What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-10-29 compared with 2023-10-24 · 267 added, 154 removed, 786 unchanged (35% of the section changed)

9 unchanged sentences

Summary of Significant Accounting Policies

Business Combination

Property and Equipment, Net

12 unchanged sentences

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").

We have audited the accompanying consolidated balance sheets of The Simply Good Foods Company and subsidiaries (the "Company") as of August 31, 2024, and August 26, 2023, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for the fifty-three weeks ended August 31, 2024, the fifty-two weeks ended August 26, 2023, and August 27, 2022, 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 31, 2024, and August 26, 2023, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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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 Matters

The critical audit matters communicated below are matters 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 matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition — Trade Promotions — Refer to Note 2 to the consolidated financial statements

Critical Audit Matter Description

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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.

These estimates are made using various information including historical data on performance of similar trade promotional activities, and the Company's best estimates of current activity.

We identified the allowance for trade promotions related to manufacturer charge-backs as a critical audit matter because management’s estimate of the expected future promotional claims is subjective and requires a high degree of judgment.

Auditing management’s assumptions and judgments used in determining the allowance for trade promotions related to manufacturer charge-backs as of August 31, 2024, required a high degree of auditor judgment and an increased extent of effort.

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:

Our auditing procedures over the allowance for trade promotions related to manufacturer charge-backs included the following, among others:

• We tested the design, implementation and operating effectiveness of internal controls over the allowance for trade promotions.

• For a selection of allowances for trade promotions recorded as of August 31, 2024, 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.

◦ Agreed contract terms from the accounting records to the promotion agreement with the customer and verified the promotion period was prior to September 1, 2024.

◦ Evaluated the appropriateness of the year-end trade accrual estimate using historical data on performance of similar trade promotional activities 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 unresolved as of August 31, 2024, we compared that amount to the August 31, 2024, allowance for promotions balance and traced the resolved deduction to an approved trade promotion.

• For a selection of customer promotional claims resolved after August 31, 2024, we compared that amount to the August 31, 2024, allowance for promotions balance and traced the resolved deduction to an approved trade promotion.

Business Combination - Only What You Need, Inc.

- Valuation of Brand Intangible Asset - Refer to Note 3 to the consolidated financial statements

Critical Audit Matter Description

The Company completed the acquisition of Only What You Need, Inc.

(“OWYN”) for approximately $280 million on June 13, 2024.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including the indefinite lived brand intangible asset of $223 million.

The fair value of the indefinite lived brand intangible asset was estimated using the multi-period excess earnings method of the income approach, wherein the net earnings attributable to the asset are isolated from “contributory” assets in order to estimate the cash flows solely attributable to the asset over its remaining economic life.

Given the fair value determination of the indefinite lived brand intangible asset for Only What You Need, Inc.

requires management to make significant estimates and assumptions related to the selection of the long-term growth rate and discount rate, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgement and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our auditing procedures related to the selection of long-term growth rate and discount rate included the following, among others:

• We tested the design, implementation and operating effectiveness of internal controls related to the Company’s assumptions related to the selection of the long-term growth rate and discount rate.

• We obtained an understanding of management’s key assumptions in developing the long-term growth rate and discount rate.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodologies and the selection of the long-term growth rate and discount rate by:

◦ Testing the source information underlying the determination of the long-term growth rate and comparing the significant assumptions used by management to current industry and economic trends.

◦ Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation.

◦ Developing a range of independent estimates and comparing those to the discount rate selected by management.

/s/ Deloitte & Touche LLP

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Depreciation and amortization 16,917 17,416 17,285

Business transaction costs 14,524 — —

Total operating expenses 305,069 248,471 242,802

4 unchanged sentences

(Loss) in fair value change of warrant liability — — ( 30,062 )

Gain on legal settlement — — 5,000

(Loss) gain on foreign currency transactions ( 344 ) 191 ( 5 )

Gain (loss) on foreign currency transactions 267 ( 344 ) 191

Other income (expense) 1,008 11 ( 453 )

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Loss in fair value change of warrant liability — — 30,062

