What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-01-05 compared with 2021-07-08 · 147 added, 300 removed, 381 unchanged (54% of the section changed)

3 unchanged sentences

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

May 29, 2021 August 29, 2020

November 27, 2021 August 28, 2021

Current assets:

Cash and cash equivalents

$ 90,173 $ 95,847

Cash $ 35,447 $ 75,345

Accounts receivable, net

3 unchanged sentences

Other current assets

17,601 11,947

Total current assets

32 unchanged sentences

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

Common stock, $0.01 par value, 600,000,000 shares authorized, 95,875,778 and 95,751,845 shares issued at May 29, 2021 and August 29, 2020, respectively 959 958

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

Common stock, $0.01 par value, 600,000,000 shares authorized, 96,130,441 and 95,882,908 shares issued at November 27, 2021 and August 28, 2021, respectively 961 959

Treasury stock, 98,234 shares at cost at November 27, 2021 and August 28, 2021 ( 2,145 ) ( 2,145 )

Additional paid-in-capital

11 unchanged sentences

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

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

Thirteen Weeks Ended

November 27, 2021 November 28, 2020

Net sales $ 281,265 $ 231,152

5 unchanged sentences

Depreciation and amortization 4,320 4,244

Business transaction costs — 47 — 26,900

Total operating expenses 58,549 54,854

4 unchanged sentences

(Loss) gain in fair value change of warrant liability ( 17,317 ) 20,453

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

(Loss) gain on foreign currency transactions ( 353 ) 9

17 unchanged sentences

(Unaudited, dollars in thousands)

Thirty-Nine Weeks Ended

May 29, 2021 May 30, 2020

Thirteen Weeks Ended

November 27, 2021 November 28, 2020

Operating activities

$ 21,152 $ 42,953

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

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

Depreciation and amortization 4,741 4,513

2 unchanged sentences

Loss (gain) in fair value change of warrant liability 17,317 ( 20,453 )

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

Estimated credit losses 15 —

Unrealized loss on foreign currency transactions 353 9

Deferred income taxes 6,687 4,400

3 unchanged sentences

Other ( 27 ) 402

Changes in operating assets and liabilities, net of acquisition:

Changes in operating assets and liabilities:

Accounts receivable, net ( 13,993 ) ( 8,604 )

6 unchanged sentences

Other assets and liabilities ( 1,002 ) 1,227

Net cash provided by operating activities

Net cash (used in) provided by operating activities

( 7,329 ) 15,197

2 unchanged sentences

Issuance of note receivable ( 1,500 ) —

Acquisition of business, net of cash acquired — ( 982,084 )

Proceeds from sale of business — 5,800

Investments in intangible assets ( 114 ) ( 206 )

Net cash provided by (used in) investing activities

Investments in intangible and other assets ( 186 ) ( 114 )

Net cash (used in) provided by investing activities

( 4,377 ) 5,593

1 unchanged sentence

Proceeds from option exercises 274 157

Tax payments related to issuance of restricted stock units ( 320 ) ( 84 )

Tax payments related to issuance of restricted stock units and performance stock units ( 3,188 ) ( 201 )

Payments on finance lease obligations ( 78 ) ( 78 )

Principal payments of long-term debt ( 25,000 ) ( 25,000 )

Proceeds from issuance of common stock — 352,542

Equity issuance costs — ( 3,323 )

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

Proceeds from Revolving Credit Facility — 25,000

Deferred financing costs — ( 8,208 )

Net cash (used in) provided by financing activities

Net cash used in financing activities

( 27,992 ) ( 25,122 )

5 unchanged sentences

$ 35,447 $ 91,476

Thirty-Nine Weeks Ended

May 29, 2021 May 30, 2020

Thirteen Weeks Ended

November 27, 2021 November 28, 2020

Supplemental disclosures of cash flow information

5 unchanged sentences

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

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

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

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

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

Operating lease right-of-use assets exchanged for operating lease liabilities $ 5,551 $ 306

See accompanying notes to the unaudited condensed consolidated financial statements.

