3 unchanged sentences
Consolidated Balance Sheets
−Removed: Consolidated Statements of Operations and Comprehensive Income
+Added: Consolidated Statements of Operations and Comprehensive Income (Loss)
Consolidated Statements of Cash Flows
2 unchanged sentences
Nature of Operations and Principles of Consolidation
−Removed: Change in Accounting Principle
Summary of Significant Accounting Policies
12 unchanged sentences
Restructuring and Related Charges
−Removed: Unaudited Quarterly Financial Data
−Removed: Subsequent Events
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
1 unchanged sentence
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of The Simply Good Foods Company and subsidiaries (the "Company") as of August 29, 2020 and August 31, 2019, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows, for the fifty-two week period ended August 29, 2020 and the fifty-three week period ended August 31, 2019, and the related notes (collectively referred to as the "financial statements").
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 29, 2020 and August 31, 2019, and the results of its operations and its cash flows for each of the two years in the period ended August 29, 2020, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the accompanying consolidated balance sheets of The Simply Good Foods Company and subsidiaries (the "Company") as of August 28, 2021 and August 29, 2020, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows, for the fifty-two week periods ended August 28, 2021 and August 29, 2020, and the fifty-three week period ended August 31, 2019, and the related notes (collectively referred to as the "financial statements").
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 28, 2021 and August 29, 2020, and the results of its operations and its cash flows for each of the three years in the period ended August 28, 2021, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of August 28, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 26, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.
10 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
+Added: Critical Audit Matter
+Added: The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Trade Promotions — Refer to Note 2 to the financial statements
12 unchanged sentences
◦ Agreed contract terms from the accounting records to the promotion agreement with the customer and verified the promotion period was prior to August 29, 2021.
+Added: ◦ For a selection of those allowances for trade promotion balances based on volume estimates, we evaluated the appropriateness of those estimates using historical data on performance of similar trade promotional activities, third-party data, and subsequent customer activity.
• We evaluated management’s ability to estimate promotional claims incurred, but not yet received for potential management bias by comparing historical promotional claims received to management’s estimates of the claims to be received.
• For a selection of customer promotional claims presented or resolved after August 28, 2021, we compared that amount to the August 28, 2021 allowance for promotion balance and traced presented or resolved deduction to a properly recorded sale.
−Removed: Business Combination - Voyage Holdings, LLC and VMG Quest Blocker, Inc.
−Removed: - Valuation of brand and trademark and customer relationships intangible assets - Refer to Note 4 to the financial statements
−Removed: Critical Audit Matter Description
−Removed: The Company completed the acquisition of Voyage Holdings, LLC and VMG Quest Blocker, Inc.
−Removed: for $986.8 million on November 7, 2019.
−Removed: The Company accounted for the acquisition under the acquisition method of accounting for business combinations.
−Removed: Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including brand and trademark intangible asset of $750.0 million and customer relationship intangible asset of $115.0 million.
−Removed: Management estimated the fair value of the brand and trademark and customer relationship intangible assets using an income approach and the with/without method, which estimates the value using the cash flow impact in a hypothetical scenario where the customer relationships are not in place.
−Removed: Given the fair value determination of brand and trademark intangible asset and customer relationship intangible asset for Voyage Holdings, LLC and VMG Quest Blocker Inc.
−Removed: requires management to make significant estimates and assumptions related to the forecasts of future cash flows and the selection of the discount rate, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
−Removed: How the Critical Audit Matter Was Addressed in the Audit
−Removed: Our auditing procedures related to the forecasts of future cash flows and the selection of the discount rate included the following, among others:
−Removed: We obtained an understanding of management’s key assumptions in developing the forecast.
−Removed: We assessed the reasonableness of management's forecasts of future cash flows by comparing the projections to historical results and certain peer companies.
−Removed: We evaluated whether the estimated future cash flows were consistent with projections used by the Company, as well as evidence obtained in other areas of the audit.
−Removed: With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by:
−Removed: Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation.
−Removed: Developing a range of independent estimates and comparing those to the discount rate selected by management.
/s/ Deloitte & Touche LLP
2 unchanged sentences
We have served as the Company’s auditor since 2019.
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: The Board of Directors and Shareholders of
The Simply Good Foods Company and Subsidiaries
−Removed: Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows of The Simply Good Foods Company and subsidiaries (successor) for the 52-weeks ended August 25, 2018 and the related notes.
−Removed: In our opinion, the consolidated statements of operations and comprehensive income, changes in stockholders’ equity, cash flows, and the related notes present fairly, in all material respects, the results of its operations and its cash flows for the 52-weeks ended August 25, 2018, in conformity with U.S.
−Removed: generally accepted accounting principles.
−Removed: Change in Accounting Principle
−Removed: As discussed in Note 2 to the consolidated financial statements, during the fourth quarter ended August 31, 2019 the Company elected to change its principle of accounting for the classification of shipping & handling costs relating to the delivery of products to customers from operating expenses to cost of sales and this change in accounting principle has been retrospectively applied to all periods presented .
−Removed: Basis for Opinion
−Removed: These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
−Removed: Accordingly, we express no such opinion.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion .
−Removed: /s/ Ernst & Young LLP
−Removed: We served as the Company’s auditor from 2011 to February 25, 2019.
−Removed: Denver, Colorado
−Removed: October 24, 2018
−Removed: except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the accounting principle change discussed in Note 2, as to which the date is
−Removed: October 30, 2019
−Removed: The Simply Good Foods Company and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
−Removed: August 29, 2020
−Removed: August 31, 2019
+Added: August 28, 2021 August 29, 2020
Current assets:
−Removed: Cash and cash equivalents
+Added: Cash $ 75,345 $ 95,847
Accounts receivable, net 111,456 89,740
+Added: Inventories 97,269 59,085
Prepaid expenses 4,902 3,644
4 unchanged sentences
Intangible assets, net 1,139,041 1,158,768
+Added: Goodwill 543,134 544,774
Other long-term assets 54,792 32,790
+Added: Total assets $ 2,052,217 $ 2,008,445
Liabilities and stockholders’ equity
8 unchanged sentences
Deferred income taxes 93,755 84,352
+Added: Warrant liability 159,835 93,638
Other long-term liabilities 44,890 22,765
4 unchanged sentences
Common stock, $0.01 par value, 600,000,000 shares authorized, 95,882,908 and 95,751,845 issued at August 28, 2021 and August 29, 2020, respectively 959 958
−Removed: Treasury stock, 98,234 and 98,234 shares at cost at August 29, 2020 and August 31, 2019, respectively
+Added: Treasury stock, 98,234 shares at cost at August 28, 2021 and August 29, 2020 ( 2,145 ) ( 2,145 )
Additional paid-in-capital 1,085,001 1,076,472
2 unchanged sentences
Total stockholders’ equity
+Added: 1,188,804 1,139,333
Total liabilities and stockholders’ equity
+Added: $ 2,052,217 $ 2,008,445
See accompanying Notes to the Consolidated Financial Statements
The Simply Good Foods Company and Subsidiaries
−Removed: Consolidated Statements of Operations and Comprehensive Income
+Added: Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except share and per share data)
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: August 28, 2021 August 29, 2020 August 31, 2019
+Added: Net sales $ 1,005,613 $ 816,641 $ 523,758
Cost of goods sold 595,847 492,313 306,075
+Added: Gross profit 409,766 324,328 217,683
Operating expenses:
4 unchanged sentences
Loss on impairment — 3,000 —
−Removed: Loss (gain) in fair value change of contingent consideration - TRA liability
+Added: Loss in fair value change of contingent consideration – TRA liability
Total operating expenses 236,091 246,104 145,010
3 unchanged sentences
Interest expense ( 31,557 ) ( 32,813 ) ( 13,627 )
+Added: (Loss) gain in fair value change of warrant liability ( 66,197 ) 30,938 ( 72,673 )
+Added: Gain on legal settlement 5,000 — —
Gain on settlement of TRA liability — — 1,534
−Removed: Gain (loss) on foreign currency transactions
−Removed: Total other expense
−Removed: Income before income taxes
−Removed: Income tax expense (benefit)
+Added: (Loss) gain on foreign currency transactions ( 5 ) 658 ( 452 )
+Added: Other (expense) income ( 140 ) 441 196
+Added: Total other (expense) income ( 92,815 ) 740 ( 81,196 )
+Added: Income (loss) before income taxes 80,860 78,964 ( 8,523 )
+Added: Income tax expense 39,980 13,326 16,711
+Added: Net income (loss) $ 40,880 $ 65,638 $ ( 25,234 )
Other comprehensive income (loss):
Foreign currency translation adjustments 61 ( 43 ) ( 38 )
−Removed: Comprehensive income
−Removed: Earnings per share from net income:
+Added: Comprehensive income (loss) $ 40,941 $ 65,595 $ ( 25,272 )
+Added: Earnings (loss) per share:
+Added: Basic $ 0.43 $ 0.70 $ ( 0.31 )
+Added: Diluted $ 0.42 $ 0.35 $ ( 0.31 )
Weighted average shares outstanding:
+Added: Basic 95,743,413 93,968,953 80,734,091
+Added: Diluted 97,365,598 98,343,722 80,734,091
See accompanying Notes to the Consolidated Financial Statements
2 unchanged sentences
(In thousands)
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: August 28, 2021 August 29, 2020 August 31, 2019
Operating activities
−Removed: Adjustments to reconcile net income to net cash provided by operating activities:
+Added: Net income (loss)
+Added: $ 40,880 $ 65,638 $ ( 25,234 )
+Added: Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 18,174 16,007 7,644
2 unchanged sentences
Loss on impairment — 3,000 —
−Removed: Loss (gain) in fair value change of contingent consideration - TRA liability
+Added: Loss (gain) in fair value change of warrant liability 66,197 ( 30,938 ) 72,673
+Added: Estimated credit losses 1,114 — —
+Added: Loss in fair value change of contingent consideration – TRA liability — — 533
Gain on settlement of TRA liability — — ( 1,534 )
3 unchanged sentences
Amortization of operating lease right-of-use asset 5,051 3,848 —
+Added: Loss on operating lease right-of-use asset impairment 686 — —
+Added: Gain on lease termination ( 156 ) — —
+Added: Other ( 16 ) ( 389 ) —
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net ( 22,284 ) ( 18,288 ) ( 8,360 )
+Added: Inventories ( 39,349 ) 23,880 ( 8,178 )
Prepaid expenses ( 1,202 ) 680 ( 824 )
3 unchanged sentences
Accrued expenses and other current liabilities 15,423 ( 5,572 ) 14,378
+Added: Other ( 2,083 ) ( 3,156 ) 74
Net cash provided by operating activities
+Added: 132,089 58,921 73,042
Investing activities
Purchases of property and equipment
−Removed: Proceeds from sale of property and equipment
+Added: ( 5,911 ) ( 1,736 ) ( 1,037 )
Issuance of note receivable
+Added: ( 1,600 ) ( 500 ) ( 750 )
Proceeds from note receivable
Acquisition of business, net of cash acquired
+Added: — ( 982,075 ) —
+Added: Proceeds from sale of business 5,800 — —
Investments in intangible assets and other assets
+Added: ( 795 ) ( 933 ) —
Net cash used in investing activities
+Added: ( 2,506 ) ( 983,994 ) ( 1,787 )
Financing activities
12 unchanged sentences
Settlement of TRA liability — — ( 26,468 )
−Removed: Net cash provided by (used in) financing activities
−Removed: Cash and cash equivalents
+Added: Net cash (used in) provided by financing activities ( 150,049 ) 754,652 83,376
Net (decrease) increase in cash
+Added: ( 20,466 ) ( 170,421 ) 154,631
Effect of exchange rate on cash
+Added: ( 36 ) ( 73 ) ( 261 )
Cash at beginning of period
−Removed: Cash and cash equivalents at end of period
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
+Added: 95,847 266,341 111,971
+Added: Cash at end of period
+Added: $ 75,345 $ 95,847 $ 266,341
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: August 28, 2021 August 29, 2020 August 31, 2019
Supplemental disclosures of cash flow information
Cash paid for interest
+Added: $ 27,821 $ 30,038 $ 11,164
Cash paid for taxes
+Added: $ 32,190 $ 4,530 $ 7,451
Non-cash investing and financing transactions
+Added: Non-cash proceeds from sale of business $ 3,000 $ — $ —
Operating lease right-of-use assets recognized at ASU No 2016-02 transition
+Added: $ — $ 5,102 $ —
Finance lease right-of-use assets recognized at ASU No 2016-02 transition
+Added: $ — $ 1,185 $ —
Operating lease right-of-use assets recognized after ASU No 2016-02 transition
+Added: $ 26,222 $ 3,554 $ —
+Added: Non-cash additions to property and equipment
+Added: $ 1,203 $ — $ —
+Added: Non-cash additions to intangible assets and other assets $ 218 $ — $ —
See accompanying Notes to the Consolidated Financial Statements
2 unchanged sentences
(In thousands, except share data)
−Removed: Treasury Stock
−Removed: Additional Paid in Capital
−Removed: Retained Earnings
−Removed: (Accumulated Deficit)
−Removed: Accumulated Other Comprehensive Income (Loss)
+Added: Common Stock Treasury Stock Additional Paid in Capital Retained Earnings
+Added: (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total
+Added: Shares Amount Shares Amount
Balance, August 25, 2018 70,605,675 $ 706 — $ — $ 596,364 $ 24,523 $ ( 798 ) $ 620,795
+Added: Net income — — — — — ( 25,234 ) — ( 25,234 )
Stock-based compensation — — — — 5,501 — — 5,501
Foreign currency translation adjustments — — — — — — ( 38 ) ( 38 )
+Added: Repurchase of common stock — — 98,234 ( 2,145 ) — — — ( 2,145 )
Shares issued upon vesting of restricted stock units 80,293 1 — — ( 182 ) — — ( 181 )
2 unchanged sentences
Balance, August 31, 2019 81,973,284 $ 820 98,234 $ ( 2,145 ) $ 715,740 $ ( 711 ) $ ( 836 ) $ 712,868
+Added: Net loss — — — — — 65,638 — 65,638
Stock-based compensation — — — — 7,636 — — 7,636
Foreign currency translation adjustments — — — — — — ( 43 ) ( 43 )
−Removed: Repurchase of common stock
+Added: Public equity offering 13,379,205 134 — — 349,085 — — 349,219
Shares issued upon vesting of restricted stock units 58,974 1 — — ( 192 ) — — ( 191 )
Exercise of options to purchase common stock 340,382 3 — — 4,203 — — 4,206
−Removed: Warrant conversion
Balance, August 29, 2020 95,751,845 $ 958 98,234 $ ( 2,145 ) $ 1,076,472 $ 64,927 $ ( 879 ) $ 1,139,333
+Added: Net income — — — — — 40,880 — 40,880
Stock-based compensation — — — — 8,265 — — 8,265
Foreign currency translation adjustments — — — — — — 61 61
−Removed: Public equity offering
Shares issued upon vesting of restricted stock units 72,755 1 — — ( 436 ) — — ( 435 )
1 unchanged sentence
Balance, August 28, 2021 95,882,908 $ 959 98,234 $ ( 2,145 ) $ 1,085,001 $ 105,807 $ ( 818 ) $ 1,188,804
+Added: See accompanying Notes to the Consolidated Financial Statements
Notes to Consolidated Financial Statements
4 unchanged sentences
(“Conyers Park”) on March 30, 2017.
