What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-06-30 compared with 2021-06-30 · 159 added, 183 removed, 561 unchanged (38% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(Unaudited, dollars in thousands, except share and per share data)

February 27, 2021 August 29, 2020

(Unaudited, dollars in thousands, except share data)

November 28, 2020 August 29, 2020

(As Restated,

7 unchanged sentences

Other current assets

12,833 11,947

Total current assets

32 unchanged sentences

Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued

Common stock, $0.01 par value, 600,000,000 shares authorized, 95,856,715 and 95,751,845 shares issued at February 27, 2021 and August 29, 2020, respectively 959 958

Treasury stock, 98,234 and 98,234 shares at cost at February 27, 2021 and August 29, 2020, respectively ( 2,145 ) ( 2,145 )

Common stock, $0.01 par value, 600,000,000 shares authorized, 95,818,871 and 95,751,845 shares issued at November 28, 2020 and August 29, 2020, respectively 958 958

Treasury stock, 98,234 and 98,234 shares at cost at November 28, 2020 and August 29, 2020, respectively ( 2,145 ) ( 2,145 )

Additional paid-in-capital

11 unchanged sentences

(Unaudited, dollars in thousands, except share and per share data)

Thirteen Weeks Ended Twenty-Six Weeks Ended

February 27, 2021 February 29, 2020 February 27, 2021 February 29, 2020

Thirteen Weeks Ended

November 28, 2020 November 30, 2019

(As Restated,

see Note 2) (As Restated,

Net sales $ 231,152 $ 152,153

7 unchanged sentences

Total operating expenses 54,854 65,191

Income from operations 33,341 25,269 72,528 22,284

Income (loss) from operations 39,187 ( 2,985 )

Other income (expense):

1 unchanged sentence

Interest expense ( 8,372 ) ( 4,969 )

(Loss) gain in fair value change of warrant liability ( 45,334 ) 37,644 ( 24,881 ) 50,952

Gain (loss) on foreign currency transactions 975 ( 194 ) 984 ( 178 )

Gain in fair value change of warrant liability 20,453 13,308

Gain on foreign currency transactions 9 16

Other income 47 37

Total other (expense) income ( 52,242 ) 26,954 ( 40,102 ) 36,725

(Loss) income before income taxes ( 18,901 ) 52,223 32,426 59,009

Income tax expense 7,313 3,922 15,687 2,193

Net (loss) income $ ( 26,214 ) $ 48,301 $ 16,739 $ 56,816

Other comprehensive income:

Total other income 12,140 9,771

Income before income taxes 51,327 6,786

Income tax expense (benefit) 8,374 ( 1,729 )

Net income $ 42,953 $ 8,515

Other comprehensive income (loss):

Foreign currency translation adjustments ( 45 ) —

Comprehensive (loss) income $ ( 25,971 ) $ 48,160 $ 16,937 $ 56,675

(Loss) earnings per share from net (loss) income:

Comprehensive income $ 42,908 $ 8,515

Earnings per share from net income:

Basic $ 0.45 $ 0.09

7 unchanged sentences

(Unaudited, dollars in thousands)

Twenty-Six Weeks Ended

February 27, 2021 February 29, 2020

Thirteen Weeks Ended

November 28, 2020 November 30, 2019

(As Restated,

1 unchanged sentence

$ 42,953 $ 8,515

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 4,513 2,525

1 unchanged sentence

Stock compensation expense 1,110 1,673

Loss (gain) in fair value change of warrant liability 24,881 ( 50,952 )

Gain in fair value change of warrant liability ( 20,453 ) ( 13,308 )

Unrealized loss (gain) on foreign currency transactions 9 ( 16 )

2 unchanged sentences

Loss on operating lease right-of-use asset impairment 354 —

Gain on lease termination ( 154 ) —

Other 402 566

35 unchanged sentences

$ 91,476 $ 72,711

Twenty-Six Weeks Ended

February 27, 2021 February 29, 2020

(As Restated,

Thirteen Weeks Ended

November 28, 2020 November 30, 2019

Supplemental disclosures of cash flow information

2 unchanged sentences

Cash paid for taxes

$ 10,023 $ 4,345

Non-cash investing and financing transactions

13 unchanged sentences

Balance at August 29, 2020 95,751,845 $ 958 98,234 $ ( 2,145 ) $ 1,076,472 $ 64,927 $ ( 879 ) $ 1,139,333

Net income — — — — — 42,953 — 42,953

Net income (as restated) — — — — — 42,953 — 42,953

Stock-based compensation — — — — 1,110 — — 1,110

3 unchanged sentences

Balance at November 28, 2020 95,818,871 $ 958 98,234 $ ( 2,145 ) $ 1,077,538 $ 107,880 $ ( 924 ) $ 1,183,307

Net income — — — — — ( 26,214 ) — ( 26,214 )

Stock-based compensation — — — — 2,484 — — 2,484

Foreign currency translation adjustments — — — — — — 243 243

Shares issued upon vesting of restricted stock units 7,034 — — — ( 51 ) — — ( 51 )

Exercise of options to purchase common stock 30,810 1 — — 369 — — 370

Balance at February 27, 2021 95,856,715 $ 959 98,234 $ ( 2,145 ) $ 1,080,340 $ 81,666 $ ( 681 ) $ 1,160,139

Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total

1 unchanged sentence

Balance at August 31, 2019 81,973,284 $ 820 98,234 $ ( 2,145 ) $ 715,740 $ ( 711 ) $ ( 836 ) $ 712,868

Net loss — — — — — 8,515 — 8,515

Net income — — — — — 8,515 — 8,515

Stock-based compensation — — — — 1,673 — — 1,673

3 unchanged sentences

Balance at November 30, 2019 95,416,772 $ 954 98,234 $ ( 2,145 ) $ 1,066,636 $ 7,804 $ ( 836 ) $ 1,072,413

