RAVE RESTAURANT GROUP, INC. The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year endedJune 27, 2021 and may contain certain forward-looking statements that are based on current management expectations. Generally, verbs in the future tense and the words "believe," "expect," "anticipate," "estimate," "intends," "opinion," "potential" and similar expressions identify forward-looking statements. Forward-looking statements in this report include, without limitation, statements relating to our business objectives, our customers and franchisees, our liquidity and capital resources, and the impact of our historical and potential business strategies on our business, financial condition, and operating results. Our actual results could differ materially from our expectations. Further information concerning our business, including additional factors that could cause actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q, are set forth in our Annual Report on Form 10-K for the year endedJune 27, 2021 . These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The forward-looking statements contained herein speak only as of the date of this Quarterly Report on Form 10-Q and, except as may be required by applicable law, we do not undertake, and specifically disclaim any obligation to, publicly update or revise such statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Results of Operations OverviewRave Restaurant Group, Inc. , through its subsidiaries (collectively, the "Company" or "we," "us" or "our") franchises pizza buffet ("Buffet Units"), delivery/carry-out ("Delco Units") and express ("Express Units") restaurants under the trademark "Pizza Inn " and franchises fast casual pizza restaurants ("Pie Five Units") under the trademarks "Pie Five Pizza Company " or "Pie Five". The Company also licensesPizza Inn Express , or PIE, kiosks ("PIE Units") under the trademark "Pizza Inn". We facilitate food, equipment and supply distribution to our domestic and international system of restaurants through agreements with third party distributors. AtSeptember 26, 2021 , franchised and licensed units consisted of the following: Three Months EndedSeptember 26, 2021 (in thousands, except unit data) Pizza Inn Pie Five All Concepts Ending Retail Ending Retail Ending Retail Units Sales Units Sales Units Sales Domestic Franchised/Licensed 133$ 20,347 33$ 5,060 166$ 25,407 International Franchised 32 - 32 14
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Domestic units are located in 19 states predominantly situated in the southern
half of
Basic net income per common share increased$0.02 per share to$0.02 per share for the three months endedSeptember 26, 2021 , compared to basic net income of$0.00 per share in the comparable period in the prior fiscal year. The Company had net income of$285 thousand for the three months endedSeptember 26, 2021 compared to net income of$76 thousand in the comparable period in the prior fiscal year, on revenues of$2.6 million for the three months endedSeptember 26, 2021 compared to$1.9 million in the comparable period in the prior fiscal year. The increase in revenue was primarily due to increases in franchise royalties, advertising funds contributions, and supplier convention funds.
COVID-19 Pandemic
OnMarch 11, 2020 , theWorld Health Organization declared the outbreak of novel coronavirus (COVID-19) as a pandemic, and the disease has spread rapidly throughoutthe United States and the world. Federal, state and local responses to the COVID-19 pandemic, as well as our internal efforts to protect customers, franchisees and employees, have severely disrupted our business operations. Most of the domestic Pizza Inn buffet restaurants and Pie Five restaurants are in areas that were for varying periods subject to "shelter-in-place" and social distancing restrictions prohibiting in-store sales and, therefore, were limited to carry-out and/or delivery orders. In some areas, these restrictions limited non-essential movement outside the home, which discouraged or even precluded carryout orders. In most cases, in-store dining has now resumed subject to seating capacity limitations, social distancing protocols, and enhanced cleaning and disinfecting practices. Further, the COVID-19 pandemic has precipitated significant job losses, a labor shortage in restaurant service workers, and a national economic downturn that typically impacts the demand for restaurant food service. Although most of our domestic restaurants have continued to operate under these conditions, we have experienced temporary closures from time to time during the pandemic. We have not experienced any significant shortages of supplies or any significant delays in receiving our food or beverage inventories, restaurant supplies or products, but disruption of supply chains as a result of COVID-19 or other factors could cause difficulty in obtaining inventories or supplies in the foreseeable future. The COVID-19 pandemic has resulted in dramatically reduced aggregate in-store retail sales at Buffet Units and Pie Five Units, modestly offset by