−Removed: 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”).
+Added: 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 “Business Combination”).
The common stock of Simply Good Foods is listed on the Nasdaq Capital Market under the symbol “SMPL.”
−Removed: On August 21, 2019, the Company's wholly-owned subsidiary Simply Good Foods USA, Inc., formerly known as Atkins Nutritionals, Inc.
−Removed: (“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").
−Removed: On November 7, 2019, pursuant to the Purchase Agreement, 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.
−Removed: (“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).
+Added: 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 “Quest Acquisition”).
+Added: On November 7, 2019, Simply Good USA completed the Quest Acquisition via Simply Good USA’s acquisition of 100% of the equity interests of Voyage Holdings, LLC, and VMG Quest Blocker, Inc.
+Added: (the “Target Companies”) for a cash purchase price of approximately $ 1.0 billion 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.
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.
−Removed: 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:
−Removed: Atkins® for those following a low-carb lifestyle;
−Removed: and Quest® for consumers seeking to partner with a brand that makes the foods they crave work for them, not against them, through a variety of protein-rich foods and beverages that also limit sugars and simple carbs.
+Added: The product portfolio the Company develops, markets and sells consists primarily of protein bars, ready-to-drink (“RTD”) shakes, sweet and salty snacks and confectionery products marketed under the Atkins®, Atkins Endulge®, and Quest® brand names.
+Added: Simply Good Foods is poised to expand its wellness platform through innovation and organic growth along with acquisition opportunities in the nutritional snacking space.
+Added: The Company’s nutritious snacking platform consists of brands that specialize in providing products for consumers that follow certain nutritional philosophies and health-and-wellness trends:
+Added: Atkins® for those following a low-carb lifestyle and Quest® for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbs.
The Company distributes its products in major retail channels, primarily in North America, including grocery, club, and mass merchandise, as well as through e-commerce, convenience, specialty, and other channels.
The Company’s portfolio of nutritious snacking brands gives it a strong platform with which to introduce new products, expand distribution, and attract new consumers to its products.
−Removed: The Company's platform also positions it to continue to selectively pursue acquisition opportunities of brands in the nutritious snacking category.
−Removed: 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.
+Added: The Company remains uncertain of the ultimate effect COVID-19 could have on its business notwithstanding the distribution of several U.S.
+Added: government approved vaccines and the easing of movement restrictions.
+Added: This uncertainty stems from the potential for, among other things, (i) the presence of current mutations of COVID-19 which have resulted in increased rates of reported cases for which currently approved vaccines are not as effective along with the possibility of future mutations occurring for which current approved vaccines are less effective, (ii) unexpected supply chain disruptions, including disruptions resulting from labor shortages or other human capital challenges, (iii) changes to customer operations, (iv) a reversal in recently improving consumer purchasing and consumption behavior, and (v) the closure of customer establishments.
Basis of Presentation
4 unchanged sentences
The accompanying financial statements include Consolidated Balance Sheets for the periods ended August 28, 2021 and August 29, 2020.
−Removed: The remaining financial statements include the fifty-two week period ended August 29, 2020 , the fifty-three week period ended August 31, 2019 , and the fifty-two week period ended August 25, 2018 .
+Added: The remaining financial statements include the fifty-two weeks ended August 28, 2021, the fifty-two weeks ended August 29, 2020, and the fifty-three weeks ended August 31, 2019.
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.
1 unchanged sentence
Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Simply Good Foods and its subsidiaries on a consolidated basis.
−Removed: Reclassification of Prior Year Amounts
−Removed: Certain prior year amounts have been reclassified to conform to the current year presentation including (i) Selling expenses and Marketing expenses, which have been combined as Selling and marketing expenses on the Consolidated Statements of Operations and Comprehensive Income and (ii) Other operating expense , which has been combined with General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
−Removed: Change in Accounting Principle
−Removed: During the fourth quarter ended August 31, 2019, the Company changed its accounting principle related to the presentation of third-party delivery costs associated with shipping and handling activities previously included as operating expenses in Distribution in the Consolidated Statements of Operations and Comprehensive Income.
−Removed: The Company now presents these expenses within Cost of goods sold in the Consolidated Statements of Operations and Comprehensive Income.
−Removed: In connection with the change in accounting principle, the Company also changed its definition of shipping and handling costs to include costs paid to third-party warehouse operators associated with delivering product to a customer, previously included in General and administrative , and Depreciation and amortization of the assets at the third-party warehouse, previously included in Depreciation and amortization .
−Removed: Under the previous definition of shipping and handling costs, the Company only included delivery costs in Distribution .
−Removed: The accounting policy change was applied retrospectively to all periods presented and the Consolidated Statements of Operations and Comprehensive Income reflect the effect of this accounting principle change for all periods presented.
−Removed: The effect of the adjustment is as follows in thousands:
−Removed: Fifty-Two Weeks Ended August 25, 2018
−Removed: Change in Accounting Principle and Presentation
−Removed: Other Operating Expense (1)
−Removed: Cost of goods sold
−Removed: General and administrative
−Removed: Depreciation and amortization
−Removed: Other operating expenses have been combined with General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
Summary of Significant Accounting Policies
4 unchanged sentences
Business Combination
−Removed: On November 7, 2019 , pursuant to the Purchase Agreement, the Company completed the Acquisition of Quest for a cash purchase price of approximately $ 1.0 billion , subject to customary post-closing adjustments.
−Removed: The Acquisition of Quest was accounted for using the acquisition method of accounting prescribed by Accounting Standard Codification ("ASC") Topic 805, Business Combinations (“ASC 805”), whereby the results of operations, including the revenues and earnings of Quest, are included in the financial statements from the date of acquisition.
+Added: On November 7, 2019 , pursuant to the Purchase Agreement, the Company completed the Quest Acquisition for a cash purchase price of approximately $ 1.0 billion, subject to customary post-closing adjustments.
+Added: The Quest Acquisition was accounted for using the acquisition method of accounting prescribed by ASC Topic 805, Business Combinations (“ASC 805”), whereby the results of operations, including the revenues and earnings of Quest, are included in the financial statements from the date of acquisition.
Additionally, assets acquired and liabilities assumed were recognized at their fair values based on widely accepted valuation techniques in accordance with ASC Topic 820, Fair Value Measurements, as of the closing date.
The process for estimating fair values requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of future cash flows and developing appropriate discount rates.
−Removed: ASC 805 establishes a measurement period to provide the Company with a reasonable amount of time to obtain the information necessary to identify and measure various items in a business combination and cannot extend beyond one year from the acquisition date.
−Removed: Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed as of acquisition date.
−Removed: The Company expects to complete the final fair value determination of the assets acquired and liabilities assumed as soon as practicable within the measurement period, but not to exceed one year from the acquisition date.
+Added: ASC 805 establishes a measurement period to provide companies with a reasonable amount of time to obtain the information necessary to identify and measure various items in a business combination and cannot extend beyond one year from the acquisition date.
+Added: The Company completed its final assessment of purchase price allocation for the Quest Acquisition to the estimated fair value of the net assets acquired at the date of acquisition during the first quarter of fiscal year 2021.
+Added: 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.
Fair Value Measurements
5 unchanged sentences
There were no significant transfers between levels during any period presented.
−Removed: Cash and Cash Equivalents
−Removed: Cash and cash equivalents consist of cash on hand, deposits available on demand and other short-term, highly liquid investments with original maturities of three months or less.
−Removed: Cash equivalents are carried at cost, which approximates fair value.
−Removed: Accounts Receivable, Net
+Added: Cash consists of cash on hand, deposits available on demand and other short-term, highly liquid investments with original maturities of three months or less.
+Added: Accounts Receivable, Net and Expected Credit Losses
Accounts receivable, net consists primarily of trade receivables, net of allowances for doubtful accounts, returns, and trade promotions.
The Company sells its products for cash or on credit terms, which are established in accordance with local and industry practices and typically require payment within 30 days of delivery and may allow discounts for early payment.
−Removed: The Company estimates an allowance for doubtful accounts based upon a review of outstanding receivables, historical collection information and an analysis of customer data.
+Added: The Company estimates its allowance for doubtful accounts and the related expected credit loss based upon the Company’s historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts.
Accounts receivable are written off when determined to be uncollectible.
+Added: Charges related to credit loss on accounts receivables from transactions with external customers were approximately $ 0.6 million, $ 0.5 million, and $ 0.1 million for the fifty-two weeks ended August 28, 2021, fifty-two weeks ended August 29, 2020, and fifty-three weeks ended August 31, 2019, respectively.
At August 28, 2021 and August 29, 2020, the allowance for doubtful accounts was $ 1.1 million and $ 0.5 million, respectively.
+Added: Additionally, during the fifty-two weeks ended August 28, 2021 the Company recorded a $ 0.5 million expected credit loss reserve on its $ 3.0 million note receivable related to the SimplyProtein Sale, which is defined in Note 5, Goodwill and Intangibles.
Inventories are valued at the lower of cost or net realizable value on a first-in, first-out basis, adjusted for the value of inventory that is determined to be excess, obsolete, expired or unsaleable.
1 unchanged sentence
Reserves are also taken for certain products or packaging materials when it is determined their cost may not be recoverable.
−Removed: At August 29, 2020 and August 31, 2019 , the provision for obsolete inventory was $ 0.5 million and $ 0.4 million , respectively.
+Added: Inventories, as presented with the Consolidated Balance Sheets, is summarized as follows:
+Added: (In thousands) August 28, 2021 August 29, 2020
+Added: Finished goods $ 91,893 $ 56,117
+Added: Raw materials 6,007 3,457
+Added: Reserve for obsolete inventory ( 631 ) ( 489 )
+Added: Total inventories $ 97,269 $ 59,085
Property and Equipment, Net
2 unchanged sentences
The general ranges of estimated useful lives are:
−Removed: Furniture and fixtures
−Removed: Computer equipment, software and website development costs
−Removed: Machinery and equipment
−Removed: Office equipment
+Added: Furniture and fixtures 7 years
+Added: Computer equipment, software and website development costs 3 - 5 years
+Added: Machinery and equipment 7 years
+Added: Office equipment 3 - 5 years
Leasehold improvements are amortized over the shorter of the remaining term of the lease or the useful life of the improvement utilizing the straight-line method.
The Company performs impairment tests for Property and equipment, net when circumstances indicate that the carrying value of the asset may not be recoverable.
−Removed: There were no indicators of impairment in the fifty-two week period ended August 29, 2020 , the fifty-three week period ended August 31, 2019 , or the fifty-two week period ended August 25, 2018 .
+Added: There were no indicators of impairment in the fifty-two weeks ended August 28, 2021, the fifty-two weeks ended August 29, 2020, or the fifty-three weeks ended August 31, 2019.
Goodwill and Intangible Assets, Net
−Removed: Goodwill and Intangible assets, net result primarily from the Business Combination and acquisitions.
−Removed: Intangible assets primarily include brands and trademarks with indefinite lives and customer-related relationships with finite lives.
+Added: Goodwill and Intangible assets, net result primarily from the Business Combination and other acquisitions.
+Added: Intangible assets primarily includes brands and trademarks with indefinite lives and customer-related relationships with finite lives.
Upon acquisition, the purchase price is first allocated to identifiable assets and liabilities, including customer-related intangible assets and trademarks, with any remaining purchase price recorded as Goodwill .
1 unchanged sentence
The Company conducts its annual impairment tests at the beginning of the fourth fiscal quarter.
−Removed: Goodwill and indefinite-lived intangible assets are assessed using either a qualitative or quantitative approach to determine whether it is more likely than not that the fair values of the reporting units are less than their carrying amounts.
+Added: Goodwill and indefinite-lived intangible assets are assessed using either a qualitative or quantitative approach to determine whether it is more likely than not that the fair values of the reporting units or indefinite-lived intangible assets are less than their carrying amounts.
The qualitative assessment evaluates factors including macro-economic conditions, industry-specific and company-specific considerations, legal and regulatory environments, and historical performance.
−Removed: If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed.
+Added: If the Company determines that it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying value, a quantitative assessment is performed.
Otherwise, no further assessment is required.
−Removed: The quantitative approach compares the estimated fair value of the reporting unit to its carrying amount, including goodwill.