8 unchanged sentences

Foreign currency translation adjustments — — — — — — ( 40 ) ( 40 )

Shares issued upon vesting of restricted stock units 53,908 — — — ( 201 ) — — ( 201 )

Shares issued upon vesting of restricted stock units and performance stock units 227,729 2 — — ( 3,190 ) — — ( 3,188 )

Exercise of options to purchase common stock 19,804 — — — 274 — — 274

Balance at November 27, 2021 96,130,441 $ 961 98,234 $ ( 2,145 ) $ 1,084,690 $ 126,959 $ ( 858 ) $ 1,209,607

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

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

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

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

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

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

Net income — — — — — 5,895 — 5,895

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

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

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

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

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

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

1 unchanged sentence

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

Net loss — — — — — 8,515 — 8,515

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

Public equity offering 13,379,205 134 — — 349,085 — — 349,219

Shares issued upon vesting of restricted stock units 46,911 — — — ( 70 ) — — ( 70 )

Exercise of options to purchase common stock 17,372 — — — 208 — — 208

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

Net income — — — — — 42,953 — 42,953

3 unchanged sentences

Exercise of options to purchase common stock 13,118 — — — 157 — — 157

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

Net income — — — — — 48,112 — 48,112

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

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

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

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

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

See accompanying notes to the unaudited condensed consolidated financial statements.

4 unchanged sentences

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

The 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:

Atkins® for those following a low-carb lifestyle;

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.

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.

Simply Good Foods is poised to expand its wellness platform through innovation and organic growth along with acquisition opportunities in the nutritional snacking space.

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:

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.

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

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

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

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

The results reported in these unaudited interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire fiscal year and should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended August 28, 2021, included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the SEC on October 26, 2021.

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

government approved vaccines and the easing of movement restrictions.

This uncertainty stems from the potential for, among other things, (i) the possibility for mutations of COVID-19 to result in increased rates of reported cases for which currently approved vaccines are not effective, (ii) unexpected supply chain disruptions, (iii) changes to customer operations, (iv) reversal in recently improving consumer purchasing and consumption behavior, and (v) the closure of customer establishments.

government approved vaccines, the availability of booster inoculations and the easing of movement restrictions relative to the onset of COVID-19.

This uncertainty stems from the potential for, among other things, (i) the rise of COVID-19 mutations that have resulted in increased rates of reported cases for which currently approved vaccines are or may not be as 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 or reduced access to customer establishments.

Summary of Significant Accounting Policies

Restatement of Previously Issued Financial Statements

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

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

Contracts in Entity’s Own Equity.

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

Refer to Note 2, Summary of Significant Accounting Policies , to the consolidated financial statements included in the Annual Report for a description of significant accounting policies.

1 unchanged sentence

Recently Issued Accounting Pronouncements Not Yet Adopted

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

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

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

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

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

In March 2020, the FASB issued ASU 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.

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

The amendments 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.

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

The Company will continue to monitor the effects of rate reform, if any, on any new or amended contracts through December 31, 2022.

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

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

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

The amendments of this ASU should be applied retrospectively.

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

Recently Adopted Accounting Pronouncements

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.

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

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

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

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

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

Business Combination

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

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

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

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.

The Acquisition of Quest was funded by the Company 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.

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.

For the thirty-nine weeks ended May 30, 2020, Business transaction costs within the Condensed Consolidated Statements of Operations and Comprehensive Income were $ 26.9 million, which included $ 14.5 million of transaction advisory fees related to the Acquisition of Quest, $ 3.2 million of banker commitment fees, $ 6.1 million of non-deferrable debt issuance costs related to the incremental term loan, and $ 3.1 million of other costs, including legal, due diligence, and accounting fees.

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

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

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

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

All transaction advisory fees relating to the Acquisition of Quest were approved by the Company’s Audit Committee.

The following table sets forth the final purchase price allocation of the Acquisition of Quest to the estimated fair value of the net assets acquired at the date of acquisition, in thousands:

Assets acquired:

Cash and cash equivalents $ 4,745

Accounts receivable, net 25,359

Inventories 44,032

Prepaid assets 1,214

Other current assets 3,812

Property and equipment, net (1)

Intangible assets, net (2)

Other long-term assets 20,997

Liabilities assumed:

Accounts payable 25,200

Other current liabilities 11,237

Deferred income taxes (3)

Other long-term liabilities 18,891

Total identifiable net assets 912,295

Total assets acquired and liabilities assumed $ 986,820

(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.

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

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

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

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

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

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

The fair values of the intangible assets were estimated using inputs primarily from the 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.

The significant assumptions used in estimating the fair value of the intangible assets include the estimated life the asset will contribute to cash flows, profitability, and the estimated discount rate.

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

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

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

Amounts recorded for goodwill resulting in a tax basis step-up are generally expected to be deductible for tax purposes.

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.

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

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

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.

