Company Quick10K Filing
Red Robin
Price30.27 EPS-1
Shares13 P/E-49
MCap391 P/FCF7
Net Debt177 EBIT17
TEV568 TEV/EBIT34
TTM 2019-12-29, in MM, except price, ratios
10-Q 2020-04-19 Filed 2020-06-10
10-K 2019-12-29 Filed 2020-02-25
10-Q 2019-10-06 Filed 2019-11-05
10-Q 2019-07-14 Filed 2019-08-23
10-Q 2019-04-21 Filed 2019-05-30
10-K 2018-12-30 Filed 2019-02-27
10-Q 2018-10-07 Filed 2018-11-07
10-Q 2018-07-15 Filed 2018-08-22
10-Q 2018-04-22 Filed 2018-05-24
10-K 2017-12-31 Filed 2018-02-27
10-Q 2017-10-01 Filed 2017-11-07
10-Q 2017-07-09 Filed 2017-08-09
10-Q 2017-04-16 Filed 2017-05-17
10-K 2016-12-25 Filed 2017-02-21
10-Q 2016-10-02 Filed 2016-11-03
10-Q 2016-07-10 Filed 2016-08-10
10-Q 2016-04-17 Filed 2016-05-18
10-K 2015-12-27 Filed 2016-02-19
10-Q 2015-10-04 Filed 2015-11-04
10-Q 2015-07-12 Filed 2015-08-13
10-Q 2015-04-19 Filed 2015-05-21
10-K 2014-12-28 Filed 2015-02-20
10-Q 2014-10-05 Filed 2014-11-07
10-Q 2014-07-13 Filed 2014-08-15
10-Q 2014-04-20 Filed 2014-05-23
10-K 2013-12-29 Filed 2014-02-24
10-Q 2013-10-06 Filed 2013-11-08
10-Q 2013-07-14 Filed 2013-08-16
10-Q 2013-04-21 Filed 2013-05-24
10-K 2012-12-30 Filed 2013-02-28
10-Q 2012-09-30 Filed 2012-11-02
10-Q 2012-07-08 Filed 2012-08-10
10-Q 2012-04-15 Filed 2012-05-17
10-K 2011-12-25 Filed 2012-02-23
10-Q 2011-10-02 Filed 2011-11-04
10-Q 2011-07-10 Filed 2011-08-12
10-Q 2011-04-17 Filed 2011-05-20
10-K 2010-12-26 Filed 2011-02-25
10-Q 2010-10-03 Filed 2010-11-05
10-Q 2010-07-11 Filed 2010-08-13
10-Q 2010-04-18 Filed 2010-05-21
10-K 2009-12-27 Filed 2010-02-25
8-K 2020-06-17
8-K 2020-06-16
8-K 2020-06-10
8-K 2020-05-29
8-K 2020-05-21
8-K 2020-04-14
8-K 2020-04-10
8-K 2020-04-01
8-K 2020-03-26
8-K 2020-03-10
8-K 2020-02-27
8-K 2020-02-25
8-K 2020-02-06
8-K 2020-01-13
8-K 2020-01-10
8-K 2020-01-07
8-K 2019-11-05
8-K 2019-10-07
8-K 2019-09-11
8-K 2019-09-05
8-K 2019-09-02
8-K 2019-08-23
8-K 2019-08-02
8-K 2019-06-26
8-K 2019-06-19
8-K 2019-06-11
8-K 2019-06-04
8-K 2019-05-30
8-K 2019-05-30
8-K 2019-04-03
8-K 2019-04-01
8-K 2019-03-20
8-K 2019-02-26
8-K 2018-12-31
8-K 2018-11-06
8-K 2018-10-30
8-K 2018-09-04
8-K 2018-08-21
8-K 2018-08-01
8-K 2018-05-30
8-K 2018-05-22
8-K 2018-02-22

