Hawkins Inc. Annual Report 2016

Plain-text annual report

HAWKINS INC FORM 10-K (Annual Report) Filed 06/03/16 for the Period Ending 04/03/16 Address Telephone CIK 3100 E HENNEPIN AVE MINNEAPOLIS, MN 55413 6123316910 0000046250 Symbol HWKN SIC Code 5160 - Chemicals And Allied Products Industry Chemical Manufacturing Basic Materials 03/29 Sector Fiscal Year http://www.edgar-online.com © Copyright 2016, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended April 3, 2016Commission File No. 0-7647 HAWKINS, INC.(Exact Name of Registrant as Specified in its Charter) Minnesota 41-0771293(State of Incorporation) (I.R.S. EmployerIdentification No.)2381 Rosegate, Roseville,Minnesota 55113(Address of Principal Executive Offices) (Zip Code)(612) 331-6910(Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $.05 per shareName of exchange on which registered: NASDAQ Global MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þIndicate 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 thepreceding twelve 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 past90 days. Yes þ No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post suchfiles). Yes þ No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of theRegistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer ¨ Non-accelerated filer¨ Accelerated filerþ Smaller reporting companyoIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þThe aggregate market value of voting stock held by non-affiliates of the Registrant on September 27, 2015 (the last business day of the Registrant’s most recentlycompleted second fiscal quarter) was approximately $361.3 million based upon the closing sale price for the Registrant’s common stock on that date as reported by TheNASDAQ Stock Market, excluding all shares held by officers and directors of the Registrant and by the Trustees of the Registrant’s Employee Stock Ownership Plan and Trust.As of May 27, 2016 , the Registrant had 10,556,625 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCEPortions of our Proxy Statement for the annual meeting of shareholders to be held August 4, 2016, are incorporated by reference in Part III of this Annual Reporton Form 10-K FORWARD-LOOKING STATEMENTSThe information presented in this Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities ExchangeAct of 1934, as amended (the “Exchange Act”). These forward-looking statements have been made pursuant to the provisions of the Private Securities LitigationReform Act of 1995. These statements are not historical facts, but rather are based on our current expectations, estimates and projections, and our beliefs andassumptions. We intend words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will” and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which arebeyond our control and are difficult to predict. These factors could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. These risks and uncertainties are described in the risk factors and elsewhere in this Annual Report on Form 10-K. We caution you not to placeundue reliance on these forward-looking statements, which reflect our management’s view only as of the date of this Annual Report on Form 10-K. We are notobligated to update these statements or publicly release the result of any revisions to them to reflect events or circumstances after the date of this Annual Report onForm 10-K or to reflect the occurrence of unanticipated events.As used in this Annual Report on Form 10-K, except where otherwise stated or indicated by the context, “Hawkins,” “we,” “us,” “the Company,” “our,” or “theRegistrant” means Hawkins, Inc. References to “fiscal 2017” means our fiscal year ending April 2, 2107, “fiscal 2016” means our fiscal year ended April 3, 2016,“fiscal 2015” means our fiscal year ended March 29, 2015, and “fiscal 2014” means our fiscal year ended March 30, 2014.2Hawkins, Inc.Annual Report on Form 10-KFor the Fiscal Year Ended April 3, 2016 PagePART IITEM 1.Business1ITEM 1A.Risk Factors4ITEM 1B.Unresolved Staff Comments9ITEM 2.Properties10ITEM 3.Legal Proceedings11ITEM 4.Mine Safety Disclosures11PART IIITEM 5.Market for the Company’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities12ITEM 6.Selected Financial Data14ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations14ITEM 7A.Quantitative and Qualitative Disclosures about Market Risk21ITEM 8.Financial Statements and Supplementary Data22ITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure44ITEM 9A.Controls and Procedures44ITEM 9B.Other Information45PART IIIITEM 10.Directors, Executive Officers, and Corporate Governance46ITEM 11.Executive Compensation47ITEM 12.Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters47ITEM 13.Certain Relationships and Related Transactions, and Director Independence47ITEM 14.Principal Accountant Fees and Services47PART IVITEM 15.Exhibits and Financial Statement Schedules483PART I ITEM 1. BUSINESSHawkins, Inc. distributes, blends and manufactures chemicals and specialty ingredients for our customers in a wide variety of industries. We began our operationsprimarily as a distributor of bulk chemicals with a strong customer focus. Over the years, we have maintained our strong customer focus and have expanded ourbusiness by increasing our sales of value-added chemical products and specialty ingredients, including manufacturing, blending and repackaging certain products.We believe that we create value for our customers through superb service and support, quality products, personalized applications and trustworthy, creativeemployees.We currently conduct our business in three segments: Industrial, Water Treatment, and Health and Nutrition. Our Health and Nutrition segment was established asa result of our acquisition of Stauber Performance Ingredients (“Stauber”) in December 2015. Financial information regarding these segments is reported in Items 7and 8 of this Annual Report on Form 10-K.Industrial Segment. Our Industrial Group specializes in providing industrial chemicals, products and services to industries such as agriculture, chemicalprocessing, electronics, energy, food, pharmaceutical, plating and power generation. This group’s principal products are acids, alkalis and industrial and food-gradesalts.The Industrial Group:•Receives, stores and distributes various chemicals in bulk quantities, including liquid caustic soda, sulfuric acid, hydrochloric acid, phosphoric acid,potassium hydroxide and aqua ammonia;•Manufactures sodium hypochlorite (bleach), agricultural products and certain food-grade products, including liquid phosphates, lactates and other blendedproducts;•Repackages water treatment chemicals for our Water Treatment Group and bulk industrial chemicals to sell in smaller quantities to our customers;•Performs custom blending of chemicals according to customer formulas and specifications; and•Performs contract and private label bleach packaging.The group’s sales are concentrated primarily in Illinois, Iowa, Minnesota, Missouri, North Dakota, South Dakota, Tennessee and Wisconsin while the group’sfood-grade products are sold nationally. The Industrial Group relies on a specially trained sales staff that works directly with customers on their specific needs. Thegroup conducts its business primarily through distribution centers and terminal operations.Water Treatment Segment. Our Water Treatment Group specializes in providing chemicals, equipment and solutions for potable water, municipal and industrialwastewater, industrial process water and non-residential swimming pool water. This group has the resources and flexibility to treat systems ranging in size from asingle small well to a multi-million-gallon-per-day facility.The group utilizes delivery routes operated by our employees who typically serve as route driver, salesperson and trained technician to deliver our products anddiagnose our customers’ water treatment needs. We believe that the high level of service provided by these individuals allows us to serve as the trusted watertreatment expert for many of the municipalities and other customers that we serve. We also believe that there are significant synergies between our WaterTreatment and Industrial Groups in that we are able to obtain a competitive cost position on many of the chemicals sold by the Water Treatment Group due to thevolumes of these chemicals purchased by our Industrial Group. In addition, our Industrial and Water Treatment groups share certain of our facilities, whichleverage fixed costs across both groups.The group operates out of warehouses in 29 cities supplying products and services to customers primarily in Arkansas, Florida, Illinois, Indiana, Iowa, Kansas,Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Wisconsin and Wyoming. We entered the Florida market in fiscal 2015through our acquisition of substantially all the assets of The Dumont Company, Inc. (“Dumont”), with seven operating locations. In addition, we added two newbranches in fiscal 2016 and one new branch in fiscal 2014. We expect to continue to invest in existing and new branches to expand the group’s geographiccoverage. Our Water Treatment Group has historically experienced higher sales during April to September, primarily due to a seasonal increase in chemicals usedby municipal water treatment facilities.1Health and Nutrition Segment. We established the Health and Nutrition segment of our business in December 2015 through our acquisition of Stauber. Our Healthand Nutrition Group specializes in providing ingredient distribution, processing and formulation solutions to manufacturers of nutraceutical, functional food andbeverage, personal care, dietary supplement and other nutritional food and health and wellness products. This group offers a diverse product portfolio includingminerals, botanicals and herbs, vitamins and amino acids, excipients, joint products, sweeteners and enzymes.The Health and Nutrition Group relies on a specially trained sales and product development staff that works directly with customers on their specific needs. Thegroup’s extensive product portfolio combined with value-added services, including product formulation, sourcing and distribution, processing and blending andquality control and compliance, positions this group as a one-stop ingredient solutions provider to its customers. The group operates out of facilities in Californiaand New York and its products are sold nationally and, in certain cases, internationally.Raw Materials. We have numerous suppliers, including many of the major chemical producers in the United States. We source our health and nutritioningredients from a wide array of domestic and international vendors. We typically have written distributorship agreements or supply contracts with our chemicalsuppliers that are periodically renewed. We believe that most of the products we purchase can be obtained from alternative sources should existing relationships beterminated. We are dependent upon the availability of our raw materials. While we believe that we have adequate sources of supply for our raw material andproduct requirements, we cannot be sure that supplies will be consistently available in the future. In the event that certain raw materials become generallyunavailable, suppliers may extend lead times or limit or cut off the supply of materials to us. As a result, we may not be able to supply or manufacture products forour customers.Intellectual Property. Our intellectual property portfolio is of economic importance to our business. When appropriate, we have pursued, and we will continue topursue, patents covering our products. We also have obtained certain trademarks for our products to distinguish them from our competitors’ products. We regardmuch of the formulae, information and processes that we generate and use in the conduct of our business as proprietary and protectable under applicable copyright,patent, trademark, trade secret and unfair competition laws.Customer Concentration. In fiscal 2016, none of our customers accounted for 10% or more of our total sales. Sales to our largest customer representedapproximately 5% of our total sales in fiscal 2016, 6% of our total sales in fiscal 2015 and 7% of our total sales in fiscal 2014. Aggregate sales to our five largestcustomers, all of which are in our Industrial segment, represented approximately 14% of our total sales in fiscal 2016, 18% of our total sales in fiscal 2015 and21% of our total sales in fiscal 2014. No other customer represented more than 2% of our total sales in fiscal 2016. The loss of any of our largest customers, or asubstantial portion of their business, could have a material adverse effect on our results of operations.Competition. We operate in a competitive industry and compete with many producers, distributors and sales agents offering products equivalent to substantiallyall of the products we offer. Many of our competitors are larger than we are and may have greater financial resources, although no one competitor is dominant inthe markets we serve. We compete by offering quality products at competitive prices coupled with outstanding customer service and value-added services orproduct formulation where needed. Because of our long-standing relationships with many of our suppliers, we are often able to leverage those relationships toobtain products when supplies are scarce or to obtain competitive pricing.Geographic Information. Substantially all of our revenues are generated by sales to customers within, and long-lived assets are located in, the United States. Justslightly more than 1% of our total revenues were from sales to customers outside of the U.S. in fiscal 2016, and less than 1% of our revenues were from sales tocustomers outside of the U.S. in both fiscal 2015 and fiscal 2014.Working Capital. Due to the nature of our operations, which includes purchases of large quantities of bulk chemicals, the timing of purchases can result insignificant changes in working capital and the resulting operating cash flow. Historically, our cash requirements for working capital increase during the periodfrom April through November as caustic soda inventory levels increase as the majority of barges are received during this period. Additionally, due to seasonality ofthe Water Treatment business, our accounts receivable balance is generally higher during the period of April through September.Employees. We had 636 employees as of April 3, 2016, including 60 covered by collective bargaining agreements.About Us. Hawkins, Inc. was founded in 1938 and incorporated in Minnesota in 1955. We became a publicly-traded company in 1972. Our principal executiveoffices are located at 2381 Rosegate, Roseville, Minnesota.2Available Information. We have made available, free of charge, through our Internet website (http://www.hawkinsinc.com), our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports, as soon as reasonably practicable after weelectronically file these materials with, or furnish them to, the Securities and Exchange Commission. Reports of beneficial ownership filed by our directors andexecutive officers pursuant to Section 16(a) of the Exchange Act are also available on our website. We are not including the information contained on our websiteas part of, or incorporating it by reference into, this Annual Report on Form 10-K.3ITEM 1A. RISK FACTORSYou should consider carefully the following risks when reading the information, including the financial information, contained in this Annual Report on Form 10-K.We operate in a highly competitive environment and face significant competition and price pressure.We operate in a highly competitive industry and compete with producers, manufacturers, distributors and sales agents offering products equivalent to substantiallyall of the products we offer. Competition is based on several key criteria, including product price, product performance, product quality, product availability andsecurity of supply, breadth of product offerings, geographic reach, responsiveness of product development in cooperation with customers, technical expertise andcustomer service. Many of our competitors are larger than we are and may have greater financial resources, more product offerings and a greater geographic reach.As a result, these competitors may be able to offer a broader array of products to a larger geographic area and may be better able than us to withstand changes inconditions within our industry, changes in the prices and availability of raw materials, changes in general economic conditions and be able to introduce innovativeproducts that reduce demand for or the profit of our products. Additionally, competitors’ pricing decisions could compel us to decrease our prices, which couldadversely affect our margins and profitability. Our ability to maintain or increase our profitability is dependent upon our ability to offset competitive decreases inthe prices and margins of our products by improving production efficiency, investing in infrastructure to reduce freight costs, identifying and selling higher marginproducts, providing higher levels of technical expertise and customer service, and improving existing products through innovation and research and development.If we are unable to maintain our profitability or competitive position, we could lose market share to our competitors and experience reduced profitability.Fluctuations in the prices and availability of our raw materials, which may be cyclical in nature, could have a material adverse effect on our operations andthe margins we receive on sales of our products.We experience regular and recurring fluctuations in the pricing of our raw materials. Those fluctuations can be significant and occur rapidly. The cyclicality ofcommodity markets, such as caustic soda, primarily results from changes in the balance between supply and demand and the level of general economic activity.We cannot predict whether the markets for our raw materials will favorably impact or negatively impact the margins we can realize.Our principal chemical raw materials are generally purchased under supply contracts. The prices we pay under these contracts generally lag the market prices ofthe underlying raw material and the cost of inventory we have on hand, particularly inventories of our bulk commodity chemicals where we have significantvolumes stored at our facilities, generally will lag the current market pricing of such inventory. The pricing within our supply contracts generally adjusts quarterlyor monthly. While we attempt to maintain competitive pricing and stable margin dollars, the potential variance in our cost of inventory from the current marketpricing can cause significant volatility in our margins realized. In periods of rapidly increasing market prices, our inventory cost position will tend to be favorable,possibly by material amounts, which may positively impact our margins. Conversely, in periods of rapidly decreasing market prices, our inventory cost positionwill tend to be unfavorable, possibly by material amounts, which may negatively impact our margins. We do not engage in futures or other derivatives contracts tohedge against fluctuations in future prices. We may enter into sales contracts where the selling prices for our products are fixed for a period of time, exposing us tovolatility in raw materials prices that we acquire on a spot market or short-term contractual basis. We attempt to pass commodity pricing changes to our customers,but we may be unable to or be delayed in doing so. Our inability to pass through price increases or any limitation or delay in our passing through price increasescould adversely affect our profit margins.We are also dependent upon the availability of our raw materials. In the event that raw materials are in short supply or unavailable, raw material suppliers mayextend lead times or limit or cut off supplies. As a result, we may not be able to supply or manufacture products for some or all of our customers. Constraints onthe supply or delivery of critical raw materials could disrupt our operations and adversely affect the performance of our businesses.Demand for our products is affected by general economic conditions and by the cyclical nature of many of the industries we serve, which could causesignificant fluctuations in our sales volumes and results.Demand for our products is affected by general economic conditions. A decline in general economic or business conditions in the industries served by ourcustomers could have a material adverse effect on our businesses. Although we sell to areas traditionally considered non-cyclical, such as water treatment, foodproducts and health and nutritional ingredients, many of our customers are in businesses that are cyclical in nature, such as the industrial manufacturing and energyindustries which include the ethanol and agriculture industries. Downturns in these industries could adversely affect our sales and our financial results by affectingdemand for and pricing of our products.4Changes in our customers’ needs or failure of our products to meet customers’ specifications could adversely affect our sales and profitability.Our products are used for a broad range of applications by our customers. Changes in our customers’ product needs or processes may enable our customers toreduce or eliminate consumption of the products that we provide. Customers may also find alternative materials or processes that no longer require our products.Consequently, it is important that we develop new products to replace the sales of products that mature and decline in use.Our products provide important performance attributes to our customers’ products. If our products fail to meet the customers’ specifications, perform in a mannerconsistent with quality specifications or have a shorter useful life than required, a customer could seek replacement of the product or damages for costs incurred asa result of the product failure. A successful claim or series of claims against us could have a material adverse effect on our financial condition and results ofoperations and could result in a loss of one