What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-03 compared with 2021-03-18 · 552 added, 405 removed, 837 unchanged (53% of the section changed)

1 unchanged sentence

Index to the Financial Statements Page

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of January 3, 2021 and December 29, 2019

Consolidated Statements of Operations And Comprehensive Income (Loss) for the fiscal periods ended January 3, 2021 and August 28, 2 020 and the years ended Dece mber 29, 2019 and December 30, 2018

Consolidated Statements of Equity (Deficit) for the fiscal periods ended January 3, 2021 and August 28, 2020 and the years ended December 29, 2019 and December 30, 2018

Consolidated Statements of Cash Flows for the fiscal periods ended January 3, 2021 and August 28, 2020 and the years ended December 29, 2019 and December 30, 2018

Report of Independent Registered Public Accounting Firm ( Grant Thornton LLP , Philadelphia, PA , PCAOB ID Number 248 )

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting (Grant Thornton LLP, Philadelphia, PA, PCAOB ID Number 248)

Consolidated Balance Sheets as of January 2, 2022 and January 3, 2021

Consolidated Statements of Operations And Comprehensive Income (Loss) for the year ended January 2, 2022, fiscal periods ended January 3, 2021 and August 28, 2020, and year ended December 29, 2019

Consolidated Statements of Equity for the year ended January 2, 2022, fiscal periods ended January 3, 2021 and August 28, 2020, and year ended December 29, 2019

Consolidated Statements of Cash Flows for the year ended January 2, 2022, fiscal periods ended January 3, 2021 and August 28, 2020, and year ended December 29, 2019

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of Utz Brands, Inc.

(a Delaware corporation) and subsidiaries as of January 3, 2021 (successor) and Utz Brands Holdings, LLC (a Delaware limited liability company) (formerly UM-U Intermediate, LLC;

collectively with Utz Brands, Inc., the “Company”) and subsidiaries and affiliates as of December 29, 2019 (predecessor), the related consolidated statements of operations and comprehensive income (loss), equity (deficit), and cash flows for the period from August 29, 2020 to January 3, 2021 (successor), the period from December 30, 2019 to August 28, 2020 (predecessor), and the years ended December 29, 2019 and December 30, 2018 (predecessor) 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 January 3, 2021 (successor) and December 29, 2019 (predecessor) and the results of its operations and its cash flows for the period from August 29, 2020 to January 3, 2021 (successor), the period from December 30, 2019 to August 28, 2020 (predecessor), and the years ended December 29, 2019 and December 30, 2018 (predecessor), in conformity with accounting principles generally accepted in the United States of America.

(a Delaware corporation) and subsidiaries (the "Company" or "Successor") as of January 2, 2022 and January 3, 2021, the related consolidated statements of comprehensive income (loss), equity (deficit), and cash flows of the Successor and Utz Brands Holdings, LLC (a Delaware limited liability company) ("Predecessor") for the year ended January 2, 2022 (Successor), the periods from August 29, 2020 to January 3, 2021 (Successor) and December 30, 2019 to August 28, 2020 (Predecessor), and the year ended December 29, 2019 (Predecessor), 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 January 2, 2022 and January 3, 2021, and the results of its operations and its cash flows for the year ended January 2, 2022 (Successor), the periods from August 29, 2020 to January 3, 2021 (Successor) and December 30, 2019 to August 28, 2020 (Predecessor), and the year ended December 29, 2019 (Predecessor) in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of January 2, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 3, 2022 expressed include an unqualified opinion.

Change in accounting principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2021 due to the adoption of Accounting Standards Update 2016-02, Leases (Accounting Standards Codification Topic 842).

Basis for opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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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) relate 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 separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Customer trade promotions

As described further in note 1 (Revenue Recognition) to the consolidated financial statements, the Company has recorded a provision for customer trade allowances, consisting primarily of pricing allowances and programs associated with sales to customers.

The costs of these activities are recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure.

The reserve recorded requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade customer or consumer.

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

The Company’s reserve for customer trade allowances as of January 2, 2022 was $26.5 million.

The principal consideration for our determination that customer trade promotions is a critical audit matter is due to uncertainty around the amount and timing of settlements, which typically occur in a period subsequent to the related sales transactions.

Our audit procedures related to the customer trade promotions included the following, among others.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s trade promotions process at disaggregated levels.

This included controls related to the recording of the Company’s current trade spending and calculations of the trade reserves.

We analyzed the reserve by trade promotion type to identify unusual trends.

We assessed the Company’s historical ability to accurately estimate its customer trade allowances by comparing historical estimates to final settlements.

We compared a sample of settlements subsequent to period end to the amount previously recognized by the Company.

/s/ GRANT THORNTON LLP

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March 3, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Utz Brands, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Utz Brands, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of January 2, 2022, based on criteria established in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 2, 2022, based on criteria established in the 2013 Internal Control — Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended January 2, 2022, and our report dated March 3, 2022 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

Philadelphia, Pennsylvania

March 3, 2022

Utz Brands, Inc.

CONSOLIDATED BALANCE SHEETS

January 3, 2021 and December 29, 2019

January 2, 2022 and January 3, 2021

(In thousands, except share information)

Successor Predecessor

January 3, 2021 As of December 29, 2019

January 2, 2022 As of

January 3, 2021

Current Assets

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Total assets $ 2,716,346 $ 2,584,164

LIABILITIES AND EQUITY (DEFICIT)

LIABILITIES AND EQUITY

Current Liabilities

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Accrued expenses and other 71,280 80,788

Current portion of warrant liability — 52,580

Total current liabilities 188,020 200,109

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Non-current accrued expenses and other 55,838 37,771

Non-current warrant liability 46,224 85,032

Deferred tax liability 136,334 73,786

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Commitments and contingencies

Equity (Deficit)

Members' equity (deficit) ( 27,446 )

Shares of Class A Common Stock (Successor), $ 0.0001 par value;

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

1,000,000,000 shares authorized;

71,094,714 shares issued and outstanding at January 3, 2021

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

77,644,645 and 71,094,714 shares issued and outstanding as of January 2, 2022 and January 3, 2021, respectively.

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

61,249,000 shares authorized;

60,349,000 issued and outstanding at January 3, 2021

Additional paid-in capital (Successor) 623,729

Accumulated deficit (Successor) ( 22,401 )

59,349,000 and 60,349,000 shares issued and outstanding as of January 2, 2022 and January 3, 2021, respectively.

Additional paid-in capital 912,574 793,461

Accumulated deficit ( 236,598 ) ( 241,490 )

Accumulated other comprehensive income 3,715 924

Total stockholders' equity and members' equity (deficit) 602,265 ( 26,038 )

Total stockholders' equity 679,705 552,908

Noncontrolling interest 754,968 831,994

Total equity (deficit) 1,522,514 ( 33,352 )

Total liabilities and equity (deficit) $ 2,584,164 $ 778,547

Total equity 1,434,673 1,384,902

Total liabilities and equity $ 2,716,346 $ 2,584,164

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

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the fiscal periods ended January 3, 2021 and August 28, 2020, and years ended December 29, 2019 and December 30, 2018

For the year ended January 2, 2022, fiscal periods ended January 3, 2021 and August 28, 2020, and year ended December 29, 2019

(In thousands, except share information)

Successor Predecessor

For the year ended January 2, 2022 From

August 29, 2020

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December 30, 2019

August 28, 2020 Year Ended December 29, 2019 Year Ended December 30, 2018

August 28, 2020 For the year ended December 29, 2019

Net sales $ 1,180,713 $ 325,648 $ 638,662 $ 768,228

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Gross profit 383,909 105,671 227,067 253,798

Selling and administrative expenses

Selling, general and administrative expenses

Selling 249,352 63,616 131,579 163,589

Administrative 43,871 64,050 64,723 68,018

Total selling and administrative expenses 107,487 195,629 228,312 251,392

General and administrative 125,855 43,871 64,050 64,723

Total selling, general and administrative expenses 375,207 107,487 195,629 228,312

Gain on sale of assets

Gain (loss) on disposal of property, plant and equipment 109 79 6,028 ( 2,312 )

Gain on disposal of property, plant and equipment, net 1,133 109 79 6,028

Gain on sale of routes, net 731 749 1,264 7,232

Total gain on sale of assets 1,864 858 1,343 13,260

(Loss) income from operations ( 958 ) 32,781 38,746 19,383

Other (expense) income

Income (loss) from operations 10,566 ( 958 ) 32,781 38,746

Other income (expense)

Interest expense ( 34,708 ) ( 13,301 ) ( 26,659 ) ( 48,388 )

Other (expense) income ( 2,058 ) 1,271 ( 576 ) 607

Other (expense) income, net ( 15,359 ) ( 25,388 ) ( 48,964 ) ( 45,108 )

(Loss) income before taxes ( 16,317 ) 7,393 ( 10,218 ) ( 25,725 )

Income tax (benefit) expense ( 267 ) 3,973 3,146 1,919

Net (loss) income ( 16,050 ) 3,420 ( 13,364 ) ( 27,644 )

Other income (expense) 3,551 ( 2,058 ) 1,271 ( 576 )

Gain (loss) on remeasurement of warrant liability 36,675 ( 91,851 ) — —

Other income (expense), net 5,518 ( 107,210 ) ( 25,388 ) ( 48,964 )

Income (loss) before income taxes 16,084 ( 108,168 ) 7,393 ( 10,218 )

Income tax expense (benefit) 8,086 ( 267 ) 3,973 3,146

Net income (loss) 7,998 ( 107,901 ) 3,420 ( 13,364 )

Net loss (income) attributable to noncontrolling interest 12,557 7,971 — ( 2,808 )

Net (loss) income attributable to controlling interest $ ( 8,079 ) $ 3,420 $ ( 16,172 ) $ ( 30,500 )

Net income (loss) attributable to controlling interest $ 20,555 $ ( 99,930 ) $ 3,420 $ ( 16,172 )

Earnings per share of Class A Common Stock:

Basic and Diluted $ ( 0.13 )

Basic $ 0.26 $ ( 1.64 )

Diluted $ 0.25 $ ( 1.64 )

Weighted-average shares of Class A Common Stock outstanding

Basic and Diluted 61,085,943

Basic 76,677,981 61,085,943

Diluted 81,090,229 61,085,943

Other comprehensive gain (loss):

Change in fair value of interest rate swap $ 2,791 $ 924 $ ( 7,463 ) $ 1,408

Comprehensive (loss) income $ ( 7,155 ) $ ( 4,043 ) $ ( 14,764 ) $ ( 30,500 )

Comprehensive income (loss) $ 23,346 $ ( 99,006 ) $ ( 4,043 ) $ ( 14,764 )

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

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CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

For the fiscal periods ended January 3, 2021 and August 28, 2020, and years ended December 29, 2019 and December 30, 2018

For the year ended January 2, 2022, fiscal periods ended January 3, 2021 and August 28, 2020, and year ended December 29, 2019

(In thousands, except share information)

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(Deficit) Equity Accumulated Other Comprehensive (Loss) Income Noncontrolling Interest Total (Deficit) Equity

Balance at January 1, 2018 $ ( 79,310 ) $ — $ ( 12,251 ) $ ( 91,561 )

Net (loss) income ( 30,500 ) — 2,856 ( 27,644 )

Distributions to members and noncontrolling interest ( 10,161 ) — ( 1,950 ) ( 12,111 )

Balance at December 30, 2018 $ ( 119,971 ) $ — $ ( 11,345 ) $ ( 131,316 )

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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

Tax impact arising from exchanges and exercises of warrants — — ( 51,455 ) — — ( 51,455 ) — ( 51,455 )

