Container Store losses and debt outlined by Bed Bath & Beyond (BBBY)
Rhea-AI Filing Summary
Bed Bath & Beyond, Inc. files an amended report to add audited historical financial statements of The Container Store Group, Inc. and unaudited pro forma condensed combined financials reflecting the July 8, 2026 acquisition of The Container Store Holdings LLC and the April 2, 2026 acquisition of The Brand House Collective, Inc.
The Container Store’s Successor fiscal year ended March 28, 2026 shows net sales of $670,096 thousand and a net loss of $139,876 thousand, with total assets of $582,391 thousand and a shareholders’ deficit of $133,049 thousand. Total debt, including related-party Exit Term Loans and the Exit ABL facility, is scheduled at $274,127 thousand. Cash used in operating activities was $70,292 thousand.
The filing details The Container Store’s December 2024 Chapter 11 cases, January 2025 plan confirmation, emergence as a private company, cancellation of prior equity, and adoption of fresh start accounting. Exit financing includes term loans maturing in 2029 and a $140,000 Exit ABL Credit Facility maturing in 2028.
Positive
- None.
Negative
- TCS net loss and deficit: The Container Store recorded a net loss of $139,876 thousand for the year ended March 28, 2026 and had a shareholders’ deficit of $133,049 thousand, indicating substantial losses and negative equity at the acquired business.
- High leverage: Debt maturities total $274,127 thousand across Exit Term Loans and the Exit ABL Credit Facility, alongside $21,316 thousand of interest expense in the Successor fiscal year, pointing to a significant ongoing debt service burden.
Filing Explained
The amendment adds financial context; liquidity adequacy remains management’s projection-based assessment for the next 12 months.
This amendment is a completed reporting step: it adds acquisition-related financial information, while its pro forma figures are not presented as actual results or a forecast of future performance.
The pro forma statements combine the companies as if the acquisitions had occurred on the relevant dates for informational purposes; they are not the company’s actual post-acquisition results or a projection.
The TCS notes state that its financial statements were prepared assuming the business will continue as a going concern, with management saying existing cash, projected operating cash flows, and available borrowing capacity are adequate for operating needs, liabilities, and commitments over the next 12 months.
That assessment is subject to risks if actual results differ from projections, so the liquidity support described is an assessment based partly on forecasts rather than a completed financing event.
8-K Event Classification
Item 9.01 — Financial Statements and Exhibits
1 item
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
TCS Net Sales: $670,096 thousand
TCS Net Loss: $139,876 thousand
Total Assets: $582,391 thousand
+5 more
8 metrics
TCS Net Sales
$670,096 thousand
The Container Store Group, Inc. Successor fiscal year ended March 28, 2026
TCS Net Loss
$139,876 thousand
The Container Store Group, Inc. Successor fiscal year ended March 28, 2026
Total Assets
$582,391 thousand
The Container Store Group, Inc. balance sheet as of March 28, 2026
Shareholders’ Deficit
$133,049 thousand
The Container Store Group, Inc. shareholders’ equity (deficit) as of March 28, 2026
Scheduled Debt Maturities
$274,127 thousand
Total revolving lines of credit and debt maturities after March 28, 2026
Exit ABL Credit Facility
$140,000
Aggregate revolving commitment under Exit ABL Credit Facility maturing January 28, 2028
Interest Expense
$21,316 thousand
The Container Store Group, Inc. Successor fiscal year ended March 28, 2026
Cash Used in Operations
$70,292 thousand
Net cash used in operating activities, Successor fiscal year ended March 28, 2026
Key Terms
fresh start accounting, Reorganization items, net, Exit ABL Credit Facility, Debtor-in-possession, +2 more
6 terms
fresh start accounting financial
"Upon the Company's emergence from the Chapter 11 Cases, the Company adopted fresh start accounting"
Fresh start accounting is an accounting reset that occurs after a company emerges from a major restructuring or bankruptcy, where assets and liabilities are revalued to current fair values and a new equity base is recorded. Like wiping a chalkboard and writing a new starting score, it gives investors a clearer baseline for future performance but can make past results hard to compare and often changes reported profits, asset values and shareholder stakes.
Reorganization items, net financial
"certain charges incurred during fiscal 2024 related to the Chapter 11 Cases are recorded as Reorganization items, net"
Reorganization items, net are one-off costs and gains a company records when it restructures—such as closing plants, laying off staff, or selling parts of the business—shown after offsets like related gains or tax effects. Think of it as the single line that captures the cleanup bill (or occasional profit) from rearranging operations; investors watch it because these items can make earnings look artificially worse or better and help separate ongoing performance from one-time events.
Exit ABL Credit Facility financial
"providing for a $140,000 aggregate revolving credit commitment, subject to a borrowing base, under the Exit ABL Credit Facility"
Debtor-in-possession financial
"provided a senior secured super-priority priming debtor-in-possession term loan credit facility"
A debtor-in-possession is a company that has filed for bankruptcy protection but is allowed to keep operating and managing its assets while a court oversees the restructuring process. Investors pay attention because this status can help preserve business value and cash flow during reorganization, affect the priority of new loans and claims, and shape how much existing shareholders and creditors ultimately recover—like a shopkeeper allowed to stay open while reorganizing debts under court supervision.
enterprise value financial
"We estimated the enterprise value of the Successor Company by applying the discounted cash flow method"
Enterprise value is the total worth of a company, reflecting what it would cost to buy the entire business. It includes the company's market value plus any debts, minus its cash holdings, offering a comprehensive picture of its true value. Investors use it to compare companies regardless of their capital structures, helping them assess how much they would need to pay to acquire the business.
gift card breakage financial
"The Company recorded $873 of gift card breakage for the fiscal year 2025 (Successor)"
Gift card breakage is the portion of prepaid gift card value that is never redeemed by customers — like finding pocket change left unused after a party. For investors, it matters because companies can count that unused value as extra revenue or reduced liability over time, which can boost profits, affect cash flow, and change how reliable future sales and liability estimates look.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What does Bed Bath & Beyond (BBBY) disclose in this 8-K/A amendment?
The amendment provides audited historical financial statements of The Container Store Group, Inc. and unaudited pro forma combined financial data reflecting BBBY’s acquisitions of The Container Store Holdings LLC and The Brand House Collective, Inc., as required for significant business combinations.
How did The Container Store perform financially before its acquisition by BBBY?
For the year ended March 28, 2026, The Container Store generated net sales of $670,096 thousand and a net loss of $139,876 thousand. Its balance sheet shows a shareholders’ deficit of $133,049 thousand, reflecting cumulative losses and leverage at the acquired business.
What is the debt structure of The Container Store after its reorganization?
Post-emergence, The Container Store has $274,127 thousand of scheduled debt maturities, including Exit Term Loans and borrowings under a $140,000 Exit ABL Credit Facility. Interest rates range from SOFR plus 4.25–6.50% or fixed 5.00%, with several facilities maturing in 2028–2029.
What Chapter 11 events for The Container Store are described in BBBY’s filing?
The filing explains that The Container Store filed Chapter 11 cases in December 2024, had its plan of reorganization confirmed on January 24, 2025, and emerged on January 28, 2025. All prior common stock was canceled without consideration, and the company adopted fresh start accounting.
How much cash did The Container Store generate or use in operations before joining BBBY?
In the Successor fiscal year ended March 28, 2026, The Container Store used $70,292 thousand of net cash in operating activities. This reflects the impact of operating losses, non-cash impairment charges, and working capital movements during the period prior to consolidation with BBBY.
What pro forma information involving BBBY and The Container Store is included?
The filing includes unaudited pro forma condensed combined balance sheet and statements of operations for Bed Bath & Beyond as of March 31, 2026 and for the three months ended March 31, 2026 and year ended December 31, 2025, giving effect to the TCS and TBHC mergers for informational purposes.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
July 27, 2026 (July 8, 2026 )
Date of Report (Date of earliest event reported)
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(Address of principal executive offices)(Zip Code)
(801 ) 947-3100
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol(s) |
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Name of each exchange on which
registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 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. ☐
Explanatory Note
On July 9, 2026, Bed Bath & Beyond, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original Report”) with the Securities and
Exchange Commission (the “SEC”) to
disclose that on July 8, 2026, it had completed its previously announced acquisition of The Container Store Holdings, LLC (“TCS Holdings”), pursuant to that certain Agreement and Plan of Merger, dated as of April 2, 2026, by and among the Company, TCS Merger Sub, LLC, a
Delaware limited liability company and wholly owned subsidiary of the Company (“Merger Sub”), and TCS Holdings, pursuant to which Merger Sub merged with and into TCS Holdings, with TCS Holdings surviving as a wholly owned subsidiary of the Company (the “TCS Merger”). The Container Store Group, Inc. (“TCS”) is a direct wholly owned subsidiary of TCS Holdings.
The Company is hereby filing this Current Report on Form 8-K/A (this “Amendment”) to amend
Item 9.01 of the Original Report to provide the information described below. Except as set forth herein, this Amendment does not amend, modify or update any other information in the Original Report. This Amendment should be read in conjunction
with the Original Report, which provides a more complete description of the TCS Merger.
In the Original Report, the Company stated that it would file the historical financial statements required by Item 9.01(a) of Form 8-K and the pro
forma financial information required by Item 9.01(b) of Form 8-K relating to the TCS Merger (which also includes certain pro forma financial information in connection with the previously reported acquisition of The Brand House Collective, Inc. (“TBHC”) by the Company on April 2, 2026 (the “TBHC Merger”)) by amendment to the Original Report no later than 71 days from the date
on which the Original Report was required to be filed.
The pro forma financial information included in this Current Report on Form 8-K/A has been presented for informational purposes only, as required by
Form 8-K, and is not intended to, and does not purport to, present or be indicative of what the Company’s actual results of operations or financial position would have been if the TCS Merger or the TBHC Merger had occurred on the relevant date, and
is not intended to project the future results of operations or financial position that the Company may achieve following such acquisitions.
| Item 9.01. |
Financial Statements and Exhibits.
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(a) Financial statements of businesses acquired
The audited consolidated financial statements of TCS and its subsidiaries as of and for the fiscal year ended March 28, 2026, and as of March 29, 2025, and for the
period from January 26, 2025 through March 29, 2025 (successor), and for the period from March 31, 2024 through January 25, 2025 and the fiscal year ended March 30, 2024 (predecessor), and the related notes thereto, are filed herewith as Exhibit
99.1 and incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma condensed combined balance sheet of the Company as of March 31, 2026 and the unaudited pro forma condensed combined statements of operations
for the three months ended March 31, 2026 and for the year ended December 31, 2025, and the related notes thereto, in each case giving effect to the TCS Merger and the TBHC Merger, are filed herewith as Exhibit 99.2 and incorporated herein by
reference.
(d) Exhibits.
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Exhibit Number
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Exhibit Description
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23.1
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Consent of Pricewaterhouse Coopers LLP, independent auditor of TCS as of and for the fiscal year ended March 28, 2026.
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23.2
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Consent of Ernst & Young LLP, independent auditor of TCS as of March 29, 2025, and for the period from January 26, 2025 through March 29, 2025 (successor), and for the period from March 31, 2024 through
January 25, 2025 and the fiscal year ended March 30, 2024 (predecessor).
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99.1
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Audited consolidated financial statements of TCS and its subsidiaries as of and for the fiscal year ended March 28, 2026, and as of March 29, 2025, and for the period from January 26, 2025 through March 29,
2025 (successor), and for the period from March 31, 2024 through January 25, 2025 and the fiscal year ended March 30, 2024 (predecessor), and the related notes thereto.
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99.2
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Unaudited pro forma condensed combined balance sheet of the Company as of March 31, 2026, the unaudited pro forma condensed combined statements of operations of the Company for the three months ended March
31, 2026, and for the year ended December 31, 2025, and the related notes thereto, in each case giving effect to the TCS Merger and the TBHC Merger.
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104
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Cover Page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Bed Bath & Beyond, Inc.
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By:
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/s/ Marcus Lemonis
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Marcus Lemonis
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Chief Executive Officer
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Date:
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July 27, 2026
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Exhibit 99.1
Consolidated Financial Statements
The Container Store Group, Inc.
As of March 28, 2026 (Successor) and March 29, 2025 (Successor)
For the year ended March 28, 2026 (Successor), the period from January 26, 2025 through March 29, 2025 (Successor), the period from March 31, 2024 through January 25, 2025 (Predecessor), and the year ended March 30,
2024 (Predecessor)
With Report of Independent Auditors
TABLE OF CONTENTS
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Reports of Independent Auditors
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3
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Consolidated Financial Statements
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Consolidated Balance Sheets
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7
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Consolidated Statements of Operations
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9
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Consolidated Statements of Comprehensive Loss
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10
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Consolidated Statements of Shareholders' Equity (Deficit)
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11
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Consolidated Statements of Cash Flows
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12
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Notes to Consolidated Financial Statements
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14
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2
Table of Contents
Report of Independent Auditors
To the Management and Board of Directors of The Container Store Group, Inc.
Opinion
We have audited the accompanying consolidated financial statements of The Container Store Group, Inc. and its subsidiaries (Successor) (the "Company"), which comprise the consolidated balance sheet as of March 28, 2026, and the related
consolidated statements of operations, of comprehensive loss, of shareholders' equity and of cash flows for the year then ended, including the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 28, 2026, and the results of its operations and its cash flows for the year then
ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of
the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going
concern for one year after the date the consolidated financial statements are available to be issued.
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PricewaterhouseCoopers LLP
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2121 North Pearl Street, Suite 2000
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Dallas, Texas 75201
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www.pwc.com/us
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(214) 999 1400
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3
Table of Contents
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are
considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with US GAAS, we:
| • |
Exercise professional judgment and maintain professional skepticism throughout the audit.
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| • |
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on
a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
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| • |
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control. Accordingly, no such opinion is expressed.
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| • |
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
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| • |
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
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We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during
the audit.
Dallas, Texas
June 2, 2026
4
Table of Contents
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Ernst & Young LLP
One Victory Park
Suite 2000
2323 Victory Avenue
Dallas, TX 75219
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Tel: +1 214 969 8000
Fax: +1 214 969 8587
ey.com
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Report of Independent Auditors
To the Board of Directors and Shareholders of The Container Store Group, Inc.
Opinion
We have audited the consolidated financial statements of The Container Store Group, Inc. (the Company), which comprise the consolidated balance sheets as of March 29, 2025 (Successor) and March 30, 2024 (Predecessor), and the related
consolidated statements of operations, comprehensive loss, changes in shareholders' equity and cash flows for the period from January 26, 2025 through March 29, 2025 (Successor), the period from March 31, 2024 through January 25, 2025
(Predecessor) and the year ended March 30, 2024 (Predecessor), and the related notes (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at March 29, 2025 (Successor) and March 30, 2024 (Predecessor), and the results of its operations and its
cash flows for the period from January 26, 2025 through March 29, 2025 (Successor), the period from March 31, 2024 through January 25, 2025 (Predecessor) and the year ended March 30, 2024 (Predecessor) in accordance with accounting principles
generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Company Reorganization
As discussed in Notes 1, 2, and 3 to the consolidated financial statements, on December 22, 2024, the Bankruptcy Court entered an order confirming the plan of reorganization, which became effective on January 28, 2025. Accordingly, the
accompanying consolidated financial statements have been prepared in conformity with Accounting Standards Codification 852-10, Reorganizations, for the Successor Company as a new entity with assets, liabilities and a capital structure having
carrying amounts not comparable with prior periods.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance
of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one
year after the date that the financial statements are available to be issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered
material
5
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if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
| • |
Exercise professional judgment and maintain professional skepticism throughout the audit.
|
| • |
Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements.
|
| • |
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. Accordingly, no such opinion is expressed.
|
| • |
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
|
| • |
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time.
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We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters
that we identified during our audit.
Dallas, Texas
June 27, 2025
6
Table of Contents
The Container Store Group, Inc.
Consolidated Balance Sheets
| Successor Company | ||||||||
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(In thousands)
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March 28,
2026
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March 29,
2025
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||||||
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Assets
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||||||||
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Current assets:
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||||||||
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Cash
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$
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29,118
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$
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35,475
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||||
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Accounts receivable, net
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21,514
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23,176
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||||||
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Inventory
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133,060
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135,657
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||||||
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Prepaid expenses
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13,294
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16,279
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||||||
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Income taxes receivable
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1,378
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5,208
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||||||
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Other current assets
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2,901
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8,550
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||||||
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Total current assets
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201,265
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224,345
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||||||
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Noncurrent assets:
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Property and equipment, net
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83,660
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94,458
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||||||
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Noncurrent operating lease right-of-use assets
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269,112
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312,960
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||||||
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Goodwill
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2,495
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2,344
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||||||
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Trade names
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19,825
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22,006
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||||||
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Deferred financing costs, net
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880
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1,065
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||||||
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Noncurrent deferred tax assets, net
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18
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103
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||||||
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Other assets
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5,136
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6,542
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||||||
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Total noncurrent assets
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381,126
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439,478
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||||||
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Total assets
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$
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582,391
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$
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663,823
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||||
See accompanying notes.
7
Table of Contents
The Container Store Group, Inc.
Consolidated Balance Sheets
| Successor Company | ||||||||
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(In thousands, except share and per share amounts)
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March 28,
2026
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March 29,
2025
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||||||
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Liabilities and shareholders’ equity (deficit)
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||||||||
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Current liabilities:
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||||||||
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Accounts payable
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$
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46,483
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$
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36,933
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||||
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Accrued liabilities
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72,777
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74,760
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Current portion of long-term debt
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284
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218
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||||||
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Current operating lease liabilities
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59,561
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54,952
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Income taxes payable
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261
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261
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Total current liabilities
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179,366
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167,124
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Noncurrent liabilities:
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Long-term debt
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80,871
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72,399
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Long-term debt, related party
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187,735
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111,856
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Noncurrent operating lease liabilities
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250,672
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294,822
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Noncurrent deferred tax liabilities, net
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8,497
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9,150
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Other long-term liabilities
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8,299
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6,509
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Total noncurrent liabilities
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536,074
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494,736
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Total liabilities
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715,440
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661,860
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Commitments and contingencies (Note 13)
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||||||||
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Shareholders’ equity (deficit):
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||||||||
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Successor common stock, $0.01 par value, 5,000 shares authorized; 1,000 shares issued at March 28, 2026 and March 29, 2025
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—
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—
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||||||
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Additional paid-in capital
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11,311
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11,311
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Accumulated other comprehensive income
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12,029
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7,165
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||||||
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Retained deficit
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(156,389
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)
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(16,513
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)
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||||
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Total shareholders’ equity (deficit)
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(133,049
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)
|
1,963
|
|||||
|
Total liabilities and shareholders’ equity (deficit)
|
$
|
582,391
|
$
|
663,823
|
||||
See accompanying notes.
8
Table of Contents
The Container Store Group, Inc.
Consolidated Statements of Operations
|
Successor Company
|
Predecessor Company
|
|||||||||||||||
|
Fiscal Year Ended
|
Period from
|
Period from
|
Fiscal Year Ended
|
|||||||||||||
|
(In thousands)
|
March 28,
2026
|
January 26, 2025
through March 29,
2025
|
March 31, 2024
through January
25, 2025
|
March 30,
2024
|
||||||||||||
|
Net sales
|
$
|
670,096
|
$
|
116,001
|
$
|
627,813
|
$
|
847,779
|
||||||||
|
Cost of sales (excluding depreciation and amortization)
|
330,061
|
51,052
|
273,358
|
359,014
|
||||||||||||
|
Gross profit
|
340,035
|
64,949
|
354,455
|
488,765
|
||||||||||||
|
Selling, general, and administrative expenses (excluding depreciation and amortization)
|
404,511
|
67,978
|
350,502
|
439,485
|
||||||||||||
|
Indefinite-lived asset impairment charges
|
3,009
|
—
|
103,283
|
97,279
|
||||||||||||
|
Stock-based compensation
|
—
|
—
|
1,584
|
1,870
|
||||||||||||
|
Pre-opening costs
|
279
|
444
|
2,122
|
2,861
|
||||||||||||
|
Depreciation and amortization
|
28,129
|
3,560
|
34,916
|
44,333
|
||||||||||||
|
Long-lived asset impairment charges
|
8,815
|
—
|
12,536
|
—
|
||||||||||||
|
Gain on lease termination, net
|
(2,423
|
)
|
—
|
(7,235
|
)
|
—
|
||||||||||
|
Reorganization items, net
|
—
|
—
|
(19,522
|
)
|
—
|
|||||||||||
|
Other expenses
|
16,978
|
5,576
|
22,271
|
7,423
|
||||||||||||
|
(Gain) loss on disposal of assets
|
(64
|
)
|
2
|
(23
|
)
|
248
|
||||||||||
|
Loss from operations
|
(119,199
|
)
|
(12,611
|
)
|
(145,979
|
)
|
(104,734
|
)
|
||||||||
|
Interest expense
|
21,316
|
3,488
|
18,490
|
20,672
|
||||||||||||
|
Loss before taxes
|
(140,515
|
)
|
(16,099
|
)
|
(164,469
|
)
|
(125,406
|
)
|
||||||||
|
Provision (benefit) for income taxes
|
(639
|
)
|
414
|
(15,667
|
)
|
(22,119
|
)
|
|||||||||
|
Net loss
|
$
|
(139,876
|
)
|
$
|
(16,513
|
)
|
$
|
(148,802
|
)
|
$
|
(103,287
|
)
|
||||
See accompanying notes.
9
Table of Contents
The Container Store Group, Inc.
Consolidated Statements of Comprehensive Loss
|
Successor Company
|
Predecessor Company
|
|||||||||||||||
|
Fiscal Year Ended
|
Period From
|
Period From
|
Fiscal Year Ended
|
|||||||||||||
|
(In thousands)
|
March 28,
2026
|
January 26, 2025
through March 29,
2025
|
March 31, 2024
through January 25,
2025
|
March 30,
2024
|
||||||||||||
|
Net loss
|
$
|
(139,876
|
)
|
$
|
(16,513
|
)
|
$
|
(148,802
|
)
|
$
|
(103,287
|
)
|
||||
|
Pension liability adjustment, net of tax provision (benefit) of $9, $46, $230 and $(7)
|
37
|
(2
|
)
|
1,584
|
(26
|
)
|
||||||||||
|
Foreign currency translation adjustment, net of tax
|
4,827
|
7,167
|
(2,716
|
)
|
(908
|
)
|
||||||||||
|
Comprehensive loss
|
$
|
(135,012
|
)
|
$
|
(9,348
|
)
|
$
|
(149,934
|
)
|
$
|
(104,221
|
)
|
||||
See accompanying notes.
10
Table of Contents
The Container Store Group, Inc.
Consolidated Statements of Shareholders’ Equity (Deficit)
| Common stock |
Additional
paid in
capital
|
Accumulated
other comprehensive
income (loss)
|
Retained
deficit
|
Total
shareholders’
equity
(deficit)
|
||||||||||||||||||||
|
(In thousands, except share amounts)
|
Shares
|
Amount
|
||||||||||||||||||||||
|
Balance at April 1, 2023 (Predecessor)
|
3,278,569
|
$
|
33
|
$
|
872,663
|
$
|
(32,509
|
)
|
$
|
(578,002
|
)
|
$
|
262,185
|
|||||||||||
|
Net loss
|
—
|
—
|
—
|
—
|
(103,287
|
)
|
(103,287
|
)
|
||||||||||||||||
|
Stock-based compensation
|
—
|
—
|
1,871
|
—
|
—
|
1,871
|
||||||||||||||||||
|
Vesting of restricted stock awards
|
28,417
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
Taxes related to net share settlement of restricted stock awards
|
—
|
—
|
(144
|
)
|
—
|
—
|
(144
|
)
|
||||||||||||||||
|
Foreign currency translation adjustment
|
—
|
—
|
—
|
(908
|
)
|
—
|
(908
|
)
|
||||||||||||||||
|
Pension liability adjustment, net of $7 tax benefit
|
—
|
—
|
—
|
(26
|
)
|
—
|
(26
|
)
|
||||||||||||||||
|
Balance at March 30, 2024 (Predecessor)
|
3,306,986
|
$
|
33
|
$
|
874,390
|
$
|
(33,443
|
)
|
$
|
(681,289
|
)
|
$
|
159,691
|
|||||||||||
|
Net loss
|
—
|
—
|
—
|
—
|
(148,802
|
)
|
(148,802
|
)
|
||||||||||||||||
|
Stock-based compensation
|
—
|
—
|
1,584
|
—
|
—
|
1,584
|
||||||||||||||||||
|
Vesting of restricted stock awards
|
23,180
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
Taxes related to net share settlement of restricted stock awards
|
—
|
—
|
(31
|
)
|
—
|
—
|
(31
|
)
|
||||||||||||||||
|
Foreign currency translation adjustment
|
—
|
—
|
—
|
(2,716
|
)
|
—
|
(2,716
|
)
|
||||||||||||||||
|
Pension liability adjustment, net of $230 tax provision
|
—
|
—
|
—
|
1,584
|
—
|
1,584
|
||||||||||||||||||
|
Cancellation of predecessor equity
|
(3,330,166
|
)
|
(33
|
)
|
(875,943
|
)
|
34,575
|
830,091
|
(11,310
|
)
|
||||||||||||||
|
Issuance of successor common stock
|
1,000
|
—
|
11,311
|
—
|
—
|
11,311
|
||||||||||||||||||
|
Balance at January 25, 2025 (Predecessor)
|
1,000
|
$
|
—
|
$
|
11,311
|
$
|
—
|
$
|
—
|
$
|
11,311
|
|||||||||||||
| Balance at January 26, 2025 (Successor) |
1,000 |
$
|
—
|
$
|
11,311
|
$
|
—
|
$
|
—
|
$
|
11,311
|
|||||||||||||
|
Net loss
|
—
|
—
|
—
|
—
|
(16,513 | ) | (16,513 | ) | ||||||||||||||||
|
Foreign currency translation adjustment
|
—
|
—
|
—
|
7,167 |
—
|
7,167 | ||||||||||||||||||
|
Pension liability adjustment, net of $46 tax provision
|
—
|
—
|
—
|
(2 | ) |
—
|
(2 | ) | ||||||||||||||||
|
Balance at March 29, 2025 (Successor)
|
1,000
|
$ |
—
|
$ |
11,311
|
$ | 7,167 | $ | (16,513 | ) | $ | 1,963 | ||||||||||||
|
Net loss
|
—
|
—
|
—
|
—
|
(139,876 | ) | (139,876 | ) | ||||||||||||||||
|
Foreign currency translation adjustment
|
—
|
—
|
—
|
4,827
|
—
|
4,827 | ||||||||||||||||||
|
Pension liability adjustment, net of $9 tax provision
|
—
|
—
|
—
|
37 |
—
|
37 |
||||||||||||||||||
| Balance at March 29, 2025 (Successor) |
1,000
|
$ |
—
|
$ |
11,311
|
$ | 12,029 | $ | (156,389 | ) | $ | (133,049 | ) | |||||||||||
See accompanying notes.
11
Table of Contents
The Container Store Group, Inc.
