What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-16 · 1121 added, 1420 removed, 623 unchanged (80% of the section changed)

Financial Statements and Supplementary Data.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

INDEX TO CONSOLIDATED

FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders Equity

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Stockholders’

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Schedule ICondensed Parent Only Financial Information of Advantage Solutions

Schedule I—Condensed Registrant Only Financial Information of Advantage Solutions Inc.

as of December 31, 2021 and 2020, and for the years ended December 31, 2021, 2020, and 2019

1 unchanged sentence

To the Board of Directors and Stockholders of Advantage Solutions Inc.

Opinion on the Financial Statements

audited the accompanying consolidated balance sheets of Advantage Solutions Inc.

and its subsidiaries (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of operations and

comprehensive loss, of stockholders equity, and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedule listed in the accompanying index

(collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of

Change in Accounting Principle

discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

These consolidated financial statements are the responsibility of the Companys management.

Our responsibility is to express

an opinion on the Companys consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with

respect to the Company in accordance with the U.S.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Advantage Solutions Inc.

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’

equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating

the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded four acquisitions completed in 2021 from its assessment of internal control over financial reporting as of December 31, 2021 because they were acquired by the Company in purchase business combinations during 2021.

We have also excluded the four acquisitions completed in 2021 from our audit of internal control over financial reporting.

The acquired entities are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent 1% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized 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 of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters

communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are

material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial

statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessment

As described in

Notes 1 and 3 to the consolidated financial statements, the Companys consolidated goodwill balance was $2.2 billion as of December 31, 2020.

Management tests goodwill for impairment at the beginning

of the fourth quarter of a given fiscal year, and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

Upon performing the

quantitative impairment test, if the fair value of the reporting unit is less than its carrying amount, goodwill is impaired and the excess of the reporting units carrying value over the fair value is recognized as an impairment loss.

Management performed a quantitative impairment test as of October 1, 2020 for its reporting units, and determined that its goodwill is not impaired.

Management utilizes a combination of income and market approaches to estimate the fair value of

its reporting units.

The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for the reporting units revenue growth rates, operating margins, terminal growth rates, and discount rates,

all of which require significant management judgment.

The market approach applies market multiples derived from the historical earnings data of selected guideline publicly-traded companies to the reporting units businesses to yield a value of

each reporting unit, which requires significant management judgment.

The principal considerations for our determination that performing

procedures relating to the goodwill impairment assessment is a critical audit matter are (i) the significant judgment by management when determining the fair value estimates of the reporting units;

(ii) the high degree of auditor judgment,

subjectivity, and effort in performing procedures and evaluating managements significant assumptions related to revenue growth rates, operating margins, terminal growth rates, discount rates, and market multiples;

and (iii) the audit

effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit

evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others, (i) testing managements process for determining the fair value estimates of the reporting units;

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessments

As described in Notes 1 and 3 to the consolidated financial statements, the Company’s consolidated goodwill balance was $2.2 billion as of December 31, 2021.

Management tests its goodwill for impairment at the beginning of the fourth quarter of a given fiscal year and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

Upon performing the quantitative impairment test, if the fair value of the reporting unit is less than its carrying amount, goodwill is impaired and the excess of the reporting unit’s carrying value over the fair value is recognized as an impairment loss.

Based on the results of the quantitative impairment test performed for its reporting units, management determined that its goodwill is not impaired .

Management utilizes a combination of income and market approaches to estimate the fair value of its reporting units.

The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for the reporting units’

revenue growth rates, EBITDA margins, terminal growth rates, and discount rates, all of which require significant management judgment.

The market approach applies market multiples derived from the historical earnings data of selected guideline publicly-traded companies to the reporting units’

businesses to yield a value of each reporting unit, which requires significant management judgment.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments is a critical audit matter are (i) the significant judgment by management when determining the fair value of the reporting units;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, EBITDA margins, terminal growth rates, discount rates, and market multiples;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over management’s valuation of the reporting units.

T hese procedures also included, among others (i) testing management’s process for determining the fair value of the reporting units;

(ii) evaluating the appropriateness of the income and market approaches, and the combination of the approaches;

(iii) testing the completeness and accuracy of the underlying data used in the fair value estimates;

and (iv) evaluating

the reasonableness of the significant assumptions used by management related to revenue growth rates, operating margins, terminal growth rates, discount rates, and market multiples.

Evaluating managements assumptions related to revenue growth

rates and operating margins involved evaluating whether the assumptions were reasonable considering (i) the current and past performance of the reporting units;

(ii) the consistency with external market and industry data;

(iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income and market

approaches, and the combination of the approaches and (ii) the reasonableness of the significant assumptions related to the terminal growth rates, discount rates, and market multiples.

Indefinite-Lived Intangible Assets Impairment Assessment

As described in Notes 1 and 3 to the consolidated financial statements, the Companys consolidated indefinite-lived intangible assets net carrying

value was $900 million as of December 31, 2020.

Intangible assets with indefinite useful lives are not amortized but tested annually, at the beginning of the fourth quarter, for impairment or more often if events occur or circumstances

change that would create a triggering event.

Management performed a quantitative impairment test as of October 1, 2020, and determined that its indefinite-lived intangible assets are not impaired.

Management tests its indefinite-lived

intangible assets for impairment using a relief from royalty method by comparing the estimated fair values of the indefinite-lived intangible assets with the carrying values.

The estimates used in the determination of fair value are subjective in

nature and involve the use of significant assumptions.

(iii) testing the completeness and accuracy of the underlying data used in the valuation approaches;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates , EBITDA margins, terminal growth rates, discount rates, and market multiples.

Evaluating management’s significant assumptions related to revenue growth rates and EBITDA margins involved e valuating whether the significant assumptions were reasonable considering (i) the current and past performance of the reporting units;

(ii) the consistency with external m arket and industry data;

and (iii) whether these significant assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income and market approaches, and the combination of the approaches and (ii) the reasonableness of the significant assumptions related to the terminal growth rates, discount rates, and market multiples.

Indefinite-Lived Intangible Assets Impairment Assessments

As described in Notes 1 and 3 to the consolidated financial statements, the Company’s consolidated indefinite-lived intangible assets net carrying value was $900 million as of December 31, 2021.

Intangible assets with indefinite useful lives are not amortized but tested annually, at the beginning of the fourth quarter, for impairment or more often if events occur or circumstances change that would create a triggering event.

Management performed its annual quantitative impairment test as of October 1, 2021, and concluded

that its indefinite-lived intangible assets were not impaired.

Management tests its indefinite-lived intangible assets for impairment using a relief from royalty method by comparing the estimated fair values of the indefinite-lived intangible assets with the carrying values.

The estimates used in the determination of fair value are subjective in nature and involve the use of significant assumptions.

These estimates and assumptions include revenue growth rates, terminal growth rates, discount rates, and royalty rates, all of which require significant management judgment.

The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible assets impairment assessment is a

critical audit matter are (i) the significant judgment by management when determining the fair value estimates of the indefinite-lived intangible assets;

(ii) the high degree of auditor judgment, subjectivity, and effort in performing

procedures and evaluating managements significant

assumptions related to revenue growth rates, terminal growth rates, discount rates, and royalty rates;

and (iii) the audit effort involved the use of professionals with specialized skill and

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the

consolidated financial statements.

These procedures included, among others, (i) testing managements process for determining the fair value estimates;

The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible assets impairment assessments is a critical audit matter are (i) the significant judgment by management when determining the fair value of the indefinite-lived intangible assets;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, terminal growth rates, discount rates, and royalty rates;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible assets impairment assessments, including controls over management’s valuation of the indefinite-lived intangible assets.

T hese procedures also included, among others (i) testing management’s process for determining the fair value of the indefinite-lived intangible assets;

(ii) evaluating the appropriateness of the relief from royalty method;

(iii) testing the completeness and accuracy of the underlying data used in the fair value estimates;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, terminal growth

rates, discount rates, and royalty rates.

Evaluating managements assumption related to revenue growth rates involved evaluating whether the assumption was reasonable considering (i) the current and past performance of the underlying

(iii) testing the completeness and accuracy of the underlying data used in the relief from royalty method;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, terminal growth rates, discount rates, and royalty rates.

Evaluating management’s significant assumption related to revenue growth rates involved evaluating whether the significant assumption was reasonable considering (i) the current and past performance of the underlying assets;

(ii) the consistency with external market and industry data;

and (iii) whether this assumption was consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to

assist in evaluating (i) the appropriateness of the relief from royalty method and (ii) the reasonableness of the significant assumptions related to the terminal growth rates, discount rates, and royalty rates.

and (iii) whether the significant assumption was consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the relief from royalty method and (ii) the r easonableness of the significant assumptions related to the terminal growth rates, discount rates, and royalty rates.

/s/ PricewaterhouseCoopers LLP

1 unchanged sentence

March 1, 2022

We have served as the Companys

auditor since 2003.

We have served as the Company’s auditor since 2003.

ADVANTAGE SOLUTIONS INC.

4 unchanged sentences

Restricted cash

Accounts receivable, net of allowance for expected credit losses of $16,377 and $15,107,

Accounts receivable, net of allowance for expected credit losses of

$ 15,916 and $ 16,377 , respectively

Prepaid expenses and other current assets

12 unchanged sentences

Long-term debt, net of current portion

Deferred income tax liabilities, net

Deferred income tax liabilities

Warrant liability

Other long-term liabilities

1 unchanged sentence

Commitments and contingencies (Note 19)

Redeemable noncontrolling interest

Equity attributable to stockholders of Advantage Solutions Inc.

Preferred stock, no par value, 10,000,000 shares authorized;

none issued and outstanding as of

December 31, 2020 and 2019, respectively

and outstanding as of December 31, 2021 and December 31, 2020,

Common stock, $ 0.0001 par value, 3,290,000,000 shares authorized;

318,425,182 and 203,750,000

shares issued and outstanding as of December 31, 2020 and 2019, respectively

316,963,552 and 318,425,182 shares issued and outstanding as of

December 31, 2021 and December 31, 2020, respectively

Additional paid in capital

1 unchanged sentence

Loans to Karman Topco L.P.

Accumulated other comprehensive income (loss)

Accumulated other comprehensive (loss) income

Treasury stock, at cost;

1,610,014 shares as of December 31, 2021

Total equity attributable to stockholders of Advantage Solutions Inc.

Nonredeemable noncontrolling interest

Total stockholders equity

Total liabilities and stockholders equity

Total stockholders’

Total liabilities, redeemable noncontrolling interest, and

stockholders’

See Notes to the Consolidated Financial Statements.

ADVANTAGE SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Year Ended December 31,

(in thousands, except share and per share data)

Cost of revenues (exclusive of depreciation and amortization shown separately below)

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

Selling, general, and administrative expenses

Impairment of goodwill and indefinite-lived assets

(Recovery from) loss on Take 5

Recovery from Take 5

Depreciation and amortization

Total expenses

Operating income (loss)

Total operating expenses

Operating income

Other expenses:

Change in fair value of warrant liability

Interest expense, net

Loss before income taxes

(Benefit from) provision for income taxes

net income attributable to noncontrolling interest

Net loss attributable to stockholders of Advantage Solutions Inc.

Other comprehensive income (loss), net of tax:

Total other expenses

Income (loss) before income taxes

Provision for (benefit from) income taxes

Net income (loss)

net income attributable to noncontrolling

Net income (loss) attributable to stockholders of

Advantage Solutions Inc.

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments

Total comprehensive loss attributable to stockholders of Advantage Solutions Inc.

Net loss per common share:

Basic and diluted

Total comprehensive income (loss) attributable to

stockholders of Advantage Solutions Inc.

Net income (loss) per common share:

Weighted-average number of common shares:

Basic and diluted

See Notes to the Consolidated Financial Statements.

ADVANTAGE SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

Treasury Stock

Solutions Inc.

4 unchanged sentences

Stockholders'

(in thousands, except share data)

Income (Loss)

Balance at January 1, 2018, as originally reported

Retroactive application of recapitalization

Balance at January 1, 2018, as adjusted

Comprehensive loss

(in thousands, except share data)

Balance at January 1, 2019

Comprehensive income (loss)

Net (loss) income

3 unchanged sentences

Redemption of noncontrolling interest

Loans to Karman Topco L.P.

Interest on loans to Karman Topco L.P.

Equity-based compensation

Balance at December 31, 2019

Comprehensive loss

Comprehensive income (loss)

Net (loss) income

1 unchanged sentence

Total comprehensive (loss) income

Increase in noncontrolling interest

Redemption of noncontrolling interest

Loans to Karman Topco L.P.

Recapitalization transaction, net of fees and deferred taxes

Issuance of performance shares

Interest on loans to Karman Topco L.P.

Equity-based compensation

Balance at December 31, 2020

Comprehensive loss

Net (loss) income

Comprehensive income (loss)

Net income (loss)

Foreign currency translation adjustments

Total comprehensive (loss) income

Recapitalization transaction, net of fees and deferred taxes

Issuance of performance shares

Loans to Karman Topco L.P.

Total comprehensive income (loss)

Interest on loans to Karman Topco L.P.

Redemption of noncontrolling interest

Equity-based compensation

Vesting of stock-based compensation awards

Purchase of treasury stock

Shares issued upon vesting of

restricted stock units

Shares issued under Employee Stock

Purchase Plan

Shares issued upon exercise of

Stock-based compensation expense

Balance at December 31, 2021

5 unchanged sentences

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash provided by

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by

operating activities

Noncash interest expense

Extinguishment costs related to repayment of First and Second Lien Credit Agreements

Impairment of goodwill and long-lived assets

Loss on Take 5

Noncash interest expense, net

Extinguishment costs related to repayment and repricing of long-term debt

Depreciation and amortization

Change in fair value of warrant liability

Fair value adjustments related to contingent consideration

Deferred income taxes

Equity-based compensation

Equity-based compensation of Topco

Stock-based compensation

Equity in earnings of unconsolidated affiliates

2 unchanged sentences

Loss on divestiture

Changes in operating assets and liabilities, net of effects from purchases of businesses:

Accounts receivable

Prepaid expense and other assets

Changes in operating assets and liabilities, net of effects from

purchases of businesses:

Accounts receivable, net

Prepaid expenses and other assets

Accounts payable

15 unchanged sentences

Payment under accounts receivable securitization facility

Proceeds from issuance of long-term debt

Proceeds from government loans for COVID-19 relief

Proceeds from new borrowings under the New Senior Secured Credit Facilities

Proceeds from new borrowings under the Senior Secured Credit Facilities and Notes

Principal payments on long-term debt

Proceeds from issuance of common stock

Proceeds from recapitalization, net of fees

Settlement of Daymon credit agreement

Contingent consideration payments

2 unchanged sentences

Contribution from noncontrolling interest

Purchase of treasury stock

Redemption of noncontrolling interest

Net cash (used in) provided by financing activities

Net effect of foreign currency fluctuations on cash

Net cash used in financing activities

Net effect of foreign currency changes on cash

Net change in cash, cash equivalents and restricted cash

3 unchanged sentences

Cash payments for interest

Cash payments for income taxes

Non-cash proceeds from divestitures

Cash payments for income taxes, net

Purchase of property and equipment recorded in accounts payable

1 unchanged sentence

Deferred taxes related to transaction costs in connection with recapitalization

Fair value of liability for private placement warrants acquired at Closing

Note payable related to settlement of contingent consideration

4 unchanged sentences

On July 25, 2014, Advantage Solutions Inc.

(ASI Intermediate) acquired Advantage Sales & Marketing Inc.

2014 Topco Acquisition) from AGS Topco Holdings, L.P.

and its private equity sponsor, Apax Partners.

(“ASI Intermediate”) acquired Advantage Sales & Marketing Inc.

(the “2014 Topco Acquisition”).

As a result of the 2014 Topco Acquisition, Advantage Sales & Marketing Inc.

became a wholly owned indirect subsidiary of ASI

Intermediate, of which Karman Topco L.P.

(Topco) is the parent.

The units of Topco are held by equity funds affiliated with

or advised by CVC Capital Partners, Leonard Green & Partners, Juggernaut Capital Partners, Centerview Capital, L.P., Bain Capital and Yonghui Investment Limited, as well as by current and former members of the Companys management.

On September 7, 2020, ASI Intermediate entered into an agreement and plan of merger (as amended, modified, supplemented or waived,

the Merger Agreement), with Conyers Park II Acquisition Corp, a Delaware corporation, now known as Advantage Solutions Inc.

(Conyers Park), CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers

Park (Merger Sub), and Topco.

became a wholly owned indirect subsidiary of ASI Intermediate, of which Karman Topco L.P.

(“Topco”) is the parent.

The units of Topco are held by equity funds affiliated with or advised by CVC Capital Partners, Leonard Green & Partners, Juggernaut Capital Partners, Centerview Capital, L.P., Bain Capital and Yonghui Investment Limited, as well as by current and former members of the Company’s management.

On September 7, 2020, ASI Intermediate entered into an agreement and plan of merger (as amended, modified, supplemented or waived, the “Merger Agreement”), with Conyers Park II Acquisition Corp., a Delaware corporation, now known as Advantage Solutions Inc.

(“Conyers Park”), CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers Park (“Merger Sub”), and Topco.

Conyers Park neither engaged in any operations nor generated any revenue.

Based on Conyers Parks business activities, it was a shell company as defined under the Securities Exchange Act of

1934, as amended (the Exchange Act)

On October 28, 2020 (the Closing Date), Conyers Park consummated the

merger pursuant to the Merger Agreement, by and among Merger Sub, ASI Intermediate (Legacy Advantage), and Topco.

Pursuant to the Merger Agreement, Merger Sub was merged with and into Legacy Advantage with Legacy Advantage being the

surviving company in the merger as a wholly owned subsidiary of Conyers Park (the Merger and, together with the other transactions contemplated by the Merger Agreement, the Transactions).

On the Closing Date, and in

connection with the closing of the Transactions (the Closing), Conyers Park changed its name to Advantage Solutions Inc.

(the Company or Advantage) and ASI Intermediate changed its name to ASI Intermediate, Corp.

As of the Closing, Topco received 203,750,000 shares of the Companys Class A common stock, par value $0.0001 per share (the

Common Stock).

Additionally, 5,000,000 shares of Class A common stock (Performance Shares) were issued to Topco at Closing, which were subject to vesting upon satisfaction of a market performance condition for any period

of 20 trading days out of 30 consecutive trading days during the five-year period after the Closing, and Topco was not able to vote or sell such shares until vesting.

Such Performance Shares vested on January 15, 2021 when the market

performance condition was satisfied.

In connection with the entry into the Merger Agreement, Conyers Park also entered into the

Subscription Agreements with certain investors (the PIPE Investors), pursuant to which, among other things, Conyers Park agreed to issue and sell in a private placement shares of Conyers Park Class A common stock for a purchase

price of $10.00 per share.

Based on Conyers Park’s business activities, it was a “shell company”

as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)

On October 28, 2020, Conyers Park consummated the merger pursuant to the Merger Agreement, by and among Merger Sub, ASI Intermediate (“Legacy Advantage”), and Topco.

Pursuant to the Merger Agreement, Merger Sub was merged with and into Legacy Advantage with Legacy Advantage being the surviving company in the merger as a wholly owned subsidiary of Conyers Park (the “Merger”

and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”).

On October 28, 2020, and in connection with the closing of the Transactions (the “Closing”), Conyers Park changed its name to Advantage Solutions Inc.

(the “Company”

or “Advantage”) and ASI Intermediate changed its name to ASI Intermediate Corp.

As of the Closing, Topco received 203,750,000 shares of the Company’s Class A common stock, par value $ 0.0001 per share (the “Common Stock”).

Additionally, 5,000,000 shares of Class A common stock (“Performance Shares”) were issued to Topco at Closing, which were subject to vesting upon satisfaction of a market performance condition for any period of 20 trading days out of 30 consecutive trading days during the five-year period after the Closing, and Topco was not able to vote or sell such shares until vesting.

Such Performance Shares vested on January 15, 2021 when the market performance condition was satisfied.

In connection with the entry into the Merger Agreement, Conyers Park also entered into subscription agreements with certain investors (the “PIPE Investors”), pursuant to which, among other things, Conyers Park agreed to issue and sell in a private placement shares of Conyers Park Class A common stock for a purchase price of $ 10.00 per share.

The PIPE Investors, other than the Advantage Sponsors and their affiliates, have agreed to purchase an aggregate of 51,130,000 shares of Conyers Park Class A common stock.

Certain of the Advantage Sponsors or their

affiliates agreed to purchase an aggregate of 34,410,000 shares of Conyers Park Class A common stock, and, at their sole discretion.

The shares of Conyers Park Class A common stock purchased by the PIPE Investors in the private placement

are referred to as the PIPE Shares and the aggregate purchase price paid for the PIPE Shares is referred to as the PIPE Investment Amount. At the Closing, the PIPE Investment was consummated, and 85,540,000 shares of

Class A common stock were issued for aggregate gross proceeds of $855.4 million.

Further, as part of the Closing, Conyers

Parks public shareholders redeemed 32,114,818 shares of Class A common stock at a redemption price of $10.06 per share, resulting in a $323.1 million payment from Conyers Parks trust account proceeds and 12,885,182 shares of Class A

common stock of Conyers Park existing public

stockholders remain outstanding.

Additionally, 11,250,000 shares of Conyers Park Class B common stock, par value $0.0001 per share, held by the CP Sponsor, automatically converted into shares of

Conyers Park Class A common stock.

Certain of the Advantage Sponsors or their affiliates agreed to purchase an aggregate of 34,410,000 shares of Conyers Park Class A common stock, and, at their sole discretion.

The shares of Conyers Park Class A common stock purchased by the PIPE Investors in the private placement are referred to as the “PIPE Shares”

and the aggregate purchase price paid for the PIPE Shares is referred to as the “PIPE Investment Amount.”

At the Closing, the PIPE Investment was consummated, and 85,540,000 shares of Class A common stock were issued for aggregate gross proceeds of $ 855.4 million.

Further, as part of the Closing, Conyers Park’s public shareholders redeemed 32,114,818 shares of Class A common stock at a redemption price of $ 10.06 per share, resulting in a $ 323.1 million payment from Conyers Park’s trust account proceeds and 12,885,182 shares of Class A common stock of Conyers Park existing public stockholders remain outstanding.

Additionally, 11,250,000 shares of Conyers Park Class B common stock, par value $ 0.0001 per share, held by CP Sponsor and its directors, automatically converted into shares of the Company’s Park Class A common stock.

As of the Closing, the PIPE Investors, Conyers Park existing public stockholders, and CP Sponsor collectively held 109,675,182 shares of Class A common stock.

The Merger was accounted for as a reverse recapitalization in accordance with GAAP.

Under this method of accounting, Conyers Park is treated

as the acquired company for financial reporting purposes.

This determination was primarily based on the current stockholder of Legacy Advantage, Topco, having a relative majority of the voting power of the combined entity, the operations

of Legacy Advantage prior to the Merger comprising the only ongoing operations of the combined entity, and senior management of Legacy Advantage comprising the senior management of the combined entity.

Accordingly, for accounting purposes, the

financial statements of the combined entity represent a continuation of the financial statements of Legacy Advantage with the acquisition being treated as the equivalent of Legacy Advantage issuing stock for the net assets of Conyers Park,

accompanied by a recapitalization.

Under this method of accounting, Conyers Park is treated as the “acquired”

company for financial reporting purposes.

This determination was primarily based on the current stockholder of Legacy Advantage, Topco, having a relative majority of the voting power of the combined entity, the operations of Legacy Advantage prior to the Merger comprising the only ongoing operations of the combined entity, and senior management of Legacy Advantage comprising the senior management of the combined entity.

Accordingly, for accounting purposes, the financial statements of the combined entity represent a continuation of the financial statements of Legacy Advantage with the acquisition being treated as the equivalent of Legacy Advantage issuing stock for the net assets of Conyers Park, accompanied by a recapitalization.

The net assets of Conyers Park are stated at historical cost, with no goodwill or other intangible assets recorded.

The shares and net (loss) income per share available to holders of the Legacy Advantages

common stock, prior to the Merger, have been retroactively restated as shares reflecting the exchange ratio established in the Merger Agreement.

In connection with the Merger, ASI Intermediate received $93.9 million from Conyers Parks trust account balance after the payments of

$323.1 million redemptions by Conyers Park public stockholders and of $37.3 million transaction expenses incurred by Conyers Park.

ASI Intermediate incurred direct and incremental costs of approximately $24.0 million related to the equity

issuance, consisting primarily of investment banking, legal, accounting and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds.

In addition, the Company

incurred $39.8 million in transaction bonuses and $76.0 million in non-cash share-based compensation expense due to the accelerated vesting of Topcos legacy share-based compensation plan.

transaction bonuses and share-based compensation are included in Selling, general and administrative expenses on our Consolidated Statement of Operations and Comprehensive Loss for year ended December 31, 2020.

The shares and net (loss) income per share available to holders of the Legacy Advantage’s common stock, prior to the Merger, have been retroactively restated as shares reflecting the exchange ratio established in the Merger Agreement.

In connection with the Merger, ASI Intermediate received $ 93.9 million from Conyers Park’s trust account balance after the payments of $ 323.1 million redemptions by Conyers Park public stockholders and of $ 37.3 million transaction expenses incurred by

Conyers Park, net of deferred taxes of $ 3.9 million.

ASI Intermediate incurred direct and incremental costs of approximately $ 24.0 million related to the equity issuance, consisting primarily of investment banking, legal, accounting and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds.

In addition, the Company incurred $ 39.8 million in transaction bonuses and $ 76.0 million in non-cash share-based compensation expense due to the accelerated vesting of Topco’s legacy share-based compensation plan.

The transaction bonuses and share-based compensation are included in “Selling, general and administrative expenses”

on the Company's Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2020.

The Company also classified the 7,333,333 private placement warrants originally issued by Conyers Park to Conyers Park II Sponsor LLC in a private placement in connection with its initial public offering and assumed by the Company as a warrant liability with an initial fair value of the private placement warrants of $ 7.9 million with a decrease to additional paid-in capital in connection with the consummation of the Transactions on October 28, 2020.

The Company is headquartered in Irvine, California and is a leading business solutions provider to consumer goods manufacturers and retailers.

The Company is a provider of outsourced solutions to consumer goods companies and retailers.

The Companys common stock and warrants

are now listed on the Nasdaq Global Select market under the symbol ADV and warrants to purchase the Common Stock at an exercise price of $11.50 per share are listed on the Nasdaq Global Select market under the symbol ADVWW.