Share-based compensation 573,214 1 — 12,960 — — 12,961 — 12,961

Exchange 1,000,000 — ( 1,000,000 ) — 12,949 — — 12,949 ( 12,949 ) —

Net income — — — 20,555 — 20,555 ( 12,557 ) 7,998

Other comprehensive income — — — — 2,791 2,791 — 2,791

Dividends declared ($ 0.204 per share of Class A Common Stock)

— — — ( 15,663 ) — ( 15,663 ) — ( 15,663 )

Distribution to noncontrolling interest — — — — — — ( 18,806 ) ( 18,806 )

Balance at January 2, 2022 77,644,645 77,645 $ 8 59,349,000 $ 6 $ 912,574 $ ( 236,598 ) $ 3,715 $ 679,705 $ 754,968 $ 1,434,673

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the fiscal periods ended January 3, 2021 and August 28, 2020, and years ended December 29, 2019 and December 30, 2018

For the year ended January 2, 2022, fiscal periods ended January 3, 2021 and August 28, 2020, and year ended December 29, 2019

(In thousands)

Successor Predecessor Predecessor

Successor Predecessor

For the year ended January 2, 2022 From

August 29, 2020

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December 30, 2019

August 28, 2020 For the year ended December 29, 2019 For the year ended December 30, 2018

August 28, 2020 For the year ended December 29, 2019

Cash flows from operating activities

Net (loss) income $ ( 16,050 ) $ 3,420 $ ( 13,364 ) $ ( 27,644 )

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

Net income (loss) $ 7,998 $ ( 107,901 ) $ 3,420 $ ( 13,364 )

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

Impairment and other charges — — — 3,880

1 unchanged sentence

Amortization of step-up of inventory — 5,795 — —

(Gain) loss on disposal of property and equipment ( 109 ) ( 79 ) ( 6,028 ) 2,312

(Gain) loss on remeasurement of warrant liability ( 36,675 ) 91,851 — —

Gain on disposal of property and equipment ( 1,133 ) ( 109 ) ( 79 ) ( 6,028 )

Gain on sale of routes ( 731 ) ( 749 ) ( 1,264 ) ( 7,232 )

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Deferred income taxes 4,828 ( 958 ) 3,583 1,949

Deferred financing costs ( 2,639 ) 1,742 955 2,355

Amortization of deferred financing costs 3,919 ( 2,639 ) 1,742 955

Changes in assets and liabilities:

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Accounts payable and accrued expenses and other ( 5,451 ) ( 26,634 ) 21,295 1,181

Net cash (used in) provided by operating activities ( 932 ) 30,627 27,992 15,747

Net cash provided by (used in) operating activities 48,387 ( 932 ) 30,627 27,992

Cash flows from investing activities

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Purchases of intangibles ( 1,757 ) ( 79,013 ) ( 650 ) —

Proceeds on sale of property and equipment 1,344 615 12,059 4,740

Proceeds from sale of property and equipment 3,033 1,344 615 12,059

Proceeds from sale of routes 14,186 2,082 2,774 3,008

Proceeds on the sale of IO notes — — 33,204 —

Proceeds from the sale of IO notes 11,762 — — 33,204

Notes receivable, net ( 13,998 ) ( 4,470 ) ( 3,611 ) ( 6,312 )

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Repayments on term debt and notes payable ( 795,488 ) ( 239,989 ) ( 6,686 ) ( 135,141 )

Payment of debt issuance cost ( 9,210 ) — — —

Contribution from member and noncontrolling interest — — — 123,908

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CCH’s sponsor was Collier Creek Partners LLC, a Delaware limited liability company (the "Sponsor").

On August 28, 2020, CCH domesticated into a Delaware corporation and changed its name to "Utz Brands, Inc." (the “Domestication”) and consummated the acquisition of certain limited liability company units of UBH, the parent of Utz Quality Foods, LLC (“UQF”), as a result of a new issuance by UBH and purchases from UBH’s existing equity holders pursuant to a Business Combination Agreement, dated as of June 5, 2020 (the “Business Combination Agreement”) among CCH, UBH and Series U of UM Partners, LLC (“Series U”) and Series R of UM Partners, LLC (“Series R” and together with Series U, the “Continuing Members”) (the Domestication and the transactions contemplated by the Business Combination Agreement, collectively, the “Business Combination”), following the approval at the extraordinary general meeting of the shareholders of CCH held on August 27, 2020.

On August 28, 2020, CCH domesticated into a Delaware corporation and changed its name to "Utz Brands, Inc." (the “Domestication”) and consummated the acquisition of certain limited liability company units of Utz Brands Holdings, LLC ("UBH"), the parent of Utz Quality Foods, LLC (“UQF”), as a result of a new issuance by UBH and purchases from UBH’s existing equity holders pursuant to a Business Combination Agreement, dated as of June 5, 2020 (the “Business Combination Agreement”) among CCH, UBH and Series U of UM Partners, LLC (“Series U”) and Series R of UM Partners, LLC (“Series R” and together with Series U, the “Continuing Members”) (the Domestication and the transactions contemplated by the Business Combination Agreement, collectively, the “Business Combination”), following the approval at the extraordinary general meeting of the shareholders of CCH held on August 27, 2020.

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

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Kennedy Endeavors, LLC Truco Holdco, Inc.

Good Health Natural Products, LLC

Good Health Natural Products, LLC R.W.

Garcia Holdings, LLC

Condor Snack Foods, LLC

2 unchanged sentences

Truco Enterprises, LP

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.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are required to comply with the new or revised financial accounting standards.

Garcia CO., Inc.

Loss of Emerging Growth Company Status – As of January 2, 2022, we no longer identify as 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 we previously took 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.

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

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.

The Company had elected not to opt out of such extended transition period which means that when a standard was issued or revised and it has different application dates for public or private companies, the Company, when it was as an emerging growth company, could adopt the new or revised standard at the time private companies adopt the new or revised standard.

Due to the loss of our Emerging Growth Company status, as discussed above, we adopted Topic 842 effective of the first day of fiscal year 2021 within this Form 10-K.

This guidance was not adopted within our Form 10-Q's during the fiscal year 2021, therefore the results related to Topic 842 are not comparable with those periods.

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

The Company has steadily expanded its distribution channels to where it now sells products to supermarkets, mass merchants, club stores, dollar and discount stores, convenience stores, independent grocery stores, drug stores, food service, vending, military, and other channels in most regions of the United States through routes to market that include direct-store-delivery, direct to warehouse, and third-party distributors.

With the acquisition of Golden Flake in September 2016, Inventure Foods in December 2017, Kennedy in October 2019 and Truco in December 2020, the Company expanded its national production and distribution capabilities.

The Company manufactures and distributes a full line of high-quality salty snack items, such as potato chips, tortilla chips, pretzels, cheese balls, pork skins, party mixes, and popcorn.

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Interest costs and related penalties related to unrecognized tax benefits are required to be calculated, if applicable.

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 January 3, 2021 and December 29, 2019, no liability for unrecognized tax benefits was required to be reported.

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

As of January 2, 2022 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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If an entity believes, as a result of each qualitative assessment, it is more likely than not that the fair value of goodwill or an indefinite-lived intangible asset exceeds its carrying value then a quantitative impairment test is not required.

For the qualitative analysis performed, which took place on the first day of the fourth quarter, we have 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 have taken place from the period of the business combination, which assessed goodwill, o n August 28, 2020.

We have determined that there was no significant impact that affected the fair value of the reporting unit.

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

Our fiscal year 2021 qualitative analysis concluded that Goodwill and all but one of our intangible assets is not more likely than not to be impaired.

We performed a quantitative impairment test on the intangible asset during which we compared the fair value of the intangible, using a relief from royalty method, to the carrying value of the asset and determined that the intangible asset was not impaired.

Share-Based Compensation – Share-based compensation is rewarded to employees and directors of the Company and accounted for in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”).

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Operations are charged with the cost of claims reported and an estimate of claims incurred but not reported.

Total health care expense under the program was $ 6.5 million and $ 9.9 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 16.6 million and $ 15.8 million for the years ended December 29, 2019 and December 30, 2018, respectively.

The reserve for unpaid claims, which includes an estimate of claims incurred but not reported, was $ 1.5 million and $ 1.4 million at January 3, 2021 and December 29, 2019, respectively.

Total health care expense under the program was $ 18.0 million for the year ended January 2, 2022, $ 6.5 million and $ 9.9 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 16.6 million for the year ended December 29, 2019.

The reserve for unpaid claims, which includes an estimate of claims incurred but not reported, was $ 1.9 million and $ 1.5 million at January 2, 2022 and January 3, 2021, respectively.

The Company is primarily self-insured through large deductible insurance plans for automobile, general liability and workers’ compensation.

The Company has utilized a number of different insurance vehicles and programs for these insurable risks and recognizes expenses and reserves in accordance with the provisions of each insurance vehicle/program.

The expense associated with automobile, general liability and workers’ compensation insurance programs totaled $ 1.5 million and $ 6.5 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 9.0 million and $ 8.6 million for the years ended December 29, 2019 and December 30, 2018, respectively.

The expense associated with automobile, general liability and workers’ compensation insurance programs totaled $ 8.7 million for the year ended January 2, 2022, $ 1.5 million and $ 6.5 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 9.0 million for the year ended December 29, 2019.

The Company also records reserves for unpaid claims and an estimate for claims incurred but not yet reported, including an estimate for the development of any such claim.

As of January 3, 2021 and December 29, 2019, the Company had reserves totaling $ 5.0 million and $ 5.7 million, respectively, for these insurance programs.

As of January 2, 2022 and January 3, 2021, the Company had reserves totaling $ 5.9 million and $ 5.0 million, respectively, for these insurance programs.

Shipping and Handling – The Company records shipping and handling expenses within selling expenses.

Shipping and handling expenses for products shipped to customers totaled $ 12.6 million and $ 22.0 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 27.7 million and $ 26.2 million for the years ended December 29, 2019 and December 30, 2018, respectively.

Shipping and handling expenses for products shipped to customers totaled $ 57.0 million for the year ended January 2, 2022, $ 12.6 million and $ 22.0 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 27.7 million for the year ended December 29, 2019.

Advertising Costs – Advertising costs are charged to operations when incurred.

The Company had no significant direct response advertising.

Advertising expenses totaled $ 6.0 million and $ 5.1 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 8.0 million and $ 5.9 million for the years ended December 29, 2019 and December 30, 2018, respectively.

Advertising expenses totaled $ 11.8 million for the year ended January 2, 2022, $ 6.0 million and $ 5.1 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 8.0 million for the year ended December 29, 2019.

Employee Benefits – The Company maintains several contributory 401(k) retirement plans (the “Plans”) for its employees.

Profit sharing contributions are made at the discretion of the Board of Directors and expenses recognized related to the profit sharing contribution was $ 1.8 million and $ 3.5 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 4.9 million and $ 5.1 million for fiscal years 2019 and 2018, respectively.

Profit sharing contributions are made at the discretion of the Board of Directors and expenses recognized related to the profit sharing contribution was $ 3.9 million for the year ended January 2, 2022, $ 1.8 million and $ 3.5 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 4.9 million for the year ended December 29, 2019.

The Plans provide employees with matching contributions primarily at 20 % of their contributions as defined in the Plans.

The expense related to the matching contributions was $ 0.6 million and $ 1.1 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively and totaled $ 1.4 million and $ 1.3 million for fiscal years 2019 and 2018, respectively.

The expense related to the matching contributions was $ 1.9 million for the year ended January 2, 2022, $ 0.6 million and $ 1.1 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and totaled $ 1.4 million for the year ended December 29, 2019.

Revenue Recognition – The Company’s revenues primarily consist of the sale of salty snack items to customers, including supermarkets, mass merchants, club stores, dollar and discount stores, convenience stores, independent grocery stores, drug stores, food service, vending, military, and other channels.

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The costs of these activities are recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure.

