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Franchise Group, Inc. (the "Company") is filing this Quarterly Report on Form 10-Q/A, Amendment No. 1 (the “Amended Report”) to amend its Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2022 originally filed with the Securities and Exchange Commission (“SEC”) on August 4, 2022 (the “Original Report”). The purpose of this Amended Report is to amend and restate our Condensed Consolidated Statement of Cash Flows as of and for the six months ended June 25, 2022. Details regarding the restatement can be found in Note 15 "Restatement of Previously Issued Financial Statements" in this Amended Report.

The restatement has no impact on the balance sheet, the income statement or the operations of the Company. An explanation of the impact on the Company’s financial statements, and the Condensed Consolidated Statement of Cash Flows as of and for the six months ended June 25, 2022 as originally reported is contained in Note 15 “Impact of Corrections on Previously Issued Consolidated Financial Statements” in this Amended Report.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  
FORM 10-Q/A

Amendment No. 1
 
   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended June 25, 2022
 
OR
 
         Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from             to            
 
Commission File Number 001-35588
 
Franchise Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 27-3561876
(State of incorporation) (IRS employer identification no.)
 
109 Innovation Court, Suite J
Delaware, Ohio 43015
(Address of principal executive offices)
(740) 363-2222
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $.01 per shareFRGNASDAQ Global Market
7.50% Series A Cumulative Preferred Stock, par value $0.01 per share and liquidation preference of $25.00 per shareFRGAPNASDAQ Global Market
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.  Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
 Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No

The number of shares outstanding of the registrant's common stock, par value $0.01 value per share, as of July 29, 2022 was 40,361,906 shares.



Explanatory Note

Franchise Group, Inc. (the "Company") is filing this Quarterly Report on Form 10-Q/A, Amendment No. 1 (the “Amended Report”) to amend its Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2022 originally filed with the Securities and Exchange Commission (“SEC”) on August 4, 2022 (the “Original Report”). The purpose of this Amended Report is to amend and restate the Company's Condensed Consolidated Statement of Cash Flows as of and for the six months ended June 25, 2022. Details regarding the restatement can be found in Note 15 "Restatement of Previously Issued Financial Statements" in this Amended Report.

The restatement has no impact on the balance sheet, the income statement or the operations of the Company. An explanation of the impact on the Company’s financial statements, and the Condensed Consolidated Statement of Cash Flows as of and for the six months ended June 25, 2022 as originally reported is contained in Note 15 “Impact of Corrections on Previously Issued Consolidated Financial Statements” in this Amended Report.
Items Amended in This Amended Report

This Amended Report amends and restates the following items of the Original Report as of and for the fiscal quarter ended June 25, 2022:

Part I — Item 1. Financial Statements (Unaudited)
Part I — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part I — Item 4. Controls and Procedures
Part II — Item 6. Exhibits

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), this Amended Report includes new certifications specified in Rule 13a-14 under the Exchange Act, from the Company's Chief Executive Officer and Chief Financial Officer dated as of the date of filing of this Amended Report.

Pursuant to Rule 12b-15 under the Exchange Act, this Amended Report contains only the items and exhibits to the Original Report that are being amended and restated, and unaffected items and exhibits are not included herein. Except as noted herein, the information included in the Original Report remains unchanged. This Amended Report continues to describe the conditions as of the date of the Original Report and, except as contained herein, we have not updated or modified the disclosures contained in the Original Report to reflect any events that have occurred after the Original Report. Accordingly, forward-looking statements included in this Amended Report may represent management’s views as of the Original Report and should not be assumed to be accurate as of any date thereafter. This Amended Report should be read in conjunction with the Company's filings made with the SEC subsequent to the filing of the Original Report, including any amendment to those filings.



