3 unchanged sentences
(Amounts in thousands, except share data)
−Removed: March 25, 2020
−Removed: December 25, 2019
Current assets:
5 unchanged sentences
Property and equipment owned, net
−Removed: Property held under operating leases, net ("ROU asset")
+Added: Property held under operating leases, net ("ROU asset")
Deferred tax assets
6 unchanged sentences
Accrued insurance
+Added: Accrued income taxes payable
Accrued interest
12 unchanged sentences
Preferred stock, $ 0.01 par value, 100,000,000 shares authorized;
−Removed: none issued or
+Added: none issued or outstanding
Common stock, $ 0.01 par value, 200,000,000 shares authorized;
10 unchanged sentences
Thirteen Weeks Ended
−Removed: March 25, 2020
−Removed: March 27, 2019
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
Company-operated restaurant revenue
11 unchanged sentences
Loss on disposal of assets
−Removed: Loss on assets held for sale
+Added: Recovery of securities lawsuits related legal expenses and other insurance claims
Impairment and closed-store reserves
+Added: Loss on disposition of restaurants
Total expenses
1 unchanged sentence
Interest expense, net
−Removed: Income tax receivable agreement (income) expense
+Added: Income tax receivable agreement expense (income)
Income before provision for income taxes
7 unchanged sentences
Thirteen Weeks Ended
−Removed: March 25, 2020
−Removed: March 27, 2019
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
Other comprehensive loss (income)
1 unchanged sentence
Unrealized net losses arising during the period from interest rate swap
−Removed: Reclassifications of gains into net income
+Added: Reclassifications of losses into net income
Income benefit
4 unchanged sentences
(Amounts in thousands, except share data)
−Removed: Thirteen Weeks Ended March 25, 2020
−Removed: Paid-in Capital
−Removed: Accumulated Deficit
−Removed: Accumulated Other Comprehensive Income (Loss)
−Removed: Stockholders’ Equity
−Removed: Balance, December 25, 2019
+Added: Thirteen Weeks Ended June 24, 2020
+Added: Comprehensive
+Added: Stockholders’
+Added: Income (Loss)
+Added: Balance, March 25, 2020
Stock-based compensation
+Added: Issuance of common stock related to restricted stock
+Added: Issuance of common stock upon exercise of stock options
+Added: Shares repurchased for employee tax withholdings
Forfeiture of common stock related to restricted shares
Other comprehensive loss, net of tax
+Added: Balance, June 24, 2020
+Added: Thirteen Weeks Ended June 26, 2019
+Added: Comprehensive
+Added: Stockholders’
Balance, March 27, 2019
−Removed: Thirteen Weeks Ended March 27, 2019
−Removed: Paid-in Capital
−Removed: Accumulated Deficit
−Removed: Accumulated Other Comprehensive Income
−Removed: Stockholders’ Equity
+Added: Stock-based compensation
+Added: Issuance of common stock related to restricted shares
+Added: Issuance of common stock upon exercise of stock options
+Added: Shares repurchased for employee tax withholdings
+Added: Repurchase of common stock
+Added: ( 1,303,282 )
+Added: Balance, June 26, 2019
+Added: Twenty-Six Weeks Ended June 24, 2020
+Added: Comprehensive
+Added: Stockholders’
+Added: Income (Loss)
Balance, December 25, 2019
Stock-based compensation
+Added: Issuance of common stock related to restricted stock
+Added: Issuance of common stock upon exercise of stock options
+Added: Shares repurchased for employee tax withholdings
+Added: Forfeiture of common stock related to restricted shares
+Added: Other comprehensive loss, net of tax
+Added: Balance, June 24, 2020
+Added: Twenty-Six Weeks Ended June 26, 2019
+Added: Comprehensive
+Added: Stockholders’
+Added: Balance, December 26, 2018
+Added: Stock-based compensation
Issuance of common stock related to restricted shares
+Added: Issuance of common stock upon exercise of stock options
Shares repurchased for employee tax withholdings
Repurchase of common stock
−Removed: Balance, March 27, 2019
+Added: ( 1,558,836 )
+Added: Balance, June 26, 2019
EL POLLO LOCO HOLDINGS, INC.
1 unchanged sentence
(Amounts in thousands)
−Removed: Thirteen Weeks Ended
−Removed: March 25, 2020
−Removed: March 27, 2019
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
Cash flows from operating activities:
−Removed: Adjustments to reconcile net income to net cash flows (used in) provided by operating
+Added: Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization
Stock-based compensation expense
−Removed: Income tax receivable agreement (income) expense
−Removed: Loss on held for sale assets
+Added: Income tax receivable agreement expense
+Added: Loss on disposition of restaurants
Loss on disposal of assets
11 unchanged sentences
Other accrued expenses and liabilities
−Removed: Net cash flows (used in) provided by operating activities
+Added: Net cash flows provided by operating activities
Cash flows from investing activities:
+Added: Proceeds from disposition of restaurants
Purchase of property and equipment
1 unchanged sentence
Cash flows from financing activities:
+Added: Minimum tax withholdings related to net share settlements
Payments on revolver and swingline loan
Borrowings on revolver and swingline loan
+Added: Proceeds from issuance of common stock upon exercise of stock options, net of expenses
Payment of obligations under finance leases
1 unchanged sentence
Net cash flows provided by (used in) financing activities
−Removed: Increase (decrease) in cash and cash equivalents
+Added: Increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
−Removed: Thirteen Weeks Ended
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
Supplemental cash flow information
−Removed: March 25, 2020
−Removed: March 27, 2019
Cash paid during the period for interest
+Added: Cash paid during the period for income taxes
Unpaid purchases of property and equipment
8 unchanged sentences
(“EPL”), which develops, franchises, licenses, and operates quick-service restaurants under the name El Pollo Loco® and operates under one operating segment.
−Removed: At March 25, 2020 , the Company operated 195 and franchised 284 El Pollo Loco restaurants.
+Added: At June 24, 2020, the Company operated 196 and franchised 283 El Pollo Loco restaurants.
Basis of Presentation
23 unchanged sentences
The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, insurance reserves, lease accounting matters, stock-based compensation, income tax receivable agreement liability, contingent liabilities and income tax valuation allowances.
−Removed: On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China ("COVID-19") and the risks to the international community as the virus spreads globally beyond its point of origin.
+Added: On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China ("COVID-19") and the risks to the international community as the virus spreads globally beyond its point of origin.
On March 11, 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.
−Removed: Following the pandemic declaration in March 2020, federal, state and local governments began to respond to the public health crisis by requiring social distancing, "stay at home" directives, and restaurant restrictions - including government-mandated dining room closures - that limited business to off-premise services only (take-out, drive-thru and delivery).
+Added: The COVID-19 pandemic has significantly disrupted consumer demand, as well as the Company’s restaurant operations.
+Added: Following the pandemic declaration in March 2020, federal, state and local governments began to respond to the public health crisis by requiring social distancing, "stay at home"
+Added: directives, and restaurant restrictions - including government-mandated dining room closures - that limited business to off-premise services only (take-out, drive-thru and delivery).
Historically, approximately 20 % of the Company’s sales are associated with dine-in service.
−Removed: As such, the COVID-19 pandemic has significantly disrupted consumer demand, as well as the Company's restaurant operations.
−Removed: All of the Company's restaurants are operating on a take-away, mobile pick-up and delivery basis only, as well as maintaining drive-thru operations where available, in order to protect its employees and customers from the spread of the COVID-19 pandemic and to comply with the government mandates.
−Removed: As of March 25, 2020, the Company had not closed any restaurants due to the COVID-19 pandemic.
−Removed: Please refer to Subsequent Events, below, for discussion of stores that have temporarily closed.
+Added: In May 2020, the “stay at home” directive was modified in most areas in which the Company operates, allowing for the opening of lower-risk workplaces, including restaurants, but with restrictions such as limited capacity.
+Added: However, in recent months a surge in the COVID-19 pandemic has caused many state and local governments to re-implement certain restrictions to try and contain the spread of the virus.
+Added: Except for nine restaurants in Houston and one in Utah, all of the Company’s restaurants are operating on a take-away, mobile pick-up and delivery basis, as well as maintaining drive-thru operations where available, in order to protect its employees and customers from the spread of the COVID-19 pandemic and to comply with the government mandates.
+Added: Due to the impact of the COVID-19 pandemic, during the thirteen and twenty-six weeks ended June 24, 2020, the Company has temporarily closed 31 restaurants, typically for one to three days , 30 of which have reopened and 1 remained closed as of June 24, 2020.
+Added: Similarly, franchisees have temporarily closed 21 restaurants, of which 17 have reopened and four remain closed as of June 24, 2020.
+Added: As of June 24, 2020, the Company had not permanently closed any restaurants due to the COVID-19 pandemic.
The full impact of the COVID-19 outbreak continues to evolve as of the date of this report.
