RED ROBIN GOURMET BURGERS INC 10-Q

ITEM 1. Financial Statements (unaudited) RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except for per share amounts) July 11, 2021 December 27, 2020 Assets: Current assets: Cash and cash equivalents $ 25,569 $ 16,116 Accounts receivable, net 11,323 16,510 Inventories 23,926 23,802 Income tax receivable 16,352 16,662 Prepaid expenses and other current assets 12,342 13,818 Total current assets 89,512 86,908 Property and equipment, net 396,746 427,033 Right of use assets, net 424,647 425,573 Intangible assets, net 23,069 24,714 Other assets, net 8,129 10,511 Total assets $ 942,103 $ 974,739 Liabilities and stockholders ' equity: Current liabilities: Accounts payable $ 31,396 $ 20,179 Accrued payroll and payroll-related liabilities 34,106 27,653 Unearned revenue 43,531 50,138 Current portion of lease obligations 51,022 55,275 Current portion of long-term debt 9,692 9,692 Accrued liabilities and other 44,258 39,617 Total current liabilities 214,005 202,554 Long-term debt 145,106 160,952 Long-term portion of lease obligations 457,896 465,233 Other non-current liabilities 15,933 25,287 Total liabilities $ 832,940 $ 854,026 Commitments and contingencies (see note 9) Stockholders ' equity: Common stock; $ 0.001 par value: 45,000 shares authorized; 20,449 shares issued; 15,717 and 15,548 shares outstanding as of July 11, 2021 and December 27, 2020 $ 20 $ 20 Preferred stock, $ 0.001 par value: 3,000 shares authorized; 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 ) Paid-in capital 238,677 243,407 Accumulated other comprehensive income (loss), net of tax 16 ( 4 ) Retained earnings 63,489 77,198 Total stockholders' equity 109,163 120,713 Total liabilities and stockholders ' equity $ 942,103 $ 974,739 See Notes to Condensed Consolidated Financial Statements. 1 Table of Contents RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) 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 Revenues: Restaurant revenue $ 272,157 $ 160,144 $ 590,834 $ 461,578 Franchise and other revenues 4,818 978 12,416 5,609 Total revenues 276,975 161,122 603,250 467,187 Costs and expenses: Restaurant operating costs (excluding depreciation and amortization shown separately below): Cost of sales 61,917 38,780 131,083 109,206 Labor 98,949 62,742 210,608 181,308 Other operating 46,928 34,663 104,640 86,954 Occupancy 21,614 20,758 51,714 54,415 Depreciation and amortization 19,215 20,560 45,103 48,880 Selling, general, and administrative expenses 28,346 19,697 58,956 61,199 Pre-opening costs 374 3 374 156 Other charges 2,196 14,501 7,667 133,880 Total costs and expenses 279,539 211,704 610,145 675,998 Loss from operations ( 2,564 ) ( 50,582 ) ( 6,895 ) ( 208,811 ) Other expense: Interest expense, net and other 2,786 1,979 7,116 5,349 Loss before income taxes ( 5,350 ) ( 52,561 ) ( 14,011 ) ( 214,160 ) Income tax (benefit) provision ( 354 ) 3,700 ( 302 ) 16,399 Net loss $ ( 4,996 ) $ ( 56,261 ) $ ( 13,709 ) $ ( 230,559 ) Loss per share: Basic $ ( 0.32 ) $ ( 4.09 ) $ ( 0.88 ) $ ( 17.38 ) Diluted $ ( 0.32 ) $ ( 4.09 ) $ ( 0.88 ) $ ( 17.38 ) Weighted average shares outstanding: Basic 15,665 13,741 15,617 13,262 Diluted 15,665 13,741 15,617 13,262 Other comprehensive (loss) income: Foreign currency translation adjustment $ ( 1 ) $ 17 $ 20 $ ( 1,130 ) Other comprehensive (loss) income, net of tax ( 1 ) 17 20 ( 1,130 ) Total comprehensive loss $ ( 4,997 ) $ ( 56,244 ) $ ( 13,689 ) $ ( 231,689 ) See Notes to Condensed Consolidated Financial Statements. 2 Table of Contents RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (Unaudited) Common Stock Treasury Stock Accumulated Other Comprehensive (Loss) Income, net of tax Paid-in Capital Retained Earnings (in thousands) Shares Amount Shares Amount Total Balance, December 27, 2020 20,449 $ 20 4,901 $ ( 199,908 ) $ 243,407 $ ( 4 ) $ 77,198 $ 120,713 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 ) Non-cash stock compensation — — — — 880 — — 880 Net loss — — — — — — ( 8,713 ) ( 8,713 ) Other comprehensive income — — — — — 21 — 21 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. 3 Table of Contents RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (Unaudited) Common Stock Treasury Stock Accumulated Other Comprehensive Loss, net of tax Paid-in Capital Retained Earnings (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 Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 39 ) 1,605 ( 1,388 ) — — 217 Acquisition of treasury stock — — 72 ( 1,635 ) — — — ( 1,635 ) Non-cash stock compensation — — — — 712 — — 712 Net loss — — — — — — ( 174,298 ) ( 174,298 ) 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 — — — — — 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. 