Simply Good Foods Co 10-K

Item 8. Financial Statements and Supplementary Data. TABLE OF CONTENTS Page Index to the Financial Statements Report of Independent Registered Public Accounting Firm 47 Consolidated Balance Sheets 49 Consolidated Statements of Income and Comprehensive Income 50 Consolidated Statements of Cash Flows 51 Consolidated Statements of Stockholders’ Equity 53 Notes to Consolidated Financial Statements Note 1. Nature of Operations and Principles of Consolidation 54 Note 2 . Summary of Significant Accounting Policies 54 Note 3 . Property and Equipment, Net 59 Note 4 . Goodwill and Intangibles 60 Note 5 . Accrued Expenses and Other Current Liabilities 61 Note 6 . Long-Term Debt and Line of Credit 61 Note 7 . Fair Value of Financial Instruments 63 Note 8 . Income Taxes 64 Note 9 . Leases 66 Note 1 0 . Commitments and Contingencies 67 Note 1 1 . Stockholder’s Equity 68 Note 1 2 . Earnings Per Share 68 Note 1 3 . Omnibus Incentive Plan 69 Note 1 4 . Segment and Customer Information 72 Note 1 5 . Restructuring and Related Charges 73 46 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of The Simply Good Foods Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of The Simply Good Foods Company and subsidiaries (the "Company") as of August 26, 2023 and August 27, 2022, the related consolidated statements of income and comprehensive income, stockholders' equity, and cash flows, for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 26, 2023 and August 27, 2022, and the results of its operations and its cash flows for each of the three years in the period ended August 26, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of August 26, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 24, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition — Trade Promotions — Refer to Note 2 to the financial statements Critical Audit Matter Description The Company offers trade promotions through various programs to customers and consumers. Trade promotions include discounts, rebates, slotting, and other marketing activities. Trade promotions are recorded as a reduction to net sales with a corresponding reduction to accounts receivable at the time of revenue recognition for the underlying sale. The recognition of trade promotions requires the Company to make estimates regarding the volume of incentives that will be redeemed and their total cost. These estimates are made using various information including historical data on performance of similar trade promotional activities, market data, and the Company's best estimates of current activity. As of August 26, 2023, the allowance for trade promotions balance, which is recorded as a reduction to accounts receivable, was approximately $28.8 million. Given the subjectivity of estimating the expected promotional claims, performing audit procedures to evaluate whether the allowance for trade promotions balance is appropriately recorded as of August 26, 2023, required a high degree of auditor judgment and an increased extent of effort. 47 How the Critical Audit Matter Was Addressed in the Audit Our auditing procedures related to the allowance for trade promotions balance included the following, among others: • We tested the effectiveness of internal controls over the allowance for trade promotions. • For a selection of allowance for trade promotions balance recorded as of August 26, 2023, we: ◦ Confirmed contract terms directly with the customer. ◦ Agreed contract terms from the accounting records to the promotion agreement with the customer and verified the promotion period was prior to August 27, 2023. ◦ Evaluated the appropriateness of the year-end trade accrual estimate using historical data on performance of similar trade promotional activities, market data, and subsequent customer activity. • We evaluated management’s ability to estimate promotional claims incurred, but not yet received for potential management bias by comparing historical promotional claims received to management’s estimates of the claims to be received. • For a selection of customer promotional claims resolved as of August 26, 2023, we compared that amount to the August 26, 2023 allowance for promotions balance and traced the resolved deduction to an approved trade promotion. • For a selection of customer promotional claims resolved after August 26, 2023, we compared that amount to the August 26, 2023 allowance for promotions balance and traced the resolved deduction to an approved trade promotion. /s/ Deloitte & Touche LLP Denver, Colorado October 24, 2023 We have served as the Company’s auditor since 2019. 48 Table of Contents The Simply Good Foods Company and Subsidiaries Consolidated Balance Sheets (In thousands, except share data) August 26, 2023 August 27, 2022 Assets Current assets: Cash $ 87,715 $ 67,494 Accounts receivable, net 145,078 132,667 Inventories 116,591 125,479 Prepaid expenses 6,294 5,027 Other current assets 15,974 20,934 Total current assets 371,652 351,601 Long-term assets: Property and equipment, net 24,861 18,157 Intangible assets, net 1,108,119 1,123,258 Goodwill 543,134 543,134 Other long-term assets 49,318 58,099 Total assets $ 2,097,084 $ 2,094,249 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 52,712 $ 62,149 Accrued interest 1,940 160 Accrued expenses and other current liabilities 35,062 39,675 Current maturities of long-term debt 143 264 Total current liabilities 89,857 102,248 Long-term liabilities: Long-term debt, less current maturities 281,649 403,022 Deferred income taxes 116,133 105,676 Other long-term liabilities 38,346 44,639 Total liabilities 525,985 655,585 See commitments and contingencies (Note 10) Stockholders’ equity: Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued — — Common stock, $0.01 par value, 600,000,000 shares authorized, 101,929,868 and 101,322,834 issued at August 26, 2023 and August 27, 2022, respectively 1,019 1,013 Treasury stock, 2,365,100 shares and 1,818,754 shares at cost at August 26, 2023 and August 27, 2022, respectively ( 78,451 ) ( 62,003 ) Additional paid-in-capital 1,303,168 1,287,224 Retained earnings 347,956 214,381 Accumulated other comprehensive loss ( 2,593 ) ( 1,951 ) Total stockholders’ equity 1,571,099 1,438,664 Total liabilities and stockholders’ equity $ 2,097,084 $ 2,094,249 See accompanying Notes to the Consolidated Financial Statements 49 Table of Contents The Simply Good Foods Company and Subsidiaries Consolidated Statements of Income and Comprehensive Income (In thousands, except share and per share data) 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 26, 2023 August 27, 2022 August 28, 2021 Net sales $ 1,242,672 $ 1,168,678 $ 1,005,613 Cost of goods sold 789,252 723,117 595,847 Gross profit 453,420 445,561 409,766 Operating expenses: Selling and marketing 119,489 121,685 112,928 General and administrative 111,566 103,832 106,181 Depreciation and amortization 17,416 17,285 16,982 Total operating expenses 248,471 242,802 236,091 Income from operations 204,949 202,759 173,675 Other income (expense): Interest income 1,144 15 84 Interest expense ( 30,068 ) ( 21,881 ) ( 31,557 ) (Loss) in fair value change of warrant liability — ( 30,062 ) ( 66,197 ) Gain on legal settlement — — 5,000 (Loss) gain on foreign currency transactions ( 344 ) 191 ( 5 ) Other income (expense) 11 ( 453 ) ( 140 ) Total other income (expense) ( 29,257 ) ( 52,190 ) ( 92,815 ) Income before income taxes 175,692 150,569 80,860 Income tax expense 42,117 41,995 39,980 Net income $ 133,575 $ 108,574 $ 40,880 Other comprehensive income: Foreign currency translation, net of reclassification adjustments ( 642 ) ( 1,133 ) 61 Comprehensive income $ 132,933 $ 107,441 $ 40,941 Earnings per share: Basic $ 1.34 $ 1.10 $ 0.43 Diluted $ 1.32 $ 1.08 $ 0.42 Weighted average shares outstanding: Basic 99,442,046 98,754,913 95,743,413 Diluted 100,880,079 100,589,156 97,365,598 See accompanying Notes to the Consolidated Financial Statements 50 Table of Contents The Simply Good Foods Company and Subsidiaries Consolidated Statements of Cash Flows (In thousands) 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 26, 2023 August 27, 2022 August 28, 2021 Operating activities Net income $ 133,575 $ 108,574 $ 40,880 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,253 19,299 18,174 Amortization of deferred financing costs and debt discount 2,763 2,559 4,636 Stock compensation expense 14,480 11,697 8,265 Loss in fair value change of warrant liability — 30,062 66,197 Estimated credit losses 315 601 1,114 Unrealized loss (gain) on foreign currency transactions 344 ( 191 ) 5 Deferred income taxes 10,590 11,789 9,403 Amortization of operating lease right-of-use asset 6,729 6,620 5,051 Loss on operating lease right-of-use asset impairment — — 686 Gain on lease termination — ( 30 ) ( 156 ) Other 567 681 ( 16 ) Changes in operating assets and liabilities: Accounts receivable, net ( 13,374 ) ( 21,796 ) ( 22,284 ) Inventories 8,169 ( 29,508 ) ( 39,349 ) Prepaid expenses ( 1,306 ) ( 138 ) ( 1,202 ) Other current assets 6,837 ( 11,739 ) 2,322 Accounts payable ( 9,510 ) 2,878 25,923 Accrued interest 1,780 100 ( 900 ) Accrued expenses and other current liabilities ( 5,223 ) ( 15,283 ) 15,423 Other assets and liabilities ( 5,872 ) ( 5,536 ) ( 2,083 ) Net cash provided by operating activities 171,117 110,639 132,089 Investing activities Purchases of property and equipment ( 11,585 ) ( 5,232 ) ( 5,911 ) Issuance of note receivable — ( 2,400 ) ( 1,600 ) Proceeds from sale of business — — 5,800 Investments in intangible assets and other assets ( 603 ) ( 524 ) ( 795 ) Net cash used in investing activities ( 12,188 ) ( 8,156 ) ( 2,506 ) Financing activities Proceeds from option exercises 5,247 4,343 700 Tax payments related to issuance of restricted stock units ( 2,859 ) ( 3,660 ) ( 435 ) Repurchase of common stock ( 16,448 ) ( 59,858 ) — Payments on finance lease obligations ( 278 ) ( 313 ) ( 314 ) Principal payments of long-term debt ( 121,500 ) ( 50,000 ) ( 150,000 ) Deferred financing costs ( 2,694 ) ( 544 ) — Net cash (used in) financing activities ( 138,532 ) ( 110,032 ) ( 150,049 ) Net increase (decrease) in cash 20,397 ( 7,549 ) ( 20,466 ) Effect of exchange rate on cash ( 176 ) ( 302 ) ( 36 ) Cash at beginning of period 67,494 75,345 95,847 Cash at end of period $ 87,715 $ 67,494 $ 75,345 51 Table of Contents 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 26, 2023 August 27, 2022 August 28, 2021 