−Removed: Management has taken precautionary actions, such as drawing on its 2018 Revolver (see Note 4), temporarily suspending all but essential capital spending and share repurchase activity, reevaluating essential support center general and administrative expenses and fine-tuning its restaurant labor model based on dining room closures and lower sales volumes.
−Removed: Additionally, Management has delayed making April rent payments on the majority of its leased properties and is currently negotiating rent abatement and/or deferment with its landlords for those properties.
−Removed: For the Company's franchisees, the Company is deferring 50% of their April royalties as well as 100% of their 2020 remodel and new restaurant build requirements until 2021.
+Added: Management has taken precautionary actions, such as drawing on its 2018 Revolver (see Note 4), temporarily suspending all but essential capital spending and share repurchase activity, reevaluating essential support center general and administrative expenses and fine-tuning its restaurant labor model based on indoor dining room restrictions, limited dining room capacity in restaurants located in geographies where indoor dining is permitted, dining room closures and fluctuating sales volumes.
+Added: Additionally, Management has delayed making April, May and June rent payments on the majority of its leased properties and has reached agreements for rent abatement and/or deferment with the Company’s landlords for those properties.
+Added: See Note 5 “Other Accrued Expenses and Current Liabilities” and Note 6 “Other Noncurrent Liabilities” for details of these balances.
+Added: For the Company’s franchisees, the Company deferred 50 % of their April royalties as well as 100 % of their 2020 remodel and new restaurant build requirements until 2021.
Management is continually evaluating the impact of the global crisis on its financial condition, liquidity, operations, suppliers, industry, and workforce and will take additional actions as necessary.
−Removed: The disruption in operations has led to the Company to consider the impact of the COVID-19 pandemic on its liquidity, debt covenant compliance, and recoverability of long-lived and ROU assets, goodwill and intangible assets, among others.
−Removed: If these disruptions continue, the Company expects a continued material negative impact on its consolidated financial condition, future results of operations and liquidity.
−Removed: The extent of such negative impact will be determined, in part, by the longevity and severity of the pandemic.
−Removed: Due to the rapid development and fluidity of this situation, the Company cannot determine the ultimate impact that the COVID-19 pandemic will have on the Company’s consolidated financial condition, liquidity, and future results of operations, and therefore any prediction as to the ultimate material adverse impact on the Company’s consolidated financial condition, liquidity, and future results of operations is uncertain.
+Added: The disruption in operations led to the Company considering the impact of the COVID-19 pandemic on its liquidity, debt covenant compliance, and recoverability of long-lived and ROU assets, goodwill and intangible assets, among others.
+Added: If these disruptions to the Company’s operations from the COVID-19 pandemic continue, they may have a material negative impact on the Company’s consolidated financial condition, future results of operations and liquidity.
+Added: The extent of such negative impact will depend, in part, on the longevity and severity of the pandemic.
+Added: Due to the rapid development and fluidity of this situation, the Company cannot determine the ultimate impact that the COVID-19 pandemic will have on the Company’s consolidated financial condition, liquidity, and future results of operations, and therefore any prediction as to the ultimate materiality of the adverse impact on the Company’s consolidated financial condition, liquidity, and future results of operations is uncertain.
Subsequent Events
−Removed: Due to the impact of the COVID-19 pandemic, subsequent to March 25, 2020 , the Company has temporarily closed 18 restaurants, 15 of which have reopened and 3 remain closed at this time.
−Removed: Similarly, franchisees have temporarily closed 12 restaurants, 8 of which have reopened and 4 remain closed at this time.
−Removed: On March 27, 2020 President Trump signed into a law a stimulus package, the Coronavirus Aid, Relief and Economic Security ("CARES") Act, which contains several tax provisions and deferral of employer Social Security taxes that are otherwise owed for wage payments.
−Removed: The tax provisions include a correction of previous drafting error related to quality improvement property ("QIP") and immediate refundability of all remaining alternative minimum tax ("AMT") credits.
−Removed: The Company is in the process of assessing the impact of these new tax provisions and will recognize the impact during its second quarter of 2020.
−Removed: On March 19, 2020, the Surety from who the Company procured the appeal bond to secure the judgment against the Company in a legal matter, issued a collateral demand to the Company.
−Removed: On April 17, 2020, the Company issued a letter of credit in the amount of $2.7 million to satisfy the Surety’s collateral demand.
−Removed: Refer to Note 7 "Commitments and Contingencies" for further details.
−Removed: In order to provide the aforementioned letter of credit, on April 15, 2020 the Company made a $2.7 million pre-payment on the 2018 Revolver.
−Removed: Additionally, subsequent to March 25, 2020 one franchised location in Texas has been permanently closed.
−Removed: The Company has evaluated subsequent events that have occurred after March 25, 2020 , and determined that there were no other events or transactions occurring during this reporting period that require recognition or disclosure in the condensed consolidated financial statements.
+Added: Subsequent to June 24, 2020, the Company has temporarily closed 36 restaurants, typically for one to three days , and franchisees have temporarily closed 11 restaurants.
+Added: As of July 31, 2020, four company-operated and three franchise locations remained closed.
+Added: Subsequent to June 24, 2020, the Surety, from whom the Company procured an appeal bond to secure the judgement against the Company in the matter of Janice P.
+Added: Handlers-Bryman and Michael D.
+Added: El Pollo Loco, Inc., released its collateral demand, freeing the $ 2.7 million Letter of Credit previously issued in April 2020.
+Added: Additionally,
+Added: subsequent to June 24, 2020, the Company reached an agreement in principle with the plaintiffs to resolve the lawsuit.
+Added: See Note 7, “Commitments and Contingencies, Legal Matters” for more details.
+Added: The Company has evaluated subsequent events that have occurred after June 24, 2020, and determined that there were no other events or transactions occurring during this reporting period that require recognition or disclosure in the condensed consolidated financial statements.
Cash and Cash Equivalents
1 unchanged sentence
The Company’s principal liquidity and capital requirements are new restaurants, existing restaurant capital investments (remodels and maintenance), interest payments on our debt, lease obligations and working capital and general corporate needs.
−Removed: At March 25, 2020 , the Company’s total debt was $141.5 million .
+Added: At June 24, 2020, the Company’s total debt was $ 138.8 million.
The Company’s ability to make payments on its indebtedness and to fund planned capital expenditures depends on available cash and its ability to generate adequate cash flows in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond the Company’s control.
−Removed: Based on current operations, the Company believes that its cash flow from operations and available cash of $43.4 million at March 25, 2020 will be adequate to meet the Company’s liquidity needs for the next twelve months from the date of filing of these condensed consolidated financial statements.
+Added: Based on current operations, the Company believes that its cash flow from operations and available cash of $ 60.3 million at June 24, 2020 will be adequate to meet the Company’s liquidity needs for the next twelve months from the date of filing of these condensed consolidated financial statements.
However, depending on the severity and longevity of the COVID-19 pandemic, the Company’s financial performance and liquidity could be further impacted and could impact the Company’s ability to meet certain covenants required in its 2018 Credit Agreement (as defined below), specifically the lease-adjusted coverage ratio and fixed-charge coverage ratio.
−Removed: Assets Held For Sale
−Removed: During the thirteen weeks ended March 27, 2019 , the Company agreed in principle to sell four restaurants within the San Francisco area to an existing franchisee.
−Removed: Additionally, during the thirteen weeks ended March 27, 2019 , the Company agreed in principle to sell seven restaurants in the Phoenix area to another existing franchisee.
−Removed: Assets are classified as held for sale if they meet the criteria outlined in Accounting Standards Codification ("ASC") 360, Property, Plant and Equipment .
−Removed: In accordance with applicable accounting guidance, the net assets were recorded at the lower of carrying value or fair value less costs to sell.
−Removed: The Company classified $4.5 million of assets as held for sale, consisting of leasehold improvements and other property equipment, as of March 27, 2019 , and recognized a loss on held for sale assets of $4.1 million for the thirteen weeks ended March 27, 2019 .
−Removed: These transactions were completed during the second quarter of 2019.
−Removed: As of March 25, 2020, there were no assets held for sale.
+Added: Recovery of Securities Class Action Legal Expenses and Other Insurance Claims
+Added: During the thirteen and twenty-six weeks ended June 24, 2020, the Company received insurance proceeds of $ 0.1 million related to a property claim.
+Added: During the thirteen and twenty-six weeks ended June 26, 2019, the Company received insurance proceeds of $ 10.0 million related to the settlement of a securities class action lawsuit.
+Added: See Note 7, “Commitments and Contingencies, Legal Matters.’
+Added: Loss on Disposition of Restaurants
+Added: During the thirteen and twenty-six weeks ended June 26, 2019, the Company completed the sale of four company-operated restaurants within the San Francisco area to an existing franchisee and seven company-operated restaurants in the Phoenix area to another existing franchisee.
+Added: The Company determined that these restaurant dispositions represent multiple element arrangements, and as a result, the cash consideration received was allocated to the separate elements based on their relative selling price.
