Portillo’s(PTLO) - 2021 Q4 - Annual Report

Cautionary Note Regarding Forward-Looking Information The report contains forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ materially - The report contains forward-looking statements subject to known and unknown risks and uncertainties, which may cause actual results to differ materially[8] - Forward-looking statements are identified by words such as 'aim,' 'anticipate,' 'believe,' 'estimate,' 'expect,' 'forecast,' 'future,' 'outlook,' 'potential,' 'project,' 'projection,' 'plan,' 'intend,' 'seek,' 'may,' 'could,' 'would,' 'will,' 'should,' 'can,' 'can have,' 'likely,' and their negatives[8] - Readers should evaluate all forward-looking statements in the context of risks and uncertainties disclosed in 'Part I, Item 1A Risk Factors' and 'Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations'[9] Part I Item 1. Business The company operates 69 restaurants specializing in Chicago street food, focusing on a multichannel service model and annual unit growth - Portillo's Inc was incorporated on June 8, 2021, and completed its IPO on October 25, 2021, becoming the sole managing member of Portillo's OpCo[13][14] - As of December 26, 2021, the company owned and operated 69 restaurants across nine states, including one 50%-owned by C&O Chicago, L.L.C[17] - The company's growth strategy aims to increase its number of restaurants by approximately 10% annually, focusing on adjacent and national markets outside Chicagoland[33] - Portillo's employs 7,453 team members as of December 26, 2021, and was named one of Forbes Top Midsize Employers in February 2021, emphasizing a 'People are the Heart of Portillo's' culture[36][37] - The company operates two commissaries in Illinois to supply iconic products like Italian beef, gravy, and sweet peppers, ensuring product consistency and quality[52] Item 1A. Risk Factors The company faces significant risks from the COVID-19 pandemic, economic vulnerabilities, competition, geographic concentration, and financial obligations - The COVID-19 pandemic continues to pose risks, including impacts on guest traffic, staffing shortages, supply chain disruptions, and increased operating costs, despite a steady recovery in 2021[73][74][77][78] - The company faces significant competition in the restaurant industry, with potential adverse effects on traffic, sales, and operating profit margins due to food quality, service, price, and convenience factors[101] - Geographic concentration in the Midwestern United States (87% of restaurants, 54% in Chicagoland) makes the company vulnerable to adverse regional conditions[104] - Indebtedness of approximately $325.8 million as of December 26, 2021, could limit borrowing capacity, require substantial cash flow for debt service, and increase vulnerability to adverse economic changes[140][145] - The Tax Receivable Agreement (TRA) requires cash payments to pre-IPO LLC Members equal to 85% of realized tax benefits, estimated at $156.6 million as of December 26, 2021, which could be substantial and impact liquidity[156][158][162] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC Item 2. Properties The company leases all its properties, including 69 restaurants concentrated in Illinois, two commissaries, and its corporate office - The company's home office is located at 2001 Spring Road, Suite 400, Oak Brook, IL 60523, and is leased[218] - As of December 26, 2021, Portillo's operated 69 restaurants across nine states, with 44 locations in Illinois[219][221] - The company operates two food production commissaries in Illinois and three non-traditional locations (food truck, ghost kitchen, concessions partnership)[219] Restaurant Locations by State (as of December 26, 2021) | State | Number of Restaurants | | :--- | :--- | | Arizona | 4 | | California | 2 | | Florida | 3 | | Illinois | 44 | | Indiana | 7 | | Iowa | 1 | | Michigan | 1 | | Minnesota | 3 | | Wisconsin | 4 | | Total | 69 | Item 3. Legal Proceedings This section refers to Note 18, 'Contingencies,' in the financial statements for details on legal proceedings - Disclosure regarding legal proceedings is incorporated by reference from Part II, Item 8 'Financial Statements And Supplementary Data, Note 18 Contingencies'[222] Item 4. Mine Safety Disclosure This item is not applicable