What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-11 · 121 added, 131 removed, 332 unchanged (43% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

July 12, 2020 December 29, 2019

(in thousands, except for share amounts) October 4, 2020 December 29, 2019

Current assets:

2 unchanged sentences

Inventories 24,496 26,424

Income tax receivable 63,066 5,308

Prepaid expenses and other current assets 11,652 21,338

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20,449 and 17,851 shares issued;

15,547 and 12,923 shares outstanding as of July 12, 2020 and December 29, 2019

15,548 and 12,923 shares outstanding as of October 4, 2020 and December 29, 2019

Preferred stock, $ 0.001 par value:

3,000 shares authorized;

no shares issued and outstanding as of July 12, 2020 and December 29, 2019

Treasury stock 4,902 and 4,928 shares, at cost, as of July 12, 2020 and December 29, 2019

no shares issued and outstanding as of October 4, 2020 and December 29, 2019

Treasury stock 4,901 and 4,928 shares, at cost, as of October 4, 2020 and December 29, 2019

( 199,908 ) ( 202,313 )

6 unchanged sentences

See Notes to Condensed Consolidated Financial Statements.

T a b l e o f C o n t e n t s

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except per share amounts)

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 12, 2020 July 14, 2019 July 12, 2020 July 14, 2019

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Twelve Weeks Ended Forty Weeks Ended

(in thousands, except for share amounts) October 4, 2020 October 6, 2019 October 4, 2020 October 6, 2019

Restaurant revenue $ 197,009 $ 289,862 $ 658,587 $ 992,764

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Loss before income taxes ( 26,875 ) ( 7,035 ) ( 241,035 ) ( 21,877 )

Income tax provision (benefit) 3,700 ( 15,986 ) 16,399 ( 16,462 )

Net (loss) income $ ( 56,261 ) $ 981 $ ( 230,559 ) $ 1,620

(Loss) earnings per share:

Income tax benefit ( 20,696 ) ( 5,214 ) ( 4,297 ) ( 21,676 )

Net loss $ ( 6,179 ) $ ( 1,821 ) $ ( 236,738 ) $ ( 201 )

Loss per share:

Basic $ ( 0.40 ) $ ( 0.14 ) $ ( 16.98 ) $ ( 0.02 )

6 unchanged sentences

Other comprehensive income (loss), net of tax 9 ( 262 ) ( 1,121 ) ( 185 )

Total comprehensive (loss) income $ ( 56,244 ) $ 1,387 $ ( 231,689 ) $ 1,697

Total comprehensive loss $ ( 6,170 ) $ ( 2,083 ) $ ( 237,859 ) $ ( 386 )

See Notes to Condensed Consolidated Financial Statements.

T a b l e o f C o n t e n t s

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY

(In thousands)

Common Stock Treasury Stock Accumulated

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Capital Retained

Shares Amount Shares Amount Total

(in thousands) Shares Amount Shares Amount Total

Balance, December 29, 2019 17,851 $ 18 4,928 $ ( 202,313 ) $ 213,922 $ ( 4,373 ) $ 353,266 $ 360,520

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Balance, July 12, 2020 20,449 $ 20 4,902 $ ( 199,945 ) $ 240,812 $ ( 5,503 ) $ 122,707 $ 158,091

Issuance of common stock, $0.001 par value, net of stock issuance costs — — — — ( 7 ) — — ( 7 )

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 1 ) 37 ( 73 ) — — ( 36 )

Non-cash stock compensation — — — — 1,316 — — 1,316

Net loss — — — — — — ( 6,179 ) ( 6,179 )

Other comprehensive income — — — — — 9 — 9

Balance, October 4, 2020 20,449 $ 20 4,901 $ ( 199,908 ) $ 242,048 $ ( 5,494 ) $ 116,528 $ 153,194

See Notes to Condensed Consolidated Financial Statements.

