What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-17 · 329 added, 254 removed, 366 unchanged (61% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(in thousands, except share and per share data)

Current assets

16 unchanged sentences

Long-term debt, net of current portion

Deferred income tax liabilities, net

Deferred income tax liabilities

Warrant liability

1 unchanged sentence

Total liabilities

Commitments and contingencies (Note 10)

Redeemable noncontrolling interest

1 unchanged sentence

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

issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

no ne issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

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

318,449,966 and 318,425,182 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

318,496,390 and 318,425,182 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid in capital

Accumulated deficit

Loans to Topco

Loans to Karman Topco L.P.

Accumulated other comprehensive (loss) income

5 unchanged sentences

ADVANTAGE SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30,

Six Months Ended June 30,

(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

Recovery from Take 5

Depreciation and amortization

Total expenses

Total operating expenses

Operating income

Other expenses:

Other (income) expenses:

Change in fair value of warrant liability

Interest expense, net

Total other expenses

Total other (income) expenses

Income (loss) before income taxes

Provision for income taxes

Provision for (benefit from) income taxes

Net income (loss)

net loss attributable to noncontrolling interest

Net loss attributable to stockholders of Advantage Solutions Inc.

Other comprehensive loss, net of tax:

Net income (loss) attributable to stockholders of Advantage Solutions Inc.

Other comprehensive income (loss), 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 Condensed Consolidated Financial Statements.

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Income (Loss)

(in thousands, except share data)

Balance at April 1, 2021

Comprehensive income (loss)

Net (loss) income

Foreign currency translation adjustments

Total comprehensive income (loss)

Loans to Karman Topco L.P.

Redemption of noncontrolling interest

Equity-based compensation

Shares issued upon vesting of restricted stock units

Shares issued upon exercise of warrants

Stock-based compensation expense

Balance at June 30, 2021

Solutions Inc.

Nonredeemable

Comprehensive

Stockholders’

Noncontrolling

Stockholders’

Income (Loss)

(in thousands, except share data)

Balance at A pril

Comprehensive loss

Foreign currency translation adjustments

Total comprehensive loss

Loans to Karman Topco L.P.

Equity-based compensation

Balance at June 30, 2020

See Notes to the Condensed Consolidated Financial Statements.

Solutions Inc.

Nonredeemable

Comprehensive

Stockholders’

Noncontrolling

Stockholders’

Income (Loss)

(in thousands, except share data)

Balance at January 1, 2021

Comprehensive loss

Net income (loss)

Foreign currency translation adjustments

Total comprehensive loss

Loans to Topco

Equity-based compensation of Topco

Loans to Karman Topco L.P.

Redemption of noncontrolling interest

Equity-based compensation

Vesting of stock-based compensation awards

Shares issued upon vesting of restricted stock units

Shares issued upon exercise of warrants

Stock-based compensation expense

Balance at March 31, 2021

Balance at June 30, 2021

Solutions Inc.

5 unchanged sentences

Income (Loss)

(in thousands, except share data)

Balance at January 1, 2020

2 unchanged sentences

Total comprehensive loss

Balance at March 31, 2020

Loans to Karman Topco L.P.

Equity-based compensation

Balance at June 30, 2020

See Notes to the Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash provided by operating activities

Noncash interest (income) expense

Net income (loss)

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

Noncash interest expense, net

Depreciation and amortization

Changes in fair value of warrant liability

Change in fair value of warrant liability

Fair value adjustments related to contingent consideration

4 unchanged sentences

Distribution received from unconsolidated affiliates

Noncash losses (gains) related to lease abandonments

Loss on disposal of property and equipment

1 unchanged sentence

Accounts receivable

Prepaid expense and other assets

Prepaid expenses and other assets

Accounts payable

10 unchanged sentences

Payments on lines of credit

Proceeds from accounts receivable securitization facility

Proceeds from issuance of long-term debt

Principal payments on long-term debt

1 unchanged sentence

Holdback payments

Redemption of noncontrolling interest

Net cash (used in) provided by financing activities

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Purchase of property and equipment recorded in accounts payable and accrued expenses

Note payable related to settlement of contingent consideration

See Notes to the Condensed Consolidated Financial Statements.

