FLOWERS FOODS INC

Previous 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.

Current wording

The following discussion of the financial condition and results of operations of the company as of and for the twelve and twenty-eight weeks ended July 18, 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 comparative period presented in our Condensed Consolidated Financial Statements.

Current wording

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

Previous wording

Additionally, detailed below are expense items affecting comparability that will provide greater context while reading this discussion. For more information regarding these items, see the reference to the Notes to Condensed Consolidated Financial Statements of this Form 10-Q as indicated in the table:

Current wording

Additionally, detailed below are expense (recovery) items affecting comparability that will provide greater context while reading this discussion. For more information regarding these items, see the reference to the Notes to Condensed Consolidated Financial Statements of this Form 10-Q as indicated in the table:

Previous 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.

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 July 18, 2026, we have incurred costs related to the project of approximately $275 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, 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 $4.8 million during Fiscal 2025. In the fourth quarter of Fiscal 2025, we expanded the scope to include a comprehensive review of our brands, operations, and financial strategy. Although this review is ongoing, it resulted in the impairment of two regional brands in the fourth quarter of Fiscal 2025. This aligns with our strategy to optimize our brand portfolio and invest in our national brands and key product categories.

Current 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 $4.8 million during Fiscal 2025. In the fourth quarter of Fiscal 2025, we expanded the scope to include a comprehensive review of our brands, operations, and financial strategy. Although this review is ongoing, it resulted in the impairment of two regional brands in the fourth quarter of Fiscal 2025.

Previous 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.

Current wording

This aligns with our strategy to optimize our brand portfolio and invest in our national brands and key product categories. In the first quarter of Fiscal 2026, we incurred additional RIF-related costs of $1.7 million and we made RIF payments of $0.8 million and $1.3 million in the first and second quarters of Fiscal 2026, respectively. 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 as detailed in the table above and these costs are included in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income.

Previous 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.

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 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. 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

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.

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 expanded 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. 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, 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.

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, and the current promotional environment of the fresh packaged bread category. Other factors include supply chain disruptions, including the impacts of tariffs on our costs (including retaliatory tariffs), increased labor costs, the conflict between Russia and Ukraine, and the conflicts in the Middle East. Our results for the first half of Fiscal 2026 as compared to the prior year period were negatively impacted by volume-driven sales declines, partially offset by the benefit of sales increases attributed to the Simple Mills acquisition and price increases we have implemented. Volume declines resulted from increased market share contraction due to a highly competitive and volatile marketplace and continued weakness in the fresh packaged bread category, most notably for branded traditional loaf breads.

Previous 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.

Current wording

Sales decreased 1.2% for the twenty-eight weeks ended July 18, 2026 compared to the same period in the prior year due to volume declines of 4.4%, partially offset by the acquisition contribution (cycled on February 21, 2026) of 1.3% and positive price/mix of 1.9%. Branded Retail sales increased 0.1% with the acquisition contributing 2.0% and positive price/mix contributing 3.9%, mostly offset by volume declines of 5.8%. Traditional loaf breads experienced the largest volume declines. Sales in the Other sales category decreased 3.6% due to declines in store branded retail sales, partially offset by increased non-retail sales. Marketplace volatility and a challenging consumer environment negatively impacted volumes for both sales categories.

Previous 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.

Current wording

Income from operations for the twenty-eight weeks ended July 18, 2026 was $147.9 million compared to $178.5 million in the prior year period. Sales declines, higher outside purchases of product, increased legal settlements, increased incentive compensation expense, and greater restructuring charges and related implementation costs resulted in the decrease. Lower acquisition and integration costs, the prior year plant closure costs, and lower ingredient costs and distributor distribution fees partially offset the overall decrease.

Previous 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.

Current wording

For the twenty-eight weeks ended July 18, 2026, net income was $82.7 million compared to $111.4 million in the prior year period. The decrease resulted primarily from lower income from operations, as described above, increased interest expense, and a higher effective tax rate primarily due to shortfalls related to vesting of stock incentive awards.

Previous wording

"term loan facility") which provides us with a prepayable financing structure. The proceeds from the facility will be used to finance the repayment in full of the 2026 notes. Additionally, on April 6, 2026, we amended the $500.0 million senior unsecured revolving credit facility (the "credit facility") to, among other things, extend the covenant holiday currently in effect to October 9, 2027 and add an additional tier to the pricing grid. On April 14, 2026, we amended the accounts receivable repurchase facility (the "repurchase facility") to, among other things, extend the scheduled facility expiration date from April 14, 2027 to April 16, 2029.

Current wording

During the twenty-eight weeks ended July 18, 2026, we generated net cash flows from operations of $241.5 million, invested $44.5 million in capital expenditures, and decreased our indebtedness by $70.0 million. Additionally, we paid $81.0 million in dividends to our shareholders. On April 6, 2026, we entered into a $400.0 million senior unsecured delayed draw term loan credit facility (the "term loan facility") which provides us with a prepayable financing structure. The proceeds from the facility will be used to finance the repayment in full of the 2026 notes. Additionally, on April 6, 2026, we amended the $500.0 million senior unsecured revolving credit facility (the "credit facility") to, among other things, extend the covenant holiday currently in effect to October 9, 2027 and add an additional tier to the pricing grid. On April 14, 2026, we amended the accounts receivable repurchase facility (the "repurchase facility") to, among other things, extend the scheduled facility expiration date from April 14, 2027 to April 16, 2029. On May 21, 2026, our Board of Directors reset the dividend to an annual rate of $0.50 per share.

Previous 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.

Current wording

During the twenty-eight weeks ended July 12, 2025, we generated net cash flows from operations of $266.5 million, paid $791.9 million of the total consideration of $846.2 million for the Simple Mills acquisition, invested $56.4 million in capital expenditures, and increased our indebtedness by $734.9 million primarily to fund the acquisition. Also, in the prior year period, we paid $104.8 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 sixteen weeks ended April 25, 2026 and April 19, 2025 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 twelve and twenty-eight weeks ended July 18, 2026 and July 12, 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 (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.

Current wording

Sales decreased quarter over quarter due to lower volumes for both sales categories and negative price/mix for the Other category, net of favorable price/mix for the Branded Retail category. Price/mix benefited from price increases we implemented starting in the fourth quarter of the prior year to offset input cost inflation as well as Simple Mills' comprising a larger percentage of sales. Our promotional activity increased quarter over quarter, as a result of targeting more differentiated and premium-priced items which aligns with changing consumer preferences.

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) 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.

Current wording

Materials, supplies, labor and other production costs as a percent of sales increased quarter over quarter primarily due to significantly lower production volumes which contributed to higher workforce-related costs, and greater outside purchases of product (sales with no associated ingredient costs). Lower ingredient costs as a percent of sales and positive sales price/mix 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. Ingredient costs decreased as a percent of sales due to greater outside purchases of product, positive sales price/mix, and lower pricing for commodities, particularly flour, sweeteners and eggs. Higher costs for other ingredients, such as oils and cocoa, the impact of tariffs, and increased scrap partially offset the decrease. We expect the impact of lower production volumes to continue to negatively impact our operations.

Previous wording

We anticipate our Fiscal 2026 sales will be lower than Fiscal 2025 due to the additional week in Fiscal 2025 and continued weakness in the fresh packaged bread category. The sales benefit from the Simple Mills acquisition contribution (acquired on February 21, 2025), growth in more differentiated products, including Simple Mills' products, and the benefit of price increases implemented in the fourth quarter of Fiscal 2025 are anticipated to partially offset the sales decrease.

Current wording

We anticipate our Fiscal 2026 sales will be lower than Fiscal 2025 sales due to the additional week in Fiscal 2025 and continued weakness in the fresh packaged bread category. The sales benefit from the Simple Mills acquisition contribution (acquired on February 21, 2025), growth in more differentiated products, including Simple Mills' products, and the benefit of price increases implemented in the fourth quarter of Fiscal 2025 are anticipated to partially offset the sales decrease.

Previous 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.

Current wording

Branded Retail sales increased modestly period over period due to the Simple Mills acquisition contribution and favorable price/mix, mostly offset by volume declines. Volumes were impacted by intense marketplace competition and the challenging consumer environment resulting in significant declines in market share. Contraction of the fresh packaged bread category has continued driven by changes in consumer preferences and inflationary pressure on consumer spending. We experienced the largest volume declines for branded traditional loaf products. Growth in Simple Mills, Wonder cake and breakfast bread, and Nature's Own Keto products partially offset the volume decline. Price/mix benefitted from Simple Mills products comprising a larger percentage of our Branded Retail sales and from positive pricing actions.

Previous 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.

Current wording

Sales in the Other category decreased 3.6% due to unfavorable price/mix and decreased volume for store-branded retail products, partially offset by improved volume for non-retail sales. Store branded retail sales declined primarily due to discontinued business. Our non-retail sales increased primarily due to growth in vending.

Previous 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.

Current wording

Workforce-related costs increased as a percent of sales primarily due to a shift away from distributor distribution fees and higher incentive compensation costs, partially offset by benefits of cost savings programs we have implemented. 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 from 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, greater restructuring-related implementation costs, and increased marketing investments, partially offset by higher acquisition and integration-related costs in the prior year period. We launched a marketing campaign for Nature's Own during the second quarter of Fiscal 2026 to highlight a more consumer-relevant brand. The company anticipates additional marketing investments in the third and fourth quarters of Fiscal 2026 to continue promoting the Nature's Ownbrand.

Previous 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.

Current wording

Depreciation and amortization expense for the first half of Fiscal 2026 increased in dollars and as a percent of sales as compared to the prior year period primarily due to assets being placed in service.

Previous 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.