T a b l e o f C o n t e n t s

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY

(In thousands)

Common Stock Treasury Stock Accumulated

1 unchanged sentence

Capital Retained

Shares Amount Shares Amount Total

(in thousands) Shares Amount Shares Amount Total

Balance, December 30, 2018 17,851 $ 18 4,880 $ ( 201,505 ) $ 212,752 $ ( 4,801 ) $ 376,341 $ 382,805

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Balance July 14, 2019 17,851 $ 18 4,866 $ ( 200,428 ) $ 212,059 $ ( 4,724 ) $ 362,789 $ 369,714

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 1 ) 37 ( 44 ) — — ( 7 )

Acquisition of treasury stock — — 29 ( 959 ) — — — ( 959 )

Non-cash stock compensation — — — — 1,126 — — 1,126

Net loss — — — — — — ( 1,821 ) ( 1,821 )

Other comprehensive loss — — — — — ( 262 ) — ( 262 )

Balance, October 6, 2019 17,851 $ 18 4,894 $ ( 201,350 ) $ 213,141 $ ( 4,986 ) $ 360,968 367,791

See Notes to Condensed Consolidated Financial Statements.

T a b l e o f C o n t e n t s

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Twenty-Eight Weeks Ended

July 12, 2020 July 14, 2019

Forty Weeks Ended

(in thousands) October 4, 2020 October 6, 2019

Cash flows from operating activities:

Net (loss) income $ ( 230,559 ) $ 1,620

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Net loss $ ( 236,738 ) $ ( 201 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization 68,053 71,087

7 unchanged sentences

Accounts receivable 13,250 14,059

Income tax receivable ( 57,756 ) 941

Prepaid expenses and other current assets 11,229 1,426

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See Notes to Condensed Consolidated Financial Statements.

T a b l e o f C o n t e n t s

RED ROBIN GOURMET BURGERS, INC.

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Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries ("Red Robin" or the "Company"), primarily operates, franchises, and develops full-service restaurants in North America.

As of July 12, 2020, the Company owned and operated 450 restaurants located in 38 states.

The Company also had 102 franchised full-service restaurants in 16 states and one Canadian province as of July 12, 2020.

As of October 4, 2020, the Company owned and operated 444 restaurants located in 38 states.

The Company also had 103 franchised full-service restaurants in 16 states and one Canadian province.

The Company operates its business as one operating and one reportable segment.

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Current and Prior Fiscal Quarters:

Third Quarter 2020 October 4, 2020 12

Third Quarter 2019 October 6, 2019 12

Second Quarter 2020 July 12, 2020 12

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Certain amounts presented in prior periods have been reclassified to conform with the current period presentation.

For the twenty-eight weeks ended July 14, 2019, the Company reclassified the following within net cash (used in) provided by operating activities on the condensed consolidated statements of cash flows:

$ 14.1 million from Non-cash other charges to Goodwill and restaurant asset impairment and $ 1.5 million from Other operating assets and liabilities, net to Lease assets, net of liabilities.

Going Concern - Substantial Doubt Resolved

As required by ASC Topic 205-40, Presentation of Financial Statements - Going Concern , management has assessed the Company's ability to continue as a going concern for one year from the financial statement issuance date for the fiscal quarter ended July 12, 2020.

On May 29, 2020, the Company obtained the First Amendment to the Credit Agreement and Waiver (the "Amendment") to the Company's Amended and Restated Credit Agreement (the "Credit Facility").

The Amendment provided relief from our existing events of default under the Credit Facility and provided covenant relief subject to the successful completion of a $ 25 million capital raise on or before November 13, 2020, as further disclosed in Note 8, Borrowings .

As of the issuance date of our first quarter 2020 financial statements, the Company disclosed, as required under applicable accounting standards, that substantial doubt existed surrounding the Company's ability to meet its obligations within one year of the issuance date of the first quarter Form 10-Q because the capital raise was outside of management's control at the time.

On June 17, 2020, the Company issued 2.6 million shares of common stock raising proceeds of $ 28.7 million, net of stock issuance costs, through its at-the-market equity offering.

The equity raise satisfied the terms of the Amendment, and management expects to remain in compliance with the Credit Facility covenants for at least twelve months from the issuance of the July 12, 2020 Form 10-Q.

Management has concluded there is not a substantial doubt regarding the Company’s ability to continue as a going concern.

As of December 29, 2019, the Company reclassified $ 5.3 million from Prepaid expenses and other current assets to Income tax receivable on the condensed consolidated balance sheets.