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On September 7, 2020, ASI Intermediate Corp., then known as Advantage Solutions Inc.

(“Legacy Advantage”), 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 (“Conyers Park”), now known as Advantage Solutions Inc., CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers Park (“Merger Sub”), and Karman Topco L.P., then the parent company of Legacy Advantage (“Topco”).

(“ASI”), 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 (“Conyers Park”), now known as Advantage Solutions Inc., CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers Park (“Merger Sub”), and Karman Topco L.P., then the parent company of ASI (“Topco”).

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

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 (the “Closing Date”), Conyers Park consummated the merger pursuant to the Merger Agreement, and Merger Sub was merged with and into Legacy Advantage with Legacy Advantage surviving 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 (the “Closing Date”), Conyers Park consummated the merger pursuant to the Merger Agreement, and Merger Sub was merged with and into ASI with ASI surviving 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.

and Legacy Advantage changed its name to ASI Intermediate Corp.

The Company’s Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ADV” and warrants to purchase the Class A common stock at an exercise price

11.50 per share are listed on the Nasdaq Global Select M

arket under the symbol “ADVWW”.

and ASI changed its name to ASI Intermediate Corp.

The Company’s Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ADV” and warrants to purchase the Class A 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

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The Condensed Consolidated Balance Sheet at December 31, 2020 was derived from the audited Consolidated Balance Sheet at that date and does not include all the disclosures required by U.S.

In the opinion of management, all adjustments which are of a normal recurring nature and necessary for a fair statement of the results as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 have been reflected in the condensed consolidated financial statements.

In the opinion of management, all adjustments which are of a normal recurring nature and necessary for a fair statement of the results as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 have been reflected in the condensed consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2020 and the related footnotes thereto.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.

continues to spread throughout the United States and other countries across the world, and the duration and severity of the effects are currently unknown.

pandemic has impacted the Company and could materially impact our financial results in the future.

The Consolidated Condensed Financial Statements presented herein reflect estimates and assumptions made by management at March 31, 2021.

Such estimates and assumptions affect, among other things, the Company’s goodwill, long-lived asset and indefinite-lived intangible asset valuation, assessment of the annual effective tax rate and the allowance for expected credit losses and bad debt.

Events and changes in circumstances, including those resulting from the impacts of COVID-19,

will be reflected in management’s estimates for future periods.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.

COVID-19 continues

to spread throughout the United States and other countries across the world, and the duration and severity of the effects are currently unknown.

The COVID-19 pandemic

has impacted the Company and could materially impact the Company’s financial results in the future.

The Consolidated Condensed Financial Statements presented herein reflect estimates and assumptions made by management at June 30, 2021.

Events and changes in circumstances, including those resulting from the impacts of COVID-19, will

be reflected in management’s estimates for future periods.

Recent Accounting Standards

Recent Accounting Standards Adopted by the Company

In December 2019, the FASB issued ASU No.

Simplifying the Accounting for Income Taxes

”), 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.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No.

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.

is effective for fiscal years beginning after December 15, 2020.

The Company adopted ASU 2019-12

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The amendments in this update are effective for reporting periods that include or are subsequent to March 12, 2020.

Once adopted, the amendments in this update must be applied prospectively for all eligible contract modifications for that topic.

Once adopted, the amendments in this update 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.

In May 2021, the FAS 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):

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).

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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 consolidation financial statements.

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.

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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.

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 merchandising 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.

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Disaggregated revenues were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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Total revenues

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’ notice.

The Company does not have significant consideration 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, the Company has a present and unconditional right to payment and records the receivable from clients in Accounts receivable, net of allowance for expected credit losses in the Condensed Consolidated Balance Sheets.

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 variable consideration and are estimated using an expected value/most likely amount approach.

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

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

Adjustments to revenues during the current period related to services transferred during prior periods were not material for the three months ended March 31, 2021 and 2020.

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.

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 Condensed Consolidated Balance Sheets.

Contract liabilities represent deferred revenues which are cash payments that are received in advance of the Company’s satisfaction of the applicable obligation and are included in Deferred revenues in the Condensed Consolidated Balance Sheets.

