BG Foods Inc

Previous wording

growth. We intend to implement our growth strategy through the following initiatives: expanding our brand portfolio with disciplined acquisitions of complementary branded businesses, continuing to develop new products and delivering them to market quickly, leveraging our multiple channel sales and distribution system and continuing to focus on higher growth customers and distribution channels.

Current wording

Our company has been built upon a successful track record of acquisition-driven growth. Our goal is to continue to increase sales, profitability and cash flows through strategic acquisitions, new product development and organic growth. We intend to implement our growth strategy through the following initiatives: expanding our brand portfolio with disciplined acquisitions of complementary branded businesses, continuing to develop new products and delivering them to market quickly, leveraging our multiple channel sales and distribution system and continuing to focus on higher growth customers and distribution channels.

Previous wording

Since 1996, we have successfully acquired and integrated more than 50 brands into our company. Most recently, on May 5, 2022, we acquired the frozen vegetable manufacturing operations of Growers Express, LLC. We refer to this acquisition in this report as the “Yuma acquisition.” This acquisition has been accounted for using the acquisition method of accounting and, accordingly, the assets acquired, liabilities assumed and results of operations of the acquired business are included in our consolidated financial statements from the date of acquisition. This acquisition and the application of the acquisition method of accounting affect comparability between periods.

Current wording

Since 1996, we have successfully acquired and integrated more than 50 brands or businesses into our company. On May 5, 2022, we acquired the frozen vegetable manufacturing operations of Growers Express, LLC. We refer to this acquisition in this report as the “Yuma acquisition.” This acquisition has been accounted for using the acquisition method of accounting and, accordingly, the assets acquired, liabilities assumed and results of operations of the acquired business are included in our consolidated financial statements from the date of acquisition. This acquisition and the application of the acquisition method of accounting affect comparability between periods.

Previous wording

On January 3, 2023, we completed the sale of theBack to Nature business to a subsidiary of Barilla America, Inc. We refer to this divestiture in this report as the “Back to Nature sale.” On November 8, 2023, we completed the sale of theGreen Giant U.S. shelf-stable product line to Seneca Foods Corporation. We refer to this divestiture in this report as the “Green Giant U.S. shelf-stable divestiture.” These divestitures affect comparability between periods.

Current wording

More recently, in an attempt to sharpen focus, improve margins and reduce our long-term debt, we have begun reshaping our portfolio through select divestitures. For example, on January 3, 2023, we completed the sale of theBack to Nature business to a subsidiary of Barilla America, Inc. We refer to this divestiture in this report as the “Back to Nature sale” or “Back to Nature divestiture.” On November 8, 2023, we completed the sale of theGreen Giant U.S. shelf-stable product line to Seneca Foods Corporation. We refer to this divestiture in this report as the “Green Giant U.S. shelf-stable divestiture.” These divestitures affect comparability between periods. We have also decided to place our frozen and remaining shelf-stable vegetable businesses under strategic review and we are evaluating a possible divestiture of some or all of the assets in our Frozen & Vegetables business unit, either in a single transaction or in a series of transactions.

Previous wording

We experienced material net cost increases for raw materials during early fiscal 2023, fiscal 2022 and fiscal 2021 due to a number of factors, including the war in Ukraine and the COVID-19 pandemic. Raw material costs remained elevated in fiscal 2023 and we anticipate that certain raw material costs will remain elevated during fiscal 2024. We are currently locked into our supply and prices for a majority of our most significant raw material commodities (excluding, among others, oils) through the first half of fiscal 2024, and for most of our needs for oils through the first quarter and into the second quarter of fiscal 2024.

Current wording

We experienced material net cost increases for raw materials during the last several years due to a number of factors. Raw material costs remained elevated in fiscal 2023 and fiscal 2024 and we anticipate that certain raw material costs will remain elevated during fiscal 2025. We are currently locked into our supply and prices for a majority of our most significant raw material commodities into or through the second or third quarter of 2025.

Previous wording

In recent years, we have been negatively impacted by industry-wide increases in the cost of distribution, primarily driven by increased freight rates. Freight rates increased significantly during the fourth quarter of 2020 throughout fiscal 2021 and fiscal 2022. We attempt to offset all or a portion of these increases through price increases and cost savings initiatives. For example, despite higher rates for freight in 2021 and 2022, we were able to offset a portion of the freight cost increases through pricing, which included both list price increases and trade spend optimization. Although freight rates began to decline in 2023, we expect freight rates to remain elevated in 2024.

Current wording

In recent years, we have been negatively impacted by industry-wide increases in the cost of distribution, primarily driven by increased freight rates. We attempt to offset all or a portion of these increases through list price increases, trade spend reductions and cost savings initiatives. Although freight rates began to decline in 2023, freight rates remained elevated during fiscal 2024 and we expect freight rates to remain elevated during fiscal 2025.

Previous wording

We plan to continue managing inflation risk by entering into short-term supply contracts and advance commodities purchase agreements from time to time, and, when necessary, by raising prices. Beginning in the fourth quarter of 2022 through the fourth quarter of 2023, we have seen improvements in our gross profit and gross profit margins as our net pricing has to a large extent caught up with input cost increases. However, to the extent we are unable to avoid or offset any present or future cost increases by locking in our costs, implementing cost saving measures or increasing prices to our customers, our operating results could be materially adversely affected. In addition, if input costs decline, customers may look for price reductions in situations where we have locked into purchases at higher costs. During the past several years, our cost saving measures and sales price increases have not been sufficient to fully offset increases to our raw material, ingredient and packaging and distribution costs.