For the forty weeks ended October 6, 2019, the Company reclassified the following within net cash (used in) provided by operating activities on the condensed consolidated statements of cash flows:

$ 14.1 million from Non-cash other charges to Goodwill and restaurant asset impairment, $ 0.9 million from Prepaid expenses and other current assets to Income tax receivable, and $ 0.3 million from Other operating assets and liabilities, net to Lease assets, net of liabilities.

Recent Accounting Pronouncements

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COVID-19 Pandemic

Due to the novel coronavirus ("COVID-19") pandemic, we have navigated and continue to navigate an unprecedented time for our business and industry as we collectively work to maintain the stable operation of our business.

During the second quarter of 2020, the Company began re-opening dining rooms at Company-owned restaurants in accordance with local limits with re-opened restaurants operating at no higher than 50% occupant capacity.

Re-opening dining rooms was executed with the health, safety, and well-being of Red Robin's Team Members, Guests, and communities in mind, and strict adherence to US Centers for Disease Control ("CDC"), state, and local guidelines as our top priority.

The COVID-19 pandemic has had a material adverse effect on our business, and we expect the impact from COVID-19 will continue to negatively affect our business through the remainder of fiscal year 2020.

Due to the novel coronavirus ("COVID-19") pandemic, we continue to navigate an unprecedented time for our business and industry.

During the third quarter 2020, the Company continued to expand outdoor seating capacity at reopened Company-owned restaurants in accordance with local limits.

Reopening dining rooms and expanding seating capacity was executed with the health, safety, and well-being of Red Robin's Team Members, Guests, and communities in mind, and strict adherence to US Centers for Disease Control and Prevention, state, and local guidelines as our top priority.

The COVID-19 pandemic has had a material adverse effect on our business, and we expect the impact from COVID-19 will continue to negatively affect our business.

Franchise Revenue

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Abated royalty payments and advertising contributions will not be collected by the Company.

The Company began charging and collecting partial franchise royalty payments and advertising contributions during the latter half of the second fiscal quarter of 2020.

The Company began charging and collecting partial franchise royalty payments and advertising contributions during the latter half of the second fiscal quarter of 2020, which continued throughout the Company's third fiscal quarter.

As of the end of the third quarter of 2020, the Company had resumed charging full royalty and advertising contributions to our franchisees.

Franchised restaurants operate under contractual arrangements with the Company, and the payments specified in the franchise contracts are accounted for under ASC Topic 606, Revenue from Contracts with Customers .

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We are engaging in ongoing constructive discussions with landlords regarding the potential restructuring of lease payments and rent concessions.

As of July 12, 2020, the Company has contractually negotiated rent concessions on certain leases.

As of October 4, 2020, the Company has contractually negotiated rent concessions with many of its landlords, with negotiations complete on approximately 50 % of its leases.

The types of rent concessions the Company has negotiated include early termination, early renewal, rent deferral, and rent abatement.

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Additionally, the classification of the leases was not reassessed.

The Company recorded an immaterial remeasurement to the lease liability and right-of-use asset resulting from contractual rent concessions under the FASB relief during the second fiscal quarter of 2020.

The Company recorded a $ 2.2 million remeasurement to increase the lease liability and right-of-use asset resulting from contractual rent concessions under the FASB relief during the third fiscal quarter of 2020.

For contractual rent concessions that substantially changed the total cash flows of the lease and did not qualify for the FASB relief, we applied the modification framework in accordance with ASC Topic 842 , Leases .

The Company reassessed lease classification for rent concessions that did not qualify for the FASB relief, and it was concluded one lease changed from finance to operating and two leases changed from operating to finance.

Based on updated discount rates, a $ 21.7 million remeasurement was recorded to increase the lease liability, a $ 21.7 million adjustment was recorded to increase the right-of-use asset, and an immaterial loss was recorded in Occupancy on the condensed consolidated statements of operations and comprehensive (loss) income.

Contractual rent concessions granted to the Company did not grant the right to use additional assets not included in the original lease contracts, so no separate contracts were accounted for as part of the rent concession modifications.

We performed a goodwill impairment analysis during the first quarter of 2020 resulting in full impairment of our goodwill balance totaling $ 95.4 million.