increased aggregate carry-out and delivery sales. The decreased aggregate retail sales have correspondingly decreased supplier rebates and franchise royalties payable to the Company. During the fourth quarter of fiscal 2020, we participated in a government-sponsored loan program. (See, "Liquidity and Capital Resources--PPP Loan," below.) We also temporarily furloughed certain employees and reduced base salary by 20% for all remaining employees for the fourth quarter of fiscal 2020, as well as reducing other expenses. While the Company will remain focused on controlling expenses, future results of operations could be materially adversely impacted by the pandemic and its aftermath. We expect that some Buffet Units and Pie Five Units could continue to be subject to capacity restrictions for some time as social distancing protocols remain in place. Additionally, an outbreak or perceived outbreak of COVID-19 connected to restaurant dining could cause negative publicity directed at any of our brands and cause customers to avoid our restaurants. We cannot predict how long the pandemic will last or whether it will reoccur, what additional restrictions may be enacted, to what extent off-premises dining will continue, to what extent the labor shortage will continue, if individuals will be comfortable returning to our Buffet Units and Pie Five Units following social distancing protocols, or if distributions of supply chains will cause difficulty in obtaining inventories or supplies in the foreseeable future. Any of these changes could materially adversely affect the Company's future financial performance. However, the ultimate impact of COVID-19 on our future results of operations and liquidity cannot presently be predicted.
Non-GAAP Financial Measures and Other Terms
The Company's financial statements are prepared in accordance withUnited States generally accepted accounting principles ("GAAP"). However, the Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating performance. Management may also use such non-GAAP financial measures in evaluating the effectiveness of business strategies and for planning and budgeting purposes. However, these non-GAAP financial measures should not be viewed as an alternative or substitute for the results reflected in the Company's GAAP financial statements. 15
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We consider EBITDA and Adjusted EBITDA to be important supplemental measures of operating performance that are commonly used by securities analysts, investors and other parties interested in our industry. We believe that EBITDA is helpful to investors in evaluating our results of operations without the impact of expenses affected by financing methods, accounting methods and the tax environment. We believe that Adjusted EBITDA provides additional useful information to investors by excluding non-operational or non-recurring expenses to provide a measure of operating performance that is more comparable from period to period. We believe that restaurant operating cash flow is a useful metric to investors in evaluating the ongoing operating performance of Company-owned restaurants and comparing such store operating performance from period to period. Management also uses these non-GAAP financial measures for evaluating operating performance, assessing the effectiveness of business strategies, projecting future capital needs, budgeting and other planning purposes.
The following key performance indicators presented herein, some of which represent non-GAAP financial measures, have the meaning and are calculated as follows:
? "EBITDA" represents earnings before interest, taxes, depreciation and
amortization.
? "Adjusted EBITDA" represents earnings before interest, taxes, depreciation and
amortization, stock compensation expense, gain/loss on sale of assets, costs
related to impairment and other lease charges, franchisee default and closed
store revenue/expense, and closed and non-operating store costs.
? "Retail sales" represents the restaurant sales reported by our franchisees,
which may be segmented by brand or domestic/international locations.
? "System-wide retail sales" represents combined retail sales for franchisee and
Company-owned restaurants for a specified brand.
? "Comparable store retail sales" includes the retail sales for restaurants that
have been open for at least 18 months as of the end of the reporting period.
The sales results for a restaurant that was closed temporarily for remodeling
or relocation within the same trade area are included in the calculation only
for the days that the restaurant was open in both periods being compared.
? "Store weeks" represent the total number of full weeks that specified
restaurants were open during the period.
? "Average units open" reflects the number of restaurants open during a reporting
period weighted by the percentage of the weeks in a reporting period that each
restaurant was open.
? "Average weekly sales" for a specified period is calculated as total retail
sales (excluding partial weeks) divided by store weeks in the period.