RRGB 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.6 rrgb-20200419xex106.htm
EX-10.7 rrgb-20200419xex107.htm
EX-31.1 rrgb-20200419xex311.htm
EX-31.2 rrgb-20200419xex312.htm
EX-32.1 rrgb-20200419xex321.htm

Red Robin Earnings 2020-04-19

Balance SheetIncome StatementCash Flow
1.31.00.80.50.30.02011201420172021
Assets, Equity
0.50.40.30.10.0-0.12011201420172021
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12011201420172021
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
        
For the quarterly period ended April 19, 2020

or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            


Commission File Number: 001-34851

RED ROBIN GOURMET BURGERS, INC.
(Exact name of registrant as specified in its charter)
Delaware84-1573084
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
6312 S. Fiddlers Green Circle, Suite 200NGreenwood Village, Colorado   80111
(Address of principal executive offices)    (Zip Code)

(303) 846-6000
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueRRGBNASDAQ(Global Select Market)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of June 8, 2020, there were 12,913,659 shares of the registrant's common stock, par value of $0.001 per share outstanding.


Table of Contents
RED ROBIN GOURMET BURGERS, INC.
TABLE OF CONTENTS
  Page

i

Table of Contents
PART I — FINANCIAL INFORMATION
ITEM 1.    Financial Statements (unaudited)
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
April 19, 2020December 29, 2019
Assets:
Current assets:
Cash and cash equivalents$88,920  $30,045  
Accounts receivable, net10,263  22,372  
Inventories24,863  26,424  
Prepaid expenses and other current assets30,790  26,646  
Total current assets154,836  105,487  
Property and equipment, net486,273  518,013  
Right of use assets, net413,287  426,248  
Goodwill  96,397  
Intangible assets, net27,369  29,975  
Other assets, net40,286  61,460  
Total assets$1,122,051  $1,237,580  
Liabilities and stockholders equity:
Current liabilities:
Accounts payable$26,304  $33,040  
Accrued payroll and payroll-related liabilities24,694  35,221  
Unearned revenue43,349  54,223  
Short-term portion of lease obligations49,654  42,699  
Short-term debt9,692    
Accrued liabilities and other39,110  29,403  
Total current liabilities192,803  194,586  
Long-term debt281,221  206,875  
Long-term portion of lease obligations453,775  465,435  
Other non-current liabilities9,883  10,164  
Total liabilities937,682  877,060  
Stockholders equity:
Common stock; $0.001 par value: 45,000 shares authorized; 17,851 and 17,851 shares issued; 12,890 and 12,923 shares outstanding as of April 19, 2020 and December 29, 2019
18  18  
Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding as of April 19, 2020 and December 29, 2019
    
Treasury stock 4,961 and 4,928 shares, at cost, as of April 19, 2020 and December 29, 2019
(202,343) (202,313) 
Paid-in capital213,246  213,922  
Accumulated other comprehensive loss, net of tax(5,520) (4,373) 
Retained earnings178,968  353,266  
Total stockholders’ equity184,369  360,520  
Total liabilities and stockholders equity
$1,122,051  $1,237,580  
See Notes to Condensed Consolidated Financial Statements.
1

Table of Contents
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(In thousands, except per share amounts)
(Unaudited)
Sixteen Weeks Ended
April 19, 2020April 21, 2019
Revenues:
Restaurant revenue$301,434  $400,484  
Franchise and other revenues4,631  9,382  
Total revenues306,065  409,866  
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales70,426  93,715  
Labor118,566  142,894  
Other operating52,291  55,565  
Occupancy33,657  35,020  
Depreciation and amortization28,320  28,438  
Selling, general, and administrative expenses
41,502  48,116  
Pre-opening costs153  319  
Other charges
119,379  2,398  
Total costs and expenses464,294  406,465  
(Loss) income from operations(158,229) 3,401  
Other expense:
Interest expense, net and other3,370  3,238  
(Loss) income before income taxes(161,599) 163  
Income tax provision (benefit)12,699  (476) 
Net (loss) income$(174,298) $639  
(Loss) earnings per share:
Basic$(13.51) $0.05  
Diluted$(13.51) $0.05  
Weighted average shares outstanding:
Basic12,903  12,967  
Diluted12,903  13,041  
Other comprehensive (loss) income:
Foreign currency translation adjustment$(1,147) $(329) 
Other comprehensive loss, net of tax(1,147) (329) 
Total comprehensive (loss) income$(175,445) $310  