to the company Part II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities The company's Class A stock began trading on Nasdaq in October 2021, with IPO proceeds used for debt repayment, and no dividends are anticipated - Class A common stock began trading on the Nasdaq Global Select Market under 'PTLO' on October 21, 2021; Class B common stock is not listed or traded[226][227] - As of March 3, 2022, there were approximately 17 shareholders of record for Class A common stock and 14 for Class B common stock[228] - The company has not declared or paid dividends on common stock and does not anticipate doing so in the foreseeable future[229] IPO Net Proceeds Usage (October 25, 2021) | Use of Proceeds | Amount (millions) | | :--- | :--- | | Repay redeemable preferred units (including redemption premium) | $221.7 | | Repay borrowings outstanding under Second Lien Credit Agreement (including penalties) | $158.1 | | Purchase LLC Units or Class A common stock from pre-IPO LLC members | $57.0 | Stock Performance (October 21, 2021 - December 26, 2021) | Index | 10/21/2021 | 11/1/2021 | 12/1/2021 | 12/26/2021 | | :--- | :--- | :--- | :--- | :--- | | Portillo's Inc | $100.00 | $143.51 | $127.94 | $131.75 | | S&P 500 | 100.00 | 107.01 | 106.26 | 111.03 | | S&P 500 Restaurants | 100.00 | 99.46 | 99.75 | 108.31 | Item 6. Selected Financial Data This section states that it is not applicable Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operations This section analyzes financial performance for fiscal years 2021 and 2020, covering operations, IPO impacts, key metrics, and liquidity 7.1. Overview Portillo's operates 69 high-energy, multichannel restaurants serving iconic Chicago street food across nine states - Portillo's operates 69 restaurants across nine states as of December 26, 2021, offering iconic Chicago street food through a multichannel model including dine-in, carryout, delivery, and catering[245][246] 7.2. Recent Developments and Trends Fiscal 2021 saw significant revenue growth, a successful IPO, and continued restaurant expansion despite pandemic-related challenges Fiscal 2021 Financial Highlights | Metric | Value (millions) | | :--- | :--- | | Total revenue | $535.0 | | Same-restaurant sales increase | 10.5% | | Operating income | $30.0 | | Net loss | $(13.4) | | Restaurant-Level Adjusted EBITDA | $142.1 | | Adjusted EBITDA | $98.5 | - The company completed an IPO of 23,310,810 shares at $20.00/share, generating $430.0 million net proceeds, used to repay redeemable preferred units ($221.7M), Second Lien Credit Agreement borrowings ($158.1M), and purchase LLC Units/Class A stock ($57.0M)[249][254] - Same-restaurant sales increased by 0.8% (Q1), 25.0% (Q2), 6.8% (Q3), and 10.3% (Q4) in 2021 compared to 2020, despite negative impacts from the Omicron variant on seasonal catering sales in late Q4 2021[251] - Five new restaurants were opened in fiscal 2021 (Michigan, Florida, Arizona, Indiana, Wisconsin), with a target of seven new restaurants for fiscal 2022, including the first in Texas and an off-premise-only location in Joliet, Illinois[255] - Menu innovation in 2021 included the introduction of a Spicy Chicken sandwich and seasonal shakes/specialty cakes[256] 7.3. Consolidated Results of Operations Total revenues grew 17.5% in 2021, but a net loss was recorded due to significantly higher G&A expenses from IPO-related costs Consolidated Results of Operations (Fiscal Years Ended) | Metric | Dec 26, 2021 (in thousands) | Dec 27, 2020 (in thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | REVENUES, NET | $534,952 | $455,471 | $79,481 | 17.5% | | Cost of goods sold, excluding D&A | 166,764 | 142,446 | 24,318 | 17.1% | | Labor | 138,788 | 115,991 | 22,797 | 19.7% | | Occupancy | 28,060 | 24,920 | 3,140 | 12.6% | | Other operating expenses | 59,258 | 50,169 | 9,089 | 18.1% | | Total restaurant operating expenses | 392,870 | 333,526 | 59,344 | 17.8% | | General and administrative expenses | 87,089 | 39,854 | 47,235 | 118.5% | | Pre-opening expenses | 3,565 | 2,209 | 1,356 | 61.4% | | Depreciation and amortization | 23,312 | 24,584 | (1,272) | (5.2)% | | Net income attributable to equity method investment | (797) | (459) | (338) | 73.6% | | Other income, net | (1,099) | (1,537) | 438 | (28.5)% | | OPERATING INCOME | 30,012 | 