What changed in this filing

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Item 1. Financial Statements

2021-08-18 compared with 2021-05-25 · 80 added, 98 removed, 294 unchanged (38% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in thousands, except for per share amounts) July 11, 2021 December 27, 2020

Current assets:

29 unchanged sentences

20,449 shares issued;

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

15,717 and 15,548 shares outstanding as of July 11, 2021 and December 27, 2020

Preferred stock, $ 0.001 par value:

3,000 shares authorized;

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

no shares issued and outstanding as of July 11, 2021 and December 27, 2020

Treasury stock 4,732 and 4,901 shares, at cost, as of July 11, 2021 and December 27, 2020

( 193,039 ) ( 199,908 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Sixteen Weeks Ended

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

Twelve Weeks Ended Twenty-Eight Weeks Ended

(in thousands, except for per share amounts) July 11, 2021 July 12, 2020 July 11, 2021 July 12, 2020

Restaurant revenue $ 272,157 $ 160,144 $ 590,834 $ 461,578

18 unchanged sentences

Loss before income taxes ( 5,350 ) ( 52,561 ) ( 14,011 ) ( 214,160 )

Income tax provision 52 12,699

Income tax (benefit) provision ( 354 ) 3,700 ( 302 ) 16,399

Net loss $ ( 4,996 ) $ ( 56,261 ) $ ( 13,709 ) $ ( 230,559 )

5 unchanged sentences

Diluted 15,665 13,741 15,617 13,262

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustment $ ( 1 ) $ 17 $ 20 $ ( 1,130 )

Other comprehensive income (loss), net of tax 21 ( 1,147 )

Other comprehensive (loss) income, net of tax ( 1 ) 17 20 ( 1,130 )

Total comprehensive loss $ ( 4,997 ) $ ( 56,244 ) $ ( 13,689 ) $ ( 231,689 )

13 unchanged sentences

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

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 95 ) 3,844 ( 3,547 ) — — 297

Non-cash stock compensation — — — — 1,577 — — 1,577

Net loss — — — — — — ( 4,996 ) ( 4,996 )

Other comprehensive (loss) — — — — — ( 1 ) — ( 1 )

Balance, July 11, 2021 20,449 $ 20 4,732 $ ( 193,039 ) $ 238,677 $ 16 $ 63,489 $ 109,163

See Notes to Condensed Consolidated Financial Statements.

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY

Common Stock Treasury Stock Accumulated

9 unchanged sentences

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 — — — — — 17 — 17

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

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Sixteen Weeks Ended

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

Twenty-Eight Weeks Ended

(in thousands) July 11, 2021 July 12, 2020

Cash flows from operating activities:

Net loss $ ( 13,709 ) $ ( 230,559 )

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

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

Depreciation and amortization 45,103 48,880

Gift card breakage ( 2,793 ) ( 1,806 )

Goodwill and restaurant asset impairment 1,242 110,912

Goodwill and asset impairment 1,357 116,193

Non-cash other charges 509 2,764

11 unchanged sentences

Other operating assets and liabilities, net ( 8,175 ) 6,854

Net cash (used in) provided by operating activities 18,932 ( 13,320 )

Net cash provided by (used in) operating activities 37,184 ( 18,607 )

Cash flows from investing activities:

7 unchanged sentences

Debt issuance costs ( 616 ) ( 2,952 )

Proceeds from issuance of common stock, net of stock issuance costs — 29,675

Proceeds from exercise of stock options and employee stock purchase plan 549 666

Net cash provided by (used in) financing activities ( 7,393 ) 81,738

Net cash (used in) provided by financing activities ( 16,931 ) 26,369

Effect of exchange rate changes on cash 34 ( 256 )

10 unchanged sentences

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

As of July 11, 2021, the Company owned and operated 430 restaurants located in 38 states.

The Company also had 101 franchised full-service restaurants in 16 states and one Canadian province.

16 unchanged sentences

First Quarter 2020 April 19, 2020 16

Second Quarter 2021 July 11, 2021 12

Second Quarter 2020 July 12, 2020 12

Current and Prior Fiscal Years:

2 unchanged sentences

Reclassifications

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.

Certain amounts presented have been reclassified within the July 12, 2020 Condensed Consolidated Statement of Cash Flows to conform with the current period presentation, including prior year reclassifications from Prepaid expenses and other current assets to Inventory and 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

In December 2019, the Financial Accounting Standards Board ("FASB") issued Update 2019-12, Income Taxes ("Topic 740") as part of its Simplification Initiative.

This guidance provides amendments to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

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

7 unchanged sentences

COVID-19 Pandemic

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.

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

These include jurisdictional restrictions on restaurants limiting indoor dining room capacity.

The COVID-19 pandemic has had a material adverse effect on our business, including a significant decrease in Guest traffic and sales since March 2020.

As of July 11, 2021, nearly all of our Company-owned and franchised locations were operating without restriction.

While we continue to take appropriate actions to mitigate the impact of COVID-19, the future impact on business operations and financial performance remains unknown at this point.

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 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.

For contractual rent concessions that do not substantially change the total cash flows of the lease, the Company has elected to account for these concessions assuming the existing lease agreements provide enforceable rights and obligations consistent with the relief issued by the Financial Accounting Standards Board titled ASC Topic 842 and ASC Topic 840:

Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic ("FASB Relief") .

