FLOWERS FOODS INC

Previous wording

The following discussion of the financial condition and results of operations of the company as of and for the twelve and forty weeks ended October 4, 2025 should be read in conjunction with the Form 10-K and Part II., Item 1A., Risk Factors, of the Form 10-Q for the quarterly period ended April 19, 2025. Any reference to sales refers to net sales inclusive of allowances and deductions against gross sales for variable consideration and consideration payable to customers.

Current wording

The following discussion of the financial condition and results of operations of the company as of and for the sixteen weeks ended April 25, 2026 should be read in conjunction with the Form 10-K. Any reference to sales refers to net sales inclusive of allowances and deductions against gross sales for variable consideration and consideration payable to customers.

Previous wording

Results of operations — analyzes the company’s consolidated results of operations for the two comparative periods presented in our Condensed Consolidated Financial Statements.

Current wording

Results of operations — analyzes the company’s consolidated results of operations for the comparative period presented in our Condensed Consolidated Financial Statements.

Previous wording

Comparative results from quarter to quarter are impacted by the company's fiscal reporting calendar. Internal financial results and key performance indicators are reported on a weekly basis to ensure the same number of Saturdays and Sundays in comparable months to allow for consistent four-week progression analysis. This structure results in our first quarter consisting of sixteen weeks while the remaining three quarters have twelve weeks (except in cases where there is an extra week every five or six years). Fiscal 2025 is a 53-week year with the extra week in the fourth quarter. Accordingly, interim results may not be indicative of subsequent interim period results, or comparable to prior or subsequent interim period results, due to differences in the lengths of the interim periods.

Current wording

Comparative results from quarter to quarter are impacted by the company's fiscal reporting calendar. Internal financial results and key performance indicators are reported on a weekly basis to ensure the same number of Saturdays and Sundays in comparable months to allow for consistent four-week progression analysis. This structure results in our first quarter consisting of sixteen weeks while the remaining three quarters have twelve weeks (except in cases where there is an extra week every five or six years). Fiscal 2026 is a 52-week year. Fiscal 2025 was a 53-week year with the extra week in the fourth quarter. Accordingly, interim results may not be indicative of subsequent interim period results, or comparable to prior or subsequent interim period results, due to differences in the lengths of the interim periods.

Previous wording

Business process improvement costs related to the transformation strategy initiatives In the second half of Fiscal 2020, we launched initiatives to transform our business, including an upgrade to our information system, as well as investments in e-commerce, autonomous planning, and our "bakery of the future" initiatives. Implementation of the ERP upgrade is anticipated to be completed in Fiscal 2026. The ERP upgrade is discussed in the “Transformation Strategy Initiatives” section below. The expensed portion of costs incurred related to these initiatives, which was primarily consulting costs, are detailed in the table above and are reflected in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income. We currently expect costs (a portion of which may be expensed as incurred, capitalized, recognized as a cloud computing arrangement, or recognized as a prepaid service contract) related to the upgrade of our ERP system to be approximately $25.0 million to $30.0 million for Fiscal 2025.

Current wording

Business process improvement costs The upgrade of our ERP system, which is part of our transformation strategy initiatives, is being deployed through a phased approach and is anticipated to be completed in Fiscal 2027. We currently estimate total costs for the ERP upgrade will be approximately $325 million (of which approximately 42% has been or is anticipated to be capitalized). As of April 25, 2026, we have incurred costs related to the project of approximately $272 million. We currently expect costs (a portion of which may be expensed as incurred, capitalized, recognized as a cloud computing arrangement, or recognized as a prepaid service contract) related to the upgrade of our ERP system to be approximately $25.0 million to $30.0 million for Fiscal 2026. The expensed portion of costs incurred related to these initiatives for the sixteen weeks ended April 25, 2026 and April 19, 2025, which was primarily consulting costs, are detailed in the table above and are reflected in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income. Costs from previously capitalized, cloud computing arrangements, or prepaid service contracts are recognized in operating costs and are not included in the business process improvement costs above.

Previous wording

Restructuring charges and related implementation costs During the first quarter of Fiscal 2025, we began a review of our cost-to-serve focused on improving efficiencies and identifying cost reduction opportunities. Based on this review, we announced a restructuring program in the third quarter of Fiscal 2025 and incurred costs for employee termination benefits related to a reduction-in-force ("RIF") of $5.5 million and made payments of $4.5 million. The RIF charges are included in the restructuring charges line item of the Condensed Consolidated Statements of Income. Additionally, during the twelve and forty weeks ended October 4, 2025, the company incurred consulting costs associated with this review of $3.5 million and $10.7 million, respectively, and these costs are included in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income. We anticipate additional restructuring charges and related costs in subsequent quarters.