Supplemental disclosures of cash flow information Cash paid for interest $ 25,511 $ 19,222 $ 27,821 Cash paid for taxes $ 27,411 $ 49,181 $ 32,190 Non-cash investing and financing transactions Non-cash proceeds from sale of business $ — $ — $ 3,000 Non-cash additions to property and equipment $ 178 $ 743 $ 1,203 Non-cash additions to intangible assets and other assets $ 26 $ 86 $ 218 Issuance of common stock in extinguishment of warrant liabilities $ — $ 189,897 $ — Operating lease right-of-use assets recognized after ASU No 2016-02 transition $ 289 $ 6,872 $ 26,222 Non-cash credits for repayment of note receivable $ 395 $ — $ — See accompanying Notes to the Consolidated Financial Statements 52 Table of Contents The Simply Good Foods Company and Subsidiaries Consolidated Statements of Stockholders’ Equity (In thousands, except share data) Common Stock Treasury Stock Additional Paid in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Shares Amount Shares Amount Balance, August 29, 2020 95,751,845 $ 958 98,234 $ ( 2,145 ) $ 1,076,472 $ 64,927 $ ( 879 ) $ 1,139,333 Net income — — — — — 40,880 — 40,880 Stock-based compensation — — — — 8,265 — — 8,265 Foreign currency translation adjustments — — — — — — 61 61 Shares issued upon vesting of restricted stock units 72,755 1 — — ( 436 ) — — ( 435 ) Exercise of options to purchase common stock 58,308 — — — 700 — — 700 Balance, August 28, 2021 95,882,908 $ 959 98,234 $ ( 2,145 ) $ 1,085,001 $ 105,807 $ ( 818 ) $ 1,188,804 Net income — — — — — 108,574 — 108,574 Stock-based compensation — — — — 11,697 — — 11,697 Foreign currency translation adjustments — — — — — — 14 14 Reclassification adjustment for currency translation gains related to the liquidation of foreign entities — — — — — — ( 1,147 ) ( 1,147 ) Repurchase of common stock — — 1,720,520 ( 59,858 ) — — — ( 59,858 ) Warrant conversion 4,830,761 48 — — 189,849 — — 189,897 Shares issued upon vesting of restricted stock units 256,374 3 — — ( 3,663 ) — — ( 3,660 ) Exercise of options to purchase common stock 352,791 3 — — 4,340 — — 4,343 Balance, August 27, 2022 101,322,834 $ 1,013 1,818,754 $ ( 62,003 ) $ 1,287,224 $ 214,381 $ ( 1,951 ) $ 1,438,664 Net income — — — — — 133,575 — 133,575 Stock-based compensation — — — — 13,562 — — 13,562 Foreign currency translation adjustments — — — — — — ( 642 ) ( 642 ) Repurchase of common stock — — 546,346 ( 16,448 ) — — — ( 16,448 ) Shares issued upon vesting of restricted stock units 210,718 2 — — ( 2,861 ) — — ( 2,859 ) Exercise of options to purchase common stock 396,316 4 — — 5,243 — — 5,247 Balance, August 26, 2023 101,929,868 $ 1,019 2,365,100 $ ( 78,451 ) $ 1,303,168 $ 347,956 $ ( 2,593 ) $ 1,571,099 See accompanying Notes to the Consolidated Financial Statements 53 Table of Contents Notes to Consolidated Financial Statements (In thousands, except for share and per share data) 1. Nature of Operations and Principles of Consolidation Description of Business The Simply Good Foods Company (“Simply Good Foods” or the “Company”) is a consumer packaged food and beverage company that aims to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements, and other product offerings. The product portfolio the Company develops, markets and sells consists primarily of protein bars, ready-to-drink (“RTD”) shakes, sweet and salty snacks and confectionery products marketed under the Atkins® and Quest® brand names. Simply Good Foods is poised to expand its wellness platform through innovation and organic growth along with acquisition opportunities in the nutritional snacking space. The Company’s nutritious snacking platform consists of brands that specialize in providing products for consumers that follow certain nutritional philosophies and health-and-wellness trends: Atkins® for those following a low-carb lifestyle and Quest® for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbs. The Company distributes its products in major retail channels, primarily in North America, including grocery, club, and mass merchandise, as well as through e-commerce, convenience, specialty, and other channels. The Company’s portfolio of nutritious snacking brands gives it a strong platform with which to introduce new products, expand distribution, and attract new consumers to its products. The common stock of Simply Good Foods is listed on the Nasdaq Capital Market under the symbol “SMPL.” While the Company’s business has improved from the end of fiscal year 2022, the Company’s business performance in fiscal year 2023 was affected by unfavorable raw material costs, higher co-manufacturing costs, and supply chain challenges, including supply chain disruptions resulting from labor shortages and disruptions in sourcing ingredients. The supply chain environment showed signs of improvement during the year, which we expect to continue during fiscal year 2024. Additionally, management is continuing to monitor the dynamic macroeconomic inflationary environment in the United States and elsewhere, elevated levels of supply chain costs, and consumer behavior. Current or future governmental policies may increase the risk of inflation and possible economic recession, which could further increase the costs of ingredients, packaging and finished goods for our business as well as negatively effect consumer behavior and demand for our products. Basis of Presentation The consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The Company maintains its accounting records on a 52/53-week fiscal year, ending on the last Saturday in August. The financial information presented within the Company’s consolidated financial statements has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial statements include Consolidated Balance Sheets for the periods ended August 26, 2023 and August 27, 2022. The remaining financial statements include the fifty-two weeks ended August 26, 2023, the fifty-two weeks ended August 27, 2022, and the fifty-two weeks ended August 28, 2021. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Simply Good Foods and its subsidiaries on a consolidated basis. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Fair Value Measurements Fair value represents the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities are valued based upon observable and non-observable inputs. Valuations using Level 1 inputs are based on unadjusted quoted 54 Table of Contents prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 inputs utilize significant other observable inputs available at the measurement date, other than quoted prices included in Level 1. Valuations using Level 3 inputs are based on significant unobservable inputs that cannot be corroborated by observable market data and require significant judgment. There were no significant transfers between levels during any period presented. Cash Cash consists of cash on hand, deposits available on demand and other short-term, highly liquid investments with original maturities of three months or less. Accounts Receivable, Net and Expected Credit Losses Accounts receivable, net consists primarily of trade receivables, net of allowances for doubtful accounts, returns, and trade promotions. The Company sells its products for cash or on credit terms, which are established in accordance with local and industry practices and typically require payment within 30 days of delivery and may allow discounts for early payment. The Company estimates its allowance for doubtful accounts and the related expected credit loss based upon the Company’s historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts. Accounts receivable are written off when determined to be uncollectible. Charges related to credit loss on accounts receivables from transactions with external customers were approximately $ 0.7 million, $ 0.1 million, and $ 0.6 million for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021, respectively. As of August 26, 2023 and August 27, 2022, the allowance for doubtful accounts was $ 1.9 million and $ 1.2 million, respectively. Additionally, as of August 26, 2023, the Company had an expected credit loss reserve of $ 1.0 million on its $ 3.0 million note receivable related to the SimplyProtein Sale, as defined in Note 4, Goodwill and Intangibles, of which $ 0.5 million was recorded during each of the fifty-two weeks ended August 27, 2022 and August 28, 2021, respectively. Inventories Inventories are valued at the lower of cost or net realizable value on a first-in, first-out basis, adjusted for the value of inventory that is determined to be excess, obsolete, expired or unsaleable. Obsolete inventory is reserved at 50 % for inventory four to six months from expiration, and 100 % for items within three months of expiration. Reserves are also taken for certain products or packaging materials when it is determined their cost may not be recoverable. Inventories, as presented with the Consolidated Balance Sheets, is summarized as follows: (In thousands) August 26, 2023 August 27, 2022 Finished goods $ 111,761 $ 116,047 Raw materials 6,512 10,870 Reserve for obsolete inventory ( 1,682 ) ( 1,438 ) Total inventories $ 116,591 $ 125,479 Property and Equipment, Net Property and equipment, net is stated at the allocated fair value for acquired assets. Additions to property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives. The general ranges of estimated useful lives are: Furniture and fixtures 7 years Computer equipment, software and website development costs 3 - 5 years Machinery and equipment 5 - 7 years Office equipment 3 - 5 years Leasehold improvements are amortized over the shorter of the remaining term of the lease or the useful life of the improvement utilizing the straight-line method. The Company performs impairment tests for Property and equipment, net when circumstances indicate that the carrying value of the asset may not be recoverable. There were no indicators of impairment in the fifty-two weeks ended August 26, 2023, August 27, 2022, or August 28, 2021. 