The goodwill impairment is included in Other charges on the condensed consolidated statements of operations and comprehensive (loss) income for the twenty-eight weeks ended July 12, 2020 and was measured as the amount by which the carrying amount of the reporting unit, including goodwill, exceeded its fair value.

The Company reassessed lease classification for rent concessions that did not qualify for the FASB relief.

During the third fiscal quarter of 2020, it was concluded no leases changed classification between operating and finance.

Based on updated discount rates, a $ 10.1 million remeasurement was recorded to increase the lease liability and a $ 9.9 million adjustment, net of broker's fees, was recorded to increase the right-of-use asset during the third fiscal quarter of 2020.

Contractual rent concessions granted to the Company during the third fiscal quarter of 2020 did not grant the right to use additional assets not included in the original lease contracts, so no separate contracts were accounted for as part of the rent concession modifications.

Restaurant Assets

During the twelve weeks ended July 12, 2020, the Company recognized $ 5.3 million of impairment related to restaurant assets included in Other charges on the condensed consolidated statements of operations and comprehensive (loss) income resulting from the continuing and projected future results of 6 Company-owned restaurants.

Restaurant asset impairment of $ 2.3 million was related to 4 permanently closed Company-owned restaurants and included in Restaurant closure and refranchising costs in Note 7, Other Charges .

Additional restaurant asset impairment was recognized during the twelve weeks ended July 12, 2020 due to changes in management's forecast.

Although current fiscal year to date results continue to align with management's forecast, the increase in reported COVID-19 cases across the United States and factors associated with the pandemic have changed management's expectation on the timing of the Company's recovery and projected results in future fiscal periods at certain restaurants.

If reported COVID-19 cases continue to increase or other factors associated with the pandemic continue to develop, management's forecast could change in future periods requiring additional restaurant asset impairment.

The Company recognized $ 15.5 million of impairment related to restaurant assets during the first quarter of 2020 resulting from the continuing and projected future results of 24 Company-owned restaurants.

The restaurant asset impairment is included in Other charges on the condensed consolidated statements of operations and comprehensive (loss) income for the twenty-eight weeks ended July 12, 2020.

Recoverability of restaurant assets, including restaurant sites, leasehold improvements, information technology systems, right-of-use assets, amortizable intangible assets, and other fixed assets, to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets.

Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant level.

Each restaurant's past and present operating performance was reviewed in combination with projected future results primarily through projected undiscounted cash flows that included management's current expectation of future financial impacts from COVID-19.

If the restaurant assets were determined to be impaired through comparison of the assets carrying value to its undiscounted cash flows, the Company compared the carrying amount of each restaurant's assets to its fair value as estimated by management to calculate the impairment amount.

The fair value of restaurant assets is generally determined using a discounted cash flow projection model, which is based on significant inputs not observed in the market and represents a level 3 fair value measurement.

In certain cases, management uses other market information, when available, to estimate the fair value of a restaurant's assets.

The restaurant asset impairment charges represent the excess of the carrying amount over the estimated fair value of the restaurant assets calculated using a discounted cash flow projection model.

The March 19, 2020 passage of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") created an opportunity for the Company to carry back 2019 and 2020 projected net operating losses ("NOL's").

As a result, $ 35 million of federal and state tax receivables are recorded in Prepaid expenses and other current assets on the condensed consolidated balance sheets as of July 12, 2020 and are expected to generate projected cash tax refunds in the range of $ 14 million to $ 17 million within the next 12 months.

The remaining receivables will be carried forward as allowed under applicable taxing jurisdictions.

As a result of these projected NOL carrybacks, approximately $ 58 million of the previously utilized FICA tip tax credits will be reinstated.

As of July 12, 2020, the existing $ 79 million FICA tip credit carryforwards will be utilized based on projected future taxable income, however they are anticipated to be replaced by originating FICA tip credits that are not projected to be utilized in the carry forward period.

Therefore, a $ 79 million valuation allowance has been established for the FICA tip credit carryforwards.

$ 27 million of the valuation allowance was recognized during the twelve weeks ended July 12, 2020.

