The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited combined interim
consolidated financial statements as of and for the twenty-six weeks ended July
3, 2022, together with our audited combined consolidated financial statements
for our most recently completed fiscal year set forth under Item 8 of our Annual
Report on Form 10-K. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those discussed below. Factors that could cause or contribute to such
differences include, but are not limited to, those identified below and those
discussed in Item 1A "Risk Factors" of our Annual Report on Form 10-K and other
filings under the Exchange Act.

Our fiscal year end is the Sunday closest to December 31. Our fiscal year 2021
ended January 2, 2022 and was a fifty-two-week period and our fiscal year 2022
will end January 1, 2023 and is a fifty-two-week fiscal year. Our fiscal
quarters are comprised of thirteen weeks each, except for fifty-three-week
fiscal periods of which the fourth quarter is comprised of fourteen weeks, and
end on the thirteenth Sunday of each quarter (fourteenth Sunday of the fourth
quarter, when applicable).

                                                                              23

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Overview



We are a leading United States manufacturer of branded salty snacks. We produce
a broad offering of salty snacks, including potato chips, tortilla chips,
pretzels, cheese snacks, pork skins, veggie snacks, pub/party mixes, and other
snacks. Our iconic portfolio of authentic, craft, and "better for you" brands,
which includes Utz®, ON THE BORDER®, Zapp's®, Golden Flake®, Good Health®,
Boulder Canyon®, Hawaiian® Brand, and TORTIYAHS!®, among others, enjoys strong
household penetration in the United States, where our products can be found in
approximately 49% of U.S. households. We operate manufacturing facilities across
the U.S. with a broad range of capabilities, and our products are distributed
nationally to grocery, mass merchant, club, convenience, drug and other
retailers through direct shipments, distributors, and approximately 2,000
direct-store-delivery ("DSD") routes. Our company was founded in 1921 in
Hanover, Pennsylvania, and benefits from over 100 years of brand awareness and
heritage in the salty snack industry. We have historically expanded our
geographic reach and product portfolio organically and through acquisitions.
Based on 2021 retail sales, we are the second-largest producer of branded salty
snacks in our core geographies. We have historically expanded our geographic
reach and product portfolio organically and through acquisitions.

Key Developments and Trends

Our management team monitors a number of developments and trends that could impact our revenue and profitability objectives.



Long-Term Demographics, Consumer Trends, and Demand - We participate in the
attractive and growing $32 billion U.S. salty snacks category, within the
broader greater than $105 billion market for U.S. snack foods as of June 22,
2022. The salty snacks category has grown retail sales at an approximately 7.1%
compound annual growth rate ("CAGR") from 2018 through 2021 with a major spike
in 2020 during the novel coronavirus ("COVID-19") pandemic consumption. In the
last few years, snacking occasions have been on the rise as consumers
increasingly seek out convenient, delicious snacks for both on-the-go and
at-home lifestyles. Additionally, the salty snacks category has historically
benefited from favorable competitive dynamics, including low private label
penetration and category leaders competing primarily through marketing and
innovation. We expect these consumer and category trends to continue to drive
strong retail sales growth for salty snacks.

As a staple food product with resilient consumer demand and a predominantly
domestic supply chain, the salty snack category is well positioned to navigate
periods of economic disruption or other unforeseen global events. The U.S. salty
snack category has demonstrated strong performance through economic downturns
historically, growing at a 4% CAGR from 2007 to 2010 during the last recession.
More recently, the U.S. salty snack category demonstrated strong performance
during the COVID-19 pandemic which began in March 2020 in the U.S. For the
thirteen weeks ended July 3, 2022, U.S. retail sales for salty snacks based on
IRI data increased by 14.8% versus the comparable prior year period. In the same
period, our retail sales increased 16.0%.

Competition - The salty snack industry is highly competitive and includes many
diverse participants. Our products primarily compete with other salty snacks but
also compete more broadly for certain eating occasions with other snack foods.
We believe that the principal competitive factors in the salty snack industry
include taste, convenience, product variety, product quality, price, nutrition,
consumer brand awareness, media and promotional activities, in-store
merchandising execution, customer service, cost-efficient distribution, and
access to retailer shelf space. We believe we compete effectively with respect
to each of these factors.

Operating Costs - Our operating costs include raw materials, labor,
manufacturing overhead, selling, distribution, and administrative expenses. We
manage these expenses through annual cost saving and productivity initiatives,
sourcing and hedging programs, pricing actions, refinancing and tax
optimization. Additionally, we maintain ongoing efforts led by our project
management office, or PMO, to expand our profitability, including implementing
significant reductions to our operating cost structure in both supply chain and
overhead costs. See Commodity Trends for more information on the current trends
of our Operating Costs.

Taxes - On March 27, 2020, The Coronavirus Aid, Relief, and Economic Security
Act ("CARES Act") was enacted which includes various tax provisions with
retroactive effect. The CARES Act is an approximately $2 trillion emergency
economic stimulus package in response to the COVID-19 outbreak, which among
other things contains numerous income tax provisions. Some of these tax
provisions are effective retroactively for years ending before the date of
enactment. We deferred $7.8 million of payroll tax deposits per the CARES Act.
The deferred payroll taxes must be deposited in two installments, with the first
installment of $3.9 million paid as of December 31, 2021, and the remaining $3.9
million due on December 31, 2022. We continue to evaluate the impact of the
CARES Act; however, we believe it is unlikely to have a material effect on our
consolidated financial position, results of operations, and cash flow.

24

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Financing Costs - We regularly evaluate our variable and fixed-rate debt. We
continue to use low-cost, short- and long-term debt to finance our ongoing
working capital, capital expenditures and other investments and dividends. Our
weighted average interest rate for the twenty-six weeks ended July 3, 2022 was
4.1%, up from 3.7% during the twenty-six weeks ended July 4, 2021. We have used
interest rate swaps to help manage some of our exposure to interest rate
changes, which can drive cash flow variability related to our debt. Refer to
Note 8. "Long-Term Debt" and Note 9. "Derivative Financial Instruments and
Purchase Commitments" to our unaudited condensed consolidated financial
statements included under Part I, Item 1 of this filing for additional
information on debt, derivative and purchase commitment activity.

LIBOR Transition - As of July 3, 2022, we had $849.1 million in variable rate
indebtedness, up from $823.2 million at January 2, 2022. As of July 3, 2022, our
variable rate indebtedness is tied to the Eurocurreny Rate which currently uses
the London Inter Bank Offered Rate ("LIBOR") as a benchmark for establishing
applicable rates. As of July 3, 2022, we have entered into interest rate hedges
covering $500.0 million of debt through September 30, 2026, which limits some of
our exposure to changes in interest rates. See Note 9. "Derivatives Financial
Instruments and Purchase Commitments" for additional details. On November 30,
2020, the Board of Governors of the Federal Reserve System, the Office of the
Comptroller of Currency and the Federal Deposit Insurance Corporation issued a
public statement that the administrator of LIBOR announced it will consult on an
extension of publication of certain U.S. Dollar LIBOR tenors until June 30,
2023, which would allow additional legacy USD LIBOR contracts to mature before
the succession of LIBOR. The Eurocurrency Rate could change benchmarks, the
extent and manner of any future changes with respect to methods of calculating
LIBOR or replacing LIBOR with another benchmark are unknown and impossible to
predict at this time and, as such, may result in interest rates that are
materially higher than current interest rates. If interest rates applicable to
our variable interest indebtedness increase, our interest expense will also
increase, which could make it difficult for us to make interest payments and
fund other fixed costs and, in turn, adversely impact our cash flow available
for general corporate purposes.