The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade or consumer.

The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade customer or consumer.

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

The Company has reserves in place of $ 17.6 million as of January 3, 2021 and $ 16.4 million as of December 29, 2019.

The Company has reserves in place of $ 26.5 million as of January 2, 2022 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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Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.

Some examples, but not a comprehensive list, include sales and promotional allowances, customer returns, allowances for doubtful accounts, inventory valuations, useful lives of fixed assets and related impairment, long-term investments, hedge transactions, goodwill and intangible asset valuations and impairments, incentive compensation, income taxes, self-insurance, contingencies, litigation, and inputs used to calculate deferred tax liabilities, tax valuation allowances, tax receivable agreements, Actual results could vary materially from the estimates that were used.

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

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

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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.

For public business entities, ASU 2019-12 was effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted.

We adopted this standard upon the loss of our emerging growth status as of January 2, 2022.

Adoption of the new standard did not have a material impact on our consolidated financial statements.

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.

Lessees should recognize a liability to make lease payments and a right-of-use asset representing the lessee’s right to use the underlying asset for the lease term.

On June 3, 2020, the FASB deferred the effective date of ASC 842 for private or emerging growth companies to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements, but believes that there will be assets and liabilities recognized on the Company’s consolidated balance sheet and an immaterial impact on the Company’s consolidated statements of operations.

Lessees should recognize a liability to make lease payments and a right-of-use ("ROU") asset representing the lessee’s right to use the underlying asset for the lease term.

We adopted the new guidance effective January 4, 2021 using the modified retrospective approach.

The primary impact of adopting this standard was the recognition of $ 28.6 million of operating ROU liabilities and $ 29.0 million of operating ROU assets.

The adoption did not have a material impact on how we account for finance leases.

"Leases" for more information regarding our leasing arrangements.

In June 2016, ASU No.

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As a result of the application of the acquisition method of accounting in the Successor period, the financial statements for the Successor period are presented on a full step-up basis as a result of the Business Combination, and are therefore not comparable to the financial statements of the Predecessor period that are not presented on the same full step-up basis due to the Business Combination.

The following table summarizes the provisional total business enterprise value, comprised of the fair value of certain purchase consideration paid by the Company to the Continuing Members, the fair value of the noncontrolling interest and the fair value of certain net debt assumed by the Company at Closing:

The following table summarizes the total business enterprise value, comprised of the fair value of certain purchase consideration paid by the Company to the Continuing Members, the fair value of the noncontrolling interest and the fair value of certain net debt assumed by the Company at Closing:

(in thousands)

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The difference between the fair value of the Phantom Units and the fair values of the 2020 LTIP RSUs represents the fair value of the compensation expenses for the post-combination requisite service period for the replacement awards.

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.

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

Refer to Note 11.

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

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

(in thousands)

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net cash flow generating capability) that is to be provided by the trade names and customer relationships, respectively.

The provisional fair values allocated to identifiable intangible assets and their estimated useful lives are as follows:

The fair values allocated to identifiable intangible assets and their estimated useful lives are as follows:

Fair Value Useful Life

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

As of January 3, 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.

As of August 28, 2021, the purchase price allocation had been finalized.

The predecessor financial statements of UBH include $ 25.0 million of transaction costs from December 30, 2019 to August 28, 2020.

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UBH contributed revenues of $ 325.6 million and net loss of $ 13.8 million in the consolidated statement of operations for the period from the acquisition date of August 28, 2020 to January 3, 2021.

Kitchen Cooked

On November 19, 2019 UBH entered into a stock purchase agreement to acquire all of the outstanding shares of common stock ("Kitchen Cooked Acquisition") of Kitchen Cooked, an Illinois corporation.

UBH acquired Kitchen Cooked to expand its distribution and production capacity in Illinois and the surrounding area.

UBH closed the acquisition of Kitchen Cooked on December 30, 2019.

At the closing, UBH made a cash payment of $ 6.9 million and recorded $ 2.0 million in deferred payment obligations for the acquisition of the outstanding shares of Kitchen Cooked as well as certain real estate supporting its operations.

The $ 2.0 million in deferred payments were payable in installments of $ 1.0 million each on the first two anniversaries following the closing, with $ 1.0 million paid at the end of fiscal 2020 and $ 1.0 million payable towards the end of fiscal year 2021.

The purchase consideration was primarily allocated between trademarks $ 1.6 million, customer relationships $ 2.1 million, and other assets totaling $ 2.3 million and liabilities assumed of $ 1.2 million, which resulted in goodwill of $ 4.1 million.

The Company has determined that all the acquired customer relationships and trademarks will be amortized over a period of 15 years on a straight-line basis commensurate with the acquisition date expectations for the economics that are to be provided by the trademarks and customer relationships.

The goodwill of $ 4.1 million arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations and intangible assets that do not qualify for separate recognition.

None of the goodwill recognized is expected to be deductible for income tax purposes.

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

Anderson business ("HKA Acquisition"), a leading brand of peanut butter-filled pretzels, from Conagra Brands, Inc.

for approximately $ 8.0 million.

The acquisition includes certain intangible assets is intended to broaden the Company's product offering to include filled pretzels.

The provisional fair values to which the purchase price was allocated $ 1.8 million to trademarks, $ 2.7 million to customer relationships, and $ 3.5 million to goodwill.

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

As of January 3, 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.

Truco Holdco Inc.

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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.

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

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

(in thousands)

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(2) The identifiable intangible assets represent the existing customer relationships of Truco that were valued using a discounted cash flow model using projected sales growth, attrition and a useful life of 15 years.

Truco’s provisional customer relationship fair value is $ 225.0 million.

Truco’s customer relationship fair value is $ 225.0 million.

The Company has determined that all the acquired customer relationships will be amortized over a period of 15 years on a straight-line basis commensurate with the acquisition date expectations for the economics that are to be provided by the customer relationships.

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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.

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

As of December 14, 2021, the purchase price allocation had been finalized.

The Company incurred $ 5.6 million of transaction costs directly related to the acquisition.

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Truco contributed revenues of $ 9.7 million and net income of $ 0.8 million in the consolidated statement of operations and comprehensive income (loss) for the period from the acquisition date of December 14, 2020 to January 3, 2021.

On September 10, 2019, UQF entered into a stock purchase agreement to acquire all of the outstanding shares of common stock of Kennedy (the "Kennedy Acquisition") from Conagra Brands, Inc.

(“Conagra”), a Delaware corporation.

Kennedy was previously wholly owned by the Conagra subsidiary, Peak Finance Holdings LLC (“the Seller”).

Kennedy consists of two divisions:

Tim’s Cascade Snacks and Snyder of Berlin, which are snack food manufactures.

Kennedy was acquired to expand the Company’s national footprint and capture significant synergies.

The acquisition provided UQF with the second-largest DSD network for branded salty snacks in the Pacific Northwest;

a leased, regional production facility outside of Seattle, WA;

and increased scale with retailers in the Western U.S.

The Company also acquired regional DSD routes and a production facility in Berlin, PA, which are highly complementary with its existing business in that region.

The acquisition was closed on October 21, 2019 when UQF commenced a cash acquisition to purchase all of the outstanding shares of common stock of Kennedy.

UQF made a cash payment of $ 141.4 million for the acquisition on the closing date, which included cash paid for the acquisition of the outstanding shares of Kennedy, settlement of insurance for the transaction incurred by UQF, transfer of $ 1.6 million in operating cash to Kennedy, and settlement of certain professional fees totaling $ 1.8 million incurred by UQF.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of the Kennedy Acquisition:

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

to acquire certain assets of the C.J.

Vitner business ("Vitner's acquisition" or "acquisition of Vitner's"), a leading brand of salty snacks in the Chicago, IL area.

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, $ 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 January 2, 2022, 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 May 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)

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Property, plant and equipment 24,650

Trademarks 20,810

Customer relationships 1,270

Favorable and unfavorable lease intangibles ( 85 )

Total assets acquired:

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Accounts payable 2,017

Accrued expenses and other 1,644

Other non-current liabilities 18

Accrued expenses 844

Total liabilities assumed:

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Goodwill $ 11,603

As of January 3, 2021, the purchase price allocation has been finalized.

UQF has determined that all the acquired trademarks included in Intangible assets, net will be amortized over a period of 15 - 20 years, and the customer relationship asset will be amortized over a period of 15 years on a straight-line basis commensurate with the acquisition date expectations for the economic value (i.e.

net cash flow generating capability) that is to be provided by the trademarks and relationships, respectively.

The transaction included the recognition of a liability of $ 0.1 million for unfavorable leases acquired which shall be amortized over three years .

The goodwill of $ 71.5 million arising from the acquisition of Kennedy consists largely of the synergies and economies of scale expected from combining the operations, and intangible assets that do not qualify for separate recognition, including assembled workforce acquired through the acquisition.

The goodwill recognized is expected to be deductible for income tax purposes.

The results of operations of Kennedy are reported in the Company’s combined financial statements from the date of acquisition and include $ 20.6 million of total net sales and $ 0.1 million of net income for fiscal year 2019.

During fiscal year 2020 Kennedy was integrated into the Company to the point where Kennedy revenue and net income is not separable.

The following unaudited pro forma financial information presents the results of operations as if the Business Combination, Truco Acquisition, IP Purchase, HKA Acquisition, Kitchen Cooked Acquisition, and the Kennedy Acquisition had occurred on January 1, 2019.

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

As of January 2, 2022, 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.

On November 2, 2021, the Company announced that its subsidiaries, entered into a definitive agreement to acquire the equity of R.W.

Garcia Holdings, LLC and its' wholly-owned subsidiary R.W.

Garcia Co., Inc.

("RW Garcia"), an artisan maker of high-quality organic tortilla chips, crackers, and corn chips (RW Garcia acquisition").

The Company closed on this transaction on December 6, 2021, and the cash purchase price of approximately $ 58.3 million funded in part from a draw on the Company's line of credit and cash on hand.

In addition to this acquisition on December 6, 2021, the Company closed on an acquisition of a manufacturing facility of which RW Garcia was a tenant.

The cost of the manufacturing facility was approximately $ 6.0 million.

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

(in thousands)

Purchase consideration $ 56,355

Tax consideration 1,992

Total consideration 58,347

Assets acquired:

Accounts receivable 4,660

Inventory 5,674

Prepaid expenses and other assets 2,592

Property, plant and equipment 20,210

Trade name 3,100

Customer relationships 4,720

Total assets acquired:

Liabilities assumed:

Accounts payable 6,017

Accrued expenses 1,770

Deferred tax liability 6,140

Total liabilities assumed:

Net identifiable assets acquired 32,430

Goodwill $ 25,917

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

As of January 2, 2022, 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.

The following unaudited pro forma financial information presents the results of operations as if the Business Combination, Truco Acquisition, IP Purchase, HKA Acquisition, Kitchen Cooked Acquisition, the Kennedy Acquisition, the Vitner's Acquisition, the Festida Acquisition.

Garcia Acquisition had occurred on December 30, 2019.

These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations.

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In addition, the pro forma net income is not adjusted to exclude transaction expenses and other non-recurring costs.