55 Table of Contents Goodwill and Intangible Assets, Net Goodwill and Intangible assets, net result primarily from the consummation of the business combination between Conyers Park Acquisition Corp. and NCP-ATK Holdings, Inc. on July 7, 2017, which created the Company, and the acquisition of Quest. Intangible assets primarily includes brands and trademarks with indefinite lives and customer-related relationships with finite lives. Upon acquisition, the purchase price is first allocated to identifiable assets and liabilities, including customer-related intangible assets and trademarks, with any remaining purchase price recorded as Goodwill . Goodwill and indefinite-lived intangible assets are not amortized but instead are tested for impairment at least annually, or more frequently if indicators of impairment exist. The Company conducts its annual impairment tests at the beginning of the fourth fiscal quarter. Goodwill and indefinite-lived intangible assets are assessed using either a qualitative or quantitative approach to determine whether it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying amount. The qualitative assessment evaluates factors including macro-economic conditions, industry-specific and company-specific considerations, legal and regulatory environments, and historical performance. If the Company determines that it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying value, a quantitative assessment is performed. Otherwise, no further assessment is required. The quantitative approach compares the estimated fair value of the reporting unit, including goodwill, or the indefinite-lived intangible asset to its carrying amount. Impairment is indicated if the estimated fair value of the reporting unit or indefinite-lived intangible asset is less than the carrying amount, and an impairment charge is recognized for the differential. For fiscal year 2023, the Company performed a qualitative goodwill impairment assessment for its consolidated reporting unit and its indefinite-lived intangible assets. The qualitative assessments did not identify indicators of impairment, and it was determined that it was more likely than not the reporting unit and indefinite-lived intangibles had fair values in excess of their carrying values. Accordingly, no further impairment assessment was necessary, and the Company determined neither its reporting unit nor any indefinite-lived intangibles were impaired. There were no impairment charges related to goodwill in the fifty-two weeks ended August 26, 2023 or since the inception of the Company. There were no impairment charges related to indefinite-lived intangibles recognized in the fifty-two weeks ended August 26, 2023 or August 27, 2022. Refer to Note 4, Goodwill and Intangibles for additional information regarding the Company’s reporting units and impairment assessments. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company reviews for impairment indicators of finite-lived intangibles and other long-lived assets as described in the “Property and Equipment, Net” significant accounting policy. Deferred Financing Costs and Debt Discounts Costs incurred in obtaining long-term financing paid to parties other than creditors are considered a deferred financing cost and are amortized over the terms of the long-term financing agreements using the effective-interest method. Amounts paid to creditors are recorded as a reduction in the proceeds received by the creditor and are considered a discount on the issuance of debt. Income Taxes Income taxes include federal, state and foreign taxes currently payable, and deferred taxes arising from temporary differences between income for financial reporting and income tax purposes. Deferred tax assets and liabilities are determined based on the differences between the financial statement balances and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the fiscal year that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to amounts expected to be realized. Leases Contracts are evaluated to determine whether they contain a lease at inception. Leases are classified as either finance leases or operating leases based on criteria in ASC Topic 842, Leases. The Company’s operating leases are generally comprised of real estate and certain equipment used in warehousing products. The Company’s finance leases are generally comprised of warehouse equipment. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The majority of the Company’s leases do not provide an implicit rate; therefore, the Company uses its secured incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments for those leases. The Company’s incremental borrowing rate for a lease is the rate of interest it would pay to borrow on a collateralized basis over a similar term to the lease in a similar economic environment. The Company applied incremental borrowing rates using a portfolio approach. Right-of-use assets also include any lease payments made and exclude lease incentives. Lease terms may 56 Table of Contents include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term operating leases that have a term of one year or less. The Company monitors for triggering events or conditions that require a reassessment of its leases. When the reassessment requires a re-measurement of the lease liability, a corresponding adjustment is made to the carrying amount of the right-of-use asset. Additionally, the Company reviewed for impairment indicators of its right-of-use assets and other long-lived assets as described in the “Property and Equipment, Net” significant accounting policy. Warrant Accounting The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued private placement stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity (“ASC 815-40”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is assessed as part of this evaluation. During the fifty-two weeks ended August 27, 2022 and August 28, 2021, the Company had outstanding liability-classified private warrants that allowed holders to purchase 6,700,000 shares of the Company’s common stock (the “Private Warrants”). Such Private Warrants were held by Conyers Park Sponsor, LLC (“Conyers Park”), a related party. Each whole warrant entitled the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share. On January 7, 2022, Conyers Park elected to exercise the Private Warrants in full on a cashless basis, resulting in a net issuance of 4,830,761 shares of the Company’s common stock. As a result of the cashless exercise on January 7, 2022, there were no outstanding liability-classified Private Warrants as of August 26, 2023 or August 27, 2022. During the reporting periods the Private Warrants were outstanding, they were precluded from equity classification, being liability-classified. The Company accounted for these Private Warrants as a derivative warrant liability in accordance with ASC 815-40. Accordingly, the Company recognized the Private Warrants as a liability at fair value and adjusted the Private Warrants to fair value at each reporting period through other income. The fair value adjustments were determined using a Black-Scholes option-pricing methodology (“Black-Scholes model”). The valuation was primarily based on observable market data while the related theoretical private warrant volatility assumption within the Black-Scholes model represented a Level 3 measurement within the fair value measurement hierarchy. The periodic remeasurement of the Private Warrants was reflected in (Loss) in fair value change of warrant liability within the Consolidated Statements of Income and Comprehensive Income. Revenue Recognition The Company recognizes revenue when performance obligations under the terms of a contract with its customer are satisfied. The Company has determined that fulfilling and delivering products is a single performance obligation. Revenue is recognized at the point in time when the Company has satisfied its performance obligation and the customer has obtained control of the products. This generally occurs when the product is delivered to or picked up by the customer based on applicable shipping terms, which is typically within 30 days. Revenue is measured as the amount of consideration expected to be received in exchange for fulfilled product orders, including estimates of variable consideration. The most common forms of variable consideration include trade promotions, such as consumer incentives, coupon redemptions and other marketing activities, allowances for unsaleable product, and any additional amounts where a distinct good or service cannot be identified or the value cannot be reasonably estimated. Trade promotions are recorded as a reduction to net sales with a corresponding reduction to accounts receivable at the time of revenue recognition for the underlying sale. The recognition of trade promotions requires management to make estimates regarding the volume of incentive that will be redeemed and their total cost. As of August 26, 2023 and August 27, 2022, the allowance for trade promotions was $ 28.8 million and $ 23.9 million, respectively. Estimates of variable consideration are made using various information including historical data on performance of similar trade promotional activities, market data from IRI, and the Company’s best estimate of current activity. The Company reviews these estimates regularly and makes revisions as necessary. Revisions can include changes for consideration paid to customers that lack sufficient evidence to support a distinct good or service assertion, or for which a reasonably estimable fair value cannot be determined, primarily related to the Company’s assessments of cooperative advertising programs. Uncertainties related to the estimate of variable consideration are resolved in a short time frame and do not require any additional constraint on variable consideration. Adjustments to variable consideration are recognized in the period the adjustments are identified and have historically been insignificant. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. The Company provides standard assurance type warranties that its products will comply with all agreed-upon specifications. No 57 Table of Contents services beyond an assurance type warranty are provided to customers. While customers generally have a right to return defective or non-conforming products, past experience has demonstrated that product returns have been immaterial. Customer remedies for defective or non-conforming products may include a refund or exchange. As a result, the right of return is estimated and recorded as a reduction in revenue at the time of sale, if necessary. The Company’s customer contracts identify product quantity, price and payment terms. Payment terms are granted consistent with industry standards. Although some payment terms may be more extended, the majority of the Company’s payment terms are less than 60 days. As a result, revenue is not adjusted for the effects of a significant financing component. Amounts billed and due from customers are classified as Accounts receivable, net on the Consolidated Balance Sheets. The Company utilizes third-party contract manufacturers for the manufacture of its products. The Company has evaluated whether it is the principal or agent in these relationships. The Company has determined that it is the principal in all cases, as it retains the responsibility for fulfillment and risk of loss, as well as establishes the price. In accordance with ASC Topic 606, Revenue from Contracts with Customers, the Company has elected the practical expedient to expense the incremental costs to obtain a contract, because the amortization period would be less than one year, and the practical expedient for shipping and handling costs. Shipping and handling costs incurred to deliver products to customers are accounted for as fulfillment activities, rather than a promised service, and as such are included in Cost of goods sold in the Consolidated Statements of Income and Comprehensive Income. Revenues from transactions with external customers for each of the Company’s products would be impracticable to disclose and management does not view its business by product line. For revenue disaggregated by geographic area and brand refer to Note 14, Segment and Customer Information. Cost of Goods Sold Costs of goods sold represent costs directly related to the manufacture and distribution of the Company’s products. Such costs include raw materials, co-manufacturing costs, packaging, shipping and handling, third-party distribution, and depreciation of distribution center equipment and leasehold improvements. Shipping and Handling Costs Shipping and handling costs include costs paid to third-party warehouse operators associated with delivering product to customers and depreciation and amortization of company-owned assets at the third-party warehouse. Shipping and handling costs are recognized in Cost of goods sold . Costs relating to products shipped to customers were $ 89.2 million, $ 91.7 million, and $ 66.5 million for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021, respectively. Advertising Costs Production costs related to television commercials are expensed when first aired. All other advertising costs are expensed when incurred or when the advertising service is received through Selling and marketing . Total advertising costs were $ 79.2 million, $ 84.3 million, and $ 74.9 million for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021, respectively. Production costs related to television commercials not yet aired and prepaid advertising services not yet received are included in Prepaid expenses in the accompanying Consolidated Balance Sheets. As of August 26, 2023 and August 27, 2022, total prepaid advertising expenses were $ 1.8 million and $ 2.0 million, respectively. Research and Development Activities The Company’s research and development activities primarily consist of generating and testing new product concepts, new flavors and packaging. The Company expenses research and development costs as incurred related to compensation, facility costs, consulting, and supplies. Research and development activities are primarily internal and associated costs are included in General and administrative . The Company’s total research and development expenses were $ 4.3 million, $ 4.1 million, and $ 3.5 million for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021, respectively. Share-Based Compensation The Company uses share-based compensation, including stock options, restricted stock units, performance stock units, and stock appreciation rights, to provide long-term performance incentives for its employees, directors, and consultants. Share-based compensation is recognized on a straight-line basis over the requisite service period of the award based on their grant-date fair value. Forfeitures are 58 Table of Contents recognized as they occur. Share-based compensation expense is included in General and administrative. Defined Contribution Plan The Company sponsors defined contribution plans to provide retirement benefits to its employees. The Company’s 401(k) plan and similar plans for non-domestic employees are based on a portion of eligible pay up to a defined maximum. All matching contributions are made in cash. Expense associated with defined contribution plans was $ 1.4 million, $ 1.1 million, and $ 1.4 million for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021, respectively. Foreign Currency Translation For all foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated into U.S. dollars using the exchange rate in effect at the end of each reporting period. Income statement accounts are translated at the average exchange rate prevailing during each reporting period. Translation adjustments are recorded as a component of Other comprehensive income . Gains or losses resulting from transactions in foreign currencies are included in Other income (expense) . Recently Issued and Adopted Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. Additionally, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848, which extended the period of time for which ASU 2020-04 could be applied. As a result, the amendments in ASU 2020-04 can be applied to contract modifications due to rate reform and eligible existing and new hedging relationships entered into between March 12, 2020 and December 31, 2024. The amendments of these ASUs are effective for all entities and should be applied on a prospective basis. On January 21, 2022, the Company entered into a repricing amendment (the “2022 Repricing Amendment”) to its credit agreement with Barclays Bank PLC and other parties (as amended to date, the “Credit Agreement”), as described in Note 6, Long-Term Debt and Line of Credit. In addition to replacing the London Interbank Offered Rate (“LIBOR”) as the Credit Agreement’s reference rate with the Secured Overnight Financing Rate (“SOFR”), the 2022 Repricing Amendment contemporaneously modified other terms that changed, or had the potential to change, the amount or timing of contractual cash flows as contemplated by the guidance in ASU 2020-04. As such, the contract modifications related to the 2022 Repricing Amendment were outside of the scope of the optional guidance in ASU 2020-04. The Company will continue to monitor the effects of rate reform, if any, on any new or amended contracts through December 31, 2024. The Company does not anticipate the amendments in this ASU will be material to its consolidated financial statements. No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material effect on the Company’s consolidated financial statements. 3. Property and Equipment, Net Property and equipment, net , as presented with the Consolidated Balance Sheets, is summarized as follows: (In thousands) August 26, 2023 August 27, 2022 Furniture and fixtures $ 7,291 $ 7,232 Computer equipment and software 1,570 1,432 Machinery and equipment 16,944 6,292 Leasehold improvements 9,747 9,883 Finance lease right-of-use-assets 968 1,185 Construction in progress 221 137 Property and equipment, gross 36,741 26,161 Less: accumulated depreciation ( 11,880 ) ( 8,004 ) Property and equipment, net $ 24,861 $ 18,157 Total depreciation expense was $ 4.4 million for the fifty-two weeks ended August 26, 2023, $ 3.2 million for the fifty-two weeks 59 Table of Contents ended August 27, 2022, and $ 2.3 million for the fifty-two weeks ended August 28, 2021. 4. Goodwill and Intangibles As of August 26, 2023 and August 27, 2022, Goodwill in the Consolidated Balance Sheets was $ 543.1 million. For fiscal year 2023, the Company performed a qualitative goodwill impairment assessment for its consolidated reporting unit. The qualitative assessment did not identify indicators of impairment, and it was determined that it was more likely than not the reporting unit had a fair value in excess of its carrying value. Accordingly, no further impairment assessment was necessary, and the Company determined its reporting unit was not impaired. There were no impairment charges related to goodwill during the fifty-two weeks ended August 26, 2023 or since the inception of the Company. During the fifty-two weeks ended August 27, 2022, the Company substantially completed its efforts to fully integrate its operations and organization structure after the Quest Acquisition. The Company aligned the nature of its production processes and the methods used to distribute products to customers for the Atkins® and Quest® brands. The Company also designed its organizational structure to support entity-wide business functions across brands, products, customers, and geographic regions. Additionally, the Company’s chief operating decision maker reviews operating results and forecasts at the consolidated level. As a result, during fifty-two weeks ended August 26, 2023 and August 27, 2022, the Company determined its operations are organized into one , consolidated operating segment and reporting unit. Previously, during the fifty-two weeks ended August 28, 2021, the Company had two reporting units which were its operating segments, Atkins and Quest. Intangible assets, net in the Consolidated Balance Sheets consist of the following: August 26, 2023 (In thousands) Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 974,000 $ — $ 974,000 Intangible assets with finite lives: Customer relationships 15 years $ 174,000 $ 53,303 $ 120,697 Licensing agreements 13 years 22,000 10,498 11,502 Proprietary recipes and formulas 7 years 7,000 6,131 869 Software and website development costs 3 - 5 years 6,328 5,356 972 Intangible assets in progress 3 - 5 years 79 — 79 $ 1,183,407 $ 75,288 $ 1,108,119 August 27, 2022 (In thousands) Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 974,000 $ — $ 974,000 Intangible assets with finite lives: Customer relationships 15 years $ 174,000 $ 41,703 $ 132,297 Licensing agreements 13 years 22,000 8,581 13,419 Proprietary recipes and formulas 7 years 7,000 5,131 1,869 Software and website development costs 3 - 5 years 5,863 4,190 1,673 $ 1,182,863 $ 59,605 $ 1,123,258 Changes in Intangible assets, net during the fifty-two weeks ended August 26, 2023 and August 27, 2022 were primarily related to recurring amortization expense. Changes in Intangible assets, net during the