Current wording

In the first quarter of Fiscal 2026, we incurred additional RIF-related costs of $1.7 million and made RIF payments of $0.8 million. The RIF charges are included in the restructuring charges line item of the Condensed Consolidated Statements of Income. The company incurred consulting costs associated with these restructuring activities of $8.2 million and $4.3 million during the sixteen weeks ended April 25, 2026 and April 19, 2025, respectively, and these costs are included in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income. This review is ongoing and we anticipate additional restructuring charges and related implementation costs in subsequent quarters.

Previous wording

Legal settlements and related costs In the first and second quarters of Fiscal 2025, we reached agreements to settle certain distributor-related litigation for total settlement payments, inclusive of plaintiffs' attorney fees, of $2.1 million. In the third quarter of Fiscal 2023, we reached an agreement to settle certain distributor-related litigation for a settlement payment, inclusive of plaintiffs’ attorney fees, of $55.0 million which was paid in the second quarter of Fiscal 2024. The settlement also required a phased repurchase of approximately 350 distribution territories in California and the company previously estimated this cost, along with the cost to repurchase approximately 50 other California distribution territories that are not part of the settlement, to be approximately $80.2 million. The repurchases of the distribution rights commenced at the end of the first quarter of Fiscal 2024 and were completed early in the second quarter of Fiscal 2025 for a total cost of $79.0 million. The company recognized an adjustment to the repurchase liability of $1.2 million in the first quarter of Fiscal 2025 in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income. In the third quarter of Fiscal 2024, we reached agreements to settle certain distributor-related litigation in the aggregate amount of $0.8 million, inclusive of plaintiffs’ attorney fees.

Current wording

Legal settlements and related costs In the first quarter of Fiscal 2026, we reached agreements to settle certain distributor-related litigation and non-distributor-related litigation for total settlement payments, inclusive of plaintiffs' attorney fees, of $11.0 million and $3.4 million, respectively. In the first quarter of Fiscal 2025, we reached an agreement to settle certain distributor-related litigation for total settlement payments, inclusive of plaintiffs' attorney fees, of $1.9 million. Additionally, in the first quarter of Fiscal 2025, the company recognized a reduction of $1.2 million to the territory repurchase liability associated with a legal settlement originally recorded in Fiscal 2023. All of these amounts are recorded in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income.

Previous wording

Acquisition and integration-related costs On February 21, 2025, the company completed the acquisition of Simple Mills, maker of a premium brand of better-for-you crackers, cookies, snack bars, and baking mixes, for total consideration of approximately $848.6 million. The goodwill, identifiable intangible assets, taxes, and certain other assets and liabilities are still under review. The company funded the cash consideration and related acquisition fees and expenses with the net proceeds of the Notes (as defined below) offerings completed on February 14, 2025. We incurred acquisition and integration-related costs as detailed in the table above and these costs are recorded in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income.

Current wording

Simple Mills acquisition and integration-related costs On February 21, 2025, the company completed the acquisition of Simple Mills, maker of a premium brand of better-for-you crackers, cookies, snack bars, and baking mixes, for total consideration of $846.2 million. The acquisition expands our presence in the better-for-you snacking category, diversifying our category exposure, and enhancing the company's growth and margin prospects. Founded in 2012, Simple Mills is a market-leading natural brand and its products are made with simple ingredients, pioneered from using nutrient-dense nut, seed, and vegetable flours, attracting natural and mainstream consumers alike. Simple Mills' products are produced by co-manufacturers and distributed via warehouse distribution, and are available nationwide. The company funded the cash consideration and the related acquisition fees and expenses with the net proceeds of the 2035 notes and 2055 notes offerings completed on February 14, 2025. During the sixteen weeks ended April 25, 2026 and April 19, 2025, we incurred acquisition and integration-related costs as detailed in the table above and these costs are recorded in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income.

Previous wording

We continue to monitor a variety of factors on our business, including the impact of the inflationary economic environment on our costs and the buying patterns of our consumers, supply chain disruptions, including the impacts of tariffs (including retaliatory tariffs) , increased labor costs, the conflict between Russia and Ukraine, and the conflict in the Middle East. Our results through the third quarter of Fiscal 2025 as compared to the prior year period were negatively impacted by continued weakness in the fresh packaged bread category, most notably for branded traditional loaf breads. The benefit of sales increases, mainly from the Simple Mills acquisition contribution and to a lesser extent sales improvement for DKB, Nature's Own Keto, and Wonder cake products, was more than offset by higher operating costs.

