What changed in this filing

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Item 1. Financial Statements

2021-08-12 compared with 2021-05-13 · 240 added, 165 removed, 649 unchanged (38% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

April 4, 2021 and January 3, 2021

(In thousands)

April 4, 2021

July 4, 2021 and January 3, 2021

(In thousands, except share information)

As of January 3, 2021

(Unaudited) (as restated)

Current Assets

16 unchanged sentences

Current Liabilities

Current portion of term debt $ 7,500 $ 469

Current portion of term debt and financing obligations $ 10,672 $ 469

Current portion of other notes payable 8,979 9,018

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Total current liabilities 153,924 200,109

Non-current portion of term debt and revolving credit facility 718,443 778,000

Non-current portion of term debt, revolving credit facility and financing obligations 785,636 778,000

Non-current portion of other notes payable 27,473 24,564

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1,000,000,000 shares authorized;

76,481,833 and 71,094,714 shares issued and outstanding as of April 4, 2021 and January 3, 2021, respectively.

76,570,422 and 71,094,714 shares issued and outstanding as of July 4, 2021 and January 3, 2021, respectively.

Shares of Class V Common Stock, $ 0.0001 par value;

61,249,000 shares authorized;

60,349,000 shares issued and outstanding as of April 4, 2021 and January 3, 2021.

60,349,000 shares issued and outstanding as of July 4, 2021 and January 3, 2021.

Additional paid-in capital 944,758 793,461

8 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the thirteen weeks ended April 4, 2021 and March 29, 2020

For the thirteen and twenty-six weeks ended July 4, 2021 and June 28, 2020

(In thousands, except share information)

Successor Predecessor

Thirteen weeks ended April 4, 2021 Thirteen weeks ended March 29, 2020

Successor Predecessor Successor Predecessor

Thirteen weeks ended July 4, 2021 Thirteen weeks ended June 28, 2020 Twenty-six weeks ended July 4, 2021 Twenty-six weeks ended June 28, 2020

Net sales $ 297,919 $ 241,977 $ 567,101 $ 470,006

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Income from operations 4,369 17,451 13,668 29,664

Other (expense) income

Other income (expense)

Interest expense ( 7,896 ) ( 9,987 ) ( 18,757 ) ( 19,630 )

Other income 758 259 1,476 839

Loss on remeasurement of warrant liability ( 21,501 ) —

Other (expense) income, net ( 31,644 ) ( 9,063 )

(Loss) income before taxes ( 22,345 ) 3,150

Gain (loss) on remeasurement of warrant liability 19,368 — ( 2,133 ) —

Other income (expense), net 12,230 ( 9,728 ) ( 19,414 ) ( 18,791 )

Income (loss) before income tax expense 16,599 7,723 ( 5,746 ) 10,873

Income tax expense 420 1,171 1,424 2,629

Net (loss) income ( 23,349 ) 1,692

Net income (loss) 16,179 6,552 ( 7,170 ) 8,244

Net loss attributable to noncontrolling interest 1,400 — 2,220 —

Net (loss) income attributable to controlling interest $ ( 22,529 ) $ 1,692

Net income (loss) attributable to controlling interest $ 17,579 $ 6,552 $ ( 4,950 ) $ 8,244

Earnings per Class A Common stock:

Basic & diluted $ ( 0.30 )

Basic $ 0.22 $ ( 0.07 )

Diluted $ 0.21 $ ( 0.07 )

Weighted-average shares of Class A Common stock outstanding

Basic & diluted 75,927,005

Basic 76,500,488 76,213,746

Diluted 81,732,056 76,213,746

Other comprehensive income (loss):

Interest rate swap $ 822 $ ( 7,208 )

Comprehensive loss $ ( 21,707 ) $ ( 5,516 )

Change in value of interest rate swap $ 607 $ ( 709 ) $ 1,429 $ ( 7,917 )

Comprehensive income (loss) $ 18,186 $ 5,843 $ ( 3,521 ) $ 327

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

For the thirteen weeks ended April 4, 2021 and March 29, 2020

For the thirteen and twenty-six weeks ended July 4, 2021 and June 28, 2020

(In thousands, except share data)

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Balance at March 29, 2020 ( 35,725 ) ( 5,800 ) — ( 41,525 )

Net income 6,552 — — 6,552

Other comprehensive loss — ( 709 ) — ( 709 )

Distributions to members ( 2,539 ) — — ( 2,539 )

Balance at June 28, 2020 $ ( 31,712 ) $ ( 6,509 ) $ — $ ( 38,221 )

Class A Common Stock Class V Common Stock Additional Paid-in Capital Accumulated (Deficit) Accumulated Other Comprehensive Income Total Stockholders' Equity Non-controlling Interest Total Equity

Successor Shares Amount Shares Amount

Balance at January 3, 2021 (as restated) 71,094,714 $ 7 60,349,000 $ 6 $ 793,461 $ ( 241,490 ) $ 924 $ 552,908 $ 831,994 $ 1,384,902

Balance at January 3, 2021 71,094,714 $ 7 60,349,000 $ 6 $ 793,461 $ ( 241,490 ) $ 924 $ 552,908 $ 831,994 $ 1,384,902

Conversion of warrants 4,976,717 — — 144,659 — — 144,659 ( 32,714 ) 111,945

Share-based compensation 410,402 — — 2,883 — — 2,883 — 2,883

Stock-based compensation 410,402 — — 2,883 — — 2,883 — 2,883

Net loss — — — ( 22,529 ) — ( 22,529 ) ( 820 ) ( 23,349 )

1 unchanged sentence

Balance at April 4, 2021 76,481,833 $ 7 60,349,000 $ 6 $ 941,003 $ ( 264,019 ) $ 1,746 $ 678,743 $ 798,460 $ 1,477,203

Stock-based compensation 88,589 1 — 3,755 — — 3,756 — 3,756

Net income — — — 17,579 — 17,579 ( 1,400 ) 16,179

Other comprehensive income — — — — 607 607 — 607

Cash dividends — — — ( 7,645 ) — ( 7,645 ) — ( 7,645 )

Distribution to noncontrolling interest — — — — — — ( 10,829 ) ( 10,829 )

Balance at July 4, 2021 76,570,422 $ 8 60,349,000 $ 6 $ 944,758 $ ( 254,085 ) $ 2,353 $ 693,040 $ 786,231 $ 1,479,271

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the thirteen weeks ended April 4, 2021 and March 29, 2020

For the twenty-six weeks ended July 4, 2021 and June 28, 2020

(In thousands)

Successor Predecessor

Thirteen weeks ended April 4, 2021 Thirteen weeks ended March 29, 2020

Twenty-six weeks ended July 4, 2021 Twenty-six weeks ended June 28, 2020

Cash flows from operating activities

Net (loss) income $ ( 7,170 ) $ 8,244

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

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

Depreciation and amortization 38,552 17,947

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Deferred taxes 1,224 2,239

Deferred financing costs 2,870 653

Amortization of deferred financing fees 3,168 1,306

Changes in assets and liabilities:

3 unchanged sentences

Accounts payable and accrued expenses and other ( 5,320 ) 12,930

Net cash used in operating activities ( 13,183 ) ( 2,773 )

Net cash (used in) provided by operating activities ( 44 ) 20,313

Cash flows from investing activities

8 unchanged sentences

Cash flows from financing activities

Line of credit borrowings, net 15,000 10,000

Borrowings on term debt and notes payable 808,000 2,650

5 unchanged sentences

Distribution to noncontrolling interest ( 11,009 ) —

Net cash (used in) provided by financing activities ( 4,317 ) 7,815

Net cash provided by (used in) financing activities 50,501 ( 7,384 )

Net decrease in cash and cash equivalents ( 20,086 ) ( 5,082 )

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The Noncontrolling interest represents the common limited liability company units of UBH held by the Continuing Members.

The financial statements include the accounts of the Predecessor, prior to the Business Combination, which was determined to be consolidated UBH, which includes the accounts of its wholly-owned subsidiary, Utz Quality Foods, LLC (“UQF”).

