8. GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS

Goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of a reporting unit may exceed its fair value. The company performs a quantitative impairment assessment by comparing the fair value of each reporting unit with its carrying amount. Indefinite-lived intangible assets are also tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may exceed its fair value.

During the third quarter of Fiscal 2026, the company experienced certain triggering events including, but not limited to, significant decreases in its sales and operating results, significant decline in its stock price, and a downgrade of its corporate credit rating. The company’s operating results were negatively impacted by volatility in global and U.S. economies, as a result of, among other things, the inflationary economic environment, increased competition in the fresh packaged bread category, and shifts in consumer preferences.

As a result of these triggering events, the company performed a quantitative interim impairment assessment of goodwill and indefinite-lived intangible assets for its two reporting units, legacy Flowers Foods and Simple Mills, during the third quarter ended October 10, 2026. This assessment was performed consistently with the valuation methodology utilized in its annual testing.

The projected cash flows for the legacy Flowers Foods reporting unit were discounted at 9.5% and its estimated fair value was determined to exceed its carrying value by approximately 13.8%. Based on equal weighting of the income and market approaches, and holding other valuation assumptions constant, the discount rate for the legacy Flowers Foods reporting unit would have to exceed 12.3% or forecasted EBITDA margin across all future periods would have to be reduced approximately 1.4% of revenue (or 16% lower) in order for the estimated fair value of the reporting unit to fall below its carrying value.

The projected cash flows for the Simple Mills reporting unit were discounted at 8.5% and its estimated fair value was determined to exceed its carrying value by approximately 7.7%. Based on equal weighting of the income and market approaches, and holding other valuation assumptions constant, the discount rate for the Simple Mills reporting unit would have to exceed 9.2% or forecasted EBITDA margin across all future periods would have to be reduced approximately 1.8% of revenue (or 11% lower) in order for the estimated fair value of the reporting unit to fall below its carrying value.

No impairment of goodwill or indefinite-lived intangible assets was identified as a result of the interim impairment assessments performed in the third quarter ended October 10, 2026. At October 10, 2026, the total goodwill associated with the legacy Flowers Foods and Simple Mills reporting units was $679.9 million and $367.2 million, respectively. In management’s opinion, the goodwill balance of either reporting unit could be at risk of impairment in the near term if the reporting unit’s operations do not perform in line with management’s expectations or if there is a negative change in the long-term financial outlook for that reporting unit or in other factors such as the discount rate or market multiples.