COVID-19 - In March 2020, the World Health Organization declared that COVID-19
constituted a "Public Health Emergency of International Concern" and later
characterized it as a "pandemic". In response, we have taken necessary
preventive actions and continue to implement safety measures to protect our
employees who are working on and off site. The same time period, March 2020,
also marked the beginning of COVID-19's impact on the consumption, distribution
and production of our products. Demand for product increased significantly for
several weeks in late March and into April 2020 as customers "pantry-loaded" in
response to "shelter-in-place" measures that were enacted in many markets.
Following that initial spike, in the weeks that followed, demand for product
continued to out-pace prior year rates as families have favored "at-home" dining
at a greater rate than pre-pandemic levels. We have serviced that demand by
increasing production and distribution activities. Our strategic manufacturing
capabilities and DSD distribution network have allowed us to effectively service
the increased demand and be responsive to evolving market dynamics driven by
changes in consumer behavior. During this time we picked up a significant number
of new customers and have experienced a high level of repeat customers within
fiscal year 2021 and the first and second quarters of 2022. We will continue to
monitor customer and consumer activity and adapt our plans as necessary to best
service the business.

Recent Developments and Significant Items Affecting Comparability

Acquisitions



On February 8, 2021, the Company closed on a definitive agreement with Snak-King
Corp. to acquire certain assets of the C.J. Vitner's business, ("Vitner's
acquisition" or "acquisition of Vitner's"), a leading brand of salty snacks in
the Chicago, IL area. The acquisition increases our distribution in the Chicago
area and Midwest Region and expands our product offering. The Company paid the
aggregate cash purchase price of approximately $25.2 million which was funded
from current cash-on-hand.

On May 11, 2021, the Company announced that its subsidiary, UQF, entered into a
definitive agreement with Great Lakes Festida Holdings, Inc. to acquire all
assets including real estate located in Grand Rapids, Michigan related to the
operations of Festida Foods ("Festida Foods acquisition" or "acquisition of
Festida Foods"), a manufacturer of tortilla chips, corn chips, and pellet
snacks, and the largest manufacturer of tortilla chips for the Company's ON THE
BORDER® brand. The Company closed this transaction on June 7, 2021 and the
purchase price of approximately $40.3 million was funded in part from
incremental financing on an existing term loan.


On November 2, 2021, the Company announced that certain of its subsidiaries,
entered into a definitive agreement to acquire R.W. Garcia Holdings, LLC and its
wholly-owned subsidiary, R.W. Garcia Co., Inc. ("RW Garcia"), to acquire the
equity of RW Garcia, an artisan maker of high-quality organic tortilla chips,
crackers, and corn chips ("RW Garcia acquisition"). The Company closed on this
transaction on December 6, 2021, with the purchase price of approximately
$57.8 million funded in part from a draw on the Company's line of credit and
cash on hand. In addition to this acquisition on December 6, 2021, the Company
closed on an acquisition of a manufacturing facility of which RW Garcia was a
tenant. The cost of the manufacturing facility was approximately $6.0 million.

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Commodity Trends



We regularly monitor worldwide supply and commodity costs so we can
cost-effectively secure ingredients, packaging and fuel required for production.
A number of external factors such as weather conditions, commodity market
conditions, and the effects of governmental, agricultural or other programs
affect the cost and availability of raw materials and agricultural materials
used in our products. We address commodity costs primarily through the use of
buying-forward, which locks in pricing for key materials between three and 18
months in advance. Other methods include hedging, net pricing adjustments to
cover longer term cost inflation, and manufacturing and overhead cost control.
Our hedging techniques, such as forward contracts, limit the impact of
fluctuations in the cost of our principal raw materials? however, we may not be
able to fully hedge against commodity cost changes, where there is a limited
ability to hedge, and our hedging strategies may not protect us from increases
in specific raw material costs. Toward the end of 2020, we began to experience
an increase in pricing in certain commodity trends that continued to rise
throughout fiscal year 2021 and have continued to rise through the second
quarter of 2022. We expect this trend to continue through 2022 and this may
adversely impact our net income. Additionally, the Company has experienced
rising costs related to fuel and freight rates as well as rising labor costs
which have negatively impacted profitability. Transportation costs have been on
the rise since early 2021 and may continue to rise which may also adversely
impact net income. Taken all together, the Company expects gross input cost
inflation (which includes commodities, labor, and transportation) to be in the
mid to high-teens in fiscal 2022. The Company looks to offset rising costs
through increasing manufacturing and distribution efficiencies as well as
through price increases to our customers, although it is unclear whether
historic customer sales levels will be maintained at these higher prices. Due to
competitive or market conditions, planned trade or promotional incentives, or
other factors, our pricing actions may also lag commodity cost changes.

While the costs of our principal raw materials fluctuate, we believe there will
continue to be an adequate supply of the raw materials we use and that they will
generally remain available from numerous sources. Market factors including
supply and demand may result in higher costs of sourcing those materials.

Independent Operator Conversions



Our DSD distribution is executed via Company-owned routes operated by route
sales professionals ("RSP" or "RSPs"), and third-party routes managed by IOs. We
have used the IO and RSP models for more than a decade. In fiscal year 2017, we
embarked on a multi-year strategy to convert all Company-owned RSP routes to the
IO model. The mix between IOs and RSP was approximately 91% and 9%, respectively
as of July 3, 2022 versus 83% and 17% ratio for IOs and RSPs respectively as of
July 4, 2021. We anticipate completing substantially all remaining conversions
by the end of fiscal year 2022. The conversion process involves selling
distribution rights of a defined route to an IO. As we convert a large number of
routes in a year, there is a meaningful decrease in the selling and
administrative costs that we previously incurred on RSPs and a corresponding
increase in discounts paid to IOs to cover their costs to distribute our
product. The net impact is a reduction in selling and distribution expenses and
a decrease in Net Sales and Gross Profit. Conversions also impact our balance
sheet resulting in cash proceeds to us as a result of selling the route to an
IO, or by creating notes receivable related to the sale of the routes.

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Results of Operations

Overview

The following tables present selected unaudited financial data for the thirteen and twenty-six weeks ended July 3, 2022 and July 4, 2021.