UQF is consolidated with its wholly-owned subsidiaries:

UTZTRAN, LLC;

Heron Holding Corporation (“Heron”), with its wholly-owned subsidiaries Golden Flake Snack Foods, Inc.

(“Golden Flake”), Inventure Foods, Inc.

Heron Holding Corporation (“Heron”), with its wholly-owned subsidiaries Golden Flake Snack Foods, Inc., Inventure Foods, Inc.

and its subsidiaries (“Inventure Foods”), and Kitchen Cooked Inc.

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Kennedy Endeavors, LLC (“Kennedy”);

and GH Pop Holdings, LLC, with its wholly-owned subsidiaries Good Health Natural Products, LLC (“Good Health”), Condor Snack Foods, LLC, and Snikiddy, LLC (“Snikiddy”).

and GH Pop Holdings, LLC, with its wholly-owned subsidiaries Good Health Natural Products, LLC, Condor Snack Foods, LLC, and Snikiddy, LLC.

All intercompany transactions and balances have been eliminated in consolidation.

Restatement of Previously Issued Condensed Consolidated Financial Statements – The notes included herein should be read in conjunction with the Company's restated audited consolidated financial statements included in the Company's Annual Report on Form 10-K/A filed with the SEC on May 13, 2021 (the "2020 Form 10-K/A").

As previously disclosed in our 2020 Form 10-K/A as filed on May 13, 2021, we restated the Company’s previously issued consolidated financial statements as of and for the fiscal year ended January 3, 2021, as well as the fiscal quarter ended September 27, 2020 to make the necessary accounting corrections related to warrant accounting.

We have also restated related amounts within the accompanying footnotes to the condensed consolidated financial statements.

Since the Warrants were not part of the Predecessor, and therefore no warrant liability or expense due to the remeasurement of the warrant liability is shown in such periods, we have not restated herein our condensed consolidated financial statements as of and for the fiscal quarter ended March 29, 2020.

Emerging Growth Company – The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the "Securities Act"), as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

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This may make comparison of the Company’s financial statements with another public company which is either not an emerging growth company or is an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.

Under the JOBS Act, we will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering of common equity securities, (ii) the last day of the fiscal year in which we have annual gross revenue of $1.07 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt;

and (iv) the date on which we are deemed to be a “large accelerated filer,” which will occur at such time as the Company has an aggregate worldwide market value of common equity securities held by non-affiliates of $700.0 million or more as of the last business day of our most recently completed second fiscal quarter.

Since the aggregate worldwide market value of our Class A Common Stock held by non-affiliates exceeded $700.0 million as of the last business day of our most recently completed second fiscal quarter, we will not be an emerging growth company commencing on the last day of fiscal year 2021.

Operations – The Company through its wholly owned subsidiary UQF, is a premier producer, marketer and distributor of snack food products since 1921.

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Cash and Cash Equivalents – The Company considers all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents.

The majority of the Company’s cash is held in financial institutions with insurance provided by the Federal Deposit Insurance Corporation (“FDIC”) of $250,000 per depositor.

The majority of the Company’s cash is held in financial institutions with insurance provided by the Federal Deposit Insurance Corporation of $250,000 per depositor.

At various times, account balances may exceed federally insured limits.

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The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling and administrative expenses.

As of April 4, 2021 and January 3, 2021, no liability for unrecognized tax benefits was required to be reported.

As of July 4, 2021 and January 3, 2021, no liability for unrecognized tax benefits was required to be reported.

The Company does not expect any significant changes in its unrecognized tax benefits in the next fiscal year.

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For the latest qualitative analysis performed, which took place on the first day of the fourth quarter of 2020, we had taken into consideration all the events and circumstances listed in FASB ASC 350, Intangibles—Goodwill and Other, in addition to other entity-specific factors that had taken place from the period of the business combination, which assessed goodwill, on August 28, 2020.

We have determined that there was no significant impact that affected the fair value of the reporting unit through April 4, 2021.

We have determined that there was no significant impact that affected the fair value of the reporting unit through July 4, 2021.

Therefore, we have determined that it was not necessary to perform a quantitative goodwill impairment test for the reporting unit.

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The Company sells its products in most regions of the United States primarily through its DSD network, direct to warehouse shipments, and third-party distributors.

These revenue contracts generally have a single performance obligation.

These revenue contracts generally have a single performance obligation, and the Company recognizes revenue when such obligation is satisfied, as described below.

Revenue, which includes shipping and handling charges billed to the customer, is reported net of variable consideration and consideration payable to customers, including applicable discounts, returns, allowances, trade promotion, consumer coupon redemption, unsaleable product, and other costs.

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These estimates are made using various techniques including historical data on performance of similar promotional programs.

The Company has reserves in place of $ 26.0 million as of April 4, 2021 and $ 17.6 million as of January 3, 2021.

The Company has reserves in place of $ 25.3 million as of July 4, 2021 and $ 17.6 million as of January 3, 2021.

Differences between estimated expense and actual redemptions are recognized as a change in management estimate as actual redemptions are incurred.

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Actual results could vary materially from the estimates that were used.

Recently Issued Accounting Standards – In December 2019, the FASB issued "ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes" ("Topic 740").

This ASU is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities.

For non-public business entities or emerging growth companies, ASU 2019-12 is effective for annual periods beginning after December 15, 2021 and interim periods within those annual periods, with early adoption permitted.

An entity that elects early adoption must adopt all the amendments in the same period.

Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No.

Recently Issued Accounting Standards – In February 2016, the FASB issued ASU No.

2016-02, Leases (“Topic 842”), which requires a lessee to recognize in its balance sheet an asset and liability for most leases with a term greater than 12 months.

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The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures.

In December 2019, the FASB issued "ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes" ("Topic 740").

An entity that elects early adoption must adopt all the amendments in the same period.

Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU No.

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At the closing of the Business Combination (the "Closing") on August 28, 2020 (the "Closing Date"), the Company domesticated into a Delaware corporation and changed its name to "Utz Brands, Inc." At the Closing, the Company (i) acquired certain common and preferred interests of the Continuing Members from third party members (“UPA Seller”), and the Continuing Members then redeemed such common and preferred interests for, and the Company received, an equivalent value of common limited liability company units of UBH, (ii) contributed cash in exchange for additional common limited liability company units of UBH, and (iii) purchased additional common limited liability company units and 100% of the managing interests of UBH from the Continuing Members.

As part of the Business Combination, the Continuing Members (a) received certain cash considerations for the common limited liability company units that they sold to the Company, (b) received such number of shares of newly issued non-economic Class V Common Stock in the Company equal to the common limited liability company units that the Continuing Members retained in UBH, and a unit of limited liability company units of UBH and a share of Class V Common Stock are exchangeable for one share of Class A Common Stock of the Company, (c) were entitled to receive certain restricted common limited liability company units in UBH (the "Retained Restricted Units") that would be vested under certain market conditions, which vested as of the Closing, and (d) entered into a Tax Receivable Agreement (“TRA”) that requires the Company to pay to the Continuing Members 85% of the applicable cash savings, if any, in U.S.

As part of the Business Combination, the Continuing Members (a) received certain cash considerations for the common limited liability company units that they sold to the Company, (b) received such number of shares of newly issued non-economic Class V Common Stock in the Company equal to the common limited liability company units that the Continuing Members retained in UBH, and a unit consisting of limited liability company units of UBH and a share of Class V Common Stock are exchangeable for one share of Class A Common Stock of the Company, (c) were entitled to receive certain restricted common limited liability company units in UBH (the "Retained Restricted Units") that would be vested under certain market conditions, which vested as of the Closing, and (d) entered into a Tax Receivable Agreement (“TRA”) that requires the Company to pay to the Continuing Members 85% of the applicable cash savings, if any, in U.S.

federal and state income tax determined based on certain attributes as defined in the TRA.

