What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-07-08 compared with 2021-04-08 · 221 added, 173 removed, 460 unchanged (46% of the section changed)

3 unchanged sentences

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

February 27, 2021 August 29, 2020

May 29, 2021 August 29, 2020

Current assets:

33 unchanged sentences

98,100 84,352

Warrant liability 154,352 93,638

Other long-term liabilities

5 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, 95,875,778 and 95,751,845 shares issued at May 29, 2021 and August 29, 2020, respectively 959 958

Treasury stock, 98,234 shares at cost at May 29, 2021 and August 29, 2020 ( 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 Thirty-Nine Weeks Ended

May 29, 2021 May 30, 2020 May 29, 2021 May 30, 2020

Net sales $ 284,001 $ 215,101 $ 745,760 $ 594,355

11 unchanged sentences

Interest expense ( 7,985 ) ( 8,324 ) ( 24,352 ) ( 23,882 )

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

(Loss) gain in fair value change of warrant liability ( 35,833 ) 31,703 ( 60,714 ) 82,655

Gain on legal settlement 5,000 — 5,000 —

(Loss) gain on foreign currency transactions ( 272 ) ( 418 ) 712 ( 596 )

Other income 70 59 229 104

Total other expense ( 6,908 ) ( 10,690 ) ( 15,221 ) ( 14,227 )

Total other (expense) income ( 39,019 ) 23,049 ( 79,121 ) 59,774

Income before income taxes 21,303 54,157 53,729 113,166

14 unchanged sentences

(Unaudited, dollars in thousands)

Twenty-Six Weeks Ended

February 27, 2021 February 29, 2020

Thirty-Nine Weeks Ended

May 29, 2021 May 30, 2020

Operating activities

4 unchanged sentences

Stock compensation expense 5,766 5,945

Unrealized loss (gain) on foreign currency transactions ( 985 ) 178

Loss (gain) in fair value change of warrant liability 60,714 ( 82,655 )

Unrealized (gain) loss on foreign currency transactions ( 712 ) 596

Deferred income taxes 13,670 8,055

12 unchanged sentences

Other assets and liabilities ( 2,104 ) ( 2,711 )

Net cash provided by (used in) operating activities

Net cash provided by operating activities

91,488 24,100

15 unchanged sentences

Proceeds from issuance of long-term debt — 460,000

Proceeds from Revolving Credit Facility — 25,000

Deferred financing costs — ( 8,208 )

7 unchanged sentences

$ 90,173 $ 111,134

Twenty-Six Weeks Ended

February 27, 2021 February 29, 2020

Thirty-Nine Weeks Ended

May 29, 2021 May 30, 2020

Supplemental disclosures of cash flow information

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Non-cash proceeds from sale of business $ 3,000 $ —

Operating lease right-of-use assets recognized at ASU No 2016-02 transition $ — $ 5,102

Finance lease right-of-use assets recognized at ASU No 2016-02 transition $ — $ 1,185

Operating lease right-of-use assets recognized after ASU No 2016-02 transition $ 316 $ 2,733

Operating lease right-of-use assets recognized at ASU 2016-02 transition $ — $ 5,102

Finance lease right-of-use assets recognized at ASU 2016-02 transition $ — $ 1,185

Operating lease right-of-use assets recognized after ASU 2016-02 transition $ 316 $ 3,745

Non-cash additions to property and equipment $ 84 $ 374

See accompanying notes to the unaudited condensed consolidated financial statements.

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

Net income — — — — — 5,895 — 5,895

Stock-based compensation — — — — 2,172 — — 2,172

Foreign currency translation adjustments — — — — — — 95 95

Shares issued upon vesting of restricted stock units 4,683 — — — ( 68 ) — — ( 68 )

Exercise of options to purchase common stock 14,380 — — — 173 — — 173

Balance at May 29, 2021 95,875,778 $ 959 98,234 $ ( 2,145 ) $ 1,082,617 $ 87,561 $ ( 586 ) $ 1,168,406

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

13 unchanged sentences

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

Net income — — — — — 48,112 — 48,112

Stock-based compensation — — — — 2,150 — — 2,150

Foreign currency translation adjustments — — — — — — 61 61

Shares issued upon vesting of restricted stock units 323 — — — ( 4 ) — — ( 4 )

Balance at May 30, 2020 95,476,860 $ 955 98,234 $ ( 2,145 ) $ 1,071,617 $ 104,217 $ ( 916 ) $ 1,173,728

See accompanying notes to the unaudited condensed consolidated financial statements.