+Added: Cash proceeds included upfront consideration for the sale of the restaurants and franchise fees, as well as future cash consideration for royalties and lease payments.
+Added: The Company considered the future lease payments in allocating the initial cash consideration received.
+Added: The cash consideration per restaurant for franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements.
+Added: The Company initially defers and subsequently recognizes the franchise fees over the term of the franchise agreement.
+Added: Future royalty income is also recognized in revenue as earned.
+Added: These sales resulted in cash proceeds of $ 4.8 million and a net loss on sale of restaurants of $ 0.9 million and $ 5.1 million for the thirteen and twenty-six weeks ended June 26, 2019, respectively.
+Added: These restaurants are now included in the total number of franchised El Pollo Loco restaurants.
Recently Adopted Accounting Pronouncements
−Removed: In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.
−Removed: 2020-04, "Reference Rate Reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional guidance, for a limited time, to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting.
+Added: In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.
+Added: 2020-04, "Reference Rate Reform (Topic 848):
+Added: Facilitation of the Effects of Reference Rate Reform on Financial Reporting,"
+Added: which provides optional guidance, for a limited time, to ease the potential burden in accounting for or
+Added: recognizing the effects of reference rate reform on financial reporting.
ASU 2020-04 is effective for a limited time, from March 12, 2020, through December 31, 2022.
2 unchanged sentences
In February 2018, the FASB issued ASU No.
−Removed: 2018-13, "Fair Value Measurement (Topic 820):
−Removed: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement," which finalizes proposed ASU No.
+Added: 2018-13, "Fair Value Measurement (Topic 820):
+Added: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,"
+Added: which finalizes proposed ASU No.
2015-350, and of the same name as part of its disclosure framework project, which focuses on improving the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by U.S.
4 unchanged sentences
In June 2016, the FASB issued ASU No.
−Removed: 2016-13, "Financial Instruments—Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments," which finalizes proposed ASU No.
−Removed: 2012-260 "Financial Instruments—Credit Losses (Subtopic 825-15)" and adds Topic 326 "Financial Instruments—Credit Losses", to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
+Added: 2016-13, "Financial Instruments—Credit Losses (Topic 326):
+Added: Measurement of Credit Losses on Financial Instruments,"
+Added: which finalizes proposed ASU No.
+Added: 2012-260 "Financial Instruments—Credit Losses (Subtopic 825-15)"
+Added: and adds Topic 326 "Financial Instruments—Credit Losses", to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
The Company adopted ASU No.
3 unchanged sentences
In December 2019, the FASB issued ASU No.
−Removed: 2019-12, "Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes", which modifies Topic 740 to simplify the accounting for income taxes.
+Added: 2019-12, "Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes", which modifies Topic 740 to simplify the accounting for income taxes.
ASU 2019-12 is effective for financial statements issued for annual periods beginning after December 15, 2020, and for the interim periods therein.
3 unchanged sentences
The Company has never experienced any losses related to these balances.
−Removed: The Company had one supplier for which amounts due totaled 12.2% and 11.7% of the Company’s accounts payable at March 25, 2020 and December 25, 2019 , respectively.
−Removed: Purchases from the Company’s largest supplier totaled 27.4% of total expenses for the thirteen weeks ended March 25, 2020 , and 26.6% of total expenses for the thirteen weeks ended March 27, 2019 .
−Removed: Company-operated and franchised restaurants in the greater Los Angeles area generated, in the aggregate, approximately 72.4% of total revenue for the thirteen weeks ended March 25, 2020 , and 69.2% for the thirteen weeks ended March 27, 2019 .
+Added: The Company had one supplier for which amounts due totaled 44.5 % and 11.7 % of the Company’s accounts payable at June 24, 2020 and December 25, 2019, respectively.
+Added: Purchases from the Company’s largest supplier totaled 26.4 % and 27.0 % of total expenses for the thirteen and twenty-six weeks ended June 24, 2020, respectively, and 30.3 % and 28.8 % of total expenses for the thirteen and twenty-six weeks ended June 26, 2019.
+Added: Company-operated and franchised restaurants in the greater Los Angeles area generated, in the aggregate, approximately 71.1 % and 71.7 % of total revenue for the thirteen and twenty-six weeks ended June 24, 2020, respectively, and 69.3 % for each of the thirteen and twenty-six weeks ended June 26, 2019.
Goodwill and Indefinite Lived Intangible Assets
5 unchanged sentences
The amount of goodwill included in the cost basis of the asset sold is determined based on the relative fair value of the portion of the reporting unit disposed of compared to the fair value of the reporting unit retained.
−Removed: The Company determined there was no decrement of goodwill related to the disposition of restaurants during the thirteen weeks ended March 25, 2020 .
+Added: The Company determined there was no decrement of goodwill related to the disposition of restaurants during the thirteen and twenty-six weeks ended June 26, 2019.
The Company performs an annual impairment test for goodwill during the fourth fiscal quarter of each year, or more frequently if impairment indicators arise.
10 unchanged sentences
These assumptions are subject to change as a result of changing economic and competitive conditions.
−Removed: Due to the recent impact of the COVID-19 pandemic to the global economy, including but not limited to, the volatility of the Company's stock price as well as that of its competitors, declining sales at the Company's restaurants and the challenging environment for the restaurant industry generally, the Company determined that there were indicators of potential impairment of its goodwill and indefinite-lived intangible assets during the thirteen weeks ended March 25, 2020 .
+Added: Due to the recent impact of the COVID-19 pandemic to the global economy, including but not limited to, the volatility of the Company’s stock price as well as that of its competitors and the challenging environment for the restaurant industry generally, the Company determined that there were indicators of potential impairment of its goodwill and indefinite-lived intangible assets during the thirteen and twenty-six weeks ended June 24, 2020.
As such, the Company performed an impairment assessment for both goodwill and indefinite-lived intangible assets and concluded that the fair value of these assets substantially exceeded their carrying values.
−Removed: Accordingly, the Company did not record any impairment to its goodwill or indefinite-lived intangible assets during the thirteen weeks ended March 25, 2020 .
+Added: Accordingly, the Company did not record any impairment to its goodwill or indefinite-lived intangible assets during the thirteen and twenty-six weeks ended June 24, 2020.
T he ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, it is possible that impairments could be identified in future periods, and such amounts could be material.
11 unchanged sentences
The key inputs for the valuation models are observable market prices, discount rates, and forward yield curves.
−Removed: Long-Term Debt" for further discussion regarding our interest rate swaps.
−Removed: The following table presents fair value for the interest rate swap at March 25, 2020 (in thousands):
+Added: See "Note 4.
+Added: Long-Term Debt"
+Added: for further discussion regarding our interest rate swaps.
+Added: The following table presents fair value for the interest rate swap at June 24, 2020 (in thousands):
Fair Value Measurements Using
6 unchanged sentences
when there is evidence of impairment).
−Removed: The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the thirteen weeks ended March 25, 2020 (in thousands):
−Removed: Fair Value Measurements at March 25, 2020 Using
−Removed: Thirteen Weeks Ended March 25, 2020
+Added: The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the thirteen and twenty-six weeks ended June 24, 2020 (in thousands):
+Added: Thirteen Weeks
+Added: Twenty-Six Weeks
+Added: Fair Value Measurements at June 24, 2020 Using
+Added: Ended June 24, 2020
+Added: Ended June 24, 2020
Impairment Losses
+Added: Impairment Losses
Certain property and equipment owned, net
Certain ROU assets, net
−Removed: The following non-financial instruments were measured at fair value on a nonrecurring basis as of and for the thirteen weeks ended March 27, 2019 (in thousands):
−Removed: Fair Value Measurements at March 27, 2019 Using
−Removed: Thirteen Weeks Ended March 27, 2019
+Added: The following non-financial instruments were measured at fair value on a nonrecurring basis as of and for the thirteen and twenty-six weeks ended June 26, 2019 (in thousands):
+Added: Thirteen Weeks
+Added: Twenty-Six Weeks
+Added: Fair Value Measurements at June 26, 2019 Using
+Added: Ended June 26, 2019
+Added: Ended June 26, 2019
Impairment Losses
−Removed: Certain property and equipment - Held for sale
+Added: Impairment Losses
+Added: Certain property and equipment owned, net
Impairment of Long-Lived Assets and ROU Assets
−Removed: The Company reviews its long-lived and right-of-use assets ("ROU assets") for impairment on a restaurant-by-restaurant basis whenever events or changes in circumstances indicate that the carrying value of certain long-lived and ROU assets may not be recoverable.
+Added: The Company reviews its long-lived and right-of-use assets ("ROU assets") for impairment on a restaurant-by-restaurant basis whenever events or changes in circumstances indicate that the carrying value of certain long-lived and ROU assets may not be recoverable.
The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets.
2 unchanged sentences
The fair value is measured on a nonrecurring basis using unobservable (Level 3) inputs.