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Compensation expenses will be recorded evenly during the post-combination requisite service period through the end of fiscal 2021, which is the cliff vest date of the replacement awards.

(3) A total of 3,483,022 common limited liability company units that were initially subject to certain restrictions (the "Retained Restricted Units") in UBH were received by the Continuing Members at the Closing.

(3) A total of 3,483,022 Retained Restricted Units in UBH were received by the Continuing Members at the Closing.

These Retained Restricted Units were vested and converted to common limited liability company units of UBH at the Closing, as the vesting conditions were all met as of the Closing.

The fair value of the Retained Restricted Units was calculated based on the stock price of the Company at the August 28, 2020 Closing, less a 5% lack of marketability discount due to a restriction on the exchange of the Continuing Members’ common limited liability company units to Class A Common Stock of the Company for a period not to exceed 12 months from the Closing.

The fair value of the Retained Restricted Units was calculated based on the stock price of the Company on the Closing Date, less a 5 % lack of marketability discount due to a restriction on the exchange of the Continuing Members’ common limited liability company units to Class A Common Stock of the Company for a period not to exceed 12 months from the Closing Date.

(4) The noncontrolling interest represents the common limited liability company units of UBH held by the Continuing Members.

The fair value of these units was determined based on the Class A Common Stock price of the Company at the August 28, 2020 Closing, less a 5% lack of marketability discount due to a restriction on the exchange of the Continuing Members’ common limited liability company units to Class A Common Stock of the Company for a period not to exceed 12 months from the Closing.

The fair value of these units was determined based on the Class A Common Stock price of the Company on the Closing Date, less a 5 % lack of marketability discount due to a restriction on the exchange of the Continuing Members’ common limited liability company units to Class A Common Stock of the Company for a period not to exceed 12 months from the Closing Date.

The following table summarizes the provisional fair values of the assets acquired and liabilities assumed of UBH at Closing:

2 unchanged sentences

Cash and cash equivalents $ 13,713

Accounts receivable, net 119,339

Inventory, net 63,862

Accounts receivable 119,339

Inventory 63,862

Prepaid expenses and other assets 6,116

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A portion of the goodwill recognized is expected to be deductible for income tax purposes.

As of April, 4, 2021, the purchase price allocation has not been finalized.

As of July 4, 2021, the purchase price allocation has not been finalized.

On November 2, 2020, the Company, through its subsidiary, UQF, acquired certain assets of the H.K.

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The trademarks and customer relationships are being amortized over a period of 15 years.

As of April 4, 2021, the purchase price allocation has not been finalized.

As of July 4, 2021, the purchase price allocation has not been finalized.

We expect to finalize the valuation report and complete the purchase price allocation no later than one-year from the acquisition date.

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Intangible assets not recognized apart from goodwill consist primarily of the strong market position and the assembled workforce of Truco.

As of January 3, 2021, the purchase price allocation has not been finalized.

As of July 4, 2021, the purchase price allocation has not been finalized.

We expect to finalize the valuation report and complete the purchase price allocation no later than one-year from the acquisition date.

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These transaction costs are recorded within administrative expenses within the consolidated statements of operations and comprehensive income (loss).

Truco contributed revenues of $ 44.3 million and net income of $ 4.7 million in the consolidated statement of operations and comprehensive income (loss) for the for the first fiscal quarter of 2021.

For the thirteen weeks ended July 4, 2021, Truco contributed revenues of $ 52.6 million and a net loss of $( 4.0 ) million in the consolidated statement of operations and comprehensive income (loss).

For the twenty-six weeks ended July 4, 2021, Truco contributed revenues of $ 96.9 million and net income of $ 0.7 million in the consolidated statement of operations and comprehensive income (loss).

On January 11, 2021, the Company announced that its subsidiary, UQF entered into a definitive agreement with Snak-King Corp.

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The Company closed this transaction on February 8, 2021 and the purchase price of approximately $ 25.2 million was funded from current cash-on-hand.

The provisional fair values to which the purchase price was allocated were $ 2.9 million to trademarks, $ 0.8 million to customer relationships, $ 1.7 million to DSD routes, and $ 17.8 million to goodwill.

The provisional fair values to which the purchase price was allocated were $ 2.9 million to trademarks, $ 0.8 million to customer relationships, $ 1.7 million to DSD routes, $ 1.9 million of other net assets, and $ 17.9 million to goodwill.

The trademarks and customer relationships are being amortized over a period of 15 years.

As of April 4, 2021, the purchase price allocation has not been finalized.

As of July 4, 2021, the purchase price allocation has not been finalized.

We expect to finalize the valuation report and complete the purchase price allocation no later than one-year from the acquisition date.

Festida Foods

On April 11, 2021, the Company announced that its subsidiary, UQF entered into a definitive agreement with Great Lakes Festida Holdings, Inc.

to acquire all assets including real estate located in Grand Rapids, Michigan related to the operations of Festida Foods ("Festida Foods acquisition" or "acquisition of Festida Foods"), a manufacturer of tortilla chips, corn chips, and pellet snacks, and the largest manufacturer of tortilla chips for the Company's ON THE BORDER® brand.

The Company closed this transaction on June 7, 2021 and the purchase price of approximately $ 40.3 million was funded in part from incremental financing on an existing term loan.

The following table summarizes the provisional fair values of the assets acquired and liabilities assumed by the Company at the date of the acquisition:

(in thousands)

Purchase consideration $ 40,324

Assets acquired:

Accounts receivable 2,776

Inventory 2,704

Prepaid expenses and other assets 207

Property, plant and equipment 24,650

Customer relationships 1,530

Total assets acquired:

Liabilities assumed:

Accounts payable 2,017

Accrued expenses 869

Total liabilities assumed:

Net identifiable assets acquired 28,981

Goodwill $ 11,343

The customer relationships are being amortized over a period of 10 years.

As of July 4, 2021, the purchase price allocation has not been finalized.

We expect to finalize the valuation report and complete the purchase price allocation no later than one-year from the acquisition date.

Inventories consisted of the following:

(in thousands) As of

April 4, 2021

As of January 3, 2021

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(in thousands) As of

April 4, 2021

As of January 3, 2021

8 unchanged sentences

Property, plant and equipment, net $ 285,611 $ 270,416

Depreciation expense was $ 9.9 million and $ 7.0 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

Depreciation expense was $ 10.2 million and $ 7.1 million for the thirteen weeks ended July 4, 2021 (Successor), and the thirteen weeks ended June 28, 2020 (Predecessor), respectively.

Depreciation expense was $ 20.3 million and $ 14.1 million for the twenty-six weeks ended July 4, 2021 (Successor), and the twenty-six weeks ended June 28, 2020 (Predecessor), respectively.

Depreciation expense is classified in cost of goods sold, selling expenses, and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

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(in thousands)

Balance as of Balance as of January 3, 2021 $ 862,183

Balance as of January 3, 2021 $ 862,183

Acquisition of Vitner's 17,880

Balance as of April 4, 2021 880,063

Truco acquisition adjustment 1,118

Acquisition of Festida Foods 11,343

Balance as of July 4, 2021 $ 892,524

For the first fiscal quarter of 2021, the change to goodwill was attributable to the acquisition of Vitner's.

For the second fiscal quarter of 2021, the change to goodwill was attributable to a Truco acquisition adjustment and the acquisition of Festida Foods.

Intangible assets, net, consisted of the following:

(in thousands) As of

April 4, 2021

As of January 3, 2021

2 unchanged sentences

Technology 43 43

Trade names 60,750 57,810

Trademarks 60,750 57,810

Master distribution rights 2,221 2,221

4 unchanged sentences

Trade names 434,513 434,513

Company owned routes 15,540 14,240

IO routes 13,264 14,240

Intangible assets, net $ 1,157,679 $ 1,171,709

Amortizable trademark intangible assets increased by $ 2.9 million and distributor/customer relationships increased by $ 0.8 million during the first quarter of fiscal 2021 due to the acquisition of Vitner's.