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

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

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:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

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

Net sales (1)

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

(1) Net sales for the thirteen and thirty-nine weeks ended May 29, 2021 excludes immaterial international net sales.

Unaudited Pro Forma Financial Information

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.

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

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

Revenue $ 215,101 $ 662,758

Gross profit $ 88,626 $ 267,293

Net income $ 47,040 $ 128,689

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

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

This ASU was 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.

The Company adopted this ASU as of the first day of fiscal year 2022.

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

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which provided 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.

The Company adopted this ASU as of the first day of fiscal year 2022 on a prospective basis.

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

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.

Revenue Recognition

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.

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

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

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

Thirteen Weeks Ended

(In thousands) November 27, 2021 November 28, 2020

North America (1)

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

The North America geographic area includes the divested SimplyProtein® brand.

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

Charges related to credit loss on accounts receivables from transactions with external customers were approximately $ 0.6 million and $ 0.7 million for the thirteen and thirty-nine weeks ended May 29, 2021, respectively, and were approximately $ 0.1 million and

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

As of May 29, 2021 and August 29, 2020, the allowances for doubtful accounts related to these accounts receivable were $ 1.2 million and $ 0.5 million, respectively.

Charges related to credit loss on accounts receivables from transactions with external customers were immaterial for the thirteen weeks ended November 27, 2021 and approximately $ 0.1 million for the thirteen weeks ended November 28, 2020.

As of November 27, 2021 and August 28, 2021, the allowances for doubtful accounts related to these accounts receivable were $ 1.2 million and $ 1.1 million, respectively.

Goodwill and Intangibles

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

(in thousands) Goodwill

Balance as of August 29, 2020 $ 544,774

Acquisition of business, measurement period adjustment 1,178

Sale of business ( 2,818 )

Balance as of May 29, 2021 $ 543,134

The change in Goodwill attributed to the acquisition of a business during the thirty-nine weeks ended May 29, 2021 was the result of measurement period adjustments made to finalize the acquisition method of accounting for the Acquisition of Quest as described in Note 3.

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

In addition to purchasing these assets, the buyer assumed certain liabilities related to the SimplyProtein brand’s business.

There was no gain or loss recognized as a result of the SimplyProtein Sale.

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

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

As of November 27, 2021 and August 28, 2021, Goodwill in the Condensed Consolidated Balance Sheets was $ 543.1 million.

There were no impairment charges related to goodwill during the thirteen weeks ended November 27, 2021 or since the inception of the Company.

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

November 27, 2021

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

3 unchanged sentences

Customer relationships 15 years 174,000 33,003 140,997

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

Licensing agreements 13 years 22,000 7,144 14,856

Proprietary recipes and formulas 7 years 7,000 4,381 2,619

Software and website development costs 3 - 5 years 5,863 3,267 2,596

Intangible assets in progress 3 - 5 years 55 — 55

$ 1,182,863 $ 47,795 $ 1,135,068

5 unchanged sentences

Customer relationships 15 years 174,000 30,103 143,897

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

Licensing agreements 13 years 22,000 6,664 15,336

Proprietary recipes and formulas 7 years 7,000 4,131 2,869

Software and website development costs 3 - 5 years 5,560 2,924 2,636

Intangible assets in progress 3 - 5 years 303 — 303

$ 1,182,863 $ 43,822 $ 1,139,041

Changes in Intangible assets, net during the thirty-nine weeks ended May 29, 2021 were primarily related to the SimplyProtein Sale and recurring amortization expense.

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

Amortization expense related to intangible assets

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

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

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

Changes in Intangible assets, net during the thirteen weeks ended November 27, 2021 were primarily related to recurring amortization expense.

Amortization expense related to intangible assets was $ 4.0 million and $ 3.9 million for the thirteen weeks ended November 27, 2021 and November 28, 2020, respectively.

There were no impairment charges related to intangible assets during the thirteen weeks ended November 27, 2021 and November 28, 2020.

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

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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”).

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.

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

The 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.

Substantially concurrent with the consummation of the business combination between Conyers Park Acquisition Corp.

and NCP-ATK Holdings, Inc.

on July 7, 2017, the full $ 200.0 million of the Term Facility (the “Term Loan”) was drawn.

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

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

The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement.

Simply Good Foods USA, Inc., is the administrative borrower and certain other subsidiary holding companies are co-borrowers under the Credit Agreement.

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.

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.

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.

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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.

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.

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 %.

The Incremental Facility Amendment was executed to partially finance the Acquisition of Quest.