The Company’s common stock and public warrants (as further described in Note 12, Equity ) are now listed on the Nasdaq Global Select market under the symbol “ADV”

and warrants to purchase the common stock at an exercise price of $ 11.50 per share are listed on the Nasdaq Global Select market under the symbol “ADVWW”.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its controlled subsidiaries and have been prepared in accordance

with accounting principles generally accepted in the United States (U.S.

The consolidated financial statements include the accounts of the Company and its controlled subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

GAAP”).

The financial information set forth herein reflects:

(a) the consolidated statements of operations and comprehensive loss, stockholders equity,

and cash flows for the years ended December 31, 2020, 2019, and 2018 and (b) the consolidated balance sheets as of December 31, 2020 and 2019.

The consolidated financial statements for the years ended December 31, 2020, 2019, and

2018 reflect Topcos basis in the assets and liabilities of the Company, as a result of the 2014 Topco Acquisition.

The Companys share in the earnings or losses for its joint ventures is reflected in Investments in unconsolidated

affiliates and Cost of revenues in the Consolidated Balance Sheets and Consolidated Statements of Operations and Comprehensive Loss, respectively.

(a) the consolidated statements of operations and comprehensive income (loss), stockholders’

equity, and cash flows for the years ended December 31, 2021, 2020, and 2019 and (b) the consolidated balance sheets as of December 31, 2021 and 2020.

The consolidated financial statements for the years ended December 31, 2021, 2020, and 2019 reflect Topco’s basis in the assets and liabilities of the Company, as a result of the 2014 Topco Acquisition.

The Company’s share in the earnings or losses for its investments in affiliates is reflected in “Investments in unconsolidated affiliates”

and “Cost of revenues”

in the Consolidated Balance Sheets and Consolidated Statements of Operations and Comprehensive Income (Loss), respectively.

All intercompany balances and transactions have been eliminated upon consolidation.

Take 5 Matter

On April 1, 2018, the Company acquired certain assets and assumed liabilities of Take 5 Media Group (Take 5) for total

consideration of $81.6 million, including the fair value of contingent consideration of $4.6 million and holdback liabilities of $0.8 million.

In June 2019, as a result of a review of internal allegations related to inconsistency of

data provided by Take 5 to its clients, the Company commenced an investigation into Take 5s operations.

In July 2019, as a result of the Companys investigation, the Company determined that revenue during the fiscal year ended

December 31, 2018 attributable to the Take 5 business had been recognized for services that were not performed on behalf of clients of Take 5 and that inaccurate reports were made to Take 5 clients about those services (referred to as the

Take 5 Matter).

As a result of these findings, in July 2019, the Company terminated all operations of Take 5, including the use of its associated trade names and the offering of its services to its clients and offered refunds to Take 5

clients of collected revenues attributable to Take 5 since the Companys acquisition of Take 5.

The Company also determined that the amounts assigned to the assets of Take 5 acquired on the acquisition date had been improperly established based

on inaccurate assumptions as to the fair value of the assets acquired and recorded a loss on Take 5 charge of $79.2 million in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2018.

In May 2020, the Company received $7.7 million from its representation warranty and indemnity policy related to the Take 5 acquisition

for claims related to the Take 5 Matter, the maximum aggregate recovery under the policy.

Certain prior period balances have been reclassified to conform to the current financial statement presentation.

These reclassifications had no impact on previously reported result of operations or stockholders’

Use of Estimates

The preparation of the Companys consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.

Actual results could

differ from such estimates.

The most significant estimates include revenues, workers compensation and employee medical claim reserves, fair value of contingent consideration, leases, income taxes, equity-based compensation, derivative

instruments and fair value considerations in applying purchase accounting and assessing goodwill and other asset impairments.

The preparation of the Company’s consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from such estimates.

The most significant estimates include revenues, workers’

compensation and employee medical claim reserves, fair value of contingent consideration, leases, income taxes, equity-based compensation, derivative instruments and fair value considerations in applying purchase accounting and assessing goodwill and other asset impairments.

Foreign Currency

The Companys reporting currency is U.S.

dollars as that is the currency of the primary economic environment in which the Company

The Company’s reporting currency is U.S.

dollars as that is the currency of the primary economic environment in which the Company operates.

The Company translates the assets and liabilities of its non-U.S.

1 unchanged sentence

dollars using exchange rates in effect at the end of each period.

expenses for these subsidiaries are translated using rates that approximate those in effect during the period.

Gains and losses from these translations are included in Accumulated other comprehensive income (loss) in the Consolidated

Statements of Stockholders Equity.

Transactions in foreign currencies other than the entities functional currency are converted using the rate of exchange at the date of transaction.

The gains or losses arising from the revaluation of

foreign currency transactions to functional currency are included in Selling, general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

Unrealized foreign currency exchange gains and losses

on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders

The Company reports gains and losses from foreign exchange rate changes related to intercompany receivables and payables that are of a long-term investment nature, in Other comprehensive income (loss) in the

Consolidated Statements of Operations and Comprehensive Loss.

These items represented net losses of $2.1 million, $2.9 million, and $4.4 million during the fiscal years ended December 31, 2020, 2019, and 2018, respectively.

Revenues and expenses for these subsidiaries are translated using rates that approximate those in effect during the period.

Gains and losses from these translations are included in “Accumulated other comprehensive income (loss)”

in the Consolidated Statements of Stockholders’

Transactions in foreign currencies other than the entities’

functional currency are converted using the rate of exchange at the date of transaction.

The gains or losses arising from the revaluation of foreign currency transactions to functional currency are included in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature ( i .

e ., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders’

The Company reports gains and losses from foreign exchange rate changes related to intercompany receivables and payables that are of a long-term investment nature, in “Other comprehensive income (loss)”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

These items represented a net gain of $ 1.0 million, a loss of $ 2.1 million, and a loss of $ 2.9 million during the fiscal years ended December 31, 2021, 2020, and 2019, respectively.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and highly liquid investments having an original maturity of three months or less.

Companys investments consist primarily of institutional money market funds and U.S.

The Company’s investments consist primarily of U.S.

Treasury securities.

The Companys investments are carried at cost, which approximates fair value.

The Company has restricted cash related to funds

received from clients that will be disbursed at the direction of those clients.

Corresponding liabilities have been recorded in Other accrued expenses in the Consolidated Balance Sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Companys consolidated

balance sheets that sum to the total of the same such amounts shown in the Companys Consolidated Statements of Cash Flows:

The Company’s investments are carried at cost, which approximates fair value.

The Company has restricted cash related to funds received from clients that will be disbursed at the direction of those clients.

Corresponding liabilities have been recorded in “Other accrued expenses”

in the Consolidated Balance Sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s consolidated balance sheets that sum to the total of the same such amounts shown in the Company’s Consolidated Statements of Cash Flows:

(in thousands)

3 unchanged sentences

Accounts Receivable and Expected Credit Losses

Accounts receivable consist of amounts due from clients for services provided in normal business activities and are recorded at invoiced

Accounts receivable consist of amounts due from clients for services provided in normal business activities and are recorded at invoiced amounts.

The Company measures expected credit losses against certain billed receivables based upon the latest information regarding whether invoices are ultimately collectible.

Assessing the collectability of client receivables requires management

Assessing the collectability of client receivables requires management judgment.

The Company determines its expected credit losses by specifically analyzing individual accounts receivable, historical bad debts, client credit-worthiness, current economic conditions, and accounts receivable aging trends.

reserves are periodically re-evaluated and adjusted as more information about the ultimate collectability of accounts receivable becomes available.

Upon determination that a receivable is uncollectible, the

receivable balance and any associated reserve is written off.

Valuation reserves are periodically re-evaluated and adjusted as more information about the ultimate collectability of accounts receivable becomes available.

Upon determination that a receivable is uncollectible, the receivable balance and any associated reserve is written off.

The Company’s expected credit losses were not material for the years ended December 31, 2021, 2020 and 2019.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of accounts

receivable and cash balances at various financial institutions.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of accounts receivable and cash balances at various financial institutions.

The Company maintains cash balances in accounts at various financial institutions.

At times such cash balances may exceed federally insured limits.

The Company has not experienced any

losses in such accounts.

The Company has not experienced any losses in such accounts.

The Company uses derivative financial instruments to hedge interest rate and foreign exchange risk.

Derivative instruments, used to hedge

interest rates, consist of interest rate swaps and interest rate caps.

Interest rate swap contracts involve the exchange of floating rate interest payment obligations for fixed interest rate payments without the exchange of the underlying principal

Derivative instruments, used to hedge interest rates, consist of interest rate swaps and interest rate caps.

Interest rate swap contracts involve the exchange of floating rate interest payment obligations for fixed interest rate payments without the exchange of the underlying principal amounts.

Interest rate cap contracts limit the floating interest rate exposure to the indicative rate in the agreement.

Derivatives are initially recognized at fair value on the date a contract is entered into and are subsequently re-measured at fair value.

The fair values of derivatives are measured using observable market prices or, where market prices are not available, by using discounted expected future cash flows at prevailing interest

and exchange rates.

The Company does not designate these derivatives as hedges for accounting purposes, and as a result, all changes in the fair value of derivatives, used to hedge interest rates and foreign exchange risk, are recorded in

Interest expense and in Selling, general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss, respectively.

These arrangements contain an element of risk in that the counterparties

may be unable to meet the terms of such

arrangements.

In the event the counterparties are unable to fulfill their related obligations, the Company could potentially incur significant additional costs by replacing the positions at then

current market rates.

The fair values of derivatives are measured using observable market prices or, where market prices are not available, by using discounted expected future cash flows at prevailing interest and exchange rates.

and in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss), respectively.

These arrangements contain an element of risk in that the counterparties may be unable to meet the terms of such arrangements.

In the event the counterparties are unable to fulfill their related obligations, the Company could potentially incur significant additional costs by replacing the positions at then current market rates.

The Company manages its risk of exposure by limiting counterparties to those banks and institutions deemed appropriate by management.

1 unchanged sentence

Property and equipment are stated at cost, and the balances are presented net of accumulated depreciation.

Depreciation expense is calculated

using the straight-line method over the estimated useful lives of the assets.

Depreciation expense is calculated using the straight-line method over the estimated useful lives of the assets.

The following table provides the range of estimated useful lives used for each asset type:

4 unchanged sentences

Capitalized costs are amortized on a straight-line basis over the estimated useful lives of the software, generally not exceeding five years .

Leasehold improvements are amortized on a straight-line basis over the shorter of their respective lease terms or their respective estimated

useful lives.

The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the Consolidated Balance Sheets and the resulting gain or loss is reflected in the Cost of revenues and Selling, general,

administrative expenses within the Consolidated Statements of Operations and Comprehensive Loss, depending on the nature of the assets.

Expenditures for maintenance and repairs are expensed as incurred, whereas expenditures for improvements

and replacements are capitalized.

Leasehold improvements are amortized on a straight-line basis over the shorter of their respective lease terms or their respective estimated useful lives.

The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the Consolidated Balance Sheets and the resulting gain or loss is reflected in the “Cost of revenues”

and “Selling, general, administrative expenses”

within the Consolidated Statements of Operations and Comprehensive Income (Loss), depending on the nature of the assets.

Expenditures for maintenance and repairs are expensed as incurred, whereas expenditures for improvements and replacements are capitalized.

Equity Method Investments

Investments in companies in which the Company exercises significant influence over the operating and financial policies of the investee and are

not required to be consolidated are accounted for using the equity method.

The Companys proportionate share of the net income or loss of equity method investments is included in results of operations and any dividends received reduce the

carrying value of the investment.

The excess of the cost of the Companys investment over its proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill and included in the carrying

amount of the investment.

Investments in companies in which the Company exercises significant influence over the operating and financial policies of the investee and are not required to be consolidated are accounted for using the equity method.

The Company’s proportionate share of the net income or loss of equity method investments is included in the results of operations and any dividends received reduce the carrying value of the investment.

The excess of the cost of the Company’s investment over its proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill and included in the carrying amount of the investment.

Goodwill in the equity method investments is not amortized.

Gains and losses from changes in the Companys ownership interests are recorded in results of operations until control is achieved.

In instances in which a

change in the Companys ownership interest results in obtaining control, the existing carrying value of the investment is remeasured to the acquisition date fair value and any gain or loss is recognized in the Consolidated Statements of

Operations and Comprehensive Loss.

Distributions received from unconsolidated entities that represent returns on the investors

investment are reported as cash flows from operating activities in the Companys statement of cash flows.

Cash distributions from unconsolidated entities that represent returns of the Companys investment are reported as cash flows from

investing activities.

Gains and losses from changes in the Company’s ownership interests are recorded in results of operations until control is achieved.

In instances in which a change in the Company’s ownership interest results in obtaining control, the existing carrying value of the investment is remeasured to the acquisition date fair value and any gain or loss is recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Distributions received from unconsolidated entities that represent returns on the investor’s investment are reported as cash flows from operating activities in the Company’s Consolidated Statements of Cash Flows.

Cash distributions from unconsolidated entities that represent returns of the Company’s investment are reported as cash flows from investing activities.

Business Combinations

The Company accounts for business combinations using the acquisition method.

Under this method, the purchase price of an acquisition is

allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition.

To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets

acquired and liabilities assumed, such excess is allocated to goodwill.

Factors giving rise to goodwill generally include assembled workforce, geographic presence, expertise,

and synergies that are anticipated as a result of the business combination, including enhanced product and service offerings.

The Company determines the estimated fair values after review and

consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management.

The Company adjusts the preliminary purchase price allocation, as necessary, during the measurement period of up to one

year after the acquisition closing date as the Company obtains more information as to facts and circumstances existing at the acquisition date impacting asset valuations and liabilities assumed.

Goodwill acquired in business combinations is assigned

to the reporting unit expected to benefit from the combination as of the acquisition date.

Under this method, the purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition.

To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill.

Factors giving rise to goodwill generally include assembled workforce, geographic presence, expertise, and synergies that are anticipated as a result of the business combination, including enhanced product and service offerings.

The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management.

The Company adjusts the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as the Company obtains more information as to facts and circumstances existing at the acquisition date impacting asset valuations and liabilities assumed.

Goodwill acquired in business combinations is assigned to the reporting unit expected to benefit from the combination as of the acquisition date.

Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

Goodwill and Indefinite Lived Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired in an

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired in an acquisition.

The Company tests for impairment of goodwill at the reporting unit level.

The Company generally combines reporting units, which are a component of an operating segment when they have similar economic characteristics, nature of services,

types of client, distribution methods and regulatory environment.

The Company has two reporting units, sales and marketing, which are also the Companys operating segments.

The Company tests its goodwill for impairment at the beginning of the fourth quarter of a given fiscal year and whenever events or changes in

circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

The Company has the option to perform a qualitative assessment of whether it is more likely than not that a reporting units fair value is less than

its carrying value before performing a quantitative impairment test.

If the qualitative assessment indicates it is not more likely than not that the fair value of a reporting unit, as determined applying the quantitative impairment test described

below, is less than the carrying amount, then there is no need to perform the quantitative impairment test.

Upon performing the quantitative impairment test, if the fair value of the reporting unit is less than its carrying amount, goodwill is

impaired and the excess of the reporting units carrying value over the fair value is recognized as an impairment loss;

The Company generally combines reporting units, which are a component of an operating segment when they have similar economic characteristics, nature of

services, types of client, distribution methods and regulatory environment.

The Company has two reporting units, sales and marketing, which are also the Company’s operating segments.

The Company tests its goodwill for impairment at the beginning of the fourth quarter of a given fiscal year and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

The Company has the option to perform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before performing a quantitative impairment test.

If the qualitative assessment indicates it is not more likely than not that the fair value of a reporting unit, as determined applying the quantitative impairment test described below, is less than the carrying amount, then there is no need to perform the quantitative impairment test.

however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.

The Companys annual goodwill impairment assessment for the year ended December 31, 2020 was performed as of October 1, 2020.

The Company’s annual goodwill impairment assessment for the year ended December 31, 2021 was performed as of October 1, 2021.

The Company utilizes a combination of income and market approaches to estimate the fair value of its reporting units.

The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for the

reporting units revenue growth rates, operating margins, terminal growth rates, and discount rates all of which require significant management judgment.

The market approach applies market multiples derived from the historical earnings data of

selected guideline publicly-traded companies to the Companys reporting units businesses to yield a second assumed value of each reporting unit, which requires significant management judgment.

The guideline companies are first screened by

industry group and then further narrowed based on the reporting units business descriptions, markets served, competitors, operating margins, and revenue size.

Market multiples are then selected from within the range of these guideline

companies multiples based on the subject reporting unit.

These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy (described in Fair Value

Measurements, below).

The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for the reporting units’

revenue growth rates, EBITDA margins, terminal growth rates, and discount rates all of which require significant management judgment.

The market approach applies market multiples derived from the historical earnings data of selected guideline publicly-traded companies to the Company’s reporting units’

businesses to yield a second assumed value of each reporting unit, which requires significant management judgment.

The guideline companies are first screened by industry group and then further narrowed based on the reporting units’

business descriptions, markets served, competitors, EBITDA margins, and revenue size.

Market multiples are then selected from within the range of these guideline companies multiples based on the subject reporting unit.

These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy (described in “Fair Value Measurements,”

The Company based its fair value estimates on assumptions it believes to be reasonable but which are unpredictable and inherently uncertain.

A change in these underlying assumptions would cause a change in the results of

the tests and, as such, could cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

Additionally, if actual results are not consistent with the estimates and assumptions or if there are

significant changes to the Companys planned strategy, it may cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

A change in these underlying assumptions would cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

Additionally, if actual results are not consistent with the estimates and assumptions or if there are significant changes to the Company’s planned strategy, it may cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

The Company compares a weighted average of the output from the income and market approaches to the carrying value of each reporting unit.

Company also compares the aggregate estimated fair value of its reporting units to the estimated value of its total invested capital on a marketable basis.

Based on the results of the Companys quantitative impairment test performed for its

reporting units, the Company determined that its goodwill is not impaired for the year ended December 31, 2020.

The fair value of the sales reporting unit exceeded its carrying value by 8.3%.

The fair value of the marketing reporting unit

significantly exceeded its carrying value, which the Company defines as greater than 20%.

The Company determined that no additional triggering events occurred that required the Company to perform an interim goodwill impairment test as of

December 31, 2020.

In performing the quantitative impairment test for the year ended December 31, 2019, the Company had also

determined that its goodwill was not impaired.

The fair value of the sales reporting unit exceeded its carrying value by 3.5%.

The Company also compares the aggregate estimated fair value of its reporting units to the estimated value of its total invested capital on a marketable basis.

Based on the results of the Company’s quantitative impairment test performed for its reporting units, the Company determined that its goodwill is not impaired for the year ended December 31, 2021.

The fair values of the reporting units significantly exceeded their carrying values, which the Company defines as greater than 20% .

The Company determined that no additional triggering events occurred that required the Company to perform an interim goodwill impairment test as of December 31, 2021.

In performing the quantitative impairment test for the year ended December 31, 2020 and 2019, the Company had also determined that its goodwill was not impaired.

The fair value of the sales reporting unit exceeded its carrying value by 8.3 % and 3.5 %, respectively.

The fair value of the marketing reporting unit significantly exceeded its carrying value.

The Company determined that no

additional triggering events occurred that required the Company to perform an interim goodwill impairment test as of December 31, 2019.

Accordingly, no impairment related to the Companys goodwill was recorded for the year ended

December 31, 2019.

During the year ended December 31, 2018, based on the results of the Companys quantitative impairment

test performed for the sales reporting unit, the Company recognized a $652.0 million non-cash goodwill impairment charge.

While there was no single determinative event or factor, the consideration of the

weight of evidence of several factors that developed during 2018 led the Company to conclude that it was more likely than not that the fair value of the sales reporting unit was below its carrying value.

These factors included:

(i) the decrease

of revenues and profitability due to a large retailer revising its in-store retail merchandising program to restrict manufacturers ability to select any third-party outsource provider to perform

unrestricted and unmonitored retail merchandising, (ii) the unrelated decrease of revenues and profitability related to reduced services from several clients in the grocery channel and foodservice channel, (iii) the combination of the

Companys completed third quarter and preliminary fourth quarter results being below managements expectations, and (iv) the development and approval of the Companys 2019 annual operating plan in the fourth quarter of 2018,

which provided additional insights into expectations such as lower long-term revenue growth and profitability expectations.

Based on these factors, the Company recorded the non-cash goodwill impairment charge

in 2018, which has been reflected in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2018.

As the sales reporting unit was written down to its respective fair value, there was zero excess fair

value over its carrying amount as of December 31, 2018.

Based on the results of the quantitative impairment test performed for the

marketing reporting unit for 2018, the Company determined that the Companys goodwill was not impaired for the marketing reporting unit for the year ended December 31, 2018.

The fair value of the marketing reporting unit significantly

exceeded its carrying value.

The Companys indefinite-lived intangible assets are its sales and marketing trade names.

assets with indefinite useful lives are not amortized but tested annually, at the beginning of the fourth quarter, for impairment or more often if events occur or circumstances change that would create a triggering event.

The Company has the option

to perform a qualitative assessment of whether it is more likely than not that the indefinite-lived intangible assets fair value is less than its carrying value before performing a quantitative impairment test.

The Company tests its

indefinite-lived intangible assets for impairment using a relief from royalty method by comparing the estimated fair values of the indefinite-lived intangible assets with the carrying values.

The estimates used in the determination of fair value are

subjective in nature and involve the use of significant assumptions.

The Company determined that no additional triggering events occurred that required the Company to perform an interim goodwill impairment test as of December 31, 2020 and 2019.

Accordingly, no impairment related to the Company’s goodwill was recorded for the year ended December 31, 2020 and 2019.

The Company’s indefinite-lived intangible assets are its sales and marketing trade names.

The Company has the option to perform a qualitative assessment of whether it is more likely than not that the indefinite-lived intangible asset’s fair value is less than its carrying value before performing a quantitative impairment test.

The Company tests its indefinite-lived intangible assets for impairment using a relief from royalty method by comparing the estimated fair values of the indefinite-lived intangible assets with the carrying values.

The estimates used in the determination of fair value are subjective in nature and involve the use of significant assumptions.

These estimates and assumptions include revenue growth rates, terminal growth rates, discount rates and royalty rates, all of which require significant management judgment.

assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.

The Company based its fair value estimates on assumptions it believes to be reasonable, but which

are unpredictable and inherently uncertain.

The assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.

The Company based its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain.

Actual future results may differ from the estimates.

In connection with the Companys annual quantitative impairment test as of

October 1, 2020 and 2019, the Company concluded that its indefinite-lived intangible assets were not impaired for the years ended December 31, 2020 and 2019.

The fair value of the indefinite-lived intangible assets related to sales trade

names exceeded its carrying value by 13.3% and 8.3% for the years ended December 31, 2020 and 2019, respectively.

The fair value of the indefinite-lived intangible assets related to marketing trade names exceeded its carrying value by 8.4% and

10.0% for the years ended December 31, 2020 and 2019, respectively.

The Company determined that no additional triggering events occurred that required the Company to perform an interim impairment test of indefinite-lived intangible assets as of

December 31, 2020 and 2019.

Accordingly, no impairment related to the Companys intangible assets was recorded for the years ended December 31, 2020 and 2019.

During the year ended December 31, 2018, the Company concluded the carrying value of the indefinite-lived trade name in the sales

reporting unit exceeded its estimated fair value.

While there was no single determinative event or factor, the factors that led to the impairment were the same circumstances outlined in the goodwill impairment discussion above.

As a result, the

Company recognized a non-cash intangible asset impairment charge of $580.0 million during the year ended December 31, 2018, which was reflected in its Consolidated Statements of Operations and

Comprehensive Loss.

Based on the quantitative test performed for the indefinite-lived marketing trade name, the Company determined that the indefinite-lived trade name in the marketing reporting unit was not impaired for the year ended

December 31, 2018.

In connection with the Company’s annual quantitative impairment test as of October 1, 2021, 2020 and 2019, the Company concluded that its indefinite-lived intangible assets were not impaired for the years ended December 31, 2021, 2020 and 2019.

The fair value of the indefinite-lived intangible assets related to sales trade names significantly exceeded its carrying value for the year ended December 31, 2021, and exceeded its carrying value by 13.3 % and 8.3 % for the years ended December 31, 2020 and 2019, respectively.

The fair value of the indefinite-lived intangible assets related to marketing trade names significantly exceeded its carrying value for the year ended December 31, 2021, and exceeded its carrying value by 8.4 % and 10.0 % for the years ended December 31, 2020 and 2019, respectively.

The Company determined that no additional triggering events occurred that required the Company to perform an interim impairment test of its indefinite-lived intangible assets as of December 31, 2021, 2020, and 2019.

Accordingly, no impairment related to the Company’s intangible assets was recorded for the years ended December 31, 2021, 2020, and 2019.

Long-Lived Assets

Long-lived assets to be held and used, including finite-lived intangible assets, are reviewed for impairment whenever events or changes in

circumstances indicate that the carrying amount of an asset may not be fully recoverable.

These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans, or changes in anticipated

future cash flows.

Long-lived assets to be held and used, including finite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable.

These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans, or changes in anticipated future cash flows.

If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets.

If the assets are

impaired, the impairment recognized is measured as the amount by which the carrying amount exceeds the fair value of the assets.

If the assets are impaired, the impairment recognized is measured as the amount by which the carrying amount exceeds the fair value of the assets.

Fair value is generally determined by estimates of discounted cash flows.

The discount rate used in any estimate of

discounted cash flows would be the rate required for a similar investment of like risk.

No impairment related to the Companys long-lived assets was recorded during the years ended December 31, 2020, 2019, and 2018.

As the Company assesses impairment of long-lived assets at the lowest level for which identifiable cash flows are largely independent of the

cash flows of other assets and liabilities, the Company has determined that the asset group for impairment testing is comprised of the assets and liabilities of the Companys operating segments.

The Company has identified client relationships

as the primary asset because it is the principal asset from which the components derive their cash flow generating capacity.

The discount rate used in any estimate of discounted cash flows would be the rate required for a similar investment of like risk.

No impairment related to the Company’s long-lived assets was recorded during the years ended December 31, 2021, 2020, and 2019.

As the Company assesses impairment of long-lived assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, the Company has determined that the asset group for impairment testing is comprised of the assets and liabilities of the Company’s operating segments.

The Company has identified client relationships as the primary asset because it is the principal asset from which the components derive their cash flow generating capacity.

Contingent Consideration

Certain of the Companys acquisition and sale agreements include contingent consideration arrangements, which are generally based on the

achievement of future financial performance.