Company owned routes increased by $ 1.7 million related to routes acquired in the acquisition of Vitner's and $ 1.2 million related to the purchase of certain distribution rights in the Central Florida region from an existing third party distributor.

There were no other changes to intangible assets during the thirteen weeks ended April 4, 2021 other than those which arise from the normal course of business of buying and selling of Company owned routes and amortization.

Amortization of the distributor/customer relationships, technology, and trade names amounted to $ 9.5 million and $ 1.9 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

Distributor/customer relationships increased by $ 1.5 million during the second quarter of fiscal 2021 due to the acquisition of Festida Foods.

There were no other changes to intangible assets during the twenty-six weeks ended July 4, 2021 other than those which arise from the normal course of business of buying and selling of Company owned routes and amortization.

Amortization of the distributor/customer relationships, technology, and trade names amounted to $ 8.9 million and $ 1.9 million for the thirteen weeks ended July 4, 2021 (Successor), and the thirteen weeks ended June 28, 2020 (Predecessor), respectively.

Amortization of the distributor/customer relationships, technology, and trade names amounted to $ 18.3 million and $ 3.8 million for the twenty-six weeks ended July 4, 2021 (Successor), and the twenty-six weeks ended June 28, 2020 (Predecessor), respectively.

Amortization expense is classified in administrative expenses on the consolidated statements of operations and comprehensive income (loss).

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The notes bear interest at rates ranging from 0.00 % to 8.55 % with terms ranging generally from one to ten years .

The notes receivable balances due from IOs at April 4, 2021 and January 3, 2021 totaled $ 27.9 million and $ 27.1 million, respectively, and are collateralized by the routes for which the loans are made.

Of the balance at April 4, 2021 and January 3, 2021, $ 23.6 million and $ 23.1 million, respectively relates to corresponding notes payable, as discussed in further detail within Note 8.

The notes receivable balances due from IOs at July 4, 2021 and January 3, 2021 totaled $ 30.6 million and $ 27.1 million, respectively, and are collateralized by the routes for which the loans are made.

Of the balance at July 4, 2021 and January 3, 2021, $ 26.7 million and $ 23.1 million, respectively relates to corresponding notes payable, as discussed in further detail within Note 8.

"Long-Term Debt".

Other notes receivable totaled $ 0.4 million and $ 0.6 million as of April 4, 2021 and January 3, 2021, respectively.

Other notes receivable totaled $ 1.2 million and $ 0.6 million as of July 4, 2021 and January 3, 2021, respectively.

ACCRUED EXPENSES AND OTHER

Accrued expenses and other consisted of the following:

(in thousands) As of April 4, 2021 As of January 3, 2021

(in thousands) As of July 4, 2021 As of January 3, 2021

Accrued compensation and benefits $ 19,845 $ 36,968

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Total accrued expenses and other $ 59,599 $ 80,788

As of April 4, 2021, the long term accrued expenses and other primarily consists of $ 28.7 million related to the TRA, described in Note 2.

"Acquisitions", $ 7.1 million related to supplemental retirement and salary continuation plans, $ 1.3 million related the long term portion of an interest rate hedge liability and $ 0.4 million of other long term accrued.

As of January 3, 2021, the long term accrued expenses and other primarily consists of $ 28.7 million related to the TRA, described in Note 2.

"Acquisitions", $ 6.9 million related to supplemental retirement and salary continuation plans, $ 2.1 million related the long term portion of an interest rate hedge liability and $ 0.1 million of other long term accrued expenses.

Non-current accrued expenses and other consisted of the following:

(in thousands) As of July 4, 2021 As of January 3, 2021

$ 28,669 $ 28,669

Supplemental retirement and salary continuation plans $ 7,911 $ 6,901

Long term portion of an interest rate hedge liability $ 650 $ 2,082

Other long term accrued expenses $ 50 $ 119

Total accrued expenses and other $ 37,280 $ 37,771

LONG-TERM DEBT

Revolving Credit Facility

On November 21, 2017, UBH entered into an asset based revolving credit facility (the “ABL facility”) in an initial aggregate principal amount of $ 100.0 million.

On November 21, 2017, UBH entered into an asset based revolving credit facility (as amended, the “ABL facility”) in an initial aggregate principal amount of $ 100.0 million.

The ABL facility was set to expire on the fifth anniversary of closing, or November 21, 2022.

On April 1, 2020, the ABL facility was amended to increase the credit limit up to $ 116.0 million and to extend the maturity through August 22, 2024.

On December 18, 2020 the ABL facility was amended to increase the credit limit up to $ 161.0 million and as of April 4, 2021, the outstanding balance of the ABL facility was $ 15.0 million.

No amounts were outstanding under this facility as of January 3, 2021.

Availability under the ABL facility is based on a monthly accounts receivable and inventory borrowing base certification, which is net of outstanding letters of credit.

As of April 4, 2021 and January 3, 2021, $ 93.4 million and $ 106.4 million, respectively, was available for borrowing, net of letters of credit.

On December 18, 2020 the ABL facility was amended to increase the credit limit up to $ 161.0 million.

No amounts were outstanding under this facility as of July 4, 2021 and January 3, 2021.

Availability under the ABL facility is based on a monthly accounts receivable and inventory borrowing base certification, which is net of outstanding letters of credit and amounts borrowed.

As of July 4, 2021 and January 3, 2021, $ 109.0 million and $ 106.4 million, respectively, was available for borrowing, net of letters of credit.

The facility bears interest at an annual rate based on LIBOR plus an applicable margin of 1.50 % (ranging from 1.50 % to 2.00 % based on availability) or the prime rate plus an applicable margin of 0.50 % (ranging from 0.50 % to 1.00 %).

Had the Company elected to use the Prime rate, the interest rate on the facility as of April 4, 2021 and March 29, 2020, would have been 3.75 % and 3.75 %, respectively.

The Company elected to use the LIBOR rate, the interest rate on the ABL facility as of April 4, 2021 was 1.61 %.

The Company elected to use the LIBOR rate as of March 29, 2020 and the interest rate was 2.36 %.

The ABL facility is also subject to unused line fees ( 0.5 % at April 4, 2021) and other fees and expenses.

Standby letters of credit in the amount of $ 14.1 million have been issued as of April 4, 2021 and January 3, 2021.

Had the Company elected to use the Prime rate, the interest rate on the facility as of July 4, 2021 and June 28, 2020, would have been 3.75 % and 3.75 %, respectively.

The Company elected to use the LIBOR rate, the interest rate on the ABL facility as of July 4, 2021 was 1.60 %.

The Company elected to use the LIBOR rate as of June 28, 2020 and the interest rate was 1.66 %.

The ABL facility is also subject to unused line fees ( 0.5 % at July 4, 2021) and other fees and expenses.

Standby letters of credit in the amount of $ 11.6 million and $ 14.1 million have been issued as of July 4, 2021 and January 3, 2021, respectively.

The standby letters of credit are primarily issued for insurance purposes.

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The First Lien Term Loan bears interest at an annual rate based on either LIBOR plus an applicable margin of 3.50 %, or prime rate plus an applicable margin of 2.50 %.

The interest rate on the First Lien Term Loan as of March 29, 2020 was 5.10 %.

The interest rate on the First Lien Term Loan as of June 28, 2020 was 5.10 %.

In connection with Amendment No.

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The Company incurred closing and other costs associated with the Term Loans, which were allocated to each loan on a specific identification basis based on original principal amounts.

Finance fees allocated to the First Lien Term Loan and the Second Lien Term Loan were $ 10.7 million and $ 4.1 million, respectively, which are presented net within “non-current portion of debt” on the consolidated balance sheets for the predecessor periods.

Finance fees allocated to the First Lien Term Loan and the Second Lien Term Loan were $ 10.7 million and $ 4.1 million, respectively, which were presented net within “non-current portion of debt” on the consolidated balance sheets for the predecessor periods.

Deferred fees are amortized ratably over the respective lives of each term loan.

