the underwriters from certain of these stockholders pursuant to an option the underwriters held to cover overallotments of shares. We did not receive any proceeds from the sale of shares by the stockholders.

The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-178270), which was declared effective by the SEC on March 27, 2012. The offering commenced as of March 28, 2012 and did not terminate before all of the securities registered in the registration statement were sold. Credit Suisse Securities (USA) LLC, J. P. Morgan Securities LLC, William Blair & Company, LLC, RBC Capital Markets, LLC, Stifel, Nicolaus & Company, Incorporated and Canaccord Genuity, Inc., acted as the underwriters. We raised $11.1 million in net proceeds after deducting underwriting discounts and commissions of $1.3 million and other offering expenses of $5.6 million.

We used $1.3 million of the net proceeds to pay Solera in connection with the termination of its advisory services agreement with us and the remaining balance of the net proceeds was used to repay a portion of our indebtedness outstanding under our credit facility. No other payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries and to non-employee directors as compensation for board or board committee service.

During the ~~fiscal~~second quarter ended ~~June~~September 30 2012, we issued an aggregate of ~~326,612 shares and 15,493~~61,138 shares of our common stock to certain employees and officers upon the exercise of options awarded under our 2004 Plan and ~~non-plan based awards, respectively.~~since October 1, 2012 through October 15, 2012, we issued an aggregate of 1,000 shares of our common stock to an employee upon the exercise of options awarded under our 2004 Plan. We received aggregate proceeds of ~~$1.8~~$0.4 million during the three months ended ~~June~~September 30, 2012 and $7,000 in the period since October 1, 2012 through October 15, 2012 as a result of the exercise of these options. We believe these transactions were exempt from the registration requirements of the Securities Act in reliance on Rule 701 thereunder as transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701. As of ~~July~~October 15, 2012, options to purchase an aggregate of ~~992,053~~929,915 shares and 161,122 shares of our common stock remain outstanding under the 2004 Plan and non-plan based awards, respectively. All option awards granted under the 2004 Plan and non-plan based awards were made prior to the effectiveness of our IPO. No further option grants will be made under our 2004 Plan.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering.

The exhibits listed below are filed as a part of this Quarterly Report on Form 10-Q.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware				20-1266625
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

1610 Fifth Street Berkeley, CA				94710
(Address of principal executive offices)				(Zip Code)


PART I – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2

	Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2012 and March 31, 2012	2

	~~Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2012 and 2011~~	3

	Condensed Consolidated Statements of ~~Convertible Preferred Stock and Stockholders’ Equity (Deficit)~~Operations for the Three and Six Months Ended ~~June~~September 30, 2012 and 2011	43

	Condensed Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Six Months Ended September 30, 2012	4

	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~June~~September 30, 2012 and 2011	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2228

Item 4.	Controls and Procedures	2329

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 2.	~~PART II – OTHER INFORMATION~~

~~Item 1.~~	~~Legal Proceedings~~	24

~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds	2531

Item 6.	Exhibits	2632

Signatures		2733


	~~April 2, 2012~~
~~Remaining contractual life (in years)~~		~~0.03~~
~~Risk-free interest rate~~		~~2.2~~	%
~~Expected volatility~~		41	%
~~Expected dividend rate~~		0	%


	Number			Weighted-Average
	of Shares			Exercise Price
Balance, March 31, 2012		1,759,367		$	9.56
Granted		2,562			36.30
Cancelled		(2,523	)		6.29
Exercised		(403,243	)		5.47

Balance, September 30, 2012		1,356,163		$	10.84


	April 2, 2012
Fair value at March 31, 2012	$	2,157
Change in fair value recorded in other income (expense), net		13

Fair value at April 2, 2012	$	2,170


Shares-Based Awards	Shares			Weighted- Average Grant Date Fair Value
Unvested at March 31, 2012		65,899		$	19.00
Granted		7,220			44.07
Vested		—			—
Performance Shares Adjustment		—			—
Forfeited		(500	)		19.00

Unvested at September 30, 2012		72,619		$	21.49


Exhibit Number		Description

4.1		Termination Agreement relating to Stockholders Agreement, between the Company and Solera Capital, LLC, dated as of July 26, 2012 (incorporated by reference to Exhibit 4.4 of the Company’s amendment number 1 to registration statement on Form S-1 filed with the SEC on July 30, 2012).

10.1		Amended and Restated Contract Manufacturing and Packaging Agreement between the Company and Philadelphia Macaroni Company dated as of September 25, 2012.*

10.2		Amendment to Contract Manufacturing and Packaging Agreement between the Company and Chelten House Products, Inc. dated as of September 25, 2012.*

10.3		Contract Manufacturing and Packaging Agreement between the Company and Little Lady Foods, Inc. dated as of September 28, 2012.*

31.1		Certification of the Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer and Chief Financial Officer, pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

101		The following materials from the Company’s Quarterly Report on Form 10-Q for the three and six months ended ~~March 31,~~September 30, 2012 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language):

		(i) Unaudited Condensed Consolidated Balance Sheets, (ii) Unaudited Condensed Consolidated Statements of Operations, (iii) Unaudited Condensed Consolidated ~~Statements~~Statement of ~~Comprehensive Income,~~Convertible Preferred Stock and Stockholders’ Equity (Deficit) (iv) Unaudited Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.


ANNIE’S, INC.

By:		/s/ Kelly J. Kennedy
		Kelly J. Kennedy
		Chief Financial Officer
		(Principal Financial and Accounting
		Officer and Duly Authorized Officer)

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