What changed in this filing

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Item 1. Financial Statements

2020-11-02 compared with 2020-07-29 · 122 added, 68 removed, 245 unchanged (44% of the section changed)

4 unchanged sentences

(amounts in thousands, except share and par value amounts)

September 26,

2020 December 28,

28 unchanged sentences

100,000,000 shares authorized;

29,596,347 and 29,457,228 shares issued and outstanding as of June 27, 2020 and December 28, 2019, respectively

29,683,465 and 29,457,228 shares issued and outstanding as of September 26, 2020 and December 28, 2019, respectively

Additional paid-in-capital 496 552

7 unchanged sentences

(amounts in thousands, except per share data)

Thirteen Weeks Ended Twenty-Six Weeks Ended

2020 June 29,

2019 June 27,

2020 June 29,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Royalty revenue, franchise fees and other $ 28,806 $ 21,876 $ 80,863 $ 64,391

12 unchanged sentences

Income before income tax expense 9,896 7,706 34,545 21,055

Income tax expense 3,784 1,070 5,014 1,825

Income tax expense (benefit) ( 185 ) 1,801 4,829 3,626

Net income $ 10,081 $ 5,905 $ 29,716 $ 17,429

11 unchanged sentences

Consolidated Statements of Stockholders' Deficit

For the Twenty-Six Weeks Ended June 29, 2019 and June 27, 2020

For the Thirty-Nine Weeks Ended September 28, 2019

(amounts in thousands, except share data)

16 unchanged sentences

Balance at June 29, 2019 29,442,728 295 892 ( 217,555 ) ( 216,368 )

Net income — — — 5,905 5,905

Shares issued under stock plans 11,560 — 174 — 174

Tax payments for restricted stock upon vesting ( 914 ) — — ( 84 ) ( 84 )

Stock-based compensation expense — — 2,043 — 2,043

Dividends paid — — ( 2,772 ) ( 473 ) ( 3,245 )

Balance at September 28, 2019 29,453,374 $ 295 $ 337 $ ( 212,207 ) $ ( 211,575 )

See accompanying notes to consolidated financial statements.

WINGSTOP INC.

AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

For the Thirty-Nine Weeks Ended September 26, 2020

(amounts in thousands, except share data)

Shares Amount Additional

13 unchanged sentences

Balance at June 27, 2020 29,596,347 296 43 ( 193,011 ) ( 192,672 )

Net income — — — 10,081 10,081

Shares issued under stock plans 87,751 1 328 — 329

Tax payments for restricted stock upon vesting ( 633 ) — — ( 99 ) ( 99 )

Stock-based compensation expense — — 3,007 — 3,007

Dividends paid — — ( 2,882 ) ( 1,301 ) ( 4,183 )

Balance at September 26, 2020 29,683,465 $ 297 $ 496 $ ( 184,330 ) $ ( 183,537 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(amounts in thousands)

Twenty-Six Weeks Ended

2020 June 29,

Thirty-Nine Weeks Ended

September 26,

2020 September 28,

Operating activities

16 unchanged sentences

Purchases of property and equipment ( 3,729 ) ( 21,082 )

Acquisitions of restaurants from franchisees ( 5,635 ) ( 1,229 )

Proceeds from sales of assets 4,800 —

4 unchanged sentences

Repayments of long-term debt ( 800 ) ( 1,600 )

Payment of deferred financing costs — ( 15 )

Tax payments for restricted stock upon vesting ( 340 ) ( 1,143 )

11 unchanged sentences

Wingstop Inc., together with its consolidated subsidiaries (collectively, “Wingstop” or the “Company”), is in the business of franchising and operating Wingstop restaurants.

As of June 27, 2020, the Company had 1,244 domestic franchised restaurants, and 162 international franchised restaurants.

As of June 27, 2020, the Company owned and operated 30 restaurants.

As of September 26, 2020, the Company had 1,277 domestic franchised restaurants and 171 international franchised restaurants.

As of September 26, 2020, the Company owned and operated 31 restaurants.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.

Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States have been condensed or omitted.