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The proceeds of the Bridge Credit Agreement were used to fund the Company’s acquisition of Truco and the IP Purchase from OTB Acquisition, LLC, in which the Company withdrew $ 490.0 million to finance the Truco Acquisition and IP Purchase.

The Bridge Credit Agreement bears interest at an annual rate based on 4.25 % Base plus 1 month LIBOR with scheduled incremental increases to the base rate, as defined in the Bridge Credit Agreement.

The Bridge Credit Agreement bears interest at an annual base rate of 4.25 % plus 1 month LIBOR with scheduled incremental increases to the base rate, as defined in the Bridge Credit Agreement.

The loan converts into an Extended Term Loan if the Loan remains open 365 days after the closing date.

2 unchanged sentences

In connection with Amendment No.

2 to the Credit Agreement, and a $ 12.0 million repayment in the first quarter of 2021, the outstanding balance of $ 370.0 million was repaid in full.

2 to the Credit Agreement, and a $ 12.0 million repayment in the first quarter of 2021, the outstanding balance of $ 370.0 million was repaid in full and the Bridge Credit Agreement was terminated.

On January 20, 2021, the Company entered into Amendment No.

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The Company incurred debt issuance costs and original issuance discounts of $ 8.4 million.

The interest rate on this instrument was 3.11 % as of April 4, 2021.

The First Lien Term Loan, the Secured First Lien Note, Term Loan B, and the ABL facility are collateralized by substantially all of the assets and liabilities of the Company.

The credit agreements contain certain affirmative and negative covenants as to operations and the financial condition of the Company.

The Company was in compliance with its financial covenant as of April 4, 2021.

The interest rate on Term Loan B was 3.09 % as of July 4, 2021.

On June 22, 2021, the Company entered into Amendment No.

3 to the Credit Agreement ("Amendment No.

Pursuant to the terms of Amendment No.

3, the Company increased the principal balance of Term Loan B by $ 75.0 million to bring the aggregated balance of Term Loan B proceeds to $ 795.0 million, of which $ 791.2 million remains outstanding as of July 4, 2021.

The Company incurred additional debt issuance costs and original issuance discounts of $ 0.7 million related to the incremental funding.

The First Lien Term Loan, the Secured First Lien Note, Term Loan B, and the ABL facility are collateralized by substantially all of the assets of UBH and its subsidiaries, including equity interests in certain of UBH’s subsidiaries.

The credit agreements contain certain affirmative and negative covenants as to operations and the financial condition of UBH and its subsidiaries.

UBH and its subsidiaries were in compliance with its financial covenant as of July 4, 2021.

On July 2, 2021, the Company entered into an agreement with Bank of America Leasing & Capital, LLC, whereby the Company agreed to sell and lease-back certain manufacturing equipment and warehouse/distribution equipment for $ 13.0 million.

This was accounted for as a financing transaction.

The terms of the sale leaseback transaction are for 60 months at an interest rate of 3.26 %.

Other Notes Payable and Capital Leases

During the first fiscal quarter of 2020, the Company closed on the acquisition of Kitchen Cooked and the acquisition included a deferred purchase price of $ 2.0 million, of which $ 1.0 million is still outstanding as of April 4, 2021 and January 3, 2021.

Additionally, during the first fiscal quarter of 2020, the Company purchased intellectual property that include a deferred purchase price of $ 0.5 million, of which $ 0.4 million and $ 0.5 million is outstanding as of April 4, 2021 and January 3, 2021, respectively.

During the first fiscal quarter of 2020, the Company closed on the acquisition of Kitchen Cooked and the acquisition included a deferred purchase price of $ 2.0 million, of which $ 1.0 million was outstanding as of July 4, 2021 and January 3, 2021.

Additionally, during the first fiscal quarter of 2020, the Company purchased intellectual property that include a deferred purchase price of $ 0.5 million, of which $ 0.4 million and $ 0.5 million was outstanding as of July 4, 2021 and January 3, 2021, respectively.

Amounts outstanding under notes payable consisted of the following:

(in thousands) As of

April 4, 2021

As of January 3, 2021

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During the first quarter of fiscal 2021, the Company sold an additional $ 2.3 million of notes receivable from IOs on its books for $ 2.5 million to a financial institution.

Due to the structure of the transactions, the sale did not qualify for sale accounting treatment and the Company has recorded the notes payable obligation owed by the IOs to the financial institution on its books;

During the second quarter of fiscal 2021, the Company sold an additional $ 5.6 million of notes receivable from IOs on its books for $ 5.8 million to a financial institution.

Due to the structure of the transactions, the sales did not qualify for sale accounting treatment and the Company has recorded the notes payable obligation owed by the IOs to the financial institution on its books;

the corresponding notes receivable also remained on the Company’s books.

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Accordingly, the Company has the ability to recover substantially all of the outstanding loan value upon default.

Interest expense for the thirteen weeks ended April 4, 2021 (Successor) was $ 10.9 million, $ 7.6 million of which was related to the Company’s credit facility and other long-term debt, of which $ 2.9 million was related to amortization of deferred financing fees, and $ 0.4 million of which was related to IO loans.

Interest expense for the thirteen weeks ended March 29, 2020 (Predecessor) was $ 9.6 million, $ 8.3 million of which was related to the Company’s credit facility and other long-term debt, $ 0.7 million of which was related to amortization of deferred financing fees, and $ 0.6 million of which was related to IO loans.

The interest expense on IO loans is a pass-through expense that has an offsetting interest income within Other (expense) income.

Interest expense for the thirteen weeks ended July 4, 2021 (Successor) was $ 7.9 million, $ 7.3 million of which was related to the Company’s credit facility and other long-term debt, of which $ 0.3 million was related to amortization of deferred financing fees, and $ 0.3 million of which was related to IO loans.

Interest expense for the thirteen weeks ended June 28, 2020 (Predecessor) was $ 10.0 million, $ 8.7 million of which was related to the Company’s credit facility and other long-term debt, $ 0.7 million of which was related to amortization of deferred financing fees, and $ 0.6 million of which was related to IO loans.

Interest expense for the twenty-six weeks ended July 4, 2021 (Successor) was $ 18.8 million, $ 14.9 million of which was related to the Company’s credit facility and other long-term debt, of which $ 3.2 million was related to amortization of deferred financing fees, and $ 0.7 million of which was related to IO loans.

Interest expense for the twenty-six weeks ended June 28, 2020 (Predecessor) was $ 19.6 million, $ 17.1 million of which was related to the Company’s credit facility and other long-term debt, $ 1.3 million of which was related to amortization of deferred financing fees, and $ 1.2 million of which was related to IO loans.

The interest expense on IO loans is a pass-through expense that has an offsetting interest income within Other income (expense).

DERIVATIVE FINANCIAL INSTRUMENTS AND PURCHASE COMMITMENTS

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The Company entered into this transaction to reduce its exposure to changes in cash flows associated with its variable rate debt and has designated this derivative as a cash flow hedge.

At April 4, 2021, the effective fixed interest rate on the long-term debt hedged by this contract was 3.47 %.

At July 4, 2021, the effective fixed interest rate on the long-term debt hedged by this contract was 3.53 %.

For further treatment of the Company’s interest rate swap, refer to Note 10.

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"Warrants" for additional information on our warrant liabilities.

A reconciliation of the changes in the warrant liability during the thirteen weeks ended April 4, 2021 (Successor) is as follows:

A reconciliation of the changes in the warrant liability during the twenty-six weeks ended July 4, 2021 (Successor) is as follows:

(in thousands)

3 unchanged sentences

Fair value of warrant liabilities as of April 4, 2021 104,400

Gain on remeasurement of warrant liability ( 19,368 )

Fair value of warrant liabilities as of July 4, 2021 $ 85,032

Purchase Commitments

Additionally, the Company has outstanding purchase commitments for specific quantities at fixed prices for certain key ingredients to economically hedge commodity input prices.

These purchase commitments totaled $ 81.2 million as of April 4, 2021.