Consolidated
Statements of Cash Flows
|
Successor Company
|
Predecessor Company | |||||||||||||||
|
Fiscal Year Ended
|
Period From
|
Period From
|
Fiscal Year Ended
|
|||||||||||||
| (In thousands) |
March 28,
2026
|
January 26, 2025
through March 29,
2025
|
March 31, 2024
through January 25,
2025 |
March 30,
2024
|
||||||||||||
|
Operating activities
|
||||||||||||||||
|
Net loss
|
$
|
(139,876
|
)
|
$
|
(16,513
|
)
|
$
|
(148,802
|
)
|
$ | (103,287 | ) | ||||
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||||||||||
|
Depreciation and amortization
|
28,129
|
3,560
|
34,916
|
44,333
|
||||||||||||
|
Stock-based compensation
|
—
|
—
|
1,584
|
1,870
|
||||||||||||
|
Loss (gain) on disposal of assets
|
(64
|
)
|
2
|
(23
|
)
|
248
|
||||||||||
|
Deferred tax expense (benefit)
|
(1,485
|
)
|
414
|
(15,682
|
) | (24,751 | ) | |||||||||
|
Non-cash interest
|
10,225
|
1,933
|
1,526
|
1,884
|
||||||||||||
|
Long-lived asset impairment charge
|
8,815
|
—
|
12,536
|
—
|
||||||||||||
|
Trade name impairment charge
|
3,009
|
—
|
103,283
|
73,832
|
||||||||||||
|
Goodwill impairment charge
|
—
|
—
|
—
|
23,447
|
||||||||||||
|
Recognition of pension actuarial losses
|
38
|
—
|
1,533
|
—
|
||||||||||||
|
Gain on lease termination
|
(1,423
|
)
|
—
|
(7,235
|
)
|
—
|
||||||||||
|
Noncash reorganization items
|
—
|
—
|
(29,421
|
)
|
—
|
|||||||||||
|
Other
|
524
|
40
|
432
|
(339 | ) | |||||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||||||
|
Accounts receivable
|
2,439
|
1,276
|
(1,702
|
)
|
3,565
|
|||||||||||
|
Inventory
|
3,360
|
1,933
|
21,573
|
12,145
|
||||||||||||
|
Prepaid expenses and other assets
|
3,881
|
256
|
(4,790
|
)
|
564
|
|||||||||||
|
Accounts payable and accrued liabilities
|
6,729
|
2,808
|
(21,640
|
)
|
3,396
|
|||||||||||
|
Net change in lease assets and liabilities
|
(445
|
)
|
2,856
|
(4,120
|
)
|
15,714
|
||||||||||
|
Income taxes
|
4,377
|
395
|
(817
|
)
|
(5,177 | ) | ||||||||||
|
Other noncurrent liabilities
|
1,475
|
86
|
93
|
(655 | ) | |||||||||||
|
Net cash provided by (used in) operating activities
|
(70,292
|
)
|
(954
|
)
|
(56,756
|
)
|
46,789
|
|||||||||
|
|
||||||||||||||||
|
Investing activities
|
||||||||||||||||
|
Additions to property and equipment
|
(15,300
|
)
|
(2,701
|
)
|
(21,018
|
) | (39,894 | ) | ||||||||
|
Investments in non-qualified plan trust
|
—
|
—
|
(38
|
)
|
(252 | ) | ||||||||||
|
Proceeds from non-qualified plan trust
|
3,815
|
16
|
803
|
719
|
||||||||||||
|
Proceeds from sale of property and equipment
|
123
|
—
|
54
|
206
|
||||||||||||
|
Net cash used in investing activities
|
(11,362
|
)
|
(2,685
|
)
|
(20,199
|
)
|
(39,221 | ) | ||||||||
|
|
||||||||||||||||
|
Financing activities
|
||||||||||||||||
|
Borrowings on revolving lines of credit
|
25,825
|
—
|
—
|
65,568
|
||||||||||||
|
Repayments on revolving lines of credit
|
(25,825
|
)
|
—
|
—
|
(67,935 | ) | ||||||||||
|
Repayments on long-term debt
|
(264
|
)
|
(38
|
)
|
(158
|
)
|
(89 | ) | ||||||||
|
Repayments on Senior Secured Term Loan Facility
|
—
|
—
|
(69,070
|
)
|
(2,000 | ) | ||||||||||
|
Borrowings on Revolving Credit Facility
|
—
|
—
|
64,000
|
31,000
|
||||||||||||
|
Repayments on Revolving Credit Facility
|
—
|
—
|
(80,000
|
)
|
(20,000 | ) | ||||||||||
|
Borrowings on DIP ABL Credit Facility
|
—
|
—
|
90,556
|
—
|
||||||||||||
|
Repayments on DIP ABL Credit Facility
|
—
|
—
|
(90,556
|
)
|
—
|
|||||||||||
|
Borrowings on Exit ABL Credit Facility
|
29,200
|
—
|
84,896
|
—
|
||||||||||||
|
Repayments on Exit ABL Credit Facility
|
(24,794
|
)
|
(12,500
|
)
|
—
|
—
|
||||||||||
See accompanying notes.
12
Table of Contents
The Container Store Group, Inc.
Consolidated Statements of Cash Flows
|
Successor Company
|
Predecessor Company
|
|||||||||||||||
|
Fiscal Year Ended
|
Period From
|
Period From
|
Fiscal Year Ended
|
|||||||||||||
| (In thousands) |
March 28,
2026
|
January 26, 2025
through March 29,
2025
|
March 31, 2024
through January 25,
2025
|
March 30,
2024
|
||||||||||||
|
Financing activities (continued)
|
||||||||||||||||
|
Borrowings on DIP Term Loan Facility
|
$
|
—
|
$
|
—
|
$
|
40,000
|
$
|
—
|
||||||||
|
Repayments on DIP Term Loan Facility
|
—
|
—
|
(42,800
|
) |
—
|
|||||||||||
|
Borrowings on First-Out Exit Term Loans
|
—
|
—
|
42,800
|
—
|
||||||||||||
|
Borrowings on Amendment No. 1 Super Senior Term Loans
|
20,000
|
—
|
—
|
—
|
||||||||||||
|
Borrowings on Amendment No. 2 Super Senior Term Loans
|
25,000
|
—
|
—
|
—
|
||||||||||||
|
Borrowings on Amendment No. 3 2026 Priming Super Senior Term Loans
|
25,000
|
—
|
—
|
—
|
||||||||||||
|
Borrowings on Second-Out Exit Term Loans
|
—
|
—
|
72,199
|
—
|
||||||||||||
|
Debt issuance costs - Exit ABL Credit Facility
|
—
|
—
|
(1,127
|
) |
—
|
|||||||||||
|
Debt issuance costs - Exit Term Loans
|
—
|
—
|
(3,629
|
) |
—
|
|||||||||||
|
Payment of taxes with shares withheld upon restricted stock vesting
|
—
|
—
|
(31
|
) | (144 | ) |
||||||||||
|
Net cash provided by (used in) financing activities
|
74,142
|
(12,538
|
)
|
107,080
|
6,400
|
|||||||||||
|
Effect of exchange rate changes on cash
|
1,155
|
936
|
(409
|
) | 74 |
|||||||||||
|
|
||||||||||||||||
|
Net (decrease) increase in cash
|
(6,357
|
)
|
(15,241
|
)
|
29,716
|
14,042
|
||||||||||
|
Cash at beginning of fiscal period
|
35,475
|
50,716
|
21,000
|
6,958
|
||||||||||||
|
Cash at end of fiscal period
|
$
|
29,118
|
$
|
35,475
|
$
|
50,716
|
$
|
21,000
|
||||||||
|
Supplemental information:
|
||||||||||||||||
|
Cash paid for interest
|
$
|
4,571
|
$
|
1,595
|
$
|
11,872
|
$
|
18,781
|
||||||||
|
Cash (refund) paid for taxes
|
$
|
(3,296
|
)
|
$
|
505
|
$
|
1,212
|
$
|
7,958
|
|||||||
|
Purchases of property and equipment (included in accounts payable)
|
$
|
1,331
|
$
|
629
|
$
|
770
|
$
|
3,350
|
||||||||
|
Cash paid for amounts included in the measurement of operating lease liabilities
|
$
|
90,622
|
$
|
12,138
|
$
|
82,664
|
$
|
95,809
|
||||||||
|
Additions to right-of-use assets in exchange for operating lease liabilities
|
$
|
15,728
|
$
|
—
|
$
|
33,903
|
$
|
116,607
|
||||||||
See accompanying notes.
13
Table of Contents
The Container Store Group, Inc.
Notes to Consolidated Financial Statements
(In thousands, except share amounts and unless otherwise stated)
March 28, 2026
1. Nature of business and summary of significant accounting policies
Description of business
The Container Store, Inc. was founded in 1978 in Dallas, Texas, as a retailer with a mission to provide customers with storage and organizing solutions to accomplish their projects through an
assortment of innovative products and unparalleled customer service. In 2007, The Container Store, Inc. was sold to The Container Store Group, Inc. (the “Company”), a holding company, of which a majority stake was purchased by Leonard Green and
Partners, L.P. (“LGP”), with the remainder held by certain employees of The Container Store, Inc. On November 6, 2013, the Company completed the initial public offering of its common stock (the “IPO”) at which time LGP held a controlling interest
in the Company as the majority shareholder. In fiscal 2022, LGP sold some of the common stock of the Company, reducing their ownership to less than 50% of the Company’s outstanding common stock. On December 22, 2024, the Company and certain of
its domestic subsidiaries commenced voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division
(the “Bankruptcy Court”), providing for a court-administered reorganization pursuant to a prepackaged joint plan of reorganization (as amended, the "Plan of Reorganization"). On January 24, 2025, the Plan of Reorganization was confirmed by the
Bankruptcy Court. Refer to Voluntary Filing Under Chapter 11 below, as well as Note 2 Emergence from Voluntary Reorganization Under Chapter 11 Proceedings for
more information.
The Container Store, Inc. consists of our retail stores, website and call center (which includes business sales), as well as our in-home services business. As of March 28, 2026 (Successor), The
Container Store, Inc. operated 99 stores with an average size of approximately 24,000 square feet (18,000 selling square feet) in 34 states and the District of Columbia. The Container Store, Inc. also offers all of its products directly to its
customers through its website, responsive mobile site and app, and call center. The Container Store, Inc.’s wholly owned Swedish subsidiary, Elfa International AB (“Elfa”), designs and manufactures component-based shelving and drawer systems and
made-to-measure sliding doors that are customizable for any area of the home. elfa® branded products are sold exclusively in the United States in The Container Store® retail stores, website, and call center and Elfa sells to various retailers and
distributors primarily in the Nordic region and throughout Europe on a wholesale basis. C Studio Manufacturing, Inc. (“C Studio”), formerly known as “Closet Parent Company, Inc.”, or “Closet Works”, assumed its new name effective January 2023. We
own and operate the C Studio manufacturing facility in Elmhurst, Illinois, which designs and manufactures the Company’s premium wood-based custom space product offering, and is included in the TCS segment.
Basis of presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP).
Basis of consolidation
The consolidated financial statements include our accounts and those of the Company’s wholly owned subsidiaries. The Company eliminates all significant intercompany balances and transactions,
including intercompany profits, in consolidation.
Voluntary Filing under Chapter 11
On December 21, 2024, the Company and certain of its domestic subsidiaries (collectively with the Company, the “Debtors”) entered into a Transaction Support Agreement (the “Transaction Support
Agreement”) with certain holders of over 90% of the total claims arising under the Company’s senior secured term loan credit facility (the “Consenting Term Lenders”), and certain stockholders of the Company, including Green Equity Investors V,
L.P., Green Equity Investors Side V, L.P. and TCS CO-INVEST LLC. In accordance with the terms of the Transaction Support Agreement, on December 22, 2024 (the “Petition Date”), the Debtors commenced voluntary cases (the “Chapter 11 Cases”) under
chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”), providing for a court-administered reorganization
pursuant to a prepackaged joint plan of reorganization (as amended, the "Plan of Reorganization"). On January 24, 2025, the Plan of Reorganization was confirmed by the Bankruptcy Court.
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On January 28, 2025, (the "Effective Date") the Plan of Reorganization became effective and the Company emerged from the Chapter 11 Cases after completing a series of transactions through which,
among other things, all issued and outstanding shares of the Company’s common stock were canceled and extinguished without consideration. The Company terminated its reporting obligations under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and will continue as a private company.
Upon the Company's emergence from the Chapter 11 Cases, the Company adopted fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial
reporting purposes. The Company selected a convenience date of January 25, 2025 for purposes of applying fresh start accounting as the activity between the convenience date and the Effective Date did not result in a material difference in the
financial results. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after the Effective Date, are not comparable with the
consolidated financial statements on or before that date. Refer to Note 3, Fresh Start Accounting and Reorganization Items, Net, for additional information.
References to "Successor" or "Successor Company" relate to the financial position and results of operations of the Company after the Effective Date. References to "Predecessor" or "Predecessor
Company" refer to the financial position and results of operations of the Company on or before the Effective Date.
During the Predecessor period, the Company applied Accounting Standards Codification (“ASC”) 852 - Reorganizations (“ASC 852”) in preparing the consolidated financial statements. ASC 852 requires
the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly,
certain charges incurred during fiscal 2024 related to the Chapter 11 Cases, including professional fees incurred directly as a result of the Chapter 11 Cases are recorded as Reorganization items, net in the statement of operations of the
Predecessor period.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of
liabilities in the normal course of business. Based on the Company’s current financial projections, management believes the Company’s existing cash, projected operating cash flows and available borrowing capacity under its Exit Asset-Based
Lending Agreement are adequate to meet its operating needs, liabilities and commitments over the next twelve months from the issuance of the accompanying consolidated financial statements. However, forecasts and projections are subject to risks
and uncertainties about our operations, industry, financial condition, performance, operating results and liquidity. If future actual results differ from current financial projections, we could fail to generate adequate cash flows to meet
operating needs in future periods.
Fiscal year
The Company follows a 4-4-5 fiscal calendar, whereby each fiscal quarter consists of thirteen weeks grouped into two four-week “months” and one five-week “month”, and its fiscal year ends on the
Saturday closest to March 31st. Elfa’s fiscal year ends on the last day of the calendar month of March. All references to "Successor" represents “fiscal 2025,” which represents the results of the 52-week fiscal year ended March 28, 2026, or the
results of the 9-week period ended March 29, 2025. All references to “Predecessor” represents the results of the 43-week period ended January 25, 2025 or “fiscal 2023," which represents the results of the 52-week fiscal year ended March 30, 2024.
Restricted Cash
The Company had restricted cash balances of zero and $7,910 as of March 28, 2026 (Successor) and March 29, 2025 (Successor), respectively. These amounts are classified as Cash on the Consolidated
Balance Sheets and Consolidated Statement of Cash Flows.
Management estimates
The preparation of the Company’s consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Significant accounting judgments and estimates include fair value estimates
for operating lease assets and liabilities, indefinite-lived intangible assets, obsolescence and shrink reserve, assessments of long-lived asset impairments, gift card breakage, and assessment of valuation allowances on deferred tax assets.
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Revenue recognition
Revenue from sales related to retail operations is recognized when the merchandise is delivered to the customer at the point of sale. Revenue from sales that are shipped or delivered directly to
customers is recognized upon estimated delivery to the customer and includes applicable shipping or delivery revenue. Revenue from sales that are installed is recognized upon completion of the installation service to the customer and includes
applicable installation revenue. Installation services are generally short-term in nature and are completed within a relatively short period following delivery. As such, application of over-time revenue recognition guidance would not result in a
material difference in the timing of revenue recognition. Revenue from sales of other services is recognized upon the completion of the service. Revenue from sales related to manufacturing operations is recorded upon shipment. Sales are recorded
net of sales taxes collected from customers. A sales return allowance is recorded for estimated returns of merchandise subsequent to the balance sheet date that relate to sales prior to the balance sheet date. The returns allowance is based on
historical return patterns and reduces sales and cost of sales, accordingly. Merchandise exchanges of similar product and price are not considered merchandise returns and, therefore, are excluded when calculating the sales returns allowance. We
have not made any material changes to our assumptions used to recognize revenue during the periods presented.
Contract Balances
Contract balances as a result of transactions with customers primarily consist of trade receivables included in Accounts receivable, net, unearned revenue included in Accrued liabilities, and
gift cards and store credits outstanding included in Accrued liabilities in the Company's consolidated balance sheets. See Note 5 for disclosure on the Company's trade receivables, unearned revenue, and gift cards and store credits outstanding
with customers as of March 28, 2026 (Successor) and March 29, 2025 (Successor).
Gift cards and merchandise credits
Gift cards are sold to customers in retail stores, through the call center and website, and through certain third parties. We issue merchandise credits in our stores and through our call center.
Revenue from sales of gift cards and issuances of merchandise credits is recognized when the gift card is redeemed by the customer, or the likelihood of the gift card being redeemed by the customer is remote (gift card breakage). The gift card
breakage rate is determined based upon historical redemption patterns. An estimate of the rate of gift card breakage is applied over the period of estimated performance (48 months as of the end of fiscal 2025 and fiscal 2024) and the breakage
amounts are included in net sales in the consolidated statement of operations. The Company recorded $873, $141, $921, and $1,195 of gift card breakage for the fiscal year 2025 (Successor), the period of January 26, 2025 through March 29, 2025
(Successor), the period of March 31, 2024 through January 25, 2025 (Predecessor), and the fiscal year 2023 (Predecessor), respectively.
Cost of sales
Cost of sales related to retail operations includes the purchase cost of inventory sold (net of vendor rebates), in-bound freight, as well as inventory loss reserves. Costs incurred to ship or
deliver merchandise to customers, as well as direct installation and organization services costs, are also included in cost of sales. Cost of sales from manufacturing operations includes costs associated with production, including materials,
wages, other variable production costs, and other applicable manufacturing overhead.
Leases
We recognize a lease liability upon lease commencement, measured at the present value of the fixed future minimum lease payments over the lease term. We have elected the practical expedient to
not separate lease and non-lease components. Therefore, lease payments included in the measurement of the lease liability include all fixed payments in the lease arrangement. We record a right-of-use asset for an amount equal to the lease
liability, increased for any prepaid lease costs and initial direct costs and reduced by any lease incentives. We remeasure the lease liability and right-of-use asset when a change to our future minimum lease payments occurs. Lease expense on
operating leases is recorded on a straight-line basis over the term of the lease and is recorded in selling, general and administrative expenses (“SG&A”).
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Advertising
All advertising costs of the Company are expensed when incurred, or upon the release of the initial advertisement, except for production costs related to direct mailings to customers, which are initially
capitalized. Production costs related to direct mailings consist primarily of printing and postage and are expensed upon initial mailing to the customer. Advertising costs are recorded in SG&A. Pre-opening advertising costs are recorded in
pre-opening costs. Total advertising expense incurred for the fiscal year 2025 (Successor), the period of January 26, 2025 through March 29, 2025 (Successor), the period of March 31, 2024 through January 25, 2025 (Predecessor), and fiscal year
2023 (Predecessor), was $28,036, $4,098, $22,966, and $27,647 respectively.
Pre-opening costs
Non-capital expenditures associated with opening new stores and distribution centers and relocating stores, including marketing expenses, travel and relocation costs are expensed as incurred and
are included in pre-opening costs in the consolidated statement of operations.
Income taxes
We account for income taxes utilizing ASC 740, Income Taxes. ASC 740 requires an asset and liability approach, which requires the recognition of deferred
tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. We recognize interest and penalties related to unrecognized tax benefits in
income tax expense. There were no uncertain tax positions requiring an accrual as of March 28, 2026 (Successor) and March 29, 2025 (Successor). Valuation allowances are established against deferred tax assets when it is more-likely-than-not that
the realization of those deferred tax assets will not occur. Valuation allowances are released as positive evidence of future taxable income sufficient to realize the underlying deferred tax assets becomes available.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which expands income tax disclosure requirements, primarily related to the effective tax rate reconciliation and income
taxes paid. We adopted the standard prospectively in fiscal 2025. See Note 7 for more information.
Deferred tax assets and liabilities are measured using the enacted tax rates in effect in the years when those temporary differences are expected to reverse. The effect on deferred taxes from a
change in the tax rate is recognized through continuing operations in the period that includes the enactment of the change. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future.
We operate in certain jurisdictions outside the United States. ASC 740-30 provides that the undistributed earnings of a foreign subsidiary be accounted for as a temporary difference under the
presumption that all undistributed earnings will be distributed to the parent company as a dividend. Sufficient evidence of the intent to permanently reinvest the earnings in the jurisdiction where earned precludes a company from recording the
temporary difference. For purposes of ASC 740-30, the Company does not consider the earnings subject to the transition tax and global intangible low-taxed income (“GILTI”) under the Tax Cuts and Jobs Act (the “Tax Act”) permanently reinvested.
All other earnings are considered permanently reinvested. The Company has elected an accounting policy to recognize GILTI as a period cost when incurred.
Judgment is required in determining the provision for income and other taxes and related accruals, and deferred tax assets and liabilities. In the ordinary course of business, there are
transactions and calculations where the ultimate tax outcome is uncertain. Additionally, the Company's various tax returns are subject to audit by various tax authorities. Although the Company believes that its estimates are reasonable, actual
results could differ from these estimates.
Stock-based compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation, which requires the fair value of
stock-based payments to be recognized in the consolidated financial statements as compensation expense over the requisite service period. For time-based awards, compensation expense is recognized on a straight-line basis, net of estimated
forfeitures, over the requisite service period for awards that actually vest. For performance-based awards, compensation expense is estimated based on achievement of the performance condition and is recognized using the accelerated attribution
method over the requisite service period for awards that actually vest. Stock-based compensation expense is recorded in the stock-based compensation line in the consolidated statements of operations. ASC 718 also provides guidance for determining
whether certain financial instruments awarded in share-based payment transactions are liabilities. The guidance requires that instruments that include conditions other than service, performance or market conditions that affect their fair value,
exercisability or vesting be classified as a liability and be remeasured at fair value at each fiscal period.
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Restricted Stock Awards
Prior to emergence, the fair value of each restricted stock award was determined based on the closing price of the Company’s common stock as reported on the New York Stock Exchange on the grant
date.
Stock Options
At emergence, all stock options were terminated. Prior to emergence, the Board would determine the exercise price of stock options based on the closing price of the Company’s common stock as
reported on The New York Stock Exchange on the grant date. The Company would estimate the fair value of each stock option grant on the date of grant based upon the Black-Scholes option-pricing model. This model required various significant
judgmental assumptions in order to derive a final fair value determination for each type of award including:
| • |
Expected Term—The expected term of the options represents the period of time between the grant date of the options and the date the options are either exercised or canceled, including an estimate of options still outstanding. For
future grants, we would expect to utilize TCS historical data to calculate the expected term.
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Expected Volatility—The expected volatility incorporates historical and implied volatility of comparable public companies for a period approximating the expected term. For future grants, we would expect to utilize the TCS stock price
volatility.
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Expected Dividend Yield—The expected dividend yield is based on the Company’s expectation of not paying dividends on its common stock for the foreseeable future.
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Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and with a maturity that approximates the expected term.
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Accounts receivable
Accounts receivable consist primarily of trade receivables, receivables from The Container Store, Inc.’s credit card processors for sales transactions, and tenant improvement allowances from The
Container Store, Inc.’s landlords in connection with new leases. An allowance for doubtful accounts is established on trade receivables, if necessary, for estimated losses resulting from the inability of customers to make required payments.
Factors such as payment terms, historical loss experience, and economic conditions are generally considered in determining the allowance for doubtful accounts. Accounts receivable are presented net of allowances for doubtful accounts of $462 and
$47 at March 28, 2026 (Successor) and March 29, 2025 (Successor), respectively.
Inventories
Inventories at retail stores and distribution centers are comprised of finished goods and are valued at the lower of cost or estimated net realizable value, with cost determined on a
weighted-average cost method including associated in-bound freight costs. Manufacturing inventories are comprised of raw materials, work in process, and finished goods and are valued on a first-in, first out basis using full absorption accounting
which includes material, labor, other variable costs, and other applicable manufacturing overhead. To determine if the value of inventory is recoverable at cost, we consider current and anticipated demand, customer preference and the merchandise
age. The significant estimates used in inventory valuation are obsolescence (including excess and slow-moving inventory) and estimates of inventory shrinkage. We adjust our inventory for obsolescence based on historical trends, aging reports,
specific identification and our estimates of future retail sales prices.
Reserves for shrinkage are estimated and recorded throughout the period as a percentage of cost of sales based on historical shrinkage results and current inventory levels. Actual shrinkage is recorded throughout the year based upon periodic
cycle counts. Actual inventory shrinkage can vary from estimates due to factors including the mix of our inventory and execution against loss prevention initiatives in our stores and distribution center.
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Property and equipment
Property and equipment are recorded at cost less accumulated depreciation. Significant additions and improvements are capitalized, and expenditures for maintenance and repairs are expensed. Gains and losses on the
disposition of property and equipment are recognized in the period incurred.
Depreciation, including amortization of assets recorded under finance lease obligations, is provided using the straight-line method over the estimated useful lives of depreciable assets as follows:
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Buildings
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30 years | |
| Furniture, fixtures, and equipment | 3 to 10 years | |
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Computer software
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2 to 5 years | |
| Leasehold improvements |
Shorter of useful life or lease term | |
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Finance leases
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Shorter of useful life or lease term | |
Costs of developing or obtaining software for internal use or developing the Company’s website, such as external direct costs of materials or services and internal payroll costs directly related
to the software development projects, are capitalized. For the fiscal year ended and March 28, 2026 (Successor), the period of January 26, 2025 through March 29, 2025 (Successor), the period of March 31, 2024 through January 25, 2025
(Predecessor), and fiscal year ended March 30, 2024 (Predecessor), the Company capitalized $8,333, $2,337, $9,113, and $13,115 respectively. For the fiscal year ended March 28, 2026 (Successor), the period of January 26, 2025 through March 29,
2025 (Successor), the period of March 31, 2024 through January 25, 2025 (Predecessor), and the fiscal year ended March 30, 2024 (Predecessor), the Company amortized $13,855, $2,083, $10,700, and $11,007 respectively, of costs in connection with
the development of internally used software.
Long-lived assets
Long-lived assets, such as property and equipment, lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset, a product recall or an adverse action or
assessment by a regulator. If the sum of the estimated undiscounted future cash flows related to the asset is less than the carrying amount, we recognize a loss equal to the difference between the carrying amount and the fair value, usually
determined by the estimated discounted cash flow analysis of the asset.
For our TCS segment, we generally evaluate long-lived tangible assets at a store level, or at the lowest level at which independent cash flows can be identified. We evaluate corporate assets or
other long-lived assets that are not store-specific at the consolidated level. For our Elfa segment, we evaluate long-lived tangible assets at the segment level.
Since there is typically no active market for our long-lived tangible assets, we estimate fair values based on the expected future cash flows. We estimate future cash flows based on store-level
historical results, current trends, and operating and cash flow projections. Our estimates are subject to uncertainty and may be affected by a number of factors outside our control, including general economic conditions, and the competitive
environment. While we believe our estimates and judgments about future cash flows are reasonable, future impairment charges may be required if the expected cash flow estimates, as projected, do not occur or if events change requiring us to revise
our estimates.
Self-insured liabilities
We are primarily self-insured for workers’ compensation, employee health benefits and general liability claims. We record self-insurance liabilities based on claims filed, including the
development of those claims, and an estimate of claims incurred but not yet reported. Factors affecting these estimates include future inflation rates, changes in severity, benefit level changes, medical costs and claim settlement patterns.
Should a different amount of claims occur compared to what was estimated, or costs of the claims increase or decrease beyond what was anticipated, reserves may need to be adjusted accordingly. Self-insurance reserves for employee health benefits,
workers’ compensation and general liability claims are recorded in the accrued liabilities line item of the consolidated balance sheet and were collectively $2,507 and $2,178 as of March 28, 2026 (Successor) and March 29, 2025 (Successor),
respectively.