FRANCHISE GROUP, INC. AND SUBSIDIARIES
 
Form 10-Q for the Quarterly Period Ended June 25, 2022
 
Table of Contents
 
  Page Number
   
   
 
 
 
 
   
   



PART I. FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS (UNAUDITED)
1


FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)

 Three Months EndedSix Months Ended
 (In thousands, except share count and per share data)June 25, 2022June 26, 2021June 25, 2022June 26, 2021
Revenues: 
Product$952,009 $805,768 $1,931,173 $1,389,585 
Service and other135,648 48,193 283,929 76,768 
Rental7,341 8,797 15,365 17,750 
Total revenues1,094,998 862,758 2,230,467 1,484,103 
Operating expenses:  
Cost of revenue:
   Product600,780 522,576 1,217,364 861,991 
   Service and other8,732 934 17,395 1,339 
   Rental2,741 2,935 5,603 5,940 
Total cost of revenue612,253 526,445 1,240,362 869,270 
Selling, general, and administrative expenses405,639 278,157 782,633 503,702 
Total operating expenses1,017,892 804,602 2,022,995 1,372,972 
Income from operations77,106 58,156 207,472 111,131 
Other expense:  
Bargain purchase gain3,581  3,514  
Gain on sale-leaseback transactions, net49,854  49,854  
Other12,853  (9,122)(36,726)
Interest expense, net(88,839)(22,865)(181,167)(70,300)
Income from continuing operations before income taxes54,555 35,291 70,551 4,105 
Income tax expense (benefit)13,572 2,770 17,250 (81)
Income from continuing operations40,983 32,521 53,301 4,186 
Income from discontinued operations, net of tax 6,215  48,363 
Net income attributable to Franchise Group, Inc.$40,983 $38,736 $53,301 $52,549 
Income per share from continuing operations:
Basic$0.96 $0.76 $1.22 $ 
Diluted0.94 0.74 1.19  
Net income per share:  
Basic$0.96 $0.91 $1.22 $1.20 
Diluted0.94 0.89 1.19 1.20 
Weighted-average shares outstanding:
Basic40,356,299 40,175,058 40,331,855 40,142,571 
Diluted41,126,605 40,905,567 41,148,668 40,142,571 

See accompanying notes to condensed consolidated financial statements.
2


FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

 Three Months EndedSix Months Ended
(In thousands)June 25, 2022June 26, 2021June 25, 2022June 26, 2021
Net income$40,983 $38,736 $53,301 $52,549 
Other comprehensive income (loss)
Unrealized (gain) loss on interest rate swap agreement, net of taxes of $0, $(1), $0, and $13, respectively
 (2) 45 
Foreign currency translation adjustment 158  381 
Forward contracts related to foreign currency exchange rates (17)  
Other comprehensive income 139  426 
Comprehensive income$40,983 $38,875 $53,301 $52,975 
 
 See accompanying notes to condensed consolidated financial statements.
3


FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share count and per share data)June 25, 2022December 25, 2021
Assets
Current assets:
Cash and cash equivalents$95,038 $292,714 
Current receivables, net 178,687 118,698 
Current securitized receivables, net322,028 369,567 
Inventories, net825,393 673,170 
Current assets held for sale27,999  
Other current assets26,389 24,063 
Total current assets1,475,534 1,478,212 
Property, plant, and equipment, net226,771 449,886 
Non-current receivables, net10,402 11,755 
Non-current securitized receivables, net40,820 47,252 
Goodwill806,653 806,536 
Intangible assets, net122,347 127,951 
Tradenames222,703 222,687 
Operating lease right-of-use assets866,226 714,741 
Investment in equity securities24,394 35,249 
Other non-current assets19,151 18,902 
Total assets$3,815,001 $3,913,171 
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term obligations$322,363 $486,170 
Current operating lease liabilities178,278 173,101 
Accounts payable and accrued expenses 425,728 410,552 
Other current liabilities41,671 50,833 
Total current liabilities968,040 1,120,656 
Long-term obligations, excluding current installments1,281,530 1,383,725 
Non-current operating lease liabilities 701,185 557,071 
Other non-current liabilities 95,392 88,888 
Total liabilities3,046,147 3,150,340 
Stockholders' equity:
Common stock, $0.01 par value per share, 180,000,000 shares authorized, 40,358,754 and 40,296,688 shares issued and outstanding at June 25, 2022 and December 25, 2021, respectively.
404 403 
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized, and 4,541,125 shares issued and outstanding at June 25, 2022 and December 25, 2021, respectively.
45 45 
Additional paid-in capital486,059 475,396 
Retained earnings282,346 286,987 
Total equity768,854 762,831 
Total liabilities and equity$3,815,001 $3,913,171 