The Incremental Facility Amendment was executed to partially finance the acquisition of Quest Nutrition, LLC on November 7, 2019.

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

Effective as of December 16, 2021, the Company entered into a third amendment (the “Extension Amendment”) to the Credit Agreement.

The Extension Amendment provides for an extension of the stated maturity date of the Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from July 7, 2022 to the earlier of (i) 91 days prior to the maturity date of the Initial Term Loans on July 7, 2024 and (ii) December 16, 2026.

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

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

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.

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

The Company was in compliance with all financial covenants as of November 27, 2021 and August 28, 2021, respectively.

Long-term debt consists of the following:

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

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

(In thousands) November 27, 2021 August 28, 2021

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

431,500 456,500

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

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

Deferred financing fees 4,814 5,636

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Long-term debt, net of deferred financing fees $ 427,017 $ 451,269

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended May 29, 2021.

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

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

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

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

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

As of November 27, 2021, the Company had letters of credit in the amount of $ 3.5 million outstanding.

These letters of credit offset against the $ 75.0 million 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 November 27, 2021.

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

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

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

As of November 27, 2021 and August 28, 2021, the book value of the Company’s debt approximated fair value.

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

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These valuations require significant judgment.

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

Level 3 Measurements

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

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

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

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

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

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

Significant judgment is required in determining the expected volatility, historically the key assumption, of the Private Warrants.

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

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

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

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

May 29, 2021 May 30, 2020

There were 6,700,000 Private Warrants outstanding as of November 27, 2021 and November 28, 2020.

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

November 27, 2021 November 28, 2020

Exercise Price $ 11.50 $ 11.50

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

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

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

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

The adjustments for the thirteen weeks ended November 27, 2021 and November 28, 2020 were a loss of $ 17.3 million and a gain of $ 20.5 million, respectively.

The adjustments resulted in a total warrant liability at November 27, 2021 and November 28, 2020 of $ 177.2 million and $ 73.2 million, respectively.

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

Thirty-Nine Weeks Ended

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

Thirteen Weeks Ended

(In thousands) November 27, 2021 November 28, 2020

Income before income taxes $ 33,975 $ 51,327

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Effective tax rate 37.7 % 16.3 %

The effective tax rate for the thirty-nine weeks ended May 29, 2021 was 50.6 % greater than the effective tax rate for the thirty-nine weeks ended May 30, 2020, which was primarily driven by the non-cash change in the fair value of the warrant liability and other permanent differences.

The effective tax rate for the thirteen weeks ended November 27, 2021 was 21.4 % greater than the effective tax rate for the thirteen weeks ended November 28, 2020, which was primarily driven by the non-cash change in the fair value of the warrant liability and other permanent differences.

The components of lease expense were as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

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

Thirteen Weeks Ended

(In thousands) Statements of Operations Caption November 27, 2021 November 28, 2020

Operating lease cost:

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Total operating lease cost 2,908 1,896

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

Finance lease cost:

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

In conjunction with the Company’s restructuring activities as discussed in Note 14, the Company incurred impairment charges of $ 0.7 million in the thirty-nine weeks ended May 29, 2021 related to its operating lease right-of-use assets for leases in Toronto, Ontario and the Netherlands.

Additionally, the Company terminated the lease in Toronto, Ontario, which resulted in a gain on lease termination of $ 0.2 million in the thirty-nine weeks ended May 29, 2021.

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

In conjunction with the Company’s restructuring activities as discussed in Note 13, Restructuring and Related Charges, the Company recorded an immaterial gain on lease termination related to its lease in the Netherlands in the thirteen weeks ended November 27, 2021 and a $ 0.4 million impairment charge related to its operating lease right-of-use asset for its lease in Toronto, Ontario in the thirteen weeks ended November 28, 2020.

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

Refer to Note 13, Restructuring and Related Charges, for additional information regarding restructuring activities.

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

(In thousands) Balance Sheets Caption May 29, 2021 August 29, 2020

The right-of-use assets and corresponding liabilities related to both operating and finance leases are as follows:

(In thousands) Balance Sheets Caption November 27, 2021 August 28, 2021

Operating lease right-of-use assets Other long-term assets $ 50,116 $ 46,197

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Total lease liabilities $ 53,691 $ 49,370

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

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

(In thousands) Operating Leases Finance Leases

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2024 9,212 145

2024 4,232 145

Thereafter 26,063 —

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Present value of lease liabilities $ 53,071 $ 620

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

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

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

May 29, 2021 August 29, 2020

November 27, 2021 August 28, 2021

Weighted-average remaining lease term (in years)

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Supplemental and other information related to leases was as follows:

Thirty-Nine Weeks Ended

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

Thirteen Weeks Ended

(In thousands) November 27, 2021 November 28, 2020

Cash paid for amounts included in the measurement of lease liabilities

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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.