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Goodwill
We evaluate goodwill annually to determine whether it is impaired. Goodwill is also tested between annual impairment tests if an event occurs or circumstances change that would indicate that the
fair value of a reporting unit is less than its carrying amount. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset.
If an impairment indicator exists, we test goodwill for recoverability.
When performing a quantitative test for impairment, we compare the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit exceeds the carrying amount of
the net assets assigned to that unit, goodwill is considered not impaired and we are not required to perform further testing. If the carrying amount of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit,
then we would record an impairment loss equal to the difference.
We measure the fair value of the reporting unit using a combination of the income approach and market approach to determine the fair value of the Company to be compared against the carrying value
of net assets, both level 3 valuations (as defined in Note 14). The determination of fair value requires assumptions and estimates of many critical factors, including among others, our nature and our history, financial and economic conditions
affecting us, our industry and the general economy, past results, our current operations and future prospects, sales of similar businesses or capital stock of publicly held similar businesses, as well as prices, terms and conditions affecting
past sales of similar businesses. Forecasts of future operations are based, in part, on operating results and management’s expectations as to future market conditions. These types of analyses contain uncertainties because they require management
to make assumptions and to apply judgments to estimate industry economic factors and the profitability of future business strategies. If actual results are not consistent with our estimates and assumptions, we may be exposed to future impairment
losses that could be material. See Note 4 for more information on our goodwill activity and impairment assessments performed.
Trade names
We annually evaluate whether our trade names continue to have an indefinite life. Trade names are reviewed for impairment annually on the first day of the fourth fiscal quarter and may be
reviewed more frequently if indicators of impairment are present. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an
asset, a product recall or an adverse action or assessment by a regulator.
When performing a quantitative test, the impairment review is performed by comparing the carrying amount to the estimated fair value, determined using a discounted cash flow methodology, a level
3 valuation (as defined in Note 14). If the recorded carrying amount of the trade name exceeds its estimated fair value, an impairment charge is recorded to write the trade name down to its estimated fair value. Factors used in the valuation of
intangible assets with indefinite lives include, but are not limited to, future revenue growth assumptions, estimated market royalty rates that could be derived from the licensing of our trade names to third parties, and a rate used to discount
the estimated royalty cash flow projections.
The valuation of trade names requires assumptions and estimates of many critical factors, which are consistent with the factors discussed under “Goodwill” above. Forecasts of future operations
are based, in part, on operating results and management’s expectations as to future market conditions. These types of analyses contain uncertainties because they require management to make assumptions and to apply judgments to estimate industry
economic factors and the profitability of future business strategies. If actual results are not consistent with our estimates and assumptions, we may be exposed to future impairment losses that could be material. See Note 4 for more information
on our trade names activity and impairment assessments performed.
Foreign currency
The Company operates foreign subsidiaries in the following countries: Sweden, Norway, Finland, Denmark, Germany and Poland. The functional currency of the Company’s foreign operations is the
applicable country’s currency. All assets and liabilities of foreign subsidiaries and affiliates are translated at year-end rates of exchange. Revenues and expenses of foreign subsidiaries and affiliates are translated at average rates of
exchange for the year. Unrealized gains and losses on translation are reported as cumulative translation adjustments through other comprehensive income (loss).
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The functional currency for the Company’s wholly owned subsidiary, Elfa, is the Swedish krona. During fiscal 2025 (Successor), the rate of exchange from U.S. dollar to Swedish krona decreased
from 10.1 to 9.5. The carrying amounts of assets related to Elfa and subject to currency fluctuation were $118,291 and $125,051 as of March 28, 2026 (Successor) and March 29, 2025 (Successor), respectively. Foreign currency realized loss of $3,
realized gains of $3, realized gains of $12, and realized losses of $118 are included in SG&A in the consolidated statements of operations for the fiscal 2025 (Successor), the period of January 26, 2025 through March 29, 2025 (Successor), the
period of March 31, 2024 through January 25, 2025 (Predecessor), and fiscal year 2023 (Predecessor), respectively.
Recent accounting pronouncements
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting
for Internal-Use Software, which amends the accounting guidance for internal-use software to better align with current software development practices, including incremental and iterative development methods. The amendments remove the
existing project stage framework and instead require capitalization of qualifying software development costs when management authorizes and commits to funding the project and it is probable the software will be completed and used as intended. The
amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are currently evaluating the impact that adoption of
this guidance will have on the Company's consolidated financial statements and related disclosures.
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Emergence From Voluntary Reorganization Under Chapter 11 Proceedings
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As described in Note 1, on December 22, 2024, the Company and the other Debtors filed the Chapter 11 Cases. On January 24, 2025, the Plan of Reorganization was confirmed by the Bankruptcy Court.
The Company and the other Debtors emerged from bankruptcy upon effectiveness of the Plan of Reorganization on January 28, 2025 (the "Effective Date").
On the Effective Date and pursuant to the Plan of Reorganization, among other things, (i) all previously issued and outstanding equity interests in the Company are cancelled, released, and
extinguished, and will be of no further force or effect, all for no consideration or distributions, (ii) the Company contributed 1,000 shares of newly issued common stock of the Company, par value $0.01 per share (such shares of common stock, the
“New Parent Shares”), as a contribution to the capital of The Container Store, Inc., a Texas corporation (“TCS”), and in exchange for no additional shares of capital stock of TCS, (iii) TCS contributed all of the New Parent Shares to an entity
newly formed by TCS, The Container Store Holdings, LLC (“Reorganized Parent”), as a contribution to the capital of the Reorganized Parent, (iv) TCS distributed (a) to the Holders (as defined in the Plan of Reorganization) of Allowed DIP Term Loan
Claims (as defined in the Plan of Reorganization) (or, where applicable, their respective designees under the Plan of Reorganization) (1) the Exit Term Loans (as defined in the Plan of Reorganization) and (2) 64% of the equity interests in
Reorganized Parent, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, such Allowed DIP Term Loan Claims and (b) to the Holders of Allowed Prepetition Term Loan Claims (as defined in the Plan of
Reorganization) (or, where applicable, their respective designees under the Plan of Reorganization) 36% of the equity interests in Reorganized Parent, in full and final satisfaction, settlement, release, and discharge of, and in exchange for,
such Allowed Prepetition Term Loan Claims, in each case of the foregoing, on the terms and subject to the conditions set forth in the Plan of Reorganization.
The Company terminated its reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and continues as a private company.
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3.
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Fresh Start Accounting and Reorganization Items, Net Fresh Start
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In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and adopted fresh start accounting on the Effective Date. The Company was
required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (ii) the reorganization value of the Company's assets
immediately prior to confirmation of the Plan of Reorganization was less than the post-petition liabilities and allowed claims. ASC 852 requires that fresh start accounting be applied when the Bankruptcy Court enters a confirmation order
confirming a plan of reorganization, or as of a later date when all material conditions precedent to the effectiveness of a plan of reorganization are resolved, which was January 28, 2025 for the Company. The Company selected a convenience date
of January 25, 2025 for purposes of applying fresh start accounting as the activity between the convenience date and the Effective Date did not result in a material difference in the financial results. As such, the application of fresh start
accounting was reflected in our consolidated balance sheet as of March 29, 2025 (Successor) and related fresh start accounting adjustments were included in our consolidated statement of operations for the 43-week period ended January 25, 2025
(Predecessor).
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In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair values in
conformity with ASC 805, Business Combinations. The reorganization value represents the fair value of the Successor Company's assets before considering liabilities. As a result of the application of fresh
start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after January 25, 2025 are not comparable with the consolidated financial statements as of or prior to that date.
Reorganization Value
As set forth in the Plan, the enterprise value of the Successor Company was estimated to be between $184,000 and $216,000, which was confirmed by the Bankruptcy Court. Based on the estimates and
assumptions discussed below, the Company estimated the enterprise value to be $208,299.
We estimated the enterprise value of the Successor Company by applying the discounted cash flow method. To estimate enterprise value applying the discounted cash flow method, we established an
estimate of future cash flows for the period 2025 to 2030 with a terminal value and discounted the estimated future cash flows to present value. The expected cash flows for the period 2025 to 2030 with a terminal value were based upon certain
financial projections and assumptions provided to the Bankruptcy Court. The expected cash flows for the period 2025 to 2030 were derived from revenue projections and assumptions regarding growth and profit margin, as applicable.
The Company’s enterprise value represents the fair value of its interest-bearing debt and equity capital, while the reorganization value is derived from the enterprise value by adding back
non-interest bearing liabilities.
The following table reconciles the enterprise value to the implied value (for fresh-start accounting purposes) of the Successor common stock as of the Effective Date:
|
(In thousands)
|
||||
|
Enterprise Value
|
$
|
208,299
|
||
|
Less:
|
||||
|
Debt issued upon emergence, net of deferred financing costs
|
(196,405
|
)
|
||
|
Finance leases
|
(583
|
)
|
||
|
Implied value of Successor common stock at emergence
|
$
|
11,311
|
||
The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date:
|
(In thousands)
|
||||
|
Enterprise Value
|
$
|
208,299
|
||
|
Plus: Non-interest bearing current liabilities
|
158,171
|
|||
|
Plus: Non-interest bearing long-term liabilities
|
315,714
|
|||
|
Reorganization value
|
$
|
682,184
|
||
Consolidated Balance Sheet
The adjustments set forth in the following consolidated balance sheet as of January 25, 2025 reflect the consummation of the transactions contemplated by the Plan of Reorganization (reflected
in the column "Reorganization Adjustments"), as well as fair value adjustments as a result of applying fresh start accounting (reflected in the column "Fresh Start Adjustments"). The explanatory notes highlight methods used to determine fair
values or other amounts of the assets and liabilities, as well as significant assumptions or inputs.
22
Table of Contents
|
As of January 25, 2025
|
||||||||||||||||||
|
(In thousands)
|
Predecessor Company
|
Reorganization Adjustments
|
Fresh Start Adjustments
|
Successor Company
|
||||||||||||||
|
Assets
|
||||||||||||||||||
|
Current assets:
|
||||||||||||||||||
|
Cash
|
$
|
64,866
|
$
|
(14,150
|
) | (1) |
$
|
—
|
$
|
50,716
|
||||||||
|
Accounts receivable, net
|
22,581
|
—
|
—
|
22,581
|
||||||||||||||
|
Inventory
|
136,475
|
—
|
—
|
136,475
|
||||||||||||||
|
Prepaid expenses
|
16,980
|
—
|
(198
|
) |
(14) |
16,782
|
||||||||||||
|
Income taxes receivable
|
5,698
|
—
|
—
|
5,698
|
||||||||||||||
|
Other current assets
|
8,224
|
—
|
—
|
8,224
|
||||||||||||||
|
Total current assets
|
254,824
|
(14,150
|
) |
(198
|
) |
240,476
|
||||||||||||
|
Noncurrent assets:
|
||||||||||||||||||
|
Property and equipment, net
|
133,402
|
—
|
(43,116
|
) |
(11) |
90,286
|
||||||||||||
|
Noncurrent operating lease right-of-use assets
|
378,522
|
—
|
(57,449
|
) |
(12) |
321,073
|
||||||||||||
|
Goodwill
|
—
|
—
|
2,133
|
(13) |
2,133
|
|||||||||||||
|
Trade names
|
42,752
|
—
|
(22,056
|
) |
(13) |
20,696
|
||||||||||||
|
Deferred financing costs, net
|
—
|
1,127
|
(2) |
—
|
1,127
|
|||||||||||||
|
Noncurrent deferred tax assets, net
|
26,815
|
—
|
(26,789
|
) |
(14) |
26
|
||||||||||||
|
Other assets
|
6,367
|
—
|
—
|
6,367
|
||||||||||||||
|
Total noncurrent assets
|
587,858
|
1,127
|
(147,277
|
) |
441,708
|
|||||||||||||
|
Total assets
|
$
|
842,682
|
$
|
(13,023
|
) |
$
|
(147,475
|
) |
$
|
682,184
|
||||||||
|
Liabilities and shareholders’ equity
|
||||||||||||||||||
|
Current liabilities:
|
||||||||||||||||||
|
Accounts payable
|
$
|
38,661
|
$
|
(2,900
|
) |
(3) |
$
|
—
|
$
|
35,761
|
||||||||
|
Accrued liabilities
|
38,343
|
30,310
|
(4) |
—
|
68,653
|
|||||||||||||
|
DIP (debtor-in-possession) financing
|
42,800
|
(42,800
|
) |
(5) |
—
|
—
|
||||||||||||
|
Current portion of long-term debt
|
201
|
—
|
—
|
201
|
||||||||||||||
|
Current operating lease liabilities
|
1,183
|
64,332
|
(6) |
(12,101
|
) |
(12) |
53,414
|
|||||||||||
|
Income taxes payable
|
(691
|
)
|
1,034
|
(6) |
—
|
343
|
||||||||||||
|
Total current liabilities
|
120,497
|
49,976
|
(12,101
|
) |
158,372
|
|||||||||||||
|
Noncurrent liabilities:
|
||||||||||||||||||
|
Long-term debt
|
382
|
196,405
|
(7) |
—
|
196,787
|
|||||||||||||
|
Noncurrent operating lease liabilities
|
2,466
|
346,343
|
(6) |
(47,225
|
) |
(12) |
301,584
|
|||||||||||
|
Noncurrent deferred tax liabilities, net
|
2,764
|
(234
|
) |
(6) |
5,250
|
(14) |
7,780
|
|||||||||||
|
Liabilities subject to compromise
|
699,106
|
(699,106
|
) |
(6) |
—
|
—
|
||||||||||||
|
Other long-term liabilities
|
5,323
|
1,027
|
(6) |
—
|
6,350
|
|||||||||||||
|
Total noncurrent liabilities
|
710,041
|
(155,565
|
) |
(41,975
|
) |
512,501
|
||||||||||||
|
Total liabilities
|
830,538
|
(105,589
|
) |
(54,076
|
) |
670,873
|
||||||||||||
|
Shareholders’ equity:
|
||||||||||||||||||
|
Predecessor common stock
|
33
|
(33 | ) |
(8) |
—
|
— |
||||||||||||
|
Successor common stock
|
—
|
— |
—
|
— |
||||||||||||||
|
Predecessor additional paid-in capital
|
875,943
|
(875,943 | ) |
(8) |
—
|
— |
||||||||||||
|
Successor additional paid-in capital
|
—
|
11,311 | (9) |
—
|
11,311 |
|||||||||||||
|
Accumulated other comprehensive loss
|
(33,741
|
)
|
— |
33,741
|
(15) |
— | ||||||||||||
|
Retained deficit
|
(830,091
|
)
|
957,231 |
(10) |
(127,140
|
) |
(15) |
—
|
||||||||||
|
Total shareholders’ equity
|
 12,144
|
92,566
|
(93,399
|
) |
11,311
|
|||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
842,682
|
(13,023 | ) |
$
|
(147,475
|
) |
$
|
682,184
|
|||||||||
23
Table of Contents
Reorganization Adjustments
In accordance with the Plan of Reorganization, the following adjustments were made:
| (1) |
The table below reflects the uses of cash on the Effective Date from implementation of the Plan of Reorganization:
|
|
(In thousands)
|
||||
|
Cash at January 25, 2025 (before reorganization adjustments)
|
$
|
64,866
|
||
|
Sources:
|
||||
|
Proceeds from Exit ABL Credit Facility
|
84,691
|
|||
|
Proceeds from Exit Term Loans
|
114,999
|
|||
|
Total sources of cash
|
199,690
|
|||
|
Uses:
|
||||
|
Payment of DIP ABL Credit Facility
|
(84,341
|
)
|
||
|
Payment of First-Out DIP Term Loans
|
(42,800
|
)
|
||
|
Payment of Senior Secured Term Loan Facility
|
(72,199
|
)
|
||
|
Payment of emergence deferred financing costs
|
(4,756
|
)
|
||
|
Payment of professional fees
|
(9,744
|
)
|
||
|
Total uses of cash
|
(213,840
|
)
|
||
|
Net uses of cash
|
(14,150
|
)
|
||
|
Cash upon emergence
|
$
|
50,716
|
||
| (2) |
Reflects the deferred financing costs associated with the Exit ABL Credit Facility. Refer to Note 5 to our audited consolidated financial statements for more information on the details of this new credit facility.
|
| (3) |
Reflects the payment of $9,744 of professional fees associated with the reorganization that did not qualify for capitalization, partially offset by the reinstatement of $6,844 of accounts payable included within Liabilities subject to
compromise to be satisfied in the ordinary course of business.
|
| (4) |
Reflects the reinstatement of $31,040 of accrued liabilities included within Liabilities subject to compromise to be satisfied in the ordinary course of business, partially offset by the removal of $730 of accrued interest associated
with the DIP debt agreements which accreted to the debt balances at emergence.
|
| (5) |
Reflects the repayment of the First-Out DIP Term Loans. Refer to Note 5 to our audited consolidated financial statements for more information on the details of this new credit facility.
|
| (6) |
The table below indicates the disposition of Liabilities subject to compromise:
|
|
(In thousands)
|
||||
|
Liabilities subject to compromise pre-emergence
|
$
|
699,106
|
||
|
To be reinstated on the Effective Date:
|
||||
|
Accounts payable
|
(6,844
|
)
|
||
|
Accrued liabilities
|
(31,040
|
)
|
||
|
Current operating lease liabilities
|
(64,332
|
)
|
||
|
Noncurrent operating lease liabilities
|
(346,343
|
)
|
||
|
Long-term debt
|
(83,956
|
)
|
||
|
Income taxes payable
|
(1,034
|
)
|
||
|
Noncurrent deferred tax liability
|
234
|
|||
|
Other long-term liabilities
|
(1,027
|
)
|
||
|
Total liabilities reinstated
|
$
|
(534,342
|
)
|
|
|
Less amounts settled per the Plan of Reorganization
|
||||
|
Issuance of Second-Out Exit Term Loans
|
(72,199
|
)
|
||
|
Gain on settlement of Liabilities subject to compromise
|
$
|
92,565
|
||
24
Table of Contents
| (7) |
The exit financing consists of the following:
|
|
(In thousands)
|
Maturity
|
Interest Rate
|
Amount
|
|||
|
First-Out Exit Term Loans
|
April 30, 2029
|
SOFR + 650 bps
|
$
|
42,940
|
||
|
Second-Out Exit Term Loans
|
July 30, 2029
|
SOFR + 500 bps
|
72,199
|
|||
|
Exit ABL Credit Facility
|
January 28, 2028
|
SOFR + 425 bps
|
84,895
|
|||
|
Less: Deferred financing costs
|
(3,629
|
)
|
||||
|
Long-term debt - Exit financing
|
$
|
196,405
|
||||
| (8) |
Pursuant to the terms of the Plan of Reorganization, as of the Effective Date, all Predecessor common stock and stock-based compensation awards were canceled without any distribution. As a result of the cancellation, the Company
recognized $786 in compensation expense related to the unrecognized portion of share-based compensation as of the Effective Date.
|
| (9) |
Reflects the issuance of Successor Company equity.
|
| (10) |
The table reflects the cumulative impact on retained earnings for the reorganization adjustments outlined above:
|
|
(In thousands)
|
||||
|
Gain on settlement of Liabilities subject to compromise
|
$
|
92,565
|
||
|
Cancellation of Predecessor equity
|
875,977
|
|||
|
Issuance of Successor equity
|
(11,311
|
)
|
||
|
Net impact on Retained deficit
|
$
|
957,231
|
||
Fresh Start Adjustments
We have applied fresh start accounting in accordance with ASC 852. Fresh start accounting requires the revaluation of our assets and liabilities to fair value, including both existing and new intangible assets,
such as tradenames. Fresh start accounting also requires the elimination of all predecessor earnings or deficits in Accumulated deficit and Accumulated other comprehensive loss. These adjustments reflect the actual amounts recorded as of the
Effective Date.
| (11) |
Reflects the fair value adjustment to recognize the Company’s property and equipment as of January 25, 2025 based on the fair values of such property and equipment. Owned real property was valued using a market approach comparing
similar properties to recent market transactions. All other personal property was valued using a replacement cost approach.
|
| (12) |
Upon application of fresh start accounting, the operating lease obligation was calculated using the incremental borrowing rate applicable to the Company as of January 25, 2025. The incremental borrowing rate used increased from 9.5% as
of March 30, 2024 to 11.3% as of January 25, 2025. As a result of this increase, the Company's Operating lease liabilities and corresponding Operating lease right-of-use assets decreased by $59,324 to reflect the lower balances resulting
from the application of a higher incremental borrowing rate. In addition, the Company increased the Operating lease right-of-use assets to recognize $1,875 related to the favorable lease contracts.
|
| (13) |
Reflects the fair value adjustment to recognize certain intangible assets at estimated current fair value as part of the application of fresh-start accounting. For purposes of estimating the fair value of trade names, the Company
primarily used the Royalty Savings Method, a variation of the Income approach. Estimated royalty rates were determined for each of the trade names considering the relative contribution to the Company’s overall profitability as well as
available public information regarding market royalty rates for similar assets. The selected royalty rates were applied to the revenue generated by the trademarks and trade names to determine the amount of royalty payments saved as a
result of owning these assets. The forecasted cash flows expected to be generated as a result of the royalty savings were discounted to present value utilizing a discount rate considering overall business risks and risks associated with
the asset being valued.
|
Additionally, the Company recorded $2,133 of goodwill related to the Elfa segment of the business as a result of the application of fresh-start accounting. The goodwill represents the excess of
the enterprise value allocated to the Elfa segment over the fair value of the assets and liabilities of the Elfa segment. Refer to Note 4 to our audited consolidated financial statements for more information on the details of goodwill and trade
names.
25
Table of Contents
| (14) |
Reflects a net decrease to deferred tax assets attributed primarily to an increase in the valuation allowance, as well as a net increase to deferred tax liabilities for fresh start adjustments attributed primarily to intangible
assets.
|
| (15) |
The table below reflects the cumulative impact of the fresh-start adjustments as discussed above:
|
|
(In thousands)
|
||||
|
Fresh-start adjustment to property and equipment
|
$
|
(43,116
|
)
|
|
|
Fresh-start adjustment to operating lease assets
|
(57,449
|
)
|
||
|
Fresh-start adjustment to trade names
|
(22,056
|
)
|
||
|
Fresh-start adjustment to goodwill
|
2,133
|
|||
|
Fresh-start adjustment to operating lease liabilities
|
59,326
|
|||
|
Impact of foreign currency translation on fresh-start accounting adjustments
|
822
|
|||
|
Total Fresh-start adjustments impacting Reorganization items, net
|
$
|
(60,340
|
)
|
|
|
Reset of accumulated other comprehensive income
|
(34,563
|
)
|
||
|
Income tax expense
|
(32,237
|
)
|
||
|
Net impact to Retained deficit
|
$
|
(127,140
|
)
|
|
Reorganization Items, Net
The table below presents the Reorganization items incurred and cash paid for Reorganization items as a result of Chapter 11 Cases during the periods presented:
|
Successor Company
|
Predecessor Company | |||||||||||
|
(In thousands)
|
 Period From
|
Period From
|
Fiscal Year Ended |
|||||||||
|
January 26, 2025 through
March 29, 2025
|
March 31, 2024 through
January 25, 2025
|
March 30,
2024
|
||||||||||
|
Debtor-in-possession refinancing costs
|
$
|
—
|
$
|
8,896
|
$ |
— | ||||||
|
Professional fees and other bankruptcy costs
|
—
|
3,807
|
— | |||||||||
|
Net gain on liabilities subject to compromise
|
—
|
(92,565
|
) |
—
|
||||||||
|
Impact of fresh start accounting
|
—
|
60,340
|
— |
|||||||||
|
Reorganization items, net
|
$
|
—
|
$
|
(19,522
|
) |
$ |
—
|
|||||
|
Cash payment for reorganization items, net
|
$
|
140
|
$
|
9,744
|
$ |
— |
||||||
4. Goodwill and trade names
The estimated goodwill and trade name fair values are computed using estimates as of the measurement date, which is defined as the first day of the fiscal fourth quarter or as of an interim
assessment date. The Company makes estimates and assumptions about sales, gross margins, selling, general and administrative percentages and profit margins, based on budgets and forecasts, business plans, economic projections, anticipated
future cash flows, and marketplace data. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period and our estimated weighted average cost of capital. There are inherent uncertainties
related to these factors and management’s judgment in applying these factors. Another estimate using different, but still reasonable, assumptions could produce different results. As there are numerous assumptions and estimations utilized to
derive the estimated enterprise fair value of each reporting unit, it is possible that actual results may differ from estimated results requiring future impairment charges.
We conducted an interim qualitative assessment of our trade names balance as of September 28, 2024 (Predecessor) in accordance with the Financial Accounting Standard Board Accounting
Standards Codification (ASC) Topic 350, Intangibles-Goodwill and Other, which we determined it is not more likely than not that our trade names are impaired. We conducted an interim quantitative
impairment test of our trade names balance on December 28, 2024 (Predecessor) due to identified factors during the prior three months. In connection with the interim quantitative test, we determined there was an impairment of the TCS trade
name of $93,692 and an impairment of our Elfa trade name of $9,591.
26
Table of Contents
As of January 25, 2025 (Predecessor), the Company recorded $2,133 of goodwill related to the Elfa segment as a result of the application of fresh-start accounting. The goodwill represents the
excess of the enterprise value allocated to the Elfa segment over the fair value of the assets and liabilities of the Elfa segment. Further, the TCS trade name value was adjusted down by $22,129 to reflect its fair value of $7,474 and the
Elfa trade name value was adjusted up by $73 to reflect its fair value of $13,222 as a result of fresh-start accounting. See Note 3 Fresh Start Accounting and Reorganization Items, Net for further
information.
During the fiscal year ended March 28, 2026 (Successor), we conducted an annual impairment test of our goodwill and trade names balances in accordance with ASC 350. In connection with our
assessments, we determined there was an impairment of the Elfa trade name of $3,009.
Future impairment changes could be required if we do no achieve our current net sales and profitability projections.