See Notes to Condensed Consolidated Financial Statements.
2

Table of Contents
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In thousands)
(Unaudited)
Common StockTreasury StockAccumulated
Other
Comprehensive
Loss,
net of tax
Paid-in
Capital
Retained
Earnings
SharesAmountSharesAmountTotal
Balance, December 29, 201917,851  $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, 202017,851  $18  4,961  $(202,343) $213,246  $(5,520) $178,968  $184,369  

Common StockTreasury StockAccumulated
Other
Comprehensive
Loss,
net of tax
Paid-in
Capital
Retained
Earnings
SharesAmountSharesAmountTotal
Balance, December 30, 201817,851  $18  4,880  $(201,505) $212,752  $(4,801) $376,341  $382,805  
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan—  —  (32) 1,344  (1,204) —  —  140  
Acquisition of treasury stock—  —  31  (974) —  —  —  (974) 
Non-cash stock compensation—  —  —  —  477  —  —  477  
Net income—  —  —  —  —  —  639  639  
Other comprehensive loss—  —  —  —  —  (329) —  (329) 
Topic 842 transition impairment, net of tax—  —  —  —  —  —  (15,172) (15,172) 
Balance, April 21, 201917,851  $18  4,879  $(201,135) $212,025  $(5,130) $361,808  $367,586  

See Notes to Condensed Consolidated Financial Statements.
3

Table of Contents
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Sixteen Weeks Ended
April 19, 2020April 21, 2019
Cash flows from operating activities:
Net (loss) income$(174,298) $639  
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization28,320  28,438  
Goodwill and restaurant asset impairment110,912  —  
Non-cash other charges808  1,859  
Deferred income tax provision (benefit)21,152  (760) 
Stock-based compensation expense706  475  
Other, net(630) (3,509) 
Changes in operating assets and liabilities:
Accounts receivable11,711  12,444  
Inventories1,484  (728) 
Prepaid expenses and other current assets(4,144) (1,224) 
Lease assets, net of liabilities6,795  3,721  
Trade accounts payable and accrued liabilities(8,022) (5,576) 
Unearned revenue(9,460) (10,453) 
Other operating assets and liabilities, net1,346  (35) 
Net cash (used in) provided by operating activities(13,320) 25,291  
Cash flows from investing activities:
Purchases of property, equipment, and intangible assets(8,746) (10,195) 
Proceeds from sales of real estate and property, plant, and equipment and other investing activities43  118  
Net cash used in investing activities(8,703) (10,077) 
Cash flows from financing activities:
Borrowings of long-term debt116,000  111,000  
Payments of long-term debt and finance leases(32,006) (121,239) 
Purchase of treasury stock(1,635) (974) 
Debt issuance costs(1,040)   
Proceeds from exercise of stock options and employee stock purchase plan419  368  
Net cash provided by (used in) financing activities81,738  (10,845) 
Effect of exchange rate changes on cash(840) 21  
Net change in cash and cash equivalents58,875  4,390  
Cash and cash equivalents, beginning of period30,045  18,569  
Cash and cash equivalents, end of period$88,920  $22,959  
Supplemental disclosure of cash flow information
Income taxes (refund received) paid$(11) $2,492  
Interest paid, net of amounts capitalized2,708  3,481  
Change in construction related payables$(1,745) $635  