                                             Thirteen weeks        Thirteen weeks          Twenty-six            Twenty-six
                                              ended July 3,         ended July 4,          weeks ended           weeks ended
                                                  2022                  2021              July 3, 2022          July 4, 2021
Net sales                                    $    350,147          $    297,919          $    690,914          $    567,101
Cost of goods sold                                238,618               202,359               475,578               376,300
Gross profit                                      111,529                95,560               215,336               190,801
Selling, distribution, and administrative
expenses
Selling and distribution                           68,796                64,439               156,906               121,167
Administrative                                     38,816                29,041                77,367                58,974
Total selling, distribution, and
administrative expenses                           107,612                93,480               234,273               180,141
Gain on sale of assets, net                         1,375                 2,289                 1,742                 3,008
Income (loss) from operations                       5,292                 4,369               (17,195)               13,668
Other (expense) income
Interest expense                                  (10,727)               (7,896)              (19,830)              (18,757)
Other (expense) income                               (645)                  758                  (125)                1,476
Gain (loss) on remeasurement of warrant
liability                                           5,760                19,368                 7,704                (2,133)
Other (expense) income, net                        (5,612)               12,230               (12,251)              (19,414)
Income (loss) before taxes                           (320)               16,599               (29,446)               (5,746)
Income tax (benefit) expense                       (2,865)                  420                   (93)                1,424
Net income (loss)                            $      2,545          $     16,179          $    (29,353)         $     (7,170)

Thirteen weeks ended July 3, 2022 versus thirteen weeks ended July 4, 2021

Net sales



Net sales was $350.1 million and $297.9 million for the thirteen weeks ended
July 3, 2022 and July 4, 2021, respectively. The net sales increase of
$52.2 million or 17.5% for the thirteen weeks ended July 3, 2022, over the
comparable period in 2021, was primarily related to favorable price/mix of
13.0%, which was largely driven by pricing actions in the second half of 2021
and during the first half of 2022 as a response to inflationary pressures. In
addition, the 2021 acquisitions of Festida Foods and R.W. Garcia, as well as,
organic volume growth, and distribution gains at national customers and in key
geographies also contributed to the year-over-year revenue growth.

IO discounts increased to $39.3 million for the thirteen weeks ended July 3,
2022 from $30.4 million for the corresponding thirteen weeks ended July 4, 2021.
Excluding the impacts of acquisitions and increased IO discounts related to RSP
to IO conversion, organic net sales increased 13.6% for the thirteen weeks ended
July 3, 2022 versus the corresponding period in 2021.

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Net sales are evaluated based on classification as Power and Foundation brands.
Power brands include our iconic heritage Utz brand and iconic ON THE BORDER®
brand; craft brands such as Zapp's®, Golden Flake® Pork Skins, TORTIYAHS!, and
Hawaiian®; "better for you" brands such as Good Health® and Boulder Canyon®; and
selected licensed brands such as TGI Fridays®. Our Foundation brands are
comprised of several regional brands, including Bachman®, Golden Flake® Chips
and Cheese, Tim's Cascade® Snacks, Snyder of Berlin®, and "Dirty" Potato Chips®,
R.W. Garcia® and selected licensed brands such as Herdez® as well as other
partner and private label brands.

For the thirteen weeks ended July 3, 2022, excluding brands acquired through our
Vitner's, Festida Foods, and R. W. Garcia acquisitions, Power brand sales
increased by approximately 17.5%, while Foundation brand sales decreased by
approximately 0.2% from the thirteen weeks ended July 4, 2021. The increase in
Power brand sales is due primarily to favorable pricing actions and increased
sales volume, offset by continued IO conversions. Foundation brand sales
decrease was primarily driven IO conversions, and SKU rationalization, offset by
favorable pricing actions.

Cost of goods sold and Gross profit



Gross profit was $111.5 million and $95.6 million for the thirteen weeks ended
July 3, 2022 and July 4, 2021, respectively. The increase in gross profit for
thirteen weeks ended July 3, 2022 was driven by organic volume growth, the gross
profit contributions related to the acquisition of Festida Foods and R.W.
Garcia, and the benefits of leveraging our existing infrastructure and available
capacity while also improving efficiencies through productivity initiatives. In
addition, pricing initiatives were put in place to help reduce the impact of
continued commodity, transportation, and wage inflation.

Gross profit margin was 31.9% for the thirteen weeks ended July 3, 2022 versus
32.1% for the thirteen weeks ended July 4, 2021. The decline in gross profit
margin was primarily driven by commodity and wage inflation, higher depreciation
costs due to the acquired assets of Festida Foods and R.W. Garcia businesses,
offset by our pricing and productivity actions. Additionally, IO discounts
increased to $39.3 million for the thirteen weeks ended July 3, 2022 from $30.4
million for the thirteen weeks ended July 4, 2021, reducing gross profit by $8.9
million. The increase in IO discounts was driven by increased sales due to
volume growth and pricing actions, and continued conversions of DSD routes from
RSP to IO. The growth of IO discounts related to the conversion of DSD routes to
IOs is offset by lower selling and distribution expense.

Selling, distribution, and administrative expense



Selling, distribution, and administrative expenses were $107.6 million and
$93.5 million for the thirteen weeks ended July 3, 2022 and July 4, 2021,
respectively resulting in an increase of $14.1 million or 15.1% over the
corresponding period in fiscal year 2021. The increase in expenses for the
thirteen weeks ended July 3, 2022 was driven by higher delivery costs by $3.7
million and the addition of operational costs related to organic growth and the
acquired operations of Festida Foods and R.W. Garcia businesses, as well as,
wage inflation. These incremental costs were offset by the reductions of selling
costs related to the continued conversion of Company-owned RSP to IO routes.

Gain (loss) on sale of assets



Gain on sale of assets was $1.4 million and $2.3 million for the thirteen weeks
ended July 3, 2022 and July 4, 2021, respectively. The Company has continued to
convert Company-owned routes to IO routes during the second fiscal quarter of
2022, offsetting the sales price by the respective route intangible asset.

Other (expense) income, net



Other (expense) income, net was expense of $(5.6) million compared to income of
$12.2 million for the thirteen weeks ended July 3, 2022 and July 4, 2021,
respectively. The decrease in income for the thirteen weeks ended July 3, 2022
was primarily due to a $5.8 million gain from the remeasurement of warrant
liability for the thirteen weeks ended July 3, 2022 versus a gain of $19.4
million for the thirteen weeks ended July 4, 2021. Also significant was interest
expense of $10.7 million for the thirteen weeks ended July 3, 2022 compared to
$7.9 million for the thirteen weeks ended July 4, 2021. The additional increase
in interest expense is primarily attributable to the additional equipment loan
and ABL facility draws, as well as an uptick in interest rates, which impacted
the un-hedged portion of debt.

Income taxes

Income tax (benefit)/expense was $(2.9) million and $0.4 million for the thirteen weeks ended July 3, 2022 and July 4, 2021, respectively.

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Twenty-six weeks ended July 3, 2022 versus twenty-six weeks ended July 4, 2021

Net sales



Net sales was $690.9 million and $567.1 million for the twenty-six weeks ended
July 3, 2022 and July 4, 2021, respectively. Net sales for the twenty-six weeks
ended July 3, 2022 increased $123.8 million or 21.8% over the comparable period
in 2021. The increase in net sales for the twenty-six weeks ended July 3, 2022
was primarily related to favorable price/mix of 11.3%, which was largely driven
by pricing actions in the second half of 2021 and during the first half of 2022
as a response to inflationary pressures, as well as organic volume growth, and
the acquisitions of Vitner's, Festida Foods, and R.W. Garcia

IO discounts increased to $73.5 million for the twenty-six weeks ended July 3,
2022 from $56.9 million for the corresponding twenty-six weeks ended July 4,
2021. Excluding the impacts of acquisitions and increased IO discounts related
to RSP to IO conversion, organic net sales increased 16.9% for the twenty-six
weeks ended July 3, 2022 versus the corresponding period in 2021.

Net sales are evaluated based on classification as Power and Foundation brands.
Power brands include our iconic heritage Utz brand and iconic ON THE BORDER®
brand; craft brands such as Zapp's®, Golden Flake® Pork Skins, TORTIYAHS!, and
Hawaiian®; "better for you" brands such as Good Health® and Boulder Canyon®; and
selected licensed brands such as TGI Fridays®. Our Foundation brands are
comprised of several regional brands, including Bachman®, Golden Flake® Chips
and Cheese, Tim's Cascade® Snacks, Snyder of Berlin®, and "Dirty" Potato Chips®,
R.W. Garcia® and selected licensed brands such as Herdez® as well as other
partner and private label brands.

For the twenty-six weeks ended July 3, 2022, excluding brands acquired through
our Vitner's, Festida Foods, and R. W. Garcia acquisitions, Power brand sales
increased by approximately 22.3%, while Foundation brand sales increased
approximately 3.1% from the twenty-six weeks ended July 4, 2021. The increase in
Power brand sales is due primarily to favorable pricing actions and increased
sales volume, offset by continued IO conversions. Foundation brand sales
increase was primarily driven by favorable pricing actions offset by continued
IO conversion and SKU rationalization.

Cost of goods sold and Gross profit



Gross profit was $215.3 million and $190.8 million for the twenty-six weeks
ended July 3, 2022 and July 4, 2021, respectively. The increase in gross profit
for twenty-six weeks ended July 3, 2022 was driven by organic volume growth, the
gross profit contributions related to the acquisition of Vitner's, Festida
Foods, and R.W. Garcia, and the benefits of leveraging our existing
infrastructure and available capacity while also improving efficiencies through
productivity initiatives. In addition, pricing initiatives were put in place to
help reduce the impact of continued commodity, transportation, and wage
inflation.

Gross profit margin was 31.2% for the twenty-six weeks ended July 3, 2022 versus
33.6% for the twenty-six weeks ended July 4, 2021. The decline in gross profit
margin was primarily driven by commodity and wage inflation, higher depreciation
costs due to the acquired assets of Festida Foods and R.W. Garcia businesses,
offset by pricing and productivity actions. Additionally, IO discounts increased
to $73.5 million for the twenty-six weeks ended July 3, 2022 from $56.9 million
for the twenty-six weeks ended July 4, 2021, reducing gross profit by $16.6
million. The increase in IO discounts was driven by increased sales due to
volume growth and pricing actions, and continued conversions of DSD routes from
RSP to IO. The growth of IO discounts related to the conversion of DSD routes to
IOs is offset by lower selling and distribution expense.

Selling, distribution, and administrative expense



Selling, distribution, and administrative expenses were $234.3 million and
$180.1 million for the twenty-six weeks ended July 3, 2022 and July 4, 2021,
respectively, resulting in an increase of $54.1 million, or 30.0%, over the
corresponding period in fiscal year 2021. The increase in expenses for the
twenty-six weeks ended July 3, 2022 was driven by higher Acquisition and
Integration costs related to the buyout of multiple distributors, which were
accounted for as contract terminations, and resulted in expense of $23.0
million. In addition, other contract termination expense and related impairments
totaled a combined $2.6 million. Excluding these items selling, distribution,
and administrative expenses increased by 15.8% for the twenty-six weeks ended
July 3, 2022 compared to the corresponding period in fiscal year 2021. We
believe that these actions will help drive increased future profitability and
allow us to better serve our customers. Other significant contributors to the
increase in expense can be attributed to higher delivery costs by $8.6 million
and the addition of operational costs related to the acquired operations
Vitner's, Festida, and R.W. Garcia businesses, as well as, wage inflation
related to selling, distribution, and administrative employees. These
incremental costs were offset by the reductions of selling costs related to the
continued conversion out of Company-owned RSP to IO routes.

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Gain (loss) on sale of assets

Gain on sale of assets was $1.7 million and $3.0 million for the twenty-six weeks ended July 3, 2022 and July 4, 2021, respectively. The Company has continued to convert Company-owned routes to IO routes during the first and second fiscal quarters of 2022, offsetting the sales price by the respective route intangible asset.



Other (expense) income, net

Other expense, net was $(12.3) million and $(19.4) million for the twenty-six
weeks ended July 3, 2022 and July 4, 2021, respectively. The decrease in expense
for the twenty-six weeks ended July 3, 2022 was primarily due to a $7.7 million
gain from the remeasurement of warrant liability for the twenty-six weeks ended
July 3, 2022 versus a loss of $2.1 million for the twenty-six weeks ended
July 4, 2021. Also significant was interest expense of $19.8 million for the
twenty-six weeks ended July 3, 2022 compared to $18.8 million for the thirteen
weeks ended July 4, 2021. The additional increase in interest expense is
primarily attributable to the additional equipment loan draws as well as an
uptick in interest rates, which impacted the un-hedged portion of debt.

Income taxes

Income tax (benefit) expense was $(0.1) million and $1.4 million for the twenty-six weeks ended July 3, 2022 and July 4, 2021, respectively.

EBITDA and Adjusted EBITDA

We define EBITDA as Net Income before Interest, Income Taxes, and Depreciation and Amortization.



We define Adjusted EBITDA as EBITDA further adjusted to exclude certain non-cash
items, such as accruals for long-term incentive programs, hedging and purchase
commitments adjustments, remeasurement of warrant liabilities, and asset
impairments; Acquisition and Integration Costs; Business Transformation
Initiatives; and Financing-Related Costs.

Adjusted EBITDA is one of the key performance indicators we use in evaluating
our operating performance and in making financial, operating, and planning
decisions. We believe EBITDA and Adjusted EBITDA are useful to investors in the
evaluation of Utz's operating performance compared to other companies in the
salty snack industry, as similar measures are commonly used by companies in this
industry. We have also historically reported an Adjusted EBITDA metric to
investors and banks for covenant compliance. We also report Adjusted EBITDA as a
percentage of Net Sales as an additional measure for investors to evaluate our
Adjusted EBITDA margins on Net Sales.

The following table provides a reconciliation from net income (loss) to EBITDA
and Adjusted EBITDA for the thirteen and twenty-six weeks ended July 3, 2022 and
July 4, 2021:

                                                   Thirteen weeks ended       Thirteen weeks ended         Twenty-six weeks           Twenty-six weeks
(dollars in millions)                                  July 3, 2022               July 4, 2021            ended July 3, 2022         ended July 4, 2021
Net income (loss)                                  $         2.5              $        16.2              $       (29.4)             $        (7.2)
Plus non-GAAP adjustments:
Income Tax (Benefit) Expense                                (2.9)                       0.4                       (0.1)                       1.4
Depreciation and Amortization                               22.4                       19.1                       44.6                       38.6
Interest Expense, Net                                       10.7                        7.9                       19.8                       18.8
Interest Income (IO loans)(1)                               (0.4)                      (0.4)                      (0.9)                      (1.3)
EBITDA                                                      32.3                       43.2                       34.0                       50.3
Certain Non-Cash Adjustments(2)                              4.8                        2.8                        8.3                        7.0
Acquisition and Integration(3)                               7.2                        6.1                       36.0                        8.0
Business Transformation Initiatives(4)                       3.6                        2.4                        7.9                        5.7
Financing-Related Costs(5)                                   0.1                        0.6                        0.2                        0.6
(Gain) Loss on Remeasurement of Warrant
Liability(6)                                                (5.8)                     (19.4)                      (7.7)                       2.1
Adjusted EBITDA                                    $        42.2              $        35.7              $        78.7              $        73.7
Adjusted EBITDA as a % of Net Sales                         12.1      %                12.0      %                11.4      %                13.0      %


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(1)Interest Income from IO Loans refers to Interest Income that we earn from IO
notes receivable that have resulted from our initiatives to transition from RSP
distribution to IO distribution ("Business Transformation Initiatives"). There
is a notes payable recorded that mirrors most of the IO notes receivable, and
the interest expense associated with the notes payable is part of the Interest
Expense, Net adjustment.

(2)Certain Non-Cash Adjustments are comprised primarily of the following:



Incentive programs and other non-cash adjustments - For the thirteen weeks ended
July 3, 2022 and July 4, 2021, the Company incurred $3.3 million and $2.7
million, respectively, of share-based compensation and compensation expense
associated with the employee stock purchase plan. The thirteen and twenty-six
weeks ended July 3, 2022 also includes $1.5 million of unrealized purchase
commitment losses. For the twenty-six weeks ended July 3, 2022 and July 4, 2021,
the Company incurred $4.8 million and $5.6 million, respectively, of share-based
compensation and compensation expense associated with the employee stock
purchase plan. During the twenty-six weeks ended July 3, 2022, the Company
recorded an impairment of $2.0 million related to the termination of
distribution agreements.

(3)Adjustment for Acquisition and Integration Costs - This is comprised of
consulting, transaction services, and legal fees incurred for acquisitions and
certain potential acquisitions. The majority of charges are related to the
buyout of multiple distributors, which was accounted for as a contract
termination resulting in expense of $23.0 million for the twenty-six weeks ended
July 3, 2022 as well as other integration costs. During the thirteen and
twenty-six weeks ended July 3, 2022, we incurred incremental costs of $6.2
million and $12.0 million, respectively, for the integration of Truco, R.W.
Garcia, Kings Mountain, and costs to evaluate other potential acquisitions, as
well as, $1.0 million for the incremental Tax Receivable Agreement Liability
associated with the Business Combination. Acquisition and Integration costs
incurred primarily for the Vitner's acquisition, the Truco acquisition, and
related integration expenditures were $1.9 million and $3.9 million for the
thirteen and twenty-six weeks ended July 4, 2021, respectively, as well as $4.1
million related to distributor buyouts which was accounted for as contract
terminations for the thirteen and twenty-six weeks ended July 4, 2021.

(4)Business Transformation Initiatives Adjustment - This adjustment is related
to consultancy, professional, and legal fees incurred for specific initiatives
and structural changes to the business that do not reflect the cost of normal
business operations. In addition, gains and losses realized from the sale of
distribution rights to IOs and the subsequent disposal of trucks, severance
costs associated with the elimination of RSP positions, and ERP transition
costs, fall into this category. The Company incurred such costs of $3.6 million
and $2.4 million for the thirteen weeks ended July 3, 2022 and July 4, 2021,
respectively, and $6.3 million and $5.7 million for the twenty-six weeks ended
July 3, 2022 and July 4, 2021, respectively.

(5)Financing-Related Costs - These costs include adjustments for various items related to raising debt and equity capital or debt extinguishment costs.



(6)Gains and losses related to the changes in the remeasurement of warrant
liabilities are not expected to be settled in cash, and when exercised would
result in a cash inflow to the Company with the Warrants converting to Class A
Common Stock with the liability being extinguished and the fair value of the
Warrants at the time of exercise being recorded as an increase to equity.

Liquidity and Capital Resources

The following table presents net cash provided by operating activities, investing activities and financing activities for the twenty-six weeks ended July 3, 2022 and July 4, 2021.



                                                                       Twenty-six            Twenty-six
                                                                       weeks ended           weeks ended
(in thousands)                                                        July 3, 2022          July 4, 2021
Net cash used in operating activities                                $    (26,268)         $        (44)
Net cash used in investing activities                                $    (47,251)         $    (70,543)
Net cash provided by financing activities                            $     51,754          $     50,501


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For the twenty-six weeks ended July 3, 2022, our consolidated cash balance,
including cash equivalents, was $20.1 million or $21.8 million lower than at
January 2, 2022. Net cash used in operating activities for the twenty-six weeks
ended July 3, 2022 was $26.3 million compared to $0.0 million for the twenty-six
weeks ended July 4, 2021, with the difference largely driven by the payment of
$20.2 million in the first quarter of 2022 related to the buyout of multiple
distributors, which were accounted for as contract terminations. The twenty-six
weeks ended July 3, 2022 also included a larger cash outflow related to the
building of inventory compared to the prior year comparable period. Cash used in
investing activities for the twenty-six weeks ended July 3, 2022 was
$47.3 million driven by purchases of property and equipment offset by proceeds
from the sale of assets and receipt of an insurance claim, versus cash used in
investing activity of $70.5 million for the twenty-six weeks ended July 4, 2021,
which was primarily driven by the acquisition of Vitner's and Festida Foods. Net
cash provided by financing activities was $51.8 million for the twenty-six weeks
ended July 3, 2022, driven by an increase in the line of credit of
$29.8 million, borrowings on the equipment term loans and other notes payable of
$28.9 million, and proceeds from the issuance of shares of $28.0 million, offset
by cash payments on net settled stock based compensation, the payment of
dividends and distribution, and repayments on term debt and notes payable,
versus net cash used in financing activities of $50.5 million for the twenty-six
weeks ended July 4, 2021, which was primarily a result of the payoffs of the
First Term Loan and the Bridge Credit Agreement, payments of dividends and
distributions, offset by the borrowings under Term Loan B and proceeds from the
redemption of warrants.

Financing Arrangements

The primary objective of our financing strategy is to maintain a prudent capital
structure that provides us flexibility to pursue our growth objectives. We use
short-term debt as management determines is reasonable, principally to finance
ongoing operations, including our seasonal requirements for working capital
(generally accounts receivable, inventory, and prepaid expenses and other
current assets, less accounts payable, accrued payroll, and other accrued
liabilities), and a combination of equity and long-term debt to finance both our
base working capital needs and our non-current assets.

Revolving Credit Facility



On November 21, 2017, UBH entered into an asset based revolving credit facility
(as amended, the "ABL facility"), pursuant to the terms of that certain First
Lien Term Loan Credit Agreement, dated November 21, 2017 (the "Credit
Agreement"). On April 1, 2020, the ABL facility was amended to increase the
credit limit up to $116.0 million and to extend the maturity through August 22,
2024. On December 18, 2020, the ABL facility was amended to increase the credit
limit up to $161.0 million. As of July 3, 2022 and January 2, 2022,
$65.8 million and $36.0 million, respectively, were outstanding under this
facility. Availability under the ABL facility is based on a monthly accounts
receivable and inventory borrowing base certification, which is net of
outstanding letters of credit. As of July 3, 2022 and January 2, 2022, $82.8
million and $96.9 million, respectively, was available for borrowing, net of
letters of credit. The ABL facility is also subject to unused line fees (0.5% at
July 3, 2022) and other fees and expenses.

Standby letters of credit in the amount of $12.0 million and $10.3 million have
been issued as of July 3, 2022 and January 2, 2022, respectively. The standby
letters of credit are primarily issued for insurance purposes.

Term Loans



On December 14, 2020, the Company entered into a Bridge Credit Agreement with a
syndicate of banks, led by Bank of America, N.A. (the "Bridge Credit
Agreement"). The proceeds of the Bridge Credit Agreement were used to fund the
Company's acquisition of Truco and the IP Purchase from OTB Acquisition, LLC, in
which the Company withdrew $490.0 million to finance the Truco Acquisition and
IP Purchase. The Bridge Credit Agreement bears interest at an annual rate based
on 4.25% plus 1 month LIBOR with scheduled incremental increases to the base
rate, as defined in the Bridge Credit Agreement. The loan converts into an
Extended Term Loan if the Loan remains open 365 days after the closing date. As
of January 3, 2021, the outstanding balance of the Bridge Credit Agreement was
$370.0 million, with $120.0 million being repaid from the redemption of the
Company's warrants. Commitment fees and deferred financing costs on the Bridge
Credit Agreement totaled $7.2 million, of which $2.6 million was expended in the
thirteen weeks ended April 4, 2021. In connection with Amendment No. 2 to the
Credit Agreement, and a $12.0 million repayment in the first quarter of 2021,
the outstanding balance of $370.0 million was repaid in full.

On January 20, 2021, the Company entered into Amendment No. 2 to the Credit
Agreement ("Amendment No. 2") which provided additional operating flexibility
and revisions to certain restrictive covenants. Pursuant to the terms of
Amendment No. 2, the Company raised $720 million in aggregate principal of Term
Loan B ("Term Loan B") which bears interest at LIBOR plus 3.00%, and extended
the maturity of the Credit Agreement to January 20, 2028. The proceeds were
used, together with cash on hand and proceeds from our exercised warrants, to
redeem the outstanding principal amount of existing Term Loan B and Bridge
Credit Agreement of $410 million and $358 million, respectively. The refinancing
was accounted for as an extinguishment. The Company incurred debt issuance costs
and original issuance discounts of $8.4 million.

32

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On June 22, 2021, the Company entered into Amendment No. 3 to the Credit
Agreement ("Amendment No. 3"). Pursuant to the terms of Amendment No. 3, the
Company increased the principal balance of Term Loan B by $75.0 million to bring
the aggregated balance of Term Loan B proceeds to $795.0 million. The Company
incurred additional debt issuance costs and original issuance discounts of
$0.7 million related to the incremental funding.

The First Lien Term Loan, the Secured First Lien Note, Term Loan B, and the ABL
facility are collateralized by substantially all of the assets and liabilities
of the Company. The credit agreements contain certain affirmative and negative
covenants as to operations and the financial condition of the Company. The
Company was in compliance with its financial covenant as of July 3, 2022.

                                                                Principal                                                                                       January 2,
Debt (in thousands)                      Issue Date              Balance              Interest Rate              Maturity Date            July 3, 2022             2022
Term loan B                                June-21            $  795,000                        4.06  %           January-28            $     783,261          $  787,236
Equipment loans (1)                                                                    3.26%-5.77%                  Various                    49,747              26,655
ABL facility (2)                                                                                                                               65,824              36,000
Net impact of debt issuance
costs and original issue
discounts                                                                                                                                      (7,511)             (7,929)
Total long-term debt                                                                                                                          891,321             841,962
Less: current portion                                                                                                                         (14,255)            (11,414)
Long term portion of term debt
and financing obligations                                                                                                               $     877,066          $  830,548


(1) In July 2021, the Company entered into two separate finance lease
obligations with Banc of America Leasing & Capital, LLC, which have been treated
as secured borrowing. The Company has made a series of draws upon these
agreements totaling $25.6 million in fiscal 2022, with varying maturities up
through 2028.

(2) The facility bears interest at an annual rate based on LIBOR plus an
applicable margin of 1.75% (ranging from 1.50% to 2.00% based on availability)
or the prime rate plus an applicable margin of 0.75% (ranging from 0.50% to
1.00%). The Company generally utilizes the Prime rate for amounts that the
Company expects to pay down within 30 days, the interest rate on the facility as
of July 3, 2022 and July 4, 2021, which was 5.50% and 3.75%, respectively under
the Prime rate. The Company elects to use the LIBOR for balances that are
expected to be carried longer than 30 days, the interest rate on the ABL
facility as of July 3, 2022 was 3.35%. Had there been an outstanding balance and
the Company elected to use the LIBOR rate as of July 4, 2021, the interest rate
would have been 1.60%.

Other Notes Payable and Capital Leases



During the first fiscal quarter of 2022, we bought out and terminated the
contracts of multiple distributors who had previously been providing services to
the Company. These transaction were accounted for primarily as contract
terminations and resulted in expense of $23.0 million. As a condition of our
buyout of distributors an additional $3.1 million was outstanding as of July 3,
2022.

During the third quarter of 2021, the Company recorded liabilities related primarily to reclaiming distribution rights from distributors, of which $1.3 million was outstanding as of July 3, 2022 and January 2, 2022, respectively.

During the first fiscal quarter of 2020, the Company purchased intellectual property that include a deferred purchase price of $0.5 million, of which $0.3 million is outstanding as of July 3, 2022 and January 2, 2022, respectively.