Current wording

We continue to monitor a variety of factors on our business, including the impact of the inflationary economic environment on our costs and the buying patterns of our consumers, shifts in consumer preferences based on health trends, supply chain disruptions, including the impacts of tariffs (including retaliatory tariffs), increased labor costs, the conflict between Russia and Ukraine, and the conflicts in the Middle East. Our results for the first quarter of Fiscal 2026 as compared to the prior year period were negatively impacted by continued weakness in the fresh packaged bread category, most notably for branded traditional loaf breads, and market share contraction due to a competitive marketplace. The benefit of sales increases attributed to the Simple Mills acquisition, sales improvement for more differentiated products, such as organic, Keto, and gluten-free, growth in Wonder cake products (introduced in the first quarter of Fiscal 2025), and price increases we have implemented was more than offset by volume declines for other product categories and higher operating costs.

Previous wording

Supply chain and other disruptions could negatively impact production volumes, and the global and U.S. supply chain remains uncertain. Although the conflict between Russia and Ukraine and the conflict in the Middle East have not impacted our operations directly, we are closely monitoring the impact on the broader economy including on the availability and price of commodities used in or for the production of our products. Tariffs (including retaliatory tariffs) have impacted our operations. Disruptions in our operations related to factors including, but not limited to, the procurement of raw materials and packaging items, transport of our products, and workforce availability, could negatively impact our operations, results of operations, cash flows, and liquidity.

Current wording

Supply chain and other disruptions have and could continue to negatively impact production costs and/or volumes, and the global and U.S. supply chain remains uncertain. Although the conflict between Russia and Ukraine and the conflicts in the Middle East have not impacted our operations directly, we are closely monitoring the impact on the broader economy including on the availability and price of commodities used in or for the production and distribution of our products. Tariffs (including retaliatory tariffs) have impacted our operations. Disruptions in our operations related to factors including, but not limited to, the procurement of raw materials and packaging items, transport of our products, and workforce availability, could negatively impact our operations, results of operations, cash flows, and liquidity.

Previous wording

We believe we have sufficient liquidity to satisfy our cash needs and we continue to execute on our strategic priorities, including our transformation strategy initiatives, as further discussed in the “Liquidity and Capital Resources” section below.

Current wording

We believe we have sufficient liquidity to satisfy our cash needs and we continue to execute on our strategic priorities, including the deployment of the upgrade of our ERP system, as further discussed in the “Liquidity and Capital Resources” section below.

Previous wording

Sales increased 3.0% for the twelve weeks ended October 4, 2025 compared to the same quarter in the prior year due to the acquisition contribution of 5.9%, partially offset by volume declines of 0.6% and negative price/mix of 2.3%. Branded Retail sales increased 6.9% with the acquisition contributing 9.3%, while sales in the Other sales category decreased 3.8%. Negative price/mix from competitive marketplace dynamics impacted both sales categories. Branded Retail sales also experienced softer volumes most notably for traditional loaf breads.

Current wording

Sales increased 1.1% for the sixteen weeks ended April 25, 2026 compared to the same quarter in the prior year due to the acquisition contribution (cycled on February 21, 2026) of 2.3% and positive price/mix of 2.1%, partially offset by volume declines of 3.3%. Branded Retail sales increased 3.4% with the acquisition contributing 3.6% and positive price/mix contributing 4.0%, somewhat offset by volume declines of 4.2% largely from weakness in sales of traditional loaf breads. Sales in the Other sales category decreased 3.1% due to declines in store branded retail sales, partially offset by increased non-retail sales. Softer volumes impacted both sales categories due to a competitive marketplace and a challenging consumer environment.

Previous wording

For the twelve weeks ended October 4, 2025, income from operations was $66.5 million compared to $90.2 million in the prior year quarter. The decrease resulted mostly from greater outside purchases of product related to the Simple Mills acquisition, increased expenses for labor and rent, and the restructuring charges and related implementation costs. Lower distributor distribution fees and ingredient costs and the prior year plant closure costs partially offset the decrease.

Current wording

For the sixteen weeks ended April 25, 2026, income from operations was $79.8 million compared to $85.1 million in the prior year quarter. The decrease resulted mostly from greater outside purchases of product related to the Simple Mills products, higher legal settlements, increased employee compensation expense, and greater restructuring charges and related implementation costs. These increases were partially offset by lower acquisition and integration costs, the prior year plant closure costs, and lower ingredient costs and distributor distribution fees.