or more customers.Our business is subject to hazards common to chemical businesses, any of which could interrupt our production and adversely affect our results of operations.Our business is subject to hazards common to chemical manufacturing, blending, storage, handling and transportation, including explosions, fires, severe weather,natural disasters, mechanical failure, unscheduled downtime, transportation interruptions, traffic accidents involving our delivery vehicles, chemical spills,discharges or releases of toxic or hazardous substances or gases and other risks. These hazards could cause personal injury and loss of life, severe damage to ordestruction of property and equipment, and environmental contamination. In addition, the occurrence of material operating problems at any of our facilities due toany of these hazards may make it impossible for us to make sales to our customers and may result in a negative public or political reaction. Many of our facilitiesare near significant residential populations which increases the risk of negative public or political reaction should an environmental issue occur and could lead toadverse zoning or other regulatory actions that could limit our ability to operate our business in those locations. Accordingly, these hazards and their consequencescould have a material adverse effect on our operations as a whole, including our results of operations and cash flows, both during and after the period ofoperational difficulties.We are highly dependent upon transportation infrastructure to ship and receive our products and delays in these shipments could adversely affect our resultsof operations.Although we maintain a number of owned trucks and trailers, we rely heavily upon transportation provided by third parties (including common carriers, bargecompanies, rail companies and trans-ocean cargo companies) to deliver products to us and to our customers. Our access to third-party transportation is notguaranteed, and we may be unable to transport our products in a timely manner, or at all, in certain circumstances, or at economically attractive rates. Disruptionsin transportation are common, are often out of our control, and can happen suddenly and without warning. Rail limitations, such as limitations in rail capacity,availability of railcars and adverse weather conditions have disrupted or delayed rail shipments in the past and we expect they will continue into the future. Bargeshipments are delayed or impossible under certain circumstances, including during times of high or low water levels, when waterways are frozen and when locksand dams are inoperable. Truck transportation has been negatively impacted by a number of factors, including limited availability of qualified drivers andequipment, and limitations on drivers’ hours of service, and we expect these conditions will continue into the future. The volumes handled by, and operatingchallenges at, ocean ports has been volatile and can delay the receipt of goods, or cause the cost of shipping goods to be more expensive. Our failure to ship orreceive products in a timely and efficient manner could have a material adverse effect on our financial condition and results of operations.Environmental, health and safety, transportation and storage laws and regulations cause us to incur substantial costs and may subject us to future liabilitiesand risks.We are subject to numerous federal, state and local environmental, health and safety laws and regulations in the jurisdictions in which we operate, including themanagement, storage, transportation and disposal of chemicals and wastes; product regulation; air water and soil contamination; and the investigation and cleanupof any spills or releases that may result from our management, handling, storage, sale, or transportation of chemicals and other products. The nature of our businessexposes us to risks of liability under these laws and regulations. Ongoing compliance with such laws and regulations is an important consideration for us and weinvest substantial capital and incur significant operating costs in our compliance efforts. In addition, societal concerns regarding the safety of chemicals incommerce and their potential impact on the environment have resulted in a growing trend towards increasing levels of product safety and environmental protectionregulations. These concerns have led to, and could continue to result in, more stringent regulatory intervention by governmental authorities. In addition, theseconcerns could influence public5perceptions, impact the commercial viability of the products we sell and increase the costs to comply with increasingly complex regulations, which could have anegative impact on our business, financial condition and results of operations.In addition, we operate a fleet of more than 150 vehicles, primarily in our Water Treatment Group, which are highly regulated, including by the U.S. Department ofTransportation (“DOT”). The DOT governs transportation matters including authorization to engage in motor carrier service, including the necessary permits toconduct our businesses, equipment operation, and safety. We are audited periodically by the DOT to ensure that we are in compliance with various safety, hours-of-service, and other rules and regulations. If we were found to be out of compliance, the DOT could severely restrict or otherwise impact our operations, whichcould have a material adverse effect on our operations as a whole, including our results of operations and cash flows.If we violate applicable laws or regulations, in addition to being required to correct such violations, we could be held liable in administrative, civil or criminalproceedings for substantial fines and other sanctions that could disrupt, limit or halt our operations, which could have a material adverse effect on our operations asa whole, including our results of operations and cash flows. Liabilities associated with the investigation and cleanup of releases of hazardous substances, as well aspersonal injury, property damages or natural resource damages arising out of such releases of hazardous substances, may be imposed in many situations withoutregard to violations of laws or regulations or other fault, and may also be imposed jointly and severally (so that a responsible party may be held liable for more thanits share of the losses involved, or even the entire loss). Such liabilities can be difficult to identify and the extent of any such liabilities can be difficult to predict.We use, and in the past have used, hazardous substances at many of our facilities, and have generated, and continue to generate, hazardous wastes at a number ofour facilities. We have in the past been, and may in the future be, subject to claims relating to exposure to hazardous materials and the associated liabilities may bematerial.Our food, pharmaceutical and nutritional products are subject to government regulation, both in the United States and abroad, which could increase our costssignificantly and limit or prevent the sale of such products.The manufacture, packaging, labeling, advertising, promotion, distribution and sale of our food, pharmaceutical and nutritional products are subject to regulationby numerous national and local governmental agencies in the United States and other countries. The primary regulatory bodies in the United States are the Foodand Drug Administration (the “FDA”), the United States Department of Agriculture and the Federal Trade Commission, and we are also subject to similarregulators in other countries. Failure to comply with these regulatory requirements may result in various types of penalties or fines. These include injunctions,product withdrawals, recalls, product seizures, fines and criminal prosecutions. Individual states also regulate nutritional supplements. A state may interpret claimsor products presumptively valid under federal law as illegal under that state’s regulations. Approvals or licensing may be conditioned on reformulation of productsor may be unavailable with respect to certain products or product ingredients. Any of these government agencies, as well as legislative bodies, can change existingregulations, or impose new ones, or could take aggressive measures, causing or contributing to a variety of negative consequences, including:•requirements for the reformulation of certain or all products to meet new standards,•the recall or discontinuance of certain or all products,•additional record-keeping requirements,•expanded documentation of the properties of certain or all products,•expanded or different labeling,•adverse event tracking and reporting, and•additional scientific substantiation.In particular, the FDA’s current good manufacturing practices (“GMPs”) describe policies and procedures designed to ensure that nutraceuticals, pharmaceuticalsand dietary supplements are produced in a quality manner, do not contain contaminants or impurities, and are accurately labeled and cover the manufacturing,packaging, labeling and storing of supplements, with requirements for quality control, design and construction of manufacturing plants, testing of ingredients andfinal products, record keeping, and complaints processes. Those who manufacture, package or store dietary supplements must comply with current GMPs. If we orour suppliers fail to comply with current GMP procedures, the FDA may take enforcement action against us or our suppliers.Any or all of the potential negative consequences described above could have a material adverse effect on us or substantially increase the cost of doing business inthis area. There can be no assurance that the regulatory environment in which we operate will not change or that such regulatory environment, or any specificaction taken against us, will not result in a material adverse effect on us.6Our businesses expose us to potential product liability claims and recalls, which could adversely affect our financial condition and performance.The repackaging, blending, mixing and distribution of products by us, including chemical products and products used in food or food ingredients or with medical,pharmaceutical or nutritional supplement applications, involve an inherent risk of exposure to product liability claims, product recalls, product seizures and relatedadverse publicity, including, without limitation, claims for exposure to our products, spills or escape of our products, personal injuries, food-related claims andproperty damage or environmental claims. A product liability claim, judgment or recall against our customers could also result in substantial and unexpectedexpenditures for us, affect consumer confidence in our products and divert management’s attention from other responsibilities. Although we maintain productliability insurance, there can be no assurance that the type or level of coverage is adequate or that we will be able to continue to maintain our existing insurance orobtain comparable insurance at a reasonable cost, if at all. A product recall or a partially or completely uninsured judgment against us could have a materialadverse effect on our business, financial condition and results of operations.Demand for our food and nutritional products is highly dependent upon consumers’ perception of the safety and quality of our products, our customers’products as well as similar products distributed by other companies, and adverse publicity and negative public perception regarding particular ingredients orproducts or the nutraceuticals industry in general could limit our ability to increase revenue and grow that portion of our business.Purchasing decisions made by consumers of products that contain our ingredients may be affected by adverse publicity or negative public perception regardingparticular ingredients or products or the nutraceuticals industry in general. This negative public perception may include publicity regarding the legality or quality ofparticular ingredients or products in general or of other companies or our products or ingredients specifically. Negative public perception may also arise fromregulatory investigations, regardless of whether those investigations involve us. We are highly dependent upon consumers’ perception of the safety and quality ofproducts that contain our ingredients as well as similar products distributed by other companies. Thus, the mere publication of reports asserting that such productsmay be harmful could have a material adverse effect on us, regardless of whether these reports are scientifically supported. Publicity related to nutritionalsupplements may also result in increased regulatory scrutiny of our industry. Adverse publicity may have a material adverse effect on our business, financialcondition, results of operations and cash flows. There can be no assurance of future favorable scientific results and media attention or of the absence of unfavorableor inconsistent findings.Our businesses, particularly that of our Water Treatment Group and our agricultural product sales within our Industrial Group, are subject to seasonality andweather conditions, which could adversely affect our results of operations.Our Water Treatment Group has historically experienced higher sales during April to September, primarily due to a seasonal increase in chemicals used bymunicipal water treatment facilities. Our agricultural product sales are also seasonal, primarily corresponding with the planting and harvesting seasons. Demand inboth of these areas is also affected by weather conditions, as either higher or lower than normal precipitation or temperatures may affect water usage and the timingand the amount of consumption of our products. We cannot assure you that seasonality or fluctuating weather conditions will not have a material adverse effect onour results of operations.The insurance that we maintain may not fully cover all potential exposures.We maintain property, business interruption and casualty insurance, but such insurance may not cover all risks associated with the hazards of our businesses and issubject to limitations, including deductibles and limits on the liabilities covered. We may incur losses beyond the limits or outside the coverage of our insurancepolicies, including liabilities for environmental remediation and product liability. In addition, from time to time, various types of insurance for companies in thechemical or food and nutritional products industry have not been available on commercially acceptable terms or, in some cases, have not been available at all. Inthe future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.We entered into a credit facility, and failure to comply with the covenants thereunder may have a material adverse effect.In December 2015, we entered into a credit agreement (the “Credit Agreement”) with U.S. Bank National Association and other lenders from time to time partythereto (collectively, the “Lenders”), which provides us with senior secured credit facilities (the “Credit Facility”) totaling $165.0 million, consisting of (i) a $100.0million senior secured term loan credit facility (the “Term Loan Facility”) and (ii) a $65.0 million senior secured revolving loan credit facility (the “RevolvingLoan Facility”). The Revolving Loan Facility includes a $5.0 million letter of credit subfacility and $8.0 million swingline subfacility. Loans under the Term Loan7Facility will be repaid in quarterly installments on the last day of each fiscal quarter, with $5.0 million to be paid in year one, $7.5 million to be paid in year two,and $10.0 million to be paid in years three through five. The remaining outstanding balance on these credit facilities will be repaid in full after five years. If we are unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments on the Credit Facility, we will be in default. Weare also required to comply with several financial covenants under the Credit Agreement. Our ability to comply with such financial covenants may be affected byevents beyond our control, which could result in a default under the Credit Agreement; such default may have a material adverse effect on our business, financialcondition, operating results or cash flows.The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict the ability of the Company and itssubsidiaries to incur additional indebtedness, dispose of significant assets, make certain investments, including any acquisitions other than permitted acquisitions,make certain payments, enter into sale and leaseback transactions, grant liens on its assets or rate management transactions, subject to certain limitations. Theserestrictions may adversely affect our business.Impairment to the carrying value of our goodwill or other intangible assets could adversely affect our financial condition and consolidated results ofoperations.Goodwill represents the excess of the cost of acquired businesses over the fair value of identifiable tangible net assets and identifiable intangible assets purchased.Goodwill is tested at least annually for impairment, and is tested for impairment more frequently if events or changes in circumstances indicate that the asset mightbe impaired. Goodwill impairment testing is at the reporting unit level. We perform an analysis of qualitative factors to determine if it is more likely than not thatthe fair value of a reporting unit is less than its carrying amount. If that qualitative analysis indicates that an impairment may exist, then we would calculate theamount of the impairment by comparing the fair value of the assets and liabilities to the fair value of the reporting unit. The fair value of the reporting unit inexcess of the value of the assets and liabilities is the implied fair value of the goodwill. If this amount is less than the carrying amount of goodwill, impairment isrecognized for the difference. A significant amount of judgment is involved in determining if an indication of impairment exists. Factors may include, amongothers: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adversechange in the business climate; unanticipated competition; and slower growth rates. An adverse change in these factors may have a significant impact on therecoverability of the net assets recorded, and the resulting impairment charge could have a material adverse effect on our financial condition and consolidatedresults of operations.We evaluate the useful lives of our intangible assets to determine if they are definite- or indefinite-lived. Reaching a determination on useful life requiressignificant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of theindustry, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), and the expected livesof other related groups of assets. We cannot accurately predict the amount and timing of any impairment of goodwill and other intangible assets. Should the value of these assets become impaired,there could be a material adverse effect on our financial condition and consolidated results of operations.If we are unable to retain key personnel or attract new skilled personnel, it could have an adverse impact on our businesses.Because of the specialized and technical nature of our businesses, our future performance is dependent on the continued service of, and on our ability to attract andretain, qualified management, scientific, technical and support personnel. The unanticipated departure of key members of our management team could have anadverse impact on our business.We may not be able to successfully consummate future acquisitions or integrate acquisitions into our business, which could result in unanticipated expensesand losses.As part of our business growth strategy, we have acquired businesses and may pursue acquisitions in the future. Our ability to pursue this strategy will be limitedby our ability to identify appropriate acquisition candidates and our financial resources, including available cash and borrowing capacity. The expense incurred inconsummating acquisitions, the time it takes to integrate an acquisition or our failure to integrate businesses successfully could result in unanticipated expenses andlosses. Furthermore, we may not be able to realize the anticipated benefits from acquisitions.8The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financialresources that would otherwise be available for the ongoing development or expansion of existing operations. The risks associated with the integration ofacquisitions include potential disruption of our ongoing businesses and distraction of management, unforeseen claims, liabilities, adjustments, charges and write-offs, difficulty in conforming the acquired business’ standards, processes, procedures and controls with our operations, and challenges arising from the increasedscope, geographic diversity and complexity of the expanded operations.Our businesses are subject to risks stemming from natural disasters or other extraordinary events outside of our control, which could interrupt our productionand adversely affect our results of operations.Natural disasters have the potential of interrupting our operations and damaging our properties, which could adversely affect our businesses. Since 1963, floodingof the Mississippi River has required the Company’s terminal operations to be temporarily shifted out of its buildings seven times, including three times since thespring of 2010. We can give no assurance that flooding or other natural disasters will not recur or that there will not be material damage or interruption to ouroperations in the future from such disasters.Chemical-related assets may be at greater risk of future terrorist attacks than other possible targets in the United States. Federal law imposes site securityrequirements, specifically on chemical facilities, which have increased our overhead expenses. Federal regulations have also been adopted to increase the securityof the transportation of hazardous chemicals in the United States. We ship and receive materials that are classified as hazardous and we believe we have met theserequirements, but additional federal and local regulations that limit the distribution of hazardous materials are being considered. Bans on movement of hazardousmaterials through certain cities could adversely affect the efficiency of our logistical operations. Broader restrictions on hazardous material movements could leadto additional investment and could change where and what products we provide.The occurrence of extraordinary events, including future terrorist attacks and the outbreak or escalation of hostilities, cannot be predicted, but their occurrence canbe expected to negatively affect the economy in general, and specifically the markets for our products. The resulting damage from a direct attack on our assets, orassets used by us, could include loss of life and property damage. In addition, available insurance coverage may not be sufficient to cover all of the damageincurred or, if available, may be prohibitively expensive.We may not be able to renew our leases of land where four of our operations facilities reside.We lease the land where our three main terminals are located and where another significant manufacturing plant is located. We do not have guaranteed leaserenewal options and may not be able to renew our leases in the future. Our current lease renewal periods extend out to 2018, 2023, 2029 and 2034. We arecurrently in negotiations to extend the lease expiring in 2018 for a period of 15 years. The failure to secure extended lease terms on any one of these facilities mayhave a material adverse impact on our business, as they are where a portion of our chemicals are manufactured and where the majority of our bulk chemicals arestored. While we can make no assurances, based on historical experience and anticipated future needs, we intend to extend these leases and believe that we will beable to renew our leases as the renewal periods expire. If we are unable to renew three of our leases (two relate to terminals and one to manufacturing) any propertyremaining on the land becomes the property of the lessor, and the lessor has the option to either maintain the property or remove the property at our expense. Thefourth lease provides that we turn any property remaining on the land over to the lessor for them to maintain or remove at their expense. The cost to relocate ouroperations could have a material adverse effect on our results of operations and financial condition.ITEM 1B. UNRESOLVED STAFF COMMENTSNone. 