See Notes to Condensed Consolidated Financial Statements.
4

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 April 19, 2020, the Company owned and operated 452 restaurants located in 38 states. The Company also had 102 franchised full-service restaurants in 16 states and one Canadian province as of April 19, 2020. 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 29, 2019 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 29, 2019, filed with the SEC on February 25, 2020.
Our current and prior year periods, period end dates, and number of weeks included in the period are summarized in the table below:
PeriodsPeriod End DateNumber of Weeks in Period
Current and Prior Fiscal Quarters:
First Quarter 2020April 19, 202016
First Quarter 2019April 21, 201916
Current and Prior Fiscal Years:
Fiscal Year 2020December 27, 202052
Fiscal Year 2019December 29, 201952
Reclassifications
Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. For the sixteen weeks ended April 21, 2019, the Company reclassified the following within net cash (used in) provided by operating activities on the condensed consolidated statements of cash flows: $3.7 million from Other, net to Lease assets, net of liabilities presented in the changes to operating assets and liabilities, $0.8 million from Other, net to Deferred income tax provision (benefit) presented in the adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities, and $0.7 million from Prepaid expense and other current assets to Inventories presented in the changes to operating assets and liabilities.

5

Table of Contents

Going Concern
Under ASC 205-40, Presentation of Financials Statements – Going Concern, the Company is required to assess whether substantial doubt is raised in that conditions or events indicate that it is probable the Company will be unable to meet its obligations when they come due within one year from the financial statement issuance date. The assessment also includes the Company's consideration of any management plans to alleviate such substantial doubt. The conditions related to the COVID-19 pandemic have had a material adverse impact on the Company's revenues, profitability, and cash flows.
Pursuant to the terms of the First Amendment to the Credit Agreement and Waiver (the "Amendment") to the Company's Amended and Restated Credit Agreement (the "Credit Facility"), further described in Note 2, COVID-19 Pandemic, the lenders thereto agreed, among other things, to waive the existing events of default under the Credit Facility related to the Company's failure to comply with the financial covenants as of the end of the fiscal quarter ended April 19, 2020. In addition, the lenders agreed to (a) suspend the application of the lease adjusted leverage ratio financial covenant (the "Leverage Ratio Covenant") and the fixed charge coverage ratio financial covenant (the "FCCR Covenant"), in each case, for the fiscal quarters ending on July 12, 2020, October 4, 2020 and December 27, 2020 and (b) increase the maximum leverage permitted for purposes of the Leverage Ratio Covenant for each of the first three fiscal quarters ending in 2021; provided that the Company issues new equity (or convertible debt) generating net cash proceeds of at least $25 million.
The Company is actively evaluating options for raising equity capital in order to satisfy the requirements of the Amendment. If the Company is unable to raise sufficient equity capital within the timeframe prescribed by the Amendment, and is unable to obtain a further waiver or amendment to the Credit Facility, then the Company could experience an event of default under the Credit Facility, which could have a material adverse effect on the Company's liquidity, financial condition, and results of operations. We cannot make any assurance regarding the likelihood, certainty, or exact timing of the Company's ability to raise capital or execute further amendments to the Credit Facility. As a result, under applicable accounting standards, the Company concluded, because the equity raise is outside of management's control, substantial doubt exists surrounding the Company's ability to meet its obligations within one year of the financial statement issuance date and to continue as a going concern.
The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q do not include any adjustments that might result from the outcome of this uncertainty.
Recent Accounting Pronouncements
Income Taxes
In December 2019, the Financial Accounting Standards Board ("FASB") issued Update 2019-12, Income Taxes ("Topic 740") as part of its Simplification Initiative. This guidance provides amendments to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for annual and interim reporting periods beginning after December 15, 2020, and early adoption is permitted. We 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.
Recently Adopted Accounting Standards
Current and Expected Credit Losses
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Update 2016-13, Financial Instruments - Credit Losses (“Topic 326”), subsequently amended by various standard updates. This guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information when determining credit loss estimates and requires financial assets to be measured net of expected credit losses at the time of initial recognition. The Company performed an analysis to determine the impact on our condensed consolidated financial statements and recognized an immaterial adjustment to Accounts Receivable, Net on our condensed consolidated balance sheets upon adoption during the first quarter of 2020. We performed an update to our analysis in the context of the COVID-19 pandemic and recognized an additional immaterial adjustment related to our franchise receivables.
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2. COVID-19 Pandemic
Overview
Due to the novel coronavirus ("COVID-19") pandemic, we have navigated and continue to navigate an unprecedented time for our business and industry as we collectively work to combat the global crisis. With the health, safety, and well-being of Red Robin's Team Members, Guests, and communities as our top priority, we immediately shifted our restaurants to an off-premise model and are strictly adhering to US Centers for Disease Control ("CDC"), state, and local guidelines as we have begun to reopen our dining rooms to our Guests and Team Members. The COVID-19 pandemic has had a material effect on our business, and we expect the impact from COVID-19 will continue to negatively affect our business through the remainder of fiscal year 2020.
Franchise Revenue
In response to COVID-19's effect on our franchisee's operations, we temporarily abated franchise royalty payments and advertising contributions effective March 20, 2020. During periods of abated payments, franchise revenue is not recognized under GAAP or collected from our franchise partners. Franchised restaurants operate under contractual arrangements with the Company, and the payments specified in the franchise contracts will be accounted for under ASC Topic 606, Revenue from Contracts with Customers.
Rent
In response to the impact of COVID-19 on our operations, beginning April 1, 2020 the Company has not made full lease payments under its existing lease agreements. During the suspension of payments, the Company continued to recognize expenses and liabilities for lease obligations and corresponding right-of-use assets on the balance sheet in accordance with ASC Topic 842.
We have engaged in ongoing constructive discussions with landlords regarding the potential restructuring of lease payments and rent concessions. We will elect to recognize any contractual rent concessions reached in the future as a variable credit to rent expense as opposed to a lease modification consistent with the relief issued by the Financial Accounting Standards Board titled ASC Topic 842 and ASC Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic. Contractual rent concessions expected to be agreed to cannot be reasonably determined at this time based on the status of discussions with our landlords.
Goodwill
The Company determined the sustained decrease in our stock price coupled with the closure of our dining rooms and significant decline to the equity value of our peers and overall U.S. stock market represented a goodwill impairment triggering event. We performed a quantitative analysis as of our first quarter ended April 19, 2020 to determine if impairment to our goodwill existed for our one reporting unit. We used a blended approach in calculating fair value of our one reporting unit including the income approach, market approach, and market capitalization approach. This analysis resulted in full impairment of our goodwill balance totaling $95.4 million recognized during the sixteen weeks ended April 19, 2020 included in Other charges on the condensed consolidated statement of operations and comprehensive (loss) income. The goodwill impairment was measured as the amount by which the carrying amount of the reporting unit, including goodwill, exceeded its fair value.



Restaurant Assets
The Company determined the triggering event described above also represented a restaurant asset impairment triggering event. The Company recognized $15.5 million of impairment related to restaurant assets during the sixteen weeks ended April 19, 2020 included in Other charges on the condensed consolidated statement of operations and comprehensive (loss) income resulting from the continuing and projected future results of 24 Company-owned restaurants. Recoverability of restaurant assets, including restaurant sites, leasehold improvements, information technology systems, right-of-use assets, amortizable intangible assets, and other fixed assets, to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant level. Each restaurant's past and present operating performance was reviewed in combination with projected future results primarily through projected undiscounted cash flows that included management's expectation of future financial impacts from COVID-19. If the restaurant assets were determined to be impaired through comparison of the assets carrying value to its undiscounted cash flows, the Company compared the carrying amount of each restaurant's assets to its fair value as estimated by management to calculate the impairment amount. The fair value of restaurant assets is generally determined using a discounted cash flow projection model, which is based on significant inputs not observed in the market and represents a level 3 fair value measurement. In certain cases, management uses other market information, when available, to estimate the fair value of a restaurant's assets. The restaurant asset impairment charges represent the excess of the carrying amount over the estimated fair value of the restaurant assets calculated using a discounted cash flow projection model. Additional restaurant asset impairment may be required to be recognized if the COVID-19 pandemic continues to negatively impact our business.
Valuation Allowance on Deferred Tax Assets
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the future reversals of existing deferred tax liabilities and projected taxable income, including whether future originating deductible temporary differences are likely to be realized.
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 projected net operating losses ("NOL's") to generate up to $12 million of projected cash tax refunds within the next 12 months. As a result of these projected NOL carrybacks, approximately $38 million of the previously utilized FICA tip tax credits will be reinstated. As of April 19, 2020 the existing $52 million FICA tip credit carryforwards will be utilized based on projected future taxable income, however they are anticipated to be replaced by originating FICA tip credits that are not projected to be utilized in the carry forward period. Therefore, a $52 million valuation allowance has been established for the FICA tip credit carryforwards. To the extent future actual taxable income exceeds the current projections, the FICA tip credit carryforwards may become realizable.
Borrowings
During the first quarter ended April 19, 2020, the Company made draws of $94 million on its revolving line of credit to provide operating liquidity while our restaurant dining rooms remain closed due to the COVID-19 pandemic. As of April 19, 2020, our credit facility was fully drawn.
Subsequent Event - Credit Agreement Amendment
On May 29, 2020, the Company entered into the Amendment which amends the Company's Credit Facility as follows:
increased the pricing under the Credit Facility for (a) the period of the Amendment Effective Date through the first interest determination date occurring after the fiscal quarter ending on or about April 18, 2021 to LIBOR (subject to a 1.00% LIBOR floor) plus 3.25% and (b) periods thereafter to the amounts set forth in a grid included in the Amendment (to which a 1.00% LIBOR floor shall apply);
waived the existing events of default under the Credit Facility related to the Company's failure to comply with the financial covenants as of April 19, 2020
suspended the application of (a) the Lease Ratio Covenant and (b) the FCCR Covenant, in each case, for the fiscal quarter ending on July 12, 2020;
if the Company issues new equity (or convertible debt) generating net cash proceeds of at least $25 million (the "Minimum Capital Event"), (a) suspend the application of the Leverage Ratio Covenant and FCCR Covenant, in each case, for the fiscal quarters ending on October 4, 2020 and December 27, 2020 and (b) increase the maximum leverage permitted for purposes of the Leverage Ratio Covenant for each of the first three fiscal quarters ending in 2021;



Additionally, (a) the Leverage Ratio Covenant will be calculated using a seasonally adjusted annualized consolidated EBITDA for the applicable period since the beginning of fiscal year 2021 and (b) the FCCR Covenant will be calculated only for the applicable period since the beginning of fiscal year 2021;
added a minimum liquidity covenant, measured as of the last day of each fiscal month, that applies during the period commencing on the Amendment Effective Date through March 21, 2021;
subject to limited exceptions, prohibit expansion capital expenditures, restricted payments, acquisitions, and other investments until the later of (a) the Company's delivery of a compliance certificate for the fiscal quarter ending on or about July 11, 2021 demonstrating compliance with the financial covenants then in effect and (b) the Company satisfying an agreed ratio under its Leverage Ratio Covenant for the most recently ended fiscal quarter or fiscal year, as applicable;
added a maximum cash balance limitation requiring revolver repayments (but with no associated permanent reduction in the revolver) to the extent that the Company's consolidated cash on hand exceeds $30 million as of the end of any fiscal month;
revised the conditions precedent to the revolver borrowings so that certain effects of COVID-19 are excluded for purposes of certain representations and warranties that must be true and correct as conditions to revolving borrowings;
required mandatory prepayments from net cash proceeds of equity (or convertible debt) issuances that exceed amounts set forth in the Amendment; and
provided for certain additional financial reporting requirements under the Credit Facility.
As conditions to the Amendment, the Company (a) repaid the revolving loans, so that the amount of the Company's consolidated cash on hand did not exceed $30 million as of the Amendment Effective Date totaling $59 million and (b) paid certain customary amendment fees to the lenders under the Credit Facility totaling approximately $1.1 million which will be capitalized as deferred loan fees and amortized over the remaining term of the Credit Facility.
3. Revenue
Disaggregation of revenue
In the following table, revenue is disaggregated by type of good or service (in thousands):
Sixteen Weeks Ended
April 19, 2020April 21, 2019
Restaurant revenue$301,434  $400,484  
Franchise revenue(1)
2,897  5,363  
Gift card breakage1,414  3,680  
Other revenue320  339  
Total revenues$306,065  $409,866  
———————————————————
(1) The decrease in Franchise revenue is driven by the temporary abatement and non-collection of franchise payments. See Note 2, COVID-19 Pandemic, for further discussion.
Contract liabilities
Components of Unearned revenue in the accompanying condensed consolidated balance sheets are as follows (in thousands):
April 19, 2020December 29, 2019
Unearned gift card revenue$32,650  $43,544  
Deferred loyalty revenue$10,699  $10,679  
Revenue recognized in the condensed consolidated statements of operations and comprehensive (loss) income for the redemption of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):
Sixteen Weeks Ended
April 19, 2020April 21, 2019
Gift card revenue$11,911  $16,097  



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4. Leases
Leases are included in right-of-use assets, net, short-term portion of lease obligations, and long-term portion of lease liabilities on our condensed consolidated balance sheet as of April 19, 2020 and December 29, 2019 as follows (in thousands):
April 19, 2020FinanceOperatingTotal
Right of use assets, net$7,324  $405,963  $413,287  
Short-term portion of lease obligations738  48,916  49,654  
Long-term portion of lease obligations8,624  445,151  453,775  
Total$9,362  $494,067  $503,429  
December 29, 2019FinanceOperatingTotal
Right of use assets, net$7,552  $418,696  $426,248  
Short-term portion of lease obligations725  41,974  42,699  
Long-term portion of lease obligations8,822  456,613  465,435  
Total$9,547  $498,587  $508,134  
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 as follows (in thousands):
Sixteen Weeks Ended
April 19, 2020April 21, 2019
Operating lease cost$21,990  $23,672  
Finance lease cost:
Amortization of right of use assets203  248  
Interest on lease liabilities138  169  
Total finance lease cost$341  $417  
Variable lease cost8,317  8,885  
Total$30,648  $32,974  
Maturities of our lease liabilities as of April 19, 2020 were as follows (in thousands):
Finance Leases Operating LeasesTotal
Remainder of 2020$877  $57,349  $58,226  
20211,133  76,042  77,175  
2022979  73,629  74,608  
2023916  71,600  72,516  
2024932  68,384  69,316  
Thereafter7,458  379,808  387,266  
Total future lease liability$12,295  $726,812  $739,107  
Less imputed interest2,933  232,745  235,678  
Fair value of lease liability$9,362  $494,067  $503,429  
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Supplemental cash flow information related to leases is as follows (in thousands, except other information):
Sixteen Weeks Ended
April 19, 2020April 21, 2019
Cash flows from operating activities
Cash paid related to lease liabilities
Operating leases$12,683  $19,772  
Finance leases138  137  
Cash flows from financing activities
Cash paid related to lease liabilities
Finance leases  239  
Cash paid for amounts included in the measurement of lease liabilities:$12,821  $20,148  
Right of use assets obtained in exchange for operating lease obligations$2,311  $4,325  
Right of use assets obtained in exchange for finance lease obligations$  $1,669  
Other information related to operating leases as follows:
Weighted average remaining lease term10.50 years11.32 years
Weighted average discount rate7.38 %7.34 %
Other information related to financing leases as follows: