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You should carefully consider the risks described below before making an investment decision.
−Removed: Our business, prospects, financial condition or operating results could be harmed by any of these risks, and other risks not currently known to us or that we currently consider immaterial.
+Added: Our business, prospects, financial condition or operating results could be harmed by any of these risks, and other risks not currently known to us or that we currently consider immaterial, which could become material.
The trading price of our securities could decline due to any of these risks, and, as a result, you may lose all or part of your investment.
Risks Related to our Business
+Added: Changing consumer preferences, habits, perceptions of certain nutritional snacking products and discretionary spending may negatively affect our brand loyalty, purchase frequency rate and net sales, and materially and adversely affect our business, financial condition and results of operations.
+Added: We focus on products we believe have positive effects on health and compete in a market that relies on innovation and evolving consumer preferences.
+Added: The packaged food industry in general, and the nutritional snacking industry in particular, is subject to changing consumer trends, demands and preferences and emerging nutrition science is constantly evolving.
+Added: Products, ingredients, or methods of eating once considered healthy may become disfavored by consumers, scientifically disproven or no longer be perceived as healthy.
+Added: Trends within the food industry change over time and our failure to anticipate, identify or react to changes in these trends could, among other things, lead to reduced consumer demand, shelf or retail space and price reductions, and could materially and adversely affect our business, financial condition and results of operations.
+Added: Additionally, certain ingredients used in our products may become negatively perceived by consumers for a variety of reasons, resulting in reformulation of existing products to remove such ingredients, which may negatively affect the taste or other qualities of our products.
+Added: Factors that may affect consumer perception of healthy products include dietary trends and attention to different nutritional aspects of foods, concerns regarding the health effects of specific ingredients and nutrients, trends away from specific ingredients and processing in products and increasing awareness of the environmental and social effects of product production.
+Added: Consumer perceptions of the nutritional profile of our products and related eating practices may shift.
+Added: Consumers may also no longer perceive products with fewer carbohydrates, higher levels of protein, higher levels of fat, or additional fiber or which contain alternative sweeteners as healthy or needed to achieve personal weight management, wellness, or fitness goals.
+Added: Adverse messaging in the media, including social media, or within certain influencer communities, relating to the marketing of nutritional snacking products or weight-related dietary programs may adversely affect the overall consumer impression of certain of our products, programs or brands, which may materially and adversely affect our business.
+Added: Approaches regarding nutritional approaches and healthy lifestyles are the subject of numerous studies and publications, often with differentiating views and opinions, some of which may be adverse to us.
+Added: Conflicting scientific information on what constitutes good nutrition, or the benefits of certain dietary approaches may also materially and adversely affect our business.
+Added: Our success depends, in part, on our ability to advance sound nutrition research and to anticipate the tastes and dietary habits of consumers and other consumer trends and to offer products with marketing messaging that appeal to their needs and preferences on a timely and affordable basis.
+Added: A change in consumer discretionary spending, due to inflationary pressures, economic downturn or other reasons may also materially and adversely affect our sales, and our business, financial condition and results of operations.
Our operations are dependent on a global supply chain and effects of supply chain constraints and inflationary pressure on us or our suppliers could adversely affect our operating results.
−Removed: Our operations and the operations of our contract manufacturers have been, and may continue to be, affected by supply chain constraints and packaging, ingredient and labor shortages, resulting in increased costs caused, in part, by the COVID-19 pandemic, the uncertain economic environment, and macroeconomic and geopolitical events and trends.
+Added: Our operations and the operations of our contract manufacturers have been, and may continue to be, affected by supply chain constraints and packaging, ingredient and labor challenges resulting in increased costs.
+Added: The continuing uncertain economic environment, and macroeconomic and geopolitical events and trends may increase these risks.
In addition, current or future governmental policies may increase the risk of further inflation, which could further increase the costs of ingredients, packaging and finished goods for our business.
Similarly, if costs of goods and labor continue to increase, our suppliers may continue to seek price increases from us.
−Removed: If we cannot mitigate the effect of supply chain constraints and inflationary pressure through price increases or cost saving measures, our results of operations and financial condition could be negatively affected.
+Added: These circumstances have resulted in negative effects on our results of operations.
+Added: If we cannot mitigate the effect of supply chain constraints and inflationary pressure through price increases or cost saving measures, our results of operations and financial condition could be further negatively affected.
Even if we can raise the prices of our products, consumers might react negatively to these price increases, which could have a material adverse effect on, among other things, our brands, reputation, and sales.
+Added: During fiscal year 2023, our price increases may have caused some consumers to purchase fewer of our products than they have in the past.
If our competitors maintain or lower their prices while we raise prices, we may lose customers or the purchase frequency of our products may slow, which would both adversely affect sales.
Our profitability may be negatively affected by higher costs, inadequate pricing or a reduction in purchase frequencies of our products, which may negatively affect gross margins and sales.
−Removed: Even though we are working to alleviate supply chain constraints through various measures, we cannot predict the effect of these constraints on the timing of revenue and operating costs of our business in the near future.
−Removed: Supply chain challenges and supply chain constraints relating to ingredients, freight and packaging, including cost inflation, have negatively affected our gross margins and profitability during fiscal year 2022 and may continue to have a negative effect on our future operating results and profitability.
−Removed: In addition, p rolonged unfavorable economic conditions, including because of COVID-19 or similar outbreaks, endemics or pandemics, and any resulting recession or slowed economic growth, may have an adverse effect on our sales and profitability.
+Added: Even though we continue to work to alleviate supply chain constraints through various measures, we cannot predict the effect of these constraints on the timing of revenue and operating costs of our business in the near future.
+Added: Supply chain challenges and supply chain constraints relating to ingredients, freight and packaging, including cost
+Added: inflation, have negatively affected our gross margins and profitability during fiscal year 2023 and may continue to have a negative effect on our future operating results and profitability.
+Added: In addition, p rolonged unfavorable economic conditions, including because of recession or slowed economic growth, or public health outbreaks, endemics or pandemics, may have an adverse effect on our sales and profitability.
If we cannot maintain or increase prices of our products to cover elevated input costs, our margins may decrease.
We rely, in part, on price increases to offset cost increases and maintain or improve the profitability of our business.
−Removed: Our ability to maintain prices or effectively implement price increases, including our price increases effective in fiscal year 2022, may be affected by several factors, including competition, effectiveness of our marketing programs, the continuing strength of our brands, market demand and general economic conditions, including broader inflationary pressures.
+Added: Our ability to maintain prices or effectively implement price increases, may be affected by several factors, including competition, effectiveness of our marketing programs, the continuing strength of our brands, market demand and general economic conditions, including broader inflationary pressures.
During challenging economic times, consumers may be less willing or able to pay a price premium for our branded products and may shift purchases to lower-priced or other value offerings, making it more difficult for us to maintain prices and/or effectively implement price increases.
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If we cannot maintain or increase prices for our products or must increase trade and promotional activity, our margins may be adversely affected.
−Removed: For more information on the implementation of our price increases and the effects of supply chain cost increases on our profitability during fiscal year 2022, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
−Removed: Furthermore, price increases generally result in volume losses, as consumers tend to purchase fewer units at higher price points.
+Added: For more information on the effects of supply chain cost increases on our profitability during fiscal year 2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
+Added: Furthermore, price increases generally cause volume losses, as consumers tend to purchase fewer units at higher price points.
If such losses are greater than expected or if we lose distribution due to price increases, our business, financial condition and results of operations may be materially and adversely affected.
−Removed: Pandemics, epidemics or disease outbreaks, such as the novel coronavirus (“COVID-19”), have in the past and may in the future disrupt our business, including, among other things, consumption and trade patterns, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations.
−Removed: The actual or perceived effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as COVID-19, could negatively affect our operations, liquidity, financial condition and results of operations.
−Removed: The COVID-19 pandemic situation continues to remain dynamic and subject to rapid and possibly material change, including but not limited to changes that may materially affect the operations of our customers and supply chain partners in the future, which ultimately could cause material negative effects on our business and results of operations.
−Removed: For example, the operations of several of our contract manufacturers were affected by the COVID-19 pandemic’s effect on the availability of labor.
−Removed: Pandemics, epidemics or disease outbreaks may affect demand for our products because quarantines or other government restrictions on movement may cause erratic consumer purchase behavior.
−Removed: Our business experienced these effects during fiscal year 2022 as described in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K Governmental or societal impositions of restrictions on public gatherings, especially if prolonged, may have adverse effects on consumption rates and in-person traffic to retail stores and, in turn, our business.
−Removed: Even the perceived risk of infection or health risk may adversely affect traffic to our store-based retail customers and, in turn, our business, liquidity, financial condition and results of operations, particularly if any mobility restrictions are in place for significant time.