9ITEM 2. PROPERTIESOur corporate office is located in Roseville, Minnesota, where we lease approximately 40,000 square feet under a lease with an initial term through December 31,2021. We own our principal manufacturing, warehousing, and distribution location in Minneapolis, Minnesota, which consists of approximately 11 acres of land,with six buildings containing a total of 177,000 square feet of office and warehouse space primarily used by our Industrial Group. We have installed sprinklersystems in substantially all of our warehouse facilities for fire protection. We believe that we carry customary levels of insurance covering the replacement ofdamaged property.In addition to the facilities described previously, our other facilities are described below. We believe that these facilities, together with those described above, areadequate and suitable for the purposes they serve. Unless noted, each facility is owned by us and is primarily used as office and warehouse. GroupLocation Approx.Square Feet IndustrialCamanche, IA 95,000 Centralia, IL (1) 77,000 Dupo, IL (2) 64,000 Minneapolis, MN (3) 9,000 St. Paul, MN (4) 32,000 Rosemount, MN (5) 63,000 St Louis, MO 6,000 Water TreatmentFt. Smith, AR (6) 17,000 Apopka, FL (6) 32,100 Big Pine Key, FL (6) 4,200 Hollywood, FL (6) 5,400 LaBelle, FL (6) 8,200 Monticello, FL (6) 5,000 Starke, FL (6) 4,000 Webster, FL (6) 6,500 Swainsboro, GA 57,000 Eldridge, IA 6,000 Slater, IA 12,000 Centralia, IL 39,000 Havana, IL 16,000 Peotone, IL (6) 18,000 Muncie, IN 12,000 Garnett, KS 18,000 Frankfort, KY 20,000 Columbia, MO (6) 14,000 Billings, MT 9,000 Fargo, ND 20,000 Washburn, ND 14,000 Lincoln, NE (6) 16,000 Tulsa, OK 7,300 Sioux Falls, SD 27,000 Rapid City, SD 9,000 Fond du Lac, WI 24,000 Superior, WI 17,000 Industrial and Water TreatmentSt. Paul, MN (7) 59,000 Memphis, TN 41,000 Health and NutritionFullerton, CA (8) 55,800 Florida, NY (9) 107,00010(1)This facility includes 10 acres of land located in Centralia, Illinois owned by the Company. The facility includes manufacturing capacity and primarilyserves our food-grade products and agriculture businesses.(2)The land for this manufacturing and packaging facility is leased from a third party, with the lease expiring in May 2023.(3)This facility is leased from a third party and is warehouse space.(4)Our terminal operations, located at two sites on opposite sides of the Mississippi River, are made up of three buildings, outside storage tanks for the storageof liquid bulk chemicals, including caustic soda, as well as numerous smaller tanks for storing and mixing chemicals. The land is leased from the PortAuthority of the City of St. Paul, Minnesota. One of the applicable leases runs through 2034, while the other one runs through 2018. We are in negotiationsto extend the lease that runs through 2018 lease for a period of 15-20 years.(5)This facility includes 28 acres of land owned by the Company. This manufacturing facility was constructed by us and has outside storage tanks for thestorage of bulk chemicals, as well as numerous smaller tanks for storing and mixing chemicals.(6)This facility is leased from a third party and is warehouse space.(7)Our Red Rock facility, which consists of a 59,000 square-foot building located on approximately 10 acres of land, has outside storage capacity for liquidbulk chemicals, as well as numerous smaller tanks for storing and mixing chemicals. The land is leased from the Port Authority of the City of St. Paul,Minnesota and the lease runs until 2029.(8)This is a leased facility comprising administrative offices and a distribution facility. The lease runs through January 2021.(9)This is comprised of a 79,000 square foot manufacturing plant which sits on approximately 16 acres, as well as a leased 28,000 square foot warehouselocated in close proximity.ITEM 3. LEGAL PROCEEDINGSThere are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries are a partyor of which any of our property is the subject.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.11PART II ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITYSECURITIES Quarterly Stock Data High Low Fiscal 2016 4 th Quarter $37.63 $30.53 3 rd Quarter 43.17 34.74 2 nd Quarter 44.00 33.94 1 st Quarter 43.75 37.45 Fiscal 2015 4 th Quarter $44.30 $36.93 3 rd Quarter 45.13 33.22 2 nd Quarter 38.00 34.00 1 st Quarter 37.75 32.98 Cash Dividends Declared Paid Fiscal 2017 1st Quarter — $0.40 Fiscal 2016 4 th Quarter $0.40 — 3 rd Quarter — $0.40 2 nd Quarter $0.40 — 1 st Quarter — $0.38 Fiscal 2015 4 th Quarter $0.38 — 3 rd Quarter — $0.38 2 nd Quarter $0.38 — 1 st Quarter — $0.36Our common shares are traded on The NASDAQ Global Market under the symbol “HWKN.” The price information represents sales prices as reported by TheNASDAQ Global Market. As of May 27, 2016 , shares of our common stock were held by approximately 442 shareholders of record.We first started paying cash dividends in 1985 and have continued to do so since. Future dividend levels will be dependent upon our consolidated results ofoperations, financial position, cash flows and other factors, and are subject to approval by our Board of Directors.On May 29, 2014, our Board of Directors authorized a share repurchase program of up to 300,000 shares of our outstanding common stock. The shares may berepurchased on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. We did not sell or purchase any sharesof our common stock during the fourth quarter of fiscal 2016. As of April 3, 2016, the maximum number of shares available to be repurchased under the sharerepurchase program was 112,546.12The following graph compares the cumulative total shareholder return on our common shares with the cumulative total returns of the NASDAQ Industrial Index,the NASDAQ Composite Index, the Russell 2000 Index and the Standard & Poor’s (“S&P”) Small Cap 600 Index for our last five completed fiscal years. Thegraph assumes the investment of $100 in our stock, the NASDAQ Industrial Index, the NASDAQ Composite Index, the Russell 2000 Index and the S&P SmallCap 600 Index on April 3, 2011, and reinvestment of all dividends.13ITEM 6. SELECTED FINANCIAL DATASelected financial data for the Company is presented in the table below and should be read in conjunction with Management’s Discussion and Analysis ofFinancial Condition and Results of Operations included in Item 7 and the Company’s Financial Statements and Notes to Financial Statements included in Item 8 ofthis Annual Report on Form 10-K. Total assets shown below are for the Company’s total operations. Fiscal Years 2016 2015 2014 2013 2012 (In thousands, except per share data)Sales $413,976 $364,023 $348,263 $350,387 $343,834 Gross profit 80,257 65,791 61,600 56,936 65,868 Net Income (1) 18,143 19,214 18,094 17,108 21,628 Basic earnings per common share 1.72 1.82 1.72 1.64 2.09 Diluted earnings per common share 1.72 1.81 1.71 1.62 2.08 Cash dividends declared per common share 0.80 0.76 0.72 0.68 0.64 Cash dividends paid per common share 0.78 0.74 0.70 0.66 0.62 Total assets $436,491 $248,462 $237,193 $222,148 $204,081 (1) - The reported numbers for fiscals 2013 and 2012 are income from continuing operations.We acquired Stauber Performance Ingredients in December 2015, and we acquired substantially all the assets of Davis Supply, Inc. in the third quarter of fiscal2016 and The Dumont Company, Inc. in the third quarter of fiscal 2015. The results of these operations since the acquisition dates are included in our consolidatedresults of operations.ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following is a discussion and analysis of our financial condition and results of operations for fiscal 2016, 2015 and 2014. Fiscal 2016 was a 53-week year,whereas fiscal 2015 and 2014 were 52-week years. This discussion should be read in conjunction with the Financial Statements and Notes to Financial Statementsincluded in Item 8 of this Annual Report on Form 10-K.OverviewWe derive substantially all of our revenues from the sale of chemicals and specialty ingredients to our customers in a wide variety of industries. We began ouroperations primarily as a distributor of bulk chemicals with a strong customer focus. Over the years, we have maintained the strong customer focus and haveexpanded our business by increasing our sales of value-added chemical products and specialty ingredients, including manufacturing, blending and repackagingcertain products.Recent Acquisitions and Business ExpansionOn December 23, 2015, we acquired Stauber Performance Ingredients (“Stauber”) for $157.0 million on a cash-free, debt-free basis, subject to a customaryworking capital adjustment. The total consideration for the acquisition was $158.2 million ($156.7 million net of cash acquired). We paid $156.0 million in cash atclosing and paid an additional $2.2 million in early fiscal 2017 based upon closing cash, debt and working capital balances. The purchase was funded with $131.0million of proceeds from the credit facility described more fully in Note 6 to the consolidated financial statements as well as cash on hand. Stauber operates out offacilities in New York and California and blends and distributes specialty products and ingredients to the nutritional, food, pharmaceutical, cosmetic and pet careindustries. The acquisition expands our portfolio of value-added specialty products within new markets. Stauber had revenues of approximately $118.0 million forthe twelve months ended December 23, 2015. The results of operations since the acquisition date, and the assets, including the goodwill associated with theacquisition, are included in our newly formed Health and Nutrition operating segment, starting with our results for the fourth quarter of fiscal 2016. Direct costs of$3.3 million related to this acquisition, consisting mainly of professional and consulting fees, were expensed as incurred during the fiscal year, and are classified asselling, general and administrative expenses in our consolidated statement of income.14On September 18, 2015, we acquired substantially all of the assets of Davis Supply, Inc. (“Davis”) under the terms of an asset purchase agreement with Davis andits shareholders. We paid $4.5 million cash at closing, using available cash on hand to fund the acquisition. Davis was a water treatment chemical distributioncompany operating in Florida with revenues of approximately $5 million in calendar year 2014. We integrated this business into our existing Florida locations. Theresults of operations after the date of acquisition and the acquired assets are included in our Water Treatment Segment.In the third quarter of fiscal 2015, we acquired substantially all of the assets of The Dumont Company, Inc. (“Dumont”) under the terms of an asset purchaseagreement with Dumont and its shareholders. We paid $10.1 million in cash including a working capital adjustment, using available cash on hand to fund theacquisition. Dumont was a water treatment chemical distribution company with revenues of approximately $14.0 million in calendar year 2013. Through thisacquisition we added seven operating locations across Florida serving municipal water and wastewater treatment, private utilities, commercial swimming pools,irrigation water treatment and food processing chemical markets. The results of operations since the acquisition date are included in our Water Treatment Segment.In the third quarter of fiscal 2014, we acquired substantially all the assets of Advance Chemical Solutions, Inc. (“ACS”). We paid $2.9 million in cash, including$0.5 million of contingent consideration based on the achievement of certain financial performance targets. ACS had revenues of approximately $4.0 million forthe 12 months ended September 30, 2013. The results of its operations since the acquisition date are included in our Water Treatment segment.In addition to the acquisitions discussed above, we opened two new branches for our Water Treatment Group in fiscal 2016. We expect to continue to invest inexisting and new branches to expand our Water Treatment Group’s geographic coverage. The cost of any one of these expansion branches is not expected to bematerial. In addition, over the past two years, we have proactively added route sales and other support personnel to Water Treatment Group branch offices withinour existing geographic coverage area. While these additions will add costs in the near term, we expect these investments to better position us for future growth.New Operating SegmentIn connection with the Stauber acquisition in fiscal 2016, we established our Health and Nutrition operating segment. This segment specializes in providingingredient distribution, processing and formulation solutions to manufacturers of nutraceutical, functional food and beverage, personal care, dietary supplement andother nutritional food and health and wellness products. This group offers a diverse product portfolio including minerals, botanicals and herbs, vitamins and aminoacids, excipients, joint products, sweeteners and enzymes.Because this is a new operating segment for us, there is no comparison to the prior year in the year-over-year discussions below.Share Repurchase ProgramIn fiscal 2015, our Board of Directors authorized a share repurchase program of up to 300,000 shares of our outstanding common stock. The shares may berepurchased on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. The primary objective of the sharerepurchase program is to offset the impact of dilution from issuances relating to employee and director equity grants and our employee stock purchase program.During fiscal 2016 we repurchased 127,852 shares of common stock with an aggregate purchase price of $4.8 million, and during fiscal 2015 we repurchased59,602 shares of common stock with an aggregate purchase price of $2.2 million. The remaining balance of shares available to be purchased under the currentshare repurchase program is 112,546 shares.Financial OverviewAn overview of our financial performance in fiscal 2016 is provided below:• Sales of $414.0 million , a 13.7% increase from fiscal 2015 ;•Gross profit of $80.3 million , an increase of $14.5 million , or 22.0%, from fiscal 2015 ; and• Net cash provided by operating activities of $36.3 million .We seek to maintain relatively constant gross profit dollars per unit sold on each of our products as the cost of our raw materials increase or decrease, subject tocompetitive pricing pressures that may negatively impact our gross profit dollars per unit sold. Since we expect that we will continue to experience fluctuations inour raw material costs and resulting prices in the future, we15believe that gross profit dollars is the best measure of our profitability from the sale of our products, as opposed to gross profit as a percentage of sales.We use the last in, first out (“LIFO”) method of valuing the majority of our inventory, which causes the most recent product costs to be recognized in our incomestatement. The valuation of LIFO inventory for interim periods is based on our estimates of fiscal year-end inventory levels and costs. The LIFO inventoryvaluation method and the resulting cost of sales are consistent with our business practices of pricing to current chemical raw material prices. Our LIFO reservedecreased by $1.4 million in fiscal 2016 due to a decrease in certain inventory volumes on hand, along with lower commodity prices, resulting in an increase to ourreported gross profit for the year. Our LIFO reserve increased by $0.4 million in fiscal 2015 due to an increase in inventory volumes on hand, resulting in adecrease to our reported gross profit for the year.We disclose the sales of our bulk commodity products as a percentage of total sales dollars for our Industrial and Water Treatment segments. Our definition of bulkcommodity products includes products that we do not modify in any way, but receive, store, and ship from our facilities, or direct ship to our customers in largequantities. We review our sales reporting on a periodic basis to ensure we are including all products that meet this definition. The disclosures in this documentreferring to sales of bulk commodity products have been updated for all periods presented based on the most recent review.Results of OperationsThe following table sets forth certain items from our statement of income as a percentage of sales from period to period: Fiscal2016 Fiscal 2015 Fiscal2014Sales 100.0 % 100.0 % 100.0 %Cost of sales (80.6)% (81.9)% (82.3)%Gross profit 19.4 % 18.1 % 17.7 %Selling, general and administrative expenses (11.9)% (9.7)% (9.6)%Operating income 7.5 % 8.4 % 8.1 %Interest (expense) income, net (0.2)% — % — %Income before income taxes 7.3 % 8.4 % 8.1 %Income tax provision (3.0)% (3.1)% (2.9)%Net income 4.4 % 5.3 % 5.2 %Fiscal 2016 Compared to Fiscal 2015SalesSales increased $50.0 million , or 13.7% , to $414.0 million for fiscal 2016 , as compared to sales of $364.0 million for fiscal 2015 . Our newly-established Healthand Nutrition segment accounted for $33.9 million of the year-over-year increase and water treatment locations acquired in fiscal 2015 and 2016 accounted for$12.6 million of the increase.Industrial Segment. Industrial segment sales increased $2.7 million , or 1.1% , to $251.7 million for fiscal 2016 . Sales of bulk commodity products in theIndustrial segment were approximately 20% of sales in fiscal 2016 compared to 23% in fiscal 2015. An overall increase in sales volumes, driven in part by the 53 rdweek in fiscal 2016, along with a shift in product mix to more sales of products that carry higher per-unit selling prices, more than offset the impact of lowerselling prices due to lower product costs and lower volumes sold on certain bulk commodity products.Water Treatment Segment. Water Treatment segment sales increased $13.4 million , or 11.6% , to $128.3 million for fiscal 2016 . Sales of bulk commodityproducts in the Water Treatment segment were approximately 16% of sales in fiscal 2016 compared to 19% in fiscal 2015. Our locations acquired in fiscal 2015and 2016 accounted for $12.6 million of the total increase in sales. Also contributing to the year-over-year increase was an overall increase in sales volumes at ourother locations, driven by the 53 rd week in fiscal 2016, and higher sales volumes of specialty products, partially offset by lower volumes sold and lower sellingprices on certain bulk commodity products.Health and Nutrition Segment. Sales for our newly established Health and Nutrition segment were $33.9 million for the fourth quarter and full year of fiscal 2016.16Gross ProfitGross profit was $80.3 million , or 19.4% of sales, for fiscal 2016 , an increase of $14.5 million from $65.8 million , or 18.1% of sales, for fiscal 2015 . Our newlyestablished Health and Nutrition segment accounted for $6.8 million of the increase, including an estimated $0.5 million related to the 53 rd week in fiscal 2016.Including the Health and Nutrition segment, we estimate the total gross profit impact of the 53 rd week to be approximately $2.1 million of additional gross profitfor the year. The LIFO method of valuing inventory increased gross profit by $1.4 million for fiscal 2016 , while it decreased gross profit by $0.4 million for fiscal2015 .Industrial Segment. Gross profit for the Industrial segment was $38.0 million , or 15.1% of sales, for fiscal 2016 , an increase of $4.3 million from $33.6 million ,or 13.5% of sales, for fiscal 2015 . We estimate the gross profit impact of the 53 rd week in the Industrial segment to be approximately $1.0 million of additionalgross profit for the year. An increase in sales of specialized products that carry higher per-unit margins were partially offset by lower sales of bulk commodityproducts, which carry