Net income — — — — — 48,301 — 48,301

Stock-based compensation — — — — 2,122 — — 2,122

Foreign currency translation adjustments — — — — — — ( 141 ) ( 141 )

Shares issued upon vesting of restricted stock units 771 — — — ( 10 ) — — ( 10 )

Exercise of options to purchase common stock 58,994 1 — — 723 — — 724

Balance at February 29, 2020 95,476,537 $ 955 98,234 $ ( 2,145 ) $ 1,069,471 $ 56,105 $ ( 977 ) $ 1,123,409

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

Nature of Operations and Principles of Consolidation

The Simply Good Foods Company (“Simply Good Foods” or the “Company”) was formed by Conyers Park Acquisition Corp.

(“Conyers Park”) on March 30, 2017.

On April 10, 2017, Conyers Park and NCP-ATK Holdings, Inc., among others, entered into a definitive merger agreement (the “Merger Agreement”), pursuant to which on July 7, 2017, Conyers Park merged into Simply Good Foods and as a result acquired the companies which conducted the Atkins® brand business (the “Acquisition of Atkins”).

The common stock of Simply Good Foods is listed on the Nasdaq Capital Market under the symbol “SMPL.”

On August 21, 2019, the Company’s wholly-owned subsidiary Simply Good Foods USA, Inc., formerly known as Atkins Nutritionals, Inc., (“Simply Good USA”) entered into a Stock and Unit Purchase Agreement (the “Purchase Agreement”) to acquire Quest Nutrition, LLC (“Quest”), a healthy lifestyle food company (the “Acquisition of Quest”).

On November 7, 2019, Simply Good USA completed the Acquisition of Quest, via Simply Good USA’s direct or indirect acquisition of 100% of the equity interests of Voyage Holdings, LLC (“Voyage Holdings”), and VMG Quest Blocker, Inc.

(“Voyage Blocker” and, together with Voyage Holdings, the “Target Companies”) for a cash purchase price of approximately $ 1.0 billion (subject to customary adjustments for the Target Companies’ levels of cash, indebtedness, net working capital and transaction expenses as of the closing date).

The unaudited condensed consolidated financial statements include the accounts of Simply Good Foods and its wholly-owned subsidiaries.

All intercompany accounts and transactions have been eliminated.

Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Simply Good Foods and its subsidiaries.

The Company maintains its accounting records on a 52/53-week fiscal year, ending on the last Saturday in August of each year.

Description of Business

The Simply Good Foods Company (“Simply Good Foods” or the “Company”) is a consumer-packaged food and beverage company that aims to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements.

The Simply Good Foods Company is a consumer-packaged food and beverage company that aims to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements.

The Company’s nutritious snacking platform consists of the following core brands that specialize in providing products for consumers that follow certain nutritional philosophies, dietary approaches and/or health-and-wellness trends:

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The Company’s platform also positions it to continue to selectively pursue acquisition opportunities of brands in the nutritious snacking category.

The common stock of Simply Good Foods is listed on the Nasdaq Capital Market under the symbol “SMPL.”

Unaudited Interim Condensed Consolidated Financial Statements

The unaudited interim condensed consolidated financial statements include the accounts of Simply Good Foods and its wholly-owned subsidiaries.

All intercompany accounts and transactions have been eliminated.

Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Simply Good Foods and its subsidiaries.

The Company maintains its accounting records on a 52/53-week fiscal year, ending on the last Saturday in August of each year.

The interim condensed consolidated financial statements and related notes of the Company and its subsidiaries are unaudited.

6 unchanged sentences

1 to Form 10-K (“Form 10-K/A”) filed with the SEC on June 30, 2021.

As discussed in Note 2, Restatement of Previously Issued Financial Statements, the consolidated financial statements have been restated to reflect certain warrants as liabilities rather than equity.

The Company remains uncertain of the ultimate effect COVID-19 could have on its business notwithstanding the distribution of several U.S.

government approved vaccines and various federal, state and local governments having begun to ease the movement restrictions and public health initiatives while continuing to adhere to enhanced safety measures, such as physical distancing and face mask protocols.

This uncertainty as to the duration and severity of economic effects from the COVID-19 pandemic stems from the potential for, among other things, (i) continued rates of reported cases of COVID-19 and the potential for mutations of COVID-19 to result in increased rates of reported cases for which currently approved vaccines are not effective, (ii) unexpected supply chain disruptions, (iii) changes to customer operations, (iv) continued or additional changes in consumer purchasing and consumption behavior beyond those evidenced to date, and (v) the closure of customer establishments.

As discussed in Note 2, Restatement of Previously Issued Financial Statements, the condensed consolidated financial statements have been restated to reflect certain warrants as liabilities rather than equity.

Additionally, based on the duration and severity of economic effects from the novel coronavirus (“COVID-19”) pandemic, including but not limited to stock market volatility, the potential for (i) continued increased rates of reported cases of COVID-19 (which has been referred to as a second wave), (ii) unexpected supply chain disruptions, (iii) changes to customer operations, (iv) continued or additional changes in consumer purchasing and consumption behavior beyond those evidenced to date, and (v) the closure of customer establishments, the Company remains uncertain of the ultimate effect COVID-19 could have on its business .

Restatement of Previously Issued Financial Statements

4 unchanged sentences

Following consideration of the guidance in the SEC statement, the Company concluded that its private warrants should be classified as a liability and measured at fair value at each reporting period, rather than as equity awards.