Balance sheet amounts are as of June 27, 2020 and December 28, 2019, and operating results are for the thirteen and twenty-six weeks ended June 27, 2020 and June 29, 2019.

Balance sheet amounts are as of September 26, 2020 and December 28, 2019, and operating results are for the thirteen and thirty-nine weeks ended September 26, 2020 and September 28, 2019.

In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented.

4 unchanged sentences

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of June 27, 2020 and December 28, 2019 were as follows (in thousands):

June 27, 2020 December 28, 2019

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of September 26, 2020 and December 28, 2019 were as follows (in thousands):

September 26, 2020 December 28, 2019

Cash and cash equivalents $ 48,230 $ 12,849

7 unchanged sentences

The management approach is based upon the way management reviews performance and allocates resources.

Due to changes in how the Company’s chief operating decision maker assesses the Company’s performance and allocates resources, the Company reevaluated its operating segments and has determined it has one operating segment and one reporting segment.

During the second fiscal quarter of 2020, the Company reevaluated its operating segments and determined it has one operating segment and one reporting segment due to changes in how the Company’s chief operating decision maker assesses the Company’s performance and allocates resources.

Recently Issued Accounting Pronouncements

12 unchanged sentences

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

2020 June 29,

2019 June 27,

2020 June 29,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Basic weighted average shares outstanding 29,642 29,449 29,572 29,401

1 unchanged sentence

Diluted weighted average shares outstanding 29,854 29,696 29,791 29,667

For the thirteen weeks ended June 27, 2020 and June 29, 2019, equity awards representing approximately 1,000 and 6,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

For the twenty-six weeks ended June 27, 2020 and June 29, 2019, equity awards representing approximately 1,000 and 18,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

For the thirteen weeks ended September 26, 2020 and September 28, 2019, equity awards representing approximately 400 and 100 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

For the thirty-nine weeks ended September 26, 2020 and September 28, 2019, equity awards representing approximately 400 and 2,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

(3) Dividends

In each of the first two quarters of 2020, the Company’s Board of Directors declared a quarterly dividend of $ 0.11 per share of common stock, which, in the aggregate, totaled $ 6.5 million, or $ 0.22 per share of common stock, and which was paid during the twenty-six weeks ended June 27, 2020.

Subsequent to the second quarter, on July 28, 2020, the Company’s Board of Directors declared a quarterly dividend of $ 0.14 per share of common stock for stockholders of record as of August 28, 2020, to be paid on September 11, 2020, totaling approximately $ 4.1 million.

The Company’s Board of Directors declared a quarterly dividend of $0.11 per share of common stock in each of the first two quarters, and a quarterly dividend of $0.14 per share of common stock in the third quarter, resulting in aggregate dividend payments of $ 10.7 million, or $ 0.36 per share of common stock, during the thirty-nine weeks ended September 26, 2020.

Subsequent to the third quarter, on November 2, 2020, the Company’s Board of Directors announced a quarterly dividend of $0.14 per share of common stock, payable to stockholders of record as of November 20, 2020.

The regular quarterly dividend is to be paid on December 10, 2020, totaling approximately $ 4.2 million.

On October 30, 2020, in conjunction with the completion of a transaction to refinance the Company's existing securitized financing facility, the Company’s Board of Directors declared a special dividend of $ 5.00 per share of common stock, payable to stockholders of record as of November 20, 2020.

The special dividend is to be paid on December 3, 2020, totaling approximately $ 149 million.

(4) Fair Value Measurements

4 unchanged sentences

Level 3 — Unobservable inputs reflecting management’s estimates and assumptions.

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short-term nature.

Fair value of debt is determined on a non-recurring basis, which results are summarized as follows (in thousands):

June 27, 2020 December 28, 2019

September 26, 2020 December 28, 2019

Fair Value Carrying

5 unchanged sentences

(1) The fair value of the 2018-1 Class A-2 Senior Secured Notes was estimated using available market information.

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(2) The fair value of the 2018-1 Class A-1 Variable Funding Senior Notes was estimated based on the borrowing rates currently available for variable rate loans obtained from third-party lending institutions and approximated the book value of such 2018-1 Class A-1 Variable Funding Senior Notes.

1 unchanged sentence

(5) Income Taxes

Income tax expense and the effective tax rate were $ 3.8 million and 24.7 %, respectively, for the thirteen weeks ended June 27, 2020, and $ 1.1 million and 17.9 %, respectively, for the thirteen weeks ended June 29, 2019.

Income tax expense and the effective tax rate were $ 5.0 million and 20.3 %, respectively, for the twenty-six weeks ended June 27, 2020, and $ 1.8 million and 13.7 %, respectively, for the twenty-six weeks ended June 29, 2019.

Income tax expense for the thirteen and twenty-six weeks ended June 27, 2020 included $ 0.2 million and $ 1.5 million, respectively, in tax benefits resulting from the recognition of excess tax benefits from stock-based compensation, as compared to $ 0.6 million and $ 1.8 million in tax benefits for the thirteen and twenty-six weeks ended June 29, 2019, respectively.

Income tax benefit and the effective tax rate were $ 0.2 million and ( 1.9 )%, respectively, for the thirteen weeks ended September 26, 2020, compared to income tax expense and an effective tax rate of $ 1.8 million and 23.4 %, respectively, for the thirteen weeks ended September 28, 2019.

Income tax expense and the effective tax rate were $ 4.8 million and 14.0 %, respectively, for the thirty-nine weeks ended September 26, 2020, and $ 3.6 million and 17.2 %, respectively, for the thirty-nine weeks ended September 28, 2019.

Income tax expense for the thirteen and thirty-nine weeks ended September 26, 2020 included $ 2.9 million and $ 4.4 million, respectively, in tax benefits resulting from the recognition of excess tax benefits from stock-based compensation, as compared to $ 0.1 million and $ 1.9 million in tax benefits for the thirteen and thirty-nine weeks ended September 28, 2019, respectively.

(6) Debt Obligations

Long-term debt consists of the following components (in thousands):

June 27, 2020 December 28, 2019

Long-term debt consisted of the following components (in thousands):

September 26, 2020 December 28, 2019

2018-1 Class A-2 Senior Secured Notes $ 316,800 $ 317,600

4 unchanged sentences

Long-term debt, net $ 311,240 $ 307,669

The Company's outstanding debt consists of (i) Series 2018-1 4.97 % Fixed Rate Senior Secured Notes, Class A-2 (the “Class A-2 Notes”) issued by Wingstop Funding LLC (the “Issuer”), a limited-purpose, bankruptcy-remote, wholly owned indirect subsidiary of Wingstop Inc.

and (ii) Series 2018-1 Variable Funding Senior Notes, Class A-1, which permit borrowings of up to a maximum principal amount of $ 20 million, which may be used to borrow amounts on a revolving basis and to issue letters of credit (the “Variable Funding Notes,” and together with the Class A-2 Notes, the “Notes”).

As of June 27, 2020, we had $ 316.8 million of Class A-2 Notes outstanding and $ 16.0 million of Variable Funding Notes outstanding.

As of September 26, 2020, we had $ 316.8 million of outstanding Series 2018-1 4.97 % Fixed Rate Senior Secured Notes, Class A-2 (the “2018 Class A-2 Notes”) and $ 16.0 million of outstanding Series 2018-1 Variable Funding Senior Notes, Class A-1 (the “2018 Variable Funding Notes,” and together with the 2018 Class A-2 Notes, the “2018 Notes”).

The 2018 Variable Funding Notes were issued in the first quarter of 2020 as a precautionary measure to improve the Company's cash position.

The Variable Funding Notes had a weighted average interest rate of 2.72 % during the twenty-six weeks ended June 27, 2020 and are classified as current debt.

The 2018 Variable Funding Notes had a weighted average interest rate of 2.72 % during the thirty-nine weeks ended September 26, 2020 and are classified as current debt.

There were no borrowings outstanding under the 2018 Variable Funding Notes as of December 28, 2019.

Further, as of June 27, 2020 and December 28, 2019, $ 4.0 million of letters of credit were outstanding against the Variable Funding Notes, which relate primarily to interest reserves required under the base indenture and related supplemental indenture.

