Company: CHEF
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001517175-25-000002
Chunk: 64

Company: Chefs' Warehouse, Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 1A
Chunk 64
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. In June 2024, Canada enacted the Pillar Two global minimum tax rate. Numerous other countries have also begun to implement or have already implemented similar measures. The Company will continue to monitor regulatory developments to assess potential impacts to the Company.

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Complying with new tax rules, laws or regulations could impact our business, financial condition or results of operations, and increases to federal, provincial or state statutory tax rates and other changes in tax laws, rules or regulations may increase our effective tax rate. Any increase in our effective tax rate could have a material impact on our business, financial condition or results of operations. 

We estimate our ability to recover deferred tax assets within the jurisdiction from which they arise. A valuation allowance is recognized if, based on the available positive and negative evidence, it is more likely than not that some or all of a deferred tax asset is not recoverable. This evaluation considers several factors, including recent results of operations, future taxable income, scheduled reversal of deferred tax liabilities, and tax planning strategies. Our financial condition and results of operations could be adversely impacted if our valuation allowances increase due to an unfavorable change in our estimate of the recoverability of our deferred tax assets or changes in laws or regulations that limit our ability to recover them.

Financial Risk

Our substantial indebtedness may limit our ability to invest in the ongoing needs of our business.

As of December 27, 2024, we had approximately $720.2 million of total indebtedness, consisting of $260.0 million of loans outstanding on our senior secured term loan facility (“Term Loan”), $287.5 million of convertible debt, $120.0 million of borrowings outstanding under our asset-based loan facility (“ABL”) and $52.7 million of finance leases and other financing obligations. See Note 9 “Debt Obligations” to our consolidated financial statements for a full description of our debt instruments.

Our indebtedness could have important consequences for us and our investors. For example, our indebtedness:

•requires us to utilize a substantial portion of our cash flows from operations to make payments on our indebtedness, reducing the availability of our cash flows to fund working capital, capital expenditures, development activity and other general corporate purposes;

•increases our vulnerability to adverse general economic or industry conditions;

•limits our flexibility in planning for, or reacting to, changes in our business or the industries in which we operate;

•makes us more vulnerable to increases in interest rates, as borrowings under our Term Loan and ABL (together the