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Item 1. Financial Statements

2022-11-02 compared with 2022-08-10 · 125 added, 89 removed, 307 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for per share amounts) July 10, 2022 December 26, 2021

(in thousands, except for per share amounts) October 2, 2022 December 26, 2021

Current assets:

25 unchanged sentences

Commitments and contingencies (see Note 8.

Commitments and Contingencies)

Stockholders ' equity:

3 unchanged sentences

20,449 shares issued;

15,899 and 15,722 shares outstanding as of July 10, 2022 and December 26, 2021

15,900 and 15,722 shares outstanding as of October 2, 2022 and December 26, 2021

Preferred stock, $ 0.001 par value:

3,000 shares authorized;

no shares issued and outstanding as of July 10, 2022 and December 26, 2021

Treasury stock 4,550 and 4,727 shares, at cost, as of July 10, 2022 and December 26, 2021

no shares issued and outstanding as of October 2, 2022 and December 26, 2021

Treasury stock 4,549 and 4,727 shares, at cost, as of October 2, 2022 and December 26, 2021

( 184,169 ) ( 192,803 )

Paid-in capital 242,235 242,560

Accumulated other comprehensive (loss) income, net of tax ( 6 ) 1

Retained earnings 6,159 27,196

Accumulated other comprehensive income (loss), net of tax ( 51 ) 1

Retained earnings (deficit) ( 6,408 ) 27,196

Total stockholders' equity 51,627 76,974

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Twelve Weeks Ended Twenty-Eight Weeks Ended

(in thousands, except for per share amounts) July 10, 2022 July 11, 2021 July 10, 2022 July 11, 2021

Twelve Weeks Ended Forty Weeks Ended

(in thousands, except for per share amounts) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Restaurant revenue $ 282,449 $ 270,202 $ 951,718 $ 861,036

10 unchanged sentences

Pre-opening costs 217 418 514 792

Other charges, net 8,146 2,196 13,453 7,667

Other charges (gains), net ( 5,217 ) 1,561 8,236 9,228

Total costs and expenses 294,908 287,580 993,529 897,725

2 unchanged sentences

Interest expense, net and other 4,590 2,870 16,151 9,986

Loss on debt refinancing

Interest income and other, net

Total other expenses 4,590 2,870 16,151

Loss before income taxes ( 12,610 ) ( 15,006 ) ( 33,152 ) ( 29,017 )

Income tax provision 434 ( 354 ) 496 ( 302 )

Income tax provision (benefit) ( 43 ) ( 26 ) 453 ( 328 )

Net loss $ ( 12,567 ) $ ( 14,980 ) $ ( 33,605 ) $ ( 28,689 )

5 unchanged sentences

Diluted 15,892 15,709 15,816 15,647

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation adjustment $ ( 45 ) $ ( 6 ) $ ( 51 ) $ 14

Other comprehensive (loss) income, net of tax ( 18 ) ( 1 ) ( 7 ) 20

Other comprehensive income (loss), net of tax ( 45 ) ( 6 ) ( 51 ) 14

Total comprehensive loss $ ( 12,612 ) $ ( 14,986 ) $ ( 33,656 ) $ ( 28,675 )

4 unchanged sentences

Comprehensive

(Loss) Income,

Income/(Loss),

Capital Retained

Earnings (Deficit)

(in thousands) Shares Amount Shares Amount Total

3 unchanged sentences

Net loss — — — — — — ( 3,105 ) ( 3,105 )

Other comprehensive income — — — — — 11 — 11

Other comprehensive income (loss), net of tax — — — — — 11 — 11

Balance, April 17, 2022 20,449 $ 20 4,663 $ ( 190,022 ) $ 242,756 $ 12 $ 24,091 $ 76,857

2 unchanged sentences

Net loss — — — — — — ( 17,932 ) ( 17,932 )

Other comprehensive loss — — — — — ( 18 ) — ( 18 )

Other comprehensive income (loss), net of tax — — — — — ( 18 ) — ( 18 )

Balance, July 10, 2022 20,449 $ 20 4,550 $ ( 184,205 ) $ 239,607 $ ( 6 ) $ 6,159 $ 61,575

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 1 ) 36 ( 40 ) — — ( 4 )