If it is determined the contingent consideration arrangements are not compensatory, the fair values of these contingent consideration arrangements are included as part of the purchase price of the

acquisitions or divestitures on their respective transaction dates.

For each transaction, the Company estimates the fair value of contingent consideration payments as part of the initial purchase price and records the estimated fair value of

contingent consideration related to proceeds from divestitures as an asset in Other Assets or related to purchases of businesses as a liability in Other accrued expenses or Other long-term liabilities in the

Consolidated Balance Sheets.

The Company reviews and assesses the estimated fair value of contingent consideration on a quarterly basis,

and the updated fair value could differ materially from the initial estimates.

Changes in the estimated fair value of contingent consideration liabilities related to the time component of the present value calculation are reported

in Interest expense in the Consolidated Statements of Operations and Comprehensive Loss.

Adjustments to the estimated fair value related to changes in all other unobservable inputs

are reported in Selling, general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

The portion of the cash settlement up to the acquisition date fair value of the contingent consideration are classified as Contingent

consideration payments in cash flows from financing activities, and amounts paid in excess of the acquisition date fair value are classified as Other accrued expenses and other liabilities in cash flows from operating activities in

the Consolidated Statements of Cash Flows.

In the first quarter of 2019, the Company adopted ASC 842, Leases , using the modified retrospective transition method.

Certain of the Company’s acquisition and sale agreements include contingent consideration arrangements, which are generally based on the achievement of future financial performance.

If it is determined the contingent consideration arrangements are not compensatory, the fair values of these contingent consideration arrangements are included as part of the purchase price of the acquisitions or divestitures on their respective transaction dates.

For each transaction, the Company estimates the fair value of contingent consideration payments as part of the initial purchase price and records the estimated fair value of contingent consideration related to proceeds from divestitures as an asset in “Other Assets”

or related to purchases of businesses as a liability in “Other accrued expenses”

or “Other long-term liabilities”

in the Consolidated Balance Sheets.

The Company reviews and assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from these initial estimates.

Changes in the estimated fair value of contingent consideration liabilities related to the time component of the present value calculation are reported in “Interest expense”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The portion of the cash settlement up to the acquisition date fair value of the contingent consideration is classified as “Contingent consideration payments”

in cash flows from financing activities, and amounts paid in excess of the acquisition date fair value are classified as “Other accrued expenses and other liabilities”

in cash flows from operating activities in the Consolidated Statements of Cash Flows.

The Company has obligations under various real estate leases, equipment leases, and software license agreements.

The Company assesses whether

these arrangements are or contain leases at lease inception.

Classification of the leases between financing and operating leases is determined by assessing whether the lease transfers ownership of the asset to the Company, the lease grants an option

for the Company to purchase the underlying asset, the lease term is for the majority of the remaining assets economic life, or if the minimum lease payments equals or substantially exceed all of the leased assets fair market value.

December 31, 2020, the Company did not have any finance leases.

See Note 8, Leases , for further information regarding the Companys operating leases.

The Company assesses whether these arrangements are or contain leases at lease inception.

Classification of the leases between financing and operating leases is determined by assessing whether the lease transfers ownership of the asset to the Company, the lease grants an option for the Company to purchase the underlying asset, the lease term is for the majority of the remaining asset’s economic life, or if the minimum lease payments equals or substantially exceed all of the leased asset’s fair market value.

As of December 31, 2021, the Company's finance leases were not material.

See Note 8, Leases , for further information regarding the Company’s operating leases.

Self-Insurance Liability

The Company maintains a high deductible program for workers compensation claims.

Losses and liabilities relating to workers

compensation claims are fully insured beyond the Companys deductible limits.

The Companys estimated liabilities are not discounted and are based on information provided by third party administrators, combined with managements

judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and claims settlement practices.

The Company maintains a high deductible program for workers’

compensation claims.

Losses and liabilities relating to workers’

compensation claims and employee medical claims are fully insured beyond the Company’s deductible limits.

The Company’s estimated liabilities are not discounted and are based on information provided by third party administrators, combined with management’s judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and claims settlement practices.

Revenue Recognition

The Company recognizes revenue when control of promised goods or services are transferred to the client in an amount that reflects the

consideration that the Company expects to be entitled to in exchange for such goods or services.

Substantially all of the Companys contracts with clients involve the transfer of a service to the client, which represents a performance

obligation that is satisfied over time because the client simultaneously receives and consumes the benefits of the services provided.

In most cases, the contracts consist of a performance obligation that is comprised of a series of distinct services

that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service).

For these contracts, the Company allocates the ratable portion of the consideration based on the services provided in each period of service

to such period.

Revenues related to the sales segment are primarily recognized in the form of commissions,

fee-for-service, or on a cost-plus basis for providing headquarter relationship management, analytics, insights and intelligence services, administrative services,

retail services, retailer client relationships and in-store media programs, and digital technology solutions (which include business intelligence solutions, e-commerce

services, and content services).

Marketing segment revenues are primarily recognized in the form of fee-for-service (including retainer fees, fees charged to clients based on hours incurred, project-based fees, or fees for

executing in-person consumer engagements or experiences, which engagements or experiences the Company refers to as events), commissions, or on a cost-plus basis for providing experiential

marketing, shopper and consumer marketing services, private label development and digital, social, and media services.

The Company recognizes revenue when control of promised goods or services are transferred to the client in an amount that reflects the consideration that the Company expects to be entitled to in exchange for such goods or services.

Substantially all of the Company’s contracts with clients involve the transfer of a service to the client, which represents a performance obligation that is satisfied over time because the client simultaneously receives and consumes the benefits of the services provided.

In most cases, the contracts consist of a performance obligation that is comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer ( i .

e ., distinct days of service).

For these contracts, the Company allocates the ratable portion of the consideration based on the services provided in each period of service to such period.

Revenues related to the sales segment are primarily recognized in the form of commissions, fee-for-service, or on a cost-plus basis for providing headquarter relationship management, analytics, insights and intelligence services, administrative services, retail services, retailer client relationships and in-store media programs, and digital technology solutions (which include business intelligence solutions, e-commerce services, and content services).

Marketing segment revenues are primarily recognized in the form of fee-for-service (including retainer fees, fees charged to clients based on hours incurred, project-based fees, or fees for executing in-person consumer engagements or experiences, which engagements or experiences the Company refers to as “events”), commissions, or on a cost-plus basis for providing experiential marketing, shopper and consumer marketing services, private label development and digital, social, and media services.

The Company disaggregates revenues from contracts with clients by reportable segment.

Revenues within each segment are further disaggregated between brand-centric services and retail-centric services.

Brand-centric services are centered on providing solutions to support manufacturers sales and marketing strategies.

Brand-centric services are centered on providing solutions to support manufacturers’

sales and marketing strategies.

Retail- centric services are centered on providing solutions to retailers.

9 unchanged sentences

Total revenues

The Company is party to certain client contracts that include variable consideration, whereby the ultimate

consideration is contingent on future events such as the clients sales to retailers, hours worked, event count, costs incurred, and performance incentive bonuses.

For commission based service contracts, the consideration received from the

client is variable because the Company earns an agreed upon percentage of the clients sales to retailers, which is agreed upon on a manufacturer-by-manufacturer

The Company is party to certain client contracts that include variable consideration, whereby the ultimate consideration is contingent on future events such as the client’s sales to retailers, hours worked, event count, costs incurred, and performance incentive bonuses.

For commission based service contracts, the consideration received from the client is variable because the Company earns an agreed upon percentage of the client’s sales to retailers, which is agreed upon on a manufacturer-by-manufacturer basis.

Revenues are recognized for the commission earned during the applicable reporting period.

The Company generally earns commission revenues from headquarter relationship management, analytics, insights and intelligence, e-commerce, administration, private label development and retail services arrangements.

As part of these arrangements, the Company provides a variety of services to consumer goods manufacturers in order to improve

the manufacturers sales at retailers.

As part of these arrangements, the Company provides a variety of services to consumer goods manufacturers in order to improve the manufacturer’s sales at retailers.

This includes primarily outsourced sales, business development, category and space management, relationship management, and sales strategy services.

In exchange for these services, the Company earns an

agreed upon percentage of its clients sales to retailers, which is agreed upon on a manufacturer-by-manufacturer basis.

For service contracts whereby the client is charged a fee per hour incurred or fee per event completed, revenues are recognized over time as

actual hours are incurred or as events are completed, respectively.

For service contracts with a cost-plus arrangement, revenues are recognized on a gross basis over time for a given period based on the actual costs incurred plus a fixed mark-up fee that is negotiated on a client-by-client basis.

For certain contracts with clients, the Company is entitled to additional fees upon meeting specific performance goals or thresholds, which

are referred to as bonus revenues.

In exchange for these services, the Company earns an agreed upon percentage of its client’s sales to retailers, which is agreed upon on a manufacturer-by-manufacturer basis.

For service contracts whereby the client is charged a fee per hour incurred or fee per event completed, revenues are recognized over time as actual hours are incurred or as events are completed, respectively.

For service contracts with a cost-plus arrangement,

revenues are recognized on a gross basis over time for a given period based on the actual costs incurred plus a fixed mark-up fee that is negotiated on a client-by-client basis.

For certain contracts with clients, the Company is entitled to additional fees upon meeting specific performance goals or thresholds, which are referred to as bonus revenues.

Bonus revenues are estimated and are recognized as revenues as the related services are performed for the client.

The variability of the consideration for the services transferred during a reporting period is typically resolved by the end of the reporting

The variability of the consideration for the services transferred during a reporting period is typically resolved by the end of the reporting period.

However, for certain client contracts, the Company is required to estimate the variable consideration for the services that have been transferred to the client during the reporting period.

The Company typically estimates the variable

consideration based on the expected value method.

The Company typically estimates the variable consideration based on the expected value method.

Estimates are based on historical experience and current facts known during the reporting period.

The Company only recognizes revenues related to variable consideration if it is probable that a

significant reversal of revenues recognized will not occur when the uncertainty associated with the variable consideration is resolved.

When such probable threshold is not satisfied, the Company will constrain some or all of the variable

consideration and the constrained variable consideration will not be recognized as revenues.

The Company only recognizes revenues related to variable consideration if it is probable that a significant reversal of revenues recognized will not occur when the uncertainty associated with the variable consideration is resolved.

When such probable threshold is not satisfied, the Company will constrain some or all of the variable consideration and the constrained variable consideration will not be recognized as revenues.

The Company records an adjustment to revenue for differences between estimated revenues and the amounts ultimately invoiced to the client.

Adjustments to

revenue during the current period related to services transferred during prior periods were not material during the year ended December 31, 2020.

The Company has contracts that include fixed consideration such as a fee per project or a

fixed monthly fee.

For contracts with a fee per project, revenues are recognized over time using an input method such as hours worked that reasonably depicts the Companys performance in transferring control of the services to the client.

Company determined that the input method represents a reasonable method to measure the satisfaction of the performance obligation to the client.

For contracts with a fixed monthly fee, revenues are recognized using a time-based measure resulting in

a straight-line revenue recognition.

available to provide services upon the clients request or the client receives the benefit from the Companys services evenly over the contract period.

The Company evaluates each client contract individually in accordance with the applicable accounting guidance to determine whether the Company

acts as a principal (whereby the Company would present revenues on a gross basis), or as an agent (whereby the Company would present revenues on a net basis).

While the Company primarily acts as a principal in its arrangements and reports revenues

on a gross basis, the Company will occasionally act as an agent and accordingly presents revenues on a net basis.

For example, for certain advertising arrangements, the Companys clients purchase media content in advance, and the Company does

not take on any risk of recovering its cost to acquire the media content.

Adjustments to revenue during the current period related to services transferred during prior periods were not material during the years ended December 31, 2021, 2020, and 2019.

The Company has contracts that include fixed consideration such as a fee per project or a fixed monthly fee.

For contracts with a fee per project, revenues are recognized over time using an input method such as hours worked that reasonably depicts the Company’s performance in transferring control of the services to the client.

The Company determined that the input method represents a reasonable method to measure the satisfaction of the performance obligation to the client.

For contracts with a fixed monthly fee, revenues are recognized using a time-based measure resulting in a straight-line revenue recognition.

A time-based measure was determined to represent a reasonable method to measure the satisfaction of the performance obligation to the client because the Company has a stand ready obligation to make itself available to provide services upon the client’s request or the client receives the benefit from the Company’s services evenly over the contract period.

The Company evaluates each client contract individually in accordance with the applicable accounting guidance to determine whether the Company acts as a principal (whereby the Company would present revenues on a gross basis), or as an agent (whereby the Company would present revenues on a net basis).

While the Company primarily acts as a principal in its arrangements and reports revenues on a gross basis, the Company will occasionally act as an agent and accordingly presents revenues on a net basis.

For example, for certain advertising arrangements, the Company’s clients purchase media content in advance, and the Company does not take on any risk of recovering its cost to acquire the media content.

As a result, the Company determined it acts as the agent in these arrangements and records revenues and their related costs on a net basis.

However, in cases where media

content is not purchased in advance by its clients, the Company records such revenues and its related costs on a gross basis, as it bears the risk of recovering the costs to acquire the revenues related to such media content and it is responsible

for fulfillment of the services thereunder.

Substantially all of the Companys contracts with its clients either have a contract

term that is less than one year with options for renewal and/or can be cancelled by either party upon 30 to 120 days notice.

For the purpose of disclosing the transaction price allocated to remaining unsatisfied performance obligations or

partially satisfied performance obligations, the Company elected policies to:

(1) exclude contracts with a contract term of one year or less and (2) exclude contracts with variable consideration that is allocated entirely to a wholly

unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation when that performance obligation qualifies as a series of remaining performance obligations.

However, in cases where media content is not purchased in advance by its clients, the Company records such revenues and its related costs on a gross basis, as it bears the risk of recovering the costs to acquire the revenues related to such media content and it is responsible for fulfillment of the services thereunder.

Substantially all of the Company’s contracts with its clients either have a contract term that is less than one year with options for renewal and/or can be cancelled by either party upon 30 to 120 days’

For the purpose of disclosing the transaction price allocated to remaining unsatisfied performance obligations or partially satisfied performance obligations, the Company elected policies to:

(1) exclude contracts with a contract term of one year or less and (2) exclude contracts with variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation when that performance obligation qualifies as a series of remaining performance obligations.

After applying these policy elections, the Company determined that it does not have a significant amount of fixed considerations allocated to remaining performance obligations for contracts with a contract term that exceeds one year.

When the Company satisfies its performance obligation and recognizes revenues accordingly, the Company has a present and unconditional right

to payment and records the receivable from clients in Accounts receivable in the Consolidated Balance Sheet.

The Companys general payment terms are short-term in duration and the Company does not adjust the promised amount of

consideration for the effects of a significant financing component.

Contract liabilities represent deferred revenues which are cash

payments that are received in advance of the Companys satisfaction of the applicable obligation(s) and are included in Deferred revenues in the Consolidated Balance Sheet.

Deferred revenues are recognized as revenues when the

related services are performed for the client.

Revenues recognized during the year ended December 31, 2020 included $33.2 million of Deferred revenues as of December 31, 2019.

Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of

assets and liabilities, and for operating losses and tax credit carry-forwards.

Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are

expected to be realized or settled.

tax provision (benefit) is computed on the pre-tax income (loss) of the entities located within each taxing jurisdiction based on current tax law.

valuation allowance for deferred tax assets is recorded to the extent that the ultimate realization of the deferred tax assets is not considered more likely than not.

The Company believes its deferred tax assets are more likely than not to be

realized based on historical and projected future results, or a valuation allowance is established.

Realization of the Companys

deferred tax assets is principally dependent upon its achievement of future taxable income, the estimation of which requires significant management judgment.

These judgments regarding future profitability may change due to many factors, including

future market conditions and the Companys ability to successfully execute its business plans.

When the Company satisfies its performance obligation and recognizes revenues accordingly, the Company has a present and unconditional right to payment and records the receivable from clients in “Accounts receivable”

in the Consolidated Balance Sheet.

The Company’s general payment terms are short-term in duration and the Company does not adjust the promised amount of consideration for the effects of a significant financing component.

Contract liabilities represent deferred revenues which are cash payments that are received in advance of the Company’s satisfaction of the applicable obligation(s) and are included in “Deferred revenues”

in the Consolidated Balance Sheet.

Deferred revenues are recognized as revenues when the related services are performed for the client.

Revenues recognized during the years ended December 31, 2021, 2020, and 2019, included $ 37.2 million, $ 33.2 million, and $ 32.1 million of Deferred revenues from the respective prior years.

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry- forwards.

Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled.

The income tax provision (benefit) is computed on the pre-tax income (loss) of the entities located within each taxing jurisdiction based on current tax law.

A valuation allowance for deferred tax assets is recorded to the extent that the ultimate realization of the deferred tax assets is not considered more likely than not.

The Company believes its deferred tax assets are more likely than not to be realized based on historical and projected future results, or a valuation allowance is established.

Realization of the Company’s deferred tax assets is principally dependent upon its achievement of future taxable income, the estimation of which requires significant management judgment.

These judgments regarding future profitability may change due to many factors, including future market conditions and the Company’s ability to successfully execute its business plans.

These changes, if any, may require adjustments to deferred tax asset balances and deferred income tax expense.

Uncertain Tax Positions

The Company accounts for uncertain tax positions when it is more likely than not that the tax position will not be sustained on examination by

the taxing authorities, based on the technical merits of the position.

As of December 31, 2020, and 2019, the Companys unrecognized tax benefits were $0.6 million and $0.6 million, respectively.

All the unrecognized tax benefits

as of December 31, 2020 would be included in the effective tax rate if recognized in future periods.

The Company is unaware of any

positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase within the next twelve months.

The Company files tax returns in the United States, various states and foreign

jurisdictions.

The Company accounts for uncertain tax positions when it is more likely than not that the tax position will not be sustained on examination by the taxing authorities, based on the technical merits of the position.

As of December 31, 2021, and 2020, the Company’s unrecognized tax benefits were $ 0.6 million and $ 0.6 million, respectively.

The Company has not recorded any material uncertain tax positions for the year ended December 31, 2021.

All the unrecognized tax benefits as of December 31, 2021 would be included in the effective tax rate if recognized in future periods.

The Company is unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase within the next twelve months.

The Company files tax returns in the United States, various states and foreign jurisdictions.

With few exceptions, as of December 31, 2021, the Company is no longer subject to federal, state, or non-U.S.

income tax examinations by tax authorities for years prior to 2017.

The Company is undergoing various U.S.

federal, state and non-U.S.

tax audits for tax years 2014 through 2020.

The Company has elected to classify interest and penalties as components of tax expense.

These amounts were immaterial for the years ended

December 31, 2020, 2019 and 2018.

These amounts were immaterial for the years ended December 31, 2021, 2020 and 2019.

Equity-based Compensation

The Company measures the cost of non-employee services received in exchange for an award of equity

instruments based on the measurement date fair value consistent with the vesting of the awards and measuring the fair value of these units at the end of each measurement period.

The Company measures the cost of non-employee services received in exchange for an award of equity instruments based on the measurement date fair value consistent with the vesting of the awards and measuring the fair value of these units at the end of each measurement period.

The cost is recognized over the requisite service period.

Companys equity-based compensation is based on grant date fair value determined utilizing Backsolve Option Pricing Method (OPM) for its Common Series C Units and a combination of the OPM and Monte Carlo valuation model for its

Common Series C-2 Units.

Other Comprehensive Income (Loss)

The Companys comprehensive loss includes net loss as well as foreign currency translation adjustments, net of tax.

Unrealized foreign

currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive loss in

stockholders equity.

Earnings Per Share

The Company calculates earnings per share (EPS) using a dual presentation of basic and diluted earnings per share.

Basic earnings

per share is calculated by dividing net income by the weighted-average shares of common stock outstanding without the consideration for potential dilutive shares of common stock.

Diluted earnings per share represents basic earnings per share

adjusted to include the potentially dilutive effect of outstanding share option awards, non-vested share awards, common stock warrants, and Performance Shares.

Diluted earnings per share is computed by dividing the net income by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method

and if-converted method, as applicable.

During periods of net loss, diluted loss per share is equal to basic loss per share because the antidilutive effect of potential common shares is disregarded.

result of the Transactions, the Company has retrospectively adjusted the weighted-average number of common shares outstanding prior to October 28, 2020 by multiplying them by the exchange ratio used to determine the number of common shares into

which they converted.

The following is a reconciliation of basic and diluted net loss per common share:

Year Ended December 31,

(in thousands, except share and earnings per share data)

Basic and diluted:

Net loss attributable to stockholders of Advantage Solutions Inc.

Weighted-average number of common shares

Basic and diluted net loss per common share

As part of the Transactions, 5,000,000 Performance Shares were issued to Topco at Closing, which were subject

to vesting upon satisfaction of a market performance condition for any period of 20 trading days out of 30 consecutive trading days during the five-year period after the Closing, and Topco was not able to vote or sell such shares until vesting.

These Performance Shares were considered contingently issuable shares and remained unvested as of December 31, 2020.

Therefore, these Performance Shares are excluded from shares outstanding for basic and diluted EPS until the contingency is

The 5,000,000 Performance Shares vested on January 15, 2021, when the closing price for the Class A common stock exceeded $12.00 per share for 20 trading days out of 30 consecutive trading days.

The Company had 18,583,333 warrants, including 7,333,333 private placement warrants held by the CP Sponsor, to purchase Class A common

stock at $11.50 per share at the Closing, and no such warrants were exercised during the years ended December 31, 2020, 2019 and 2018.

For the years ended December 31, 2020, 2019 and 2018, the Company has excluded the potential effect of

warrants to purchase shares of Class A common stock and Performance Shares in the calculation of diluted net loss per common share, as the effect would be anti-dilutive due to losses incurred.

See Note 11 Equity Based Compensation and Equity for additional information regarding the terms of public and private placement

The Company’s equity-based compensation is based on grant date fair value determined utilizing Backsolve Option Pricing Method (“OPM”) for its Common Series C Units and a combination of the OPM and Monte Carlo valuation model for its Common Series C-2 Units.

Warrant Liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in the Financial Accounting Standards Board ASC 480, and ASC 815.

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement”

in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and on the date of issuance and remeasured to fair value at each balance sheet date thereafter.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter.

Changes in the estimated fair value of the warrants are recognized in “Changes in fair value of warrant liability”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The fair value of the private placement warrants on the date of issuance and on each measurement date is estimated using a Black-Scholes option pricing model which includes inputs such as the Company’s stock price, exercise price per share, and the number of private placement warrants outstanding.

Assumptions used in the model are subjective and require significant judgment, and include implied

volatility and the risk-free interest rate.

Based on the period of time the public warrants have now been trading, the Company believes that it is also an appropriate method to determine the fair value of the liability classified private placement warrants by approximating the value with the share price of the public warrants at the respective period end, which is inherently less subjective and judgmental given it is based on observable inputs.

The Company determined the valuation as of December 31, 2021 taking into consideration that both methods did not result in a materially different valuation.

Other Comprehensive (Loss) Income

The Company’s comprehensive (loss) income includes net income (loss) as well as foreign currency translation adjustments, net of tax.

Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive (loss) income in stockholders’

Fair Value Measurements

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous

market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and

significant to the fair value measurement:

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk.

Quoted prices in active markets for identical assets or liabilities.

Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted

prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Inputs that are generally unobservable and typically reflect managements estimate of assumptions that

market participants would use in pricing the asset or liability.

The valuation techniques used to measure the fair

value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market

Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The valuation techniques used to measure the fair value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data.

Variable Interest Entities and Investments

In accordance with the guidance for the consolidation of a variable interest entity (VIE), the Company analyzes its variable

interests, including loans, leases, guarantees, and equity investments, to determine if the entity in which it has a variable interest is a VIE.

The Companys analysis includes both quantitative and qualitative considerations.

The Company bases

its quantitative analysis on the forecasted cash flows of the entity, and its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and financial agreements.

The Company also

uses its quantitative and qualitative analyses to determine if it is the primary beneficiary of the VIE, and if such determination is made, it includes the accounts of the VIE in its consolidated financial statements.

In accordance with the guidance for the consolidation of a variable interest entity (“VIE”), the Company analyzes its variable interests, including loans, leases, guarantees, and equity investments, to determine if the entity in which it has a variable interest is a VIE.

The Company’s analysis includes both quantitative and qualitative considerations.

The Company bases its quantitative analysis on the forecasted cash flows of the entity, and its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and financial agreements.

The Company also uses its quantitative and qualitative analyses to determine if it is the primary beneficiary of the VIE, and if such determination is made, it includes the accounts of the VIE in its consolidated financial statements.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) is the sole source of

authoritative U.S.

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative U.S.

GAAP literature recognized by the FASB and applicable to the Company.

The Company has reviewed the FASB issued Accounting Standards Update (ASU) accounting pronouncements and interpretations thereof that have

effectiveness dates during the periods reported and in future periods.

The Company has reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods.

For any new pronouncements announced, management considers whether the new pronouncements could alter previous U.S.

GAAP and determine whether any new or modified principles will

have a material impact on the Companys reported financial position or operations in the near term.

The applicability of any standard is subject to the formal review of the Companys financial management and certain standards are under

consideration.

GAAP and determine whether any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.

The applicability of any standard is subject to the formal review of the Company’s financial management and certain standards are under consideration.

Recent Accounting Standards Adopted by the Company

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial InstrumentsCredit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which changes the methodology for measuring credit losses on financial

instruments and the timing of when such losses are recorded.

This update replaces the existing incurred loss impairment model with an expected loss model (referred to as the Current Expected Credit Loss model).

The Company adopted ASU 2016-13 and its related amendments on January 1, 2020.

The adoption of this new accounting standard and its related amendments did not have a material impact on the Companys consolidated financial

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement .

This guidance modifies the disclosure requirements on fair value measurements in Topic 820 based on the consideration of costs and benefits to promote the

appropriate exercise and discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements.

amendments in this update are effective for reporting periods beginning after December 15, 2019, with early adoption permitted.

The adoption of this accounting standard did not have a material impact on the Companys consolidated financial

Accounting Standards Recently Issued but Not Yet Adopted by the Company

In March 2020 and January 2021, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2021-01, Reference Rate Reform (Topic 848):

Scope , respectively.

ASU 2020-04 and ASU 2021-01 provide optional expedients and exceptions for applying U.S.

GAAP, to contracts, hedging relationships, and other transactions that reference the

London Interbank Offered Rate or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met.

The guidance in ASU 2020-04 and ASU 2021-01 was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2022.

The Company is currently evaluating the impact

of the adoption of ASU 2020-04 and ASU 2021-01 on its consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Simplifying the Accounting for

Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes , and clarifies certain

aspects of the current guidance to promote consistency among reporting entities.

2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020.

Most amendments within the standard

are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The Company adopted ASU 2019-12 on January 1, 2021 and the adoption of this accounting standard did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards Recently Issued but Not Yet Adopted by the Company

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

This guidance provides optional expedients and exceptions for U.S.

GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate if certain criteria are met.

The amendments in this update are effective for reporting periods that include or are subsequent to March 12, 2020 and must be applied prospectively to contract modifications and hedging relationships through December 31, 2022.

The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

All other new accounting pronouncements issued, but not yet effective or adopted have been deemed to be not relevant to the Company and,

accordingly, are not expected to have a material impact once adopted.

In August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

ASU 2020-06 also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas.

This update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted for all entities, including adoption in an interim period.

The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force) .

The guidance clarifies certain aspects of the current guidance to promote consistency among reporting of an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange.

The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted for all entities, including adoption in an interim period.

The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 606):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 as if it had originated the contracts.

Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements, if the acquiree prepared financial statements in accordance with GAAP.

The amendment in this update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including adoption in an interim period.

The guidance should be applied prospectively to business combinations occurring on or after the effective date of the amendment in this update.

The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance .

This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy.

This standard is effective for annual periods beginning after December 15, 2021.

Early adoption is permitted.

The amendments should be applied either (1) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or (2) retrospectively to those transactions.

The Company is required to adopt the guidance in the first quarter of fiscal 2023.

The Company is currently evaluating the impact of these amendments on its consolidated financial statements.

All other new accounting pronouncements issued, but not yet effective or adopted have been deemed to be not relevant to the Company and, accordingly, are not expected to have a material impact once adopted.

2021 Acquisitions

The Company acquired five businesses during the year ended December 31, 2020, of which three were sales agencies and two marketing

agencies in the United States.

The Company acquired six businesses during the year ended December 31, 2021.

The acquisitions were accounted for under the acquisition method of accounting.

As such, the purchase consideration for each acquired business was allocated to the acquired tangible and intangible assets and

liabilities assumed based upon their respective fair values.

Assets acquired and liabilities assumed in the business combination were recorded on the Companys financial statements as of the acquisition date based upon the estimated fair value

at such date.

As such, the purchase consideration for each acquired business was allocated to the acquired tangible and intangible assets and liabilities assumed based upon their respective fair values.

Assets acquired and liabilities assumed in the business combination were recorded on the Company’s financial statements as of the acquisition date based upon the estimated fair value at such date.

The excess of the purchase consideration over the estimated fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill.

The allocation of the excess purchase price was based upon preliminary

estimates and assumptions and is subject to revision when the Company receives final information.

Accordingly, the measurement period for such purchase price allocations will end when the information, or the facts and circumstances, becomes

available, but will not exceed twelve months.

The results of operations of the business acquired by the Company have been included in the Consolidated Statements of Operations and Comprehensive Loss since the date of acquisition.

The aggregate purchase price for the acquisitions referenced above was $88.1 million, which includes $68.0 million paid in cash,

$14.8 million recorded as contingent consideration liabilities, and $5.3 million recorded as holdback amounts.

Contingent consideration payments are determined based on future financial performance and payment obligations (as defined in

the applicable purchase agreement) and recorded at fair value.

The allocation of the excess purchase price was based upon preliminary estimates and assumptions and is subject to revision when the Company receives final information.

Accordingly, the measurement period for such purchase price allocations will end when the information, or the facts and circumstances, becomes available, but will not exceed twelve months.

The results of operations of each acquired business has been included in the Consolidated Statements of Operations and Comprehensive Income (Loss) since its respective date of acquisition.

The aggregate purchase price for the acquisitions referenced above was $ 76.0 million, which includes $ 42.7 million paid in cash, $ 19.8 million recorded as contingent consideration liabilities, and $ 13.5 million recorded as holdback amounts.

Contingent consideration payments are determined based on future financial performance and payment obligations (as defined in the applicable purchase agreement) and are recorded at fair value.

The maximum potential payment outcome related to the acquisitions is $ 71.4 million.

Holdback amounts are used to withhold a portion of the initial purchase price payment until

certain post-closing conditions are satisfied and are typically settled within 24 months of the acquisition.

Holdback amounts are used to withhold a portion of the initial purchase price payment until certain post-closing conditions are satisfied and are typically settled within 24 months of the acquisition.

The goodwill related to the acquisitions represented the value paid for the assembled workforce, geographic presence, and expertise.

the resulting goodwill relating to these acquisitions, $26.7 million is deductible for tax purposes.

The preliminary fair values of the identifiable assets and liabilities of the acquisitions

completed during the year ended December 31, 2020, at the respective acquisition dates, are as follows:

Of the resulting goodwill relating to these acquisitions, $ 14.3 million is deductible for tax purposes.

The preliminary fair values of the identifiable assets and liabilities of the acquisitions completed during the year ended December 31, 2021, as of the applicable acquisition dates, are as follows:

(in thousands)

2 unchanged sentences

Total consideration

Recognized amounts of identifiable assets acquired and liabilities assumed:

Recognized amounts of identifiable assets acquired and liabilities

Accounts receivable

1 unchanged sentence

Identifiable intangible assets

Accounts payable

Other liabilities

Total liabilities

Redeemable noncontrolling interest

Total identifiable net assets

Goodwill arising from acquisitions

Purchase price allocations are considered preliminary and subject to adjustment during the measurement period,

which is up to one year from the acquisition date.

The identifiable intangible assets are being amortized on a straight-line basis over

their estimated useful lives.

The identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives.

The preliminary fair value and estimated useful lives of the intangible assets acquired are as follows:

1 unchanged sentence

Client relationships

The operating results of the businesses acquired during the year ended December 31, 2020 contributed

total revenues of $64.3 million in the year ended December 31, 2020.

The Company has determined that the presentation of net income or loss from the date of acquisition is impracticable due to the integration of the operations upon

During the year ended December 31, 2020, the Company incurred $0.2 million in transaction costs related to the

acquisitions described above.

These costs have been included in Selling, general, and administrative expenses in the Consolidated Statement of Operations and Comprehensive Loss.

Developed technology

Total identifiable intangible assets

The operating results of the businesses acquired during the year ended December 31, 2021 contributed total revenues of $ 75.9 million during the year ended December 31, 2021.

The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of the operations upon acquisition.

During the year ended December 31, 2021, the Company incurred $ 1.6 million, in transaction costs related to the acquisitions described above.

These costs have been included in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

2020 Acquisitions

The Company acquired four businesses during fiscal year 2019, of which two were marketing agencies in the United States and two were sales

agencies in the Europe.

The Company acquired five businesses during the year ended December 31, 2020, of which three were sales agencies and two marketing agencies in the United States.

The acquisitions were accounted for under the acquisition method of accounting.

As such, the purchase consideration for each acquired business was allocated to the acquired tangible and intangible assets and liabilities

assumed based upon their respective fair values.

Assets acquired and liabilities assumed in the business combination were recorded on the Companys financial

statements as of the acquisition date based upon the estimated fair value at such date.

The excess of the purchase consideration over the estimated fair value of the net tangible and identifiable

intangible assets acquired was recorded as goodwill.

As such, the purchase consideration for each acquired business was allocated to the acquired tangible and intangible assets and liabilities assumed based upon their respective fair values.

Assets acquired and liabilities assumed in the business combination were recorded on the Company’s financial statements as of the acquisition date based upon the estimated fair value at such date.

The excess of the purchase consideration over the estimated fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill.

The allocation of the excess purchase price was based upon estimates and assumptions.

The results of operations of the businesses acquired by the Company have been included in the Companys

consolidated financial statements since the date of the consummation of the acquisition.

The aggregate purchase price for the

acquisitions was $14.0 million, which includes $10.6 million paid in cash, $2.5 million recorded as contingent consideration liabilities, and $0.9 million recorded as holdback amounts.

Contingent consideration payments are

determined based on future financial performance and payment obligations (as defined in the applicable purchase agreement) and recorded at fair value.

The maximum potential payment outcome related to the acquisitions referenced above is

$10.7 million.

The results of operations of the business acquired by the Company have been included in the Consolidated Statements of Operations and Comprehensive Income (Loss) since the date of acquisition.

The aggregate purchase price for the acquisitions referenced above was $ 88.1 million, which includes $ 68.0 million paid in cash, $ 14.8 million recorded as contingent consideration liabilities, and $ 5.3 million recorded as holdback amounts.

Contingent consideration payments are determined based on future financial performance and payment obligations (as defined in the applicable purchase agreement) and recorded at fair value.

The maximum potential payment outcome related to the acquisitions is $ 53.0 million.

The goodwill related to

the acquisitions represented the value paid for the assembled workforce, geographic presence, and expertise.

The goodwill related to the acquisitions represented the value paid for the assembled workforce, geographic presence, and expertise.

Of the resulting goodwill relating to these acquisitions, $ 26.7 million is deductible for tax purposes.

The fair values of the identifiable assets and liabilities of the acquisitions completed during the year ended December 31, 2019, at the

respective acquisition dates, are as follows:

The fair values of the identifiable assets and liabilities of the acquisitions completed during the year ended December 31, 2020, at the respective acquisition dates, are as follows:

(in thousands)

2 unchanged sentences

Total consideration

Recognized amounts of identifiable assets acquired and liabilities assumed:

Recognized amounts of identifiable assets acquired and liabilities

Accounts receivable

Property and equipment

Identifiable intangible assets

Accounts payable

Accrued compensation and benefits

Deferred revenue

Long-term debt

Deferred income tax liabilities

Noncontrolling interest and other liabilities

Total liabilities and noncontrolling interest

Total liabilities

Total identifiable net assets

1 unchanged sentence

(in thousands)

Weighted Average

Client relationships

Total identifiable intangible assets

The operating results of the businesses acquired during the year ended December 31,

2019 contributed total revenues of $17.3 million to the Company in such period.

The Company has determined that the presentation of net income from the date of the respective acquisitions is impracticable due to the integration of the

operations upon acquisition.

During the year ended December 31, 2019, the Company incurred $0.4 million in transaction costs

related to the acquisitions described above.

These costs have been included in Selling, general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

The operating results of the businesses acquired during the year ended December 31, 2020 contributed total revenues of $ 64.3 million in the year ended December 31, 2020.

The Company has determined that the presentation of net income or loss from the date of acquisition is impracticable due to the integration of the operations upon acquisition.

During the year ended December 31, 2020, the Company incurred $ 0.2 million in transaction costs related to the acquisitions described above.

These costs have been included in “Selling, general, and administrative expenses”

in the Consolidated Statement of Operations and Comprehensive Income (Loss).

2019 Acquisitions

The Company acquired nine businesses during fiscal year 2018, of which four were sales agencies and five were marketing agencies in the United

This included the acquisition of Take 5 in April 2018, which is discussed further in Note 1, Organization and Significant Accounting Policies .

The Company acquired four businesses during fiscal year 2019, of which two were marketing agencies in the United States and two were sales agencies in the Europe.

The acquisitions were accounted for under the acquisition method of accounting.

the purchase consideration for each acquired business was allocated to the acquired tangible and intangible assets and liabilities assumed based upon their respective fair values.

Assets acquired and liabilities assumed in the business combination

were recorded on the Companys financial statements as of the acquisition date based upon the estimated fair value at such date.

The excess of the purchase consideration over the estimated fair value of the net tangible and identifiable

intangible assets acquired was recorded as goodwill.

Excluding Take 5, the results of operations of the businesses acquired by the Company have been included in the Companys consolidated financial statements since the date of the consummation

of the acquisition.

The aggregate purchase price for the acquisitions, excluding Take 5, was $129.8 million, which includes $109.8

million paid in cash, $18.7 million recorded as contingent consideration liabilities, and $1.4 million recorded as holdback amounts.

A $79.2 million loss on Take 5 was recognized in the Companys Statement of Comprehensive Loss for the year

ended December 31, 2018, which represents $76.2 million paid in cash for Take 5 and $3.0 million of acquired liabilities remaining.

As such, the purchase consideration for each acquired business was allocated to the acquired tangible and intangible assets and liabilities assumed based upon their respective fair values.

Assets acquired and liabilities assumed in the business combination were recorded on the Company’s financial statements as of the acquisition date based upon the estimated fair value at such date.

The excess of the purchase consideration over the estimated fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill.

The allocation of the excess purchase price was based upon estimates and assumptions.

The results of operations of the businesses acquired by the Company have been included in the Company’s consolidated financial statements since the date of the consummation of the acquisition.

The aggregate purchase price for the acquisitions was $ 14.0 million, which includes $ 10.6 million paid in cash, $ 2.5 million recorded as contingent consideration liabilities, and $ 0.9 million recorded as holdback amounts.

Contingent consideration payments are determined based on future financial performance and payment obligations (as defined in the applicable purchase agreement) and recorded at fair value.

The maximum potential payment outcome related to the acquisitions referenced above is $ 10.7 million.

related to the acquisitions represented the value paid for the assembled workforce, geographic presence, and expertise.

The goodwill related to the acquisitions represented the value paid for the assembled workforce, geographic presence, and expertise.

Of the resulting goodwill relating to these acquisitions, $ 0.3 million is deductible for tax purposes.

The operating results of the businesses acquired during the year ended December 31, 2018 contributed total revenues of $29.6 million to the

Company in such period.

During the year ended December 31, 2018, the Company incurred $2.1 million in transaction costs related to the

acquisitions described above.

These costs have been included in Selling, general, and administrative expenses in the Consolidated Statements of Comprehensive Loss.

Supplemental Pro Forma Information

Supplemental information on a pro forma basis, presented as if the acquisitions executed during the period from January 1, 2018 to

March 16, 2021 had been consummated as of the beginning of the comparative prior period, is as follows:

Twelve Months Ended December 31,

The fair values of the identifiable assets and liabilities of the acquisitions completed during the year ended December 31, 2019, at the respective acquisition dates, are as follows:

(in thousands)

Consideration

Fair value of contingent consideration

Total consideration

Recognized amounts of identifiable assets acquired and liabilities

Accounts receivable

Identifiable intangible assets

Total liabilities and noncontrolling liabilities

Total identifiable net assets

Goodwill arising from acquisitions

(in thousands)

Client relationships

Total identifiable intangible assets

The operating results of the businesses acquired during the year ended December 31, 2019 contributed total revenues of $ 17.3 million to the Company in such period.

The Company has determined that the presentation of net income or loss from the date of the respective acquisitions is impracticable due to the integration of the operations upon acquisition.

During the year ended December 31, 2019, the Company incurred $ 0.4 million in transaction costs related to the acquisitions described above.

These costs have been included in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Supplemental Pro Forma Information (unaudited)

Supplemental information on an unaudited pro forma basis, presented as if the acquisitions executed during the period from January 1, 2019 to March 1, 2022 had been consummated as of the beginning of the comparative prior period, is as follows:

Year Ended December 31,

(in thousands, except per share data)

Total revenues

Net loss attributable to stockholders of Advantage Solutions Inc.

Basic and diluted net loss per common share

The unaudited pro forma supplemental information is based on estimates and assumptions which

the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, the pro forma impact of acquisition costs which consisted of legal, advisory and due diligence

fees and expenses, and the pro forma tax effect of the pro forma adjustments for the years ended December 31, 2020, 2019, and 2018.

This supplemental pro forma information has been prepared for comparative purposes and does not purport to be

indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

Net income (loss)

The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, the pro forma impact of transaction costs which consisted of legal, advisory and due diligence fees and expenses, and the pro forma tax effect of the pro forma adjustments for the years ended December 31, 2021, 2020, and 2019.

This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisitions been consummated during the periods for which pro forma information is presented.

Goodwill and Intangible Assets

1 unchanged sentence

(in thousands)

Gross carrying amount as of December 31, 2019

Accumulated impairment charge (1)

Balance at December 31, 2019

Balance at January 1, 2020

Foreign exchange translation effects

Balance at December 31, 2020

(in thousands)

Gross carrying amount as of December 31, 2018

Accumulated impairment charge (1)

Balance at December 31, 2018

Foreign exchange translation effects

Measurement period adjustments

Foreign exchange translation effects

Balance at December 31, 2021

During the fiscal year ended December 31, 2018, the Company recognized a

non-cash goodwill impairment charge of $652.0 million related to the Companys sales reporting unit as a result of the Companys annual evaluation of goodwill impairment test.

Accumulated impairment losses to goodwill were $ 652.0 million as of December 31, 2021 and 2020, respectively.

The following tables set forth information for intangible assets:

December 31, 2021

(in thousands)

Average Useful

(amounts in thousands)

Weighted Average Useful Life

Gross Carrying

Impairment Charges (1)

Finite-lived intangible assets:

6 unchanged sentences

December 31, 2020

(in thousands)

Average Useful

(amounts in thousands)

Weighted Average Useful Life

Gross Carrying

Impairment Charges

Finite-lived intangible assets:

5 unchanged sentences

Total other intangible assets

As of December 31, 2020, estimated future amortization expenses of the Companys existing intangible

assets are as follows:

As of December 31, 2021, estimated future amortization expenses of the Company’s existing intangible assets are as follows:

(in thousands)

Total amortization expense

The Company recorded all intangible assets at their respective fair values and assessed the useful lives of

The Company records all intangible assets at their respective fair values and assesses the estimated useful lives of the assets at the time of acquisition.

Client relationships were valued using the multi-period excess earnings method under the income approach.

The values of client relationships are generally regarded as the estimated economic benefit derived from the incremental revenues

and related cash flow as a direct result of the client relationships in place versus having to replicate them.

The values of client relationships are generally regarded as the estimated economic benefit derived from the incremental revenues and related cash flow as a direct result of the client relationships in place versus having to replicate them.

Further, the Company evaluated the legal, regulatory, contractual, competitive, economic or other factors in determining the useful life.

Trade names were valued using the relief-from-royalty method under the income approach.

This method relies on the premise that, in lieu of ownership, a company would be willing to pay a royalty to obtain access to the use and benefits of the trade

The Company has

considered its sales and marketing trade names related to the 2014 Topco Acquisition to be indefinite, as there is no foreseeable limit on the period of time over which such trade names are

expected to contribute to the cash flows of the reporting entity.

This method relies on the premise that, in lieu of ownership, a company would be willing to pay a royalty to obtain access to the use and benefits of the trade names.

The Company has considered its sales and marketing trade names related to the 2014 Topco Acquisition to be indefinite, as there is no foreseeable limit on the period of time over which such trade names are expected to contribute to the cash flows of the reporting entity.

Further, the Company evaluated legal, regulatory, contractual, competitive, economic and other factors in determining the useful life.

In connection with the acquisitions during the years ended December 31, 2020 and 2019, the Company recorded intangible assets of

$42.5 million and $10.4 million, respectively.

Amortization expenses included in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020, 2019 and 2018 were $191.2 million,

$189.9 million, and $188.8 million, respectively.

No impairment related to the Companys intangible assets was recorded

for the years ended December 31, 2020 and 2019.

During the fiscal year ended December 31, 2018, the Company recognized a non-cash intangible asset impairment charge of $580.0 million related to

the Companys indefinite-lived sales trade name in connection with the annual intangible impairment test (as further described in Note 1, Organization and Significant Account Policies ).

In connection with the acquisitions during the years ended December 31, 2021 and 2020, the Company recorded intangible assets of $ 35.6 million and $ 42.5 million, respectively.

Amortization expenses included in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2021, 2020 and 2019 were $ 198.9 million, $ 191.2 million, and $ 189.9 million, respectively.

No impairment related to the Company’s intangible assets was recorded for the years ended December 31, 2021, 2020, and 2019.

Prepaid and Other Assets

1 unchanged sentence

(in thousands)

Inventory and supplies

Prepaid expenses

Miscellaneous receivables

Interest rate cap

Workers' compensation receivables

Interest rate caps

Other current assets

1 unchanged sentence

(in thousands)

Operating lease

right-of-use assets

Contingent consideration receivable

Operating lease right-of-use assets

Interest rate caps

Workers' compensation receivable

3 unchanged sentences

Costs are determined on the first-in, first-out basis.

The Company records write-downs of inventories which are obsolete or in excess of anticipated demand or net realizable value based on a

consideration of marketability, historical sales and demand forecasts which consider the assumptions about future demand and market conditions.

The Company records write-downs of inventories which are obsolete or in excess of anticipated demand or net realizable value based on a consideration of marketability, historical sales and demand forecasts which consider the assumptions about future demand and market conditions.

Property and Equipment

7 unchanged sentences

Total property and equipment, net

Depreciation expense was $45.1 million, $42.7 million, and $36.4 million related to property

and equipment for the years ended December 31, 2020, 2019, and 2018, respectively.

The Company commenced a plan to strategically

exit certain offices during the year ended December 31, 2020.

In enacting the plan, the Company recognized $21.1 million of loss primarily related to disposal of property and equipment from abandoning several office leases for the year

ended December 31, 2020.

Depreciation expense was $ 41.1 million, $ 45.1 million, and $ 42.7 million related to property and equipment for the years ended December 31, 2021, 2020, and 2019, respectively.

The Company commenced a plan to strategically exit certain offices during the year ended December 31, 2020.

In enacting the plan, the Company recognized $ 21.1 million of loss primarily related to disposal of property and equipment from abandoning several office leases for the year ended December 31, 2020.

Other Liabilities

1 unchanged sentence

(in thousands)

Interest rate cap and accrued interest payable

Contingent consideration

Operating lease liability

Interest rate caps and accrued interest payable

Rebates due to retailers

Contingent consideration

Client deposits

Client refunds related to the Take 5 Matter

Employee insurance reserves

Employee medical self-insurance reserves

General liability insurance reserve

Note payable related to contingent consideration

Restructuring charges

Other accrued expenses

3 unchanged sentences

Operating lease liability

Workers' compensation

Contingent consideration

Workers compensation and other insurance reserves

Deferred employer social security taxes

Interest rate cap

Other long-term liabilities

Total other long-term liabilities

Under the workers compensation programs, the estimated liability for claims incurred but unpaid at

December 31, 2020 and 2019 were $56.2 million and $55.9 million, respectively.

Under the workers’

compensation programs, the estimated liability for claims incurred but unpaid at December 31, 2021 and 2020 were $ 57.7 million and $ 56.2 million, respectively.

These amounts include reported claims as well as claims incurred but not reported.

As of December 31, 2020, $25.6 million and $30.6 million

of this liability was included in the Accrued compensation and benefits and Other long-term liabilities in the Consolidated Balance Sheets, respectively.

As of December 31, 2019, $26.2 million and $29.7 million

of this liability was included in the Accrued compensation and benefits and Other long-term liabilities in the Consolidated Balance Sheets, respectively.

In connection with its deductible limits, the Company has standby letters-of-credit as of December 31, 2020 and 2019 in the amount of $60.7 million and $63.5 million, respectively, and a $7.5 million surety bond as of

December 31, 2020 supporting the estimated unpaid claim liabilities.

The CARES Act (as further described in Note 15, Income

Taxes ) provides for deferred payment of the employer portion of social security taxes between March 27, 2020 and December 31, 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31,

As of December 31, 2021, $ 26.3 million and $ 31.4 million of this liability was included in the “Accrued compensation and benefits”

and “Other long-term liabilities”

in the Consolidated Balance Sheets, respectively.

As of December 31, 2020, $ 25.6 million and $ 30.6 million of this liability was included in the “Accrued compensation and benefits”

and “Other long-term liabilities”

in the Consolidated Balance Sheets, respectively.

In connection with its deductible limits, the Company has standby letters-of-credit as of December 31, 2021 and 2020 in the amount of $ 54.8 million and $ 60.7 million, respectively, and $ 10.0 million and $ 7.5 million surety bond as of such years supporting the estimated unpaid claim liabilities.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) (as further described in Note 16, Income Taxes ) provides for deferred payment of the employer portion of social security taxes between March 27, 2020 and December 31, 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022.

The Company began deferring payment of the employer share of the security taxes in April 2020.

As of December 31, 2020, $24.0 million and $24.0 million of this liability was included in the Accounts payable and

Other long-term liabilities, respectively, in the Consolidated Balance Sheets.

During the year ended December 31, 2021, the Company repaid $ 24.0 million and $ 24.0 million of the remaining liability was included in the “Accounts payable”

in the Consolidated Balance Sheets as of December 31, 2021.

Contingent Consideration Liabilities

Each reporting period, the Company measures the fair value of its contingent liabilities by evaluating the significant

unobservable inputs and probability weightings using Monte Carlo simulations.

Any resulting decreases or increases in the fair value result in a corresponding gain or loss reported in Selling, general, and administrative expenses in the

Consolidated Statements of Operations and Comprehensive Loss.

The Company has reassessed the fair value of contingent consideration, noting that as of December 31, 2020, projected EBITDA related to acquisitions, which was anticipated to

contribute to measurement period EBITDA, was higher than expected.

This reassessment resulted in a fair value adjustment of a $7.2 million loss that was included in Selling, general, and administrative expenses in the Consolidated

Statements of Operations and Comprehensive Loss.

The remaining change in fair value for the year ended December 31, 2020 was due to present value accretion that was included in Interest expense, net in the Consolidated Statements of

Operations and Comprehensive Loss.

Each reporting period, the Company measures the fair value of its contingent liabilities by evaluating the significant unobservable inputs and probability weightings using Monte Carlo simulations.

Any resulting decreases or increases in the fair value result in a corresponding gain or loss reported in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company has reassessed the fair value of contingent consideration, noting that as of December 31, 2021, projected EBITDA related to acquisitions, which was anticipated to contribute to measurement period EBITDA, was higher than expected.

This reassessment resulted in a fair value adjustment of a $ 4.6 million loss that was included in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

remaining change in fair value for the year ended December 31, 2021 was due to present value accretion that was included in “Interest expense, net”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 31, 2021, the maximum potential payment outcomes were $ 283.0 million.

Company had unsecured loan notes in aggregate of $4.0 million outstanding as of December 31, 2020 to settle contingent considerations related to 2017 sales acquisitions, which is included in Other accrued expenses in the

Consolidated Balance Sheets.

The following table summarizes the changes in the carrying value of estimated contingent

consideration liabilities:

Year Ended December 31,

The Company had unsecured loan notes in aggregate of $ 4.0 million outstanding as of December 31, 2020 to settle contingent considerations related to 2017 sales acquisitions, which was included in “Other accrued expenses”

in the Consolidated Balance Sheets.