lower per-unit margins. The LIFO method of valuing inventory increased gross profit in our industrial segment by $1.0 million in fiscal 2016, while it decreased gross profit by $0.3 million in fiscal 2015.Water Treatment Segment. Gross profit for the Water Treatment segment increased $3.3 million to $35.5 million , or 27.6% of sales, for fiscal 2016 , as comparedto $32.2 million , or 28.0% of sales, for fiscal 2015 . The increase in gross profit dollars was largely driven by profits from our locations acquired in fiscal 2015and 2016. We estimate the gross profit impact of the 53 rd week to be approximately $0.6 million of additional gross profit for the year. In addition, productmargins at many of our other locations increased year over year on increased volumes, offset somewhat by increased operating expenses. The LIFO method ofvaluing inventory increased gross profit by $0.4 million in fiscal 2016 , while it decreased gross profit by $0.1 million in fiscal 2015 .Health and Nutrition Segment. Gross profit for our newly established Health and Nutrition segment was $6.8 million for the fourth quarter and full year of fiscal2016. We estimate the gross profit impact of the 53 rd week to be approximately $0.5 million of additional gross profit for the year. Inventories in this segment arevalued using the first-in, first-out (“FIFO”) method.Selling, General and Administrative ExpensesSelling, general and administrative (“SG&A”) expenses increased $13.7 million to $49.1 million , or 11.9% of sales, for fiscal 2016 , as compared to $35.4 million, or 9.7% of sales, for fiscal 2015 . Our newly established Health and Nutrition segment accounted for $7.7 million of the increase, including $3.3 million in non-recurring costs directly related to the acquisition and $0.3 million related to the 53 rd week in fiscal 2016. SG&A expenses from our Water Treatment locationsacquired in fiscal 2015 and 2016 accounted for $1.8 million of the increase. Other drivers of the remaining expense increase are the addition of sales personnel inboth our Water Treatment and Industrial segments and added administrative positions to support our business growth needs, with an estimated $0.6 million of theincrease attributable to the 53 rd week in fiscal 2016.Operating IncomeOperating income was $31.2 million , or 7.5% of sales, for fiscal 2016 , as compared to $30.4 million , or 8.4% of sales, for fiscal 2015 . Operating income wasnegatively impacted by $3.3 million of non-recurring costs directly associated with the acquisition, which are included in our Health and Nutrition Segment.Operating income for the Industrial segment increased by $2.0 million as a result of the gross profit and SG&A changes discussed above. Operating income for theWater Treatment segment decreased $0.4 million , as increased SG&A expenses more than offset increases in gross profit as discussed above.Interest (Expense) Income, NetInterest expense increased by $0.8 million for fiscal 2016 due to the interest costs on the debt added in fiscal 2016 to partially fund the Stauber acquisition.Income Tax ProvisionOur effective income tax rate was 40.2% for fiscal 2016 compared to 36.9% for fiscal 2015 . Our effective tax rate for fiscal 2016 was negatively impacted byincome tax expense of approximately $0.5 million associated with $1.4 million of Stauber acquisition related expenditures which are not deductible for taxpurposes and were recorded as discrete items during fiscal 2016. Our effective tax rate for 2016 was also negatively impacted by $0.2 million related to apreliminary audit finding by a state income tax jurisdiction covering multiple years. The effective tax rate is generally impacted by projected levels of taxableincome, permanent items, and state taxes.17Fiscal 2015 Compared to Fiscal 2014 SalesSales increased $15.8 million, or 4.5%, to $364.0 million for fiscal 2015, as compared to sales of $348.3 million for fiscal 2014. Sales of bulk commodity productswere approximately 22% of sales in fiscal 2015 and 23% in fiscal 2014.Industrial Segment. Industrial segment sales increased $4.2 million, or 1.7%, to $249.1 million for fiscal 2015. Volumes increased year-over-year; however, lowerraw material prices and competitive pricing pressures in certain product lines resulted in lower per-unit selling prices.Water Treatment Segment. Water Treatment segment sales increased $11.6 million, or 11.2%, to $115.0 million for fiscal 2015. Our recently acquired Florida andOklahoma locations accounted for $7.9 million of the total increase. In addition, growth in our newer branches and increased sales of specialty chemicals werepartially offset by the impact of lower raw material prices.Gross ProfitGross profit was $65.8 million, or 18.1% of sales, for fiscal 2015, as compared to $61.6 million, or 17.7% of sales, for fiscal 2014. The LIFO method of valuinginventory decreased gross profit by $0.4 million for fiscal 2015, while it increased gross profit by $1.9 million for fiscal 2014.Industrial Segment. Gross profit for the Industrial segment was $33.6 million, or 13.5% of sales, for fiscal 2015, an increase of $1.6 million from $32.0 million, or13.1% of sales, for fiscal 2014. The increase in gross profit dollars was driven by higher sales volumes in fiscal 2015 as compared to fiscal 2014, partially offset bylower per-unit margins due to continued competitive pricing pressures in certain product lines. Gross profit for fiscal 2015 as compared to fiscal 2014 wasfavorably impacted by $0.3 million, as costs incurred in fiscal 2014 to exit a leased facility were partially offset by accelerated depreciation on assets incurred infiscal 2015 in connection with a construction project. The LIFO method of valuing inventory decreased gross profit in our industrial segment by $0.3 million infiscal 2015, while it increased gross profit by $1.6 million in fiscal 2014.Water Treatment Segment. Gross profit for the Water Treatment segment increased $2.6 million to $32.2 million, or 28.0% of sales, for fiscal 2015, as comparedto $29.6 million, or 28.6% of sales, for fiscal 2014. The increase in gross profit dollars was a result of higher sales volumes across most of our branches, inparticular the addition of our recently acquired Florida and Oklahoma locations, along with increased sales of specialty chemicals. Gross profit as a percentage ofsales decreased primarily due to the addition of and growth in our newer branches that have lower per-branch revenues, and the costs to operate these branchesrepresent a higher percentage of their sales than many of our existing branches. The LIFO method of valuing inventory decreased gross profit by $0.1 million infiscal 2015, while it increased gross profit by $0.3 million in fiscal 2014.Selling, General and Administrative ExpensesSG&A expenses were $35.4 million, or 9.7% of sales, for fiscal 2015, as compared to $33.5 million, or 9.6% of sales, for fiscal 2014. The expenses increased inour Water Treatment segment, with $1.6 million of the increase due to our recently acquired Florida and Oklahoma locations, and the remainder of the increasedriven by the addition of sales personnel in existing locations.Operating IncomeOperating income was $30.4 million, or 8.4% of sales, for fiscal 2015, as compared to $28.1 million, or 8.1% of sales, for fiscal 2014. Operating income for theIndustrial segment increased by $1.6 million as a result of the gross profit increases discussed above. Operating income for the Water Treatment segment increased$0.8 million, as increased SG&A expenses partially offset increases in gross profit as discussed above.Interest Income (Expense), NetInterest income on cash and investments of $0.2 million was offset by interest expense related to our pension withdrawal liability of $0.2 million during both fiscal2015 and fiscal 2014.18Income Tax ProvisionOur effective income tax rate was 36.9% for fiscal 2015 compared to 35.5% for fiscal 2014. Our effective tax rate for fiscal 2014 was reduced by a non-recurringstate tax benefit of $0.4 million. The effective tax rate is generally impacted by projected levels of taxable income, permanent items, and state taxes. Liquidity and Capital ResourcesCash provided by operating activities in fiscal 2016 was $36.3 million compared to $20.7 million in fiscal 2015 and $34.6 million in fiscal 2014 . The increase incash provided by operating activities was primarily due to the timing of inventory purchases. Our inventory levels on hand at the end of fiscal 2014 were unusuallylow, which resulted in significant cash expended to rebuild inventory levels in the first quarter of fiscal 2015. At the end of fiscal 2015, our inventory levels werehigher and we did not experience as large of a cash outflow during the first quarter of fiscal 2016. Due to the nature of our operations, which includes purchases oflarge quantities of bulk chemicals, the timing of purchases can result in significant changes in working capital and the resulting operating cash flow. Historically,our cash requirements for working capital increase during the period from April through November as caustic soda inventory levels increase as the majority ofbarges are received during this period.Cash used in investing activities was $151.4 million in fiscal 2016 compared to $26.4 million in fiscal 2015 and $23.1 million in fiscal 2014 . We expended $159.0million, net of cash acquired, to complete the Stauber and Davis acquisitions in fiscal 2016 compared to $10.1 million for the Dumont acquisition in 2015. Net cashof $31.7 million was provided by sales of investments during fiscal 2016 as we liquidated our investments to partially fund the Stauber acquisition. Capitalexpenditures were $24.2 million in fiscal 2016 , $14.6 million in fiscal 2015 and $12.3 million in fiscal 2014 . Capital expenditures in fiscal 2016 included $7.7million related to facility improvements, replacement equipment, new and replacement containers and water treatment trucks, $6.4 million related to businessexpansion, inventory storage and process improvements, and $5.4 million related to a major upgrade to one of our terminal facilities. Total capital spending infiscal 2017 is currently expected to be comparable to fiscal 2016.Cash provided by financing activities was $116.4 million in fiscal 2016 , as compared to cash used in financing activities of $9.1 million in fiscal 2015 and $6.7million in fiscal 2014 . Proceeds of $131.0 million were received in connection with the credit facility we entered into during the third quarter of fiscal 2016 tofund the Stauber acquisition. This was partially offset by cash used to fund dividends of $8.3 million and share repurchases of $4.8 million.Cash and investments available-for-sale was $20.0 million at April 3, 2016 , a decrease of $30.4 million as compared with March 29, 2015 , due to the cashoutflow related to the Stauber acquisition, capital expenditures, dividend payments, the share repurchase program and the Davis acquisition exceeding the cashflows generated from operations for fiscal 2016.On December 23, 2015, in connection with the Stauber acquisition described more fully in Note 2 to the consolidated financial statements, we entered into a creditagreement (the “Credit Agreement”) with U.S. Bank National Association (“U.S. Bank”) as Sole Lead Arranger and Sole Book Runner and other lenders fromtime to time party thereto (collectively, the “Lenders”), whereby U.S. Bank is also serving as Administrative Agent. The Credit Agreement provides us with seniorsecured credit facilities (the “Credit Facility”) totaling $165.0 million, consisting of a $100.0 million senior secured term loan credit facility (the “Term LoanFacility”) and a $65.0 million senior secured revolving loan credit facility (the “Revolving Loan Facility”). The Revolving Loan Facility includes a letter of creditsubfacility in the amount of $5.0 million and a swingline subfacility in the amount of $8.0 million. The Term Loan facility requires mandatory quarterlyrepayments as outlined in Note 6 to the consolidated financial statements, with the balance due at maturity. The Credit Facility is scheduled to terminate onDecember 23, 2020. The Credit Facility is secured by substantially all of our personal property assets and those of our subsidiaries.Borrowings under the Credit Facility bear interest at a rate per annum equal to one of the following, plus, in both cases, an applicable margin based upon ourleverage ratio: (a) LIBOR for an interest period of one, two, three or six months as selected by us, reset at the end of the selected interest period, or (b) a base ratedetermined by reference to the highest of (1) U.S. Bank’s prime rate, (2) the Federal Funds Effective Rate plus 0.5%, or (3) one-month LIBOR for U.S. dollars plus1.0%. The LIBOR margin is 1.125%, 1.25% or 1.5%, depending on our leverage ratio. The base rate margin is 0.125%, 0.25% or 0.5%, depending on our leverageratio. At April 3, 2016, the effective interest rate on our borrowings was approximately 1.9%.We used $131.0 million of the proceeds from the Credit Facility to fund our acquisition of Stauber. As of April 3, 2016, we had $34.0 million remaining availableunder the Credit Facility, which may be used for working capital, capital expenditures, restricted payments and acquisitions permitted under the credit agreement,and other general corporate purposes.19In addition to paying interest on the outstanding principal under the Credit Facility, we are required to pay a commitment fee on the unutilized commitmentsthereunder. The commitment fee is 0.25% to 0.3%, depending on our leverage ratio.Debt issuance costs of $0.7 million paid to lenders are reflected as a reduction of long-term debt and will be amortized as interest expense over the term of thecredit facility.The Credit Agreement requires us to maintain (a) a minimum fixed charge coverage ratio of 1.15 to 1.00 and (b) a maximum total cash flow leverage ratio of 3.0 to1.0. The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict our ability to incur additionalindebtedness, dispose of significant assets, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enterinto sale and leaseback transactions, grant liens on our assets or enter into rate management transactions, subject to certain limitations. We will be permitted tomake distributions, pay dividends and repurchase shares so long as no default or event of default exists or would exist as a result thereof. As of April 3, 2016, wewere in compliance with all required covenants.The Credit Agreement contains customary events of default, including failure to make payments under the Term Loan Facility, failure to comply with covenants inthe Credit Agreement and other loan documents, cross default to other material indebtedness, failure by us to pay or discharge material judgments, bankruptcy, andchange of control. The occurrence of an event of default would permit the lenders to terminate their commitments and accelerate loans under the Credit Facility.As part of our growth strategy, we have acquired businesses and may pursue acquisitions or other strategic relationships in the future that we believe willcomplement or expand our existing businesses or increase our customer base. We believe we could borrow additional funds under our current or new creditfacilities or sell equity for strategic reasons or to further strengthen our financial position.Off-Balance Sheet ArrangementsWe do not have any off-balance sheet arrangements.Contractual Obligations and Commercial CommitmentsThe following table provides aggregate information about our contractual payment obligations and the periods in which payments are due: Payments Due by PeriodContractual Obligation 2017 2018 2019 2020 2021 More than5 Years Total (In thousands)Senior secured term loan (1) $5,625 $8,125 $10,000 $10,000 $65,000 $— $98,750Senior secured revolver (2) $— $— $— $— $31,000 $— $31,000Operating lease obligations $2,750 $2,553 $2,250 $2,059 $1,833 $3,596 $15,041Pension withdrawal liability (3) $467 $467 $467 $467 $467 $5,840 $8,175(1)Represents principal payments only. See Note 6 of our consolidated Financial Statements for further information.(2)Represents balance outstanding as of April 3, 2016, and assumes such amount remains outstanding until its maturity date. See Note 6 of our consolidatedFinancial Statements for further information.(3)This relates to our withdrawal from a multiemployer pension plan. Payments on this obligation began in fiscal 2014 and will continue through 2034.Critical Accounting PoliciesIn preparing the financial statements, we follow U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires usto make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities.We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that are believed to bereasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions. We consider the following policiesto involve the most judgment in the preparation of our financial statements.20Revenue Recognition - We recognize revenue when there is evidence that the customer has agreed to purchase the product, the price and terms of the sale arefixed, the product has shipped and title has passed to our customer, performance has occurred, and collection of the receivable is reasonably assured.LIFO Reserve - Certain of our inventories are valued at the lower of cost or market with cost being determined using the LIFO method. We may incur significantfluctuations in our LIFO reserve and, as a result, gross margins, due primarily to changes in the level of inventory on hand and the per-unit cost of large-volumecomponents of our inventory. The prices for this inventory fluctuate depending on the balance between supply and demand. Management reviews the LIFO reserveon a quarterly basis. Inventories not valued used the LIFO method are valued at the lower of cost or market with cost being determined using the FIFO method.Goodwill and Infinite-life Intangible Assets - Goodwill represents the excess of the cost of acquired businesses over the fair value of identifiable tangible net assetsand identifiable intangible assets purchased. Goodwill is tested at least annually for impairment, and is tested for impairment more frequently if events or changesin circumstances indicate that the asset might be impaired. As of January 1, 2016, we performed an analysis of qualitative factors to determine whether it is morelikely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-stepgoodwill impairment test. Based on management’s analysis of qualitative factors, we determined that it was not necessary to perform a two-step goodwillimpairment test for any reporting unit.Business Acquisitions - We account for acquired businesses using the acquisition method of accounting which requires that the assets acquired and liabilitiesassumed be recorded at the date of acquisition at their respective fair values. The judgments made in determining the estimated fair value assigned to each class ofassets acquired and liabilities assumed, as well as asset lives, can materially impact net income. Accordingly, for significant items, we typically obtain assistancefrom a third-party valuation expert.There are several methods that can be used to determine the fair value of assets acquired and liabilities assumed in a business combination. For intangible assets,we normally utilize one or more forms of the “income method.” This method starts with a forecast of all of the expected future net cash flows attributable to thesubject intangible asset. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated withthe cash flow streams. Some of the more significant estimates and assumptions inherent in the income method (or other methods) include the projected future cashflows (including timing) and the discount rate reflecting the risks inherent in the future cash flows.Estimating the useful life of an intangible asset also requires judgment. For example, different types of intangible assets will have different useful lives, influencedby the nature of the asset, competitive environment, and rate of change in the industry. Certain assets may even be considered to have indefinite useful lives. All ofthese judgments and estimates can significantly impact the determination of the amortization period of the intangible asset, and thus net income.Recently Issued Accounting PronouncementsSee Item 8, “Note 1 - Nature of Business and Significant Accounting Policies” of the Notes to Consolidated Financial Statements for information regardingrecently adopted accounting standards or accounting standards to be adopted in the future.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKWe are subject to the risk inherent in the cyclical nature of commodity chemical prices. However, we do not currently purchase forward contracts or otherwiseengage in hedging activities with respect to the purchase of commodity chemicals. We attempt to pass changes in the cost of our materials on to our customers;however, there are no assurances that we will be able to pass on the increases in the future.We are exposed to market risks related to interest rates. Our exposure to changes in interest rates is limited to borrowings under our credit facility. A 25 basis pointchange in interest rates would potentially increase or decrease annual interest expense by approximately $0.3 million. Other types of market risk, such as foreigncurrency risk, do not arise in the normal course of our business activities.21ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders of Hawkins, Inc.:We have audited the accompanying consolidated balance sheets of Hawkins, Inc. and subsidiaries (the Company) as of April 3, 2016 and March 29, 2015, and therelated consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April3, 2016. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule for each of the years in thethree-year period ended April 3, 2016, listed in schedule II of this Form 10-K. We also have audited the Company’s internal control over financial reporting as ofApril 3, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal controlover financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’sReport on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and financial statementschedule and an opinion on the Company’s internal control over financial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internalcontrol over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understandingof internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believethat our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hawkins, Inc. andsubsidiaries as of April 3, 2016, and March 29, 2015, and the results of their operations and their cash flows for each of the years in the three-year period endedApril 3, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the financial statement schedule referred to above, whenconsidered in relation to the basic consolidated financial statements taken as a while, presents fairly, in all material respects, the information set forth therein. Alsoin our opinion, Hawkins, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of April 3, 2016, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.Management excluded from its assessment of the effectiveness of internal control over financial reporting as of April 3, 2016, Stauber Performance Ingredients,Inc’s internal control over financial reporting that comprise total assets of $204.7 million and net sales of $33.9 million included in the consolidated financialstatements of Hawkins, Inc. and subsidiaries as of and for the year ended April 3, 2016. Our audit of internal control over financial reporting of Hawkins, Inc. alsoexcluded an evaluation of the internal control over financial reporting of Stauber Performance Ingredients, Inc./s/ KPMG LLPMinneapolis, MinnesotaJune 2, 201622HAWKINS, INC.CONSOLIDATED BALANCE SHEETS(In thousands, except share and per-share data) April 3, 2016 March 29, 2015ASSETS CURRENT ASSETS: Cash and cash equivalents $20,014 $18,639Investments available-for-sale — 14,485Trade receivables, less allowance for doubtful accounts of $602 for 2016 and $445 for 2015 59,271 40,355Inventories 47,719 37,028Income taxes receivable 6,062 732Prepaid expenses and other current assets 4,222 3,101Total current assets 137,288 114,340PROPERTY, PLANT, AND EQUIPMENT: Land 9,085 8,038Buildings and improvements 84,391 73,095Machinery and equipment 75,132 60,077Transportation equipment 22,442 19,596Office furniture and equipment including computer systems 13,798 11,966 204,848 172,772Less accumulated depreciation 88,527 79,042Net property, plant, and equipment 116,321 93,730OTHER ASSETS: Goodwill 97,724 11,750Intangible assets, less accumulated amortization of $6,370 for 2016 and $3,933 for 2015 82,934 11,154Long-term investments — 17,249Other 2,224 239Total other assets 182,882 40,392Total assets $436,491 $248,462LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable — trade $30,121 $20,083Dividends payable 4,226 4,038Accrued payroll and employee benefits 8,787 6,122Current portion of long-term debt 5,489 —Deferred income taxes — 2,698Due to sellers of acquired business 6,829 —Container deposits 1,081 1,008Other current liabilities 3,232 2,394Total current liabilities 59,765 36,343LONG-TERM DEBT, LESS CURRENT PORTION 123,616 —PENSION WITHDRAWAL LIABILITY 6,282 6,589OTHER LONG-TERM LIABILITIES 3,611 1,588DEFERRED INCOME TAXES 42,242 9,978Total liabilities 235,516 54,498COMMITMENTS AND CONTINGENCIES — —SHAREHOLDERS’ EQUITY: Common stock; authorized: 30,000,000 shares of $0.05 par value; 10,512,471 and 10,564,949 shares issuedand outstanding for 2016 and 2015, respectively 526 528Additional paid-in capital 48,189 50,901Retained earnings 152,265 142,567Accumulated other comprehensive loss (5) (32)Total shareholders’ equity 200,975 193,964Total liabilities and shareholders’ equity $436,491 $248,462See accompanying notes to consolidated financial statements.23HAWKINS, INC.CONSOLIDATED STATEMENTS OF INCOME(In thousands, except share and per-share data) Fiscal Year Ended April 3, 2016 March 29, 2015 March 30, 2014Sales $413,976 $364,023 $348,263Cost of sales (333,719) (298,232) (286,663)Gross profit 80,257 65,791 61,600Selling, general and administrative expenses (49,086) (35,375) (33,510)Operating income 31,171 30,416 28,090Interest (expense) income, net (805) 38 (29)Income before income taxes 30,366 30,454 28,061Income tax provision (12,223) (11,240) (9,967)Net income $18,143 $19,214 $18,094 Weighted average number of shares outstanding-basic 10,524,730 10,568,582 10,544,467Weighted average number of shares outstanding-diluted 10,578,042 10,633,554 10,599,755 Basic earnings per share $1.72 $1.82 $1.72Diluted earnings per share $1.72 $1.81 $1.71 Cash dividends declared per common share $0.80 $0.76 $0.72See accompanying notes to consolidated financial statements.24HAWKINS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In thousands, except share data) (In thousands) April 3, 2016 March 29, 2015 March 30, 2014 Net income$18,143 $19,214 $18,094Other comprehensive income (loss), net of tax: Unrealized gain (loss) on available-for-sale investments25 11 (47)Unrealized gain on post-retirement liability2 1 109Total other comprehensive income27 12 62Total comprehensive income$18,170 $19,226 $18,156See accompanying notes to consolidated financial statements.25HAWKINS, INC.CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY(In thousands, except share data) Common Stock AdditionalPaid-inCapital RetainedEarnings Accumulated OtherComprehensive Income(Loss) TotalShareholders’EquityShares Amount BALANCE — March 31, 2013 10,495,427 $525 $48,779 $120,974 $(106) $170,172Cash dividends declared (7,641) (7,641)Share-based compensation expense 1,322 1,322Tax benefit on share-basedcompensation plans (214) (214)Vesting of restricted stock 41,906 2 (2) —Shares surrendered for payrolltaxes (12,480) (1) (484) (485)Stock options exercised 9,333 1 185 186ESPP shares issued 28,214 1 916 917Other comprehensive income, netof tax 62 62Net income 18,094 18,094BALANCE — March 30, 2014 10,562,400 $528 $50,502 $131,427 $(44) $182,413Cash dividends declared (8,074) (8,074)Share-based compensation expense 1,631 1,631Tax benefit on share-basedcompensation plans 92 92Vesting of restricted stock 29,355 1 (1) —Shares surrendered for payrolltaxes (7,920) (295) (295)Stock options exercised 9,333 186 186ESPP shares issued 31,383 2 986 988Shares repurchased (59,602) (3) (2,200) (2,203)Other comprehensive income, netof tax 12 12Net income 19,214 19,214BALANCE — March 29, 2015 10,564,949 $528 $50,901 $142,567 $(32) $193,964Cash dividends declared (8,445) (8,445)Share-based compensation expense 1,706 1,706Tax benefit on share-basedcompensation plans (1) (1)Vesting of restricted stock 60,658 3 (3) —Shares surrendered for payrolltaxes (18,834) (1) (698) (699)ESPP shares issued 33,550 2 1,079 1,081Shares repurchased (127,852) (6) (4,795) (4,801)Other comprehensive income, netof tax 27 27Net income 18,143 18,143BALANCE — April 3, 2016 10,512,471 $526 $48,189 $152,265 $(5) $200,975See accompanying notes to consolidated financial statements.26HAWKINS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Fiscal Year Ended April 3, 2016 March 29, 2015 March 30, 2014CASH FLOWS FROM OPERATING ACTIVITIES: Net income $18,143 $19,214 $18,094Reconciliation to cash flows: Depreciation and amortization 15,511 13,015 12,605Amortization of debt issuance costs 34 — —Loss on disposal of investments 104 — —Deferred income taxes 1,103 (418) 2,150Share-based compensation expense 1,706 1,631 1,322(Gain) loss from property disposals (33) 45 111Changes in operating accounts (using) providing cash, net of effects ofacquisition: Trade receivables (2,950) (1,051) (1,698)Inventories (322) (9,977) 2,122Accounts payable 3,831 563 335Accrued liabilities 192 (506) 141Accrued interest 50 — —Income taxes (701) (2,177) (2)Other (335) 325 (568)Net cash provided by operating activities 36,333 20,664 34,612CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant, and equipment (24,183) (14,552) (12,261)Purchases of investments (6,091) (15,303) (25,161)Sale and maturities of investments 37,763 13,280 16,612Proceeds from property disposals 358 223 115Acquisitions, net of cash acquired (159,199) (10,068) (2,416)Net cash used in investing activities (151,352) (26,420) (23,111)CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid (8,257) (7,859) (7,410)New shares issued 1,081 988 917Stock options exercised — 186 186Excess tax benefit from share-based compensation (1) 92 62Shares surrendered for payroll taxes (699) (295) (485)Shares repurchased (4,801) (2,203) —Repayment of debt (1,250) — —Payments for debt issuance costs (679) — —Proceeds from long-term borrowings 100,000 — —Proceeds from revolver borrowings 31,000 — —Net cash provided by (used in) financing activities 116,394 (9,091) (6,730)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,375 (14,847) 4,771CASH AND CASH EQUIVALENTS - beginning of period 18,639 33,486 28,715CASH AND CASH EQUIVALENTS - end of period $20,014 $18,639 $33,486SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION- Cash paid during the year for income taxes $11,811 $13,801 $7,757Cash paid for interest 702 — —Noncash investing activities - Capital expenditures in accounts payable 1,884 1,126 699Acquisition consideration accrued but not paid 2,200 — —See accompanying notes to consolidated financial statements.27HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1 — Nature of Business and Significant Accounting PoliciesNature of Business - We have three reportable segments: Industrial, Water Treatment and Health and Nutrition. The Industrial Group specializes in providingindustrial chemicals, products and services to industries such as agriculture, chemical processing, electronics, energy, food, pharmaceutical, plating and powergeneration. This group also manufactures and sells certain food-grade products, including liquid phosphates, lactates and other blended products. The WaterTreatment Group specializes in providing chemicals, equipment and solutions for potable water, municipal and industrial wastewater, industrial process water andnon-residential swimming pool water. This group has the resources and flexibility to treat systems ranging in size from a single small well to a multi-million-gallon-per-day facility. We established the Health and Nutrition segment of our business in December 2015 through our acquisition of Stauber PerformanceIngredients (“Stauber”). Our Health and Nutrition Group specializes in providing ingredient distribution, processing and formulation solutions to manufacturers ofnutraceutical, functional food and beverage, personal care, dietary supplement and other nutritional food and health and wellness products. This group offers adiverse product portfolio including minerals, botanicals and herbs, vitamins and amino acids, excipients, joint products, sweeteners and enzymes.Fiscal Year - Our fiscal year is a 52 or 53-week year ending on the Sunday closest to March 31. Our fiscal year ended April 3, 2016 (“fiscal 2016”) was 53 weeks.Our fiscal year ended March 29, 2015 (“fiscal 2015”) and March 30, 2014 (“fiscal 2014”) were 52 weeks. The fiscal year ending April 2, 2017 (“fiscal 2017”) willalso be 52 weeks.Principles of Consolidation - The consolidated financial statements include the accounts of Hawkins, Inc. and its wholly-owned subsidiaries. All intercompanytransactions and accounts have been eliminated.Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.Revenue Recognition - We recognize revenue when there is evidence that the customer has agreed to purchase the product, the price and terms of the sale arefixed, the product has shipped and title has passed to our customer, performance has occurred, and collection of the receivable is reasonably assured.Shipping and Handling - All shipping and handling amounts billed to customers are included in revenues. Costs incurred related to the shipping and the handlingof products are included in cost of sales.Fair Value Measurements - The financial assets and liabilities that are re-measured and reported at fair value for each reporting period include marketablesecurities, as well as contingent consideration payable in fiscal 2015 related to the acquisition of Advance Chemical Solutions, Inc. (“ACS”). There are no fairvalue measurements with respect to nonfinancial assets or liabilities that are recognized or disclosed at fair value in our consolidated financial statements on arecurring basis.Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of themeasurement date:Level 1: Valuation is based on observable inputs such as quoted market prices (unadjusted) for identical assets or liabilities in active markets.Level 2: Valuation is based on inputs such as quoted market prices for similar assets or liabilities in active markets or other inputs that are observable forthe asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.Level 3: Valuation is based upon other unobservable inputs that are significant to the fair value measurement.In making fair value measurements, observable market data must be used when available. When inputs used to measure fair value fall within different levels of thehierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.28HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Cash Equivalents - Cash equivalents include all liquid debt instruments (primarily cash funds and money market accounts) purchased with an original maturity ofthree months or less. The balances maintained at financial institutions may, at times, exceed federally insured limits.Investments - Available-for-sale securities consist of certificates of deposit (“CD’s”) and municipal bonds and are valued at current market value, with theresulting unrealized gains and losses excluded from earnings and reported, net of tax, as a separate component of shareholders’ equity until realized. Anyimpairment loss to reduce an investment’s carrying amount to its fair market value is recognized in income when a decline in the fair market value of an individualsecurity below its cost or carrying value is determined to be other than temporary. As of April 3, 2016, we did not own any available-for-sale securities.Trade Receivables and Concentrations of Credit Risk - Financial instruments, which potentially subject us to a concentration of credit risk, principally consist oftrade receivables. We sell our principal products to a large number of customers in many different industries. There are no concentrations of credit risk with asingle customer from a particular service or geographic area that would significantly impact us in the near term. To reduce credit risk, we routinely assess thefinancial strength of our customers. We record an allowance for doubtful accounts to reduce our receivables to an amount we estimate is collectible from ourcustomers. Estimates used in determining the allowance for doubtful accounts are based on historical collection experience, current trends, aging of accountsreceivable and periodic evaluations of our customers’ financial condition. Our cash balances are held at two separate financial institutions where the cash balancesmay exceed federally insured limits. The institutions are two of the largest commercial banking institutions in the country and both have maintained strong creditratings.Inventories - Inventories, consisting primarily of finished goods, are primarily valued at the lower of cost or net realizable value, with cost for approximately 70%of our inventory determined using the last-in, first-out (“LIFO”) method. Cost for the other 30% of our total inventory is determined using the first-in, first-out(“FIFO”) method.Property, Plant and Equipment - Property is stated at cost and depreciated or amortized over the lives of the assets, using the straight-line method. Estimated livesare: 10 to 40 years for buildings and improvements; 3 to 20 years for machinery and equipment; and 3 to 10 years for transportation equipment and officefurniture and equipment including computer systems. Leasehold improvements are depreciated over the lesser of their estimated useful lives or the remaining leaseterm.Significant improvements that add to productive capacity or extend the lives of properties are capitalized. Costs for repairs and maintenance are charged to expenseas incurred. When property is retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts andany related gains or losses are included in income.We review the recoverability of long-lived assets to be held and used, such as property, plant and equipment, when events or changes in circumstances occur thatindicate the carrying value of the asset group may not be recoverable, such as prolonged industry downturn or significant reductions in projected future cash flows.The assessment of possible impairment is based on our ability to recover the carrying value of the asset group from the expected future pre-tax cash flows(undiscounted) of the related operations. If these cash flows are less than the carrying value of such asset group, an impairment loss would be measured by theamount the carrying value exceeds the fair value of the long-lived asset group. The measurement of impairment requires us to estimate future cash flows and thefair value of long-lived assets. No long-lived assets were determined to be impaired during fiscal years 2016 , 2015 or 2014 .Goodwill and Identifiable Intangible Assets - Goodwill represents the excess of the cost of acquired businesses over the fair value of identifiable tangible netassets and identifiable intangible assets purchased. Goodwill is tested at least annually for impairment, and is tested for impairment more frequently if events orchanges in circumstances indicate that the asset might be impaired. As of January 1, 2016, the company performed an analysis of qualitative factors to determinewhether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to performa two-step goodwill impairment test. Based on management’s analysis of qualitative factors, we determined that it was not necessary to perform a two-stepgoodwill impairment test for any reporting unit.Our primary identifiable intangible assets include customer lists, trade secrets, non-competition agreements, trademarks and trade names acquired in previousbusiness acquisitions. Identifiable intangible assets with finite lives are amortized whereas identifiable intangible assets with indefinite lives are not amortized. Thevalues assigned to the intangible assets with finite lives are being amortized on average over approximately 14 years . Identifiable intangible assets that are subjectto amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Identifiableintangible assets not subject to amortization are tested for impairment annually or more frequently if events warrant. The impairment test consists of a qualitativeassessment to determine whether it is more likely than not that the asset is impaired. Based on29HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)management’s analysis of qualitative factors, we determined that it was not necessary to perform a quantitative impairment test for fiscal 2016.Impairment assessments were also completed in the fourth quarters of fiscal 2015 and 2014 , which resulted in no impairment charges for either of these fiscalyears.Income Taxes - In the preparation of our consolidated financial statements, the calculation of income taxes by management is based upon the estimated effectiverate applicable to operating results for the full fiscal year. This includes estimating the current tax liability as well as assessing differences resulting from differenttreatment of items for tax and book accounting purposes. Differences that are temporary in nature result in deferred tax assets and liabilities, which are recorded onthe consolidated balance sheet, while differences that are permanent in nature impact the income tax expense recorded on the income statement and impact theeffective tax rate for the fiscal year. The deferred tax assets and liabilities are analyzed regularly and management assesses the likelihood that deferred tax assetswill be recovered from future taxable income. We record any interest and penalties related to income taxes as income tax expense in the consolidated statements ofincome.The effect of income tax positions are recognized only if those positions are more likely than not of being sustained. Changes in recognition or measurement aremade as facts and circumstances change. See note 11 for further information regarding the recording of a liability and offsetting receivable regarding an uncertaintax position taken by Stauber prior to its acquisition by us.Stock-Based Compensation - We account for stock-based compensation on a fair value basis. The estimated grant date fair value of each stock-based award isrecognized in expense over the requisite service period (generally the vesting period). Non-vested share awards are recorded as expense over the requisite serviceperiods based on the market value on the date of grant.Earnings Per Share - Basic earnings per share (“EPS”) are computed by dividing net income by the weighted-average number of common shares outstanding.Diluted EPS are computed by dividing net income by the weighted-average number of common shares outstanding including the incremental shares assumed to beissued upon the exercise of stock options and the incremental shares assumed to be issued as performance units and restricted stock. Basic and diluted EPS werecalculated using the following: April 3, 2016 March 29, 2015 March 30, 2014Weighted average common shares outstanding — basic 10,524,730 10,568,582 10,544,467Dilutive impact of stock performance units, restricted stock, and stock options 53,312 64,972 55,288Weighted average common shares outstanding — diluted 10,578,042 10,633,554 10,599,755There were no shares or stock options excluded from the calculation of weighted average common shares for diluted EPS for fiscal 2016 , 2015 or 2014 .Derivative Instruments and Hedging Activities - We do not have any freestanding or embedded derivatives and it is our practice to not enter into contracts