4 Table of Contents RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 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 provided by (used in) operating activities: Depreciation and amortization 45,103 48,880 Gift card breakage ( 2,793 ) ( 1,806 ) Goodwill and asset impairment 1,357 116,193 Non-cash other charges 509 2,764 Deferred income tax provision — 42,686 Stock-based compensation expense 2,457 1,771 Other, net 1,913 393 Changes in operating assets and liabilities: Accounts receivable 5,159 13,211 Income tax receivable 334 ( 17,453 ) Inventories ( 594 ) 1,363 Prepaid expenses and other current assets 1,454 ( 2,717 ) Lease assets, net of liabilities ( 9,375 ) 17,666 Trade accounts payable and accrued liabilities 17,358 ( 9,374 ) Unearned revenue ( 3,814 ) ( 8,479 ) Other operating assets and liabilities, net ( 8,175 ) 6,854 Net cash provided by (used in) operating activities 37,184 ( 18,607 ) Cash flows from investing activities: Purchases of property, equipment, and intangible assets ( 10,854 ) ( 11,456 ) Proceeds from sales of real estate and property, plant, and equipment and other investing activities 20 43 Net cash used in investing activities ( 10,834 ) ( 11,413 ) Cash flows from financing activities: Borrowings of long-term debt 68,300 135,000 Payments of long-term debt and finance leases ( 85,164 ) ( 134,385 ) Purchase of treasury stock — ( 1,635 ) 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 (used in) provided by financing activities ( 16,931 ) 26,369 Effect of exchange rate changes on cash 34 ( 256 ) Net change in cash and cash equivalents 9,453 ( 3,907 ) Cash and cash equivalents, beginning of period 16,116 30,045 Cash and cash equivalents, end of period $ 25,569 $ 26,138 Supplemental disclosure of cash flow information Income tax refunds received, net $ ( 628 ) $ ( 3 ) Interest paid, net of amounts capitalized $ 5,423 $ 4,915 See Notes to Condensed Consolidated Financial Statements. 5 Table of Contents RED ROBIN GOURMET BURGERS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation and Recent Accounting Pronouncements 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 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. The Company operates its business as one operating and one reportable segment. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Red Robin and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for any interim period are not necessarily indicative of results for the full year. The accompanying Condensed Consolidated Financial Statements of Red Robin have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company's annual consolidated financial statements on Form 10-K have been condensed or omitted. 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 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: Periods Period End Date Number of Weeks in Period Current and Prior Fiscal Quarters: First Quarter 2021 April 18, 2021 16 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: Fiscal Year 2021 December 26, 2021 52 Fiscal Year 2020 December 27, 2020 52 Reclassifications 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. 6 Table of Contents Recent Accounting Pronouncements 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. We reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a significant impact on the Company's Condensed Consolidated Financial Statements. 2. COVID-19 Pandemic Overview 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. Rent 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 . 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. Income Tax 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. 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. 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 $ 12.0 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. 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. 7 Table of Contents 3. Revenue 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 11, 2021 July 12, 2020 July 11, 2021 July 12, 2020 Restaurant revenue $ 272,157 $ 160,144 $ 590,834 $ 461,578 Franchise revenue 3,944 380 8,820 3,277 Gift card breakage 500 392 2,793 1,806 Other revenue 374 206 803 526 Total revenues $ 276,975 $ 161,122 $ 603,250 $ 467,187 ——————————————————— Contract liabilities Components of Unearned revenue in the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands): July 11, 2021 December 27, 2020 Unearned gift card revenue $ 30,765 $ 38,309 Deferred loyalty revenue $ 12,766 $ 11,829 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): Twenty-Eight Weeks Ended July 11, 2021 July 12, 2020 Gift card revenue $ 10,945 $ 12,990 4. Leases 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 Current portion of lease obligations 1,108 49,914 51,022 Long-term portion of lease obligations 10,925 446,971 457,896 Total $ 12,033 $ 496,885 $ 508,918 December 27, 