Management concluded the effect of this error on the

Company’s previously reported condensed consolidated financial statements is material and, as such, the accompanying condensed consolidated financial statements as of February 27, 2021, and the thirteen and twenty-six weeks ended February 27, 2021, and accompanying notes thereto have been restated from the amounts previously reported to give effect to the correction of this error (the “Restatement”).

Effects of the Restatement on the Consolidated Balance Sheets as of August 29, 2020, and the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteen and twenty-six weeks ended February 29, 2020, are presented in the Company’s Amendment No.

Management concluded the effect of this error on the Company’s previously reported consolidated financial statements is material and, as such, the accompanying condensed consolidated financial statements as of November 28, 2020 and the thirteen weeks ended November 28, 2020, and accompanying notes thereto have been restated from the amounts previously reported to give effect to the correction of this error (the “Restatement”).

Effects of the Restatement on the Consolidated Balance Sheets as of August 29, 2020, and the Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteen weeks ended November 30, 2019, are presented in the Company’s Amendment No.

1 to Form 10-K (“Form 10-K/A”) for the fiscal year ended August 29, 2020 filed with the SEC on June 30, 2021.

Additionally, see Note 13, Earnings (Loss) Per Share, for restated earnings (loss) per share amounts.

Additionally, see Note 13, Earnings Per Share, for restated earnings (loss) per share amounts.

As a result of the Restatement, the Company’s private warrants (the “Private Warrants”) are now reflected as a liability measured at fair value on the Company’s Condensed Consolidated Balance Sheets, and the change in the fair value of this liability in each period is recognized as a gain or loss in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The effect of the Restatement on the Condensed Consolidated Balance Sheets as of February 27, 2021, and Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and Condensed Consolidated Statements of Cash Flows for the thirteen and twenty-six weeks ended February 27, 2021, are presented below.

The effect of the Restatement on the Condensed Consolidated Balance Sheets as of November 28, 2020, and Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended November 28, 2020, are presented below.

Regarding the Condensed Consolidated Statements of Cash Flows, the adjustments below to net income were offset by adjustments to non-cash operating activities within cash flow provided by operations.

The Restatement had no effect on total net cash flows from operating, investing or financing activities.

The effect of the Restatement on the February 27, 2021 stockholders’ equity balances is presented in the Condensed Consolidated Statements of Stockholders’ Equity below.

Condensed Consolidated Balance Sheet February 27, 2021

The effect of the Restatement on the November 28, 2020 stockholders’ equity balances is presented in the Condensed Consolidated Statements of Stockholders’ Equity below.

Condensed Consolidated Balance Sheet November 28, 2020

(In thousands) As Previously Reported Restatement Adjustment As Restated

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Comprehensive Income (Loss) Thirteen Weeks Ended

February 27, 2021

(In thousands) As Previously Reported Restatement Adjustment As Restated

Loss in fair value change of warrant liability — ( 45,334 ) ( 45,334 )

Total other expense ( 6,908 ) ( 45,334 ) ( 52,242 )

Income (loss) before income taxes 26,433 ( 45,334 ) ( 18,901 )

Net income (loss) 19,120 ( 45,334 ) ( 26,214 )

Comprehensive income (loss) $ 19,363 $ ( 45,334 ) $ ( 25,971 )

As a result of the Restatement adjustments, basic earnings per share decreased $ 0.47 , from earnings of $ 0.2 0 per share to a loss of $ 0.27 per share, and diluted earnings per share decreased $ 0.46 , from earnings of $ 0.19 per share to a loss of $ 0.27 per share.

Condensed Consolidated Statement of Operations and

Comprehensive Income (Loss) Twenty-Six Weeks Ended

February 27, 2021

November 28, 2020

(In thousands) As Previously Reported Restatement Adjustment As Restated

Loss in fair value change of warrant liability — ( 24,881 ) ( 24,881 )

Total other expense ( 15,221 ) ( 24,881 ) ( 40,102 )

Gain in fair value change of warrant liability $ — $ 20,453 $ 20,453

Total other (expense) income ( 8,313 ) 20,453 12,140

Income before income taxes 30,874 20,453 51,327

1 unchanged sentence

Comprehensive income $ 22,455 $ 20,453 $ 42,908

As a result of the Restatement adjustments, basic earnings per share decreased $ 0.26 , from earnings of $ 0.43 per share to $ 0.17 per share, and diluted earnings per share decreased $ 0.24 , from earnings of $ 0.41 per share to $ 0.17 per share.

Twenty-Six Weeks Ended

Condensed Consolidated Statement of Cash Flows February 27, 2021

As a result of the Restatement adjustments, basic earnings per share increased $ 0.21 , from $ 0.24 per share to $ 0.45 per share, and diluted earnings per share was unchanged.

Thirteen Weeks Ended

Condensed Consolidated Statement of Cash Flows November 28, 2020

(In thousands) As Previously Reported Restatement Adjustment As Restated

2 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Loss in fair value change of warrant liability — 24,881 24,881

Gain in fair value change of warrant liability — ( 20,453 ) ( 20,453 )

Net cash provided by operating activities

$ 15,197 $ — $ 15,197

Condensed Consolidated Statement of Stockholders’ Equity February 27, 2021

Condensed Consolidated Statement of Stockholders’ Equity November 28, 2020

(In thousands) As Previously Reported Restatement Adjustment As Restated

Additional paid-in-capital

$ 1,095,573 $ ( 18,035 ) $ 1,077,538

Net income 22,500 20,453 42,953

1 unchanged sentence

Total stockholders’ equity

$ 1,256,492 $ ( 73,185 ) $ 1,183,307

Summary of Significant Accounting Policies

29 unchanged sentences

Business Combination

(the “Target Companies”) for a cash purchase price at closing of $ 988.9 million subject to customary post-closing adjustments for the Target Companies’ levels of cash, indebtedness, net working capital and transaction expenses as of the closing date.