−Removed: Impairment is indicated if the estimated fair value of the reporting unit is less than the carrying amount of the reporting unit, and an impairment charge is recognized for the differential.
−Removed: For fiscal year 2020, the Company elected to perform both qualitative and quantitative assessments of its goodwill and indefinite-lived intangible assets.
−Removed: During the fourth quarter of fiscal 2020, the Company determined there were indicators of impairment related to the SimplyProtein brand intangible asset.
−Removed: Therefore, the Company performed a quantitative assessment of its brand intangible asset, which indicated the fair value exceeded the carrying value, resulting in a loss on impairment of $ 3.0 million in the fifty-two week period ended August 29, 2020 .
−Removed: There were no impairment charges related to goodwill in the fifty-two week period ended August 29, 2020 .
−Removed: Additionally, for fiscal year 2019, we elected to perform quantitative assessments of goodwill and indefinite-lived intangible assets.
−Removed: No impairment charges related to goodwill or indefinite-lived intangibles were recognized in the fifty-three week period ended August 31, 2019 .
−Removed: The Company performed qualitative assessments of goodwill and indefinite-lived intangible assets for fiscal year 2018 .
−Removed: The qualitative assessments determined that it was more likely than not the reporting unit, brands and trademarks had a fair value in excess of their carrying value.
−Removed: Accordingly, no further impairment assessment was necessary, and no impairment charges related to goodwill or indefinite-lived intangibles were recognized in the fifty-two week period ended August 25, 2018 .
+Added: The quantitative approach compares the estimated fair value of the reporting unit, including goodwill, or the indefinite-lived intangible asset to its carrying amount.
+Added: Impairment is indicated if the estimated fair value of the reporting unit or indefinite-lived intangible asset is less than the carrying amount, and an impairment charge is recognized for the differential.
+Added: For fiscal year 2021, the Company performed qualitative goodwill impairment assessments for each reporting unit that had goodwill, which consisted of both of the Company’s operating segments, Atkins and Quest, and its indefinite-lived intangible assets.
+Added: The qualitative assessments did not identify indicators of impairment, and it was determined that it was more likely than not each reporting unit and indefinite-lived intangible had fair values in excess of their carrying values.
+Added: Accordingly, no further impairment assessment was necessary, and the Company determined neither reporting unit or any indefinite-lived intangibles were impaired.
+Added: There were no
+Added: impairment charges related to goodwill in the fifty-two weeks ended August 28, 2021 or since the inception of the Company.
+Added: There were no impairment charges related to indefinite-lived intangibles recognized in the fifty-two weeks ended August 28, 2021 or the fifty-three weeks ended August 31, 2019.
+Added: There was a $ 3.0 million loss on impairment of an indefinite-lived intangible in the fifty-two weeks ended August 29, 2020, as discussed in Note 5, Goodwill and Intangibles.
Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives.
22 unchanged sentences
Additionally, the Company reviewed for impairment indicators of its right-of-use assets and other long-lived assets as described in the “Property and Equipment, Net” significant accounting policy.
+Added: Warrant Accounting
+Added: The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
+Added: The Company evaluates all of its financial instruments, including issued private placement stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815-40, Derivatives and Hedging:
+Added: Contracts in Entity’s Own Equity (“ASC 815-40”).
+Added: The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is assessed as part of this evaluation.
+Added: Prior to the Business Combination, Conyers Park issued 13,416,667 public warrants and 6,700,000 private warrants (the “Private Warrants”).
+Added: The Company assumed the Conyers Park warrants to purchase common stock in connection with the Business Combination.
+Added: As a result of the Business Combination, 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.
+Added: All other features of the warrants were unchanged.
+Added: Each whole warrant entitles the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share.
+Added: The warrants became exercisable 30 days after the completion of the Business Combination and expire five years after that date, or earlier upon redemption or liquidation, as applicable.
+Added: The assumed 13,416,667 public warrants qualified for equity classification until the warrants were fully redeemed in fiscal 2019.
+Added: As of August 28, 2021, the 6,700,000 Private Warrants remain outstanding and are precluded from equity classification, being liability-classified.
+Added: The Company accounts for these Private Warrants as a derivative warrant liability in accordance with ASC 815-40.
+Added: Accordingly, the Company recognizes the Private Warrants as a liability at fair value and adjusts the Private Warrants to fair value at each reporting period through other income.
+Added: The fair value adjustments are determined by using a Black-Scholes option-pricing methodology (“Black-Scholes model”).
+Added: The valuation is 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.
+Added: The periodic remeasurement of the Private Warrants is reflected in (Loss) gain in fair value change of warrant liability within the Consolidated Statements of Operations and Comprehensive Income (Loss).
Revenue Recognition
4 unchanged sentences
Revenue is measured as the amount of consideration expected to be received in exchange for fulfilled product orders, including estimates of variable consideration.
−Removed: The most common forms of variable consideration include trade promotions, such as consumer incentives,
−Removed: coupon redemptions and other marketing activities, allowances for unsaleable product, and any additional amounts where a distinct good or service cannot be identified or the value cannot be reasonably estimated.
+Added: The most common forms of variable consideration include trade promotions, such as consumer incentives, coupon redemptions and other marketing activities, allowances for unsaleable product, and any additional amounts where a distinct good or service cannot be identified or the value cannot be reasonably estimated.
Trade promotions are recorded as a reduction to net sales with a corresponding reduction to accounts receivable at the time of revenue recognition for the underlying sale.
18 unchanged sentences
The Company utilizes third-party contract manufacturers for the manufacture of its products.
−Removed: The Company has evaluated whether the it is the principal or agent in these relationships.
−Removed: The Company has determined that it is the principal in all cases, as it maintains the responsibility for fulfillment, risk of loss and establishes the price.
+Added: The Company has evaluated whether it is the principal or agent in these relationships.
+Added: The Company has determined that it is the principal in all cases, as it retains the responsibility for fulfillment and risk of loss, as well as establishes the price.
In accordance with ASC Topic 606, Revenue from Contracts with Customers, the Company has elected the practical expedient to expense the incremental costs to obtain a contract, because the amortization period would be less than one year, and the practical expedient for shipping and handling costs.
−Removed: Shipping and handling costs incurred to deliver products to customers are accounted for as fulfillment activities, rather than a promised service, and as such are included in Cost of goods sold in the Consolidated Statements of Operations and Comprehensive Income.
+Added: Shipping and handling costs incurred to deliver products to customers are accounted for as fulfillment activities, rather than a promised service, and as such are included in Cost of goods sold in the Consolidated Statements of Operations and Comprehensive Income (Loss).
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.
6 unchanged sentences
Shipping and handling costs are recognized in Cost of goods sold .
−Removed: Costs of $ 49.8 million for the fifty-two week period ended August 29, 2020 , $ 32.3 million for the fifty-three week period ended August 31, 2019 , and $ 27.2 million for the fifty-two week period ended August 25, 2018 were recorded relating to products shipped to customers.
+Added: Costs of $ 66.5 million for the fifty-two weeks ended August 28, 2021, $ 49.8 million for the fifty-two weeks ended August 29, 2020, and $ 32.3 million for the fifty-three weeks ended August 31, 2019 were recorded relating to products shipped to customers.
Advertising Costs
Production costs related to television commercials are expensed when first aired.
−Removed: All other advertising costs are expensed when incurred through Selling and marketing .
−Removed: Total advertising costs were $ 55.3 million for the fifty-two week period ended August 29, 2020 , $ 35.4 million for the fifty-three week period ended August 31, 2019 , and $ 34.0 million for the fifty-two week period ended August 25, 2018 .
−Removed: Production costs related to television commercials not yet aired are included in Prepaid expenses in the accompanying Consolidated Balance Sheets.
−Removed: There were no productions costs related to television commercials not yet aired at August 29, 2020 or August 31, 2019 .
+Added: All other advertising costs are expensed when incurred or when the advertising service is received through Selling and marketing .
+Added: Total advertising costs were $ 74.9 million for the fifty-two weeks ended August 28, 2021, $ 55.3 million for the fifty-two weeks ended August 29, 2020, and $ 35.4 million for the fifty-three weeks ended August 31, 2019.
+Added: Production costs related to television commercials not yet aired and prepaid advertising services not yet received are included in Prepaid expenses in the accompanying Consolidated Balance Sheets.
+Added: Total prepaid advertising expenses were $ 1.6 million and $ 0.2 million at August 28, 2021 and August 29, 2020.
Research and Development Activities
2 unchanged sentences
Research and development activities are primarily internal and associated costs are included in General and administrative .
−Removed: The Company’s total research and development expenses were $ 4.0 million for the fifty-two week period ended August 29, 2020 , $ 2.2 million for the fifty-three week period ended August 31, 2019 , and $ 2.5 million for the fifty-two week period ended August 25, 2018 .
+Added: The Company’s total research and development expenses were $ 3.5 million for the fifty-two weeks ended August 28, 2021, $ 4.0 million for the fifty-two weeks ended August 29, 2020, and $ 2.2 million for the fifty-three weeks ended August 31, 2019.
Share-Based Compensation
7 unchanged sentences
All matching contributions are made in cash.
−Removed: Expense associated with defined contribution plans was $ 1.3 million for the fifty-two week period ended August 29, 2020 , $ 0.6 million for the fifty-three week period ended August 31, 2019 , and $ 0.4 million for the fifty-two week period ended August 25, 2018 .
+Added: Expense associated with defined contribution plans was $ 1.4 million for the fifty-two weeks ended August 28, 2021, $ 1.3 million for the fifty-two weeks ended August 29, 2020, and $ 0.6 million for the fifty-three weeks ended August 31, 2019.
Foreign Currency Translation
7 unchanged sentences
Recently Issued Accounting Pronouncements Not Yet Adopted
−Removed: In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.
−Removed: 2016-13, Financial Instruments-Credit Losses (Topic 326), which modifies disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures.
−Removed: This ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.
−Removed: The amendments of this ASU should be applied on a retrospective basis to all periods presented.
−Removed: The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements.
−Removed: In August 2018, the FASB issued ASU No.
−Removed: 2018-13, Fair Value Measurement (Topic 820), which modifies disclosure requirements on fair value measurements of Accounting Standards Codification (“ASC”) 820.
−Removed: This ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein.
−Removed: Early adoption is permitted including in any interim period for which financial statements have not yet been issued.
−Removed: Entities are permitted to early adopt the eliminated or modified disclosure requirements and delay the adoption new disclosure requirements until their effective date.
−Removed: The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements and does not anticipate adoption of this ASU will be material to its consolidated financial statements.
−Removed: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes, which amends the existing guidance relating to the accounting for income taxes.
−Removed: 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.
−Removed: GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance.
+Added: In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes, which amends existing guidance related to the
+Added: accounting for income taxes.
+Added: 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, 2020, with early adoption permitted.
−Removed: The Company does not expect that the adoption of this new guidance will have a material effect on its consolidated financial statements.
−Removed: In March 2020, the FASB issued ASU No.
−Removed: 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.
−Removed: The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022.
+Added: 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.
+Added: 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.
+Added: 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 and December 31, 2022.
The amendments of this ASU should be applied on a prospective basis.
−Removed: The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements.
+Added: The Company will continue to monitor the effects of rate reform, if any, on any new or amended contracts through December 31, 2022.
+Added: The Company does not anticipate the amendments in this ASU will be material to its consolidated financial statements.
+Added: 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.
+Added: This ASU is effective for all entities for fiscal years beginning after December 15, 2020, with early adoption permitted.
+Added: The amendments of this ASU should be applied retrospectively.
+Added: The Company does not anticipate the adoption of this ASU will be material to its consolidated financial statements.
+Added: No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material effect on the Company’s consolidated financial statements.
Recently Adopted Accounting Pronouncements
−Removed: In February 2016, the FASB issued ASU No.
−Removed: 2016-02, Leases (Topic 842).
−Removed: The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.
−Removed: A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.
−Removed: In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842):
−Removed: Targeted Improvements.
−Removed: ASU 2018-11 provides entities another option for transition, allowing entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption.
−Removed: The amendments provide the option for the ASU to be applied at the beginning of the period adopted using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period.
−Removed: On September 1, 2019, the Company adopted ASU No.
−Removed: 2016-02 using the alternative transition method under ASU No.
−Removed: 2018-11, which permits application of the new lease guidance at the beginning of the period of adoption, with comparative periods continuing to be reporting under Topic 840.
−Removed: Upon adoption, the Company recorded the following within the Condensed Consolidated Balance Sheet:
−Removed: operating lease right-of-use assets of $ 5.1 million included within Other long-term assets, current operating lease liabilities of $ 2.0 million included within Accrued expenses and other current liabilities, long-term operating lease liabilities of $ 3.8 million included within Other long-term liabilities, finance lease right-of-use assets of $ 1.2 million included within Property and equipment, net, current finance lease liabilities of $0.2 million included within Current maturities of long term debt, and long-term finance lease liabilities of $ 1.0 million included within Long-term debt less current maturities .
−Removed: Following the Acquisition of Quest, the Company recorded the following amounts in the Condensed Consolidated Balance Sheet as of the closing date on November 7, 2019:
−Removed: operating lease right-of-use assets of $ 21.1 million included within Other long-term assets, current operating lease liabilities of $ 2.0 million included within Accrued expenses and other current liabilities, and long-term operating lease liabilities of $ 18.9 million included within Other long-term liabilities.
−Removed: The adoption of these ASUs did not result in a cumulative-effect adjustment to the opening balance of retained earnings.
−Removed: The guidance provided a number of optional practical expedients in adoption.
−Removed: The Company elected to adopt the package of practical expedients permitted under the transition guidance within the standard, which among other things, permits it to not reassess prior conclusions about lease identification, lease classification and initial direct costs under the new standard.
−Removed: The Company did not elect the use-of-hindsight practical expedient or the practical expedient pertaining to land easements, the latter not being applicable.