The Company has recorded purchase commitment losses totaling $ 0.0 million and $ 0.3 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

These purchase commitments totaled $ 64.6 million as of July 4, 2021.

The Company has recorded purchase commitment gain (losses) totaling $ 0.0 million and $( 0.7 ) million for the thirteen weeks ended July 4, 2021 (Successor), and the thirteen weeks ended June 28, 2020 (Predecessor), respectively.

The Company has recorded purchase commitment gain (losses) totaling $ 0.0 million and $( 1.0 ) million for the twenty-six weeks ended July 4, 2021 (Successor), and the twenty-six weeks ended June 28, 2020 (Predecessor), respectively.

FAIR VALUE MEASUREMENTS

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Derivative assets and liabilities included in Level 2 primarily represent commodity and interest rate swap contracts.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of April 4, 2021:

(in thousands) Level I Level II Level III Total

6 unchanged sentences

Total liabilities $ — $ 885,258 $ — $ 885,258

(in thousands) Level I Level II Level III Total

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The Company received an assessment from the Commonwealth of Pennsylvania pursuant to a sales and use tax audit for the period from January 1, 2014 through December 31, 2016.

As of April 4, 2021 and January 3, 2021, the Company had a reserve of $ 1.3 million, to cover the assessment.

As of July 4, 2021 and January 3, 2021, the Company had a reserve of $ 1.3 million, to cover the assessment.

The Company partially guarantees loans made to IOs by Cadence Bank for the purchase of routes.

The outstanding balance of loans guaranteed was $ 3.3 million and $ 4.1 million at April 4, 2021 and January 3, 2021, respectively, all of which was recorded by the Company as an off balance sheet arrangement.

The outstanding balance of loans guaranteed was $ 2.8 million and $ 4.1 million at July 4, 2021 and January 3, 2021, respectively, all of which was recorded by the Company as an off balance sheet arrangement.

The maximum amount of future payments the Company could be required to make under the guarantees equates to 25 % of the outstanding loan balance up to $ 2.0 million.

2 unchanged sentences

The Company partially guarantees loans made to IOs by Bank of America for the purchase of routes.

The outstanding balance of loans guaranteed that were issued by Bank of America was $ 8.4 million and $ 7.1 million at April 4, 2021 and January 3, 2021, respectively, which are off balance sheet.

The outstanding balance of loans guaranteed that were issued by Bank of America was $ 10.0 million and $ 7.1 million at July 4, 2021 and January 3, 2021, respectively, which are off balance sheet.

As discussed in Note 8.

"Long-Term Debt", the Company also sold notes receivable on its books to Bank of America during fiscal 2019 and fiscal 2021, which the Company partially guarantees.

The outstanding balance of notes purchased by Bank of America at April 4, 2021 and January 3, 2021 was $ 17.4 million and $ 16.5 million, respectively.

Due to the structure of the transactions, the sale did not qualify for sale accounting treatment, as such the Company records the notes payable obligation owed by the IOs to the financial institution on its Consolidated Balance Sheets;

The outstanding balance of notes purchased by Bank of America at July 4, 2021 and January 3, 2021 was $ 21.0 million and $ 16.5 million, respectively.

Due to the structure of the transactions, the sales did not qualify for sale accounting treatment, as such the Company records the notes payable obligation owed by the IOs to the financial institution on its consolidated balance sheets;

the corresponding note receivable also remained on the Company’s consolidated balance sheets.

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The agreement with M&T Bank was amended in January 2020 so that the Company guaranteed up to 25 % of the greater of the aggregate principal amount of loans outstanding on the payment date or January 1st of the subject year.

The outstanding balance of loans guaranteed was $ 6.2 million and $ 6.6 million at April 4, 2021 and January 3, 2021, respectively, all of which was the Company's consolidated balance sheets.

The outstanding balance of loans guaranteed was $ 5.6 million and $ 6.6 million at July 4, 2021 and January 3, 2021, respectively, all of which was the Company's consolidated balance sheets.

These loans are collateralized by the routes for which the loans are made.

1 unchanged sentence

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Total accumulated other comprehensive income (loss) was $ 1.7 million as of April 4, 2021 and $ 0.9 million as of January 3, 2021.

Total accumulated other comprehensive income (loss) was $ 2.4 million as of July 4, 2021 and $ 0.9 million as of January 3, 2021.

Total accumulated other comprehensive income (loss) consists solely of unrealized gains (losses) from the Company’s derivative financial instruments accounted for as cash flow hedges.

During the periods ended April 4, 2021 and March 29, 2020, changes to the balance in accumulated other comprehensive income (loss) were as follows:

During the periods ended July 4, 2021 and June 28, 2020, changes to the balance in accumulated other comprehensive income (loss) were as follows:

(in thousands) Gain on

3 unchanged sentences

Balance as of April 4, 2021 1,746

Unrealized gain on cash flow hedges 607

Balance as of July 4, 2021 $ 2,353

(in thousands) Loss on

3 unchanged sentences

Balance as of March 29, 2020 ( 5,800 )

Unrealized loss on cash flow hedges ( 709 )

Balance as of June 28, 2020 $ ( 6,509 )

SUPPLEMENTARY CASH FLOW INFORMATION

Cash paid for interest was $ 9.8 million and $ 9.5 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

Refunds related to income related taxes were $ 0.2 million and $ 0.2 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

Payments made for income-related taxes were $ 0.0 million and $ 0.0 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

Dividends paid during the thirteen weeks ended April 4, 2021 (Successor) were $ 4.3 million and were included within the "accrued expense and other" of the Consolidated Balance Sheet as of January 3, 2021.

There were no accrued dividend as of April 4, 2021.

Cash paid for interest was $ 17.4 million and $ 19.1 million for the twenty-six weeks ended July 4, 2021 (Successor), and the twenty-six weeks ended June 28, 2020 (Predecessor), respectively.

Refunds related to income related taxes were $ 0.2 million and $ 0.0 million for the twenty-six weeks ended July 4, 2021 (Successor), and the twenty-six weeks ended June 28, 2020 (Predecessor), respectively.

Payments made for income-related taxes were $ 3.1 million and $ 0.0 million for the twenty-six weeks ended July 4, 2021 (Successor), and the twenty-six weeks ended June 28, 2020 (Predecessor), respectively.

Dividends paid during the twenty-six weeks ended July 4, 2021 (Successor) were $ 8.1 million, of which $ 4.3 million was included within the "accrued expense and other" of the consolidated balance sheet as of January 3, 2021.

There were accrued dividends as of July 4, 2021 of $ 3.8 million.

The Company is subject to federal and state income taxes with respect to our allocable share of any taxable income or loss of UBH, as well as any standalone income or loss the Company generates.

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The Company anticipates this structure to remain in existence for the foreseeable future.

The Company recorded income tax expense of $ 1.0 million and $ 1.5 million for the thirteen-week periods ended April 4, 2021 and March 29, 2020, respectively.

The effective tax rates for the thirteen-week periods ended April 4, 2021 and March 29, 2020 were ( 4.5 )% and 46.3 %, respectively.

The Company’s effective tax rates differ from the federal statutory rate of 21% primarily due to the impact of UBH, which is a partnership, is not taxed at the Company level, and is required to allocate some of its taxable results to the Continuing Members, as well as state taxes and the fair value impact of warrant liabilities.

The Company’s effective tax rate for the thirteen-week period ended April 4, 2021 is 6.5 % before consideration of any discrete items.

During the thirteen-week period ended April 4, 2021, the effective tax rate was impacted by statutory state tax rate changes which resulted in a discrete tax expense of $ 1.1 million.

The Company recorded income tax expense for the thirteen and twenty-six week periods ended July 4, 2021 of $ 0.4 million and $ 1.4 million, respectively.

Comparably, the Company recorded income tax expense for the thirteen and twenty-six week periods ended June 28, 2020 of $ 1.2 million and $ 2.6 million, respectively.

The effective tax rates for the thirteen and twenty-six week periods ended July 4, 2021 were 2.5 % and ( 24.8 )%, respectively.