See accompanying notes to condensed consolidated financial statements.
4


FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)  
Three Months Ended June 25, 2022
(In thousands)Common stock sharesCommon stockPreferred stock sharesPreferred stockAdditional paid-in-capitalAccumulated other comprehensive lossRetained earningsTotal Franchise Group equity
Balance at March 26, 202240,354 $404 4,541 $45 $480,628 $ $270,609 $751,686 
Net income— — — — — — 40,983 40,983 
Stock-based compensation expense, net4  — — 5,407 — — 5,407 
Issuance of common stock1 — — — 24 — — 24 
Common dividend declared ($0.625 per share)— — — — — — (27,117)(27,117)
Preferred dividend declared ($0.469 per share)— — — — — — (2,129)(2,129)
Balance at June 25, 202240,359 $404 4,541 $45 $486,059 $ $282,346 $768,854 

Six Months Ended June 25, 2022
(In thousands)Common stock sharesCommon stockPreferred stock sharesPreferred stockAdditional paid-in-capitalAccumulated other comprehensive lossRetained earningsTotal Franchise Group equity
Balance at December 25, 202140,297 $403 4,541 $45 $475,396 $ $286,987 $762,831 
Net income— — — — — — 53,301 53,301 
Exercise of stock options15 — — — 180 — — 180 
Stock-based compensation expense, net46 1 — — 10,434 — — 10,435 
Issuance of common stock1 — — — 49 — — 49 
Common dividend declared ($0.625 per share)— — — — — — (53,685)(53,685)
Preferred dividend declared ($0.469 per share)— — — — — — (4,257)(4,257)
Balance at June 25, 202240,359 $404 4,541 $45 $486,059 $ $282,346 $768,854 


5


FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

Three Months Ended June 26, 2021
(In thousands)Common stock sharesCommon stockPreferred stock sharesPreferred stockAdditional paid-in-capitalAccumulated other comprehensive lossRetained earningsTotal Franchise Group equity
Balance at March 27, 202140,157 $402 4,541 $45 $464,106 $(1,112)$19 $463,460 
Net income— — — — — — 38,736 38,736 
Total other comprehensive income— — — — — 139 — 139 
Exercise of stock options33 — — — 360 — — 360 
Stock-based compensation expense, net18  — — 2,884 — — 2,884 
Issuance of Series A Preferred Stock— —   1 — — 1 
Common dividend declared ($0.375 per share)— — — — — — (15,457)(15,457)
Preferred dividend declared ($0.469 per share)— — — — — — (2,128)(2,128)
Balance at June 26, 202140,208 $402 4,541 $45 $467,351 $(973)$21,170 $487,995 

Six Months Ended June 26, 2021
(In thousands)Common stock sharesCommon stockPreferred stock sharesPreferred stockAdditional paid-in-capitalAccumulated other comprehensive lossRetained earningsTotal Franchise Group equity
Balance at December 26, 202040,092 $401 1,250 $13 $382,383 $(1,399)$3,769 $385,167 
Net income— — — — — — 52,549 52,549 
Total other comprehensive income— — — — — 426 — 426 
Exercise of stock options36 — — — 385 — — 385 
Stock-based compensation expense, net80 1 — — 5,073 — — 5,074 
Issuance of Series A Preferred Stock— — 3,291 32 79,510 — — 79,542 
Common dividend declared ($0.375 per share)— — — — — — (30,891)(30,891)
Preferred dividend declared ($0.469 per share)— — — — — — (4,257)(4,257)
Balance at June 26, 202140,208 $402 4,541 $45 $467,351 $(973)$21,170 $487,995 