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The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by GAAP have been condensed or omitted.

The results reported in these unaudited interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire fiscal year and should be read in conjunction with the Company's consolidated financial statements for the fiscal year ended August 29, 2020, included in our Annual Report on Form 10-K (“Annual Report”), filed with the SEC on October 28, 2020.

The results reported in these unaudited interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire fiscal year and should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended August 29, 2020, included in the Company’s Annual Report on Form 10-K/A (“Annual Report”) filed with the SEC on June 30, 2021.

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.

government approved vaccines and the easing of movement restrictions.

This uncertainty stems from the potential for, among other things, (i) the possibility 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) reversal in recently improving consumer purchasing and consumption behavior, and (v) the closure of customer establishments.

Summary of Significant Accounting Policies

Refer to Note 3, Summary of Significant Accounting Policies , to the consolidated financial statements included in the Company's Annual Report for a description of significant accounting policies.

Restatement of Previously Issued Financial Statements

On April 12, 2021, the SEC issued a statement (the “SEC Statement”) on the accounting and reporting considerations for warrants issued by special purpose acquisition companies (“SPACs”).

Following consideration of the guidance in the SEC Statement, the Company concluded that its private warrants (“Private Warrants”) should be classified as a liability and measured at fair value, with changes in fair value each period reported in earnings in accordance with Accounting Standards Codification 815-40, Derivatives and Hedging:

Contracts in Entity’s Own Equity.

On June 30, 2021, the Company filed restatements of its previously issued consolidated and condensed financial statements with the SEC on the Company’s Annual Report on Form 10-K/A for the fiscal year ended August 29, 2020, as well as the Company’s Quarterly Report on Form 10-Q/A as of and for the thirteen weeks ended November 28, 2020 and the Company’s Quarterly Report on Form 10-Q/A as of and for the thirteen and twenty-six weeks ended February 27, 2021.

Refer to Note 4, Summary of Significant Accounting Policies , to the consolidated financial statements included in the Annual Report for a description of significant accounting policies.

Recently Issued and Adopted Accounting Pronouncements

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In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which amends the existing guidance relating to the accounting for income taxes.

This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the

general principles of accounting for income taxes and to improve the consistent application of U.S.

GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance.

Simplifying the Accounting for Income Taxes, which amends existing guidance related to the accounting for income taxes.

This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance.

This ASU is effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements and does not expect that the adoption of this ASU will be material to its consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting.

The amendments in this ASU are effective for all entities and can be applied to contract modifications due to rate reform and eligible existing and new hedging relationships entered into between March 12, 2020 through December 31, 2022.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting.

The amendments of this ASU should be applied on a prospective basis.

The Company will continue to monitor the effects of rate reform, if any, on its contracts and the effects of adoption of this ASU through December 31, 2022.

The Company does not anticipate the amendments in this ASU to be material to its consolidated financial statements.

In October 2020, the FASB issued ASU No.

2020-10, Codification Improvements, which provides updates for technical corrections, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements across various areas of accounting within U.S.

The Company does not anticipate the amendments in this ASU will be material to its consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which provides updates for technical corrections, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements across various areas of accounting within GAAP.

This ASU is effective for all entities for fiscal years beginning after December 15, 2020, with early adoption permitted.

The amendments of this ASU should be applied retrospectively.

The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements and does not anticipate the adoption of this ASU will be material to its consolidated financial statements.