The following table summarizes the changes in the carrying value of the contingent consideration liabilities:

(in thousands)

1 unchanged sentence

Fair value of acquisitions

Note issuance for settlements

Changes in fair value

Note issuance for settlements

Measurement period adjustments

Foreign exchange translation effects

1 unchanged sentence

(in thousands)

New Term Loan Facility

First Lien Term Loan

Second Lien Term Loan

New Revolving Credit Facility

Term Loan Facility

Revolving Credit Facility

Government loans for COVID-19 relief

Notes payable and deferred obligations

2 unchanged sentences

Long-term debt, net of current portion

First Lien Credit Agreement, Second Lien Credit Agreement, and AR Facility

On July 25, 2014, certain subsidiaries of the Company entered into the following credit facilities with different syndicates of lenders in

connection with the 2014 Topco Acquisition:

a first lien credit agreement (the First Lien Credit Agreement) that provided for:

a $200.0 million revolving line of credit (the Revolving Credit Facility), of which up to

$75.0 million may be used for letters of credit,

a $1.8 billion term loan facility (the Initial First Lien Term Loans),

commitments for an additional $60.0 million of unfunded delayed draw term loans (the Delayed Draw

Commitments), and

uncommitted incremental revolving and first lien term loan facilities, subject to certain incurrence tests;

a second lien credit agreement (the Second Lien Credit Agreement) that provided for:

a $760.0 million term loan facility (the Second Lien Term Loans), and

uncommitted incremental second lien term loan facilities, subject to certain incurrence tests.

The Company incurred $1.8 billion of Initial First Lien Term Loans and $760.0 million of Second Lien Term

Loans in July 2014, and used the proceeds to finance the 2014 Topco Acquisition and to pay related fees

and expenses.

The Company incurred an aggregate of $60.0 million of additional first lien term loans under the Delayed Draw Commitments in September and November 2014, and used the proceeds

to finance certain acquisitions and to pay related fees and expenses.

The Company incurred $150.0 million of additional first lien term loans under the incremental facilities in April 2015 and used the proceeds to finance additional

acquisitions, pay related fees and expenses, repay loans under the Revolving Credit Facility and for general corporate purposes.

The Company also uses the Revolving Credit Facility to maintain various letters of credit.

In May 2017, the Company

incurred $225.0 million of additional First Lien Term Loans and extended the termination with respect to a $150.0 million portion of the Companys Revolving Credit Facility (the Series A Revolving Loan Facility) from

July 25, 2019 to April 23, 2021.

The proceeds were used to finance additional acquisitions, to repay existing loans under the Revolving Credit Facility and for general corporate purposes.

From time to time the Borrower has incurred and

repaid loans under the Revolving Credit Facility, and those borrowings generally are used for working capital purposes and to fund acquisitions.

The Borrower also uses the Revolving Credit Facility (including the Series A Revolving Loan Facility) to

issue letters of credit on the Borrower and its subsidiaries behalf.

In February 2018, the Borrower executed the Third Amendment to First Lien Credit Agreement, which amended the First Lien Credit Agreement to enable the Borrower to incur the

Incremental First Lien Term Loans in an aggregate principal amount of $350.0 million.

The Borrower used the proceeds of the Incremental Term Loans to pay for the refinancing of all existing indebtedness of Daymon, finance additional

acquisitions, and for general corporate purposes.

As of December 31, 2019, the Company had $2.5 billion of debt outstanding

under the First Lien Term Loan and $760 million of debt outstanding under the Second Lien which were scheduled to mature in July 2021 and July 2022, respectively.

In April 2020, the Company entered into an accounts receivable securitization facility under which accounts receivable of certain domestic

subsidiaries are sold on a non-recourse basis to a special purpose entity (SPE), which is a bankruptcy-remote, consolidated subsidiary of the Company.

Accordingly, the assets of the SPE

are not available to satisfy the obligations of the Company or any of its subsidiaries.

From time to time, the SPE may finance such accounts receivable with a revolving loan facility secured by a pledge of such accounts receivable.

The amount of

outstanding borrowings on the revolving loan facility at any one time is limited to $300.0 million.

The agreement governing the accounts receivable securitization facility provides for an initial three-year term and may be extended and contains

certain covenants and termination events.

An occurrence of an event of default or a termination event under the accounts receivable securitization facility may give rise to the right of its counterparty to terminate this facility.

On April 27, 2020 the Company obtained $120.0 million under its accounts receivable securitization facility, representing the

minimum funding threshold of 60.0% of the $200.0 million borrowing base.

The Company guaranteed the performance of the obligations of its subsidiaries that sell and service the account receivable under the accounts receivable securitization

In accordance with the terms of the accounts receivable securitization facility, the Company may use the borrowings for working capital, general corporate or other purposes permitted thereunder.

In connection with the Merger, $3.3 billion of the Companys debt arrangements under the First Lien Credit Agreement, Second Lien

Credit Agreement, and AR Facility that existed in 2020 (collectively, the Credit Facilities) were repaid and terminated, with incremental costs of $86.8 million.

Of these fees, $56.7 million were capitalized and recorded as

deferred debt issuance costs and $30.1 million were expensed.

As of the time of the repayment, there were $16.7 million of unamortized fees related to the Credit Facilities.

Of these fees, $5.4 million fees continued to be capitalized

as deferred issuance costs and $11.3 million were expensed as a loss on the extinguishment of debt.

All expensed fees are included in Interest expense, net, in the Consolidated Statements of Operations and Comprehensive Loss.

Fees related to the issuance or refinancing of long-term debt capitalized are amortized over the term of the debt using the effective interest

The amortization of deferred debt issuance costs is included in

Interest expense, net, in the Consolidated Statements of Operations and Comprehensive Loss and amounted to $14.8 million, $16.9 million, and $15.3 million for the years

ended December 31, 2020, 2019 and 2018, respectively.

As of December 31, 2020, Long-term debt in the Consolidated Balance Sheets included debt issuance costs of $62.1 million less accumulated amortization of

$1.6 million.

New Senior Secured Credit Facilities

In connection with the consummation of the Transaction, Advantage Sales & Marketing Inc., an indirect wholly-owned subsidiary of the

Company (the Borrower) entered into (i) a new senior secured asset-based revolving credit facility in an aggregate principal amount of up to $400.0 million, subject to borrowing base capacity (the New Revolving Credit

Facility) and (ii) a new secured first lien term loan credit facility in an aggregate principal amount of $1.325 billion (the New Term Loan Facility and together with the New Revolving Credit Facility, the New

Senior Secured Credit Facilities

New Revolving Credit Facility

The New Revolving Credit Facility provides for revolving loans and letters of credit in an aggregate amount of up to $400.0 million,

subject to borrowing base capacity.

Letters of credit are limited to the lesser of (a) $150.0 million and (b) the aggregate unused amount of commitments under the New Revolving Credit Facility then in effect.

Loans under the New Revolving

Credit Facility may be denominated in either U.S.

In connection with the consummation of the Transactions, Advantage Sales & Marketing Inc., an indirect wholly-owned subsidiary of the Company (the “Borrower”), entered into (i) a senior secured asset-based revolving credit facility in an aggregate principal amount of up to $ 400.0 million, subject to borrowing base capacity (as amended and/or restated from time to time, the “Revolving Credit Facility”) and (ii) a secured first lien term loan credit facility in an aggregate principal amount of $ 1.325 billion (as amended and/or/restated from time to time, the “Term Loan Facility”

and together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”).

Revolving Credit Facility

The Revolving Credit Facility provides for revolving loans and letters of credit in an aggregate amount of up to $400.0 million, subject to borrowing base capacity.

Letters of credit are limited to the lesser of (a) $ 150.0 million and (b) the aggregate unused amount of commitments under the Revolving Credit Facility then in effect.

Loans under the Revolving Credit Facility may be denominated in either U.S.

dollars or Canadian dollars.

Bank of America, N.A., will act as administrative agent and ABL Collateral Agent.

The New Revolving Credit Facility matures five years after the date the Company enters

into our New Revolving Credit Facility.

The Borrower may use borrowings under the New Revolving Credit Facility to fund working capital and for other general corporate purposes, including permitted acquisitions and other investments.

Borrowings under the New Revolving Credit Facility are limited by borrowing base calculations based on the sum of specified percentages of

eligible accounts receivable plus specified percentages of qualified cash, minus the amount of any applicable reserves.

Borrowings will bear interest at a floating rate, which can be either

an adjusted Eurodollar rate plus an applicable margin or, at the Borrowers option, a base rate plus an applicable margin.

The applicable margins for the

New Revolving Credit Facility are 2.00%, 2.25% or 2.50%, with respect to Eurodollar rate borrowings and 1.00%, 1.25% or 1.50%, with respect to base rate borrowings, in each case depending on average excess availability under the New Revolving Credit

The Borrowers ability to draw under the New Revolving Credit Facility or issue letters of credit thereunder will be conditioned upon, among other things, the Borrowers delivery of prior written notice of a borrowing or

issuance, as applicable, the Borrowers ability to reaffirm the representations and warranties contained in the credit agreement governing the New Revolving Credit Facility and the absence of any default or event of default thereunder.

The Borrowers obligations under the New Revolving Credit Facility are guaranteed by Karman Intermediate Corp.

(Holdings) and

all of the Borrowers direct and indirect wholly owned material U.S.

subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions based on immateriality

thresholders of aggregate assets and revenues of Canadian subsidiaries) (the Guarantors).

The New Revolving Credit Facility is secured by a lien on substantially all of Holdings, the Borrowers and the Guarantors assets

(subject to certain permitted exceptions).

The New Revolving Credit Facility has a first-priority lien on the current asset collateral and a second-priority lien on security interests in the fixed asset collateral (second in priority to the liens

securing the Notes and the New Term Loan Facility discussed below), in each case, subject to other permitted liens.

The New Revolving

Credit Facility has the following fees:

(i) an unused line fee of 0.375% or 0.250% per annum of the unused portion of the New Revolving Credit Facility, depending on average excess availability under the New Revolving Credit Facility;

Bank of America, N.A.

( “Bank of America”

) , will act as administrative agent and ABL Collateral Agent.

The Revolving Credit Facility matures five years after the date the Company enters into the Company's Revolving Credit Facility.

The Borrower may use borrowings under the Revolving Credit Facility to fund working capital and for other general corporate purposes, including permitted acquisitions and other investments.

Borrowings under the Revolving Credit Facility are limited by borrowing base calculations based on the sum of specified percentages of eligible accounts receivable plus specified percentages of qualified cash, minus the amount of any applicable reserves.

Borrowings will bear interest at a floating rate, which can be either an adjusted Eurodollar rate plus an applicable margin or, at the

Borrower’s option, a base rate plus an applicable margin.

The applicable margins for the Revolving Credit Facility are 2.00 %, 2.25 % or 2.50 %, with respect to Eurodollar rate borrowings and 1.00 %, 1.25 % or 1.50 %, with respect to base rate borrowings, in each case depending on average excess availability under the Revolving Credit Facility.

The Borrower’s ability to draw under the Revolving Credit Facility or issue letters of credit thereunder will be conditioned upon, among other things, the Borrower’s delivery of prior written notice of a borrowing or issuance, as applicable, the Borrower’s ability to reaffirm the representations and warranties contained in the credit agreement governing the Revolving Credit Facility and the absence of any default or event of default thereunder.

The Borrower’s obligations under the Revolving Credit Facility are guaranteed by Karman Intermediate Corp.

(“Holdings”) and all of the Borrower’s direct and indirect wholly owned material U.S.

subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions based on immateriality thresholders of aggregate assets and revenues of Canadian subsidiaries) (the “Guarantors”).

The Revolving Credit Facility is secured by a lien on substantially all of Holdings’, the Borrower’s and the Guarantors’

assets (subject to certain permitted exceptions).

The Revolving Credit Facility has a first-priority lien on the current asset collateral and a second-priority lien on security interests in the fixed asset collateral (second in priority to the liens securing the Notes and the Term Loan Facility discussed below), in each case, subject to other permitted liens.

The Revolving Credit Facility has the following fees:

(i) an unused line fee of 0.375 % or 0.250 % per annum of the unused portion of the Revolving Credit Facility, depending on average excess availability under the Revolving Credit Facility;

(ii) a letter of credit participation fee on the aggregate stated amount of each letter of credit equal to the applicable margin for adjusted Eurodollar rate loans, as applicable;

and (iii) certain other customary fees and expenses of the

lenders and agents thereunder.

The New Revolving Credit Facility contains customary covenants, including, but not limited

to, restrictions on the Borrowers ability and that of its subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay

dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness, enter into transactions with affiliates or change its line of business.

The New Revolving Credit Facility will require the maintenance of a

fixed charge coverage ratio (as set forth in the credit agreement governing the New Revolving Credit Facility) of 1.00 to 1.00 at the end of each fiscal quarter when excess availability is less than the greater of $25.0 million and 10% of the

lesser of the borrowing base and maximum borrowing capacity.

and (iii) certain other customary fees and expenses of the lenders and agents thereunder.

The Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on the Borrower’s ability and that of its subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness, enter into transactions with affiliates or change its line of business.

The Revolving Credit Facility will require the maintenance of a fixed charge coverage ratio (as set forth in the credit agreement governing the Revolving Credit Facility) of 1.00 to 1.00 at the end of each fiscal quarter when excess availability is less than the greater of $ 25.0 million and 10 % of the lesser of the borrowing base and maximum borrowing capacity.

Such fixed charge coverage ratio will be tested at the end of each quarter until such time as excess availability exceeds the level set forth above.

The New Revolving Credit Facility provides that, upon the occurrence of certain events of default, the Borrowers obligations thereunder

may be accelerated and the lending commitments terminated.

Such events of default include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material

indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, material pension-plan events, certain

change of control events and other customary events of default.

New Term Loan Facility

The New Term Loan Facility consists of a term loan facility denominated in US dollars in an aggregate principal amount of $1.325 billion.

Borrowings under the New Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.00% per annum of the principal amount.

Borrowings will bear interest at a floating rate, which can be either an adjusted Eurodollar rate

plus an applicable margin or, at the Borrowers option, a base rate plus an applicable margin.

The applicable margins for the New Term Loan Facility are 5.25% with respect to Eurodollar rate borrowings and 4.25% with respect to base rate

The Borrower may voluntarily prepay loans or reduce commitments under the New Term Loan Facility, in whole or in part,

subject to minimum amounts, with prior notice but without premium or penalty (other than a 1.00% premium on any prepayment in connection with a repricing transaction prior to the date that is twelve months after the date we entered into the New Term

Loan Facility).

The Borrower will be required to prepay the New Term Loan Facility with 100% of the net cash proceeds of certain asset

sales (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios) and subject to certain reinvestment rights, 100% of the net cash proceeds of certain debt issuances and 50% of excess cash flow (such

percentage subject to reduction based on the achievement of specific first lien net leverage ratios).

The Borrower was not required to make any excess cash flow payment for the year ended December 31, 2020, and the Borrower did not make any

other mandatory or voluntary prepayments of the New Term Loan Facility for the year ended December 31, 2020.

The Borrowers

obligations under the New Term Loan Facility are guaranteed by Holdings and the Guarantors.

The New Term Loan Facility is secured by a lien on substantially all of Holdings, the Borrowers and the Guarantors assets (subject to

certain permitted exceptions).

The New Term Loan Facility has a first-priority lien on the fixed asset collateral (equal in priority with the liens securing the Notes) and a second-priority lien on the current asset collateral (second in priority to

the liens securing the New Revolving Credit Facility), in each case, subject to other permitted liens.

The New Term Loan Facility

contains certain customary negative covenants, including, but not limited to, restrictions on the Borrowers ability and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or

security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

The New Term Loan Facility provides that, upon the occurrence of certain events of default,

the Companys obligations thereunder may be accelerated.

Such events of default will include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other

material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, change of control and other

customary events of default.

The Revolving Credit Facility provides that, upon the occurrence of certain events of default, the Borrower’s obligations thereunder may be accelerated and the lending commitments terminated.

Such events of default include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, material pension-plan events, certain change of control events and other customary events of default.

On October 28, 2021, the Borrower and Holdings also entered into the First Amendment to ABL Revolving Credit Agreement (the “ABL Amendment”), which amended the ABL Revolving Credit Agreement, dated October 28, 2020, by and among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent.

The ABL Amendment was entered into by the Borrower to amend certain terms and provisions, including (i) reducing the interest rate floor for Eurocurrency rate loans from 0.50 % to 0.00 % and base rate loans from 1.50 % to 1.00 %, and (ii) updating the provisions by which U.S.

Dollar LIBOR will eventually be replaced with SOFR or another interest rate benchmark to reflect the most recent standards and practices used in the industry.

The ABL amendment was deemed to be a modification of the revolving credit facility for accounting purposes.

Term Loan Facility

The Term Loan Facility consists of a term loan credit facility denominated in U.S.

dollars in an aggregate principal amount of $ 1.325 billion.

Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.00 % per annum of the principal amount.

Borrowings will bear interest at a floating rate, which can be either an adjusted Eurodollar rate plus an applicable margin or, at the Borrower’s option, a base rate plus an applicable margin.

The applicable margins for the Term Loan Facility are 5.25 % with respect to Eurodollar rate borrowings and 4.25 % with respect to base rate borrowings.

The Borrower may voluntarily prepay loans or reduce commitments under the Term Loan Facility, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty (other than a 1.00 % premium on any prepayment in connection with a repricing transaction prior to the date that is twelve months after the date the Company entered into the Term Loan Facility on October 28, 2020).

The Borrower will be required to prepay the Term Loan Facility with 100 % of the net cash proceeds of certain asset sales (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios) and subject to certain reinvestment rights, 100 % of the net cash proceeds of certain debt issuances and 50 % of excess cash flow (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios).

The Borrower was not required to make any excess cash flow payment for the year ended December 31, 2020, and the Borrower did not make any other mandatory or voluntary prepayments of the Term Loan Facility for the year ended December 31, 2021.

The Borrower’s obligations under the Term Loan Facility are guaranteed by Holdings and the Guarantors.

The Term Loan Facility is secured by a lien on substantially all of Holdings’, the Borrower’s and the Guarantors’

assets (subject to certain permitted exceptions).

The Term Loan Facility has a first- priority lien on the fixed asset collateral (equal in priority with the liens securing the Notes) and a second-priority lien on the current asset collateral (second in priority to the liens securing the Revolving Credit Facility), in each case, subject to other permitted liens.

The Term Loan Facility contains certain customary negative covenants, including, but not limited to, restrictions on the Borrower’s ability and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

The Term Loan Facility provides that, upon the occurrence of certain events of default, the Company’s obligations thereunder may be accelerated.

Such events of default will include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, change of control and other customary events of default.

On October 28, 2021 (the “First Lien Amendment Effective Date”), the Borrower, together Holdings and certain of the Borrower’s subsidiaries, entered into Amendment No.

1 to the First Lien Credit Agreement (the “First Lien Amendment”), which amended the Term Loan Facility, dated October 28, 2020, by and among the Borrower, Holdings, Bank of America, as administrative agent and collateral agent, each lender party from time to time thereto, and the other parties thereto.

The First Lien Amendment was entered into by the Borrower to reduce the applicable interest rate on the term loan to 5.25 % per annum.

Additional terms and provisions amended include (i) resetting the period for six months following the First Lien Amendment Effective Date in which a 1.00 % prepayment premium shall apply to any prepayment of the term loan in connection with certain repricing events, and (ii) updating the provisions by which U.S.

Dollar LIBOR will eventually be replaced with SOFR or another interest rate benchmark to reflect the most recent standards and practices used in the industry.

Th e First Lien Amendment was deemed to be a modification of the term loan facility for accounting purposes.

In connection with the First Lien Amendment, the Company incurred $ 2.3 million of third-party fees and expenses and recognized $ 1.5 million of non-cash expense on the extinguishment of debt from write off of unamortized debt issuance costs which were recorded in " Interest expense, net”

in the Consolidated Statements of Operations and Comprehensive Income (Loss) during the year ended December 31, 2021.

Senior Secured Notes

In connection with the Closing, Advantage Solutions FinCo LLC (Finco) issued $775.0 million aggregate principal amount of

6.50% Senior Secured Notes due 2028 (the Notes).

In connection with the Transactions, Advantage Solutions FinCo LLC (“Finco”) issued $ 775.0 million aggregate principal amount of 6.50 % Senior Secured Notes due 2028 (the “Notes”).

Substantially concurrently with the Merger, Finco merged with and into Advantage Sales & Marketing Inc.

(the Issuer), with the Issuer continuing as the surviving

entity and assuming the obligations of Finco.

(the “Issuer”), with the Issuer continuing as the surviving entity and assuming the obligations of Finco.

The Notes were sold to BofA Securities, Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co.

1 unchanged sentence

The Notes were resold to certain non-U.S.

persons pursuant to Regulation S under the Securities Act of 1933, as amended (the Securities Act ), and to persons reasonably believed to be qualified institutional buyers pursuant to

Rule 144A under the Securities Act at a purchase price equal to 100% of their principal amount.

The terms of the Notes are governed by an Indenture, dated as of October 28, 2020 (the Indenture), among Finco, the Issuer, the

guarantors named therein (the Notes Guarantors) and Wilmington Trust, National Association, as trustee and collateral agent.

persons pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), and to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act at a purchase price equal to 100 % of their principal amount.

The terms of the Notes are governed by an Indenture, dated as of October 28, 2020 (the “Indenture”), among Finco, the Issuer, the guarantors named therein (the “Notes Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent.

Interest and maturity

Interest on the Notes is payable semi-annually in arrears on May 15 and November 15 at a rate of 6.50% per annum, commencing on

May 15, 2021.

Interest on the Notes is payable semi-annually in arrears on May 15 and November 15 at a rate of 6.50% per annum, commencing on May 15, 2021 .

The Notes will mature on November 15, 2028 .

The Notes are guaranteed by Holdings and each of the Issuers direct and indirect wholly owned material U.S.

subsidiaries (subject to

certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions based on immateriality thresholders of aggregate assets and revenues of Canadian subsidiaries) that is a borrower or guarantor

under the New Term Loan Facility.

The Notes are guaranteed by Holdings and each of the Issuer’s direct and indirect wholly owned material U.S.

subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions

based on immateriality thresholders of aggregate assets and revenues of Canadian subsidiaries) that is a borrower or guarantor under the Term Loan Facility.

Security and Ranking

The Notes and the related guarantees are the general, senior secured obligations of the Issuer and the Notes Guarantors, are secured on a

first-priority pari passu basis by security interests on the fixed asset collateral (equal in priority with liens securing the New Term Loan Facility), and are secured on a second-priority basis by security interests on the current

asset collateral (second in priority to the liens securing the New Revolving Credit Facility and equal in priority with liens securing the New Term Loan Facility), in each case, subject to certain limitations and exceptions and permitted liens.

The Notes and related guarantees rank (i) equally in right of payment with all of the Issuers and the Guarantors senior

indebtedness, without giving effect to collateral arrangements (including the New Senior Secured Credit Facilities) and effectively equal to all of the Issuers and the Guarantors senior indebtedness secured on the same priority basis as

the Notes, including the New Term Loan Facility, (ii) effectively subordinated to any of the Issuers and the Guarantors indebtedness that is secured by assets that do not constitute collateral for the Notes to the extent of the

value of the assets securing such indebtedness and to indebtedness that is secured by a senior-priority lien, including the New Revolving Credit Facility to the extent of the value of the current asset collateral and (iii) structurally

subordinated to the liabilities of the Issuers non-Guarantor subsidiaries.

The Notes and the related guarantees are the general, senior secured obligations of the Issuer and the Notes Guarantors, are secured on a first-priority pari passu basis by security interests on the fixed asset collateral (equal in priority with liens securing the Term Loan Facility), and are secured on a second-priority basis by security interests on the current asset collateral (second in priority to the liens securing the Revolving Credit Facility and equal in priority with liens securing the Term Loan Facility), in each case, subject to certain limitations and exceptions and permitted liens.

The Notes and related guarantees rank (i) equally in right of payment with all of the Issuer’s and the Guarantors’

senior indebtedness, without giving effect to collateral arrangements (including the Senior Secured Credit Facilities) and effectively equal to all of the Issuer’s and the Guarantors’

senior indebtedness secured on the same priority basis as the Notes, including the Term Loan Facility, (ii) effectively subordinated to any of the Issuer’s and the Guarantors’

indebtedness that is secured by assets that do not constitute collateral for the Notes to the extent of the value of the assets securing such indebtedness and to indebtedness that is secured by a senior-priority lien, including the Revolving Credit Facility to the extent of the value of the current asset collateral and (iii) structurally subordinated to the liabilities of the Issuer’s non-Guarantor subsidiaries.

Optional redemption for the Notes

The Notes are redeemable on or after November 15, 2023 at the applicable redemption prices specified in the Indenture plus accrued and

unpaid interest.

The Notes may also be redeemed at any time prior to November 15, 2023 at a redemption price equal to 100% of the aggregate principal amount of such Notes to be redeemed plus a make-whole premium, plus accrued and

unpaid interest.

In addition, the Issuer may redeem up to 40% of the original aggregate principal amount of Notes before November 15, 2023 with the net cash proceeds of certain equity offerings at a redemption price equal to 106.5% of the

aggregate principal amount of such Notes to be redeemed, plus accrued and unpaid interest.

Furthermore, prior to November 15, 2023, the Issuer may redeem during each calendar year up to 10% of the original aggregate principal amount of the

Notes at a redemption price equal to 103% of the aggregate principal amount of such Notes to be redeemed, plus accrued and unpaid interest.

If the Issuer or its restricted subsidiaries sell certain of their respective assets or experience specific

kinds of changes of control, subject to certain exceptions, the Issuer must offer to purchase the Notes at par.

In connection with any offer to purchase all Notes, if holders of no less than 90% of the aggregate principal amount of Notes validly

tender their Notes, the Issuer is entitled to redeem any remaining Notes at the price offered to each holder.

The Notes are redeemable on or after November 15, 2023 at the applicable redemption prices specified in the Indenture plus accrued and unpaid interest.

The Notes may also be redeemed at any time prior to November 15, 2023 at a redemption price equal to 100 % of the aggregate principal amount of such Notes to be redeemed plus a “make-whole”

premium, plus accrued and unpaid interest.

In addition, the Issuer may redeem up to 40 % of the original aggregate principal amount of Notes before November 15, 2023 with the net cash proceeds of certain equity offerings at a redemption price equal to 106.5 % of the aggregate principal amount of such Notes to be redeemed, plus accrued and unpaid interest.

