Item 5. Other Information
ITEM 5. Other Information
Immaterial Correction of Prior Period Financial Statements
As discussed in Note 1 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, the Company discovered a multi-year error in its calculation and recognition of revenue related to gift cards, primarily related to breakage revenue for bonus and discounted gift cards for which no or discounted monetary consideration was received, which resulted in the Company overstating total revenue by $0.2 million for the sixteen weeks ended April 16, 2023, $1.1 million for the year ended December 25, 2022, and $0.5 million for the twenty-eight weeks ended July 10, 2022. The period (rollover) impact of the error correction on net loss for the year ended December 25, 2022 increased net loss by $1.1 million. Management has evaluated this misstatement and concluded it was not material to prior periods, individually or in the aggregate. However, correcting the cumulative effect of the error in the twelve and twenty-eight weeks ended July 9, 2023 would have had a significant effect on the results of operations Therefore, the Company plans to correct the Consolidated Financial Statements for the prior periods that will be presented in the Form 10-K filing for the year ended December 31, 2023. The Company also plans to correct the comparable Q3 2022 and Q1 2023 Condensed Consolidated Financial Statements that will be presented in the Q3 2023 and Q1 2024 Form 10-Q filings, respectively.
The following table reflects the effects of the correction on all affected line items of the Company's previously reported Condensed Consolidated Financial Statements for the sixteen weeks ended April 16, 2023, which will be corrected in future filings:
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
Sixteen Weeks Ended April 16, 2023
(in thousands) As Previously Reported Adjustment As Corrected
Restaurant revenue $ 406,893 $ — $ 406,893
Franchise and other revenues 11,075 (156) 10,919
Total revenues 417,968 (156) 417,812
Loss before income taxes (3,080) (156) (3,236)
Net loss (3,100) (156) (3,256)
Net loss per share (0.19) (0.01) (0.20)
Total comprehensive loss (3,092) (156) (3,248)
OTHER NON-GAAP INFORMATION:
Adjusted EBITDA 36,080 (156) 35,924
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (unaudited)
Sixteen Weeks Ended April 16, 2023
(in thousands) Accumulated Deficit Total Shareholders' Equity
As Previously Reported
Balance, December 25, 2022 $ (50,604) $ 5,375
Net loss (3,100) (3,100)
Balance, April 16, 2023 (53,704) 4,686
Adjustments
Balance, December 25, 2022 (3,586) (3,586)
Net loss (156) (156)
Balance, April 16, 2023 (3,741) (3,741)
As Corrected
Balance, December 25, 2022 (54,190) 1,789
Net loss (3,256) (3,256)
Balance, April 16, 2023 $ (57,445) $ 945
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CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Sixteen Weeks Ended April 16, 2023
(in thousands) As Previously Reported Adjustment As Corrected
Net income (loss) $ (3,100) $ (156) $ (3,256)
Gift card breakage (4,965) 156 (4,809)
Unearned revenue (7,949) — (7,949)
The following tables reflect the effects of the correction on all affected line items of the Company's previously reported Consolidated Financial Statements as of and for the year ended December 25, 2022 to be presented as comparative in the Form 10-K for the year ended December 31, 2023:
CORRECTED CONSOLIDATED BALANCE SHEETS (unaudited)
December 25, 2022
(in thousands) As Previously Reported Adjustment As Corrected
Unearned revenue $ 43,358 $ 3,586 $ 46,944
Total current liabilities 216,627 3,586 220,213
Total liabilities 826,770 3,586 830,356
Accumulated deficit (50,604) (3,586) (54,190)
Total stockholders' equity 5,375 (3,586) 1,789
CORRECTED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
Fifty-Two Weeks Ended December 25, 2022
(in thousands) As Previously Reported Adjustment As Corrected
Restaurant revenue $ 1,230,318 $ (129) $ 1,230,189
Franchise and other revenues 16,993 (954) 16,039
Total revenues 1,266,617 (1,083) 1,265,534
Loss before income taxes (77,053) (1,083) (78,136)
Net loss (77,800) (1,083) (78,883)
Net loss per share (4.91) (0.07) (4.98)