The Company is currently evaluating the effects of this guidance and does not anticipate the adoption of this ASU will be material to its consolidated financial statements.

Recently Adopted Accounting Pronouncements

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The Company adopted this ASU as of the first day of fiscal 2021.

As a result of adopting this ASU, the Company changed its method of estimating its allowance for doubtful accounts for trade receivables to be based upon the Company's historical credit loss experience adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts.

As a result, the Company changed its method of estimating its allowance for doubtful accounts for trade receivables to be based upon the Company’s historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts.

The change in estimating the allowance for doubtful accounts did not have a material effect on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820), which modified disclosure requirements on fair value measurements of Accounting Standards Codification (“ASC”) 820.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which modified disclosure requirements on fair value measurements of Accounting Standards Codification (“ASC”) 820.

The Company adopted this ASU as of the first day of fiscal 2021.

The adoption of this ASU did not have a material effect on the consolidated financial statements or the related disclosures.

The adoption of this ASU did not have a material effect on the consolidated financial statements or related disclosures.

Business Combination

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 and VMG Quest Blocker, Inc.

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

(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.

3 unchanged sentences

Total consideration paid on the closing date was $ 988.9 million.

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.

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.

For the thirty-nine weeks ended May 30, 2020, Business transaction costs within the Condensed 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.

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.

Three members of the Company’s Board of Directors, Messrs.

LLC), but they are not themselves partners, executives or employees of Centerview Partners LLC, and Centerview Partners LLC is not a related party of the Company pursuant to applicable rules and policies.

Kilts, West, and Ratzan, have business relationships with certain partners of Centerview Partners LLC (including relating to Centerview Capital Consumer, a private equity firm and affiliate of Conyers Park Sponsor LLC), but they are not themselves partners, executives or employees of Centerview Partners LLC, and Centerview Partners LLC is not a related party of the Company pursuant to applicable rules and policies.

The advisory fee paid to Centerview Partners LLC represented approximately 1.2 % of the total cash purchase price paid by the Company on the closing date of the Acquisition of Quest.

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The useful lives of the leasehold improvements, furniture and fixtures, and equipment are consistent with the Company’s accounting policies.

(2) Intangible assets were recorded at fair value consistent with ASC 820 as a result of the Acquisition of Quest.

(2) Intangible assets were recorded at fair value consistent with ASC 820, Fair Value Measurements, as a result of the Acquisition of Quest.

Intangible assets consisted of $ 750.0 million of indefinite brands and trademarks, $ 115.0 million of amortizable customer relationships, and $ 3.4 million of internally developed software.

The useful lives of the intangible assets are disclosed in Note 5 of the consolidated financial statements.

The fair value measurement of the assets and liabilities was based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy.

The useful lives of the intangible assets are disclosed in Note 5 of the condensed consolidated financial statements.

The fair value measurements of the assets and liabilities were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy.

Level 3 fair market values were determined using a variety of information, including estimated future cash flows and market comparable data and companies.

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(3) Primarily as a result of the fair value attributable to the identifiable intangible assets, the deferred income tax liability was $ 10.8 million.

(4) Goodwill was recorded at fair value consistent with ASC 820 as a result of the Acquisition of Quest.

(4) Goodwill was recorded at fair value consistent with ASC 820, Fair Value Measurements, as a result of the Acquisition of Quest.

Amounts recorded for goodwill created in an acquisition structured as a stock purchase for tax are generally not expected to be deductible for tax purposes.

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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.

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.

Specifically, the carrying amount of the intangible assets, net 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.

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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 Thirty-Nine Weeks Ended

(In thousands) May 29, 2021 May 30, 2020 May 29, 2021 May 30, 2020

Net sales (1)

$ 127,097 $ 87,234 $ 327,891 $ 192,621

(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 and thirty-nine weeks ended May 29, 2021 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 Thirty-Nine Weeks Ended

(In thousands) May 30, 2020 May 30, 2020

Revenue $ 215,101 $ 662,758

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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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands) May 29, 2021 May 30, 2020 May 29, 2021 May 30, 2020

North America (1)

2 unchanged sentences

Total North America 273,179 209,171 710,889 573,805

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

International 10,822 5,930 34,871 20,550

Total net sales $ 284,001 $ 215,101 $ 745,760 $ 594,355

(1) Revenue within the North America geographic area substantially relates to the United States and includes the divested SimplyProtein brand.