−Removed: There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis, which requires the use of
−Removed: estimates and assumptions.
+Added: There is uncertainty in the projected undiscounted future cash flows used in the Company’s impairment review analysis, which requires the use of estimates and assumptions.
If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material.
−Removed: Based on the results of the analysis, the Company recorded a non-cash impairment charge of $1.9 million for the thirteen weeks ended March 25, 2020 , primarily related to the carrying value of the ROU assets of one restaurant in Texas and the long-lived assets of three restaurants in California.
−Removed: The Company did not recognize any impairment charges for the thirteen weeks ended March 27, 2019 , other than the loss on assets held for sale, discussed above.
+Added: The Company determined that triggering events occurred during each of the thirteen and twenty-six weeks ended June 24, 2020 that required an impairment review of the Company’s long-lived and ROU assets.
+Added: Based on the results of the analysis, the Company recorded non-cash impairment charges of $ 0.1 million and $ 2.0 million for the thirteen and twenty-six weeks ended June 24, 2020, respectively, primarily related to the carrying value of the ROU assets of one restaurant in Texas and the long-lived assets of three restaurants in California.
+Added: The Company recorded a non-cash impairment charge of $ 0.2 million for both the thirteen and twenty-six weeks ended June 26, 2019, primarily related to the carrying value of one restaurant in California.
Given the inherent uncertainty in projecting results for newer restaurants in newer markets, as well as the impact of the COVID-19 pandemic, the Company is monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis.
3 unchanged sentences
The remaining value of the ROU asset is amortized on a straight-line basis, with the expense recognized in closed-store reserve expense.
−Removed: Additionally, any property tax and common area maintenance ("CAM") payments relating to closed restaurants are included within closed-store expense.
−Removed: During the thirteen weeks ended March 25, 2020 , the Company recognized $0.5 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.
−Removed: During the thirteen weeks ended March 27, 2019 , the Company closed one restaurant in California and one restaurant in Texas and recognized $0.3 million primarily related to the amortization of ROU assets for the two closed stores.
+Added: Additionally, any property tax and common area maintenance ("CAM") payments relating to closed restaurants are included within closed-store expense.
+Added: During the thirteen and twenty-six weeks ended June 24, 2020, the Company recognized $ 0.4 million and $ 0.9 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.
+Added: During the twenty-six weeks ended June 26, 2019, the Company closed one restaurant in California and one restaurant in Texas, and recognized $ 0.3 million and $ 0.6 million of closed-store reserve expense for the thirteen and twenty-six weeks ended June 26, 2019, respectively, primarily related to the amortization of ROU assets, property taxes and CAM payments for its closed locations.
Derivative Financial Instruments
−Removed: The Company uses an interest rate swap, a derivative instrument, to hedge interest rate risk and are not used for trading purposes.
−Removed: The derivative contract is entered into with financial institutions.
+Added: The Company uses an interest rate swap, a derivative instrument, to hedge interest rate risk and not for trading purposes.
+Added: The derivative contract is entered into with a financial institution.
The Company records the derivative instrument on its condensed consolidated balance sheet at fair value.
−Removed: The derivative instrument qualifies as a hedging instrument in a qualifying cash flow hedge relationship, the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive (loss) income ("AOCI") and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
+Added: The derivative instrument qualifies as a hedging instrument in a qualifying cash flow hedge relationship, and the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive (loss) income ("AOCI") and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
For any derivative instruments not designated as hedging instruments, the gain or loss will be recognized in earnings immediately.
2 unchanged sentences
To mitigate the counterparty credit risk, the Company will only enter into contracts with major financial institutions, based upon their credit ratings and other factors, and will continue to assess the creditworthiness of the counterparty.
−Removed: As of March 25, 2020 , the counterparty to the Company's interest rate swap has performed in accordance with their contractual obligation.
+Added: As of June 24, 2020, the counterparty to the Company’s interest rate swap has performed in accordance with its contractual obligation.
The provision for income taxes, income taxes payable and deferred income taxes is determined using the asset and liability method.
7 unchanged sentences
Otherwise, the Company may not recognize any of the potential tax benefit associated with the position.
−Removed: The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution.
−Removed: Unrecognized tax benefits involve management’s
−Removed: judgment regarding the likelihood of the benefit being sustained.
+Added: Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution.
+Added: Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained.
The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect the Company’s consolidated financial position, results of operations, and cash flows.
The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.
−Removed: The Company had no accrual for interest or penalties at March 25, 2020 or at December 25, 2019 , and did not recognize interest or penalties during the thirteen weeks ended March 25, 2020 or March 27, 2019 , since there were no material unrecognized tax benefits.
+Added: The Company had no accrual for interest or penalties at June 24, 2020 or at December 25, 2019, and did not recognize interest or penalties during the thirteen and twenty-six weeks ended June 24, 2020 or June 26, 2019, since there were no material unrecognized tax benefits.
Management believes no material changes to the amount of unrecognized tax benefits will occur within the next twelve months.
−Removed: For the thirteen weeks ended March 25, 2020 the Company received a Notice of Proposed Adjustment ("NOPA"), for the years ended December 27, 2017 and December 28, 2016, related to the Company's methodology regarding its ordering of utilization of AMT net operating losses ("NOL).
+Added: On July 30, 2014, the Company entered into the income tax receivable agreement (the "TRA"), which calls for the Company to pay to its pre-IPO stockholders 85 % of the savings in cash that the Company realizes in its income taxes as a result of utilizing its net operating losses and other tax attributes attributable to preceding periods.
+Added: For the thirteen and twenty-six weeks ended June 24, 2020, the Company recorded income tax receivable agreement expense of $ 0.3 million and $ 0.2 million, respectively, and for the thirteen and twenty-six weeks ended June 26, 2019, the Company recorded income tax receivable agreement income of $ 0.1 million and income tax receivable expense of $ 0.1 million, respectively, related to the amortization of interest expense related to our total expected TRA payments and changes in estimates for actual tax returns filed and future forecasted taxable income.
+Added: On March 27, 2020, President Trump signed into a law a stimulus package, the Coronavirus Aid, Relief and Economic Security ("CARES") Act, which contains several tax provisions and deferral of employer Social Security taxes that are otherwise owed for wage payments.
+Added: The tax provisions include a correction of a previous drafting error related to quality improvement property ("QIP") and immediate refundability of all remaining alternative minimum tax ("AMT") credits.
+Added: The new provisions did not have a material impact on the Company’s condensed consolidated financial statements.
+Added: During the twenty-six weeks ended June 24, 2020 the Company received a Notice of Proposed Adjustment ("NOPA"), for the years ended December 27, 2017 and December 28, 2016, related to the Company’s methodology regarding its ordering of utilization of AMT net operating losses ("NOL”).
This resulted in payment of $ 0.4 million, and the audit is closed.
−Removed: As a result of the CARES Act, discussed above, this amount is immediately refundable upon filing of a Form 1139.
−Removed: See "Subsequent Event" disclosure above for further discussion of the tax impact of the CARES Act.
−Removed: On July 30, 2014, the Company entered into the income tax receivable agreement (the "TRA"), which calls for the Company to pay to its pre-IPO stockholders 85% of the savings in cash that the Company realizes in its income taxes as a result of utilizing its net operating losses and other tax attributes attributable to preceding periods.
−Removed: For the thirteen weeks ended March 25, 2020 , the Company recorded income tax receivable agreement income of $0.1 million , and for the thirteen weeks ended March 27, 2019 , the Company recorded income tax receivable agreement expense of $0.2 million , related to the amortization of interest expense related to our total expected TRA payments and changes in estimates for actual tax returns filed and future forecasted taxable income.
−Removed: Changes in Accounting Policies
−Removed: Except for the changes below, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements.
−Removed: The Company adopted Topic 842 with a date of initial application of December 27, 2018.
−Removed: As a result, the Company has changed its accounting policy for leases as detailed below.
−Removed: The Company’s operations utilize property, facilities, equipment and vehicles owned by the Company or leased from others, the majority of which are operating leases.
−Removed: Additionally, the Company has various contracts with vendors that have been determined to contain an embedded lease in accordance with Topic 842.
−Removed: As of the date of adoption, the Company recognized a ROU asset and lease liability equal to the present value of these leases within its consolidated balance sheet for any leases with terms longer than 12 months.
−Removed: The Company also has three finance leases, subleases facilities to certain franchises and is the lessor for certain property, facilities and equipment owned by the Company.
−Removed: The adoption of Topic 842 did not have an impact on the Company's current accounting policies for these items.
−Removed: Furthermore, the adoption of this standard did not have any impact on the Company’s consolidated statement of operations or the consolidated statement of cash flows.
−Removed: The Company applied Topic 842 using the effective date method, which allowed the Company to apply the standard as of the adoption date, and to recognize the cumulative effect of initially applying Topic 842 as an adjustment to retained earnings at December 27, 2018, if applicable.