The changes in the carrying amounts of goodwill and trade names were as follows:
|
Goodwill
|
Trade names
|
|||||||
|
Balance at January 25, 2025 (Predecessor)
|
||||||||
|
Gross balance
|
$
|
—
|
$
|
251,401
|
||||
|
Fiscal 2024 impairment charges
|
—
|
(103,283
|
)
|
|||||
|
Impact of fresh-start accounting
|
2,133
|
(22,056
|
)
|
|||||
|
Accumulated impairment charges
|
—
|
(105,366
|
)
|
|||||
|
Total, net
|
$
|
2,133
|
$
|
20,696
|
||||
|
Foreign currency translation adjustments
|
$
|
211
|
$
|
1,310
|
||||
|
Balance at March 29, 2025 (Successor)
|
||||||||
|
Gross balance
|
2,344
|
22,006
|
||||||
|
Accumulated impairment charges
|
—
|
—
|
||||||
|
Total, net
|
2,344
|
22,006
|
||||||
|
Foreign currency translation adjustments
|
151
|
828
|
||||||
|
Balance at March 28, 2026 (Successor)
|
||||||||
|
Gross balance
|
2,495
|
22,834
|
||||||
|
Fiscal 2025 impairment charges
|
—
|
(3,009
|
)
|
|||||
|
Accumulated impairment charges
|
—
|
—
|
||||||
|
Total, net
|
$
|
2,495
|
$
|
19,825
|
||||
27
Table of Contents
5. Detail of certain balance sheet accounts
| Successor Company | ||||||||
|
March 28,
2026
|
March 29,
2025
|
|||||||
|
Accounts receivable, net:
|
||||||||
|
Trade receivables, net
|
$
|
11,468
|
$
|
11,215
|
||||
|
Credit card receivables
|
8,961
|
9,966
|
||||||
|
Other receivables
|
1,085
|
1,995
|
||||||
|
$
|
21,514
|
$
|
23,176
|
|||||
|
Inventory:
|
||||||||
|
Finished goods
|
$
|
127,451
|
$
|
129,340
|
||||
|
Raw materials
|
5,024
|
5,346
|
||||||
|
Work in progress
|
585
|
971
|
||||||
|
$
|
133,060
|
$
|
135,657
|
|||||
|
Property and equipment, net:
|
||||||||
|
Land and buildings
|
$
|
27,677
|
$
|
26,392
|
||||
|
Furniture and fixtures
|
6,795
|
7,759
|
||||||
|
Machinery and equipment
|
27,498
|
26,290
|
||||||
|
Computer software and equipment
|
22,018
|
16,009
|
||||||
|
Leasehold improvements
|
14,798
|
14,236
|
||||||
|
Construction in progress
|
11,231
|
6,220
|
||||||
|
Other
|
1,787
|
1,440
|
||||||
|
111,804
|
98,346
|
|||||||
|
Less accumulated depreciation and amortization
|
(28,144
|
)
|
(3,888
|
)
|
||||
|
$
|
83,660
|
$
|
94,458
|
|||||
|
|
||||||||
|
Accrued liabilities:
|
||||||||
|
Accrued payroll, benefits and bonuses
|
$
|
15,158
|
$
|
20,344
|
||||
|
Unearned revenue
|
20,708
|
18,307
|
||||||
|
Accrued transaction and property tax
|
11,754
|
12,997
|
||||||
|
Gift cards and store credits outstanding
|
12,333
|
12,807
|
||||||
|
Accrued sales returns
|
2,330
|
2,111
|
||||||
|
Accrued interest
|
2,235 |
1,908
|
||||||
|
Other accrued liabilities
|
8,259
|
6,286
|
||||||
|
$
|
72,777
|
$ |
74,760 |
|||||
Contract balances as a result of transactions with customers primarily consist of trade receivables included in Accounts receivable, net, unearned revenue included in Accrued liabilities, and
gift cards and store credits outstanding included in Accrued liabilities in the Company's consolidated balance sheets. Unearned revenue was $18,307 as of March 29, 2025 (Successor), and $17,862 was subsequently recognized into revenue in the
fiscal year 2025 (Successor). Gift cards and store credits outstanding was $12,807 as of March 29, 2025 (Successor), and $3,405 was subsequently recognized into revenue in the fiscal year 2025 (Successor).
28
Table of Contents
6. Long-term debt and revolving lines of credit
Third-party long-term debt and revolving lines of credit consist of the following:
| Successor Company | ||||||||
|
March 28,
2026
|
March 29,
2025
|
|||||||
|
Second-Out Exit Term Loans
|
$
|
3,842
|
$
|
—
|
||||
|
Obligations under finance leases
|
654
|
609
|
||||||
|
Exit ABL Credit Facility
|
76,761
|
72,008
|
||||||
|
Total debt
|
81,257
|
72,617
|
||||||
|
Less current portion
|
(284
|
)
|
(218
|
)
|
||||
|
Less deferred financing costs (1)
|
(102
|
)
|
—
|
|||||
|
Total long-term debt
|
$
|
80,871
|
$
|
72,399
|
||||
| (1) |
Represents deferred financing costs related to each term loan above, which are included in long-term debt in the consolidated balance sheet.
|
Related party long-term debt consists of the following:
| Successor Company | ||||||||
|
March 28,
2026
|
March 29,
2025
|
|||||||
|
First-Out Exit Term Loans
|
$
|
45,916
|
$
|
43,144
|
||||
|
Amendment No. 1 Super Senior Term Loans
|
21,684
|
—
|
||||||
|
Amendment No. 2 Super Senior Term Loans
|
26,090
|
—
|
||||||
|
Amendment No. 3 2026 Priming Super Senior Term Loans
|
25,895
|
—
|
||||||
|
Rolled-Up First-Out Term Loans
|
20,943
|
—
|
||||||
|
Second-Out Exit Term Loans
|
52,342
|
72,199
|
||||||
|
Total debt, related party
|
192,870
|
115,343
|
||||||
|
Less deferred financing costs (2)
|
(5,135
|
)
|
(3,487
|
)
|
||||
|
Total long-term debt, related party
|
$
|
187,735
|
$
|
111,856
|
||||
| (2) |
Represents deferred financing costs related to each term loan above, which are included in long-term debt, related party in the consolidated balance sheet.
|
Scheduled total revolving lines of credit and debt maturities for the fiscal years subsequent to March 28, 2026 (Successor), are as follows:
|
Within 1 year
|
$
|
284
|
||
|
2 years
|
77,030
|
|||
|
3 years
|
101
|
|||
|
4 years
|
196,712
|
|||
|
5 years
|
—
|
|||
|
Thereafter
|
—
|
|||
|
$
|
274,127
|
29
Table of Contents
Predecessor
Senior Secured Term Loan Facility
On April 6, 2012, the Company, The Container Store, Inc. and certain of our domestic subsidiaries entered into a credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent and
Collateral Agent, and the lenders party thereto (as amended to date, the “Senior Secured Term Loan Facility”). On October 8, 2024, the Company entered into Amendment No. 9 (the “Ninth Amendment”). Pursuant to the terms of the Ninth Amendment,
the Existing Senior Secured Term Loan Facility to, among other things: (i) waive the testing of the consolidated leverage ratio covenant (defined in the Senior Secured Term Loan Facility as the ratio of total debt to consolidated EBITDA) for
the second quarter of fiscal year 2024, (ii) add a covenant for the Company to enter into a qualified financing transaction, subject to the approval of the Required Lenders by November 15, 2024 (as such date may be extended by the Required
Lenders, as defined in the Existing Term Loan Facility), and (iii) amend certain of the covenants in the Existing Term Loan Facility, which, among other things, further restrict the Company and its Subsidiaries’ ability to incur additional
indebtedness or engage in certain non-ordinary course transactions. Refer to Debtor-in-Possession Credit Agreements for further information regarding cancellation of this agreement.
Revolving Credit Facility
On April 6, 2012, the Company, The Container Store, Inc. and certain of our domestic subsidiaries entered into an asset-based revolving credit agreement with the lenders party thereto,
JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and Wells Fargo Bank, National Association, as Syndication Agent (as amended, the “Revolving Credit Facility”). The aggregate principal amount of the facility was
$100,000 and borrowings under the facility accrued interest at Adjusted Term SOFR + 1.25%. Refer to Debtor-in-Possession Credit Agreements for further information regarding cancellation of this agreement.
Debtor-in-Possession (DIP) Credit Agreements
Upon approval from the Bankruptcy Court, the DIP Term Lenders provided a senior secured super-priority priming debtor-in-possession term loan credit facility in an aggregate principal amount
of up to $115,000, consisting of (a) $40,000 in money term loan (the "First-out DIP Term Loan") and (b) $75,000 of outstanding claims under the Company's existing senior secured term loan credit facility (the "Second-out DIP Term Loan")
converted and exchanged into term loans under the DIP Term Loan Facility (the "DIP Term Loan Facility"). Pursuant to and subject to the terms of the Plan of Reorganization, on the Effective Date, the obligations of the Company and the other
Debtors under the Senior Secured Term Loan Facility (as amended), among the Company, the guarantors party thereto, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and the related loan
documents thereunder were cancelled.
Also upon approval from the Bankruptcy Court, the Company entered into a senior secured super-priority debtor-in-possession asset-based revolving credit agreement (the "DIP ABL Credit
Facility") in an aggregate principal amount of up to $140,000. Proceeds from the DIP ABL Credit Agreement were used to repay, in full, all outstanding amounts owed under, and to cash collateralize all outstanding letters of credit under (at
105% the face amount thereof), the Company's existing Revolving Credit Facility, and such facility was terminated and of no further force and effect.
On January 28, 2025, upon emergence from Bankruptcy, the Company's Senior Secured Super-Priority Priming Debtor-in-Possession Term Loan Agreement matured and all outstanding loans therefore
were converted into Exit Term Loans and the Company's Senior Secured Super-Priority Debtor-in-Possession Asset-Based Revolving Credit Agreement matured and all outstanding thereunder were converted into Exit ABL Loans (see Successor section
below).
Successor
Exit Term Loan Agreement
On January 28, 2025, the Company, entered into an exit term loan credit agreement with the lenders under the DIP Term Loan Facility, providing for approximately $115,139 aggregate principal
amount of exit term loans comprised of an amount of first-out exit term loans under the Exit Term Loan Credit Agreement equal to approximately $42,940 were deemed issued in exchange, and a dollar-for-dollar basis, for the full amount of
First-out DIP Term Loans (the "First-Out Exit Term Loans") and an amount of second-out exit term loans under the Exit Term Loan Credit Agreement equal to approximately $72,199 were deemed issued in exchange, on a dollar-for-dollar basis, for
the full amount of Second-Out DIP Term Loans (the "Second-Out Exit Term Loans", and both of which are collectively referred to as the "Exit Term Loans"). The Exit Term Loans involve lenders who are also shareholders of the Company pursuant to
the Plan of Reorganization. Due to the related party involvement, the Company has disclosed the relationship and terms herein. Refer to Note 2 for additional information on the Plan of Reorganization.
30
Table of Contents
The First-Out Exit Term Loans bear interest at a percentage per annum equal to SOFR plus 6.50% payable monthly in arrears with up to 5.50% payable in-kind, maturing April 30, 2029. The
Second-Out Exit Term Loans bear interest at 5.00% per annum, payable every 6 months, with up to 4.00% payable in-kind, maturing July 30, 2029. The loans and other obligations under the Exit Term Loan Agreement are secured by substantially all
assets of the Company and certain domestic subsidiaries (the "Company Parties"), with a first-priority security interest on equipment, real property, intellectual property, investment property and other fixed assets (and proceeds thereof)
(the "Term Priority Assets") and a second-priority security interest on ABL Priority Assets (as defined below). The Exit Term Loan Agreement contains a number of covenants that, among other things, restrict our ability, subject to specified
exceptions, to incur additional debt; incur additional liens and contingent liabilities; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve ourselves, engage in businesses that are not in a related line of
business; make loans, advances or guarantees engage in transactions with affiliates; and make investments. In addition, the financing agreements contain certain cross-default provisions. We are required to maintain minimum liquidity (as
defined in the agreement) of at least $10,000 as of the last day of any calendar month.
Amendment No. 1 Super Senior Term Loans and Rolled-Up First-Out Term Loans
On September 15, 2025, the Company entered into Amendment No. 1 to the Exit Term Loan Credit Agreement (the "First Amendment"). The First Amendment resulted in $20,000 aggregate principal
amount of super senior term loan commitments from the First-Out Lenders or their designees (the "Amendment No. 1 Super Senior Term Loans"), as well as a $20,000 conversion, via a cashless roll, from the Second-Out Term Loans into new term
loans having equal priority with the First-Out Term Loans (the "Rolled-Up First-Out Term Loans"). The Amendment No. 1 Super Senior Term Loans and Rolled-up First-Out Term Loans bear interest at a percentage equal to SOFR plus 6.50% or Base
Rate plus 5.50%, maturing on April 30, 2029. Interest is either paid in cash or payable in-kind. Beginning November 1, 2025, all interest incurred is considered payable in-kind and capitalized to the outstanding principal balance, as approved
by the lenders.
Amendment No. 2 Super Senior Term Loans
On January 9, 2026, the Company entered into Amendment No. 2 to the Exit Term Loan Credit Agreement (the “Second Amendment”). The Second Amendment resulted in $25,000 aggregate principal
amount of super senior term loan commitments from certain existing First-Out lenders or their designees (the "Amendment No. 2 Super Senior Term Loans"). The Amendment No. 2 Super Senior Term Loans bear interest as a percentage equal to SOFR
plus 6.50% or Base Rate plus 5.50%, maturing on April 30, 2029, with all interest incurred considered payable in-kind and capitalized to the outstanding principal balance.
Amendment No. 3 2026 Priming Super Senior Term Loans
On March 9, 2026, the Company entered into Amendment No. 3 to the Exit Term Loan Credit Agreement (the “Third Amendment”). The Third Amendment resulted in $25,000 aggregate principal amount
of priming super senior term loan commitments from the First-Out Lenders or their designees (the "Amendment No. 3 2026 Priming Super Senior Term Loans"). The Amendment No. 3 2026 Priming Super Senior Term Loans bear interest as a percentage
equal to SOFR plus 6.50% or Base Rate plus 5.50%, maturing on April 30, 2029, with all interest incurred considered payable in-kind and capitalized to the outstanding principal balance.
As of March 28, 2026 (Successor), the Company was in compliance with all covenants under the Exit Term Loan Credit Agreement (as amended) and no Event of Default (as defined) has occurred.
Exit Asset-Based Lending (ABL) Credit Facility
On January 28, 2025, the Company parties entered into an exit asset-based revolving credit agreement with the lender under the DIP ABL Credit Facility, providing for a $140,000 aggregate
revolving credit commitment, subject to a borrowing based as set forth in the Exit ABL Credit Agreement (the "Exit ABL Credit Facility"). On January 28, 2025, an amount of exit revolving loans under the Exit ABL Credit Facility equal to
approximately $84,895 were deemed issued in exchange, on a dollar-for-dollar basis, for the full amount of DIP ABL Credit Facility. As of March 28, 2026 (Successor), there were $76,761 borrowings outstanding under the Exit ABL Credit Facility
and $13,454 was available to borrow.
31
Table of Contents
The Exit ABL Credit Facility bears interest at a percentage per annum equal to SOFR plus 4.25% and matures on January 28, 2028. The Exit ABL Credit Facility is secured by substantially all
assets of the Company Parties (subject to customary exceptions), with a first-priority lien on inventory, accounts receivable (including credit card receivables) and other working capital assets (and proceeds thereof) (the “ABL Priority
Assets”) and a second-priority lien on Term Priority Assets. The Exit ABL Credit Facility contains a number of covenants that, among other things, restrict our ability, subject to specified exceptions, to incur additional debt; incur
additional liens and contingent liabilities; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve ourselves, engage in businesses that are not in a related line of business; make loans, advances or
guarantees engage in transactions with affiliates; and make investments. In addition, the financing agreements contain certain cross-default provisions. We are required to maintain minimum availability of at least 10% of the greater of the
borrowing base and the aggregate commitments (as defined in the agreement). As of March 28, 2026 (Successor), we were in compliance with all covenants under the Exit ABL Credit Facility and no Event of Default (as defined) has occurred.
2019 Elfa Senior Secured Credit Facilities
On March 18, 2019, Elfa refinanced its master credit agreement with Nordea Bank AB entered into on April 1, 2014 and the senior secured credit facilities thereunder, and entered into a new
master credit agreement with Nordea Bank Abp, filial i Sverige (“Nordea Bank”), which consists of (i) an SEK 110,000 (approximately $11,539 as of March 28, 2026 (Successor)) revolving credit facility (the “2019 Original Revolving Facility”),
(ii) upon Elfa’s request, an additional SEK 115,000 (approximately $12,063 as of March 28, 2026 (Successor)) revolving credit facility (the “2019 Additional Revolving Facility” and together with the 2019 Original Revolving Facility, the “2019
Elfa Revolving Facilities”), and (iii) an uncommitted term loan facility in the amount of SEK 25,000 (approximately $2,622 as of March 28, 2026 (Successor)), which is subject to receipt of Nordea Bank’s commitment and satisfaction of
specified conditions (the “Incremental Term Facility”, together with the 2019 Elfa Revolving Facilities, the “2019 Elfa Senior Secured Credit Facilities”). The term for the 2019 Elfa Senior Secured Credit Facilities began on April 1, 2019
and, pursuant to an amendment entered into in fiscal 2025, matures on September 30, 2028. Loans borrowed under the 2019 Elfa Revolving Facilities bear interest at Nordea Bank’s base rate +1.40%. Any loan borrowed under the Incremental Term
Facility would bear interest at Stibor +1.70%.
The 2019 Elfa Senior Secured Credit Facilities are secured by the majority of assets of Elfa. The 2019 Elfa Senior Secured Credit Facilities contains a number of covenants that, among other
things, restrict Elfa’s ability, subject to specified exceptions, to incur additional liens, sell or dispose of assets, merge with other companies, engage in businesses that are not in a related line of business and make guarantees. In
addition, Elfa is required to maintain (i) a Group Equity Ratio (as defined in the 2019 Elfa Senior Secured Credit Facilities) of not less than 32.5% and (ii) a consolidated ratio of net debt to EBITDA (as defined in the 2019 Elfa Senior
Secured Credit Facilities) of less than 3.20. As of March 28, 2026 (Successor), Elfa was in compliance with all covenants under the 2019 Elfa Senior Secured Credit Facilities and no Event of Default (as defined in the 2019 Elfa Senior Secured
Credit Facilities) had occurred.
There was $7,867 available under the 2019 Elfa Senior Secured Credit Facilities as of March 28, 2026 (Successor), based on the factors described above. There were no borrowings outstanding
under the 2019 Elfa Senior Secured Credit Facilities as of March 28, 2026 (Successor).
32
Table of Contents
7. Income taxes
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which expands income tax disclosure requirements, primarily related to the
effective tax rate reconciliation and income taxes paid. We adopted the standard prospectively in fiscal 2025.
As a result of steps in the Plan of Reorganization described in Note 2 and the fresh start accounting adjustments described in Note 3 Fresh Start Accounting
and Reorganization Items, Net, there were significant tax adjustments recorded in the period from March 31, 2024 through January 25, 2025 (Predecessor). The Company recorded income tax provision in the Predecessor Company of $20,263
for the reduction in fixed assets from the cancellation of debt income (“CODI”) realized upon emergence. The Company recorded income tax benefit of $3,693 for fresh start adjustments and $16,526 for extinguishment of debt in the Predecessor
period.
Components of the provision for income taxes are as follows:
| Successor Company | Predecessor Company | |||||||||||||||
|
Fiscal Year Ended
|
Period from
|
Period from
|
Fiscal Year Ended
|
|||||||||||||
|
March 28, 2026
|
January 26, 2025
through March 29,
2025
|
|
March 31, 2024
through January 25,
2025
|
March 30,
2024
|
||||||||||||
|
(Loss) income before income taxes:
|
||||||||||||||||
|
U.S.
|
$
|
(137,379
|
)
|
$
|
(17,441
|
)
|
$
|
(183,489
|
)
|
$
|
(122,030
|
)
|
||||
|
Foreign
|
(3,136
|
)
|
1,342
|
19,020
|
(3,376
|
)
|
||||||||||
|
$
|
(140,515
|
)
|
$
|
(16,099
|
)
|
$
|
(164,469
|
)
|
$
|
(125,406
|
)
|
|||||
|
Current
|
||||||||||||||||
|
Federal
|
$
|
(184
|
)
|
$
|
(38
|
)
|
$
|
(209
|
)
|
$
|
1,459
|
|||||
|
State
|
222
|
9
|
75
|
313
|
||||||||||||
|
Foreign
|
808
|
29
|
149
|
860
|
||||||||||||
|
Total current provision
|
846
|
—
|
15
|
2,632
|
||||||||||||
| Deferred | ||||||||||||||||
|
Federal
|
—
|
809
|
(16,812
|
)
|
(17,779
|
)
|
||||||||||
|
State
|
—
|
(610
|
)
|
(2,399
|
)
|
(5,365
|
)
|
|||||||||
|
Foreign
|
(1,485
|
)
|
215
|
3,529
|
(1,607
|
)
|
||||||||||
|
Total deferred (benefit) provision
|
(1,485
|
)
|
414
|
(15,682
|
)
|
(24,751
|
)
|
|||||||||
|
Total (benefit) provision for income taxes
|
$
|
(639
|
)
|
$
|
414
|
$
|
(15,667
|
)
|
$
|
(22,119
|
)
|
|||||
33
Table of Contents
Effective income tax rate reconciliation
Differences between the actual provision for income taxes and the amounts computed by applying the statutory federal tax rate to income before taxes, for the current year, are as follows:
| Successor Company | ||||||||
| Fiscal Year Ended | ||||||||
|
March 28,
2026
|
||||||||
| Amount |
Percent | |||||||
|
Benefit computed at federal statutory rate
|
$
|
(29,508
|
)
|
21.00
|
%
|
|||
|
Change in valuation allowance
|
29,525
|
(21.01
|
)
|
|||||
|
State income taxes, net of federal benefit (1)
|
175
|
(0.12
|
)
|
|||||
|
Effect of foreign income taxes
|
(18
|
)
|
0.01
|
|||||
|
Effect of cross-border tax laws
|
344
|
(0.24
|
)
|
|||||
|
Other, net
|
(1,157
|
)
|
0.81
|
|||||
|
$
|
(639
|
)
|
0.45
|
%
|
||||
|
(1)
|
State taxes in Texas contributed to the majority of the tax effect in this category.
|
Differences between the actual provision for income taxes and the amounts computed by applying the statutory federal tax rate to income before taxes, for fiscal years prior to the adoption of
ASU 2023-09, are as follows:
| Successor Company | Predecessor Company | |||||||||||
 Period from
|
Period from
|
Fiscal Year Ended
|
||||||||||
|
January 26, 2025
through March 29,
2025
|
March 31, 2024
through January 25,
2025
|
March 30,
2024
|
||||||||||
|
Benefit computed at federal statutory rate
|
$
|
(3,381
|
)
|
$
|
(34,538
|
)
|
$
|
(26,335
|
)
|
|||
|
Permanent differences
|
222
|
1,287
|
7,960
|
|||||||||
|
Change in valuation allowance
|
4,399
|
26,170
|
(46
|
)
|
||||||||
|
State income taxes, net of federal benefit
|
(825
|
)
|
(8,385
|
)
|
(3,991
|
)
|
||||||
|
Effect of foreign income taxes
|
5
|
76
|
(5
|
)
|
||||||||
|
Other, net
|
(6
|
)
|
(277
|
)
|
298
|
|||||||
|
$
|
414
|
$
|
(15,667
|
)
|
$
|
(22,119
|
)
|
|||||
34
Table of Contents
Cash (refund) paid for taxes
The components of cash paid for income taxes, net of (refunds), are as follows:
|
Successor Company
|
||||
|
Fiscal Year Ended
|
||||
|
March 28,
2026
|
||||
|
U.S. federal
|
$
|
(1,511
|
)
|
|
|
U.S. state and local
|
||||
|
California
|
(397
|
)
|
||
|
Maryland
|
(469
|
)
|
||
|
Texas
|
204
|
|||
|
Other
|
(544
|
)
|
||
|
Total U.S. state and local
|
(2,717
|
)
|
||
|
Foreign
|
||||
|
Sweden
|
(857
|
)
|
||
|
Other
|
278
|
|||
|
Total foreign
|
(579
|
)
|
||
|
Total income taxes paid, net of (refunds)
|
$
|
(3,296
|
)
|
|
Total income taxes paid, net of (refunds), for the period of January 26, 2025 through March 29, 2025 (Successor), the period of March 31, 2024 through January 25, 2025 (Predecessor), and the fiscal year 2023 (Predecessor), were $505,
$1,212, and $7,958, respectively.
Deferred taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. Components of deferred tax assets and liabilities as of March 28, 2026 and March 29, 2025, are as follows:
| Successor Company | ||||||||
|
March 28, 2026
|
March 29, 2025
|
|||||||
|
Deferred tax assets:
|
||||||||
|
Inventory
|
$
|
3,027
|
$
|
2,916
|
||||
|
Loss and credit carryforwards
|
48,087
|
20,156
|
||||||
|
Stock-based compensation
|
—
|
—
|
||||||
|
Accrued liabilities
|
15,287
|
11,441
|
||||||
|
Operating lease liabilities
|
79,549
|
89,559
|
||||||
|
Capital assets
|
39
|
46
|
||||||
|
Other
|
3,140
|
2,331
|
||||||
|
149,129
|
126,449
|
|||||||
|
Valuation allowance
|
(72,372
|
)
|
(35,979
|
)
|
||||
|
Total deferred tax assets
|
76,757
|
90,470
|
||||||
|
Deferred tax liabilities:
|
||||||||
|
Intangibles
|
(6,294
|
)
|
(6,862
|
)
|
||||
|
Operating lease assets
|
(70,915
|
)
|
(81,944
|
)
|
||||
|
Capital assets
|
(8,027
|
)
|
(10,711
|
)
|
||||
|
Total deferred tax liabilities
|
(85,236
|
)
|
(99,517
|
)
|
||||
|
Net deferred tax liabilities
|
$
|
(8,479
|
)
|
$
|
(9,047
|
)
|
||
35
Table of Contents
The Company has recorded deferred tax assets and liabilities based upon estimates of their realizable value with such estimates based upon likely future tax consequences. In assessing the
need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets within the jurisdiction in which they arise. If, based on the weight of available
evidence, it is more-likely-than-not that a deferred tax asset will not be realized, the Company records a valuation allowance. As of March 28, 2026 (Successor), the Company established a 100% valuation allowance against U.S. net deferred tax
assets due to the uncertainty regarding realization.
Foreign and domestic tax credits, net of valuation allowances, totaled approximately $77 at March 28, 2026 (Successor) and approximately $48 at March 29, 2025 (Successor). The various credits
available at March 28, 2026 (Successor) expire in the 2045 tax year.
The Company had deferred tax assets for foreign and net operating loss carryovers of $42,499 at March 28, 2026 (Successor), and approximately $16,935 at March 29, 2025 (Successor). Valuation
allowances of $42,135 and $16,935 were recorded against the net operating loss deferred tax assets at March 28, 2026 (Successor) and March 29, 2025 (Successor), respectively.
The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is currently subject to U.S. federal income tax examinations for
the year ended March 30, 2020 and forward. With respect to state and local jurisdictions and countries outside of the United States, the Company and subsidiaries are typically subject to examination for three to six years after the income tax
returns have been filed.
We operate in certain jurisdictions outside the United States. ASC 740-30 provides that the undistributed earnings of a foreign subsidiary be accounted for as a temporary difference under the
presumption that all undistributed earnings will be distributed to the parent company as a dividend. Sufficient evidence of the intent to permanently reinvest the earnings in the jurisdiction where earned precludes a company from recording
the temporary difference. For purposes of ASC 740-30, the Company does not consider the earnings subject to the transition tax and GILTI under the Tax Act permanently reinvested. All other earnings are considered permanently reinvested. No
deferred tax liability has been recognized for temporary differences related to investments in foreign subsidiaries that are considered indefinitely reinvested. Determination of the amount of the unrecognized deferred tax liability is not
practicable due to the complexity of the hypothetical calculation, including assumptions regarding the timing and manner of repatriation and the applicable tax consequences in relevant jurisdictions. The Company has elected an accounting
policy to recognize GILTI as a period cost when incurred.