Estimated credit losses 315 601 1,114

Unrealized loss (gain) on foreign currency transactions 344 ( 191 ) 5

Estimated credit (recoveries) losses ( 150 ) 315 601

Unrealized (gain) loss on foreign currency transactions ( 267 ) 344 ( 191 )

Deferred income taxes 8,366 10,590 11,789

Amortization of operating lease right-of-use asset 6,991 6,729 6,620

Loss on operating lease right-of-use asset impairment — — 686

Gain on lease termination — — ( 30 )

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— — ( 2,400 )

Proceeds from sale of business — — 5,800

Acquisition of business, net of cash acquired

( 280,409 ) — —

Investments in intangible assets and other assets

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Principal payments of long-term debt ( 135,000 ) ( 121,500 ) ( 50,000 )

Proceeds from issuance of long-term debt 250,000 — —

Cash received on repayment of note receivable 3,000 — —

Deferred financing costs ( 1,199 ) ( 2,694 ) ( 544 )

Net cash (used in) financing activities ( 138,532 ) ( 110,032 ) ( 150,049 )

Net cash provided by (used in) financing activities 115,901 ( 138,532 ) ( 110,032 )

Net increase (decrease) in cash

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Non-cash investing and financing transactions

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

Non-cash additions to property and equipment

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Issuance of common stock in extinguishment of warrant liabilities $ — $ — $ 189,897

Operating lease right-of-use assets recognized after ASU No 2016-02 transition

Operating lease right-of-use assets recognized in exchange for lease liabilities

$ 2,066 $ 289 $ 6,872

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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 )

4 unchanged sentences

Foreign currency translation adjustments — — — — — — ( 642 ) ( 642 )

Reclassification adjustment for currency translation gains related to the liquidation of foreign entities — — — — — — ( 1,147 ) ( 1,147 )

Repurchase of common stock — — 546,346 ( 16,448 ) — — — ( 16,448 )

Warrant conversion 4,830,761 48 — — 189,849 — — 189,897

Shares issued upon vesting of restricted stock units 210,718 2 — — ( 2,861 ) — — ( 2,859 )

4 unchanged sentences

Foreign currency translation adjustments — — — — — — 554 554

Repurchase of common stock — — 546,346 ( 16,448 ) — — — ( 16,448 )

Shares issued upon vesting of restricted stock units 328,568 3 — — ( 5,051 ) — — ( 5,048 )

7 unchanged sentences

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

On April 29, 2024, the Company entered into a stock purchase agreement (the “Purchase Agreement”) to acquire Only What You Need, Inc.

(“OWYN”), a plant-based protein food company (the “OWYN Acquisition”), for approximately $ 280.0 million.

On June 13, 2024, pursuant to the Purchase Agreement, the Company completed the OWYN Acquisition by acquiring 100% of the equity interests for a cash purchase price at closing of $ 281.9 million, subject to certain customary post-closing adjustments.

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.

Quest for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbs, Atkins for those following a low-carb lifestyle and OWYN for those looking for plant-based alternatives.

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.

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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

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The accompanying financial statements include Consolidated Balance Sheets for the periods ended August 31, 2024, and August 26, 2023.

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 remaining financial statements include the fifty-three weeks ended August 31, 2024, the fifty-two weeks ended August 26, 2023, and the fifty-two weeks ended August 27, 2022.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

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Actual results could differ from those estimates.

Business Combination

The OWYN Acquisition was accounted for using the acquisition method of accounting prescribed by Accounting Standard Codification ("ASC") Topic 805, Business Combinations (“ASC 805”), whereby the results of operations, including the revenues and earnings of OWYN, are included in the financial statements from the date of acquisition.

Additionally, assets acquired and liabilities assumed were recognized at their fair values based on widely accepted valuation techniques in accordance with ASC Topic 820, Fair Value Measurements, as of the closing date.

The process for estimating fair values requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of

future cash flows and developing appropriate discount rates.

ASC 805 establishes a measurement period to provide the Company with a reasonable amount of time to obtain the information necessary to identify and measure various items in a business combination and cannot extend beyond one year from the acquisition date.

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

The Company expects to complete the final fair value determination of the assets acquired and liabilities assumed as soon as practicable within the measurement period, but not to exceed one year from the acquisition date.