(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 the 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 were approximately $ 0.6 million and $ 0.7 million for the thirteen and thirty-nine weeks ended May 29, 2021, respectively, and were approximately $ 0.1 million and

$ 0.2 million for the thirteen and thirty-nine weeks ended May 30, 2020, respectively.

As of May 29, 2021 and August 29, 2020, the allowances for doubtful accounts related to these accounts receivable were $ 1.2 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 thirty-nine weeks ended May 29, 2021 were as follows:

(in thousands) Goodwill

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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 3.

Balance as of May 29, 2021 $ 543,134

The change in Goodwill attributed to the acquisition of a business during the thirty-nine weeks ended May 29, 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 3.

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.

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

February 27, 2021

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

There were no impairment charges related to goodwill during the thirteen and thirty-nine weeks ended May 29, 2021 or since the inception of the Company.

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

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

Intangible assets with indefinite life:

Brands and trademarks

Indefinite life $ 974,000 $ — $ 974,000

Brands and trademarks Indefinite life $ 974,000 $ — $ 974,000

Intangible assets with finite lives:

Customer relationships

15 years 174,000 24,303 149,697

Proprietary recipes and formulas

7 years 7,000 3,631 3,369

Licensing agreements

14 years 22,000 5,706 16,294

Software and website development costs

3 - 5 years 5,302 2,678 2,624

Intangible assets in progress

3 - 5 years 55 — 55

Customer relationships 15 years 174,000 27,203 146,797

Proprietary recipes and formulas 7 years 7,000 3,881 3,119

Licensing agreements 14 years 22,000 6,099 15,901

Software and website development costs 3 - 5 years 5,302 2,975 2,327

Intangible assets in progress 3 - 5 years 55 — 55

$ 1,182,357 $ 40,158 $ 1,142,199

August 29, 2020

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

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

Intangible assets with indefinite life:

Brands and trademarks

Indefinite life $ 979,000 $ — $ 979,000

Brands and trademarks Indefinite life $ 979,000 $ — $ 979,000

Intangible assets with finite lives:

Customer relationships

15 years 174,000 18,503 155,497

Proprietary recipes and formulas

7 years 7,000 3,131 3,869

Licensing agreements

14 years 22,000 4,920 17,080

Software and website development costs

3 - 5 years 5,967 2,645 3,322

Customer relationships 15 years 174,000 18,503 155,497

Proprietary recipes and formulas 7 years 7,000 3,131 3,869

Licensing agreements 14 years 22,000 4,920 17,080

Software and website development costs 3 - 5 years 5,967 2,645 3,322

$ 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 thirty-nine weeks ended May 29, 2021 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 each of the thirteen weeks ended May 29, 2021 and May 30, 2020 was $ 3.8 million and $ 3.9 million, respectively.

Amortization expense related to intangible assets during the thirty-nine weeks ended May 29, 2021 and May 30, 2020 was $ 11.6 million and $ 10.1 million, respectively.

There were no impairment charges related to intangible assets during the thirteen and thirty-nine weeks ended May 29, 2021 and May 30, 2020.

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

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Substantially concurrent with the consummation of the Acquisition of Atkins, the full $ 200.0 million of the Term Facility (the “Term Loan”) was drawn.

The interest rate per annum is based on either (i) a base rate equaling the higher of (a) the “prime rate”, (b) the federal funds effective rate plus 0.50 % and (c) the Euro-currency rate applicable for an interest period of one month plus 1.00 % plus (x) 3.00 % margin for the Term Loan or (y) 2.00 % margin for the Revolving Credit Facility, or (ii) London Interbank Offered Rate (“LIBOR”) adjusted for statutory reserve requirements, plus (x) 4.00 % margin for the Term Loan subject to a floor of 1.00 % or (y) 3.00 % margin for the Revolving Credit Facility.

