Delaware
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84-1303469
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(State or other jurisdiction of incorporation or organization)
|
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(I.R.S. Employer Identification No.)
|
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520 Zang Street, Suite D
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Broomfield,
|
CO
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|
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80021
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(Address of principal executive offices)
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(Zip Code)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Class A Common Stock, $0.01 par value per share
|
NDLS
|
Nasdaq Global Select Market
|
Large accelerated filer
|
☐
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Accelerated Filer
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☒
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Non-accelerated filer
|
☐
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Smaller reporting company
|
☒
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Emerging growth company
|
☐
|
Class
|
|
Outstanding at November 1, 2019
|
Class A Common Stock, $0.01 par value per share
|
|
44,122,121 shares
|
|
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|
Page
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|
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|||
|
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||
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||
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||
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||
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|||
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|||
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|||
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|||
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|||
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|||
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October 1,
2019 |
|
January 1,
2019 |
||||
|
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
3,086
|
|
|
$
|
4,655
|
|
Accounts receivable
|
|
2,279
|
|
|
2,391
|
|
||
Inventories
|
|
9,875
|
|
|
9,646
|
|
||
Prepaid expenses and other assets
|
|
4,291
|
|
|
6,474
|
|
||
Income tax receivable
|
|
191
|
|
|
185
|
|
||
Total current assets
|
|
19,722
|
|
|
23,351
|
|
||
Property and equipment, net
|
|
134,682
|
|
|
138,774
|
|
||
Operating lease assets, net
|
|
212,760
|
|
|
—
|
|
||
Goodwill
|
|
7,154
|
|
|
6,400
|
|
||
Intangibles, net
|
|
963
|
|
|
1,291
|
|
||
Other assets, net
|
|
2,346
|
|
|
2,216
|
|
||
Total long-term assets
|
|
357,905
|
|
|
148,681
|
|
||
Total assets
|
|
$
|
377,627
|
|
|
$
|
172,032
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
8,145
|
|
|
$
|
7,854
|
|
Accrued payroll and benefits
|
|
9,725
|
|
|
13,391
|
|
||
Accrued expenses and other current liabilities
|
|
9,563
|
|
|
11,183
|
|
||
Current operating lease liabilities
|
|
22,431
|
|
|
—
|
|
||
Current portion of long-term debt
|
|
1,125
|
|
|
719
|
|
||
Total current liabilities
|
|
50,989
|
|
|
33,147
|
|
||
Long-term debt, net
|
|
41,963
|
|
|
44,183
|
|
||
Long-term operating lease liabilities, net
|
|
229,157
|
|
|
—
|
|
||
Deferred rent
|
|
—
|
|
|
37,334
|
|
||
Deferred tax liabilities, net
|
|
197
|
|
|
133
|
|
||
Other long-term liabilities
|
|
4,275
|
|
|
4,554
|
|
||
Total liabilities
|
|
326,581
|
|
|
119,351
|
|
||
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock—$0.01 par value, 1,000,000 shares authorized and undesignated as of October 1, 2019 and January 1, 2019; no shares issued or outstanding
|
|
—
|
|
|
—
|
|
||
Common stock—$0.01 par value, 180,000,000 shares authorized as of October 1, 2019 and January 1, 2019; 46,545,992 issued and 44,122,121 outstanding as of October 1, 2019 and 46,353,309 issued and 43,929,438 outstanding as of January 1, 2019
|
|
465
|
|
|
464
|
|
||
Treasury stock, at cost, 2,423,871 shares as of October 1, 2019 and January 1, 2019
|
|
(35,000
|
)
|
|
(35,000
|
)
|
||
Additional paid-in capital
|
|
199,878
|
|
|
198,352
|
|
||
Accumulated deficit
|
|
(114,297
|
)
|
|
(111,135
|
)
|
||
Total stockholders’ equity
|
|
51,046
|
|
|
52,681
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
377,627
|
|
|
$
|
172,032
|
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||||||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
|
October 1,
2019 |
|
October 2,
2018 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant revenue
|
|
$
|
116,759
|
|
|
$
|
115,552
|
|
|
$
|
344,382
|
|
|
$
|
341,616
|
|
Franchising royalties and fees, and other
|
|
1,545
|
|
|
1,175
|
|
|
4,158
|
|
|
3,032
|
|
||||
Total revenue
|
|
118,304
|
|
|
116,727
|
|
|
348,540
|
|
|
344,648
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
|
29,544
|
|
|
30,617
|
|
|
89,083
|
|
|
90,962
|
|
||||
Labor
|
|
37,951
|
|
|
37,738
|
|
|
113,920
|
|
|
112,353
|
|
||||
Occupancy
|
|
12,108
|
|
|
12,035
|
|
|
36,849
|
|
|
37,155
|
|
||||
Other restaurant operating costs
|
|
17,161
|
|