On August 21, 2019, Simply Good USA entered into the Purchase Agreement with VMG Voyage Holdings, LLC, VMG Tax-Exempt II, L.P., Voyage Employee Holdings, LLC, and other sellers defined in the Purchase Agreement.

On November 7, 2019, pursuant to the Purchase Agreement, Simply Good USA completed the Acquisition of Quest for a cash purchase price at closing of $ 988.9 million subject to customary post-closing adjustments.

Simply Good USA acquired Quest as a part of the Company’s vision to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements.

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Cash sources of funding included $ 195.3 million of cash on hand, net proceeds of approximately $ 350.0 million from an underwritten public offering of common stock, and $ 443.6 million in new term loan debt.

In the third fiscal quarter of 2020, the Company received a post-closing release from escrow of approximately $ 2.1 million related to net working capital adjustments, resulting in a total net consideration paid of $ 986.8 million as of February 27, 2021.

For the twenty-six weeks ended February 29, 2020, Business transaction costs within the Consolidated Statements of Operations and Comprehensive Income were $ 26.9 million, which included $ 14.5 million of transaction advisory fees related to the Acquisition of Quest, $ 3.2 million of banker commitment fees, $ 6.1 million of non-deferrable debt issuance costs related to the incremental term loan, and $ 3.1 million of other costs, including legal, due diligence, and accounting fees.

For the thirteen weeks ended November 30, 2019, Business transaction costs within the Consolidated Statements of Operations and Comprehensive Income were $ 26.2 million, which included $ 14.5 million of transaction advisory fees related to the Acquisition of Quest, $ 3.2 million of banker commitment fees, $ 6.1 million of non-deferrable debt issuance costs related to the incremental term loan, and $ 2.4 million of other costs, including legal, due diligence, and accounting fees.

Included in the transaction advisory fees was $ 12.0 million paid to Centerview Partners LLC, an investment banking firm that served as the lead financial advisor to the Company for this transaction.

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Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

The Company completed its final assessment of purchase price allocation for the Acquisition of Quest to the estimated fair value of the net assets acquired at the date of acquisition during the first quarter of fiscal 2021.

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

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

Specifically, the carrying amount of the intangible assets, net were increased by $ 20.0 million as a result of valuation adjustments related to the Company’s finalization of tax attributes, which also resulted in a decrease to deferred income taxes of $ 3.2 million.

Additionally, accounts receivable, net decreased $ 4.3 million and inventories increased $ 0.9 million due to fair value measurement period adjustments, and the carrying amount of property and equipment, net decreased by $ 0.5 million to reflect its estimated fair value.

As a result of these adjustments and the change in total net consideration paid of approximately $ 2.1 million related to net working capital adjustments discussed above, goodwill decreased $ 21.5 million.

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

1 unchanged sentence

The following table provides net sales from the acquired Quest business included in the Company’s results:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) February 27, 2021 February 29, 2020 February 27, 2021 February 29, 2020

Thirteen Weeks Ended

(in thousands) November 28, 2020 November 30, 2019

Net sales (1)

$ 95,769 $ 17,082

(1) Net sales for the thirteen and twenty-six weeks ended February 27, 2021 excludes immaterial international net sales.

(1) Net sales for the thirteen weeks ended November 28, 2020 excludes immaterial international net sales.

Unaudited Pro Forma Financial Information

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The following unaudited pro forma financial information presents the combined results of the Company and Quest as if the Acquisition of Quest has occurred at the beginning of fiscal 2019:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) February 29, 2020 February 29, 2020

Thirteen Weeks Ended

(in thousands) November 30, 2019

Revenue $ 220,556

3 unchanged sentences

Revenues from transactions with external customers for each of the Company’s products would be impracticable to disclose and management does not view its business by product line.

The following is a summary of revenue disaggregated by geographic area and core brands:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(In thousands) February 27, 2021 February 29, 2020 February 27, 2021 February 29, 2020

The following is a summary of revenue disaggregated by geographic area and brand:

Thirteen Weeks Ended

(In thousands) November 28, 2020 November 30, 2019

North America

2 unchanged sentences

Total North America 218,530 144,894

219,180 219,740 437,710 364,634

International 12,622 7,259

1 unchanged sentence

(1) The North America geographic area consists of net sales substantially related to the United States and there is no individual foreign country to which more than 10% of Company’s net sales are attributed or that is otherwise deemed individually material.

The North America geographic area includes the divested SimplyProtein brand.

(2) Quest net sales are primarily in North America.

Charges related to credit loss on accounts receivables from transactions with external customers were nominal for each of the thirteen and twenty-six weeks ended February 27, 2021 and were approximately $ 0.1 million for each of the thirteen and twenty-six weeks ended February 29, 2020.

As of February 27, 2021 and August 29, 2020, the allowance for doubtful accounts related to these accounts receivable was $ 0.6 million and $ 0.5 million, respectively.

Charges related to credit loss on accounts receivables from transactions with external customers totaled approximately $ 0.1 million for the thirteen weeks ended November 28, 2020 and were nominal for the thirteen weeks ended November 30, 2019.

As of November 28, 2020 and August 29, 2020, the allowance for doubtful accounts related to these accounts receivable was $ 0.6 million and $ 0.5 million, respectively.

Goodwill and Intangibles

Changes to Goodwill during the thirteen week period ended February 27, 2021 were as follows:

Changes to Goodwill during the thirteen week period ended November 28, 2020 were as follows:

(in thousands) Goodwill

2 unchanged sentences

Sale of business ( 2,818 )

Balance as of February 27, 2021 $ 543,134

The change in Goodwill attributed to the acquisition of a business during the twenty-six weeks ended February 27, 2021 was the result of measurement period adjustments made to finalize the acquisition method of accounting for the Acquisition of Quest as described in Note 4.