−Removed: Therefore, the comparative information has not been adjusted and continues to be reported under Topic 840.
−Removed: However, the Company did not have any impact to its retained earnings.
−Removed: Additionally, the Company elected to apply the package of practical expedients, which allowed for carryforwards of 1) historical lease classifications, 2) determination of whether a contract contains a lease under the new definition of a lease and 3) whether previously capitalized initial direct costs qualify for capitalization.
−Removed: See Note 11, "Leases," for further details.
+Added: As a result of the CARES Act, discussed above, this amount is immediately refundable upon filing of a Form 1139, which the Company filed during the thirteen and twenty-six weeks ended June 24, 2020 and recognized a receivable, included in Accounts and other receivables within the condensed consolidated balance sheet as of June 24, 2020.
PROPERTY AND EQUIPMENT
The costs and related accumulated depreciation and amortization of major classes of property and equipment are as follows (in thousands):
−Removed: March 25, 2020
+Added: June 24, 2020
December 25, 2019
3 unchanged sentences
accumulated depreciation and amortization
−Removed: Depreciation expense was $4.4 million and $4.8 million for the thirteen weeks ended March 25, 2020 and March 27, 2019 , respectively.
−Removed: Based on the Company's review of its long-lived assets for impairment, the Company recorded non-cash impairment charges of $1.4 million for the thirteen weeks ended March 25, 2020 , primarily related to the carrying value of the assets of three restaurants in California.
+Added: Depreciation expense was $ 4.2 million and $ 4.5 million for the thirteen weeks ended June 24, 2020 and June 26, 2019, respectively, and $ 8.5 million and $ 9.2 million for the twenty-six weeks ended June 24, 2020 and June 26, 2019, respectively .
+Added: Based on the Company’s review of its long-lived assets for impairment, the Company recorded non-cash impairment charges of $ 0.1 million and $ 1.4 million for the thirteen and twenty-six weeks ended June 24, 2020, respectively, primarily related to the carrying value of the assets of three restaurants in California.
+Added: During the thirteen and twenty-six weeks ended June 26, 2019, the Company recorded non-cash impairment charges of $ 0.2 million, primarily related to
+Added: the carrying value of one restaurant in California.
D epending on the severity and longevity of the COVID-19 pandemic, the Company’s financial performance could be further impacted and it is possible that material impairments could be identified in future periods.
−Removed: Assets are classified as held for sale if they meet the criteria outlined in ASC 360, Property, Plant and Equipment .
−Removed: In accordance with applicable accounting guidance, the net assets were recorded at the lower of carrying value or fair value less costs to sell.
−Removed: The Company classified $4.5 million of assets as held for sale as of March 27, 2019 , and recognized a loss on held for sale assets of $4.1 million for the thirteen weeks ended March 27, 2019 .
STOCK-BASED COMPENSATION
−Removed: At March 25, 2020 , options to purchase 2,034,834 shares of common stock were outstanding, including 1,518,145 vested and 516,689 unvested.
+Added: At June 24, 2020, options to purchase 1,641,851 shares of common stock were outstanding, including 1,258,437 vested and 383,414 unvested.
Unvested options vest over time;
−Removed: however, upon a change in control, the board may accelerate vesting.
−Removed: At March 25, 2020 , 1,159,366 premium options, options granted above the stock price at date of grant, remained outstanding.
−Removed: A summary of stock option activity as of March 25, 2020 and changes during the thirteen weeks ended March 25, 2020 is as follows:
+Added: however, upon a change in control, the Board of Directors may accelerate vesting.
+Added: At June 24, 2020, 820,342 premium options, options granted above the stock price at date of grant, remained outstanding.
+Added: A summary of stock option activity as of June 24, 2020 and changes during the twenty-six weeks ended June 24, 2020 is as follows:
Weighted-Average
2 unchanged sentences
Forfeited, cancelled or expired
−Removed: Outstanding - March 25, 2020
−Removed: Vested and expected to vest at March 25, 2020
−Removed: Exercisable at March 25, 2020
−Removed: At March 25, 2020 , the Company had total unrecognized compensation expense of $1.5 million related to unvested stock options, which it expects to recognize over a weighted-average period of 2.68 years.
−Removed: A summary of restricted share activity as of March 25, 2020 and changes during the thirteen weeks ended March 25, 2020 is as follows:
+Added: Outstanding - June 24, 2020
+Added: Vested and expected to vest at June 24, 2020
+Added: Exercisable at June 24, 2020
+Added: At June 24, 2020, the Company had total unrecognized compensation expense of $ 1.3 million related to unvested stock options, which it expects to recognize over a weighted-average period of 2.46 years.
+Added: A summary of restricted share activity as of June 24, 2020 and changes during the twenty-six weeks ended June 24, 2020 is as follows:
Weighted-Average
1 unchanged sentence
Forfeited, cancelled, or expired
−Removed: Unvested shares at March 25, 2020
−Removed: Unvested shares at March 25, 2020 , included 430,823 unvested restricted shares, 36,058 unvested performance stock units and 72,117 unvested restricted units.
−Removed: At March 25, 2020 , the Company had unrecognized compensation expense of $3.7 million related to unvested restricted shares, which it expects to recognize over a weighted-average period of 2.57 years, unrecognized compensation expense of $0.1 million related to performance stock units, which it expects to recognize over a weighted-average period of 3.12 years and unrecognized compensation expense of $0.5 million related to unvested restricted units, which it expects to recognize over a weighted-average period of 2.12 years.
−Removed: Total stock-based compensation expense was $0.5 million for both the thirteen weeks ended March 25, 2020 and March 27, 2019 .
+Added: Unvested shares at June 24, 2020
+Added: Unvested shares at June 24, 2020, included 733,885 unvested restricted shares, 36,058 unvested performance stock units and 48,078 unvested restricted units.
+Added: At June 24, 2020, the Company had unrecognized compensation expense of $ 8.0 million related to unvested restricted shares, which it expects to recognize over a weighted-average period of 3.22 years, unrecognized compensation expense of $ 0.1 million related to performance stock units, which it expects to recognize over a weighted-average period of 2.87 years and unrecognized compensation expense of $ 0.5 million related to unvested restricted units, which it expects to recognize over a weighted-average period of 1.87 years.
+Added: Total stock-based compensation expense was $ 0.7 million and $ 1.3 million for the thirteen and twenty-six weeks ended June 24, 2020, respectively, and $ 0.6 million and $ 1.1 million for the thirteen and twenty-six weeks ended June 26, 2019, respectively.
LONG-TERM DEBT
2 unchanged sentences
The 2018 Revolver and 2018 Credit Agreement will mature on July 13, 2023 .
−Removed: The obligations under the 2018 Credit Agreement and related loan documents are guaranteed by the Company and Intermediate.
+Added: The obligations under the 2018 Credit Agreement and related
+Added: loan documents are guaranteed by the Company and Intermediate.
The obligations of the Company, EPL and Intermediate under the 2018 Credit Agreement and related loan documents are secured by a first priority lien on substantially all of their respective assets.
4 unchanged sentences
Borrowings under the 2018 Revolver may be repaid and reborrowed.
−Removed: The interest rate range was 3.11% to 3.29% for the thirteen weeks ended March 25, 2020 and 3.96% to 4.01% for the thirteen weeks ended March 27, 2019 .
+Added: The interest rate range was 1.67 % to 3.11 % and 1.67 % to 3.29 % for the thirteen and twenty-six weeks ended June 24, 2020, respectively, and 3.90 % to 6.00 % for both the thirteen and twenty-six weeks ended June 26, 2019.
The 2018 Credit Agreement contains certain financial covenants.
−Removed: The Company was in compliance with the financial covenants as of March 25, 2020 .
+Added: The Company was in compliance with the financial covenants as of June 24, 2020.
However, depending on the severity and longevity of the COVID-19 pandemic, the Company’s financial performance and liquidity could be further impacted and could impact the Company’s ability to comply with certain financial covenants required in the 2018 Credit Agreement, specifically the lease-adjusted coverage ratio and fixed-charge coverage ratio.
−Removed: At March 25, 2020 , $8.4 million of letters of credit and $141.5 million in borrowings under the 2018 Revolver were outstanding.
−Removed: The Company had $0.1 million amounts available under the 2018 Revolver at March 25, 2020 .
−Removed: During the thirteen weeks ended March 25, 2020 , the Company borrowed $44.5 million , net of pay downs of $8.0 million , on the Company’s 2018 Revolver, primarily as a precautionary measure to bolster its existing cash position, related to the uncertainty regarding the current COVID-19 pandemic, as well as to fund litigation settlement payments.
−Removed: See Note 1 under "Subsequent Events" for further details regarding the Company's actions related to the COVID-19 pandemic and Note 7 for further details regarding the litigation settlement payments.