Comparably, the effective tax rates for the thirteen and twenty-six week periods ended June 28, 2020 were 15.2 % and 24.2 %, respectively.

The Company’s effective tax rates differ from the federal statutory rate of 21% primarily due to the impact of UBH, which is a partnership, therefore not taxed at the Company level, and is required to allocate some of its taxable results to the Continuing Members, as well as state taxes and the fair value impact of warrant liabilities.

The Company’s effective tax rates for the thirteen and twenty-six week periods ended July 4, 2021 are ( 9.1 )% and ( 5.5 )%, respectively, before consideration of any discrete items.

During the thirteen and twenty-six week periods ended July 4, 2021, the effective tax rate was impacted by statutory state tax rate changes which resulted in a discrete tax expense of $ 0.2 million and $ 1.2 million, respectively.

The Company regularly evaluates valuation allowances established for deferred tax assets ("DTA's") for which future realization is uncertain.

The Company assessed the available positive and negative evidence to estimate whether future taxable income would be generated to permit use of the existing DTA's.

As of April 4, 2021, a significant piece of objective negative evidence evaluated was the twelve-quarter cumulative loss before taxes.

As of July 4, 2021, a significant piece of objective negative evidence evaluated was the twelve-quarter cumulative loss before taxes.

Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth.

The Company determined that there is uncertainty regarding the utilization of certain DTA's such as the investment in Utz Brands Holdings, LLC and state net operating losses where the Company does not expect to continue to have nexus.

The Company determined that there is uncertainty regarding the utilization of certain DTA's such as the investment in UBH and state net operating losses where the Company does not expect to continue to have nexus.

Therefore, a full valuation allowance has been recorded against the DTA's for which it is more-likely-than-not they will not be realized.

1 unchanged sentence

however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as projections for growth.

As of April 4, 2021, tax years 2017 through 2021 remain open and subject to examination by the Internal Revenue Service and the majority of the states where the Company has nexus, and tax years 2016 through 2021 remain open and subject to examination in selected states that have a longer statute of limitations.

As of July 4, 2021, tax years 2017 through 2021 remain open and subject to examination by the Internal Revenue Service and the majority of the states where the Company has nexus, and tax years 2016 through 2021 remain open and subject to examination in selected states that have a longer statute of limitations.

Upon audit, tax authorities may challenge all or part of a tax position.

A tax position successfully challenged by a taxing authority could result in an adjustment to our provision for income taxes in the period in which a final determination is made.

The Company did not maintain any unrecognized tax benefits as of April 4, 2021 and January 3, 2021, respectively.

The Company did not maintain any unrecognized tax benefits as of July 4, 2021 and January 3, 2021, respectively.

Tax receivable agreement liability

Pursuant to an election under section 754 of the Internal Revenue Code, the Company obtained an increase in its share of the tax basis in the net assets of UBH when it was deemed to purchase UBH units from the UPA Seller and purchased UBH units from the Continuing Members per the Business Combination.

The Continuing Members have the option to exchange UBH units for UBI common stock post-Business Combination.

Following the Business Combination, the Continuing Members may exchange UBH units (along with the forfeiture of a corresponding number of Class V Common Stock of the Company for Class A Common Stock of the Company.

The Company intends to treat any such exchanges as direct purchases for U.S.

2 unchanged sentences

They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

Pursuant to the Business Combination Agreement, the Company entered into the TRA, which provides for the payment by the Company of 85% of the amount of any tax benefits realized as a result of (i) increases in the share of the tax basis in the net assets of UBH resulting from the Business Combination and any future exchanges by the Continuing Members of UBH units for UBI common stock;

(ii) tax basis increases attributable to payments made under the TRA;

2 unchanged sentences

The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the timing and amount of taxable income generated by the Company each year, as well as the tax rate then applicable, among other factors.

As of April 4, 2021 and January 3, 2021, the Company had a liability of $ 28.7 million related to its projected obligations under the TRA, which is reflected as a non-current accrued expense in the consolidated balance sheet.

As of July 4, 2021 and January 3, 2021, the Company had a liability of $ 28.7 million related to its projected obligations under the TRA, which is reflected as a non-current accrued expense in the consolidated balance sheets.

The Company leases certain vehicles, equipment and distribution centers under operating leases expiring in various years through 2031.

1 unchanged sentence

Capital leases, net, are included in Property, Plant and Equipment as follows:

(in thousands) As of April 4, 2021 As of January 3, 2021

(in thousands) As of July 4, 2021 As of January 3, 2021

Leases $ 9,225 $ 9,335

2 unchanged sentences

Charges resulting from the depreciation of assets held under capital leases are recognized within depreciation expense in the consolidated statements of operations and comprehensive income (loss).

Rental expense for leases to third parties totaled was $ 2.6 million and $ 2.9 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

Future minimum payments, to third parties, by year and in the aggregate, consisted of the following at April 4, 2021:

Rental expense for leases to third parties totaled $ 3.0 million and $ 2.7 million for the thirteen weeks ended July 4, 2021 (Successor), and the thirteen weeks ended June 28, 2020 (Predecessor), respectively.

Rental expense for leases to third parties totaled $ 5.6 million for each of the twenty-six weeks ended July 4, 2021 (Successor), and the twenty-six weeks ended June 28, 2020 (Predecessor).

Future minimum payments, to third parties, by year and in the aggregate, consisted of the following at July 4, 2021:

(in thousands)

2 unchanged sentences

Total $ 45,633

Prior to the Business Combination, CCH issued 15,833,332 warrants that were initially sold by CCH in its initial public offering of securities (the “Public Warrants”), including 1,166,666 warrants issued pursuant to those certain Forward Purchase Agreements entered into by CCH, the Sponsor, and the independent directors of CCH (the “Forward Purchase Agreements”) that were issued at the Closing of the Business Combination as part of the Forward Purchase Agreement discussed below (the “Forward Purchase Warrants”), and 7,200,000 warrants initially sold to the Sponsor simultaneously with the closing of its initial public offering (the “Private Placement Warrants,” collectively, with the Public Warrants and Forward Purchase Warrants, the “Warrants”).

Prior to the Business Combination, CCH issued 15,833,332 warrants that were initially sold by CCH in its initial public offering of securities (the “Public Warrants”), including 1,166,666 warrants issued pursuant to those certain Forward Purchase Agreements entered into by CCH with the Sponsor and each of the independent directors of CCH (the “Forward Purchase Agreements”) that were issued at the Closing of the Business Combination as part of the Forward Purchase Agreement discussed below (the “Forward Purchase Warrants”), and 7,200,000 warrants initially sold to the Sponsor simultaneously with the closing of its initial public offering (the “Private Placement Warrants,” collectively, with the Public Warrants and Forward Purchase Warrants, the “Warrants”).

As a result of the Business Combination, the Company assumed the CCH warrants and such warrants are now exercisable for shares of UBI Class A Common Stock instead of Class A ordinary shares of CCH.

1 unchanged sentence

On December 14, 2020, the Company provided notice to the holders of the Public Warrants and Forward Purchase Warrants that their warrants would be redeemed in accordance with the original terms on January 14, 2021.

As of April 4, 2021, all Public Warrants of 7,466,666 and Forward Purchase Warrants of 1,166,666 have been exercised.

As of July 4, 2021, all Public Warrants and Forward Purchase Warrants have been exercised (except for the Public Warrants that were redeemed by the Company on January 14, 2021).

Prior to January 3, 2021, 10,825,664 Public Warrants and Forward Purchase Warrants were exercised.

As of April 4, 2021, there were 7,200,000 Private Placement Warrants outstanding.

As of July 4, 2021, there were 7,200,000 Private Placement Warrants outstanding.

As of January 3, 2021, there were 4,575,645 Public Warrants, 432,000 Forward Purchase Warrants, and 7,200,000 Private Placement Warrants outstanding.

5 unchanged sentences

The Warrants are deemed equity instruments for income tax purposes, and accordingly, there is no tax accounting relating to changes in the fair value of the Warrants recognized.