In December 2021, the OECD introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that imposed a global minimum tax rate of 15%. Numerous countries, including European Union
member states, enacted legislation that took effect on January 1, 2024. The United States is not subject to Pillar 2. To mitigate the administrative burden in complying with the OECD Global BEPS rules during the initial years of
implementation, the OECD developed the temporary “Transitional Country-by-Country Safe Harbor” ("Safe Harbor"). The Safe Harbor applies for fiscal years beginning on or before December 31, 2026. Under the Safe Harbor, the top-up tax for such
jurisdiction is deemed to be zero, provided that at least one of the Safe Harbor tests is met for the jurisdiction. The Company was able to avail itself of the Pillar 2 Safe Harbor in the jurisdictions in which it operates. On January 5,
2026, the OECD announced changes to the model rules to include the “side by side” arrangement, which contains simplification measures as well as an exemption for US parented companies from certain aspects of the Pillar Two regime. The updated
model rules will need to be enacted into local legislation to become effective. The Company was able to avail itself of the Pillar 2 Safe Harbor in the jurisdictions in which it operates. As of March 28, 2026 (Successor), the impact of Pillar
2 legislation was immaterial. The Company will continue to monitor the legislative developments of Pillar 2 framework in the jurisdictions in which it operates.
On July 4, 2025, the One Big Beautiful Bill Act (the OBBB) was enacted in the United States. The OBBB contains several changes impacting corporate taxpayers, including modifications to the
capitalization of research and development expenses, changes to calculations for the limitation on deductions for interest expense, and the reestablishment of accelerated depreciation (full expensing) on fixed assets. The OBBB also includes
adjustments to the calculation of certain international tax framework provisions, which were initially established by the Tax Cuts and Jobs Act of 2017. The OBBB has multiple effective dates, with certain provisions effective in 2025 and
others implemented through 2027. The OBBB did not have a material impact on our consolidated financial statements as of March 28, 2026 (Successor).
36
Table of Contents
8. Employee benefit plans
401(k) Plan
All domestic employees of the Company are eligible to participate in the Company’s 401(k) Plan immediately upon date of hire. Participants may contribute up to 80% of annual compensation,
limited to twenty-three thousand five hundred annually (thirty-one thousand for participants aged 50 years and over). Effective March 29, 2025, the Company canceled 401(k) matching contributions for the foreseeable future. The amount charged
to expense for the Company’s matching contribution was zero, zero, $4 and $3,876 for the year ended March 28, 2026 (Successor), the period of January 26, 2025 through March 29, 2025 (Successor), the period of March 31, 2024 through January
25, 2025 (Predecessor), and the year ended March 30, 2024 (Predecessor), respectively.
Non-qualified retirement plan
The Company has a non-qualified retirement plan whereby certain employees can elect to defer a portion of their compensation into retirement savings accounts. Under the plan, there is no
requirement that the Company match contributions, although the Company may contribute matching payments at its sole discretion. No matching contributions were made to the plan during any of the periods presented. The Company has established a
rabbi trust that serves as an investment to the corresponding non-qualified plan liability. The assets of the rabbi trust are general assets of the Company and primarily consist of mutual funds. During fiscal year 2024, plan participants were
notified the Company and its affiliates have made the decision to terminate the non-qualified plan, effective as of August 28, 2024 (the "Termination Date"). Effective as of the Termination Date, no additional contributions or amounts will be
credited or debited to a participant's Account (as defined in the plan) following the Termination Date. The plan administrator paid out the balance of each participant's account in a lump sum, less any applicable withholdings, on August 28,
2025.
The total fair value of the plan asset recorded in other current assets was zero and $3,533 as of March 28, 2026 (Successor) and March 29, 2025 (Successor), respectively. The total carrying
value of the plan liability recorded in accrued liabilities was zero and $3,533 as of March 28, 2026 (Successor) and March 29, 2025 (Successor), respectively.
Pension plan
The Company provides pension benefits to the employees of Elfa under collectively bargained pension plans in Sweden, which are recorded in other long-term liabilities. The defined benefit
plan provides benefits for participating employees based on years of service and final salary levels at retirement. The defined benefit plans are unfunded and the plan was frozen in fiscal 2021. Certain employees also participate in defined
contribution plans for which Company contributions are determined as a percentage of participant compensation.
The following is a summary of the defined-benefit pension plan, a statement of funded status, and the related weighted-average assumptions:
| Successor Company | ||||||||
|
March 28,
2026
|
March 29,
2025
|
|||||||
|
Projected benefit obligation, end of year
|
$
|
3,805
|
$
|
3,729
|
||||
|
Fair value of plan assets, end of year
|
—
|
—
|
||||||
|
Underfunded status, end of year
|
$
|
(3,805
|
)
|
$
|
(3,729
|
)
|
||
|
Discount rate
|
3.5
|
%
|
3.4
|
%
|
||||
|
Rate of pay increases
|
—
|
%
|
—
|
%
|
||||
Benefit cost, benefits paid, and employer contributions are immaterial for disclosure purposes.
9. Stock-based compensation
On October 16, 2013, the Board approved the 2013 Incentive Award Plan (as subsequently amended and restated, the “2013 Equity Plan”). The 2013 Equity Plan provided for grants of nonqualified
stock options, incentive stock options, restricted stock, restricted stock units, deferred stock awards, deferred stock units, stock appreciation rights, dividends equivalents, performance awards, and stock payments.
37
Table of Contents
On September 12, 2017, the Company's shareholders approved The Container Store Group Inc. Amended and Restated 2013 Incentive Award Plan (the “Amended and Restated 2013 Plan”). The Amended
and Restated 2013 Plan (i) increased the number of shares of common stock available for issuance under such plan from 3,616,570 shares to 11,116,570 shares; (ii) was intended to allow awards under the Amended and Restated 2013 Plan to
continue to qualify as tax-deductible performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended, subject to anticipated changes resulting from the Tax Act as described below; and (iii) made certain
minor technical changes to the terms of the Amended and Restated 2013 Plan.
On August 30, 2023, the Company’s shareholders approved The Container Store Group, Inc. 2023 Incentive Award Plan (the “2023 Plan”) which replaced the 2013 Equity Plan. Following approval of
the 2023 Plan, no further awards were granted under the 2013 Equity Plan. However, the terms and conditions of the Amended and Restated 2013 Plan will continue to govern any outstanding awards granted thereunder.
The 2023 Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock
units, performance bonus awards, performance stock units, other stock or cash-based awards, and dividend equivalents to eligible individuals.
As described in Note 1 and Note 2, on December 22, 2024, the Company and the other Debtors filed the Chapter 11 Cases. On January 24, 2025, the Plan of Reorganization was confirmed by the
Bankruptcy Court. The Company and the other Debtors emerged from bankruptcy upon effectiveness of the Plan of Reorganization on January 28, 2025 (the "Effective Date"). On the Effective Date, among other things, all issued and outstanding
shares of the Company’s common stock were canceled and extinguished without consideration. All equity incentive plans of the Company, including options, restricted stock awards, performance awards, and other awards are terminated. The
cancellation was accounted for as a settlement for no consideration and the remaining unrecognized compensation cost for these awards was recorded as an operating expense in the Predecessor Consolidated Statement of Operation.
Total stock-based compensation cost was zero, zero, $1,584 and $1,870 for year ended March 28, 2026 (Successor), the period of January 26, 2025 through March 29, 2025 (Successor), the period
of March 31, 2024 through January 25, 2025 (Predecessor), and the year ended March 30, 2024 (Predecessor), respectively. The stock-based compensation cost for the period of March 31, 2024 through January 25, 2025 (Predecessor) includes $786
related to the accelerated recognition of the unrecognized compensation cost for the awards that were cancelled upon bankruptcy emergence, as explained in the paragraph above.
10. Shareholders’ equity (deficit)
As described in Note 2 Emergence from Voluntary Reorganization under Chapter 11 Proceedings and Note 3 Fresh
Start Accounting and Reorganization Items, Net, the Company emerged from bankruptcy upon the effectiveness of the Plan of Reorganization on January 28, 2025 (the "Effective Date"), at which time all shares of the Predecessor
Company's issued and outstanding common stock immediately prior to the Effective Date were canceled, released, and extinguished. The Company contributed 1,000 shares of newly issued common stock of the Company, par value $0.01 per share (such
shares of common stock, the "New Parent Shares"), as a contribution to the capital of The Container Store, Inc., a Texas corporation ("TCS"), and in exchange for no additional shares of capital stock of TCS. TCS then contributed all of the
New Parent Shares to an entity newly formed by TCS, The Container Store Holdings, LLC (“Reorganized Parent”), as a contribution to the capital of the Reorganized Parent.
Predecessor
The Predecessor Company had 250,000,000 shares of common stock authorized, with a par value of $0.01, of which 3,330,166 were issued and outstanding immediately prior to emergence from
bankruptcy, and all of which were canceled, released, and extinguished as of the Effective Date. The Predecessor Company also had 5,000,000 shares of preferred stock authorized, with a par value of $0.01, of which no shares were issued or
outstanding.
Successor
Common stock
As of March 28, 2026 (Successor), the Company had 5,000 shares of common stock authorized, with a par value of $0.01, of which 1,000 were issued.
38
Table of Contents
Preferred stock
As of March 28, 2026 (Successor), the Company had no shares of preferred stock authorized, issued, or outstanding.
11. Accumulated other comprehensive income
Accumulated other comprehensive income (“AOCI”) consists of changes in our foreign currency hedge contracts, pension liability adjustment, and foreign currency translation. The components of
AOCI, net of tax, were as follows:
|
Pension
liability
adjustment
|
Foreign
currency
translation
|
Total
|
||||||||||
|
Balance at April 1, 2023 (Predecessor)
|
$
|
(1,117
|
)
|
$
|
(31,392
|
)
|
$
|
(32,509
|
)
|
|||
|
Other comprehensive (loss) income before reclassifications, net of tax
|
(26
|
)
|
(908
|
)
|
(934
|
)
|
||||||
|
Amounts reclassified to earnings, net of tax
|
—
|
—
|
—
|
|||||||||
|
Net current period other comprehensive (loss) income
|
(26
|
)
|
(908
|
)
|
(934
|
)
|
||||||
|
Balance at March 30, 2024 (Predecessor)
|
$
|
(1,143
|
)
|
$
|
(32,300
|
)
|
$
|
(33,443
|
)
|
|||
|
Other comprehensive (loss) income before reclassifications, net of tax
|
$
|
1,584
|
$
|
(2,716
|
)
|
$
|
(1,132
|
)
|
||||
|
Amounts reclassified to earnings, net of tax
|
—
|
—
|
—
|
|||||||||
|
Net current period other comprehensive (loss) income
|
1,584
|
(2,716
|
)
|
(1,132
|
)
|
|||||||
|
Cancellation of Predecessor equity
|
(441
|
)
|
35,016
|
34,575
|
||||||||
|
Balance at January 25, 2025 (Predecessor)
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
|
Other comprehensive (loss) income before reclassifications, net of tax
|
$
|
(2
|
)
|
$
|
7,167
|
$
|
7,165
|
|||||
|
Amounts reclassified to earnings, net of tax
|
—
|
—
|
—
|
|||||||||
|
Net current period other comprehensive (loss) income
|
(2
|
)
|
7,167
|
7,165
|
||||||||
|
Balance at March 29, 2025 (Successor)
|
$
|
(2
|
)
|
$
|
7,167
|
$
|
7,165
|
|||||
|
Other comprehensive (loss) income before reclassifications, net of tax
|
$
|
37
|
$
|
4,827
|
$
|
4,864
|
||||||
|
Amounts reclassified to earnings, net of tax
|
—
|
—
|
—
|
|||||||||
|
Net current period other comprehensive (loss) income
|
37
|
4,827
|
4,864
|
|||||||||
|
Balance at March 28, 2026 (Successor)
|
$
|
35
|
$
|
11,994
|
$
|
12,029
|
||||||
Amounts reclassified from AOCI to earnings for the pension liability adjustment category are generally included in cost of sales and selling, general and administrative expenses in the
Company’s consolidated statements of operations. For a description of the Company’s employee benefit plans, refer to Note 8.
12. Leases
We conduct all of our U.S. operations from leased facilities that include our support center, distribution centers, manufacturing facilities, and 99 store locations. The support center,
distribution centers, manufacturing facilities, and stores are leased under operating leases that generally expire over the next 1 to 15 years. We also lease computer hardware under operating leases that generally expire over the next few
years. In most cases, management expects that in the normal course of business, leases will be renewed or replaced by other leases. The Company also has finance leases at our Elfa segment which are immaterial.
39
Table of Contents
Lease expense on operating leases is recorded on a straight-line basis over the term of the lease, commencing on the date the Company takes possession of the leased property and is recorded
in selling, general and administrative expenses ("SG&A").
We consider lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are
excluded from our calculation of lease liabilities. Our variable lease payments include lease payments that are based on a percentage of sales.
Upon lease commencement, we recognize the lease liability measured at the present value of the fixed future minimum lease payments. We have elected the practical expedient to not separate
lease and non-lease components. Therefore, lease payments included in the measurement of the lease liability include all fixed payments in the lease arrangement. We record a right-of-use asset for an amount equal to the lease liability,
increased for any prepaid lease costs and initial direct costs and reduced by any lease incentives. We remeasure the lease liability and right-of-use asset when a change to our future minimum lease payments occurs. Key assumptions and
judgments included in the determination of the lease liability include the discount rate applied to present value of the future lease payments and the exercise of renewal options.
Many of our leases contain renewal options. The option periods are generally not included in the lease term used to measure our lease liabilities and right-of-use assets upon commencement as
exercise of the options is not reasonably certain. We remeasure the lease liability and right-of-use asset when we are reasonably certain to exercise a renewal option.
Discount Rate
Our leases do not provide information about the rate implicit in the lease. Therefore, we utilize an incremental borrowing rate to calculate the present value of our future lease obligations.
The incremental borrowing rate represents the rate of interest we would have to pay on a collateralized borrowing, for an amount equal to the lease payments, over a similar term and in a similar economic environment.
The components of lease costs were as follows:
| Successor Company | Predecessor Company | |||||||||||||||
|
Fiscal Year Ended
|
Period from
|
Period from
|
Fiscal Year Ended
|
|||||||||||||
|
March 28,
2026
|
January 26, 2025
through March 29,
2025
|
March 31, 2024
through January 25,
2025
|
March 30,
2024
|
|||||||||||||
|
Operating lease costs
|
$
|
90,149
|
$
|
15,241
|
$
|
82,341
|
$
|
94,974
|
||||||||
|
Variable lease costs
|
450
|
91
|
466
|
707
|
||||||||||||
|
Total lease costs
|
$
|
90,599
|
$
|
15,332
|
$
|
82,807
|
$
|
95,681
|
||||||||
We do not have sublease income and do not recognize lease assets or liabilities for short-term leases, defined as operating leases with initial terms of less than 12 months. Our short-term
lease costs were not material for the periods presented.
Weighted average remaining operating lease term and incremental borrowing rate were as follows:
| Successor Company | ||||||||
|
March 28, 2026
|
March 29, 2025
|
|||||||
|
Weighted average remaining lease term (years)
|
5.7
|
6.2
|
||||||
|
Weighted average incremental borrowing rate
|
11.3
|
%
|
11.3
|
%
|
||||
40
Table of Contents
As of March 28, 2026 (Successor), future minimum lease payments under our operating lease liabilities were as follows:
| Operating Leases | ||||
|
Within 1 year
|
$
|
91,180
|
||
|
2 years
|
82,415
|
|||
|
3 years
|
67,272
|
|||
|
4 years
|
54,133
|
|||
|
5 years
|
40,490
|
|||
|
Thereafter
|
95,558
|
|||
|
Total lease payments
|
$
|
431,048
|
||
|
Less amount representing interest
|
(120,815
|
)
|
||
|
Total lease liability
|
$
|
310,233
|
||
|
Less current lease liability
|
(59,561
|
)
|
||
|
Total noncurrent lease liability
|
$
|
250,672
|
||
13. Commitments and contingencies
In connection with insurance policies and other contracts, the Company has outstanding standby letters of credit totaling $12,792 as of March 28, 2026 (Successor).
The Company is subject to ordinary litigation and routine reviews by regulatory bodies that are incidental to its business. The Company has recorded accruals with respect to these matters,
where appropriate, which are reflected in the Company's unaudited condensed consolidated financial statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been
made.
Rashon Hayes v. The Container Store, Inc.
The Company was named as a defendant in a putative class action and representative action was filed on February 10, 2020 in Santa Clara Superior Court by Rashon Hayes (“Plaintiff”), a former,
hourly-paid employee of TCS who was employed from April 2019 to June 2019. The First Amended Complaint was filed on August 3, 2020 and alleges eleven causes of action: (1) unpaid overtime, (2) unpaid meal period premiums, (3) unpaid rest
period premiums, (4) unpaid minimum wages, (5) final wages not timely paid, (6) wages not timely paid during employment, (7) non-compliant wage statements, (8) failure to keep requisite payroll records, (9) unreimbursed business expenses,
(10) violation of California Business and Professions Code section 17200, and (11) violation of the California Private Attorneys General Act. The lawsuit seeks restitution of unpaid wages for plaintiff and other class members, pre-judgement
interest, appointment of class administrator, and attorney's fees and costs. Parties engaged in mediation on February 21, 2024 and reached a preliminary, confidential settlement.
Based on information currently available, the Company does not believe that its pending legal matters, either on an individual basis or in the aggregate, will have a material adverse effect
on the Company’s consolidated financial statements as a whole. However, litigation and other legal matters involve an element of uncertainty. Adverse decisions and settlements, including any required changes to the Company's business, or
other developments in such matters could affect our operating results in future periods or result in a liability or other amounts material to the Company's annual consolidated financial statements.
The Company is subject to ordinary litigation and routine reviews by regulatory bodies that are incidental to its business, none of which is expected to have a material adverse effect on the
Company’s consolidated financial statements on an individual basis or in the aggregate.
14. Fair value measurements
Under U.S. GAAP, the Company is required to a) measure certain assets and liabilities at fair value or b) disclose the fair values of certain assets and liabilities recorded at cost.
Accounting standards define fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is calculated
assuming the transaction occurs in the principal or most advantageous market for the asset or liability and includes consideration of non-performance risk and credit risk of both parties. Accounting standards pertaining to fair value
establish a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value. These tiers include:
41
Table of Contents
| • |
Level 1—Valuation inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
|
| • |
Level 2—Valuation inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all
significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
| • |
Level 3—Valuation inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are determined using model-based techniques
that include option pricing models, discounted cash flow models and similar techniques.
|
As of March 28, 2026 (Successor) and March 29, 2025 (Successor), the Company held certain items that are required to be measured at fair value on a recurring basis. These items included the
non-qualified retirement plan, which consists of investments purchased by employee contributions to retirement savings accounts. The fair value amount of the non-qualified retirement plan is measured using the net asset value per share
practical expedient, and therefore, is not classified in the fair value hierarchy. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. The Company has consistently
applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of contracts it holds.
During the year ended March 28, 2026, the Company recorded intangible asset impairment charges that were not material. The Company did not have any material assets or liabilities measured at
fair value on a nonrecurring basis during the period.
The following items are measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820, Fair Value Measurements, at
March 28, 2026 and March 29, 2025:
|
|
Successor Company |
|||||||||
|
Description
|
Balance Sheet Location
|
March 28, 2026
|
March 29, 2025
|
|||||||
|
Assets
|
||||||||||
|
Nonqualified retirement plan
|
Other current assets
|
$
|
—
|
$ |
3,533
|
|||||
|
Total assets
|
$
|
—
|
$
|
3,533
|
||||||
The fair value of long-term debt was estimated using quoted prices as well as recent transactions for similar types of borrowing arrangements (level 2 valuations). As of March 28, 2026 and
March 29, 2025, the estimated fair value of the Company’s long-term debt, including current maturities, was as follows:
| Successor Company | ||||||||
|
March 28, 2026
|
March 29, 2025
|
|||||||
|
First-Out Exit Term Loans
|
$
|
37,192
|
$
|
39,045
|
||||
|
Amendment No. 1 Super Senior Term Loans
|
17,564
|
—
|
||||||
|
Amendment No. 2 Super Senior Term Loans
|
21,133
|
—
|
||||||
|
Amendment No. 3 2026 Priming Super Senior Term Loans
|
20,975
|
—
|
||||||
|
Rolled-Up First-Out Term Loans
|
16,964
|
—
|
||||||
|
Second-Out Exit Term Loans
|
23,036
|
49,095
|
||||||
|
Obligations under finance leases
|
654
|
609
|
||||||
|
Exit ABL Credit Facility
|
76,761
|
72,008
|
||||||
|
Total fair value of debt
|
$
|
214,279
|
$
|
160,757
|
||||
42
Table of Contents
15. Subsequent Events
The Company evaluated subsequent events through June 2, 2026, the date the consolidated financial statements were available to be issued, and the following events occurred that require
disclosure.
Merger Agreement with Bed Bath and Beyond, Inc.
On April 2, 2026 (the “Effective Date”), the Company entered into an Agreement and Plan of Merger (the "TCS Merger Agreement"), by and among Bed Bath and Beyond, Inc. (BBBY), Falcon Merger
Sub, LLC, a wholly owned subsidiary of Bed Bath Beyond, Inc. ("TCS Merger Sub"), and The Container Store Holdings, LLC ("TCS"), pursuant to which, subject to the terms and conditions set forth therein, TCS Merger Sub will merge with and into
TCS (the "TCS Merger"), with TCS surviving such TCS Merger as a wholly owned subsidiary of Bed Bath and Beyond, Inc. (the "Surviving Entity").
Pursuant to the terms of the TCS Merger Agreement, the aggregate consideration to be delivered at closing is expected to be approximately $150,000 (the “Purchase Price”), subject to certain
adjustments and structural considerations as set forth in the TCS Merger Agreement. The consideration will consist of a combination of (i) senior convertible notes of BBBY with an aggregate principal amount of at least $54,000, subject to
adjustment, and (ii) shares of the BBBY’s common stock, subject to certain limitations, including an equity issuance cap. To the extent such equity issuance cap is exceeded, additional consideration will be delivered in the form of senior
convertible notes. The TCS merger consideration (as defined in the TCS Merger Agreement) may be paid to TCS equity holders or, under certain circumstances, to TCS lenders in satisfaction of outstanding indebtedness.
The completion of the TCS Merger is subject to customary closing conditions, including, among others, (i) the absence of legal restraints, (ii) receipt of required lender approvals or the
completion of an alternative restructuring transaction, (iii) the receipt of specified financing, (iv) the delivery of audited financial statements of TCS, and (v) the accuracy of representations and warranties and compliance with covenants
by the parties.
In connection with the TCS Merger Agreement, BBBY also entered into related agreements, including a transaction support agreement with certain equity holders and lenders of TCS, a put
agreement with certain lenders, and commitments to provide, from time to time, incremental term loans to TCS in an aggregate amount not to exceed $30,000, subject to the conditions of the TCS Merger Agreement. In no event shall BBBY be
required to provide any such loans until an aggregate principal amount of $30,000 million of 2026-2 Priming Super Senior Term Loans shall have been funded by the Term Loan Creditors.
The TCS Merger Agreement may be terminated under certain circumstances, including by either party if the transaction has not been completed by July 31, 2026 (subject to extension in certain
circumstances), or upon certain breaches, mutual consent, or the occurrence of legal restraints. The transaction is expected to close in the third quarter of calendar year 2026.
Amendment No. 4 to Term Loan Credit Agreement
On April 2, 2026, the Company entered into Amendment No. 4 to the Exit Term Loan Credit Agreement (the “Fourth Amendment”). The Fourth Amendment resulted in $30,000 aggregate principal amount
of priming super senior term loan commitments from the First-Out Lenders or their designees (the "Amendment No. 4 2026-2 Priming Super Senior Term Loans"). The $30,000 principal amount was received by the Company during fiscal April 2026.
Exit Asset-Based Lending (ABL) Credit Facility Payment
On April 2, 2026, the Company repaid $15,000 on the Exit ABL Credit Facility.
43
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Introduction
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X and gives effect to the
following acquisitions (collectively, the “Business Combinations”), using the assumptions and adjustments described in the accompanying notes.
The Brand House Collective, Inc.
On April 2, 2026, Bed Bath & Beyond, Inc., a Delaware corporation (‘‘BBBY’’), completed the acquisition of The Brand House Collective,
Inc., a Tennessee corporation (‘‘TBHC’’), pursuant to the Agreement and Plan of Merger, dated as of November 24, 2025 (the “TBHC Merger Agreement”), by and among BBBY, Knight Merger Sub II, Inc., a Delaware corporation and wholly owned subsidiary
of BBBY (“Knight Merger Sub”), and TBHC. Pursuant to the TBHC Merger Agreement, upon the terms and subject to the conditions set forth therein, Knight Merger Sub merged with and into TBHC, with TBHC surviving as a wholly owned subsidiary of BBBY
(the “TBHC Merger”).
At the effective time of the TBHC Merger (the “TBHC Merger Effective Time”),
each share of TBHC common stock, no par value per share (“TBHC Common Stock”), issued and outstanding immediately prior to the TBHC Merger Effective Time (other than treasury shares and shares held by BBBY or Knight Merger Sub, which were
cancelled) was converted into the right to receive 0.1993 shares (the “Exchange Ratio”) of BBBY common stock, par value $0.0001 per share (“BBBY Common Stock”), and, if applicable, cash in lieu of fractional shares.
At the TBHC Merger Effective Time, (i) each outstanding award of TBHC restricted
share units (“TBHC RSU”) automatically and fully vested and was converted into the right to receive a number of shares of BBBY Common Stock equal to (A) the number of shares of TBHC Common Stock subject to the TBHC RSU multiplied by (B) the
Exchange Ratio, plus, if applicable, cash in lieu of fractional shares, and (ii) each outstanding option to purchase TBHC Common Stock (“TBHC Option”) was cancelled and converted into the right to receive a number of shares of BBBY Common Stock
equal to (A) the Net Option Share Amount (as defined in the TBHC Merger Agreement) applicable to the TBHC Option multiplied by (B) the Exchange Ratio, plus, if applicable, cash in lieu of fractional shares. As a result of the foregoing, all TBHC
Options were cancelled for no consideration because their exercise prices exceeded $0.94, the closing price of TBHC Common Stock on April 1, 2026, the trading day immediately prior to the closing of the TBHC
Merger.
The Container Store Holdings, LLC
On July 8, 2026, BBBY completed the acquisition of The Container Store Holdings, LLC, a Delaware limited liability company (“TCS Holdings”),
pursuant to the Agreement and Plan of Merger, dated as of April 2, 2026 (the “TCS Merger Agreement”), by and among BBBY, TCS Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of BBBY, and TCS Holdings. Pursuant to
the TCS Merger Agreement, upon the terms and subject to the conditions, TCS Merger Sub merged with and into TCS Holdings, with TCS Holdings surviving as a wholly owned subsidiary of BBBY (the “TCS Merger”). The Container Store Group, Inc. (“TCS”)
is a direct wholly owned subsidiary of TCS Holdings.
At the effective time of the TCS Merger, BBBY issued 13,714,287 shares of BBBY Common Stock and $112.6 million aggregate principal amount of
its 5.00% Convertible Senior Notes due 2033 (“Convertible Notes”) to holders of outstanding TCS indebtedness as merger consideration. The BBBY Common Stock issued had an acquisition-date fair value of $67.7 million, based on BBBY's closing share
price of $5.37 on July 8, 2026, adjusted for a discount for lack of marketability of $0.43 per share due to the unregistered status of the shares issued. The Convertible Notes had an aggregate principal amount of $112.6 million and an
acquisition-date fair value of $108.4 million. All outstanding TCS Holdings equity securities were cancelled and extinguished for no purchase consideration. Immediately after the closing of the TCS Merger, BBBY repurchased 286,663 shares of BBBY
Common Stock (which are held as treasury shares) and cancelled $1.3 million aggregate principal amount of Convertible Notes in connection with the repayment of certain TCS loans.