−Removed: During the thirteen weeks ended March 27, 2019 , the Company elected to pay down $3.0 million of outstanding borrowings on the Company’s 2018 Revolver.
+Added: At June 24, 2020, $ 11.1 million of letters of credit and $ 138.8 million in borrowings under the 2018 Revolver were outstanding.
+Added: The Company had $ 0.1 million in borrowing availability under the 2018 Revolver at June 24, 2020.
+Added: During the thirteen weeks ended June 24, 2020, the Company elected to pay down $ 2.7 million on its 2018 Revolver.
+Added: During the twenty-six weeks ended June 24, 2020, the Company borrowed $ 41.8 million, net of pay downs of $ 10.7 million on its 2018 Revolver, primarily as a precautionary measure to bolster its existing cash position, related to the uncertainty regarding the current COVID-19 pandemic, as well as to fund litigation settlement payments.
+Added: See Note 1 under "COVID-19"
+Added: for further details regarding the Company’s actions related to the COVID-19 pandemic and Note 7 for further details regarding the litigation settlement payments.
+Added: During the thirteen and twenty-six weeks ended June 26, 2019, the Company borrowed $ 14.0 million and $ 11.0 million, respectively, net of pay downs of $ 12.0 and $ 15.0 million of outstanding borrowings on the Company’s 2018 Revolver, primarily to fund settlement payments.
There are no required principal payments prior to maturity for the 2018 Revolver.
2 unchanged sentences
The objective of the interest rate swap was to reduce the Company’s exposure to interest rate risk for a portion of its variable-rate interest payments on its borrowings under the 2018 Revolver.
−Removed: Under the terms of the swap agreement, the variable LIBOR-based component of interest payments were converted to a fixed rate of 1.31% , plus applicable margin, which is currently 1.5% .
−Removed: The interest rate swap was designated as a cash flow hedge, as the changes in the future cash flows of the swap were expected to offset changes in expected future interest payments on the related variable-rate debt, in accordance with ASC 815, Derivatives and Hedging .
+Added: Under the terms of the swap agreement, the variable LIBOR-based component of interest payments was converted to a fixed rate of 1.31 %, plus applicable margin, which is currently 1.5 %.
+Added: The interest rate swap was designated as a cash flow hedge, as the changes in the future cash flows of the swap were expected to offset changes in expected future interest payments on the related variable-rate debt, in accordance with Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging.”
The changes in the fair value of the interest rate swap are not included in earnings, but are included in other comprehensive (loss) income (“OCI”).
These changes in fair value are subsequently reclassified into net earnings as a component of interest expense as the hedged interest payments are made on the variable rate borrowings.
−Removed: For the thirteen weeks ended March 25, 2020 , the swap was a highly effective cash flow hedge.
−Removed: As of March 25, 2020 , the estimated net loss included in AOCI related to the Company's cash flow hedge that will be reclassified into earnings in the next 12 months is $0.1 million , based on current LIBOR interest rates.
+Added: For the thirteen and twenty-six weeks ended June 24, 2020, the swap was a highly effective cash flow hedge.
+Added: As of June 24, 2020, the estimated net loss included in AOCI related to the Company’s cash flow hedge that will be reclassified into earnings in the next 12 months is $ 0.5 million, based on current LIBOR interest rates.
The following table shows the financial statement line item and amount of the Company’s cash flow hedge accounting on the condensed consolidated balance sheet (in thousands):
−Removed: March 25, 2020
+Added: June 24, 2020
December 25, 2019
3 unchanged sentences
Thirteen Weeks Ended
−Removed: March 25, 2020
−Removed: March 27, 2019
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
Interest expense on hedged portion of debt
−Removed: Interest income on interest rate swap
+Added: Interest expense on interest rate swap
Interest expense on debt and derivatives, net
−Removed: The following table summarizes the effect of the Company's cash flow hedge accounting on AOCI for the thirteen weeks ended March 25, 2020 and March 27, 2019 (in thousands):
+Added: The following table summarizes the effect of the Company’s cash flow hedge accounting on AOCI for the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019 (in thousands):
Thirteen Weeks Ended
+Added: Twenty-Six Weeks Ended
+Added: Loss Reclassified from
+Added: Loss Reclassified from
Net Loss Recognized in OCI
−Removed: (Gain) Reclassified from AOCI into Interest expense
−Removed: March 25, 2020
−Removed: March 27, 2019
−Removed: March 25, 2020
−Removed: March 27, 2019
+Added: AOCI into Interest expense
+Added: Net Loss Recognized in OCI
+Added: AOCI into Interest expense
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
Interest rate swap
2 unchanged sentences
Other accrued expenses and current liabilities consist of the following (in thousands):
−Removed: March 25, 2020
+Added: June 24, 2020
December 25, 2019
3 unchanged sentences
Deferred franchise and development fees
+Added: Current portion of lease payment deferrals
Total other accrued expenses and current liabilities
1 unchanged sentence
Other noncurrent liabilities consist of the following (in thousands):
−Removed: March 25, 2020
+Added: June 24, 2020
December 25, 2019
1 unchanged sentence
Derivative liability
+Added: Lease payment deferrals - net of current portion
Total other noncurrent liabilities
27 unchanged sentences
The two lawsuits have been consolidated, with co-lead plaintiffs and class counsel.
−Removed: A consolidated complaint was filed
−Removed: on January 29, 2016, on behalf of co-lead plaintiffs and others similarly situated, alleging violations of federal securities laws in connection with Holdings common stock purchased or otherwise acquired and the purchase of call options or the sale of put options, between May 1, 2015 and August 13, 2015 (the “Class Period”).
+Added: A consolidated complaint was filed on January 29, 2016, on behalf of co-lead plaintiffs and others similarly situated, alleging violations of federal securities laws in connection with Holdings common stock purchased or otherwise acquired and the purchase of call options or the sale of put options, between May 1, 2015 and August 13, 2015 (the “Class Period”).
The named defendants are Holdings;
6 unchanged sentences
As a result, Plaintiffs and other members of the putative class allegedly suffered damages in connection with their purchase of Holdings’ stock during the Class Period.
−Removed: In addition, Plaintiffs allege that the Individual Defendants and Controlling Shareholder Defendants had direct involvement in, and responsibility over, the operations of Holdings, and are presumed to have had, among other things, the power to control or influence the transactions giving rise to the alleged securities law violations.
+Added: In addition, Plaintiffs allege that the Individual Defendants and Controlling Shareholder Defendants had direct involvement in, and responsibility over, the operations of Holdings, and are presumed
+Added: to have had, among other things, the power to control or influence the transactions giving rise to the alleged securities law violations.
In both cases, Plaintiffs seek an unspecified amount of damages, as well as costs and expenses (including attorneys’ fees).
25 unchanged sentences
The court denied defendants’ motion to dismiss the complaint for failure to state a claim.
−Removed: On January 17, 2018, the court entered an order granting the parties’ stipulation staying all proceedings in the Diep action for five months or until the completion of an investigation of the allegations in the action by a special litigation committee of the Holdings board of directors (the "SLC").
+Added: On January 17, 2018, the court entered an order granting the parties’ stipulation staying all proceedings in the Diep action for five months or until the completion of an investigation of the allegations in the action by a special litigation committee of the Holdings board of directors (the "SLC").
On February 13, 2019, after concluding its investigation, the SLC filed a motion to dismiss the Diep action.
7 unchanged sentences
Handlers-Bryman and Michael D.
−Removed: Bryman, as individuals and in their capacities as trustees of the Handlers Bryman Trust (collectively, “Plaintiffs”), filed suit against us alleging, among other things, that we “imposed unreasonable time limitations” on their development of
−Removed: additional restaurant locations in Lancaster, California, and that we thereafter developed company-operated El Pollo Loco restaurants in the “market area” of Plaintiffs’ existing El Pollo Loco restaurant in Lancaster.
+Added: Bryman, as individuals and in their capacities as trustees of the Handlers Bryman Trust (collectively, “Plaintiffs”), filed suit against us alleging, among other things, that we “imposed unreasonable time limitations” on their development of additional restaurant locations in Lancaster, California, and that we thereafter developed company-operated El Pollo Loco restaurants in the “market area” of Plaintiffs’ existing El Pollo Loco restaurant in Lancaster.
Plaintiffs asserted claims against us for, among other things, (i) breach of the implied covenant of good faith and fair dealing, (ii) intentional interference with prospective business, and (iii) unfair business practices.
−Removed: In addition to an unspecified amount of damages and costs of the lawsuit, Plaintiffs sought reformation of the contract, declaratory relief, disgorgement of alleged revenues and profits, injunctive relief, and a judicial mandate requiring us to either transfer the company-operated locations to Plaintiffs or to continuously disgorge to Plaintiffs the unjust enrichment allegedly obtained by us through the operation of the company-operated restaurants in Lancaster.