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

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

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

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

As of November 27, 2021 and August 28, 2021, the Company had $ 0.7 million reserved for potential settlements.

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

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

Based on the terms of the contracts in place and achievement of performance conditions as of May 29, 2021, the Company will be required to make payments of $ 2.8 million over the next year.

Based on the terms of the contracts in place and achievement of performance conditions as of November 27, 2021, the Company will be required to make payments of $ 2.1 million over the next year.

Stockholders’ Equity

Public Equity Offering

On October 9, 2019, the Company completed an underwritten public offering of 13,379,205 shares of common stock at a price to the public of $ 26.35 per share.

The Company paid underwriting discounts and commissions of $ 0.19 per share resulting in net proceeds to the Company of $ 26.16 per share, or approximately $ 350.0 million (the “Offering”).

The Company paid $ 0.8 million for legal, accounting and registrations fees related to the Offering.

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

Warrants to Purchase Common Stock

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

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

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

All other features of the warrants were unchanged.

As of November 27, 2021, the Company has outstanding liability-classified Private Warrants that allow holders to purchase 6,700,000 shares of the Company’s common stock.

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

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

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

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

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

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

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

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

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

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

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

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

As of May 29, 2021, the Private Warrants to purchase 6,700,000 shares of the Company’s common stock remain outstanding, have not been transferred by Conyers Park Sponsor, LLC, a related party, and remain liability-classified.

As discussed in Note 7, the liability-classified warrants are remeasured on a recurring basis, primarily based on observable market data while the related theoretical private warrant volatility assumption within the Black-Scholes model represents a Level 3 measurement within the fair value measurement hierarchy.

The warrants expire on July 7, 2022 or earlier upon redemption or liquidation, as applicable.

As discussed in Note 6, 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.

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Under the stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions.

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

shares over any specific period of time.

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

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

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

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

During the thirteen weeks ended November 27, 2021 and November 28, 2020, the Company did not repurchase any shares of common stock.

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

Earnings Per Share

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

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

As of November 27, 2021, the Company has outstanding liability-classified Private Warrants to purchase 6,700,000 shares of the Company’s common stock.

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

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

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

Thirteen Weeks Ended

(In thousands, except per share data) November 27, 2021 November 28, 2020

Basic earnings per share computation:

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

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

Net income available to common stockholders $ 21,152 $ 42,953

Weighted average common shares outstanding - basic 95,856,845 95,538,111

Basic earnings per share from net income $ 0.22 $ 0.45

Diluted earnings per share computation:

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

Net income available for common stockholders $ 21,152 $ 42,953

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

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Diluted earnings per share from net income $ 0.22 $ 0.23

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

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

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

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

Diluted earnings per share calculations for the thirteen weeks ended May 30, 2020 excluded 0.1 million non-vested shares that would have been anti-dilutive.

The diluted earnings per share calculation for the thirteen weeks ended November 27, 2021 excluded 4.6 million shares, issuable upon exercise of Private Warrants, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen weeks ended November 27, 2021 and November 28, 2020 excluded 0.2 million and 0.7 million shares of common stock issuable upon exercise of stock options, respectively, that would have been anti-dilutive.

An immaterial number of non-vested restricted stock units that would have been anti-dilutive were excluded from diluted earnings per share calculations for the thirteen weeks ended November 27, 2021 and November 28, 2020.

Omnibus Incentive Plan

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

The Company recorded stock-based compensation expense of $ 2.2 million and $ 2.2 million in the thirteen weeks ended May 29, 2021 and May 30, 2020, respectively, and $ 5.8 million and $ 5.9 million in the thirty-nine weeks ended May 29, 2021 and May 30, 2020, respectively.

The Company recorded stock-based compensation expense of $ 2.6 million and $ 1.1 million in the thirteen weeks ended November 27, 2021 and November 28, 2020, respectively.