2020 Finance Operating Total Right of use assets, net $ 9,644 $ 415,929 $ 425,573 Current portion of lease obligations 1,078 54,197 55,275 Long-term portion of lease obligations 10,937 454,296 465,233 Total $ 12,015 $ 508,493 $ 520,508 8 Table of Contents 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): 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 Finance lease cost: Amortization of right of use assets 197 185 460 388 Interest on lease liabilities 117 124 276 262 Total finance lease cost $ 314 $ 309 $ 736 $ 650 Variable lease cost 4,359 4,988 10,775 13,305 Total $ 20,916 $ 20,246 $ 49,215 $ 50,894 Maturities of our lease liabilities as of July 11, 2021 were as follows (in thousands): Finance Leases Operating Leases Total Remainder of 2021 $ 820 $ 35,857 $ 36,677 2022 1,327 78,816 80,143 2023 1,244 75,746 76,990 2024 1,264 73,579 74,843 2025 1,283 68,874 70,157 Thereafter 9,349 373,835 383,184 Total future lease liability $ 15,287 $ 706,707 $ 721,994 Less imputed interest 3,254 209,822 213,076 Carrying value of lease liability $ 12,033 $ 496,885 $ 508,918 9 Table of Contents Supplemental cash flow and other information related to leases is as follows (in thousands, except other information): Twenty-Eight Weeks Ended July 11, 2021 July 12, 2020 Cash flows from operating activities Cash paid related to lease liabilities Operating leases $ 47,727 $ 17,188 Finance leases 276 262 Cash flows from financing activities Cash paid related to lease liabilities Finance leases 1,018 — Cash paid for amounts included in the measurement of lease liabilities: $ 49,021 $ 17,450 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 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 11.3 years 12.2 years Weighted average discount rate 4.56 % 4.96 % 5. 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 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 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): 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 Dilutive effect of stock options and awards — — — — Diluted weighted average shares outstanding 15,665 13,741 15,617 13,262 Awards excluded due to anti-dilutive effect on diluted loss per share 241 865 308 317 10 Table of Contents 6. Other Charges Other charges consist of the following (in thousands): 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 Asset impairment 115 5,281 1,357 20,779 Litigation contingencies 85 — 1,170 4,500 COVID-19 related costs 244 651 813 849 Board and stockholder matter costs — 967 128 2,449 Goodwill impairment — — — 95,414 Severance and executive transition — — — 881 Other charges $ 2,196 $ 14,501 $ 7,667 $ 133,880 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 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. The goodwill impairment was measured as the amount by which the carrying amount of the reporting unit, including goodwill, exceeded its fair value. 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. 7. Borrowings Borrowings as of July 11, 2021 and December 27, 2020 are summarized below (in thousands): July 11, 2021 December 27, 2020 Borrowings Weighted Average Interest Rate Borrowings Weighted Average Interest Rate Revolving credit facility, term loan, and other long-term debt $ 154,798 7.40 % $ 170,644 4.50 % Total debt 154,798 170,644 Less current portion 9,692 9,692 Long-term debt $ 145,106 $ 160,952 Amounts issued under letters of credit $ 8,600 $ 8,700 11 Table of Contents 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 $ 2.1 million and $ 3.3 million as of July 11, 2021 and December 27, 2020. 8. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis 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 11, 2021 and December 27, 2020 (in thousands): July 11, 2021 Level 1 Level 2 Level 3 Assets: Investments in rabbi trust $ 6,113 $ 6,113 $ — $ — Total assets measured at fair value $ 6,113 $ 6,113 $ — $ — December 27, 2020 Level 1 Level 2 Level 3 Assets: Investments in rabbi trust $ 6,740 $ 6,740 $ — $ — Total assets measured at fair value $ 6,740 $ 6,740 $ — $ — 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, right of use assets, goodwill, and other intangible assets. These assets are measured at fair value if determined to be impaired. 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. 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 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 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. The interest rate on the credit facility represents a level 2 fair value input. 9. Commitments and Contingencies 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 from Guests or Team Members alleging illness, injury, food quality, health, or operational concerns. 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. 12 Table of Contents