What changed in this filing

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Item 1. Financial Statements

2021-05-25 compared with 2020-11-05 · 124 added, 185 removed, 268 unchanged (54% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in thousands, except for per share amounts) April 18, 2021 December 27, 2020

Current assets:

7 unchanged sentences

Right of use assets, net 427,182 425,573

Goodwill — 96,397

Intangible assets, net 23,741 24,714

14 unchanged sentences

Total liabilities 838,851 854,026

Commitments and contingencies (see note 9)

Stockholders ' equity:

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45,000 shares authorized;

20,449 and 17,851 shares issued;

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

20,449 shares issued;

15,622 and 15,548 shares outstanding as of April 18, 2021 and December 27, 2020

Preferred stock, $ 0.001 par value:

3,000 shares authorized;

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

no shares issued and outstanding as of April 18, 2021 and December 27, 2020

Treasury stock 4,827 and 4,901 shares, at cost, as of April 18, 2021 and December 27, 2020

( 196,883 ) ( 199,908 )

Paid-in capital 240,647 243,407

Accumulated other comprehensive loss, net of tax ( 5,494 ) ( 4,373 )

Accumulated other comprehensive income (loss), net of tax 17 ( 4 )

Retained earnings 68,485 77,198

3 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

Twelve Weeks Ended Forty Weeks Ended

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

Sixteen Weeks Ended

(in thousands, except for per share amounts) April 18, 2021 April 19, 2020

Restaurant revenue $ 318,677 $ 301,434

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Loss before income taxes ( 8,661 ) ( 161,599 )

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

Income tax provision 52 12,699

Net loss $ ( 8,713 ) $ ( 174,298 )

10 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.

2 unchanged sentences

Comprehensive

(Loss) Income,

Capital Retained

2 unchanged sentences

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 74 ) 3,025 ( 3,640 ) — — ( 615 )

Acquisition of treasury stock — — 72 ( 1,635 ) — — — ( 1,635 )

Non-cash stock compensation — — — — 880 — — 880

Net loss — — — — — — ( 8,713 ) ( 8,713 )

Other comprehensive loss — — — — — ( 1,147 ) — ( 1,147 )

Balance, April 19, 2020 17,851 $ 18 4,961 $ ( 202,343 ) $ 213,246 $ ( 5,520 ) $ 178,968 $ 184,369

Issuance of common stock, $ 0.001 par value, net of stock issuance costs

2,598 2 — — 28,723 — — 28,725

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 59 ) 2,398 ( 2,228 ) — — 170

Non-cash stock compensation — — — — 1,071 — — 1,071

Net loss — — — — — — ( 56,261 ) ( 56,261 )

Other comprehensive income — — — — — 21 — 21

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

Balance, April 18, 2021 20,449 $ 20 4,827 $ ( 196,883 ) $ 240,647 $ 17 $ 68,485 $ 112,286

Common Stock Treasury Stock Accumulated

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Non-cash stock compensation — — — — 712 — — 712

Net income — — — — — — 639 639

Other comprehensive loss — — — — — ( 329 ) — ( 329 )

Topic 842 transition impairment, net of tax — — — — — — ( 15,172 ) ( 15,172 )

Balance, April 21, 2019 17,851 $ 18 4,879 $ ( 201,135 ) $ 212,025 $ ( 5,130 ) $ 361,808 $ 367,586

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 30 ) 1,208 ( 907 ) — — 301

Acquisition of treasury stock — — 17 ( 501 ) — — — ( 501 )

Non-cash stock compensation — — — — 941 — — 941

Net income — — — — — — 981 981

Other comprehensive income — — — — — 406 — 406

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 — — — — — — ( 174,298 ) ( 174,298 )

Other comprehensive loss — — — — — ( 1,147 ) — ( 1,147 )

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

Balance, April 19, 2020 17,851 $ 18 4,961 $ ( 202,343 ) $ 213,246 $ ( 5,520 ) $ 178,968 $ 184,369

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

Forty Weeks Ended

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

Sixteen Weeks Ended

(in thousands) April 18, 2021 April 19, 2020

Cash flows from operating activities:

5 unchanged sentences

Non-cash other charges 516 808

Deferred income tax provision (benefit) 52,439 ( 27,477 )

Deferred income tax provision — 21,152

Stock-based compensation expense 880 706

3 unchanged sentences

Income tax receivable 510 ( 6,194 )

Inventories ( 41 ) 1,484

Prepaid expenses and other current assets 975 2,050

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Debt issuance costs ( 616 ) ( 1,040 )

Proceeds from issuance of common stock, net of stock issuance costs 28,945 —

Proceeds from exercise of stock options and employee stock purchase plan 245 419

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Supplemental disclosure of cash flow information

Income taxes (refund received) paid $ ( 2,391 ) $ 3,140

Income tax refunds received, net $ ( 473 ) $ ( 11 )

Interest paid, net of amounts capitalized $ 3,182 $ 2,708

Change in construction related payables $ 462 $ 3,902

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

As of April 18, 2021, the Company owned and operated 440 restaurants located in 38 states.