−Removed: Additionally, the Company elected to include both lease and non-lease components as a single component for all asset classes in which the Company is the lessee.
−Removed: For additional information regarding leases, refer to Note 11 .
−Removed: In June 2018, the FASB issued ASU No.
−Removed: 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting.
−Removed: This ASU simplifies aspects of share-based compensation issued to non-employees by aligning the guidance with accounting for employee share-based compensation.
+Added: In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), which modified the measurement of expected credit losses of certain financial instruments.
The Company adopted this ASU as of the first day of fiscal 2021.
−Removed: The adoption of this ASU did not have a material effect on the consolidated financial statements.
−Removed: In August 2018, the FASB issued ASU No.
−Removed: 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.
+Added: 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.
+Added: The change in estimating the allowance for doubtful accounts did not have a material effect on the Company’s consolidated financial statements.
+Added: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which modified disclosure requirements on fair value measurements of ASC Topic 820, Fair Value Measurement.
The Company adopted this ASU as of the first day of fiscal 2021.
1 unchanged sentence
Business Combination
−Removed: 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.
−Removed: 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.
+Added: On August 21, 2019 , Simply Good USA entered into the Purchase Agreement to acquire Quest.
+Added: On November 7, 2019 , Simply Good USA completed the Quest Acquisition 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.
Quest is a healthy lifestyle food company offering a variety of bars, cookies, chips, ready-to-drink shakes and pizzas that compete in many of the attractive, fast growing sub-segments within the nutritional snacking category.
−Removed: The Acquisition of Quest was funded by the Company through a combination of cash, equity and debt financing.
+Added: The Quest Acquisition was funded through a combination of cash, equity and debt financing.
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.
−Removed: 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 August 29, 2020 .
−Removed: Business transaction costs within the Consolidated Statements of Operations and Comprehensive Income for fifty-two week period ended August 29, 2020 was $ 27.1 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
−Removed: issuance costs related to the incremental term loan, and $ 3.3 million of other costs, including legal, due diligence, and accounting fees.
−Removed: Included in the transaction advisory fees paid for the Acquisition of Quest is $ 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.
+Added: 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.
+Added: Business transaction costs within the Consolidated Statements of Operations and Comprehensive Income (Loss) for the fifty-two weeks ended August 29, 2020 was $ 27.1 million, which included $ 14.5 million of transaction advisory fees related to the Quest Acquisition, $ 3.2 million of banker commitment fees, $ 6.1 million of non-deferrable debt issuance costs related to the incremental term loan, and $ 3.3 million of other costs, including legal, due diligence, and accounting fees.
+Added: Included in the transaction advisory fees paid for the Quest Acquisition 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.
−Removed: 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.
−Removed: The advisory fee paid to Centerview Partners LLC represents approximately 1.2% of the total cash purchase price paid by the Company on the closing date of the Acquisition of Quest.
−Removed: All transaction advisory fees relating to the Acquisition of Quest were approved by the Company’s Audit Committee.
−Removed: The following table sets forth the preliminary purchase price allocation of the Acquisition of Quest to the estimated fair value of the net assets acquired at the date of acquisition.
−Removed: The preliminary purchase price allocation may be adjusted as a result of the finalization of our purchase price allocation procedures related to the assets acquired and liabilities assumed.
−Removed: The preliminary November 7, 2019 fair value is as follows in thousands:
+Added: 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
+Added: Company pursuant to applicable rules and policies.
+Added: The advisory fee paid to Centerview Partners LLC represents approximately 1.2 % of the total cash purchase price paid by the Company on the closing date of the Quest Acquisition.
+Added: All transaction advisory fees relating to the Quest Acquisition were approved by the Company’s Audit Committee.
+Added: The following table sets forth the final purchase price allocation of the Quest Acquisition to the estimated fair value of the net assets acquired at the date of acquisition, in thousands:
Assets acquired:
1 unchanged sentence
Accounts receivable, net 25,359
+Added: Inventories 44,032
Prepaid assets 1,214
10 unchanged sentences
Total assets acquired and liabilities assumed $ 986,820
−Removed: (1) Property and equipment, net primarily consists of leasehold improvements for the Quest headquarters of $ 6.9 million , furniture and fixtures of $ 2.2 million , and equipment of $ 0.7 million .
+Added: (1) Property and equipment, net primarily consisted of leasehold improvements for the Quest headquarters of $ 6.9 million, furniture and fixtures of $ 2.2 million, and equipment of $ 0.7 million.
The Quest headquarters lease ends in April 2029.
−Removed: The useful lives of the leasehold improvements, furniture and fixtures, and equipment is consistent with the Company's accounting policies.
−Removed: (2) Intangible assets were recorded at fair value consistent with ASC 820 as a result of the Acquisition of Quest.
−Removed: Intangible assets consist of $ 750.0 million of indefinite brand and trademark, $ 115.0 million of amortizable customer relationships, and $ 3.4 million of internally developed software.
+Added: The useful lives of the leasehold improvements, furniture and fixtures, and equipment are consistent with the Company’s accounting policies.
+Added: (2) Intangible assets were recorded at fair value consistent with ASC Topic 820, Fair Value Measurement, as a result of the Quest Acquisition.
+Added: 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.
−Removed: 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.
+Added: 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.
2 unchanged sentences
(3) Primarily as a result of the fair value attributable to the identifiable intangible assets, the deferred income tax liability was $ 10.8 million.
−Removed: (4) Goodwill was recorded at fair value consistent with ASC 820 as a result of the Acquisition of Quest.
+Added: (4) Goodwill was recorded at fair value consistent with ASC Topic 820, Fair Value Measurement, as a result of the Quest Acquisition.
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.
Amounts recorded for goodwill resulting in a tax basis step-up are generally expected to be deductible for tax purposes.
−Removed: Tax deductible Goodwill is estimated to be $ 67.7 million .
+Added: Tax deductible goodwill was estimated to be $ 67.7 million.
Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.
−Removed: The final determination of the fair value of the assets acquired and liabilities assumed is expected to be completed in the first fiscal quarter of 2021.
−Removed: Since the initial preliminary estimates reported in the first fiscal quarter of 2020, the Company has updated certain amounts reflected in the preliminary purchase price allocation, as summarized in the fair values of assets acquired and liabilities assumed as set forth above.
−Removed: 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 .
+Added: The Company completed its final assessment of purchase price allocation for the Quest Acquisition to the estimated fair value of the net assets acquired at the date of acquisition during the first quarter of fiscal 2021.
+Added: 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 in the table above.
+Added: 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.
−Removed: 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 has decreased $ 22.7 million .
−Removed: Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed at the acquisition date.
−Removed: The final fair value determination of the assets acquired and liabilities assumed will be completed prior to one year from the transaction completion, consistent with ASC 805.
−Removed: The results of Quest's operations have been included in the Simply Good Foods' Consolidated Financial Statements since November 7, 2019, the date of acquisition.
+Added: 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.
+Added: 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.
+Added: The results of Quest’s operations have been included in the Company’s consolidated financial statements since November 7, 2019, the date of acquisition.
The following table provides net sales from the acquired Quest business included in the Company’s results:
−Removed: 52-Weeks Ended
−Removed: (In thousands)
−Removed: August 29, 2020
+Added: 52-Weeks Ended 52-Weeks Ended
+Added: (In thousands) August 28, 2021 August 29, 2020
+Added: Net sales (1)
+Added: $ 453,619 $ 286,803
+Added: (1) Net sales for the fifty-two weeks ended August 28, 2021 excludes immaterial international sales.
Unaudited Pro Forma Financial Information
−Removed: Pro forma financial information is not intended to represent or be indicative of the actual results of operations of the combined business that would have been reported had the Acquisition of Quest been completed at the beginning of the fiscal year 2019, nor is it representative of future operating results of the Company.
−Removed: This unaudited pro forma combined financial information is prepared based on Article 11 of Regulation S-X period end guidance.
−Removed: The Company and the legacy Quest entity have different fiscal year ends, with Simply Good Foods’ fiscal year being the last Saturday of August while the legacy Quest business fiscal year end was December 31.
−Removed: Because the year ends differ by more than 93 days, Quest's financial information is required to be adjusted to a period within 93 days of Simply Good Foods’ fiscal period end.
−Removed: For the purposes of preparing the unaudited pro forma combined financial information for the fifty-three week period ended August 31, 2019 , the Company added Quest’s unaudited consolidated statement of operations for the six months ended June 30, 2019 to Quest's unaudited consolidated statement of operations for the six months ended December 31, 2018, which was derived by deducting the historical unaudited consolidated statement of operations for the six months ended June 30, 2018, from the unaudited consolidated statement of operations for the fiscal year ended December 31, 2018.
−Removed: In addition to the above period end adjustments, the pro forma results include certain adjustments, as required under ASC 805, which are different than Article 11 pro forma requirements.
−Removed: ASC 805 requires pro forma adjustments to reflect the effects of fair value adjustments, transaction costs, capital structure changes, the tax effects of such adjustments, and also requires nonrecurring adjustments be prepared as though the Acquisition of Quest had occurred as of the beginning of the earliest period presented.
−Removed: The adjustments to the historical Quest financial results include the exclusion of legacy derivatives and interest expense that were settled in the execution of the Acquisition of Quest.
−Removed: Additional adjustments include non-recurring transaction costs and the portion of the inventory fair value adjustment recorded by the Company during the fifty-two week period ended August 29, 2020 .
−Removed: Both periods were further adjusted to reflect a full period of (a) fair value adjustments related to inventory and incremental customer relationship amortization, (b) interest expense with the higher principal and interest rates associated with the Company's new term loan debt incurred to finance, in part, the Acquisition of Quest, and (c) the effects of the adjustments on income taxes and net income.
−Removed: The following unaudited pro forma combined financial information presents combined results of the Company and Quest as if the Acquisition of Quest has occurred at the beginning of fiscal 2019:
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
+Added: Pro forma financial information is not intended to represent or be indicative of the actual results of operations of the combined business that would have been reported had the Quest Acquisition been completed at the beginning of the fiscal year 2019, nor is it representative of future operating results of the Company.
+Added: The following unaudited pro forma combined financial information presents combined results of the Company and Quest as if the Quest Acquisition has occurred at the beginning of fiscal 2019:
+Added: 52-Weeks Ended 53-Weeks Ended
+Added: (In thousands) August 29, 2020 August 31, 2019
+Added: Net sales $ 885,044 $ 832,629
+Added: Gross profit $ 355,395 $ 317,758
+Added: Net income (loss) $ 90,028 $ ( 42,627 )
Property and Equipment, Net
−Removed: Property and equipment, net , as presented with the Consolidated Balance Sheets, are summarized as follows:
+Added: Property and equipment, net , as presented with the Consolidated Balance Sheets, is summarized as follows:
(In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
+Added: August 28, 2021 August 29, 2020
Furniture and fixtures $ 3,100 $ 3,197
1 unchanged sentence
Machinery and equipment 1,934 1,135
−Removed: Website development costs
Leasehold improvements 8,219 8,137
4 unchanged sentences
Property and equipment, net $ 16,584 $ 11,850
−Removed: The increase in Property and equipment, net as of August 29, 2020 as compared to August 31, 2019 was primarily a result of the Acquisition of Quest.
−Removed: Total depreciation expense was $ 1.8 million for the fifty-two week period ended August 29, 2020 , $ 1.1 million for the fifty-three week period ended August 31, 2019 , and $ 1.2 million for the fifty-two week period ended August 25, 2018 .
−Removed: General and administrative includes a $ 0.1 million loss on disposal of property and equipment in the fifty-two week period ended August 25, 2018 .
+Added: Total depreciation expense was $ 2.3 million for the fifty-two weeks ended August 28, 2021, $ 1.8 million for the fifty-two weeks ended August 29, 2020, and $ 1.1 million for the fifty-three weeks ended August 31, 2019.
Goodwill and Intangibles
−Removed: Changes to Goodwill during the fifty-two week period ended August 29, 2020 were as follows:
−Removed: (In thousands)
+Added: Changes to Goodwill during the fifty-two weeks ended August 28, 2021 and the fifty-two weeks ended August 29, 2020 were as follows:
+Added: (In thousands) Goodwill
Balance as of August 31, 2019 $ 471,427
1 unchanged sentence
Balance as of August 29, 2020 $ 544,774
−Removed: The change in Goodwill during the fifty-two week period ended August 29, 2020 was the result of the acquisition method of accounting related to the Acquisition of Quest as described in Note 4 .
−Removed: There were no changes in the Company's goodwill in the fifty-three week period ended August 31, 2019 .
−Removed: There were no impairment charges related to goodwill in the fifty-two week period ended August 29, 2020 or since the inception of the Company.
+Added: Acquisition of business 1,178
+Added: Sale of business ( 2,818 )
+Added: Balance as of August 28, 2021 $ 543,134
+Added: The change in Goodwill attributed to the acquisition of a business during the fifty-two weeks ended August 28, 2021 and the fifty-two weeks ended August 29, 2020 was the result of the Quest Acquisition and subsequent measurement period adjustments made to finalize the acquisition method of accounting as described in Note 3, Business Combination.
+Added: 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”).
+Added: In addition to purchasing these assets, the buyer assumed certain liabilities related to the SimplyProtein brand’s business.
+Added: There was no gain or loss recognized as a result of the SimplyProtein Sale.
+Added: In conjunction with the SimplyProtein Sale, the Company disposed of $ 2.8 million of goodwill associated with the SimplyProtein business.
+Added: For fiscal year 2021, the Company performed qualitative goodwill impairment assessments for each reporting unit that had goodwill, which consisted of both of the Company’s operating segments, Atkins and Quest.
+Added: The qualitative assessments did not identify indicators of impairment, and it was determined that it was more likely than not each reporting unit had fair values in excess of their carrying values.
+Added: Accordingly, no further impairment assessment was necessary, and the Company determined neither reporting unit was impaired.