fifty-two weeks ended August 28, 2021 were primarily related to the sale of the assets and liabilities of the Company’s SimplyProtein brand and recurring amortization expense. In conjunction with the SimplyProtein Sale, the Company sold its SimplyProtein brand intangible asset, which had a carrying value of approximately $ 5.0 million as of the date of the sale. 60 Table of Contents During the fifty-two weeks ended August 26, 2023, the Company performed qualitative impairment assessments for its indefinite-lived intangible assets. The qualitative assessments did not identify indicators of impairment, and it was determined that it was more likely than not each indefinite-lived intangible asset had fair values in excess of their carrying values. Accordingly, no further impairment assessment was necessary. There were no impairment charges related to indefinite-lived intangibles recognized in the fifty-two weeks ended August 26, 2023, August 27, 2022, or August 28, 2021, respectively. During the fifty-two weeks ended August 26, 2023, the Company did not identify indicators of impairment related to its finite-lived intangible assets, which are tested for impairment when events or circumstances indicated that the carrying amount may not be recoverable. There were no impairment charges related to the Company’s finite-lived intangible assets in the fifty-two weeks ended August 26, 2023, August 27, 2022, or August 28, 2021, respectively. Amortization expense related to intangible assets was $ 15.7 million for the fifty-two weeks ended August 26, 2023, $ 15.8 million for the fifty-two weeks ended August 27, 2022, and $ 15.6 million for the fifty-two weeks ended August 28, 2021. Estimated future amortization for each of the next five fiscal years and thereafter is as follows: (In thousands) Amortization 2024 $ 15,091 2025 13,980 2026 13,740 2027 13,556 2028 13,517 Thereafter 64,156 Total $ 134,040 5. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities in the Consolidated Balance Sheets were comprised of the following: (In thousands) August 26, 2023 August 27, 2022 Accrued professional fees $ 1,290 $ 1,039 Accrued advertising allowances and claims 1,960 3,856 Accrued bonus expenses 8,387 12,761 Accrued freight expenses 1,171 2,065 Accrued payroll-related expenses 3,792 1,995 Accrued commissions 1,466 1,422 Income taxes payable 65 223 VAT payable 4,707 5,171 Accrued capital expenditures 2 350 Other accrued expenses 4,656 4,544 Current operating lease liabilities 7,566 6,249 Accrued expenses and other current liabilities $ 35,062 $ 39,675 6. Long-Term Debt and Line of Credit On July 7, 2017, the Company entered into a credit agreement with Barclays Bank PLC and other parties (as amended to date, the “Credit Agreement”). The Credit Agreement at that time provided for (i) a term facility of $ 200.0 million (“Term Facility”) with a seven -year maturity and (ii) a revolving credit facility of up to $ 75.0 million (the “Revolving Credit Facility”) with a five -year maturity. Substantially concurrent with the consummation of the business combination which formed the Company between Conyers Park Acquisition Corp. and NCP-ATK Holdings, Inc. on July 7, 2017, the full $ 200.0 million of the Term Facility (the “Term Loan”) was drawn. On November 7, 2019, the Company entered into a second amendment (the “Incremental Facility Amendment”) to the Credit Agreement to increase the principal borrowed on the Term Facility by $ 460.0 million. The Term Facility together with the incremental 61 Table of Contents borrowing make up the Initial Term Loans (as defined in the Incremental Facility Amendment). The Incremental Facility Amendment was executed to partially finance the acquisition of Quest Nutrition, LLC on November 7, 2019. No amounts under the Term Facility were repaid as a result of the execution of the Incremental Facility Amendment. Effective as of December 16, 2021, the Company entered into a third amendment (the “Extension Amendment”) to the Credit Agreement. The Extension Amendment provided for an extension of the stated maturity date of the Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from July 7, 2022 to the earlier of (i) 91 days prior to the then-effective maturity date of the Initial Term Loans and (ii) December 16, 2026. On January 21, 2022, the Company entered into the “2022 Repricing Amendment” to the Credit Agreement. The 2022 Repricing Amendment, among other things, (i) reduced the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to the effective date of the 2022 Repricing Amendment, (ii) reset the prepayment premium for the existing Initial Term Loans to apply to Repricing Transactions (as defined in the Credit Agreement) that occur within six months after the effective date of the 2022 Repricing Amendment, and (iii) implemented SOFR and related replacement provisions for LIBOR. On April 25, 2023, the Company entered into the “2023 Repricing Amendment” to the Credit Agreement. The 2023 Repricing Amendment, (i) reduced the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to April 25, 2023, and (ii) provided for an extension of the maturity date of the Initial Term Loans from July 7, 2024, to March 17, 2027. The 2023 Repricing Amendment did not change the interest rate on the Revolving Credit Facility, which continues to bear interest based upon the Company’s consolidated net leverage ratio as of the end of the fiscal quarter for which consolidated financial statements are delivered to the Administrative Agent under the Credit Agreement. No additional debt was incurred, or any proceeds received by the Company in connection with the 2023 Repricing Amendment. No amounts under the Term Facility were repaid as a result of the execution of the 2023 Repricing Amendment. Effective as of the 2023 Repricing Amendment, the interest rate per annum for the Initial Term Loans is based on either: i. A base rate equaling the higher of (a) the “prime rate,” (b) the federal funds effective rate plus 0.50 %, or (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) applicable for an interest period of one month plus 1.00 % plus (x) 1.50 % margin for the Term Loan or (y) 2.00 % margin for the Revolving Credit Facility; or ii. SOFR plus a credit spread adjustment equal to 0.10 % for one-month SOFR, 0.15 % for up to three-month SOFR and 0.25 % for up to six-month SOFR, subject to a floor of 0.50 %, plus (x) 2.50 % margin for the Term Loan or (y) 3.00 % margin for the Revolving Credit Facility. In connection with the closing of the 2023 Repricing Amendment, the Company expensed $ 2.4 million primarily for third-party fees and capitalized an additional $ 2.7 million primarily for the payment of upfront lender fees (original issue discount). The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement. Simply Good Foods USA, Inc., is the administrative borrower and certain other subsidiary holding companies are co-borrowers under the Credit Agreement. Each of the Company’s domestic subsidiaries that is not a named borrower under the Credit Agreement has provided a guarantee on a secured basis. As security for the payment or performance of the debt under the Credit Agreement, the borrowers and the guarantors have pledged certain equity interests in their respective subsidiaries and granted the lenders a security interest in substantially all of their domestic assets. All guarantors other than Quest Nutrition, LLC are holding companies with no assets other than their investments in their respective subsidiaries. The Credit Agreement contains certain financial and other covenants that limit the Company’s ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions and investments, consolidations, mergers, reorganizations and other fundamental changes, payment of dividends and other distributions to equity and warrant holders, and prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size. The Revolving Credit Facility has a maximum total net leverage ratio equal to or less than 6.00 :1.00 contingent on credit extensions in excess of 30 % of the total amount of commitments available under the Revolving Credit Facility. Any failure to comply with the restrictions of the credit facilities may result in an event of default. The Company was in compliance with all financial covenants as of August 26, 2023 and August 27, 2022, respectively. 62 Table of Contents Long-term debt consists of the following: (In thousands) August 26, 2023 August 27, 2022 Term Facility (effective rate of 7.9% at August 26, 2023) $ 285,000 $ 406,500 Finance lease liabilities (effective rate of 5.6% at August 26, 2023) 143 406 Less: Deferred financing fees 3,351 3,620 Total debt 281,792 403,286 Less: Current finance lease liabilities 143 264 Long-term debt, net of deferred financing fees $ 281,649 $ 403,022 As of August 26, 2023, the Company had letters of credit in the amount of $ 3.5 million outstanding. These letters of credit offset against the $ 75.0 million availability of the Revolving Credit Facility and exist to support three of the Company’s leased buildings and insurance programs relating to workers’ compensation. No amounts were drawn against these letters of credit at August 26, 2023. The Company is not required to make principal payments on the Term Facility over the twelve months following the period ended August 26, 2023. The outstanding balance of the Term Facility is due upon its maturity in March 2027. As of August 26, 2023, aggregate principal maturities of debt for each of the next five fiscal years and thereafter are as follows: (In thousands) Principal maturities 2024 $ 143 2025 — 2026 — 2027 285,000 2028 — Thereafter — Total debt $ 285,143 The Company utilizes market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates. The Company carries debt at historical cost and discloses fair value. As of August 26, 2023 and August 27, 2022, the book value of the Company’s debt approximated fair value. The estimated fair value of the Term Loan is valued based on observable inputs and classified as Level 2 in the fair value hierarchy. 7. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measurements, a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is used: Level 1 – Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2 – Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 – Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. Level 3 Measurements During the fifty-two weeks ended August 27, 2022 and August 28, 2021, the Company had outstanding liability-classified Private Warrants that allowed holders to purchase 6,700,000 shares of the Company’s common stock. Such Private Warrants were held by Conyers Park Sponsor, LLC (“Conyers Park”), a related party. On January 7, 2022, Conyers Park elected to exercise the Private Warrants in full on a cashless basis, resulting in a net issuance of 4,830,761 shares of the Company’s common stock. As a result of Conyers Park’s election to exercise the Private Warrants, there were no outstanding liability-classified Private Warrants as of August 26, 2023 or 63 Table of Contents August 27, 2022. Refer to Note 11, Stockholders’ Equity, for additional details regarding the cashless exercise of the Private Warrants. The Company utilized the Black-Scholes model to estimate the fair value of the Private Warrants at each reporting date. The application of the Black-Scholes model utilizes significant assumptions, including volatility. Significant judgment is required in determining the expected volatility, historically the key assumption, of the Private Warrants. In order to determine the most accurate measure of this volatility, the Company measured expected volatility based on several inputs, including considering a peer group of publicly traded companies, the Company’s implied volatility based on traded options, the implied volatility of comparable warrants, and the implied volatility of any outstanding public warrants during the periods they were outstanding. As a result of the unobservable inputs that were used to determine the expected volatility of the Private Warrants, the fair value measurement of these warrants reflected a Level 3 measurement within the fair value measurement hierarchy. The periodic remeasurement of the warrant liability has been reflected in (Loss) in fair value change of warrant liability within the Consolidated Statements of Income and Comprehensive Income. The adjustments for the fifty-two weeks ended August 27, 2022 and August 28, 2021 resulted in a loss of $ 30.1 million and $ 66.2 million, respectively. As a result of the warrant exercise on January 7, 2022, there was no associated adjustment during the fifty-two weeks ended August 26, 2023. There were no transfers of financial instruments between the three levels of the fair value hierarchy during the fiscal years ended August 26, 2023, August 27, 2022, and August 28, 2021, respectively. Additionally, all other components of the balance sheet such as accounts receivable, cash and cash equivalents and others approximated fair value as of August 26, 2023. 8. Income Taxes The sources of income before income taxes are as follows: 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 26, 2023 August 27, 2022 August 28, 2021 Domestic $ 173,733 $ 148,080 $ 79,526 Foreign 1,959 2,489 1,334 Total income before income taxes $ 175,692 $ 150,569 $ 80,860 Income tax expense was comprised of the following: 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 26, 2023 August 27, 2022 August 28, 2021 Current: Federal $ 24,740 $ 22,733 $ 23,225 State and local 6,128 6,226 5,800 Foreign 659 1,247 1,552 Total current expense $ 31,527 $ 30,206 $ 30,577 Deferred: Federal $ 8,804 $ 11,218 $ 5,982 State and local 1,740 1,614 3,096 Foreign 46 ( 1,043 ) 325 Total deferred income tax expense 10,590 11,789 9,403 Total tax expense $ 42,117 $ 41,995 $ 39,980 64 Table of Contents A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows: 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 26, 2023 August 27, 2022 August 28, 2021 Statutory income tax expense: 21.0 % 21.0 % 21.0 % Change in fair value of warrant liabilities — 5.0 20.5 State income tax expense, net of federal 4.0 4.2 4.3 Valuation allowance — ( 1.5 ) ( 1.2 ) Taxes on foreign income above the U.S. tax 0.2 1.3 1.6 Change in tax rate — ( 0.2 ) 1.8 Other permanent items ( 1.2 ) ( 1.9 ) 1.4 Income tax expense 24.0 % 27.9 % 49.4 % The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities at August 26, 2023 and August 27, 2022 were as follows: (In thousands) August 26, 2023 August 27, 2022 Deferred tax assets Accounts receivable allowances $ 1,381 $ 1,519 Accrued expenses 3,732 4,330 Share based compensation 4,398 3,430 Lease liabilities 11,200 12,733 Tax capitalization of inventory costs 2,177 2,257 Transaction costs 1,961 2,137 Federal benefit of state taxes 1,418 1,444 Other 1,664 659 Deferred tax assets 27,931 28,509 Deferred tax liabilities: Excess tax over book depreciation ( 4,870 ) ( 3,776 ) Intangible assets ( 127,791 ) ( 116,682 ) Lease right-of-use assets ( 9,997 ) ( 11,660 ) Other ( 1,406 ) ( 1,935 ) Deferred tax liabilities ( 144,064 ) ( 134,053 ) Net deferred tax liabilities $ ( 116,133 ) $ ( 105,544 ) The Company had state net operating loss carryforwards of $ 0.3 million and $ 2.1 million at August 26, 2023 and August 27, 2022, respectively. The state net operating loss carryforwards will begin to expire in 2030. As of August 26, 2023, the Company has no valuation allowances on its deferred tax assets. As of August 26, 2023, the Company does not intend to indefinitely reinvest its foreign earnings within its subsidiary in Canada and has not recognized any tax liabilities related to this jurisdiction. It is the Company’s intention to reinvest the earnings of its other non-U.S. subsidiaries in its Australia and New Zealand operations. As of August 26, 2023, the Company has not made a provision for U.S. or additional foreign withholding taxes for any outside basis differences inherent in its investments in foreign subsidiaries that are indefinitely reinvested. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries. As of August 26, 2023 and August 27, 2022, the Company has no unrecognized tax benefits. The Company records interest and penalties associated with unrecognized tax benefits as a component of tax expense. As of August 26, 2023 and August 27, 2022, the Company has not accrued any interest or penalties on unrecognized tax benefits, as there is no position recorded as of these fiscal year-ends. No changes to the uncertain tax position balance are anticipated within the next 12 months, 65 Table of Contents and are not expected to materially affect the financial statements. As of August 26, 2023, tax years 2016 to 2022 remain subject to examination in the United States and the tax years 2016 to 2022 remain subject to examination in other major foreign jurisdictions where the Company conducts business. State income tax returns are generally subject to examination for a period of three to six years after the filing of the respective return. 9. Leases The components of lease expense were as follows. 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) Statement of Operations Caption August 26, 2023 August 27, 2022 August 28, 2021 Operating lease cost: Lease cost Cost of goods sold and General and administrative $ 8,998 $ 9,077 $ 6,752 Variable lease cost (1) Cost of goods sold and General and administrative 3,556 3,068 1,681 Total operating lease cost $ 12,554 $ 12,145 $ 8,433 Finance lease cost: Amortization of right-of use assets Cost of goods sold $ 241 $ 273 $ 273 Interest on lease liabilities Interest expense 14 30 45 Total finance lease cost $ 255 $ 303 $ 318 Total lease cost $ 12,809 $ 12,448 $ 8,751 (1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs. In conjunction with the Company’s restructuring activities as discussed in Note 15, Restructuring and Related Charges, the Company recorded an immaterial gain on lease termination related to its lease in the Netherlands in the fifty-two weeks ended August 27, 2022 and a $ 0.5 million impairment charge, net of a gain on lease termination, related to its leases in Toronto, Ontario and the Netherlands in the fifty-two weeks ended August 28, 2021. The effect of these restructuring activities has been included within General and administrative on the Consolidated Statements of Income and Comprehensive Income. Refer to Note 15, Restructuring and Related Charges, for additional information regarding restructuring activities. The right-of-use assets and corresponding liabilities related to both operating and finance leases are as follows: (In thousands) Balance Sheets Caption August 26, 2023 August 27, 2022 Assets Operating lease right-of-use assets Other long-term assets $ 40,022 $ 46,460 Finance lease right-of-use assets Property and equipment, net 125 367 Total lease assets $ 40,147 $ 46,827 Liabilities Current: Operating lease liabilities Accrued expenses and other current liabilities $ 7,566 $ 6,249 Finance lease liabilities Current maturities of long-term debt 143 264 Long-term: Operating lease liabilities Other long-term liabilities 37,272 44,482 Finance lease liabilities Long-term debt, less current maturities — 142 Total lease liabilities $ 44,981 $ 51,137 66 Table of Contents Future maturities of lease liabilities as of August 26, 2023 were as follows: (In thousands) Operating Leases Finance Leases Fiscal year ending: 2024 $ 9,476 $ 145 2025 8,750 — 2026 6,952 — 2027 7,110 — 2028 6,447 — Thereafter 13,496 — Total lease payments 52,231 145 Less: Interest ( 7,393 ) ( 2 ) Present value of lease liabilities $ 44,838 $ 143 The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases were as follows: August 26, 2023 August 27, 2022 Weighted-average remaining lease term (in years) Operating leases 6.24 7.27 Finance leases 0.61 1.51 Weighted-average discount rate Operating leases 4.4 % 4.7 % Finance leases 5.6 % 5.6 % Supplemental and other information related to leases was as follows: 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 26, 2023 August 27, 2022 August 28, 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 11,002 $ 9,656 $ 7,622 Operating cash flows from finance leases $ 544 $ 631 $ 37 Financing cash flows from finance leases $ 278 $ 313 $ 314 10. Commitments and Contingencies Litigation The Company is a party to certain litigation and claims that are considered normal to the operations of the business. From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of business. The Company is not presently a party to any litigation that it believes to be material, and the Company is not aware of any pending or threatened litigation against it that its management believes could have a material adverse effect on its business, operating results, financial condition or cash flows. During the fifty-two weeks ended August 28, 2021, the