thatcontain them.Recently Issued Accounting PronouncementsIn March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 which provides accounting guidanceintended to improve the accounting for share-based payment transactions. This guidance outlines new provisions intended to simplify various aspects related toaccounting for share-based payments and their presentation in the financial statements and will be effective for years beginning after December 15, 2016 (our fiscalyear ending April 1, 2018) and interim periods within those years. We are currently evaluating the impact of this accounting pronouncement on our results ofoperations and financial position.In March 2016, the FASB issued ASU 2016-02 which provides new accounting guidance requiring lessees to recognize most leases as assets and liabilities on thebalance sheet. This guidance will be effective for interim periods beginning after December 15, 2018 (our fiscal year ended March 30, 2020). We are currentlyevaluating the impact of this accounting pronouncement on our results of operations and financial position.In January 2016, the FASB issued ASU 2016-01 which provides guidance that addresses certain aspects of recognition, measurement, presentation, and disclosureof financial instruments. This guidance will be effective for annual reporting periods beginning after December 15, 2017 (our fiscal year ending March 31, 2019),and interim periods within those annual periods.30HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Early adoption is not permitted. We are currently evaluating the impact that this guidance will have on our results of operations and financial position.In September 2015, the FASB issued ASU 2015-16 which eliminates the requirement for an acquirer to retrospectively adjust the financial statements formeasurement-period adjustments that occur in periods after a business combination is consummated. The new guidance is effective for fiscal years beginning afterDecember 15, 2015 (our fiscal year ending April 2, 2017), and interim periods within those years. We do not expect adoption of this accounting pronouncement tohave a significant impact on our consolidated financial statements or results of operations.In July 2015, the FASB issued ASU 2015-11 which requires company to change the measurement principal for inventory measured using the FIFO or average costmethod from the lower of cost or market to the lower of cost and net realizable value. Treatment of inventory valued under the last-in, first-out (“LIFO”) method isunchanged by this guidance. The new guidance will be applied prospectively and will be effective for fiscal years beginning after December 15, 2016 (our fiscalyear ending April 1, 2018), and interim periods within those years. We are currently evaluating the impact of this accounting pronouncement on our results ofoperations and financial position.In May 2014, the FASB issued ASU 2014-09 which provides new accounting requirements for recognition of revenue from contracts with customers. Therequirements of the new standard will be effective for annual reporting periods beginning after December 15, 2017 (our fiscal year ending March 31, 2019), andinterim periods within those annual periods. We are currently evaluating the impact of this accounting pronouncement on our results of operations and financialposition.Recently Adopted Accounting PronouncementsIn April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs. The new guidance requires debt issuance costs related to arecognized debt liability to be presented as a direct deduction from the debt liability on the balance sheet. The guidance is effective for fiscal years beginning afterDecember 15, 2015, with early adoption permitted. We elected to early adopt this guidance in our third quarter of fiscal 2016.In November 2015, the FASB issued ASU 2015-17 requiring entities with a classified balance sheet to present all deferred tax assets and liabilities as non-current.The new guidance is effective for fiscal years beginning after December 15, 2016 with early adoption permitted. We elected to early adopt this guidanceprospectively effective December 28, 2016, the beginning of our fourth quarter of fiscal 2016. Accordingly, all of our deferred tax assets and liabilities have beenpresented as long-term liabilities on the April 3, 2016 consolidated balance sheet.Note 2 — Business CombinationsAcquisition of Stauber Performance Ingredients: On December 23, 2015, we acquired Stauber for $157.0 million on a cash-free, debt-free basis subject to acustomary working capital adjustment. The total consideration for the acquisition was $158.2 million ( $156.7 million net of cash acquired). We paid $156.0million in cash at closing and paid an additional $2.2 million in early fiscal 2017 based upon closing cash, debt and working capital balances. The purchase wasfunded with $131.0 million of proceeds from the credit facility described more fully in Note 6 as well as cash on hand.Stauber operates out of facilities in New York and California and blends and distributes specialty products and ingredients to the nutritional, food, pharmaceutical,cosmetic and pet care industries. The acquisition expands our portfolio of value-added specialty products within new markets. Stauber had revenues ofapproximately $118.0 million for the twelve months ended December 23, 2015, the date of the acquisition. The results of operations since the acquisition date, andthe assets, including the goodwill associated with the acquisition, are included in our newly formed Health and Nutrition operating segment.Direct acquisition costs of $3.3 million , consisting mainly of professional and consulting fees, were expensed as incurred during the year ended April 3, 2016, andare classified as selling, general, and administrative expenses in our consolidated statement of income, and are reported in our Health and Nutrition segment.The acquisition was accounted for under the acquisition method of accounting. Accordingly, the cost to acquire Stauber was allocated to the underlying net assetsin proportion to estimates of their respective fair values.The fair value of acquired property, plant and equipment of $11.0 million was valued using a cost approach with consideration given to the continuation of theproperty in the current operation at the present locations. The fair value of acquired identifiable intangible assets is $71.5 million . The acquired intangible assets,all of which are finite-lived, have a weighted average useful life31HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)of 16.3 years and are being amortized on a straight-line basis. The intangible assets include customer relationships of $66.0 million ( 17 years life), trade name of$4.0 million ( 10 years life), non-competition agreements of $1.3 million ( 3.3 years weighted average life) and order backlog of $0.1 million .The fair value of acquired identifiable intangible assets was determined using the income approach. In performing these valuations, the key underlying probability-adjusted assumptions of the discounted cash flows were projected revenues, gross margin expectations and operating cost estimates. The valuations were based onthe information that was available as of the acquisition date and the expectations and assumptions that have been deemed reasonable by management. There areinherent uncertainties and management judgment required in these determinations. The fair value measurements of the assets acquired were based on valuationsinvolving significant unobservable inputs, or Level 3 in the fair value hierarchy. None of the intangible assets are expected to be deductible for income taxpurposes. As a result, a $28.6 million deferred tax liability was recorded on the opening balance sheet for the amount of non-deductible amortization expense.The purchase price of Stauber exceeded the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed by $84.2 million .Cash flows used to determine the purchase price included strategic and synergistic benefits (investment value) specific to Hawkins, which resulted in a purchaseprice in excess of the fair value of identifiable net assets. The purchase price also included the fair values of other assets that were not identifiable, not separatelyrecognizable under accounting rules (e.g., assembled workforce) or of immaterial value in addition to a going-concern element that represents our ability to earn ahigher rate of return on the group of assets than would be expected on the separate assets as determined during the valuation process. None of the goodwill isexpected to be deductible for income tax purposes.The allocation of the purchase price to trade receivables, income taxes and goodwill is subject to change within the measurement period (up to one year from theacquisition date). The fair value of trade receivables is open pending the collection of certain uncollected balances. Any adjustment to the preliminary allocation offair value of trade receivables will result in an adjustment to goodwill. Income taxes and related accounts are open pending the finalization of Stauber’s December23, 2015 tax returns. Any adjustment to the income tax balances recorded will result in an adjustment to the amount recorded as a payable to the prior ownersand/or goodwill. The following table summarizes the fair value measurement of the assets acquired and liabilities assumed as of the acquisition date:(In thousands) AmountCash and cash equivalents (a) $1,502Trade receivables 15,737Inventories 10,207Other assets 900Property, plant, and equipment 10,989Intangible assets 71,459Accounts payable (5,398)Accrued expenses and other current liabilities (a) (2,925)Deferred income taxes (28,445)Other non-current liabilities (79) Net assets acquired 73,947Goodwill 84,229Total preliminary purchase price 158,176Less acquired cash (1,502)Preliminary purchase price, net of cash acquired $156,674(a) In addition to these balances, $7.3 million of cash and current accrued liabilities were recorded that relate to stock and other acquisition-related compensation payments, which were recordedby Stauber as of the acquisition date but were paid subsequent to the acquisition date.Note: Included in our consolidated balance sheet is an income tax receivable of $4.6 million related to pre-acquisition income taxes, with an offsetting liability payable to the prior owners asthese amounts will be paid to them upon receipt.32HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)The following pro forma information has been prepared as if the Stauber acquisition and the borrowing to finance the acquisition had occurred as of the beginningof the fiscal years presented. The unaudited pro forma information is not necessarily indicative of what our consolidated results of operations actually would havebeen had the acquisition occurred at the beginning of each fiscal year, nor is it indicative of our future operational results. Year Ended(In thousands, except per share data)April 3, 2016 March 29, 2015Pro forma net sales$501,667 $469,538Pro forma net income22,952 21,352 Pro forma basic earnings per share$2.18 $2.02Pro forma diluted earnings per share$2.17 $2.01The unaudited pro forma financial information above is adjusted to reflect the following: (a) interest expense, including amortization of debt issuance costs, relatedto the $131.0 million of debt used to fund the acquisition; (b) amortization expense related to the $71.5 million of identifiable intangible assets recognized inconjunction with the acquisition; (c) elimination of amortization of intangibles and interest expense previously reflected on Stauber’s financial statements; (d)elimination of stock and other acquisition-related compensation recorded by Stauber, and transaction-related expenses recorded by us; and (e) recording incometaxes at an estimated combined federal and state statutory rate of approximately 38% on these pre-tax adjustments.Acquisition of Davis Supply, Inc. : On September 18, 2015, we acquired substantially all of the assets of Davis Supply, Inc. (“Davis”) under the terms of an assetpurchase agreement with Davis and its shareholders. We paid $4.5 million cash at closing, using available cash on hand to fund the acquisition. Davis was a watertreatment chemical distribution company operating in Florida with revenues of approximately $5.0 million in calendar year 2014. We have integrated this businessinto our existing Florida locations. The results of operations after the date of acquisition and the acquired assets are included in our Water Treatment Segment.Costs associated with this transaction were not material and were expensed as incurred.The acquisition has been accounted for under the acquisition method of accounting, under which the total purchase price is allocated to the net tangible andintangible assets of Davis acquired based on their estimated fair values. We estimated the fair values of the assets acquired and liabilities assumed using adiscounted cash flow analysis (income approach). The following table summarizes the allocation of the purchase price to the fair values assigned to the assetsacquired and liabilities assumed as of the acquisition date:(In thousands)AmountInventories$145Property, plant, and equipment78Intangible assets2,532 Net assets acquired2,755Goodwill1,745Total purchase price$4,500Intangible assets recognized in connection with this acquisition consist of $2.4 million related to customer relationships to be amortized over 20 years , and $0.1million related to a non-compete agreement to be amortized over five years . The goodwill recognized as a result of this acquisition is primarily attributable tostrategic and synergistic benefits, as well as the assembled workforce. Such goodwill is expected to be deductible for tax purposes.Acquisition of The Dumont Company, Inc. : On October 20, 2014, we acquired substantially all of the assets of The Dumont Company, Inc. (“Dumont”) under theterms of an asset purchase agreement with Dumont and its shareholders. We paid $10.1 million in cash including a working capital adjustment, using availablecash on hand to fund the acquisition. Dumont was a water treatment chemical distribution company with revenues of approximately $14.0 million in calendar year2013. Through this acquisition we added seven operating locations across Florida. The results of operations since the acquisition date, and the assets,33HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)including the goodwill associated with this acquisition, are included in our Water Treatment segment. Costs associated with this transaction were not material toour company and were expensed as incurred.The acquisition has been accounted for under the acquisition method of accounting, under which the total purchase price is allocated to the net tangible andintangible assets of Dumont acquired in connection with the acquisition based on their estimated fair values. We estimated the fair values of the assets acquired andliabilities assumed using a discounted cash flow analysis (income approach). The following table summarizes the preliminary allocation of the purchase price tothe fair values assigned to the assets acquired and liabilities assumed at the date of the Dumont acquisition:(In thousands)AmountAccounts receivable$1,358Inventory859Other assets159Property, plant, and equipment702Intangible assets3,509Current liabilities(877) Net assets acquired5,710Goodwill4,358Total purchase price$10,068Intangible assets recognized in connection with this acquisition consist of $2.8 million related to customer relationships to be amortized over 20 years and $0.7million related to a trade name to be amortized over four years . The goodwill recognized as a result of this acquisition is primarily attributable to strategic andsynergistic benefits, as well as the assembled workforce. Such goodwill is expected to be deductible for tax purposes.Acquisition of Advance Chemical Solutions, Inc. : On October 1, 2013, we acquired substantially all of the assets of ACS. We paid $2.9 million in cash, including$0.5 million of contingent consideration based on the achievement of certain financial performance targets.The ACS acquisition was accounted for under the acquisition method of accounting, under which the total estimated purchase price is allocated to the net tangibleand intangible assets acquired based on their estimated fair values. We estimated the fair values of the assets acquired and liabilities assumed to be $2.8 millionusing a discounted cash flow analysis (income approach). ACS had revenues of approximately $4.0 million for the 12 months ended September 30, 2013. Theresults of its operations since the acquisition date, and the assets, are included in our Water Treatment segment.Note 3 — Cash and Cash Equivalents and InvestmentsThe following table presents information about our financial assets that are measured at fair value on a recurring basis as of April 3, 2016 and March 29, 2015 , andindicates the fair value hierarchy of the valuation techniques utilized to determine such fair value. Description April 3, 2016 Level 1 Level 2 Level 3(In thousands) Assets: Cash and cash equivalents $20,014 $20,014 $— $— Description March 29, 2015 Level 1 Level 2 Level 3(In thousands) Assets: Cash and cash equivalents $18,639 $18,639 $— $—Certificates of deposit 29,136 — 29,136 —Municipal Bonds 2,598 — 2,598 — 34HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)As of March 29, 2015, our financial assets that were measured at fair value on a recurring basis were CD’s and municipal bonds, with maturities ranging from threemonths to three years , which fall within valuation technique Level 2. The CD’s and municipal bonds were classified as investments in current assets andnoncurrent assets on the consolidated balance sheets.The carrying value of cash and cash equivalents accounts approximates fair value, as maturities are three months or less. During the fiscal year ended April 3,2016, we sold all available-for-sale securities to partially fund the purchase of Stauber as discussed in Note 2. Realized gains and losses were not material for fiscal2016, 2015 or 2014.Note 4 — InventoriesInventories at April 3, 2016 and March 29, 2015 consisted of the following: 2016 2015(In thousands) Inventory (FIFO basis) $51,857 $42,567LIFO reserve (4,138) (5,539)Net inventory $47,719 $37,028The FIFO value of inventories accounted for under the LIFO method was $36.5 million at April 3, 2016 and $39.0 million at March 29, 2015 . The remainder ofthe inventory was valued and accounted for under the FIFO method.We decreased the LIFO reserve by $1.4 million in fiscal 2016 due primarily to lower levels of certain inventory on hand at the end of the year, as well as lowercommodity costs as compared to the previous year, and increased the reserve $0.4 million in fiscal 2015 due primarily to higher levels of inventory at the end ofthat year.Note 5 — Goodwill and Other Identifiable Intangible AssetsThe changes in the carrying amount of goodwill for each of our three reportable segments were as follows:(In thousands)IndustrialWater TreatmentHealth andNutritionTotalBalance as of March 31, 2014$6,495$897$—$7,392Addition due to acquisition—4,358—4,358Balance as of March 29, 20156,4955,255—11,750Addition due to acquisition—1,74584,22985,974Balance as of April 4, 2016$6,495$7,000$84,229$97,724 As of April 3, 2016 , goodwill amounted to $97.7 million , an increase of $86.0 million from the balance at March 29, 2015 . The increase in goodwill relates to theStauber and Davis acquisitions discussed more fully in Note 2.The following is a summary of our intangible assets as of April 3, 2016 and March 29, 2015 :35HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 2016 Gross Amount AccumulatedAmortization Net carrying value(In thousands) Finite-life intangible assets: Customer relationships $78,384 $(3,289) $75,095Trademarks and trade names 6,045 (1,090) 4,955Trade secrets 962 (934) 28Carrier relationships 800 (568) 232Other finite-life intangible assets 1,886 (489) 1,397Total finite-life intangible assets 88,077 (6,370) 81,707Indefinite-life intangible assets 1,227 — 1,227Total intangible assets, net $89,304 $(6,370) $82,934 2015 Gross Amount AccumulatedAmortization Net carrying value(In thousands) Finite-life intangible assets: Customer relationships $9,723 $(1,697) $8,026Trademarks and trade names 2,034 (667) 1,367Trade secrets 962 (896) 66Carrier relationships 800 (337) 463Other finite-life intangible assets 341 (336) 5Total finite-life intangible assets 13,860 (3,933) 9,927Indefinite-life intangible assets 1,227 — 1,227Total intangible assets, net $15,087 $(3,933) $11,154Intangible asset amortization expense was $2.4 million during fiscal 2016 , $0.9 million during fiscal 2015 , and $0.7 million during fiscal 2014 .The estimated future amortization expense for identifiable intangible assets during the next five years is as follows:(In thousands) 2017 2018 2019 2020 2021Estimated amortization expense $6,051 $5,704 $5,454 $5,074 $5,028Note 6 – DebtOn December 23, 2015, in connection with the Stauber acquisition described more fully in Note 2, we entered into a credit agreement (the “Credit Agreement”)with U.S. Bank National Association (“U.S. Bank”), as Lead Arranger, and Sole Bookrunner, and other lenders from time to time party thereto (collectively, the“Lenders”), whereby U.S. Bank is also serving as Administrative Agent. The Credit Agreement provides us with senior secured credit facilities (the “CreditFacility”) totaling $165.0 million , consisting of a $100.0 million senior secured term loan credit facility (the “Term Loan Facility”) and a $65.0 million seniorsecured revolving loan credit facility (the “Revolving Loan Facility”). The Revolving Loan Facility includes a letter of credit subfacility in the amount of $5.0million and a swingline subfacility in the amount of $8.0 million . The Term Loan facility requires mandatory quarterly repayments as outlined in the table belowwith the remainder of the loan due at maturity. The Credit Facility is scheduled to