There were no amounts drawn down on the letters of credit as of June 27, 2020 or December 28, 2019.

During the first fiscal quarter of 2020, the Company had a leverage ratio under the Class A-2 Notes of less than 5.0 x.

Further, as of September 26, 2020 and December 28, 2019, $ 4.0 million of letters of credit were outstanding against the 2018 Variable Funding Notes, which relate primarily to interest reserves required under the base indenture and related supplemental indenture.

There were no amounts drawn down on the letters of credit as of September 26, 2020 or December 28, 2019.

During the thirty-nine weeks ended September 26, 2020, the Company had a leverage ratio under the 2018 Class A-2 Notes of less than 5.0 x.

Per the terms of the Company’s debt agreements, principal payments on the 2018 Class A-2 Notes are not due until the repayment date as long as the Company maintains a leverage ratio of less than 5.0x.

As such, the Company ceased making principal payments beginning in the second quarter of 2020.

Accordingly, the entire outstanding balance of the Class A-2 Notes has been classified as long-term debt.

The Class A-2 Notes and the Variable Funding Notes were each issued in a securitization transaction pursuant to which certain of the Company’s domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements and intellectual property, were contributed or otherwise transferred to the Issuer and certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as guarantors of the Notes and that have pledged substantially all of their assets.

As such, the Company ceased

WINGSTOP INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

making principal payments beginning in the second quarter of 2020.

Accordingly, the entire outstanding balance of the 2018 Class A-2 Notes has been classified as long-term debt.

The 2018 Class A-2 Notes and the 2018 Variable Funding Notes were each issued in a securitization transaction pursuant to which certain of the Company’s domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements and intellectual property, were contributed or otherwise transferred to the Issuer and certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as guarantors of the 2018 Notes and that have pledged substantially all of their assets.

On October 30, 2020, the Company completed a transaction to refinance its existing securitized financing facility with a new securitized financing facility.

For additional information, see “Note 11—Subsequent Events."

(7) Commitments and Contingencies

3 unchanged sentences

Stock-based compensation is measured at the date of grant, based on the calculated fair value of the award, and is recognized as expense over the requisite employee service period (generally the vesting period of the award).

The Company recognized $ 3.3 million in stock-based compensation expense for the twenty-six weeks ended June 27, 2020, with a corresponding increase to additional paid-in-capital.

The Company recognized $ 6.3 million in stock-based compensation expense for the thirty-nine weeks ended September 26, 2020, with a corresponding increase to additional paid-in-capital.

Stock-based compensation expense is included in Selling, general and administrative expense in the Consolidated Statements of Operations.

2 unchanged sentences

Stock Options Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Weighted Average Remaining Term

Outstanding - December 28, 2019 134 $ 5.72 $ 10,801 3.8

Outstanding - December 28, 2019 134 $ 5.72 $ 10,801 3.8 years

Options granted 68 84.41

Options exercised ( 130 ) 5.40

Outstanding - June 27, 2020 155 $ 38.02 $ 15,086 5.6

The total grant-date fair value of stock options vested during the twenty-six weeks ended June 27, 2020 was $ 0.2 million.

The total intrinsic value of stock options exercised during the twenty-six weeks ended June 27, 2020 was $ 2.8 million.

As of June 27, 2020, total unrecognized compensation expense related to unvested stock options was $ 1.4 million, which is expected to be recognized over a weighted-average period of 2.7 years.

During the twenty-six weeks ended June 27, 2020, there was a modification to certain awards resulting in additional compensation expense of $ 0.4 million.

Outstanding - September 26, 2020 72 $ 79.94 $ 15,171 5.3 years

The total grant-date fair value of stock options vested during the thirty-nine weeks ended September 26, 2020 was $ 0.2 million.

The total intrinsic value of stock options exercised during the thirty-nine weeks ended September 26, 2020 was $ 15.4 million.

As of September 26, 2020, total unrecognized compensation expense related to unvested stock options was $ 1.3 million, which is expected to be recognized over a weighted-average period of 2.4 years.