57,294 | (27,282) | (47.6)% | | Interest expense | 39,694 | 45,031 | (5,337) | (11.9)% | | Loss on debt extinguishment | 7,265 | — | 7,265 | N/A | | NET (LOSS) INCOME | (13,416) | 12,263 | (25,679) | (209.4)% | - Revenues increased by $79.5 million (17.5%) to $535.0 million in 2021, primarily due to a 10.5% increase in same-restaurant sales (7.8% average check, 2.7% transactions) and new restaurant openings[261] - General and administrative expenses surged by $47.2 million (118.5%) to $87.1 million in 2021, mainly driven by $29.2 million in equity-based stock compensation and $3.2 million in public company costs[274] - Interest expense decreased by $5.3 million (11.9%) to $39.7 million in 2021 due to decreased borrowings and the payoff of Second Term B-3 Loans with IPO proceeds[285] - A loss on debt extinguishment of $7.3 million was recognized in 2021 due to prepayment penalties and write-off of debt discount/issuance costs from the Second Term B-3 Loans payoff[286] 7.4. Key Performance Indicators and Non-GAAP Financial Measures Key metrics for fiscal 2021 showed a 10.5% increase in same-restaurant sales and growth in AUV and Adjusted EBITDA Key Performance Indicators (Fiscal Years Ended) | Metric | Dec 26, 2021 | Dec 27, 2020 | | :--- | :--- | :--- | | Total Restaurants | 69 | 64 | | AUV (in millions) | $8.2 | $7.7 | | Change in same-restaurant sales | 10.5% | (7.7)% | | Adjusted EBITDA (in thousands) | $98,497 | $87,804 | | Adjusted EBITDA Margin | 18.4% | 19.3% | | Restaurant-Level Adjusted EBITDA (in thousands) | $142,082 | $121,945 | | Restaurant-Level Adjusted EBITDA Margin | 26.6% | 26.8% | - Same-restaurant sales increased 10.5% in 2021, calculated from a Comparable Restaurant Base of 61 restaurants[293][295] - AUV (Average Unit Volume) for the Comparable Restaurant Base increased from $7.7 million in 2020 to $8.2 million in 2021[293] - Adjusted EBITDA increased to $98.5 million in 2021 from $87.8 million in 2020, while Adjusted EBITDA Margin decreased from 19.3% to 18.4%[293] - Restaurant-Level Adjusted EBITDA increased to $142.1 million in 2021 from $121.9 million in 2020, with its margin slightly decreasing from 26.8% to 26.6%[293] 7.5. Liquidity and Capital Resources Liquidity is sourced from operations and a revolving facility, with IPO proceeds used for significant debt and preferred unit repayments - As of December 26, 2021, the company had $39.3 million in cash and cash equivalents and restricted cash, with $45.0 million available under its Revolving Facility[307] - IPO net proceeds of $430.0 million were used to repay $221.7 million in redeemable preferred units, $158.1 million in Second Lien Credit Agreement borrowings, and purchase $57.0 million in LLC Units/Class A stock[310] - A Tax Receivable Agreement (TRA) liability of $156.6 million was recognized as of December 26, 2021, representing 85% of estimated tax savings over 15-47 years[312] - Net cash provided by operating activities decreased by $15.4 million (26.4%) in 2021, primarily due to a decrease in net income and changes in operating assets and liabilities[314] - Net cash used in investing activities increased by $14.8 million (69.3%) in 2021, mainly due to the opening of five new restaurants compared to two in 2020[317] Summary of Cash Flows (in thousands) | Activity | Dec 26, 2021 | Dec 27, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $42,874 | $58,271 | | Net cash used in investing activities | $(36,260) | $(21,420) | | Net cash used in financing activities | $(8,783) | $(18,048) | | Net (decrease) increase in cash and restricted cash | $(2,169) | $18,803 | 7.6. Critical Accounting Estimates Critical accounting estimates involve goodwill impairment, equity-based compensation, Tax Receivable Agreement liabilities, and income taxes - Goodwill and indefinite-lived intangible assets (trade names) are assessed for impairment annually using income and market approaches; no impairment charges were recorded in 2021[330][331][332] - Equity-based compensation includes non-qualified stock options, restricted stock units (RSUs), and performance-based stock options (PSOs), valued using Black-Scholes and Monte Carlo models[333] - In connection with the IPO, a $6.6 million cash payment and $26.2 million non-cash compensation expense were recognized for modified performance-vesting awards under the 2014 Equity Incentive Plan[336] - A liability of $156.6 million was recognized for the Tax Receivable Agreement (TRA) as of December 26, 2021, based on the probability of generating sufficient future taxable income to utilize related tax benefits[337] - Deferred tax assets of $74.5 million (net of valuation allowances) were recognized as of December 26, 2021, primarily from the investment in Portillo's OpCo and TRA-related tax basis increases[341] 7.7. JOBS Act The company qualifies as an 'emerging growth company' under the JOBS Act, allowing for reduced reporting and disclosure requirements - Portillo's qualifies as an 'emerging growth company' (EGC) under the JOBS Act, allowing exemptions from auditor attestation for internal controls and reduced executive compensation disclosures[344] - The company intends to take advantage of the extended transition period for complying with new or revised accounting standards[345] - EGC status will be maintained until the fifth anniversary of the IPO, or until certain revenue, market value, or debt thresholds are met[346] Item 7A. Quantitative And Qualitative Disclosures About Market Risk The company is exposed to market risks from commodity prices, interest rates on its floating-rate debt, and broad inflation - The company is exposed to commodity price risks for ingredients like pork, beef, chicken, potatoes, and bread, which are affected by supply, demand, inflation, weather, and seasonality[348] - Floating interest rates on Credit Facilities expose the company to interest rate risk; a 100 basis point change would alter annual interest expense by approximately $3.3 million based on $325.8 million outstanding debt as of December 26, 2021[349] - Inflation impacts all restaurant operating expenses, which the company attempts to offset through menu price increases, efficient purchasing, and productivity improvements, but competitive conditions may limit this ability[350] - Labor costs are influenced by federal and state minimum wage rates and supply/demand forces, directly affecting operating expenses[352] Item 8. Financial Statements And Supplementary Data This section presents the audited consolidated financial statements and supplementary data for the fiscal years 2019 through 2021 - The financial statements were audited by Deloitte & Touche LLP, who issued an unqualified opinion[356][360] Consolidated Balance Sheets (as of December 26, 2021 and December 27, 2020, in thousands) | ASSETS | Dec 26, 2021 | Dec 27, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents and restricted cash | $39,263 | $41,432 | | Accounts receivable | 7,840 | 5,204 | | Inventory | 6,078 | 5,075 | | Prepaid expenses | 5,836 | 2,915 | | Total current assets | 59,017 | 54,626 | | Property and equipment, net | 190,834 | 174,769 | | Goodwill | 394,298 | 394,298 | | Trade names | 223,925 | 223,925 | | Other intangible assets, net | 35,832 | 42,255 | | Equity method investment | 16,170 | 16,015 | | Deferred tax asset | 74,455 | — | | Other assets | 5,042 | 4,334 | | TOTAL ASSETS | $999,573 | $910,222 | | LIABILITIES, REDEEMABLE PREFERRED UNITS AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $27,249 | $21,427 | | Current portion of long-term debt | 3,324 | 3,324 | | Current deferred revenue | 6,893 | 6,774 | | Accrued expenses | 29,472 | 34,827 | | Total current liabilities | 66,938 | 66,352 | | Long-term debt, net of current portion | 315,829 | 466,380 | | Deferred rent | 32,174 | 26,694 | | Tax receivable agreement liability | 156,638 | — | | Other long-term liabilities | 4,588 | 9,516 | | Total long-term liabilities | 509,229 | 502,590 | | Total liabilities | 576,167 | 568,942 | | Redeemable preferred units | — | 200,571 | | Total stockholders' equity | 423,406 | 140,709 | | TOTAL LIABILITIES, REDEEMABLE PREFERRED UNITS AND STOCKHOLDERS' EQUITY | $999,573 | $910,222 | Consolidated Statements of Operations (Fiscal Years Ended, in thousands) | Metric | Dec 26, 2021 | Dec 27, 2020 | Dec 29, 2019 | | :--- | :--- | :--- | :--- | | REVENUES, NET | $534,952 | $455,471 | $479,417 | | OPERATING INCOME | 30,012 | 57,294 | 48,922 | | Interest expense | 39,694 | 45,031 | 43,367 | | Loss on debt extinguishment | 7,265 | — | — | | (LOSS) INCOME BEFORE INCOME TAXES | (16,947) | 12,263 | 5,555 | | Income