Previous wording

Net income for the forty weeks ended October 4, 2025 was $150.9 million compared to $205.0 million in the prior year period. Lower income from operations, as described above, combined with increased interest expense from funding the acquisition and a higher effective tax rate primarily resulted in the decrease.

Current wording

Net income for the sixteen weeks ended April 25, 2026 was $42.1 million compared to $53.0 million in the prior year quarter. The decrease quarter over quarter resulted primarily from lower income from operations, as described above, increased interest expense, and a significantly higher effective tax rate primarily due to shortfalls related to vesting of stock incentive awards.

Previous wording

During the forty weeks ended October 5, 2024, we generated net cash flows from operations of $282.4 million, invested $86.6 million in capital expenditures, and increased our indebtedness by $5.0 million. Also, in the prior year period, we paid $152.5 million in dividends to our shareholders and repurchased $22.7 million of company stock.

Current wording

During the sixteen weeks ended April 19, 2025, we generated net cash flows from operations of $135.6 million, paid $791.9 million of the total consideration of $846.2 million for the Simple Mills acquisition, invested $25.6 million in capital expenditures, and increased our indebtedness by $776.6 million primarily to fund the acquisition. Also, in the prior year period, we paid $52.3 million in dividends to our shareholders.

Previous wording

Results of operations, expressed as a percentage of sales and the dollar and percentage change from period to period, for the twelve and forty weeks ended October 4, 2025 and October 5, 2024 are set forth in the tables below (dollars in thousands):

Current wording

Results of operations, expressed as a percentage of sales and the dollar and percentage change from period to period, for the sixteen weeks ended April 25, 2026 and April 19, 2025 are set forth in the tables below (dollars in thousands):

Previous wording

Sales increased quarter over quarter due to the Simple Mills acquisition contribution, partially offset by unfavorable price/mix for both sales categories and lower Branded Retail volumes. Branded Retail volumes were impacted by the challenging consumer environment and, to a lesser extent, higher hurricane-driven demand in the prior year quarter. Our quarterly promotional activity increased, targeting more differentiated and premium-priced items which aligns with changing consumer preferences.

Current wording

Sales increased quarter over quarter due to the Simple Mills acquisition contribution (cycled on February 21, 2026) of 2.3% and favorable price/mix for the Branded Retail category, partially offset by lower volumes for both sales categories and negative price/mix for the Other category. We began implementing price increases in the fourth quarter of the prior year to offset input cost inflation. Branded Retail volumes were impacted by the challenging consumer environment and marketplace competition. Our promotional activity increased quarter over quarter, targeting more differentiated and premium-priced items which aligns with changing consumer preferences.

Previous wording

Branded Retail sales increased 6.9% quarter over quarter due to the acquisition contribution, partially offset by volume declines and unfavorable price/mix. Volumes were negatively impacted by continued weakness in the fresh packaged bread category, and, to a lesser extent, increased hurricane-driven demand in the prior year quarter. The largest volume declines were in branded traditional loaf products. Growth in more-premium branded products, such as DKBorganic and Nature's Own Keto, as well as improvement in cake sales from the addition of Wonder cake, introduced in the first quarter of Fiscal 2025, partially offset the volume decline. Additionally, to address changes in consumer preferences, we introduced two varieties of Nature's Ownsmall loaves in the second quarter of Fiscal 2024 and expanded our varieties in the current year. Price/mix was negatively impacted by shifts in mix resulting from cake comprising a larger percentage of our Branded Retail sales and the addition of smaller loaf sizes.

Current wording

Branded Retail sales increased 3.4% quarter over quarter due to the Simple Mills acquisition contribution and favorable price/mix, partially offset by volume declines. Volumes were negatively impacted by continued weakness in the fresh packaged bread category driven by changes in consumer preferences, inflationary pressure on consumer spending, and a competitive marketplace. The largest volume declines were in branded traditional loaf products. Growth in Simple Mills, Wonder cake (introduced near the end of the first quarter of Fiscal 2025), and Nature's Own Keto products partially offset the volume decline. To address changes in consumer preferences, we introduced additional varieties of Nature's Ownsmall loaves and a Keto multi-grain loaf subsequent to the first quarter of Fiscal 2025 and a Keto protein loaf in the first quarter of Fiscal 2026. Other more recently introduced products include DKBsandwich rolls and sourdough loaf. Additionally, Simple Mills continues to innovate, introducing a number of new products and pack sizes. Price/mix benefitted from Simple Mills products comprising a larger percentage of our Branded Retail sales and positive pricing actions.

Previous wording

Sales in the Other category decreased 3.8% due to unfavorable price/mix, partially offset by increased volume for non-retail items. Store branded retail sales declined primarily due to lower cake volumes and negative price/mix. Our non-retail sales experienced unfavorable price/mix, impacted by foodservice comprising a smaller portion of our non-retail sales and increased contract manufacturing sales. Non-retail sales volumes increased due to growth in contract manufacturing and vending, net of foodservice volume declines.

Current wording

Sales in the Other category decreased 3.1% due to unfavorable price/mix and decreased volume for store-branded retail products, partially offset by improved non-retail sales. Store branded retail sales declined primarily due to discontinued business resulting in lower cake and traditional loaf volumes, and negative price/mix. Our non-retail sales increased primarily due to growth in vending, partially offset by unfavorable price/mix from foodservice comprising a smaller portion of our non-retail sales.

Previous wording

Materials, supplies, labor and other production costs as a percent of sales increased quarter over quarter primarily due to increased outside purchases of product (sales with no associated ingredient costs) and lower sales price/mix combined with lower production volumes. Lower ingredient and workforce-related costs as a percent of sales partially offset the increase. Outside purchases of product are included in the Other line item in the table above, the majority of which relate to purchases of Simple Mills products, all of which are co-manufactured. We expect this trend of elevated outside purchases of product to continue. The decrease in ingredient costs as a percent of sales was due to increased outside purchases of product. Lower pricing for commodities, particularly flour, also contributed to the decrease, partially offset by higher costs for other ingredients such as cocoa and eggs and the impact of tariffs and lower sales price/mix. Workforce-related costs decreased as a percent of sales due to a greater portion of our products being co-manufactured as well as lower incentive compensation costs. We expect the impact of lower production volumes to continue to negatively impact our operations.

Current wording

Materials, supplies, labor and other production costs as a percent of sales increased quarter over quarter primarily due to increased outside purchases of product (sales with no associated ingredient costs) combined with lower production volumes. Lower ingredient costs as a percent of sales partially offset the increase. Outside purchases of product are included in the Other line item in the table above, the majority of which relate to purchases of Simple Mills products, all of which are co-manufactured. The decrease in ingredient costs as a percent of sales was due to increased outside purchases of product as well as lower pricing for commodities, particularly flour, sweeteners and eggs. Higher costs for other ingredients, such as oils and cocoa, and the impact of tariffs partially offset the decrease. We expect the impact of lower production volumes to continue to negatively impact our operations.

Previous wording

Prices of ingredient and packaging materials fluctuate due to various factors including, but not limited to, government policy and regulation (including tariffs), weather conditions, domestic and international demand, availability due to supply conditions, including livestock disease, or other unforeseen circumstances, and we monitor these markets closely. We use eggs in several of our products and have and could continue to be adversely impacted from increased costs and/or reduced availability of supply as a result of the avian influenza. We enter into forward purchase agreements and other financial instruments to manage the impact of volatility in certain raw material prices. Any decrease in the availability of these agreements and instruments could increase the cost of these raw materials and significantly affect our earnings.

Current wording

Prices of ingredient and packaging materials fluctuate due to various factors including, but not limited to, government policy and regulation (including tariffs), weather conditions, domestic and international demand, availability due to supply conditions, including livestock disease, or other unforeseen circumstances, and we monitor these markets closely. We enter into forward purchase agreements and other financial instruments to manage the impact of volatility in certain raw material prices. Any decrease in the availability of these agreements and instruments could increase the cost of these raw materials and significantly affect our earnings.

Previous wording

Workforce-related costs increased as a percent of sales quarter over quarter primarily due to a shift away from distributor distribution fees as the company converted to an employee-based model in California and wage inflation on lower sales price/mix. Reduced incentive compensation costs partially offset the increase. Distributor distribution fees decreased as a percent of sales primarily due to a smaller portion of our sales being made through IDPs mostly due to the California conversion and the addition of Simple Mills' sales which are warehouse-delivered. The California conversion was completed early in the second quarter of Fiscal 2025. The increase in the Other line item in the table above mostly relates to increased rent expenses, higher legal expenses, and the restructuring-related implementation and acquisition and integration-related costs incurred in the current year quarter.

Current wording

Workforce-related costs increased as a percent of sales quarter over quarter primarily due to a shift away from distributor distribution fees and higher employee compensation costs, partially offset by benefits of cost savings programs implemented subsequent to the first quarter of the prior year. Distributor distribution fees decreased as a percent of sales primarily due to a smaller portion of our sales being made through IDPs due to Simple Mills' sales which are warehouse-delivered and converting to an employee-based model in California. The California conversion was completed early in the second quarter of Fiscal 2025. The increase in the Other line item in the table above mostly relates to higher legal settlements and expenses and greater restructuring-related implementation costs, partially offset by higher acquisition and integration-related costs in the prior year quarter. The company anticipates increased marketing investments in the second and third quarters of Fiscal 2026 to promote the launch of a more consumer-relevant Nature's Ownbrand with fewer, simpler ingredients and new packaging.

Previous wording

Depreciation and amortization expense for the third quarter of Fiscal 2025 increased in dollars and as a percent of sales due to amortization expense associated with the intangible assets acquired in the Simple Mills acquisition and we expect this increase to continue for the remainder of Fiscal 2025.

Current wording

Depreciation and amortization expense for the first quarter of Fiscal 2026 increased in dollars and as a percent of sales as compared to the prior year quarter primarily due to assets being placed in service and amortization expense associated with the intangible assets acquired in the Simple Mills acquisition.

Previous wording

Income from operations for the twelve weeks ended October 4, 2025 decreased as a percent of sales compared to the prior year quarter primarily due to higher materials, supplies, labor, and other production costs and the restructuring charges incurred in the current year quarter, partially offset by the prior year plant closure costs.

Current wording

Income from operations for the sixteen weeks ended April 25, 2026 decreased in dollars and as a percent of sales compared to the prior year quarter primarily due to higher materials, supplies, labor, and other production costs, partially offset by the prior year plant closure costs.

Previous wording

Net interest expense increased in dollars and as a percent of sales as compared to the prior year quarter due to the issuance of the Notes (as defined below) on February 14, 2025 to fund the Simple Mills acquisition and related fees and expenses. We expect net interest expense to be elevated for the remainder of Fiscal 2025.

Current wording

Net interest expense increased in dollars and as a percent of sales as compared to the prior year quarter due to the issuance of the 2035 notes and 2055 notes on February 14, 2025 to fund the Simple Mills acquisition and related fees and expenses.

Previous wording

The effective tax rate for the forty weeks ended October 4, 2025 was 25.2% compared to 24.6% in the prior year period. The increase in the rate was primarily due to a shortfall tax expense on stock-based compensation. For the periods presented, the primary differences in the effective rate relate to state income taxes, shortfalls in the current year period and windfalls in the prior year period on the vesting of stock-based compensation awards, and benefits recognized from tax credits.

Current wording

The effective tax rate for the sixteen weeks ended April 25, 2026 was 30.0% compared to 25.6% in the prior year quarter. The increase in the rate quarter over quarter was primarily due to an increased shortfall tax expense on stock-based compensation, partially offset by a favorable tax impact recognized for acquisition-related costs. For both periods presented, the primary differences in the effective rate and statutory were state income taxes and shortfalls on the vesting of stock-based compensation awards.

Previous wording

Comprehensive income changed primarily due to the decrease in net income quarter over quarter.

Current wording

Comprehensive income decreased primarily due to the decrease in net income quarter over quarter, net of changes in the fair value of derivatives.

Previous wording

Although there has been no material adverse impact on our results of operations, liquidity or cash flows for the forty weeks ended October 4, 2025, volatility in global and U.S. economies, as a result of, among other things, the inflationary economic environment, supply chain disruptions, tariffs (including retaliatory tariffs), increased labor costs, the conflict between Russia and Ukraine, and the conflict in the Middle East, could significantly impact our ability to generate future cash flows. We continue to evaluate these various potential business risks, which include the possibility of future economic downturns that could shift consumer demand away from our Branded Retail products to store branded products, supply chain disruptions that have impacted, and could continue to impact, the procurement and cost of raw materials and packaging items (including the impacts of tariffs and retaliatory tariffs), the workforce available to us, among other risks.