Fair Value Measurements

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Assets and liabilities are valued based upon observable and non-observable inputs.

Valuations using Level 1 inputs are based on unadjusted quoted

prices that are available in active markets for the identical assets or liabilities at the measurement date.

Valuations using Level 1 inputs are based on unadjusted quoted 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.

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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.

Charges related to credit (recoveries) losses on accounts receivables from transactions with external customers were approximately $( 0.1 ) million, $ 0.7 million, and $ 0.1 million for the fifty-three weeks ended August 31, 2024, the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively.

As of August 31, 2024, and August 26, 2023, the allowance for doubtful accounts was $ 0.7 million and $ 1.9 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 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.

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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.

There were no indicators of impairment in the fifty-three weeks ended August 31, 2024, August 26, 2023, or August 27, 2022.

Goodwill and Intangible Assets, Net

1 unchanged sentence

and NCP-ATK Holdings, Inc.

on July 7, 2017, which created the Company, and the acquisition of Quest.

on July 7, 2017, which created the Company, and the acquisitions of Quest and OWYN.

Intangible assets primarily includes brands and trademarks with indefinite lives and customer-related relationships with finite lives.

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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.

During the third quarter of the fiscal year ended August 31, 2024, the Company conducted a qualitative impairment assessment in the fiscal third quarter that identified potential indicators of impairment for the Atkins brand indefinite lived intangible asset.

Accordingly, the Company proceeded to conduct a quantitative impairment assessment over the asset.

Based on our testing, the asset had an excess fair value well over its respective carrying value, resulting in no impairment.

During the fifty-three weeks ended August 31, 2024, the Company performed qualitative impairment assessments for its indefinite-lived intangible assets as of the first day of the fourth fiscal quarter.

The qualitative assessment 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 assessments were necessary.

There were no impairment charges related to indefinite-lived intangibles recognized in the fifty-three weeks ended August 31, 2024, August 26, 2023, or August 27, 2022, respectively.

Refer to Note 5, Goodwill and Intangibles for additional information regarding the Company’s reporting units and impairment assessments.

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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.

Costs incurred in obtaining long-term financing paid to parties other than creditors are considered a deferred financing cost, which are presented net against Long-term debt, less current maturities on the balance sheet, 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.

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Right-of-use assets also include any lease payments made and exclude lease incentives.

Lease terms may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease terms may 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.

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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”).

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 (the “Private Warrants”).

Such Private Warrants were held by Conyers Park Sponsor, LLC (“Conyers Park”), a related party.

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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.

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.

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The Company provides standard assurance type warranties that its products will comply with all agreed-upon specifications.

services beyond an assurance type warranty are provided to customers.

No 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.

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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.

Costs relating to products shipped to customers were $ 93.5 million, $ 89.2 million, and $ 91.7 million for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively.

Advertising Costs

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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.

Total advertising costs were $ 103.0 million, $ 79.2 million, and $ 84.3 million for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, 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.

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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.

The Company’s total research and development expenses were $ 5.4 million, $ 4.3 million, and $ 4.1 million for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively.

Share-Based Compensation

1 unchanged sentence

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

recognized as they occur.

Share-based compensation expense is included in General and administrative.

Forfeitures are recognized as they occur.

Employee related Share-based compensation expense is included in General and administrative, while Share-based compensation expense related to non-employee consultants of the Company is recorded in Selling and marketing.

Defined Contribution Plan

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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.

Expense associated with defined contribution plans was $ 1.6 million, $ 1.4 million, and $ 1.1 million for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively.

Foreign Currency Translation

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

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (“ASU 2023-09”), which updates disclosures required in the footnotes to the financial statements to further aid investors in understanding how to analyze income tax reporting.

The amendments are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available.

The amendments should be applied on a prospective basis, however, retrospective application is permitted.

The Company is currently evaluating the provisions of the amendments and the effect on its future 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.

Business Combination

On April 29, 2024 , the Company’s wholly owned subsidiary, Simply Good Foods, USA, Inc.

entered into a stock purchase agreement (the “Purchase Agreement”) to acquire Only What You Need, Inc.