−Removed: The spread of pandemics, epidemics or disease outbreaks such as COVID-19 may also disrupt our third-party business partners’ ability to meet their obligations to us, which may negatively affect our operations.
−Removed: These third parties include those who supply our ingredients, packaging, and other necessary operating materials, contract manufacturers, distributors, and logistics and transportation services providers.
−Removed: For example, the operations of several of our contract manufacturers were affected by the COVID-19 pandemic’s effect on the availability of labor.
−Removed: Ports and other channels of entry may be closed or operate at only a portion of capacity, as workers may be prohibited or otherwise unable to report to work and means of transporting products within regions or countries may be limited for the same reason.
−Removed: Because of the COVID-19 pandemic, transport restrictions have been put in place and global supply was and may become again in the future constrained, each of which may cause and have caused price increases or shortages of certain ingredients and raw materials used in our products.
−Removed: In addition we may experience disruptions to our operations.
−Removed: Further, our contract manufacturers’ ability to manufacture our products was, and may again in the future be, impaired by disruption to their employee staffing, procurement, manufacturing, or warehousing capabilities because of COVID-19 or similar outbreaks.
−Removed: Our results of operations depend on, among other things, our ability to maintain and increase sales volume with our existing customers, to attract new consumers and to provide products that appeal to consumers at prices they are willing and able to pay.
−Removed: Our ability to implement our innovation, advertising, display and promotion activities designed to maintain and increase our sales volumes on a timely basis may be negatively affected because of modifications to retailer shelf reset timing or retailer pullback on in-store display and promotional activities during the COVID-19 pandemic or similar situations.
−Removed: Retailers may also alter their normal inventory receiving and product restocking practices during pandemics, epidemics or disease outbreaks such as COVID-19, which may negatively affect our business.
−Removed: Workforce limitations and travel restrictions resulting from pandemics, epidemics or disease outbreaks such as COVID-19 and related government actions may affect many aspects of our business.
−Removed: If a significant percentage of our workforce cannot work or we cannot visit our contract manufacturers’ locations, including because of illness, travel or government restrictions related to pandemics or disease outbreaks, our operations may be negatively affected.
−Removed: In addition, pandemics or disease outbreaks could cause a widespread health crisis that could adversely affect the economies and financial markets of many countries where we offer products, resulting in an economic downturn that could affect customers’ and consumers’ demand for our products.
−Removed: Adverse and uncertain economic conditions, such as decreases in per capita income and level of disposable income, increased unemployment or a decline in consumer confidence because of the COVID-19 pandemic or similar situations, could have an adverse effect on distributor, retailer and consumer demand for our products.
−Removed: Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns.
−Removed: Our consolidated results of operations for the full fiscal year ended August 27, 2022 were affected by ongoing changes in consumer shopping and consumption behavior likely due, in part, to COVID-19 infections, the ongoing shift to work-from-home arrangements and school disruptions as described in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
−Removed: While our Quest brand has outperformed its portion of the nutritious snacking segment, the performance of our Atkins brand, which is part of the weight management portion of the market, has remained slower due to factors that may include the temporary softer interest in weight management for consumers and fewer on-the-go usage occasions.
−Removed: We believe these effects on consumer demand and shopping behavior because of the COVID-19 pandemic may continue, including because of new virus variants and the effect these variants have on consumer shopping patterns, until a more consistent return of work outside the home to more normal patterns and our brand benefits of active nutrition and weight management drive more better-for-you snacking and meal replacement usage occasions.
−Removed: Our efforts to manage and mitigate these factors may be unsuccessful, and the effectiveness of these efforts depends on factors beyond our control, including the duration and severity of any pandemic, epidemic or disease outbreak, and third party actions taken to contain its spread and mitigate public health effects.
We may not be able to compete successfully in the highly competitive nutritional snacking industry.
Our business is committed to providing people a more nutritious way to eat.
−Removed: As a result, we compete in the nutritional snacking industry, which is included in the general snack foods industry.
+Added: We compete in the nutritional snacking industry, which is included in the general snack foods industry.
The nutritious snacking industry is large and intensely competitive.
Competitive factors in the nutritional snacking industry include product quality, taste, brand awareness among consumers, nutritional content, simpler and less processed ingredients, innovation of “on-trend” snacks, variety of snacks offered, grocery aisle placement, access to retailer shelf space, price, advertising and promotion, product packaging and package design.
−Removed: We compete in this market against numerous multinational, regional and local companies principally based on our low-carb, low-sugar and protein-rich nutritional content, product taste and quality, our brand recognition and loyalty, marketing, advertising, price and the ability to satisfy specific consumer dietary needs.
+Added: We compete in this market against numerous multinational, regional and local companies principally based on our nutritional content, product taste and quality, our brand recognition and loyalty, marketing, advertising, price and the ability to satisfy specific consumer dietary needs.
An increasing focus on healthy and simpler products in the marketplace will likely increase these competitive pressures within the category in future periods.
−Removed: Our competitors in the nutritional snacking industry include companies selling branded weight loss programs who support these programs by offering a wide variety of diet foods, meal replacement bars, shakes and nutritional supplements, and through the promotion of weight loss and weight management approaches such as keto, paleo, vegan, gluten free, vegetarian and others.
+Added: Our competitors in the nutritional snacking industry include companies selling meal replacement bars, shakes and nutritional supplements and through specific dietary approaches such as keto, paleo, vegan, gluten free, vegetarian and others.
Views towards nutritional snacking, weight loss and management, and other nutritional approaches, are cyclical and trendy, with constantly changing consumer perceptions.
−Removed: Besides remaining competitive through the quality of our products, consumer perceptions of the Atkins’ weight management approach and the effectiveness of a low-carb, low-sugar and protein-rich eating approach for both our Atkins and Quest brands must continue to be viewed favorably, or our business and reputation may be materially and adversely affected.
−Removed: For the Atkins brand, if other weight management approaches become more popular, or are generally perceived to be more effective, we may not be able to compete effectively.
+Added: Besides remaining competitive through the quality of our products and consumer perceptions of the effectiveness of a low-carb, low-sugar and protein-rich eating approach, both our brands must continue to be viewed favorably, or our business and reputation may be materially and adversely affected.
+Added: If other nutritional approaches become more popular, or are generally perceived to be more effective, we may not be able to compete effectively.
+Added: In addition, public opinion on the use of chronic weight management medication is shifting significantly as the popularity of clinical solutions grows and more medications are approved by the FDA.
+Added: Moreover, the growing acceptance and use of medication to manage weight could negatively affect the demand for many types of food in general and our products.
+Added: If the use of weight management medication becomes more popular and more widely used and we are unable to communicate effectively to consumers how our products can support achieving or maintaining their weight management goals, of our business could be materially and adversely affected.
Some of our competitors have resources substantially greater than we have and sell brands that may be more widely recognized than our brands.
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If we fail to implement our growth strategies successfully, timely, or at all, our ability to increase our revenue and operating profits could be materially and adversely affected.
−Removed: Our future success depends, largely, on our ability to implement our growth strategies effectively.
+Added: Our success depends, largely, on our ability to implement our growth strategies effectively.
However, we may fail to accomplish this.
We expect to continue focusing on nutritional snacking and intend to add additional brands to our product portfolio.
−Removed: As a business with more than one brand, we face increased complexities and greater uncertainty regarding consumer trends and demands than as a single-brand business.
−Removed: Our ability to expand successfully our nutritional snacking brands and other growth strategies depends on, among other things, our ability to identify, and successfully cater to, new demographics and consumer trends, develop new and innovative products, identify and acquire additional product lines and businesses, secure shelf space in grocery stores, wholesale clubs and other retailers, increase consumer awareness of our brands, enter into distribution and other strategic arrangements with third-party retailers and other potential distributors of our products, and compete with numerous other companies and products.
−Removed: In addition, regarding our Atkins brand, lifestyle consumers of products may have different preferences and spending habits than the consumers of traditional weight loss products.
−Removed: We may fail in reaching and maintaining the loyalty or purchase frequency rate of new Atkins consumers to the same extent, or at all, as we have with our historical Atkins consumers.
−Removed: We may also not succeed in evolving our advertising and other efforts to appeal to our target consumers for both Atkins and Quest.
+Added: Our ability to expand successfully our nutritional snacking brands and other growth strategies depends on, among other things, our ability to identify, and successfully cater to, new demographics and consumer trends, develop new and innovative products, identify and acquire additional product lines and businesses, secure shelf space in grocery stores, wholesale clubs and other retailers, increase consumer awareness of our
+Added: brands, enter into distribution and other strategic arrangements with third-party retailers and other potential distributors of our products, and compete with numerous other companies and products.