tax benefit | (3,531) | — | — | | NET (LOSS) INCOME | (13,416) | 12,263 | 5,555 | | NET LOSS ATTRIBUTABLE TO PORTILLO'S INC | $(15,184) | $(8,261) | $(12,869) | Consolidated Statements of Cash Flows (Fiscal Years Ended, in thousands) | Activity | Dec 26, 2021 | Dec 27, 2020 | Dec 29, 2019 | | :--- | :--- | :--- | :--- | | NET CASH PROVIDED BY OPERATING ACTIVITIES | $42,874 | $58,271 | $43,325 | | NET CASH USED IN INVESTING ACTIVITIES | $(36,260) | $(21,420) | $(22,012) | | NET CASH USED IN FINANCING ACTIVITIES | $(8,783) | $(18,048) | $(11,721) | | NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH | $(2,169) | $18,803 | $9,592 | | CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD | $39,263 | $41,432 | $22,629 | Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosures The company reports no changes in or disagreements with its accountants on accounting and financial disclosures Item 9A. Controls And Procedures Management concluded that disclosure controls and procedures were effective as of December 26, 2021 - Disclosure controls and procedures were evaluated and deemed effective as of December 26, 2021[537] - As an emerging growth company, the company is not required to include a management's assessment or an auditor's attestation report on internal control over financial reporting in this Annual Report on Form 10-K[538][539] - There were no material changes to internal control over financial reporting during the quarter ended December 26, 2021[540] Item 9B. Other Information This item states that it is not applicable Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item states there is no disclosure regarding foreign jurisdictions that prevent inspections Part III Item 10. Directors, Executive Officers And Corporate Governance This section details the company's leadership, board structure, committee composition, and corporate governance policies - Michael Osanloo serves as President, Chief Executive Officer, and Director, with over 140 years of combined executive experience in the restaurant industry among the executive officers[36][547] - The Board of Directors is composed of eight directors, with a majority determined to be independent under Nasdaq rules[567][568] - The Audit Committee, chaired by Ann Bordelon, includes Ms Bordelon, Mr Glass, and Mr Miles, all qualifying as 'audit committee financial experts'[571] - The Compensation Committee and Nominating and Corporate Governance Committee are composed entirely of independent directors[568][572][573] - The company has adopted a Code of Business Conduct and Corporate Governance Guidelines, available on its investor relations website[574][577] Item 11. Executive Compensation As an emerging growth company, this section provides reduced compensation details for named executive officers for Fiscal 2021 - The company leverages its 'emerging growth company' status to provide reduced executive compensation disclosures[578] - NEOs received a cash bonus in Fiscal 2021 related to the IPO, and performance-based annual cash incentives under the 2021 Bonus Program, which exceeded its Adjusted EBITDA growth target[590][591][592] - Equity compensation for NEOs in connection with the IPO included Restricted Stock Units (RSUs) and Performance Stock Options (PSOs) under the 2021 Equity Incentive Plan[596][597] - A new non-employee director compensation program for 2022 includes an annual retainer of $200,000 ($120,000 in time-based RSUs, $80,000 in cash), plus additional fees for committee chairs[625] Summary Compensation Table (Fiscal 2021, in $) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock awards ($) | Option awards ($) | Nonequity incentive plan ($) | All other compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Michael Osanloo, President and CEO | 2021 | 791,167 | 1,719,150 | 3,938,000 | 23,728,075 | 1,018,464 | 49,351 | 31,244,207 | | Sherri Abruscato, Chief Development & Supply Chain Officer | 2021 | 385,035 | 474,597 | 264,000 | 4,879,503 | 247,826 | 12,887 | 6,263,848 | | Michelle Hook, Chief Financial Officer and Treasurer | 2021 | 370,137 | 103,149 | 1,500,000 | 2,985,558 | 242,666 | 41,299 | 5,242,809 | Non-Employee Director Compensation (Fiscal 2021, in $) | Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | All other compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Michael A Miles | 250,000 | 120,000 | — | 469,274 | 839,274 | | Ann Bordelon | 50,000 | 120,000 | 483,116 | 50,563 | 703,679 | | Noah Glass | 50,000 | 120,000 | 483,116 | 50,563 | 703,679 | | Paulette Dodson | — | — | — | — | — | | Gerard J Hart | 50,000 | 120,000 | 483,100 | 50,563 | 703,663 | | Joshua A Lutzker | — | — | — | — | — | | Richard K Lubin | — | — | — | — | — | Item 12. Security Ownership Of Certain Beneficial Owners And Management Related Stockholder Matters This section details beneficial stock ownership, with funds managed by Berkshire holding the largest stake at 63.73% Beneficial Ownership of Class A Common Stock (as of March 3, 2022) | Name and Address of Beneficial Owner | Number of Shares | Percentage of Outstanding Class A Common Stock | | :--- | :--- | :--- | | Funds managed by Berkshire | 45,554,689 | 63.73% | | Select Equity Group, L.P | 3,771,957 | 5.28% | | The Vanguard Group | 1,820,986 | 2.55% | | Michael Osanloo | 1,510,646 | 2.11% | | Sherri Abruscato | 551,050 | * | | Michelle Hook | 24,335 | * | | Michael A Miles, Jr | 847,455 | 1.19% | | Ann Bordelon | 35,682 | * | | Noah Glass | 76,988 | * | | Paulette Dodson | — | * | | Gerard J Hart | 109,714 | * | | Richard K Lubin | — | — | | Joshua A Lutzker | — | — | | All directors and executive officers as a group (15 persons) | 3,755,725 | 5.24% | Equity Compensation Plans Table (as of December 26, 2021) | Metric | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuances under equity compensation plans | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 8,220,236 | $7.90 | 5,344,678 | Item 13. Certain Relationships And Related Transactions, And Director Independence This section outlines related party transactions, including the Tax Receivable Agreement, registration rights, and property leases - A $1.0 million stock subscription receivable from the CEO and President was fully repaid by August 13, 2021[640] - In connection with the IPO, 35,673,321 shares of Class B common stock and an equal number of LLC Units were issued to pre-IPO LLC Members[235] - The Amended LLC Agreement dictates Portillo's Inc as the sole managing member of Portillo's OpCo, controlling operations and making pro rata cash distributions to LLC Unit holders for tax obligations[643][644][646] - The Tax Receivable Agreement (TRA) requires payments to TRA Parties of 85% of realized tax savings, estimated at $156.6 million as of December 26, 2021, primarily over 15 years[655][656] - The company entered into a Registration Rights Agreement with Berkshire and other stockholders, providing 'demand' and 'piggyback' registration rights for common stock[664] - The company leases 23 real properties from entities owned by former President, CEO, and Owner Richard Portillo, with $7.9 million in rental payments in 2021 A consulting agreement with Mr Portillo, paying $2.0 million annually, terminated on July 31, 2021[670] - A written Related Person Transaction Policy was adopted to review and approve transactions exceeding $120,000 involving related persons, overseen by the Audit Committee[671][672][673] Item 14. Principal Accounting Fees And Services This section details fees paid to Deloitte & Touche LLP for audit and tax services in fiscal 2021 and 2020 - Audit fees increased significantly in 2021 due to professional services for the audit of annual financial statements and review of Form 10-Q filings[677] - All services and fees provided by Deloitte were pre-approved by the Audit Committee[679] Aggregate Fees Billed by Deloitte & Touche LLP (in thousands) | Fee Type | 2021 | 2020 | | :--- | :--- | :--- | | Audit fees | $2,757 | $478 | | Audit-related fees | 2 | 2 | | Tax fees | 1,225 | 105 | | All other fees | — | — | | Total | $3,984 | $585 | Part IV Item 15. Exhibits And Financial Statement Schedules This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report - The report includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Stockholders' and Members' Equity, and Cash Flows[682] - Financial statement schedules include Schedule II: Valuation and Qualifying Accounts[682] - A comprehensive Exhibit Index lists all exhibits filed or incorporated by reference as part of the report[683] Item 16. Form 10-K Summary This item states that no Form 10-K Summary is included