Quantitative and Qualitative Disclosures About Market Risk.
−Removed: The following discussion of market risks contains forward-looking statements and should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes in Part I, Item 1 of this report and with the following items in our Annual Report on Form 10-K for the fiscal year ended January 2, 2024:
+Added: The following discussion of market risks contains forward-looking statements and should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes in Part I, Item 1 of this report, Part II, Item 1A of this report, “Risk Factors,” and with the following items in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024:
the audited consolidated financial statements and related notes in Part IV, Item 15;
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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: Beginning in fiscal 2021, our operating results were impacted by geopolitical and other macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.
−Removed: While we have seen improvements in many of these areas, some of these factors continue to impact our operating results in fiscal 2024, contributing to significantly increased commodity and other costs.
+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.
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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.
−Removed: As of October 1, 2024, we had no hedging contracts in place.
+Added: As of April 1, 2025, we had no hedging contracts in place.
Commodities for which we have not entered into contracts can be subject to unforeseen supply and cost fluctuations, which at times may be significant.
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We may not have the ability to increase menu prices or vary menu items in response to food commodity price increases.
−Removed: For the third quarters of fiscal 2024 and 2023, a hypothetical increase of 1% in food costs would have negatively impacted cost of sales by $2.0 million and $1.9 million, respectively.
+Added: For the first quarter of both fiscal 2025 and 2024, a hypothetical increase of 1% in food costs would have negatively impacted cost of sales by $2.0 million.
We are exposed to market risk from interest rate changes on our funded debt.
This exposure relates to the component of the interest rate on our Loan Agreement that is indexed to market rates.
−Removed: Based on outstanding borrowings at both October 1, 2024 and January 2, 2024, a hypothetical 1% rise in interest rates would have increased interest expense by $1.3 million, on an annual basis.
+Added: As of April 1, 2025, we had no outstanding borrowings under the Loan Agreement.
+Added: Based on outstanding borrowings at December 31, 2024, a hypothetical 1% rise in interest rates would have increased interest expense by $1.1 million, on an annual basis.
(See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 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 October 1, 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.
−Removed: However, under such a scenario, net income would have declined by $2.8 million and $2.4 million at October 1, 2024 and January 2, 2024, respectively.
+Added: Based on balances at April 1, 2025 and December 31, 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 a scenario, net income would have declined by $2.8 million and $2.9 million at April 1, 2025 and December 31, 2024, respectively.
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.