Non-cash stock compensation — — — — 2,668 — — 2,668

Net loss — — — — — — ( 12,567 ) ( 12,567 )

Other comprehensive income (loss), net of tax — — — — — ( 45 ) — ( 45 )

Balance, October 2, 2022 20,449 $ 20 4,549 $ ( 184,169 ) $ 242,235 $ ( 51 ) $ ( 6,408 ) $ 51,627

Common Stock Treasury Stock Accumulated

Comprehensive

Income/(Loss),

Capital Retained

4 unchanged sentences

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

Other comprehensive income — — — — — 21 — 21

Other comprehensive income (loss), net of tax — — — — — 21 — 21

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

2 unchanged sentences

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

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

Other comprehensive income (loss), net of tax — — — — — ( 1 ) — ( 1 )

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

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 5 ) 220 ( 280 ) — — ( 60 )

Non-cash stock compensation — — — — 2,048 — — 2,048

Net loss — — — — — — ( 14,980 ) ( 14,980 )

Other comprehensive income (loss), net of tax — — — — — ( 6 ) — ( 6 )

Balance, October 3, 2021 20,449 $ 20 4,727 $ ( 192,819 ) $ 240,445 $ 10 $ 48,509 $ 96,165

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-Eight Weeks Ended

(in thousands) July 10, 2022 July 11, 2021

Forty Weeks Ended

(in thousands) October 2, 2022 October 3, 2021

Cash flows from operating activities:

6 unchanged sentences

Stock-based compensation expense 8,229 4,501

(Gain) loss on sale of property, plant, and equipment ( 9,204 ) —

Other, net 3,240 2,228

11 unchanged sentences

Purchases of property, equipment, and intangible assets ( 27,036 ) ( 19,987 )

Proceeds from sales of real estate and property, plant, and equipment and other investing activities 269 20

Proceeds from sales of property and equipment and other investing activities 8,739 20

Net cash used in investing activities ( 18,297 ) ( 19,967 )

18 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 July 10, 2022, the Company owned and operated 426 restaurants located in 38 states.

As of October 2, 2022, the Company owned and operated 424 restaurants located in 38 states.

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

14 unchanged sentences

Current and Prior Fiscal Quarters:

First Quarter 2022 April 17, 2022 16

First Quarter 2021 April 18, 2021 16

Second Quarter 2022 July 10, 2022 12

Second Quarter 2021 July 11, 2021 12

First Quarter 2022

April 17, 2022 16

First Quarter 2021

April 18, 2021 16

Second Quarter 2022

July 10, 2022 12

Second Quarter 2021

July 11, 2021 12

Third Quarter 2022

October 2, 2022 12

Third Quarter 2021

October 3, 2021 12

Current and Prior Fiscal Years:

Fiscal Year 2022 December 25, 2022 52

Fiscal Year 2021 December 26, 2021 52

Fiscal Year 2022

December 25, 2022 52

Fiscal Year 2021

December 26, 2021 52

Upcoming fiscal year:

Fiscal Year 2023 December 31, 2023 53

Fiscal Year 2023

December 31, 2023 53

Reclassifications

Certain amounts presented have been reclassified within the July 11, 2021 Condensed Consolidated Statement of Cash Flows to conform with the current period presentation, including prior year reclassifications from Lease assets, net of liabilities to Other operating assets and liabilities.

Certain amounts presented have been reclassified within the October 3, 2021 Condensed Consolidated Statement of Cash Flows to conform with the current period presentation, including prior year reclassifications from Lease assets, net of liabilities to Other operating assets and liabilities.

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

Change in Accounting Estimate - Gift Card Breakage

As part of its annual assessment of gift card breakage and during the twenty-eight weeks ended July 10, 2022, the Company re-evaluated the estimated redemption pattern related to gift cards and aligned the recognition of gift card breakage to the updated estimated redemption pattern.

As part of its annual assessment of gift card breakage and during the forty weeks ended October 2, 2022, the Company re-evaluated the estimated redemption pattern related to gift cards and aligned the recognition of gift card breakage to the updated estimated redemption pattern.

As a result, the Company recognized $ 5.9 million of additional gift card breakage in Franchise and other revenues, partially offset by $ 0.6 million of associated commissions costs recognized in Selling, general and administrative expenses, in the first quarter of 2022.