(“OWYN”), a plant-based protein food company (the “OWYN Acquisition”), for approximately $ 280.0 million.

We acquired OWYN as a part of our vision to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements that will now offer plant-based products to a wider market of consumers.

The OWYN Acquisition was funded through a combination of incremental borrowings under our outstanding Term Facility, totaling $ 250.0 million, and cash on hand.

Business transaction costs within the Consolidated Statements of Income and Comprehensive Income for the fifty-three weeks ended August 31, 2024 were $ 14.5 million, inclusive of $ 5.7 million of transaction advisory fees related to the OWYN Acquisition, $ 3.4 million of non-deferrable third-party financing costs incurred in connection with the 2024 Incremental Facility Amendment to the Credit Agreement, and $ 5.4 million of legal, due diligence, accounting, and other costs.

The OWYN Acquisition was accounted for as a business combination under ASC 805, Business Combinations (“ASC 805”) which requires, among other things, assets acquired and liabilities assumed to be measured at their acquisition date fair value.

The following table sets forth the preliminary purchase price allocation of the OWYN Acquisition to the estimated fair value of the net assets acquired at the date of the Acquisition, in thousands.

The preliminary purchase price allocation may be adjusted as a result of the finalization of the Company’s purchase price allocation procedures related to the assets acquired and liabilities assumed ;

including, but not limited to, certain customary post-closing adjustments such as the finalization of working capital, tax return finalization, and other adjustments.

The preliminary June 13, 2024, fair value is as follows:

Assets acquired:

Cash and cash equivalents $ 1,476

Accounts receivable, net 14,214

Inventories (1)

Prepaid assets 563

Property and equipment, net 136

Intangible assets, net (2)

Other long-term assets 6

Liabilities assumed:

Accounts payable 20,378

Other current liabilities 3,753

Deferred tax liability (3)

Total identifiable net assets 233,332

Total assets acquired and liabilities assumed $ 281,885

(1) Inventory was estimated using the comparative sales method, which quantifies the fair value of inventory based on the expected sales price of the subject inventory, reduced for:

(i) all costs expected to be incurred in its completion/disposition efforts and (ii) a profit on those costs.

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

Intangible assets consist of $ 223.0 million of brand and $ 20.5 million of customer relationships.

The useful lives of the intangible assets are disclosed in Note 5 of the Consolidated Financial Statements.

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

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

The fair value of the indefinite-lived brand asset was estimated using the multi-period excess earnings method of the income approach, wherein the net earnings attributable to the asset are isolated from other “contributory assets” in order to estimate the cash flows solely attributable to the asset over its remaining economic life.

The fair value of the customer relationship intangible asset was estimated using the with/without method of the income approach, wherein the value is estimated by comparing the overall business cash flows with the customer relationships in place to the cash flows in a hypothetical scenario where the customer relationships are not in place.

The significant assumptions used in estimating the fair value under the with/without method include the time to recreate the asset, profitability under both scenarios, and the estimated discount rate.

(3) Primarily as a result of the fair value attributable to the identifiable intangible assets, the deferred income tax liability was $ 41.5 million.

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

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

As such, the acquired goodwill is not expected to be deductible for tax purposes.

Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

The final determination of the fair value of the assets acquired and liabilities assumed is expected to be completed in the fourth fiscal quarter of 2025.

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

The final fair value determination of the assets acquired and liabilities assumed will be completed prior to one year from the transaction completion, consistent with ASC 805.

The results of OWYN’s operations have been included in the Simply Good Foods' Consolidated Financial Statements since the acquisition date.

The Company has not disclosed earnings from the acquired OWYN business as they are immaterial.

The following table provides net sales from the acquired OWYN business included in the Company's results:

53-Weeks Ended

(In thousands) August 31, 2024

Net sales $ 29,213

Unaudited Pro Forma Financial Information

Pro forma financial information is not intended to represent or be indicative of the actual results of operations of the combined business that would have been reported had the OWYN Acquisition been completed at the beginning of the fiscal year 2023, nor is it representative of future operating results of the Company.

This unaudited pro forma combined financial information is prepared based on ASC 805 period end guidance.