1
On July 8, 2026, BBBY entered into an indenture (the “Indenture”) with the subsidiary guarantors party thereto and Computershare Trust Company,
National Association, as trustee, with respect to $112.6 million aggregate principal amount of BBBY's Convertible Notes. The Convertible Notes are senior unsecured obligations of BBBY, guaranteed by certain of its subsidiaries, bear interest at a
rate of 5.00% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning April 1, 2027, and mature on July 8, 2033, unless earlier converted or repurchased. BBBY has performed a preliminary accounting assessment and
concluded that the embedded conversion feature within the Convertible Notes meets the definition of an embedded derivative that requires bifurcation and separate accounting as a derivative liability measured at fair value, with subsequent changes
in fair value recognized in earnings (mark-to-market) at each reporting date pursuant to ASC 815. This conclusion is driven by certain settlement provisions that exist until BBBY obtains the requisite approval of BBBY stockholders under the
listing rules of the New York Stock Exchange (or successor exchange) in connection with the issuance of BBBY Common Stock in the TCS Merger and upon conversion of the Convertible Notes. Upon receipt of such stockholder approval, the embedded
conversion feature is expected to no longer require bifurcation.
In accordance with Regulation S-X Article 11, the unaudited pro forma condensed combined balance sheet reflects the Convertible Notes at their
consideration transferred fair value as a component of long-term debt. Given the time constraints of this filing, a definitive valuation model to reliably determine the fair value of the embedded derivative liability and allocate the residual value
to the debt host instrument at the acquisition date has not been completed. The final allocation and the separation of the embedded derivative will be determined within the measurement period under ASC 805, which may result in a change to the
discount on the host debt and the recognition of a separate derivative liability.
Furthermore, the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2026 and the year ended
December 31, 2025 do not include any hypothetical fair value adjustments or mark-to-market gains or losses associated with the embedded derivative for historical periods. Calculating or ascribing historical fair value changes for periods prior to
issuance would be speculative and is not factually supportable under Article 11. Beginning from the actual issuance date until the earlier of settlement or the receipt of BBBY stockholder approval, future reported operating results will reflect
mark-to-market fair value adjustments for the embedded derivative, which could introduce material volatility into BBBY's future statements of operations during that period.
Effective January 28, 2025, TCS Holdings became the direct holding company of TCS in connection with TCS’ emergence from bankruptcy pursuant to
its Plan of Reorganization. TCS Holdings has no material assets other than its ownership of 100% of the outstanding capital stock of TCS and conducts no independent operations and has no revenues or employees of its own. The audited consolidated
financial statements of TCS are included as Exhibit 99.1 to this amended current report. As the financial statements of TCS Holdings are not included in this amended current report, their exclusion had no effect on the pro forma net loss per share
for the three months ended March 31, 2026 and the year ended December 31, 2025.
Additional Information Related to the Unaudited Pro Forma Condensed Combined Financial Information
The following table presents the fiscal year-end dates of BBBY, TBHC and TCS:
|
Entity
|
|
Fiscal Year End
|
|
BBBY
|
|
December 31 of each year
|
|
TBHC
|
|
Saturday closest to January 31 of each year
|
|
TCS
|
|
Saturday closest to March 31 of each year
|
Because the fiscal year-ends of TBHC and TCS differ from BBBY's fiscal year-end by less than one fiscal quarter, the historical financial
statements of TBHC and TCS have been combined without any conforming adjustments to BBBY’s fiscal periods, as permitted by Rule 11-02(c)(3) of Regulation S-X.
The unaudited pro forma condensed combined balance sheet as of March 31, 2026 gives effect to the Business Combinations as if they had occurred
on March 31, 2026 and has been prepared by combining:
| • |
the unaudited consolidated balance sheet of BBBY as of March 31, 2026;
|
| • |
the unaudited consolidated balance sheet of TBHC as of April 4, 2026*; and
|
| • |
the audited consolidated balance sheet of TCS as of March 28, 2026.
|
* Management utilized the unaudited consolidated balance sheet of TBHC as of April 4, 2026 in preparing the unaudited pro forma condensed
combined balance sheet, as it represents the closest balance sheet date to the April 2, 2026 acquisition date. For pro forma purposes, certain transaction accounting adjustments were applied to reflect transactions occurring between the April 2,
2026 acquisition date and April 4, 2026. See Note 1, “Basis of Pro Forma Presentation,” for additional information regarding these adjustments.
The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026 gives effect to the Business
Combinations as if they had occurred on January 1, 2025 and has been prepared by combining:
| • |
the unaudited consolidated statement of operations of BBBY for the three months ended March 31, 2026;
|
2
| • |
the unaudited consolidated statement of operations of TBHC for the 13 weeks ended April 4, 2026**; and
|
| • |
the unaudited consolidated statement of operations of TCS for the 13 weeks ended March 28, 2026, which corresponds to its most recently completed fiscal quarter***.
|
** Management utilized TBHC's historical consolidated statement of operations for the 13 weeks ended April 4, 2026 in preparing the unaudited
pro forma condensed combined statement of operations. The historical consolidated statement of operations for the 13-week period was derived by combining the results of operations for the 4-week period ended January 31, 2026, the 4-week period
ended February 28, 2026 and the 5-week period ended April 4, 2026. As a result of utilizing TBHC's 13 weeks ended April 4, 2026, the 4-week period ended January 31, 2026 is included in both the historical statement of operations for the 13 weeks
ended April 4, 2026 and the historical annual statement of operations for the fiscal year ended January 31, 2026. Accordingly, the results of operations for this 4-week period are reflected in both the unaudited pro forma condensed combined
statement of operations for the three months ended March 31, 2026 and the year ended December 31, 2025. For the 4-week period ended January 31, 2026, TBHC reported revenue of $21.2 million and a net loss from continuing operations of $11.5 million.
Management concluded that the activity occurring between the April 2, 2026 acquisition date and April 4, 2026 was not material to the historical consolidated statement of operations.
*** Management utilized TCS’ historical consolidated statement of operations for the 13 weeks ended March 28, 2026, which corresponds to its most recently completed
fiscal quarter, in preparing the unaudited pro forma condensed combined statement of operations. As a result, the 13-week period ended March 28, 2026 is included in both TCS’ historical consolidated statement of operations for the 13 weeks ended
March 28, 2026 and its historical consolidated statement of operations for the fiscal year ended March 28, 2026. Accordingly, the results of operations for this 13-week period are reflected in both the unaudited pro forma condensed combined
statement of operations for the three months ended March 31, 2026 and the year ended December 31, 2025. For the 13 weeks ended March 28, 2026, TCS reported net sales of $160.2 million and a net loss of $81.2 million.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025 gives effect to the Business
Combinations as if they had occurred on January 1, 2025, the beginning of the earliest period presented, and has been prepared by combining:
| • |
the audited consolidated statement of operations of BBBY for the year ended December 31, 2025,
|
| • |
the audited consolidated statement of operations of TBHC for the 52 weeks ended January 31, 2026, and
|
| • |
the audited consolidated statement of operations of TCS for the fiscal year ended March 28, 2026.
|
The unaudited pro forma condensed combined financial information and corresponding notes to the unaudited pro forma condensed combined
financial information were derived from, and should be read in conjunction with, the following historical financial statements and the accompanying notes:
| • |
The historical unaudited consolidated financial statements of BBBY as of and for the three months ended March 31, 2026, as included in BBBY’s Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission (the “SEC”) on April 27, 2026;
|
| • |
The historical audited consolidated financial statements of BBBY as of and for the fiscal year ended December 31, 2025, as included in BBBY’s Annual Report on Form 10-K
filed with the SEC on February 24, 2026;
|
| • |
The historical audited consolidated financial statements of TBHC for the fiscal year ended January 31, 2026, as included in Amendment No. 1 to BBBY's Current Report on Form
8-K (Form 8-K/A), filed with the SEC on May 8, 2026; and
|
| • |
The historical audited consolidated financial statements of TCS as of and for the fiscal year ended March 28, 2026, as included herein as Exhibit 99.1 to this Amendment No.
1 to BBBY’s Current Report on Form 8-K (Form 8-K/A).
|
3
Unaudited Pro Forma Condensed Combined Balance Sheet
(in thousands)
|
As of March 31,
2026
|
As of April 4, 2026
|
As of March 28, 2026
|
As of March 31,
2026
|
||||||||||||||||||||||||||||||
|
Bed Bath &
Beyond, Inc.
(Historical)
|
The Brand House
Collective, Inc.
(Historical, adjusted
for reclassifications)
|
Transaction
Accounting
Adjustments
|
(Note 4)
|
The Container Store
Group, Inc.
(Historical, adjusted
for reclassifications)
|
Transaction
Accounting
Adjustments
|
(Note 7)
|
Unaudited Pro
Forma
Condensed
Combined
Balance Sheet
|
||||||||||||||||||||||||||
|
Assets
|
|||||||||||||||||||||||||||||||||
|
Current assets:
|
|||||||||||||||||||||||||||||||||
|
Cash and cash equivalents
|
$
|
135,829
|
$
|
14,092
|
$
|
(10,000
|
)
|
4(e)
|
|
$
|
29,118
|
$
|
30,000
|
7(a)
|
|
$
|
191,412
|
||||||||||||||||
|
(20,000
|
)
|
4(c)
|
6,465
|
7(l)
|
|
||||||||||||||||||||||||||||
|
5,908
|
4(c)
|
||||||||||||||||||||||||||||||||
|
Restricted cash
|
26,673
|
-
|
-
|
26,673
|
|||||||||||||||||||||||||||||
|
Accounts receivable, net of allowance for credit losses
|
24,005
|
-
|
(3,836
|
)
|
4(e)
|
21,514
|
41,683
|
||||||||||||||||||||||||||
|
Inventories
|
496
|
56,194
|
133,060
|
59
|
7(f)
|
189,809
|
|||||||||||||||||||||||||||
|
Prepaid expenses and other current assets
|
9,713
|
7,076
|
17,573
|
34,362
|
|||||||||||||||||||||||||||||
|
Total current assets
|
196,716
|
77,362
|
(27,928
|
)
|
201,265
|
36,524
|
483,939
|
||||||||||||||||||||||||||
|
Property and equipment, net
|
12,586
|
13,278
|
20,850
|
4(h)
|
83,660
|
64,000
|
7(h)
|
194,374
|
|||||||||||||||||||||||||
|
Intangible assets, net
|
45,079
|
-
|
19,825
|
4,046
|
7(i)
|
68,950
|
|||||||||||||||||||||||||||
|
Goodwill
|
6,160
|
-
|
69,578
|
4(d)
|
2,495
|
133,755
|
7(c)
|
71,744
|
|||||||||||||||||||||||||
|
22,041
|
4(e)
|
(50,593
|
)
|
7(d)
|
|||||||||||||||||||||||||||||
|
(2,512
|
)
|
4(i)
|
6,117
|
7(e)
|
|||||||||||||||||||||||||||||
|
3,776
|
4(f)
|
(59
|
)
|
7(f)
|
|||||||||||||||||||||||||||||
|
(20,850
|
)
|
4(h)
|
(41,121
|
)
|
7(g)
|
||||||||||||||||||||||||||||
|
(11,464
|
)
|
4(g)
|
(64,000
|
)
|
7(h)
|
||||||||||||||||||||||||||||
|
3,132
|
4(l)
|
(4,046
|
)
|
7(i)
|
|||||||||||||||||||||||||||||
|
(275
|
)
|
7(j)
|
|||||||||||||||||||||||||||||||
|
19,610
|
7(m)
|
||||||||||||||||||||||||||||||||
|
Equity securities, including securities measured at fair value
|
64,236
|
-
|
91
|
4(j)
|
55,929
|
||||||||||||||||||||||||||||
|
|
(8,398
|
)
|
4(e)
|
||||||||||||||||||||||||||||||
|
Operating lease right-of-use assets
|
4,937
|
100,655
|
18,564
|
4(g)
|
269,112
|
49,472
|
7(g)
|
445,527
|
|||||||||||||||||||||||||
|
|
2,512
|
4(i)
|
275
|
7(j)
|
|||||||||||||||||||||||||||||
|
Other long-term assets, net including securities measured at fair value
|
74,740
|
3,333
|
(44,410
|
)
|
4(e)
|
6,034
|
(880
|
)
|
7(e)
|
29,331
|
|||||||||||||||||||||||
|
|
(856
|
)
|
4(f)
|
236
|
7(l)
|
||||||||||||||||||||||||||||
|
|
(8,866
|
)
|
7(l)
|
||||||||||||||||||||||||||||||
|
Total assets
|
$
|
404,454
|
$
|
194,628
|
$
|
24,126
|
$
|
582,391
|
$
|
144,195
|
$
|
1,349,794
|
|||||||||||||||||||||
|
Liabilities and Stockholders' Equity (Deficit)
|
|||||||||||||||||||||||||||||||||
|
Current liabilities:
|
|||||||||||||||||||||||||||||||||
|
Accounts payable
|
$
|
91,532
|
$
|
51,815
|
$
|
(3,836
|
)
|
4(e)
|
$
|
46,483
|
$
|
191,902
|
|||||||||||||||||||||
|
$
|
5,908
|
4(c)
|
|||||||||||||||||||||||||||||||
|
Accrued liabilities
|
47,480
|
19,116
|
(473
|
)
|
4(e)
|
73,038
|
706
|
7(b)
|
146,338
|
||||||||||||||||||||||||
|
2,165
|
4(k)
|
4,306
|
7(k)
|
||||||||||||||||||||||||||||||
|
Unearned revenue
|
34,639
|
143
|
34,782
|
||||||||||||||||||||||||||||||
|
Operating lease liabilities, current
|
946
|
33,520
|
59,561
|
1,603
|
7(g)
|
95,630
|
|||||||||||||||||||||||||||
|
Short-term debt, net
|
15,500
|
-
|
284
|
15,784
|
|||||||||||||||||||||||||||||
|
Total current liabilities
|
190,097
|
104,594
|
3,764
|
179,366
|
6,615
|
484,436
|
|||||||||||||||||||||||||||
|
Long-term debt, net
|
-
|
6,811
|
10,000
|
4(a)
|
268,606
|
30,000
|
7(a)
|
191,061
|
|||||||||||||||||||||||||
|
(10,000
|
)
|
4(e)
|
(226,712
|
)
|
7(d)
|
||||||||||||||||||||||||||||
|
5,237
|
7(e)
|
||||||||||||||||||||||||||||||||
|
108,370
|
7(d)
|
||||||||||||||||||||||||||||||||
|
(1,251
|
)
|
7(l)
|
|||||||||||||||||||||||||||||||
|
Operating lease liabilities, non-current
|
5,404
|
78,599
|
7,100
|
4(g)
|
250,672
|
6,748
|
7(g)
|
348,523
|
|||||||||||||||||||||||||
|
Other long-term liabilities, including commitments measured at fair value
|
6,500
|
3,185
|
3,132
|
4(l)
|
16,796
|
19,610
|
7(m)
|
49,223
|
|||||||||||||||||||||||||
|
Related party debt, net
|
-
|
40,812
|
205
|
4(b)
|
-
|
||||||||||||||||||||||||||||
|
2,920
|
4(f)
|
||||||||||||||||||||||||||||||||
|
(43,937
|
)
|
4(e)
|
|||||||||||||||||||||||||||||||
|
Total liabilities
|
202,001
|
234,001
|
(26,816
|
)
|
715,440
|
(51,383
|
)
|
1,073,243
|
|||||||||||||||||||||||||
|
Stockholders’ equity (deficit):
|
|||||||||||||||||||||||||||||||||
|
Preferred stock
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
|
Common stock
|
8
|
226,589
|
(196,589
|
)
|
4(d)
|
-
|
-
|
7(c)
|
10
|
||||||||||||||||||||||||
|
(10,000
|
)
|
4(a)
|
1
|
7(d)
|
|||||||||||||||||||||||||||||
|
(20,000
|
)
|
4(c)
|
|||||||||||||||||||||||||||||||
|
1
|
4(e)
|
||||||||||||||||||||||||||||||||
|
Additional paid‑in capital
|
1,241,225
|
-
|
13,642
|
4(e)
|
11,311
|
(11,311
|
)
|
7(c)
|
1,322,615
|
||||||||||||||||||||||||
|
67,748
|
7(d)
|
||||||||||||||||||||||||||||||||
|
Accumulated deficit
|
(859,109
|
)
|
(265,962
|
)
|
(205
|
)
|
4(b)
|
|
(156,389
|
)
|
(706
|
)
|
7(b)
|
(864,987
|
)
|
||||||||||||||||||
|
(2,165
|
)
|
4(k)
|
|
157,095
|
7(c)
|
||||||||||||||||||||||||||||
|
266,167
|
4(d)
|
|
(4,306
|
)
|
7(k)
|
||||||||||||||||||||||||||||
|
91
|
4(j)
|
|
236
|
7(l)
|
|||||||||||||||||||||||||||||
|
266
|
7(l)
|
||||||||||||||||||||||||||||||||
|
Accumulated other comprehensive loss
|
(2,574
|
)
|
12,029
|
(12,029
|
)
|
7(c)
|
(2,574
|
)
|
|||||||||||||||||||||||||
|
Treasury stock at cost
|
(177,458
|
)
|
-
|
(1,416
|
)
|
7(l)
|
(178,874
|
)
|
|||||||||||||||||||||||||
|
Total stockholders’ equity (deficit) attributable to stockholders of Bed Bath & Beyond, Inc.
|
202,092
|
(39,373
|
)
|
50,942
|
(133,049
|
)
|
195,578
|
276,190
|
|||||||||||||||||||||||||
|
Equity attributable to noncontrolling interests
|
361
|
-
|
361
|
||||||||||||||||||||||||||||||
|
Total stockholders’ equity (deficit)
|
202,453
|
(39,373
|
)
|
50,942
|
(133,049
|
)
|
195,578
|
276,551
|
|||||||||||||||||||||||||
|
Total liabilities and stockholders’ equity (deficit)
|
$
|
404,454
|
$
|
194,628
|
$
|
24,126
|
$
|
582,391
|
$
|
144,195
|
$
|
1,349,794
|
|||||||||||||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial statements
4
Unaudited Pro Forma Condensed Combined Statements of Operations
(in thousands)
|
|
Three Months Ended
March 31, 2026
Bed Bath & Beyond, Inc.
(Historical)
|
13 Weeks Ended April 4, 2026
The Brand House Collective, Inc.
(Historical, adjusted for
reclassifications)
|
Transaction
Accounting
Adjustments
|
(Note 5)
|
13 Weeks Ended March 28, 2026
The Container Store Group, Inc.
(Historical, adjusted for
reclassifications)
|
Transaction
Accounting
Adjustments
|
(Note 8)
|
Three Months Ended
March 31, 2026
Unaudited Pro Forma
Condensed Combined
Statements of Operations
|
||||||||||||||||||||||||
|
Net revenue
|
$
|
247,755
|
$
|
64,996
|
$
|
160,179
|
$
|
-
|
$
|
472,930
|
||||||||||||||||||||||
|
Cost of goods sold
|
188,557
|
45,739
|
85,713
|
-
|
320,009
|
|||||||||||||||||||||||||||
|
Gross profit
|
59,198
|
19,257
|
-
|
74,466
|
-
|
152,921
|
||||||||||||||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||||||||||
|
Sales and marketing
|
32,310
|
14,785
|
1,082
|
5(e)
|
|
10,073
|
-
|
58,250
|
||||||||||||||||||||||||
|
Technology
|
21,214
|
2,262
|
172
|
5(e)
|
7,572
|
2,404
|
8(d)
|
32,136
|
||||||||||||||||||||||||
|
|
(1,488
|
)
|
8(d)
|
|||||||||||||||||||||||||||||
|
General and administrative
|
14,863
|
30,240
|
(2,460
|
)
|
5(k
|
93,377
|
(2,968
|
)
|
8(c)
|
136,828
|
||||||||||||||||||||||
|
|
213
|
5(e)
|
-
|
(4,979
|
)
|
8(d)
|
||||||||||||||||||||||||||
|
|
500
|
5(d)
|
-
|
8,042
|
8(d)
|
|||||||||||||||||||||||||||
|
Customer service and merchant fees
|
9,018
|
-
|
-
|
-
|
9,018
|
|||||||||||||||||||||||||||
|
Other operating expense (income), net
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||
|
Indefinite-lived asset impairment charges
|
3,009
|
-
|
3,009
|
|||||||||||||||||||||||||||||
|
Gain on lease termination
|
(1,423
|
)
|
-
|
(1,423
|
)
|
|||||||||||||||||||||||||||
|
Other expenses (gain)
|
5,935
|
-
|
5,935
|
|||||||||||||||||||||||||||||
|
(Gain) loss on disposal of assets
|
(64
|
)
|
-
|
(64
|
)
|
|||||||||||||||||||||||||||
|
Asset impairment
|
-
|
5,147
|
8,815
|
-
|
13,962
|
|||||||||||||||||||||||||||
|
Total operating expenses
|
77,405
|
52,434
|
(493
|
)
|
127,294
|
1,011
|
257,651
|
|||||||||||||||||||||||||
|
Operating loss
|
(18,207
|
)
|
(33,177
|
)
|
493
|
(52,828
|
)
|
(1,011
|
)
|
(104,730
|
)
|
|||||||||||||||||||||
|
Interest income (expense), net
|
1,729
|
(1,350
|
)
|
375
|
5(b)
|
(6,234
|
)
|
369
|
8(a)
|
(1,997
|
)
|
|||||||||||||||||||||
|
|
821
|
5(i)
|
-
|
4,271
|
8(e)
|
|||||||||||||||||||||||||||
|
|
(578
|
)
|
5(i)
|
-
|
(1,400
|
)
|
8(g)
|
|||||||||||||||||||||||||
|
Other (expense) income, net
|
329
|
40
|
1,520
|
5(j)
|
-
|
-
|
1,889
|
|||||||||||||||||||||||||
|
Loss before income taxes
|
(16,149
|
)
|
(34,487
|
)
|
2,631
|
(59,062
|
)
|
2,229
|
(104,838
|
)
|
||||||||||||||||||||||
|
Provision for income taxes
|
249
|
525
|
-
|
5(l)
|
22,169
|
-
|
8(j)
|
22,943
|
||||||||||||||||||||||||
|
Net loss
|
(16,398
|
)
|
(35,012
|
)
|
2,631
|
(81,231
|
)
|
2,229
|
(127,781
|
)
|
||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Net loss per share of common stock:
|
||||||||||||||||||||||||||||||||
|
Basic
|
$
|
(0.24
|
)
|
$
|
0.27
|
|||||||||||||||||||||||||||
|
Diluted
|
$
|
(0.24
|
)
|
$
|
0.27
|
|||||||||||||||||||||||||||
|
Weighted average shares of common stock outstanding:
|
||||||||||||||||||||||||||||||||
|
Basic
|
69,049
|
85,859
|
||||||||||||||||||||||||||||||
|
Diluted
|
69,049
|
85,859
|
||||||||||||||||||||||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial statements
5
Unaudited Pro Forma Condensed Combined Statements of Operations
(in thousands)
|
|
The Year ended December 31,
2025
Bed Bath & Beyond, Inc.
(Historical)
|
52 Weeks Ended January 31, 2026
The Brand House Collective, Inc.
(Historical, adjusted for
reclassifications)
|
Transaction
Accounting
Adjustments
|
(Note 5)
|
52 Weeks Ended March 28, 2026
The Container Store Group, Inc.
(Historical, adjusted for
reclassifications)
|
Transaction
Accounting
Adjustments
|
(Note 8)
|
The year ended December 31,
2025
Unaudited Pro Forma Condensed
Combined Statements of
Operations
|
||||||||||||||||||||||||
|
Net revenue
|
$
|
1,044,616
|
$
|
395,782
|
$
|
(2,417
|
)
|
5(a)
|
$
|
670,096
|
$
|
-
|
$
|
2,108,077
|
||||||||||||||||||
|
Cost of goods sold
|
787,094
|
250,217
|
(1,651
|
)
|
5(a)
|
330,061
|
59
|
8(b)
|
|
1,365,780
|
||||||||||||||||||||||
|
Gross profit
|
257,522
|
145,565
|
(766
|
)
|
340,035
|
(59
|
)
|
742,297
|
||||||||||||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||||||||||
|
Sales and marketing
|
143,356
|
62,519
|
3,848
|
5(e)
|
35,546
|
-
|
245,269
|
|||||||||||||||||||||||||
|
Technology
|
90,276
|
9,620
|
1,214
|
5(e)
|
36,135
|
18,137
|
8(d)
|
143,172
|
||||||||||||||||||||||||
|
|
(12,210
|
)
|
8(d)
|
|||||||||||||||||||||||||||||
|
General and administrative
|
53,569
|
121,127
|
(645
|
)
|
5(k)
|
361,238
|
(3,763
|
)
|
8(c)
|
548,460
|
||||||||||||||||||||||
|
|
2,165
|
5(c)
|
-
|
23,646
|
8(d)
|
|||||||||||||||||||||||||||
|
|
295
|
5(e)
|
-
|
(15,919
|
)
|
8(d)
|
||||||||||||||||||||||||||
|
|
2,001
|
5(d)
|
-
|
4,306
|
8(f)
|
|||||||||||||||||||||||||||
|
|
-
|
706
|
8(h)
|
|||||||||||||||||||||||||||||
|
|
(266
|
)
|
8(i)
|
|||||||||||||||||||||||||||||
|
Customer service and merchant fees
|
37,324
|
-
|
-
|
-
|
-
|
37,324
|
||||||||||||||||||||||||||
|
Other operating expense (income), net
|
(5,790
|
)
|
-
|
-
|
-
|
-
|
(5,790
|
)
|
||||||||||||||||||||||||
|
Indefinite-lived asset impairment charges
|
3,009
|
-
|
3,009
|
|||||||||||||||||||||||||||||
|
Gain on lease termination, net
|
(2,423
|
)
|
-
|
(2,423
|
)
|
|||||||||||||||||||||||||||
|
Other expenses
|
16,978
|
-
|
16,978
|
|||||||||||||||||||||||||||||
|
(Gain) loss on disposal of assets
|
(64
|
)
|
-
|
(64
|
)
|
|||||||||||||||||||||||||||
|
Gain on sale of internally developed intangible assets
|
-
|
(10,000
|
)
|
10,000
|
5(h)
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Asset impairment
|
-
|
2,013
|
-
|
8,815
|
-
|
10,828
|
||||||||||||||||||||||||||
|
Total operating expenses
|
318,735
|
185,279
|
18,878
|
459,234
|
14,637
|
996,763
|
||||||||||||||||||||||||||
|
Operating loss
|
(61,213
|
)
|
(39,714
|
)
|
(19,644
|
)
|
(119,199
|
)
|
(14,696
|
)
|
(254,466
|
)
|
||||||||||||||||||||
|
Interest income (expense), net
|
5,052
|
(6,024
|
)
|
1,873
|
5(b)
|
(21,316
|
)
|
1,084
|
8(a)
|
(9,017
|
)
|
|||||||||||||||||||||
|
|
2,879
|
5(i)
|
-
|
13,968
|
8(e)
|
|||||||||||||||||||||||||||
|
|
(933
|
)
|
5(i
|
-
|
(5,600
|
)
|
8(g)
|
|||||||||||||||||||||||||
|
Other (expense) income, net
|
(27,635
|
)
|
230
|
5,193
|
5(j)
|
-
|
-
|
(21,499
|
)
|
|||||||||||||||||||||||
|
|
622
|
5(g)
|
-
|
-
|
||||||||||||||||||||||||||||
|
|
91
|
5(f)
|
-
|
-
|
||||||||||||||||||||||||||||
|
Loss before income taxes
|
(83,796
|
)
|
(45,508
|
)
|
(9,919
|
)
|
(140,515
|
)
|
(5,244
|
)
|
(284,982
|
)
|
||||||||||||||||||||
|
Provision for income taxes
|
825
|
358
|
-
|
5(l)
|
(639
|
)
|
-
|
8(j)
|
544
|
|||||||||||||||||||||||
|
Net loss
|
(84,621
|
)
|
(45,866
|
)
|
(9,919
|
)
|
(139,876
|
)
|
(5,244
|
)
|
(285,526
|
)
|
||||||||||||||||||||
|
Net loss per share of common stock:
|
||||||||||||||||||||||||||||||||
|
Basic
|
$
|
(1.41
|
)
|
$
|
(3.71
|
)
|
||||||||||||||||||||||||||
|
Diluted
|
$
|
(1.41
|
)
|
$
|
(3.71
|
)
|
||||||||||||||||||||||||||
|
Weighted average shares of common stock outstanding:
|
||||||||||||||||||||||||||||||||
|
Basic
|
60,130
|
76,940
|
||||||||||||||||||||||||||||||
|
Diluted
|
60,130
|
76,940
|
||||||||||||||||||||||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial statements
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Basis of Pro Forma Presentation
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended,
and is presented for illustrative purposes only. The adjustments included in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an understanding of the
effects of the Business Combinations on BBBY. The historical financial information of BBBY, TBHC and TCS has been prepared in accordance with U.S. GAAP.