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

Revenues recognized during the three months ended March 31, 2021 that were included in Deferred revenues as of December 31, 2020 were $ 26.1 million.

Revenues recognized during the three months ended March 31, 2020 that were included in Deferred revenues as of December 31, 2019 were $ 24.0 million.

Revenues recognized during the three and six months ended June 30, 2021 that were included in Deferred revenues as of December 31, 2020 were $ 5.8 million and $ 31.9 million, respectively.

Revenues recognized during the three and six months ended June 30, 2020 that were included in Deferred revenues as of December 31, 2019 were $ 3.2 million and $ 27.2 million, respectively.

2021 Acquisitions

The Company acquired two businesses during the three months ended March 31, 2021, which were two

sales agencies.

During the six months ended June 30, 2021, the Company acquired three sales businesses.

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

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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 Condensed Consolidated Statements of Comprehensive Loss since its respective date of acquisition.

The results of operations of each acquired business has been included in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) since its respective date of acquisition.

The aggregate purchase price for the acquisitions referenced above was $ 27.0 million, which includes $ 20.4 million paid in cash, $ 5.1 million recorded as contingent consideration liabilities, and $ 1.4 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.

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 $ 13.5 million.

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Of the resulting goodwill relating to these acquisitions, $ 9.0 million is deductible for tax purposes.

The preliminary fair values of the identifiable assets and liabilities of the acquisitions completed during the three months ended March 31, 2021, as of the applicable acquisition dates, are as follows:

The preliminary fair values of the identifiable assets and liabilities of the acquisitions completed during the six months ended June 30, 2021, as of the applicable acquisition dates, are as follows:

(in thousands)

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Goodwill arising from acquisitions

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:

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Total identifiable intangible assets

The operating results of the businesses acquired during the three months ended March 31, 2021 contributed total revenues of $ 4.7 million in the three months ended March 31, 2021.

The operating results of the businesses acquired during the six months ended June 30, 2021 contributed total revenues of $ 6.3 million and $ 10.9 million in the three and six months ended June 30, 2021, respectively.

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 three months ended March 31, 2021, 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 Condensed Consolidated Statements of Comprehensive Loss.

During the three and six months ended June 30, 2021, the Company incurred an immaterial amount and $ 0.2 million, respectively, in transaction costs related to the acquisitions described above.

These costs have been included in “Selling, general, and administrative expenses” in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

2020 Acquisitions

The Company acquired three businesses during the six months ended June 30, 2020, of which two were sales businesses and a marketing agency 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 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 results of operations of the business acquired by the Company have been included in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) since the date of acquisition.

The aggregate purchase price for the acquisitions referenced above was $ 72.1 million, which includes $ 51.4 million paid in cash, $ 17.2 million recorded as contingent consideration liabilities, and $ 3.5 million recorded as holdback amounts.

The maximum potential payment outcome related to the acquisitions is $ 45.8 million.

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, $ 19.8 million is deductible for tax purposes.

The fair values of the identifiable assets and liabilities of the acquisitions completed during the six months ended June 30, 2020, 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 assumed:

Accounts receivable

Property and equipment

Identifiable intangible asset s

Total liabilities

Total identifiable net assets

Goodwill arising from acquisitions

The identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives.

The fair value and estimated useful lives of the intangible assets acquired are as follows:

(in thousands)

Weighted Average

Client relationships

The operating results of the businesses acquired during the six months ended June 30, 2020 contributed total revenues of $ 15.8 million and $ 26.9 million in the three months and six months ended June 30, 2020, respectively.

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 three and six months ended June 30, 2020, the Company incurred an immaterial amount and $ 0.2 million, respectively, in transaction costs related to the acquisitions described above.

These costs have been included in “Selling, general, and administrative expenses” in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Supplemental Pro Forma Information

Supplemental information on a pro forma basis, presented as if the acquisitions executed during the period from January 1, 2021 to May 17, 2021 and for the year ended December 31, 2020, had been consummated as of the beginning of the comparative prior period, is as follows:

Three Months Ended

Supplemental information on a pro forma basis, presented as if the acquisitions executed during the period from January 1, 2021 to August 9, 2021 and for the year ended December 31, 2020, had been consummated as of the beginning of the comparative prior period, is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except per share data)

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Net income (loss) attributable to stockholders of Advantage Solutions Inc.