? "Restaurant operating cash flow" represents the pre-tax income earned by
Company-owned restaurants before (1) allocated marketing and advertising
expenses, (2) impairment and other lease charges, and (3) non-operating store
costs.
? "Non-operating store costs" represent gain or loss on asset disposal, store
closure expenses, lease termination expenses and expenses related to abandoned
store sites.
? "Franchisee default and closed store revenue/expense" represents the net of
accelerated revenues and costs attributable to defaulted area development
agreements and closed franchised stores.
Adjusted EBITDA
Adjusted EBITDA for the fiscal quarter ended
RAVE RESTAURANT GROUP, INC.
ADJUSTED EBITDA
(In thousands)
Three Months Ended
September 26, September 27,
2021 2020
Net income $ 285 $ 76
Interest expense 24 23
Income taxes 3 2
Depreciation and amortization 44 44
EBITDA $ 356 $ 145
Stock compensation expense 42 -
Severance 33 -
Impairment of long-lived assets and other lease charges - 17
Franchisee default and closed store revenue (1 ) (67 )
Closed and non-operating store costs 1 82
Adjusted EBITDA $ 431 $ 177
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IndexPizza Inn Brand Summary The following tables summarize certain key indicators for the Pizza Inn franchised and licensed domestic units that management believes are useful in evaluating performance: Three Months Ended September 26, September 27, 2021 2020 Pizza Inn Retail Sales - Total Domestic Units (in thousands, except unit data) Domestic Units Buffet Units - Franchised $ 18,645$ 14,724 Delco/Express Units - Franchised 1,642 1,536 PIE Units - Licensed 60 59 Total Domestic Retail Sales $ 20,347$ 16,319 Pizza Inn Comparable Store Retail Sales - Total Domestic 19,768 15,812Pizza Inn Average Units Open in Period Domestic Units Buffet Units - Franchised 71 79 Delco/Express Units - Franchised 52 55 PIE Units - Licensed 10 12 Total Domestic Units 133 146Total Pizza Inn domestic retail sales increased$4.0 million , or 24.7%, for the three months endedSeptember 26, 2021 when compared to the same period of the prior year. Pizza Inn domestic comparable store retail sales increased by$4.0 million , or 25.0%, for the three months endedSeptember 26, 2021 when compared to the same period of the prior year. The following chart summarizes Pizza Inn unit activity for the three months endedSeptember 26, 2021 : Three Months Ended September 26, 2021 Beginning Concept Ending Units Opened Change Closed Units Domestic Units Buffet Units - Franchised 70 1 - - 71 Delco/Express Units - Franchised 54 - - 2 52 PIE Units - Licensed 11 - - 1 10 Total Domestic Units 135 1 - 3 133 International Units (all types) 32 - - - 32 Total Units 167 1 - 3 165 There was a net decrease of two domestic Pizza Inn units during the three months endedSeptember 26, 2021 . We believe the net closure of Pizza Inn units will continue in the near term and eventually reverse in future periods. During the quarter, the number of international Pizza Inn units remained stable. We expect international units to increase modestly in future periods. 17
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Pie Five Brand Summary
The following tables summarize certain key indicators for the Pie Five
franchised and Company-owned restaurants that management believes are useful in
evaluating performance:
Three Months Ended
September 26, September 27,
2021 2020
(in thousands, except unit data)
Pie Five Retail Sales - Total Units
Domestic Units - Franchised $ 5,060 $ 4,507
Domestic Units - Company-owned - -
Total Domestic Retail Sales $ 5,060 $ 4,507
Pie Five Comparable Store Retail Sales - Total $
4,745 $ 4,039
Pie Five Average Units Open in Period Domestic Units - Franchised 33 39 Domestic Units - Company-owned - - Total Domestic Units 33 39 Pie Five system-wide retail sales increased$0.6 million , or 12.3%, for the three months endedSeptember 26, 2021 when compared to the same period of the prior year. Pie-Five comparable store retail sales increased by$0.7 million , or 17.5%, for the three months endedSeptember 26, 2021 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average units open in the period decreased from 39 to 33. The following chart summarizes Pie Five Unit activity for the three months endedSeptember 26, 2021 : Three Months Ended September 26, 2021 Beginning Ending Units Opened Transfer Closed Units Domestic - Franchised 33 - - - 33 Domestic - Company-owned - - - - - Total Domestic Units 33 - - - 33