+Added: In addition, low carbohydrate eating lifestyle consumers of our products and those consumers using chronic weight management medication to support their weight loss goals may have different preferences and spending habits than the consumers of traditional weight loss products.
+Added: We may also fail to adequately explain to consumers using chronic weight management medication how our products can support achieving and maintaining weight loss goals.
+Added: We may fail in reaching and maintaining the loyalty or purchase frequency rate of new consumers to the same extent, or at all, as we have with our historical consumers.
+Added: We may also not succeed in evolving our advertising and other efforts to appeal to our target consumers.
If we cannot identify and capture new audiences and demographics for all our brands, our ability to integrate additional brands successfully will be adversely affected.
+Added: We may also not succeed in evolving our advertising and other efforts to appeal to our target consumers.
Accordingly, we may not be able to successfully implement our growth strategies, expand the number of our brands, or continue to maintain growth in our sales at our current rate, or at all.
If we fail to implement our growth strategies or if we invest resources in growth strategies that ultimately prove unsuccessful, our sales and profitability may be negatively affected, which would materially and adversely affect our business, financial condition and results of operations.
−Removed: Changes in consumer preferences, habits, perceptions of certain nutritional snacking products and discretionary spending may negatively affect our brand loyalty, purchase frequency rate and net sales, and materially and adversely affect our business, financial condition and results of operations.
−Removed: We focus on products we believe have positive effects on health and compete in a market that relies on innovation and evolving consumer preferences.
−Removed: The packaged food industry in general, and the nutritional snacking industry in particular, is subject to changing consumer trends, demands and preferences and emerging nutrition science is constantly evolving.
−Removed: Products or methods of eating once considered healthy may become disfavored by consumers, scientifically disproven or no longer be perceived as healthy.
−Removed: Trends within the food industry change over time and our failure to anticipate, identify or react to changes in these trends could, among other things, lead to reduced consumer demand, shelf or retail space and price reductions, and could materially and adversely affect our business, financial condition and results of operations.
−Removed: Additionally, certain ingredients used in our products may become negatively perceived by consumers, resulting in reformulation of existing products to remove such ingredients, which may negatively affect the taste or other qualities of our products.
−Removed: Factors that may affect consumer perception of healthy products include dietary trends and attention to different nutritional aspects of foods, concerns regarding the health effects of specific ingredients and nutrients, trends away from specific ingredients and processing in products and increasing awareness of the environmental and social effects of product production.
−Removed: Consumer perceptions of the nutritional profile of our products and related eating practices may shift, and consumers may no longer perceive products with fewer carbohydrates, higher levels of protein, higher levels of fat and additional fiber as healthy or needed to achieve personal weight management, wellness, or fitness goals.
−Removed: Adverse messaging in the media, including social media, or within certain influencer communities, relating to the marketing of weight management products or programs may adversely affect the overall consumer impression of certain of our products, programs or brands, which may materially and adversely affect our business.
−Removed: Approaches regarding weight management and healthy lifestyles are the subject of numerous studies and publications, often with differentiating views and opinions, some of which may be adverse to us.
−Removed: Conflicting scientific information on what constitutes good nutrition, diet fads or other weight loss trends may also materially and adversely affect our business.
−Removed: Our success depends, in part, on our ability to anticipate the tastes and dietary habits of consumers and other consumer trends and to offer products with marketing messaging that appeal to their needs and preferences on a timely and affordable basis.
−Removed: A change in consumer discretionary spending, due to inflationary pressures, economic downturn or other reasons may also materially and adversely affect our sales, and our business, financial condition and results of operations.
−Removed: If we do not continually enhance our brand recognition, increase distribution of our products, attract new consumers to our brands and introduce new and innovative products, either on a timely basis or at all, our business may suffer.
+Added: If we do not continually enhance our brand recognition, maintain or increase distribution of our products, attract new consumers to our brands and introduce new and innovative products, either on a timely basis or at all, our business may suffer.
The nutritional snacking industry is subject to rapid and frequent changes in consumer demands.
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New product sales represent a growing and important portion of our net sales.
−Removed: To respond to new and evolving consumer demands, achieve market acceptance and keep pace with new nutritional, weight management, technological and other developments, we must constantly introduce new and innovative products into the market, some of which may not be accepted by consumers, may be sent to market prematurely or may not be consistent with our quality and taste standards.
−Removed: Accordingly, we may not succeed in timely developing, introducing or marketing any new or enhanced products.
+Added: To respond to new and evolving consumer demands, achieve market acceptance and keep pace with new nutritional, scientific, technological and other developments, we must constantly introduce new and innovative products into the market, some of which may not be accepted by consumers, may be sent to market prematurely, or may contravene our taste or texture standards.
+Added: Accordingly, we may fail in timely developing, introducing or marketing any new or enhanced products.
If we cannot commercialize new products, our revenue may not grow as expected, which would materially and adversely affect our business, financial condition and results of operations.
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There can be no assurance that retailers will provide sufficient, or any, shelf space, nor that online retailers will provide online access to, or adequate product visibility on, their platform to enable us to meet our growth objectives.
−Removed: Unattractive placement or pricing, including as a result of our recent price increases, may put our products at a disadvantage compared to those of our competitors.
+Added: Unattractive placement or pricing, including because of our recent price increases, may put our products at a disadvantage compared to those of our competitors.
Even if we obtain shelf space or preferable shelf placement, our new and existing products may fail to achieve the sales expectations set by our retailers, potentially causing these retailers to remove our products from their shelves.
−Removed: Additionally, an increase in the quantity and quality of private label products in the product categories in which we compete could create more pressure for shelf space and placement for branded products within each such category, which could materially and adversely affect our sales.
+Added: Additionally, an increase in the availability, quantity and quality of private label products in the product categories in which we compete could create more pressure for shelf space and placement for branded products within each such category, which could materially and adversely affect our sales.
If the perception of our brands or organizational reputation are damaged, our consumers, distributors and retailers may react negatively, which could materially and adversely affect our business, financial condition and results of operations.
We believe we have built our reputation on the efficacy of our nutritional approach, and the high-quality flavor and nutritional content of our food.
−Removed: We must protect and expand on the value of our brands to continue to be successful in the future.
+Added: We must protect and expand on the value of our brands to continue to succeed in the future.
Any incident that erodes consumer affinity for our brands or our business operations could significantly reduce our value and damage our business.
−Removed: For example, negative third-party reports regarding the Atkins or Quest nutritional approach or the quality of our food, whether accurate or not, may adversely affect consumer perceptions, which could cause the value of our brands to suffer and adversely affect our business.
−Removed: In addition, if we recall certain products, including frozen foods or licensed products over which we may not have full quality control, the public perception of the quality of our food may be diminished.
−Removed: We may also be adversely affected by news or other negative publicity, regardless of accuracy, regarding other aspects of our business, such as public health concerns, the perception of our environmental stewardship and the effects our business has on the environment, illness, safety, security breaches of confidential consumer or employee information, employee related claims relating to alleged employment discrimination, health care and benefit issues or government or industry findings about our retailers, distributors, manufacturers or others across the industry supply chain.
+Added: For example, negative third-party research or media reports on our nutritional approach, use of ingredients or the quality of our food, whether accurate or not, may adversely affect consumer perceptions, which could cause the value of our brands to suffer and adversely affect our business.
+Added: In addition, if we recall certain products, including licensed products over which we may not have full quality control, the public perception of the quality of our food may be diminished.
+Added: We may also be adversely affected by news or other negative publicity, regardless of accuracy, regarding other aspects of our business, such as:
+Added: • public health concerns, illness or safety;
+Added: • the perception of our environmental stewardship and the effects our business has on the environment;
+Added: • security breaches of confidential consumer or employee information;
+Added: • employee related claims relating to alleged employment discrimination, health care and benefit issues;
+Added: • government or industry findings about or the financial stability of our retailers, distributors, manufacturers or others across our supply chain.
As part of our marketing initiatives, we have contracted with certain public figures to market and endorse our products.
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The availability of information on social media platforms is virtually immediate, as is its effect.
−Removed: Many social media platforms make available the content their subscribers and participants post, often without filters or checks on accuracy of the content posted.
+Added: Many social media platforms provide the content their subscribers and participants post, often without filters or checks on accuracy of the content posted.
The opportunity for dissemination of information, including inaccurate information, is potentially limitless.
Information about our business and/or products may be circulated on such platforms at any time.
−Removed: Negative views regarding our products and the efficacy of the Atkins or Quest eating approaches have been posted on various social media platforms, may continue to be posted in the future, and are out of our control.