|
16,224
|
|
|
50,475
|
|
|
49,997
|
|
||||
General and administrative
|
|
10,436
|
|
|
10,399
|
|
|
32,424
|
|
|
35,480
|
|
||||
Depreciation and amortization
|
|
5,458
|
|
|
5,790
|
|
|
16,626
|
|
|
17,407
|
|
||||
Pre-opening
|
|
266
|
|
|
—
|
|
|
331
|
|
|
50
|
|
||||
Restaurant impairments, closure costs and asset disposals
|
|
336
|
|
|
1,792
|
|
|
3,640
|
|
|
5,952
|
|
||||
Total costs and expenses
|
|
113,260
|
|
|
114,595
|
|
|
343,348
|
|
|
349,356
|
|
||||
Income (loss) from operations
|
|
5,044
|
|
|
2,132
|
|
|
5,192
|
|
|
(4,708
|
)
|
||||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
626
|
|
||||
Interest expense, net
|
|
737
|
|
|
1,093
|
|
|
2,298
|
|
|
3,385
|
|
||||
Income (loss) before income taxes
|
|
4,307
|
|
|
1,039
|
|
|
2,894
|
|
|
(8,719
|
)
|
||||
Provision (benefit) for income taxes
|
|
64
|
|
|
(11
|
)
|
|
64
|
|
|
(259
|
)
|
||||
Net income (loss) and comprehensive income (loss)
|
|
$
|
4,243
|
|
|
$
|
1,050
|
|
|
$
|
2,830
|
|
|
$
|
(8,460
|
)
|
Earnings (loss) per share of Class A and Class B common stock, combined:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.10
|
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
(0.20
|
)
|
Diluted
|
|
$
|
0.09
|
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
(0.20
|
)
|
Weighted average shares of Class A and Class B common stock outstanding, combined:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
43,990,049
|
|
|
43,094,524
|
|
|
44,007,345
|
|
|
41,798,640
|
|
||||
Diluted
|
|
44,899,176
|
|
|
44,829,363
|
|
|
45,078,539
|
|
|
41,798,640
|
|
|
|
Fiscal Quarter Ended
|
||||||||||||||||||||||||
|
|
Common Stock(1) (2)
|
|
Treasury
|
|
Additional Paid-In
Capital |
|
Accumulated
Deficit |
|
Total
Stockholders’ Equity |
||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||
Balance—July 2, 2019
|
|
46,508,586
|
|
|
$
|
465
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
199,978
|
|
|
$
|
(118,540
|
)
|
|
$
|
46,903
|
|
Stock plan transactions and other
|
|
37,406
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(49
|
)
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(51
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,243
|
|
|
4,243
|
|
|||||
Balance—October 1, 2019
|
|
46,545,992
|
|
|
$
|
465
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
199,878
|
|
|
$
|
(114,297
|
)
|
|
$
|
51,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance—July 3, 2018
|
|
43,690,395
|
|
|
$
|
437
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
172,936
|
|
|
$
|
(112,204
|
)
|
|
$
|
26,169
|
|
Issuance of common stock in connection with a public offering, net of transaction expenses
|
|
2,500,000
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
23,132
|
|
|
—
|
|
|
23,157
|
|
|||||
Stock plan transactions and other
|
|
149,618
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
946
|
|
|
—
|
|
|
947
|
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
652
|
|
|
—
|
|
|
652
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,050
|
|
|
1,050
|
|
|||||
Balance—October 2, 2018
|
|
46,340,013
|
|
|
$
|
463
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
197,666
|
|
|
$
|
(111,154
|
)
|
|
$
|
51,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Three Fiscal Quarters Ended
|
||||||||||||||||||||||||
|
|
Common Stock(1) (2)
|
|
Treasury
|
|
Additional Paid-In
Capital |
|
Accumulated
Deficit |
|
Total
Stockholders’ Equity |
||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||
Balance—January 1, 2019
|
|
46,353,309
|
|
|
$
|
464
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
198,352
|
|
|
$
|
(111,135
|
)
|
|
$
|
52,681
|
|
Stock plan transactions and other
|
|
192,683
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(285
|
)
|
|
—
|
|
|
(284
|
)
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,811
|
|
|
—
|
|
|
1,811
|
|
|||||
Adoption of ASU No. 2016-02, Leases (Topic 842)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,992
|
)
|
|
(5,992
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,830
|
|
|
2,830
|
|
|||||
Balance—October 1, 2019
|
|
46,545,992
|
|
|
$
|
465
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
199,878
|
|
|
$
|
(114,297
|
)
|
|
$
|
51,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance—January 2, 2018
|
|
43,550,329
|
|
|
$
|
436
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
171,613
|
|
|
$
|
(101,188
|
)
|
|
$
|
35,861
|
|
Issuance of common stock in connection with a public offering, net of transaction expenses
|
|
2,500,000
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
23,132
|
|
|
—
|
|
|
23,157
|
|
|||||
Stock plan transactions and other
|
|
289,684
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
652
|
|
|
—
|
|
|
654
|
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,269
|
|
|
—
|
|
|
2,269
|
|
|||||
Adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,506
|
)
|
|
(1,506
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,460
|
)
|
|
(8,460
|
)
|
|||||
Balance—October 2, 2018
|
|
46,340,013
|
|
|
$
|
463
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
197,666
|
|
|
$
|
(111,154
|
)
|
|
$
|
51,975
|
|
(1)
|
Unless otherwise noted, activity relates to Class A common stock.