For the year ended January 3, 2021 For the year ended December 29, 2019

For the year ended January 2, 2022 For the year ended January 3, 2021

(in thousands) (unaudited) (unaudited)

Pro forma net sales $ 1,219,090 $ 1,252,562

Pro forma net loss ( 11,587 ) ( 30,346 )

Pro forma net loss attributable to controlling interest ( 5,945 ) ( 15,398 )

Pro forma net income (loss) $ 10,811 $ ( 6,418 )

Pro forma net income (loss) attributable to controlling interest $ 22,132 $ ( 3,226 )

Pro forma net loss attributable to noncontrolling interest $ ( 11,322 ) $ ( 3,192 )

Inventories consisted of the following:

Successor Predecessor

(in thousands) As of

January 2, 2022

As of December 29, 2019

As of January 3, 2021

Finished goods $ 43,533 $ 28,935

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Maintenance parts 6,556 5,746

59,831 51,144

inventory reserve ( 21 ) ( 250 )

Total inventories $ 79,517 $ 59,810

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Property, plant and equipment, net, consisted of the following:

Successor Predecessor

(in thousands) As of

January 2, 2022

As of December 29, 2019

As of January 3, 2021

Land $ 25,886 $ 22,750

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Property, plant and equipment, net $ 303,807 $ 270,416

In the fourth quarter of fiscal year 2018 as a result of the expected shutdown of the Oracle ERP system associated with the Inventure Foods acquisition, the Company performed a detailed review of the computer hardware and software acquired in this acquisition.

As a result of this review, the Company determined that certain assets with a cost of $ 0.8 million and a net book value of $ 0.5 million had become impaired with no realizable or salvage value and, accordingly, were written off at the end of fiscal year 2018.

During 2018, based on a plant optimization study, management made a determination to close its Denver plant.

The plant was officially closed at the end of July 2018.

All production at the Denver plant was transferred to other facilities owned by the Company.

The Denver plant assets were depreciated through July 2018 when operations ceased.

The carrying amount of the assets in the Denver plant at December 30, 2018 was $ 3.6 million.

On March 4, 2019, the Company entered into an agreement for the sale of the property, subject to inspection by the buyer and other customary closing conditions.

Based on the existing agreement for sale, the fair value less cost to sell of the assets exceeded the carrying amount of the assets.

Accordingly, the Company measured the Denver plant assets at the carrying amount and classified these assets as “assets held for sale” on the combined balance sheet at December 30, 2018.

In July 2019, the Company sold the Denver plant for $ 8.2 million, realizing a gain of $ 4.6 million in other income, net.

There were no material fixed asset impairments for the fiscal year 2020 or fiscal year 2021.

Depreciation expense was $ 12.4 million and $ 19.0 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 23.6 million and $ 24.6 million for the years ended December 29, 2019 and December 30, 2018, 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).

Depreciation expense was $ 43.1 million for the year ended January 2, 2022, $ 12.4 million and $ 19.0 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 23.6 million for the year ended December 29, 2019.

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

GOODWILL AND INTANGIBLE ASSETS, NET

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(in thousands)

Balance as of Balance as of December 30, 2018 $ 130,907

Acquisition of Kennedy 71,500

Balance as of December 29, 2019 $ 202,407

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Kennedy acquisition adjustment 989

August 28, 2020 $ 207,456

Balance as of August 28, 2020 $ 207,456

(in thousands)

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Acquisition of Truco 213,687

January 3, 2021 $ 862,183

For the predecessor period, the change to goodwill was attributable to the acquisition of Kitchen Cooked and a measurement period adjustment to the Kennedy opening balance sheet.

For the successor period, the opening balance of goodwill was attributable to the business combination with CCH as described in the Note 1.

" Operations and Summary of Significant Accounting Policies" and Note 2.

"Acquisitions".

The change to goodwill in the successor period was attributable to the acquisitions of H.K.

Anderson and Truco.

Balance as January 3, 2021 $ 862,183

Acquisition of Vitner's 17,880

Acquisition of Festida Foods 11,603

Acquisition of RW Garcia 25,917

Truco acquisition adjustment 1,243

Business Combination agreement adjustment ( 3,388 )

Balance as January 2, 2022 $ 915,438

Intangible assets, net, consisted of the following:

Successor Predecessor

(in thousands) As of January 3, 2021 As of December 29, 2019

(in thousands) As of January 2, 2022 As of January 3, 2021

Subject to amortization:

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Master distribution rights 2,221 2,221

Unfavorable lease — ( 85 )

Amortizable assets, gross 744,044 731,224

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Trade names 434,513 434,513

Master distribution rights — 4,677

IO routes 9,176 14,240

Intangible assets, net $ 1,142,509 $ 1,171,709

Amortizable trademark intangible assets increased by $ 1.6 million and distributor/customer relationships increased by $ 2.1 million during fiscal year 2020 due to the acquisition of Kitchen Cooked.

Trade names increased by $ 0.7 million due to the purchase of the rights for certain intellectual property.

For the successor period, the balance of the intangible assets were recorded at fair value and the historical accumulated amortization was derecognized as a result of the business combination with CCH as described in the Note 1.

" Operations and summary of Significant Accounting Policies" and Note 2.

"Acquisitions".

These changes resulted in additional amortization of $ 4.7 million in the successor period from August 29, 2020 to January 3, 2021.

Amortizable trademark intangible assets increased by $ 1.8 million, indefinite life trade names assets increased by $ 79.0 million and distributor/customer relationships increased by $ 227.7 million during the fourth quarter of fiscal 2020 due to the acquisition of H.K.

Anderson and Truco.

Amortizable trademark intangible assets increased by $ 6.0 million and distributor/customer relationships increased by $ 6.8 million during fiscal year 2021 due to the acquisition of Vitner's, Festida Foods, and RW Garcia.

There were no other changes to intangible assets during the year ended January 2, 2022 other than that which arises from the regular buying and selling of Company owned routes and amortization.

Amortization of the distributor/customer relationships, technology, and trademarks amounted to $ 8.3 million and $ 5.1 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 5.7 million and $ 5.8 million for the years ended December 29, 2019 and December 30, 2018, respectively.

Amortization of the distributor/customer relationships, technology, and trademarks amounted to $ 37.0 million for the year ended January 2, 2022, $ 8.3 million and $ 5.1 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 5.7 million for the year ended December 29, 2019.

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 January 3, 2021 and December 29, 2019 totaled $ 27.1 million and $ 34.0 million, respectively, and are collateralized by the routes for which the loans are made.

Of the balance at January 3, 2021 and December 29, 2019, $ 23.1 million and $ 33.7 million, respectively, relates to a corresponding notes payable, as discussed in further detail within “Note 8.

The notes receivable balances due from IOs at January 2, 2022 and January 3, 2021 totaled $ 27.2 million and $ 27.1 million, respectively, and are collateralized by the routes for which the loans are made.

Of the balance at January 2, 2022 and January 3, 2021, $ 24.8 million and $ 23.1 million, respectively, relates to a corresponding notes payable, as discussed in further detail within “Note 8.

Long-Term Debt”.

Other notes receivable totaled $ 0.6 million and $ 1.4 million as of January 3, 2021 and December 29, 2019, respectively.

Other notes receivable totaled $ 0.2 million and $ 0.6 million as of January 2, 2022 and January 3, 2021, respectively.

ACCRUED EXPENSES AND OTHER

Current Accrued expenses and other consisted of the following:

Successor Predecessor

(in thousands) As of January 3, 2021 As of December 29, 2019

(in thousands) As of January 2, 2022 As of January 3, 2021

Accrued compensation and benefits $ 20,081 $ 36,968

Operating ROU liability (see "Note 16.

Leases") 9,152 —

Insurance liabilities 8,620 8,100

Accrued freight and manufacturing related costs 8,928 6,972

Truco acquisition tax consideration (1)

Acquisition tax consideration 5,660 4,468

Accrued dividends 4,189 4,261

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Total accrued expenses and other $ 71,280 $ 80,788

(1) The Stock Purchase Agreement provided that Truco Holdings LLC is entitled to receive any tax refunds received by the Company after the closing date for any pre-closing date tax period of Truco as described in Note 2.

"Acquisitions".

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.

As of December 29, 2019, the long term accrued expenses and other primarily consists of $ 14.4 million related to the 2018 LTIP, $ 5.2 million related to supplemental retirement and salary continuation plans.

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

(in thousands) As of January 2, 2022 As of January 3, 2021

TRA liability

$ 24,443 $ 28,691

Operating ROU liability (see "Note 16.

Leases") 23,226 —

Supplemental retirement and salary continuation plans 8,117 6,901

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

Other long term accrued expenses 52 97

Total accrued expenses and other $ 55,838 $ 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 July 23, 2020 the ABL facility was amended to add language around the public structure.

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 January 3, 2021 or December 29, 2019.

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 January 3, 2021 and December 29, 2019, $ 106.4 million and $ 83.0 million, respectively, was available for borrowing, net of letters of credit.

As of January 2, 2022 and January 3, 2021, $ 36.0 million and $ 0.0 million , respectively, were outstanding under this facility.

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 January 2, 2022 and January 3, 2021, $ 96.9 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 %).

Under the Prime rate, had there been outstanding balances, the interest rate on the facility as of January 3, 2021 and December 29, 2019 would have been 3.75 % and 5.25 %, respectively.

Had there been outstanding balances and the Company elected to use the LIBOR rate, the interest rate on the ABL facility as of January 3, 2021 and December 29, 2019 would have been 1.64 % and 3.30 %, respectively.

Had the Company elected to use the Prime rate, the interest rate on the facility as of January 2, 2022 and January 3, 2021 would have been 3.75 %.

The Company elected to use the LIBOR rate, the interest rate on the ABL facility as of January 2, 2022 was 1.58 %.

Had there been outstanding balances and the Company elected to use the LIBOR rate, the interest rate on the ABL facility as of January 2, 2022 and January 3, 2021 would have been 1.60 % and 1.64 %, respectively.

The ABL facility is also subject to unused line fees ( 0.5 % at January 2, 2022) and other fees and expenses.

Standby letters of credit in the amount of $ 14.1 million have been issued as of January 3, 2021 and December 29, 2019.

Standby letters of credit in the amount of $ 10.3 million and $ 14.1 million have been issued as of January 2, 2022 and January 3, 2021, respectively.

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

Term debt and financing obligations

On November 21, 2017, the Company entered into a First Lien Term Loan Credit Agreement (the “First Lien Term Loan”) in a principal amount of $ 535.0 million and a Second Lien Term Loan Credit Agreement (the “Second Lien Term Loan”, and collectively with the First Lien Term Loan, the “Term Loans”) in a principal amount of $ 125.0 million.

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"Acquisitions") an advance payment of principal was made on the First Lien Term Loan of $ 111.6 million, as such no principal payments are due until November 21, 2024.

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 January 3, 2021 and December 29, 2019 was 3.65 % and 5.20 %, respectively.

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 total repayment was $ 126.3 million, and resulted in a loss on early extinguishment of approximately $ 4.3 million.

On January 20, 2021, the First Lien Term Loan was refinanced.

"Subsequent Event" for further details.

Separately, on October 21, 2019, the Company entered into a Senior Secured First Lien Floating Rate Note (the “Secured First Lien Note”) in a principal amount of $ 125.0 million.

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The Secured First Lien Note requires quarterly interest payments, with a repayment of principal on the maturity date of November 21, 2024.

The Secured First Lien Note bears interest at an annual rate based on 3 month LIBOR plus an applicable margin of 5.25 %.

The interest rate on the Secured First Lien Note on August 28, 2020, prior to payoff was 6.7 %.

On August 28, 2020, as part of the Business Combination Agreement with CCH (as described in Note 1.

" Operations and Summary of Significant Accounting Policies" and Note 2.

"Acquisitions", the Secured First Lien Note was paid off.

The total repayment was $ 128.8 million, which includes a $ 2.5 million early termination fee included within other expense (income), net in the Successor period and $ 1.3 million of interest expense which had been accrued in the Predecessor period.

On December 14, 2020, the Company entered into a Bridge Credit Agreement with a syndicate of banks, led by Bank of America, N.A.

(the “Bridge Credit Agreement”).

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

As of January 3, 2021, the outstanding balance of the Bridge Credit Agreement was $ 370.0 million, with $ 120.0 million being repaid from the redemption of the Company's warrants.