The Business Combinations will be accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations (ASC 805), with BBBY treated as the accounting acquirer. Under the acquisition method, the consideration transferred for each Business Combination will be allocated to the identifiable assets
acquired and liabilities assumed based on their estimated fair values as of the applicable acquisition date. Any excess of the consideration transferred over the estimated fair value of the identifiable net assets acquired will be recognized as
goodwill.
The purchase accounting reflected in the unaudited pro forma condensed combined financial information is preliminary and has been prepared based on estimates and
assumptions made by BBBY's management. The final determination of the fair values of the assets acquired and liabilities assumed, the allocation of purchase consideration, and the evaluation of accounting policies for conformity may differ
materially from the amounts presented herein. Accordingly, preliminary purchase price allocations and related pro forma adjustments are subject to change.
In determining the preliminary estimates of the fair values of the assets acquired and liabilities assumed, BBBY utilized publicly available
information, market data and other assumptions that BBBY believes are reasonable under the circumstances. There can be no assurance that the final valuations will not differ materially from the preliminary estimates reflected herein. Changes in the
estimated fair values of assets acquired and liabilities assumed may result in changes to the allocation of purchase consideration, including the amount assigned to goodwill, and may affect future depreciation and amortization expense.
The unaudited pro forma condensed combined financial information does not reflect the costs of any integration activities, cost savings,
operating synergies, revenue enhancements, restructuring activities, or other benefits or costs that may result from the Business Combinations, except to the extent required by Article 11 of Regulation S-X. The pro forma adjustments represent
BBBY's best estimates based on information currently available and assumptions that BBBY believes are reasonable under the circumstances.
The unaudited pro forma condensed combined financial information is provided for informational purposes only and is not necessarily indicative
of the results of operations or financial position that would have been achieved had the Business Combinations occurred on the dates assumed. Further, the unaudited pro forma condensed combined financial information is not necessarily indicative of
BBBY's future results of operations or financial position following the Business Combinations.
The unaudited pro forma condensed combined financial information gives effect to Business Combinations and includes the following:
| • |
Reclassifications to conform the historical financial statement presentation of TBHC and TCS to BBBY's financial statement presentation (the “Reclassification Adjustments”);
and
|
| • |
Transaction accounting adjustments to reflect the preliminary allocation of purchase consideration to the identifiable assets acquired and liabilities assumed and estimated
transaction costs directly attributable to the Business Combinations in accordance with ASC 805 (the “Transaction Accounting Adjustments”);
|
Management utilized the unaudited consolidated balance sheet of TBHC as of April 4, 2026 in preparing the unaudited pro forma condensed
combined balance sheet, as it represents the closest balance sheet date to the April 2, 2026 acquisition date. For pro forma purposes, certain transaction accounting adjustments were applied to reflect transactions occurring between April 2, 2026
and April 4, 2026:
| a. |
As part of the consideration transferred in the TBHC Merger, BBBY repaid $10.0 million of TBHC’s indebtedness with Bank of America on the April 2, 2026 acquisition date. The
unaudited consolidated balance sheet of TBHC as of April 4, 2026 reflects the repayment and, accordingly, does not include the related liability. For purposes of the unaudited pro forma condensed combined balance sheet, the Bank of America
indebtedness of $10.0 million was reinstated to present TBHC's historical balances as of April 2, 2026. See Note 4(a).
|
7
| b. |
As part of the consideration transferred in the TBHC Merger, $0.2 million of the collaboration fee payable arising from a preexisting relationship between TBHC and BBBY was
written off upon settlement of the preexisting relationship on April 2, 2026. The historical balance sheet of TBHC as of April 4, 2026 reflects this write-off and, accordingly, does not include the related liability. For purposes of the
unaudited pro forma condensed combined balance sheet, the collaboration fee receivable has been reinstated to present TBHC's historical balances as of April 2, 2026. See Note 4(b).
|
| c. |
To reflect the reversal of the post-merger capital contribution from BBBY to THBC of $20.0 million,
recorded as a decrease to cash with a corresponding decrease to common stock. The reversal resulted in a negative cash balance of $5.9 million, which has been reclassified to accounts payable for financial statement presentation purposes.
See Note 4(c).
|
2. Reclassification Adjustments
During the preparation of this unaudited pro forma condensed combined financial information, BBBY management performed a preliminary review of
the financial information of the acquired companies to identify differences in accounting policies and financial statement presentation as compared to those of BBBY. At the time of preparing the unaudited pro forma condensed combined financial
information, other than the reclassification adjustments described herein, BBBY is not aware of any other material differences. However, BBBY will continue to perform its detailed review of the accounting policies of the acquired companies. Upon
completion of that review, differences may be identified between the accounting policies of BBBY and those of the acquired companies that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial
information.
8
The following tables present TBHC's historical balance sheet as of April 4, 2026, historical consolidated statement of operations for the 13
weeks ended April 4, 2026 and historical consolidated statement of operations for the year ended January 31, 2026, reclassified to conform to BBBY's financial statement presentation. The Reclassification Adjustments do not affect TBHC's historical
net loss, total assets, total liabilities, or total stockholders' equity.
Unaudited Reclassified Condensed Combined Balance Sheet
April 4, 2026
(in thousands)
|
Bed Bath & Beyond, Inc.
|
The Brand House Collective, Inc.
|
The Brand
House
Collective, Inc.
|
Reclassification
Adjustments
|
Notes
|
The Brand House
Collective, Inc.
(Historical,
adjusted for
reclassifications)
|
||||||||||
|
Assets
|
|
|
|||||||||||||
|
Current assets:
|
|
|
|||||||||||||
|
Cash and cash equivalents
|
Cash and cash equivalents
|
$
|
14,092
|
$
|
-
|
|
$
|
14,092
|
|||||||
|
Restricted cash
|
|
-
|
-
|
|
-
|
||||||||||
|
Accounts receivable, net of allowance for credit losses
|
|
-
|
-
|
|
-
|
||||||||||
|
Inventories
|
Inventories, net
|
56,194
|
-
|
|
56,194
|
||||||||||
|
Prepaid expenses and other current assets
|
Prepaid expenses and other current assets
|
7,076
|
-
|
|
7,076
|
||||||||||
|
Total current assets
|
|
77,362
|
-
|
|
77,362
|
||||||||||
|
Property and equipment, net
|
Property and equipment, net
|
13,278
|
-
|
|
13,278
|
||||||||||
|
Intangible assets, net
|
|
-
|
-
|
|
-
|
||||||||||
|
Goodwill
|
|
-
|
-
|
|
-
|
||||||||||
|
Equity securities, including securities measured at fair value
|
|
-
|
-
|
|
-
|
||||||||||
|
Operating lease right-of-use assets
|
Operating lease right-of-use assets
|
100,655
|
-
|
|
100,655
|
||||||||||
|
Other long-term assets, net including securities measured at fair value
|
Other assets
|
3,333
|
-
|
|
3,333
|
||||||||||
|
Total assets
|
|
$
|
194,628
|
$
|
-
|
|
$
|
194,628
|
|||||||
|
Liabilities and Stockholder's Equity (Deficit)
|
|
|
|||||||||||||
|
Current liabilities:
|
|
|
|||||||||||||
|
Accounts payable
|
Accounts payable
|
$
|
51,815
|
$
|
-
|
|
$
|
51,815
|
|||||||
|
Accrued liabilities
|
Accrued expenses and other liabilities
|
19,259
|
(143
|
)
|
(a)
|
19,116
|
|||||||||
|
Unearned revenue
|
|
-
|
143
|
(a)
|
143
|
||||||||||
|
Operating lease liabilities, current
|
Operating lease liabilities
|
33,520
|
-
|
|
33,520
|
||||||||||
|
Short-term debt, net
|
|
-
|
-
|
|
-
|
||||||||||
|
Current related party debt, net
|
-
|
-
|
|
-
|
|||||||||||
|
Total current liabilities
|
|
104,594
|
-
|
|
104,594
|
||||||||||
|
Long-term debt, net
|
6,811
|
-
|
|
6,811
|
|||||||||||
|
Operating lease liabilities, non-current
|
Operating lease liabilities
|
78,599
|
-
|
|
78,599
|
||||||||||
|
Other long-term liabilities, including commitments measured at fair value
|
Other liabilities
|
3,185
|
-
|
|
3,185
|
||||||||||
|
Related party debt, net
|
40,812
|
-
|
|
40,812
|
|||||||||||
|
Total liabilities
|
|
234,001
|
-
|
|
234,001
|
||||||||||
|
Stockholders’ equity (deficit):
|
|
|
|||||||||||||
|
Preferred stock
|
Preferred stock
|
-
|
-
|
|
-
|
||||||||||
|
Common stock
|
Common stock
|
226,589
|
-
|
|
226,589
|
||||||||||
|
Additional paid‑in capital
|
Additional paid‑in capital
|
-
|
-
|
|
-
|
||||||||||
|
Accumulated deficit
|
|
(265,962
|
)
|
-
|
|
(265,962
|
)
|
||||||||
|
Treasury stock at cost
|
|
-
|
-
|
|
-
|
||||||||||
|
Total stockholders’ equity (deficit) attributable to stockholders of Bed Bath & Beyond, Inc.
|
|
(39,373
|
)
|
-
|
|
(39,373
|
)
|
||||||||
|
Equity attributable to noncontrolling interests
|
|
-
|
-
|
|
-
|
||||||||||
|
Total stockholders’ equity (deficit)
|
|
(39,373
|
)
|
-
|
|
(39,373
|
)
|
||||||||
|
Total liabilities and stockholders’ equity (deficit)
|
|
$
|
194,628
|
$
|
-
|
|
$
|
194,628
|
|||||||
| (a) |
Reclassification of TBHC's unearned revenue to BBBY's historical presentation.
|
9
Unaudited Reclassified Condensed Combined Statements of Operations
For the 13 Weeks Ended April 4, 2026
(in thousands)
|
Bed Bath & Beyond, Inc.
|
The Brand House Collective, Inc.
|
The Brand
House
Collective, Inc.
|
Reclassification
Adjustments
|
Notes
|
The Brand
House
Collective, Inc.
(Historical,
adjusted for
reclassifications)
|
||||||||||
|
Net revenue
|
Net sales
|
$
|
64,996
|
$
|
-
|
|
$
|
64,996
|
|||||||
|
Cost of goods sold
|
Cost of sales
|
60,047
|
(14,308
|
)
|
(b)
|
45,739
|
|||||||||
|
Gross profit
|
Gross profit
|
4,949
|
14,308
|
|
19,257
|
||||||||||
|
Operating expenses:
|
Operating expenses:
|
|
|||||||||||||
|
Sales and marketing
|
|
-
|
14,308
|
(b)
|
14,785
|
||||||||||
|
|
|
442
|
(c)
|
||||||||||||
|
|
|
35
|
(d)
|
||||||||||||
|
Technology
|
|
-
|
777
|
(c)
|
2,262
|
||||||||||
|
|
|
1,258
|
(d)
|
||||||||||||
|
|
|
227
|
(e)
|
||||||||||||
|
General and administrative
|
|
-
|
19,013
|
(c)
|
30,240
|
||||||||||
|
|
|
10,946
|
(d)
|
||||||||||||
|
|
|
281
|
(e)
|
||||||||||||
|
Customer service and merchant fees
|
|
-
|
|
-
|
|||||||||||
|
Compensation and benefits
|
20,232
|
(20,232
|
)
|
(c)
|
-
|
||||||||||
|
Other operating expenses (income), net
|
Other operating expenses
|
12,239
|
(12,239
|
)
|
(d)
|
-
|
|||||||||
|
Depreciation (exclusive of depreciation included in cost of sales)
|
508
|
(508
|
)
|
(e)
|
-
|
||||||||||
|
Asset impairment
|
5,147
|
-
|
|
5,147
|
|||||||||||
|
Total operating expenses
|
Total operating expenses
|
38,126
|
14,308
|
|
52,434
|
||||||||||
|
Operating loss
|
Operating loss
|
(33,177
|
)
|
-
|
|
(33,177
|
)
|
||||||||
|
Interest income, net
|
|
-
|
(1,350
|
)
|
(f)
|
(1,350
|
)
|
||||||||
|
Interest expense
|
(1,350
|
)
|
1,350
|
(f)
|
-
|
||||||||||
|
Other income (expense), net
|
Other income
|
40
|
-
|
|
40
|
||||||||||
|
Loss before income taxes
|
Loss before income taxes
|
(34,487
|
)
|
-
|
|
(34,487
|
)
|
||||||||
|
Provision for income taxes
|
Income tax expense (benefit)
|
525
|
-
|
|
525
|
||||||||||
|
Net loss
|
Net loss
|
$
|
(35,012
|
)
|
$
|
-
|
|
$
|
(35,012
|
)
|
|||||
| (b) |
Reclassification of TBHC's store occupancy expenses from TBHC's “Cost of sales” to BBBY's “Sales and marketing.”
|
| (c) |
Reclassification of TBHC's “Compensation and benefits” to BBBY's “Sales and marketing,” “Technology,” and “General and administrative”.
|
| (d) |
Reclassification of TBHC 's “Other operating expenses” to BBBY's “Sales and marketing,” “Technology,” and “General and administrative.”
|
| (e) |
Reclassification of TBHC 's “Depreciation (exclusive of depreciation included in cost of sales)” to BBBY's “Technology,” and “General and administrative.”
|
| (f) |
Reclassification of TBHC 's “Interest expense” to BBBY's “Interest income, net.”
|
10
Unaudited Reclassified Condensed Combined Statements of Operations
For the 52 Weeks Ended January 31, 2026
(in thousands)
|
Bed Bath & Beyond, Inc.
|
The Brand House Collective, Inc.
|
The Brand
House
Collective, Inc.
|
Reclassification
Adjustments
|
Notes
|
The Brand
House
Collective, Inc.
(Historical,
adjusted for
reclassifications)
|
||||||||||
|
Net revenue
|
Net sales
|
$
|
395,782
|
$
|
-
|
|
$
|
395,782
|
|||||||
|
Cost of goods sold
|
Cost of sales
|
310,709
|
(60,492
|
)
|
(b)
|
250,217
|
|||||||||
|
Gross profit
|
Gross profit
|
85,073
|
60,492
|
|
145,565
|
||||||||||
|
Operating expenses:
|
Operating expenses:
|
|
|||||||||||||
|
Sales and marketing
|
|
-
|
60,492
|
(b)
|
62,519
|
||||||||||
|
|
|
1,549
|
(c)
|
||||||||||||
|
|
|
478
|
(d)
|
||||||||||||
|
Technology
|
|
-
|
2,926
|
(c)
|
9,620
|
||||||||||
|
|
|
4,828
|
(d)
|
||||||||||||
|
|
|
1,866
|
(e)
|
||||||||||||
|
General and administrative
|
|
-
|
72,341
|
(c)
|
121,127
|
||||||||||
|
|
|
48,333
|
(d)
|
||||||||||||
|
|
|
453
|
(e)
|
||||||||||||
|
Customer service and merchant fees
|
|
-
|
-
|
|
-
|
||||||||||
|
Compensation and benefits
|
76,816
|
(76,816
|
)
|
(c)
|
-
|
||||||||||
|
Other operating expenses (income), net
|
Other operating expenses
|
53,639
|
(53,639
|
)
|
(d)
|
-
|
|||||||||
|
Depreciation (exclusive of depreciation included in cost of sales)
|
2,319
|
(2,319
|
)
|
(e)
|
-
|
||||||||||
|
Gain on sale of internally developed intangible assets
|
(10,000
|
)
|
-
|
|
(10,000
|
)
|
|||||||||
|
Asset impairment
|
2,013
|
-
|
|
2,013
|
|||||||||||
|
Total operating expenses
|
Total operating expenses
|
124,787
|
60,492
|
|
185,279
|
||||||||||
|
Operating loss
|
Operating loss
|
(39,714
|
)
|
-
|
|
(39,714
|
)
|
||||||||
|
Interest income, net
|
|
-
|
(6,024
|
)
|
(f)
|
(6,024
|
)
|
||||||||
|
Interest expense
|
(6,024
|
)
|
6,024
|
(f)
|
-
|
||||||||||
|
Other income (expense), net
|
Other income
|
230
|
-
|
|
230
|
||||||||||
|
Loss before income taxes
|
Loss before income taxes
|
(45,508
|
)
|
-
|
|
(45,508
|
)
|
||||||||
|
Provision for income taxes
|
Income tax expense (benefit)
|
358
|
-
|
|
358
|
||||||||||
|
Net loss
|
Net loss
|
$
|
(45,866
|
)
|
$
|
-
|
|
$
|
(45,866
|
)
|
|||||
| (b) |
Reclassification of TBHC's store occupancy expenses from TBHC's “Cost of sales” to BBBY's “Sales and marketing.”
|
| (c) |
Reclassification of TBHC's “Compensation and benefits” to BBBY's “Sales and marketing,” “Technology,” and “General and administrative”.
|
| (d) |
Reclassification of TBHC 's “Other operating expenses” to BBBY's “Sales and marketing,” “Technology,” and “General and administrative.”
|
| (e) |
Reclassification of TBHC 's “Depreciation (exclusive of depreciation included in cost of sales)” to BBBY's “Technology,” and “General and administrative.”
|
| (f) |
Reclassification of TBHC 's “Interest expense” to BBBY's “Interest income, net.”
|
11
The following tables present TCS’ historical balance sheet as of March 28, 2026, and historical consolidated statement of operations for the 13 weeks and fiscal year
ended March 28, 2026, reclassified to conform to BBBY's financial statement presentation. The Reclassification Adjustments do not affect TCS’ historical net loss, total assets, total liabilities, or stockholders' equity.
Unaudited Reclassified Condensed Combined Balance Sheet as of March 28, 2026
(in thousands)
|
Bed Bath & Beyond, Inc.
|
The Container Store Group, Inc.
|
The Container
Store Group,
Inc.
|
Reclassification
Adjustments
|
Notes
|
The Container
Store Group, Inc.
(Historical,
adjusted for
reclassifications) |
||||||||||
|
Assets
|
|
|
|||||||||||||
|
Current assets:
|
|
|
|||||||||||||
|
Cash and cash equivalents
|
Cash
|
$
|
29,118
|
$
|
-
|
|
$
|
29,118
|
|||||||
|
Restricted cash
|
|
-
|
-
|
|
-
|
||||||||||
|
Accounts receivable, net of allowance for credit losses
|
Accounts receivable, net
|
21,514
|
-
|
|
21,514
|
||||||||||
|
Inventories
|
Inventory
|
133,060
|
-
|
|
133,060
|
||||||||||
|
Prepaid expenses and other current assets
|
Prepaid expenses
|
13,294
|
4,279
|
(a)
|
17,573
|
||||||||||
|
Income taxes receivable
|
1,378
|
(1,378
|
)
|
(a)
|
-
|
||||||||||
|
Other current assets
|
2,901
|
(2,901
|
)
|
(a)
|
-
|
||||||||||
|
Total current assets
|
|
201,265
|
-
|
|
201,265
|
||||||||||
|
Property and equipment, net
|
Property and equipment, net
|
83,660
|
-
|
|
83,660
|
||||||||||
|
Intangible assets, net
|
Trade names
|
19,825
|
-
|
|
19,825
|
||||||||||
|
Goodwill
|
Goodwill
|
2,495
|
-
|
|
2,495
|
||||||||||
|
Equity securities, including securities measured at fair value
|
|
-
|
-
|
|
-
|
||||||||||
|
Operating lease right-of-use assets
|
Noncurrent operating lease right-of-use assets
|
269,112
|
-
|
|
269,112
|
||||||||||
|
Deferred financing costs, net
|
880
|
(880
|
)
|
(b)
|
-
|
||||||||||
|
Noncurrent deferred tax assets, net
|
18
|
(18
|
)
|
(b)
|
-
|
||||||||||
|
Other long-term assets, net including securities measured at fair value
|
Other assets
|
5,136
|
898
|
(b)
|
6,034
|
||||||||||
|
Total assets
|
|
$
|
582,391
|
$
|
-
|
|
$
|
582,391
|
|||||||
|
Liabilities and Stockholder's Equity (Deficit)
|
|
|
|||||||||||||
|
Current liabilities:
|
|
|
|||||||||||||
|
Accounts payable
|
Accounts payable
|
$
|
46,483
|
$
|
-
|
|
$
|
46,483
|
|||||||
|
Accrued liabilities
|
Accrued liabilities
|
72,777
|
261
|
(c)
|
73,038
|
||||||||||
|
Unearned revenue
|
|
-
|
|
-
|
|||||||||||
|
Operating lease liabilities, current
|
Current operating lease liabilities
|
59,561
|
-
|
|
59,561
|
||||||||||
|
Short-term debt, net
|
Current portion of long-term debt
|
284
|
-
|
|
284
|
||||||||||
|
Income taxes payable
|
261
|
(261
|
)
|
(c)
|
-
|
||||||||||
|
Total current liabilities
|
|
179,366
|
-
|
|
179,366
|
||||||||||
|
Long-term debt
|
268,606
|
-
|
|
268,606
|
|||||||||||
|
Operating lease liabilities, non-current
|
Noncurrent operating lease liabilities
|
250,672
|
-
|
|
250,672
|
||||||||||
|
Noncurrent deferred tax liabilities, net
|
8,497
|
(8,497
|
)
|
(d)
|
-
|
||||||||||
|
Other long-term liabilities, including commitments measured at fair value
|
Other long-term liabilities
|
8,299
|
8,497
|
(d)
|
16,796
|
||||||||||
|
Total liabilities
|
|
715,440
|
-
|
|
715,440
|
||||||||||
|
Stockholders’ equity (deficit):
|
|
|
|||||||||||||
|
Preferred stock
|
Preferred stock
|
-
|
-
|
|
-
|
||||||||||
|
Common stock
|
Common stock
|
-
|
-
|
|
-
|
||||||||||
|
Additional paid‑in capital
|
Additional paid‑in capital
|
11,311
|
-
|
|
11,311
|
||||||||||
|
Accumulated deficit
|
Retained deficit
|
(156,389
|
)
|
-
|
|
(156,389
|
)
|
||||||||
|
Accumulated other comprehensive loss
|
Accumulated other comprehensive income
|
12,029
|
|
12,029
|
|||||||||||
|
Treasury stock at cost
|
|
-
|
-
|
|
-
|
||||||||||
|
Total stockholders’ equity (deficit) attributable to stockholders of Bed Bath & Beyond, Inc.
|
|
(133,049
|
)
|
-
|
|
(133,049
|
)
|
||||||||
|
Equity attributable to noncontrolling interests
|
|
-
|
|
-
|
|||||||||||
|
Total stockholders’ equity (deficit)
|
|
(133,049
|
)
|
-
|
|
(133,049
|
)
|
||||||||
|
Total liabilities and stockholders’ equity (deficit)
|
|
$
|
582,391
|
$
|
-
|
|
$
|
582,391
|
|||||||
| (a) |
Reclassification of TCS’ “Income taxes receivable,” and “Other current assets” to BBBY's “Prepaid expenses and other current assets.”
|
| (b) |
Reclassification of TCS’ “Deferred financing costs, net,” “Noncurrent deferred tax assets, net” to BBBY's “ Other long-term assets, net including securities measured at fair value.”
|
| (c) |
Reclassification of TCS’ “Income taxes payable” to BBBY's “Accrued liabilities.”
|
| (d) |
Reclassification of TCS’ “Noncurrent deferred tax liabilities, net” to BBBY's “Other long-term liabilities.”
|
12
Unaudited Reclassified Condensed Combined Statements of Operations
For the 13 Weeks Ended March 28, 2026
(in thousands)
|
Bed Bath & Beyond, Inc.
|
The Container Store Group, Inc.
|
The Container
Store Group,
Inc.
|
Reclassification
Adjustments
|
Notes
|
The Container
Store Group,
Inc. (Historical,
adjusted for
reclassifications)
|
||||||||||
|
Net revenue
|
Net sales
|
$
|
160,179
|
$
|
-
|
|
$
|
160,179
|
|||||||
|
Cost of goods sold
|
Cost of sales (excluding depreciation and amortization)
|
85,713
|
-
|
|
85,713
|
||||||||||
|
Gross profit
|
Gross profit
|
74,466
|
-
|
|
74,466
|
||||||||||
|
Operating expenses
|
Operating expenses
|
|
|||||||||||||
|
Sales and marketing
|
|
-
|
10,073
|
(e)
|
10,073
|
||||||||||
|
Technology
|
|
-
|
6,084
|
(e)
|
7,572
|
||||||||||
|
|
1,488
|
(g)
|
|||||||||||||
|
General and administrative
|
|
-
|
88,292
|
(e)
|
93,377
|
||||||||||
|
|
106
|
(f)
|
|||||||||||||
|
|
4,979
|
(g)
|
|||||||||||||
|
Customer service and merchant fees
|
|
-
|
-
|
|
-
|
||||||||||
|
Other operating expenses (income), net
|
|
-
|
-
|
|
-
|
||||||||||
|
Selling, general, and administrative expenses (excluding depreciation and amortization)
|
104,449
|
(104,449
|
)
|
(e)
|
-
|
||||||||||
|
Pre-opening costs
|
106
|
(106
|
)
|
(f)
|
-
|
||||||||||
|
Depreciation and amortization
|
6,467
|
(6,467
|
)
|
(g)
|
-
|
||||||||||
|
Long-lived asset impairment
|
8,815
|
|
8,815
|
||||||||||||
|
Indefinite-lived asset impairment charges
|
3,009
|
|
3,009
|
||||||||||||
|
Gain on lease termination
|
(1,423
|
)
|
-
|
|
(1,423
|
)
|
|||||||||
|
Other expenses (gain)
|
5,935
|
-
|
|
5,935
|
|||||||||||
|
(Gain) loss on disposal of assets
|
(64
|
)
|
-
|
|
(64
|
)
|
|||||||||
|
Total operating expenses
|
|
127,294
|
-
|
|
127,294
|
||||||||||
|
Operating loss
|
Loss from operations
|
(52,828
|
)
|
-
|
|
(52,828
|
)
|
||||||||
|
Interest income, net
|
|
-
|
(6,234
|
)
|
(h)
|
(6,234
|
)
|
||||||||
|
Interest expense, net
|
(6,234
|
)
|
6,234
|
(h)
|
-
|
||||||||||
|
Other income (expense), net
|
|
|
-
|
||||||||||||
|
Loss before income taxes
|
Loss before taxes
|
(59,062
|
)
|
-
|
|
(59,062
|
)
|
||||||||
|
Provision for income taxes
|
Provision (benefit) for income taxes
|
22,169
|
-
|
|
22,169
|
||||||||||
|
Net loss
|
Net loss
|
$
|
(81,231
|
)
|
$
|
-
|
|
$
|
(81,231
|
)
|
|||||
| (e) |
Reclassification of TCS’ “Selling, general, and administrative expenses” to BBBY's “Sales and marketing”, “Technology” and “General and administrative”
|
| (f) |
Reclassification of TCS’ “Pre-opening costs” to BBBY's “General and administrative”
|
| (g) |
Reclassification of TCS’ “Depreciation and amortization” to BBBY's “Technology” and “General and administrative”
|
| (h) |
Reclassification of TCS’ “Interest expense” to BBBY's “Interest income, net”
|
13
Unaudited Reclassified Condensed Combined Statements of Operations
For the 52 Weeks Ended March 28, 2026
(in thousands)
|
Bed Bath & Beyond, Inc.