Current wording

Income from operations for the twenty-eight weeks ended July 18, 2026 decreased in dollars and as a percent of sales compared to the prior year period primarily due to sales declines on higher operating 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 2035 notes and 2055 notes on February 14, 2025 to fund the Simple Mills acquisition and related fees and expenses.

Current wording

Net interest expense increased in dollars and as a percent of sales as compared to the prior year period 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 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.

Current wording

The effective tax rate for the twenty-eight weeks ended July 18, 2026 was 27.6% compared to 25.6% in the prior year period. The increase in the rate 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 rate were related to state income taxes and shortfalls on the vesting of stock-based compensation awards.

Previous wording

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

Current wording

Comprehensive income decreased primarily due to the decrease in net income period over period, 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 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.

Current wording

Although there has been no material adverse impact on our results of operations, liquidity or cash flows for the twenty-eight weeks ended July 18, 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, among other risks, 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), and the workforce available to us.

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 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.

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 July 18, 2026, we had total available liquidity of $1,144.6 million, consisting of cash on hand and the available balances under the term loan facility, credit facility, and the repurchase facility. As of July 18, 2026, the company has a $13.5 million federal income tax receivable.

Previous wording

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

Current wording

Liquidity Discussion for the Twenty-Eight Weeks Ended July 18, 2026 and July 12, 2025

Previous 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):

Current wording

Cash and cash equivalents were $52.8 million at July 18, 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

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.

Current wording

For the twenty-eight weeks ended July 18, 2026, the deferred income tax activity reflects the impact of the shortfall on the vesting of stock equity awards and deferred income tax activity related to accrued legal expenses. Additionally, for the current and prior year periods ended July 18, 2026 and July 12, 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, initial year 100% bonus depreciation, and the partial deduction of research and development expenses previously capitalized 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 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.

Current wording

Changes in accounts receivable were mainly attributable to changes in sales period over period and increases in days sales outstanding. Changes in inventories 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 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.

Current wording

Changes in other assets 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 twenty-eight weeks ended July 18, 2026, the company accrued $14.4 million in legal settlements and made payments of $3.4 million. During the twenty-eight weeks ended July 12, 2025, the company accrued $2.1 million of legal settlements and paid $1.9 million that had been accrued for in the prior year.

Previous 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):

Current wording

Our Board of Directors declared the following quarterly dividends during the twenty-eight weeks ended July 18, 2026 (amounts in thousands, except per share data):

Previous wording

The increase in dividends paid resulted from an increase in the dividend rate compared to the prior year. Additionally, we paid dividends of $2.2 million at the time of vesting of certain restricted stock awards.

Current wording

On May 21, 2026, our Board of Directors reset the dividend to an annual rate of $0.50 per share resulting in the decrease in dividends paid as compared to the prior year period. In addition to dividends paid included in the table above, we paid dividends of $2.3 million at the time of vesting of certain restricted stock awards.

Previous wording

Stock repurchase decisions are made based on our stock price, our belief of relative value, and our cash projections at any given time. During the sixteen weeks ended April 25, 2026 and April 19, 2025, we repurchased 378,398 and 286,980 shares of our common stock for $3.8 million and $5.5 million, respectively, under a share repurchase plan approved by our Board of Directors. All of the shares acquired in the current and prior year periods were acquired to satisfy employees’ tax withholding and payment obligations in connection with the vesting of restricted stock awards, which are repurchased by the company based on the fair market value on the vesting date.

Current wording

Stock repurchase decisions are made based on our stock price, our belief of relative value, and our cash projections at any given time. During the twenty-eight weeks ended July 18, 2026 and July 12, 2025, we repurchased 383,204 and 286,980 shares of our common stock for $3.8 million and $5.5 million, respectively, under a share repurchase plan approved by our Board of Directors. All of the shares acquired in the current and prior year periods were acquired to satisfy employees’ tax withholding and payment obligations in connection with the vesting of restricted stock awards, which are repurchased by the company based on the fair market value on the vesting date.

Previous wording

Changes in debt obligations in the prior year period primarily related to issuing the 2035 notes and 2055 notes to fund the Simple Mills acquisition. See the discussion below under the “Capital Structure” section for additional details regarding changes in debt obligations.

Current wording

Changes in debt obligations in the prior year period primarily related to issuing the 2035 notes and 2055 notes to fund the Simple Mills acquisition, net of repayments. See the discussion below under the “Capital Structure” section for additional details regarding changes in debt obligations.

Previous wording

The following table details the amounts available and the highest and lowest balances outstanding under our debt facilities during the sixteen weeks ended April 25, 2026:

Current wording

The following table details the amounts available and the highest and lowest balances outstanding under our debt facilities during the twenty-eight weeks ended July 18, 2026:

Previous wording

Amount excludes a provision in the credit facility agreement which allows the company to request an additional $200.0 million in additional revolving commitments.

Current wording

Amount excludes a provision in the credit facility agreement which allows the company to request an additional $200.0 million in revolving commitments.