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On January 20, 2021, the Bridge Credit Agreement was repaid in full by the refinancing of term debt.

"Subsequent Events" for further details.

The First Lien Term Loan, the Secured First Lien Note, the Bridge Credit Agreement 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 January 3, 2021.

Aggregate principal maturities of debt as of January 3, 2021 are as follows:

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 and the Bridge Credit Agreement was terminated.

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

2 to the Credit Agreement ("Amendment No.

2") which provided additional operating flexibility and revisions to certain restrictive covenants.

Pursuant to the terms of Amendment No.

2, the Company raised $ 720 million in aggregate principal of Term Loan B ("Term Loan B") which bears interest at LIBOR plus 3.00 %, and extended the maturity of the Credit Agreement to January 20, 2028.

The proceeds were used, together with cash on hand and proceeds from our exercised warrants, to redeem the outstanding principal amount of existing Term Loan B and Bridge Credit Agreement of $ 410 million and $ 358 million, respectively.

The refinancing was accounted for as an extinguishment.

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

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.

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 January 2, 2022.

Long-term debt consisted of the following:

Debt (in thousands)

Issue Date Principal Balance Interest Rate Maturity Date January 2, 2022 January 3, 2021

Term loan B June-21 $ 795,000 3.09 % January-28 $ 787,236 $ —

First lien term loan credit agreement November-17 535,000 3.64 % November-24 — 404,650

Second lien term loan credit agreement November-17 125,000 6.25 % November-24 — 5,350

Bridge credit agreement December-20 490,000 4.40 % December-25 — 370,000

Equipment loans (1)

Miscellaneous equipment loans 697 1,108

Revolving credit facility 36,000 —

Net impact of debt issuance costs and original issue discounts ( 7,929 ) ( 2,639 )

Total long-term debt 841,962 778,469

current portion ( 11,414 ) ( 469 )

Long term portion of term debt and financing obligations $ 830,548 $ 778,000

(1) In July 2021, the Company entered into two separate finance lease obligations with Banc of America Leasing & Capital, LLC.

In the first agreement, we agreed to sell and lease-back certain manufacturing equipment and warehouse/distribution equipment for $ 13.0 million with an interest rate of 3.26 %.

In the second agreement, we drew $ 9.8 million related to certain manufacturing equipment and warehouse/distribution equipment.

Only interest is due on these loans until the capital projects are completed.

In November 2021, we entered into an additional two agreements for $ 1.5 million with an interest rate of 3.97 % and $ 2.2 million with an interest rate of 3.98 %.

Amounts outstanding under term debt and financing obligations consisted of the following:

(in thousands)

2022 $ 11,414

Thereafter 757,892

Total $ 849,891

Other Notes Payable and Capital Leases

During the first fiscal quarter of 2020, the Company closed on the acquisition of Kitchen Cooked, as described in Note 2.

"Acquisitions" and the acquisition included a deferred purchase price of $ 2.0 million, of which $ 1.0 million is still outstanding as of 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, which is outstanding as of January 3, 2021.

Term loan B, the Revolving Credit Facility, and the equipment loans are debt of UBH and its’ subsidiaries.

There are no material differences between the financial statements of UBI and consolidated subsidiaries and the financial statements of UBH and consolidated subsidiaries, except for the Warrant liability and associated gain (loss) on remeasurement of warrant liability as described in “Note 17.

Warrants” and the Tax Receivable Agreement described in “Note 2.

Acquisitions” and cash or cash equivalent of $ 5.3 million held at UBI as of fiscal year end 2021.

The cash on hand is primarily the result of distributions from UBH and is primarily used to pay dividends to shareholders and make tax payments.

Other Notes Payable and Finance 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 was still outstanding as of January 3, 2021 and the remaining balance was repaid within fiscal 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 January 2, 2022 and January 3, 2021, respectively.

During the third quarter of 2021, the Company recorded liabilities related primarily to reclaiming distribution rights from distributors, of which $ 1.3 million was outstanding as of January 2, 2022.

Amounts outstanding under notes payable consisted of the following:

Successor Predecessor

(in thousands) As of

January 2, 2022

As of December 29, 2019

As of January 3, 2021

Note payable – IO notes $ 24,822 $ 23,106

Capital lease 8,967 6,055

Finance lease obligations (1)

Other 1,678 1,509

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Long term portion of notes payable $ 24,709 $ 24,564

(1) See “Note 16.

Leases” for further discussion on our finance lease obligations.

During fiscal 2019, the Company sold $ 33.2 million of notes receivable from IOs on its books for $ 34.1 million in a series of transactions to a financial institution.

Due to the structure of the transaction, 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 balance sheet;

the corresponding notes receivable also remained on the Company’s balance sheet.

During fiscal 2021, the Company sold an additional $ 11.8 million of notes receivable from IOs on its books for $ 12.5 million in a series of transactions to a financial institution.

Due to the structure of the transactions, they 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.

The Company services the loans for the financial institution by collecting principal and interest from the IOs and passing it through to the institution.

The underlying notes have various maturity dates through December 2028.

The underlying notes have various maturity dates through April 2030.

The Company partially guarantees the outstanding loans, as discussed in further detail within “Note 12.

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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 Successor period from August 29, 2020 to January 3, 2021 was $ 13.3 million, $ 7.9 million of which was related to the Company’s ABL facility and other long-term debt and $ 4.7 million of which was related to amortization of deferred financing fees, and $ 0.7 million of which was related to IO loans.

Interest expense for the Predecessor period from December 30, 2019 to August 28, 2020 was $ 26.7 million, $ 23.3 million of which was related to the Company’s ABL facility and other long-term debt, $ 1.7 million of which was related to amortization of deferred financing fees, and $ 1.7 million of which was related to IO loans.

Interest expense for the year ended December 29, 2019 was $ 48.4 million, $ 43.7 million of which was related to the Company’s ABL facility and other long-term debt, $ 2.1 million of which was related to amortization of deferred financing fees, and $ 2.6 million of which was related to IO loans.

Interest expense for the year ended December 30, 2018 was $ 45.7 million, $ 42.3 million of which was related to the Company’s ABL facility and other long-term debt, $ 2.4 million of which was related to amortization of deferred financing fees, and $ 0.7 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).

Interest Expense

Interest expense consisted of the following:

Successor Predecessor

(in thousands) Year Ended January 2, 2022 From

August 29, 2020

January 3, 2021 From

December 30, 2019

August 28, 2020 Year Ended December 29, 2019

Company’s ABL facility and other long-term debt $ 29,270 $ 7,911 $ 23,350 $ 43,688

Amortization of deferred financing fees 3,847 4,721 1,743 2,101

IO loans 1,591 669 1,566 2,599

Total interest $ 34,708 $ 13,301 $ 26,659 $ 48,388

DERIVATIVE FINANCIAL INSTRUMENTS AND PURCHASE COMMITMENTS

Derivative Financial Instruments

To reduce the effect of interest rate fluctuations, the Company entered into an interest rate swap contract on September 6, 2019, with an effective date of September 30, 2019, with a counter party to make a series of payments based on a fixed interest rate of 1.339 % and receive a series of payments based on the greater of LIBOR or 0.00 %.

To reduce the effect of interest rate fluctuations, the Company entered into a three year interest rate swap contract on September 6, 2019, with an effective date of September 30, 2019, with a counter party to make a series of payments based on a fixed interest rate of 1.339 % and receive a series of payments based on the greater of LIBOR or 0.00 %.

Both the fixed and floating payment streams are based on a notional amount of $ 250 million.

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 January 3, 2021, the effective fixed interest rate on the long-term debt hedged by this contract was 4.4 %.

On December 21, 2021, with an effective date of December 31, 2021, the Company entered into an accreting interest rate swap contract with a counter party to make a series of payments based on a fixed interest rate of 1.3885 % and receive a series of payments based on the greater of LIBOR or 0.00 %.

Both the fixed and floating payment streams are based on a notional amount of $ 250 million, accreting to $ 500 million and maturing on September 30, 2026.

The Company entered into these transactions 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 January 2, 2022, the effective fixed interest rate on the long-term debt hedged by these contract was 3.5 %.

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

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Accumulated Other Comprehensive (Loss) Income.”

Warrant Liabilities

The Company has outstanding warrants which are accounted for as derivative liabilities pursuant to ASC 815-40.

"Warrants" for additional information on our warrant liabilities.

A reconciliation of the changes in the warrant liability for the year ended January 2, 2022 is as follows:

(in thousands)

Fair value of warrant liabilities as of January 3, 2021 $ 137,612

Reclassification of warrant liability to equity for exercised or cancelled warrants ( 54,713 )

Gain on remeasurement of warrant liability ( 36,675 )

Fair value of warrant liabilities as of January 2, 2022 $ 46,224

Purchase Commitments

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The Company accrues for losses on firm purchase commitments in a loss position at the end of each reporting period to the extent that there is an active observable market.

The Company has recorded purchase commitment gain (losses) totaling $ 0.9 million and $( 0.7 ) million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively.

The Company has recorded purchase commitment gain (losses) totaling $ 0.9 million and $( 1.1 ) million for the years ended December 29, 2019 and December 30, 2018, respectively.

The Company has recorded purchase commitment gain (losses) totaling $ 2.8 million for the year ended January 2, 2022, $ 0.9 million and $( 0.7 ) million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and $ 0.9 million for the year ended December 29, 2019, respectively.

FAIR VALUE MEASUREMENTS

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Cash and cash equivalents $ 41,898 $ — $ — $ 41,898

Interest rate swaps — 2,208 — 2,208

Total assets $ 41,898 $ 2,208 $ — $ 44,106

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Total liabilities $ — $ 846,616 $ — $ 846,616

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 December 29, 2019:

(in thousands) Level I Level II Level III Total

Cash and cash equivalents $ 46,831 $ — $ — $ 46,831

Interest rate swaps — 1,486 — 1,486

Total assets $ 46,831 $ — $ — $ 46,831

Commodity contracts $ — $ 248 $ — $ 248

Interest rate swaps — 5,163 — 5,163

Public warrants 52,580 — — 52,580

Private placement warrants — 85,032 — 85,032

Debt — 778,469 — 778,469

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SHARE-BASED COMPENSATION

2020 Omnibus Equity Incentive Plan

In August 2020, CCH’s shareholders approved the Company’s 2020 Omnibus Equity Incentive Plan (the “2020 Plan”).

The 2020 Plan provides for the grant of various equity-based incentive awards to eligible employees and directors of the Company and its subsidiaries.

The types of equity-based awards currently outstanding under the 2020 Plan include RSUs, PSUs, and stock options.

There are 9,500,000 shares of Class A Common Stock reserved for issuance under the 2020 Plan.

All awards currently issued under the 2020 Plan may be settled only in shares of Class A Common Stock.

Restricted Stock Units

For the periods presented, compensation expense included in selling and general and administrative expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows:

Successor Predecessor

(in thousands) Year Ended January 2, 2022 From

August 29, 2020

January 3, 2021 From

December 30, 2019

August 28, 2020 Year Ended December 29, 2019

RSUs $ 8,574 $ 6,176 $ — $ —

PSUs 1,228 401 — —

Stock Options 493 213 — —

Pre-tax compensation expense $ 10,295 $ 6,790 $ — $ —

The tax benefit recognized from the share-based compensation expense is immaterial.

Unrecognized compensation expense related to nonvested share-based compensation grants was as follows:

(in thousands) As of January 2, 2022 As of January 3, 2021

RSUs $ 1,248 $ 10,021

PSUs 1,710 2,960

Stock Options 1,044 1,565

Total $ 4,002 $ 14,546

Restricted and Performance Share Units

2020 LTIP RSUs

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The fair value of the 2020 LTIP RSUs at the Closing of the Business Combination in excess of the fair value of the replaced Phantom Units attributable to the pre-combination period was approximately $ 13.9 million and is attributable to the post-combination requisite service period.