terminate on December 23, 2020. The Credit Facility is secured by substantiallyall of our personal property assets and those of our subsidiaries.Borrowings under the Credit Facility bear interest at a rate per annum equal to one of the following, plus, in both cases, an applicable margin based upon ourleverage ratio: (a) LIBOR for an interest period of one, two, three or six months as selected by us, reset at the end of the selected interest period, or (b) a base ratedetermined by reference to the highest of (1) U. S. Bank’s prime rate, (2) the Federal Funds Effective Rate plus 0.5% , or (3) one-month LIBOR for U.S. dollarsplus 1.0% . The LIBOR margin is 1.125% , 1.25% or 1.5% , depending on our leverage ratio. The base rate margin is 0.125% , 0.25% or 0.5% , depending on ourleverage ratio. At April 3, 2016 , the effective interest rate on our borrowings was approximately 1.9% .36HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)We used $131.0 million of the proceeds from the Credit Facility to fund our acquisition of Stauber. We may use the remaining $34.0 million for working capital,capital expenditures, restricted payments and acquisitions permitted under the Credit Facility, and other general corporate purposes.In addition to paying interest on the outstanding principal under the Credit Facility, we are required to pay a commitment fee on the unutilized commitmentsthereunder. The commitment fee is 0.25% to 0.3% , depending on our leverage ratio.Debt issuance costs of $0.7 million paid to the lenders are reflected as a reduction of debt and are being amortized on a straight line basis over the term of the creditfacility. During the fiscal year ended April 3, 2016 , less than $0.1 million of debt issuance costs were expensed. As of April 3, 2016, $0.6 million of debt issuancecosts were reflected as a reduction of debt on our balance sheet.The Credit Agreement requires us to maintain (a) a minimum fixed charge coverage ratio of 1.15 to 1.00 and (b) a maximum total cash flow leverage ratio of 3.0 to1.0. The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict our ability to incur additionalindebtedness, dispose of significant assets, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enterinto sale and leaseback transactions, grant liens on our assets or enter into rate management transactions, subject to certain limitations. We will be permitted tomake distributions, pay dividends and repurchase shares so long as no default or event of default exists or would exist as a result thereof. As of April 3, 2016, wewere in compliance with all required covenants.Debt at April 3, 2016 consisted of the following:(In thousands) April 3, 2016Senior secured term loan $98,750Senior secured revolver 31,000Total debt 129,750Less: unamortized debt issuance costs (645)Less: current portion of long-term debt, net of current unamortized debt issuance costs (5,489)Total long-term debt $123,616Scheduled annual maturities of debt as of April 3, 2016 are as follows:Fiscal year ending (In thousands)2017 $5,6252018 8,1252019 10,0002020 10,0002021 96,000 $129,750We had no debt as of March 29, 2015.Note 7 — Share-Based Compensation Performance-Based Restricted Stock Units. Our Board of Directors has approved a performance-based equity compensation arrangement for our executiveofficers. This performance-based arrangement provides for the grant of performance-based restricted stock units that represent a possible future issuance ofrestricted shares of our common stock based on our pre-tax income target for the applicable fiscal year. The actual number of restricted shares to be issued to eachexecutive officer will be determined when our final financial information becomes available after the applicable fiscal year and will be between zero shares and44,447 shares in the aggregate for fiscal 2016 . The restricted shares issued will fully vest two years after the last day of the fiscal year on which the performanceis based. We are recording the compensation expense for the outstanding performance share units and then-converted restricted stock over the life of the awards.The following table represents the restricted stock activity for fiscal 2016 :37HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Shares Weighted-Average GrantDate Fair ValueOutstanding at beginning of year 53,580 $37.55Granted 37,309 40.89Vested (53,580) 37.55Forfeited or expired — —Outstanding at end of year 37,309 $40.89The weighted average grant date fair value of restricted shares issued in fiscal 2016 , 2015 and 2014 was $40.89 , $34.45 , and $40.25 , respectively. We recordedcompensation expense on performance-based restricted stock of approximately $1.2 million for fiscal 2016 , $1.1 million for fiscal 2015 and $0.8 million for fiscal2014 , substantially all of which was recorded in selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Income. The total fairvalue of performance-based restricted stock units vested in fiscal 2016 was $2.0 million compared to $0.8 million in fiscal 2015 and $1.3 million in fiscal 2014 . Until the performance-based restricted stock units result in the issuance of restricted stock, the amount of expense recorded each period is dependent upon ourestimate of the number of shares that will ultimately be issued and our then current common stock price. Upon issuance of restricted stock, we recordcompensation expense over the remaining vesting period using the award date closing price. Unrecognized compensation expense related to non-vested restrictedstock and non-vested restricted share units as of April 3, 2016 was $1.2 million and is expected to be recognized over a weighted average period of 1.4 years .The benefits of tax deductions that vary from the recognized compensation costs from share-based compensation are recorded as a change in additional paid-incapital rather than a deduction of taxes paid. The amount of excess tax benefit (expense) recognized and recorded in additional paid-in capital resulting from share-based compensation cost was nominal in fiscal 2016 , $1.0 million in fiscal 2015 and $(0.2) million in 2014 .Restricted Stock Awards. As part of their retainer, our non-employee directors receive restricted stock for their Board services. The restricted stock awards areexpensed over the requisite vesting period, which begins on the date of issuance and ends on the date of the next Annual Meeting of Shareholders, based on themarket value on the date of grant. The following table represents the Board’s restricted stock activity for fiscal 2016 : Shares Weighted-Average GrantDate Fair ValueOutstanding at beginning of year 7,077 $34.61Granted 6,804 36.00Vested (7,077) 34.61Forfeited or expired — —Outstanding at end of year 6,804 $36.00Annual expense related to the value of restricted stock was $0.2 million for each of fiscal 2016 , 2015 and 2014 , all of which was recorded in SG&A expense inthe Consolidated Statements of Income. Unrecognized compensation expense related to non-vested restricted stock awards as of April 3, 2016 was $0.1 millionand is expected to be recognized over a weighted average period of 0.3 years.Stock Option Awards. Our Board of Directors (the “Board”) previously approved a long-term incentive equity compensation arrangement for our executive officersthat provided for the grant of non-qualified stock options that vested at the end of a three -year period, although no stock options have been granted under thisarrangement since the fiscal year ended March 28, 2010. During fiscal 2015, 9,333 options were exercised with an exercise price of $19.90 . As of April 3, 2016we had no stock options outstanding. No expense was recorded in fiscal 2016 , 2015 or 2014 related to the value of stock options.Note 8 — Share Repurchase Program38HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)On May 29, 2014, our Board authorized a share repurchase program of up to 300,000 shares of our outstanding common shares. Under the program, we areauthorized to repurchase shares for cash on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. Uponrepurchase of the shares, we reduce our common stock for the par value of the shares with the excess applied against additional paid-in capital. We repurchased127,852 of common stock at an aggregate purchase price of $4.8 million during fiscal 2016, and 59,602 shares of common stock at an aggregate purchase price of$2.2 million during fiscal 2015. As of April 3, 2016, the number of shares available to be purchased under the share repurchase program was 112,546 .Note 9 — Profit Sharing, Employee Stock Ownership, Employee Stock Purchase and Pension PlansCompany sponsored plans . The majority of our non-bargaining unit employees are eligible to participate in a company-sponsored profit sharing plan.Contributions are made at our discretion subject to a maximum amount allowed under the Internal Revenue Code. The profit sharing plan contribution level foreach employee depends upon date of hire, with those employees hired after April 1, 2012 eligible to receive a contribution that is 50% of the contribution made foremployees hired on or before April 1, 2012. Our contribution to the profit sharing plan for fiscal 2016, fiscal 2015 and fiscal 2014 was 5% of each employee’seligible compensation for employees hired on or before April 1, 2012. In addition to the discretionary employer contribution described above, the profit sharingplan includes a 401(k) plan that allows employees to contribute pre-tax earnings up to the maximum amount allowed under the Internal Revenue Code, with anemployer match of up to 5% of the employee’s eligible compensation.We have an employee stock ownership plan (“ESOP”) covering the majority of our non-bargaining unit employees. Contributions are made at our discretionsubject to a maximum amount allowed under the Internal Revenue Code. The ESOP contribution level for each employee depends upon date of hire, with thoseemployees hired after April 1, 2012 eligible to receive a contribution that is 50% of the contribution made for employees hired on or before April 1, 2012. Ourcontribution to the ESOP for fiscal 2016, fiscal 2015 and fiscal 2014 was 5% of each employee’s eligible compensation for employees hired on or before April 1,2012.As described in Note 2, we acquired Stauber on December 23, 2015. Concurrent with the acquisition, Stauber’s existing company sponsored plans wereterminated. Effective January 1, 2016, Stauber employees became eligible for the 401(k) component of the profit sharing plan described above, including theemployer match componentWe have an employee stock purchase plan (“ESPP”) covering substantially all of our employees. The ESPP allows employees to purchase newly-issued shares ofthe Company’s common stock at a discount from market. The number of new shares issued under the ESPP was 33,550 in fiscal 2016, 31,383 in fiscal 2015 and28,214 in fiscal 2014.In March 2013, concurrent with our withdrawal from a multiemployer pension plan described below, we established a retirement plan and ESOP for our collectivebargaining unit employees. Each of these plans is subject to a maximum amount allowed under the Internal Revenue Code. The retirement plan provides for acontribution of 5% of each employee’s eligible wages annually for employees who were eligible to enter the plan on March 1, 2013 and a contribution of 2.5% ofeach employee’s eligible wages annually for employees who entered the plan subsequent to March 1, 2013. Additionally, the retirement plan includes a 401(k) planthat will allow employees to contribute pre-tax earnings up to the maximum amount allowed under the Internal Revenue Code, with an employer match of up to5% of the employee’s eligible compensation. The ESOP provides for contributions of 5% of each employee’s eligible wages annually for employees who wereeligible to enter the plan on March 1, 2013, and a contribution of 2.5% of each employee’s eligible wages annually for employees who enter the plan subsequent toMarch 1, 2013. The following represents the contribution expense for the company sponsored profit sharing, ESOP, ESPP and 401(k) plans for fiscal 2016, 2015 and 2014:Benefit Plan 2016 2015 2014 (In thousands) Non-bargaining unit employee plans: Profit sharing $1,393 $1,266 $1,231 401(K) matching contributions 1,586 1,216 980 ESOP 1,393 1,266 1,231 Bargaining unit employee plans 444 450 500 ESPP - all employees 274 253 257 Total contribution expense $5,090 $4,451 $4,199 39HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Multiemployer pension plan . In fiscal 2013, we concluded negotiations with two collective bargaining units to discontinue our participation in the Central States,Southeast and Southwest Areas Pension Fund (“CSS” or “the plan”), a collectively bargained multiemployer pension plan. Payment of our share of the unfundedvested benefit liability will be made over 20 years and is subject to a cap. At the end of the 20-year period we will have no further liability, even if our share of theunfunded vested benefit liability has not yet been paid in full. The cash payments to be made total approximately $9.3 million , or $467,000 per year. Our paymentsbegan in fiscal 2014.Note 10 — Commitments and ContingenciesLeases — We have various operating leases for buildings and land on which some of our operations are located as well as trucks utilized for deliveries in certainbranches. Future minimum lease payments due under operating leases with an initial term of one year or more at April 3, 2016 are as follows:(In thousands) 2017 2018 2019 2020 2021 ThereafterMinimum lease payment $2,750 $2,553 $2,250 $2,059 $1,833 $3,596Total rental expense for fiscal years 2016, 2015 and 2014 was as follows: 2016 2015 2014(In thousands) Minimum rentals $2,890 $1,665 $1,223Contingent rentals 21 103 110Total rental expense $2,911 $1,768 $1,333Litigation - As of April 3, 2016 there were no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we orany of our subsidiaries are a party or of which any of our property is the subject. Legal fees associated with such matters are expensed as incurred.Asset Retirement Obligations - We have three leases of land which contain terms that state that at the end of the lease term, we have a specified amount of time toremove the property and buildings. These leases expire in 2018, 2023 and 2034. At that time, anything that remains on the land becomes the property of the lessor,and the lessor has the option to either maintain the property or remove the property at our expense. We are currently negotiating an extension for a period of 15-20years for the lease which expires in 2018. We have not been able to reasonably estimate the fair value of the asset retirement obligations, primarily due to thecombination of the following factors: The leases do not expire in the near future; we have a history of extending the leases with the lessors and currently intend todo so at expiration of the lease periods; the lessors do not have a history of terminating leases with their tenants; and because it is more likely than not that thebuildings will have value at the end of the lease life and therefore, may not be removed by either the lessee or the lessor. Therefore, in accordance with accountingguidance related to asset retirement and environmental obligations, we have not recorded an asset retirement obligation as of April 3, 2016 . We will continue tomonitor the factors surrounding the requirement to record an asset retirement obligation and will recognize the fair value of a liability in the period in which it isincurred and a reasonable estimate can be made.Note 11 — Income TaxesThe provisions for income taxes for fiscal 2016, 2015 and 2014 were as follows: 2016 2015 2014(In thousands) Federal — current $8,761 $9,574 $7,612State — current 2,238 2,133 1,255Total current 10,999 11,707 8,867 Federal — deferred 1,027 (517) 676State — deferred 197 50 424Total deferred 1,224 (467) 1,100Total provision $12,223 $11,240 $9,96740HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Reconciliations of the provisions for income taxes, based on income from continuing operations, to the applicable federal statutory income tax rate of 35% arelisted below. 2016 2015 2014Statutory federal income tax 35.0 % 35.0 % 35.0 %State income taxes, net of federal deduction 5.0 % 4.7 % 3.2 %ESOP dividend deduction on allocated shares (0.7)% (0.7)% (0.8)%Domestic production deduction (1.5)% (2.4)% (2.1)%Non-deductible acquisition costs 1.6 % — % — %Assessment related to state tax audit 0.6 % — % — %Other — net 0.2 % 0.3 % 0.2 %Total 40.2 % 36.9 % 35.5 % The tax effects of items comprising our net deferred tax liability as of April 3, 2016 and March 29, 2015 are as follows:(In thousands) 2016 2015Deferred tax assets: Trade receivables $361 $178Stock compensation accruals 620 949Pension withdrawal liability 2,635 2,755Other 1,302 811Total deferred tax assets $4,918 $4,693Deferred tax liabilities: Inventories $(2,671) $(3,307)Prepaid (975) (689)Excess of tax over book depreciation (14,439) (12,699)Intangibles (29,075) (674)Total deferred tax liabilities $(47,160) $(17,369)Net deferred tax liabilities $(42,242) $(12,676)As of April 3, 2016 , the Company has determined that it is more likely than not that the deferred tax assets at April 3, 2016 will be realized either through futuretaxable income or reversals of taxable temporary differences.As of March 29, 2015 , there were no unrecognized tax benefits. During fiscal 2016, we recorded a gross unrecognized tax benefit of $1.9 million in other long-term liabilities on our consolidated balance sheet as a result of uncertain income tax positions taken by Stauber on its tax returns for periods prior to ouracquisition. The Stauber acquisition agreement provides the Company with indemnification from the prior owners for any tax liabilities relating to pre-acquisitiontax returns. Accordingly, we have also recorded an offsetting, long-term receivable for $1.9 million , and as such any change in the unrecognized tax benefit willnot impact our effective tax rate in future periods. As of April 3, 2016, the liability for uncertain tax positions and the corresponding receivable included $0.3million of interest and penalties. We expect these uncertain income tax amounts to decrease as the applicable examination periods by the relevant taxing authoritiesexpire.We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The tax years prior to our fiscal year ended March 31, 2013 areclosed to examination by the Internal Revenue Service, and with few exceptions, state and local income tax jurisdictions.Note 12 — Segment InformationWe have three reportable segments: Industrial, Water Treatment and Health and Nutrition. Our Health and Nutrition segment was established as a result of ouracquisition of Stauber in December 2015. The accounting policies of the segments are the same as those described in the summary of significant accountingpolicies. Product costs and expenses for each segment are based on actual costs incurred along with cost allocations of shared and centralized functions. Weevaluate performance based on profit or loss41HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)from operations before income taxes not including nonrecurring gains and losses. Reportable segments are defined primarily by product and type of customer.Segments are responsible for the sales, marketing and development of their products and services. Other than our Health and Nutrition segment, the segments donot have separate accounting, administration, customer service or purchasing functions. There are no intersegment sales and no operating segments have beenaggregated. Given the nature of our business, it is not practical to disclose revenues from external customers for each product or each group of similar products. Nosingle customer’s revenues amounted to 10% or more of our total revenue. Sales are primarily within the United States and all assets are located within the UnitedStates.Reportable Segments Industrial WaterTreatment Health andNutrition Total(In thousands) Fiscal Year Ended April 3, 2016: Sales $251,749 $128,312 $33,915 $413,976Gross profit 37,967 35,470 6,820 80,257Selling, general, and administrative expenses 22,137 19,261 7,688 49,086Operating income (loss) 15,830 16,209 (868) 31,171Identifiable assets* $158,015 $50,013 $195,939 $403,967Fiscal Year Ended March 29, 2015: Sales $249,066 $114,957 $— $364,023Gross profit 33,619 32,172 — 65,791Selling, general, and administrative expenses 19,793 15,582 — 35,375Operating income 13,826 16,590 — 30,416Identifiable assets* $151,157 $42,860 $— $194,017Fiscal Year Ended March 30, 2014: Sales $244,888 $103,375 $— $348,263Gross profit 32,041 29,559 — 61,600Selling, general, and administrative expenses 19,781 13,729 — 33,510Operating income 12,260 15,830 — 28,090Identifiable assets* $141,506 $29,001 $— $170,507 * Unallocated assets, consisting primarily of cash and cash equivalents, investments and prepaid expenses, were $32.8 million at April 3, 2016 , $53.7 million atMarch 29, 2015 and $66.7 million at March 30, 2014 .In fiscal 2016, operating profit for the Health and Nutrition segment was negatively impacted by $3.3 million (pre-tax) of non-recurring SG&A expenses directlyrelated to the acquisition by Hawkins.42HAWKINS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Note 13 — Selected Quarterly Financial Data (Unaudited) (In thousands, except per share data) Fiscal 2016 (1) First Second Third FourthSales $101,496 $94,592 $88,375 $129,513Gross profit 20,735 19,811 14,709 25,002Selling, general, and administrative expenses 9,891 10,303 12,825 16,067Operating income 10,844 9,508 1,884 8,935Net income $6,791 $5,678 $815 $4,859Basic earnings per share $0.64 $0.54 $0.08 $0.46Diluted earnings per share $0.64 $0.54 $0.08 $0.46 Fiscal 2015 First Second Third FourthSales $98,036 $88,881 $83,825 $93,281Gross profit 18,496 18,122 13,642 15,531Selling, general, and administrative expenses 8,875 8,271 8,697 9,532Operating income 9,621 9,851 4,945 5,999Net income $6,021 $6,147 $3,146 $3,900Basic earnings per share $0.57 $0.58 $0.30 $0.37Diluted earnings per share $0.57 $0.58 $0.30 $0.37(1) The sum of quarterly per share data may not equal the full year due to rounding.Operating income was negatively impacted by non-recurring SG&A expenses directly related to the acquisition of Stauber by Hawkins of $2.7 million (pre-tax) inthe third quarter and $0.6 million (pre-tax) in the fourth quarter of fiscal 2016.43ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENot applicable.ITEM 9A. CONTROLS AND PROCEDURESEvaluation of disclosure controls and proceduresAs of the end of the period covered by this Annual Report on Form 10-K, we conducted an evaluation, under supervision and with the participation ofmanagement, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls andprocedures pursuant to Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Based upon that evaluation, our chief executive officer and chief financial officerconcluded that our disclosure controls and procedures are effective. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of theExchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under theExchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and proceduresinclude, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act isaccumulated and communicated to our management, including our principal executive and principal financial officers, or person performing similar functions, asappropriate to allow timely decisions regarding required disclosure.Management’s Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) ofthe Securities Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control overfinancial reporting includes those policies and procedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financialstatements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance withauthorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use ordisposition of our assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of theeffectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate.Management assessed the effectiveness of our internal control over financial reporting as of April 3, 2016 , based on the criteria described in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, managementbelieves that our internal control over financial reporting was effective as of April 3, 2016 .We acquired Stauber Performance Ingredients on December 23, 2015. In the conduct of our assessment of the effectiveness of internal control over financialreporting for the year ended April 3, 2016, we have excluded total assets of $204.7 million (of which $154.5 million represents goodwill and intangibles includedwithin the scope of the assessment) and net sales of $33.9 million related to Stauber that are included in our consolidated financial statements as of and for the yearended April 3, 2016. We must include Stauber in the conduct of our assessment of the effectiveness of internal control over financial reporting no later than thethird quarter of fiscal 2017.Our independent registered public accounting firm has issued an attestation report on our internal control over financial reporting for April 3, 2016 which isincluded in the Report of Independent Registered Public Accounting Firm in Item 8 of this Annual Report on 10-K.44 /s/ Patrick H. Hawkins /s/ Kathleen P. PepskiPatrick H. Hawkins Kathleen P. PepskiChief Executive Officer and President Vice President, Chief Financial Officer,and TreasurerJune 2, 2016 June 2, 2016Attestation Report of Registered Public Accounting FirmThe attestation report required under this Item 9A is contained in Item 8 of this Annual Report on 10-K under the caption “Report of Independent Registered PublicAccounting Firm.”Changes in Internal Control ProceduresOther than the acquisition of Stauber described in Item 9A, there was no change in our internal control over financial reporting during the fourth quarter of fiscal2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATIONNot Applicable45PART IIICertain information required by Part III is incorporated by reference from Hawkins’ definitive Proxy Statement for the Annual Meeting of Shareholders to be heldon August 4, 2016 (the “ 2016 Proxy Statement”). Except for those portions specifically incorporated in this Form 10-K by reference to the 2016 Proxy Statement,no other portions of the 2016 Proxy Statement are deemed to be filed as part of this Form 10-K.ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCEOur executive officers, their ages and offices held, as of June 2, 2016 are set forth below:Name Age OfficePatrick H. Hawkins 45 Chief Executive Officer and PresidentKathleen P. Pepski 61 Vice President, Chief Financial Officer, and TreasurerRichard G. Erstad 52 Vice President, General Counsel and SecretaryOlivier A. Guiot 39 President — Stauber Performance IngredientsThomas J. Keller 56 Vice President — Water Treatment GroupSteven D. Matthews II 45 Vice President — OperationsTheresa R. Moran 53 Vice President — Quality and SupportJohn R. Sevenich 58 Vice President — Industrial GroupPatrick H. Hawkins has been our Chief Executive Officer and President and member of our board since March 2011. He has held the position of President sinceMarch 2010. He joined the Company in 1992 and served as the Business Director - Food and Pharmaceuticals, a position he held from 2009 to 2010. Previously heserved as Business Manager - Food and Co-Extrusion Products from 2007 to 2009 and Sales Representative - Food Ingredients from 2002 to 2007. He previouslyserved the Company in various other capacities, including Plant Manager, Quality Director and Technical Director.Kathleen P. Pepski has been our Vice President, Chief Financial Officer and Treasurer since February 2008 and was Secretary from February 2008 to November2008. She was the Executive Vice President and Chief Financial Officer of PNA Holdings, LLC and Katun Corporation, a supplier of business equipment parts,from 2003 to 2007, the Vice President of Finance of Hoffman Enclosures, a manufacturer of systems enclosures and a subsidiary of Pentair, Inc., from 2002 to2003, Senior Vice President and Chief Financial Officer of BMC Industries, Inc., a manufacturer of lenses and aperture masks, from 2000 to 2001, and VicePresident and Controller at Valspar Corporation, a paint and coatings manufacturer, from 1994 to 2000.Richard G. Erstad has been our Vice President, General Counsel and Secretary since November 2008. He was General Counsel and Secretary of BUCA, Inc., arestaurant company, from 2005 to 2008. Mr. Erstad had previously been an attorney with the corporate group of Faegre & Benson LLP, a law firm, from 1996 to2005, where his practice focused on securities law and mergers and acquisitions. He is a member of the Minnesota Bar.Olivier A. Guiot has served as President of Stauber Performance Ingredients since our acquisition of Stauber in December 2015. Prior to that, Mr. Guiot held theposition of Executive Vice President of Sales and Marketing for Stauber since 2013 and President of Pharmline, Inc., which was acquired by Stauber, from 2010 to2013. Mr. Guiot originally joined Pharmline in 2004 and served in various positions before his promotion to President. Thomas J. Keller has been our Vice President - Water Treatment Group since April 2012. Prior to attaining this position, Mr. Keller held various positions sincejoining the Company in 1980, most recently as its Water Treatment General Manager, a position he held since June 2011. Previously, Mr. Keller served as aRegional Manager of the Water Treatment Group from 2002 to 2011.Steven D. Matthews II has been our Vice President - Operations since December 2013. He was a Regional General Manager in the Paperboard ConvertingDivision of Newark Recycled Paperboard Solutions, a producer of recycled paperboard, from 2012 to 2013. Previously, he spent a total of fifteen years during twodifferent periods at General Electric in a variety of engineering, Six Sigma, supply chain and plant leadership positions in the Plastics, Aircraft Engines, Lightingand Water divisions. From 2005-2008, he was a Corporate Supply Chain Engagement Leader with Ingersoll Rand, a global diversified industrial company.46Theresa R. Moran has been our Vice President - Quality and Support since February 2010. Since joining the Company in 1981, Ms. Moran has served theCompany in a variety of positions, including Administration Operations Manager from 1999 to 2007 and most recently as Director - Process Improvement, aposition she held from 2007 until the time of her promotion.John R. Sevenich has been our Vice President - Industrial Group since May 2000. He was the Business Unit Manager of Manufacturing from 1998 to 2000 and wasa Sales Representative with the Company from 1989 to 1998.“Election of Directors,” “Corporate Governance,” and “Section 16(a) Beneficial Ownership Reporting Compliance” of the 2015 Proxy Statement are incorporatedherein by reference.Steven D. Matthews II filed a bankruptcy petition related to the dissolution of a small family business of which Mr. Matthews was an owner and guarantor. Thebankruptcy was discharged in 2009.We have adopted a Code of Business Conduct and Ethics that applies to all of our directors and employees, including our principal executive officer, principalfinancial officer, controller and other persons performing similar functions. We have posted the Code of Business Conduct and Ethics on our website located athttp://www.hawkinsinc.com. Hawkins’ Code of Business Conduct and Ethics is also available in print to any shareholder who requests it in writing from ourCorporate Secretary. We intend to post on our website any amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics that applies toour principal executive officer, principal financial officer, controller and other persons performing similar functions within four business days following the date ofsuch amendment or waiver. We are not including the information contained on our website as part of, or incorporating it by reference into, this report.ITEM 11. EXECUTIVE COMPENSATION“Compensation of Executive Officers and Directors” of the 2016 Proxy Statement is incorporated herein by this reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS“Security Ownership of Management and Beneficial Ownership” and “Equity Compensation Plan Information” of the 2016 Proxy Statement are incorporatedherein by this reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE“Election of Directors” and “Related Party Transactions” of the 2016 Proxy Statement are incorporated herein by this reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES“Independent Registered Public Accounting Firm’s Fees” of the 2016 Proxy Statement is incorporated herein by this reference.47PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a)(1) FINANCIAL STATEMENTS OF THE COMPANY The following financial statements of Hawkins, Inc. are filed as part of this Annual Report on Form 10-K: Report of Independent Registered Public Accounting Firm. Consolidated Balance Sheets at April 3, 2016 and March 29, 2015. Consolidated Statements of Income for the fiscal years ended April 3, 2016, March 29, 2015 and March 30, 2014. Consolidated Statements of Comprehensive Income for the fiscal years ended April 3, 2016, March 29, 2015 and March 30, 2014. Consolidated Statements of Shareholders’ Equity for the fiscal years ended April 3, 2016, March 29, 2015 and March 30, 2014. Consolidated Statements of Cash Flows for the fiscal years ended April 3, 2016, March 29, 2015 and March 30, 2014. Notes to Consolidated Financial Statements. (a)(2) FINANCIAL STATEMENT SCHEDULES OF THE COMPANY The additional financial data listed below is included as a schedule to this Annual Report on Form 10-K and should be read in conjunctionwith the financial statements presented in Part II, Item 8. Schedules not included with this additional financial data have been omitted becausethey are not required or the required information is included in the financial statements or the notes. The following financial statement schedule for the fiscal years 2016, 2015 and 2014. Schedule II — Valuation and Qualifying Accounts. (a)(3) EXHIBITS The exhibits of this Annual Report on Form 10-K included herein are set forth on the attached Exhibit Index.48SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. HAWKINS, INC. Date:June 2, 2016 By /s/ Patrick H. Hawkins Patrick H. Hawkins,Chief Executive Officer and PresidentPursuant to the requirements of the Securities Exchange Act of 1934, this report has also been signed below by the following persons on behalf of theCompany and in the capacities indicated on the date set forth beside their signature. /s/ Patrick H. Hawkins Date:June 2, 2016Patrick H. Hawkins, Chief Executive Officer andPresident (Principal Executive Officer) and Director /s/ Kathleen P. Pepski Date:June 2, 2016Kathleen P. Pepski, Vice President, Chief FinancialOfficer, and Treasurer (Principal Financial Officerand Principal Accounting Officer) /s/ John S. McKeon Date:June 2, 2016John S. McKeon, Director, Chairman of the Board /s/ Daniel J. Stauber Date:June 2, 2016Daniel J. Stauber, Director /s/ Duane M. Jergenson Date:June 2, 2016Duane M. Jergenson, Director /s/ Daryl I. Skaar Date:June 2, 2016Daryl I. Skaar, Director /s/ James A. Faulconbridge Date:June 2, 2016James A. Faulconbridge, Director /s/ James T. Thompson Date:June 2, 2016James T. Thompson, Director /s/ Jeffrey L. Wright Date:June 2, 2016Jeffrey L. Wright, Director /s/ Mary J. Schumacher Date:June 2, 2016Mary J. Schumacher, Director SCHEDULE IIHAWKINS, INC.VALUATION AND QUALIFYING ACCOUNTSFOR THE FISCAL YEARS ENDED APRIL 3, 2016, MARCH 29, 2015, AND MARCH 30, 2014 Additions Description Balance atBeginningof Year Charged toCosts andExpenses Charged toOtherAccounts DeductionsWrite-Offs Balance atEnd of Year (In thousands)Reserve deducted from asset to which itapplies: Year Ended April 3, 2016: Allowance for doubtful accounts $445 $272 $— $115 $602Year Ended March 29, 2015: Allowance for doubtful accounts $477 $(32) $— $— $445Year Ended March 30, 2014: Allowance for doubtful accounts $469 $44 $— $36 $477Exhibit IndexUnless otherwise indicated, all documents incorporated into this Annual Report on Form 10-K by reference to a document filed with the SEC are locatedunder file number 0-7647. Exhibit Description Method of Filing 2.1 Stock Purchase Agreement, dated November 23, 2015, by and among the Company, SPHHoldings, Inc., the stockholders of SPH Holdings, Inc. listed therein, and ICV Manager, LLC. (1) Incorporated byReference 3.1 Amended and Second Restated Articles of Incorporation.(2) Incorporated byReference 3.2 Amended and Restated By-Laws.(3) Incorporated byReference 10.1* Hawkins, Inc. 2004 Omnibus Stock Plan.(4) Incorporated byReference 10.2* Form of Non-Statutory Stock Option Agreement under the Company’s 2004 Omnibus Stock Plan.(5) Incorporated byReference 10.3* Hawkins, Inc. 2010 Omnibus Incentive Plan.(6) Incorporated byReference 10.4* Form of Performance-Based Unit Award Notice and Restricted Stock Agreement under theCompany’s 2010 Omnibus Incentive Plan.(7) Incorporated byReference 10.5* Form of Restricted Stock Agreement under the Company’s 2010 Omnibus Incentive Plan.(8) Incorporated byReference 10.6* Hawkins, Inc. Executive Severance Plan.(9) Incorporated byReference 10.7 Commitment Letter, dated November 23, 2015, by and among the Company, U.S.Bank NationalAssociation, and JP Morgan Chase Bank, N.A. (10) Incorporated byReference 10.8 Credit Agreement dated as of December 23, 2015 among the Company, U.S. Bank NationalAssociation, and certain financial institutions.(11) Incorporated byReference 21 Subsidiaries of the registrant Filed Electronically 23.1 Consent of Independent Registered Public Accounting Firm. Filed Electronically 31.1 Certification by Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act. Filed Electronically 31.2 Certification by Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act. Filed Electronically 32.1 Section 1350 Certification by Chief Executive Officer. Filed Electronically 32.2 Section 1350 Certification by Chief Financial Officer. Filed Electronically 101 Financial statements from the Annual Report on Form 10-K of Hawkins, Inc. for the period endedApril 3, 2016, filed with the SEC on June 2, 2016, formatted in Extensible Business ReportingLanguage (XBRL); (i) the Consolidated Balance Sheets at April 3, 2016 and March 29, 2015, (ii)the Consolidated Statements of Income for the fiscal years ended April 3, 2016, March 29, 2015and March 30, 2014 (iii) the Consolidated Statements of Comprehensive Income (Loss) for thefiscal years ended April 3, 2016, March 29, 2015 and March 30, 2014 (iv) the ConsolidatedStatements of Shareholders’ Equity for the fiscal years ended April 3, 2016, March 29, 2015 andMarch 30, 2014 (v) Consolidated Statements of Cash Flows for the fiscal years ended April 3,2016, March 29, 2015 and March 30, 2014 (iv) Notes to Consolidated Financial Statements. Filed Electronically*Management contract or compensation plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K.(1)Incorporated by reference to Exhibit 2.1 on the Company’s Current Report on Form 8-K dated November 23, 2015.(2)Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010.(3)Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated October 28, 2009 and filed November 3, 2009.(4)Incorporated by reference to Appendix B to the Company’s Proxy Statement for the 2004 Annual Meeting of Shareholders filed July 23, 2004.(5)Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008.(6)Incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8 filed June 6, 2011 (file no. 333-174735).(7)Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010.(8)Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010.(9)Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 3, 2011.(10)Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 23, 2015(11)Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 23, 2015.Exhibit 21Subsidiaries of Hawkins, Inc.Subsidiary State of OrganizationVertex Chemical Corporation Minnesota Stauber Performance Ingredients, Inc. MinnesotaStauber California, Inc., a subsidiary of Stauber Performance Ingredients, Inc. CaliforniaStauber New York, Inc., a subsidiary of Stauber Performance Ingredients, Inc. New YorkExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of DirectorsHawkins, Inc.:We consent to the incorporation by reference in the registration statement No. 333-87582 on Form S-8 relating to the Hawkins, Inc. Employee Stock PurchasePlan, and Amended and Restated, No. 333-172761 on Form S-8 relating to Hawkins, Inc. Employee Stock Purchase Plan, 333-123080 on Form S-8 relating to theHawkins, Inc. 2004 Omnibus Stuck Plan, and 333-174735 on Form S-8 relating to the Hawkins, Inc. 2010 Omnibus Incentive Plan of our report dated June 2,2016, with respect to the consolidated balance sheets of Hawkins, Inc. as of April 3, 2016 and March 29, 2015, the related consolidated statements of income,comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April 3, 2016, the related financial statementschedule, and the effectiveness of internal control over financial reporting as of April 3, 2016, which report appears in the April 3, 2016 annual report on Form 10-K of Hawkins, Inc.Our report dated June 2, 2016 on internal control over financial reporting as of April 3, 2016, contains an explanatory paragraph that states management excludedfrom its assessment of the effectiveness of internal control over financial reporting as of April 3, 2016, Stauber Performance Ingredients, Inc.’s internal controlover financial reporting that comprise total assets of $204.7 million and net sales of $33.9 million included in the consolidated financial statements of Hawkins,Inc. and subsidiaries as of and for the year ended April 3, 2016. Our audit of internal control over financial reporting of Hawkins, Inc. also excluded an evaluationof the internal control over financial reporting of Stauber Performance Ingredients, Inc./s/ KPMG LLPMinneapolis, MinnesotaJune 2, 2016Exhibit 31.1CERTIFICATION PURSUANT TOSECTION 302 OFTHE SARBANES-OXLEY ACT OF 2002CERTIFICATIONSI, Patrick H. Hawkins, certify that:1.I have reviewed this annual report on Form 10-K of Hawkins, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and we have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements forexternal purposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting.5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: June 2, 2016 /s/ Patrick H. Hawkins Patrick H. Hawkins Chief Executive Officer and PresidentExhibit 31.2CERTIFICATION PURSUANT TOSECTION 302 OFTHE SARBANES-OXLEY ACT OF 2002CERTIFICATIONSI, Kathleen P. Pepski, certify that:1.I have reviewed this annual report on Form 10-K of Hawkins, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and we have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements forexternal purposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting.5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: June 2, 2016 /s/ Kathleen P. Pepski Kathleen P. Pepski Vice President, Chief Financial Officer, and TreasurerExhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Hawkins, Inc. (the Company) on Form 10 for the period ended April 3, 2016 , as filed with the Securities and ExchangeCommission on the date hereof (the Report), I, Patrick H. Hawkins, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350,as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Patrick H. HawkinsPatrick H. HawkinsChief Executive Officer and PresidentJune 2, 2016Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Hawkins, Inc. (the Company) on Form 10-K for the period ended April 3, 2016 , as filed with the Securities and ExchangeCommission on the date hereof (the Report), I, Kathleen P. Pepski, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adoptedpursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Kathleen P. PepskiKathleen P. PepskiVice President, Chief Financial Officer, and TreasurerJune 2, 2016

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