+Added: There were no impairment charges related to goodwill in the fifty-two weeks ended August 28, 2021 or since the inception of the Company.
Intangible assets, net in the Consolidated Balance Sheets consist of the following:
August 28, 2021
−Removed: (In thousands)
−Removed: Gross carrying amount
−Removed: Accumulated amortization
−Removed: Net carrying amount
+Added: (In thousands) Useful life Gross carrying amount Accumulated amortization Net carrying amount
Intangible assets with indefinite life:
−Removed: Brands and trademarks
−Removed: Indefinite life
+Added: Brands and trademarks Indefinite life $ 974,000 $ — $ 974,000
Intangible assets with finite lives:
−Removed: Customer relationships
−Removed: Proprietary recipes and formulas
−Removed: Licensing agreements
−Removed: Software and website development costs
+Added: Customer relationships 15 years $ 174,000 $ 30,103 $ 143,897
+Added: Licensing agreements 13 years 22,000 6,664 15,336
+Added: Proprietary recipes and formulas 7 years 7,000 4,131 2,869
+Added: Software and website development costs 3 - 5 years 5,560 2,924 2,636
+Added: Intangible assets in progress 3 - 5 years 303 — 303
+Added: $ 1,182,863 $ 43,822 $ 1,139,041
August 29, 2020
−Removed: (In thousands)
−Removed: Gross carrying amount
−Removed: Accumulated amortization
−Removed: Net carrying amount
+Added: (In thousands) Useful life Gross carrying amount Accumulated amortization Net carrying amount
Intangible assets with indefinite life:
−Removed: Brands and trademarks
−Removed: Indefinite life
+Added: Brands and trademarks Indefinite life $ 979,000 $ — $ 979,000
Intangible assets with finite lives:
−Removed: Customer relationships
−Removed: Proprietary recipes and formulas
−Removed: Licensing agreements
−Removed: Intangible assets, net changed due to the Acquisition of Quest, amortization expense, and an impairment loss related to brand and trademark intangible assets.
+Added: Customer relationships 15 years $ 174,000 $ 18,503 $ 155,497
+Added: Licensing agreements 14 years 22,000 4,920 17,080
+Added: Proprietary recipes and formulas 7 years 7,000 3,131 3,869
+Added: Software and website development costs 3 - 5 years 5,967 2,645 3,322
+Added: $ 1,187,967 $ 29,199 $ 1,158,768
+Added: Changes in Intangible assets, net during the fifty-two weeks ended August 28, 2021 were primarily related to the SimplyProtein Sale and recurring amortization expense.
+Added: 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.
+Added: Changes in Intangible assets, net during the fifty-two weeks ended August 29, 2020 were primarily related to the Quest Acquisition, recurring amortization expense, and an impairment loss related to brand and trademark intangible assets.
During the fourth quarter of fiscal 2020, the Company determined there were indicators of impairment related to the SimplyProtein brand intangible asset.
−Removed: Therefore, the Company performed a quantitative assessment of its brand intangible asset, which indicated its fair value exceeded its carrying value, resulting in a loss on impairment of $ 3.0 million .
−Removed: Amortization expense related to intangible assets was $ 14.0 million for the fifty-two week period ended August 29, 2020 , $ 6.5 million for the fifty-three week period ended August 31, 2019 , and $ 6.5 million for the fifty-two week period ended August 25, 2018 .
+Added: Therefore, the Company performed a quantitative assessment of its brand intangible asset, which indicated its fair value did not exceed its carrying value, resulting in a loss on impairment of $ 3.0 million during the fifty-two weeks ended August 29, 2020.
+Added: During the fifty-two weeks ended August 28, 2021, the Company performed qualitative impairment assessments for its indefinite-lived intangible assets.
+Added: The qualitative assessments did not identify indicators of impairment, and it was determined that it was more likely than not each indefinite-lived intangible asset had fair values in excess of their carrying values.
+Added: Accordingly, no further impairment assessment was necessary.
+Added: There were no impairment charges related to indefinite-lived intangibles recognized in the fifty-two weeks ended August 28, 2021 or the fifty-three weeks ended August 31, 2019.
+Added: There was a $ 3.0 million loss on impairment of an indefinite-lived intangible in the fifty-two weeks ended August 29, 2020, as discussed above.
+Added: During the fifty-two weeks ended August 28, 2021, the Company did not identify indicators of impairment related to its finite-lived intangible assets, which are tested for impairment when events or circumstances indicated that the carrying amount may not be recoverable.
+Added: There were no impairment charges related to the Company’s finite-lived intangible assets in the fifty-two weeks ended August 28, 2021, fifty-two weeks ended August 29, 2020, or the fifty-three weeks ended August 31, 2019.
+Added: Amortization expense related to intangible assets was $ 15.6 million for the fifty-two weeks ended August 28, 2021, $ 14.0 million for the fifty-two weeks ended August 29, 2020, and $ 6.5 million for the fifty-three weeks ended August 31, 2019.
Estimated future amortization for each of the next five fiscal years and thereafter is as follows:
−Removed: (In thousands)
+Added: (In thousands) Amortization
+Added: 2022 $ 15,795
+Added: Thereafter 91,948
+Added: Total $ 164,738
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities in the Consolidated Balance Sheets were comprised of the following:
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
+Added: (In thousands) August 28, 2021 August 29, 2020
Accrued professional fees $ 2,124 $ 3,125
5 unchanged sentences
Income taxes payable 9,020 839
+Added: VAT payable 4,386 2,367
Accrued restructuring 851 4,139
+Added: Accrued capital expenditures 788 —
Other accrued expenses 5,059 2,559
1 unchanged sentence
Accrued expenses and other current liabilities $ 53,606 $ 38,007
−Removed: The increase in Accrued expenses and other current liabilities as of August 29, 2020 as compared to August 31, 2019 was primarily a result of the Acquisition of Quest.
Long-Term Debt and Line of Credit
On July 7, 2017, the Company entered into a credit agreement with Barclays Bank PLC and other parties (as amended to date, the “Credit Agreement”).
−Removed: The Credit Agreement provides for (i) a term facility of $ 200.0 million (“Term Facility”) with a seven-year maturity and (ii) a revolving credit facility of up to $ 75.0 million (the “Revolving Credit Facility”) with a five-year maturity.
−Removed: Substantially concurrent with the consummation of the Acquisition of Atkins, the full $ 200.0 million of the Term Facility (the “Term Loan”) was drawn.
−Removed: 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 Term Loan or (y) 2.00 % margin for 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.
−Removed: As security for the payment or performance of its debt, the Company has pledged certain equity interests in its subsidiaries.
+Added: The Credit Agreement at that time provided for (i) a term facility of $ 200.0 million (“Term Facility”) with a seven -year maturity and (ii) a revolving credit facility of up to $ 75.0 million (the “Revolving Credit Facility”) with a five -year maturity.
+Added: Substantially concurrent with the consummation of the Business Combination, the full $ 200.0 million of the Term Facility (the “Term Loan”) was drawn.
+Added: The interest rate per annum is based on either:
+Added: (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.
+Added: The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement.
+Added: Simply Good Foods USA, Inc., is the administrative borrower and certain other subsidiary holding companies are co-borrowers under the Credit Agreement.
+Added: Each of the Company’s domestic subsidiaries that is not a named borrower under the Credit Agreement has provided a guarantee on a secured basis.
+Added: As security for the payment or performance of the debt under the Credit Agreement, the borrowers and the guarantors have pledged certain equity interests in their respective subsidiaries and granted the lenders a security interest in substantially all of their domestic assets.
+Added: All guarantors other than Quest Nutrition, LLC are holding companies with no assets other than their investments in their respective subsidiaries.
On March 16, 2018 (the “Amendment Date”), the Company entered into an amendment (the “Repricing Amendment”) to the Credit Agreement.
4 unchanged sentences
The incremental fees paid to the administrative agent are reflected as additional debt discount and are amortized over the terms of the long-term financing agreements using the effective-interest method.
−Removed: On November 7, 2019, the Company entered into an amendment (the “Incremental Facility Amendment”) to the Credit Agreement to increase the principal borrowed on the Term Facility by $ 460.0 million .
+Added: On November 7, 2019, the Company entered into a second amendment (the “Incremental Facility Amendment”) to the Credit Agreement to increase the principal borrowed on the Term Facility by $ 460.0 million.
The Term Facility together with the incremental borrowing make up the Initial Term Loans (as defined in the Incremental Facility Amendment) and as of the Amendment No.
2 Effective Date (as defined in the Incremental Facility Amendment), the Initial Term Loans bear interest at a rate equal to, at the Company’s option, either LIBOR plus an applicable margin of 3.75 %, or a base rate plus an applicable margin of 2.75 %.
−Removed: The Incremental Facility Amendment was executed to partially finance the Acquisition of Quest.
+Added: The Incremental Facility Amendment was executed to partially finance the Quest Acquisition.
No amounts under the Term Facility were repaid as a result of the execution of the Incremental Facility Amendment.
−Removed: During the third fiscal quarter of 2020, the Company borrowed $ 25.0 million under the Revolving Credit Facility.
−Removed: This was a precautionary measure to preserve financial flexibility and to maintain liquidity in response to the spread of COVID-19 and uncertainty around consumer behavior.
−Removed: The Company used the proceeds of the Revolving Credit Facility to meet initial elevated customer orders in response to COVID-19, build finished goods inventory of some of its high velocity items, support working capital and support general corporate purposes.
−Removed: In the fourth fiscal quarter of 2020, the Company repaid the $ 25.0 million borrowing under the Revolving Credit Facility.
−Removed: The Company may repay borrowings under the Revolving Credit Facility at any time without penalty.
−Removed: As of August 29, 2020 and August 31, 2019 , there were no amounts drawn against the Revolving Credit Facility.
−Removed: 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.
−Removed: 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 the third anniversary of the closing date of the credit facilities) contingent on credit extensions in excess of 30 % of the total amount of commitments available under the Revolving Credit Facility.
+Added: 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
+Added: prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size.
+Added: The Revolving Credit Facility has a maximum total net leverage ratio equal to or less than 6.00 :1.00 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.
2 unchanged sentences
(In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
+Added: August 28, 2021 August 29, 2020
Term Facility (effective rate of 4.8% at August 28, 2021)
+Added: $ 456,500 $ 606,500
Finance lease liabilities (effective rate of 5.6% at August 28, 2021)
Deferred financing fees
−Removed: Current maturities, net of deferred financing fees of $0.0 million at August 29, 2020 and $1.3 million at August 31, 2019, respectively
+Added: 451,554 597,150
Current finance lease liabilities
Long-term debt, net of deferred financing fees
−Removed: As of August 29, 2020 , aggregate principal maturities of debt for each of the next five fiscal years and thereafter are as follows:
−Removed: (In thousands)
−Removed: Principal Maturities
−Removed: The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended August 29, 2020 .
+Added: $ 451,269 $ 596,879
As of August 28, 2021, the Company had letters of credit in the amount of $ 3.5 million outstanding.
−Removed: Our letters of credit offset against the availability of the Revolving Credit Facility.
−Removed: These letters of credit exist to support three of the Company's leased buildings and insurance programs relating to workers' compensation.
+Added: 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 August 28, 2021.
+Added: The Company is not required to make principal payments on the Term Facility over the twelve months following the period ended August 28, 2021.
+Added: The outstanding balance of the Term Facility is due upon its maturity in July 2024.
+Added: As of August 28, 2021, aggregate principal maturities of debt for each of the next five fiscal years and thereafter are as follows:
+Added: (In thousands) Principal maturities
+Added: Total debt $ 457,190
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.
4 unchanged sentences
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.
−Removed: 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:
+Added: 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.
2 unchanged sentences
These valuations require significant judgment.
−Removed: A loss of $ 0.5 million and a benefit of $ 2.8 million was charged to the Loss (gain) in fair value change of contingent consideration - TRA liability for the fifty-three week period ended August 31, 2019 and fifty-two week period ended August 25, 2018 , respectively.
−Removed: The Company settled the Income Tax Receivable Agreement (the “TRA”) during the fifty-three week period ended August 31, 2019 , which resulted in a $ 1.5 million gain.
−Removed: Following the settlement of the TRA liability, the Company did no t have any Level 3 financial assets or liabilities as of August 29, 2020 or August 31, 2019 .
+Added: A loss of $ 0.5 million was charged to the Loss in fair value change of contingent consideration – TRA liability for the fifty-three weeks ended August 31, 2019.
+Added: The Company settled the Income Tax Receivable Agreement (the “TRA”) during the fifty-three weeks
+Added: ended August 31, 2019, which resulted in a $ 1.5 million gain.
Refer to Note 9, Income Taxes, for additional details regarding the TRA liability settlement.
+Added: Level 3 Measurements
+Added: The Company has outstanding liability-classified Private Warrants that allow holders to purchase 6,700,000 shares of the Company’s common stock.
+Added: Such Private Warrants are held by Conyers Park Sponsor, LLC, a related party.
+Added: The Company utilizes the Black-Scholes model to estimate the fair value of the Private Warrants at each reporting date.
+Added: The application of the Black-Scholes model utilizes significant assumptions, including volatility.
+Added: Significant judgment is required in determining the expected volatility, historically the key assumption, of the Private Warrants.
+Added: 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 warrants, and the implied volatility of any outstanding public warrants during the periods they were outstanding.
+Added: 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.
+Added: The periodic remeasurement of the warrant liability is reflected in (Loss) gain in fair value change of warrant liability within the Consolidated Statements of Operations and Comprehensive Income (Loss).
+Added: The adjustments for changes in fair value of the warrant liability for the fifty-two weeks ended August 28, 2021, the fifty-two weeks ended August 29, 2020, and the fifty-three weeks ended August 31, 2019 were a loss of $ 66.2 million, a gain of $ 30.9 million and a loss of $ 72.7 million, respectively.