Unrecognized compensation expense related to the 2020 LTIP RSUs was $ 8.2 million at January 3, 2021, which is expected to be recognized as expense over the remaining post-combination service period of approximately 1.0 year.

The Company incurred $ 5.7 million of share-based compensation expense from August 29, 2020 through January 3, 2021.

There were no forfeitures of 2020 LTIP RSUs during the Successor period.

Initial Grant RSUs

Under the 2020 Plan, the Company has granted certain employees and directors RSUs as a result of their significant contributions.

Restricted Share Units

Under the 2020 Plan, the Company granted certain employees and directors RSUs as a result of their significant contributions.

These grants will settle upon vesting into shares of the Company’s Class A Common Stock, subject to continued employment.

The Initial Grant RSUs for directors will vest on May 6, 2021, while the Initial Grant RSUs for certain employees will vest in equal installments on December 31, 2022 and December 31, 2023.

Subject to the vesting of such awards, the Initial Grant RSUs will participate in dividends of the Company beginning with the fiscal 2020 end-of-year dividend declaration, which was paid out in the first quarter of fiscal 2021.

During the period from August 29, 2020 through January 3, 2021, the Company granted 128,935 Initial Grant RSUs at a grant date fair value of $ 18.40 per unit, which is the closing share price of the Company’s Class A Common Stock on the grant date (August 31, 2020), provided that the issuance of the Initial Grant RSUs was contingent upon the Company filing a Form S-8 with the SEC, which occurred on November 2, 2020.

All such RSUs remained unvested at January 3, 2021.

Unrecognized compensation expense related to unvested Initial Grant RSUs was $ 1.9 million at January 3, 2021, which is expected to be recognized as expense over the weighted-average period of 2.0 years.

The Company incurred $ 0.5 million of share-based compensation expense from August 29, 2020 through January 3, 2021.

There were no forfeitures of Initial Grant RSUs during the Successor period.

In conjunction with the vesting of the Initial Grant RSUs, the Company granted additional RSUs to directors that will vest on May 5, 2022.

Subject to the vesting of such awards, the RSUs participated in dividends of the Company beginning with the fiscal 2020 end-of-year dividend declaration, which was paid out in the first quarter of fiscal year 2021.

Performance Share Units

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The awards will vest 50 % on December 31, 2022 and 50 % on December 31, 2023, subject to the market condition described above.

Subject to the vesting of such awards, the PSUs will participate in dividends of the Company beginning with the fiscal 2020 end-of-year dividend declaration, which was paid out in the first quarter of fiscal 2021.

Since the PSUs vest based on market conditions, a Monte Carlo simulation model was used to determine the grant-date fair value of the PSUs.

The assumptions used in the Monte Carlo simulation model included a weighted average expected term of 2.8 years, weighted average expected volatility of 53.6 %, and weighted average risk-free rate of 0.2 %.

During the period from August 29, 2020 through January 3, 2021, the Company granted 140,076 PSUs at a weighted average grant date fair value of $ 23.67 per unit, all of which remained unvested at January 3, 2021.

As of January 3, 2021, the Company had $ 2.9 million of total unrecognized compensation cost related to PSUs that will be recognized over a weighted average period of 2.3 years.

The Company incurred $ 0.4 million in share-based compensation expense from August 29, 2020 through January 3, 2021 related to the PSUs.

There were no forfeitures of PSUs during the Successor period.

Performance Stock Units and Restricted Stock Units Number of Units Weighted-average grant date fair value for equity awards (per unit) Weighted Average Remaining Contractual Term

Outstanding at beginning of year $ 1,608,502 $ 10.57 2.3 Years

Granted 42,321 26.57

Vested ( 1,376,536 ) 7.91

Forfeited ( 6,928 ) 19.88

Outstanding and exercisable at end of year $ 267,359 $ 22.33 1.5 Years

Stock Options

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The use of this method effectively assumes that exercise occurs evenly over the period from vesting until expiration, and therefore the expected term is the midpoint between the service period and the contractual term of the award.

As of January 3, 2021, the Company had $ 1.5 million of total unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 2.0 years.

For the period from August 29, 2020 through January 3, 2021, the stock compensation expense related to the stock options was $ 0.2 million.

Utz Quality Foods, LLC 2018 Long-Term Incentive Plan

UBH recorded a reserve for the estimated fair value of vested Phantom Units under the 2018 LTIP of $ 14.4 million as of December 29, 2019 and $ 11.2 million as of August 28, 2020, the Closing Date of the Business Combination.

The 2018 LTIP liability is included in non-current accrued expenses and other on the consolidated balance sheets of the Predecessor.

In connection with the Business Combination, these awards were replaced by the 2020 LTIP, a sub-plan under the 2020 Plan.

Stock Options Number of Units Weighted-Average Grant Date Fair Value for Equity Awards (per unit) Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (1)

Outstanding at beginning of year 286,268 $ 16.34 2.3 Years

Forfeited — —

Outstanding and exercisable at end of year 286,268 $ 16.34 1.5 Years 0.00

(1) The aggregate intrinsic value in the above table represents the total pre-tax amount that a participant would receive if the option had been exercised on the last day of the respective fiscal period.

Options with a market value less than its exercise value are not included in the intrinsic value amount.

Employee Stock Purchase Plan

On December 10, 2020, the Board of Directors approved the 2021 Employee Stock Purchase Plan (“ESPP”), subject to stockholder approval.

The ESPP will be effective January 1, 2021, and purchase rights may be granted under the ESPP prior to stockholder approval, but no purchase rights may be exercised unless and until stockholder approval is obtained.

The ESPP was effective January 1, 2021, and purchase rights may be granted under the ESPP prior to stockholder approval, but no purchase rights may be exercised unless and until stockholder approval is obtained.

The maximum number of shares of the Company’s Class A Common Stock available for sale under the ESPP shall not exceed in the aggregate 1,500,000 shares, and may be unissued shares or treasury shares or shares bought on the market for purposes of the ESPP.

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Shares are purchased on the applicable exercise dates, which is the last trading day of each purchase period with initial purchase dates of June 30, 2021 and December 31, 2021.

The purchase price will be 90 % of the lower of (i) the fair market value of the stock on the date of enrollment and (ii) the fair market value of the stock on the last day of the related purchase period.

As of January 30, 2021, 7.7 million shares of Class A common stock were available for issuance under the ESPP, and employee contributions had not yet commenced.

For the year ended January 2, 2022, the Company granted 128,642 shares with a fair value of $ 2.7 million, and the Company recognized compensation expense of $ 0.5 million.

CONTINGENCIES

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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 January 3, 2021 and December 29, 2019, the Company had a reserve of $ 1.3 million to cover the assessment.

As of January 2, 2022 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 $ 4.1 million and $ 5.1 million at January 3, 2021 and December 29, 2019, respectively, all of which was recorded by the Company as an off balance sheet arrangement.

The outstanding balance of loans guaranteed was $ 2.2 million and $ 4.1 million at January 2, 2022 and January 3, 2021, respectively, which are accounted for 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.

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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 $ 7.1 million and $ 0.7 million at January 3, 2021 and December 29, 2019, respectively, which are off balance sheet.

The outstanding balance of loans guaranteed that were issued by Bank of America was $ 18.6 million and $ 7.1 million at January 2, 2022 and January 3, 2021, respectively, which are accounted for as an off balance sheet arrangement.

As discussed in “Note 8.

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

The outstanding balance of notes purchased by Bank of America at January 3, 2021 and December 29, 2019 was $ 16.5 million and $ 25.1 million, respectively.

The outstanding balance of notes purchased by Bank of America at January 2, 2022 and January 3, 2021 was $ 19.7 million and $ 16.5 million, respectively.

Due to the structure of the transaction, 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 balance sheet;

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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 $ 6.6 million and $ 8.6 million at January 3, 2021 and December 29, 2019, respectively, all of which was on balance sheet.

The outstanding balance of loans guaranteed was $ 4.9 million and $ 6.6 million at January 2, 2022 and January 3, 2021, respectively, all of which was on balance sheet.

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

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The audit consists of three components including accounts payable, payroll, and accounts receivable customer over-payments.

The Company estimates that the potential liability for the accounts payable and payroll components is approximately $ 0.2 million, which has been included in the other accrued expenses section of the balance sheet as of January 3, 2021 and December 29, 2019.

As of the date of these financial statements, the Company is not able to reasonably estimate the potential liability for the accounts receivable customer over-payments.

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

Total accumulated other comprehensive income was $ 0.9 million as of January 3, 2021 and $ 1.4 million as of December 29, 2019.

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

Changes to the balance in accumulated other comprehensive (loss) income were as follows:

(in thousands) Gains/(Losses) on

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Total accumulated other comprehensive income was $ 3.7 million as of January 2, 2022 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.

Changes to the balance in accumulated other comprehensive income (loss) were as follows:

(in thousands) Gains on

Cash Flow Hedges

Balance as of December 30, 2018 $ —

Balance as of August 29, 2020 $ —

Unrealized gain on cash flow hedges 924

Balance as of January 3, 2021 924

Unrealized gain on cash flow hedges 2,791

Balance as of January 2, 2022 $ 3,715

(in thousands) Loss on

Cash Flow Hedges

Balance as of December 29, 2019 $ 1,408

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Balance as of August 28, 2020 $ ( 6,055 )

(in thousands) Gain on

Cash Flow Hedges

Balance as of August 29, 2020 $ —

Unrealized gain on cash flow hedges 924

Balance as of January 3, 2021 $ 924

SUPPLEMENTARY CASH FLOW INFORMATION

Cash paid for interest was $ 9.2 million and $ 28.8 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 45.7 million and $ 40.9 million for the years ended December 29, 2019 and December 30, 2018, respectively.

Refunds related to income related taxes were $ 0.1 million and $ 0.2 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 0.1 million and $ 0.0 million for the years ended December 29, 2019 and December 30, 2018, respectively.

Payments made for income-related taxes were $ 0.5 million and $ 0.5 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 1.7 million and $ 0.7 million for the years ended December 29, 2019 and December 30, 2018, respectively.

Cash paid for interest was $ 31.6 million for the year ended January 2, 2022, $ 9.2 million and $ 28.8 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 45.7 million for the year ended December 29, 2019.

Refunds related to income related taxes were $ 0.7 million for the year ended January 2, 2022, $ 0.1 million and $ 0.2 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 0.1 million for the year ended December 29, 2019.

Payments made for income-related taxes were $ 3.7 million for the year ended January 2, 2022, $ 0.5 million and $ 0.5 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 1.7 million for the year ended December 29, 2019.

The following non cash considerations were part of the Business Combination Agreement with CC H:

Continuing Members' retained restricted units totaling $ 54.1 million, TRA totaling $ 25.3 million, and LTIP RSU awards totaling $ 11.2 million .

Dividends declared but not paid were $ 4.3 million as of January 3, 2021 and are included within the "accrued expense and other" of the Consolidated Balance Sheet .

There were no accrued dividend as of December 29, 2019.

Dividends declared but not paid were $ 4.2 million and $ 4.3 million as of January 2, 2022 and January 3, 2021, respectively, and are included within the "accrued expense and other" of the Consolidated Balance Sheet.

