Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Feb. 24, 2018 | Apr. 05, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Simply Good Foods Co. | |
Entity Central Index Key | 1,702,744 | |
Current Fiscal Year End Date | --08-25 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Feb. 24, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 70,582,573 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Feb. 24, 2018 | Aug. 26, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 79,010 | $ 56,501 |
Accounts receivable, net | 41,355 | 37,181 |
Inventories | 25,813 | 29,062 |
Prepaid expenses | 4,025 | 2,904 |
Other current assets | 11,294 | 8,263 |
Total current assets | 161,497 | 133,911 |
Long-term assets: | ||
Property and equipment, net | 2,289 | 2,105 |
Intangible assets, net | 315,896 | 319,148 |
Goodwill | 471,427 | 465,030 |
Other long-term assets | 2,294 | 2,294 |
Total assets | 953,403 | 922,488 |
Current liabilities: | ||
Accounts payable | 12,322 | 14,859 |
Accrued interest | 547 | 561 |
Accrued expenses and other current liabilities | 16,779 | 15,042 |
Current portion of TRA liability | 3,017 | 2,548 |
Current maturities of long-term debt | 714 | 234 |
Total current liabilities | 33,379 | 33,244 |
Long-term liabilities: | ||
Long-term debt, less current maturities | 191,522 | 191,856 |
Long-term portion of TRA liability | 24,273 | 23,127 |
Deferred income taxes | 52,517 | 75,559 |
Total liabilities | 301,691 | 323,786 |
See commitments and contingencies (Note 8) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued | 0 | 0 |
Common stock, $0.01 par value, 600,000,000 shares authorized, 70,582,573 and 70,562,477 issued and outstanding, respectively | 706 | 706 |
Additional paid-in-capital | 612,336 | 610,138 |
Retained Earnings (accumulated deficit) | 39,451 | (12,161) |
Accumulated other comprehensive (loss) income | (781) | 19 |
Total stockholders' equity | 651,712 | 598,702 |
Total liabilities and stockholders' equity | $ 953,403 | $ 922,488 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Feb. 24, 2018 | Aug. 26, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock shares issued (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock shares issued (in shares) | 70,582,573 | 70,562,477 |
Common stock shares outstanding (in shares) | 70,582,573 | 70,562,477 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Feb. 24, 2018 | Feb. 25, 2017 | Feb. 24, 2018 | Feb. 25, 2017 | |
Net sales | $ 109,347 | $ 215,934 | ||
Cost of goods sold | 59,090 | 112,920 | ||
Gross profit | 50,257 | 103,014 | ||
Operating Expenses: | ||||
Distribution | 5,391 | 10,208 | ||
Selling | 4,975 | 8,878 | ||
Marketing | 10,056 | 19,906 | ||
General and administrative | 12,711 | 24,790 | ||
Depreciation and amortization | 1,948 | 3,882 | ||
Business transaction costs | 1,877 | 1,877 | ||
Gain in fair value change of contingent consideration - TRA liability | (3,668) | (3,026) | ||
Other expense | 184 | 430 | ||
Total operating expenses | 33,474 | 66,945 | ||
Income from operations | 16,783 | 36,069 | ||
Other income (expense): | ||||
Change in warrant liabilities | 0 | 0 | ||
Interest expense | (3,093) | (6,112) | ||
Gain (loss) on foreign currency transactions | 601 | 956 | ||
Other income | 312 | 398 | ||
Total other expense | (2,180) | (4,758) | ||
Income before income taxes | 14,603 | 31,311 | ||
Income tax (benefit) expense | (26,791) | (20,301) | ||
Net income | 41,394 | 51,612 | ||
Other comprehensive income: | ||||
Foreign currency translation adjustments | (101) | (800) | ||
Comprehensive income | $ 41,293 | $ 50,812 | ||
Earnings per share from net income: | ||||
Basic (in dollars per share) | $ 0.59 | $ 0.73 | ||
Diluted (in dollars per share) | $ 0.56 | $ 0.71 | ||
Weighted average shares outstanding: | ||||
Basic (in shares) | 70,582,573 | 70,576,744 | ||
Diluted (in shares) | 73,832,207 | 72,605,705 | ||
(Predecessor) | ||||
Net sales | $ 102,308 | $ 202,111 | ||
Cost of goods sold | 55,735 | 106,826 | ||
Gross profit | 46,573 | 95,285 | ||
Operating Expenses: | ||||
Distribution | 4,960 | 9,329 | ||
Selling | 3,978 | 8,271 | ||
Marketing | 10,030 | 19,236 | ||
General and administrative | 11,768 | 21,699 | ||
Depreciation and amortization | 2,474 | 4,927 | ||
Business transaction costs | 0 | 0 | ||
Gain in fair value change of contingent consideration - TRA liability | 0 | 0 | ||
Other expense | 58 | 58 | ||
Total operating expenses | 33,268 | 63,520 | ||
Income from operations | 13,305 | 31,765 | ||
Other income (expense): | ||||
Change in warrant liabilities | (1,119) | (397) | ||
Interest expense | (6,566) | (13,629) | ||
Gain (loss) on foreign currency transactions | (108) | (718) | ||
Other income | 22 | 199 | ||
Total other expense | (7,771) | (14,545) | ||
Income before income taxes | 5,534 | 17,220 | ||
Income tax (benefit) expense | 2,071 | 6,970 | ||
Net income | 3,463 | 10,250 | ||
Other comprehensive income: | ||||
Foreign currency translation adjustments | 113 | 416 | ||
Comprehensive income | $ 3,576 | $ 10,666 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Feb. 24, 2018 | Feb. 25, 2017 | |
Operating activities | ||
Net income | $ 51,612 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 3,882 | |
Amortization of deferred financing costs and debt discount | 645 | |
Stock compensation expense | 1,967 | |
Change in warrant liabilities | 0 | |
Gain in fair value change of contingent consideration - TRA liability | (3,026) | |
Unrealized (gain) loss on foreign currency transactions | (956) | |
Deferred income taxes | (23,398) | |
Loss on disposal of property and equipment | 72 | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (4,672) | |
Inventories | 3,284 | |
Prepaid expenses | (909) | |
Other current assets | (2,346) | |
Accounts payable | (2,601) | |
Accrued interest | (15) | |
Accrued expenses and other current liabilities | 1,726 | |
Other | 86 | |
Net cash provided by operating activities | 25,351 | |
Investing activities | ||
Purchases of property and equipment | (886) | |
Acquisition of business, net of cash acquired | (1,757) | |
Net cash used in investing activities | (2,643) | |
Financing activities | ||
Proceeds from option exercises | 0 | |
Cash received from warrant exercises | 231 | |
Principal payments of long-term debt | (500) | |
Net cash used in financing activities | (269) | |
Cash and cash equivalents | ||
Net increase (decrease) in cash | 22,439 | |
Effect of exchange rate on cash | 70 | |
Cash at beginning of period | 56,501 | |
Cash and cash equivalents at end of period | 79,010 | |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 5,481 | |
Cash paid for taxes | $ 1,755 | |
(Predecessor) | ||
Operating activities | ||
Net income | $ 10,250 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 4,927 | |
Amortization of deferred financing costs and debt discount | 983 | |
Stock compensation expense | 1,063 | |
Change in warrant liabilities | 397 | |
Gain in fair value change of contingent consideration - TRA liability | 0 | |
Unrealized (gain) loss on foreign currency transactions | 718 | |
Deferred income taxes | (1,369) | |
Loss on disposal of property and equipment | 0 | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 1,584 | |
Inventories | 6,474 | |
Prepaid expenses | (51) | |
Other current assets | (3,345) | |
Accounts payable | (6,050) | |
Accrued interest | 49 | |
Accrued expenses and other current liabilities | 3,748 | |
Other | 9 | |
Net cash provided by operating activities | 19,387 | |
Investing activities | ||
Purchases of property and equipment | (284) | |
Acquisition of business, net of cash acquired | (21,039) | |
Net cash used in investing activities | (21,323) | |
Financing activities | ||
Proceeds from option exercises | 109 | |
Cash received from warrant exercises | 0 | |
Principal payments of long-term debt | (3,586) | |
Net cash used in financing activities | (3,477) | |
Cash and cash equivalents | ||
Net increase (decrease) in cash | (5,413) | |
Effect of exchange rate on cash | (162) | |
Cash at beginning of period | 78,492 | |
Cash and cash equivalents at end of period | 72,917 | |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 12,444 | |
Cash paid for taxes | $ 1,710 |
Nature of Operations and Princi
Nature of Operations and Principles of Consolidation | 6 Months Ended |
Feb. 24, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Principles of Consolidation | Nature of Operations and Principles of Consolidation Conyers Park Acquisition Corp (“Conyers Park”) was formed on April 20, 2016, as a special purpose acquisition company (“SPAC”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Simply Good Foods Company (“Simply Good Foods”), was formed by Conyers Park on March 30, 2017. On April 10, 2017, Conyers Park and NCP-ATK Holdings, Inc. (“Atkins”) announced that they entered into a definitive merger agreement (the “Merger Agreement”). On July 7, 2017 (the “Closing Date”), pursuant to the Merger Agreement, Conyers Park merged into Simply Good Foods which acquired Atkins. As a result, both entities became wholly-owned subsidiaries of Simply Good Foods (the "Business Combination"). Simply Good Foods was listed on the NASDAQ Capital Market under the symbol “SMPL” upon the consummation of the Business Combination. Atkins was formerly owned by Roark Capital Management, LLC (“Roark”). The Business Combination resulted in Conyers Park controlling the board of directors of the combined entity. As a result, for accounting purposes, Simply Good Foods is the acquirer and the accounting “successor” in the Business Combination while Atkins is the acquiree and accounting “predecessor”. Our financial statement presentation includes the financial statements of Atkins as “predecessor” for all periods prior to the Closing Date and of Simply Good Foods, including the consolidation of Atkins, for periods after the Closing Date. See Note 3 for a detailed discussion of the Business Combination. Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer, for periods prior to the completion of the Business Combination, to Atkins and its subsidiaries, and, for periods upon or after the completion of the Business Combination, to Simply Good Foods and its subsidiaries. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company maintains its accounting records on a 52/53-week fiscal year. The financial information presented within our consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial statements include condensed consolidated balance sheet information for the successor entity ended February 24, 2018 and August 26, 2017 . The remaining financial statements include the successor thirteen week period, and twenty-six week period ended February 24, 2018 and the predecessor thirteen week and twenty-six week period ended February 25, 2017 . Description of Business Simply Good Foods operates in the healthy snacking category. The Atkins ® brand focuses on an approach to eating that advocates reduced levels of refined carbohydrates and refined sugars, and encourages the consumption of lean protein, fiber, fruits, vegetables, and good fats. The Company sells a variety of nutrition bars, Ready to Drink ("RTD") shakes, snacks and confectionery products designed around the nutrition principles of the Atkins eating approach. In addition to snacking products we have granted a license for frozen meals sold in the United States. Seasonality The Company has experienced in the past, and expects to continue to experience, seasonal fluctuations in sales as a result of consumer spending patterns. Historically, sales have been greatest in the first calendar quarter as the Company sells product to retail locations, which sell to consumers in the second fiscal quarter, primarily driven by the post-holiday resolution season. The Company has also seen minimal seasonality in the summer and back-to-school shopping seasons in the third and fourth fiscal quarters, respectively. The period of the lowest sales has historically been the fourth fiscal quarter. The Company believes these consumer spending patterns are driven primarily by the predisposition of consumers to adjust their approach to nutrition at certain times of the year as well as the timing of the Company’s advertising linked with key customer promotion windows. Unaudited Interim Condensed Consolidated Financial Statements The interim condensed consolidated financial statements and related notes (“Interim Statements”) of the Company and its subsidiaries are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these Interim Statements are not necessarily indicative of the results that may be reported for the entire year. These Interim Statements should be read in conjunction with the Company's consolidated financial statements for the fiscal year ended August 26, 2017 , included in our Annual Report on Form 10-K (“Annual Report”), filed on November 9, 2017. The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by GAAP have been condensed or omitted. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Feb. 24, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Refer to Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included in our Annual Report for a description of critical accounting policies. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. The change in the tax law will be partially effective in the current 2018 fiscal year and fully effective in the 2019 fiscal year. The primary impacts to the Company include repeal of the alternative minimum tax regime, decrease of the corporate income tax rate structure, and net operating loss limitations. These changes will have a material impact to the value of deferred tax assets and liabilities, the value of the Company’s Tax Receivable Agreement (the “TRA”), and the Company’s future taxable income and effective tax rate. Refer to Note 7 , Income Taxes, below for further information regarding the recently issued law. Other than the Tax Act, there have been no significant changes to our critical accounting policies since August 26, 2017 . Recently Issued and Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers . The objective of ASU No. 2014-09 is to outline a new, single comprehensive model to use in accounting for revenue arising from contracts with customers. The new revenue recognition model provides a five-step analysis for determining when and how revenue is recognized, depicting the transfer of promised goods or services to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. On July 9, 2015, the FASB voted to delay the implementation of ASU No. 2014-09 by one year to fiscal years and interim periods within those years beginning after December 15, 2017. An entity may elect to early adopt as of the original effective date, fiscal years and interim periods within those years beginning after December 15, 2016. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing which provides additional clarification regarding identifying performance obligations and licensing. In December 2016, the FASB issued ASU No. 2016-19, 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . These ASUs will replace most existing revenue recognition guidance in GAAP and, due to the Business Combination, will be effective for the Company beginning in fiscal 2019. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company is currently evaluating recently issued guidance against contracts with key customers. The Company believes the key changes in the standard that impact revenue recognition relate to the recognition of customer programs and incentive offerings, including special pricing agreements, price protection, promotion, and other volume-based incentives. Based on our preliminary review, we do not expect adoption to have a material impact on our consolidated financial statements but further work to substantiate this preliminary conclusion is underway. We will determine the transition method to apply and the implications of using either the full retrospective or modified retrospective approach after this additional work is concluded. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10). This new standard enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. The provisions of this ASU are effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods within those annual periods. This ASU is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. This ASU is effective for the Company’s August 2019 fiscal year end. The Company does not anticipate adoption of this ASU will have a material impact to its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for the Company beginning in fiscal 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for all entities, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. This ASU is effective for the Company’s August 2019 fiscal year end. The Company does not anticipate adoption of this ASU will have a material impact on its consolidated statements of cash flows. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment . The standard simplifies how an entity tests goodwill by eliminating Step 2 of the goodwill impairment test. The amended standard also modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. The new guidance is effective for the Company beginning in fiscal 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805) , to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The provisions of this ASU provide a more robust framework to use in determining when a set of assets and activities is a business by clarifying the requirements related to inputs, processes, and outputs. These provisions are to be applied prospectively and are effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods within those annual periods. This ASU is effective for the Company’s 2019 fiscal year end. The Company does not anticipate adoption of this ASU to be material to its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The amended standard specifies the modification accounting applicable to any entity which changes the terms or conditions of a share-based payment award. The new guidance is effective for all entities after December 2017. Early adoption is permitted. The Company does not anticipate adoption of this ASU to be material to its consolidated financial statements. |
Business Combination
Business Combination | 6 Months Ended |
Feb. 24, 2018 | |
Business Combinations [Abstract] | |
Business Combination | Business Combination Acquisition of Atkins Upon the consummation of the Business Combination, and through a number of sub-mergers discussed in Note 1 above, Conyers Park merged into Simply Good Foods which subsequently acquired, and obtained control over Atkins. As a result of the Business Combination, Simply Good Foods is the acquirer for accounting purposes, and Atkins is the acquiree and accounting predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for Atkins for periods prior to the Closing Date. The Company is the “Successor” for periods after the Closing Date, which includes consolidation of Atkins subsequent to the Business Combination. The Merger was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. The historical financial information of Conyers Park, prior to the Business Combination, are not reflected in the Predecessor financial statements as those amounts are considered de-minimis. The financial statements of Conyers Park are included in the post-merger Successor entity, which includes balance sheet and equity items of Conyers Park assumed by Simply Good Foods through the transaction. As a result of the application of the acquisition method of accounting as of the Closing Date, the financial statements for the Predecessor period and for the Successor period are presented on a different basis of accounting and are therefore not comparable. The Business Combination is accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). ASC 805 requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values, as determined in accordance with ASC 820, Fair Value Measurements, as of the Closing Date. Consistent with the acquisition method of accounting, the assets acquired and liabilities assumed from Atkins have been recorded at their respective fair values and added to those of Conyers Park. ASC 805 establishes a measurement period to provide the Company with a reasonable amount of time to obtain the information necessary to identify and measure various items in a business combination and cannot extend beyond one year from the acquisition date. The Business Combination was funded by Conyers Park through a combination of cash, stock, and debt financing. Cash sources of funding included $404.0 million of cash held in Conyers Park’s trust account, $100.0 million from private placement equity issuance, $200.0 million in new term loan debt, and $0.2 million of cash on hand at Conyers Park. Upon the close of the transaction, a total of $8.1 million was paid in debt issuance costs related to the new term loan, $8.1 million was paid in deferred equity issuance costs related to the original IPO of Conyers Park, $3.0 million was paid related to the private placement equity issuance costs, and $12.4 million of cash was paid in acquisition-related transaction costs incurred by Conyers Park. As an integrated part of the closing of the Business Combination, $284.0 million of cash was paid to retire the predecessor long-term debt of Atkins. The acquisition-related transaction costs incurred by Conyers Park are reflected within the opening accumulated deficit within the Simply Good Foods consolidated statement of stockholder’s equity. In the first quarter of fiscal 2018, per the terms of the Merger Agreement, Simply Good Foods paid a working capital adjustment of $1.8 million to the former owners of Atkins which resulted in an increase to the previously recognized Goodwill. In connection with this change in control, the assets and liabilities of Atkins were recorded at their respective fair value on the closing date by application of the acquisition method of accounting as prescribed by ASC 805 and ASC 820. Upon the completion of the purchase accounting as of the close of the transaction, Roark received approximately $821.6 million in total consideration. A total of $673.8 million of cash consideration was paid to acquire Atkins. The total consideration is inclusive of 10.2 million shares of common stock of Simply Good Foods valued at $11.47 per share or $117.6 million in equity consideration at fair value. Roark is also entitled to future cash payments pursuant to the TRA which had a preliminary estimated fair value of $25.7 million as of the close of the Business Combination, as disclosed in the Annual Report. During the second quarter we completed the valuation of the TRA. The finalized TRA resulted in incremental contingent consideration of $4.6 million , the inclusion of which increased the initial fair value of TRA consideration to $30.3 million . The increase in consideration also increased Goodwill $4.6 million to $471.4 million . The TRA obligation is recorded at fair value and classified as a liability. The TRA generally provides for the payment by Simply Good Foods to Roark for certain federal, state, local and non-U.S. tax benefits deemed realized in post-closing taxable periods by Simply Good Foods, Conyers Park, Atkins and Atkins’ eligible subsidiaries from the use of up to $100 million of the following tax attributes: (i) net operating losses available to be carried forward as of the closing of the Business Combination; (ii) certain deductions generated by the consummation of the business transaction; and (iii) remaining depreciable tax basis from the 2003 acquisition of Atkins Nutritionals, Inc. The TRA is contingent consideration and subsequent changes in fair value of the contingent liability will be recognized in earnings. As of February 24, 2018 , the estimated fair value of these prospective contingent payments is $27.3 million which has been recorded as a liability and represents 100% of the value of the recorded tax attributes (refer to Note 7 , Income Taxes , for additional discussion on the TRA). As disclosed in the Annual Report, the predecessor financial statements of historical Atkins’ included business combination related seller costs of $2.0 million related to legal costs, $8.6 million of contingent success fees to an investment banker providing advisory services triggered by the transaction, and $13.8 million of contingent change-in-control bonuses. These seller costs were incurred during the fourth quarter of fiscal 2017 and were recorded within business combination transaction costs within the Statements of Operations and Comprehensive Income as disclosed in the Annual Report. The following summarizes the fair value of the Business Combination. (In thousands) Cash paid $ 673,763 Equity consideration paid to selling equity holders (1) 117,567 Total cash and equity consideration 791,330 TRA payable to selling equity holders 30,315 Total consideration $ 821,645 (1) Equity consideration paid is summarized below: (In thousands, except equity per share data) Shares of Simply Good Foods paid to former equity holders of Atkins 10,250 Fair Value of SMPL equity per share $ 11.47 Equity consideration paid $ 117,567 The fair value of these units was determined as follows: Per share price based on the market price on the day of the close $ 11.47 The Company has recorded the final allocation of the purchase price to Predecessor’s tangible and identified intangible assets acquired and liabilities assumed, based on their fair values as of the closing date. The July 7, 2017 fair value is as follows (in thousands): Assets acquired: Cash and cash equivalents $ 71,181 Accounts receivable, net 31,507 Inventories 33,023 Prepaid assets 1,781 Other current assets 13,466 Property and equipment, net 1,793 Intangible assets, net (1) 320,000 Other long-term assets 2,224 Liabilities assumed: Accounts payable (12,187 ) Other current liabilities (36,498 ) Deferred income taxes (2) (76,072 ) Total identifiable net assets 350,218 Goodwill (1)(3) 471,427 Total assets acquired and liabilities assumed $ 821,645 (1) Goodwill and intangible assets were recorded at fair value consistent with ASC 820 as a result of the Business Combination. Intangible assets consist of brands and trademarks, customer relationships, proprietary recipes and formulas and licensing agreements. The useful lives of the intangible assets are disclosed in Note 4 . The fair value measurement of the assets and liabilities was based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy. Level 3 fair market values were determined using a variety of information, including estimated future cash flows, appraisals, and market comparable data and companies. (2) As a result of the increase in the fair value of the intangible asset the deferred income taxes were stepped-up by $50.7 million . (3) Amounts recorded for goodwill are generally not expected to be deductible for tax purposes. Unaudited Pro Forma Financial Information The following unaudited pro forma combined financial information presents combined results of Conyers Park and Atkins as if the Business Combination had occurred at the beginning of fiscal year 2017: 13-weeks ended 26-weeks ended February 25, 2017 February 25, 2017 Revenue $ 102,308 $ 202,111 Gross profit $ 46,573 $ 95,285 Net income $ 6,305 $ 15,324 These pro forma combined results include certain adjustments, primarily due to decreases in amortization expense due to the changes in useful lives of intangible assets and decreases in interest expense due to the refinancing of Atkins debt. The pro forma financial information is not intended to represent or be indicative of the actual results of operations of the combined entity that would have been reported had the Business Combination been completed at the beginning of fiscal year 2017, nor is it representative of future operating results of the Company. |
Goodwill and Intangibles
Goodwill and Intangibles | 6 Months Ended |
Feb. 24, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangibles | Goodwill and Intangibles The following table presents the changes in goodwill : Total Balance, August 26, 2017 (Successor) $ 465,030 Goodwill working capital adjustment 1,757 Measurement period adjustment of the Business Combination 4,640 Balance as of February 24, 2018 (Succe ssor) $ 471,427 Changes in the Company’s Goodwill from August 26, 2017 to February 24, 2018 resulted from the finalization of the acquisition method of accounting as described in Note 3 above. There were no impairment charges related to goodwill during these periods or since the inception of the Company. Intangible assets, net in our condensed consolidated balance sheets consist of the following: Successor February 24, 2018 Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 232,000 $ — $ 232,000 Intangible assets with finite lives: Customer relationships 15 years 59,000 2,482 56,518 Proprietary recipes and formulas 7 years 7,000 631 6,369 Licensing agreements 14 years 22,000 991 21,009 $ 320,000 $ 4,104 $ 315,896 Successor August 26, 2017 Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 232,000 $ — $ 232,000 Intangible assets with finite lives: Customer relationships 15 years 59,000 515 58,485 Proprietary recipes and formulas 7 years 7,000 131 6,869 Licensing agreements 14 years 22,000 206 21,794 $ 320,000 $ 852 $ 319,148 Intangible assets, net changed due to regular amortization expense. Amortization expenses related to intangible assets during the thirteen weeks ended February 24, 2018 and February 25, 2017 were $1.6 million and $2.2 million respectively. Amortization expenses related to intangible assets during the twenty-six week s ended February 24, 2018 and February 25, 2017 were $3.3 million and $4.4 million respectively. Estimated future amortization for each of the next five fiscal years and thereafter is as follows: (In thousands by fiscal year) Remainder of 2018 $ 3,253 2019 6,505 2020 6,505 2021 6,505 2022 6,505 2023 and thereafter 54,623 |
Long-Term Debt and Line of Cred
Long-Term Debt and Line of Credit | 6 Months Ended |
Feb. 24, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Line of Credit | Long-Term Debt and Line of Credit On July 7, 2017, the Company entered into a Credit Agreement with Barclays Bank PLC and other parties. The Credit Agreement provides for a term facility of $200.0 million (“Term Facility”) with a seven year maturity, and a revolving credit facility of up to $75.0 million (the “Revolving Credit Facility”) with a five year maturity, in each case under the first lien senior secured loan facilities (the “First Lien”). Substantially concurrent with the consummation of the Business Combination, the full $200.0 million of the first lien term loan (the “Term Loan”) was drawn, and no revolving loans were drawn. The interest rate per annum is based on either (i) a base rate equaling the higher of (a) the “prime rate”, (b) the federal funds effective rate plus 0.50% and (c) the Euro-currency rate applicable for an interest period of one month plus 1.00% plus (x) 3.00% margin for Term Loan or (y) 2.00% margin for Revolving Credit Facility, or (ii) London Interbank Offered Rate (“LIBOR”) adjusted for statutory reserve requirements, plus (x) 4.00% margin for Term Loan and is subject to a floor of 1.00% or (y) 3.00% margin for Revolving Credit Facility. The applicable margin for Revolving Credit Facility will be adjusted after the completion of the Company’s first full fiscal quarter after the closing of the Business Combination based upon the Company’s consolidated first lien net leverage ratio. As security for the payment or performance of its debt, the Company has pledged certain equity interests in its subsidiaries. The First Lien is subject to mandatory prepayments based on contractual terms. With respect to the Term Loan, prior to the six-month anniversary of the Closing Date, a 1.00% prepayment premium is payable by the Company in connection with certain repricing events. The Company may also voluntarily prepay outstanding loans at any time. The credit facilities governing our debt arrangements contain certain financial and other covenants. The revolving credit facility has a maximum total net leverage ratio equal to or less than 6.25 :1.00 (with a reduction to 6.00 :1.00 on and after the third anniversary of the closing date of the credit facilities) contingent on credit extensions in excess of 30% of the total amount of commitments available under the revolving credit facility, and limitations on our ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions, and investments, consolidations, mergers, reorganizations and other fundamental changes payment of dividends and other distributions to equity and warrant holders and prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size. Any failure to comply with the restrictions of the credit facilities may result in an event of default. The credit facilities governing our debt arrangements bear interest at variable rates. If market interest rates increase, variable rate debt will create higher debt service requirements, which could adversely affect our cash flow. As the Company has not drawn on the revolving credit facility as of February 24, 2018 , and August 26, 2017 , no debt covenants were applicable as of the period then ended. As of February 24, 2018 , the Company’s only outstanding long-term debt is the Term Loan maturing on July 7, 2024. At February 24, 2018 and August 26, 2017 , there were no amounts drawn against the Revolving Credit Facility or lines of credit, and long-term debt consists of the following: February 24, 2018 August 26, 2017 (Successor) (Successor) Term Loan $ 199,500 $ 200,000 Less: Deferred Financing Fees 7,264 7,910 Total Debt 192,236 192,090 Less: Current maturities, net of deferred financing fees of $1.3 million at February 24, 2018 and August 26, 2017, respectively 714 234 Long-term debt, net of deferred financing fees $ 191,522 $ 191,856 The Company utilizes market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates. The Company carries debt at historical cost and discloses fair value. As of August 26, 2017 and February 24, 2018 , the book value of the Company’s debt approximated fair value. All term debt is valued based on observable inputs and classified as Level 2 in the fair value hierarchy. As described in Note 14, Subsequent Events, the Term Loan was amended on March 16, 2018. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Feb. 24, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measurements, a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows: Level 1 – Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2 – Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 – Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The following tables set forth the Company’s liabilities measured at fair value. The fair value and fair value inputs of the TRA is discussed in Note 7 . Fair value at February 24, 2018 is summarized as follows: Successor Level 1 Level 2 Level 3 Total Liabilities TRA liability $ — $ — $ 27,290 $ 27,290 Fair value at August 26, 2017 is summarized as follows: Successor Level 1 Level 2 Level 3 Total Liabilities TRA liability $ — $ — $ 25,675 $ 25,675 For the thirteen and twenty-six week periods ended February 24, 2018 , a benefit of $3.7 million and $3.0 million was charged to the Gain in fair value change of contingent consideration - TRA liability in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income respectively. The benefit is primarily due the change in the federal tax rates as discussed in Note 7 . |
Income Taxes
Income Taxes | 6 Months Ended |
Feb. 24, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. The change in the tax law is partially effective in our current 2018 fiscal year and will be fully effective in our 2019 fiscal year. The Tax Act, among other things, reduces the top U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. Due to the complexities involved in accounting for the Tax Act, the U.S. Securities and Exchange Commission's Staff Accounting Bulletin ("SAB") 118 requires that the Company include in its financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. The Company is allowed a measurement period of up to one year after the enactment date to finalize the recording of the related tax impacts. As of February 24, 2018 , we have not completed our accounting for the tax effects of enactment of the Tax Act; however, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax and have recorded provisional amounts. In other cases, we have not been able to make a reasonable estimate and continue to account for those items based on our existing accounting under ASC 740, Income Taxes, and the provisions of the tax laws that were in effect immediately prior to enactment. For the items for which we were able to determine a reasonable estimate, we recognized a provisional gain of $29.0 million , which is included as a component of Income tax (benefit) expense in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. Provisional Amounts The Tax Act reduces the corporate federal tax rate to 21%, effective January 1, 2018. We have recorded a provisional decrease to our deferred tax liabilities, net, with a corresponding net adjustment to deferred income tax benefit of $29.0 million for the thirteen weeks ended February 24, 2018 . While we are able to make a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the Tax Act, including, but not limited to, our calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences. The one-time transition tax is based on our total post-1986 earnings and profits (E&P) that we previously deferred from US income taxes. We recorded immaterial provisional amounts for our one-time transition tax liability for of our foreign subsidiaries, resulting in an immaterial increase in income tax expense. We have not yet completed our calculation of the total post-1986 E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. We are continuing to gather additional information to more precisely compute the amount of the transition tax. Effective Tax Rate The following table shows the tax expense and the effective tax rate for the twenty-six week period ended February 24, 2018 and February 25, 2017 resulting from operations: February 24, 2018 February 25, 2017 (Successor) (Predecessor) Income before income taxes $ 31,311 $ 17,220 Provision for income taxes $ (20,301 ) $ 6,970 Effective tax rate (64.8 )% 40.5 % The effective tax rate for the twenty-six week period ended February 24, 2018 is lower than the effective tax rate for the twenty-six week period ended February 25, 2017 by 105.3% , which is primarily driven by the change in the tax law due to the Tax Act and the provisional gain of $29.0 million recorded during the period. Tax Receivable Agreement Concurrent with the Business Combination, the Company entered into the TRA with the historical shareholders of Atkins. The TRA entered into by the Company in consideration for the Business Combination is valued based on the future expected payments under the terms of the agreement (see Note 3 ). As more fully described in the TRA, the TRA generally provides for the payment by Simply Good Foods to the Atkins’ selling equity holders for certain federal, state, local and non-U.S. tax benefits deemed realized in post-closing taxable periods by Simply Good Foods, Conyers Park, Atkins and Atkins’ eligible subsidiaries from the use of up to $100 million of the following tax attributes: (i) net operating losses available to be carried forward as of the closing of the Business Combination; (ii) certain deductions generated by the consummation of the business transaction; and (iii) remaining depreciable tax basis from the 2003 acquisition of Atkins Nutritionals, Inc. In addition, Simply Good Foods will pay the Atkins selling equity holders for the use of 75% of up to $7.6 million of alternative minimum tax credit carryforwards. The TRA is contingent consideration and subsequent changes in fair value of the contingent liability will be recognized in earnings. The Company re-measured the TRA due to the Tax Act which changed federal tax law. The Tax Act resulted in a decrease to the top U.S. Corporate tax rate, as well as other regime changes including the repeal of the alternative minimum tax for tax years beginning after December 31, 2017. The assessment of these changes resulted in provisional one-time gain of $4.7 million , charged to the Gain in fair value change of contingent consideration - TRA liability in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. As of February 24, 2018 , the estimated fair value of these contingent payments is $27.3 million , which has been recorded as a liability and represents 100% of the value of the recorded tax attributes. Estimating the amount of payments that may be made under the TRA is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The actual increase in tax basis and deductions, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including: • The amount and timing of the Company’s income - The Company is required to pay 100% of the deemed benefits as and when deemed realized. As such, the Company is generally not required to make payments under the TRA until and unless a tax benefit is actually realized on a filed return. Without income against which specified TRA attributes are deductible, the benefit of such deduction is not deemed to be realized, resulting in no payment under the TRA. The utilization of such tax attributes and recognition of benefit against Company income will result in payments under the TRA. • The amount and timing of deductions - Similar to the above, the timing of the recognition of deductions and attributes included in the TRA will impact the ultimate timing of payments under the TRA. In turn, the fair value of the TRA payments will fluctuate over time; and • Future tax rates of jurisdictions in which the Company has tax liability, including the finalization of the assessment of the impact of the Tax Act. The TRA assumptions were re-measured for subsequent inputs based on the enacted tax rates under the Tax Act, signed into law on December 22, 2017. The significant fair value inputs used to estimate the future expected TRA payments to Roark include the timing of tax payments due to the assessment of the Tax Act, a tax savings rate of approximately 29.2% post-Tax Act enactment, a discount rate of approximately 9% , book income projections, timing of expected adjustments to calculate taxable income, and the projected rate of use for attributes defined in the TRA. The TRA fair value requires significant judgment and is classified as Level 3 in the fair value hierarchy assessment included in Note 6 , and the fair value of the instrument may change upon the assessment of the Tax Act. Payments made under the TRA are generally due within 90 days following the filing of Simply Good Foods U.S. federal and state income tax returns, and may include the tax returns that reflect activity as early as the taxable year ended August 26, 2017. Payments under the TRA will be based on the tax reporting positions that Simply Good Foods will determine. The term of the TRA generally will continue until all applicable tax benefit payments have been made under the agreement. As of February 24, 2018 , the un-discounted future expected payments under the TRA are as follows: (In thousands by fiscal year) Estimated future payments 2018 $ 2,637 2019 16,027 2020 11,728 2021 1,595 2022 183 2023 and thereafter 106 $ 32,276 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Feb. 24, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Leases The Company has non-cancellable operating leases for nine buildings. For the thirteen weeks ended February 24, 2018 and February 25, 2017 , rent expenses for the successor entity were $0.6 million and for the predecessor entity were $0.3 million , respectively. For the twenty-six week s ended February 24, 2018 and February 25, 2017 , rent expenses for the successor entity were $1.2 million and for the predecessor entity were $0.9 million , respectively. Litigation The Company is a party to certain litigation and claims that are considered normal to the operations of the business. Management is of the opinion that the outcome of these actions will not have a material adverse effect on the Company’s consolidated financial statements. Tax Receivable Agreement Refer to Note 7 for detail on the TRA, which was contingent consideration at the time of the Business Combination. Other The Company has entered into endorsement contracts with certain celebrity figures to promote and endorse the Atkins brand and line of products. These contracts contain endorsement fees, which are expensed ratably over the life of the contract, and performance fees, that are recognized at the time of achievement. Based on the terms of the contracts in place and achievement of performance conditions as of February 24, 2018 the Company will be required to make payments of $0.8 million over the next year. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Feb. 24, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Successor Stock The Company is authorized to issue 600,000,000 shares of common stock, par value $0.01 per share, of which 70,562,477 shares of Simply Good Foods were issued at the time of the Business Combination transaction and at August 26, 2017. The number of outstanding shares as of August 26, 2017 was previously reported within our Annual Report to be 70,628,322 due to the improper inclusion of 65,845 restricted stock units that were not outstanding shares of common stock at August 26, 2017. The disclosure of shares outstanding at August 26, 2017 has been updated in this report to reflect the actual number of shares outstanding. During the twenty-six week period ended February 24, 2018 , equity warrants were converted for 20,096 shares of common stock and 70,582,573 shares of common stock were issued and outstanding at February 24, 2018 . Please refer to Note 11 regarding the treatment of stock-based compensation and restricted stock units. Successor Equity Warrants Prior to the Business Combination, Conyers Park issued 13,416,667 public warrants and 6,700,000 private placement warrants. Simply Good Foods assumed the Conyers Park equity warrants upon the change of control event. As a result of the Business Combination, the warrants issued by Conyers Park are no longer exercisable for shares of Conyers Park common stock, but instead are exercisable for common stock of Simply Good Foods. All other features of the warrants remain unchanged. Each whole warrant entitles the holder to purchase one whole share of the Company's common stock at a price of $11.50 per share, subject to adjustment as discussed below. The public warrants became exercisable 30 days after the completion of the Business Combination and expire five years after that date, or earlier upon redemption or liquidation. The private warrants do not expire. The Company may call the public warrants for redemption, in whole and not in part, at a price of $0.01 per warrant upon not less than 30 days prior written notice of redemption to each warrant holder if the reported last sale price of the Company’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 -trading day period ended three business days before the Company sends the notice of redemption to the warrant holders. If the number of outstanding shares of the Company’s common stock is increased by a stock dividend payable in shares of common stock, or by a split-up of shares of common stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of common stock. If the number of outstanding shares of the Company’s common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of common stock. Due to the exercise of 20,096 warrants during the twenty-six week period ended February 24, 2018 , the Company had 20,096,571 warrants outstanding as of February 24, 2018 . Predecessor Warrant Liabilities of Atkins Atkins, the predecessor company, had outstanding warrants prior to the transaction forming Simply Good Foods. These Warrants were settled as a part of the Business Combination. Refer to Note 3 for additional details on the Business Combination. Historically, the value of the predecessor warrants were reflected as a liability in the accompanying consolidated financial statements and adjusted to fair value each reporting period through change in warrant liabilities in the accompanying Consolidated Statements of Operations and Comprehensive Income. For the predecessor entity, other income (expenses) of $1.1 million was included in the changes in warrant liabilities in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income for the thirteen weeks ended February 25, 2017 . |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Feb. 24, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is based on the weighted average number of common shares issued and outstanding for the Successor period. Diluted earnings per share is based on the weighted average number of common shares issued and outstanding and the effect of all dilutive common stock equivalents outstanding during each period. The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share: Thirteen Weeks Ended Twenty-Six Weeks Ended February 24, 2018 February 24, 2018 (In thousands, except share data) (Successor) (Successor) Basic earnings per share computation: Numerator: Net income available to common stock shareholders $ 41,394 $ 51,612 Denominator: Weighted average common shares - basic 70,582,573 70,576,744 Basic earnings per share from net income $ 0.59 $ 0.73 Diluted earnings per share computation: Numerator: Net income available to common stock shareholders $ 41,394 $ 51,612 Denominator: Weighted average common shares outstanding - basic 70,582,573 70,576,744 Warrant conversion 3,202,726 2,000,021 Restricted stock units 46,908 28,940 Weighted average common shares - diluted (1) 73,832,207 72,605,705 Diluted earnings per share from net income $ 0.56 $ 0.71 (1) Excludes the effect of non-qualified stock options which were anti-dilutive for the respective periods. |
Stock Option Plan
Stock Option Plan | 6 Months Ended |
Feb. 24, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Option Plan | Stock Option Plan Stock-based compensation includes stock options and restricted stock unit awards, which are awarded to employees, directors, and consultants of the Company. Stock-based compensation expense is recognized for equity awards over the vesting period based on their grant date fair value. Stock-based compensation expense is included within the same financial statement caption where the recipient’s other compensation is reported. The Company issued stock options to purchase 67,400 shares of common stock exercisable at $12.00 per share during the twenty-six week period ended February 24, 2018 , for a total of 2,645,092 stock options outstanding with a weighted average exercise price of $12.00 per share, as of February 24, 2018 . The Company also awarded additional 69,804 restricted stock units at a weighted average fair value of $11.97 per share during the twenty-six week period ended February 24, 2018 for a total of 135,649 outstanding restricted stock units as of February 24, 2018 . The Company recorded $0.9 million of stock-based compensation expense during the thirteen week successor period ended February 24, 2018 compared to $0.6 million of stock-based compensation expense recorded during thirteen week predecessor period ended February 25, 2017 . The Company recorded $2.0 million of stock-based compensation expense during the twenty-six week successor period ended February 24, 2018 compared to $1.1 million of stock-based compensation expense recorded during the twenty-six week predecessor period ended February 25, 2017 . As of August 26, 2017 , 65,845 shares of restricted stock units were outstanding which had not fully vested and are not included in the outstanding common stock included within the Condensed Consolidated Balance Sheets. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Feb. 24, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Successor Tax Receivable Agreement The TRA provides for the effective payment to the former equity holders of Atkins for cash savings, if any, in U.S. federal, state and local income tax, or franchise tax that is actually realized as a result of the Business Combination discussed in Note 7 . Execution of the Merger Agreement In the first quarter of fiscal 2018, per the terms of the Merger Agreement, Simply Good Foods paid a working capital adjustment of $1.8 million to the former owners of Atkins which resulted in an increase to the previously recognized Goodwill. Predecessor Pursuant to an arrangement with the former majority stockholder of Atkins, the Predecessor Company was obligated to pay a management fee of the greater of $0.9 million or an amount equal to 2% of consolidated adjusted earnings before interest, tax, depreciation and amortization (EBITDA), as defined by the First Lien and Second Lien, which can be prorated upon a fiscal year-end change. Annual reimbursements for out-of-pocket expenses were limited to $0.2 million . For the thirteen week predecessor period ended February 25, 2017 , the management fee expense was $0.6 million . For the twenty-six week predecessor period ended February 25, 2017 the management fee expense was $1.0 million . |
Segment and Customer Informatio
Segment and Customer Information | 6 Months Ended |
Feb. 24, 2018 | |
Segment Reporting [Abstract] | |
Segment and Customer Information | Segment and Customer Information The Company has organized its operations into one operating segment that sells its branded nutritional foods and snacking products designed around the nutrition principles of the Atkins eating approach. The results of the operating segment are reviewed by the Company’s chief operating decision maker to make decisions about resource expenditures and assessing financial performance. This operating segment is therefore the Company’s only reportable segment. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Feb. 24, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Effective March 16, 2018 (the “Effective Date”), Atkins Nutritionals, Inc., Atkins Nutritionals Holdings, Inc., Atkins Nutritionals Holdings II, Inc. and NCP-ATK Holdings, Inc. (collectively, the “Borrower”), each an indirect wholly-owned subsidiary of Simply Good Foods, entered into an amendment (the “Repricing Amendment”) to that certain Credit Agreement, dated as of July 7, 2017, among the Borrower, Barclays Bank PLC (the “Agent”) and the other loan parties and lenders party thereto. As a result of the Repricing Amendment, the interest rate on the outstanding $200 million Term Loan was reduced and, effective as of the Effective Date, such loans bear interest at a rate equal to, at the Borrower’s option, either LIBOR plus an applicable margin of 3.50% or a base rate plus an applicable margin of 2.50% . With respect to the Term Loan, prior to the six-month anniversary of the Effective Date, a 1.00% prepayment premium is payable by the Borrower in connection with certain repricing events. Other than the prepayment premiums and penalties described above and the payment of customary “breakage” costs, the Borrower may voluntarily prepay outstanding loans at any time. The Repricing Amendment did not change the interest rate on the Revolving Credit Facility. The Revolving Credit Facility will continue to bear interest based upon the Borrower’s consolidated first lien net leverage ratio as of the last financial statements delivered to the Agent. No additional debt was incurred, or any proceeds received, by the Borrower in connection with the Repricing Amendment. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Feb. 24, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Principles of Consolidation | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company maintains its accounting records on a 52/53-week fiscal year. |
Recently Issued and Adopted Accounting Pronouncements | Recently Issued and Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers . The objective of ASU No. 2014-09 is to outline a new, single comprehensive model to use in accounting for revenue arising from contracts with customers. The new revenue recognition model provides a five-step analysis for determining when and how revenue is recognized, depicting the transfer of promised goods or services to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. On July 9, 2015, the FASB voted to delay the implementation of ASU No. 2014-09 by one year to fiscal years and interim periods within those years beginning after December 15, 2017. An entity may elect to early adopt as of the original effective date, fiscal years and interim periods within those years beginning after December 15, 2016. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing which provides additional clarification regarding identifying performance obligations and licensing. In December 2016, the FASB issued ASU No. 2016-19, 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . These ASUs will replace most existing revenue recognition guidance in GAAP and, due to the Business Combination, will be effective for the Company beginning in fiscal 2019. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company is currently evaluating recently issued guidance against contracts with key customers. The Company believes the key changes in the standard that impact revenue recognition relate to the recognition of customer programs and incentive offerings, including special pricing agreements, price protection, promotion, and other volume-based incentives. Based on our preliminary review, we do not expect adoption to have a material impact on our consolidated financial statements but further work to substantiate this preliminary conclusion is underway. We will determine the transition method to apply and the implications of using either the full retrospective or modified retrospective approach after this additional work is concluded. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10). This new standard enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. The provisions of this ASU are effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods within those annual periods. This ASU is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. This ASU is effective for the Company’s August 2019 fiscal year end. The Company does not anticipate adoption of this ASU will have a material impact to its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for the Company beginning in fiscal 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for all entities, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. This ASU is effective for the Company’s August 2019 fiscal year end. The Company does not anticipate adoption of this ASU will have a material impact on its consolidated statements of cash flows. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment . The standard simplifies how an entity tests goodwill by eliminating Step 2 of the goodwill impairment test. The amended standard also modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. The new guidance is effective for the Company beginning in fiscal 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805) , to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The provisions of this ASU provide a more robust framework to use in determining when a set of assets and activities is a business by clarifying the requirements related to inputs, processes, and outputs. These provisions are to be applied prospectively and are effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods within those annual periods. This ASU is effective for the Company’s 2019 fiscal year end. The Company does not anticipate adoption of this ASU to be material to its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The amended standard specifies the modification accounting applicable to any entity which changes the terms or conditions of a share-based payment award. The new guidance is effective for all entities after December 2017. Early adoption is permitted. The Company does not anticipate adoption of this ASU to be material to its consolidated financial statements. |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Feb. 24, 2018 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following summarizes the fair value of the Business Combination. (In thousands) Cash paid $ 673,763 Equity consideration paid to selling equity holders (1) 117,567 Total cash and equity consideration 791,330 TRA payable to selling equity holders 30,315 Total consideration $ 821,645 (1) Equity consideration paid is summarized below: (In thousands, except equity per share data) Shares of Simply Good Foods paid to former equity holders of Atkins 10,250 Fair Value of SMPL equity per share $ 11.47 Equity consideration paid $ 117,567 The fair value of these units was determined as follows: Per share price based on the market price on the day of the close $ 11.47 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The July 7, 2017 fair value is as follows (in thousands): Assets acquired: Cash and cash equivalents $ 71,181 Accounts receivable, net 31,507 Inventories 33,023 Prepaid assets 1,781 Other current assets 13,466 Property and equipment, net 1,793 Intangible assets, net (1) 320,000 Other long-term assets 2,224 Liabilities assumed: Accounts payable (12,187 ) Other current liabilities (36,498 ) Deferred income taxes (2) (76,072 ) Total identifiable net assets 350,218 Goodwill (1)(3) 471,427 Total assets acquired and liabilities assumed $ 821,645 (1) Goodwill and intangible assets were recorded at fair value consistent with ASC 820 as a result of the Business Combination. Intangible assets consist of brands and trademarks, customer relationships, proprietary recipes and formulas and licensing agreements. The useful lives of the intangible assets are disclosed in Note 4 . The fair value measurement of the assets and liabilities was based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy. Level 3 fair market values were determined using a variety of information, including estimated future cash flows, appraisals, and market comparable data and companies. (2) As a result of the increase in the fair value of the intangible asset the deferred income taxes were stepped-up by $50.7 million . (3) Amounts recorded for goodwill are generally not expected to be deductible for tax purposes. |
Business Acquisition, Pro Forma Information | The following unaudited pro forma combined financial information presents combined results of Conyers Park and Atkins as if the Business Combination had occurred at the beginning of fiscal year 2017: 13-weeks ended 26-weeks ended February 25, 2017 February 25, 2017 Revenue $ 102,308 $ 202,111 Gross profit $ 46,573 $ 95,285 Net income $ 6,305 $ 15,324 |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 6 Months Ended |
Feb. 24, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table presents the changes in goodwill : Total Balance, August 26, 2017 (Successor) $ 465,030 Goodwill working capital adjustment 1,757 Measurement period adjustment of the Business Combination 4,640 Balance as of February 24, 2018 (Succe ssor) $ 471,427 |
Schedule of Finite-Lived Intangible Assets | Intangible assets, net in our condensed consolidated balance sheets consist of the following: Successor February 24, 2018 Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 232,000 $ — $ 232,000 Intangible assets with finite lives: Customer relationships 15 years 59,000 2,482 56,518 Proprietary recipes and formulas 7 years 7,000 631 6,369 Licensing agreements 14 years 22,000 991 21,009 $ 320,000 $ 4,104 $ 315,896 Successor August 26, 2017 Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 232,000 $ — $ 232,000 Intangible assets with finite lives: Customer relationships 15 years 59,000 515 58,485 Proprietary recipes and formulas 7 years 7,000 131 6,869 Licensing agreements 14 years 22,000 206 21,794 $ 320,000 $ 852 $ 319,148 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets, net in our condensed consolidated balance sheets consist of the following: Successor February 24, 2018 Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 232,000 $ — $ 232,000 Intangible assets with finite lives: Customer relationships 15 years 59,000 2,482 56,518 Proprietary recipes and formulas 7 years 7,000 631 6,369 Licensing agreements 14 years 22,000 991 21,009 $ 320,000 $ 4,104 $ 315,896 Successor August 26, 2017 Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 232,000 $ — $ 232,000 Intangible assets with finite lives: Customer relationships 15 years 59,000 515 58,485 Proprietary recipes and formulas 7 years 7,000 131 6,869 Licensing agreements 14 years 22,000 206 21,794 $ 320,000 $ 852 $ 319,148 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization for each of the next five fiscal years and thereafter is as follows: (In thousands by fiscal year) Remainder of 2018 $ 3,253 2019 6,505 2020 6,505 2021 6,505 2022 6,505 2023 and thereafter 54,623 |
Long-Term Debt and Line of Cr23
Long-Term Debt and Line of Credit (Tables) | 6 Months Ended |
Feb. 24, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | At February 24, 2018 and August 26, 2017 , there were no amounts drawn against the Revolving Credit Facility or lines of credit, and long-term debt consists of the following: February 24, 2018 August 26, 2017 (Successor) (Successor) Term Loan $ 199,500 $ 200,000 Less: Deferred Financing Fees 7,264 7,910 Total Debt 192,236 192,090 Less: Current maturities, net of deferred financing fees of $1.3 million at February 24, 2018 and August 26, 2017, respectively 714 234 Long-term debt, net of deferred financing fees $ 191,522 $ 191,856 |
Fair Value of Financial Instr24
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Feb. 24, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | Fair value at February 24, 2018 is summarized as follows: Successor Level 1 Level 2 Level 3 Total Liabilities TRA liability $ — $ — $ 27,290 $ 27,290 Fair value at August 26, 2017 is summarized as follows: Successor Level 1 Level 2 Level 3 Total Liabilities TRA liability $ — $ — $ 25,675 $ 25,675 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Feb. 24, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The following table shows the tax expense and the effective tax rate for the twenty-six week period ended February 24, 2018 and February 25, 2017 resulting from operations: February 24, 2018 February 25, 2017 (Successor) (Predecessor) Income before income taxes $ 31,311 $ 17,220 Provision for income taxes $ (20,301 ) $ 6,970 Effective tax rate (64.8 )% 40.5 % |
Schedule of Undiscounted Future Expected Tax Receivable Agreement Payments | As of February 24, 2018 , the un-discounted future expected payments under the TRA are as follows: (In thousands by fiscal year) Estimated future payments 2018 $ 2,637 2019 16,027 2020 11,728 2021 1,595 2022 183 2023 and thereafter 106 $ 32,276 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Feb. 24, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share: Thirteen Weeks Ended Twenty-Six Weeks Ended February 24, 2018 February 24, 2018 (In thousands, except share data) (Successor) (Successor) Basic earnings per share computation: Numerator: Net income available to common stock shareholders $ 41,394 $ 51,612 Denominator: Weighted average common shares - basic 70,582,573 70,576,744 Basic earnings per share from net income $ 0.59 $ 0.73 Diluted earnings per share computation: Numerator: Net income available to common stock shareholders $ 41,394 $ 51,612 Denominator: Weighted average common shares outstanding - basic 70,582,573 70,576,744 Warrant conversion 3,202,726 2,000,021 Restricted stock units 46,908 28,940 Weighted average common shares - diluted (1) 73,832,207 72,605,705 Diluted earnings per share from net income $ 0.56 $ 0.71 (1) Excludes the effect of non-qualified stock options which were anti-dilutive for the respective periods. |
Business Combination - Acquisit
Business Combination - Acquisition of Atkins Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Jul. 07, 2017 | Nov. 25, 2017 | Feb. 24, 2018 | Aug. 26, 2017 |
Business Combination | ||||
Goodwill working capital adjustment | $ 1,800 | $ 1,757 | ||
Measurement period adjustment of the Business Combination | 4,640 | |||
Goodwill | 471,427 | $ 465,030 | ||
TRA liability | 27,290 | 25,675 | ||
Acquisition of Atkins | ||||
Business Combination | ||||
Cash held in trust account | $ 404,000 | |||
Proceeds private placement equity investment | 100,000 | |||
Cash on hand at Conyers Park | 200 | |||
Payment for debt issuance costs related to the new tern loan | 8,100 | |||
Cash paid in acquisition-related transaction costs | 12,400 | |||
Cash paid to retire the predecessor long term debt | 284,000 | |||
Consideration amount | 821,645 | |||
Cash paid | $ 673,763 | |||
Shares issued at business combination (in shares) | 10,250 | |||
Common stock value (in dollars per share) | $ 11.47 | |||
Equity consideration at fair value | $ 117,567 | |||
TRA fair value | 25,700 | 30,315 | ||
Increase in contingent consideration - TRA liability | $ 4,600 | |||
Goodwill | 471,427 | |||
TRA contingent payment (up to) | 100,000 | |||
Percentage of the value of the recorded tax attributes | 100.00% | |||
Legal costs | 2,000 | |||
Advisory fees | 8,600 | |||
Contingent change-in-control bonuses | $ 13,800 | |||
Term Facility | Acquisition of Atkins | ||||
Business Combination | ||||
Term loan debt | 200,000 | |||
IPO | Acquisition of Atkins | ||||
Business Combination | ||||
Payment for equity issuance cost | 8,100 | |||
Private Placement | Acquisition of Atkins | ||||
Business Combination | ||||
Payment for equity issuance cost | $ 3,000 |
Business Combination - Purchase
Business Combination - Purchase Price Consideration (Details) - Acquisition of Atkins - USD ($) $ in Thousands | 6 Months Ended | |
Feb. 24, 2018 | Jul. 07, 2017 | |
Business Combination | ||
Cash paid | $ 673,763 | |
Equity consideration paid to selling equity holders | 117,567 | |
Total cash and equity consideration | 791,330 | |
TRA payable to selling equity holders | 30,315 | $ 25,700 |
Total consideration | $ 821,645 |
Business Combination - Schedule
Business Combination - Schedule of Business Acquisitions by Acquisition, Equity Interest Issued or Issuable (Details) - Acquisition of Atkins $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended |
Feb. 24, 2018USD ($)$ / sharesshares | |
Business Combination | |
Shares of Simply Good Foods paid to former equity holders of Atkins | shares | 10,250 |
Fair Value of SMPL equity per share (in dollars per share) | $ / shares | $ 11.47 |
Equity consideration paid | $ | $ 117,567 |
Business Combination - Atkins S
Business Combination - Atkins Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Feb. 24, 2018 | Aug. 26, 2017 | Jul. 07, 2017 |
Liabilities assumed: | |||
Goodwill | $ 471,427 | $ 465,030 | |
Acquisition of Atkins | |||
Assets acquired: | |||
Cash and cash equivalents | $ 71,181 | ||
Accounts receivable, net | 31,507 | ||
Inventories, net | 33,023 | ||
Prepaid expenses and other current assets | 1,781 | ||
Other current assets | 13,466 | ||
Property and equipment, net | 1,793 | ||
Intangible assets | 320,000 | ||
Other long-term assets | 2,224 | ||
Liabilities assumed: | |||
Accounts payable | (12,187) | ||
Other current liabilities | (36,498) | ||
Deferred income taxes | (76,072) | ||
Total identifiable net assets | 350,218 | ||
Goodwill | 471,427 | ||
Total purchase price | 821,645 | ||
Deferred income taxes, step-up | $ 50,700 |
Business Combination - Business
Business Combination - Business Acquisition, Pro Forma Information (Details) - Acquisition of Atkins - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Feb. 25, 2017 | Feb. 25, 2017 | |
Business Combination | ||
Revenue | $ 102,308 | $ 202,111 |
Gross profit | 46,573 | 95,285 |
Net income | $ 6,305 | $ 15,324 |
Goodwill and Intangibles - Sche
Goodwill and Intangibles - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Nov. 25, 2017 | Feb. 24, 2018 | |
Goodwill [Roll Forward] | ||
Beginning Balance | $ 465,030 | $ 465,030 |
Goodwill working capital adjustment | $ 1,800 | 1,757 |
Measurement period adjustment of the Business Combination | 4,640 | |
Ending Balance | $ 471,427 |
Goodwill and Intangibles - Narr
Goodwill and Intangibles - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Feb. 24, 2018 | Feb. 25, 2017 | Feb. 24, 2018 | Feb. 25, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill impairment charges | $ 0 | $ 0 | ||
Amortization expense | $ 1.6 | $ 2.2 | $ 3.3 | $ 4.4 |
Goodwill and Intangibles - Sc34
Goodwill and Intangibles - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Feb. 24, 2018 | Aug. 26, 2017 | |
Intangible assets with indefinite life: | ||
Intangible assets, Gross carrying amount | $ 320,000 | $ 320,000 |
Accumulated amortization | 4,104 | 852 |
Intangible assets, Net carrying amount | 315,896 | 319,148 |
Brands and trademarks | ||
Intangible assets with finite lives: | ||
Indefinite-lived intangible assets | $ 232,000 | $ 232,000 |
Customer relationships | ||
Intangible assets with indefinite life: | ||
Useful life | 15 years | 15 years |
Finite-lived intangible assets, Gross carrying amount | $ 59,000 | $ 59,000 |
Finite-lived intangible assets, Net carrying amount | 56,518 | 58,485 |
Accumulated amortization | $ 2,482 | $ 515 |
Proprietary recipes and formulas | ||
Intangible assets with indefinite life: | ||
Useful life | 7 years | 7 years |
Finite-lived intangible assets, Gross carrying amount | $ 7,000 | $ 7,000 |
Finite-lived intangible assets, Net carrying amount | 6,369 | 6,869 |
Accumulated amortization | $ 631 | $ 131 |
Licensing agreements | ||
Intangible assets with indefinite life: | ||
Useful life | 14 years | 14 years |
Finite-lived intangible assets, Gross carrying amount | $ 22,000 | $ 22,000 |
Finite-lived intangible assets, Net carrying amount | 21,009 | 21,794 |
Accumulated amortization | $ 991 | $ 206 |
Goodwill and Intangibles - Sc35
Goodwill and Intangibles - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Thousands | Feb. 24, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,018 | $ 3,253 |
2,019 | 6,505 |
2,020 | 6,505 |
2,021 | 6,505 |
2,022 | 6,505 |
2023 and thereafter | $ 54,623 |
Long-Term Debt and Line of Cr36
Long-Term Debt and Line of Credit - Narrative (Details) - Barclays Bank PLC and Other Parties - New Credit Facilities - USD ($) $ in Millions | Jul. 07, 2017 | Feb. 24, 2018 | Aug. 26, 2017 |
Debt Instrument [Line Items] | |||
Net leverage ratio (equal to or less than) | 6.25 | ||
Net leverage ratio post reduction (equal to or less than) | 6 | ||
Term Facility | |||
Debt Instrument [Line Items] | |||
Prepayment premium percent | 1.00% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Percent of commitments (in excess of) | 30.00% | ||
Line of Credit | Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.50% | ||
Line of Credit | Eurocurrency | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.00% | ||
Line of Credit | Term Facility | |||
Debt Instrument [Line Items] | |||
Borrowing capacity | $ 200 | ||
Maturity period | 7 years | ||
Line of Credit | Term Facility | Eurocurrency | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 3.00% | ||
Line of Credit | Term Facility | LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 4.00% | ||
Interest rate floor | 1.00% | ||
Line of Credit | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Borrowing capacity | $ 75 | ||
Maturity period | 5 years | ||
Outstanding debt | $ 0 | $ 0 | $ 0 |
Line of Credit | Revolving Credit Facility | Eurocurrency | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.00% | ||
Line of Credit | Revolving Credit Facility | LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 3.00% |
Long-Term Debt and Line of Cr37
Long-Term Debt and Line of Credit - Schedule of Debt (Details) - USD ($) $ in Thousands | Feb. 24, 2018 | Aug. 26, 2017 |
Debt Disclosure [Abstract] | ||
Debt, gross | $ 199,500 | $ 200,000 |
Less: Deferred Financing Fees | 7,264 | 7,910 |
Total Debt | 192,236 | 192,090 |
Less: Current maturities, net of deferred financing fees of $1.3 million at February 24, 2018 and August 26, 2017, respectively | 714 | 234 |
Long-term debt, net of deferred financing fees | 191,522 | 191,856 |
Deferred financing fees, current | $ 1,300 | $ 1,300 |
Fair Value of Financial Instr38
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 22, 2017 | Feb. 24, 2018 | Feb. 24, 2018 | Aug. 26, 2017 |
Liabilities | ||||
TRA liability | $ 27,290 | $ 27,290 | $ 25,675 | |
Change in fair value of contingent consideration | $ 4,700 | (3,668) | (3,026) | |
Level 1 | ||||
Liabilities | ||||
TRA liability | 0 | 0 | 0 | |
Level 2 | ||||
Liabilities | ||||
TRA liability | 0 | 0 | 0 | |
Level 3 | ||||
Liabilities | ||||
TRA liability | $ 27,290 | $ 27,290 | $ 25,675 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Feb. 24, 2018 | Feb. 25, 2017 | Feb. 24, 2018 | Feb. 25, 2017 | |
Entity Information [Line Items] | ||||
Income before income taxes | $ 14,603 | $ 31,311 | ||
Provision for income taxes | $ (26,791) | $ (20,301) | ||
Effective tax rate | (64.80%) | |||
(Predecessor) | ||||
Entity Information [Line Items] | ||||
Income before income taxes | $ 5,534 | $ 17,220 | ||
Provision for income taxes | $ 2,071 | $ 6,970 | ||
Effective tax rate | 40.50% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | Dec. 22, 2017 | Jul. 07, 2017 | Feb. 24, 2018 | Feb. 24, 2018 | Aug. 26, 2017 |
Entity Information [Line Items] | |||||
Provisional gain | $ 29,000 | ||||
Effective tax rate difference | (105.30%) | ||||
Gain in fair value change of contingent consideration - TRA liability | $ 4,700 | $ (3,668) | $ (3,026) | ||
TRA liability | 27,290 | $ 27,290 | $ 25,675 | ||
Tax savings rate | 29.20% | ||||
Acquisition of Atkins | |||||
Entity Information [Line Items] | |||||
TRA contingent payment (up to) | $ 100,000 | ||||
Percent of alternative minimum tax credit carryforwards | 75.00% | ||||
Alternative minimum tax credit carryforwards (up to) | $ 7,600 | $ 7,600 | |||
Percent of the value of the recorded tax attributes | 100.00% | 100.00% | |||
Percent of the deemed benefits | 100.00% | ||||
Imputed interest rate | 9.00% | ||||
TRA payment period | 90 days |
Income Taxes - Schedule of Undi
Income Taxes - Schedule of Undiscounted Future Expected Tax Receivable Agreement Payments (Details) $ in Thousands | Feb. 24, 2018USD ($) |
Income Tax Disclosure [Abstract] | |
2,018 | $ 2,637 |
2,019 | 16,027 |
2,020 | 11,728 |
2,021 | 1,595 |
2,022 | 183 |
2023 and thereafter | 106 |
Estimated future payments | $ 32,276 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Feb. 24, 2018USD ($) | Feb. 25, 2017USD ($) | Feb. 24, 2018USD ($)building | Feb. 25, 2017USD ($) | |
Entity Information [Line Items] | ||||
Number of buildings with non-cancelable operating leases | building | 9 | |||
Rent expense | $ 0.6 | $ 1.2 | ||
Other commitment payment obligation | $ 0.8 | $ 0.8 | ||
(Predecessor) | ||||
Entity Information [Line Items] | ||||
Rent expense | $ 0.3 | $ 0.9 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | Jul. 07, 2017shares | Feb. 24, 2018USD ($)$ / sharesshares | Feb. 25, 2017USD ($) | Feb. 24, 2018USD ($)trading_day$ / sharesshares | Feb. 25, 2017USD ($) | Aug. 26, 2017$ / sharesshares | Jul. 06, 2017shares |
Class of Stock [Line Items] | |||||||
Common stock shares authorized (in shares) | 600,000,000 | 600,000,000 | 600,000,000 | ||||
Common shares par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Common stock shares outstanding (in shares) | 70,582,573 | 70,582,573 | 70,562,477 | ||||
Warrants converted to shares (in shares) | 20,096 | 20,096 | |||||
Common stock shares issued (in shares) | 70,582,573 | 70,582,573 | 70,562,477 | ||||
Warrants issued (in shares) | 20,096,571 | 20,096,571 | |||||
Other income (expense) included in changes in warrant liabilities | $ | $ 0 | $ 0 | |||||
Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Shares issued at business combination (in shares) | 70,562,477 | ||||||
Number of shares authorized to purchase per warrant (in shares) | 1 | 1 | |||||
Warrant price per share (in dollars per share) | $ / shares | $ 11.50 | $ 11.50 | |||||
Scenario, Previously Reported | |||||||
Class of Stock [Line Items] | |||||||
Common stock shares outstanding (in shares) | 70,628,322 | ||||||
(Predecessor) | |||||||
Class of Stock [Line Items] | |||||||
Other income (expense) included in changes in warrant liabilities | $ | $ 1,119 | $ 397 | |||||
Public Warrants | |||||||
Class of Stock [Line Items] | |||||||
Warrants issued (in shares) | 13,416,667 | ||||||
Number of days after completion of business combination | 30 days | ||||||
Warrant expiration period | 5 years | ||||||
Warrant call price per share (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Written notice of redemption period (not less than) | 30 days | ||||||
Number of trading days within a 30-trading day period | trading_day | 20 | ||||||
Trading day period | 30 days | ||||||
Number of business days before notice of redemption | 3 days | ||||||
Public Warrants | Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Common stock price (equals or exceeds) (in dollars per share) | $ / shares | $ 18 | ||||||
Private Placement Warrants | |||||||
Class of Stock [Line Items] | |||||||
Warrants issued (in shares) | 6,700,000 | ||||||
Restricted Stock Units (RSUs) | |||||||
Class of Stock [Line Items] | |||||||
Outstanding restricted units (in shares) | 135,649 | 135,649 | 65,845 | ||||
Restricted Stock Units (RSUs) | Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Outstanding restricted units (in shares) | 65,845 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Feb. 24, 2018 | Feb. 24, 2018 | |
Numerator: | ||
Net income available to common stock shareholders | $ 41,394 | $ 51,612 |
Denominator: | ||
Weighted average common shares - basic (in shares) | 70,582,573 | 70,576,744 |
Basic earnings per share from net income (in dollars per share) | $ 0.59 | $ 0.73 |
Numerator: | ||
Net income available to common stock shareholders | $ 41,394 | $ 51,612 |
Denominator: | ||
Weighted average common shares - basic (in shares) | 70,582,573 | 70,576,744 |
Warrant conversion (in shares) | 3,202,726 | 2,000,021 |
Restricted stock units (in shares) | 46,908 | 28,940 |
Weighted average common shares - diluted (in shares) | 73,832,207 | 72,605,705 |
Diluted earnings per share from net income (in dollars per share) | $ 0.56 | $ 0.71 |
Stock Option Plan (Details)
Stock Option Plan (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Feb. 24, 2018 | Feb. 25, 2017 | Feb. 24, 2018 | Feb. 25, 2017 | Aug. 26, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock compensation expense | $ 900 | $ 1,967 | |||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock options issued (in shares) | 69,804 | ||||
Weighted average fir value (in dollars per share) | $ 11.97 | ||||
Outstanding restricted units (in shares) | 135,649 | 135,649 | 65,845 | ||
(Predecessor) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock compensation expense | $ 600 | $ 1,063 | |||
Common Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock options issued (in shares) | 67,400 | ||||
Exercisable price per share (in dollars per share) | $ 12 | ||||
Stock options outstanding (in shares) | 2,645,092 | 2,645,092 | |||
Exercise price per share (in dollars per share) | $ 12 | $ 12 | |||
Common Stock | Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Outstanding restricted units (in shares) | 65,845 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 25, 2017 | Feb. 25, 2017 | Feb. 24, 2018 | Feb. 25, 2017 | |
Related Party Transaction [Line Items] | ||||
Goodwill working capital adjustment | $ 1,800 | $ 1,757 | ||
Management fee | ||||
Related Party Transaction [Line Items] | ||||
Management fee expense | $ 600 | $ 1,000 | ||
(Predecessor) | Former Majority Stockholder, Atkins | Majority Shareholder | Management fee | ||||
Related Party Transaction [Line Items] | ||||
Percent of consolidated adjusted earnings before interest | 2.00% | |||
Minimum | (Predecessor) | Former Majority Stockholder, Atkins | Majority Shareholder | Management fee | ||||
Related Party Transaction [Line Items] | ||||
Management fee minimum | $ 900 | |||
Maximum | (Predecessor) | Former Majority Stockholder, Atkins | Majority Shareholder | Out-of-pocket expenses | ||||
Related Party Transaction [Line Items] | ||||
Annual reimbursements for out-of-pocket expenses maximum | $ 200 |
Segment and Customer Informat47
Segment and Customer Information (Details) | 6 Months Ended |
Feb. 24, 2018segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Subsequent Events (Details)
Subsequent Events (Details) - New Credit Facilities - Barclays Bank PLC and Other Parties - USD ($) $ in Millions | Mar. 16, 2018 | Jul. 07, 2017 |
Term Facility | ||
Subsequent Event [Line Items] | ||
Prepayment premium percent | 1.00% | |
Term Facility | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Outstanding debt | $ 200 | |
Line of Credit | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Prepayment premium percent | 1.00% | |
LIBOR | Line of Credit | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Basis spread on variable rate | 3.50% | |
LIBOR | Line of Credit | Term Facility | ||
Subsequent Event [Line Items] | ||
Basis spread on variable rate | 4.00% | |
Base Rate | Line of Credit | ||
Subsequent Event [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Base Rate | Line of Credit | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Basis spread on variable rate | 2.50% |