+Added: The adjustments resulted in a total warrant liability at August 28, 2021 and August 29, 2020 of $ 159.8 million and $ 93.6 million, respectively.
+Added: There were 6,700,000 Private Warrants outstanding as of August 28, 2021, August 29, 2020, and August 31, 2019.
+Added: Based on the fair value assessment that was performed, the Company determined a fair value price per Private Warrant of $ 23.86 , $ 13.98 , and $ 18.59 as of August 28, 2021, August 29, 2020, and August 31, 2019, respectively.
+Added: The table below summarizes the inputs used to calculate the fair value of the warrant liability at each of the following reporting dates:
+Added: August 28, 2021 August 29, 2020 August 31, 2019
+Added: Exercise price $ 11.50 $ 11.50 $ 11.50
+Added: Stock price $ 35.35 $ 25.39 $ 29.63
+Added: Dividend yield — % — % — %
+Added: Expected term (in years) 0.86 1.85 2.85
+Added: Risk-free interest rate 0.06 % 0.14 % 1.43 %
+Added: Expected volatility 21.70 % 29.20 % 21.10 %
+Added: Per share value of warrants $ 23.86 $ 13.98 $ 18.59
+Added: There were no transfers of financial instruments between the three levels of the fair value hierarchy during the fiscal years ended August 28, 2021, August 29, 2020, and August 31, 2019, respectively.
The sources of income before income taxes are as follows:
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
−Removed: Total income before income taxes
−Removed: Income tax expense (benefit) was comprised of the following:
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: (In thousands) August 28, 2021 August 29, 2020 August 31, 2019
+Added: Domestic $ 79,526 $ 78,418 $ ( 8,565 )
+Added: Foreign 1,334 546 42
+Added: Total income (loss) before income taxes $ 80,860 $ 78,964 $ ( 8,523 )
+Added: Income tax expense was comprised of the following:
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: (In thousands) August 28, 2021 August 29, 2020 August 31, 2019
+Added: Federal $ 23,225 $ 3,056 $ 2,784
State and local 5,800 1,835 2,684
+Added: Foreign 1,552 219 374
Total current expense $ 30,577 $ 5,110 $ 5,842
+Added: Federal $ 5,982 $ 6,747 $ 9,937
State and local 3,096 1,637 1,086
−Removed: Total deferred income tax expense (benefit)
−Removed: Total tax expense (benefit)
+Added: Foreign 325 ( 168 ) ( 154 )
+Added: Total deferred income tax expense 9,403 8,216 10,869
+Added: Total tax expense $ 39,980 $ 13,326 $ 16,711
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: (In thousands) August 28, 2021 August 29, 2020 August 31, 2019
Statutory income tax expense:
+Added: 21.0 % 21.0 % 21.0 %
+Added: Change in fair value of warrant liabilities
+Added: 20.5 ( 10.8 ) ( 222.2 )
State income tax expense, net of federal 4.3 5.0 3.9
1 unchanged sentence
Taxes on foreign income above the U.S.
−Removed: Tax Cuts and Jobs Act
+Added: tax 1.6 0.1 0.2
Change in tax rate 1.8 1.5 1.5
3 unchanged sentences
Income tax expense (benefit) 49.4 % 16.9 % ( 196.1 ) %
−Removed: The comparability of the Company's operating results of fiscal 2018 as compared to subsequent fiscal years 2019 and 2020 was effected by the U.S.
−Removed: Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which was enacted on December 22, 2017.
−Removed: The Tax Act introduced significant changes to U.S.
−Removed: income tax law including reducing the U.S.
−Removed: federal statutory tax rate from 35% to 21% and imposing new taxes on certain foreign-sourced earnings and certain intercompany payments.
−Removed: Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of fiscal 2018 in accordance with SEC Staff Accounting Bulletin No.
−Removed: 118 (“SAB 118”).
−Removed: During the period ended February 23, 2019, the Company completed its accounting for the Tax Act with no material adjustment to the provisional estimates recorded.
−Removed: For the Global Intangible Low-Taxed Income (“GILTI”) provisions of the Tax Act, the Company completed its assessment during the second quarter of 2019 and, effective August 26, 2018, elected an accounting policy to record GILTI as period costs if and when incurred.
−Removed: Additionally, the Company concluded that it had not met the threshold requirements of the base erosion and anti-abuse tax.
−Removed: Although the measurement period has closed, further technical guidance related to the Tax Act, including final regulations on a broad range of topics, is expected to be issued.
−Removed: In accordance with Accounting Standards Codification (ASC) 740, the Company will recognize any effects of the guidance in the period that such guidance is issued.
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities at August 28, 2021 and August 29, 2020 were as follows:
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
+Added: (In thousands) August 28, 2021 August 29, 2020
Deferred tax assets
4 unchanged sentences
Share-based compensation 3,265 2,770
+Added: Tax credits 173 256
Lease liabilities 12,271 6,785
+Added: Other 5,665 3,714
Deferred tax assets 30,281 23,849
7 unchanged sentences
Lease right-of-use assets ( 11,709 ) ( 6,442 )
+Added: Other ( 584 ) ( 563 )
Deferred tax liabilities ( 121,818 ) ( 105,011 )
1 unchanged sentence
The Company had state net operating loss carryforwards of $ 2.5 million and $ 11.9 million and foreign net operating losses of $ 9.4 million and $ 12.8 million at August 28, 2021 and August 29, 2020, respectively.
−Removed: The state net operating loss carryforwards will begin to expire in 2021.
−Removed: As of August 29, 2020 , the Company has recorded total valuation allowances of $ 3.2 million , of which $ 2.9 million relates to valuation allowances on deferred tax assets related to foreign net operating loss carryforwards.
−Removed: The majority of this amount represents a full valuation allowance on the deferred tax assets of foreign entities within the United Kingdom, Netherlands, and Spain.
−Removed: Of the valuation allowance on deferred tax assets, $ 0.3 million relates to state net operating losses.
−Removed: During the fifty-two week period ended August 29, 2020 , there was a $ 1.4 million decrease to the tax loss carryforwards in foreign jurisdictions.
−Removed: As the carryforwards were generated in jurisdictions where the Company has historically recognized book losses or does not have strong future earnings projections, the Company concluded it is more likely than not that the operating losses would not be realized, and thus maintained a full valuation allowance against the associated deferred tax assets.
−Removed: During the fifty-two week period ended August 29, 2020 , the Company changed its intentions and determined to not indefinitely reinvest its foreign earnings within its subsidiaries in the United Kingdom, Spain, and Canada.
+Added: The state and foreign net operating loss carryforwards will begin to expire in 2022.
+Added: As of August 28, 2021, the Company has recorded total valuation allowances of $ 2.2 million on deferred tax assets related to foreign net operating loss carryforwards.
+Added: This amount represents a full valuation allowance on the deferred tax assets of foreign entities within the United Kingdom and the Netherlands.
+Added: During the fifty-two weeks ended August 28, 2021, and August 29, 2020, the Company changed its intentions and determined to not indefinitely reinvest its foreign earnings within its subsidiaries in the Netherlands and in the United Kingdom, Spain, and Canada.
The change in assertion did not result in recognition of tax liabilities related to these jurisdictions.
It is the Company’s intention to reinvest the earnings of its other non-U.S.
−Removed: subsidiaries in those operations.
+Added: subsidiaries in its Australia and New Zealand operations.
As of August 28, 2021, the Company has not made a provision for U.S.
3 unchanged sentences
The Company records interest and penalties associated with unrecognized tax benefits as a component of tax expense.
−Removed: As of August 29, 2020 and August 31, 2019 , the Company has no t accrued interest or penalties on unrecognized tax benefits, as there is no position recorded as of these fiscal years.
+Added: As of August 28, 2021 and August 29, 2020, the Company has not accrued interest or penalties on unrecognized tax benefits, as there is no position recorded as of these fiscal years.
No changes to the uncertain tax position balance are anticipated within the next 12 months, and are not expected to materially affect the financial statements.
2 unchanged sentences
Tax Receivable Agreement
−Removed: Concurrent with the Acquisition of Atkins, the Company entered into the TRA with the historical stockholders of Atkins.
+Added: Concurrent with the Business Combination, the Company entered into the TRA with the historical stockholders of Atkins.
The TRA was valued based on the future expected payments under the terms of the agreement.
3 unchanged sentences
The Company re-measured the TRA in the second fiscal quarter of 2018 due to the Tax Act.
−Removed: The second quarter assessment of these changes resulted in a provisional one-time gain of $ 4.7 million , recognized in Loss (gain) in fair value change of contingent consideration - TRA liability .
+Added: The second quarter assessment of these changes resulted in a provisional one-time gain of $ 4.7 million, recognized in Loss in fair value change of contingent consideration – TRA liability .
During the first fiscal quarter of 2019, the Company entered into a termination agreement (the “Termination Agreement”) with Atkins Holdings, LLC and Roark Capital Acquisition, LLC.
2 unchanged sentences
The Company recorded a $ 0.5 million loss on the fair value change in the TRA liability through the settlement on November 14, 2018 and recognized a gain of $ 1.5 million in connection with the execution of the Termination Agreement and final cash payment.
−Removed: On September 1, 2019, the Company adopted ASU No.
−Removed: 2016-02, Leases, using the modified retrospective approach under ASU No.
−Removed: 2018-11, which permits application of the new guidance at the beginning of the period of adoption, with comparative periods continuing to be reported under ASC Topic 840, Leases.
−Removed: The components of lease expense were as follows:
−Removed: 52-Weeks Ended
−Removed: (In thousands)
−Removed: Statement of Operations Caption
−Removed: August 29, 2020
+Added: The components of lease expense for the fifty-two weeks ended August 28, 2021 and August 29, 2020 were as follows.
+Added: 52-Weeks Ended 52-Weeks Ended
+Added: (In thousands) Statement of Operations Caption August 28, 2021 August 29, 2020
Operating lease cost:
−Removed: Cost of goods sold and General and administrative
+Added: Lease cost Cost of goods sold and General and administrative
+Added: $ 6,752 $ 5,242
Variable lease cost (1)
1 unchanged sentence
Operating lease cost $ 8,433 $ 6,890
−Removed: Short term lease cost
−Removed: General and administrative
+Added: Short-term lease cost General and administrative $ — $ 30
Finance lease cost:
−Removed: Amortization of right-of use assets
−Removed: Cost of goods sold
−Removed: Interest on lease liabilities
−Removed: Interest expense
+Added: Amortization of right-of use assets Cost of goods sold $ 273 $ 273
+Added: Interest on lease liabilities Interest expense 45 60
Total finance lease cost $ 318 $ 333
1 unchanged sentence
(1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs.
−Removed: The gross amounts of assets and liabilities related to both operating and finance leases are as follows:
−Removed: (In thousands)
−Removed: Balance Sheet Caption
−Removed: August 29, 2020
−Removed: Operating lease right-of-use assets
−Removed: Other long-term assets
−Removed: Finance lease right-of-use assets
−Removed: Property and equipment, net
+Added: Under the previous lease accounting standard in effect for the period, ASC Topic 840, Leases, rent expense for operating leases was $ 2.2 million for the fifty-three weeks ended August 31, 2019.
+Added: In conjunction with the Company’s restructuring activities as discussed in Note 17, the Company incurred impairment charges of $ 0.7 million in the fifty-two weeks ended August 28, 2021 related to its operating lease right-of-use assets for leases in Toronto, Ontario and the Netherlands.
+Added: Additionally, the Company terminated the lease in Toronto, Ontario, which resulted in a gain on lease termination of $ 0.2 million in the fifty-two weeks ended August 28, 2021.
+Added: The effect of these restructuring activities has been included within General and administrative on the Consolidated Statements of Operations and Comprehensive Income (Loss).
+Added: Refer to Note 17, Restructuring and Related Charges, for additional information regarding restructuring activities.
+Added: The right-of-use assets and corresponding liabilities related to both operating and finance leases are as follows:
+Added: (In thousands) Balance Sheet Caption August 28, 2021 August 29, 2020
+Added: Operating lease right-of-use assets Other long-term assets $ 46,197 $ 25,703
+Added: Finance lease right-of-use assets Property and equipment, net 640 912
Total lease assets $ 46,837 $ 26,615
−Removed: Operating lease liabilities
−Removed: Accrued expenses and other current liabilities
−Removed: Finance lease liabilities
−Removed: Current maturities of long-term debt
−Removed: Operating lease liabilities
−Removed: Other long-term liabilities
−Removed: Finance lease liabilities
−Removed: Long-term debt, less current maturities
+Added: Operating lease liabilities Accrued expenses and other current liabilities $ 3,788 $ 4,329
+Added: Finance lease liabilities Current maturities of long-term debt 285 271
+Added: Operating lease liabilities Other long-term liabilities 44,892 22,764
+Added: Finance lease liabilities Long-term debt, less current maturities 405 651
Total lease liabilities $ 49,370 $ 28,015
Future maturities of lease liabilities as of August 28, 2021 were as follows:
−Removed: (In thousands)
−Removed: Operating Leases
−Removed: Finance Leases
+Added: (In thousands) Operating Leases Finance Leases
Fiscal year ending:
+Added: 2022 $ 6,087 $ 313
+Added: 2023 7,005 278
+Added: 2024 7,489 145
+Added: Thereafter 25,501 —
Total lease payments 59,935 736
+Added: Interest ( 11,255 ) ( 46 )
Present value of lease liabilities $ 48,680 $ 690
−Removed: As of August 29, 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.