Furthermore, prior to November 15, 2023, the Issuer may redeem during each calendar year up to 10 % of the original aggregate principal amount of the Notes at a redemption price equal to 103 % of the aggregate principal amount of such Notes to be redeemed, plus accrued and unpaid interest.

If the Issuer or its restricted subsidiaries sell certain of their respective assets or experience specific kinds of changes of control, subject to certain exceptions, the Issuer must offer to purchase the Notes at par.

In connection with any offer to purchase all Notes, if holders of no less than 90 % of the aggregate principal amount of Notes validly tender their Notes, the Issuer is entitled to redeem any remaining Notes at the price offered to each holder.

Restrictive covenants

The Notes are subject to covenants that, among other things limit the Issuers ability and its restricted subsidiaries

The Notes are subject to covenants that, among other things limit the Issuer’s ability and its restricted subsidiaries’

incur additional indebtedness or guarantee indebtedness;

pay dividends or make other distributions in respect of, or repurchase or redeem, the Issuers or a parent entitys capital stock;

prepay, redeem or repurchase certain

indebtedness;

pay dividends or make other distributions in respect of, or repurchase or redeem, the Issuer’s or a parent entity’s capital stock;

prepay, redeem or repurchase certain indebtedness;

issue certain preferred stock or similar equity securities;

2 unchanged sentences

enter into transactions with affiliates;

enter into agreements restricting the Issuers

subsidiaries ability to pay dividends;

and consolidate, merge or sell all or substantially all of the Issuers assets.

Most of these covenants will be suspended on the Notes so long as they have investment grade ratings from both

Moodys Investors Service, Inc.

enter into agreements restricting the Issuer’s subsidiaries’

ability to pay dividends;

and consolidate, merge or sell all or substantially all of the Issuer’s assets.

Most of these covenants will be suspended on the Notes so long as they have investment grade ratings from both Moody’s Investors Service, Inc.

and S&P Global Ratings and so long as no default or event of default under the Indenture has occurred and is continuing.

Events of default

following constitute events of default under the Notes, among others:

The following constitute events of default under the Notes, among others:

default in the payment of interest;

1 unchanged sentence

failure to comply with covenants;

failure to pay other indebtedness after final maturity or acceleration

of other indebtedness exceeding a specified amount;

failure to pay other indebtedness after final maturity or acceleration of other indebtedness exceeding a specified amount;

certain events of bankruptcy;

1 unchanged sentence

voidance of subsidiary guarantees;

failure of any material provision of any

security document or intercreditor agreement to be in full force and effect;

failure of any material provision of any security document or intercreditor agreement to be in full force and effect;

and lack of perfection of liens on a material portion of the collateral, in each case subject to applicable grace periods.

Government Loans for COVID-19 Relief

On May 25, 2020, a subsidiary of the Company operating in Japan entered into two loan agreements from a bank lender pursuant to a local

government loan program.

On May 25, 2020, a majority owned subsidiary of the Company operating in Japan entered into two loan agreements with a bank lender pursuant to a local government loan program.

Subsequently, one of the loans was refinanced on October 26, 2020.

No loss on extinguishment of debt was recognized.

The loans, which includes a refinanced loan on October 26, 2020, bear interest rates of 1.82% and

1.83% per annum with maturity dates of May 27, 2029 and October 27, 2029, respectively, and amounts under the loans will be repayable to the lender in monthly installments.

As of December 31, 2020, the Company had an aggregate

principal amount of $2.9 million borrowings outstanding.

The loans, which includes the loan that was refinanced on October 26, 2020, bear interest rates of 1.82 % and 1.83 % per annum with maturity dates of May 27, 2029 and October 27, 2029 , respectively, and the amounts under the loans will be repayable to the lender in monthly installments.

On December 28, 2021, the same subsidiary entered into a loan agreement from the bank lender pursuant to a local government loan program.

The purpose of the loan is to use the borrowed funds for working capital and to fund the anticipated recovery of business operations from the COVID-19 pandemic.

The loan bears interest rate of 0.35 % per annum until December 24, 2024 , at which time the loan will bear an interest rate of 1.25 % until the maturity date of December 31, 2036 .

As of December 31, 2021 and 2020, the Company had aggregate principal amounts of $ 5.2 million and $ 2.9 million borrowings outstanding, respectively, associated with government loan programs for relief associated with the COVID-19 pandemic.

Debt Maturities

Future minimum principal payments on long-term debt are as follows:

1 unchanged sentence

Total future minimum principal payments

The Company leases facilities, and equipment under noncancelable leases that have been classified as operating leases for financial reporting

The Company leases facilities, and equipment under noncancelable leases that have been classified as operating leases for financial reporting purposes.

These leases often include one or more options to renew and the lease term includes the renewal terms when it is reasonably certain that the Company will exercise the option.

In general, for the Companys material leases, the renewal

options are not included in the calculation of its right-of-use assets and lease liabilities, as the Company does not believe that it is reasonably certain that these

renewal options will be exercised.

The Companys lease agreements do not contain any material residual guarantees or material restrictive covenants.

All operating lease expenses are recognized on a straight-line basis over the lease term as a component of Selling, general, and

administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

Payments under the Companys lease arrangements are primarily fixed.

However, certain lease agreements contain variable costs, which are expensed

as incurred and not included in the calculation of the Companys right-of-use assets and related liabilities for those leases.

These costs typically include real

estate taxes, common area maintenance and utilities for which the Company is obligated to pay under the terms of those leases.

years ended December 31, 2020 and 2019, the Company expensed approximately $44.2 million and $53.5 million of total operating lease costs, which includes $6.6 million and $8.5 million of variable lease costs, respectively.

During the year ended December 31, 2018, the Company recognized $48.7 million of total operating lease expense.

In general, for the Company’s material leases, the renewal options are not included in the calculation of its right-of-use assets and lease liabilities, as the Company does not believe that it is reasonably certain that these renewal options will be exercised.

The Company’s lease agreements do not contain any material residual guarantees or material restrictive covenants.

All operating lease expenses are recognized on a straight-line basis over the lease term as a component of “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Payments under the Company’s lease arrangements are primarily fixed.

However, certain lease agreements contain variable costs, which are expensed as incurred and not included in the calculation of the Company’s right-of-use assets and related liabilities for those leases.

These costs typically include real estate taxes, common area maintenance and utilities for which the Company is obligated to pay under the terms of those leases.

During the years ended December 31, 2021, 2020, and 2019, the Company expensed approximately $ 28.7 million, $ 44.2 million, and $ 53.5 million, respectively, of total operating lease costs, which includes $ 4.6 million, $ 6.6 million, and $ 8.5 million of variable lease costs, respectively.

Beginning in mid-March of 2020, in response to the COVID-19 pandemic, the Company established a global work from home policy.

A significant portion of the

Companys office-based workforce temporarily transitioned to working from home and the Company commenced a plan to strategically exit certain offices during the year ended December 31, 2020.

Based on a number of factors, the Company

concluded that this strategic initiative did not result in a triggering event that would indicate that the Companys related asset groups may not be recoverable as of December 31, 2020.

In enacting the plan, the Company abandoned several

office leases prior to reaching termination agreements with its landlords, and as a result, adjusted the useful life of these asset to reflect the remaining expected use.

The reduction to

the right-of use assets and liabilities related to these leases for the year ended December 31, 2020 were $41.8 million and $42.6 million, respectively, resulting in additional lease

gain of $0.8 million.

Additionally, the Company paid $18.0 million in termination fees for the year ended December 31, 2020, which was recorded in Selling, general and administrative expenses in the Consolidated Statements

of Operations and Comprehensive Loss.

Based on the present value of the lease payments for the remaining lease term of the

Companys existing leases, the Companys right-of-use assets and lease liabilities for operating leases as of December 31, 2020 and 2019 were as follows:

A significant portion of the Company’s office-based workforce temporarily transitioned to working from home and the Company commenced a plan to strategically exit certain offices during the year ended December 31, 2020.

Based on a number of factors, the Company concluded that this strategic initiative did not result in a triggering event that would indicate that the Company’s related asset groups may not be recoverable as of December 31, 2020.

In enacting the plan, the Company abandoned several office leases prior to reaching termination agreements with its landlords, and as a result, adjusted the useful life of these asset to reflect the remaining expected use.

The reduction to the right-of use assets and liabilities related to these leases for the year ended December 31, 2021 was $ 5.7 million and $ 7.6 million, respectively, resulting in an additional lease gain of $ 1.9 million.

The reduction to the right-of use assets and liabilities related to these leases for the year ended December 31, 2020 was $ 41.8 million and $ 42.6 million,

respectively, resulting in an additional lease gain of $ 0.8 million.

Additionally, the Company paid $ 6.8 million and $ 18.0 million in termination fees for the years ended December 31, 2021 and 2020, respectively, which were recorded in “Selling, general and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Based on the present value of the lease payments for the remaining lease term of the Company’s existing leases, the Company’s right-of-use assets and lease liabilities for operating leases as of December 31, 2021 and 2020 were as follows:

(in thousands)

Classification

Operating lease

right-of-use assets

Operating lease right-of-use assets

Current operating lease liabilities

3 unchanged sentences

Total lease liabilities

Because the rate implicit in each lease is not readily determinable, the Company uses its incremental

borrowing rate to determine the present value of the lease payments.

Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

In determining its incremental borrowing rate, the Company reviewed the terms of its leases, its credit facilities, and other factors.

Information related to the Companys right-of-use assets

and related lease liabilities were as follows:

Information related to the Company’s right-of-use assets and related lease liabilities were as follows:

Year Ended December 31,

1 unchanged sentence

Cash paid for operating lease liabilities

assets obtained in exchange for new operating lease obligations

Right-of-use assets obtained in exchange for new

operating lease obligations

Weighted-average remaining lease term

5 unchanged sentences

Present value of lease liabilities

The Company has additional operating leases for real estate of $1.8 million which have not commenced as

of December 31, 2020, and as such, have not been recognized on the Companys Consolidated Balance Sheet.

The Company has additional operating leases for real estate of $ 10.0 million which have not commenced as of December 31, 2021, and as such, have not been recognized on the Company’s Consolidated Balance Sheet.

These operating leases commence in 2022.

Fair Value of Financial Instruments

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value.

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value.

These tiers include:

Level 1, defined as observable inputs such as quoted prices in

active markets;

Level 1, defined as observable inputs such as quoted prices in active markets;

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable;

and Level 3, defined as unobservable inputs for which little or no market data exists, therefore

requiring an entity to develop its own assumptions.

As of December 31, 2020, and 2019, the Companys interest rate derivatives

and forward contracts are Level 2 assets and liabilities with the related fair values based on third-party pricing service models.

These models use discounted cash flows that utilize market-based forward swap curves commensurate with the terms

of the underlying instruments.

As of December 31, 2020, and 2019, the contingent consideration assets and liabilities are

Level 3 assets and liabilities with the related fair values based on the significant unobservable inputs and probability weightings in using the income approach.

The following table sets forth the Companys financial assets and liabilities measured on a recurring basis at fair value, categorized by

input level within the fair value hierarchy.

The carrying amounts of Cash and cash equivalents, Accounts receivable, and Accounts payable approximate fair value due to the short-term maturities of these

financial instruments in the Consolidated Balance Sheets.

and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of December 31, 2021, and 2020, the Company’s interest rate derivatives and forward contracts are Level 2 assets and liabilities with the related fair values based on third-party pricing service models.

These models use discounted cash flows that utilize market-based forward swap curves commensurate with the terms of the underlying instruments.

As of December 31, 2021, and 2020, the contingent consideration liabilities are Level 3 assets and liabilities with the related fair values based on the significant unobservable inputs and probability weightings in using the income approach.

The following table sets forth the Company’s financial assets and liabilities measured on a recurring basis at fair value, categorized by input level within the fair value hierarchy.

The carrying amounts of “Cash and cash equivalents”, “Accounts receivable”, and “Accounts payable”

approximate fair value due to the short-term maturities of these financial instruments in the Consolidated Balance Sheets.

December 31, 2021

1 unchanged sentence

Assets measured at fair value

Cash and cash equivalents

Derivative financial instruments

2 unchanged sentences

Derivative financial instruments

Warrant liability

Contingent consideration liabilities

3 unchanged sentences

Assets measured at fair value

Cash and cash equivalents

Contingent consideration receivable

Derivative financial instruments

Total assets measured at fair value

1 unchanged sentence

Derivative financial instruments

Warrant liability

Contingent consideration liabilities

1 unchanged sentence

Interest Rate Cap Agreements

As of December 31, 2020, and 2019, the Company had interest rate cap contracts with an aggregate notional value of principals of

$2.2 billion and $1.5 billion, respectively, from various financial institutions to manage the Companys exposure to interest rate movements on variable rate credit facilities.

As of December 31, 2020, the aggregate fair value of

the Companys outstanding interest rate caps represented an outstanding net asset of $1.8 million and an outstanding net liability of $1.9 million.

As of December 31, 2019, the aggregate fair value of the Companys

outstanding interest rate caps represented an outstanding net liability of $3.3 million.

As of December 31, 2020, $1.8 million, $1.0 million, and $0.9 million of

the Companys fair value of outstanding interest rate caps were included in Prepaid expenses and other current assets , Other accrued expenses, and Other long-term liabilities in the Consolidated Balance

Sheets, respectively, with changes in fair value recognized as a component of Interest expense, net in the Consolidated Statements of Operations and Comprehensive Loss.

As of December 31, 2019, $1.0 million and

$2.3 million of the Companys fair value of outstanding interest rate caps were included in Other accrued expenses and Other long-term liabilities in the Consolidated Balance Sheets, respectively, with changes in

fair value recognized as a component of Interest expense, net in the Consolidated Statements of Operations and Comprehensive Loss.

During the years ended December 31, 2020, 2019, and 2018, the Company recorded interest expense in the amount of $0.4 million,

$2.7 million, and $3.9 million, respectively, related to changes in the fair value of its derivative instruments, respectively.

Forward Contracts

During the years ended December 31, 2020, 2019, and 2018, the Company recognized a gain of $0.5 million, a loss of $0.4 million,

and a loss of $1.0 million, respectively, related to changes in fair values of the forward contracts as a component of Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

Contingent Consideration Receivable

Each reporting period, the Company measures the fair value of its contingent receivable by evaluating the significant unobservable inputs and

probability weightings using Monte Carlo simulations.

Any resulting decreases or increases in the fair value result in a corresponding gain or loss reported in Selling, general, and administrative expenses in the Consolidated Statements

of Operations and Comprehensive Loss.

The Company has reassessed the fair value of contingent consideration, noting that as of

December 31, 2020, projected EBITDA related to acquisitions, which was anticipated to contribute to measurement period EBITDA, was lower than expected.

This reassessment resulted in a fair value adjustment of a $6.1 million loss that was

included in Selling, general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

As of December 31, 2021, and 2020, the Company had interest rate cap contracts with an aggregate notional value of principals of $ 2.2 billion from various financial institutions to manage the Company’s exposure to interest rate movements on variable rate credit facilities.

As of December 31, 2021, the aggregate fair value of the Company’s outstanding interest rate caps represented an outstanding net asset of $ 10.2 million and an outstanding net liability of $ 0.4 million.

As of December 31, 2020, the aggregate fair value of the Company’s outstanding interest rate caps represented an outstanding net asset of $ 1.8 million and an outstanding net liability of $ 1.9 million.

As of December 31, 2021, $ 10.2 million and $ 0.4 million of the Company’s fair value of outstanding interest rate caps were included in “Prepaid expenses and other current assets”

and “Other accrued expenses”

in the Consolidated Balance Sheets, respectively, with changes in fair value recognized as a component of “Interest expense, net”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 31, 2020, $ 1.8 million, $ 1.0 million, and $ 0.9 million of the Company’s fair value of outstanding interest rate caps were included in “Prepaid expenses and other current assets,”

“Other accrued

expenses,”

and “Other long-term liabilities”

in the Consolidated Balance Sheets, respectively, with changes in fair value recognized as a component of “Interest expense, net”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

During the years ended December 31, 2021, 2020, and 2019, the Company recognized interest income of $ 8.3 million, interest expense of $ 0.4 million and interest expense of $ 2.7 million, respectively, related to changes in the fair value of its derivative instruments, respectively.

Warrant Liability

The estimated fair value of the liability is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument.

The warrant liability is stated at fair value at each reporting period with the change in fair value recorded on the Consolidated Statement of Operations and Comprehensive Income (Loss) until the warrants are exercised, expire or other facts and circumstances lead the warrant liability to be reclassified as an equity instrument.

On October 28, 2020, the Company recorded the initial warrant liability of the private placement warrants of $ 7.9 million.

Subsequently, the warrant liability was remeasured to fair value with adjustment of $ 1.0 million and $ 13.4 million reflected in “Change in fair value of warrant liability”

in the Consolidated Statements of Operations and Comprehensive Income (Loss) during the year ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, and 2020, 7,333,333 private placement warrants remained outstanding at fair value of $ 22.2 million and $ 21.2 million, respectively.

The fair value of the warrants on the date of issuance and on each remeasurement date of those warrants classified as liabilities is estimated using the Black-Scholes option pricing model using the following inputs and assumptions:

Fair value warrants per share

Exercise price per share

Expected term (years)

Expected volatility

Risk-free interest rate

Dividend yield

Long-term Debt

The following table sets forth the carrying values and fair values of the Companys financial liabilities measured on a recurring basis,

categorized by input level within the fair value hierarchy:

The following table sets forth the carrying values and fair values of the Company’s financial liabilities measured on a non-recurring basis, categorized by input level within the fair value hierarchy:

(in thousands)

1 unchanged sentence

Balance at December 31, 2021

New Term Loan Credit Facility

New Revolving Credit Facility

Term Loan Credit Facility

Government loans for COVID-19 relief

Notes payable and deferred obligations

3 unchanged sentences

Balance at December 31, 2020

First Lien Term Loan

Second Lien Term Loan

Term Loan Credit Facility

Revolving Credit Facility

Government loans for COVID-19 relief

Notes payable and deferred obligations

1 unchanged sentence

Investments in Unconsolidated Affiliates

In connection with the Daymon Acquisition, the Company acquired 9.9% of the outstanding common shares of a subsidiary of a Japanese supermarket

chain (ATV).

The Company’s significant equity investments primarily consist of Global Smollan Holdings ( 25 % ownership), Smollan Holding Proprietary Limited ( 25 % ownership), Partnership SPV 1 Limited ( 12.5 % ownership), and Ceuta Holding Limited ( 8.8 % ownership).

Income from the Company’s equity method investments, included in “Cost of revenues”

in the Consolidated Statements of Operations and Comprehensive Income (Loss), was $ 10.3 million, $ 5.1 million, and $ 4.9 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The Company’s proportionate share in their net assets at December 31, 2021, and 2020 were $ 118.0 million and $ 107.7 million, respectively.

The Company’s equity method investments are not material to the Company’s results of operations or financial position;

therefore, no summarized financial information for the Company’s unconsolidated subsidiaries has been presented.

The Company holds 9.9 % of the outstanding common shares of a subsidiary of a Japanese supermarket chain (“ATV”).

The Company has no substantial influence over ATV.

The Company elected the measurement alternative to value this equity investment without a readily determinable fair value.

The Company will continue to apply the

alternative measurement guidance until this investment does not qualify to be so measured.

The Company will continue to apply the alternative measurement guidance until this investment does not qualify to be so measured.

The carrying value of the investment was $ 7.1 million and $ 7.9 million as of December 31, 2021 and 2020, respectively.

The Companys significant equity investments primarily consist of Global Smollan Holdings (25% ownership), Smollan Holding Proprietary

Limited (25% ownership), Partnership SPV 1 Limited (12.5% ownership), and Ceuta Holding Limited (8.8% ownership).

Income from the Companys equity method investments, included in Cost of revenues in the Consolidated Statements of

Operations and Comprehensive Loss, was $5.1 million, $4.9 million, and $4.8 million for the years ended December 31, 2020, 2019, and 2018, respectively.

The Companys proportionate share in their net assets

at December 31, 2020, and 2019 were $107.7 million and 104.1 million, respectively.

The Companys equity method investments are not material to the Companys results of operations or financial position;

no summarized financial information for the Companys unconsolidated subsidiaries has been presented.

Equity-Based Compensation and Equity

The Limited Partnership Agreement allows profits interests in Topco to be granted to directors, officers, employees, and

consultants of Topco and its subsidiaries.

The performance-based profits interests (Common Series C Units) are subject to certain vesting requirements, as described below.

Additionally, in 2014, Topco issued 30,000 time-vesting profits interests (Common Series D Units) to entities affiliated with one

equity sponsor of Topco.

Time-vesting profits interests vest on a monthly basis that began on October 1, 2014 and ended on September 1, 2019.

The compensation expense associated with the issuance of such awards for non-employees is recorded by the Company as the Company receives the benefit of the services being provided by the non-employees.

Common Series C Units and Common Series C-2

During the years ended December 31, 2020, 2019, and 2018, 2,900 Common Series C Units, 21,953 Common Series C Units,

and 10,830 Common Series C Units, respectively, were granted at no cost to employees of the Company.

As the result of an amendment and restatement of the Limited Partnership Agreement, on March 15, 2018, 75% of all Common Series C Units awards

are subject to vesting over four fiscal years from their respective issuance date.

The remaining 25% of the units vest if and when Topcos private equity sponsors as of the date of the 2014 Topco Acquisition realize a pre-tax internal rate of return of 20% compounded annually with respect to the Common Series A Units of Topco held by such sponsors.

To the extent the Common Series C Units vest, such units may still be forfeited as

a result of termination of the employment of the applicable holders or upon a non-qualifying exit event.

Certain awards vest over the remaining initial four-year term, subject to the employees continued

first four anniversaries following the completion of the Daymon Acquisition, subject to such employees continued employment with the Company.

The Limited Partnership Agreement also authorizes Topco to issue 35,000 Common Series C-2 Units to employees of the Company, which are deemed to be vested upon issuance and subject to substantially similar forfeiture provisions as the Common Series C Units, including forfeiture upon certain

terminations of employment with the Company of the applicable holders or a non-qualifying exit event.

A valuation, including an option pricing method allocation and Monte Carlo simulation, was used to estimate the fair value of Common Series C

Units and Common Series C-2 Units.

Stock Based Compensation and Other Benefit Plans

The Company has issued nonqualified stock options, RSUs (as defined below), and PSUs (as defined below) under the Advantage Solutions Inc.

2020 Incentive Award Plan (the “Plan”).

As of December 31, 2021, the number of nonqualified stock options outstanding was immaterial.

The Company’s RSUs and PSUs, as described below, are expensed and reported as non-vested shares.

The Company recognized stock-based compensation expense of $ 39.4 million for the year ended December 31, 2021.

The related deferred tax benefit for stock-based compensation recognized was $ 6.6 million for the year ended December 31, 2021.

Performance Restricted Stock Units

Performance restricted stock units (“PSUs”) are subject to the achievement of certain performance conditions based on the Company’s revenues and Adjusted EBITDA targets in the respective measurement period and the recipient’s continued service to the Company.

The PSUs are scheduled to vest over a three-year period from the date of grant and may vest from 0 % to 150 % of the number of shares set forth in the table below.

The number of PSUs earned shall be adjusted to be proportional to the partial performance between the Threshold Goals, Target Goals and Maximum Goals.

Details for each aforementioned defined term for each grant have been provided in the table below.

The fair value of PSU grants was equal to the closing price of the Company's stock on the date of the applicable grant.

The maximum potential expense if the Maximum Goals were met for these awards has been provided in the table below.

Recognition of expense associated with performance-based stock is not permitted until achievement of the performance targets are probable of occurring.

(in thousands, except share and per share data)

Performance Period

Expense to be

Maximum Potential

Expense to be

January 1, 2021—

December 31, 2021

The following table summarizes the PSU activity for the year ended December 31, 2021:

Performance Share Units

Weighted Average Grant

Date Fair Value

Outstanding at January 1, 2021

Outstanding at December 31, 2021

Restricted Stock Units

Restricted stock units (“RSUs”) are subject to the recipient’s continued service to the Company.

The RSUs are generally scheduled to vest over three years and are subject to the provisions of the agreement under the Plan.

During the year ended December 31, 2021, the following activities involving RSUs occurred under the Plan:

Number of RSUs

Weighted Average Grant

Date Fair Value

Outstanding at January 1, 2021

Outstanding at December 31, 2021

As of December 31, 2021, the total remaining unrecognized compensation cost related to RSUs amounted to $ 22.4 million, which will be amortized over the weighted-average remaining requisite service periods of 2.1 years.

Common Series C Units and C-2 Units

The Limited Partnership Agreement allows profits interests in Topco to be granted to directors, officers, employees, and consultants of Topco and its subsidiaries.

The performance-based profits interests (“Common Series C Units”) are subject to certain vesting requirements, as described below.

Common Series C Units were granted at no cost to employees of the Company.

As the result of an amendment and restatement of the Limited Partnership Agreement, on March 15, 2018, 75 % of all Common Series C Units awards are subject to vesting over four fiscal years from their respective issuance date.

The remaining 25 % of the units vest if and when Topco’s private equity sponsors as of the date of the 2014 Topco Acquisition realize a pre-tax internal rate of return of 20 % compounded annually with respect to the Common Series A Units of Topco held by such sponsors.

To the extent the Common Series C Units vest, such units may still be forfeited as a result of termination of the employment of the applicable holders or upon a non-qualifying exit event.

Certain awards vest over the remaining initial four-year term, subject to the employee’s continued employment.

In addition, certain Common Series C Units were issued in connection with the Daymon Acquisition to Daymon employees, certain of which are deemed to be vested upon issuance, and certain on which vest in four installments on each of the first four anniversaries following the completion of the Daymon Acquisition, subject to such employee’s continued employment with the Company.

A valuation, including an option pricing method allocation and Monte Carlo simulation, was used to estimate the fair value of Common Series C Units and Common Series C-2 Units.

The expected price volatility is based on the average of the historical volatility of comparable public companies.

The risk-free rate is based on U.S.

yields in effect at the time of grant over the expected term.

Treasury yields in effect at the time of grant over the expected term.

The Company did not use a dividend yield as it has not historically paid distributions.

The following weighted average assumptions were used in determining the fair value of Common Series C Unit grants made during the years ended

December 31, 2020, 2019, and 2018:

The following weighted average assumptions were used in determining the fair value of Common Series C Unit grants made during the years ended December 31, 2020 and 2019:

Year Ended December 31,

13 unchanged sentences

Topco has the option to repurchase Common Series C Units for cash.