Company received a $ 5.0 million gain on a legal settlement, which has been presented as an item within Other income (expense) in the Consolidated Statements of Income and Comprehensive Income. Other The Company enters into endorsement contracts with certain celebrity figures and social media influencers to promote and endorse the Atkins® and Quest® brands and product lines. These contracts contain endorsement fees, which are expensed ratably over the life of the contract, and performance fees, that are recognized at the time of achievement. Based on the terms of contracts in place and achievement of performance conditions as of August 26, 2023, the Company will be required to make payments of $ 3.5 million over the next year. 67 Table of Contents 11. Stockholders’ Equity Public Equity Offering On October 9, 2019, the Company completed an underwritten public offering of 13,379,205 shares of common stock at a price to the public of $ 26.35 per share. The Company paid underwriting discounts and commissions of $ 0.19 per share resulting in net proceeds to the Company of $ 26.16 per share, or approximately $ 350.0 million (the “Offering”). The Company paid $ 0.8 million for legal, accounting and registrations fees related to the Offering. The net proceeds were used to pay a portion of the purchase price and related fees and expenses for the Quest Acquisition. Warrants to Purchase Common Stock During the fifty-two weeks ended August 27, 2022, the Company had outstanding liability-classified Private Warrants that allowed holders to purchase 6,700,000 shares of the Company’s common stock. Such Private Warrants were held by Conyers Park, a related party. Each whole warrant entitled the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share. On January 7, 2022, Conyers Park elected to exercise the Private Warrants in full on a cashless basis, resulting in a net issuance of 4,830,761 shares of the Company’s common stock. As a result of the cashless exercise on January 7, 2022, there were no outstanding liability-classified Private Warrants as of August 26, 2023 or August 27, 2022. As discussed in Note 7, Fair Value of Financial Instruments, the liability-classified warrants were remeasured on a recurring basis, primarily based on observable market data while the related theoretical private warrant volatility assumption within the Black-Scholes model represents a Level 3 measurement within the fair value measurement hierarchy. The periodic fair value remeasurements of the warrant liability, including the cashless exercise and the settlement of the warrant liability, have been reflected in (Loss) in fair value change of warrant liability within the Consolidated Statements of Income and Comprehensive Income. Stock Repurchase Program The Company adopted a $ 50.0 million stock repurchase program on November 13, 2018. On April 13, 2022, and October 21, 2022, the Company announced that its Board of Directors had approved the addition of $ 50.0 million and $ 50.0 million, respectively, to its stock repurchase program, resulting in authorized stock repurchases of up to an aggregate of $ 150.0 million. Under the stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions. The stock repurchase program does not obligate the Company to acquire any specific number of shares or acquire shares over any specific period of time. The stock repurchase program may be suspended or discontinued at any time by the Company and does not have an expiration date. During the fifty-two weeks ended August 26, 2023, the Company repurchased 546,346 shares of common stock at an average share price of $ 30.11 per share. During the fifty-two weeks ended August 27, 2022, the Company repurchased 1,720,520 shares of common stock at an average share price of $ 34.79 per share. The Company did not repurchase any shares of common stock during the fifty-two weeks ended August 28, 2021. As of August 26, 2023, approximately $ 71.5 million remained available under the stock repurchase program. Accumulated Other Comprehensive Loss During the fifty-two weeks ended August 27, 2022, the Company recognized a foreign currency translation gain of $ 1.1 million related to the liquidation of a foreign subsidiary. The gain is reflected as a component of Other income (expense) in (Loss) gain on foreign currency transactions within the Consolidated Statements of Income and Comprehensive Income. 12. Earnings Per Share Basic earnings or loss per share is based on the weighted average number of common shares issued and outstanding. In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all potentially dilutive securities, including the Company’s employee stock options, non-vested stock units, and Private Warrants for the periods during which they were outstanding. During periods when the effect of the outstanding Private Warrants was dilutive, the Company assumed share settlement of the instruments as of the beginning of the reporting period and adjusted the numerator to remove the change in fair value of the warrant liability and adjusted the denominator to include the dilutive shares, calculated using the treasury stock method. During periods when the effect of the outstanding Private Warrants was anti-dilutive, the share settlement was excluded. In periods in which the Company has a net loss, diluted loss per share is based on the weighted average number of common shares issued and outstanding as the effect of including common stock equivalents outstanding would be anti-dilutive. 68 Table of Contents The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share: 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands, except share and per share data) August 26, 2023 August 27, 2022 August 28, 2021 Basic earnings per share computation: Numerator: Net income available to common stock stockholders $ 133,575 $ 108,574 $ 40,880 Denominator: Weighted average common shares outstanding – basic 99,442,046 98,754,913 95,743,413 Basic earnings per share from net income $ 1.34 $ 1.10 $ 0.43 Diluted earnings per share computation: Numerator: Numerator for diluted earnings per share $ 133,575 $ 108,574 $ 40,880 Denominator: Weighted average common shares outstanding – basic 99,442,046 98,754,913 95,743,413 Employee stock options 1,241,762 1,578,329 1,311,889 Non-vested stock units 196,271 255,914 310,296 Weighted average common shares – diluted 100,880,079 100,589,156 97,365,598 Diluted earnings per share from net income $ 1.32 $ 1.08 $ 0.42 Diluted earnings per share calculations for the fifty-two weeks ended August 26, 2023 and August 27, 2022 excluded zero and 0.7 million shares, issuable upon exercise of Private Warrants, respectively, that would have been anti-dilutive. Diluted earnings per share calculations for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021 excluded 0.6 million shares, 0.3 million shares, and an immaterial number of shares of common stock issuable upon exercise of stock options, respectively, that would have been anti-dilutive. Diluted earnings per share calculations for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021 excluded an immaterial number of non-vested stock units that would have been anti-dilutive. 13. Omnibus Incentive Plan Stock-based compensation includes stock options, restricted stock units, performance stock unit awards, and stock appreciation rights, which are awarded to employees, directors, and consultants of the Company. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award based on its grant date fair value. Stock-based compensation expense is included within General and administrative expense, which is the same financial statement caption where the recipient’s other compensation is reported. For the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021, the Company recorded stock-based compensation expense of $ 14.5 million, $ 11.7 million, and $ 8.3 million, respectively. In July 2017, the Company’s stockholders approved the 2017 Omnibus Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the issuance of a maximum of 9,067,917 shares of stock-denominated awards to directors, employees, officers and agents of the Company. As of August 26, 2023, there were 3.5 million shares available for grant under the Incentive Plan. Stock Options Stock options granted under the Incentive Plan are granted at a price equal to or more than the fair value of common stock on the date the option is granted. Stock options under the Incentive Plan generally become exercisable ratably over three years from the date of grant and must be exercised within ten years from the date of grant. The following table summarizes stock option activity for the fifty-two weeks ended August 26, 2023: 69 Table of Contents (In thousands, except share and per share data) Shares underlying options Weighted average exercise price Weighted average remaining life (years) Aggregate intrinsic value Outstanding as of August 27, 2022 2,776,551 $ 18.04 6.10 $ 39,702 Granted 285,001 37.73 Exercised ( 357,466 ) 14.68 Forfeited ( 35,624 ) 32.04 Outstanding as of August 26, 2023 2,668,462 $ 20.41 5.56 $ 39,610 Vested and expected to vest as of August 26, 2023 2,668,462 $ 20.41 5.56 $ 39,610 Exercisable as of August 26, 2023 2,030,917 $ 15.62 4.66 $ 38,539 The following table summarizes information about stock options outstanding at August 26, 2023: Range of Exercise Prices Number outstanding Weighted average exercise price Weighted average remaining life (years) Number exercisable Weighted average exercise price $ 12.00 - 17.77 1,408,964 $ 12.44 3.99 1,408,964 $ 12.44 $ 17.78 - 23.55 478,275 20.27 6.17 403,727 20.27 $ 23.56 - 29.33 178,392 24.35 6.18 176,191 24.30 $ 29.34 - 35.11 — — 0.00 — — $ 35.12 - 40.88 602,831 37.97 8.59 42,035 40.88 2,668,462 $ 20.41 5.56 2,030,917 $ 15.62 The weighted average fair value of options granted during the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021 were $ 16.58 , $ 15.32 and $ 9.99 , respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option Pricing Model based on the following assumptions: 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 26, 2023 August 27, 2022 August 28, 2021 Expected volatility 39.00 % 37.07 % 36.80 % - 38.75 % Expected dividend yield — % — % — % Expected option term 6 6 6 Risk-free rate of return 4.27 % 1.26 % 0.80 % - 0.935 % Because the Company’s Incentive Plan has not been in place for a sufficient amount of time as compared to the expected stock option terms nor does the Company have sufficient history with changes in option vesting schedules and changes in the pool of employees receiving option grants, the Company estimates the expected term using its historical experience of the time awards have been outstanding as well as an expected time outstanding, which takes into account the award vesting and contractual term. Additionally, due to a lack of sufficient trading history for the Company’s common stock, expected stock price volatility is based on a combination of a sampling of comparable publicly traded companies and the Company’s historical common stock price activity. The Company believes the sample of comparable publicly traded companies used as inputs to its expected stock price volatility most closely models the nature of the business and stock price volatility. The risk-free rates are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. Future annual dividends over the expected term are estimated to be nil . As of August 26, 2023, the Company had $ 5.5 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.6 years. During the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021, the Company received $ 5.2 million, $ 4.3 million, and $ 0.7 million in cash from stock option exercises, respectively. Restricted Stock Units Restricted stock units granted under the Incentive Plan are granted at a price equal to closing market price of the Company’s common stock on the date of grant. Restricted stock units under the Incentive Plan generally vest over three years . 