The Company and the legacy OWYN entity have different fiscal year ends, with Simply Good Foods’ fiscal year being the last Saturday of August while the legacy OWYN business fiscal year end was December 31.

Because the year ends differ by more than 93 days, OWYN's financial information is required to be adjusted to a period within 93 days of Simply Good Foods’ fiscal period end.

In addition to these period end adjustments, the pro forma results include certain nonrecurring adjustments that were directly related to the business combination, including business transaction costs, as disclosed above.

The following unaudited pro forma combined financial information presents combined results of the Company assuming the OWYN Acquisition occurred at the beginning of fiscal year 2023:

53-Weeks Ended 52-Weeks Ended

(In thousands) August 31, 2024 August 26, 2023

Net Sales $ 1,414,580 $ 1,303,643

Net income $ 136,220 $ 97,693

Property and Equipment, Net

Property and equipment, net , as presented with the Consolidated Balance Sheets, is summarized as follows:

9 unchanged sentences

Property and equipment, net $ 24,830 $ 24,861

Total depreciation expense was $ 4.4 million for the fifty-two weeks ended August 26, 2023, $ 3.2 million for the fifty-two weeks

ended August 27, 2022, and $ 2.3 million for the fifty-two weeks ended August 28, 2021.

Total depreciation expense was $ 5.8 million for the fifty-three weeks ended August 31, 2024, $ 4.4 million for the fifty-two weeks ended August 26, 2023, and $ 3.2 million for the fifty-two weeks ended August 27, 2022.

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.

Changes to Goodwill during the fifty-three weeks ended August 31, 2024 were as follows:

(In thousands) Goodwill

Balance as of August 26, 2023 $ 543,134

Acquisition of business 48,553

Balance as of August 31, 2024 $ 591,687

The change in Goodwill during the fifty-three week period ended August 31, 2024, was the result of the acquisition method of accounting related to the OWYN Acquisition as described in Note 3.

There were no changes in the Company’s goodwill in the fifty-two week period ended August 26, 2023.

There were no impairment charges related to goodwill during the fifty-three weeks ended August 31, 2024, or since the inception of the Company.

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

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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

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.

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.

Changes in Intangible assets, net during the fifty-three weeks ended August 31, 2024, were primarily related to the OWYN Acquisition and recurring amortization expense.

In conjunction with the Acquisition, the Company acquired a brand indefinite lived intangible asset and a customer relationship intangible asset, which had fair values of approximately $ 223.0 million and $ 20.5 million as of the date of the Acquisition, respectively.

Changes related to the fifty-two weeks ended August 26, 2023, and August 27, 2022, were primarily related to recurring amortization expense.

During the third quarter of the fiscal year ended August 31, 2024, the Company conducted a qualitative impairment assessment that identified potential indicators of impairment for the Atkins brand indefinite lived intangible asset.

Accordingly, the Company proceeded to conduct a quantitative impairment assessment over the asset.

Based on our testing, the asset had an excess fair value well over its respective carrying value, resulting in no impairment.

Accordingly, no further impairment assessments were necessary.

There were no impairment charges related to indefinite-lived intangibles recognized in the fifty-three weeks ended August 31, 2024, August 26, 2023, or August 27, 2022, respectively.

During the fifty-three weeks ended August 31, 2024, 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-three weeks ended August 31, 2024, August 26, 2023, or August 27, 2022, respectively.

Amortization expense related to intangible assets was $ 15.2 million for the fifty-three weeks ended August 31, 2024, $ 15.7 million for the fifty-two weeks ended August 26, 2023, and $ 15.8 million for the fifty-two weeks ended August 27, 2022.

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

(In thousands) Amortization

2024 $ 15,091

Thereafter 64,494

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VAT payable 5,915 4,707

Accrued capital expenditures 2 350

Other accrued expenses 4,656 4,544

Current operating lease liabilities 5,494 7,566

Accrued R&D expenses 1,564 360

Other accrued expenses 6,527 4,298

Accrued expenses and other current liabilities $ 49,791 $ 35,062

The increase in Accrued expenses and other current liabilities as of August 31, 2024, as compared to August 26, 2023, was primarily a result of the OWYN Acquisition.