See accompanying notes to condensed consolidated financial statements.
6



FRANCHISE GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
(In thousands)June 25, 2022June 26, 2021
As Restated (1)
Operating Activities 
Net income$53,301 $52,549 
Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
Provision for doubtful accounts56,840 1,910 
Depreciation, amortization, and impairment charges42,236 31,157 
Amortization of deferred financing costs and prepayment penalties12,032 69,923 
Amortization of securitized debt discount59,618 — 
Stock-based compensation expense10,853 5,478 
Change in fair value of investment10,855  
Gain on sale-leaseback, bargain purchases, and sales of Company-owned stores(55,883)(731)
Other non-cash items(2,182)645 
Changes in operating assets and liabilities(238,903)(55,305)
Net cash provided by (used in) operating activities(51,233)105,626 
Investing Activities 
Purchases of property, plant, and equipment(21,809)(25,028)
Proceeds from sale of property, plant, and equipment240,558 293 
Acquisition of business, net of cash and restricted cash acquired(3,754)(462,821)
Issuance of operating loans to franchisees (17,612)
Payments received on operating loans to franchisees1,000 23,013 
Net cash provided by (used in) investing activities215,995 (482,155)
Financing Activities 
Dividends paid(54,665)(32,808)
Issuance of long-term debt and other obligations219,056 1,306,724 
Repayment of long-term debt and other obligations(524,825)(856,385)
Issuance of common stock49  
Issuance of preferred stock 79,542 
Principal payments of finance lease obligations(1,383) 
Payment for debt issue costs and prepayment penalty on extinguishment(431)(87,502)
Other stock compensation transactions(239)(18)
Net cash provided by (used in) financing activities(362,438)409,553 
Effect of exchange rate changes on cash, net 142 
Net increase (decrease) in cash equivalents and restricted cash(197,676)33,166 
Cash, cash equivalents and restricted cash at beginning of period292,714 151,502 
Cash, cash equivalents and restricted cash at end of period$95,038 $184,668 
Supplemental Cash Flow Disclosure 
Cash paid for taxes, net of refunds$17,842 $1,284 
Cash paid for interest42,013 61,249 
Accrued capital expenditures 2,751 3,406 
Capital expenditures funded by finance lease liabilities 1,211 
(1) As restated - See Note 15 "Restatement of Previously Issued Financial Statements" to Condensed Consolidated Financial Statements. See accompanying notes to condensed consolidated financial statements.
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The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Statements of Cash Flows.
(In thousands)June 25, 2022June 26, 2021
Cash and cash equivalents$95,038 $165,432 
Restricted cash included in other non-current assets 367 
Cash and cash equivalents for discontinued operations 18,869 
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows$95,038 $184,668 

Amounts included in other non-current assets represent those required to be set aside by a contractual agreement with an insurer for the payment of specific workers’ compensation claims.
8


FRANCHISE GROUP, INC. AND SUBSIDIARIES
 
Notes to Unaudited Condensed Consolidated Financial Statements
 
June 25, 2022 and June 26, 2021
 
(1) Basis of Presentation
 
Unless otherwise stated, references to the "Company," "we," "us," and "our" in this Quarterly Report on Form 10-Q (the "Quarterly Report") refer to Franchise Group, Inc. and its direct and indirect subsidiaries on a consolidated basis. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the Company's Form 10-K for the year ended December 25, 2021 that was filed with the Securities and Exchange Commission (“SEC”) on February 23, 2022 (the “Form 10-K”).

In the opinion of management, all adjustments (including those of a normal recurring nature) necessary for a fair presentation of such condensed consolidated financial statements in accordance with GAAP have been recorded. The December 25, 2021 balance sheet information was derived from the audited financial statements as of that date.

Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13, "Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which changes how companies will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The standard replaces the "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost (which generally will result in the earlier recognition of allowances for losses) and requires companies to record allowances for available-for-sale debt securities, rather than reduce the carrying amount. In addition, companies will have to disclose significantly more information, including information used to track credit quality by year of origination, for most financing receivables. The ASU should be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the standard is effective. The ASU is effective for the Company for the fiscal year beginning January 1, 2023. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This standard eliminates Step 2 from the goodwill impairment test. Instead, an entity should compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The ASU is effective for the Company for the fiscal year beginning January 1, 2023. The Company is currently evaluating the impact of the adoption of this standard to its consolidated financial statements.

The London Interbank Offered Rate ("LIBOR") is scheduled to be discontinued on June 30, 2023. In an effort to address the various challenges created by such discontinuance, the FASB issued an amendment to existing guidance, ASU No. 2020-04 "Reference Rate Reform." The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g. loans, debt securities, derivatives, borrowings) necessitated by the reference rate reform. It also provides option expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by the reference rate reform. As further described in "Note 7. Long-Term Obligations", the Company entered into an amendment to a debt agreement which changed the reference rate from LIBOR to Secured Overnight Financing Rate ("SOFR"). The adoption of ASU 2020-04 did not result in a material impact to the Company's financial results or disclosures.