The interest rate per annum is based on either (i) a base rate equaling the higher of (a) the “prime rate”, (b) the federal funds effective rate plus 0.50 % or (c) the Euro-currency rate applicable for an interest period of one month plus 1.00 % plus (x) 3.00 % margin for the Term Loan or (y) 2.00 % margin for the Revolving Credit Facility, or (ii) London Interbank Offered Rate (“LIBOR”) adjusted for statutory reserve requirements, plus (x) 4.00 % margin for the Term Loan subject to a floor of 1.00 % or (y) 3.00 % margin for the Revolving Credit Facility.

As security for the payment or performance of its debt, the Company has pledged certain equity interests in its subsidiaries.

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No amounts under the Term Facility were repaid as a result of the execution of the Incremental Facility Amendment.

The Credit Agreement contains certain financial and other covenants that limit our ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions and investments, consolidations, mergers, reorganizations and other fundamental changes, payment of dividends and other distributions to equity and warrant holders, and prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size.

The Credit Agreement contains certain financial and other covenants that limit the Company’s ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions and investments, consolidations, mergers, reorganizations and other fundamental changes, payment of dividends and other distributions to equity and warrant holders, and prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size.

The Revolving Credit Facility has a maximum total net leverage ratio equal to or less than 6.25 :1.00 (with a reduction to 6.00 :1.00 on and after the third anniversary of the closing date of the Credit Agreement) contingent on credit extensions in excess of 30 % of the total amount of commitments available under the Revolving Credit Facility.

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 May 29, 2021 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) May 29, 2021 August 29, 2020

Term Facility (effective rate of 4.8% at May 29, 2021)

506,500 606,500

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

Finance lease liabilities (effective rate of 5.6% at May 29, 2021)

Deferred financing fees 6,822 10,272

549,162 597,150

Total debt 500,436 597,150

Current finance lease liabilities 282 271

Long-term debt, net of deferred financing fees $ 500,154 $ 596,879

$ 548,884 $ 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 Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended May 29, 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.

As of May 29, 2021 and August 29, 2020, there were no amounts drawn against the Revolving Credit Facility.

As of May 29, 2021, the Company had letters of credit in the amount of $ 3.5 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.

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 May 29, 2021 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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Fair value is defined as the price 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.

To increase the comparability of fair value measurements, a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows:

To increase the comparability of fair value measurements, a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is used:

Level 1 – Valuations based on quoted prices for identical assets and liabilities in active markets.

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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 May 29, 2021 and August 29, 2020 due to the relatively short maturity of these instruments.

Level 3 Measurements

The Company has outstanding liability-classified Private Warrants that allow holders to purchase 6,700,000 shares of the Company’s common stock.

Such Private Warrants are held by Conyers Park Sponsor, LLC, a related party.

The Company utilizes the Black-Scholes valuation model to estimate the fair value of the Private Warrants at each reporting date.

The application of the Black-Scholes model utilizes significant assumptions, including volatility.

Significant judgment is required in determining the expected volatility (the key assumption) of the Private Warrants.

In order to determine the most accurate measure of this volatility, the Company measured expected volatility based on several inputs, including considering a peer group of publicly traded companies, the Company’s implied volatility based on traded options, the implied volatility of comparable SPAC warrants, and the implied volatility of any outstanding public warrants during the periods they were outstanding.

As a result of the unobservable inputs that were used to determine the expected volatility of the Private Warrants, the fair value measurement of these warrants reflects a Level 3 measurement within the fair value measurement hierarchy.

There were 6,700,000 Private Warrants outstanding as of May 29, 2021 and May 30, 2020.

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

May 29, 2021 May 30, 2020

Exercise Price $ 11.50 $ 11.50

Stock Price $ 34.53 $ 17.03

Dividend Yield — % — %

Expected Term (in Years) 1.11 2.11

Risk-Free Interest Rate 0.06 % 0.16 %

Expected Volatility 23.90 % 31.80 %

Per Share Value of Warrants $ 23.04 $ 6.26

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.