|
(2)
|
On May 24, 2018, 1,522,098 shares of Class B common stock were converted into the same number of the Company’s Class A common stock. As a result of the conversion, no shares of the Company’s Class B common stock were outstanding as of October 2, 2018.
|
|
|
Three Fiscal Quarters Ended
|
||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
||||
Operating activities
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
2,830
|
|
|
$
|
(8,460
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
16,626
|
|
|
17,407
|
|
||
Deferred income taxes
|
|
64
|
|
|
(263
|
)
|
||
Restaurant impairments, closure costs and asset disposals
|
|
3,647
|
|
|
5,289
|
|
||
Loss on extinguishment of debt
|
|
—
|
|
|
626
|
|
||
Amortization of debt issuance costs
|
|
374
|
|
|
484
|
|
||
Stock-based compensation
|
|
1,780
|
|
|
2,232
|
|
||
Gain on insurance proceeds received for property damage
|
|
—
|
|
|
(373
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
122
|
|
|
489
|
|
||
Inventories
|
|
(349
|
)
|
|
(647
|
)
|
||
Prepaid expenses and other assets
|
|
(1,062
|
)
|
|
(402
|
)
|
||
Accounts payable
|
|
(864
|
)
|
|
(2,172
|
)
|
||
Deferred rent
|
|
—
|
|
|
(1,278
|
)
|
||
Income taxes
|
|
(6
|
)
|
|
(46
|
)
|
||
Operating lease assets and liabilities
|
|
(1,749
|
)
|
|
—
|
|
||
Accrued expenses and other liabilities
|
|
(5,144
|
)
|
|
(17,754
|
)
|
||
Net cash provided by (used in) operating activities
|
|
16,269
|
|
|
(4,868
|
)
|
||
Investing activities
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(13,788
|
)
|
|
(9,937
|
)
|
||
Insurance proceeds received for property damage
|
|
—
|
|
|
500
|
|
||
Proceeds from disposal of property and equipment
|
|
352
|
|
|
—
|
|
||
Franchise restaurant acquisition, net of cash acquired
|
|
(1,387
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
|
(14,823
|
)
|
|
(9,437
|
)
|
||
Financing activities
|
|
|
|
|
||||
Net payments from swing line loan
|
|
—
|
|
|
(101
|
)
|
||
Proceeds from issuance of long-term debt
|
|
—
|
|
|
74,889
|
|
||
Payments on long-term debt
|
|
(2,188
|
)
|
|
(84,030
|
)
|
||
Issuance of common stock, net of transaction expenses
|
|
—
|
|
|
23,157
|
|
||
Payments on finance leases
|
|
(543
|
)
|
|
—
|
|
||
Stock plan transactions and tax withholding on share-based compensation awards
|
|
(284
|
)
|
|
654
|
|
||
Debt issuance costs
|
|
—
|
|
|
(1,707
|
)
|
||
Net cash (used in) provided by financing activities
|
|
(3,015
|
)
|
|
12,862
|
|
||
Net decrease in cash and cash equivalents
|
|
(1,569
|
)
|
|
(1,443
|
)
|
||
Cash and cash equivalents
|
|
|
|
|
||||
Beginning of period
|
|
4,655
|
|
|
3,361
|
|
||
End of period
|
|
$
|
3,086
|
|
|
$
|
1,918
|
|
|
January 1,
2019 |
|
Adjustments Due to the Adoption of Topic 842
(unaudited)
|
|
January 2, 2019
(unaudited)
|
||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
4,655
|
|
|
$
|
—
|
|
|
$
|
4,655
|
|
Accounts receivable
|
2,391
|
|
|
225
|
|
|
2,616
|
|
|||
Inventories
|
9,646
|
|
|
—
|
|
|
9,646
|
|
|||
Prepaid expenses and other assets
|
6,474
|
|
|
(3,243
|
)
|
|
3,231
|
|
|||
Income tax receivable
|
185
|
|
|
—
|
|
|
185
|
|
|||
Total current assets
|
23,351
|
|
|
(3,018
|
)
|
|
20,333
|
|
|||
Property and equipment, net
|
138,774
|
|
|
844
|
|
|
139,618
|
|
|||
Operating lease assets, net
|
—
|
|
|
219,883
|
|
|
219,883
|
|
|||
Goodwill
|
6,400
|
|
|
—
|
|
|
6,400
|
|
|||
Intangibles, net
|
1,291
|
|
|
(67
|
)
|
|
1,224
|
|
|||
Other assets, net
|
2,216
|
|
|
—
|
|
|
2,216
|
|
|||
Total long-term assets
|
148,681
|
|
|
220,660
|
|
|
369,341
|
|
|||
Total assets
|
$
|
172,032
|
|
|
$
|
217,642
|
|
|
$
|
389,674
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