Pie Five units remained stable during the three months ended
Pie Five -
We closed our single remaining Company-owned Pie Five restaurant during the third quarter of fiscal 2020. Loss from continuing operations before taxes for Company-owned Pie Five stores decreased$99 thousand for the three months endedSeptember 26, 2021 to$1 thousand compared to$100 thousand during the same period of the prior year. The decreased loss was the result of the closure of all remaining Company-owned restaurants. 18
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Index Financial Results The Company defines its operating segments asPizza Inn Franchising ,Pie Five Franchising and Company-Owned Restaurants . The following is additional business segment information for the three months endedSeptember 26, 2021 andSeptember 27, 2020 (in thousands): Pizza Inn Pie Five Company-Owned Franchising Franchising Restaurants Corporate Total Fiscal Quarter Ended Fiscal Quarter Ended Fiscal Quarter Ended Fiscal Quarter Ended Fiscal Quarter Ended September 26, September
27,
September 27, September 26, September 27, September 26, September 27,
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
REVENUES:
Franchise and license revenues $ 2,034 $ 1,380 $ 468 $ 476 $ - $ - $ - $ - $ 2,502 $ 1,856
Rental income - - - - - - 47 48 47 48
Interest income and other - - 4 - - - - (1 ) 4 (1 )
Total revenues 2,034 1,380 472 476 - - 47 47 2,553 1,903
COSTS AND EXPENSES:
Cost of sales - - - - - 78 - - - 78
General and administrative expenses - - - - 1 5 1,205 1,084 1,206 1,089
Franchise expenses 759 280 227 267 - - - - 986 547
Loss (gain) on sale of assets - - - - - - - - - -
Impairment of long-lived assets and
other lease charges - - - - - 17 - - - 17
Bad debt expense - - - - - - 5 27 5 27
Interest expense - - - - - - 24 23 24 23
Depreciation and amortization expense - - - - - - 44 44 44 44
Total costs and expenses 759 280 227 267 1 100 1,278 1,178 2,265 1,825
INCOME/(LOSS) BEFORE TAXES $ 1,275 $ 1,100 $ 245 $ 209 $ (1 ) $ (100 ) $ (1,231 ) $ (1,131 ) $ 288 $ 78
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Index Revenues: Revenues are derived from franchise royalties, franchise license fees, supplier and distributor incentives, advertising funds, area development exclusivity fees and foreign master license fees, and supplier convention funds. The volume of supplier incentive revenues is dependent on the level of chain-wide retail sales, which are impacted by changes in comparable store sales and restaurant count, and the products sold to franchisees through third-party food distributors. Total revenues for the three month period endedSeptember 26, 2021 and for the same period in the prior fiscal year were$2.6 million and$1.9 million , respectively. The increase in revenue was primarily due to increases in franchise royalties, advertising funds contributions, and supplier convention funds.Pizza Inn Franchise Revenues Pizza Inn franchise and license revenues increased by$0.7 million to$2.0 million for the three month period endedSeptember 26, 2021 as compared to the same period in the prior fiscal year. The increase was driven by increases in supplier incentives, domestic royalties and advertising fund revenues.
Pie Five Franchise Revenues
Pie Five franchise and license revenues remained relatively stable at
Costs and Expenses:
Cost of Sales
Cost of sales, which primarily includes food and supply costs, labor, and general and administrative expenses directly related to Company-owned restaurant sales, decreased to zero for the three month period endedSeptember 26, 2021 from the$78 thousand in the three month period endedSeptember 27, 2020 . The decrease in costs of sales in the three month period reflects the closure of the single remaining Company-owned restaurant and the end of associated general and administrative expenses (primarily rent and utilities) attributable to closed stores.