Total comprehensive loss (77,835) (1,083) (78,918)
OTHER NON-GAAP INFORMATION:
Adjusted EBITDA 52,789 (679) 52,110
CORRECTED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (unaudited)
Fifty-Two Weeks Ended December 25, 2022
(in thousands) Retained Earnings/(Accumulated Deficit) Total Shareholders' Equity
As Previously Reported
Balance, December 26, 2021 $ 27,196 $ 76,974
Net loss (77,800) (77,800)
Balance, December 25, 2022 (50,604) 5,375
Adjustments
Balance, December 26, 2021 (2,503) (2,503)
Net loss (1,083) (1,083)
Balance, December 25, 2022 (3,586) (3,586)
As Corrected
Balance, December 26, 2021 24,693 74,471
Net loss (78,883) (78,883)
Balance, December 25, 2022 $ (54,190) $ 1,789
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CORRECTED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Fifty-Two Weeks Ended December 25, 2022
(in thousands) As Previously Reported Adjustment As Corrected
Net loss $ (77,800) $ (1,083) $ (78,883)
Gift card breakage (14,761) 954 (13,807)
Unearned revenue 3,906 129 4,035
The following tables reflect the effects of the correction on all affected line items of the Company's previously reported Condensed Consolidated Financial Statements to be presented as comparative in the Form 10-Q for the twelve and forty weeks ended October 1, 2023:
CORRECTED CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
December 25, 2022
(in thousands) As Previously Reported Adjustment As Corrected
Unearned revenue $ 43,358 $ 3,586 $ 46,944
Total current liabilities 216,627 3,586 220,213
Total liabilities 826,770 3,586 830,356
Accumulated deficit (50,604) (3,586) (54,190)
Total stockholders' equity 5,375 (3,586) 1,789
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
Twelve Weeks Ended October 2, 2022
Forty Weeks Ended October 2, 2022
(in thousands) As Previously Reported Adjustment As Corrected As Previously Reported Adjustment As Corrected
Restaurant revenue $ 282,449 $ (34) $ 282,415 $ 951,718 $ (85) $ 951,633
Franchise and other revenues 4,439 (49) 4,390 24,810 (508) 24,302
Total revenues 286,888 (83) 286,805 976,528 (593) 975,935
Loss before income taxes (12,610) (83) (12,693) (33,152) (593) (33,744)
Net loss (12,567) (83) (12,650) (33,605) (593) (34,197)
Net loss per share (0.79) (0.01) (0.80) (2.12) (0.04) (2.16)
Total comprehensive loss (12,612) (83) (12,695) (33,656) (593) (34,249)
OTHER NON-GAAP INFORMATION:
Adjusted EBITDA 3,960 (83) 3,877 43,900 (189) 43,711
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CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (unaudited)
Forty Weeks Ended October 2, 2022
(in thousands) Retained Earnings/(Accumulated Deficit) Total Shareholders' Equity
As Previously Reported
Balance, December 26, 2021 $ 27,196 $ 76,974
Net loss (3,105) (3,105)
Balance, April 17, 2022 24,091 76,857
Adjustments
Balance, December 26, 2021 (2,503) (2,503)
Net loss (476) (476)
Balance, April 17, 2022 (2,979) (2,979)
As Corrected
Balance, December 26, 2021 24,693 74,471
Net loss (3,581) (3,581)
Balance, April 17, 2022 21,112 73,878
As Previously Reported
Balance, April 17, 2022 24,091 76,857
Net loss (17,932) (17,932)
Balance, July 10, 2022 6,159 61,575
Adjustments
Balance, April 17, 2022 (2,979) (2,979)
Net loss (34) (34)
Balance, July 10, 2022 (3,013) (3,013)
As Corrected
Balance, April 17, 2022 21,112 73,878
Net loss (17,966) (17,966)
Balance, July 10, 2022 3,146 58,562
As Previously Reported
Balance, July 10, 2022 6,159 61,575
Net loss (12,567) (12,567)
Balance, October 2, 2022 (6,408) 51,627
Adjustments
Balance, July 10, 2022 (3,013) (3,013)
Net loss (83) (83)
Balance, October 2, 2022 (3,096) (3,096)
As Corrected
Balance, July 10, 2022 3,146 58,562
Net loss (12,650) (12,650)
Balance, October 2, 2022 $ (9,504) $ 48,531
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Forty Weeks Ended October 2, 2022
(in thousands) As Previously Reported Adjustment As Corrected
Net loss $ (33,605) $ (593) $ (34,198)
Gift card breakage (8,289) 508 (7,781)
Unearned revenue (8,386) 85 (8,301)
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The following tables reflect the effects of the correction on all affected line items of the Company's previously reported Consolidated Financial Statements to be presented as comparative in the Form 10-K for the year ended December 31, 2023:
CORRECTED CONSOLIDATED BALANCE SHEETS (unaudited)
December 26, 2021
(in thousands) As Previously Reported Adjustment As Corrected
Unearned revenue $ 54,214 $ 2,503 $ 56,717
Total current liabilities 223,300 2,503 225,803
Total liabilities 852,024 2,503 854,527
Retained earnings 27,196 (2,503) 24,693
Total stockholders' equity 76,974 (2,503) 74,471
CORRECTED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
Fifty-Two Weeks Ended December 26, 2021
(in thousands) As Previously Reported Adjustment As Corrected
Restaurant revenue $ 1,137,733 $ (90) $ 1,137,643
Franchise and other revenues 7,109 (351) 6,758
Total revenues 1,162,078 (441) 1,161,637
Loss before income taxes (50,154) (441) (50,595)
Net loss (50,002) (441) (50,443)
Net loss per share (3.19) (0.03) (3.22)
Total comprehensive loss (49,997) (441) (50,438)
OTHER NON-GAAP INFORMATION:
Adjusted EBITDA 63,526 (441) 63,085
CORRECTED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (unaudited)
Fifty-Two Weeks Ended December 26, 2021
(in thousands) Retained Earnings Total Shareholders' Equity
As Previously Reported
Balance, December 27, 2020 $ 77,198 $ 120,713
Net loss (50,002) (50,002)
Balance, December 26, 2021 27,196 76,974
Adjustments
Balance, December 27, 2020 (2,063) (2,063)
Net loss (441) (441)
Balance, December 26, 2021 (2,503) (2,503)
As Corrected
Balance, December 27, 2020 75,135 118,650
Net loss (50,443) (50,443)
Balance, December 26, 2021 $ 24,693 $ 74,471
CORRECTED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Fifty-Two Weeks Ended December 26, 2021
(in thousands) As Previously Reported Adjustment As Corrected
Net loss $ (50,002) $ (441) $ (50,443)
Gift card breakage (5,373) 351 (5,022)
Unearned revenue 9,449 90 9,539
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Securities Trading Plans of Directors and Executive Officers
During the twelve weeks ended July 9, 2023, none of our directors or officers adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S-K.
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ITEM 6. Exhibits
Exhibit
Number Description
(3.1)
Restated Certificate of Incorporation of Red Robin Gourmet Burgers, Inc., dated as of May 28, 2015. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on May 29, 2015.
(3.2)
Fifth Amended and Restated Bylaws dated March 20, 2023. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on March 24, 2023.
(10.1)
Amendment No. 1 dated July 17, 2023 by and among Red Robin Gourmet Burgers, Inc., Red Robin International, Inc., Fortress Credit Corp. and the lenders party thereto, to Credit Agreement, dated March 4, 2022. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 19, 2023.
(10.2)
Severance Agreement by and between Red Robin Gourmet Burgers, Inc. and Wayne Davis, dated June 8, 2023. Incorporated by reference to Exhibit 10.1 to our amended Current Report on Form 8-K/A filed on June 9, 2023.
31.1
Rule 13a-14(a) Certification of Chief Executive Officer
31.2
Rule 13a-14(a) Certification of Chief Financial Officer
32.1
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer
101 The following financial information from the Quarterly Report on Form 10-Q of Red Robin Gourmet Burgers, Inc. for the quarter ended July 9, 2023 formatted in XBRL (extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at July 9, 2023 and December 25, 2022; (ii) Condensed Consolidated Statements of Operations and Comprehensive Loss for the twenty-eight weeks ended July 9, 2023 and July 10, 2022; (iii) Condensed Consolidated Statements of Stockholders' Equity at July 9, 2023 and July 10, 2022; (iv) Condensed Consolidated Statements of Cash Flows for the twenty-eight weeks ended July 9, 2023 and July 10, 2022; and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
( ) Exhibits previously filed in the Company's periodic filings as specifically noted.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RED ROBIN GOURMET BURGERS, INC.
(Registrant)
August 17, 2023 By:
/s/ Todd Wilson
(Date)
Todd Wilson
(Chief Financial Officer)
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.