To the extent future actual taxable income exceeds the current projections, the FICA tip credit carryforwards may become realizable.

The Company's $ 90 million deferred tax assets are recorded net of the $ 79 million valuation allowance in Other assets, net on the condensed consolidated balance sheets as of July 12, 2020.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Management considers the future reversals of existing deferred tax liabilities and projected taxable income, including whether future originating deductible temporary differences are likely to be realized.

During the twelve weeks ended October 4, 2020, the Company recognized $ 3.3 million of impairment related to assets at two permanently closed Company-owned restaurants.

These impairment charges were included in Restaurant closure and refranchising costs in Other charges (gains) on the condensed consolidated statements of operation and comprehensive loss.

The March 19, 2020 passage of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") created an opportunity for the Company to carry back 2019 and 2020 net operating losses ("NOL's").

Upon filing of its 2019 federal tax return during the third quarter of 2020 and gaining further interpretations and expert technical guidance surrounding the application of the CARES Act, the Company recorded an additional $ 42.8 million in federal income tax receivables to Income tax receivable on the condensed consolidated balance sheets and recorded a related income tax benefit to the condensed consolidated statements of operation and comprehensive loss.

After consideration for the adjustments of carrybacks due to the CARES Act, we have a combined federal and state valuation allowance of $ 67.1 million, which was recorded to Other assets, net on the condensed consolidated balance sheets.

Subsequent to our third quarter balance sheet date, the Company received $ 49.4 million in cash tax refunds, including interest, and currently expects to receive between $ 12 million to $ 15 million of additional cash tax refunds within the next 12 months.

A portion of this refund was used to make a $ 42 million repayment on the Company's credit facility on October 30, 2020.

As of October 4, 2020, the Company had $ 9.7 million of net operating loss carryforwards for state income tax purposes that arose from the 2019 and 2020 tax years.

The Company reclassified this amount from state tax current receivable which was recorded in Prepaid expenses and other current assets as of our second fiscal quarter of 2020, to state deferred tax asset which is recorded to Other Assets, net on the condensed consolidated balance sheets as a result of the CARES Act legislation and in conjunction with the filing of our state tax returns during our third fiscal quarter.

Of these state net operating loss carryforwards, approximately $ 0.2 million may expire, if unused, in 2024.

The remaining state net operating losses approximating $ 9.5 million may expire, if unused, through 2039 or in some cases will be retained for an indefinite period.

The utilization of net operating loss carryforwards may be limited to 80% of taxable income in any given year.

As states' CARES legislation continues to evolve these estimates may change.

The total $ 67.1 million valuation allowance includes the $ 9.7 million state NOL's recorded as of October 4, 2020.

Disaggregation of revenue

In the following table, revenue is disaggregated by type of good or service (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 12, 2020 July 14, 2019 July 12, 2020 July 14, 2019

Twelve Weeks Ended Forty Weeks Ended

October 4, 2020 October 6, 2019 October 4, 2020 October 6, 2019

Restaurant revenue $ 197,009 $ 289,862 $ 658,587 $ 992,764

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Components of Unearned revenue in the accompanying condensed consolidated balance sheets are as follows (in thousands):

July 12, 2020 December 29, 2019

October 4, 2020 December 29, 2019

Unearned gift card revenue $ 31,514 $ 43,544

Deferred loyalty revenue $ 11,050 $ 10,679

Revenue recognized in the condensed consolidated statements of operations and comprehensive (loss) income for the redemption of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):

Twenty-Eight Weeks Ended

July 12, 2020 July 14, 2019

Revenue recognized in the condensed consolidated statements of operations and comprehensive loss for the redemption of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):

Forty Weeks Ended

October 4, 2020 October 6, 2019

Gift card revenue $ 16,191 $ 19,400

Leases are included in right-of-use assets, net, current portion of lease obligations, and long-term portion of lease liabilities on our condensed consolidated balance sheet as of July 12, 2020 and December 29, 2019 as follows (in thousands):

July 12, 2020 Finance Operating Total

Leases are included in right-of-use assets, net, current portion of lease obligations, and long-term portion of lease liabilities on our condensed consolidated balance sheet as of October 4, 2020 and December 29, 2019 as follows (in thousands):