This change in accounting estimate decreased net loss by $ 5.2 million, or $ 0.33 per basic and diluted share for the twenty-eight weeks ended July 10, 2022.

This change in accounting estimate decreased net loss by $ 5.2 million, or $ 0.33 per basic and diluted share for the forty weeks ended October 2, 2022.

The Company does not expect the impact of this change in estimate to be material to its future financial statements.

Recent Tax Legislation

The CHIPS and Science Act of 2022 (CHIPS) and the Inflation Reduction Act (IRA) of 2022 were signed into law by President Biden on August 9, 2022 and August 16, 2022, respectively.

The legislation introduces new options for monetizing certain credits, a corporate alternative minimum tax, and a stock repurchase excise tax.

The Company is currently evaluating the impact of CHIPS and IRA, but at present does not expect that any of the provisions included in these acts would result in a material impact to our deferred tax assets, liabilities, or income taxes payable.

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 10, 2022 July 11, 2021 July 10, 2022 July 11, 2021

Twelve Weeks Ended Forty Weeks Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Restaurant revenue $ 282,449 $ 270,202 $ 951,718 $ 861,036

4 unchanged sentences

Total revenues $ 286,888 $ 275,444 $ 976,528 $ 878,694

(1) During the twenty-eight weeks ended July 10, 2022, the Company re-evaluated the estimated redemption pattern related to gift cards and aligned the recognition of gift card breakage revenue to the updated estimated redemption pattern.

See Footnote 1, Basis of Presentation and Recent Accounting Pronouncements.

(1) During the forty weeks ended October 2, 2022, the Company re-evaluated the estimated redemption pattern related to gift cards and aligned the recognition of gift card breakage revenue to the updated estimated redemption pattern.

Basis of Presentation and Recent Accounting Pronouncements.

Contract liabilities

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

July 10, 2022 December 26, 2021

October 2, 2022 December 26, 2021

Unearned gift card revenue $ 23,971 $ 41,128

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):

Twenty-Eight Weeks Ended

July 10, 2022 July 11, 2021

Forty Weeks Ended

October 2, 2022 October 3, 2021

Gift card revenue $ 19,788 $ 14,448

The Company's finance and operating lease assets and liabilities as of July 10, 2022 and December 26, 2021 were as follows (in thousands):

July 10, 2022 Finance (1)

The Company's finance and operating lease assets and liabilities as of October 2, 2022 and December 26, 2021 were as follows (in thousands):

October 2, 2022 Finance (1)

Operating (2)

11 unchanged sentences

Total $ 11,959 $ 483,978

(1) Finance lease assets and obligations are included in Other assets, net, Accrued liabilities and other current liabilities, and Other non-current liabilities on our July 10, 2022 and December 26, 2021 Consolidated Balance Sheets.

(2) Operating lease assets and obligations are included in Operating lease assets, net, Current portion of operating lease liabilities, and Long-term portion of operating lease liabilities on our July 10, 2022 and December 26, 2021 Consolidated Balance Sheets.

(1) Finance lease assets and obligations are included in Other assets, net, Accrued liabilities and other current liabilities, and Other non-current liabilities on our October 2, 2022 and December 26, 2021 Condensed Consolidated Balance Sheets.

(2) Operating lease assets and obligations are included in Operating lease assets, net, Current portion of operating lease liabilities, and Long-term portion of operating lease liabilities on our October 2, 2022 and December 26, 2021 Condensed Consolidated Balance Sheets.

(3) The Lease assets, net caption includes the right of use assets associated with the Company's Finance and Operating leases, net of the associated amortization of these right of use assets.

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 10, 2022 July 11, 2021 July 10, 2022 July 11, 2021

Twelve Weeks Ended Forty Weeks Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Operating lease cost $ 15,793 $ 16,061 $ 53,904 $ 53,765

5 unchanged sentences

Total $ 20,295 $ 20,885 $ 70,289 $ 70,100

Maturities of our lease liabilities as of July 10, 2022 were as follows (in thousands):

Maturities of our lease liabilities as of October 2, 2022 were as follows (in thousands):

Finance Leases Operating Leases

9 unchanged sentences

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

Twenty-Eight Weeks Ended

July 10, 2022 July 11, 2021

Forty Weeks Ended

October 2, 2022 October 3, 2021

Cash flows from operating activities

15 unchanged sentences

Weighted average discount rate 4.89 % 4.56 %

On June 8, 2022 the Company closed on an agreement to sell a real estate property that the Company owned and lease it back on a short-term basis.