+Added: Negative views regarding our products and the efficacy of our eating approaches have been posted on various social media platforms, may continue to be posted in the future, and are out of our control.
Regardless of their accuracy or authenticity, such information and views may be adverse to our interests and may harm our reputation and brands.
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The concentration of our businesses in North America could present challenges and may increase the likelihood that an adverse event in North America would disproportionately materially and adversely affect product sales, financial condition and operating results.
+Added: Pandemics, epidemics or disease outbreaks, such as COVID, have in the past and may in the future disrupt our business, including, among other things, consumption and trade patterns, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations.
+Added: The actual or perceived effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as COVID-19, could negatively affect our operations, liquidity, financial condition and results of operations.
+Added: The COVID-19 pandemic
+Added: situation continues to remain dynamic and subject to rapid and possibly material change, including but not limited to changes that may materially affect the operations of our customers and supply chain partners in the future, which ultimately could cause material negative effects on our business and results of operations.
+Added: For example, the operations of several of our contract manufacturers were affected at the height of the COVID-19 pandemic’s effect on the availability of labor.
+Added: Pandemics, epidemics or disease outbreaks may affect demand for our products because quarantines or other government restrictions on movement may cause erratic consumer purchase behavior.
+Added: Our business experienced these effects during fiscal year 2022.
+Added: Future governmental or societal impositions of restrictions on public gatherings, especially if prolonged, may have adverse effects on consumption rates and in-person traffic to retail stores and, in turn, our business.
+Added: Even the perceived risk of infection or health risk may adversely affect traffic to our store-based retail customers and, in turn, our business, liquidity, financial condition and results of operations, particularly if any mobility restrictions are in place for significant time.
+Added: The spread of pandemics, epidemics or disease outbreaks such as COVID-19 may also disrupt our third-party business partners’ ability to meet their obligations to us, which may negatively affect our operations.
+Added: These third parties include those who supply our ingredients, packaging, and other necessary operating materials, contract manufacturers, distributors, and logistics and transportation services providers.
+Added: For example, the operations of several of our contract manufacturers were affected by the COVID-19 pandemic’s effect on the availability of labor.
+Added: Ports and other channels of entry may be closed or operate at only a portion of capacity, as workers may be prohibited or otherwise unable to report to work and means of transporting products within regions or countries may be limited for the same reason.
+Added: Because of the COVID-19 pandemic, transport restrictions have been put in place and global supply was and may become again in the future constrained, each of which may cause and have caused price increases or shortages of certain ingredients and raw materials used in our products.
+Added: In addition we may experience disruptions to our operations.
+Added: Further, our contract manufacturers’ ability to manufacture our products was, and may again in the future be, impaired by disruption to their employee staffing, procurement, manufacturing, or warehousing capabilities because of COVID-19 or similar outbreaks.
+Added: Our results of operations depend on, among other things, our ability to maintain and increase sales volume with our existing customers, to attract new consumers and to provide products that appeal to consumers at prices they are willing and able to pay.
+Added: Our ability to implement our innovation, advertising, display and promotion activities designed to maintain and increase our sales volumes on a timely basis may be negatively affected because of modifications to retailer shelf reset timing or retailer pullback on in-store display and promotional activities during pandemic or similar situations.
+Added: Retailers may also alter their normal inventory receiving and product restocking practices during pandemics, epidemics or disease outbreaks such as COVID-19, which may negatively affect our business.
+Added: Workforce limitations and travel restrictions resulting from pandemics, epidemics or disease outbreaks such as COVID-19 and related government actions may affect many aspects of our business.
+Added: If a significant percentage of our workforce cannot work or we cannot visit our contract manufacturers’ locations, including because of illness, travel or government restrictions related to pandemics or disease outbreaks, our operations may be negatively affected.
+Added: In addition, pandemics or disease outbreaks could cause a widespread health crisis that could adversely affect the economies and financial markets of many countries where we offer products, resulting in an economic downturn that could affect customers’ and consumers’ demand for our products.
+Added: Adverse and uncertain economic conditions, such as decreases in per capita income and level of disposable income, increased unemployment or a decline in consumer confidence because of pandemic or similar situations, could have an adverse effect on distributor, retailer and consumer demand for our products.
+Added: Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns.
+Added: We believe the effects on consumer demand and shopping behavior because of the COVID-19 pandemic could continue, including because of new virus variants and the effect these variants have on consumer shopping patterns.
+Added: Our efforts to manage and mitigate these factors may be unsuccessful, and the effectiveness of these efforts depends on factors beyond our control, including the duration and severity of any pandemic, epidemic or disease outbreak, and third-party actions taken to contain its spread and mitigate public health effects.
Risks Related to our Operating Model
Ingredient and packaging costs are volatile and may rise significantly, which may negatively affect the profitability of our business.
−Removed: We negotiate the prices for large quantities of core ingredients, such as soy, nuts, dairy, protein, fiber and cocoa, and packaging materials.
−Removed: Several ingredients are manufactured outside of the United States.
−Removed: Costs of ingredients and packaging are volatile and can fluctuate due to conditions difficult to predict, including global competition for resources, fluctuations in currency and exchange rates, weather conditions, the effects of climate change, natural or man-made disasters, consumer demand, geopolitical events, and changes in governmental trade and agricultural programs and environmental regulation.
−Removed: Volatility in the prices of the core ingredients and other supplies we purchase increased significantly in fiscal year 2022 and are expected to remain elevated during fiscal year 2023.
−Removed: As a result, our cost of goods sold increased, and our profitability was reduced.
+Added: We negotiate the prices for large quantities of core ingredients, such as nuts, protein, fiber and packaging materials.
+Added: Several ingredients are farmed or manufactured outside of the United States.
+Added: Costs of ingredients and packaging are volatile and can fluctuate due to conditions difficult to predict, including global competition for resources, fluctuations in currency and exchange rates, weather conditions, the effects of climate change, natural or man-made disasters, consumer demand, geopolitical events, and changes in governmental trade and agricultural programs and environmental regulations affecting the production or manufacturing of ingredients and packaging.
+Added: Volatility in the prices of the core ingredients and other supplies we purchase increased in fiscal year 2023 and, while these
+Added: price increases have begun to moderate, these prices may remain elevated during fiscal year 2024.
+Added: As a result, our cost of goods sold increased in fiscal year 2023, and our profitability was reduced.
We do not use hedges for availability of any core ingredients.
−Removed: Any material upward movement in core ingredient pricing could negatively affect our margins if we cannot find efficiencies or pass these costs on to our consumers, or our sales if we are forced to increase our prices.
+Added: Any material upward movement in core ingredient or packaging pricing could negatively affect our margins if we cannot find efficiencies or pass these costs on to our consumers, or our sales if we are forced to increase our prices.
If we are unsuccessful in managing our ingredient and packaging costs, if we cannot increase our prices to cover increased costs or if such price increases reduce our sales volumes, then such increases in costs will materially and adversely affect our business, financial condition and results of operations.
−Removed: For more information on the effects of supply chain cost increases results of operations during fiscal year 2022, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
+Added: For more information on the effects of supply chain cost increases on our results of operations during fiscal year 2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
Certain of our core ingredient contracts have minimum volume commitments that could require purchases without matching revenue during weaker sales periods.
−Removed: Future core ingredient prices may be affected by new laws or regulations, tariffs, suppliers’ allocations to other purchasers, interruptions in production by suppliers, natural disasters, volatility in the price of crude oil and related petrochemical products and changes in exchange rates.
−Removed: We rely on sales to a limited number of retailers for a substantial portion of our net sales and losing one or more such retailers may materially harm our business.
−Removed: In addition, we maintain “at will” contracts with these retailers, which do not require recurring or minimum purchase amounts of our products.
−Removed: A substantial majority of our sales are generated from a limited number of retailers.
−Removed: Sales to our largest retailer, Walmart, represented approximately 31% of consolidated sales in fiscal year 2022, of which approximately 23% is through their mass retail channel and approximately 8% is through their Sam’s club and e-commerce channels.
−Removed: Sales to our next two largest retailers, Amazon and Target, represented approximately 13% and 10% of consolidated sales in fiscal year 2022, respectively.
−Removed: Although the composition of our significant retailers may vary from period-to-period, we expect that most of our net sales will continue to come from a relatively small number of retailers for the foreseeable future.
−Removed: These retailers may take actions that affect us for reasons we cannot anticipate or control, such as their financial condition, changes in their business strategy or operations, including their inability to meet their labor or other human capital needs, the perceived quality of their products and introducing competing products.
−Removed: There can be no assurance that Walmart, Amazon, Target or our other significant customers will continue to purchase our products in the same quantities or on the same terms as in the past, particularly as increasingly powerful retailers continue to demand lower pricing.