Balance as of November 28, 2020 $ 543,134

The change in Goodwill attributed to the acquisition of a business during the thirteen weeks ended November 28, 2020 was the result of measurement period adjustments made to finalize the acquisition method of accounting for the Acquisition of Quest as described in Note 4.

Additionally, effective September 24, 2020, the Company sold the assets exclusively related to its SimplyProtein® brand of products for approximately $ 8.8 million of consideration, including cash of $ 5.8 million and a note receivable for $ 3.0 million, to a newly formed entity led by the Company’s former Canadian-based management team who had been responsible for this brand prior to the sale transaction (the “SimplyProtein Sale”).

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In conjunction with the SimplyProtein Sale, the Company disposed of $ 2.8 million of goodwill associated with the SimplyProtein business.

There were no impairment charges related to goodwill during the thirteen and twenty-six weeks ended February 27, 2021 or since the inception of the Company.

There were no impairment charges related to goodwill during the thirteen weeks ended November 28, 2020 or since the inception of the Company.

Intangible assets, net in the Consolidated Balance Sheets consist of the following:

February 27, 2021

November 28, 2020

(In thousands) Useful life Gross carrying amount Accumulated amortization Net carrying amount

29 unchanged sentences

$ 1,187,967 $ 29,199 $ 1,158,768

Changes in Intangible assets, net during the twenty-six weeks ended February 27, 2021 were primarily related to the SimplyProtein Sale and recurring amortization expense.

Changes in Intangible assets, net during the thirteen weeks ended November 28, 2020 were primarily related to the SimplyProtein Sale and recurring amortization expense.

In conjunction with the SimplyProtein Sale, the Company sold its SimplyProtein brand intangible asset, which had a carrying value of approximately $ 5.0 million as of the date of the sale.

Amortization expense related to intangible assets during each of the thirteen weeks ended February 27, 2021 and February 29, 2020 was $ 3.9 million, respectively.

Amortization expense related to intangible assets during the twenty-six weeks ended February 27, 2021 and February 29, 2020 was $ 7.7 million and $ 6.2 million, respectively.

There were no impairment charges related to intangible assets during the thirteen and twenty-six weeks ended February 27, 2021 and February 29, 2020.

Amortization expense related to intangible assets during the thirteen weeks ended November 28, 2020 and November 30, 2019 was $ 3.9 million and $ 2.3 million, respectively.

There were no impairment charges related to intangible assets during the thirteen weeks ended November 28, 2020 and November 30, 2019.

Estimated future amortization for each of the next five fiscal years and thereafter is as follows:

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Any failure to comply with the restrictions of the credit facilities may result in an event of default.

The Company was in compliance with all financial covenants as of February 27, 2021 and August 29, 2020, respectively.

The Company was in compliance with all financial covenants as of November 28, 2020 and August 29, 2020, respectively.

Long-term debt consists of the following:

(In thousands) February 27, 2021 August 29, 2020

Term Facility (effective rate of 4.8% at February 27, 2021)

(In thousands) November 28, 2020 August 29, 2020

Term Facility (effective rate of 4.8% at November 28, 2020)

$ 581,500 $ 606,500

Finance lease liabilities (effective rate of 5.6% at February 27, 2021)

Finance lease liabilities (effective rate of 5.6% at November 28, 2020)

Deferred financing fees

3 unchanged sentences

$ 572,923 $ 596,879

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended February 27, 2021.

The outstanding balance of the Term Facility is due upon its maturity in July 2024.

Additionally, as of February 27, 2021 and August 29, 2020, there were no amounts drawn against the Revolving Credit Facility.

As of February 27, 2021, the Company had letters of credit in the amount of $ 4.2 million outstanding.

The Company is not required to make principal payments on the Term Facility over the twelve months following the period ended November 28, 2020.

Additionally, as of November 28, 2020 and August 29, 2020, there were no amounts drawn against the Revolving Credit Facility.

As of November 28, 2020, the Company had letters of credit in the amount of $ 4.4 million outstanding.

These letters of credit offset against the availability of the Revolving Credit Facility and exist to support three of the Company’s leased buildings and insurance programs relating to workers’ compensation.

No amounts were drawn against these letters of credit at February 27, 2021.

No amounts were drawn against these letters of credit at November 28, 2020.

The Company utilizes market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates.

The Company carries debt at historical cost and discloses fair value.

As of February 27, 2021 and August 29, 2020, the book value of the Company’s debt approximated fair value.

As of November 28, 2020 and August 29, 2020, the book value of the

Company’s debt approximated fair value.

The estimated fair value of the Term Loan is valued based on observable inputs and classified as Level 2 in the fair value hierarchy.

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These valuations require significant judgment.

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of February 27, 2021 and August 29, 2020 due to the relatively short maturity of these instruments.

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of November 28, 2020 and August 29, 2020 due to the relatively short maturity of these instruments.

Level 3 Measurements

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The table below summarizes the inputs used to calculate the fair value of the warrant liability at each of the dates indicated below:

February 27, 2021 February 29, 2020

November 28, 2020 November 30, 2019

Exercise Price $ 11.50 $ 11.50

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Per Share Value of Warrants $ 10.92 $ 16.61

The periodic remeasurement of the warrant liability is reflected in (Loss) gain in fair value change of warrant liability within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The adjustments for the thirteen and twenty-six weeks ended February 27, 2021 were a loss of $ 45.3 million and $ 24.9 million, respectively.

The adjustments for the thirteen and twenty-six weeks ended February 29, 2020 were a gain of $ 37.6 million and $ 51.0 million, respectively.