70 Table of Contents The following table summarizes restricted stock unit activity for the fifty-two weeks ended August 26, 2023: Units Weighted average grant-date fair value Non-vested as of August 27, 2022 453,003 $ 30.68 Granted 328,924 37.06 Vested ( 213,568 ) 27.86 Forfeited ( 53,861 ) 33.92 Non-vested as of August 26, 2023 514,498 $ 35.59 As of August 26, 2023, the Company had $ 10.9 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 1.4 years. Performance Stock Units During the fifty-two weeks ended August 26, 2023, the Board of Directors granted performance stock units under the Company’s equity compensation plan. Performance stock units vest in a range between 0 % and 200 % based upon certain performance criteria in a three -year period. Performance stock units were valued using a Monte-Carlo simulation. The following table summarizes performance stock unit activity for the fifty-two weeks ended August 26, 2023: Units Weighted average grant-date fair value Non-vested as of August 27, 2022 255,023 $ 32.82 Granted 50,629 62.55 Vested ( 72,452 ) 27.39 Forfeited ( 41,421 ) 34.23 Non-vested as of August 26, 2023 191,779 $ 42.41 As of August 26, 2023, the Company had $ 3.4 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 0.9 years. Stock Appreciation Rights Stock appreciation rights (“SARs”) permit the holder to participate in the appreciation of the Company’s common stock price and are awarded to non-employee consultants of the Company. The Company’s SARs settle in shares of its common stock if and when the applicable vesting criteria has been met. SARs cliff vest three years from the date of grant and must be exercised within ten years . The following table summarizes SARs activity for the fifty-two weeks ended August 26, 2023: Shares Underlying SARs Weighted average exercise price Weighted average remaining contractual life (in years) Outstanding as of August 27, 2022 150,000 $ 24.20 Granted 150,000 37.67 Exercised ( 150,000 ) 24.20 Forfeited — — Outstanding as of August 26, 2023 150,000 $ 37.67 0.00 Vested and expected to vest as of August 26, 2023 150,000 $ — 0.00 Exercisable as of August 26, 2023 — $ — 0.00 The SARs exercised in the fifty-two weeks ended August 26, 2023 resulted in a net issuance of 38,850 shares of the Company’s common stock. The SARs granted in the fifty-two weeks ended August 26, 2023 are liability-classified; therefore the related stock-based compensation expense is based on the vesting provisions and the fair value of the awards. 71 Table of Contents 14. Segment and Customer Information During the fifty-two weeks ended August 27, 2022, the Company substantially completed its efforts to fully integrate its operations and organization structure after the Quest Acquisition. The Company aligned the nature of its production processes and the methods used to distribute products to customers for the Atkins® and Quest® brands. The Company also designed its organizational structure to support entity-wide business functions across brands, products, customers, and geographic regions. Additionally, the Company’s chief operating decision maker reviews operating results and forecasts at the consolidated level. As a result, during the fifty-two weeks ended August 26, 2023 and August 27, 2022, the Company determined its operations are organized into one , consolidated operating segment and reportable segment. Previously, during the fifty-two weeks ended August 28, 2021, the Company had two operating segments, Atkins and Quest, which were aggregated into one reporting segment due to similar financial, economic and operating characteristics. Reconciliation of the totals of reported segment revenue, profit or loss measurement, assets and other significant items reported by segment to the corresponding GAAP totals is not applicable to the Company as it only has one reportable segment. Additionally, revenue from transactions with external customers for each of Simply Good Foods’ products would be impracticable to disclose and management does not view its business by product line. The following is a summary of revenue disaggregated by geographic area and brand: 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 26, 2023 August 27, 2022 August 28, 2021 North America (1) Atkins $ 526,769 $ 540,328 $ 506,860 Quest 682,789 593,943 453,619 Total North America 1,209,558 1,134,271 960,479 International 33,114 34,407 45,134 Total $ 1,242,672 $ 1,168,678 $ 1,005,613 (1) The North America geographic area consists of net sales substantially related to the United States and there is no individual foreign country to which more than 10% of the Company’s net sales are attributed or that is otherwise deemed individually material. The following is a summary of long lived assets by geographic area: (In thousands) August 26, 2023 August 27, 2022 Long lived assets North America (1) $ 24,861 $ 18,157 Total $ 24,861 $ 18,157 (1) The North America geographic area consists of long-lived assets substantially related to the United States and there is no individual foreign country in which more than 10% of the Company’s long-lived assets are located or that is otherwise deemed individually material. Significant Customers Credit risk for the Company was concentrated in three customers who each comprised more than 10% of the Company’s total sales for the fifty-two weeks ended August 26, 2023, August 27, 2022, and August 28, 2021. 52-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 26, 2023 August 27, 2022 August 28, 2021 Customer 1 31 % 31 % 31 % Customer 2 16 % 13 % 12 % Customer 3 n/a 10 % n/a n/a - Not applicable as the customer was not significant during these fiscal years. 72 Table of Contents At August 26, 2023 and August 27, 2022, the following amounts of the Company’s accounts receivable, net were related to these significant customers for the periods in which the customers were significant: (In thousands) August 26, 2023 August 27, 2022 Customer 1 $ 43,098 30 % $ 44,638 34 % Customer 2 $ 37,384 26 % $ 21,829 16 % Customer 3 n/a n/a $ 18,521 14 % n/a - Not applicable as the customer was not significant during this fiscal year. 15. Restructuring and Related Charges In May 2020, the Company announced certain restructuring activities in conjunction with the implementation of the Company’s future-state organization design, which created a fully integrated organization with its completed Quest Acquisition. The new organization design became effective on August 31, 2020. These restructuring plans primarily included workforce reductions, changes in management structure, and the relocation of business activities from one location to another. The Company substantially completed its restructuring activities during the fifty-two weeks ended August 27, 2022. Since the announcement of the restructuring activities in May 2020, the Company incurred aggregate restructuring and restructuring-related costs of $ 9.9 million. The one-time termination benefits and employee severance costs incurred in relation to these restructuring activities were accounted for in accordance with ASC Topic 420, Exit or Disposal Cost Obligations, and ASC Topic 712, Compensation - Nonretirement Post-employment Benefits, respectively. The Company recognized a liability and the related expense for these restructuring costs when the liability was incurred and could be measured. Restructuring accruals were based upon management estimates at the time and could change depending upon changes in facts and circumstances subsequent to the date the original liability was recorded. The effect of these restructuring activities was included within General and administrative on the Consolidated Statements of Income and Comprehensive Income. Changes to the restructuring liability during the fifty-two weeks ended August 26, 2023 and August 27, 2022 were as follows: (In thousands) Termination benefits and severance Other Restructuring liability Balance as of August 28, 2021 $ 851 $ — $ 851 Charges 52 76 128 Cash payments ( 903 ) ( 76 ) ( 979 ) Balance as of August 27, 2022 $ — $ — $ — Balance as of August 26, 2023 $ — $ — $ — The Company substantially completed its restructuring activities during the third quarter of fiscal 2022; therefore no restructuring and restructuring-related costs were incurred in the fifty-two weeks ended August 26, 2023. During the fifty-two weeks ended August 27, 2022, the Company incurred $ 0.1 million of restructuring charges which included an immaterial gain on lease termination related to its lease in the Netherlands. In the fifty-two weeks ended August 28, 2021, the Company incurred a total of $ 4.3 million in restructuring and restructuring-related costs, which included a $ 0.5 million impairment charge, net of a gain on lease termination, related to its leases in Toronto, Ontario and the Netherlands. 73 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.