Current wording

Although there has been no material adverse impact on our results of operations, liquidity or cash flows for the sixteen weeks ended April 25, 2026, volatility in global and U.S. economies, as a result of, among other things, the inflationary economic environment, weakness in the fresh packaged bread category, supply chain disruptions, tariffs (including retaliatory tariffs), increased labor costs, the conflict between Russia and Ukraine, and the conflicts in the Middle East, could significantly impact our ability to generate future cash flows. We continue to evaluate these various potential business risks, which include the possibility of future economic downturns that could shift consumer demand away from our Branded Retail products to store branded products, shifts in consumers' preferences and buying patterns away from packaged bread items, supply chain disruptions that have impacted, and could continue to impact, the procurement and cost of raw materials and packaging items (including the impacts of tariffs and retaliatory tariffs), the workforce available to us, among other risks.

Previous wording

The macroeconomic-related factors discussed above remain fluid and the future impact on our business, results of operations, liquidity or capital resources cannot be reasonably estimated with any degree of certainty. In the event of a significant reduction in revenues, we would have additional alternatives to maintain liquidity, including the availability on our debt facilities, capital expenditure reductions, adjustments to our capital allocation policy, and cost reductions. Although we do not currently anticipate a need, we also believe that we could access the capital markets to raise additional funds. We believe that we have sufficient liquidity on hand to continue business operations during the volatile global and U.S. economic environments. As of October 4, 2025, we had total available liquidity of $613.3 million, consisting of cash on hand and the available balances under the new credit facility and the repurchase facility. Although the Act does not impact the company's effective federal tax rate, we anticipate reduced federal tax payments for the remainder of Fiscal 2025 due to the impact of the Act. As of October 4, 2025, the company has a $20.9 million federal income tax receivable.

Current wording

The macroeconomic-related factors discussed above remain fluid and the future impact on our business, results of operations, liquidity or capital resources cannot be reasonably estimated with any degree of certainty. In the event of a significant reduction in revenues, we would have additional alternatives to maintain liquidity, including the availability on our debt facilities, capital expenditure reductions, adjustments to our capital allocation policy, and cost reductions. Although we do not currently anticipate a need, we also believe that we could access the capital markets to raise additional funds. We believe that we have sufficient liquidity on hand to continue business operations during the volatile global and U.S. economic environments. As of April 25, 2026, we had total available liquidity of $1,065.3 million, consisting of cash on hand and the available balances under the term loan facility, credit facility, and the repurchase facility. As of April 25, 2026, the company has a $25.9 million federal income tax receivable.

Previous wording

Liquidity Discussion for the Forty Weeks Ended October 4, 2025 and October 5, 2024

Current wording

Liquidity Discussion for the Sixteen Weeks Ended April 25, 2026 and April 19, 2025

Previous wording

Cash and cash equivalents were $16.7 million at October 4, 2025 and $5.0 million at December 28, 2024. The cash and cash equivalents were derived from the activities presented in the tables below (amounts in thousands):

Current wording

Cash and cash equivalents were $11.5 million at April 25, 2026 and $12.1 million at January 3, 2026. The cash and cash equivalents were derived from the activities presented in the tables below (amounts in thousands):

Previous wording

Cash Flows Provided by Operating Activities. Net cash provided by operating activities consisted of the following items for non-cash adjustments to net income (amounts in thousands):

Current wording

Cash Flows Provided by Operating Activities:

Previous wording

Refer to the Plant closure costs and impairment of assets discussion in the “Matters Affecting Comparability” section above for additional information regarding the impairment of assets.

Current wording

Refer to the Plant closure costs and impairment of assets discussion in the “Matters Affecting Comparability” section above for information regarding the impairment of assets.

Previous wording

For the forty weeks ended October 4, 2025, the deferred income tax activity reflects the impact of the newly enacted federal tax legislation under the Act allowing initial year 100% bonus depreciation and the partial deduction of research and development expenses previously capitalized under Internal Revenue Code Section 174. Additionally, for the current and prior year periods ended October 4, 2025 and October 5, 2024, the deferred income tax activity was composed of changes in temporary differences year over year, including the impact of the vesting of stock equity awards, the impact of payments for a previously accrued legal settlement for the repurchase of distribution rights, and activity related to the capitalization of research and development expenses as defined under Internal Revenue Code Section 174.

Current wording

For the sixteen weeks ended April 25, 2026, the deferred income tax activity reflects the impact of the shortfall on the vesting of stock equity awards and changes in temporary differences year over year, including the impact of stock equity awards, initial year 100% bonus depreciation, and the partial deduction of research and development expenses previously capitalized under Internal Revenue Code Section 174. For the sixteen weeks ended April 19, 2025, the deferred income tax activity was composed of changes in temporary differences year over year, including the impact of the vesting of stock equity awards, the impact of payments for a previously accrued legal settlement for the repurchase of distribution rights, and activity related to the capitalization of research and development expenses as defined under Internal Revenue Code Section 174.