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

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Successor Predecessor

(in thousands) From

(in thousands) Year Ended January 2, 2022 From

August 29, 2020

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December 30, 2019

August 28, 2020 Year Ended December 29, 2019 Year Ended December 30, 2018

August 28, 2020 Year Ended December 29, 2019

Federal $ 1,553 $ — $ — $ 140

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Successor Predecessor

(in thousands) From

(in thousands) Year Ended January 2, 2022 From

August 29, 2020

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December 30, 2019

August 28, 2020 Year Ended December 29, 2019 Year Ended December 30, 2018

August 28, 2020 Year Ended December 29, 2019

Federal statutory rate (21%) $ 3,378 $ ( 22,715 ) $ 1,552 $ ( 2,146 )

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Pre-transaction loss of Utz Brands Holdings, LLC — — 1,752 4,204

Investment in Utz Brands Holdings, LLC ( 31 ) ( 23,844 ) — —

Noncontrolling interest in Utz Brands Holdings, LLC 2,448 1,497 — —

Valuation allowance 5,195 25,121 — ( 683 )

Remeasurement of warrant liability ( 7,702 ) 19,288 — —

Return to provision ( 771 ) — — —

Permanent book to tax differences ( 593 ) — — —

Credits ( 239 ) — — —

IRC §162(m) 191 — — —

Nondeductible expenses 12 — 8 6

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$ 8,086 $ ( 267 ) $ 3,973 $ 3,146

The tax effect of temporary differences that gave rise to significant components of deferred tax assets and liabilities consisted of the following at January 3, 2021 and December 29, 2019:

Successor Predecessor

The tax effect of temporary differences that gave rise to significant components of deferred tax assets and liabilities consisted of the following at January 2, 2022 and January 3, 2021:

(in thousands)

As of January 3, 2021 As of December 29, 2019

As of January 2, 2022 As of January 3, 2021

Deferred Tax Assets:

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Inventories, including uniform capitalization 664 201

Investment in Utz Brands Holdings, LLC 37,560 —

Investment in Utz Brands, LLC, Operations 25,454 25,724

Acquisition costs 818 985

Net operating losses 24,481 18,887

IRC §163(j) 1,980 —

Credits 224 108

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Intangibles ( 79,861 ) ( 75,681 )

Investment in Utz Brands Holdings, LLC, Nonreversing ( 51,455 ) —

Other deferred tax liabilities ( 425 ) ( 240 )

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Net Operating Loss and Tax Credit Carryforward

As of January 3, 2021 and December 29, 2019, the Company and certain subsidiaries have federal net operating loss ("NOL") carryforwards of $ 77.7 million and $ 77.5 million, respectively.

As of January 2, 2022 and January 3, 2021, the Company and certain subsidiaries have federal net operating loss ("NOL") carryforwards of $ 96.1 million and $ 77.7 million, respectively.

Of these, $ 41.0 million will expire, if not utilized, by 2037.

As of January 3, 2021 and December 29, 2019, the Company and certain subsidiaries also have state NOL carryforwards in the amount of $ 44.2 million and $ 51.8 million, respectively.

As of January 2, 2022 and January 3, 2021, the Company and certain subsidiaries also have state NOL carryforwards in the amount of $ 75.9 million and $ 44.2 million, respectively.

The state NOL carryforwards begin to expire in 2021, however, some state NOL's are able to be carried forward indefinitely.

As of January 3, 2021 and December 29, 2019, certain subsidiaries have state tax credit carryforwards in the amount of $ 0.1 million and $ 0.1 million, respectively.

If not utilized, the state tax credit carryforwards begin to expire between 2022 and 2034.

As of January 2, 2022 and January 3, 2021, the Company and certain subsidiaries have federal tax credit carryforwards in the amount of $ 0.2 million and $ 0.0 million , respectively.

As of January 2, 2022 and January 3, 2021, certain subsidiaries have state tax credit carryforwards in the amount of $ 0.0 million and $ 0.1 million, respectively.

Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code and similar state provisions.

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Valuation Allowance

The Company recorded a valuation allowance of $ 44.4 million and $ 1.6 million at January 3, 2021 and December 29, 2019, respectively.

The $ 42.8 million change in the valuation allowance was the result of a charge to deferred tax expense of $ 1.3 million from operations and a charge to additional paid in capital of $ 41.5 million related to warrant transactions and the December 22, 2020 exchange of UBH units for UBI common stock described in Note 20.

"Equity.” In determining the need for a valuation allowance, the Company assessed the available positive and negative evidence to estimate whether future taxable income would be generated to permit use of the existing deferred tax assets (“DTA's”).

The Company recorded a valuation allowance of $ 43.5 million and $ 32.5 million at January 2, 2022 and January 3, 2021, respectively.

In determining the need for a valuation allowance, the Company assessed the available positive and negative evidence to estimate whether future taxable income would be generated to permit use of the existing deferred tax assets (“DTA's”).

As of January 2, 2022, a significant piece of objective negative evidence evaluated was the three-year 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 Utz Brands Holdings, LLC, federal operating losses subject to annual limitations due to “change in ownership” provisions, and state net operating losses where the Company does not expect to continue to have nexus.

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

The Company has DTA’s related to its investment in partnership that are expected to be realized in the ordinary course of operations or generate future net operating losses for which a portion will have an indefinite carryforward period.

Additionally, the Company has deferred tax liabilities (“DTL’s”) related to its investment in the partnership that will not reverse in the ordinary course of business and will only reverse when the partnership is sold or liquidated.

The Company has no intention of disposing of or liquidating the partnership and therefore has not considered the indefinite lived DTL as a source of income to offset other DTA’s.

In weighing positive and negative evidence, both objective and subjective, including its three-year cumulative loss, the Company has recorded a valuation allowance against its DTA’s related to net operating losses and deductible book/tax differences and recorded a DTL primarily related to the book over tax basis in the investment in the partnership that will not reverse in the ordinary course of operations.

The Company considered that an indefinite lived DTL may be considered as a source of taxable income for an indefinite lived DTA;

however, given our indefinite lived DTL will only reverse upon sale or liquidation, the Company determined that it was more appropriate to record a valuation allowance against its DTA’s.

The amount of DTA considered realizable, 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.

If or when recognized, the tax benefits related to any reversal of the valuation allowance on DTA's as of January 3, 2021 would be accounted for as follows:

approximately $ 24.3 million would be recognized as a reduction of income tax expense and $ 14.9 million would be recognized as an increase to equity.

The net change in valuation allowance of $ 11.0 million was recorded as an increase to income tax expense for $ 5.2 million offset and an adjustment to increase equity for $ 5.8 million as it related to the direct tax effect of changes in tax basis in the investment in Utz Brands Holdings, LLC.

As of January 2, 2022, tax years 2018 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 2017 through 2021 remain open and subject to examination in selected states that have a four year statute of limitations.

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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 January 3, 2021 and December 29, 2019.

The Company did not maintain any unrecognized tax benefits as of January 2, 2022 and January 3, 2021.

Tax receivable agreement liability

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As of January 2, 2022, the Company recorded a TRA liability of $ 24.6 million, but it has a total liability of $ 38.2 million related to its projected obligations under the TRA.

The total TRA liability includes $ 28.7 million that relates to payments that originated with the Business Combination and the acquisition of Kennedy and $ 8.9 million that relates to equity transactions that occurred during the 4th quarter 2020.

The Company recorded a valuation allowance on its DTA, including the tax basis that originated with the 4th quarter 2020 equity transactions as they are not more likely than not to be realized based on the positive and negative evidence that the Company considered.

The Company has not recorded the $ 8.9 million of TRA liability that relates to the 4th quarter equity transactions as the liability is not probable under ASC 450 since the related DTA is not more likely than not to be realized as evidenced by the valuation allowance.

The total TRA liability includes $ 24.6 million that relates to payments that originated with the Business Combination and the acquisition of Kennedy and $ 13.6 million that relates to equity transactions that occurred during the 4th quarter 2020 and 3rd quarter 2021.

The Company recorded a valuation allowance on its DTA, including the tax basis that originated with the 4th quarter 2020 and 3rd quarter 2021 equity transactions as they are not more likely than not to be realized based on the positive and negative evidence that the Company considered.

The Company has not recorded the $ 13.6 million of TRA liability that relates to the 4th quarter 2020 and 3rd quarter 2021 equity transactions as the liability is not probable under ASC 450 since the related DTA is not more likely than not to be realized as evidenced by the valuation allowance.

The Company will continue to monitor positive and negative evidence to analyze its valuation allowance and it believes that sufficient positive evidence may arise to permit the release of a significant portion of its valuation allowance.

If that were to occur, it would result in the need to record $ 8.9 million of additional TRA liability for 4th quarter equity transactions, which would result in a non-cash charge to pretax results.

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

Lease terms range from one month to twelve years .

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

Successor Predecessor

(in thousands) As of

January 3, 2021 As of December 29, 2019

If that were to occur, it would result in the need to record $ 13.6 million of additional TRA liability for 4th quarter 2020 and 3rd quarter 2021 equity transactions, which would result in a non-cash charge to pretax results.

As described in Note 1.

" Operations and Summary of Significant Accounting Policies", we adopted new lease accounting guidance effective January 4, 2021.

We determine if a contractual arrangement is a lease at inception.

Our lease arrangements provide the Company the right to utilize certain specified tangible assets for a period of time in exchange for consideration.

Our leases primarily relate to building space, vehicles, and equipment.

Our leases generally have remaining terms ranging from one month to twelve years .

We separate lease components from vehicles leases and do not separate non-lease components from our building leases for the purposes of measuring our lease liabilities and assets.

Our leases consist of operating leases and finance leases which are presented within current accrued expenses and other, non-current accrued expenses and other, current portion of other notes payable, and non-current portion of other notes payable on our consolidated balance sheets.

Leases with an initial term of 12 months or lease are not recorded on the balance sheet.

We recognize a lease liability and a right of use asset at the lease commencement date based on the present value of future lease payments over the lease term discounted using our incremental borrowing rate.

As many of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments.

We recognize operating lease expense on a straight-line basis over the term of the lease within operating expenses.

Expense associated with our finance leases consists of two components, including interest on our outstanding finance lease obligations and amortization of the related right-of-use assets.

The interest component is recorded in interest expense and depreciation of the finance lease asset is recognized over a straight-line basis over the term of the lease within cost of goods sold, selling expenses, and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

Our leases do not contain material residual value guarantees or material restrictive covenants.

Some of our leases include optional renewal periods or termination provisions which we assess at inception to determine the term of the lease, subject to reassessment in certain circumstances.

The following table presents lease expense we have recorded on our consolidated statements of operations for the year ended January 2, 2022:

(in thousands)

Year Ended January 2, 2022

Finance lease expense:

Amortization of finance ROU asset $ 2,553

Interest of finance ROU asset 254

Total finance lease expense 2,807

Operating lease expense (1)

Total lease expense $ 11,924

(1) Included variable and short-term lease expense of $ 2.1 million and $ 3.4 million, respectively, for the year ended January 2, 2022.

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

(in thousands)

January 2, 2022 As of

January 3, 2021

Leases $ 10,863 $ 9,335

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Leases, net $ 8,000 $ 8,809

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.

Rental expense for leases to third parties totaled $ 3.6 million and $ 7.7 million for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively, and was $ 8.2 million and $ 12.7 million for the years ended December 29, 2019 and December 30, 2018, respectively.

On December 31, 2018, the Company amended certain vehicle lease arrangements that resulted in capital lease classification for these leases.

Future minimum payments, to third parties, by year and in the aggregate, consisted of the following at January 3, 2021:

Maturities of lease liabilities as of January 2, 2022:

(in thousands)

Operating Leases Finance Leases Total

2022 $ 9,988 $ 2,583 $ 12,571

Thereafter 2,928

Total $ 37,669

2023 8,472 2,106 10,578

2024 5,642 1,500 7,142

2025 4,404 1,007 5,411

2026 2,643 786 3,429

2027 and thereafter 3,566 743 4,309

Total undiscounted obligations (1)

34,715 8,725 43,440

Less imputed interest ( 2,337 ) ( 559 ) ( 2,895 )

Present value of lease obligations (1)

$ 32,379 $ 8,166 $ 40,545

(1) Excludes lease undiscounted obligations for buildings which the Company has entered into but which have not commenced as of January 2, 2022, totaling $ 5.2 million.