During the thirty-nine weeks ended September 26, 2020, there was a modification to certain awards resulting in additional compensation expense of $ 0.4 million.

Restricted Stock Units and Performance Stock Units

5 unchanged sentences

Units canceled ( 12 ) 64.03 ( 8 ) 66.04

Outstanding - June 27, 2020 57 $ 70.82 152 $ 68.49

The fair value of the Company’s RSUs and PSUs is based on the closing market price of the stock on the date of grant.

The RSUs granted during the twenty-six weeks ended June 27, 2020 vest over a three-year service period.

As of June 27, 2020, total unrecognized compensation expense related to unvested RSUs was $ 3.4 million, which is expected to be recognized over a weighted-average period of 1.9 years.

The Company granted 40,529 PSUs during the twenty-six weeks ended June 27, 2020 that are based on a service condition and a performance vesting condition based on the achievement of certain adjusted EBITDA targets over a performance period of three years .

The maximum vesting percentage that could be realized for each of the PSUs is 250 % based on the level of performance achieved for the respective awards, as well as a market vesting condition linked to the level of total stockholder return received by the Company’s stockholders during the performance period measured against the companies in the S&P 600 Restaurant Index (“TSR PSUs”).

The TSR PSUs were valued based on a Monte Carlo simulation model to reflect the impact of the total stockholder return market condition, resulting in a grant-date fair value range of $ 0.00 to $ 157.96 per unit based on the

Outstanding - September 26, 2020 55 $ 74.04 152 $ 68.92

WINGSTOP INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

outcome of the performance condition.

The fair value of the Company’s RSUs and PSUs is based on the closing market price of the stock on the date of grant.

The RSUs granted during the thirty-nine weeks ended September 26, 2020 vest over a three-year service period.

As of September 26, 2020, total unrecognized compensation expense related to unvested RSUs was $ 3.1 million, which is expected to be recognized over a weighted-average period of 1.7 years.

The Company granted 41,199 PSUs during the thirty-nine weeks ended September 26, 2020 that are based on a service condition and a performance vesting condition based on the achievement of certain adjusted EBITDA targets over a performance period of three years (the “TSR PSUs”).

The maximum vesting percentage that could be realized for each of the TSR PSUs is 250 % based on the level of performance achieved for the respective awards, as well as a market vesting condition linked to the level of total stockholder return received by the Company’s stockholders during the performance period measured against the companies in the S&P 600 Restaurant Index.

The probability of satisfying a market condition is considered in the estimation of the grant-date fair value for TSR PSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided.

1 unchanged sentence

The total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest.

As of June 27, 2020, total unrecognized compensation expense related to unvested PSUs was $ 5.8 million.

As of September 26, 2020, total unrecognized compensation expense related to unvested PSUs was $ 9.1 million.

(9) Company-owned Restaurant Transactions

During the Company’s fiscal quarter ended June 27, 2020, the Company sold two company-owned restaurants in the Houston market to an existing franchisee for proceeds of $ 2.3 million.

During the second fiscal quarter 2020, the Company completed the sale of two company-owned restaurants to an existing franchisee for aggregate proceeds of $ 2.3 million.

In connection with the sale of the restaurants, the Company recorded a $ 2.0 million pre-tax gain on the sale of the related assets and liabilities, which was net of a $ 28,000 reduction in goodwill.

The net gain on these restaurants was recorded in Selling, general and administrative expense on our Consolidated Statements of Operations.

Subsequent to the end of the Company’s fiscal quarter ended June 27, 2020, the Company completed the sale of five company-owned restaurants in the Kansas City market to an existing franchisee for proceeds of $ 2.5 million.

The total assets associated with these restaurants held for sale totaled $ 1.9 million and were included in Prepaid expenses and other current assets on the Consolidated Balance Sheet as of June 27, 2020.

The net gain on these store sales was recorded in Selling, general and administrative expense in the Company’s Consolidated Statements of Operations.

During the third fiscal quarter 2020, the Company completed the sale of five company-owned restaurants to an existing franchisee for aggregate proceeds of $ 2.5 million.

In connection with the sale of the restaurants, the Company recorded a $ 1.2 million pre-tax gain on the sale of the related assets and liabilities, which was net of a $ 30,000 reduction in goodwill.

The net gain on these restaurants was recorded in Selling, general and administrative expense in the Company's Consolidated Statements of Operations.

On August 31, 2020, the Company acquired five existing restaurants from a franchisee.

The total purchase price was $ 5.6 million, which was funded by cash flows from operations.

The following table summarizes the preliminary allocations of the purchase price to the estimated fair value of assets acquired and liabilities assumed at the date of the acquisition (in thousands):

Purchase Price Allocation

Working capital $ 35

Property and equipment 622

Reacquired franchise rights 1,816

Goodwill 3,162

Operating lease right-of-use assets 1,195

Operating lease liabilities ( 1,195 )

Total purchase price $ 5,635

The estimates of fair value are preliminary, and are therefore subject to further refinement.

The excess of the purchase price over the aggregate fair value of assets acquired was allocated to goodwill and is attributable to the benefits expected as a result of the acquisition, including sales and unit growth opportunities.

Approximately $ 3.2 million of the goodwill from the acquisition is expected to be deductible for federal income tax purposes.

Pro-forma financial information of the combined entities is not presented due to the immaterial impact of the financial results of the acquired restaurant on our consolidated financial statements.

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The fair value measurement of tangible and intangible assets and liabilities as of the acquisition date is based on significant inputs not observed in the market and thus represents a Level 3 fair value measurement.

Fair value measurements for reacquired franchise rights were determined using the income approach.

Fair value measurements for property and equipment were determined using the cost approach.

(10) Revenue from Contracts with Customers

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 27, 2020 and June 29, 2019 (in thousands):

Thirteen Weeks Ended Twenty-Six Weeks Ended

June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 26, 2020 and September 28, 2019 (in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Royalty revenue $ 26,007 $ 19,065 $ 72,761 $ 55,409

3 unchanged sentences

Deferred revenue is reduced as fees are recognized in revenue over the term of the franchise license for the respective restaurant.

As the term of the franchise license is typically ten years, substantially all of the franchise fee revenue recognized in the thirteen and twenty-six weeks ended June 27, 2020 was included in the deferred revenue balance as of December 28, 2019.

Approximately $ 8.3 million and $ 8.3 million of deferred revenue as of June 27, 2020 and December 28, 2019, respectively, relates to restaurants that have not yet opened, so the fees are not yet being amortized.

As the term of the franchise license is typically ten years, substantially all of the franchise fee revenue recognized in the thirteen and thirty-nine weeks ended September 26, 2020 was included in the deferred revenue balance as of December 28, 2019.

Approximately $ 8.6 million and $ 8.3 million of deferred revenue as of September 26, 2020 and December 28, 2019, respectively, relates to restaurants that have not yet opened, so the fees are not yet being amortized.

The weighted average remaining amortization period for deferred franchise and renewal fees related to open restaurants is 7.2 years.

The Company does not have any material contract assets as of June 27, 2020.

The Company did not have any material contract assets as of September 26, 2020.

(11) Subsequent Events

On October 30, 2020, the Company completed a transaction to refinance its existing securitized financing facility with a new securitized financing facility, pursuant to which Wingstop Funding LLC (the “Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of the Company, issued $ 480.0 million of its Series 2020-1 2.84 % Fixed Rate Senior Notes, Class A-2 (the "2020 Class A-2 Notes").

The Issuer also entered into a revolving financing facility of Series 2020-1 Variable Funding Senior Notes, Class A-1 which permits borrowings of up to a maximum principal amount of $ 50.0 million, which may be used to issue letters of credit.

A portion of the proceeds of the 2020 Class A-2 Notes was used to repay the $ 332.8 million of principal outstanding on the existing 2018 Class A-2 Notes and 2018 Variable Funding Notes, together with accrued and unpaid interest and make-whole prepayment consideration due thereon, and to pay related transaction fees.

The Company intends to use the additional net proceeds to strengthen its liquidity position and for general corporate purposes, including a return of capital to the Company’s stockholders (see Note 3).

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