The Company collected initial net proceeds from the purchaser-lessor of $ 3.9 million, which represents a portion of the total consideration to be received from the sale.

The Company did not recognize a sale in the second quarter of 2022 as certain criteria to recognize a sale in accordance with ASC Topic 842, Leases , and ASC Topic 606, Revenue from Contracts with Customers , were not met.

The Company did not derecognize the property, and the proceeds have been recorded on the Condensed Consolidated Balance Sheet in Accrued liabilities and other, and are included within cash flows from financing activities on the Condensed Consolidated Statements of Cash Flows for the twenty-eight weeks ended July 10, 2022.

The Company expects to recognize a gain on this transaction when sale recognition criteria have been met.

Loss Per Share

3 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 twenty-eight weeks ended July 10, 2022 and July 11, 2021, all potentially dilutive common shares are considered anti-dilutive.

As the Company was in a net loss position for each of the twelve and forty weeks ended October 2, 2022 and October 3, 2021, 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 10, 2022 July 11, 2021 July 10, 2022 July 11, 2021

Twelve Weeks Ended Forty Weeks Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Basic weighted average shares outstanding 15,892 15,709 15,816 15,647

2 unchanged sentences

Awards excluded due to anti-dilutive effect on diluted loss per share 869 545 1,010 390

Other Charges, net

Other charges, net consisted of the following (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 10, 2022 July 11, 2021 July 10, 2022 July 11, 2021

Other Charges (Gains), net

Other charges (gains), net consisted of the following (in thousands):

Twelve Weeks Ended Forty Weeks Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Asset impairment $ 2,187 $ — $ 13,048 $ 1,357

Litigation contingencies ( 1,806 ) 85 ( 86 ) 1,170

Restaurant closure and refranchising costs 930 1,752 1,879 4,199

Gain on sale of restaurant property ( 9,204 ) — ( 9,204 ) —

Executive transition 1,825 — 1,954 —

Other financing costs 1,022 — 1,392 —

COVID-19 related charges 123 299 423 1,112

Executive transition 129 — 129 —

Restaurant closure costs (gains) ( 1,570 ) 1,102 309 5,301

Closed corporate office, net of sublease income 267 — 267 —

Litigation contingencies 133 160 47 1,330

Board and stockholder matter costs — — — 128

Other charges, net $ 8,146 $ 2,196 $ 13,453 $ 7,667

The Company recognized non-cash impairment charges primarily related to restaurant assets at six and nine Company-owned restaurants during the twelve and twenty-eight weeks ended July 10, 2022, respectively, and one Company-owned restaurant for the twenty-eight weeks ended July 11, 2021.

Restaurant closure 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.

Litigation contingencies during the twelve and twenty-eight weeks ended July 10, 2022 include the impact of cash proceeds received by the Company related to certain legal claims.

Litigation contingencies during the twelve and twenty-eight weeks ended July 10, 2022 and July 11, 2021 include legal settlement costs accrued related to pending or threatened litigation.

Other financing costs include fees related to the entry by the Company into the New Credit Agreement (as defined below) on March 4, 2022 that were not capitalized with the closing of the New Credit Facility.

See Footnote 6.

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 related to the COVID-19 pandemic.

Other charges (gains), net $ ( 5,217 ) $ 1,561 $ 8,236 $ 9,228

The Company recognized non-cash impairment charges primarily related to restaurant assets at one and ten Company-owned restaurants during the twelve and forty weeks ended October 2, 2022, respectively, and one Company-owned restaurant for the forty weeks ended October 3, 2021.

During the second quarter of 2022 the Company closed on an agreement to sell a restaurant property that the Company owned and leased back on a short-term basis.

The Company collected initial net proceeds from the purchaser-lessor of $ 3.9 million, which represented a portion of the total consideration received from the sale.