October 4, 2020 Finance Operating Total

Right of use assets, net $ 11,463 $ 404,485 $ 415,948

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The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, are included in Occupancy on our condensed consolidated statement of operations as follows (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 12, 2020 July 14, 2019 July 12, 2020 July 14, 2019

Twelve Weeks Ended Forty Weeks Ended

October 4, 2020 October 6, 2019 October 4, 2020 October 6, 2019

Operating lease cost $ 14,992 $ 17,298 $ 51,931 $ 58,412

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Total $ 21,271 $ 24,266 $ 72,165 $ 81,647

Maturities of our lease liabilities as of July 12, 2020 were as follows (in thousands):

Maturities of our lease liabilities as of October 4, 2020 were as follows (in thousands):

Finance Leases Operating Leases Total

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Supplemental cash flow information related to leases is as follows (in thousands, except other information):

Twenty-Eight Weeks Ended

July 12, 2020 July 14, 2019

Forty Weeks Ended

October 4, 2020 October 6, 2019

Cash flows from operating activities

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Weighted average discount rate 7.12 % 7.33 %

Other information related to financing leases as follows:

Other information related to finance leases as follows:

Weighted average remaining lease term 11.93 years 11.63 years

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Goodwill and Intangible Assets

The following table presents goodwill as of July 12, 2020 and December 29, 2019 (in thousands):

The following table presents goodwill as of October 4, 2020 and December 29, 2019 (in thousands):

Balance, December 29, 2019 $ 96,397

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Goodwill impairment (1)

Balance, July 12, 2020 $ —

Balance, October 4, 2020 $ —

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(1) See Note 2, COVID-19 Pandemic , for further discussion of goodwill impairment recognized during the twenty-eight weeks ended July 12, 2020.

The following table presents intangible assets as of July 12, 2020 and December 29, 2019 (in thousands):

July 12, 2020 December 29, 2019

(1) See Note 2, COVID-19 Pandemic , for further discussion of goodwill impairment recognized during the forty weeks ended October 4, 2020.

The following table presents intangible assets as of October 4, 2020 and December 29, 2019 (in thousands):

October 4, 2020 December 29, 2019

Amount Accumulated

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Intangible assets, net $ 81,006 $ ( 55,566 ) $ 25,440 $ 84,534 $ ( 54,559 ) $ 29,975

(Loss) Earnings Per Share

Basic (loss) earnings per share amounts are calculated by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the period.

Diluted (loss) earnings per share amounts are calculated based upon the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period.

Loss Per Share

Basic loss per share amounts are calculated by dividing net loss by the weighted-average number of shares of common stock outstanding during the period.

Diluted loss per share amounts are calculated based upon the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period.

Potentially dilutive shares are excluded from the computation in periods in which they have an anti-dilutive effect.

Diluted (loss) earnings per share reflect the potential dilution that could occur if holders of options exercised their options into common stock.

Diluted loss per share reflects the potential dilution that could occur if holders of options exercised their options into common stock.

The Company uses the treasury stock method to calculate the effect of outstanding stock options.

Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 12, 2020 July 14, 2019 July 12, 2020 July 14, 2019

Twelve Weeks Ended Forty Weeks Ended

October 4, 2020 October 6, 2019 October 4, 2020 October 6, 2019

Basic weighted average shares outstanding 15,540 12,959 13,945 12,967

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Diluted weighted average shares outstanding 15,540 12,959 13,945 12,967

Awards excluded due to anti-dilutive effect on diluted earnings per share 865 378 317 457

Other Charges

Other charges consist of the following (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 12, 2020 July 14, 2019 July 12, 2020 July 14, 2019

Awards excluded due to anti-dilutive effect on diluted loss per share 895 358 480 405

Other Charges (Gains)

Other charges (gains) consist of the following (in thousands):

Twelve Weeks Ended Forty Weeks Ended

October 4, 2020 October 6, 2019 October 4, 2020 October 6, 2019

Goodwill impairment $ — $ — $ 95,414 $ —

Restaurant asset impairment — — 20,779 14,064

Restaurant closure and refranchising costs 7,602 1,001 9,008 1,305

Restaurant closure and refranchising costs (gains) 3,982 ( 3,922 ) 12,990 ( 2,617 )