The following table summarizes supplemental balance sheet information related to leases as of January 2, 2022:

(in thousands, except lease term and discount rate) Operating Leases Finance Leases

ROU asset, non-current (1)

$ 31,664 $ 8,000

Lease liability, current $ 9,152 $ 2,377

Lease liability, non-current 23,226 5,789

Total lease liabilities $ 32,379 $ 8,166

Weighted average remaining lease term (in years) 4.6 4.3

Weighted average discount rate 2.85 % 2.95 %

(1) Finance ROU assets are reflected within property, plant, and equipment, net on our consolidated balance sheets and operating leases ROU assets are reflected within other assets on our consolidated balance sheets.

The following table presents other information related to leases for the year ended January 2, 2022 (in thousands):

Year Ended January 2, 2022

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 8,755

Operating cash flows from finance leases $ 254

Financing cash flows from finance leases $ 2,741

Leased assets obtained in exchange for new lease liabilities $ 13,569

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.

All other features of the warrants remain unchanged.

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 January 2, 2022, there were 7,200,000 Private Placement Warrants outstanding and 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).

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.

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

The Private Placement Warrants and the shares of Class A Common Stock issuable upon the exercise of the Private Placement Warrants were not transferable, assignable or salable until after the completion of the Business Combination, subject to certain limited exceptions.

Additionally, the Private Placement Warrants are exercisable on a cashless basis, at the holder’s option, and are non-redeemable by the Company so long as they are held by the initial purchasers or their permitted transferees.

If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

We account for the Warrants as derivative liabilities in accordance with ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815-40”), due to certain settlement provisions in the corresponding warrant agreement that do not meet the criteria to be classified in stockholders’ equity.

Pursuant to ASC 815-40, the Warrants are now classified as a liability at fair value on the Company’s consolidated balance sheet, and the change in the fair value of such liability in each period is recognized as a non-cash gain or loss in the Company’s consolidated statements of operations and comprehensive income (loss).

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 gain (loss) of $ 36.7 million for the year ended January 2, 2022 and $( 91.9 ) million for the Successor period from August 29, 2020 to January 3, 2021.

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 for the predecessor period from June 29, 2020 to August 28, 2020 and the year ended December 29, 2019.

SIGNIFICANT CUSTOMERS

The sales to three customers represented 20 % and 21 % of net sales for the Successor period from August 29, 2020 to January 3, 2021 and for the Predecessor period from December 30, 2019 to August 28, 2020, respectively.

Accounts receivable for these three customers represented 20 % of total accounts receivable at January 3, 2021.

For fiscal year 2019, sales to three customers represented 16 % of net sales.

Accounts receivable for these three customers represented 22 % of total accounts receivable at December 29, 2019.

For fiscal year 2018, sales to three customers represented 18 % of net sales.

The following tables represents our net sales concentrations and accounts receivable concentration for our three largest customers by net sales.

Net sales concentrations:

Successor Predecessor

Customer From

Customer Year Ended January 2, 2022 From

August 29, 2020

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December 30, 2019

August 28, 2020 Year Ended December 29, 2019 Year Ended December 30, 2018

August 28, 2020 Year Ended December 29, 2019

Customer A 15 % 11 % 12 % 9 %

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Customer As of

January 3, 2021 As of December 29, 2019 As of December 30, 2018

January 2, 2022 As of

January 3, 2021 As of December 29, 2019

Customer A 10 % 11 % 14 %

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20 % 20 % 22 %

VARIABLE INTEREST ENTITIES

Prior to the merger of SRS and UQF described in Note 1.

"Operations and Summary of Significant Accounting Policies”, UQF held a variable interest in SRS, a commonly controlled entity, for which UQF is the primary beneficiary since UQF had the power to direct the activities of SRS and the obligation to absorb losses and the right to receive benefits.

UQF leased properties owned by SRS.

The acquisitions of these properties were funded by UQF through notes receivable.

As the primary beneficiary of this variable interest entity, the assets, liabilities and results of operations are included in UQF’s consolidated financial statements.

The equity holders’ interests were reflected in “Net income attributable to noncontrolling interest” in the consolidated statements of operations and comprehensive income (loss) and “Noncontrolling interest” in the consolidated balance sheets.

The total amount of lease expense/income between SRS and UQF for the year ended December 29, 2019 was $ 4.0 million, which was eliminated in consolidation.

When SRS merged with UQF, UQF assumed all assets and liabilities of SRS and any notes receivable or payable between the two companies were relieved.

BUSINESS RISK

The novel coronavirus, or COVID-19, outbreak began to impact consumption, distribution and production of the Company’s products in March 2020.

The Company is taking necessary preventive actions and implementing additional measures to protect its employees who are working on site.

The Company continues to experience higher demand for its products versus the prior year, and we are servicing that demand by increasing production and distribution activities.

The novel coronavirus, or COVID-19, outbreak began impacting consumption, distribution and production of our products in March 2020.

We have taken necessary preventive actions and implemented additional measures to protect our employees that work on site.

We continue to experience higher demand for our products compared to historical volumes, and we are servicing that demand by increasing production and distribution activities.

Generally, producers of food products, including salty snacks, have been deemed “essential industries” by federal, state, and local governments and are exempt from certain COVID-19-related restrictions on business operations.

The Company’s strategic manufacturing capabilities and DSD distribution network have allowed it to effectively service increases in demand and be responsive to evolving market dynamics driven by changes in consumer behavior.

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 continuing to evaluate the financial impact.

Our strategic manufacturing capabilities and DSD distribution network have allowed us to effectively service increases in demand and be responsive to evolving market dynamics driven by changes in consumer behavior.

We continue to monitor customer and consumer demands, and intend to adapt our plans as needed to continue to meet these demands.

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 71,094,714 shares of UBI were issued and outstanding on January 3, 2021.

The Company is authorized to issue 1,000,000,000 shares of Class A Common Stock, par value $ 0.0001 per share, of which 77,644,645 and 71,094,714 shares of UBI were issued and outstanding on January 2, 2022 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.

4 unchanged sentences

“Acquisitions”.

On December 22, 2020, 900,000 shares of Class V Common Stock were exchanged for Class A Common Stock.

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

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

All other features of the warrants remain unchanged.

Prior to January 3, 2021, 10,825,664 warrants were exercised.

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.

"Subsequent Events" for further details.

As of January 2, 2022 and January 3, 2021, there were 59,349,000 and 60,349,000 , respectively, shares of Class V Common Stock outstanding.

On September 21, 2021, the Continuing Members exchanged 1,000,000 Common Company Units together with the surrender and cancellation of the same number of Class V Common Stock for an equal number of shares of Class A Common Stock.

The Company did not receive any proceeds as a result of this exchange.

Forward Purchases

11 unchanged sentences

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) Year Ended January 2, 2022

Basic earnings per share:

Net income attributable to controlling interest $ 20,555

Dividends and income related to participating stock-based compensation awards ( 386 )

Net income attributable to common stockholders $ 20,169

Weighted average Class A Common Stock shares, basic 76,677,981

Basic earnings per share $ 0.26

Diluted earnings per share:

Net income attributable to common stockholders $ 20,555

Dividends and income related to participating stock-based compensation awards ( 386 )

Net income attributable to common stockholders $ 20,169

Weighted average Class A Common Stock shares, basic 76,677,981

Dilutive securities included in diluted earnings per share calculation:

Warrants 3,316,122

RSUs 1,055,003

Stock options 8,867

Total diluted weighted average shares 81,090,229

Diluted earnings per share $ 0.25

Class V Common Stock not subject to earnings per share calculation 60,063,286

Net loss attributable to noncontrolling interest $ ( 12,557 )

(in thousands, except share data) From August 29, 2020 through January 3, 2021

17 unchanged sentences

As such, earnings per share calculations were completed under the two-class method.

At January 3, 2021, the Continuing Members held all 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 $ 8.0 million for the Successor period from August 29, 2020 through January 3, 2021.

UNAUDITED QUARTERLY FINANCIAL DATA

Successor Predecessor

(in thousands, except share data) From

September 28, 2020

January 3, 2021 From

August 29, 2020

September 27, 2020 From

June 29, 2020

August 28, 2020 From

March 30, 2020

June 28, 2020 From

December 30, 2019

March 29, 2020

Net revenue $ 246,276 $ 79,372 $ 168,656 $ 241,977 $ 228,029

Operating income (loss) 221 ( 1,179 ) 3,117 17,451 12,213

Net (loss) income ( 13,619 ) ( 2,431 ) ( 4,824 ) 6,552 1,692

Net (loss) income attributable to controlling interest ( 7,968 ) ( 111 ) ( 4,824 ) 6,552 1,692

Earnings per common share attributable to:

Basic and Diluted Class A share $ ( 0.13 ) $ —

Thirteen weeks ended

(in thousands) December 29, 2019 September 29, 2019 June 30, 2019 March 31, 2019

Net revenue $ 201,756 $ 199,628 $ 188,432 $ 178,412

Operating (loss) income ( 13,803 ) 24,882 18,494 9,173

Net (loss) income ( 23,989 ) 10,323 2,917 ( 2,615 )

Net (loss) income attributable to controlling interest ( 24,654 ) 9,600 2,202 ( 3,320 )

At January 2, 2022 and January 3, 2021, the Continuing Members held all 59,349,000 and 60,349,000 , respectively, 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 $ 12.6 million and $ 8.0 million for the year ended January 2, 2022 and the Successor period from August 29, 2020 through January 3, 2021, respectively.

SUBSEQUENT EVENTS

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

to acquire certain assets of the C.J.

Vitner business, a leading brand of salty snacks in the Chicago, IL area.

The Company closed this transaction on February 8, 2021 and the purchase price of approximately $ 25 million was funded from current cash-on-hand.

On December 14, 2020, the Company announced the redemption of all of its outstanding Public Warrants and Forward Purchase Warrants to purchase shares of its Class A Common Stock that were issued under the Warrant Agreement on the redemption date of January 14, 2021 (the “Redemption Date”).

Prior to the Redemption Date, an aggregate of 15,802,379 Public Warrants and Forward Purchase Warrants were exercised, resulting in gross proceeds to the Company of $ 181.7 million, including 4,976,717 Public Warrants and Forward Purchase Warrants which were exercised during fiscal year 2021, resulting in gross proceeds of $ 57.2 million.

30,928 Public Warrants remained unexercised on the Redemption Date and were redeemed for $ 0.01 per warrant.

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

2 to the Credit Agreement, dated November 21, 2017 with Bank of America, N.A.

Pursuant to the terms of Amendment No.

2, the Company refinanced, in full, outstanding term loans under the Credit Agreement pursuant to refinancing term loans having a principal amount of $ 410 million and borrowed an additional $ 310 million in incremental term loans.

The Company will use the proceeds from the 2021 New Term Loans to prepay term loans in full, repay a portion of its borrowings under that certain Bridge Credit Agreement, dated December 14, 2020.

For the New Term Loans, the interest rate applicable is the Eurocurrency loan rate, which varies from 3.50 % to 3.00 % and the federal funds rate, which varies from 2.50 % to 2.00 %, and extend the maturity date of the term loans under the Amended Credit Agreement by approximately three years, to January 20, 2028.

On January 24, 2022, the Company announced that its subsidiaries have entered into a definitive agreement to acquire the assets of two existing third party direct store delivery distributors, Clem Snacks, Inc., a subsidiary of Clem Companies, and J&D Snacks, Inc., which together operate more than 125 DSD routes in the New York City, Long Island, Bronx and surrounding areas of New York.

The Company closed on these transaction on February 7, 2022 and the acquisitions were funded with cash on hand as well as a draw on the ABL facility.

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