During third quarter of 2022, the Company received the remaining proceeds, upon which the lease terminated and the sale transaction was completed, and recognized a $ 9.2 million gain on the sale of the restaurant property .

The initial net proceeds of $ 3.9 million are included within cash flows from financing activities and the final proceeds received of $ 8.5 million are included within cash flows from investing activities on the Condensed Consolidated Statements of Cash Flows for the forty weeks ended October 2, 2022.

Executive transition costs include costs associated with transitioning to a new Chief Executive Officer.

Other financing costs include fees related to the entry by the Company into the new Credit Agreement (as defined below) on March 4, 2022 that were not capitalized with the closing of the Credit Facility.

Restaurant closure costs (gains) include the ongoing restaurant operating costs of the Company-owned restaurants incurred for permanently closed restaurants and closed restaurant lease termination gains or losses.

Closed corporate office, net of sublease income includes expense and sublease income related to a corporate office facility that was vacated and subleased.

Litigation contingencies during the twelve and forty weeks ended October 2, 2022 include the impact of cash proceeds received by the Company related to certain legal claims.

Litigation contingencies during the twelve and forty weeks ended October 2, 2022 and October 3, 2021 include legal settlement costs accrued related to pending or threatened litigation.

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

Borrowings as of July 10, 2022 and December 26, 2021 are summarized below (in thousands):

July 10, 2022 Weighted

Borrowings as of October 2, 2022 and December 26, 2021 are summarized below (in thousands):

October 2, 2022 Weighted

Interest Rate December 26, 2021 Weighted

8 unchanged sentences

Revolving line of credit unamortized deferred financing charges (1) :

$ 1,042 $ 2,015

(1) Loan origination costs associated with the Company's credit facility are included as deferred costs in Other assets, net for financing charges allocated to the Revolving line of credit, and Long-term debt for financing charges associated with the term loan in the accompanying Condensed Consolidated Balance Sheets.

1 unchanged sentence

On March 4, 2022, the Company replaced its prior amended and restated credit agreement (the "Prior Credit Agreement") with a new Credit Agreement (the "Credit Agreement") by and among the Company, Red Robin International, Inc., as the borrower, the lenders from time to time party thereto, the issuing banks from time to time party thereto, Fortress Credit Corp., as Administrative Agent and as Collateral Agent and JPMorgan Chase Bank, N.A., as Sole Lead Arranger and Sole Bookrunner.

The five-year $ 225.0 million Credit Agreement provides for a $ 25.0 million revolving line of credit and a $ 200.0 million term loan.

The five-year $ 225.0 million Credit Agreement provides for a $ 25.0 million revolving line of credit and a $ 200.0 million term loan (collectively, the "Credit Facility").

The borrower maintains the option to increase the Credit Agreement in the future, subject to lenders’ participation, by up to an additional $ 40.0 million in the aggregate on the terms and conditions set forth in the Credit Agreement.

The Credit Facility will mature on March 4, 2027.

No amortization is required with respect to the revolving Credit Agreement.

No amortization is required with respect to the revolving Credit Facility.

The term loans require quarterly principal payments in an aggregate annual amount equal to 1.0 % of the original principal amount of the term loan.

The Credit Agreement's interest rate references SOFR, a new index calculated by short-term repurchase agreements and backed by U.S.

The Credit Agreement's interest rate references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed by U.S.

Treasury securities, or the Alternate Base Rate ("ABR"), which represents the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.5 % per annum, or (c) one-month term SOFR plus 1.0 % per annum.

The variable interest rate on the term loan was 10.31 % as of October 2, 2022.

Red Robin International, Inc.

3 unchanged sentences

On March 4, 2022, Red Robin International, Inc., the Company, and the guarantors also entered into a Pledge and Security Agreement (the “Security Agreement”) granting to the Administrative Agent a first priority security interest in substantially all of the assets of the borrower and the guarantors to secure the obligations under the Credit Agreement.

This new Security Agreement replaces the existing security agreement, dated January 10, 2020, which was entered into in connection with the Prior Credit Agreement.

This new Security Agreement replaced the existing security agreement, dated January 10, 2020, which was entered into in connection with the Prior Credit Agreement.

Red Robin International, Inc.