The remeasurement of the warrant liability resulted in a loss of $ 21.5 million for the thirteen weeks ended April 4, 2021 (Successor).

The Predecessor did not have warrants and as such no remeasurement of warrant liability is recorded in the thirteen week period ended March 29, 2020 (Predecessor).

The remeasurement of the warrant liability resulted in a gain (loss) of $ 19.4 million and $( 2.1 ) million for thirteen weeks ended July 4, 2021 (Successor) and twenty-six weeks ended July 4, 2021 (Successor), respectively.

Such gain (loss) is not attributable to the noncontrolling interest.

The Predecessor did not have warrants and as such no remeasurement of warrant liability is recorded in the thirteen week period and twenty-six week period ended June 28, 2020 (Predecessor).

BUSINESS RISK

3 unchanged sentences

The Company continues to monitor customer and consumer demands, and intends to adapt its plans as needed to continue to meet these demands.

The event is still ongoing, and the Company is in the process of evaluating the financial impact.

The event is still ongoing, and the Company continues to evaluate the financial impact.

Class A Common Stock

The Company is authorized to issue 1,000,000,000 shares of Class A Common Stock, par value $ 0.0001 per share, of which 76,481,833 and 71,094,714 shares of UBI were issued and outstanding on April 4, 2021 and January 3, 2021, respectively.

The Company is authorized to issue 1,000,000,000 shares of Class A Common Stock, par value $ 0.0001 per share, of which 76,570,422 and 71,094,714 shares of UBI were issued and outstanding on July 4, 2021 and January 3, 2021, respectively.

Upon the Closing of the Business Combination, all shares of CCH Class A ordinary shares, including 3,500,000 Forward Purchase Class A Ordinary Shares of CCH that were issued at the Closing of the Business Combination as part of the Forward Purchase Agreement discussed below, and Class B ordinary shares, less shareholder redemptions, were converted on a one -for-one basis into shares of Class A Common Stock, including 2,000,000 shares of Class B Common Stock initially issued to the Sponsor, which immediately vested upon the Closing of the Business Combination and converted into shares of Class A Common Stock of the Company.

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“Acquisitions”.

As of April 4, 2021 and January 3, 2021, there were 60,349,000 shares of Class V Common Stock outstanding.

As of July 4, 2021 and January 3, 2021, there were 60,349,000 shares of Class V Common Stock outstanding.

Forward Purchases

In connection with the Closing of the Business Combination and pursuant to a Forward Purchase Agreement entered into between CCH, CCH’s Sponsor, and CCH’s independent directors, CCH consummated the sale and issuance of 3,500,000 shares issued pursuant to the Forward Purchase Agreements and Forward Purchase Warrants to acquire up to 1,166,666 Class A ordinary shares of CCH at $ 11.50 per share, for aggregate proceeds of $ 35,000,000 that were used to fund the Business Combination.

In connection with the Closing of the Business Combination and pursuant to a Forward Purchase Agreement entered into between CCH and each of the Sponsor and CCH’s independent directors, CCH consummated the sale and issuance of 3,500,000 shares issued pursuant to the Forward Purchase Agreements and Forward Purchase Warrants to acquire up to 1,166,666 Class A ordinary shares of CCH at $ 11.50 per share, for aggregate proceeds of $ 35,000,000 that were used to fund the Business Combination (excluding proceeds paid upon exercise of the Forward Purchase Warrants)..

EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of shares of Class A Common Stock issued and outstanding during the Successor period.

Diluted earnings per share is based on the weighted average number shares of Class A Common Stock issued and outstanding and the effect of all dilutive common stock equivalents and potentially dilutive share-based awards outstanding during the Successor period.

Diluted earnings per share is based on the weighted average number shares of Class A Common Stock issued and outstanding and the effect of all dilutive common stock equivalents and potentially dilutive stock-based awards outstanding during the Successor period.

Given the historical partnership equity structure of UBH, the Company determined that the calculation of earnings per membership unit results in values that are not a valuable metric to users of these consolidated financial statements.

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

(in thousands, except share data) Thirteen weeks ended April 4, 2021

(in thousands, except share data) Thirteen weeks ended July 4, 2021

Basic earnings per share:

Net income attributable to controlling interest $ 17,579

Dividends and income related to participating stock-based compensation awards ( 384 )

Net income attributable to common stockholders $ 17,195

Weighted average Class A Common Stock shares, basic and diluted 76,500,488

Basic earnings per share $ 0.22

Diluted earnings per share:

Net income attributable to common stockholders $ 17,579

Dividends and income related to participating stock-based compensation awards ( 384 )

Net income attributable to common stockholders $ 17,195

Weighted average Class A Common Stock shares, basic 76,500,488

Dilutive securities included in diluted earnings per share calculation:

Warrants 3,870,564

Stock options 234,815

Total diluted weighted average shares 81,732,056

Diluted earnings per share $ 0.21

Class V Common Stock not subject to earnings per share calculation 60,349,000

Net loss attributable to noncontrolling interest $ 1,400

(in thousands, except share data) Twenty-six weeks ended July 4, 2021

Basic and diluted earnings per share:

Net loss attributable to controlling interest $ ( 4,950 )

Dividends related to participating stock-based compensation awards ( 170 )

Net loss attributable to common stockholders $ ( 5,120 )

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Warrants 3,955,978

2020 LTIP RSUs 1,307,549

Initial Grant RSUs 57,742

RSUs 1,348,026

Stock options 230,542

Total 5,693,633

Total weighted average anti-dilutive shares 5,677,087

Class V Common Stock not subject to earnings per share calculation 60,349,000

Net loss attributable to noncontrolling interest $ 2,220

The diluted earnings per share computation excludes the effect of certain RSUs granted to Directors and Management which convert to Class A Common Stock upon vesting 50 % at December 31, 2022 and 50 % at December 31, 2023, as their inclusion would have been anti-dilutive.

The diluted earnings per share computation for the twenty-six weeks ended July 4, 2021 excludes the effect of certain RSUs granted to Directors and Management which convert to Class A Common Stock upon vesting 50 % at December 31, 2022 and 50 % at December 31, 2023, as their inclusion would have been anti-dilutive.

Shares of the Company’s Class V Common Stock do not participate in earnings or losses of the Company and, therefore, are not participating securities.

Additionally, none of the share based compensation awards participated in earnings or losses of the Company the thirteen weeks ended April 4, 2021 (Successor).

Additionally, none of the stock-based compensation awards participated in earnings or losses of the Company for the twenty-six weeks ended July 4, 2021 (Successor).

As such, basic and diluted earnings per share calculations under the two-class method were not required.

At April 4 2021, the Continuing Members held 60,349,000 shares of Class V Common Stock issued and outstanding and also held an equal number of common limited liability company units of UBH, which comprise the noncontrolling interest.

The net loss attributable to the noncontrolling interest was $ 0.8 million for the thirteen weeks ended April 4, 2021 (Successor).

At July 4, 2021, the Continuing Members held 60,349,000 shares of Class V Common Stock issued and outstanding and also held an equal number of common limited liability company units of UBH, which comprise the noncontrolling interest.

SUBSEQUENT EVENTS

On April 8, 2021, our Board of Directors declared a cash dividend of $ 0.05 per share on our Class A Common Stock, to the stockholders of record on April 19, 2021.

Payment of the dividend was executed on May 10, 2021.

On May 11, 2021, the Company announced that it entered into a definitive agreement with Great Lakes Festida Holdings, Inc., to acquire all of the assets including real estate related to the operation of Festida Foods, a manufacturer of tortilla chips, corn chips, and pellet snacks, and the largest manufacturer of tortilla chips for the Company's ON THE BORDER® brand.

The Company expects to close on the deal in the second quarter of 2021, with the purchase price of approximately $ 41 million that will be funded from the revolving credit facility.

The Company performed a review of events subsequent to the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring recognition or disclosure in the financial statements.

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

What changed 10-Q

Item 1. Financial Statements