The following table summarizes the activity in the Common Series C Units during the years

ended December 31, 2020, 2019 and 2018:

The following table summarizes the activity in the Common Series C Units:

Year Ended December 31,

1 unchanged sentence

End of the period

The following table summarizes the activity in the Common Series C-2

Units during the years ended December 31, 2020, 2019 and 2018:

The following table summarizes the activity in the Common Series C-2 Units:

Year Ended December 31,

1 unchanged sentence

End of the period

The Company classified the Merger as a vesting exit event for accounting purposes associated with the Common

Series C and C-2 Units.

As a result, the Company recognized non-cash compensation expenses of $62.7 million in connection with the Common Series C Units and

$13.3 million in connection with the Common Series C-2 Units for the year ended December 31, 2020.

The remaining $5.7 million and $0.4 million will vest in 2021 and 2022,

respectively.

As the vesting exit event was at Topco, there was no impact to the Companys outstanding shares of Common Stock.

No expense was recorded in the years ended December 31, 2019 or 2018, since a vesting exit event was not yet

deemed probable of occurring.

The Company classified the Merger as a vesting exit event for accounting purposes associated with the Common Series C and C-2 Units.

As a result, the Company recognized non-cash compensation expenses of $ 62.7 million in connection with the Common Series C Units and $ 13.3 million in connection with the Common Series C-2 Units for the year ended December 31, 2020.

As the vesting exit event was at Topco, there was no impact to the Company’s outstanding shares of Common Stock.

Common Series D Units

The Company measures the fair value of the Common Series D Units quarterly throughout the five-year vesting period and recognizes this cost

ratably over the vesting period.

In 2014, Topco issued 30,000 time-vesting profits interests (“Common Series D Units”) to entities affiliated with one equity sponsor of Topco.

Time-vesting profits interests vest on a monthly basis that began on October 1, 2014 and ended on September 1, 2019.

The Company measures the fair value of the Common Series D Units quarterly throughout the five-year vesting period and recognizes this cost ratably over the vesting period.

There were no grants during the years ended December 31, 2021, 2020, and 2019.

The OPM was used to estimate the Common Series D Units fair value of $ 300 as of the grant date.

The expected share price volatility

is based on the average of the historical volatility of comparable public companies.

The expected share price volatility is based on the average of the historical volatility of comparable public companies.

The risk-free rate is based on U.S.

Treasury yields in effect at the time of grant over the expected term.

The Company did not use a dividend yield as it has not

historically paid distributions.

The Company did not use a dividend yield as it has not historically paid distributions.

The fair value of these units at the end of each measurement period were $ 143 , $ 644 , and $ 184 per unit as of December 31, 2021, 2020, and 2019.

Since the Common Series D Units that were issued under the Limited

Partnership Agreement were for interests in Topco, which is outside of the consolidated group, the value of the profits interests were marked to market at each of the Companys reporting periods.

The following assumptions were used in determining the fair value for the years ended

December 31, 2020, 2019, and 2018:

Since the Common Series D Units that were issued under the Limited Partnership Agreement were for interests in Topco, which is outside of the consolidated group, the value of the profits interests were marked to market at each of the Company’s reporting periods.

The following assumptions were used in determining the fair value of Common Series D Units:

Year Ended December 31,

6 unchanged sentences

On December 31, 2021, there were 30,000 Common Series D Units outstanding.

During the years ended

December 31, 2020, 2019, and 2018, the Company recorded an equity-based compensation expense of $13.8 million, $1.3 million and a gain related to equity-based compensation of $8.2 million, respectively, included in Selling,

general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

Class A Common Stock The Company is authorized to issue 3,920,000,000 shares of Class A common stock with a par

value of $0.0001 per share.

Holders of the Companys Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote.

At December 31, 2020, there were 318,425,182 shares of

Class A common stock legally issued and outstanding, including 5,000,000 Performance Shares issued to Topco at the Closing, which were subject to vesting upon satisfaction of a market performance condition after the Closing.

Such performance

shares vested on January 15, 2021 when the market performance condition was satisfied.

During the years ended December 31, 2021, 2020, and 2019, the Company recorded equity-based compensation expense of $ 15.0 million, $ 13.8 million, and $ 1.3 million, respectively, included in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Stock Options

In October 2020, the Company adopted the Plan, which provides for the issuance of qualified and non-qualified stock options to officers, directors, employees and other qualified persons.

The Plan is administered by the board of directors of the Company or a committee appointed by the board of directors.

A total of 261,324 non-qualified stock options were granted during the year ended December 31, 2021 and remained outstanding as of December 31, 2021, with a weighted average exercise price of $ 9.20 .

Stock-based compensation costs related to stock options granted to employees are measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures.

The Company estimates the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model.

The Company recognizes compensation costs for awards with service vesting conditions on an accelerated method under the graded vesting method over the requisite service period of the award, which is generally the vesting term of three years .

The Black-Scholes option-pricing model requires the use of highly subjective assumptions which determine the fair value of stock-based awards.

The assumptions used in the Company's option-pricing model represent management’s best estimates.

These estimates are complex, involve a number of variables, uncertainties and assumptions and the application of management’s judgment, so that they are inherently subjective.

If factors change and different assumptions are used, the Company's stock-based compensation expense could be materially different in the future.

These assumptions are estimated as follows:

Fair Value of Common Stock .

Represents the publicly quoted price as the fair value of ADV common stock.

Risk-Free Interest Rate .

The Company based the risk-free interest rate used in the Black-Scholes option-pricing model on the implied yield available on U.S.

Treasury zero-coupon issues with an equivalent remaining term of the options for each option group.

Expected Term .

The expected term represents the period that the stock-based awards are expected to be outstanding.

Because of the limitations on the sale or transfer or the Company's common stock as a previously privately held company, the Company does not believe its historical exercise pattern for similar awards is indicative of the pattern the Company will experience as a publicly traded company.

Management has consequently used the Staff Accounting Bulletin, or SAB 110, Simplified Method to calculate the expected term, which is the average of the contractual term and vesting period.

The Company plans to continue to use the SAB 110 Simplified Method until the Company has sufficient trading history as a publicly traded company.

Management determined the price volatility factor based on the historical volatilities of a relevant peer group as the Company did not have a sufficient trading history of common stock.

Industry peers consist of several public companies that provide similar services with comparable characteristics including enterprise value, risk profiles and position within the industry.

The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company's own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

Dividend Yield .

The expected dividend assumption is based on expectations about the Company's anticipated dividend policy.

The Company currently does not expect to issue any dividends.

In addition to assumptions used in the Black-Scholes option-pricing model, the Company must also estimate a forfeiture rate to calculate the stock-based compensation for the Company's awards.

The Company will continue to use judgment in evaluating the assumptions related to the Company's stock-based compensation on a prospective basis.

As the Company continue to accumulate

additional data, the Company may have refinements to the Company's estimates, which could materially impact the Company's future stock-based compensation expense.

The fair value of the employee stock options was estimated using the following assumptions for the periods presented:

Year Ended December 31,

Grant date fair value

Dividend yield

Expected volatility

Risk-free interest rate

Expected term (years)

As of December 31, 2021, the Company had approximately $ 0.4 million of total unrecognized compensation expense related to stock options, net of related forfeiture estimates, which the Company expects to recognize over a weighted-average period of approximately 2 years .

The intrinsic value of all outstanding options as of December 31, 2021 was zero based on the market price of the Company's common stock of $ 8.02 per share.

Employee Stock Purchase Plan

In October 2020, the board of directors adopted, and the stockholders subsequently approved, the 2020 Employee Stock Purchase Plan, as amended (the “ESPP”).

The Board has delegated concurrent authority to administer the ESPP to the Compensation Committee under the terms of the Compensation Committee’s charter.

Employees, may have to satisfy one or more of the following service requirements before participating in the ESPP, as determined by the administrator:

(a) customary employment with the Company for more than 20 hours per week and more than five months per calendar year, or (b) continuous employment with the Company for a minimum period of time, not to exceed two years, prior to the first date of an offering.

An employee may not be granted rights to purchase stock under the ESPP if such employee (x) immediately after the grant would own stock possessing five percent or more of the total combined voting power or value of the common stock, exceeds $ 25,000 of fair market value of such stock.

Additionally, “highly compensated employees”

may not be granted rights to purchase stock under the ESPP.

This includes individuals with compensation above a specified level, who is an officer and/or is subject to the disclosure requirements of Section 16(a) of the Exchange Act.

The administrator may approve offerings with a duration of not more than 27 months, and may specify one or more shorter purchase periods within each offering (“Offering Period”).

Each offering will have one or more purchase dates on which shares of the common stock will be purchased for the employees who are participating in the offering.

The administrator, in its discretion, will determine the terms of offerings under the ESPP.

The ESPP permits participants to purchase shares of the common stock through payroll deductions with up to 15 % of their earnings.

The purchase price of the shares will not be less than 85 % of the lower of the fair market value of the common stock on the first day of an offering or on the date of purchase.

Payroll deductions shall be equal to at least one percent ( 1 %) of the participant’s compensation as of each payday of the Offering Period following the Enrollment Date, but not more than the lesser of fifteen percent ( 15 %) of the participant’s compensation as of each payday of the Offering Period following the Enrollment Date or $ 25,000 per offering period.

A participant may not transfer purchase rights under the ESPP other than by will, the laws of descent and distribution or as otherwise provided under the ESPP.

In the event of a specified corporate transaction, such as the merger or change in control, a successor corporation may assume, continue or substitute each outstanding purchase right.

If the successor corporation does not assume, continue or substitute for the outstanding purchase rights, the offering in progress will be shortened and a new exercise date will be set.

The participants’

purchase rights will be exercised on the new exercise date and such purchase rights will terminate immediately thereafter.

The ESPP will remain in effect until terminated by the administrator in accordance with the terms of the ESPP.

The board of directors has the authority to amend, suspend or terminate the ESPP, at any time and for any reason.

Employee Benefit Plans

The Company sponsors 401(k) plans for certain employees who meet specified age and length of service requirements.

The 401(k) plans include a deferral feature under which employees may elect to defer a portion of their salary, subject to Internal Revenue Service limitations.

The Company provides a matching contribution based on a percentage of participating employees’

salaries and contributions made.

Total contributions to the plan for the years ended December 31, 2021, 2020, and 2019 were $ 12.5 million, $ 10.8 million, and $ 13.9 million, respectively.

Class A Common Stock —The Company is authorized to issue 3,290,000,000 shares of Class A common stock with a par value of $ 0.0001 per share.

Holders of the Company’s Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote.

At December 31, 2021, there were 316,963,552 shares of Class A common stock legally issued and outstanding, including 5,000,000 Performance Shares issued to Topco at the Closing, which were subject to vesting upon satisfaction of a market performance condition after the Closing.

Such performance shares vested on January 15, 2021 when the market performance condition was satisfied.

Topco did not have the right to vote the Performance Shares until the vesting condition for the Performance Shares was achieved.

Preferred stock The Company is authorized to issue 10,000,000 preferred stock with no par value of $0.0001 per share.

31, 2020 and 2019, there are no preferred stock issued or outstanding.

Warrants As of December 31,

2020, 11,250,000 public warrants were outstanding.

Each whole warrant entitles the holder to purchase one whole share of the Companys Class A common stock at an exercise price of $11.50 per share, subject to

Preferred stock —The Company is authorized to issue 10,000,000 preferred stock with no par value of $0.0001 per share.

At December 31, 2021 and 2020, there is no preferred stock issued or outstanding.

Common stock held in treasury, at cost —

On November 9, 2021, the Company announced that the board of directors authorized a new share repurchase program (the “2021 Share Repurchase Program”) pursuant to which the Company may repurchase up to $ 100 million of the Company’s Class A common stock.

The 2021 Share Repurchase Program does not have an expiration date, but provides for suspension or discontinuation at any time.

The 2021 Share Repurchase Program permits the repurchase of the Company’s Class A common stock on the open market and in other means from time to time.

The timing and amount of any share repurchase is subject to prevailing market conditions, relevant securities laws and other considerations, and the Company is under no obligation to repurchase any specific number of shares.

During the fourth quarter of 2021, the Company executed open market purchases of $ 12.6 million of the Company ’

s Class A common stock under the 2021 Share Repurchase Program.

As a result of repurchases during the year ended December 31, 2021, there remains $ 87.4 million of share repurchase availability under the 2021 Share Repurchase Program as of December 31, 2021.

Warrants —As of December 31, 2021, 11,244,988 public warrants were outstanding.

Each whole warrant entitles the holder to purchase one whole share of the Company’s Class A common stock at an exercise price of $ 11.50 per share, subject to adjustment.

Warrants may only be exercised for a whole number of shares of Class A common stock.

No fractional warrants will be issued upon separation of the units and only whole warrants will trade.

The warrants became exercisable 30 days

after the completion of the Merger.

The warrants became exercisable 30 days after the completion of the Merger.

The warrants will expire five years after the completion of the Merger, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

As of December 31, 2021, 7,333,333 private placement warrants were outstanding.

The private placement warrants are identical to the

public warrants, except that the private placement warrants and the Class A common stock issuable upon exercise of the private placement warrants were not transferable, assignable or salable until 30 days after the completion of the

Merger, subject to certain limited exceptions.

Additionally, the private placement warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers permitted transferees.

If the private placement warrants

are held by someone other than the initial stockholders or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants.

The private placement warrants are identical to the public warrants, except that the private placement warrants and the Class A common stock issuable upon exercise of the private placement warrants were not transferable, assignable or salable until 30 days after the completion of the Merger, subject to certain limited exceptions.

Additionally, the private placement warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’

permitted transferees.

If the private placement warrants are held by someone other than the initial stockholders or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants.

The Company may call the warrants for redemption:

1 unchanged sentence

at a price of $ 0.01 per warrant;

upon a minimum of 30 days prior written notice of redemption;

if, and only if, the last reported closing price of the common stock equals or exceeds $18.00 per share (as

adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the

notice of redemption to the warrant holders.

upon a minimum of 30 days’

prior written notice of redemption;

if, and only if, the last reported closing price of the common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) for any 20 trading days

within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

For cash or Class A common stock:

in whole and not in part;

at a price of $0.10 per warrant, provided that the warrant holders will be able to exercise their warrants prior

to redemption and receive that number of shares of Class A common stock to be determined by reference to a table included in the warrant agreement, based on the redemption date and the fair market value of the Class A common stock;

upon a minimum of 30 days prior written notice of redemption;

if, and only if, the last reported closing price of the common stock equals or exceeds $10.00 per share (as

adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends notice of redemption to the warrant holders;

if, and only if, an effective registration statement covering the shares of Class A common stock issuable

upon exercise of the warrants and a current prospectus relating thereto is available throughout the 30 day period after which written notice of redemption is given, or the Company has elected to require the exercise of the warrants on a

cashless basis.

If the Company calls the warrants for redemption, management will have the option to

require all holders that wish to exercise the warrants to do so on a cashless basis, as described in the warrant agreement.

The exercise price and number of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances

including in the event of a share dividend.

Additionally, in the event of a recapitalization, reorganization, merger or consolidation, the kind and amount of shares of stock or other securities or property (including cash) issuable upon exercise of

the warrants may be adjusted.

at a price of $0.10 per warrant, provided that the warrant holders will be able to exercise their warrants prior to redemption and receive that number of shares of Class A common stock to be determined by reference to a table included in the warrant agreement, based on the redemption date and the fair market value of the Class A common stock;

upon a minimum of 30 days ’

prior written notice of redemption;

if, and only if, the last reported closing price of the common stock equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends notice of redemption to the warrant holders;

if, and only if, an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto is available throughout the 30 day period after which written notice of redemption is given, or the Company has elected to require the exercise of the warrants on a “cashless”

If the Company calls the warrants for redemption, management will have the option to require all holders that wish to exercise the warrants to do so on a “cashless basis,”

as described in the warrant agreement.

The exercise price and number of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend.

However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price.

Additionally, in no event will the Company be required to net cash settle the warrants shares.

During the year ended December 31, 2020, no warrants were exercised for Class A common stock.

Employee Benefit Plans

Company sponsors 401(k) plans for certain employees who meet specified age and length of service requirements.

The 401(k) plans include a deferral feature under which employees may elect to defer a portion of their salary, subject to Internal

Revenue Service limitations.

The Company provides a matching contribution based on a percentage of participating employees salaries and contributions made.

Total contributions to the plan for the years ended December 31, 2020, 2019, and

2018, were $10.8 million, $13.9 million, and $13.2 million, respectively.

Earnings Per Share

The Company calculates earnings per share using a dual presentation of basic and diluted earnings per share.

Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding without the consideration for potential dilutive shares of common stock.

Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding performance stock units, restricted stock units, public and private placement warrants, the employee stock purchase plan and stock options.

Diluted earnings per share is computed by dividing the net income by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method and if-converted method, as applicable.

During periods of net loss, diluted loss per share is equal to basic loss per share because the antidilutive effect of potential common shares is disregarded.

As a result of the Transactions, the Company has retrospectively adjusted the weighted-average number of common shares outstanding prior to October 28, 2020 by multiplying them by the exchange ratio used to determine the number of common shares into which they converted.

The following is a reconciliation of basic and diluted net income (loss) per common share:

Year Ended December 31,

(in thousands, except share and earnings per share data)

Basic earnings per share computation:

Net income (loss) attributable to stockholders of Advantage Solutions Inc.

Weighted average common shares - basic

Basic earnings (loss) per common share

Diluted earnings per share computation:

Net income (loss) attributable to stockholders of Advantage Solutions Inc.

Weighted average common shares outstanding

Performance Stock Units

Restricted Stock Units

Employee stock purchase plan and stock options

Weighted average common shares - diluted

Diluted earnings (loss) per common share

During periods of net loss, diluted loss per share is equal to basic loss per share because the antidilutive effect of potential common shares is disregarded.

As part of the Transactions, 5,000,000 Performance Shares were issued to Topco at Closing, which were subject to vesting upon satisfaction of a market performance condition for any period of 20 trading days out of 30 consecutive trading days during the five-year period after the Closing, and Topco was not able to vote or sell such shares until vesting.

These Performance Shares were considered contingently issuable shares and remained unvested as of December 31, 2020.

Therefore, these Performance Shares are excluded from shares outstanding for basic and diluted earnings per share until the contingency is resolved.

The 5,000,000 Performance Shares vested on January 15, 2021, when the closing price for the Class A common stock exceeded $ 12.00 per share for 20 trading days out of 30 consecutive trading days.

The Company had 11,244,988 of public warrants and 7,333,333 of private placement warrants held by the CP Sponsor (as defined below), to purchase Class A common stock at $ 11.50 per share at the Closing, at of which remain outstanding at December 31, 2021.

See Note 12 —

Equity for additional information regarding the terms of public and private placement warrants.

Related Party Transactions

Management Fees

The Company incurred $1.4 million, $5.5 million, and $5.5 million, in management fees to certain entities affiliated with or

advised by CVC Capital Partners, Leonard Green & Partners, Bain Capital, Juggernaut Management, LLC, and Centerview Capital, L.P.

for the years ended December 31, 2020, 2019, and 2018, respectively, which are included in Selling,

general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

As of the closing of the Transactions, the management service agreements were terminated other than certain provisions, which survive,

related to indemnification and expense advancement.

Conyers Park and the Transactions

In May 2019, Conyers Park II Sponsor LLC, an affiliate of Centerview Capital Management, LLC, which was Conyer Park’s sponsor prior to the Merger (“CP Sponsor”) purchased 11,500,000 of Conyers Park’s Class B ordinary shares for an aggregate purchase price of $ 25,000 in cash, or approximately $ 0.002 per share.

In June 2019, CP Sponsor transferred 25,000 shares to each of four individuals, including a current member of the board of directors of the Company.

At the time of the Closing, the 11,250,000 shares of Conyers Park Class B common stock, par value $ 0.0001 per share, then held by CP Sponsor and its directors automatically converted into shares of the Company's Class A common stock.

CP Sponsor also purchased 7,333,333 private placement warrants for a purchase price of $ 1.50 per whole warrant, or $ 11,000,000 in the aggregate, in private placement transactions that occurred simultaneously with the closing of the Conyers Park’s initial public offering and related over-allotment option.

As a result of the Closing, each private placement warrant entitles CP Sponsor to purchase one share of the Company's Class A common stock at $ 11.50 per share.

Concurrent with the execution of the Merger Agreement, Conyers Park entered into the subscription agreements with certain investors (collectively, the “Subscription Agreements”), pursuant to which, among other things, Conyers Park agreed to issue and sell in a private placement shares of Conyers Park Class A common stock for a purchase price of $ 10.00 per share.

Certain of the Advantage Sponsors or their affiliates agreed to purchase an aggregate of 34,410,000 shares of Conyers Park Class A common stock.

Conyers Park also entered into a stockholders agreement (the “Stockholders Agreement”) with CP Sponsor, Topco, and certain of the Advantage Sponsors and their affiliates (collectively, the “Stockholder Parties”).

The Stockholders Agreement provides, among other things, that the Stockholder Parties agree to cast their votes such that the Company’s board of directors is constituted as set forth in the Stockholders Agreement and the Merger Agreement and will have certain rights to designate directors to the Company’s board of

directors, in each case, on the terms and subject to the conditions therein.

Additionally, Conyers Park entered into a Registration Rights Agreement with CP Sponsor, Topco, the Advantage Sponsors and their affiliates and the other parties thereto, pursuant to which the Company has agreed to register for resale certain shares of Class A common stock and other equity securities that are held by the parties thereto from time to time.

Overlapping Directors

Until February 2, 2020, a member of the board of directors of Topco served as a member of the board of directors for a holding company of

During the years ended December 31, 2020, 2019, and 2018, the Company recognized revenues of $3.9 million, $41.8 million, and $43.0 million, respectively, from this client.

Accounts receivable from this client were zero

and $7.0 million as of December 31, 2020, and 2019, respectively.

Beginning October 28, 2020, two members of the board of

directors of Topco served as the members of the board of directors of another client of the Company.

Eight members of the board of directors of the Company served as the members of the board of directors of clients of the Company.

Until February 2, 2020, a member of the board of directors of Topco served as a member of the board of directors for a holding company of a client.

The information below details the Company's financial relationships with those clients as of and for the periods indicated:

Accounts Receivable

Year Ended December 31,

as of December 31,

(In thousands)

All other clients

From June 25, 2019 until October 28, 2020, a member of the board of the directors of Topco served as a member of the board of directors of another client of the Company.

During the year ended December 31, 2020, the Company recognized revenues of $ 16.4 million from this client.

Accounts receivable from this

client was less than $0.1 million as of December 31, 2020.

Until October 28, 2020, a member of the board of directors of

Topco served as a member of the board of directors of another client of the Company since the appointment on June 25, 2019.

During the years ended December 31, 2020 and 2019, the Company recognized revenues of $16.4 million and

$5.4 million, respectively, from this client.

Accounts receivable from this client was zero and $0.1 million as of December 31, 2020 and 2019, respectively.

Accounts receivable from this client was zero as of December 31, 2020.

Investment in Unconsolidated Affiliates

During the years ended December 31, 2020, 2019, and 2018, the Company recognized revenues of $19.6 million, $21.9 million, and

$23.5 million, respectively, from the parent company of an investment in unconsolidated affiliates.

During the years ended December 31, 2021, 2020, and 2019, the Company recognized revenues of $ 18.1 million, $ 19.6 million, and $ 21.9 million, respectively, from the parent company of an investment in unconsolidated affiliates.

Accounts receivable from this client were $ 2.4 million and $ 2.2 million as of December 31, 2021 and 2020, respectively.

Long-term Debt

Certain funds managed by CVC Credit Partners, which is part of the same network of companies providing investment management advisory services

operating under the CVC brand as CVC Capital Partners, act as lenders under the Companys New Term Loan Facility.

As of December 31, 2020, the funds managed by CVC Credit Partners held $11.3 million of the aggregate principal

outstanding under the New Term Loan Facility.

Prior to the Closing of the Transactions, the funds managed by CVC Credit Partners under

the Companys First Lien Term Loans and Second Lien Term Loans were $100.2 million and $31.1 million, respectively, as of December 31, 2019.

Intercompany Promissory Notes

Advantage Sales & Marketing Inc., an indirect wholly-owned subsidiary of the Company, entered into intercompany loan agreements with

Topco, pursuant to which Topco has borrowed various amounts totaling $6.0 million from Advantage Sales & Marketing Inc.

Certain funds managed by CVC Credit Partners, which is part of the same network of companies providing investment management advisory services operating under the CVC brand as CVC Capital Partners, act as lenders under the Company’s Term Loan Facility.

As of December 31, 2021, the funds managed by CVC Credit Partners held $ 6.2 million of the aggregate principal outstanding under the Term Loan Facility.

Prior to the Closing of the Transactions, the funds managed by CVC Credit Partners under the Company’s Prior First Lien Credit Agreement and Prior Second Lien Credit Agreement were $ 100.2 million and $ 31.1 million, respectively, as of December 31, 2019.

Loans to Karman Topco L.P.

Advantage Sales & Marketing Inc., an indirect wholly-owned subsidiary of the Company, entered into loan agreements with Topco, pursuant to which Topco has borrowed various amounts totaling $ 6.0 million from Advantage Sales & Marketing Inc.

to facilitate the payment to certain former associates for their equity interests in Topco.

On September 1,

2020, Advantage Sales & Marketing Inc.

entered into a new intercompany loan agreement with Topco consolidating all outstanding amounts under the prior agreements.

Pursuant to the new intercompany loan agreement Topco borrowed

$6.0 million at an interest rate of 0.39% per annum.

On September 1, 2020, Advantage Sales & Marketing Inc.

entered into a new loan agreement with Topco consolidating all outstanding amounts under the prior agreements.

Pursuant to the new loan agreement Topco borrowed $ 6.0 million at an interest rate of 0.39 % per annum.

This loan matures on December 31, 2023 and is pre-payable at any time without penalty.

Restructuring Charges

Restructuring charges include severance plans designed to integrate and reduce costs intended to further improve efficiencies in operational

activities and align cost structures consistent with revenue levels associated with business changes.

In response to the COVID-19 pandemic, the Company commenced a plan involving terminating certain employees, particularly with respect to COVID-19

impacted operations.

In addition, the Company established a global work from home policy.

A significant portion of the Companys office-based workforce temporarily transitioned to working from home and the Company commenced a plan to

strategically exit certain offices during the year ended December 31, 2020.

Refer to Note 8 Leases , for additional information.

During the years ended December 31, 2019 and 2018, in connection with the Daymon

Acquisition, the Company commenced restructuring programs designed to achieve cost savings through transaction synergies.

The Company recorded severance expenses of $4.6 million, $2.3 million, and $7.9 million included in

Selling, general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020, 2019, and 2018, respectively.