Long-Term Debt and Line of Credit

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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.

Substantially

concurrent with the consummation of the business combination which formed the Company between Conyers Park Acquisition Corp.

and NCP-ATK Holdings, Inc.

1 unchanged sentence

On November 7, 2019, the Company entered into a second amendment (the “Incremental Facility Amendment”) to the Credit Agreement to increase the principal borrowed on the Term Facility by $ 460.0 million.

The Term Facility together with the incremental

borrowing make up the Initial Term Loans (as defined in the Incremental Facility Amendment).

The Term Facility together with the incremental 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.

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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:

On June 13, 2024, the Company entered into a sixth amendment (the “2024 Incremental Facility Amendment”) to the Credit Agreement to increase the principal borrowed on the Term Facility by $ 250.0 million.

The terms of the incremental borrowing are the same as the terms of the outstanding borrowings under the Term Facility.

The 2024 Incremental Facility Amendment was executed to partially finance the OWYN Acquisition.

No amounts under the Term Facility were repaid as a result of the execution of the 2024 Incremental Facility Amendment.

Effective as of the 2024 Incremental Facility Amendment, the interest rate per annum for the Initial Term Loans is based on either:

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 2.50 % plus (x) 1.50 % margin for the Term Loan or (y) 2.00 % margin for the Revolving Credit Facility;

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).

In connection with the closing of the 2024 Incremental Facility Amendment, the Company expensed $ 3.4 million of non-deferrable third-party costs through Business transaction costs and capitalized $ 1.2 million of third-party financing costs.

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

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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.

All guarantors other than Quest Nutrition, LLC and Only What You Need, Inc.

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.

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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.

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 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

August 27, 2022.

As a result of Conyers Park’s election to exercise the Private Warrants, there were no outstanding liability-classified Private Warrants as of August 31, 2024, August 26, 2023, or August 27, 2022.

Refer to Note 12, Stockholders’ Equity, for additional details regarding the cashless exercise of the Private Warrants.

5 unchanged sentences

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.

The adjustments for the fifty-two weeks ended August 27, 2022, resulted in a loss of $ 30.1 million.

As a result of the warrant exercise on January 7, 2022, there was no associated adjustment during the fifty-three weeks ended August 31, 2024, or 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 31, 2024, August 26, 2023, and August 27, 2022, 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.

The Company’s non-financial assets, which consist primarily of property and equipment, right-of-use assets, goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value.

The fair values of these assets are determined, as required, based on Level 3 measurements, including estimates of the amount and timing of future cash flows based upon historical experience, expected market conditions, and management’s plans.

All other components of the balance sheet such as accounts receivable, cash and cash equivalents, and others approximate fair value as of August 31, 2024.

The sources of income before income taxes are as follows:

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Change in tax rate 0.2 — ( 0.2 )

Non-deductible transaction costs 0.5 — —

Other permanent items ( 0.9 ) ( 1.2 ) ( 1.9 )

5 unchanged sentences

Accrued expenses 4,520 3,732

Net operating loss carryforwards 17,200 26

Share based compensation 4,736 4,398

Lease liabilities 9,956 11,200

Capitalized Section 174 Expenditures 4,330 1,053

Tax capitalization of inventory costs 1,517 2,177

3 unchanged sentences

Deferred tax assets 47,923 27,931

Valuation allowance — —

Deferred tax asset, net of valuation allowance $ 47,923 $ 27,931

Deferred tax liabilities:

5 unchanged sentences

Net deferred tax liabilities $ ( 166,012 ) $ ( 116,133 )

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.

The Company had federal net operating loss carryforwards of $ 63.0 million and $ 0.0 million, state net operating loss carryforwards of $ 44.2 million and $ 0.3 million, and foreign net operating loss carryforwards of $ 1.7 million and $ 0.0 million at August 31, 2024 and August 26, 2023, respectively.

Federal net operating loss carryforwards will begin to expire in 2037 and the state net operating loss carryforwards will begin to expire in 2031.

As of August 31, 2024, the Company has no valuation allowances on its deferred tax assets.