2 unchanged sentences

In connection with such termination and new borrowings under the new Credit Agreement, the Company paid off all outstanding borrowings, accrued interest, and fees under the Prior Credit Agreement.

The summary descriptions of the Credit Agreement and the Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Credit Agreement and the Security Agreement, respectively, which were filed as exhibits to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2022.

During the first quarter of 2022, the Company expensed approximately $ 1.7 million of deferred financing charges related to the extinguishment of the Prior Credit Agreement on March 4, 2022.

These charges were recorded to interest expense, net and other on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the twenty-eight weeks ended July 10, 2022.

In association with the issuance of the new Credit Agreement, the Company recognized $ 4.8 million of deferred financing charges, and $ 6.1 million of original issuance discount.

These charges were recorded to interest expense, net and other on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the forty weeks ended October 2, 2022.

In association with the execution of the new Credit Agreement, the Company recognized $ 4.8 million of deferred financing charges, and $ 6.1 million of original issuance discount.

Fair Value Measurements

4 unchanged sentences

Fair market value of mutual funds is measured using level 1 inputs (quoted prices for identical assets in active markets).

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 10, 2022 and December 26, 2021 (in thousands):

July 10, 2022 Level 1 Level 2 Level 3

The following tables present the Company's assets measured at fair value on a recurring basis included in Other assets, net on the accompanying Condensed Consolidated Balance Sheets as of October 2, 2022 and December 26, 2021 (in thousands):

October 2, 2022 Level 1 Level 2 Level 3

Investments in rabbi trust $ 4,020 $ 4,020 $ — $ —

7 unchanged sentences

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 Note 5, Other Charges, net .

We impaired long-lived restaurant assets with a carrying value (including right of use lease assets) of $ 18.5 million and $ 21.6 million, recognizing an impairment expense of $ 8.7 million and $ 10.9 million during the twelve and twenty-eight weeks ended July 10, 2022, respectively, related to the net book value of these long-lived restaurant assets.

We determined the fair value of these long-lived assets to be $ 9.8 million and $ 10.7 million in the twelve and twenty-eight weeks ended July 10, 2022, respectively.

Other Charges (Gains), net.

We impaired long-lived restaurant assets with a carrying value (including right of use lease assets) of $ 5.8 million and $ 27.3 million, recognizing an impairment expense of $ 2.2 million and $ 13.0 million during the twelve and forty weeks ended October 2, 2022, respectively, related to the net book value of these long-lived restaurant assets.

We determined the fair value of these long-lived assets to be $ 3.6 million and $ 14.3 million in the twelve and forty weeks ended October 2, 2022, respectively.

The impairment was recorded as a result of quantitative impairment analyses.

1 unchanged sentence

The Company's liability under its credit facility is carried at historical cost in the accompanying Condensed Consolidated Balance Sheets.

As of July 10, 2022, the fair value of the credit facility was approximately $ 195.1 million and the principal amount carrying value was $ 199.5 million.

The credit facility term loan is reported net of $ 9.0 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of July 10, 2022.

As of October 2, 2022, the fair value of the credit facility was approximately $ 194.8 million and the principal amount carrying value was $ 199.0 million.

The credit facility term loan is reported net of $ 8.6 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of October 2, 2022.

The carrying value approximated the fair value of the credit facility as of December 26, 2021, as the interest rate on the instrument approximated current market rates.

4 unchanged sentences

In addition, damage amounts claimed in litigation against us may be unsupported, exaggerated, or unrelated to possible outcomes, and as such are not meaningful indicators of our potential liability or financial exposure.

Accordingly, we review the adequacy of accruals and disclosures 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.

However, the ultimate resolution of litigated claims may differ from our current estimates.

4 unchanged sentences

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.

As of July 10, 2022, we had a balance of $ 4.4 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet.

As of October 2, 2022, we had a balance of $ 4.5 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet.

We ultimately may be subject to greater or less than the accrued amount.

As of July 10, 2022, we had non-cancellable purchase commitments to certain vendors who provide food and beverages and other supplies to our restaurants, for an aggregate of $ 135.4 million.

As of October 2, 2022, we had non-cancellable purchase commitments to certain vendors who provide food and beverages and other supplies to our restaurants, for an aggregate of $ 128.4 million.

We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded.

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