The adjustments for the thirteen and thirty-nine weeks ended May 29, 2021 were a loss of $ 35.8 million and $ 60.7 million, respectively.

The adjustments for the thirteen and thirty-nine weeks ended May 30, 2020 were a gain of $ 31.7 million and $ 82.7 million, respectively.

The adjustments resulted in a total warrant liability at May 29, 2021 and May 30, 2020 of $ 154.4 million and $ 41.9 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

Thirty-Nine Weeks Ended

(In thousands) May 29, 2021 May 30, 2020

Income before income taxes $ 53,729 $ 113,166

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Effective tax rate 57.9 % 7.3 %

The effective tax rate for the twenty-six weeks ended February 27, 2021 was 0.2 % greater than the effective tax rate for the twenty-six weeks ended February 29, 2020, which was primarily driven by permanent differences.

The effective tax rate for the thirty-nine weeks ended May 29, 2021 was 50.6 % greater than the effective tax rate for the thirty-nine weeks ended May 30, 2020, 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 Thirty-Nine Weeks Ended

(In thousands) Statements of Operations Caption May 29, 2021 May 30, 2020 May 29, 2021 May 30, 2020

Operating lease cost:

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Cost of goods sold and General and administrative 470 448 1,246 1,184

Operating lease cost 1,874 1,867 3,770 2,983

Total operating lease cost 1,956 1,927 5,726 4,910

Short-term lease cost General and administrative — 6 — 30

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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 14, the Company incurred impairment charges of $ 0.7 million in the thirty-nine weeks ended May 29, 2021 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 thirty-nine weeks ended May 29, 2021.

There were no additional impairment charges during the thirteen weeks ended May 29, 2021.

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

Refer to Note 14, 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 Sheets Caption May 29, 2021 August 29, 2020

Operating lease right-of-use assets Other long-term assets $ 21,957 $ 25,703

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Total lease liabilities $ 24,763 $ 28,015

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

Future maturities of lease liabilities as of May 29, 2021 were as follows:

(In thousands) Operating Leases Finance Leases

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Present value of lease liabilities $ 24,005 $ 758

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.

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

As of May 29, 2021, the Company has entered into a lease with estimated total minimum future lease payments of $ 32.2 million over a 10 -year minimum lease term that has not yet commenced and, as a result, is not yet recorded on the Condensed Consolidated Balance Sheets.

The Company expects the lease to commence in the fourth quarter of fiscal year 2021, and the Company has the option to renew the lease for an additional five years or ten years after the minimum lease term.

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

May 29, 2021 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

Thirty-Nine Weeks Ended

(In thousands) May 29, 2021 May 30, 2020

Cash paid for amounts included in the measurement of lease liabilities

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From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of business.

The Company is not presently a party to any litigation that it believes to be material, and the Company is not aware of any pending or threatened litigation against it that its management believes could have a material adverse effect on its business, operating result, financial condition or cash flows.

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.

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.

During the thirty-nine weeks ended May 30, 2020, the Company reserved an additional $ 0.3 million.

The reserve was included within General and administrative in the Condensed 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 May 29, 2021 and August 29, 2020, the Company had $ 0.7 million and $ 1.3 million reserved for potential settlements, respectively.

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 May 29, 2021, the Company will be required to make payments of $ 2.8 million over the next year.

Stockholders’ Equity

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The net proceeds were used to pay a portion of the purchase price and related fees and expenses for the Acquisition of Quest.

Equity Warrants

Prior to the Acquisition of Atkins, Conyers Park issued 6,700,000 private placement warrants.

The Company assumed these private placement warrants in connection with the Acquisition of Atkins.

Warrants to Purchase Common Stock

Prior to the Acquisition of Atkins, Conyers Park issued 13,416,667 public warrants and 6,700,000 Private Warrants.

The Company assumed the Conyers Park warrants to purchase common stock in connection with the Acquisition of Atkins.

As a result of the Acquisition of Atkins, the warrants issued by Conyers Park were no longer exercisable for shares of Conyers Park common stock, but were instead exercisable for common stock of the Company.

All other features of the warrants were unchanged.

As of February 27, 2021, the private placement warrants to purchase 6,700,000 shares of the Company’s common stock remain outstanding.

Each whole warrant entitles the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share.

The warrants became exercisable 30 days after the completion of the Acquisition of Atkins in 2017 and expire five years after that date, or earlier upon redemption or liquidation, as applicable.

From August 26, 2018 through October 5, 2018, public warrants to purchase an aggregate of 9,866,451 shares of the Company’s common stock were exercised for cash at an exercise price of $ 11.50 per share, resulting in aggregate gross proceeds to the Company of $ 113.5 million.

On October 4, 2018, the Company delivered a notice for the redemption (the “Redemption Notice”) of all of its public warrants that remained unexercised immediately after November 5, 2018.

Exercises of public warrants following the Redemption Notice were required to be done on a cashless basis.

Accordingly, holders were no longer permitted to exercise public warrants in exchange for payment in cash of $ 11.50 per share.

Instead, a holder exercising a public warrant was deemed to have paid the $ 11.50 per share exercise price by the surrender of 0.61885 of a share of common stock that the holder would have been entitled to receive upon a cash exercise of each public warrant.

Exercising holders received 0.38115 of a share of the Company’s common stock for each public warrant surrendered for exercise.

Following the Redemption Notice, 3,499,639 public warrants were exercised on a cashless basis.

An aggregate of 1,333,848 shares of the Company’s common stock were issued in connection with these exercises of the public warrants.

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

As of May 29, 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 discussed in Note 7, 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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Under the stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions.

The stock repurchase program does not obligate the Company to acquire any specific number of shares or acquire shares over any specific period of time.

The stock repurchase program does not obligate the Company to acquire any specific number of shares or acquire

shares over any specific period of time.

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 no t repurchase any shares of common stock.

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

During the thirty-nine weeks ended May 29, 2021 and May 30, 2020, the Company did not repurchase any shares of common stock.

As of May 29, 2021, approximately $ 47.9 million remained available under the stock repurchase program.

Earnings Per Share

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

In periods in which the Company has net income, diluted earnings per share is based on the weighted average number of common shares issued and outstanding and the effect of all dilutive common stock equivalents outstanding during each period.

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

In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all potentially dilutive securities.

In periods in which the Company has a net loss, diluted earnings per share is based on the weighted average number of common shares issued and outstanding as the effect of including common stock equivalents outstanding would be anti-dilutive.

The Company has outstanding liability-classified Private Warrants to purchase 6,700,000 shares of the Company’s common stock.

During periods when the effect is dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares, calculated using the treasury stock method.

During periods when the impact is anti-dilutive, 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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands, except per share data) May 29, 2021 May 30, 2020 May 29, 2021 May 30, 2020

Basic earnings per share computation:

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Net income $ 5,895 $ 48,112 $ 22,634 $ 104,928

Gain in fair value change of warrant liability — ( 31,703 ) — ( 82,655 )

Numerator for diluted earnings per share $ 5,895 $ 16,409 $ 22,634 $ 22,273

Weighted average common shares outstanding - basic 95,767,629 95,378,495 95,730,581 93,475,539

Public and Private Warrants 3,928,303 3,706,986 3,607,125 3,766,141

Private Warrants — 2,285,110 — 3,392,317

Employee stock options 1,465,477 630,408 1,191,593 1,028,218

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Diluted earnings per share from net income $ 0.06 $ 0.17 $ 0.23 $ 0.23

Earnings per share calculations for the thirteen weeks ended February 27, 2021 and February 29, 2020 excluded 0.2 million and 0.4 million shares underlying stock options issuable upon exercise, respectively, that would have been anti-dilutive.