−Removed: Our retailers rarely provide us with firm, long- or short-term volume purchase commitments.
−Removed: As a result, we could have periods with little to no orders for our products while still incurring costs related to workforce maintenance, marketing, general corporate and debt service.
−Removed: Furthermore, despite operating in different channels, our retailers sometimes compete for the same consumers.
−Removed: Because of actual or perceived conflicts resulting from competition, retailers may take actions that negatively affect us.
−Removed: We may not find new retailers to supplement our revenue in periods when we experience reduced purchase orders or recover fixed costs because of experiencing reduced purchase orders.
−Removed: Periods of reduced purchase orders could materially and adversely affect our business, financial condition and results of operations.
−Removed: Conversely, occasionally, we may experience unanticipated increases in orders of our products from these retailers that can create supply chain problems and may cause unfilled orders.
−Removed: If we cannot meet increased demand for our products, our reputation with these retailers, and ultimately our consumers, may be harmed.
−Removed: Unanticipated fluctuations in product requirements could cause fluctuations in our results from quarter-to-quarter.
−Removed: Consolidation among retailers may also materially and adversely affect our results.
−Removed: An increase in the concentration of our sales to large customers may negatively affect our profitability due to the effect of higher shelving fees and reduced volumes of product sold.
−Removed: Furthermore, as retailers consolidate or account for a larger percentage of our sales, they may reduce the number of branded products they offer to accommodate private label products and pressure us to lower the prices of our products.
−Removed: The loss of, a disruption in or an inability to efficiently operate our fulfillment network could materially and adversely affect our business, financial condition and results of operations.
−Removed: operations, we utilize distribution centers in Greenfield, Indiana.
−Removed: A substantial portion of our inventory is shipped directly to our retailers from these centers by a third-party logistics provider.
−Removed: Most of our other customers pick-up their orders at our distribution centers and make their own arrangements for delivery to their fulfillment network.
−Removed: A small percentage of our customers are shipped certain products directly from a co-manufacturing location.
−Removed: We rely significantly on the orderly operation of our distribution centers and logistics providers.
−Removed: If complications arise, a particular facility is damaged or destroyed or if either our third-party logistics partners or our customers who transport their own orders to their fulfillment network are not able to meet their labor or other human capital needs for delivery drivers or other warehouse personnel, our ability to deliver inventory timely will be significantly impaired, which could materially and adversely affect our business as a result of lost consumer purchases at retail thereby negatively affecting our results of operations.
−Removed: We rely on a single-sourced logistics provider for distribution and product shipments in the United States from our distribution centers.
−Removed: Our utilization of delivery services for shipments is subject to risks that may affect the ability to provide delivery services that adequately meet our shipping needs including increases in fuel prices, labor shortages, employee strikes and inclement weather.
−Removed: Occasionally, we may change third-party logistics providers and we could face logistical difficulties that could adversely affect deliveries.
−Removed: In addition, we could incur costs and expend resources in connection with such change and fail to obtain terms as favorable as those we currently receive.
−Removed: Disruptions at our distribution facilities or in our operations due to natural or man-made disasters, pandemics (such as COVID-19) or other disease outbreaks, fire, flooding, terrorism or other catastrophic events, system failure, labor shortages or disagreements or shipping problems may cause delays in the delivery of products to retailers and could materially and adversely affect our results of operations.
+Added: Future core ingredient and packaging prices may be affected by new laws or regulations, tariffs, suppliers’ allocations to other purchasers, interruptions in production by suppliers, natural disasters, volatility in the price of crude oil and related petrochemical products and changes in exchange rates.
Shortages or interruptions in the supply or delivery of our core ingredients, packaging, products or equipment we purchase could materially and adversely affect our operating results as we rely on a limited number of third-party suppliers to supply our core ingredients and packaging and a limited number of contract manufacturers to manufacture our products.
−Removed: The core ingredients used in manufacturing our products include soy, nuts, dairy, protein, fiber and cocoa.
+Added: The core ingredients used in manufacturing our products include nuts, protein and fiber.
We rely on a limited number of third-party suppliers to provide these core ingredients, a portion of which are international companies.
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Events that adversely affect our suppliers could impair our ability to obtain core ingredient inventories in the quantities desired.
−Removed: Such events include problems with our suppliers’ businesses, finances, labor relations, sustainability concerns, evolving applicable environmental regulations, ability to import core ingredients, delays in imported core ingredients being processed through local customs, costs, production, insurance, reputation and weather conditions during growing, harvesting or shipping, including flood, drought, frost and earthquakes, man-made disasters or other catastrophic occurrences, and geopolitical events such as the conflict between Ukraine and Russia.
+Added: Such events include problems with our suppliers’ businesses, finances, labor relations, sustainability concerns, evolving applicable environmental regulations, ability to import core ingredients, delays in imported core ingredients being processed through local customs, costs, production, insurance, reputation and weather conditions during growing, harvesting or shipping, including flood, drought, frost and earthquakes, man-made disasters or other catastrophic occurrences, and geopolitical events such as the continuing conflict between Ukraine and Russia.
Our financial performance depends largely on our ability to purchase core ingredients and packaging in sufficient quantities at competitive prices.
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In addition, there is no guarantee a new manufacturing partner could accurately replicate the production process and taste profile of the existing products.
−Removed: In addition, from time to time we determine to select new contract manufacturers to replace existing manufacturers to produce our products.
+Added: In addition, occasionally we determine to select new contract manufacturers to replace existing manufacturers to produce our products.
If the transition to a new manufacturer is delayed or we experience product quality or other production issues during the transition to the new manufacturer, our business may be negatively affected until these issues are resolved.
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It could take a significant period of time to locate and qualify such alternative production sources or alternative ingredients or packaging, which could materially and adversely affect our business.
−Removed: If having our products available for consumer purchase through our retail customers is disrupted as a result of an inability to obtain ingredients or packaging, labor challenges at our logistics providers or our contract manufacturers, or if our customers experience delays in stocking our products in their locations, we will experience a reduction in sales at retail and our results of operations could be material and adversely affected.
+Added: If having our products available for consumer purchase through our retail customers is disrupted because of an inability to obtain ingredients or packaging, labor challenges at our logistics providers or our contract manufacturers, or if our customers experience delays in stocking our products in their locations, we will experience a reduction in sales at retail and our results of operations could be material and adversely affected.
We are subject to risks associated with protection of our trade secrets by our third-party contract manufacturers.
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Under certain circumstances, we may be required to, or may voluntarily, recall or withdraw products.
−Removed: For example, in 2016, as part of a larger national recall by several other food companies, we incurred losses, including recalled product because of potential contamination from an ingredient supplied to one of our third-party manufacturers at their manufacturing center.
−Removed: While the contamination did not result in any consumer illness, and we were indemnified for a substantial portion of our direct product loss, the recall may have damaged the reputation for the brand.
A widespread recall or withdrawal of any of ours or licensed products may negatively and significantly affect our sales and profitability and could cause significant losses depending on the costs of the recall, destruction of product inventory, reduction in product availability, and reaction of competitors and consumers.
1 unchanged sentence
Any of these events could materially and adversely affect our business, financial condition and results of operations.
−Removed: Whether or not a product liability claim or lawsuit is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential consumers and our corporate and brand image.
+Added: Whether or not a claim or lawsuit is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential consumers and our corporate and brand image.
Moreover, claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity or contribution we may have against others.
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A product liability judgment against us or a product recall could materially and adversely affect our business, financial condition and results of operations.
+Added: We rely on sales to a limited number of retailers for a substantial portion of our net sales and losing one or more such retailers may materially harm our business.
+Added: In addition, we maintain “at-will” contracts with these retailers, which do not require recurring or minimum purchase amounts of our products.
+Added: A substantial majority of our sales are generated from a limited number of retailers.
+Added: Sales to our largest retailer, Walmart, represented approximately 31% of consolidated sales in fiscal year 2023, of which approximately 24% is through their mass retail channel and approximately 7% is through their Sam’s club and e-commerce channels.
+Added: Sales to our next largest retailer, Amazon, represented approximately 16% of consolidated sales in fiscal year 2023.
+Added: Although the composition of our significant retailers may vary from period-to-period, we expect most of our sales will continue to come from a relatively small number of retailers for the foreseeable future.
+Added: These retailers may take actions that affect us for reasons we cannot anticipate or control, such as their financial condition, changes in their business strategy or operations, including their inability to meet their labor or other human capital needs, the perceived quality of their products and introducing competing products.
+Added: There can be no assurance that Walmart or Amazon or our other significant customers will continue to purchase our products in the same quantities or on the same terms as in the past, particularly as increasingly powerful retailers continue to demand lower pricing.
+Added: Our retailers rarely provide us with firm, long- or short-term volume purchase commitments.
+Added: As a result, we could have periods with little to no orders for our products while still incurring costs related to workforce maintenance, marketing, general corporate and debt service.
+Added: Furthermore, despite operating in different channels, our retailers sometimes compete for the same consumers.
+Added: Because of actual or perceived conflicts resulting from competition, retailers may take actions that negatively affect us.
+Added: We may not find new retailers to supplement our revenue in periods when we experience reduced purchase orders or recover fixed costs because of experiencing reduced purchase orders.
+Added: Periods of reduced purchase orders could materially and adversely affect our business, financial condition and results of operations.
+Added: Conversely, occasionally, we may experience unanticipated increases in orders for our products from these retailers that can create supply chain problems and may cause unfilled orders.
+Added: If we cannot meet increased demand for our products, our reputation with
+Added: these retailers, and ultimately our consumers, may be harmed.
+Added: Unanticipated fluctuations in product requirements could cause fluctuations in our results from quarter-to-quarter.
+Added: Consolidation among retailers may also materially and adversely affect our results.
+Added: An increase in the concentration of our sales to large customers may negatively affect our profitability due to the effect of higher shelving fees and reduced volumes of product sold.
+Added: Furthermore, as retailers consolidate or account for a larger percentage of our sales, they may reduce the number of branded products they offer to accommodate private label products and pressure us to lower the prices of our products.
+Added: The loss of, a disruption in or an inability to efficiently operate our fulfillment network could materially and adversely affect our business, financial condition, and results of operations.
+Added: operations, we utilize distribution centers in Greenfield, Indiana.
+Added: A substantial portion of our inventory is shipped directly to our retailers from these centers by a third-party logistics provider.
+Added: Most of our other customers pick-up their orders at our distribution centers and arrange for delivery to their fulfillment network.
+Added: A small percentage of our customers are shipped certain products directly from a co-manufacturing location.
+Added: We rely significantly on the orderly operation of our distributions centers and logistics providers.
+Added: If complications arise, a particular facility is damaged or destroyed or if either our third-party logistics partners or our customers who transport their own orders to their fulfillment network cannot meet their labor or other human capital needs for delivery drivers or other warehouse personnel or if trucking regulations affect current trucking norms (such as a shift to electric vehicles), our ability to deliver inventory timely or cost effectively could be significantly impaired, which could materially and adversely affect our business because of lost consumer purchases at retail thereby negatively affecting our operations.
+Added: We rely on a single-sourced logistics provider for distribution and product shipments in the United States from our distribution centers.
+Added: Our utilization of delivery services for shipments is subject to risks that may affect the ability to provide delivery services that adequately meet our shipping needs including increases in fuel prices, labor shortages, employee strikes and inclement weather.
+Added: Occasionally, we may change third-party logistics providers and we could face logistical difficulties that could adversely affect deliveries.
+Added: In addition, we could incur costs and expend resources in connection with such change and fail to obtain terms as favorable as those we currently receive.
+Added: Disruptions at our distribution facilities or in our operations due to natural or man-made disasters, pandemics or other disease outbreaks, fire, flooding, terrorism or other catastrophic events, system failure, labor shortages or disagreements or shipping problems may cause delays in the delivery of products to retailers and could materially and adversely affect our results of operations.
Severe weather conditions, natural disasters such as fires, floods, droughts, hurricanes, earthquakes and tornadoes, government regulation related to climate change, and the effects of climate change and geopolitical events can affect crop supplies, and supply chain infrastructure, and negatively affect the operating results of our business.
Severe weather conditions and natural disasters, such as fires, floods, droughts, frosts, hurricanes, earthquakes, tornadoes, insect infestations and plant disease, and geopolitical events may affect the supply of core ingredients and packaging used to make and protect food products or may prevent the manufacturing or distribution of food products by third parties.
−Removed: In addition, a number of these weather conditions could become even more severe over time as a result of the effects of climate change.
+Added: In addition, a number of these weather conditions could become even more severe over time because of the effects of climate change.
Competing manufacturers might be affected differently by weather conditions, natural disasters, and geopolitical events depending on the location of their sources of supplies and manufacturing or distribution facilities.
−Removed: If supplies of core ingredients and packaging available to us are reduced, we may not be able to find enough supplemental supply sources on favorable terms, which could materially and adversely affect our business, financial condition and results of operations.
−Removed: In addition, because we rely on few contract manufacturers for a majority of our manufacturing needs and because our distribution warehouses are all in a similar geographic location, adverse weather conditions could affect the ability for those third-party operators to manufacture, store or move our products.
+Added: If supplies of core ingredients and packaging available to us are reduced, we may not find enough supplemental supply sources on favorable terms, which could materially and adversely affect our business, financial condition and results of operations.
+Added: In addition, because we rely on few contract manufacturers for most of our manufacturing needs and because our distribution warehouses are all in a similar geographic location, adverse weather conditions could affect the ability for those third-party operators to manufacture, store or move our products.
We intend to grow through mergers and acquisitions or joint ventures, and we may not successfully integrate, operate or realize the anticipated benefits of such business combinations.
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Although we regularly evaluate multiple acquisition candidates, we cannot be certain that we can successfully identify suitable acquisition candidates, negotiate acquisitions of identified candidates on favorable terms, or integrate acquisitions we complete.
−Removed: Acquisitions involve numerous risks and uncertainties, including intense competition for suitable acquisition targets, which could increase target prices and/or materially and adversely affect our ability to consummate deals on favorable terms, the potential unavailability of financial resources necessary to consummate acquisitions, the risk we improperly value and price a target, the potential inability to identify all of the risks and liabilities inherent in a target company or assets notwithstanding our diligence efforts, the diversion of management’s attention from the day-to-day operations of our business and additional strain on our existing personnel, increased leverage resulting from the additional debt financing that may be required to complete an acquisition, dilution of our net current book value per share if we issue additional equity securities to finance an acquisition, difficulties in identifying suitable acquisition targets or in completing any transactions identified on sufficiently favorable terms and the need to obtain regulatory or other governmental approvals that may be necessary to complete acquisitions.
+Added: Acquisitions involve numerous risks and uncertainties, including intense competition for suitable acquisition targets, which could increase target prices and/or materially and adversely affect our ability to consummate deals on favorable terms, the potential unavailability of financial resources necessary to consummate acquisitions, the risk we improperly value and price a target, the potential inability to identify all of the risks and liabilities inherent in a target company or assets notwithstanding our diligence efforts, the diversion of management’s attention from the day-to-day operations of our business and additional strain on our existing personnel, increased leverage resulting from the additional debt financing that may be required to complete an acquisition, dilution of our net current book value per share if we issue additional equity securities to finance an acquisition, difficulties in identifying suitable acquisition targets or in
+Added: completing any transactions identified on sufficiently favorable terms and the need to obtain regulatory or other governmental approvals that may be necessary to complete acquisitions.
Any future acquisitions may pose risks associated with entry into new geographic markets, including outside the United States and our current international markets, distribution channels, lines of business or product categories, where we may not have significant prior experience and where we may not be as successful or profitable as we are in businesses and geographic regions where we have greater familiarity and brand recognition.
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Loss of our key executive officers or other personnel, or an inability to attract and retain such management and other personnel, could negatively affect our business.
−Removed: Our future success depends to a significant degree on the skills, experience and efforts of our key executive officers and the strength of our talent positions throughout the organization.
−Removed: The sudden loss of key personnel or our failure to appropriately plan for any expected key executive succession, including for our president and chief executive officer whose employment agreement expires in July 2023, could materially and adversely affect our business and prospects, as we may not be able to find suitable individuals to replace them on a timely basis, if at all.
+Added: Our future success depends to a significant degree on the skills, experience and efforts of our key executives and the strength of our talent positions throughout the organization.
+Added: The sudden loss of key personnel or our failure to appropriately plan for any expected key executive succession could materially and adversely affect our business and prospects, as we may not be able to find suitable individuals to replace them on a timely basis, if at all.
Additionally, we also depend on our ability to attract and retain qualified personnel to operate and expand our business.
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Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss and outages, telecommunications failure or other catastrophic events and from internal and external security breaches, viruses and other disruptive problems.
−Removed: The failure of these systems to operate effectively, whether from maintenance problems, upgrading or transitioning to new platforms, or a breach in security of these systems, could result in interruptions or delays in our operations, reduce efficiency or negatively affect our operations.
−Removed: If our information technology systems fail and our redundant systems or disaster recovery plans are not adequate to address such failures, or if our business interruption or cyber-security insurance does not sufficiently compensate us for any losses that we may incur, our revenue and profits could be reduced, and the reputation of our brand and our business could be materially adversely affected.