|
The Container Store Group, Inc.
|
The Container
Store Group,
Inc.
|
Reclassification
Adjustments
|
Notes
|
The Container Store
Group, Inc. (Historical,
adjusted for
reclassifications)
|
||||||||||
|
Net revenue
|
Net sales
|
$
|
670,096
|
$
|
-
|
|
$
|
670,096
|
|||||||
|
Cost of goods sold
|
Cost of sales (excluding depreciation and amortization)
|
330,061
|
-
|
|
330,061
|
||||||||||
|
Gross profit
|
Gross profit
|
340,035
|
-
|
|
340,035
|
||||||||||
|
Operating expenses
|
Operating expenses:
|
|
|||||||||||||
|
Sales and marketing
|
|
-
|
35,546
|
(e)
|
35,546
|
||||||||||
|
Technology
|
|
-
|
23,925
|
(e)
|
36,135
|
||||||||||
|
|
|
12,210
|
(g)
|
||||||||||||
|
General and administrative
|
|
-
|
345,040
|
(e)
|
361,238
|
||||||||||
|
|
|
279
|
(f)
|
||||||||||||
|
|
|
15,919
|
(g)
|
||||||||||||
|
Customer service and merchant fees
|
|
-
|
-
|
|
-
|
||||||||||
|
Other operating expenses (income), net
|
|
-
|
-
|
|
-
|
||||||||||
|
Selling, general, and administrative expenses (excluding depreciation and amortization)
|
404,511
|
(404,511
|
)
|
(e)
|
-
|
||||||||||
|
Indefinite-lived asset impairment charges
|
3,009
|
-
|
|
3,009
|
|||||||||||
|
Pre-opening costs
|
279
|
(279
|
)
|
(f)
|
-
|
||||||||||
|
Depreciation and amortization
|
28,129
|
(28,129
|
)
|
(g)
|
-
|
||||||||||
|
Long-lived asset impairment charges
|
8,815
|
-
|
|
8,815
|
|||||||||||
|
Gain on lease termination, net
|
(2,423
|
)
|
-
|
|
(2,423
|
)
|
|||||||||
|
Other expenses
|
16,978
|
-
|
|
16,978
|
|||||||||||
|
(Gain) loss on disposal of assets
|
(64
|
)
|
-
|
|
(64
|
)
|
|||||||||
|
Total operating expenses
|
|
459,234
|
-
|
|
459,234
|
||||||||||
|
Operating loss
|
Loss from operations
|
(119,199
|
)
|
-
|
|
(119,199
|
)
|
||||||||
|
Interest income, net
|
|
-
|
(21,316
|
)
|
(h)
|
(21,316
|
)
|
||||||||
|
Interest expense, net
|
(21,316
|
)
|
21,316
|
(h)
|
-
|
||||||||||
|
Other income (expense), net
|
|
-
|
|
-
|
|||||||||||
|
Loss before income taxes
|
Loss before taxes
|
(140,515
|
)
|
-
|
|
(140,515
|
)
|
||||||||
|
Provision for income taxes
|
Provision (benefit) for income taxes
|
(639
|
)
|
-
|
|
(639
|
)
|
||||||||
|
Net loss
|
Net loss
|
$
|
(139,876
|
)
|
$
|
-
|
|
$
|
(139,876
|
)
|
|||||
| (e) |
Reclassification of TCS’ “Selling, general, and administrative expenses” to BBBY's “Sales and marketing”, “Technology” and “General and administrative”
|
| (f) |
Reclassification of TCS’ “Pre-opening costs” to BBBY's “General and administrative”
|
| (g) |
Reclassification of TCS’ “Depreciation and amortization” to BBBY's “Technology” and “General and administrative”
|
| (h) |
Reclassification of TCS’ “Interest expense” to BBBY's “Interest income, net”
|
14
3. Purchase Price and Purchase Price Allocation — TBHC
Management performed a preliminary estimation of the fair value of the TBHC assets and liabilities as of the acquisition date. As of the date of this amended current
report, BBBY is still in the process of evaluating the various assumptions of the valuation studies necessary to arrive at the required estimates of the fair value of the TBHC assets acquired and liabilities assumed and the related purchase price
allocation. The preliminary fair value estimates are subject to change based on the final valuations. The estimated preliminary fair values of the TBHC assets and liabilities are based on discussions with TBHC’s management, preliminary valuation
studies, the transaction due diligence, and information presented in TBHC financial statements. The final purchase price and purchase price allocation may be different than the information that is presented herein, and such differences could be
material.
Purchase Price
The following table summarizes the purchase price (in thousands, except shares and per share price):
|
(in thousands, except shares)
|
||||
|
TBHC's shares outstanding as of April 2, 2026
|
22,508,285
|
|||
|
Existing shares in TBHC held by BBBY
|
(8,934,461
|
)
|
||
|
TBHC's shares outstanding as of April 2, 2026, excluding shares owned by BBBY
|
13,573,824
|
|||
|
Exchange ratio as per TBHC Merger Agreement
|
0.1993
|
|||
|
Total estimated outstanding shares
|
2,705,263
|
|||
|
BBBY's stock price as of April 2, 2026
|
$
|
4.62
|
||
|
Share consideration
|
$
|
12,498
|
||
|
Add: Accelerated vesting of equity awards
|
1,145
|
|||
|
Add: Settlement of indebtedness
|
10,000
|
|||
|
Add: Settlement of preexisting relationships
|
48,246
|
|||
|
Fair value of consideration transferred
|
$
|
71,889
|
||
Preliminary Estimated Purchase Price Allocation
The following table summarizes the allocation of the estimated fair value of the purchase consideration to the assets acquired and liabilities assumed (in thousands):
|
(in thousands)
|
||||
|
Inventories
|
56,194
|
|||
|
Prepaid expenses and other current assets
|
7,076
|
|||
|
Property and equipment
|
34,128
|
|||
|
Operating lease right-of-use assets
|
121,731
|
|||
|
Other long-term assets
|
2,477
|
|||
|
Total assets
|
221,606
|
|||
|
Accounts payable
|
53,887
|
|||
|
Accrued liabilities
|
18,643
|
|||
|
Unearned revenue
|
143
|
|||
|
Operating lease liabilities, current
|
33,520
|
|||
|
Long-term debt
|
6,811
|
|||
|
Operating lease liabilities, non-current
|
85,699
|
|||
|
Other liabilities
|
6,317
|
|||
|
Net assets acquired
|
16,586
|
|||
|
Total purchase consideration
|
$
|
71,889
|
||
|
Less: Fair value of previously held equity interest
|
(8,398
|
)
|
||
|
Goodwill
|
$
|
63,701
|
||
4. Adjustments to the Unaudited Pro Forma Combined Balance
Sheet — TBHC
The following pro forma transaction accounting adjustments reflect BBBY's preliminary estimates and assumptions related to the TBHC Merger. The final determination of
the fair values of the assets acquired and liabilities assumed and the allocation of purchase consideration, may differ materially from the amounts presented herein. Accordingly, these transaction accounting adjustments are subject to change as
additional information becomes available during the measurement period.
15
Pro Forma Transaction Accounting Adjustments:
| (a) |
To reflect the $10.0 million partial repayment of TBHC's outstanding Bank of America debt as of the acquisition date. The closing historical balance sheet as of April 4,
2026 reflects the partial repayment of the debt on April 4, 2026, which occurred subsequent to the acquisition date. Because the repayment was contingent upon Bank of America's approval of the transaction, the debt has been reinstated for
purposes of the preliminary purchase price allocation.
|
| (b) |
To reflect $0.2 million of the collaboration fee related to the settlement of related-party debt between TBHC and BBBY in the opening balance sheet as of the acquisition
date. The closing historical balance sheet as of April 4, 2026 reflects the settlement of the collaboration fee subsequent to the acquisition date. Accordingly, the collaboration fee has been reinstated for purposes of the preliminary
purchase price allocation.
|
| (c) |
To reflect the reversal of the post-merger capital contribution from BBBY to THBC of $20.0 million, recorded as a decrease to cash with a corresponding decrease to common
stock. The reversal resulted in a negative cash balance of $5.9 million, which has been reclassified to accounts payable for financial statement presentation purposes
|
| (d) |
To reflect the elimination of TBHC's historical common stock and accumulated deficit as of the acquisition date.
|
| (e) |
To reflect the purchase consideration transferred for TBHC of $71.9 million, consisting of:
|
| (i) |
$12.5 million related to the issuance of approximately 2,705,263 shares of BBBY Common Stock to TBHC shareholders, based on BBBY's closing share price of $4.62 as of April
2, 2026;
|
| (ii) |
$1.2 million representing the fair value of BBBY Common Stock issued in exchange for TBHC RSU equity awards that accelerated upon the change in control;
|
| (iii) |
$10.0 million representing the payment made by BBBY to partially repay TBHC's outstanding indebtedness under its Bank of America credit facility; and
|
| (iv) |
$48.2 million representing the settlement of preexisting relationships, consisting of:
|
| • |
$3.8 million representing the settlement of accounts receivable arising from inventory sales by BBBY to TBHC;
|
| • |
$44.2 million representing the settlement of the related-party debt between BBBY and TBHC, consisting of $43.7 million of principal amount of related-party debt and $0.5
million of accrued expenses; and
|
| • |
$0.2 million representing the settlement of BBBY's collaboration fee receivable under the collaboration arrangement with TBHC.
|
| (f) |
To reflect the write-off of $3.8 million of unamortized debt issuance costs resulting from the settlement of debt upon the acquisition, including $2.9 million related to the
settlement of the related-party debt between TBHC and BBBY and $0.9 million related to the Bank of America debt.
|
| (g) |
To reflect an incremental adjustment to remeasure the acquired operating lease right-of-use assets and current and non-current operating lease liabilities using the combined
entity's incremental borrowing rate as of the acquisition date, resulting in operating lease right-of-use assets and corresponding operating lease liabilities of $119.2 million.
|
| (h) |
To reflect an incremental fair value adjustment of $20.9 million to property and equipment to its preliminary estimated acquisition-date fair value of $34.1 million.
|
16
|
PPE Class
|
Fair Value as of
April 2, 2026
|
|||
|
(in thousands)
|
||||
|
Computer software and hardware
|
$
|
4,008
|
||
|
Equipment
|
3,539
|
|||
|
Furniture and fixtures
|
6,489
|
|||
|
Leasehold improvements
|
19,843
|
|||
|
Construction in progress
|
249
|
|||
|
Total
|
$
|
34,128
|
||
| (i) |
To reflect a $2.5 million adjustment to the operating lease right-of-use assets to reflect favorable lease terms relative to market terms as of the acquisition date.
|
| (j) |
To reflect an adjustment of $0.1 million to increase the fair value of BBBY's previously held equity interest in TBHC to its acquisition-date fair value of $8.4 million,
with the corresponding remeasurement gain recognized in the unaudited pro forma condensed combined statement of operations.
|
| (k) |
To reflect $2.2 million of nonrecurring estimated transaction costs related to the acquisition of TBHC, primarily comprised of investment banking fees, legal fees, other
advisory costs, and directors' and officers' liability tail insurance. The adjustment was recorded as an increase in accrued expenses of $2.2 million, with a corresponding increase to general and administrative expenses in the unaudited pro
forma condensed consolidated statement of operations.
|
| (l) |
To reflect the recognition of a deferred tax liability of $3.1 million as of the acquisition date.
|
5. Adjustments to the Unaudited Pro Forma Condensed Combined
Statement of Operations — TBHC
The following pro forma transaction accounting adjustments reflect BBBY's preliminary estimates and assumptions related to the TBHC Merger. The final determination of
the fair values of the assets acquired and liabilities assumed and the allocation of purchase consideration, may differ materially from the amounts presented herein. Accordingly, these transaction accounting adjustments are subject to change as
additional information becomes available during the measurement period.
Pro Forma Transaction Accounting Adjustments:
| (a) |
To reflect the elimination of $0.8 million in collaboration fee revenue recognized by BBBY from their collaboration agreement with TBHC. In addition, this adjustment
reflects the elimination of $1.7 million in each of net revenue and cost of goods sold, related to inventory sold by BBBY to TBHC as this would be considered intercompany and eliminated in consolidation.
|
| (b) |
To reflect the elimination of the historical amortization of deferred debt issuance costs related to Bank of America debt and BBBY related party debt in connection with the TBHC Acquisition.
|
| (c) |
To reflect the recognition of $2.2 million of nonrecurring expense incurred in connection with the TBHC Merger that were not reflected in the historical statements of operations. These transaction
costs are primarily comprised of investment banking fees, legal fees and other related advisory costs, and directors’ and officers’ liability tail insurance.
|
| (d) |
To reflect the incremental adjustment to eliminate historical operating lease expense and record operating lease expense based on the adjusted lease schedule, reflecting the
remeasurement of operating lease right-of-use assets, including favorable lease assets, current operating lease liabilities, and non-current operating lease liabilities using the combined entity's incremental borrowing rate as of the
acquisition date.
|
| (e) |
To reflect the incremental depreciation expense resulting from the property and equipment fair value adjustment, based on the estimated acquisition-date fair value and the
estimated remaining useful lives.
|
| (f) |
To reflect the gain recognized from remeasuring BBBY's previously held equity interest in TBHC to its acquisition-date fair value.
|
17
| (g) |
To reflect the elimination of the change in the fair value of the delayed draw commitment, as the commitment represents an intercompany lending arrangement upon
consolidation.
|
| (h) |
To reflect the elimination of TBHC’s gain on sale of internally developed intangible assets sold to BBBY as this would be considered intercompany and eliminated in consolidation.
|
| (i) |
To reflect the elimination of interest expense associated with the $10.0 million of Bank of America debt repaid in connection with the TBHC Merger, and the elimination of intercompany interest
expense and the corresponding intercompany interest income related to the debt between BBBY and TBHC, as the intercompany debt and related interest would be eliminated in consolidation.
|
| (j) |
To reflect the elimination of the historical equity investment gain related to TBHC which became a wholly owned subsidiary upon the acquisition.
|
| (k) |
To reflect the elimination of compensation expense related to TBHC RSU equity awards that accelerated upon the acquisition date.
|
| (l) |
No pro forma tax adjustment has been recorded, as the impact to the unaudited pro forma condensed consolidated statement of operations is not material.
|
18
6. Purchase Price and
Purchase Price Allocation — TCS
Management performed a preliminary estimation of the fair value of the TCS assets and liabilities as of the acquisition date. As of the date of this amended current
report, BBBY is still in the process of evaluating the various assumptions of the valuation studies necessary to arrive at the required estimates of the fair value of the TCS assets acquired and liabilities assumed and the related purchase price
allocation. The preliminary fair value estimates are subject to change based on the final valuations. The estimated preliminary fair values of the TCS assets and liabilities are based on discussions with TCS’ management, preliminary valuation
studies, the transaction due diligence, and information presented in TCS financial statements. The final purchase price and purchase price allocation may be different than the information that is presented herein, and such differences could be
material.
Purchase Price
The following table summarizes the purchase price (in thousands, except shares and per share price):
|
(in thousands, except shares)
|
||||
|
BBBY common stock issued
|
13,714,287
|
|||
|
BBBY's closing share price of $5.37 on July 8, 2026, net of a $0.43 per share discount for lack of marketability applied to
the unregistered shares issued
|
$
|
4.94
|
||
|
Share consideration
|
$
|
67,749
|
||
|
Add: Fair value of Convertible Notes issued
|
108,370
|
|||
|
Fair value of consideration transferred
|
$
|
176,119
|
||
Preliminary Estimated Purchase Price Allocation
The following table summarizes allocation of the preliminary estimate of the purchase price to the assets acquired and liabilities assumed (in thousands):
|
(in thousands)
|
||||
|
Cash and cash equivalents
|
$
|
59,118
|
||
|
Accounts receivable
|
21,514
|
|||
|
Inventories
|
133,119
|
|||
|
Prepaid expenses and other current assets
|
17,573
|
|||
|
Property and equipment
|
147,660
|
|||
|
Intangible assets
|
23,871
|
|||
|
Operating lease right-of-use assets
|
318,859
|
|||
|
Other long-term assets
|
5,154
|
|||
|
Total assets
|
726,868
|
|||
|
Accounts payable
|
46,483
|
|||
|
Accrued liabilities
|
73,744
|
|||
|
Operating lease liabilities, current
|
61,164
|
|||
|
Short-term debt, net
|
284
|
|||
|
Long-term debt, net
|
77,131
|
|||
|
Operating lease liabilities, non-current
|
257,420
|
|||
|
Other long-term liabilities, including commitments measured at fair value
|
36,406
|
|||
|
Net assets acquired
|
174,236
|
|||
|
Total purchase consideration
|
$
|
176,119
|
||
|
Goodwill
|
$
|
1,883
|
||
7. Adjustments to the Unaudited Pro Forma Combined Balance
Sheet — TCS
The following pro forma transaction accounting adjustments reflect BBBY's preliminary estimates and assumptions related to the TCS Merger. The final determination of
the fair values of the assets acquired and liabilities assumed and the allocation of purchase consideration, may differ materially from the amounts presented herein. Accordingly, these transaction accounting adjustments are subject to change as
additional information becomes available during the measurement period.
19
Pro Forma Transaction Accounting Adjustments:
| (a) |
To reflect an additional borrowing of $30.0 million under Amendment No. 4 to the Exit Term Loan Credit Agreement on April 2, 2026, which occurred subsequent to March 28,
2026.
|
| (b) |
To reflect the recognition of an accrued liability of $0.7 million for the transaction bonus obligation assumed by BBBY as part of the TCS Merger, which will be settled
through the issuance of 142,857 shares of BBBY Common Stock at the price of $4.94 per share.
|
| (c) |
To reflect the elimination of TCS’ historical common stock, additional paid-in capital, accumulated deficit, and accumulated other comprehensive loss as of the acquisition
date.
|
| (d) |
To reflect the settlement of TCS indebtedness of $226.7 million through the issuance of BBBY Common Stock with a fair value of $67.7 million and Convertible Notes with a
fair value of $108.4 million to TCS debt holders, with the corresponding offset of $50.6 million recorded to goodwill. The repayment of the TCS indebtedness is included in consideration transferred because the debt agreements required
repayment upon the occurrence of a change in control effected by the TCS Merger, and the TCS Merger Agreement required settlement of the indebtedness as a condition to closing. Accordingly, in accordance with ASC 805, the settlement of the
TCS indebtedness is accounted for as consideration transferred in the TCS Merger.
|
| (e) |
To reflect the write-off of $6.1 million of unamortized deferred debt issuance costs resulting from BBBY's payment to extinguish TCS’ outstanding indebtedness upon the closing of the TCS Merger.
|
| (f) |
To reflect the fair value incremental adjustment of less than $0.1 million to inventory, based on an estimated fair value of $133.1 million. The related fair value
adjustment is assumed to be recognized through cost of sales over TCS’ historical inventory turnover period of approximately five months.
|
| (g) |
To reflect an incremental adjustment to remeasure the acquired operating lease right-of-use assets and current and non-current operating lease liabilities using the combined
entity's incremental borrowing rate as of the acquisition date, resulting in operating lease right-of-use assets and corresponding operating lease liabilities of $318.6 million.
|
| (h) |
To reflect an incremental fair value adjustment of $64.0 million to property and equipment, consisting of adjustments to owned real property, valued using the cost and
market approach, and personal property, valued using the replacement cost approach, to their acquisition-date fair values of $19.6 million and $128.1 million, respectively.
|
|
PPE Class
|
Fair Value as of
July 8, 2026
|
|||
|
(in thousands)
|
||||
|
Land and buildings
|
$
|
19,610
|
||
|
Furniture and fixtures
|
16,208
|
|||
|
Machinery and equipment
|
37,151
|
|||
|
Computer software and equipment
|
30,180
|
|||
|
Leasehold improvements
|
32,853
|
|||
|
Construction in progress
|
11,004
|
|||
|
Other
|
654
|
|||
|
Total
|
$
|
147,660
|
||
| (i) |
To reflect an incremental fair value adjustment of $4.0 million to identifiable intangible assets to their preliminary estimated acquisition-date fair value of $23.9
million, consisting of the TCS trademark and Elfa trademark with preliminary estimated fair values of $11.1 million and $12.8 million, respectively. Both trademarks were valued using the relief-from-royalty method and are considered to have
indefinite useful lives.
|
| (j) |
To reflect a $0.3 million adjustment to the operating lease right-of-use assets to reflect favorable lease terms relative to market terms as of the acquisition date.
|
| (k) |
To reflect the recognition of $4.3 million of nonrecurring expense incurred in connection with the TCS Merger that were not reflected in the historical statements of operations. These transaction
costs are primarily comprised of investment banking fees, legal fees and other related advisory costs, and directors’ and officers’ liability tail insurance.
|
20
| (l) |
To reflect the settlement of BBBY's participation interests in the TCS term loan acquired from certain TCS debt holders in November 2025 and January 2026. Pursuant to the
participation agreements, such debt holders granted BBBY rights to receive specified principal and interest payments associated with the underlying TCS term loan. The settlement of BBBY's participation interests with the TCS debt holders
resulted in an increase in cash of $6.5 million, a decrease in treasury shares of $1.4 million, a decrease in Convertible Notes of $1.3 million, derecognition of the participation receivable of $8.9 million, and recognition of a gain on
settlement of $0.3 million.
|
| (m) |
To reflect the recognition of a deferred tax liability of $19.6 million as of the acquisition date.
|
8. Adjustments to the Unaudited Pro Forma Condensed Combined
Statement of Operations — TCS
The following pro forma transaction accounting adjustments reflect BBBY's preliminary estimates and assumptions related to the TCS Merger. The final determination of
the fair values of the assets acquired and liabilities assumed and the allocation of purchase consideration, may differ materially from the amounts presented herein. Accordingly, these transaction accounting adjustments are subject to change as
additional information becomes available during the measurement period.
Pro Forma Transaction Accounting Adjustments:
| (a) |
To reflect the elimination of the historical amortization of debt issuance costs related to indebtedness that was settled in connection with the TCS Merger.
|
| (b) |
To reflect the amortization of the inventory fair value adjustment. For purposes of the unaudited pro forma condensed consolidated financial information, the inventory fair value adjustment is
assumed to be recognized over TCS’ historical inventory turnover period of approximately five months.
|
| (c) |
To reflect the incremental adjustment to eliminate historical operating lease expense and
record operating lease expense based on the adjusted lease schedule, reflecting the remeasurement of operating lease right-of-use assets, including favorable lease assets, current operating lease liabilities, and non-current operating lease liabilities using the combined entity's incremental borrowing rate as of
the acquisition date.
|
| (d) |
To reflect the incremental depreciation expense resulting from the property and equipment fair value adjustment, based on the estimated acquisition-date fair value and the
estimated remaining useful lives.
|
| (e) |
To reflect the elimination of historical interest expense associated with TCS’ debt that was settled by BBBY in connection with the closing of the TCS Merger.
|
| (f) |
To reflect the recognition of $4.3 million of nonrecurring expenses incurred in connection with the TCS Merger that were not reflected in the historical statements of operations. These transaction
costs are primarily comprised of investment banking fees, legal fees and other related advisory costs, and directors’ and officers’ liability tail insurance.
|
| (g) |
To reflect interest expense related to the Convertible Notes issued in connection with the TCS Merger.
|
| (h) |
To reflect compensation expense of $0.7 million related to the transaction bonus obligation assumed by BBBY in connection with the TCS Merger, which was settled through the
issuance of 142,857 shares of BBBY Common Stock.
|
| (i) |
To reflect the gain of $0.3 million recognized on the settlement of BBBY's participation interest in the TCS term loan in connection with the closing of the TCS Merger.
|
| (j) |
No pro forma tax adjustment has been recorded, as the impact to the unaudited pro forma condensed consolidated statement of operations is not material.
|
21
9. Pro forma basic and diluted weighted average common shares outstanding
Pro forma basic and diluted weighted average common shares outstanding have been adjusted for the following:
|
Three Months Ended
March 31, 2026
|
||||
|
Historical weighted average number of BBBY's shares outstanding - basic and diluted
|
69,049
|
|||
|
Impact of issuance of BBBYs shares to TBHC shareholders assuming issuance as of January 1, 2025
|
2,705
|
|||
|
Impact of issuance of BBBYs shares for accelerated TBHC's RSUs assuming acceleration as of January 1,
2025
|
248
|
|||
|
Impact of issuance of BBBYs shares to TCS debt holders assuming issuance as of January 1, 2025
|
13,714
|
|||
|
Impact of the issuance of BBBY shares to settle the transaction bonus as of January 2, 2025
|
143
|
|||
|
Pro forma weighted average number of BBBY's shares outstanding - basic and diluted*
|
85,859
|
|||
|
Year Ended
December 31, 2025
|
||||
|
Historical weighted average number of BBBY's shares outstanding - basic and diluted
|
60,130
|
|||
|
Impact of issuance of BBBYs shares to TBHC shareholders assuming issuance as of January 1, 2025
|
2,705
|
|||
|
Impact of issuance of BBBYs shares for accelerated TBHC's RSUs assuming acceleration as of January 1,
2025
|
248
|
|||
|
Impact of issuance of BBBYs shares to TCS debt holders assuming issuance as of January 1, 2025
|
13,714
|
|||
|
Impact of the issuance of BBBY shares to settle the transaction bonus as of January 2, 2025
|
143
|
|||
|
Pro forma weighted average number of BBBY's shares outstanding - basic and diluted*
|
76,940
|
|||
*The computation of the pro forma weighted average number of BBBY's shares outstanding - basic and
diluted for the three months ended March 31, 2026 and the year ended December 31, 2025 excludes the shares issuable upon conversion of the Convertible Notes, as their inclusion would have been anti-dilutive.
22