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As of August 31, 2024, and August 26, 2023, 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,

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.

No changes to the uncertain tax position balance are anticipated within the next 12 months and are not expected to materially affect the financial statements.

As of August 31, 2024, tax years 2017 to 2023 remain subject to examination in the United States by the Internal Revenue Service and state tax authorities and the tax years 2017 to 2023 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.

The future utilization of federal net operating loss carryforwards generated after 2017 is limited to 80% of taxable income.

An additional limitation applies to the use of federal net operating loss and credit carryforwards, under Section 382 of the Internal Revenue Code of

1986, as amended, that is applicable if the Company experiences an "ownership change”.

The Company has experienced various “ownership changes” in prior years.

With the OWYN Acquisition, an "ownership change" occurred in the current year.

The resulting Section 382 limitations are not expected to materially affect the Company’s ability to utilize carryforwards.

Future changes in the ownership of the Company could further limit the Company’s ability to utilize its net operating losses and credits.

In 2021, the Organization for Economic Co-operation and Development (OECD) announced Pillar Two Model Rules, which call for the taxation of large multinational corporations at a minimum rate of 15%.

Many non-U.S.

tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in fiscal 2025 with the adoption of additional components in later years or announced their plans to enact legislation in future years.

The currently enacted Pillar Two Model Rules are not expected to have a significant effect on the Company’s provision for income taxes.

The Company continues to monitor developments and evaluate effects, if any, of these provisions on its results of operations and cash flows for future years.

The components of lease expense were as follows.

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

In conjunction with the Company’s restructuring activities as discussed in Note 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:

6 unchanged sentences

Operating lease liabilities Other long-term liabilities 34,330 37,272

Finance lease liabilities Long-term debt, less current maturities — 142

Total lease liabilities $ 39,824 $ 44,981

Future maturities of lease liabilities as of August 31, 2024, were as follows:

(In thousands) Operating Leases Finance Leases

(In thousands) Operating Leases

Fiscal year ending:

2024 $ 9,476 $ 145

Thereafter 14,679

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

During the 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.

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.

The Company enters into endorsement contracts with certain celebrity figures and social media influencers to promote and endorse the Quest, Atkins, and OWYN 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.

1 unchanged sentence

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

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

The Company did not repurchase any shares of common stock during the fifty-three weeks ended August 31, 2024.

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 31, 2024, approximately $ 71.5 million remained available under the stock repurchase program.

1 unchanged sentence

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.

The gain is reflected as a component of Other income (expense) in Gain (loss) on foreign currency transactions within the Consolidated Statements of Income and Comprehensive Income.

Earnings Per Share

18 unchanged sentences

Diluted earnings per share from net income $ 1.38 $ 1.32 $ 1.08

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.

Diluted earnings per share calculations for the fifty-two weeks ended August 27, 2022, excluded 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-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, excluded 0.8 million shares, 0.6 million shares, and 0.3 million 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-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, excluded an immaterial number of non-vested restricted stock units that would have been anti-dilutive.

Omnibus Incentive Plan

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

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.

For the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, the Company recorded stock-based compensation expense of $ 18.4 million, $ 14.5 million, and $ 11.7 million, respectively.

In July 2017, the Company’s stockholders approved the 2017 Omnibus Incentive Plan (the “Incentive Plan”).

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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:

The following table summarizes stock option activity for the fifty-three weeks ended August 31, 2024:

(In thousands, except share and per share data) Shares underlying options Weighted average

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2,410,567 $ 20.75 4.39 2,131,180 $ 18.53

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 weighted average fair value of options granted during the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, were $ 14.36 , $ 16.58 , and $ 15.32 , 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:

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Risk-free rate of return 4.39 % 4.27 % 1.26 %

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.

As the Company has now been listed for more than five years for the years presented above, which is broadly consistent with the expected term of the options, the Company has based its Black-Scholes valuation model’s expected volatility assumption on the actual volatility of its daily closing share price over the period since listing to the valuation date.

The risk-free rates are based on the implied yield available on U.S.

2 unchanged sentences

As of August 31, 2024, the Company had $ 2.3 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.4 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.