Basic and diluted net income (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 three months ended March 31, 2021 and 2020.

Basic net income (loss) per common share

Diluted net income (loss) per common share

pro forma supplemental information is based on estimates and assumptions that 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 three and six months ended June 30, 2021 and 2020.

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.

Goodwill and Intangible Assets

Changes in goodwill for the three months ended March 31, 2021 are as follows:

Changes in goodwill for the six months ended June 30, 2021 are as follows:

(in thousands)

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Measurement period adjustments

Balance at March 31, 2021

Foreign exchange translation effects

Balance at June 30, 2021

During the fiscal year ended December 31, 2018, the Company recognized a non-cash

goodwill impairment cha rge of $ 652.0

million related to the Company’s sales reporting unit as a result of the Company’s annual evaluation of goodwill impairment test.

goodwill impairment charge of $ 652.0 million related to the Company’s sales reporting unit as a result of the Company’s annual evaluation of goodwill impairment test.

The following tables set forth information for intangible assets:

March 31, 2021

June 30, 2021

(in thousands)

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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 Company’s sales trade name as a result of the Company’s annual impairment test for indefinite-lived intangible assets.

intangible asset impairment charge of $ 580.0 million related to the Company’s sales trade name as a result of the Company’s annual impairment test for indefinite-lived intangible assets.

December 31, 2020

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Total other intangible assets

As of March 31, 2021, estimated future amortization expenses of the Company’s existing intangible assets are as follows:

Amortization expenses included in the Consolidated Statements of Operatio n

s and Comprehensive Income (Loss) for the three and six months ended June 30, 2021 and 2020 were $ 49.2 million, $ 98.6 million, $ 47.7 million, and $ 95.5 million, respectively.

As of June 30, 2021, estimated future amortization expenses of the Company’s existing intangible assets are as follows:

(in thousands)

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Long-term debt, net of current portion

As of March 31, 2021, the Company

had $ 1.3 billion of debt outstanding under the New Term Loan Facility and $ 775 million of debt outstanding under the Notes with maturity dates of

October 28, 2027 and November 15, 2028 , respectively.

The Company was in compliance with all of its affirmative and negative covenants under the New Term Loan Facility and Notes as of March 31, 2021.

As of June 30, 2021, the Company had $ 1.3 billion of debt outstanding under the New Term Loan Facility and $ 775.0 million of debt outstanding under the Notes with maturity dates of October 28, 2027 and November 15, 2028 , respectively.

The Company was in compliance with all of its affirmative and negative covenants under the New Term Loan Facility and Notes as of June 30, 2021.

In addition, the Company was required to repay the principal under the New Term Loan Facility (as such term was defined in the New Term Loan Facility Agreement) in the greater amount of its excess cash flow, as defined in the New Term Loan Facility Agreement, or $ 13.3 million, per annum, in quarterly payments.

The Company made the minimum quarterly principal payments of $ 3.3 million during the three months ended March 31, 2021 and no payments under the excess cash flow calculation were required.

During the three months ended March 31, 2020, the Company made the minimum quarterly principal payments of $ 6.5 million pursuant to its then outstanding first lien term loans that existed prior to consummation of the Transactions.

Future minimum principal payments on long-term debt are as follows as of March 31, 2021:

(in thousands)

Remainder of 2021

Total future minimum principal payments

The Company made the minimum quarterly principal payments of $ 3.3 million during the three months ended June 30, 2021 and no payments under the excess cash flow calculation were required.

During the three months ended June 30, 2020, the Company made the minimum quarterly principal payments of $ 6.5 million pursuant to its then outstanding first lien term loans that existed prior to consummation of the Transactions.

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.

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.

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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.

March 31, 2021

June 30, 2021

(in thousands)

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Interest Rate Cap Agreements

The Company had interest rate cap contracts with an aggregate notional value of principal of $ 2.2 billion as of e ach of

March 31, 2021 and December 31, 2020, from various financial institutions to manage the Company’s exposure to interest rate movements on variable rate credit facilities.

As of March 31, 2021, the aggregate fair value of the Company’s outstanding interest rate caps represented an outstanding net asset of $ 7.3 million and an outstanding net liability of $ 1.5 million.

The Company had interest rate cap contracts with an aggregate notional value of principal of $ 2.2 billion as of each of June 30, 2021 and December 31, 2020, from various financial institutions to manage the Company’s exposure to interest rate movements on variable rate credit facilities.

As of June 30, 2021, the aggregate fair value of the Company’s outstanding interest rate caps represented an outstanding net asset of $ 6.1 million and an outstanding net liability of $ 1.1 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 March 31, 2021, $ 7.3 million and $ 1.5 million of

fair value of

the Company’s 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 Loss.

As of December 31, 2020, $ 1.8 million, $ 1.0 million, and $ 0.9 million of

fair value of

the Company’s 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.

During the three months ended March 31, 2021 and 2020, the Company recorded a gain within interest expense, net in the amount of

As of June 30, 2021, $ 6.1 million and $ 1.1 million of fair value of the Company’s outstanding interest rate caps were included in “Prepaid expenses and other current assets” and “Other accrued expenses” in the Condensed Consolidated Balance Sheets, respectively, with changes in fair value recognized as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 31, 2020, $ 1.8 million, $ 1.0 million, and $ 0.9 million of fair value of the Company’s outstanding interest rate caps were included in “Prepaid expenses and other current assets”, “Other accrued expenses”, and “Other long-term liabilities” in the Condensed Consolidated Balance Sheets, respectively, with changes in fair value recognized as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

During the three months ended June 30, 2021 and 2020, the Company recorded a loss of $ 1.2 million and a gain of less than $ 0.1 million, respectively, within Interest expense, net, related to changes in the fair value of its derivative instruments.

During the six months ended June 30, 2021 and 2020, the Company recorded a gain within Interest expense, net in the amount of $

4.3 million, and $ 0.1 million, respectively, related to changes in the fair value of its derivative instruments.

Forward Contracts

As of March 31, 2021, the Company had two open Euro forward contracts to hedge foreign currency exposure on a total of € 1.2 million, with maturities in fiscal year 2021 .

As of June 30, 2021, the Company had

forward contracts to hedge foreign currency exposure on a total of € 3.6 million, with maturities in fiscal year 2021 .

As of December 31, 2020, the Company had no open euro forward contracts.

During the three months ended March 31, 2021 and 2020, the Company recognized a gain less than $ 0.1 million and $ 0.1 million, respectively, related to changes in fair value of the forward contracts as a component of “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Comprehensive Loss.

During the three months and six months ended June 30, 2021 and 2020, the Company recognized immaterial changes in fair value of the forward contracts as a component of “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations and Comprehensive

Income (Loss).

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 fair value of the warrants on the date of issuance and on each remeasurement date of certain warrants issued by the Company in a private placement in connection with the Closing (the “private placement warrants”) and classified as liabilities is estimated using the Black-Scholes option pricing model using the following assumptions:

March 31, 2021

The fair value of the warrants on the date of issuance and on each re -

measurement date of certain warrants issued by the Company in a private placement in connection with the Closing (the “private placement warrants”) and classified as liabilities is estimated using the Black-Scholes option pricing model using the following assumptions:

June 30, 2021

December 31, 2020

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Exercise price per share

Implied volatility

Expected term (years)

Expected volatility

Risk-free interest rate

Dividend yield

As of March 31, 2021, 7,333,333

private placement warrants remained outstanding at a fair value of $ 26.7

million resulting in a $ 5.5

million expense related to the change in fair value of warrant liability for the three months ended March 31, 2021.

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 Loss until the warrants are exercised, expire or other facts and circumstances lead the warrant liability

to be reclassified as an equity instrument.

As of June 30, 2021, 7,333,333 private placement warrants remained outstanding at a fair value of $ 19.7 million resulting in $ 7.0 million and $ 1.5 million gain related to the change in fair value of warrant liability for the three and six months ended June 30, 2021, respectively.

The warrant liability is stated at fair value at each reporting period with the change in fair value recorded on the

Consolidated Statement s

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.

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 Condensed Consolidated Statements of Comprehensive Loss.

As of March 31, 2021, the maximum potential payment outcomes were $ 289.9 million.

Operations and

Comprehensive

Income (Loss).

As of June 30, 2021, the maximum potential payment outcomes were $ 233.0 million.

The following table summarizes the changes in the carrying value of estimated contingent consideration liabilities:

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Fair value of acquisitions

Note issuance for settlements

Measurement period adjustments

2 unchanged sentences

End of the period

Since the initial preliminary estimates reported in 2020, the Company has updated certain amounts reflected in the preliminary purchase price allocation, as summarized in the fair values of assets acquired and liabilities assumed as set forth above.

Specifically, contingent consideration decreased $ 1.2 million due to fair value measurement period adjustments.

Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed at the acquisition date.

Long-term Debt

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Carrying Value

Balance at March 31, 2021

Balance at June 30, 2021

New Term Loan Credit Facility

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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 our 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 our 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.

In May 2019, Conyers Park II Sponsor LLC, an affiliate of Centerview Capital Management, LLC, which was Conyer s

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

the Company’s

Class A Common Stock at $ 11.50 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 have 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.

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

Three members of the board of directors of Topco served as the members of the board of directors of a client of the Company.

During the three months ended March 31, 2021, the Company recognized revenues of $ 1.0 million from this client.

Accounts receivable from this client were less than $ 0.1 million as of March 31, 2021, and December 31, 2020, respectively.

Seven members of the board of directors of the Company served as the members of the board of

directors of five clients of the Company.

Until February 2, 2020, a member of the board of directors of the Company 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

Three Months Ended

Six Months Ended

(In thousands)

From June 25, 2019 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.

During the three months ended March 31, 2020, the Company recognized revenues

4.8 million from this client.

Accounts receivable from this client were

zero as of March

2021 and December

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.

During the three months ended March 31, 2020, the Company recognized revenues of $ 3.9 million, from this client.

Accounts receivable from this client were zero as of March 31, 2021 and December 31, 2020.

During the three and six months ended June 30, 2020, the Company recognized revenues of $

4.3 million and $

9.1 million, respectively, from this client.

Investment in Unconsolidated Affiliates

During the three months ended March 31, 2021 and 2020, the Company recognized revenues of $ 4.7 million and $ 4.8 millio n,

respectively, from a parent company of an unconsolidated affiliate.

Accounts receivable from this client

re $ 2.5 million and $ 2.2 million as of March 31, 2021 and December 31, 2020, respectively.

The Company’s effective tax rate was 145.6 % and (

during the three months ended March 31, 2021 and 2020, respectively.

During the three months ended June 30, 2021 and 2020, the Company recognized revenues of $ 4.7 million and $ 2.6 million, respectively, from a parent company of an unconsolidated affiliate.

During the six months ended June 30, 2021 and 2020, the Company recognized revenues of $ 9.3 million and $ 7.3 million, respectively, from the

parent company of such

unconsolidated affiliate.

Accounts receivable from this client were $ 1.7 million and $ 2.2 million as of June 30, 2021 and December 31, 2020, respectivel y

The Company’s effective income tax rates were 53.3 % and 26.6 % for the three months ended June 30, 2021 and 2020, respectively.

The fluctuation in the effective rates during the three months ended June 30, 2021 and 2020 is caused by variations in the Company’s estimated annual effective tax rate from the respective previous quarters, changes in the income (loss) before income taxes in those periods and the impact of discrete items related to changes in statutory tax rates in certain foreign and state jurisdictions for the three months ended June 30, 2021 which resulted in a higher tax

provision overall.

The Company’s effective

17.2 % during the six months ended June 30, 2021 and 2020, respectively.

The effective tax rate is based upon the estimated income or loss before taxes for the year, by jurisdiction, and adjusted for estimated permanent tax adjustments.

The fluctuation in the Company’s effective tax rate was primarily due to a difference in projected book income/loss used in the annual effective tax rate and unfavorable permanent book/tax differences related to officers’ compensation and fair value adjustments for warrant liabilities.

Also, the company recorded a valuation allowance of $ 1.3 million as a discrete item to the quarter for its Mexico operations which resulted in a higher tax provision overall for the three months ended March 31, 2021.

Without the $ 1.3 million valuation allowance, the Company’s effective tax rate would be 31.5 % during the three months ended March 31, 2021.

The Company’s operations are organized into two reportable segments:

The fluctuation in the Company’s effective tax rate was primarily due to a difference in projected income (loss) before income taxes used in the annual effective tax rate and unfavorable permanent differences related to officers’ compensation including stock-based awards for the six months ended June 30, 2021.

Also, the Company recorded discrete items during the six months ended June 30, 2021, including a valuation allowance of $ 1.3 million for its Mexico operations and income tax expenses of $ 2.3 million and $ 0.8 million to adjust the deferred tax liability resulting from changes in statutory tax rates in certain foreign and state jurisdictions, respectively.

These discrete items resulted in a higher tax provision overall for the six months ended June 30, 2021.

The Company’s

operations are organized into two reportable segments:

sales and marketing.

., the Company’s Chief Executive Officer) in deciding how to allocate resources and in assessing performance.

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 (i.e., the Company’s 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.

5 unchanged sentences

(in thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Depreciation and amortization

Operating income

Three Months Ended March 31, 2020

Operating income (loss)

Three Months Ended June 30, 2020

Depreciation and amortization

Operating income (loss)

(in thousands)

Six Months Ended June 30, 2021

Depreciation and amortization

Operating income

Six Months Ended June 30, 2020

Depreciation and amortization

Operating income (loss)

Commitments and Contingencies

14 unchanged sentences

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 o n

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 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).

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 Company is currently unable to estimate the potential impact related to these arbitration proceeding s

, but the Company has retained outside counsel to represent the Company in these matters and intends to vigorously pursue the Company’s interests.

Other Legal Matters Related to Take 5

1 unchanged sentence

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.

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 Matter.

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, including workers’ compensation insurance.

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 $ 7.5 million and $ 0.5 million as of March 31, 2021 and December 31, 2020, respectively.

Although the Company has insurance covering certain liabilities, the insurance may not be sufficient to cover any potential liability or expenses associated with the Take 5 Matter.

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 three months ended March 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 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 six months ended June 30, 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 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 Condensed 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 March 31, 2021.

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 Condensed 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 $ 1.8 million as of June 30, 2021.

(in thousands)

1 unchanged sentence

Fair value at acquisition

Net income attributable to redeemable noncontrolling interests

attributable to redeemable noncontrolling interests

Foreign currency translation adjustment

1 unchanged sentence

Stock-Based Compensation

The Company has issued nonqualified stock options, restricted stock units, and performance share units under the Advantage Solutions Inc.

The Company has issued nonqualified stock options, restricted stock units, and performance restricted stock units under the Advantage Solutions Inc.

2020 Incentive Award Plan (the “Plan”).

As of March 31, 2021, the number of nonqualified stock options outstanding was immaterial.

Our restricted stock units and performance share units, as described below, are expensed and reported as non-vested

We recognized share-based compensation expense of $ 8.7 million in the three months ended March 31, 2021.

Performance Stock Units

Performance restricted stock units (“PSUs”) are subject to the achievement of certain performance conditions based on the Company’s Adjusted EBITDA and revenues targets in the respective measurement period and the recipient’s continued service to the Company.

The PSUs are scheduled to vest over

three-year period from the date of grant and may vest from

the number of shares set forth in the table below.

During the three months ended March 31, 2021, the following activity involving PSUs occurred under the Plan:

Number of PSUs

Weighted Average

Date Fair Value

Outstanding at January 1, 2021

Outstanding at March 31, 2021

As of June 30, 2021, the number of nonqualified stock options outstanding was immaterial.

The Company’s restricted stock units and performance restricted stock units, as described below, are expensed and reported as non-vested shares.

The Company recognized stock-based compensation expense of $

10.3 million and $

20.2 million in the three and six months ended June 30, 2021, respectively.

The related deferred tax benefit for stock-based compensation recognized was $ 1.5 million and $ 3.1 million for the three and six months ended June 30, 2021, respectively.

Performance Restricted Stock Units

Performance restricted stock units (“PSUs”) are subject to the achievement of certain performance conditions based on the Company’s Revenue 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.

Performance Period

Expense to be

January 1, 2021—December 31,

dollars in thousands

The fair value of PSU grants was equal to the closing price of ADV 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 above.

Recognition of expense associated with performance-based stock is not permitted until achievement of the performance targets are probable of occurring.

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

(though RSUs associated with 125,000 shares of Class A common stock are scheduled to vest over two years ) and are subject to the provisions of the agreement under the Plan.

During the three months ended March 31, 2021, the following activity involving RSUs occurred under the Plan:

The RSUs are generally scheduled to vest over three years and are subject to the provisions of the agreement under the Plan.

During the six months ended June 30, 2021, the following activities involving RSUs occurred under the Plan:

Number of RSUs

Weighted Average

Weighted Average Grant

Date Fair Value

Outstanding at January 1, 2021

Outstanding at March 31, 2021

As of March 31, 2021, the total remaining unrecognized compensation cost related to non-vested

PSUs, and RSUs amounted to $ 29.1 million, $ 21.1 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 2.8 years, and 2.7 years, respectively.

Joint Venture – Preferred Dividends

The Company also has cumulative preferred dividends, undeclared and unpaid associated with its joint venture.

These preferred shares do not represent a participating security, but preference dividends would be considered in determining income available to common stockholders.

The amount of the preference dividends was immaterial to all periods presented.

Outstanding at June 30, 2021

As of June 30, 2021, the total remaining unrecognized compensation cost related to RSUs amounted to $ 15.9 million, which will be amortized over the weighted-average remaining requisite service periods of 2.5 years.

Earnings Per Share

The Company calculates earnings per share (“EPS”) using a dual presentation of basic and diluted 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 (loss) attributable to stockholders of the Company by the weighted-average shares of common stock outstanding without the consideration for potential dilutive shares of common stock.

1 unchanged sentence

share awards, common stock warrants, and Performance Shares (as defined below).

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.

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.

no adjustments required to be made to weighted-average common shares outstanding for purposes of computing basic and diluted earnings per share and there were

no securities outstanding in any period presented, which were excluded from the computation of earnings per share other than antidilutive stock options, restricted stock awards, restricted stock units, and PSUs.

three months ended March

2021 , there were

0.2 million stock options, outstanding that were antidilutive, as determined under the treasury stock method, and excluded from the computation of diluted earnings.

RSUs and PSUs that were antidilutive, as determined under the treasury stock method, were

1.7 million and

2.6 million for the

three months ended March

2021 , respectively.

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.

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

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

Three Months Ended June 30,

Six Months Ended June 30,

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

March 31, 2021

March 31, 2020

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 shares of

Class A common stock were issued to Topco at Closing (the “Performance Shares

”), 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.

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.

Change in fair value of warrant liability

Numerator for diluted earnings per share

Weighted average common shares outstanding

RSUs and PSUs

Public and private placement warrants

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 shares of Class A common stock were issued to Topco at Closing (the “Performance Shares”), 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.

Topco was not able to vote or sell such shares until vesting.

The 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 and were

included in the March 31, 2021 earnings per share calculation.

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 three months ended March 31, 2021 and 2020,

respectively.

The 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 and were included in the June 30, 2021 earnings per share calculation.

The Company had

18,578,325 warrants, including

7,333,333 private placement warrants held by CP Sponsor, to purchase Class A common stock at $

11.50 per share outstanding at the Closing, and

5,000 warrants were exercised during the six months ended June 30, 2021.

Joint Venture – Preferred Dividends

The Company also has cumulative preferred dividends, undeclared and unpaid associated with its joint venture.

These preferred shares do not represent a participating security, but preference dividends would be considered in determining income available to common stockholders.

The amount of the preference dividends was immaterial to all periods presented.

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-Q

Item 1. Financial Statements