7,854
|
|
|
$
|
—
|
|
|
$
|
7,854
|
|
Accrued payroll and benefits
|
13,391
|
|
|
—
|
|
|
13,391
|
|
|||
Accrued expenses and other current liabilities
|
11,183
|
|
|
(553
|
)
|
|
10,630
|
|
|||
Current operating lease liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|||
Current portion of long-term debt
|
719
|
|
|
—
|
|
|
719
|
|
|||
Total current liabilities
|
33,147
|
|
|
(553
|
)
|
|
32,594
|
|
|||
Long-term debt, net
|
44,183
|
|
|
—
|
|
|
44,183
|
|
|||
Long-term operating lease liabilities, net
|
—
|
|
|
260,931
|
|
|
260,931
|
|
|||
Deferred rent
|
37,334
|
|
|
(37,186
|
)
|
|
148
|
|
|||
Deferred tax liabilities, net
|
133
|
|
|
—
|
|
|
133
|
|
|||
Other long-term liabilities
|
4,554
|
|
|
442
|
|
|
4,996
|
|
|||
Total liabilities
|
119,351
|
|
|
223,634
|
|
|
342,985
|
|
|||
|
|
|
|
|
|
||||||
Stockholders’ equity:
|
|
|
|
|
|
||||||
Preferred stock—$0.01 par value, 1,000,000 shares authorized and undesignated as of January 1, 2019; no shares issued or outstanding
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock—$0.01 par value, 180,000,000 shares authorized as of January 1, 2019; 46,353,309 issued and 43,929,438 outstanding as of January 1, 2019
|
464
|
|
|
—
|
|
|
464
|
|
|||
Treasury stock, at cost, 2,423,871 shares as of January 1, 2019
|
(35,000
|
)
|
|
—
|
|
|
(35,000
|
)
|
|||
Additional paid-in capital
|
198,352
|
|
|
—
|
|
|
198,352
|
|
|||
Accumulated deficit
|
(111,135
|
)
|
|
(5,992
|
)
|
|
(117,127
|
)
|
|||
Total stockholders’ equity
|
52,681
|
|
|
(5,992
|
)
|
|
46,689
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
172,032
|
|
|
$
|
217,642
|
|
|
$
|
389,674
|
|
|
|
October 1,
2019 |
|
January 1,
2019 |
||||
Leasehold improvements
|
|
$
|
200,790
|
|
|
$
|
197,571
|
|
Furniture, fixtures and equipment
|
|
123,641
|
|
|
121,479
|
|
||
Construction in progress
|
|
5,606
|
|
|
3,620
|
|
||
|
|
330,037
|
|
|
322,670
|
|
||
Accumulated depreciation and amortization
|
|
(195,355
|
)
|
|
(183,896
|
)
|
||
Property and equipment, net
|
|
$
|
134,682
|
|
|
$
|
138,774
|
|
|
|
October 1,
2019 |
|
January 1,
2019 |
||||
Gift card liability
|
|
$
|
1,446
|
|
|
$
|
3,284
|
|
Occupancy related
|
|
1,699
|
|
|
2,600
|
|
||
Utilities
|
|
1,391
|
|
|
1,582
|
|
||
Other accrued expenses
|
|
5,027
|
|
|
3,717
|
|
||
Accrued expenses and other current liabilities
|
|
$
|
9,563
|
|
|
$
|
11,183
|
|
Year 1
|
$
|
1,125
|
|
Year 2
|
1,813
|
|
|
Year 3
|
41,451
|
|
|
Total
|
$
|
44,389
|
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||||||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
|
October 1,
2019 |
|
October 2,
2018 |
||||||||
Provision (benefit) for income taxes
|
|
$
|
64
|
|
|
$
|
(11
|
)
|
|
$
|
64
|
|
|
$
|
(259
|
)
|
Effective tax rate
|
|
1.5
|
%
|
|
(1.1
|
)%
|
|
2.2
|
%
|
|
3.0
|
%
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||||||||||
|
October 1,
2019 |
|
October 2,
2018 |
|
October 1,
2019 |
|
October 2,
2018 |
||||||||
Stock-based compensation expense
|
$
|
(61
|
)
|
|
$
|
640
|
|
|
$
|
1,820
|
|
|
$
|
2,232
|
|
Capitalized stock-based compensation expense
|
$
|
11
|
|
|
$
|
12
|
|
|
$
|
32
|
|
|
$
|
37
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||||||||||
|
October 1,
2019 |
|
October 2,
2018 |
|
October 1,
2019 |
|
October 2,
2018 |
||||||||
Restaurant impairments (1)
|
$
|
89
|
|
|
$
|
314
|
|
|
$
|
2,554
|
|
|
$
|
1,231
|
|
Closure costs (1)
|
(643
|
)
|
|
1,488
|
|
|
(112
|
)
|
|
3,561
|
|
||||
Loss (gain) on disposal of assets and other
|
890
|
|
|
(10
|
)
|
|
1,198
|
|
|
1,160
|
|
||||
|
$
|
336
|
|
|
$
|
1,792
|
|
|
$
|
3,640
|
|
|
$
|
5,952
|
|
(1)
|
Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed.