Previous wording

Changes in accounts receivable were mainly attributable to changes in sales period over period. Changes in inventories resulted primarily from volatility in input costs. Changes in accounts payable for the current year period were mainly attributable to extending payment terms and volatility in input prices, and changes for the prior year period were mainly due to volatility in input prices.

Current wording

Changes in accounts receivable were mainly attributable to changes in sales period over period. Changes in inventories for the prior year period resulted primarily from volatility in input costs and the timing of sell-through of inventories. Changes in accounts payable for the current year period were mainly attributable to volatility in input prices, and changes for the prior year period were mainly due to extending payment terms and volatility in input prices.

Previous wording

The change in other assets primarily resulted from changes in income tax receivables and prepaid service contracts in each respective period. Changes in legal settlement, employee compensation, interest, and insurance liability accruals primarily resulted in the change in other accrued liabilities. During the first quarter of Fiscal 2025 and Fiscal 2024, we paid $53.8 million and $31.9 million, respectively, including our share of employment taxes, in performance-based cash awards under our bonus plans. An additional $1.4 million and $1.9 million was paid during the first quarter of Fiscal 2025 and Fiscal 2024, respectively, for our share of employment taxes on the vesting of employee restricted stock awards in each respective year. During the forty weeks ended October 4, 2025, the company accrued $2.1 million in legal settlements and made payments of $3.8 million, of which $1.7 million had been accrued for in the prior year. During the forty weeks ended October 5, 2024, the company accrued $0.8 million and paid $55.0 million to the legal fund related to a legal settlement recognized in the third quarter of Fiscal 2023.

Current wording

The change in other assets for the prior year period primarily resulted from changes in income tax receivables and prepaid assets. Changes in legal settlement, employee compensation, interest, and insurance liability accruals primarily resulted in the change in other accrued liabilities in each respective period. During the first quarter of Fiscal 2026 and Fiscal 2025, we paid $31.2 million and $53.8 million, respectively, including our share of employment taxes, in performance-based cash awards under our bonus plans. An additional $1.1 million and $1.4 million was paid during the first quarter of Fiscal 2026 and Fiscal 2025, respectively, for our share of employment taxes on the vesting of employee restricted stock awards in each respective year. During the sixteen weeks ended April 25, 2026, the company accrued $14.4 million in legal settlements and made payments of $3.4 million. During the sixteen weeks ended April 19, 2025, the company accrued $1.9 million of legal settlements and paid $1.7 million that had been accrued for in the prior year.

Previous wording

Cash Flows Disbursed for Investing Activities. The table below presents net cash disbursed for investing activities for the forty weeks ended October 4, 2025 and October 5, 2024, respectively (amounts in thousands):

Current wording

Cash Flows Disbursed for Investing Activities:

Previous wording

We currently anticipate capital expenditures of $120.0 million to $130.0 million for Fiscal 2025 (inclusive of expenditures for the ERP upgrade of $3.0 million to $5.0 million).

Current wording

We currently anticipate capital expenditures of $115.0 million to $125.0 million for Fiscal 2026 (inclusive of expenditures for the ERP upgrade of $4.0 million to $8.0 million).

Previous wording

The repurchases of the California distribution rights contributed to most of the change in the repurchases of distribution rights, net of principal payments on notes receivable. The company completed the California repurchases early in the second quarter of Fiscal 2025.

Current wording

In the prior year period, the repurchases of the California distribution rights contributed to most of the change in the repurchases of distribution rights, net of principal payments on notes receivable. The company completed the California repurchases early in the second quarter of Fiscal 2025.

Previous wording

As discussed in the "Executive Overview" section above, on February 21, 2025, we completed the Simple Mills acquisition for total cash consideration of approximately $848.6 million of which $791.9 million, which is net of cash acquired, was paid through the third quarter of Fiscal 2025. The determination of the final purchase price is pending post-close purchase price adjustments.

Current wording

As discussed in the "Executive Overview" section above, on February 21, 2025, we completed the Simple Mills acquisition for total consideration of $846.2 million of which $791.9 million, which is net of cash acquired, was paid in the first quarter of Fiscal 2025.

Previous wording

Our Board of Directors declared the following quarterly dividends during the forty weeks ended October 4, 2025 (amounts in thousands, except per share data):

Current wording

Our Board of Directors declared the following quarterly dividends during the sixteen weeks ended April 25, 2026 (amounts in thousands, except per share data):