The adjustments resulted in a total warrant liability at February 27, 2021 and February 29, 2020 of $ 118.5 million and $ 73.6 million, respectively.

The periodic remeasurement of the warrant liability is reflected in Gain in fair value change of warrant liability within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The adjustments for the thirteen weeks ended November 28, 2020 and November 30, 2019 were a gain of $ 20.5 million and a gain of $ 13.3 million, respectively.

The adjustments resulted in a total warrant liability at November 28, 2020 and November 30, 2019 of $ 73.2 million and $ 111.3 million, respectively.

The tax expense and the effective tax rate resulting from operations were as follows:

Twenty-Six Weeks Ended

(In thousands) February 27, 2021 February 29, 2020

(Loss) income before income taxes $ 32,426 $ 59,009

Income tax expense $ 15,687 $ 2,193

Thirteen Weeks Ended

(In thousands) November 28, 2020 November 30, 2019

Income (loss) before income taxes $ 51,327 $ 6,786

Provision (benefit) for income taxes $ 8,374 $ ( 1,729 )

Effective tax rate 16.3 % ( 25.5 ) %

The effective tax rate for the twenty-six weeks ended February 27, 2021 was 44.7 % greater than the effective tax rate for the twenty-six weeks ended February 29, 2020, which was primarily driven by the non-cash change in the fair value of the warrant liability and other permanent differences.

The effective tax rate for the thirteen weeks ended November 28, 2020 was 41.8 % greater than the effective tax rate for the thirteen weeks ended November 30, 2019, which was primarily driven by the non-cash change in the fair value of the warrant liability and other permanent differences.

The components of lease expense were as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(In thousands) Statement of Operations Caption February 27, 2021 February 29, 2020 February 27, 2021 February 29, 2020

Thirteen Weeks Ended

(In thousands) Statement of Operations Caption November 28, 2020 November 30, 2019

Operating lease cost:

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(1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs.

In conjunction with the Company’s restructuring activities as discussed in Note 14, the Company incurred impairment charges of $ 0.3 million and $ 0.7 million in the thirteen and twenty-six weeks ended February 27, 2021, respectively, related to its operating lease right-of-use assets for leases in Toronto, Ontario and the Netherlands.

Additionally, the Company terminated the lease in Toronto, Ontario, which resulted in a gain on lease termination of $ 0.2 million in the thirteen and twenty-six weeks ended February 27, 2021.

The effect of these restructuring activities has been included within General and administrative on the Consolidated Statements of Operations and Comprehensive Income.

In conjunction with the Company’s restructuring activities as discussed in Note 16, the Company incurred a $ 0.4 million impairment charge related to its operating lease right-of-use asset for its lease in Toronto, Ontario during the thirteen weeks ended November 28, 2020.

Costs for these restructuring activities have been included within General and administrative on the Consolidated Statements of Operations and Comprehensive Income.

Refer to Note 16, Restructuring and Related Charges, for additional information regarding restructuring activities.

The gross amounts of assets and liabilities related to both operating and finance leases are as follows:

(In thousands) Balance Sheet Caption February 27, 2021 August 29, 2020

(In thousands) Balance Sheet Caption November 28, 2020 August 29, 2020

Operating lease right- of-use assets Other long-term assets $ 24,532 $ 25,703

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Total lease liabilities $ 27,129 $ 28,015

Future maturities of lease liabilities as of February 27, 2021 were as follows:

Future maturities of lease liabilities as of November 28, 2020 were as follows:

(In thousands) Operating Leases Finance Leases

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Present value of lease liabilities $ 26,237 $ 892

As of February 27, 2021, the Company had entered into a lease with estimated total minimum future lease payments of $ 32.2 million over a 10.0 -year minimum lease term that had not yet commenced, and as a result it is not recorded on the Consolidated Balance Sheets.

As of November 28, 2020, the Company had entered into a lease with estimated total minimum future lease payments of $ 32.2 million over a 10.0 -year minimum lease term that had not yet commenced, and as a result it is not recorded on the Consolidated Balance Sheets.

The Company expects the lease to commence in fiscal year 2021, and the Company has the option to renew the lease for an additional 5.0 years or 10.0 years after the minimum lease term.

The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases were as follows:

February 27, 2021 August 29, 2020

November 28, 2020 August 29, 2020

Weighted-average remaining lease term (in years)

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Supplemental and other information related to leases was as follows:

Twenty-Six Weeks Ended

(In thousands) February 27, 2021 February 29, 2020

Thirteen Weeks Ended

(In thousands) November 28, 2020 November 30, 2019

Cash paid for amounts included in the measurement of lease liabilities

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During the fiscal year ended August 31, 2019, the Company reserved $ 3.5 million for the potential settlement of class action litigation concerning certain product label claims.

During the twenty-six weeks ended February 29, 2020, the Company reserved an additional $ 0.3 million.

During the thirteen weeks ended November 30, 2019, the Company reserved an additional $ 0.3 million.

The reserve was included within General and administrative in the Consolidated Statements of Operations and Comprehensive Income, and the reserve was fully paid into escrow and settled during the fiscal year ended August 29, 2020.

As of February 27, 2021 and August 29, 2020, the Company had $ 0.7 million and $ 1.3 million reserved for potential settlements, respectively.

As of November 28, 2020 and August 29, 2020, the Company had $ 1.3 million reserved for potential settlements.

The Company has entered into endorsement contracts with certain celebrity figures and social media influencers to promote and endorse the Atkins and Quest brands and product lines.

These contracts contain endorsement fees, which are expensed ratably over the life of the contract, and performance fees, that are recognized at the time of achievement.

Based on the terms of the contracts in place and achievement of performance conditions as of February 27, 2021, the Company will be required to make payments of $ 2.8 million over the next year.