−Removed: 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 terms and weighted-average discount rates for operating and finance leases as of August 28, 2021 were as follows:
−Removed: Operating Leases
−Removed: Finance Leases
+Added: Operating Leases Finance Leases
+Added: As of August 28, 2021
Weighted-average remaining lease term (in years) 8.38 2.44
Weighted-average discount rate 4.9 % 5.6 %
+Added: As of August 29, 2020
+Added: Weighted-average remaining lease term (in years) 6.97 3.41
+Added: Weighted-average discount rate 5.7 % 5.6 %
Supplemental and other information related to leases was as follows:
−Removed: 52-Weeks Ended
−Removed: (In thousands)
−Removed: August 29, 2020
+Added: 52-Weeks Ended 52-Weeks Ended
+Added: (In thousands) August 28, 2021 August 29, 2020
Cash paid for amounts included in the measurement of lease liabilities
2 unchanged sentences
Financing cash flows from finance leases $ 314 $ 338
−Removed: Comparative Information as Reported Under Previous Accounting Standards
−Removed: The following comparative information is reported based upon previous accounting standards in effect for the periods presented.
−Removed: Future minimum payments under lease arrangements with a remaining term in excess of one year were as follows as of August 31, 2019 :
−Removed: (In thousands)
−Removed: August 31, 2019
−Removed: For the fifty-three week period ended August 31, 2019 , rent expenses for operating leases were $ 2.2 million .
−Removed: For the fifty-two week period ended August 25, 2018 , rent expenses for operating leases were $ 2.4 million .
Commitments and Contingencies
1 unchanged sentence
From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of business.
−Removed: 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.
−Removed: During the fifty-three week period ended August 31, 2019 , the Company reserved $ 3.5 million for the potential settlement of class action litigation concerning certain product label claims.
−Removed: During the fifty-two week period ended August 29, 2020 , the Company reserved an additional $ 0.3 million .
−Removed: The reserve is 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 fifty-two week period ended August 29, 2020 .
−Removed: As of August 29, 2020 , the Company had $ 1.3 million reserved for potential settlements, of which $ 1.2 million were acquired as part of the Acquisition of Quest.
+Added: 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 results, financial condition or cash flows.
+Added: During the fifty-three weeks ended August 31, 2019 , the Company reserved $ 3.5 million for the potential settlement of class action litigation concerning certain product label claims.
+Added: During the fifty-two weeks ended August 29, 2020 , the Company reserved an additional $ 0.3 million.
+Added: The reserve was included within General and administrative in the Consolidated Statements of Operations and Comprehensive Income (Loss) and the reserve was fully paid into escrow and settled during the fifty-two weeks ended August 29, 2020 .
+Added: During the fifty-two weeks ended August 28, 2021, the Company received a $ 5.0 million gain on a legal settlement, which has been presented as an item within Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss).
+Added: As of August 28, 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.
6 unchanged sentences
The Company paid $ 0.8 million for legal, accounting and registrations fees related to the Offering.
−Removed: The net proceeds were used to pay a portion of the purchase price and related fees and expenses for the Acquisition of Quest.
−Removed: Equity Warrants
−Removed: Prior to the Acquisition of Atkins, Conyers Park issued 13,416,667 public warrants and 6,700,000 private placement warrants.
−Removed: The Company assumed the Conyers Park equity warrants in connection with the Acquisition of Atkins.
−Removed: 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.
+Added: The net proceeds were used to pay a portion of the purchase price and related fees and expenses for the Quest Acquisition.
+Added: Warrants to Purchase Common Stock
+Added: Prior to the Business Combination, Conyers Park issued 13,416,667 public warrants and 6,700,000 Private Warrants.
+Added: The Company assumed the Conyers Park warrants to purchase common stock in connection with the Business Combination.
+Added: As a result of the Business Combination, 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.
+Added: Each whole warrant entitles the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share.
+Added: The warrants became exercisable 30 days after the completion of the Business Combination 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.
7 unchanged sentences
All remaining public warrants were redeemed as of November 5, 2018 for an immaterial amount.
−Removed: The Company’s private placement warrants to purchase 6,700,000 shares of the Company’s common stock remain outstanding.
+Added: As of August 28, 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.
+Added: As discussed in Note 8, Fair Value of Financial Instruments, 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.
+Added: The periodic remeasurement of the warrant liability is reflected in (Loss) gain in fair value change of warrant liability within the Consolidated Statements of Operations and Comprehensive Income (Loss).
Stock Repurchase Program
3 unchanged sentences
The stock repurchase program may be suspended or discontinued at any time by the Company and does not have an expiration date.
−Removed: During the fifty-two week period ended August 29, 2020 , the Company did no t repurchase any shares of common stock.
−Removed: During the fifty-three week period ended August 31, 2019 , the Company repurchased 98,234 shares of common stock at an average share price of $ 21.83 per share.
+Added: During the fifty-two weeks ended August 28, 2021 and August 29, 2020, the Company did not repurchase any shares of common stock.
+Added: During the fifty-three weeks ended August 31, 2019, the Company repurchased 98,234 shares of common stock at an average share price of $ 21.83 per share.
As of August 28, 2021, approximately $ 47.9 million remained available under the stock repurchase program.
−Removed: Earnings Per Share
−Removed: Basic earnings per share is based on the weighted average number of common shares issued and outstanding.
−Removed: 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.
+Added: Earnings (Loss) Per Share
+Added: Basic earnings or loss per share is based on the weighted average number of common shares issued and outstanding.
+Added: 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.
−Removed: The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: (In thousands, except share and per share data)
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
−Removed: Basic earnings per share computation:
−Removed: Net income available to common stock stockholders
−Removed: Weighted average common shares - basic
−Removed: Basic earnings per share from net income
−Removed: Diluted earnings per share computation:
−Removed: Net income available to common stock stockholders
+Added: As of August 28, 2021, the Company has outstanding liability-classified Private Warrants to purchase 6,700,000 shares of the Company’s common stock.
+Added: 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.
+Added: During periods when the impact is anti-dilutive, the share settlement is excluded.
+Added: The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings or loss per share:
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: (In thousands, except share and per share data) August 28, 2021 August 29, 2020 August 31, 2019
+Added: Basic earnings (loss) per share computation:
+Added: Net income (loss) available to common stock stockholders $ 40,880 $ 65,638 $ ( 25,234 )
Weighted average common shares outstanding – basic 95,743,413 93,968,953 80,734,091
−Removed: Public and private warrants
+Added: Basic earnings (loss) per share from net income (loss) $ 0.43 $ 0.70 $ ( 0.31 )
+Added: Diluted earnings (loss) per share computation:
+Added: Net income (loss) available to common stock stockholders $ 40,880 $ 65,638 $ ( 25,234 )
+Added: Gain in fair value change of warrant liability — ( 30,938 ) —
+Added: Numerator for diluted earnings (loss) per share $ 40,880 $ 34,700 $ ( 25,234 )
+Added: Weighted average common shares outstanding – basic 95,743,413 93,968,953 80,734,091
+Added: Public warrants — — —
+Added: Private Warrants — 3,327,656 —
Employee stock options 1,311,889 1,001,542 —
−Removed: Non-vested shares
+Added: Restricted stock units 310,296 45,571 —
Weighted average common shares – diluted 97,365,598 98,343,722 80,734,091
−Removed: Diluted earnings per share from net income
−Removed: Earnings per share calculations for the fifty-two week period ended August 29, 2020 , fifty-three week period ended August 31, 2019 , and fifty-two week period ended August 25, 2018 excluded 0.6 million , 0.2 million and 0.2 million shares of stock options, respectively, that would have been anti-dilutive.
−Removed: An immaterial number of non-vested shares were excluded from earnings per share calculations for the fifty-two week period ended August 29, 2020 , fifty-three week period ended August 31, 2019 , and fifty-two week period ended August 25, 2018 .
+Added: Diluted earnings (loss) per share from net income (loss) $ 0.42 $ 0.35 $ ( 0.31 )
+Added: Diluted earnings or loss per share calculations for the fifty-two weeks ended August 28, 2021 and fifty-three weeks ended August 31, 2019 excluded 4.1 million and 3.0 million shares, issuable upon exercise of Private Warrants, respectively, that would have been anti-dilutive.
+Added: In addition, the fifty-three weeks ended August 31, 2019 excluded 0.6 million shares, issuable upon exercise, of public warrants that would have been anti-dilutive.
+Added: Diluted earnings or loss per share calculations for the fifty-two weeks ended August 28, 2021, fifty-two weeks ended August 29, 2020, and fifty-three weeks ended August 31, 2019 excluded an immaterial number, 0.6 million and 1.0 million shares of common stock options issuable upon exercise of stock options, respectively, that would have been anti-dilutive.
+Added: An immaterial number of non-vested restricted stock units that would have been anti-dilutive were excluded from diluted earnings or loss per share calculations for the fifty-two weeks ended August 28, 2021, fifty-two weeks ended August 29, 2020, and fifty-three weeks ended August 31, 2019.
Omnibus Incentive Plan
−Removed: Stock-based compensation includes stock options, restricted stock unit, performance stock unit awards and stock appreciation rights, which are awarded to employees, directors, and consultants of the Company.
+Added: Stock-based compensation includes stock options, restricted stock units, performance stock unit awards and stock appreciation rights, which are awarded to employees, directors, and consultants of the Company.
Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award based on their grant date fair value.
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.
−Removed: The Company recorded stock-based compensation expense of $ 7.6 million in the fifty-two week period ended August 29, 2020 , $ 5.5 million in the fifty-three week period ended August 31, 2019 , and $ 4.0 million in the fifty-two week period ended August 25, 2018 .
+Added: The Company recorded stock-based compensation expense of $ 8.3 million in the fifty-two weeks ended August 28, 2021, $ 7.6 million in the fifty-two weeks ended August 29, 2020, and $ 5.5 million in the fifty-three weeks ended August 31, 2019 .
In July 2017, the Company’s stockholders approved the 2017 Omnibus Incentive Plan (the “Incentive Plan”).
4 unchanged sentences
Stock options under the Incentive Plan generally become exercisable ratably over three years from the date of grant and must be exercised within ten years from the date of grant.
−Removed: The following table summarizes stock option activity for the fifty-two week period ended August 29, 2020 :
−Removed: (In thousands, except share and per share data)
−Removed: Weighted average
−Removed: exercise price
−Removed: Weighted average remaining contractual life
−Removed: Aggregate intrinsic
+Added: The following table summarizes stock option activity for the fifty-two weeks ended August 28, 2021:
+Added: (In thousands, except share and per share data) Shares Weighted average
+Added: exercise price Weighted average remaining life
+Added: (years) Aggregate intrinsic
Outstanding as of August 29, 2020 2,615,899 $ 14.33 7.29 $ 28,927
+Added: Granted 489,555 27.04
+Added: Exercised ( 58,308 ) 12.00
+Added: Forfeited ( 53,983 ) 22.33
Outstanding as of August 28, 2021 2,993,163 $ 16.31 6.83 $ 57,227
2 unchanged sentences
The following table summarizes information about stock options outstanding at August 28, 2021:
−Removed: Range of Exercise Prices
−Removed: Number Outstanding
−Removed: Weighted-Average Exercise Price
−Removed: Weighted-Average Remaining Life (Years)
−Removed: Number Exercisable
−Removed: Weighted-Average Exercise Price
−Removed: The weighted average fair value of options granted during the fifty-two week period ended August 29, 2020 , fifty-three week period ended August 31, 2019 , and fifty-two week period ended August 25, 2018 were $ 7.79 , $ 7.10 and $ 4.60 , respectively.
+Added: Range of Exercise Prices Number outstanding Weighted average
+Added: exercise price Weighted average remaining life (years) Number exercisable Weighted average
+Added: exercise price
+Added: $ 12.00 - 14.99 1,880,525 $ 12.04 5.91 1,880,525 $ 12.04
+Added: $ 15.00 - 17.99 117,553 16.88 6.89 117,553 16.88
+Added: $ 18.00 - 20.99 552,078 20.08 8.17 189,019 19.89
+Added: $ 21.00 - 23.99 48,396 21.85 8.57 20,594 21.77
+Added: $ 24.00 - 26.99 188,008 24.19 8.13 73,949 24.18
+Added: $ 27.00 - 29.99 6,603 28.38 9.49 — —
+Added: $ 30.00 - 32.99 — — 0.00 — —
+Added: $ 33.00 - 35.99 — — 0.00 — —
+Added: $ 36.00 - 38.99 200,000 36.56 9.96 — —
+Added: 2,993,163 $ 16.31 6.83 2,281,640 $ 13.42
+Added: The weighted average fair value of options granted during the fifty-two weeks ended August 28, 2021, fifty-two weeks ended August 29, 2020, and fifty-three weeks ended August 31, 2019 were $ 9.99 , $ 7.79 and $ 7.10 , respectively.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option Pricing Model based on the following assumptions:
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: August 28, 2021 August 29, 2020 August 31, 2019
Expected volatility 36.80 % - 38.75 % 30.27 % - 33.82 % 29.30 % - 32.09 %
2 unchanged sentences
Risk-free rate of return 0.80 % - 0.935 % 0.38 % - 1.8 % 1.82 % - 3.13 %
−Removed: Expected term is estimated using the simplified method, which takes into account vesting and contractual term.
−Removed: The simplified method is being used to calculate expected term instead of historical experience due to a lack of relevant historical data resulting from changes in option vesting schedules and changes in the pool of employees receiving option grants.
−Removed: Due to a lack of sufficient trading history for the Company's common stock, expected stock price volatility is based on a sampling of comparable publicly traded companies.
−Removed: The Company believes a sample of comparable publicly traded companies most closely models the nature of the business and stock price volatility.
+Added: Because the Company’s Incentive Plan has not been in place for a sufficient amount of time as compared to the expected stock option terms nor does the Company have sufficient history with changes in option vesting schedules and changes in the pool of employees receiving option grants, the Company estimates the expected term using its historical experience of the time awards have been outstanding
+Added: as well as an expected time outstanding, which takes into account the award vesting and contractual term.
+Added: Additionally, due to a lack of sufficient trading history for the Company’s common stock, expected stock price volatility is based on a combination of a sampling of comparable publicly traded companies and the Company’s historical common stock price activity.