Current wording

We plan to continue managing inflation risk by entering into short-term supply contracts and advance commodities purchase agreements from time to time, and, when necessary, by raising prices. However, to the extent we are unable to avoid or offset any present or future cost increases by locking in our costs, implementing cost saving measures or increasing prices to our customers, our operating results could be materially adversely affected. In addition, if input costs decline, customers may look for price reductions in situations where we have locked into purchases at higher costs. During the past several years, our cost saving measures and sales price increases have not been sufficient to fully offset increases to our raw material, ingredient and packaging and distribution costs.

Previous wording

*Changing Consumer Preferences and Channel Shifts.*Consumers in the market categories in which we compete frequently change their taste preferences, dietary habits and product packaging preferences. In addition, the rapid growth of some channels and changing consumer preferences for these channels, in particular in e-commerce, which has expanded significantly following the outbreak of COVID-19, may impact our current operations or strategies more quickly than we planned for, create consumer price deflation, alter the buying behavior of consumers or disrupt our retail customer relationships. As a result of changing consumer preferences for products and channels, we may need to increase or reallocate spending on existing and new distribution channels and technologies, marketing, advertising and new product innovation to protect or increase revenues, market share and brand significance. These expenditures may not be successful, including those related to our e-commerce and other technology-focused efforts, and might not result in trade and consumer acceptance of our efforts. If we are unable to effectively and timely adapt to changes in consumer preferences and channel shifts, our products may lose market share or we may face significant price erosion, and our business, consolidated financial condition, results of operations or liquidity could be materially and adversely affected.

Current wording

*Changing Consumer Preferences and Channel Shifts.*Consumers in the market categories in which we compete frequently change their taste preferences, dietary habits and product packaging preferences. In addition, the rapid growth of some channels and changing consumer preferences for these channels, in particular in e-commerce, may impact our current operations or strategies more quickly than we planned for, create consumer price deflation, alter the buying behavior of consumers or disrupt our retail customer relationships. As a result of changing consumer preferences for products and channels, we may need to increase or reallocate spending on existing and new distribution channels and technologies, marketing, advertising and new product innovation to protect or increase revenues, market share and brand

Previous wording

Fluctuations in Currency Exchange Rates.Our foreign sales are primarily to customers in Canada. Our sales to Canada are generally denominated in Canadian dollars and our sales for export to other countries are generally denominated in U.S. dollars. During fiscal 2023 and fiscal 2022, our net sales to customers in foreign countries represented approximately 8.6% and 7.8%, respectively, of our total net sales. We also purchase a significant majority of our maple syrup requirements from suppliers located in Québec, Canada. Any weakening of the U.S. dollar against the Canadian dollar could significantly increase our costs relating to the production of our maple syrup products to the extent we have not purchased Canadian dollars in advance of any such weakening of the U.S. dollar or otherwise entered into a currency hedging arrangement in advance of any such weakening of the U.S. dollar. These increased costs would not be fully offset by the positive impact the change in the relative strength of the Canadian dollar versus the U.S. dollar would have on our net sales in Canada. Our purchases of raw materials from other foreign suppliers are generally denominated in U.S. dollars. We also operate a manufacturing facility in Irapuato, Mexico for the manufacture ofGreen Giant frozen products and are as a result exposed to fluctuations in the Mexican peso. Our results of operations could be adversely impacted by changes in foreign currency exchange rates. Costs and expenses in Mexico are recognized in local foreign currency, and therefore we are exposed to potential gains or losses from the translation of those amounts into U.S. dollars for consolidation into our consolidated financial statements.

Current wording

Fluctuations in Currency Exchange Rates.Our foreign sales are primarily to customers in Canada. Our sales to Canada are generally denominated in Canadian dollars and our sales for export to other countries are generally denominated in U.S. dollars. During fiscal 2024 and fiscal 2023, our net sales to customers in Canada represented approximately 7.5% and 7.1%, respectively, of our total net sales. We also purchase certain raw materials from foreign suppliers. For example, we purchase a significant majority of our maple syrup requirements from suppliers in Québec, Canada. These purchases are made in Canadian dollars. A weakening of the U.S. dollar against the Canadian dollar would significantly increase our costs relating to the production of our maple syrup products to the extent we have not purchased Canadian dollars or otherwise entered into a currency hedging arrangement in advance of any such weakening of the U.S. dollar. These increased costs would not be fully offset by the positive impact the change in the relative strength of the Canadian dollar versus the U.S. dollar would have on our net sales in Canada. Our purchases of raw materials from other foreign suppliers are generally denominated in U.S. dollars, with one exception being certain purchases of raw materials in Mexico that are denominated in Mexican pesos. In addition, we operate a frozen vegetable manufacturing facility in Irapuato, Mexico and as a result are exposed to fluctuations in the Mexican peso. A weakening of the U.S. dollar in relation to the Mexican peso would significantly increase our costs relating to the purchase of raw materials and the production of frozen vegetable products to the extent we have not purchased Mexican pesos or otherwise entered into hedging arrangements in advance of the weakening of the U.S. dollar. As a result, certain revenues and expenses have been, and are expected to be, subject to the effect of foreign currency fluctuations, and these fluctuations may have an adverse impact on operating results. For example, our results of operations from ourGreen Giant frozen operations in Mexico were negatively impacted during fiscal 2023 and fiscal 2024 as a result of the Mexican peso appreciating against the U.S. dollar, and may continue to be negatively impacted during fiscal 2025.