+Added: In addition to an unspecified amount of damages and costs of the lawsuit, Plaintiffs sought reformation of the contract, declaratory relief, disgorgement of alleged revenues and profits, injunctive relief, and a judicial mandate requiring us to either transfer the company-operated locations to Plaintiffs or to continuously disgorge to Plaintiffs the unjust
+Added: enrichment allegedly obtained by us through the operation of the company-operated restaurants in Lancaster.
We denied Plaintiffs’ allegations as the franchise agreement did not grant Plaintiffs any exclusive territorial rights and, instead, expressly reserved for us the right to open and operate - and the right to grant others the right to open and operate - El Pollo Loco restaurants “in the immediate vicinity of or adjacent to” Plaintiffs’ restaurant in Lancaster.
14 unchanged sentences
The court also awarded Plaintiffs restitution of $ 4,356,600 for “impact damages” arising out of our construction of the two new company-operated El Pollo Loco restaurants in Lancaster.
−Removed: The court, reversing its previous position, held that these damages could be awarded in addition to the "lost opportunity damages" awarded by the jury.
+Added: The court, reversing its previous position, held that these damages could be awarded in addition to the "lost opportunity damages"
+Added: awarded by the jury.
Thus, the court entered a total monetary judgment of $ 8,837,806 .
4 unchanged sentences
As required by California law, on or about August 16, 2018, the Company obtained an appeal bond through a Surety company to secure the trial court’s judgment during the pendency of the appeal.
−Removed: The appeal on the merits is currently pending.
−Removed: Briefing on the merits has not yet occurred in the appellate court.
−Removed: The record was delivered by the trial court to the court of appeal on August 20, 2019.
−Removed: Due to the COVID-19 pandemic, the appellate court has extended the deadline for the Company' to file its opening brief until June 1, 2020.
−Removed: Based on the assessment by management of the numerous legal arguments that can be raised on appeal, together with independent assessments from its trial and appellate counsel, the Company believes that a loss is currently not probable or estimable under ASC 450, "Contingencies," and as of March 25, 2020 , no accrual has been made with regard to the verdict.
−Removed: On March 19, 2020, the Surety from who the Company procured the appeal bond to secure the judgment against the Company in the matter of Janice P.
+Added: The appeal on the merits is currently pending, but has been stayed pending the Parties’ agreement in principle to settle the matter, discussed immediately below.
+Added: On March 19, 2020, the Surety, One Beacon, from whom the Company procured the appeal bond to secure the judgment against the Company in the matter of Janice P.
Handlers-Bryman and Michael D.
1 unchanged sentence
On April 17, 2020, the Company provided to One Beacon a Letter of Credit in the amount of $ 2,651,342 to satisfy the Surety’s collateral demand.
+Added: On July 13, 2020, One Beacon agreed to release its collateral demand and returned the Letter of Credit to the Company.
+Added: Subsequent to June 24, 2020, the Company reached an agreement in principle with the Plaintiffs to resolve the lawsuit for a payment by the Company of $ 2.5 million, which was recorded within operating expenses in the Company’s condensed consolidated statement of income for the thirteen and twenty-six weeks ended June 24, 2020, contingent upon approval by the court of appeal of the terms of the parties’ proposed settlement.
The Company is also involved in various other claims and legal actions that arise in the ordinary course of business.
5 unchanged sentences
These contracts have terms extending through the end of 2024.
−Removed: At March 25, 2020 , the Company’s total estimated commitment to purchase chicken was $19.5 million .
+Added: At June 24, 2020, the Company’s total estimated commitment to purchase chicken was $ 11.1 million.
Contingent Lease Obligations
1 unchanged sentence
These leases have various terms, the latest of which expires in 2036 .
−Removed: As of March 25, 2020 , the potential amount of undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee was $2.9 million .
−Removed: The present value of these potential payments discounted at the Company’s estimated pre-tax cost of debt at March 25, 2020 was $2.5 million .
+Added: As of June 24, 2020, the potential amount of undiscounted payments the Company could be required to make in the event of non-payment by the primary lessee was $ 2.8 million.
+Added: The present value of these potential payments discounted at the Company’s estimated pre-tax cost of debt at June 24, 2020 was $ 2.6 million.
The Company’s franchisees are primarily liable on the leases.
3 unchanged sentences
Employment Agreements
−Removed: Effective March 18, 2020, Hector Munoz, the Company’s Chief Marketing Officer, left the Company to pursue other opportunities.
−Removed: In connection with his departure, the Company and Mr.
−Removed: Munoz entered into a Separation Agreement and General Release.
−Removed: For more information, please see Item 6, Exhibits.
The Company has employment agreements with three of the officers of the Company.
5 unchanged sentences
NET INCOME PER SHARE
−Removed: Basic earnings per share (“EPS”) is calculated using the weighted-average number of shares of common stock outstanding during the thirteen weeks ended March 25, 2020 and March 27, 2019 .
+Added: Basic earnings per share (“EPS”) is calculated using the weighted-average number of shares of common stock outstanding during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019.
Diluted EPS is calculated using the weighted-average number of shares of common stock outstanding and potentially dilutive during the period, using the treasury stock method.
7 unchanged sentences
The Company’s repurchases were executed using open market purchases, including pursuant to Rule 10b5-1 trading plans, and/or through privately negotiated transactions.
−Removed: For the thirteen weeks ended March 27, 2019 , the Company repurchased 255,554 shares of common stock under the 2018 Stock Repurchase Plan, using open market purchases, for total consideration of approximately $3.4 million .
+Added: For the thirteen and twenty-six weeks ended June 26, 2019, the Company repurchased 1,303,282 and 1,558,836 shares of common stock, respectively under the 2018 Stock Repurchase Plan, using open market purchases, for total consideration of approximately $ 14.9 million and $ 18.3 million, respectively.
The common stock repurchased under both the 2018 Stock Repurchase Plan and the 2019 Stock Repurchase Plan was retired upon repurchase.
1 unchanged sentence
Thirteen Weeks Ended
−Removed: March 25, 2020
−Removed: March 27, 2019
−Removed: Weighted-average shares
−Removed: outstanding—basic
−Removed: Weighted-average shares
−Removed: outstanding—diluted
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
+Added: Weighted-average shares outstanding—basic
+Added: Weighted-average shares outstanding—diluted
Net income per share—basic
Net income per share—diluted
−Removed: Anti-dilutive securities not considered in
−Removed: diluted EPS calculation
+Added: Anti-dilutive securities not considered in diluted EPS calculation
Below is a reconciliation of basic and diluted share counts:
Thirteen Weeks Ended
−Removed: March 25, 2020
−Removed: March 27, 2019
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
Weighted-average shares outstanding—basic
14 unchanged sentences
The Company presents sales, net of sales-related taxes and promotional allowances.
−Removed: The Company offers a loyalty rewards program, which awards a customer one point for every $1 spent.
+Added: The Company offers a loyalty rewards program, which awards a customer points for dollars spent.
When 100 points are accumulated a $ 10 reward to be used on future purchases is earned.
4 unchanged sentences
A portion of the transaction price is allocated to loyalty points, if necessary, on a pro-rata basis, based on stand-alone selling price, as determined by menu pricing and loyalty point’s terms.
−Removed: As of March 25, 2020 and December 25, 2019 , the revenue allocated to loyalty points that have not been redeemed are $1.0 million and $1.1 million , respectively, which are reflected in the Company’s accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.
+Added: As of both June 24, 2020 and December 25, 2019, the revenue allocated to loyalty points that have not been redeemed was $ 1.1 million, which is reflected in the Company’s accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.
The Company expects the loyalty points to be redeemed and recognized over a one-year period.
16 unchanged sentences
Both sales-based fees qualify under the royalty constraint exception, and do not require an estimate of future transaction price.
−Removed: Additionally, the Company is utilizing the practical expedient available under Topic 606 regarding disclosure of the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied for sales-based royalties.
+Added: Additionally, the Company is utilizing the practical expedient available under ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”) regarding disclosure of the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied for sales-based royalties.
In certain franchise agreements, the Company offers a discounted renewal to incentivize future renewals after the end of the initial franchise term.
3 unchanged sentences
As the Company is considered the principal in this relationship, payment for the hardware is considered revenue, and is received upon transfer of the goods from the Company to the franchisee.
−Removed: As of March 25, 2020 , there were no performance obligations related to hardware services that were unsatisfied or partially satisfied.
+Added: As of June 24, 2020, there were no performance obligations related to hardware services that were unsatisfied or partially satisfied.
Disaggregated revenue
1 unchanged sentence
Thirteen Weeks Ended
−Removed: March 25, 2020
−Removed: March 27, 2019
+Added: Twenty-Six Weeks Ended
Core Market (1) :
9 unchanged sentences
Total revenue
−Removed: (1) Core Market includes markets with existing company-operated restaurants at the time of the Company's Initial Public Offering ("IPO") on July 28, 2014.
+Added: (1) Core Market includes markets with existing company-operated restaurants at the time of the Company’s Initial Public Offering ("IPO") on July 28, 2014.