33

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Amounts outstanding under notes payable consisted of the following:



                                               As of
(in thousands)                             July 3, 2022             As of January 2, 2022
Note payable - IO notes                   $      24,736         $                      24,822
Capital lease                                     7,876                                 8,166
Other                                             4,717                                 1,678
Total notes payable                              37,329                                34,666
Less: current portion                           (13,214)                              (9,957)

Long term portion of notes payable $ 24,115 $ 

            24,709


During fiscal 2019, the Company sold $33.2 million of notes receivable from IOs
on its books for $34.1 million in a series of transactions to a financial
institution. During fiscal 2021, the Company sold an additional $11.8 million of
notes receivable from IOs on its books for $12.5 million in a series of
transactions to a financial institution. During fiscal 2022, the Company sold an
additional $5.0 million of notes receivable from IOs on its books for $5.0
million. Due to the structure of the transactions, they did not qualify for sale
accounting treatment and the Company has recorded the notes payable obligation
owed by the IOs to the financial institution on its books; the corresponding
notes receivable also remained on the Company's books. The Company services the
loans for the financial institution by collecting principal and interest from
the IOs and passing it through to the institution. The underlying notes have
various maturity dates through June 2032. The Company partially guarantees the
outstanding loans, as discussed in further detail within Note 11.
"Contingencies". These loans are collateralized by the routes for which the
loans are made. Accordingly, the Company has the ability to recover
substantially all of the outstanding loan value upon default.

Interest Expense

Interest expense consisted of the following:


                                            Thirteen weeks          Thirteen weeks         Twenty-six weeks        Twenty-six weeks
                                             ended July 3,           ended July 4,           ended July 3,           ended July 4,
(in thousands)                                   2022                    2021                    2022                    2021
Company's ABL facility and other
long-term debt                             $       10,073          $        7,254          $       18,404          $       14,828
Amortization of deferred financing
fees                                                  343                     298                     684                   3,168
IO loans                                              311                     344                     742                     761
Total interest                             $       10,727          $        7,896          $       19,830          $       18,757


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Off-Balance Sheet Arrangements

Purchase Commitments



The Company has outstanding purchase commitments for specific quantities at
fixed prices for certain key ingredients to economically hedge commodity input
prices. These purchase commitments totaled $93.2 million as of July 3, 2022. The
Company accrues for losses on firm purchase commitments in a loss position at
the end of each reporting period to the extent that there is an active
observable market. The Company has recorded purchase commitment losses totaling
$1.1 million and $0.0 million for the thirteen weeks ended July 3, 2022 and
July 4, 2021, respectively, and $1.0 million and $0.0 million for the twenty-six
weeks ended July 3, 2022 and July 4, 2021, respectively.

IO Guarantees-Off-Balance Sheet



The Company partially guarantees loans made to IOs by Cadence Bank for the
purchase of routes. The outstanding balance of loans guaranteed was $1.8 million
and $2.2 million at July 3, 2022 and January 2, 2022, respectively, all of which
was recorded by the Company as an off balance sheet arrangement. The maximum
amount of future payments the Company could be required to make under the
guarantees equates to 25% of the outstanding loan balance up to $2.0 million.
These loans are collateralized by the routes for which the loans are made.
Accordingly, the Company has the ability to recover substantially all of the
outstanding loan value upon default.

The Company partially guarantees loans made to IOs by Bank of America for the
purchase of routes. The outstanding balance of loans guaranteed that were issued
by Bank of America was $28.6 million and $18.6 million at July 3, 2022 and
January 2, 2022, respectively, which are off balance sheet. As discussed in Note
8. "Long-Term Debt", the Company also sold notes receivable on its books to Bank
of America during fiscal 2019 and fiscal 2021, which the Company partially
guarantees. The outstanding balance of notes purchased by Bank of America at
July 3, 2022 and January 2, 2022 was $21.1 million and $19.7 million,
respectively. Due to the structure of the transactions, the sale did not qualify
for sale accounting treatment, and as such the Company records the notes payable
obligation owed by the IOs to the financial institution on its Consolidated
Balance Sheets; the corresponding note receivable also remained on the Company's
Consolidated Balance Sheets. The maximum amount of future payments the Company
could be required to make under these guarantees equates to 25% of the
outstanding loan balance on the first day of each calendar year plus 25% of the
amount of any new loans issued during such calendar year. These loans are
collateralized by the routes for which the loans are made. Accordingly, the
Company has the ability to recover substantially all of the outstanding loan
value upon default.

The Company guarantees loans made to IOs by M&T Bank for the purchase of routes.
The agreement with M&T Bank was amended in January 2020 so that the Company
guaranteed up to 25% of the greater of the aggregate principal amount of loans
outstanding on the payment date or January 1st of the subject year. The
outstanding balance of loans guaranteed was $4.1 million and $4.9 million at
July 3, 2022 and January 2, 2022, respectively, all of which was the Company's
consolidated balance sheets. These loans are collateralized by the routes for
which the loans are made. Accordingly, the Company has the ability to recover
substantially all of the outstanding loan value upon default.

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New Accounting Pronouncements



See Note 1. "Operations and Summary of Significant Accounting Policies," to the
unaudited condensed consolidated financial statements contained in Part I, Item
1 of this Quarterly Report on Form 10-Q.

Application of Critical Accounting Policies and Estimates

General



Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. While the
majority of our revenue, expenses, assets and liabilities are not based on
estimates, there are certain accounting principles that require management to
make estimates regarding matters that are uncertain and susceptible to change.
Critical accounting policies are defined as those policies that are reflective
of significant judgments, estimates and uncertainties, which could potentially
result in materially different results under different assumptions and
conditions. Management regularly reviews the estimates and assumptions used in
the preparation of our financial statements for reasonableness and adequacy. Our
significant accounting policies are discussed in Note 1. "Operations and Summary
of Significant Accounting Policies", of the unaudited Consolidated Financial
Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q?
however, the following discussion pertains to accounting policies we believe are
most critical to the portrayal of our financial condition and results of
operations and that require significant, difficult, subjective or complex
judgments. Other companies in similar businesses may use different estimation
policies and methodologies, which may affect the comparability of our financial
condition, results of operations and cash flows to those of other companies.

Revenue Recognition



Our revenues primarily consist of the sale of salty snack items that are sold
through DSD and Direct-To-Warehouse distribution methods, either directly to
retailers or via distributors. We sell to supermarkets, mass merchandisers, club
warehouses, convenience stores and other large-scale retailers, merchants,
distributors, brokers, wholesalers, and IOs (which are third party businesses).
These revenue contracts generally have a single performance obligation. Revenue,
which includes shipping and handling charges billed to the customer, is reported
net of variable consideration and consideration payable to customers, including
applicable discounts, returns, allowances, trade promotion, consumer coupon
redemption, unsaleable product, and other costs. Amounts billed and due from
customers are classified as receivables and require payment on a short-term
basis and, therefore, we do not have any significant financing components.

We recognize revenue when (or as) performance obligations are satisfied by
transferring control of the goods to customers. Control is transferred upon
delivery of the goods to the customer. Shipping and/or handling costs that occur
before the customer obtains control of the goods are deemed to be fulfillment
activities and are accounted for as fulfillment costs. Applicable shipping and
handling are included in customer billing and are recorded as revenue as
products' control is transferred to customers. We assess the goods promised in
customers' purchase orders and identify a performance obligation for each
promise to transfer a good that is distinct.

We offer various forms of trade promotions and the methodologies for determining
these provisions are dependent on local customer pricing and promotional
practices, which range from contractually fixed percentage price reductions to
provisions based on actual occurrence or performance. Our promotional activities
are conducted either through the retail trade or directly with consumers and
include activities such as in store displays and events, feature price
discounts, consumer coupons, and loyalty programs. The costs of these activities
are recognized at the time the related revenue is recorded, which normally
precedes the actual cash expenditure. The recognition of these costs therefore
requires management judgment regarding the volume of promotional offers that
will be redeemed by either the retail trade or consumer. These estimates are
made using various techniques including historical data on performance of
similar promotional programs. In 2019, we implemented a system that improves our
ability to analyze and estimate the reserve for unpaid costs relating to our
promotional activities. Differences between estimated expense and actual
redemptions are recognized as a change in management estimate as the actual
redemption incurred.

36

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Distribution Route Purchase and Sale Transactions



We purchase and sell distribution routes as a part of our maintenance of our DSD
network. As new IOs are identified, we either sell our existing routes to the
IOs or sell routes that were previously purchased by us to the IOs. Gain/loss
from the sale of a distribution route is recorded upon the completion of the
sale transaction and signing of the relevant documents and is calculated based
on the difference between the sale price of the distribution route and the asset
carrying value of the distribution route as of the date of sale. We record
intangible assets for distribution routes that we purchase based on the payment
that we make to acquire the route and record the purchased distribution routes
as indefinite-lived intangible assets under Financial Accounting Standards Board
Accounting Standards Codification ("ASC") 350, Intangibles - Goodwill and Other.
The indefinite lived intangible assets are subject to annual impairment testing.

Goodwill and Indefinite-Lived Intangibles



We allocate the cost of acquired companies to the identifiable tangible and
intangible assets acquired and liabilities assumed, with the remaining amount
classified as goodwill. The identification and valuation of these intangible
assets and the determination of the estimated useful lives at the time of
acquisition, as well as the completion of impairment tests, require significant
management judgments and estimates. These estimates are made based on, among
other factors, review of projected future operating results and business plans,
economic projections, anticipated highest and best use of future cash flows and
the cost of capital. The use of alternative estimates and assumptions could
increase or decrease the estimated fair value of goodwill and other intangible
assets, and potentially result in a different impact to our results of
operations. Further, changes in business strategy and/or market conditions may
significantly impact these judgments and thereby impact the fair value of these
assets, which could result in an impairment of the goodwill or intangible
assets.

Finite-lived intangible assets consist of distribution/customer relationships,
technology, trademarks and non-compete agreements. These assets are being
amortized over their estimated useful lives. Finite-lived intangible assets are
tested for impairment only when management has determined that potential
impairment indicators are present.

Goodwill and other indefinite-lived intangible assets (including trade names,
master distribution rights and Company-owned routes) are not amortized but are
tested for impairment at least annually and whenever events or circumstances
change that indicate impairment may have occurred. We test goodwill for
impairment at the reporting unit level.

As we have early adopted Accounting Standards Update 2017-04, Simplifying the
Test for Goodwill Impairment, we will record an impairment charge based on the
excess of a reporting unit's carrying amount over our fair value.

ASC 350, Goodwill and Other Intangible Assets also permits an entity to first
assess qualitative factors to determine whether it is necessary to perform
quantitative impairment tests for goodwill and indefinite-lived intangibles. If
an entity believes, as a result of each qualitative assessment, it is more
likely than not that goodwill or an indefinite-lived intangible asset is not
impaired, a quantitative impairment test is not required.

We have identified the existing snack food operations as our sole reporting
unit. For the qualitative analysis performed, which took place on the first day
of the fourth quarter of 2021, we have taken into consideration all the events
and circumstances listed in FASB ASC 350, Intangibles-Goodwill and Other, in
addition to other entity-specific factors that have taken place. We have
determined that there was no significant impact that affected the fair value of
the reporting unit through July 3, 2022. Therefore, we have determined that it
was not necessary to perform a quantitative goodwill impairment test for the
reporting unit.

Income Taxes

We account for income taxes pursuant to the asset and liability method of ASC
740, Income Taxes, which require us to recognize current tax liabilities or
receivables for the amount of taxes we estimate are payable or refundable for
the current year, and deferred tax assets and liabilities for the expected
future tax consequences attributable to temporary differences between the
financial statement carrying amounts and their respective tax bases of assets
and liabilities and the expected benefits of net operating loss and credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
operations in the period enacted. A valuation allowance is provided when it is
more likely than not that a portion or all of a deferred tax asset will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income and the reversal of deferred tax liabilities
during the period in which related temporary differences become deductible.

We follow the provisions of ASC 740-10 related to the accounting for uncertainty
in income taxes recognized in an enterprise's financial statements. ASC 740-10
prescribes a comprehensive model for the financial statement recognition,
measurement, presentation and disclosure of uncertain tax positions taken or
expected to be taken in income tax returns.

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The benefit of tax positions taken or expected to be taken in our income tax
returns is recognized in the financial statements if such positions are more
likely than not of being sustained upon examination by taxing authorities.
Differences between tax positions taken or expected to be taken in a tax return
and the benefit recognized and measured pursuant to the interpretation are
referred to as "unrecognized benefits". A liability is recognized (or amount of
net operating loss carryover or amount of tax refundable is reduced) for an
unrecognized tax benefit because it represents an enterprise's potential future
obligation to the taxing authority for a tax position that was not recognized as
a result of applying the provisions of ASC 740-10. Interest costs and related
penalties related to unrecognized tax benefits are required to be calculated, if
applicable. Our policy is to classify assessments, if any, for tax related
interest as interest expense and penalties as selling and administrative
expenses. As of July 3, 2022 and January 2, 2022, no liability for unrecognized
tax benefits was required to be reported. We do not expect any significant
changes in our unrecognized tax benefits in the next year.

Business Combinations



We evaluate acquisitions of assets and other similar transactions to assess
whether or not the transaction should be accounted for as a business combination
or asset acquisition by first applying a screen test to determine if
substantially all of the fair value of the gross assets acquired is concentrated
in a single identifiable asset or group of similar identifiable assets. If the
screen is met, the transaction is accounted for as an asset acquisition. If the
screen is not met, further determination is required as to whether or not we
have acquired inputs and processes that have the ability to create outputs which
would meet the definition of a business. Significant judgment is required in the
application of the screen test to determine whether an acquisition is a business
combination or an acquisition of assets.

We use the acquisition method in accounting for acquired businesses. Under the
acquisition method, our financial statements reflect the operations of an
acquired business starting from the completion of the acquisition. The assets
acquired and liabilities assumed are recorded at their respective estimated fair
values at the date of the acquisition. Any excess of the purchase price over the
estimated fair values of the identifiable net assets acquired is recorded as
goodwill.

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