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||||||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
|
October 1,
2019 |
|
October 2,
2018 |
||||||||
Net income (loss)
|
|
$
|
4,243
|
|
|
$
|
1,050
|
|
|
$
|
2,830
|
|
|
$
|
(8,460
|
)
|
Shares:
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
|
43,990,049
|
|
|
43,094,524
|
|
|
44,007,345
|
|
|
41,798,640
|
|
||||
Effect of dilutive securities
|
|
909,127
|
|
|
1,734,839
|
|
|
1,071,194
|
|
|
—
|
|
||||
Diluted weighted average shares outstanding
|
|
44,899,176
|
|
|
44,829,363
|
|
|
45,078,539
|
|
|
41,798,640
|
|
||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share
|
|
$
|
0.10
|
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
(0.20
|
)
|
Diluted earnings (loss) per share
|
|
$
|
0.09
|
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
(0.20
|
)
|
Classification
|
October 1,
2019 |
|||
Assets
|
|
|
||
Operating
|
Operating lease assets, net
|
$
|
212,760
|
|
Finance
|
Finance lease assets, net (1)
|
896
|
|
|
Total leased assets
|
|
$
|
213,656
|
|
Liabilities
|
|
|
||
Current lease liabilities
|
|
|
||
Operating
|
Current operating lease liabilities
|
$
|
22,431
|
|
Finance
|
Current finance lease liabilities (2)
|
756
|
|
|
Long-term lease liabilities
|
|
|
||
Operating
|
Long-term operating lease liabilities
|
229,157
|
|
|
Finance
|
Long-term finance lease liabilities (2)
|
158
|
|
|
Total lease liabilities
|
|
$
|
252,502
|
|
(1)
|
The finance lease assets are included in property and equipment, net in the Condensed Consolidated Balance Sheets.
|
(2)
|
The current portion of the finance lease liabilities is included in accrued expenses and other current liabilities, and the long-term portion was included in other long-term liabilities in the Condensed Consolidated Balance Sheets.
|
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||
Classification
|
|
October 1,
2019 |
|
October 1,
2019 |
|||||
Operating lease cost
|
Occupancy, other restaurant operating costs, and general and administrative expenses
|
|
$
|
10,251
|
|
|
$
|
30,583
|
|
Finance lease cost
|
|
|
|
|
|
||||
Amortization of lease assets
|
Depreciation and amortization
|
|
161
|
|
|
511
|
|
||
Interest on lease liabilities
|
Interest expense, net
|
|
18
|
|
|
58
|
|
||
|
|
|
10,430
|
|
|
31,152
|
|
||
Sublease income
|
Franchising royalties and fees, and other
|
|
(184
|
)
|
|
(384
|
)
|
||
Total lease cost, net
|
|
|
$
|
10,246
|
|
|
$
|
30,768
|
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
Remainder of 2019
|
$
|
10,815
|
|
|
$
|
158
|
|
|
$
|
10,973
|
|
2020
|
43,172
|
|
|
539
|
|
|
43,711
|
|
|||
2021
|
42,375
|
|
|
216
|
|
|
42,591
|
|
|||
2022
|
42,184
|
|
|
44
|
|
|
42,228
|
|
|||
2023
|
40,831
|
|
|
14
|
|
|
40,845
|
|
|||
Thereafter
|
189,439
|
|
|
9
|
|
|
189,448
|
|
|||
Total lease payments
|
368,816
|
|
|
980
|
|
|
369,796
|
|
|||
Less: Imputed interest
|
117,228
|
|
|
66
|
|
|
117,294
|
|
|||
Present value of lease liabilities
|
$
|
251,588
|
|
|
$
|
914
|
|
|
$
|
252,502
|
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||
|
|
October 1,
2019 |
|
October 1,
2019 |
||||
Cash paid for lease liabilities:
|
|
|
|
|
||||
Operating leases
|
|
$
|
10,795
|
|
|
$
|
32,301
|
|
Finance leases
|
|
223
|
|
|
600
|
|
||
|
|
$
|
11,018
|
|
|
$
|
32,901
|
|
Right-of-use assets obtained in exchange for new lease liabilities:
|
|
|
|
|
||||
Operating leases
|
|
$
|
2,646
|
|
|
$
|
7,856
|
|
Finance leases
|
|
—
|
|
|
229
|
|
||
|
|
$
|
2,646
|
|
|
$
|
8,085
|
|
|
|
October 1,
2019 |
|
October 2,
2018 |
||||
Interest paid (net of amounts capitalized)
|
|
$
|
1,972
|
|
|
$
|
3,006
|
|
Income taxes paid
|
|
6
|
|
|
49
|
|
||
Changes in purchases of property and equipment accrued in accounts payable, net
|
|
1,200
|
|
|
(1,346
|
)
|
•
|
consumer recognition of our brand and our ability to respond to changing consumer preferences;
|
•
|
overall economic trends, particularly those related to consumer spending;
|
•
|
our ability to operate restaurants effectively and efficiently to meet consumer expectations;
|
•
|
pricing;
|
•
|
the number of restaurant transactions, per-person spend and average check amount;
|
•
|
marketing and promotional efforts;
|
•
|
abnormal weather patterns;
|
•
|
food safety and foodborne illness concerns;
|
•
|
local competition;
|
•
|
trade area dynamics;
|
•
|
introduction of new and seasonal menu items and limited time offerings; and
|
•
|
opening new restaurants in the vicinity of existing locations.
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||||||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
|
October 1,
2019 |
|
October 2,
2018 |
||||||||
|
|
(in thousands, unaudited)
|
||||||||||||||
Net income (loss)
|
|
$
|
4,243
|
|
|
$
|
1,050
|
|
|
$
|
2,830
|
|
|
$
|
(8,460
|
)
|
Depreciation and amortization
|
|
5,458
|
|
|
5,790
|
|
|
16,626
|
|
|
17,407
|
|
||||
Interest expense, net
|
|
737
|
|
|
1,093
|
|
|
2,298
|
|
|
3,385
|
|
||||
Provision (benefit) for income taxes
|
|
64
|
|
|
(11
|
)
|
|
64
|
|
|
(259
|
)
|
||||
EBITDA
|
|
$
|
10,502
|
|
|
$
|
7,922
|
|
|
$
|
21,818
|
|
|
$
|
12,073
|
|
Restaurant impairments, closure costs and asset disposals (1)
|
|
336
|
|
|
1,792
|
|
|
3,640
|
|
|
5,952
|
|
||||
Stock-based compensation expense
|
|
(61
|
)
|
|
640
|
|
|
1,820
|
|
|
2,232
|
|
||||
Litigation settlement (2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,796
|
|
||||
Loss on extinguishment of debt (3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
626
|
|
||||
Fees and costs related to transactions and other acquisition/disposition costs (4)
|
|
130
|
|
|
—
|
|
|
166
|
|
|
53
|
|
||||
Severance costs (5)
|
|
112
|
|
|
—
|
|
|
112
|
|
|
278
|
|
||||
Adjusted EBITDA
|
|
$
|
11,019
|
|
|
$
|
10,354
|
|
|
$
|
27,556
|
|
|
$
|
25,010
|
|
(1)
|
The first three quarters of 2019 include the impairment of two restaurants compared to one restaurant during the same period of 2018. Additionally, the first three quarters of 2018 included closure costs for the 12 restaurants closed in the first two quarters of 2018, most of which were approaching the expiration of their leases. See Note 7, Restaurant Impairments, Closure Costs and Asset Disposals.
|
(2)
|
The first three quarters of 2018 included a charge of $3.4 million for the final assessment related to data breach liabilities and a $0.3 million charge for a litigation settlement related to gift cards.
|
(3)
|
The first three quarters of 2018 included the loss on extinguishment of debt which resulted from writing off the remaining unamortized balance of debt issuance costs related to the prior credit facility when it was repaid in full in the second quarter of 2018.
|
(4)
|
The third quarter of 2019 included expenses related to transaction and acquisition costs. The first three quarters of 2019 included acquisition costs related to the purchase of one franchise restaurant and costs related to transaction costs. The first three quarters of 2018 included expenses related to the registration statement the Company filed in 2018.
|
(5)
|
The third quarter of 2019 and first three quarters of 2019 and 2018 included severance costs from departmental structural changes.
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
|
October 1,
2019 |
|
October 2,
2018 |
||||
Company-Owned Restaurant Activity
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
|
395
|
|
|
404
|
|
|
394
|
|
|
412
|
|
Openings
|
|
3
|
|
|
—
|
|
|
3
|
|
|
1
|
|
Acquisition (2)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Divestitures (1)
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
Closures
|
|
(2
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(12
|
)
|
Restaurants at end of period
|
|
391
|
|
|
401
|
|
|
391
|
|
|
401
|
|
Franchise Restaurant Activity
|
|
|
|
|
|
|
|
|
||||
Beginning of period
|
|
62
|
|
|
65
|
|
|
65
|
|
|
66
|
|
Openings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Acquisitions (2)
|
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
Divestiture (2)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
Closures
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
Restaurants at end of period
|
|
67
|
|
|
65
|
|
|
67
|
|
|
65
|
|
Total restaurants
|
|
458
|
|
|
466
|
|
|
458
|
|
|
466
|
|
(1)
|
Represents five company-owned restaurants sold to a franchisee.
|
(2)
|
During the first quarter of 2019 we acquired one franchise restaurant and during the third quarter of 2019 we sold five restaurants to a franchisee.
|
|
|
Fiscal Quarter Ended
|
|
Three Fiscal Quarters Ended
|
||||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
|
October 1,
2019 |
|
October 2,
2018 |
||||
|
|
(unaudited)
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||
Restaurant revenue
|
|
98.7
|
%
|
|
99.0
|
%
|
|
98.8
|
%
|
|
99.1
|
%
|
Franchising royalties and fees, and other
|
|
1.3
|
%
|
|
1.0
|
%
|
|
1.2
|
%
|
|
0.9
|
%
|
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
|
|
|
|
|
|
|
|
|
||||
Cost of sales
|
|
25.3
|
%
|
|
26.5
|
%
|
|
25.9
|
%
|
|
26.6
|
%
|
Labor
|
|
32.5
|
%
|
|
32.7
|
%
|
|
33.1
|
%
|
|
32.9
|
%
|
Occupancy
|
|
10.4
|
%
|
|
10.4
|
%
|
|
10.7
|
%
|
|
10.9
|
%
|
Other restaurant operating costs
|
|
14.7
|
%
|
|
14.0
|
%
|
|
14.7
|
%
|
|
14.6
|
%
|
General and administrative
|
|
8.8
|
%
|
|
8.9
|
%
|
|
9.3
|
%
|
|
10.3
|
%
|
Depreciation and amortization
|
|
4.6
|
%
|
|
5.0
|
%
|
|
4.8
|
%
|
|
5.1
|
%
|
Pre-opening
|
|
0.2
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Restaurant impairments, closure costs and asset disposals
|
|
0.3
|
%
|
|
1.5
|
%
|
|
1.0
|
%
|
|
1.7
|
%
|
Total costs and expenses
|
|
95.7
|
%
|
|
98.2
|
%
|
|
98.5
|
%
|
|
101.4
|
%
|
Income (loss) from operations
|
|
4.3
|
%
|
|
1.8
|
%
|
|
1.5
|
%
|
|
(1.4
|
)%
|
Loss on extinguishment of debt
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.2
|
%
|
Interest expense, net
|
|
0.6
|
%
|
|
0.9
|
%
|
|
0.7
|
%
|
|
1.0
|
%
|
Income (loss) before income taxes
|
|
3.6
|
%
|
|
0.9
|
%
|
|
0.8
|
%
|
|
(2.5
|
)%
|
Provision (benefit) for income taxes
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.1
|
)%
|
Net income (loss)
|
|
3.6
|
%
|
|
0.9
|
%
|
|
0.8
|
%
|
|
(2.4
|
)%
|
|
|
Fiscal Quarter Ended
|
|
Increase / (Decrease)
|
|||||||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
|
$
|
|
%
|
|||||||
|
|
|
|
||||||||||||
|
|
(in thousands, unaudited)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant revenue
|
|
$
|
116,759
|
|
|
$
|
115,552
|
|
|
$
|
1,207
|
|
|
1.0
|
%
|
Franchising royalties and fees, and other
|
|
1,545
|
|
|
1,175
|
|
|
370
|
|
|
31.5
|
%
|
|||
Total revenue
|
|
118,304
|
|
|
116,727
|
|
|
1,577
|
|
|
1.4
|
%
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
|
|
|
|
|
|
|
|
|
|||||||
Cost of sales
|
|
29,544
|
|
|
30,617
|
|
|
(1,073
|
)
|
|
(3.5
|
)%
|
|||
Labor
|
|
37,951
|
|
|
37,738
|
|
|
213
|
|
|
0.6
|
%
|
|||
Occupancy
|
|
12,108
|
|
|
12,035
|
|
|
73
|
|
|
0.6
|
%
|
|||
Other restaurant operating costs
|
|
17,161
|
|
|
16,224
|
|
|
937
|
|
|
5.8
|
%
|
|||
General and administrative
|
|
10,436
|
|
|
10,399
|
|
|
37
|
|
|
0.4
|
%
|
|||
Depreciation and amortization
|
|
5,458
|
|
|
5,790
|
|
|
(332
|
)
|
|
(5.7
|
)%
|
|||
Pre-opening
|
|
266
|
|
|
—
|
|
|
266
|
|
|
*
|
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
336
|
|
|
1,792
|
|
|
(1,456
|
)
|
|
(81.3
|
)%
|
|||
Total costs and expenses
|
|
113,260
|
|
|
114,595
|
|
|
(1,335
|
)
|
|
(1.2
|
)%
|
|||
Income from operations
|
|
5,044
|
|
|
2,132
|
|
|
2,912
|
|
|
*
|
|
|||
Interest expense, net
|
|
737
|
|
|
1,093
|
|
|
(356
|
)
|
|
(32.6
|
)%
|
|||
Income before income taxes
|
|
4,307
|
|
|
1,039
|
|
|
3,268
|
|
|
*
|
|
|||
Provision (benefit) from income taxes
|
|
64
|
|
|
(11
|
)
|
|
75
|
|
|
*
|
|
|||
Net income
|
|
$
|
4,243
|
|
|
$
|
1,050
|
|
|
$
|
3,193
|
|
|
*
|
|
Company-owned:
|
|
|
|
|
|
|
|
|
|||||||
Average unit volume
|
|
$
|
1,157
|
|
|
$
|
1,107
|
|
|
$
|
50
|
|
|
4.5
|
%
|
Comparable restaurant sales
|
|
2.2
|
%
|
|
5.2
|
%
|
|
|
|
|
*
|
Not meaningful.
|
|
|
Three Fiscal Quarters Ended
|
|
Increase / (Decrease)
|
|||||||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
|
$
|
|
%
|
|||||||
|
|
|
|
||||||||||||
|
|
(in thousands, except percentages)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant revenue
|
|
$
|
344,382
|
|
|
$
|
341,616
|
|
|
$
|
2,766
|
|
|
0.8
|
%
|
Franchising royalties and fees, and other
|
|
4,158
|
|
|
3,032
|
|
|
1,126
|
|
|
37.1
|
%
|
|||
Total revenue
|
|
348,540
|
|
|
344,648
|
|
|
3,892
|
|
|
1.1
|
%
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
|
|
|
|
|
|
|
|
|
|||||||
Cost of sales
|
|
89,083
|
|
|
90,962
|
|
|
(1,879
|
)
|
|
(2.1
|
)%
|
|||
Labor
|
|
113,920
|
|
|
112,353
|
|
|
1,567
|
|
|
1.4
|
%
|
|||
Occupancy
|
|
36,849
|
|
|
37,155
|
|
|
(306
|
)
|
|
(0.8
|
)%
|
|||
Other restaurant operating costs
|
|
50,475
|
|
|
49,997
|
|
|
478
|
|
|
1.0
|
%
|
|||
General and administrative
|
|
32,424
|
|
|
35,480
|
|
|
(3,056
|
)
|
|
(8.6
|
)%
|
|||
Depreciation and amortization
|
|
16,626
|
|
|
17,407
|
|
|
(781
|
)
|
|
(4.5
|
)%
|
|||
Pre-opening
|
|
331
|
|
|
50
|
|
|
281
|
|
|
*
|
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
3,640
|
|
|
5,952
|
|
|
(2,312
|
)
|
|
(38.8
|
)%
|
|||
Total costs and expenses
|
|
343,348
|
|
|
349,356
|
|
|
(6,008
|
)
|
|
(1.7
|
)%
|
|||
Income (loss) from operations
|
|
5,192
|
|
|
(4,708
|
)
|
|
9,900
|
|
|
*
|
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
626
|
|
|
(626
|
)
|
|
*
|
|
|||
Interest expense, net
|
|
2,298
|
|
|
3,385
|
|
|
(1,087
|
)
|
|
(32.1
|
)%
|
|||
Income (loss) before income taxes
|
|
2,894
|
|
|
(8,719
|
)
|
|
11,613
|
|
|
*
|
|
|||
Provision (benefit) for income taxes
|
|
64
|
|
|
(259
|
)
|
|
323
|
|
|
*
|
|
|||
Net income (loss)
|
|
$
|
2,830
|
|
|
$
|
(8,460
|
)
|
|
$
|
11,290
|
|
|
*
|
|
Company-owned:
|
|
|
|
|
|
|
|
|
|||||||
Average unit volumes
|
|
$
|
1,157
|
|
|
$
|
1,107
|
|
|
$
|
50
|
|
|
4.5
|
%
|
Comparable restaurant sales
|
|
3.4
|
%
|
|
3.3
|
%
|
|
|
|
|
*
|
Not meaningful.
|
|
|
Three Fiscal Quarters Ended
|
||||||
|
|
October 1,
2019 |
|
October 2,
2018 |
||||
Net cash provided by (used in) operating activities
|
|
$
|
16,269
|
|
|
$
|
(4,868
|
)
|
Net cash used in investing activities
|
|
(14,823
|
)
|
|
(9,437
|
)
|
||
Net cash (used in) provided by financing activities
|
|
(3,015
|
)
|
|
12,862
|
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(1,569
|
)
|
|
$
|
(1,443
|
)
|
Exhibit Number
|
|
Description of Exhibit
|
|
10.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
101.INS
|
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
NOODLES & COMPANY
|
|
By:
|
/s/ KEN KUICK
|
|
Ken Kuick
Chief Financial Officer (principal financial officer and duly authorized signatory for the registrant)
|
Date
|
November 8, 2019
|
|
|
Sincerely,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dave Boennighausen
|
|
|
|
|
Chief Executive Officer - Noodles & Company
|
||
|
|
|
|
|
Accepted and agreed by:
|
|
|
|
|
|
|
|
|
|
|
|
Chas Hermann
|
|
|
|
|
|
|
|
Dated:
|
|
|
|
|
|
|
|
|
|
|
|
Signed:
|
|
|
|
|
|
Print name:
|
|
|
|
|
|
Date:
|
|
|
|
|
|
On behalf of Noodles & Company
|
|
|
|
|
|
|
|
|
|
|
|
Print name:
|
|
|
|
|
|
Date:
|
|
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ DAVE BOENNIGHAUSEN
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Dave Boennighausen
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Chief Executive Officer
(Principal Executive Officer)
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ KEN KUICK
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Ken Kuick
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Chief Financial Officer
(Principal Financial Officer)
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By:
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/s/ DAVE BOENNIGHAUSEN
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Name:
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Dave Boennighausen
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Title:
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Chief Executive Officer
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By:
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/s/ KEN KUICK
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Name:
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Ken Kuick
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Title:
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Chief Financial Officer
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