(2) Non-Core Market includes markets entered into by the Company subsequent to the IPO date.
1 unchanged sentence
Thirteen Weeks Ended
−Removed: March 25, 2020
−Removed: March 27, 2019
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
Greater Los Angeles area market
1 unchanged sentence
Contract balances
−Removed: The following table provides information about the change in the franchise contract liability balances during the thirteen weeks ended March 25, 2020 and March 27, 2019 (in thousands) :
+Added: The following table provides information about the change in the franchise contract liability balances during the twenty-six weeks ended June 24, 2020 and June 26, 2019 (in thousands) :
December 25, 2019
Revenue recognized - beginning balance
−Removed: March 25, 2020
+Added: June 24, 2020
December 26, 2018
2 unchanged sentences
Revenue recognized - additional contract liability
−Removed: March 27, 2019
+Added: June 26, 2019
The Company’s franchise contract liability includes development fees, initial franchise and license fees, franchise renewal fees, lease subsidies and royalty discounts and is included within other accrued expenses and current liabilities and other noncurrent liabilities within the accompanying condensed consolidated balance sheets.
The Company receives area development fees from franchisees when they execute multi-unit area development agreements.
−Removed: Initial franchise and license fees, or franchise renewal fees, are received from franchisees upon the execution of, or renewal of, a franchise agreement.
+Added: Initial franchise and license fees, or franchise renewal fees, are received from franchisees upon the execution of, or renewal of, a franchise
Revenue is recognized from these agreements as the underlying performance obligation is satisfied, which is over the term of the agreement.
−Removed: The following table illustrates the estimated revenue to be recognized in future periods related to performance obligations under the applicable contracts that are unsatisfied as of March 25, 2020 (in thousands):
+Added: The following table illustrates the estimated revenue to be recognized in future periods related to performance obligations under the applicable contracts that are unsatisfied as of June 24, 2020 (in thousands):
Franchise revenues:
1 unchanged sentence
The Company does not currently incur costs to obtain or fulfill a contract that would be considered contract assets under Topic 606.
−Removed: Adoption of Topic 842 "Leases"
+Added: Adoption of Topic 842 "Leases"
On December 27, 2018, the Company adopted Topic 842, using the effective date method, recognizing and measuring all leases that existed as of December 27, 2018.
The Company recorded a cumulative-effect adjustment as of December 27, 2018.
−Removed: Comparative periods are presented in accordance with ASC Topic 840 and do not include any retrospective adjustments to comparative periods to reflect the adoption of Topic 842.
All leases that either (1) commenced, or (2) were modified or re-measured after December 27, 2018 are accounted for under Topic 842.
4 unchanged sentences
Additionally, the Company has various contracts with vendors that have been determined to contain an embedded lease in accordance with Topic 842.
−Removed: As of March 25, 2020 , the Company had one lease that it had entered into, but had not yet commenced.
+Added: As of June 24, 2020, the Company had no leases that it had entered into, but had not yet commenced.
The Company does not have control of the property until lease commencement.
9 unchanged sentences
Furthermore, there are no residual value guarantees and no restrictions imposed by the lease.
−Removed: During the thirteen weeks ended March 25, 2020 , the Company reassessed the lease terms on three restaurants due to certain triggering events, such as, the addition of significant leasehold improvements, the decision to terminate a lease, or the decision to renew.
−Removed: As a result of the reassessment, an additional $0.3 million of ROU asset and lease liabilities for the thirteen weeks ended March 25, 2020 were recognized and will be amortized over the new lease term.
−Removed: The reassessment did not have any impact on the original lease classification.
+Added: During the thirteen and twenty-six weeks ended June 24, 2020, the Company reassessed the lease terms on four and seven restaurants, respectively, due to certain triggering events, such as the addition of significant leasehold improvements, the decision to terminate a lease, or the decision to renew.
+Added: As a result of the reassessment, an additional $ 1.4 million and $ 1.7 million of ROU asset and lease liabilities for the thirteen and twenty-six weeks ended June 24, 2020, respectively, were recognized and will be amortized over the new lease term.
+Added: During the thirteen and twenty-six weeks ended June 26, 2019, the Company reassessed the lease terms on three restaurants due to the addition of significant leasehold improvements with useful lives that extend past the current lease expiration.
+Added: This resulted in an additional $ 1.2 million of ROU asset and lease liability, which will be recognized over the new lease term.
+Added: The reassessments did not have any impact on the original lease classification.
Additionally, as the Company adopted all practical expedients available under Topic 842, no reallocation between lease and non-lease components was necessary.
4 unchanged sentences
The Company does not have any related party leases.
−Removed: During the first quarter of 2020, the Company determined that the carrying value of ROU assets at certain restaurants was not recoverable.
−Removed: As a result, the Company recorded a $0.5 million impairment expense for the thirteen weeks ended March 25, 2020 .
−Removed: The impairment primarily related to one restaurant in Texas, sold to franchisees in the prior year.
+Added: During the twenty-six weeks ended June 24, 2020, the Company determined that the carrying value of ROU assets at one restaurant was not recoverable.
+Added: As a result, the Company recorded a $ 0.5 million impairment expense for the twenty-six weeks ended June 24, 2020, related to one restaurant in Texas, sold to franchisees in the prior year.
+Added: The Company did no t recognize any impairment related to ROU assets during the thirteen and twenty-six ended June 26, 2019.
Leases of equipment primarily consist of restaurant equipment, copiers and vehicles.
10 unchanged sentences
The following table presents the Company’s total lease cost, disaggregated by underlying asset (in thousands):
−Removed: Thirteen Weeks Ended March 25, 2020
−Removed: Property Leases
−Removed: Equipment Leases
+Added: Thirteen Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
Finance lease cost:
+Added: Amortization of right-of-use assets
Interest on lease liabilities
4 unchanged sentences
Total lease cost
−Removed: The following table presents the Company’s total lease cost on the condensed consolidated statement of income (in thousands):
−Removed: Thirteen Weeks Ended March 25, 2020
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
+Added: Finance lease cost:
+Added: Amortization of right-of-use assets
+Added: Interest on lease liabilities
+Added: Operating lease cost
+Added: Short-term lease cost
+Added: Variable lease cost
+Added: Sublease income
+Added: Total lease cost
+Added: The following table presents the Company’s total lease cost on the condensed consolidated statements of income (in thousands):
+Added: Thirteen Weeks Ended
+Added: Twenty-Six Weeks Ended
+Added: June 24, 2020
+Added: June 26, 2019
+Added: June 24, 2020
+Added: June 26, 2019
Lease cost – Occupancy and other operating expenses
Lease cost – General & administrative
+Added: Lease cost – Depreciation and amortization
Lease cost – Interest expense
1 unchanged sentence
Total lease cost
−Removed: During the thirteen weeks ended March 25, 2020 , the Company had the following cash and non-cash activities associated with its leases (in thousands):
−Removed: Thirteen Weeks Ended March 25, 2020
−Removed: Property Leases
−Removed: Equipment Leases
+Added: During the twenty-six weeks ended June 24, 2020 and June 26, 2019, the Company had the following cash and non-cash activities associated with its leases (in thousands):
+Added: Twenty-Six Weeks Ended June 24, 2020
+Added: Twenty-Six Weeks Ended June 26, 2019
Cash paid for amounts included in the measurement of lease liabilities
5 unchanged sentences
Derecognition of ROU assets due to terminations, impairment or modifications
−Removed: Operating lease ROU assets obtained and liabilities incurred as a result of adoption of ASC 842:
−Removed: Operating lease ROU assets
−Removed: Operating lease liabilities
Other Information
3 unchanged sentences
Weighted-average discount rate—operating leases
−Removed: Information regarding the Company’s minimum future lease obligations as of March 25, 2020 is as follows (in thousands):
+Added: Information regarding the Company’s minimum future lease obligations as of June 24, 2020 is as follows (in thousands):
Operating Leases
24 unchanged sentences
The Company has multiple short-term leases, which have terms of less than 12 months, and thus were excluded from the recognition requirements of Topic 842.
−Removed: The Company has recognized these lease payments in its consolidated statement of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.
+Added: The Company has recognized these lease payments in its consolidated statements of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.
The Company is a lessor for certain property, facilities and equipment owned by the Company and leased to others, principally franchisees, under non-cancelable leases with initial terms ranging from three to 20 years .
4 unchanged sentences
Additionally, there are no related party leases.
−Removed: For both thirteen weeks ended March 25, 2020 and March 27, 2019 , the Company received $0.1 million of lease income from company-owned locations .
+Added: The Company received $ 0.1 million and $ 0.2 million, respectively, of lease income from company-owned locations for the thirteen weeks ended June 24, 2020 and June 26, 2019.
+Added: For each of the twenty-six weeks ended June 24, 2020 and June 26, 2019, the Company received $ 0.3 million of lease income from company-owned locations .
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.