(2) Acquisitions

The Company continually looks to diversify and grow its portfolio of brands through acquisitions. On September 27, 2021, the Company completed its acquisition (the "Sylvan Acquisition") of Sylvan Learning ("Sylvan"), and on November 22, 2021, the Company completed its acquisition (the "Badcock Acquisition" and, together with the Sylvan Acquisition, the “Acquisitions”) of W.S. Badcock Corporation ("Badcock").

9



Badcock Acquisition

On November 22, 2021, the Company completed the Badcock Acquisition. The preliminary fair value of the consideration transferred at the acquisition date was $548.8 million. For the six months ended June 25, 2022, $0.8 million of acquisition fees had been incurred that are recorded in selling, general and administrative expenses.

The table below summarizes the unaudited preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed in the Badcock Acquisition on November 22, 2021. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in an adjustment to the preliminary values presented below. In the six months ended June 25, 2022, the preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed were adjusted, which resulted in an increase to the bargain purchase gain of $3.5 million. The increase was primarily due to the valuation of the property, plant, and equipment partially offset by an increase in other long-term liabilities for deferred taxes. The Company expects to complete the purchase price allocation as soon as reasonably possible but not to exceed one year from the date of completion of the Badcock Acquisition.
(In thousands)Preliminary
November 22, 2021
Cash and cash equivalents$23,413 
Inventories, net130,045 
Accounts receivable411,268 
Other current assets5,023 
Property, plant, and equipment238,865 
Operating lease right-of-use assets55,626 
Other non-current assets2,506 
Total assets866,746 
Current operating lease liabilities12,070 
Accounts payable and accrued expenses71,436 
Other current liabilities18,942 
Current installments of long-term obligations5,261 
Long-term obligations, excluding current installments7,247 
Non-current operating lease liabilities39,599 
Other long-term liabilities27,849 
Total liabilities182,404 
Bargain purchase gain(135,557)
Consideration transferred$548,785 

Operating lease right-of-use assets of $55.6 million and operating and lease liabilities of $51.7 million, consist of leases for retail store locations, warehouses and office equipment.

Property, plant, and equipment consists of fixtures and equipment of $93.0 million, buildings and building improvements of $98.0 million, land and land improvements of $33.4 million, leasehold improvements of $23.7 million, and construction in progress of $1.4 million.

During the six months ended June 25, 2022, the preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed were adjusted, which resulted in a $3.5 million increase to the bargain purchase gain for a cumulative bargain purchase gain of $135.6 million. The adjustment is classified as "Bargain purchase gain" on the Consolidated Statements of Operations. The Company believes the seller in the Badcock Acquisition was willing to accept a bargain purchase price in return for the Company's ability to act more quickly, partially due to the Company's access to capital to complete the transaction, and with greater certainty than any other prospective acquirer. Additionally, the Company believes the seller in the Badcock Acquisition was motivated to complete the transaction as part of an overall repositioning of its business. Upon completion of this reassessment, the Company concluded that recording a bargain purchase gain with respect to the Badcock
10


Acquisition was appropriate and required under GAAP. The tax impact related to the bargain purchase gain was non-taxable and impacted the Company's effective tax rate for the period.

Sylvan Acquisition

On September 27, 2021, the Company completed the Sylvan Acquisition. The preliminary fair value of the consideration transferred at the acquisition date was $82.9 million.

The table below summarizes the preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed in the Sylvan Acquisition on September 27, 2021. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in an adjustment to the preliminary values presented below. The Company expects to complete the purchase price allocation as soon as reasonably possible but not to exceed one year from the date of completion of the Sylvan Acquisition.
(In thousands)Preliminary
September 27, 2021
Cash and cash equivalents$4,364 
Other current assets3,592 
Property, plant, and equipment26,324 
Goodwill19,406 
Tradenames24,987 
Operating lease right-of-use assets2,874 
Other intangible assets19,412 
Other non-current assets185 
Total assets101,144 
Current operating lease liabilities891 
Accounts payable and accrued expenses6,072 
Non-current operating lease liabilities1,984 
Other long-term liabilities9,320 
Total liabilities18,267 
Consideration transferred$82,877 

Other intangible assets consists of the franchise agreements of $18.3 million and proprietary content of $1.1 million.
Property, plant and equipment consists of fixtures and equipment of $0.3 million, leasehold improvements of $0.7 million, and software and electronic content of $25.3 million.

Goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. The goodwill recognized is attributable to operational synergies in the expected franchise models and growth opportunities. None of the acquired goodwill is deductible for tax purposes.

Pet Supplies Plus Acquisition

On March 10, 2021, the Company completed its acquisition of Pet Supplies Plus. Goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. The goodwill recognized is attributable to operational synergies in the expected franchise models and growth opportunities. All of the acquired goodwill is deductible for tax purposes.

Wag N' Wash Acquisition

On February 22, 2022, the Company's Pet Supplies Plus segment completed the acquisition of Wag N' Wash, an emerging natural pet food, self-wash, and grooming franchise, for an all cash purchase price of $0.9 million, and five of the Wag N' Wash stores were subsequently sold to a franchisee for $0.6 million. The components of the purchase price allocation are not presented herein due to the immateriality of the transaction to the Company overall.

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Pro forma financial information
The following unaudited consolidated pro forma summary has been prepared by adjusting the Company's historical data to give effect to the Acquisitions as if they had occurred on January 1, 2020.
Pro forma (Unaudited)
Three Months EndedSix Months Ended
(In thousands)June 25, 2022June 26, 2021June 25, 2022June 26, 2021
Revenue$1,094,997 $1,101,517 $2,230,467 $2,145,743 
Net income38,275 64,277 50,642 119,691 
Basic net income per share$0.90 $1.55 $1.15 $2.88 
Diluted net income per share$0.88 $1.52 $1.13 $2.82 

These unaudited pro forma results include adjustments such as inventory step-up, amortization of acquired intangible assets, depreciation of acquired property, equipment, and software and interest expense on debt financing in connection with the Acquisitions. Material, nonrecurring pro forma adjustments directly attributable to the Acquisitions include:

Acquired inventory step-up to its fair value of $2.3 million is assumed to be recorded in the first quarter of 2020 and therefore removed from the six months ended June 26, 2021.

Acquisition transaction related costs of $4.9 million that were incurred during the six months ended June 26, 2021 are assumed to have occurred on the pro forma close date of January 1, 2020, and recognized as if incurred in the first quarter of 2020.

The unaudited consolidated pro forma financial information was prepared in accordance with GAAP and is not necessarily indicative of the results of operations that would have occurred if the Acquisitions had been completed on the date indicated, nor is it indicative of the future operating results of the Company.

The unaudited pro forma results do not reflect events that either have occurred or may occur after the Acquisitions, including, but not limited to, the anticipated realization of operating synergies in subsequent periods. They also do not give effect to certain charges that the Company expects to incur in connection with the acquisition, including, but not limited to, additional professional fees and employee integration.

(3) Divestitures

Liberty Tax Divestiture
On July 2, 2021, the Company completed the sale of its Liberty Tax business (the "Liberty Transaction") to NextPoint Acquisition Corp. ("NextPoint") and received total consideration of approximately $255.3 million, consisting of approximately $181.2 million in cash and approximately $74.1 million in proportionate voting shares of NextPoint recorded as an investment in equity securities in "Investment in equity securities" on the Condensed Consolidated Balance Sheets. As a result of the Liberty Transaction, the financial position and results of operations of the Liberty Tax business are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for the three and six months ended June 26, 2021.
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The following is a Condensed Consolidated Statement of Operations for the Liberty Tax business. The amounts are included in "Income (loss) from discontinued operations, net of tax" in the Company's Condensed Consolidated Statements of Operations.
 Three Months EndedSix Months Ended
 (In thousands)June 26, 2021June 26, 2021
Revenue$30,513 $106,993 
Selling, general, and administrative expenses23,725 57,786 
Income from operations6,788 49,207 
Other expense:
Other16 168 
Interest expense, net10  
Income before income taxes6,814 49,375 
Income tax expense599 1,012 
Net income attributable to discontinued operations$6,215 $48,363 

The following is the operating and investing activities for the Liberty Tax business. These amounts are included in the Company's Condensed Consolidated Statement of Cash Flows.
Six Months Ended
(In thousands)June 26, 2021
Cash flows provided by operating activities from discontinued operations$36,627 
Cash flows provided by investing activities from discontinued operations$