Previous wording

The preparation of financial statements in accordance with generally accepted accounting principles in the United States (GAAP) requires our management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates and assumptions made by management involve revenue recognition as it relates to trade and consumer promotion expenses; pension benefits; acquisition accounting fair value allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment, and deferred tax assets; and the determination of the useful life of customer relationship and finite-lived trademark intangible assets. Actual results could differ significantly from these estimates and assumptions.

Current wording

of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates and assumptions made by management involve revenue recognition as it relates to trade and consumer promotion expenses; pension benefits; acquisition accounting fair value allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment, and deferred tax assets; and the determination of the useful life of customer relationship and finite-lived trademark intangible assets. Actual results could differ significantly from these estimates and assumptions.

Previous wording

The annual goodwill impairment testing is performed by estimating the fair value of our company based on discounted cash flows that reflect certain third-party market value indicators. Similarly, the annual impairment testing for indefinite-lived intangible assets is performed by estimating the fair value of our indefinite-lived intangible assets based on discounted cash flows that reflect certain third-party market value indicators.

Current wording

The annual goodwill impairment testing is performed by estimating the fair value of each of our four reporting units based on discounted cash flows that reflect certain third-party market value indicators. We estimate the fair value of the indefinite-lived intangible assets primarily using the discounted cash flows method. We also consider other market-based valuation approaches, including market multiples and observable market indicators, to corroborate the results of our discounted cash flow analysis and further support fair value conclusions. These valuation methods reflect certain third-party market value indicators.

Previous wording

As of December 30, 2023, we had $1,438.6 million of indefinite-lived intangible assets recorded in our consolidated balance sheet. Following the impairments recorded in fiscal 2023, fiscal 2022 and fiscal 2021, none of our indefinite-lived intangible assets had a book value in excess of their calculated fair values and the percentage excess of the aggregate calculated fair value over the aggregate book value was approximately 228.7%. However, materially different assumptions regarding the future performance of our businesses or discount rates could result in significant additional impairment losses. For example, if future revenues and contributions to our operating results for any of our brands, including newly acquired brands, deteriorate, at rates in excess of our current projections, this could result in additional impairment losses for those brands. In addition, any significant decline in our market capitalization or changes in discount rates or changes in discount rates, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill. A determination that all or a portion of our goodwill or indefinite-lived intangible assets are impaired, although a non-cash charge to operations, could have a material adverse effect on our business, consolidated financial condition and results of operations.

Current wording

As of December 28, 2024, we had $548.2 million of goodwill and $1,117.4 million of indefinite-lived intangible assets recorded in our consolidated balance sheet. Following material impairments we recorded to goodwill and indefinite-lived intangible trademark assets in fiscal 2024, 2023 and 2022, none of our indefinite-lived intangible assets had a book value in excess of their calculated fair values and the percentage excess of the aggregate calculated fair value over the aggregate book value was approximately 308.9%. However, materially different assumptions regarding the future performance of our businesses or discount rates could result in significant additional impairment losses. For example, if future revenues and contributions to our operating results for any of our brands or operating segments, including recently impaired brands and newly acquired brands, deteriorate, at rates in excess of our current projections, we may be required to record additional non-cash impairment charges to certain intangible assets. In addition, any significant decline in our market capitalization or changes in discount rates, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill or the goodwill of any of our operating segments. A determination that all or a portion of our goodwill or indefinite-lived intangible assets are impaired, although a non-cash charge to operations, could have a material adverse effect on our business, consolidated financial condition and results of operations.

Previous wording

All assumptions used in our impairment evaluations for goodwill and indefinite-lived intangible assets, such as forecasted growth rates and discount rate, are based on the best available market information and are consistent with our internal forecasts and operating plans. We believe these assumptions to be reasonable, but they are inherently uncertain.

Current wording

All assumptions used in our impairment evaluations for goodwill and indefinite-lived intangible assets, such as forecasted growth rates and discount rate, are based on the best available market information and are consistent with our internal forecasts and operating plans. We believe these assumptions to be reasonable, but they are inherently uncertain. These assumptions could be adversely impacted by certain of the risks described in Part I, Item 1A, “Risk Factors,” of this report.

Previous wording

See “U.S. Tax Act” below for a discussion of the U.S. Tax Cuts and Jobs Act that was signed into law on December 22, 2017, which we refer to as the “U.S. Tax Act,” and the impact it has had, and may have, on our business and financial results.

Current wording

See “U.S. Tax Act” below for a discussion of the U.S. Tax Cuts and Jobs Act of 2017, which we refer to as the “U.S. Tax Act,” and the impact it has had, and may have, on our business and financial results.

Previous wording

We maintain four company-sponsored defined benefit pension plans covering approximately 22.2% of our employees. Our funding policy for company-sponsored defined benefit pension plans is to contribute annually not less than the amount recommended by our actuaries. The funded status of our pension plans is dependent upon many factors, including returns on invested assets and the level of certain market interest rates, employee-related demographic factors, such as turnover, retirement age and mortality, and the rate of salary increases. Certain assumptions reflect our historical experience and management’s best judgment regarding future expectations. Due to the significant management judgment involved, our assumptions could have a material impact on the measurement of our pension expenses and obligations. We review pension assumptions regularly and we may from time to time make voluntary contributions to our pension plans, which exceed the amounts required by statute. We made total contributions to our company-sponsored pension plans of $2.5 million during fiscal 2023. We did not make any contributions to our company-sponsored defined benefit pension plans in fiscal 2022. Changes in interest rates and the market value of the securities held by the plans could materially change, positively or negatively, the funded status of the plans and affect the level of pension expense and required contributions in fiscal 2024 and beyond.

Current wording

We maintain four company-sponsored defined benefit pension plans covering approximately 21.3% of our employees. Our funding policy for company-sponsored defined benefit pension plans is to contribute annually not less than the amount recommended by our actuaries. The funded status of our pension plans is dependent upon many factors, including returns on invested assets and the level of certain market interest rates, employee-related demographic factors, such as turnover, retirement age and mortality, and the rate of salary increases. Certain assumptions reflect our historical experience and management’s best judgment regarding future expectations. Due to the significant management judgment involved, our assumptions could have a material impact on the measurement of our pension expenses and obligations. We review pension assumptions regularly and we may from time to time make voluntary contributions to our pension plans, which exceed the amounts required by statute. We made contributions to our company-sponsored pension plans of $2.5 million in each of fiscal 2024 and fiscal 2023. Changes in interest rates and the market value of the securities held by the plans could materially change, positively or negatively, the funded status of the plans and affect the level of pension expense and required contributions in fiscal 2025 and beyond.

Previous wording

Our discount rate assumption for our four company-sponsored defined benefit plans changed from 4.95% - 5.00% at December 31, 2022 to 4.75% - 4.81% at December 30, 2023. As a sensitivity measure, a 0.25% decrease or increase in our discount rate would increase or decrease our pension expense by approximately $0.1 million. Similarly, a 0.25% decrease or increase in the expected return on pension plan assets would increase or decrease our pension expense by approximately $0.4 million. During fiscal 2024 we expect to make contributions of approximately $2.5 million for our four company-sponsored defined benefit pension plans.

Current wording

Our discount rate assumption for our four company-sponsored defined benefit plans changed from 4.75% - 4.81% at December 30, 2023 to 5.41% - 5.50% at December 28, 2024. As a sensitivity measure, a 0.25% decrease or increase in our discount rate would increase or decrease our pension expense by approximately $0.3 million or $0.6 million, respectively. Similarly, a 0.25% decrease or increase in the expected return on pension plan assets would increase or decrease our pension expense by approximately $0.4 million. During fiscal 2025 we expect to make contributions of approximately $2.5 million to our four company-sponsored defined benefit pension plans.

Previous wording

During the fourth quarter of fiscal 2021, we closed our manufacturing facility in Portland, Maine and withdrew from participation in a multi-employer defined benefit pension plan maintained by the labor union that represented certain of our employees at the facility. Prior to the withdrawal, we made periodic contributions to this plan pursuant to the terms of a collective bargaining agreement. Our withdrawal from the plan requires us to make withdrawal liability payments to the plan of approximately $0.9 million per year for 20 years commencing March 1, 2022. The remaining estimated present value of that liability of $12.9 million is recorded on our consolidated balance sheet as of December 30, 2023.

Current wording

Our withdrawal in 2021 from a multi-employer pension plan relating to a former manufacturing facility requires us to make withdrawal liability payments to the plan of approximately $0.9 million per year for 20 years, which commenced on March 1, 2022. The remaining estimated present value of that liability of $12.3 million is recorded on our consolidated balance sheet as of December 28, 2024.

Previous wording

Our consolidated financial statements and results of operations include an acquired business’s operations after the completion of the acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Transaction costs are expensed as incurred.

Current wording

requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Transaction costs are expensed as incurred.

Previous wording

If we are unable to fully utilize our interest expense deductions in future periods, our cash taxes will increase. Beginning with fiscal 2022, our adjusted taxable income as computed for purposes of the interest expense deduction limitation is computed after any deduction allowable for depreciation and amortization. As a result, our adjusted taxable income (used to compute the limitation) decreased and we were subject to the interest expense deduction limitation in fiscal 2023 and fiscal 2022, resulting in an increase to taxable income of $107.7 million and $90.2 million, respectively. We may continue to be subject to the interest deduction limitation in future years. We have recorded a deferred tax asset of $46.9 million and $22.2 million for fiscal 2023 and fiscal 2022, respectively, related to the interest deduction carryover, without a valuation allowance, as the disallowed interest may be carried forward indefinitely. The increase in our cash taxes resulting from the interest expense deduction limitation was approximately $25.0 million and $20.6 million for fiscal 2023 and fiscal 2022, respectively. There are various factors that may cause tax assumptions to change in the future, and we may have to record a valuation allowance against these deferred tax assets. See “—Liquidity and Capital Resources—Cash Flows–Cash Income TaxPayments” and Note 10, “Income Taxes,” to our consolidated financial statements in Part II, Item 8 of this report.

Current wording

The Tax Cuts and Jobs Act of 2017, which we refer to as the “U.S. Tax Act,” limits the deduction for net interest expense (including the treatment of depreciation and other deductions in arriving at adjusted taxable income) incurred by a corporate taxpayer to 30% of the taxpayer’s adjusted taxable income. Beginning with fiscal 2022, our adjusted taxable income as computed for purposes of the interest expense deduction limitation is computed after any deduction allowable for depreciation and amortization. As a result, our adjusted taxable income (used to compute the limitation) decreased and we were subject to the interest expense deduction limitation in fiscal 2024 and fiscal 2023, resulting in an increase to taxable income of $110.8 million and $107.7 million, respectively. We expect to continue to be subject to the interest deduction limitation in future years. We have recorded a deferred tax asset of $72.7 million and $46.9 million for fiscal 2024 and fiscal 2023, respectively, related to the interest deduction carryover, without a valuation allowance, as the disallowed interest may be carried forward indefinitely. The increase in our cash taxes resulting from the interest expense deduction limitation was approximately $19.5 million and $25.0 million for fiscal 2024 and fiscal 2023, respectively. We expect to continue to be unable to fully utilize interest expense deductions in fiscal 2025 and future periods, which will negatively impact our cash taxes. In addition, there are various factors that may cause tax assumptions to change in the future, and we may have to record a valuation allowance against these deferred tax assets. See “—Liquidity and Capital Resources—Cash Flows–Cash Income TaxPayments” and Note 10, “Income Taxes,” to our consolidated financial statements in Part II, Item 8 of this report.

Previous wording

The U.S. Treasury issued several regulations supplementing the U.S. Tax Act in 2018, including detailed guidance clarifying the calculation of the mandatory tax on previously unrepatriated earnings, application of the existing foreign tax credit rules to newly created categories and expanding details for application of the base erosion tax on affiliate payments. These regulations are to be applied retroactively and did not materially impact our 2023, 2022 or 2021 tax rates. See Note 10, “Income Taxes,” to our consolidated financial statements in Part II, Item 8 of this report.

Current wording

The U.S. Treasury issued several regulations supplementing the U.S. Tax Act in 2018, including detailed guidance clarifying the calculation of the mandatory tax on previously unrepatriated earnings, application of the existing foreign tax credit rules to newly created categories and expanding details for application of the base erosion tax on affiliate payments. These regulations are to be applied retroactively and did not materially impact our fiscal 2024 or fiscal 2023 tax rates. See Note 10, “Income Taxes,” to our consolidated financial statements in Part II, Item 8 of this report.

Previous wording

Impairment of Intangible Assets. Impairment on intangible assets represents a reduction of the carrying value of intangible assets to fair value when the carrying value of the assets is no longer recoverable.

Current wording

Impairment of Intangible Assets. Impairment of intangible assets represents a reduction of the carrying value of intangible assets to fair value when the carrying value of the assets is no longer recoverable.

Previous wording

*Other Income.*Other income includes income or expense resulting from the remeasurement of monetary assets denominated in a foreign currency into U.S. dollars for financial reporting purposes and the non-service portion of net periodic pension cost and net periodic post-retirement benefit costs.

Current wording

*Other Income.*Other income includes the non-service portion of net periodic pension cost and net periodic post-retirement benefit costs.

Previous wording

Certain disclosures in this report include non-GAAP financial measures. A non-GAAP financial measure is defined as a numerical measure of our financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with GAAP in our consolidated balance sheets and related consolidated statements of operations, comprehensive (loss) income, changes in stockholders’ equity and cash flows.

Current wording

Certain disclosures in this report include non-GAAP financial measures. A non-GAAP financial measure is defined as a numerical measure of our financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with GAAP in our consolidated balance sheets and related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows.

Previous wording

Management believes that it is useful to eliminate these items because it allows management to focus on what it deems to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. We use EBITDA and adjusted EBITDA in our business operations to, among other things, evaluate our operating performance, develop budgets and measure our performance against those budgets, determine employee bonuses and evaluate our cash flows in terms of cash needs. We also present EBITDA and adjusted EBITDA because we believe they are useful indicators of our historical debt capacity and ability to service debt and because covenants in our credit agreement and our senior notes indentures contain ratios based on these measures. As a result, reports used by internal management during monthly operating reviews feature the EBITDA and adjusted EBITDA metrics. However, management uses these metrics in conjunction with traditional GAAP operating performance and liquidity measures as part of its overall assessment of company performance and liquidity, and therefore does not place undue reliance on these measures as its only measures of operating performance and liquidity.

Current wording

Management believes that it is useful to eliminate these items because it allows management to focus on what it deems to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. We use EBITDA and adjusted EBITDA in our business operations to, among other things, evaluate our operating performance, develop budgets and measure our performance against those budgets, determine employee bonuses and evaluate our cash flows in terms of cash needs. We also present EBITDA and adjusted EBITDA because we believe they are useful indicators of our historical debt capacity and ability to service debt and because covenants in our credit agreement, our senior secured notes indenture and our senior notes indenture contain ratios based on these measures. As a result, reports used by internal management during monthly operating reviews feature the EBITDA and adjusted EBITDA metrics. However, management uses these metrics in conjunction with traditional GAAP operating performance and liquidity measures as part of its overall assessment of company performance and liquidity, and therefore does not place undue reliance on these measures as its only measures of operating performance and liquidity.

Previous wording

EBITDA and adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to operating income, net income (loss) or any other GAAP measure as an indicator of operating performance. EBITDA and adjusted EBITDA are not complete net cash flow measures because EBITDA and adjusted EBITDA are measures of liquidity that do not include reductions for cash payments for an entity’s obligation to service its debt, fund its working capital, capital expenditures and acquisitions and pay its income taxes and dividends. Rather, EBITDA and adjusted EBITDA are potential indicators of an entity’s ability to fund these cash requirements. EBITDA and adjusted EBITDA are not complete measures of an entity’s profitability because they do not include certain costs and expenses and gains and losses described above. Because not all companies use identical calculations, this presentation of EBITDA and adjusted EBITDA may not be comparable to other similarly titled measures of other companies. However, EBITDA and adjusted EBITDA can still be useful in evaluating our performance against our peer companies because management believes these measures provide users with valuable insight into key components of GAAP amounts.

Current wording

EBITDA and adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to operating income (loss), net income (loss) or any other GAAP measure as an indicator of operating performance. EBITDA and adjusted EBITDA are not complete net cash flow measures because EBITDA and adjusted EBITDA are measures of liquidity that do not include reductions for cash payments for an entity’s obligation to service its debt, fund its working capital, capital expenditures and acquisitions and pay its income taxes and dividends. Rather, EBITDA and adjusted EBITDA are potential indicators of an entity’s ability to fund these cash requirements. EBITDA and adjusted EBITDA are not complete measures of an entity’s profitability because they do not include certain costs and expenses and gains and losses described above. Because not all companies use identical calculations, this presentation of EBITDA

Previous wording

Adjusted Net Income and Adjusted Diluted Earnings Per Share. Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures used by management to measure operating performance. We define adjusted net income and adjusted diluted earnings per share as net income and diluted earnings per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to net income and diluted earnings per share to eliminate the items identified in the reconciliation below. This information is provided in order to allow investors to make meaningful comparisons of our operating performance between periods and to view our business from the same perspective as our management. Because we cannot predict the timing and amount of these items, management does not consider these items when evaluating our company’s performance or when making decisions regarding allocation of resources.

Current wording

Adjusted Net Income and Adjusted Diluted Earnings Per Share. Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures used by management to measure operating performance. We define adjusted net income and adjusted diluted earnings per share as net income (loss) and diluted earnings (loss) per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to net income (loss) and diluted earnings (loss) per share to eliminate the items identified in the reconciliation below. This information is provided in order to allow investors to make meaningful comparisons of our operating performance between periods and to view our business from the same perspective as our management. Because we cannot predict the timing and amount of these items, management does not consider these items when evaluating our company’s performance or when making decisions regarding allocation of resources.

Previous wording

On the first business day of fiscal 2023, we completed theBack to Nature divestiture and we recorded a loss on the sale of $0.1 million. See note (4) below.

Current wording

On the first business day of fiscal 2023, we completed theBack to Nature divestiture and we recorded a loss on the sale of $0.1 million.

Previous wording

Our annual impairment tests for fiscal 2023 resulted in our company recording pre-tax, non-cash impairment charges to intangible trademark assets for ourBaker’s Joy,Molly McButter,Sugar Twin andNew York Flatbreads brands of $20.5 million in the aggregate during the fourth quarter of 2023, which is recorded in “Impairment of intangible assets” in our consolidated statement of operations for fiscal 2023. We partially impaired theBaker’s Joy andSugar Twin brands, and we fully impaired theMolly McButter andNew York Flatbreads brands.

Current wording

During the fourth quarter of 2023, we recorded pre-tax, non-cash impairment charges of $20.5 million (or $15.5 million, net of tax) related to intangible trademark assets for theBaker’s Joy,Molly McButter,Sugar Twin, andNew York Flatbreads brands. We partially impaired theBaker’s Joy andSugar Twin brands, and we fully impaired theMolly McButter andNew York Flatbreads brands.

Previous wording

Net Sales. Net sales for fiscal 2023 decreased $100.7 million, or 4.7%, to $2,062.3 million from $2,163.0 million for fiscal 2022. The decrease was primarily attributable to theBack to Nature divestiture, theGreen Giant U.S. shelf-stable divestiture, a decrease in unit volume and the negative impact of foreign currency, which were partially offset by an increase in net pricing and the impact of product mix. Net sales ofBack to Nature, which we divested on January 3, 2023, and therefore not part of our* fiscal 2023 results, were $46.3 million during fiscal 2022. Net sales of theGreen Giant* U.S. shelf-stable product line, which we divested on November 8, 2023, were $24.6 million lower in fiscal 2023 compared to fiscal 2022, primarily due to the divestiture.

Current wording

Net Sales. Net sales for fiscal 2024 decreased $129.8 million, or 6.3%, to $1,932.5 million from $2,062.3 million for fiscal 2023. The decrease was primarily attributable to a decrease in base business net sales and theGreen Giant U.S. shelf-stable divestiture. Net sales of theGreen Giant U.S. shelf-stable product line, which we divested on November 8, 2023, were $64.4 million in fiscal 2023.

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Base business net sales for fiscal 2023 decreased $30.0 million, or 1.5%, to $1,997.2 million from $2,027.2 million for fiscal 2022. The decrease in base business net sales was driven by a decrease in unit volume of $118.2 million and the negative impact of foreign currency of $5.1 million, partially offset by an increase in net pricing and the impact of product mix of $93.3 million, or 4.6% of base business net sales.

Current wording

Base business net sales for fiscal 2024 decreased $65.4 million, or 3.3%, to $1,932.6 million from $1,998.0 million for fiscal 2023. The decrease in base business net sales was driven by a decrease in unit volume of $51.1 million, or 2.6%, a decrease in net pricing and the impact of product mix of $13.4 million, or 0.7% of base business net sales, and the negative impact of foreign currency of $0.9 million.

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Gross Profit. Gross profit was $455.5 million for fiscal 2023, or 22.1% of net sales. Adjusted gross profit, which excludes the negative impact of $2.9 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during fiscal 2023, was $458.4 million, or 22.2% of net sales. Gross profit was $409.6 million for fiscal 2022, or 18.9% of net sales. Adjusted gross profit, which excludes the negative impact of $9.1 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during fiscal 2022, was $418.7 million, or 19.4% of net sales.

Current wording

Gross Profit. Gross profit was $422.0 million for fiscal 2024, or 21.8% of net sales. Adjusted gross profit, which excludes the negative impact of $6.0 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during fiscal 2024, was $427.9 million, or 22.1% of net sales. Gross profit was $455.5 million for fiscal 2023, or 22.1% of net sales. Adjusted gross profit, which excludes the negative impact of

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Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $5.6 million, or 3.0%, to $196.0 million for fiscal 2023 from $190.4 million for fiscal 2022. The increase was composed of increases in general and administrative expenses of $14.1 million and consumer marketing expenses of $3.1 million, partially offset by decreases in warehousing expenses of $5.3 million, selling expenses of $3.2 million and

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $7.9 million, or 4.1%, to $188.1 million for fiscal 2024 from $196.0 million for fiscal 2023. The decrease was composed of decreases in consumer marketing expenses of $4.7 million, selling expenses of $3.9 million and warehousing expenses of $2.3 million, partially offset by increases in general and administrative expenses of $2.8 million and acquisition/divestiture-related and non-recurring expenses of $0.2 million. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 0.2 percentage points to 9.7% for fiscal 2024, as compared to 9.5% for fiscal 2023.

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*Amortization Expense.*Amortization expense decreased $0.5 million to $20.8 million for fiscal 2023 from $21.3 million for fiscal 2022.

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*Amortization Expense.*Amortization expense decreased $0.4 million to $20.4 million for fiscal 2024 from $20.8 million for fiscal 2023.

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During the fourth quarter of 2023, we completed theGreen Giant U.S. shelf-stable divestiture and recorded a loss on sale of $4.8 million during the quarter, resulting in a total loss on sale of $137.7 million during fiscal 2023. See Note 3, “Acquisitions and Divestitures” to our consolidated financial statements in Part II, Item 8 of this report.

Current wording

Loss on Sales of Assets. In connection with the divestiture of ourGreen Giant U.S. shelf-stable product line during fiscal 2023, we recorded a loss on sale of $137.7 million during fiscal 2023 and an additional $0.1 million during the first quarter of fiscal 2024.

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Impairment of Intangible Assets. Impairment of intangible assets of $20.5 million for fiscal 2023 includes a pre-tax, non-cash loss for the impairment of intangible trademark assets relating to theBaker’s Joy,Molly McButter,Sugar Twin andNew York Flatbreads brands, due primarily to our projections for reduced net sales and lower margins for the brands. See Note 6, “Goodwill and Other Intangible Assets” to our consolidated financial statements for a more detailed description of the impairment of intangible assets in fiscal 2023.

Current wording

During fiscal 2023, we recorded pre-tax, non-cash impairment charges of $20.5 million related to intangible trademark assets for ourBaker’s Joy,Molly McButter,Sugar Twin andNew York Flatbreads brands, due primarily to our projections for reduced net sales and lower margins for the brands.

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*Operating Income.*As a result of the foregoing, operating income decreased $18.2 million, or 18.5%, to $80.4 million for fiscal 2023 from $98.6 million for fiscal 2022. Operating income expressed as a percentage of net sales decreased to 3.9% in fiscal 2023 from 4.6% in fiscal 2022.

Current wording

*Operating (Loss) Income.*As a result of the foregoing, operating (loss) income decreased $257.7 million, or 320.4%, to an operating loss of $177.3 million for fiscal 2024 from an operating income of $80.4 million for fiscal 2023. Operating (loss) income expressed as a percentage of net sales decreased to 9.2% in fiscal 2024 from 3.9% in fiscal 2023.

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Net Interest Expense. Net interest expense increased $26.4 million, or 21.1%, to $151.3 million for fiscal 2023 from $124.9 million in fiscal 2022. The increase was primarily attributable to higher interest rates on our long-term debt, the accelerated amortization of deferred debt financing costs relating to long-term debt prepayments, and a $0.5 million loss on extinguishment of debt during the fourth quarter of 2023, partially offset by a reduction in average long-term debt outstanding, a $0.8 million gain on the extinguishment of debt during the second quarter of 2023 and a $0.6 million gain on extinguishment of debt during the third quarter of 2023.

Current wording

Net Interest Expense. Net interest expense increased $6.1 million, or 4.0%, to $157.4 million for fiscal 2024 from $151.3 million for fiscal 2023. The increase was primarily attributable to higher blended interest rates on our long-term debt during fiscal 2024 compared to fiscal 2023, partially offset by a reduction in average long-term debt outstanding during fiscal 2024 compared to fiscal 2023. Net interest expense during fiscal 2024 was negatively impacted by a non-cash loss on extinguishment of debt of $2.1 million and debt refinancing costs of $1.1 million related to the refinancing of our senior secured credit facility, and the accelerated amortization of deferred debt financing costs of $0.5 million resulting from the retirement of long-term debt during fiscal 2024. In addition, net interest expense for fiscal 2023 was reduced by $0.9 million as a result of a net gain on extinguishment of debt, net of the accelerated amortization

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*Income Tax Benefit.*Income tax benefit decreased $6.6 million to $0.9 million for fiscal 2023 from $7.5 million for fiscal 2022, and our effective tax rate decreased from 39.9% to 1.4%. The decrease in income tax benefit and the

Current wording

*Income Tax Benefit.*Income tax benefit increased $78.4 million to $79.3 million for fiscal 2024 from $0.9 million for fiscal 2023, and our effective tax rate increased from 1.4% to 24.0%. The increase in income tax benefit and the increase in effective tax rate were primarily due to higher pre-tax loss, as described above, which created a higher deferred tax future benefit compared to the prior year. See “U.S. Tax Act” above for a discussion of the impact of the tax legislation on income tax benefit.

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Net Cash Provided by Operating Activities. Net cash provided by operating activities increased $241.8 million to $247.8 million for fiscal 2023 from $6.0 million for fiscal 2022. The increase was largely due to an increase in gross profit and favorable working capital comparisons in fiscal 2023 compared to fiscal 2022, primarily comprised of inventories, accrued expenses and lease liabilities, and trade accounts receivable, partially offset by unfavorable working capital comparisons related to trade accounts payable and other liabilities.

Current wording

Net Cash Provided by Operating Activities. Net cash provided by operating activities decreased $116.9 million to $130.9 million for fiscal 2024 from $247.8 million for fiscal 2023. The decrease was largely due to a reduction in net sales and unfavorable working capital comparisons in fiscal 2024 compared to fiscal 2023, primarily related to inventories, trade accounts receivable, other assets, and accrued expenses and lease liabilities, partially offset by favorable working capital comparisons related to other liabilities and prepaid expenses and other current assets.

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Net Cash Provided by (Used in) Investing Activities. Net cash provided by investing activities increased $120.7 million to $81.6 million for fiscal 2023 from $39.1 million of net cash used in investing activities for fiscal 2022. The increase was primarily attributable to the sales proceeds received from theBack to Nature andGreen Giant U.S. shelf-stable divestitures during fiscal 2023, partially offset by the cash used to pay the purchase price for the Yuma acquisition during fiscal 2022.

Current wording

Net Cash (Used in) Provided by Investing Activities. For fiscal 2024, net cash used in investing activities was $27.7 million, primarily reflecting $27.3 million of capital expenditures. For fiscal 2023, net cash provided by investing activities was $81.6 million, primarily reflecting the sales proceeds received from theBack to Nature andGreen Giant U.S. shelf-stable divestitures of $107.3 million, partially offset by $25.7 million of capital expenditures.

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*Cash Income Tax Payments.*We made net cash tax payments of approximately $24.8 million and $25.6 million during fiscal 2023 and fiscal 2022, respectively. We believe that we will realize a benefit to our cash taxes payable from amortization of our trademarks, goodwill and other intangible assets for the taxable years 2024 through 2038. See “U.S. Tax Act” above for a discussion of the impact and expected impact of the U.S. Tax Act on our cash income tax payments, including the impact the U.S. Tax Act had in fiscal 2023 and fiscal 2022 and is expected to have in fiscal 2024 and beyond on our interest expense deductions and our cash taxes. If there is a change in U.S. federal tax policy or, in the case of the interest deduction, a change in our net interest expense relative to our adjusted taxable income that eliminates, limits or reduces our ability to amortize and deduct goodwill and certain intangible assets or the interest deduction we receive on our substantial indebtedness, or otherwise that reduces any of these available deductions or results in an increase in our corporate tax rate, our cash taxes payable may increase further, which could significantly reduce our future liquidity and impact our ability to make interest and dividend payments and have a material adverse effect on our business, consolidated financial condition, results of operations and liquidity.

Current wording

*Cash Income Tax Payments.*We made net cash tax payments of approximately $21.2 million and $24.8 million during fiscal 2024 and fiscal 2023, respectively. We believe that we will realize a benefit to our cash taxes payable from amortization of our trademarks, goodwill and other intangible assets for the taxable years 2025 through 2038. See “U.S. Tax Act” above for a discussion of the impact and expected impact of the U.S. Tax Act on our cash income tax payments, including the impact the U.S. Tax Act had in fiscal 2024 and fiscal 2023 and is expected to have in fiscal 2025 and beyond on our interest expense deductions and our cash taxes. If there is a change in U.S. federal tax policy or, in the case of the interest deduction, a change in our net interest expense relative to our adjusted taxable income that eliminates, limits or reduces our ability to amortize and deduct goodwill and certain intangible assets or the interest deduction we receive on our substantial indebtedness, or otherwise that reduces any of these available deductions or results in an increase in our corporate tax rate, our cash taxes payable may increase further, which could significantly reduce our future liquidity and impact our ability to make interest and dividend payments and have a material adverse effect on our business, consolidated financial condition, results of operations and liquidity.