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

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The Condensed Consolidated Balance Sheet as of December 27, 2020 has been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required for audited annual financial statements.

For further information, please refer to and read these interim condensed consolidated financial statements in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2019, filed with the SEC on February 25, 2020.

For further information, please refer to and read these interim Condensed Consolidated Financial Statements in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 27, 2020 filed with the SEC on March 3, 2021.

Our current and prior year periods, period end dates, and number of weeks included in the period are summarized in the table below:

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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

Second Quarter 2019 July 14, 2019 12

First Quarter 2021 April 18, 2021 16

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Reclassifications

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

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.

Certain amounts presented have been reclassified within the April 19, 2020 Condensed Consolidated Statement of Cash Flows to conform with the current period presentation, including prior year reclassifications from Other, net to Gift card breakage within Cash flows provided by (used in) operating activities, and from Prepaid expenses and other current assets to Income tax receivable within Changes in operating assets and liabilities.

The reclassifications had no effect on the Company’s cash flows from operations.

Recent Accounting Pronouncements

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This guidance is effective for annual and interim reporting periods beginning after December 15, 2020, and early adoption is permitted.

We adopted Topic 740 during the first quarter of fiscal year 2021, noting it did not have a material impact to the Company's Condensed Consolidated Financial Statements upon adoption.

Reference Rate Reform

In March 2020, FASB issued Update 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This update provides temporary optional expedients to applying the reference rate reform guidance to contracts that reference LIBOR or another reference rate expected to be discontinued.

Under this update, contract modifications resulting in a new reference rate may be accounted for as a continuation of the existing contract.

This guidance is effective upon issuance of the update and applies to contract modifications made through December 31, 2022.

We are currently evaluating the full impact this guidance will have on our consolidated financial statements.

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COVID-19 Pandemic

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

In response to COVID-19's effect on our franchise operations, we temporarily abated franchise royalty payments and advertising contributions effective March 20, 2020.

During periods of abated payments, franchise revenue was not recognized or collected from our franchisees.

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, 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 .

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

The COVID-19 pandemic has had a material adverse effect on our business;

with approved vaccines being distributed and administered, we expect our restaurants’ dining room capacity to continue to increase as public health conditions improve and restrictions are eased.

The extent of the reopening process, along with the potential impact of the COVID-19 pandemic on consumer spending behavior, will determine the continued significance of the impact of the COVID-19 pandemic to our operating results and financial position.

In response to the impact of COVID-19 on our operations, beginning April 1, 2020 the Company stopped making full lease payments under its existing lease agreements.

During the suspension of payments, the Company continued to recognize expenses and liabilities for lease obligations and corresponding right-of-use assets on the balance sheet in accordance with ASC Topic 842 .

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

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.

We are nearing the conclusion of ongoing discussions with landlords regarding restructuring lease payments and rent concessions.

As of April 18, 2021, the Company has contractually negotiated rent concessions with the majority of its landlords.

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 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.

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.

During the first fiscal quarter of 2021, it was concluded no leases changed classification between operating and finance.

Contractual rent concessions granted to the Company during the first fiscal quarter of 2021 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 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.

During the sixteen weeks ended April 18, 2021, the Company recognized $ 1.2 million of asset impairment related to property, plant, and equipment assets at one Company-owned restaurant.

During first quarter 2021, the Company determined to permanently close this restaurant after it had remained temporarily closed since the beginning of the COVID-19 pandemic.

These impairment charges were included in Other charges 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 2019 federal NOL’s were carried back to previous tax periods and resulted in refunds received and recorded during 2020.

In 2021, the Company expects to receive approximately $ 16 million of cash tax refunds from remaining federal and state NOL carrybacks.

As of April 18, 2021, the Company had approximately $ 5.5 million of federal net operating loss carryforwards from the 2020 and 2021 tax years.