+Added: The failure of these systems to operate effectively, whether from maintenance problems, upgrading or transitioning to new
+Added: platforms, or a breach in security of these systems, could result in interruptions or delays in our operations, reduce efficiency or negatively affect our operations.
+Added: If our information technology systems fail and our redundant systems or disaster recovery plans are not adequate to address such failures, or if our business interruption or cyber-security insurance does not sufficiently compensate us for any losses we may incur, our revenue and profits could be reduced, and the reputation of our brand and our business could be materially adversely affected.
In addition, remediation of any problems with our systems could result in significant, unplanned expenses.
−Removed: We have instituted controls, including information system governance controls that are intended to protect our computer systems and our information technology systems and networks.
+Added: We have instituted controls, including information system governance controls intended to protect our computer systems and our information technology systems and networks.
We also have business continuity plans that attempt to anticipate and mitigate failures.
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We increasingly rely on cloud computing and other technologies that result in third parties holding significant amounts of customer, consumer or employee information on our behalf.
−Removed: There has been an increase over the past several years in the frequency and sophistication of attempts to compromise the security of these types of systems.
−Removed: If the security and information systems that we or our outsourced third-party providers use to store or process such information are compromised or if we, or such third parties, otherwise fail to comply with applicable laws and regulations, we could face litigation and the imposition of penalties that could adversely affect our financial performance.
+Added: There has been an increase over the past several years in the frequency and sophistication of attempts to compromise the security of these systems.
+Added: If the security and information systems we or our outsourced third-party providers use to store or process such information are compromised or if we, or such third parties, otherwise fail to comply with applicable laws and regulations, we could face litigation and the imposition of penalties that could adversely affect our financial performance.
Our reputation as a brand or as an employer could also be adversely affected by these types of security breaches or regulatory violations, which could impair our ability to attract and retain qualified employees.
−Removed: A significant number of states require that consumers be notified if a security breach results in disclosing their personal financial account or other information.
+Added: Many states require that consumers be notified if a security breach results in disclosing their personal financial account or other information.
Additional states and governmental entities are considering such “notice” laws.
1 unchanged sentence
If we experience a security breach, and such notice or public disclosure is required in the future, our reputation and our business may be harmed.
−Removed: Except for limited information voluntarily submitted by users of our website, we typically do not collect or store consumer data or personal information.
+Added: Except for limited information voluntarily submitted by users of our website, we typically do not collect or store consumer data or personal information, although we do share information to third-party providers to provide consumer advertising.
However, third-party providers, including our licensees, contract manufacturers, e-commerce contractors and third-party sellers may do so.
The website operations of such third parties may be affected by reliance on other third-party hardware and software providers, technology changes, risks related to the failure of computer systems through which these website operations are conducted, telecommunications failures, data security breaches and similar disruptions.
−Removed: If we or our third-party providers fail to maintain or protect our respective information technology systems and data integrity effectively, fail to implement new systems, update or expand existing systems, or fail to anticipate, plan for or manage significant disruptions to or compromises of systems involved in our operations, we could:
+Added: If we or our third-party providers fail to maintain or protect our respective information technology systems and data integrity effectively, fail to implement new systems, update or expand existing systems, fail to provide necessary privacy law disclosures or fail to anticipate, plan for or manage significant disruptions to or compromises of systems involved in our operations, we could:
• lose existing customers;
1 unchanged sentence
• have disputes with customers, suppliers, distributors or others;
−Removed: • be subject to regulatory sanctions, including sanctions stemming from violations of the Health Insurance Portability and Accountability Act of 1996;
+Added: • be subject to regulatory sanctions, including sanctions stemming from violations of the Health Insurance Portability and Accountability Act of 1996 or other federal or state privacy laws;
• suffer reputational harm, and
• incur unexpected costs to remediate any unauthorized access of our systems and implement protective measures against future attacks.
−Removed: As a result of these possible outcomes we could incur increases in operating expenses and our results of operations could be materially and adversely affected.
+Added: Because of these possible outcomes we could incur increases in operating expenses and our results of operations could be materially and adversely affected.
While we maintain insurance against losses related to unauthorized access to our systems, there can be no assurance our level of coverage will be sufficient to address the losses we sustain.
1 unchanged sentence
All of our products must comply with federal, state and local regulations.
−Removed: Any non-compliance with the FDA, USDA or other applicable regulations could harm our business.
+Added: Any non-compliance with the FDA or other applicable regulations could harm our business.
Our products must comply with various rules and regulations, including those regarding product manufacturing, food safety, required testing and appropriate labeling of our products.
−Removed: The FDA has not defined nutrient content claims regarding low-carbohydrates, but has not objected to using net carbohydrate information on food labels if the label adequately explains how the term is used so it would not be false or misleading to consumers.
+Added: The FDA has not defined nutrient content claims regarding low-carbohydrates, but it has not objected to using net carbohydrate information on food labels if the label adequately explains how the term is used so it would not be false or misleading to consumers.
The FDA requires all carbohydrates per serving to be listed on the Nutrition Facts Panel (“NFP”) of a package.
−Removed: Besides the information on the NFP, we use the term “net carbohydrate” (or “net carbs”) on our existing product packaging to assist consumers in tracking the carbohydrates in that serving of food that effect their blood sugar (glucose) levels.
+Added: Besides the information on the NFP, we use the term “net carbohydrate” (or “net carbs”) on our existing product packaging.
We determine the number of net carbs in a serving by subtracting fiber, and sugar alcohols if any, from the total carbohydrates listed on the NFP.
36 unchanged sentences
• regulatory requirements from any required disclosures related to climate change;
−Removed: • farming and environmental laws.
+Added: • farming, transportation and environmental laws.
New laws, regulations or governmental policies and their related interpretations, or changes in any of the foregoing, including taxes, tariffs or other limitations on the sale of our products, ingredients in our products or commodities used in the production of our products, may alter the environment in which we do business and, therefore, may affect our operating results or increase our costs or liabilities.
24 unchanged sentences
SOFR is calculated based on short-term repurchase agreements, backed by Treasury securities.
−Removed: SOFR is observed and backward looking, which stands in contrast with the London Inter-Bank Offered Rate (“LIBOR”) under the previous methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members.
+Added: SOFR is observed and backward looking, which stands in contrast with the London Inter-Bank Offered Rate (“LIBOR”) under
+Added: the previous methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members.
Given that SOFR is a secured rate backed by government securities, it is a rate that does not take into account bank credit risk, as was the case with LIBOR.
13 unchanged sentences
We have incurred and expect to continue to incur significant legal, accounting, insurance and other expenses because of being a public company.
−Removed: The Dodd-Frank Wall Street Reform and Customer Protection Act (the “Dodd-Frank Act”) and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and related rules implemented by the SEC, have required changes in corporate governance practices of public companies.
+Added: The Dodd-Frank Wall Street Reform and Customer Protection Act (the “Dodd-Frank Act”) and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and related rules implemented by the SEC and listing exchange rules and requirements, have required changes in corporate governance practices of public companies.
In addition, rules that the SEC is implementing or is required to implement pursuant to the Dodd-Frank Act are expected to require additional changes.
1 unchanged sentence
We may be unable to hire, train or retain necessary staff and may be reliant on engaging outside consultants or professionals, which could adversely affect our business if our internal infrastructure is inadequate to fulfill our public company obligations.
−Removed: These laws, rules and regulations could also make it more expensive for us to obtain director and officer liability insurance and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
+Added: These laws, regulations and rules, including new compensation clawback rules, could also make it more expensive for us to obtain director and officer liability insurance and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers.
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Our ability to successfully offer our products, grow our business and account for transactions in an appropriate and timely manner requires an effective planning and management process and certain other automated management and accounting systems.
−Removed: We recently implemented an integrated enterprise resource planning system and certain other automated management and accounting systems.
+Added: We have an integrated enterprise resource planning system and certain other automated management and accounting systems.
We periodically update our operations and financial systems, procedures and controls;
we still rely on certain manual processes and procedures that may not scale proportionately with our business growth.
−Removed: Our systems will continue to require automation, modifications and improvements to respond to current and future changes in our business.
+Added: Our systems will continue to require automation, modifications and improvements to
+Added: respond to current and future changes in our business.
Failure to implement promptly appropriate internal systems, procedures and controls could materially and adversely affect our business, financial condition and results of operations.
5 unchanged sentences
If we fail to properly and efficiently maintain an effective internal control over financial reporting, we could fail to report our financial results accurately.
−Removed: On April 12, 2021, the staff of the SEC issued a staff statement (the “SEC Statement”) on the accounting and reporting considerations for warrants issued by special purpose acquisition companies (“SPACs”).