General and Administrative Expenses
Total general and administrative expenses increased$0.1 million to$1.2 million for the three month period endedSeptember 26, 2021 compared to$1.1 million for the same period of the prior fiscal year. The increase was primarily the result of increased advertising spend.
Franchise Expenses
Franchise expenses include general and administrative expenses directly related to the continuing service of domestic and international franchises. Franchise expenses increased to$1.0 million for the three month period endedSeptember 26, 2021 compared to$0.5 million for the same period in the prior fiscal year.
Loss (Gain) on Sale of Assets
We had no sale of assets in either the fiscal quarter ended
Impairment of Long-lived Assets and Other Lease Charges
Impairment of long-lived assets and other lease charges was zero for the three
month period ended
Bad Debt Expense
The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company's exposure to high risk accounts receivable. Bad debt expense for the three month period endedSeptember 26, 2021 decreased$22 thousand as compared to the comparable period in the prior fiscal year. 20
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Index Interest Expense
Interest expense remained stable in the three month period ended
Depreciation and Amortization Expense
Depreciation and amortization remained stable in the three month period ended
Provision for Income Tax
For the three months endedSeptember 26, 2021 , the Company recorded an income tax expense of$3 thousand , all of which is attributable to current state taxes. The Company utilized net operating losses to offset federal taxes. The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance. As ofSeptember 26, 2021 , the Company had established a full valuation allowance of$6.3 million against its deferred tax assets. The Company will continue to review the need for an adjustment to the valuation allowance. Liquidity and Capital Resources
During the three month period ended
Cash flows from operating activities generally reflect net income or losses adjusted for certain non-cash items including depreciation and amortization, changes in deferred tax assets, share based compensation, and changes in working capital. Cash used by operating activities was$343 thousand for the three month period endedSeptember 26, 2021 compared to cash used of$7 thousand for the three month period endedSeptember 27, 2020 . The primary driver of decreased cash flows during the three month period endedSeptember 26, 2021 was liabilities related to accrued expenses. Cash flows from investing activities reflect net proceeds from the sale of assets and capital expenditures for the purchase of Company assets. Cash provided by investing activities of$19 thousand during the three month period endedSeptember 26, 2021 was primarily attributable to payments received on notes receivable of$57 thousand partially offset by$27 thousand used in the purchase of intangible assets definite-lived. Cash used in investing activities during the three month period endedSeptember 27, 2020 of$23 thousand was primarily attributed to capital expenditures of$27 thousand partially offset by$4 thousand in payments received on notes receivable. Cash flows from financing activities generally reflect changes in the Company's stock and debt activity during the period. Net cash flow used by financing activities was$130 thousand for the three month period endedSeptember 26, 2021 compared to$3 thousand for the three month period endedSeptember 27, 2020 . Cash flows from financing activities for the three months endedSeptember 26, 2021 was attributable to the short term loan. Cash flows from financing activities for the three months endedSeptember 27, 2020 was attributable to equity issuance costs. As a result of the COVID-19 pandemic, we have taken aggressive measures to control expenses and expect modest cash flow from operations during the second quarter of fiscal 2022. Management believes the cash on hand combined with cash from operations will be sufficient to fund operations for the next 12 months.