The Company has approximately $ 12.6 million of net operating loss carryforwards for state income tax purposes that arose from the 2019, 2020, and 2021 tax years.

The federal net operating loss carryforwards will be retained for an indefinite period.

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

The remaining state net operating losses approximating $ 12.4 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.

The total $ 77.6 million valuation allowance includes $ 5.5 million federal NOL's and the $ 12.6 million state NOL's recorded as of April 18, 2021.

Disaggregation of revenue

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

Twelve Weeks Ended Forty Weeks Ended

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

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Restaurant revenue $ 318,677 $ 301,434

Franchise revenue (1)

2,584 3,727 5,861 13,479

Gift card breakage 2,293 1,414

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(1) The decrease in Franchise revenue is driven by the temporary abatement and non-collection of franchise payments.

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

(1) Franchise royalties and advertising contributions were temporarily abated and not collected at the end of the first quarter of 2020 due to the COVID-19 pandemic.

Contract liabilities

Components of Unearned revenue in the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands):

October 4, 2020 December 29, 2019

April 18, 2021 December 27, 2020

Unearned gift card revenue $ 30,686 $ 38,309

Deferred loyalty revenue $ 12,310 $ 11,829

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

Revenue recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the redemption and breakage of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Gift card revenue $ 9,020 $ 11,911

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

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 April 18, 2021 and December 27, 2020 as follows (in thousands):

April 18, 2021 Finance Operating Total

Right of use assets, net $ 9,362 $ 417,820 $ 427,182

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Total $ 12,015 $ 508,493 $ 520,508

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 Forty Weeks Ended

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

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 and Comprehensive Loss as follows (in thousands):

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Operating lease cost $ 21,461 $ 21,990

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Total $ 28,299 $ 30,648

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

Maturities of our lease liabilities as of April 18, 2021 were as follows (in thousands):

Finance Leases Operating Leases Total

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Fair value of lease liability $ 11,498 $ 503,600 $ 515,098

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

Forty Weeks Ended

October 4, 2020 October 6, 2019

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

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Cash flows from operating activities

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Right of use assets obtained in exchange for operating lease obligations $ 13,448 $ 2,311

Right of use assets obtained in exchange for finance lease obligations $ 4,581 $ 1,669

Other information related to operating leases as follows:

Weighted average remaining lease term 10.33 years 10.84 years

Weighted average remaining lease term (years) 10.1 years 10.5 years

Weighted average discount rate 6.96 % 7.38 %

Other information related to finance leases as follows:

Weighted average remaining lease term 11.93 years 11.63 years

Weighted average remaining lease term (years) 11.5 years 12.1 years

Weighted average discount rate 4.56 % 4.86 %

Goodwill and Intangible Assets

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

Balance, December 29, 2019 $ 96,397

Foreign currency translation adjustment ( 983 )

Goodwill impairment (1)

Balance, October 4, 2020 $ —

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(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

Amortization Net

Amount Accumulated

Amortization Net

Intangible assets subject to amortization:

Franchise rights $ 50,584 $ ( 36,813 ) $ 13,771 $ 53,336 $ ( 35,896 ) $ 17,440

Leasehold interests 13,001 ( 9,155 ) 3,846 13,001 ( 8,794 ) 4,207

Liquor licenses and other 9,961 ( 9,598 ) 363 10,737 ( 9,869 ) 868

$ 73,546 $ ( 55,566 ) $ 17,980 $ 77,074 $ ( 54,559 ) $ 22,515

Indefinite-lived intangible assets:

Liquor licenses and other $ 7,460 $ — $ 7,460 $ 7,460 $ — $ 7,460

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

Loss Per Share

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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.

As the company was in a net loss position for both the sixteen weeks ended April 18, 2021 and April 19, 2020, all potentially dilutive common shares are considered anti-dilutive.

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

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

Twelve Weeks Ended Forty Weeks Ended

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

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Basic weighted average shares outstanding 15,579 12,903

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Awards excluded due to anti-dilutive effect on diluted loss per share 241 318

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 $ —

Other Charges

Other charges consist of the following (in thousands):

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Restaurant closure and refranchising costs $ 2,447 $ 1,406

Restaurant asset impairment 1,242 15,498

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

Litigation contingencies 1,085 4,500

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

COVID-19 related costs 569 198

Board and stockholder matter costs 128 1,482

Goodwill impairment — 95,414

Severance and executive transition — 881

Executive retention — 260 — 620

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

Other charges $ 5,471 $ 119,379

Restaurant closure and refranchising costs include the ongoing restaurant operating costs of the Company-owned restaurants that remained temporarily closed due to the COVID-19 pandemic, as well as any costs incurred for permanently closed restaurants including lease termination costs.