For leases where the rent concession did not substantially change the total cash flows, the concession was accounted for as a remeasurement to the lease liability based on the original discount rate with a corresponding adjustment to the right-of-use asset.

Additionally, the classification of the leases was not reassessed.

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 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 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.

As of July 11, 2021, the Company has substantially completed negotiating rent concessions with its landlords, and are making full lease payments to substantially all of our landlords.

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

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").

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 filed the 2020 federal and state NOL cash tax refund claims totaling approximately $ 16 million during 2021.

While we expect to receive a portion of the refunds in 2021, due to government delays in processing these claims we do not expect to receive the majority until 2022.

As of July 11, 2021, the Company had approximately $ 5.2 million of federal net operating loss carryforwards from the 2020 and 2021 tax years.

The Company has approximately $ 12.2 million of net operating loss carryforwards for state income tax purposes that arose from the 2019, 2020, and 2021 tax years.

3 unchanged sentences

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

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.

The total $ 79.1 million valuation allowance includes the $ 5.2 million federal NOL and the $ 12.2 million state NOL's recorded as of July 11, 2021.

Disaggregation of revenue

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

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, 2021 July 12, 2020 July 11, 2021 July 12, 2020

Restaurant revenue $ 272,157 $ 160,144 $ 590,834 $ 461,578

4 unchanged sentences

———————————————————

(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):

April 18, 2021 December 27, 2020

July 11, 2021 December 27, 2020

Unearned gift card revenue $ 30,765 $ 38,309

1 unchanged sentence

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

Twenty-Eight Weeks Ended

July 11, 2021 July 12, 2020

Gift card revenue $ 10,945 $ 12,990

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

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 11, 2021 and December 27, 2020 as follows (in thousands):

July 11, 2021 Finance Operating Total

Right of use assets, net $ 9,909 $ 414,738 $ 424,647

8 unchanged sentences

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

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, 2021 July 12, 2020 July 11, 2021 July 12, 2020

Operating lease cost $ 16,243 $ 14,949 $ 37,704 $ 36,939

5 unchanged sentences

Total $ 20,916 $ 20,246 $ 49,215 $ 50,894

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

Maturities of our lease liabilities as of July 11, 2021 were as follows (in thousands):

Finance Leases Operating Leases Total

7 unchanged sentences

Less imputed interest 3,254 209,822 213,076

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

Carrying value of lease liability $ 12,033 $ 496,885 $ 508,918

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

Twenty-Eight Weeks Ended

July 11, 2021 July 12, 2020

Cash flows from operating activities

8 unchanged sentences

Right of use assets obtained in exchange for operating lease obligations $ 7,784 $ 19,781

Right of use assets obtained in exchange for finance lease obligations $ 751 $ 4,224

Other information related to operating leases as follows:

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

Weighted average remaining lease term 10.0 years 10.4 years

Weighted average discount rate 7.01 % 7.25 %

Other information related to finance leases as follows:

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

Weighted average remaining lease term 11.3 years 12.2 years

Weighted average discount rate 4.56 % 4.96 %

4 unchanged sentences

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

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.

As the Company was in a net loss position for both the twelve week and twenty-eight week periods ended July 11, 2021 and July 12, 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):

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, 2021 July 12, 2020 July 11, 2021 July 12, 2020

Basic weighted average shares outstanding 15,665 13,741 15,617 13,262

4 unchanged sentences

Other charges consist of the following (in thousands):

Sixteen Weeks Ended

April 18, 2021 April 19, 2020

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, 2021 July 12, 2020 July 11, 2021 July 12, 2020

Restaurant closure and refranchising costs $ 1,752 $ 7,602 $ 4,199 $ 9,008

Restaurant asset impairment 1,242 15,498

Asset impairment 115 5,281 1,357 20,779

Litigation contingencies 85 — 1,170 4,500

4 unchanged sentences

Other charges $ 2,196 $ 14,501 $ 7,667 $ 133,880

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.

Restaurant closure and refranchising costs include the ongoing restaurant operating costs of 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.

During the twenty-eight weeks ended weeks ended July 11, 2021, we impaired long-lived 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 during the fiscal first quarter 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.

During the twelve and twenty-eight weeks ended July 12, 2020 the Company recognized non-cash impairment charges related to restaurant assets at 10 and 34 Company-owned restaurants, respectively, 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.

Board and stockholder matters costs were primarily related to the recruitment and appointment of new board members, and other board and stockholder matters.

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

1 unchanged sentence

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 as of July 11, 2021 and December 27, 2020 are summarized below (in thousands):

July 11, 2021 December 27, 2020

Borrowings Weighted

7 unchanged sentences

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 $ 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.

Unamortized debt issuance costs were $ 2.1 million and $ 3.3 million as of July 11, 2021 and December 27, 2020.

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

April 18, 2021 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 July 11, 2021 and December 27, 2020 (in thousands):

July 11, 2021 Level 1 Level 2 Level 3

Investments in rabbi trust $ 6,113 $ 6,113 $ — $ —

6 unchanged sentences

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

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;

As of July 11, 2021, 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.

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

2 unchanged sentences

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 April 18, 2021 were $ 163.3 million and $ 162.0 million.

The carrying value and fair value of the credit facility as of July 11, 2021 were $ 153.9 million and $ 152.4 million.

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

3 unchanged sentences

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