During the fifty-three weeks ended August 31, 2024, and fifty-two weeks ended August 26, 2023, and August 27, 2022, the Company received $ 4.3 million, $ 5.2 million, and $ 4.3 million in cash from stock option exercises, respectively.

Restricted Stock Units

1 unchanged sentence

Restricted stock units under the Incentive Plan generally vest over three years .

The following table summarizes restricted stock unit activity for the fifty-two weeks ended August 26, 2023:

The following table summarizes restricted stock unit activity for the fifty-three weeks ended August 31, 2024:

Units Weighted average

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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.

During the fifty-three weeks ended August 31, 2024, the Board of Directors granted performance stock units under the Company’s Incentive Plan.

The number of shares issuable as a result of grants of performance stock units is determined based on the performance criteria of the Company’s relative total shareholder return, or relative TSR, measured for the Company and each company in the Russell 3000 Food & Beverage index using the immediately preceding 30-day average share price at the beginning and end of the applicable three -year performance period.

The percentile rank of the Company’s TSR within the peer group determines the percent of the target award earned, ranging between 0 % and 200 %.

The related compensation expense is recognized regardless of whether or not the market condition is satisfied, provided the requisite service is rendered.

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:

The following table summarizes performance stock unit activity for the fifty-three weeks ended August 31, 2024:

Units Weighted average

5 unchanged sentences

Non-vested as of August 31, 2024 179,791 $ 59.08

Performance stock units are generally granted to employees as a part of the annual grant in November of the associated fiscal year, although the Board of Directors reserves the right to administer mid-year grants from time to time as they see fit.

The fair value of each performance stock unit grant is estimated on the date of grant using a Monte-Carlo simulation based on the following assumptions presented below which are associated with each year’s annual grant:

53-Weeks Ended 52-Weeks Ended 52-Weeks Ended

August 31, 2024 August 26, 2023 August 27, 2022

Expected volatility 33.96 % 45.00 % 43.00 %

Expected dividend yield — % — % — %

Expected performance term 2.93 3 3

Risk-free rate of return 4.62 % 4.55 % 0.70 %

Fair value $ 57.43 $ 62.55 $ 63.42

As of August 31, 2024, the Company had $ 4.3 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.4 years.

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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:

The following table summarizes SARs activity for the fifty-three weeks ended August 31, 2024:

Shares Underlying SARs Weighted average

1 unchanged sentence

Outstanding as of August 26, 2023 150,000 $ 37.67

Granted 150,000 37.67

Exercised — —

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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.

Following the OWYN Acquisition, the Company's operations are organized into two operating segments, Quest and Atkins, and OWYN, which are aggregated into one reporting segment due to similar financial, economic and operating characteristics.

The operating segments are also similar in the following areas:

(a) the nature of the products;

(b) the nature of the production processes;

(d) the type of customer for the products;

and, (e) the nature of the regulatory environment.

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.

As a result, during the fifty-three weeks ended August 31, 2024, the Company determined its operations are organized into two operating segments, which were aggregated into one reporting segment due to similar financial, economic and operating characteristics.

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.

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.

6 unchanged sentences

Quest 777,394 682,789 593,943

OWYN 29,213 — —

Total North America 1,298,593 1,209,558 1,134,271

International (1)

32,728 33,114 34,407

Total $ 1,331,321 $ 1,242,672 $ 1,168,678

8 unchanged sentences

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.

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-three weeks ended August 31, 2024, and fifty-two weeks ended August 26, 2023, and August 27, 2022.

53-Weeks Ended 52-Weeks Ended 52-Weeks Ended

8 unchanged sentences

Customer 2 $ 51,411 34 % $ 37,384 26 %

Customer 3 n/a n/a $ 18,521 14 %

n/a - Not applicable as the customer was not significant during this fiscal year.

Restructuring and Related Charges

2 unchanged sentences

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.

The Company substantially completed the aforementioned restructuring activities during the fifty-two weeks ended August 27, 2022.

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.

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

3 unchanged sentences

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.

No restructuring and restructuring-related costs were incurred in the fifty-three weeks ended August 31, 2024, or the fifty-two weeks ended August 26, 2023.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data