2017 ATM Offering
OnDecember 5, 2017 , the Company entered into an At Market Issuance Sales Agreement withB. Riley FBR, Inc. ("B. Riley FBR") pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to$5,000,000 from time to time throughB. Riley FBR acting as agent (the "2017 ATM Offering"). The 2017 ATM Offering has been undertaken pursuant to Rule 415 and a shelf Registration Statement on Form S-3 which was declared effective by theSEC onNovember 6, 2017 . ThroughSeptember 26, 2021 , the Company had sold an aggregate of 3,064,342 shares in the 2017 ATM Offering, realizing aggregate gross proceeds of$4.4 million . The 2017 ATM Offering expired onNovember 6, 2020 . 21
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Index Convertible Notes OnMarch 3, 2017 , the Company completed a registered shareholder rights offering of its 4% Convertible Senior Notes due 2022 ("Notes"). Shareholders exercised subscription rights to purchase all 30,000 of the Notes at the par value of$100 per Note, resulting in gross offering proceeds to the Company of$3.0 million . The Notes bear interest at the rate of 4% per annum on the principal or par value of$100 per note, payable annually in arrears onFebruary 15 of each year, commencingFebruary 15, 2018 . Interest is payable in cash or, at the Company's discretion, in shares of Company common stock. The Notes mature onFebruary 15, 2022 , at which time all principal and unpaid interest will be payable in cash or, at the Company's discretion, in shares of Company common stock. The Notes are secured by a pledge of all outstanding equity securities of our two primary direct operating subsidiaries. Noteholders may convert their notes to common stock as of the 15th day of any calendar month, unless the Company sooner elects to redeem the notes. The conversion price is$2.00 per share of common stock. Accrued interest will be paid through the effective date of the conversion in cash or, at the Company's sole discretion, in shares of Company common stock. During the three month period endedSeptember 26, 2021 , none of the Notes were converted to common shares. As ofSeptember 26, 2021 ,$1.6 million in par value of the Notes were outstanding, offset by$13 thousand of unamortized debt issue costs and unamortized debt discounts.
PPP Loan
OnApril 13, 2020 , the Company received the proceeds from a loan in the amount of$0.7 million (the "PPP Loan") fromJPMorgan Chase Bank, N.A . (the "Lender") pursuant to the Paycheck Protection Program (the "PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") administered by theU.S. Small Business Administration ("SBA"). The PPP Loan was unsecured by the Company and was guaranteed by the SBA. We applied for and received a forgiveness decision in the fourth quarter of fiscal 2021, such that all of the PPP Loan was forgiven at that time. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities. The Company bases its estimates on historical experience and various other assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed periodically. Actual results could differ materially from estimates. The Company believes the following critical accounting policies require estimates about the effect of matters that are inherently uncertain, are susceptible to change, and therefore require subjective judgments. Changes in the estimates and judgments could significantly impact the Company's results of operations and financial condition in future periods. Accounts receivable consist primarily of receivables generated from franchise royalties and supplier incentives. The Company records a provision for doubtful receivables to allow for any amounts which may be unrecoverable based upon an analysis of the Company's prior collection experience, customer creditworthiness and current economic trends. Actual realization of accounts receivable could differ materially from the Company's estimates. The Company reviews long-lived assets for impairment when events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the assets compared to their carrying value. If impairment is recognized, the carrying value of an impaired asset is reduced to its fair value, based on discounted estimated future cash flows. Franchise revenue consists of income from license fees, royalties, area development and foreign master license agreements, advertising fund revenues, supplier incentive and convention contribution revenues. Franchise fees, area development and foreign master license agreement fees are amortized into revenue on a straight-line basis over the term of the related contract agreement. Royalties and advertising fund revenues, which are based on a percentage of franchise retail sales, are recognized as income as retail sales occur. Supplier incentive revenues are recognized as earned, typically as the underlying commodities are shipped. The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a "more likely than not" standard. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight is given to evidence that can be objectively verified, including recent losses. Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance. 22
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The Company accounts for uncertain tax positions in accordance with ASC 740-10, which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. ASC 740-10 requires that a company recognize in its financial statements the impact of tax positions that meet a "more likely than not" threshold, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As ofSeptember 26, 2021 andSeptember 27, 2020 , the Company had no uncertain tax positions. The Company assesses its exposures to loss contingencies from legal matters based upon factors such as the current status of the cases and consultations with external counsel and provides for the exposure by accruing an amount if it is judged to be probable and can be reasonably estimated. If the actual loss from a contingency differs from management's estimate, operating results could be adversely impacted.
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