+Added: The Company believes the sample of comparable publicly traded companies used as inputs to its expected stock price volatility most closely models the nature of the business and stock price volatility.
The risk-free rates are based on the implied yield available on U.S.
1 unchanged sentence
Future annual dividends over the expected term are estimated to be nil .
−Removed: As of August 29, 2020 , $ 2.3 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.6 years .
−Removed: During the fifty-two week period ended August 29, 2020 , fifty-three week period ended August 31, 2019 , and fifty-two week period ended August 25, 2018 , the Company received $ 4.2 million , $ 0.7 million , and $ 0.1 million in cash from stock option exercises, respectively.
+Added: As of August 28, 2021, the Company had $ 5.1 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 2.0 years.
+Added: During the fifty-two weeks ended August 28, 2021, fifty-two weeks ended August 29, 2020, and fifty-three weeks ended August 31, 2019, the Company received $ 0.7 million, $ 4.2 million, and $ 0.7 million in cash from stock option exercises, respectively.
Restricted Stock Units
1 unchanged sentence
Restricted stock units under the Incentive Plan generally vest over three years .
−Removed: The following table summarizes restricted stock unit activity for the fifty-two week period ended August 29, 2020 :
−Removed: Weighted average
+Added: The following table summarizes restricted stock unit activity for the fifty-two weeks ended August 28, 2021:
+Added: Units Weighted average
grant-date fair value
Non-vested as of August 29, 2020 208,023 $ 22.82
+Added: Granted 428,752 25.00
+Added: Vested ( 89,745 ) 24.46
+Added: Forfeited ( 50,696 ) 21.27
Non-vested as of August 28, 2021 496,334 $ 24.56
1 unchanged sentence
Performance Stock Units
−Removed: During the fifty-two week period ended August 29, 2020 , the Board of Directors granted performance stock units under the Company's equity compensation plan.
−Removed: Performance stock units vest in a range between 0 % and 200 % based upon certain performance criteria over a period of three years .
+Added: During the fifty-two weeks ended August 28, 2021, the Board of Directors granted performance stock units under the Company’s equity compensation plan.
+Added: 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.
−Removed: The following table summarizes performance stock unit activity for the fifty-two week period ended August 29, 2020 :
−Removed: Weighted average
+Added: The following table summarizes performance stock unit activity for the fifty-two weeks ended August 28, 2021:
+Added: Units Weighted average
grant-date fair value
Non-vested as of August 29, 2020 295,256 $ 17.93
+Added: Granted 116,309 23.59
+Added: Forfeited ( 31,468 ) 22.17
Non-vested as of August 28, 2021 380,097 $ 19.31
1 unchanged sentence
Stock Appreciation Rights
−Removed: Stock appreciation rights ("SARs") permit the holder to participate in the appreciation of the Company's common stock price.
+Added: Stock appreciation rights (“SARs”) permit the holder to participate in the appreciation of the Company’s common stock price and are awarded to non-employee, consultants of the Company.
The Company’s SARs settle in shares of its common stock once the applicable vesting criteria has been met.
SARs cliff vest three years from the date of grant and must be exercised within ten years .
−Removed: The following table summarizes SARs activity for the fifty-two week period ended August 29, 2020 :
−Removed: Shares Underlying SARs
−Removed: Weighted average
−Removed: exercise price
−Removed: Weighted average remaining contractual life (in years)
+Added: The following table summarizes SARs activity for the fifty-two weeks ended August 28, 2021:
+Added: Shares Underlying SARs Weighted average
+Added: exercise price Weighted average remaining contractual life (in years)
Outstanding as of August 29, 2020 150,000 $ 24.20
+Added: Exercised — —
+Added: Forfeited — —
Outstanding as of August 28, 2021 150,000 $ 24.20 8.18
4 unchanged sentences
Tax Receivable Agreement
−Removed: During the fifty-three week period ended August 31, 2019, the Company entered into the Termination Agreement, pursuant to which, the Company paid $ 26.5 million to settle the TRA (the “Termination Payment”), which provided former stockholders of Atkins with payments for federal, state, local and non-U.S.
+Added: During the fifty-three weeks ended August 31, 2019, the Company entered into the Termination Agreement, pursuant to which, the Company paid $ 26.5 million to settle the TRA (the “Termination Payment”), which provided former stockholders of Atkins with payments for federal, state, local and non-U.S.
tax benefits deemed realized by the Company.
2 unchanged sentences
The TRA liability and subsequent settlement are discussed in Note 9, Income Taxes.
−Removed: Merger Agreement Working Capital Adjustment
−Removed: In the first quarter of fiscal 2018, pursuant to the terms of the Merger Agreement, Simply Good Foods paid a working capital adjustment of $ 1.8 million to the former owners of Atkins, which resulted in an increase to the previously recognized goodwill.
Segment and Customer Information
−Removed: 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.
+Added: Following the Quest Acquisition, 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:
4 unchanged sentences
and, (e) the nature of the regulatory environment.
−Removed: Reconciliations of the totals of reported segment revenue, profit or loss measurement, assets and other significant items reported by segment to the corresponding GAAP totals is not applicable to the Company as it only has one reportable segment.
+Added: Reconciliation of the totals of reported segment revenue, profit or loss measurement, assets and other significant items reported by segment to the corresponding GAAP totals is not applicable to the Company as it only has one reportable segment.
Additionally, revenues from transactions with external customers for each of Simply Good Foods’ 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 brand:
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: (In thousands) August 28, 2021 August 29, 2020 August 31, 2019
North America (1)
+Added: Atkins $ 506,860 $ 501,472 $ 498,571
+Added: 453,619 286,803 —
+Added: Total North America 960,479 788,275 498,571
International 45,134 28,366 25,187
+Added: Total $ 1,005,613 $ 816,641 $ 523,758
+Added: (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.
(2) Quest net sales are primarily in North America.
−Removed: The following is a summary long lived assets by geographic area:
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
+Added: The following is a summary of long lived assets by geographic area:
+Added: (In thousands) August 28, 2021 August 29, 2020
Long lived assets
North America (1)
+Added: $ 16,584 $ 11,841
International — 9
+Added: Total $ 16,584 $ 11,850
+Added: (1) The North America geographic area consists of long-lived assets substantially related to the United States and there is no individual foreign country in which more than 10% of the Company’s long-lived assets are located or that is otherwise deemed individually material.
Significant Customers
−Removed: As a result of the Acquisition of Quest, the Company's exposure to credit risk concentrated in one customer was reduced during 2020.
−Removed: Credit risk for the Company was concentrated in two customers who comprised more than 10% of the Company’s total sales for the fifty-two week period ended August 29, 2020 .
−Removed: For the fifty-three week period ended August 31, 2019 and the fifty-two week period ended August 25, 2018 , credit risk for the Company was concentrated in one customer who comprised more than 10% of the Company’s total sales.
−Removed: 52-Weeks Ended
−Removed: 53-Weeks Ended
−Removed: 52-Weeks Ended
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: August 25, 2018
+Added: As a result of the Quest Acquisition, the Company’s exposure to credit risk concentrated in one customer was reduced during 2020.
+Added: Credit risk for the Company was concentrated in two customers who each comprised more than 10% of the Company’s total sales for the fifty-two weeks ended August 28, 2021 and August 29, 2020.
+Added: For the fifty-three weeks ended August 31, 2019, credit risk for the Company was concentrated in one customer who comprised more than 10% of the Company’s total sales.
+Added: 52-Weeks Ended 52-Weeks Ended 53-Weeks Ended
+Added: August 28, 2021 August 29, 2020 August 31, 2019
+Added: Customer 1 31 % 34 % 44 %
+Added: Customer 2 12 % 10 % n/a
n/a - Not applicable as the customer was not significant during these fiscal years.
At August 28, 2021 and August 29, 2020, the following amounts of the Company’s accounts receivable, net were related to these significant customers for the periods in which the customers were significant:
−Removed: (In thousands)
−Removed: August 29, 2020
−Removed: August 31, 2019
−Removed: n/a - Not applicable as the customer was not significant as of this date.
+Added: (In thousands) August 28, 2021 August 29, 2020
+Added: Customer 1 $ 37,483 34 % $ 34,411 38 %
+Added: Customer 2 $ 27,962 25 % $ 12,345 14 %
No other customers of the Company accounted for more than 10% of sales during these periods.
1 unchanged sentence
Restructuring and Related Charges
−Removed: In May 2020, the Company announced certain restructuring activities in conjunction with the implementation of the Company’s future-state organization design, which creates a fully integrated organization with its completed Acquisition of Quest.
+Added: In May 2020, the Company announced certain restructuring activities in conjunction with the implementation of the Company’s future-state organization design, which created a fully integrated organization with its completed Quest Acquisition.
The new organization design became effective on August 31, 2020.
−Removed: These restructuring plans primarily include workforce reductions and changes in management structure.
+Added: These restructuring plans primarily include workforce reductions, changes in management structure, and the relocation of business activities from one location to another.
The one-time termination benefits and employee severance costs to be incurred in relation to these restructuring activities are accounted for in accordance with ASC Topic 420, Exit or Disposal Cost Obligations, and ASC Topic 712, Compensation-Nonretirement Postemployment Benefits, respectively.
1 unchanged sentence
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.
−Removed: For the fifty-two week period ended August 29, 2020 , the Company incurred $ 5.5 million of costs for these restructuring activities which have been included within General and administrative on the Consolidated Statements of Operations and Comprehensive Income.
−Removed: Overall, the Company expects to incur a total of approximately $ 8.1 million in restructuring costs, including the $ 5.5 million referenced above.
−Removed: The one-time termination benefits and employee severance costs are to be paid throughout fiscal 2021 and the first quarter of fiscal 2022.
−Removed: Changes to the restructuring liability during the fifty-two week period ended August 29, 2020 were as follows:
−Removed: (in thousands)
−Removed: Termination benefits and severance
−Removed: Restructuring Liability
+Added: Changes to the restructuring liability during the fifty-two weeks ended August 28, 2021 and August 29, 2020 were as follows:
+Added: (In thousands) Termination benefits and severance Other Restructuring liability
Balance as of August 31, 2019 $ — $ — $ —
+Added: Charges 4,139 1,388 5,527
Cash payments — ( 1,388 ) ( 1,388 )
−Removed: Non-cash settlements or adjustments
Balance as of August 29, 2020 $ 4,139 $ — $ 4,139
−Removed: Unaudited Quarterly Financial Data
−Removed: Summarized quarterly financial data:
−Removed: 52-Weeks Ended
−Removed: 13-Weeks Ended
−Removed: 13-Weeks Ended
−Removed: 13-Weeks Ended
−Removed: 13-Weeks Ended
−Removed: (In thousands, except per share amounts)
−Removed: August 29, 2020
−Removed: August 29, 2020
−Removed: February 29, 2020
−Removed: November 30, 2019
−Removed: Income from operations
−Removed: Earnings per share from net income:
−Removed: 53-Weeks Ended
−Removed: 14-Weeks Ended
−Removed: 13-Weeks Ended
−Removed: 13-Weeks Ended
−Removed: 13-Weeks Ended
−Removed: (In thousands, except per share amounts)
−Removed: August 31, 2019
−Removed: August 31, 2019
−Removed: February 23, 2019
−Removed: November 24, 2018
−Removed: Gross profit (1)
−Removed: Income from operations
−Removed: Earnings per share from net income:
−Removed: During the fifty-three weeks period ended August 31, 2019, certain reclassifications were made to previously reported amounts to conform to the current presentation.
−Removed: On the consolidated statement of operations, inbound freight previously included in Distribution, distribution center expenses previously included in General and administrative , and depreciation for equipment used in warehouse operations were reclassified to Cost of goods sold .
−Removed: Including these expenses in Cost of goods sold better aligned costs with the related revenue.
−Removed: As a result, the first three quarters of fiscal year 2019 have been adjusted on a retrospective basis to reflect the reclassification.
−Removed: For additional information on the change in accounting principle, see Note 2.
−Removed: Earnings per common share amounts are computed independently for each of the quarters presented.
−Removed: Therefore, the sum of the quarterly earnings per share amounts may not equal the quarterly earnings per share amounts or the annual earnings per share amounts due to rounding.
−Removed: Subsequent Events
−Removed: 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 Canadian-based management team who had been responsible for this brand prior to the sale transaction.
−Removed: In addition to purchasing these assets, the buyer assumed certain liabilities related to the SimplyProtein brand’s business.
−Removed: The transaction enables management to focus its full time and Company’s resources on its core Atkins® and Quest® branded businesses and other strategic initiatives.
+Added: Charges 3,458 342 3,800
+Added: Cash payments ( 6,746 ) ( 342 ) ( 7,088 )
+Added: Balance as of August 28, 2021 $ 851 $ — $ 851
+Added: In addition to the restructuring costs shown above, the Company incurred impairment charges of $ 0.7 million in the fifty-two weeks ended August 28, 2021 related to its operating lease right-of-use assets for leases in Toronto, Ontario and the Netherlands.
+Added: Additionally, the Company terminated the lease in Toronto, Ontario, which resulted in a gain on lease termination of $ 0.2 million in the fifty-two weeks ended August 28, 2021.
+Added: As a result, the Company incurred a total of $ 4.3 million and $ 5.5 million in restructuring and restructuring-related costs in fifty-two weeks ended August 28, 2021 and August 29, 2020, respectively.
+Added: The effect of these restructuring activities has been included within General and administrative on the Consolidated Statements of Operations and Comprehensive Income (Loss).
+Added: Since the restructuring activities were announced in May 2020, the Company has incurred aggregate restructuring and restructuring-related costs of $ 9.8 million.
+Added: Overall, the Company expects to incur a total of approximately $ 10.1 million in restructuring and restructuring-related costs, which are to be paid through the second quarter of fiscal year 2022.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
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.