As of December 31, 2020, and 2019, $1.3 million and $2.6 million of the Companys restructuring charges were included in

Other accrued expenses in the Consolidated Balance Sheets, respectively.

The following table summarizes the Companys

restructuring activity:

Facilities and Other

Total Restructuring

Restructuring charges include severance plans designed to integrate and reduce costs intended to further improve efficiencies in operational activities and align cost structures consistent with revenue levels associated with business changes.

In response to the COVID-19 pandemic, the Company commenced a plan during the year ended December 31, 2020 involving terminating certain employees, particularly with respect to COVID-19 impacted operations.

The Company recorded severance expenses of $ 1.0 million, $ 4.6 million, and $ 2.3 million included in “Selling, general, and administrative expenses”

in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2021, 2020, and 2019, respectively.

As of December 31, 2021 and 2020, $ 0.3 million and $ 1.3 million of the Company’s restructuring charges were included in “Other accrued expenses”

in the Consolidated Balance Sheets, respectively.

The following table summarizes the Company’s restructuring activity:

Facilities and

Restructuring

(in thousands)

1 unchanged sentence

Payments/utilization

Foreign exchange translation effects

Balance at December 31, 2019

3 unchanged sentences

Balance at December 31, 2021

The following table summarizes the Companys restructuring charges by segment:

The following table summarizes the Company’s restructuring charges by segment:

Year Ended December 31,

1 unchanged sentence

Total restructuring charges

Total restructuring charges recognized represents the estimated total charges for the years ended

December 31, 2020, 2019, and 2018, respectively.

The (benefit from) provision for income taxes is as follows:

Total restructuring charges represents the total charges by segments for the years ended December 31, 2021, 2020, and 2019, respectively.

The provision for (benefit from) income taxes is as follows:

Year Ended December 31,

(in thousands)

Current tax (benefit) expense

Current tax expense (benefit)

Total current tax expense

Deferred tax (benefit) expense

(Benefit) deferred tax expense

Total deferred tax benefit

Total (benefit from) provision for income taxes

A reconciliation of the provision for taxes based on the federal statutory income tax rate attributable to the

Companys effective income tax rate is as follows:

Total provision for (benefit from) income taxes

A reconciliation of the provision for (benefit from) income taxes based on the federal statutory income tax rate attributable to the Company’s effective income tax rate is as follows:

Year Ended December 31,

2 unchanged sentences

Foreign tax, net of federal tax benefit

Goodwill impairment

Global intangible low taxed income

4 unchanged sentences

Contingent consideration fair value adjustment

Fair value of warrant liability

Non-deductible expenses

3 unchanged sentences

Effective tax rate

The geographic components of (loss) income before income taxes are as follows:

The geographic components of income (loss) before income taxes are as follows:

Year Ended December 31,

(in thousands)

Loss before income taxes

Income (loss) before income taxes

Net deferred tax liabilities consist of the following:

3 unchanged sentences

Interest expense

Social security tax deferral

Net operating losses

1 unchanged sentence

Transaction expenses

Debt issuance costs

Acquired intangibles, including goodwill

Contingent liabilities

Social security tax deferral

Insurance reserves

Acquired intangibles, including goodwill

Debt issuance costs

Total deferred tax assets

1 unchanged sentence

Acquired intangibles including goodwill

Debt issuance costs

Right-of-use assets

Restructuring expenses

Unrealized transactions

Total deferred tax liabilities

3 unchanged sentences

Noncurrent deferred tax asset

Noncurrent deferred tax liability

Noncurrent deferred tax liabilities

Net deferred tax liabilities

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was

signed into law.

Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act includes provisions, among others, addressing the carryback of net operating loss carryforwards

(NOLs) for specific periods, refunds of alternative minimum tax credits, temporary modifications to the limitations placed on the tax deductibility of net interest expenses, and technical amendments for qualified improvement property

Additionally, the CARES Act, in efforts to enhance business liquidity, provides for refundable employee retention tax credits and the deferral of the employer-paid portion of social security taxes.

The CARES Act allows employers to defer payment of a portion of payroll taxes otherwise due on wages paid between the enactment date and

December 31, 2020 and remit the deferred payroll taxes in equal amounts on December 31, 2021 and December 31, 2022.

Under this provision of the CARES Act, the Company has recorded the tax impact of $12.6 million as

a deferred tax asset.

The Company held cash and cash equivalents in foreign subsidiaries of $87.7 million and

$59.3 million as of December 31, 2020 and 2019, respectively.

As of December 31, 2020, and 2019, the undistributed earnings of the Companys foreign subsidiaries are $134.6 million and $92.6 million, respectively.

The Company has not recorded a deferred tax liability related to undistributed earnings of its foreign subsidiaries as of December 31,

2020, except for a $2.1 million of deferred tax liability recorded as of December 31, 2020 for unremitted earnings in Canada with respect to which the Company no longer has an indefinite reinvestment assertion.

Taxes have not been provided

on the remaining $82.5 million of undistributed foreign earnings.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) that was signed into law on March 27, 2020 allows employers to defer payment of a portion of payroll taxes otherwise due on wages paid between the enactment date and December 31, 2020 and remit the deferred payroll taxes in equal amounts on December 31, 2021 and December 31, 2022.

Under this provision of the CARES Act, the Company has recorded the tax impact of $ 6.4 million and $ 12.6 million as a deferred tax asset as of December 31, 2021 and 2020.

The Company held cash and cash equivalents in foreign subsidiaries of $ 86.2 million and $ 87.7 million as of December 31, 2021 and 2020, respectively.

As of December 31, 2021, and 2020, the undistributed earnings of the Company’s foreign subsidiaries are $ 164.1 million and $ 134.6 million, respectively.

The Company has not recorded a deferred tax liability related to undistributed earnings of its foreign subsidiaries as of December 31, 2021, except for a $ 2.5 million of deferred tax liability recorded as of December 31, 2021 for unremitted earnings in Canada with respect to which the Company no longer has an indefinite reinvestment assertion.

Taxes have not been provided on the remaining $ 101.1 million of undistributed foreign earnings.

The incremental tax liability associated with these earnings is expected to be immaterial.

The Company evaluates its deferred tax assets, including a determination of whether a valuation allowance is necessary, based upon its ability

to utilize the assets using a more likely than not analysis.

The Company evaluates its deferred tax assets, including a determination of whether a valuation allowance is necessary, based upon its ability to utilize the assets using a more likely than not analysis.

Deferred tax assets are only recorded to the extent that they are realizable based upon past and future income.

As a result of the evaluation, the Company established a valuation allowance

of $6.7 million and $5.6 million on its foreign affiliates deferred tax assets as of December 31, 2020 and 2019, respectively.

As of December 31, 2020, the Company had $6.2 million of federal NOLs, $16.3 million state NOLs, and $31.4 million foreign

The change of ownership provisions of the Tax Reform Act of 1986 may limit utilization of a portion of The Companys domestic NOLs to future periods.

The federal NOLs expire between 2036 and 2037, $13.2 million of the state NOLs

expire between 2023 and 2039 and the remaining $3.1 million of the state NOLs carry forward indefinitely.

Foreign NOLs of $11.6 million expire between 2024 and 2032 and the remaining $19.8 million of the foreign NOLs carry forward

indefinitely.

As a result of the evaluation, the Company established a valuation allowance of $ 6.9 million, $ 6.7 million, and $5.6 million on its foreign affiliates’

deferred tax assets as of December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, the Company had $ 5.6 million of United States Federal Net Operating Losses (“NOL”), $ 17.8 million state NOLs, and $ 29.4 million foreign NOLs.

The change of ownership provisions of the Tax Reform Act of 1986 may limit

utilization of a portion of The Company’s domestic NOLs to future periods.

The United States Federal NOLs expire between 2036 and 2037, $13.8 million of the state NOLs expire between 2023 and 2040 and the remaining $4.0 million of the state NOLs carry forward indefinitely.

Foreign NOLs of $8.6 million expire between 2024 and 2032 and the remaining $20.8 million of the foreign NOLs carry forward indefinitely.

Segments and Geographic Information

The Companys operations are organized into two reportable segments:

The Company’s operations are organized into two reportable segments:

sales and marketing.

The operating segments reported below are the

segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the chief operating decision maker (the chief executive officer) in deciding how to allocate resources and in

assessing performance.

Through the Companys sales segment, the Company serves as a strategic intermediary between consumer goods manufacturers and retailer partners and performs critical merchandizing services on behalf of both consumer goods

manufacturers and retail partners.

Through the Companys marketing segment, the Company develops and executes marketing programs for manufacturers and retailers.

These reportable segments are organized by the types of services provided, similar

economic characteristics, and how the Company manages its business.

The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the chief operating decision maker (the chief executive officer) in deciding how to allocate resources and in assessing performance.

Through the Company’s sales segment, the Company serves as a strategic intermediary between consumer goods manufacturers and retailer partners and performs critical merchandizing services on behalf of both consumer goods manufacturers and retail partners.

Through the Company’s marketing segment, the Company develops and executes marketing programs for manufacturers and retailers.

These reportable segments are organized by the types of services provided, similar economic characteristics, and how the Company manages its business.

The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements;

therefore, no additional

information is produced or included herein.

therefore, no additional information is produced or included herein.

The Company and its chief operating decision maker evaluate performance based on revenues and operating income.

8 unchanged sentences

Depreciation and amortization

Operating loss

Operating income

Revenues and long-lived assets by services provided in geographic region are as follows:

9 unchanged sentences

Total long-lived assets

The classification North America is primarily comprised of the Companys U.S.

operations and the classification International primarily includes the Companys operation in the U.K., Germany, the Netherlands and Japan.

Revenues by location of services provided in the U.S.

were $2.7 billion, $3.1 billion, and $3.0 billion during the years ended

December 31, 2020, 2019, and 2018, respectively.

North American revenues were primarily services provided in the U.S.

representing revenues of $ 3.0 billion, $ 2.7 billion, and $ 3.1 billion during the years ended December 31, 2021, 2020, and 2019, respectively.

The classification “International”

primarily includes the Company’s operation in the U.K., Germany, the Netherlands and Japan.

Redeemable Noncontrolling Interest

The Company is party to a put and call option agreement with respect to the common securities that represent the remaining noncontrolling interest from a majority-owned subsidiary, which was established through a majority-owned international joint venture during the year ended December 31, 2021.

The put and call option agreement representing 20 % of the total outstanding noncontrolling equity interest of that subsidiary may be exercised at the discretion of the noncontrolling interest holder by providing written notice to the Company beginning in 2026 and expiring in 2028 .

The redemption value of the put and call option agreement is based on a multiple of the majority-owned subsidiary’s earnings before interest, taxes, depreciation and amortization subject to certain adjustments.

The noncontrolling interest is subject to a put option that is outside of the Company’s control, and is presented as redeemable non-controlling interest in the temporary equity section of the Consolidated Balance Sheets.

The Company recorded its redeemable noncontrolling interest at fair value on the date of the related business combination transaction and recognizes changes in the redemption value at the end of each reporting period.

The carrying value of the redeemable noncontrolling interest was $ 1.9 million as of December 31, 2021.

(in thousands)

December 31, 2021

Beginning Balance

Fair value at acquisition

Net loss attributable to redeemable noncontrolling interests

Foreign currency translation adjustment

Ending Balance

Commitments and Contingencies

Company is involved in various legal matters that arise in the ordinary course of its business.

The Company is involved in various legal matters that arise in the ordinary course of its business.

Some of these legal matters purport or may be determined to be class and/or representative actions, or seek substantial damages, or penalties.

Company has accrued amounts in connection with certain legal matters, including with respect to certain of the matters described below.

There can be no assurance, however, that these accruals will be sufficient to cover such matters or other legal

matters or that such matters or other legal matters will not materially or adversely affect the Companys business, financial position, or results of operations.

The Company has accrued amounts in connection with certain legal matters, including with respect to certain of the matters described below.

There can be no assurance, however, that these accruals will be sufficient to cover such matters or other legal matters or that such matters or other legal matters will not materially or adversely affect the Company’s financial position, liquidity, or results of operations.

Employment Matters

Company has also been involved in various litigation, including purported class or representative actions with respect to matters arising under the California Labor Code and Private Attorneys General Act.

The Company has retained outside counsel to

represent it in these matters and is vigorously defending its interests.

The Company has also been involved in various litigation, including purported class or representative actions with respect to matters arising under the California Labor Code and Private Attorneys General Act.

The Company has retained outside counsel to represent it in these matters and is vigorously defending its interests.

Legal Matters Related to Take 5

USAO and FBI Voluntary Disclosure and Investigation Related to Take 5

The Company voluntarily disclosed to the United States Attorneys Office and the Federal Bureau of Investigation certain misconduct

occurring at Take 5, a line of business that the Company closed in July 2019.

The Company voluntarily disclosed to the United States Attorney’s Office and the Federal Bureau of Investigation certain misconduct occurring at Take 5, a line of business that the Company closed in July 2019.

The Company intends to cooperate in this and any other governmental investigations that may arise in connection with the Take 5 Matter.

At this time, the Company cannot

predict the ultimate outcome of any investigation related to the Take 5 Matter and is unable to estimate the potential impact such an investigation may have on the Company.

At this time, the Company cannot predict the ultimate outcome of any investigation related to the Take 5 Matter and is unable to estimate the potential impact such an investigation may have on the Company.

Arbitration Proceedings Related to Take 5

In August 2019, as a result of the Take 5 Matter, the Company provided a written indemnification claim notice to the sellers of Take 5 (the

Take 5 Sellers) seeking monetary damages (including interest, fees and costs) based on allegations of breach of the asset purchase agreement (the Take 5 APA), as well as fraud.

In September 2019, the Take 5 Sellers initiated

arbitration proceedings against the Company, alleging breach of the Take 5 APA as a result of the Companys decision to terminate the operations of the Take 5 business, and seeking monetary damages equal to all

unpaid earn-out payments under the Take 5 APA (plus interest, fees and costs).

In 2020, the Take 5 sellers amended their statement of claim to allege defamation, relating to statements the Company

made to customers in connection with terminating the operations of the Take 5 business, and seeking monetary damages for the alleged injury to their reputation.

The Company filed its response to the Take 5 Sellers claims, and asserted

indemnification, fraud and other claims against the Take 5 Sellers as counterclaims and cross-claims in the arbitration proceedings.

The Company is currently unable to estimate the potential impact related to these arbitration proceedings, but the

Company has retained outside counsel to represent the Company in these matters and intends to vigorously pursue the Companys interests.

In August 2019, as a result of the Take 5 Matter, the Company provided a written indemnification claim notice to the sellers of Take 5 (the “Take 5 Sellers”) seeking monetary damages (including interest, fees and costs) based on allegations of breach of the asset purchase agreement (the “Take 5 APA”), as well as fraud.

In September 2019, the Take 5 Sellers initiated arbitration proceedings against the Company, alleging breach of the Take 5 APA as a result of the Company’s decision to terminate the operations of the Take 5 business, and seeking monetary damages equal to all unpaid earn-out payments under the Take 5 APA (plus interest, fees and costs).

In 2020, the Take 5 sellers amended their statement of claim to allege defamation, relating to statements the Company made to customers in connection with terminating the operations of the Take 5 business, and seeking monetary damages for the alleged injury

to their reputation.

The Company filed its response to the Take 5 Sellers’

claims, and asserted indemnification, fraud and other claims against the Take 5 Sellers as counterclaims and cross-claims in the arbitration proceedings.

The Company is currently unable to estimate the potential impact related to these arbitration proceedings, but the Company has retained outside counsel to represent the Company in these matters and intends to vigorously pursue the Company’s interests.

The arbitration hearing for this matter commenced in the first quarter of 2022;

however, the Company does not know when the hearing will be concluded and when the Company will receive a decision from the arbitrator.

Other Legal Matters Related to Take 5

The Take 5 Matter may result in additional litigation against the Company, including lawsuits from clients, or governmental investigations,

which may expose the Company to potential liability in excess of the amounts being offered by the Company as refunds to Take 5 clients.

The Company is currently unable to determine the amount of any potential liability, costs or expenses (above the

amounts already being offered as refunds) that may result from any lawsuits or investigations associated with the Take 5 Matter or determine whether any such issues will have any future material adverse effect on the Companys financial

position, liquidity, or results of operations.

Although the Company has insurance covering certain liabilities, the Company cannot assure that the insurance will be sufficient to cover any potential liability or expenses associated with the Take 5

In the ordinary course of business, the Company is required to provide financial commitments in the form of surety bonds to third parties as a

guarantee of its performance on and its compliance with certain obligations.

If the Company were to fail to perform or comply with these obligations, any draws upon surety bonds issued on its behalf would then trigger the Companys payment

obligation to the surety bond issuer.

The Take 5 Matter may result in additional litigation against the Company, including lawsuits from clients, or governmental investigations, which may expose the Company to potential liability in excess of the amounts being offered by the Company as refunds to Take 5 clients.

The Company is currently unable to determine the amount of any potential liability, costs or expenses (above the amounts already being offered as refunds) that may result from any lawsuits or investigations associated with the Take 5 Matter or determine whether any such issues will have any future material adverse effect on the Company’s financial position, liquidity, or results of operations.

In May 2020, the Company received $ 7.7 million from its representation warranty and indemnity policy related to the Take 5 acquisition for claims related to the Take 5 Matter, the maximum aggregate recovery under the policy.

In the ordinary course of business, the Company is required to provide financial commitments in the form of surety bonds to third parties as a guarantee of its performance on and its compliance with certain obligations.

If the Company were to fail to perform or comply with these obligations, any draws upon surety bonds issued on its behalf would then trigger the Company’s payment obligation to the surety bond issuer.

The Company has outstanding surety bonds issued for its benefit of $ 10.0 million and $ 7.5 million as of December 31, 2021, and 2020, respectively.

Subsequent Events

to December 31, 2020, the Company completed two business acquisitions, which were a sales agency and a marketing agency.

The aggregate cash paid for these consummated acquisitions was $17.0 million.

The purchase agreements related to those

acquisitions included contingent consideration with a maximum payment outcome of $14.2 million and holdback of $1.4 million.

The Company has determined that the purchase price allocation related to these acquisitions is impractical to

report as of the date of this filing.

Purchase price allocations are considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date.

In January 2021 and February 2021, the Company granted performance restricted stock units with respect to our Class A common stock

(PSUs) under the Advantage Solutions Inc.

2020 Incentive Award Plan (the 2020 Plan).

The grants provided for a target of 2,557,188 shares of Common Stock to be issued pursuant to the PSUs under the 2020 Plan.

subject to the achievement of certain performance conditions based on the Companys Adjusted EBITDA and revenues and the recipients continued service to the Company, the PSUs are scheduled to vest over a three-year period from the date of

grant and may vest from 0% to 150% of the targeted number of shares set forth in the immediately preceding sentence.

In January 2021 and February 2021, the Company granted restricted stock units with respect

to our Class A common stock (RSUs) of 1,703,663 shares.

RSUs for 125,000 shares of Common Stock are scheduled to vest in two equal tranches on the first and second anniversaries of the grant date.

The remaining RSUs are scheduled to

vest in three equal tranches, and a tranche shall vest on each of the first, second and third anniversaries of the grant date.

2021, the Company granted RSUs to certain of its directors (Ronald E.

Blaylock, Beverly Chase, Virginie Costa and Elizabeth Muñoz-Guzman) with respect to 10,356 shares each.

The grants were made in

accordance with the Companys Non-Employee Director Compensation Policy.

The RSUs granted to these directors are scheduled to vest on the earlier of the one-year

anniversary of the date of grant or the day immediately preceding the date of the first annual meeting of the Companys stockholders occurring after the date of grant.

The 5,000,000 Performance Shares issued to Topco at the Closing vested on January 15, 2021, when the closing price for the Class A

common stock equaled or exceeded $12.00 per share for 20 trading days out of 30 consecutive trading days during the five-year period after the Closing.

ADVANTAGE SOLUTIONS INC.

CONDENSED PARENT ONLY FINANCIAL INFORMATION

OF ADVANTAGE SOLUTIONS INC.

CONDENSED REGISTRANT ONLY FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

(in thousands, except share data)

(in thousands)

Investment in subsidiaries

LIABILITIES AND STOCKHOLDERS' EQUITY

Warrant liability

Total liability

Equity attributable to stockholders of Advantage Solutions Inc.

Common stock $ 0.0001 par value, 3,290,000,000 shares authorized;

318,425,182 and 203,750,000

shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

316,963,552 and 318,425,182 shares issued and outstanding as of

December 31, 2021 and 2020, respectively

Additional paid-in capital

1 unchanged sentence

Loans to Karman Topco L.P.

Accumulated other comprehensive income (loss)

Accumulated other comprehensive (loss) income

Common stock in treasury, at cost;

1,610,014 shares as of December 31, 2021

Total equity attributable to stockholders of Advantage Solutions Inc.

Equity attributable to noncontrolling interest

Total stockholders equity

Total liabilities and stockholders equity

See Notes to Condensed Financial Statements

Total stockholders’

Total liabilities and stockholders’

See Notes to Condensed Registrant Only Financial Statements

ADVANTAGE SOLUTIONS INC.

CONDENSED PARENT ONLY FINANCIAL INFORMATION

OF ADVANTAGE SOLUTIONS INC.

CON DENSED REGISTRANT ONLY FINANCIAL INFORMATION

CONDENSED STATEMENTS OF OPERATIONS

3 unchanged sentences

Selling, general, and administrative expenses

Recovery from Take 5

Depreciation and amortization

1 unchanged sentence

Operating income

Other expenses:

Change in fair value of warrant liability

Interest expense, net

Income before income taxes and equity in net income of subsidiaries

Total other expenses

Loss before income taxes and equity in net income of subsidiaries

Provision for income taxes

Net income before equity in net income of subsidiaries

net income attributable to noncontrolling interests

Net loss before equity in net income of subsidiaries

Equity in net income (loss) of subsidiaries

Other comprehensive income (loss), net tax

Equity in comprehensive income (loss) of Subsidiaries

Net income (loss) attributable to subsidiaries

Other comprehensive (loss) income, net of tax equity in

comprehensive (loss) income of subsidiaries

Total comprehensive income (loss)

See Notes to Condensed Financial Statements

See Notes to Condensed Registrant Only Financial Statements

ADVANTAGE SOLUTIONS INC.

CONDENSED PARENT ONLY FINANCIAL INFORMATION

OF ADVANTAGE SOLUTIONS INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

CONDENSED REGISTRANT ONLY FINANCIAL INFORMATION

NOTES TO THE CONDENSED REGISTRANT ONLY FINANCIAL STATEMENTS

Basis of Presentation

In the parent

company only financial statements, Advantage Solutions Inc.s (Parent) investment in subsidiaries is stated at cost plus equity in undistributed earnings of the subsidiaries during the years ended December 31, 2020 and 2019.

The accompanying condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule 1 of Regulation S-X.

condensed statement of cash flows was not presented because Parents operating activities have no cash impact and there were no investing or financing cash flow activities during the years ended December 31, 2020, 2019, and 2018.

information should be read in conjunction with the accompanying Consolidated Financial Statements.

In the registrant company only financial statements, Advantage Solutions Inc.’s (the “Registrant”) investment in subsidiaries is stated at cost plus equity in undistributed earnings of the subsidiaries during the years ended December 31, 2021 and 2020.

The accompanying condensed registrant company financial statements have been prepared in accordance with Rule 12-04, Schedule 1 of Regulation S-X.

A condensed statement of cash flows was not presented because Registrant’s operating activities have no cash impact and there were no investing or financing cash flow activities during the years ended December 31, 2021, 2020, and 2019.

This information should be read in conjunction with the accompanying Consolidated Financial Statements.

Debt Restrictions

Pursuant to the terms of the New Senior Secured Credit Facilities and the Notes discussed in Note 7, Debt , of the Notes to the

Consolidated Financial Statements, the Parents subsidiaries have restrictions on their ability to pay dividends or make intercompany loans and advances to the Parent.

Since the restricted net assets of the Parents subsidiaries exceed 25%

of the consolidated net assets of the Parent and its subsidiaries, the accompanying condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule 1 of Regulation S-X.

Advantage Sales & Marketing Inc., an indirect wholly-owned

subsidiary of the Company (the Borrower) has obligations under the New Term Loan Facility that are guaranteed by Karman Intermediate Corp.

(Holdings) and all of the Borrowers direct and indirect wholly owned material

Guarantors).

The New Term Loan Facility is secured by a lien on substantially all of Holdings, the Borrowers and the Guarantors assets (subject to certain permitted exceptions).

The New Term Loan Facility has a

first-priority lien on the fixed asset collateral (equal in priority with the liens securing the Notes) and a second-priority lien on the current asset collateral (second in priority to the liens securing the New Revolving Credit Facility), in each

case, subject to other permitted liens.

The Borrower will be required to prepay the New Term Loan Facility with 100% of the net cash

proceeds of certain asset sales (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios) and subject to certain reinvestment rights, 100% of the net cash proceeds of certain debt issuances and 50% of

excess cash flow (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios).

Loan Facility contains certain customary negative covenants, including, but not limited to, restrictions on the ability of Holdings and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant

liens or security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

The New Term Loan Facility provides that, upon the occurrence of certain events of default, the Companys obligations thereunder may be

bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, change of control and other customary events of default.

Changes in and Disagreements With Accountants on Accounting and

Financial Disclosure.

Pursuant to the terms of the Senior Secured Credit Facilities and the Notes discussed in Note 7, Debt , of the Notes to the Consolidated Financial Statements, the Registrant’s subsidiaries have restrictions on their ability to pay dividends or make intercompany loans and advances to the Registrant.

Since the restricted net assets of the Registrant’s subsidiaries exceed 25 % of the consolidated net assets of the Registrant and its subsidiaries, the accompanying condensed registrant company financial statements have been prepared in accordance with Rule 12-04, Schedule 1 of Regulation S-X.

Advantage Sales & Marketing Inc., an indirect wholly-owned subsidiary of the Company (the “Borrower”) has obligations under the Term Loan Facility that are guaranteed by Karman Intermediate Corp.

(“Holdings”) and all of the Borrower’s direct and indirect wholly owned material U.S.

The Term Loan Facility is secured by a lien on substantially all of Holdings’, the Borrower’s and the Guarantors’

assets (subject to certain permitted exceptions).

The Term Loan Facility contains certain customary negative covenants, including, but not limited to, restrictions on the ability of Holdings and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

The Term Loan Facility provides that, upon the occurrence of certain events of default, the Company’s obligations thereunder may be accelerated.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data