Earnings per share calculations for the thirteen weeks ended February 27, 2021 excluded an immaterial number of non-vested shares that would have been anti-dilutive.

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.

Earnings per share for the twenty-six weeks ended February 27, 2021 excluded an immaterial number of non-vested shares that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 29, 2021 excluded 4.3 million and 3.9 million shares, issuable upon exercise of Private Warrants, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 29, 2021 excluded an immaterial number and 0.2 million shares, issuable upon exercise of stock options, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 30, 2020 excluded 0.8 million and 0.6 million shares, issuable upon exercise of stock options, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 29, 2021 and the thirty-nine weeks ended May 30, 2020 excluded an immaterial number of non-vested shares that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen weeks ended May 30, 2020 excluded 0.1 million 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 $ 2.2 million and $ 2.2 million in the thirteen weeks ended May 29, 2021 and May 30, 2020, respectively, and $ 5.8 million and $ 5.9 million in the thirty-nine weeks ended May 29, 2021 and May 30, 2020, 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 thirty-nine weeks ended May 29, 2021:

Shares underlying options Weighted average

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Forfeited ( 53,983 ) 22.33

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 May 29, 2021 2,793,163 $ 14.86 6.85

Vested and expected to vest as of May 29, 2021 2,793,163 $ 14.86 6.85

Exercisable as of May 29, 2021 2,215,040 $ 13.25 6.37

As of May 29, 2021, the Company had $ 2.9 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.7 years.

During the thirty-nine weeks ended May 29, 2021 and May 30, 2020, the Company received $ 0.7 million and $ 0.9 million in cash from stock option exercises, respectively.

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 thirty-nine weeks ended May 29, 2021:

Restricted Stock Units Weighted average

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Forfeited ( 48,735 ) 21.33

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 May 29, 2021 503,294 $ 24.31

As of May 29, 2021, the Company had $ 9.8 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 2.1 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 thirty-nine weeks ended May 29, 2021, 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 thirty-nine weeks ended May 29, 2021:

Performance stock units Weighted average

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Forfeited ( 30,688 ) 22.28

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 May 29, 2021 380,877 $ 19.31

As of May 29, 2021, the Company had $ 3.7 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.3 years.

Stock Appreciation Rights

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The Company’s SARs settle in shares of its common stock once the applicable vesting criteria has been met.

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:

SARs cliff vest three years from the date of grant and must be exercised within ten years .

The following table summarizes SARs activity for the thirty-nine weeks ended May 29, 2021:

Shares underlying SARs Weighted average

exercise price Weighted average remaining contractual life (in years)

exercise price Weighted average remaining contractual life (years)

Outstanding as of August 29, 2020 150,000 $ 24.20

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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 May 29, 2021 150,000 $ 24.20 8.43

Vested and expected to vest as of May 29, 2021 150,000 $ 24.20 8.43

Exercisable as of May 29, 2021 — $ — 0.00

As of May 29, 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 1.4 years.

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:

Changes to the restructuring liability during the thirty-nine weeks ended May 29, 2021 were as follows:

(In thousands) Termination benefits and severance Other Restructuring liability

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Cash payments ( 6,664 ) ( 201 ) ( 6,865 )

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 May 29, 2021 $ 742 $ — $ 742

In addition to the restructuring costs shown above, the Company incurred impairment charges of $ 0.7 million in the thirty-nine weeks ended May 29, 2021 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 thirty-nine weeks ended May 29, 2021.

There were no additional impairment charges during the thirteen weeks ended May 29, 2021.

As a result, for the thirteen and thirty-nine weeks ended May 29, 2021, the Company incurred a total of $ 0.2 million and $ 4.0 million in restructuring and restructuring-related costs, respectively, which have been included within General and administrative on the Condensed Consolidated Statements of Operations and Comprehensive Income.

Since the restructuring activities were announced in May 2020, the Company has incurred aggregate restructuring and restructuring-related costs of $ 9.5 million.

Overall, the Company expects to incur a total of approximately $ 9.9 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

Item 1. Financial Statements