−Removed: Specifically, the SEC Statement focused in part on provisions in warrant agreements that provide for potential changes to the settlement amounts dependent upon the characteristics of the warrant holder.
−Removed: Following consideration of the guidance in the SEC Statement, we concluded that our warrants issued through private placement (the “Private Warrants”) should be classified as a liability and measured at fair value, with changes in fair value each period reported in earnings.
−Removed: As a result, on May 13, 2021, management and the audit committee of our board of directors determined that our previously issued fiscal quarterly and year-to-date unaudited consolidated financial statements for November 28, 2020 and February 27, 2021 included and our audited consolidated financial statements for the fiscal years ending August 29, 2020, August 31, 2019 and August 25, 2018 should no longer be relied upon and would need to be restated.
−Removed: As part of the restatement process, we identified a material weakness in our internal control over financial reporting related to the determination of the appropriate accounting and classification of our Private Warrants.
−Removed: This material weakness was fully remediated with the filing of restated financial statements with the SEC for the required affected periods.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
−Removed: We developed and implemented a remediation plan to address the material weakness related to the accounting for warrants.
−Removed: These remediation measures may from time to time be time consuming and costly and there is no assurance that the remedial measures we have taken to date, or any remedial measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
−Removed: The material weakness will not be considered remediated until a sustained period of time has passed to allow management to test the design and operational effectiveness of the corrective actions.
−Removed: We may identify new material weaknesses in the future, which could limit our ability to prevent or detect a material misstatement of our annual or interim financial statements.
−Removed: The occurrence of, or failure to remediate, the material weakness we have identified or any other material weakness could result in our failure to maintain compliance with legal requirements, including Section 404 of the Sarbanes-Oxley Act and rules regarding timely filing of periodic reports, in addition to applicable stock exchange listing requirements, could cause investors to lose confidence in our financial reporting and could have an adverse effect on our the market price of our common stock.
−Removed: The restatement of certain of our financial statements subjected us to increased costs and may subject us to additional risks and uncertainties, including the increased possibility of legal proceedings.
−Removed: On April 12, 2021, the staff of the SEC issued the SEC Statement on the accounting and reporting considerations for warrants issued by SPACs.
−Removed: Specifically, the SEC Statement focused in part on provisions in warrant agreements that provide for potential changes to the settlement amounts dependent upon the characteristics of the warrant holder.
−Removed: Following consideration of the guidance in the SEC Statement, we concluded that our Private Warrants should be classified as a liability and measured at fair value, with changes in fair value each period reported in earnings.
−Removed: As a result, on May 13, 2021, management and the audit committee of our board of directors determined that our previously issued fiscal quarterly and year-to-date unaudited consolidated financial statements for November 28, 2020 and February 27, 2021 and our audited consolidated financial statements for the fiscal years ending August 29, 2020, August 31, 2019 and August 25, 2018 should no longer be relied upon and would need to be restated.
−Removed: In addition, we determined that related press releases, earnings releases, and investor communications describing our financial statements for these periods should no longer be relied upon.
−Removed: The errors identified are non-cash and related to our classification of our Private Warrants.
−Removed: Accordingly, we restated the annual, quarterly and year-to-date audited and unaudited consolidated financial statements for these periods.
−Removed: In connection with the restatement, we identified a material weakness in our internal controls over financial reporting related to the determination of the appropriate accounting and classification of our Private Warrants.
−Removed: As a result of that material weakness, the restatement, the change in accounting for our Private Warrants, and other matters raised or that may in the future be raised by the SEC, we incurred increased accounting and legal costs and may become subject to additional risks and uncertainties, including, among others, the increased possibility of legal proceedings or a review by the SEC and other regulatory bodies.
−Removed: The costs of defending against such legal proceedings or administrative actions could be significant.
−Removed: In addition, we could face monetary judgments, penalties or other sanctions that could have a material adverse effect on our business, results of operations and financial condition and could have an adverse effect on the market price of our common stock.
−Removed: This material weakness was fully remediated with the filing of restated financial statements with the SEC for the required affected periods.
+Added: Remediation measures may from time to time be time consuming and costly and there is no assurance that the remedial measures we have taken to date, or any remedial measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
+Added: A material weakness will not be considered remediated until a sustained period of time has passed to allow management to test the design and operational effectiveness of the corrective actions.
+Added: We may identify material weaknesses in the future, which could limit our ability to prevent or detect a material misstatement of our annual or interim financial statements.
+Added: The occurrence of, or failure to remediate, any material weakness we have identified or any other material weakness could result in our failure to maintain compliance with legal requirements, including Section 404 of the Sarbanes-Oxley Act and rules regarding timely filing of periodic reports, in addition to applicable stock exchange listing requirements, could cause investors to lose confidence in our financial reporting and could have an adverse effect on our the market price of our common stock.
Our only significant asset is ownership of 100% of Atkins Intermediate Holdings, LLC and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.
33 unchanged sentences
Disruptions in the worldwide economy may materially and adversely affect our business, financial condition and results of operations.
−Removed: Adverse and uncertain economic conditions, such as those caused by the inflationary environment experienced in fiscal year 2022 that is expected to continue in fiscal year 2023, geopolitical events and COVID-19, have, in the past affected, and, in the future, may affect distributor, retailer and consumer demand for our products.
+Added: Adverse and uncertain economic conditions, such as those caused by the inflationary environment first experienced in fiscal year 2022 and which continued in fiscal year 2023, geopolitical events and COVID-19, have, in the past affected, and, in the future, may affect distributor, retailer and consumer demand for our products.
In addition, our ability to manage normal commercial relationships with our suppliers, contract manufacturers, distributors, retailers, consumers and creditors may suffer.
3 unchanged sentences
Distributors and retailers may become more conservative in their ordering in response to these conditions and seek to reduce their inventories.
−Removed: Our results of operations depend on, among other things, our ability to maintain and increase sales volume with our existing distributors and retailers, to attract new consumers and to provide products that appeal to consumers at prices they are willing and able to pay.
+Added: Our results of operations depend on, among other things, our ability to maintain and increase sales volume with our existing distributors and retailers, to attract new consumers and to provide products that appeal to
+Added: consumers at prices they are willing and able to pay.
Prolonged unfavorable economic conditions may have an adverse effect on our sales and profitability.
9 unchanged sentences
In particular, our operations are subject to U.S.
−Removed: and foreign anti-corruption and trade control laws and regulations, such as the FCPA or the Bribery Act, export controls and economic sanctions programs, including those administered by the OFAC and the EU.
+Added: and foreign anti-corruption and trade control laws and regulations, such as the FCPA, export controls and economic sanctions programs, including those administered by the OFAC.
Because of doing business in foreign countries and with foreign partners, we are exposed to a heightened risk of violating anti-corruption and trade control laws and sanctions regulations.
The FCPA prohibits us from providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage.
−Removed: In addition, the Bribery Act extends beyond bribery of foreign public officials and also applies to transactions with private persons.
−Removed: The provisions of the Bribery Act are also more onerous than the FCPA in several other respects, including jurisdictional reach, non-exemption of facilitation payments and, potentially, penalties.
−Removed: Our continued expansion outside the United States, including in developing countries, and our development of new partnerships and joint venture relationships worldwide, could increase the risk of FCPA, OFAC, Bribery Act or EU sanctions violations in the future.
+Added: Our continued expansion outside the United States, including in developing countries, and our development of new partnerships and joint venture relationships worldwide, could increase the risk of FCPA, OFAC or other sanctions violations in the future.
Violations of anti-corruption and trade control laws and sanctions regulations may cause reputational damage and are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, and criminal fines and imprisonment.
12 unchanged sentences
The doctrine of corporate opportunity is intended to preclude officers, directors or other fiduciaries from personally benefiting from opportunities that belong to the corporation.
−Removed: Our amended and restated certificate of incorporation provides that, to the extent allowed by law, the doctrine of “corporate opportunity” does not apply with respect to the directors, officers, employees or representatives of Conyers Park Sponsor, Centerview Capital and Centerview Partners and their respective affiliates.
+Added: Our amended and restated certificate of incorporation provides that, to the extent allowed by law, the doctrine of “corporate opportunity” does not apply with respect to the directors, officers, employees or representatives of Centerview Capital, Centerview Partners, our original sponsor, and their respective affiliates.
The doctrine of corporate opportunity shall apply with respect to any of our directors or officers with respect to a corporate opportunity that was offered in writing to such person solely in his or her capacity as our director or officer and such opportunity is one which they are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
4 unchanged sentences
Unresolved Staff Comments.
+Added: Cybersecurity
+Added: Not applicable
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.