Based on the terms of the contracts in place and achievement of performance conditions as of November 28, 2020, the Company will be required to make payments of $ 2.9 million over the next year.

Stockholders’ Equity

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All remaining public warrants were redeemed as of November 5, 2018 for an immaterial amount.

As of February 27, 2021, the Private Warrants to purchase 6,700,000 shares of the Company’s common stock remain outstanding, have not been transferred by Conyers Park Sponsor, LLC, a related party, and remain liability-classified.

As of November 28, 2020, the Private Warrants to purchase 6,700,000 shares of the Company’s common stock remain outstanding, have not been transferred by Conyers Park Sponsor, LLC, a related party, and remain liability-classified.

As discussed in Note 8, the liability-classified warrants are remeasured on a recurring basis, primarily based on observable market data while the related theoretical private warrant volatility assumption within the Black-Scholes model represents a Level 3 measurement within the fair value measurement hierarchy.

Stock Repurchase Program

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The stock repurchase program may be suspended or discontinued at any time by the Company and does not have an expiration date.

During the twenty-six weeks ended February 27, 2021 and February 29, 2020, the Company did not repurchase any shares of common stock.

As of February 27, 2021, approximately $ 47.9 million remained available under the stock repurchase program.

Earnings (Loss) Per Share

During the thirteen weeks ended November 28, 2020 and November 30, 2019, the Company did not repurchase any shares of common stock.

As of November 28, 2020, approximately $ 47.9 million remained available under the stock repurchase program.

Earnings Per Share

Basic earnings or loss per share is based on the weighted average number of common shares issued and outstanding.

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During periods when the impact is antidilutive, the share settlement is excluded.

The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(In thousands, except per share data) February 27, 2021 February 29, 2020 February 27, 2021 February 29, 2020

The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings (loss) per share:

Thirteen Weeks Ended

(In thousands, except per share data) November 28, 2020 November 30, 2019

Basic earnings per share computation:

Net (loss) income available to common stock stockholders $ ( 26,214 ) $ 48,301 $ 16,739 $ 56,816

Net income available to common stock stockholders $ 42,953 $ 8,515

Weighted average common shares - basic 95,538,111 89,708,633

Basic (loss) earnings per share from net (loss) income $ ( 0.27 ) $ 0.51 $ 0.17 $ 0.61

Diluted earnings per share computation:

Net (loss) income available to common stock stockholders $ ( 26,214 ) $ 48,301 $ 16,739 $ 56,816

Basic earnings per share from net income $ 0.45 $ 0.09

Diluted earnings (loss) per share computation:

Net income available to common stock stockholders $ 42,953 $ 8,515

Gain in fair value change of warrant liability ( 20,453 ) ( 13,308 )

5 unchanged sentences

Weighted average common shares - diluted 99,763,119 93,529,865

Diluted (loss) earnings per share from net income $ ( 0.27 ) $ 0.11 $ 0.17 $ 0.06

Diluted earnings per share calculations for the thirteen weeks ended February 27, 2021 and February 29, 2020 excluded 1.4 million and 0.4 million shares underlying stock options issuable upon exercise, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen weeks ended February 27, 2021 excluded 0.3 million number of non-vested shares and 3.9 million of Private Warrants that would have been anti-dilutive

Diluted earnings per share calculations for the twenty-six weeks ended February 27, 2021 and February 29, 2020 excluded 0.6 million and 0.3 million shares underlying stock options issuable upon exercise, respectively, that would have been anti-dilutive.

Diluted earnings per share for the twenty-six weeks ended February 27, 2021 excluded an immaterial number of non-vested shares and 3.6 million of Private Warrants that would have been anti-dilutive.

Diluted earnings (loss) per share from net income $ 0.23 $ ( 0.05 )

Diluted earnings (loss) per share calculations for the thirteen weeks ended November 28, 2020 and November 30, 2019 excluded 0.7 million and 2.7 million shares of stock options issuable upon exercise, respectively, that would have been anti-dilutive.

Diluted earnings per share for the thirteen weeks ended November 28, 2020 excluded an immaterial number of non-vested shares that would have been anti-dilutive.

For the thirteen weeks ended November 30, 2019, the loss per share excluded 0.3 million of non-vested shares that would have been anti-dilutive.

Omnibus Incentive Plan

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Stock-based compensation expense is included within General and administrative expense, which is the same financial statement caption where the recipient’s other compensation is reported.

The Company recorded stock-based compensation expense of $ 2.5 million and $ 2.1 million in the thirteen weeks ended February 27, 2021 and February 29, 2020, respectively, and $ 3.6 million and $ 3.8 million in the twenty-six weeks ended February 27, 2021 and February 29, 2020, respectively.

The Company recorded stock-based compensation expense of $ 1.1 million and $ 1.7 million in the thirteen weeks ended November 28, 2020 and November 30, 2019, respectively.

Stock Options

The following table summarizes stock option activity for the twenty-six weeks ended February 27, 2021:

The following table summarizes stock option activity for the thirteen weeks ended November 28, 2020:

Shares Underlying Options Weighted Average

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Forfeited ( 39,575 ) 23.08

Outstanding as of February 27, 2021 2,821,951 $ 14.88 7.11

Vested and expected to vest as of February 27, 2021 2,821,951 $ 14.88 7.11

Exercisable as of February 27, 2021 2,197,655 $ 13.24 6.61

As of February 27, 2021, the Company had $ 3.5 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.9 years.

During the twenty-six weeks ended February 27, 2021 and February 29, 2020, the Company received $ 0.5 million and $ 0.9 million in cash from stock option exercises, respectively.

Outstanding as of November 28, 2020 2,846,158 $ 14.81 7.34

Vested and expected to vest as of November 28, 2020 2,846,158 $ 14.81 7.34

Exercisable as of November 28, 2020 2,228,465 $ 13.22 6.85

As of November 28, 2020, the Company had $ 4.0 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 2.1 years.

During each of the thirteen weeks ended November 28, 2020 and November 30, 2019, the Company received $ 0.2 million in cash from stock option exercises.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the twenty-six weeks ended February 27, 2021:

The following table summarizes restricted stock unit activity for the thirteen weeks ended November 28, 2020:

Restricted Stock Units Weighted average

4 unchanged sentences

Forfeited ( 12,530 ) 23.68

Non-vested as of February 27, 2021 431,622 $ 21.39

As of February 27, 2021, the Company had $ 7.6 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 2.2 years.

Non-vested as of November 28, 2020 425,641 $ 21.13

As of November 28, 2020, the Company had $ 8.4 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 2.6 years.

Performance Stock Units

During the twenty-six weeks ended February 27, 2021, the Board of Directors granted performance stock units under the Company’s equity compensation plan.

During the thirteen weeks ended November 28, 2020, the Board of Directors granted performance stock units under the Company’s equity compensation plan.

Performance stock units vest in a range between 0 % and 200 % based upon certain performance criteria in a three -year period.

Performance stock units were valued using a Monte-Carlo simulation.

The following table summarizes performance stock unit activity for the twenty-six weeks ended February 27, 2021:

The following table summarizes performance stock unit activity for the thirteen weeks ended November 28, 2020:

Performance Stock Units Weighted average

3 unchanged sentences

Forfeited ( 26,400 ) 22.06

Non-vested as of February 27, 2021 385,165 $ 19.35

As of February 27, 2021, the Company had $ 4.4 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.6 years.

Non-vested as of November 28, 2020 385,165 $ 19.35

As of November 28, 2020, the Company had $ 5.1 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.8 years.

Stock Appreciation Rights

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SARs cliff vest 3 years from the date of grant and must be exercised within 10 years.

The following table summarizes SARs activity for the twenty-six weeks ended February 27, 2021:

The following table summarizes SARs activity for the thirteen weeks ended November 28, 2020:

Shares Underlying SARs Weighted Average

3 unchanged sentences

Forfeited — —

Outstanding as of February 27, 2021 150,000 $ 24.20 8.68

Vested and expected to vest as of February 27, 2021 150,000 $ 24.20 8.68

Exercisable as of February 27, 2021 — $ — 0.00

As of February 27, 2021, the Company had $ 0.2 million of total unrecognized compensation cost related to its SARs that will be recognized over a weighted average period of 1.7 years.

Outstanding as of November 28, 2020 150,000 $ 24.20 8.93

Vested and expected to vest as of November 28, 2020 150,000 $ 24.20 8.93

Exercisable as of November 28, 2020 — $ — 0.00

As of November 28, 2020, the Company had $ 0.3 million of total unrecognized compensation cost related to its SARs that will be recognized over a weighted average period of 1.93 years.

Segment and Customer Information

Following the Acquisition of Quest, the Company’s operations are organized into two operating segments, Atkins and Quest, which are aggregated into one reporting segment due to similar financial, economic and operating characteristics.

The operating segments are also similar in the following areas:

(a) the nature of the products;

(b) the nature of the production processes;

and, (e) the nature of the regulatory environment.

Restructuring and Related Charges

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Restructuring accruals are based upon management estimates at the time and can change depending upon changes in facts and circumstances subsequent to the date the original liability was recorded.

Changes to the restructuring liability during the twenty-six weeks ended February 27, 2021 were as follows:

(in thousands) Termination benefits and severance Other Restructuring Liability

Changes to the restructuring liability during the thirteen weeks ended November 28, 2020 were as follows:

(in thousands) Restructuring Liability

Balance as of August 29, 2020 $ 4,139

2 unchanged sentences

Non-cash settlements or adjustments —

Balance as of February 27, 2021 $ 1,111 $ — $ 1,111

In addition to the restructuring costs shown above, the Company incurred impairment charges of $ 0.3 million and $ 0.7 million in the thirteen and twenty-six weeks ended February 27, 2021, respectively, related to its operating lease right-of-use assets for leases in Toronto, Ontario and the Netherlands.

Additionally, the Company terminated the lease in Toronto, Ontario, which resulted in a gain on lease termination of $ 0.2 million in the thirteen and twenty-six weeks ended February 27, 2021.

As a result, for the thirteen and twenty-six weeks ended February 27, 2021, the Company incurred a total of $ 1.3 million and $ 3.8 million in restructuring and restructuring related costs, respectively, which have been included within General and administrative on the Consolidated Statements of Operations and Comprehensive Income.

As of February 27, 2021, the Company has incurred aggregate restructuring and restructuring-related costs of $ 9.3 million since May 2020.

Balance as of November 28, 2020 $ 338

In addition to the $2.2 million restructuring costs incurred related to one-time termination benefits and employee severance as shown above, the Company incurred a $ 0.4 million restructuring-related impairment charge in the thirteen weeks ended November 28, 2020 related to its operating lease right-of-use asset for its lease in Toronto, Ontario.

As a result, for the thirteen weeks ended November 28, 2020, the Company incurred a total of $ 2.5 million in restructuring and restructuring related costs, which have been included within General and administrative on the Consolidated Statements of Operations and Comprehensive Income.

As of November 28, 2020, the Company has incurred aggregate restructuring and restructuring-related costs of $ 8.0 million since May 2020.

Overall, the Company expects to incur a total of approximately $ 9.2 million in restructuring and restructuring related costs, which are to be paid throughout fiscal 2021 and the first quarter of fiscal 2022.

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/A

Item 1. Financial Statements