Stock Options

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

The following table summarizes stock option activity for the thirteen weeks ended November 27, 2021:

Shares underlying options Weighted average

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Forfeited ( 2,300 ) 19.89

Outstanding as of May 29, 2021 2,793,163 $ 14.86 6.85

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

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

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

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

Outstanding as of November 27, 2021 3,109,538 $ 17.42 6.73

Vested and expected to vest as of November 27, 2021 3,109,538 $ 17.42 6.73

Exercisable as of November 27, 2021 2,494,944 $ 14.13 6.10

As of November 27, 2021, the Company had $ 6.5 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 2.3 years.

During the thirteen weeks ended November 27, 2021 and November 28, 2020, the Company received $ 0.3 million and $ 0.2 million in cash from stock option exercises, respectively.

Restricted Stock Units

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

Restricted Stock Units Weighted average

The following table summarizes restricted stock unit activity for the thirteen weeks ended November 27, 2021:

Units Weighted average

grant-date fair value

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Forfeited ( 10,675 ) 25.72

Non-vested as of May 29, 2021 503,294 $ 24.31

As of May 29, 2021, the Company had $ 9.8 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 2.1 years.

Non-vested as of November 27, 2021 475,623 $ 29.34

As of November 27, 2021, the Company had $ 12.1 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 2.0 years.

Performance Stock Units

During the thirty-nine weeks ended May 29, 2021, the Board of Directors granted performance stock units under the Company’s equity compensation plan.

During the thirteen weeks ended November 27, 2021, the Board of Directors granted performance stock units under the Company’s equity compensation plan.

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

Performance stock units were valued using a Monte Carlo simulation.

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

Performance stock units Weighted average

The following table summarizes performance stock unit activity for the thirteen weeks ended November 27, 2021:

Units Weighted average

grant-date fair value

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Granted 50,212 63.42

Vested ( 166,688 ) 11.93

Forfeited ( 6,350 ) 16.48

Non-vested as of May 29, 2021 380,877 $ 19.31

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

Non-vested as of November 27, 2021 257,271 $ 32.77

As of November 27, 2021, the Company had $ 5.7 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.8 years.

Stock Appreciation Rights

Stock appreciation rights (“SARs”) permit the holder to participate in the appreciation of the Company’s common stock price.

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 .

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

The following table summarizes SARs activity for the thirteen weeks ended November 27, 2021:

Shares underlying SARs Weighted average

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Forfeited — —

Outstanding as of May 29, 2021 150,000 $ 24.20 8.43

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

Exercisable as of May 29, 2021 — $ — 0.00

As of May 29, 2021, the Company had $ 0.2 million of total unrecognized compensation cost related to its SARs that will be recognized over a weighted average period of 1.4 years.

Outstanding as of November 27, 2021 150,000 $ 24.20 7.93

Vested and expected to vest as of November 27, 2021 150,000 $ 24.20 7.93

Exercisable as of November 27, 2021 — $ — 0.00

As of November 27, 2021, the Company had $ 0.1 million of total unrecognized compensation cost related to its SARs that will be recognized over a weighted average period of 0.9 years.

Restructuring and Related Charges

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 Acquisition of Quest.

The new organization design became effective on August 31, 2020.

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

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

Changes to the restructuring liability during the thirteen weeks ended November 27, 2021 were as follows:

(In thousands) Termination benefits and severance Other Restructuring liability

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Cash payments ( 748 ) ( 28 ) ( 776 )

Balance as of May 29, 2021 $ 742 $ — $ 742

In addition to the restructuring costs shown above, the Company incurred impairment charges of $ 0.7 million in the thirty-nine weeks ended May 29, 2021 related to its operating lease right-of-use assets for leases in Toronto, Ontario and the Netherlands.

Additionally, the Company terminated the lease in Toronto, Ontario, which resulted in a gain on lease termination of $ 0.2 million in the thirty-nine weeks ended May 29, 2021.

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

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

Balance as of November 27, 2021 $ 147 $ — $ 147

In addition to the restructuring costs shown above, the Company recorded an immaterial gain on lease termination related to its lease in the Netherlands in the thirteen weeks ended November 27, 2021.

As a result, the Company’s total restructuring and restructuring-related costs incurred in the thirteen weeks ended November 27, 2021 were immaterial.

The Company incurred a total of $ 2.5 million in restructuring and restructuring-related costs in the thirteen weeks ended November 28, 2020.

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

Since the restructuring activities were announced in May 2020, the Company has incurred aggregate restructuring and restructuring-related costs of $ 9.9 million.

Overall, the Company expects to incur a total of approximately $ 9.9 million in restructuring and restructuring-related costs, which are to be paid throughout fiscal 2021 and the first quarter of fiscal 2022.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements