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The cost of products and services used in our operations is subject to volatility due to the relative availability of labor and distribution, weather, natural disasters, inventory levels and other supply and/or demand impacting events such as geopolitical events, economic conditions or other unforeseen circumstances.
−Removed: Climate change may further exacerbate a number of these factors.
−Removed: During fiscal 2021, we began to experience certain supply shortages and transportation delays largely attributable to impacts of the COVID-19 pandemic.
−Removed: These shortages continued in fiscal 2022 and were exacerbated by geopolitical unrest and macroeconomic events.
−Removed: The aggregate impact of these and other factors contributed to significant cost inflation.
−Removed: While we have seen improvements in many of these areas, the absolute level of commodity costs has remained elevated.
+Added: Adverse weather and natural disasters may further exacerbate a number of these factors.
+Added: In recent years, our operating results were impacted by geopolitical and macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.
+Added: Our commodity and wage inflationary environment began returning to more historical levels in fiscal 2024.
We attempt to negotiate short-term and long-term agreements for some of our principal commodity, supply and equipment requirements, such as certain dairy products and poultry, depending on market conditions and expected demand.
While we are in the process of contracting for certain key food and non-food supplies for fiscal 2025, these efforts may not be successful or yield our intended benefits.
−Removed: We continue to evaluate the possibility of entering into similar arrangements for other commodities and periodically evaluate hedging vehicles, such as direct financial instruments, to assist us in managing risk and variability associated with such commodities.
+Added: We continue to evaluate the possibility of entering into similar arrangements for other commodities and periodically
+Added: evaluate hedging vehicles, such as direct financial instruments, to assist us in managing risk and variability associated with such commodities.
As of the end of fiscal 2024, we had no hedging contracts in place.
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This exposure relates to the component of the interest rate on the Loan Agreement that is indexed to market rates.
−Removed: Based on outstanding borrowings at January 2, 2024 and January 3, 2023, a hypothetical 1% rise in interest rates would have increased interest expense by $1.3 million on an annual basis.
+Added: Based on outstanding borrowings at December 31, 2024 and January 2, 2024, a hypothetical 1% rise in interest rates would have increased interest expense by $1.1 million and $1.3 million on an annual basis, respectively.
(See Note 10 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report for further discussion of our long-term debt.)
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In addition, because changes in these investments are not taxable, gains and losses result in tax benefit and tax expense, respectively, and directly affect net income through the income tax provision.
−Removed: Based on balances at January 2, 2024 and January 3, 2023, a hypothetical 10% decline in the market value of our deferred compensation asset and related liability would not have impacted income before income taxes.
−Removed: However, under such scenario, net income would have declined by $2.4 million and $2.0 million at January 2, 2024 and January 3, 2023, respectively.
+Added: Based on balances at December 31, 2024 and January 2, 2024, a hypothetical 10% decline in the market value of our deferred compensation asset and related liability would not have impacted income before income taxes.
+Added: However, under such scenario, net income would have declined by $2.9 million and $2.4 million at December 31, 2024 and January 2, 2024, respectively.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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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.