The Company recognized non-cash impairment charges related to restaurant assets at one and 24 Company-owned restaurants during the sixteen weeks ended April 18, 2021 and April 19, 2020 resulting from quantitative impairment analyses.

Litigation contingencies include legal settlement costs accrued within the period presented related to class action employment cases and other employment matters.

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.

Board and stockholder matters costs were primarily related to the recruitment and appointment of a new board member in the first quarter of 2021 and to the recruitment and appointment of a new board member, and other board and stockholder matters in the first quarter of 2020.

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.

Severance and executive transition in 2020 primarily relates to severance costs associated with the reduction in force of restaurant support center Team Members.

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.

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.

Severance and executive transition in 2020 primarily relates to severance costs associated with the reduction in force of restaurant support center Team Members in April 2020.

Borrowings as of April 18, 2021 and December 27, 2020 are summarized below (in thousands):

April 18, 2021 December 27, 2020

Borrowings Weighted

Interest Rate Borrowings Weighted

Interest Rate

Revolving credit facility, term loan, and other long-term debt $ 164,221 6.30 % $ 170,644 4.50 %

Total debt 164,221 170,644

Less current portion 9,692 9,692

Long-term debt $ 154,529 $ 160,952

Amounts issued under letters of credit $ 8,600 $ 8,700

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.

Unamortized debt issuance costs were $ 2.4 million and $ 3.3 million as of April 18, 2021 and December 27, 2020.

Second Amendment to Credit Agreement

On February 25, 2021, the Company entered into the Second Amendment to Credit Agreement (the "Second Amendment").

The Second Amendment further amends the credit facility to, among other things:

• suspend the application of (a) the lease adjusted leverage ratio financial covenant (the "LALR ratio") and (b) the fixed charge coverage ratio (the "FCC ratio") for the first and second fiscal quarters of 2021;

• increase the maximum leverage permitted for purposes of the LALR ratio for the fourth fiscal quarter of 2021 and the first and second fiscal quarters of 2022;

• for the third and fourth fiscal quarters of 2021 and the first fiscal quarter of 2022, provide that (a) the LALR ratio will be calculated using a seasonally adjusted annualized consolidated EBITDA for the applicable period since the beginning of the third fiscal quarter and (b) the FCC ratio will be calculated only for the applicable periods since the beginning of the third fiscal quarter of 2021;

• revise the FCC ratio to account for cash tax refunds received in fiscal year 2021;

• amend the minimum liquidity covenant such that is it measured as of the last day of each applicable fiscal quarter and (a) for the first and second quarters of 2021, requires minimum liquidity of $ 55 million and (b) for the third and fourth fiscal quarters of 2021, requires minimum liquidity of $ 42 million;

• remove provisions requiring mandatory prepayments from net cash proceeds of certain equity issuances and convertible debt issuances;

• shorten the maturity date applicable to the revolver and term loan to January 10, 2023 ;

• reduce the aggregate revolving commitment to $ 130 million on the Second Amendment effective date and to $ 100 million at the end of the third fiscal quarter of 2021;

• increase the pricing under the credit facility for (a) the period from the Second Amendment effective date through the first interest determination date occurring after the fourth fiscal quarter of 2021 to LIBOR (subject to a 1 % floor) plus 4.50 % and (b) periods thereafter to LIBOR (subject to a 1 % floor) plus 4 %;

• require the payment of a utilization fee (paid on the revolver maturity date) equal to 0.75 % per annum of the daily outstanding principal balance of term loans, revolving loans, swingline loans, and letter of credit obligations from the Second Amendment effective date to the first interest determination date occurring after the fourth fiscal quarter of 2021;

• subject to limited exceptions and other limitations, prohibit certain capital expenditures, restricted payments, acquisitions, and other investments until the Company delivers a compliance certificate for a fiscal quarter (beginning with third fiscal quarter of 2021 and the fourth fiscal quarter of 2021 specifically for restricted payments) demonstrating a LALR ratio less than or equal to 5.00 :1.00;

• amend the maximum allowable cash on hand provision to require revolver payments (but with no associated permanent reduction in the revolving commitment) to the extent that the Company's consolidated cash on hand exceeds $ 35 million at any time.

In conjunction with the execution of the Second Amendment, the Company paid certain customary amendment fees to the lenders under the credit facility totaling approximately $ 0.6 million which will be capitalized as deferred loan fees and amortized over the remaining term of the credit facility.

Additionally, in conjunction with the execution of the Second Amendment, the company performed an analysis of the amendment under ASC Topic 470 , and determined that debt modification accounting was appropriate for our term loan and revolving credit facility due to the change in total capacity under the new amendment.

During the first quarter of 2021, the Company expensed approximately $ 1.2 million of deferred financing charges related to a calculated reduction in total borrowing capacity of the revolver.

Fair Value Measurements

1 unchanged sentence

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 October 4, 2020 and December 29, 2019 (in thousands):

October 4, 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 April 18, 2021 and December 27, 2020 (in thousands):

April 18, 2021 Level 1 Level 2 Level 3

Investments in rabbi trust $ 6,788 $ 6,788 $ — $ —

6 unchanged sentences

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

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.

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.

The Company has measured non-financial assets for impairment.

We impaired long-lived restaurant assets at one Company-owned restaurant with a carrying value of $ 3.8 million (including right of use assets), recognizing an impairment expense of $ 1.2 million related to the net book value of long-lived restaurant assets for this restaurant.

The impairment was recorded as a result of the decision to close this restaurant and nine additional restaurants which had also remained closed since the beginning of the COVID-19 pandemic, whose long-lived restaurant assets had no remaining net book value;

see footnote 6 Other Charges of this Quarterly Report on Form 10-Q for additional detail.

Disclosures of Fair Value of Other Assets and Liabilities

1 unchanged sentence

Due to market interest rates decreasing during fiscal year 2021, 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.

The carrying value and fair value of the credit facility as of April 18, 2021 were $ 163.3 million and $ 162.0 million.

As of December 27, 2020, the carrying value and fair value of the credit facility were $ 169.8 million and $ 172.6 million.

The interest rate on the credit facility represents a level 2 fair value input.

Commitments and Contingencies

On July 14, 2017, a current hourly employee filed a class action lawsuit alleging that the Company failed to provide required meal breaks and rest periods and failed to reimburse business expenses, among other claims.

The case is styled Manuel Vigueras v.

Red Robin International, Inc.

and is currently pending before the United States District Court in Santa Ana, California.

In a related action, on September 21, 2017, a companion case, styled Genny Vasquez v.

Red Robin International, Inc.

was filed and is currently pending in California Superior Court in Santa Ana, California and involves claims under the California Private Attorneys' General Act that partially overlap the claims made in the Vigueras matter.

In the first quarter of 2020, the Company reached a tentative settlement agreement resolving all claims and the cost of class administration in both cases for an aggregate $ 8.5 million.

The Company is in the process of finalizing the settlement agreement, which will then be submitted to the court for approval.

Court approval is required before any settlement agreement between the parties becomes final.

An additional $ 4.5 million was accrued to reach the $ 8.5 million settlement amount during the first fiscal quarter of 2020.

Amounts recorded in the periods presented for litigation contingencies are disclosed in Note 7, Other Charges .

In the normal course of business, there are various claims in process, matters in litigation, and other contingencies.

These include employment-related claims and claims alleging illness, injury, or other food quality, health, or operational issues.

Evaluating contingencies related to litigation is a complex process involving subjective judgment on the potential outcome of future events, and the ultimate resolution of litigated claims may differ from our current analysis.

We review the adequacy of accruals and disclosures pertaining to litigation matters each quarter in consultation with legal counsel, and we assess the probability and range of possible losses associated with contingencies for potential accrual in the consolidated financial statements.

While it is not possible to predict the outcome of these claims with certainty, management is of the opinion that adequate provision for potential losses associated with these matters has been made in the condensed consolidated financial statements.

These include employment related claims and claims from Guests or Team Members alleging illness, injury, food quality, health, or operational concerns.

To date, none of these claims, certain of which are covered by insurance policies, have had a material effect on the Company.

While it is not possible to predict the outcome of these suits, legal proceedings, and claims with certainty, management is of the opinion that adequate provision for potential losses associated with these matters has been made in the financial statements and that the ultimate resolution of these matters will not have a material adverse effect on our financial position and results of operations.

However, a significant increase in the number of these claims, or one or more successful claims resulting in greater liabilities than we currently anticipate, could materially and adversely affect our business, financial condition, results of operations, and cash flows.

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