Litigation contingencies — — 4,500 —

Board and stockholder matter costs 4 1,311 2,453 2,463

Severance and executive transition — 370 881 2,364

COVID-19 related costs 430 — 1,279 —

Severance and executive transition — 594 881 2,958

Executive retention — 260 — 620

Other charges $ 14,501 $ 16,847 $ 133,880 $ 19,245

The Company recognized non-cash impairment charges related to goodwill and assets at 10 and 34 Company-owned restaurants during the twelve and twenty-eight weeks ended July 14, 2020 resulting from quantitative impairment analyses;

see Note 2, COVID-19 Pandemic, for further discussion.

Non-cash impairment charges resulting from restaurant closures are included within Restaurant closure and refranchising costs.

Restaurant closure and refranchising costs include the restaurant operating costs of the 35 Company-owned restaurants that remained temporarily closed due to the COVID-19 pandemic.

Other charges (gains) $ 4,416 $ ( 1,757 ) $ 138,296 $ 17,488

We performed a goodwill impairment analysis during the first quarter of 2020 resulting in full impairment of our goodwill balance.

The goodwill impairment was measured as the amount by which the carrying amount of the reporting unit, including goodwill, exceeded its fair value.

The Company recognized non-cash impairment charges related to restaurant assets at 30 and 29 Company-owned restaurants during the forty weeks ended October 4, 2020 and October 6, 2019 resulting from quantitative impairment analyses.

Additionally, the Company recognized non-cash impairment charges of $ 3.3 million and $ 5.7 million resulting from two and six restaurant closures during the twelve and forty weeks ended October 4, 2020 included within Restaurant closure and refranchising costs.

Restaurant closure and refranchising costs (gains) include the restaurant operating costs of the Company-owned restaurants that remained temporarily closed due to the COVID-19 pandemic.

Gains are driven by early lease terminations on previously closed restaurants.

Litigation contingencies include legal settlement costs related to two class action employment cases.

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COVID-19 related costs include the costs of purchasing personal protective equipment for restaurant Team Members and Guests and emergency sick pay provided to restaurant Team Members during the pandemic.

Total borrowings as of July 12, 2020 and December 29, 2019 were $ 207.5 million and $ 206.9 million.

As of July 12, 2020, the current portion of long-term borrowings was $ 9.7 million;

Total borrowings as of October 4, 2020 and December 29, 2019 were $ 216.1 million and $ 206.9 million.

As of October 4, 2020, the current portion of long-term borrowings was $ 9.7 million;

no borrowings as of December 29, 2019 were classified as current.

On January 10, 2020, the Company replaced its prior credit facility with a new Amended and Restated Credit Agreement (the "Credit Facility") which provides for a $ 161.5 million revolving line of credit and a $ 138.5 million term loan, which requires quarterly principal payments at a rate of 7.0 % per annum of the original principal balance, for a total borrowing capacity of $ 300 million.

Borrowings under the Credit Facility are subject to interest rates based on the London Interbank Offered Rate ("LIBOR").

The publication of LIBOR is expected to discontinue in December 2021, however, we anticipate an amended credit agreement will be executed at the new applicable interest rate.

The Credit Facility will mature on January 10, 2025.

On May 29, 2020, the Company entered into the First Amendment to the Credit Agreement and Waiver (the "Amendment") which set forth the following:

increased pricing under the Credit Facility, waiver of the lease adjusted leverage covenant ratio ("LALR ratio") and fixed charge coverage covenant ratio ("FCC ratio") for the remainder of fiscal year 2020, adjustments allowable during the first three fiscal quarters of 2021 to the LALR ratio, including increasing the maximum LALR ratio permitted and allowing the use of a seasonally adjusted annualized consolidated EBITDA in the LALR ratio calculation, and to the FCC ratio, including only being calculated for applicable periods since the beginning of 2021, and added various other additional covenant requirements.

The covenant relief in the Amendment was contingent on the Company raising capital of at least $ 25 million.

As a result of the Amendment, the Company repaid $ 59 million on the revolving line of credit such that the amount of the Company's consolidated cash on hand did not exceed $ 30 million as of the Amendment Effective Date;

paid certain customary amendment fees to lenders and advisors totaling approximately $ 1.9 million, which were capitalized as deferred loan fees and will be amortized over the remaining term of the Credit Facility;

and issued 2.6 million shares of common stock raising proceeds of $ 28.7 million, net of stock issuance costs, which were used to pay down the revolving line of credit as required by the Amendment.

As of July 12, 2020, the Company had outstanding borrowings under the Credit Facility of $ 206.6 million, in addition to amounts issued under letters of credit of $ 7.5 million.

As of October 4, 2020, the Company had outstanding borrowings under its credit facility of $ 215.2 million, in addition to amounts issued under letters of credit of $ 7.9 million.

The amounts issued under letters of credit reduce the amount available under the facility but were not recorded as debt.

As of December 29, 2019, the Company had outstanding borrowings under the prior credit facility of $ 206 million, in addition to amounts issued under letters of credit of $ 7.5 million.

Loan origination costs associated with the Credit Facility are included as deferred costs in Other assets, net in the accompanying condensed consolidated balance sheets.

Unamortized debt issuance costs were $ 3.7 million and $ 1.0 million as of July 12, 2020 and December 29, 2019.

Loan origination costs associated with the Company's credit facility are included as deferred costs in Other assets, net in the accompanying condensed consolidated balance sheets.

Unamortized debt issuance costs were $ 3.5 million and $ 1 million as of October 4, 2020 and December 29, 2019.

Fair Value Measurements

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The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable, and current accrued expenses and other liabilities approximate fair value due to the short term nature or maturity of the instruments.

The following tables present the Company's assets measured at fair value on a recurring basis included in Other assets, net on the accompanying condensed consolidated balance sheets as of July 12, 2020 and December 29, 2019 (in thousands):

July 12, 2020 Level 1 Level 2 Level 3

The following tables present the Company's assets measured at fair value on a recurring basis included in Other assets, net on the accompanying condensed consolidated balance sheets as of October 4, 2020 and December 29, 2019 (in thousands):

October 4, 2020 Level 1 Level 2 Level 3

Investments in rabbi trust $ 6,232 $ 6,232 $ — $ —

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on the condensed consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, goodwill, and other intangible assets.

These assets are measured at fair value if determined to be impaired.

As of July 12, 2020, the Company measured non-financial assets for impairment using continuing and projected future cash flows, as discussed in Note 2, COVID-19 Pandemic , which were based on significant inputs not observable in the market and thus represented a level 3 fair value measurement.

The Company has measured non-financial assets for impairment using continuing and projected future cash flows, which were based on significant inputs not observable in the market and thus represented a level 3 fair value measurement.

Based on our restaurant asset impairment analyses during fiscal year 2020, we impaired long-lived assets at 36 Company-owned restaurants with carrying values of $ 61.4 million.

We determined the fair value of these long-lived restaurant assets to be $ 34.9 million.

See Note 2, COVID-19 Pandemic , for discussion of the first quarter 2020 nonrecurring fair value measurement of goodwill and related impairment charges.

During fiscal year 2019, we impaired long-lived assets at 29 Company-owned restaurants with carrying values of $ 17.3 million.

We determined the fair value of these long-lived restaurant assets to be $ 2.2 million.

Disclosures of Fair Value of Other Assets and Liabilities

The Company's liability under its credit facility is carried at historical cost in the accompanying condensed consolidated balance sheets.

Due to market interest rates decreasing during the second fiscal quarter of 2020, the Company determined the carrying value of the liability under its Credit Facility did not approximate fair value.

The carrying value and fair value of the Credit Facility as of July 12, 2020 were $ 206.6 million and $ 217.6 million.

Due to market interest rates decreasing during fiscal year 2020, the Company determined the carrying value of the liability under its credit facility did not approximate fair value.

The carrying value and fair value of the credit facility as of October 4, 2020 were $ 215.2 million and $ 218.6 million.

As of December 29, 2019, the carrying value of the credit facility approximated fair value as the interest rate on the instrument approximated current market rates.

19 unchanged sentences

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.

What changed 10-Q

Item 1. Financial Statements