☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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84-1303469
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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520 Zang Street, Suite D
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Broomfield,
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CO
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80021
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common stock, par value $0.01 per share
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NDLS
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Nasdaq Global Select Market
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Large accelerated filer
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☐
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Accelerated filer
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☒
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Non-accelerated filer
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☐
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Smaller reporting company
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☒
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Emerging growth company
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☐
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Page
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PART I
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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PART III
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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PART IV
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ITEM 15.
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ITEM 16.
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SIGNATURES
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EXHIBITS
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•
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Focusing on our global flavors and menu offerings. We believe that our globally-inspired menu, focused on noodle and pasta dishes, differentiates us from other restaurants. We also believe this global variety, which includes a range of healthy to indulgent dishes that are cooked to order with fresh, high-quality ingredients, remains a competitive strength. We believe we have significant potential to broaden awareness for our zucchini and cauliflower-infused noodles with additional dishes as we continue to test the next evolution of our better-for-you platform along with continued innovation around our core offerings.
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•
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Improving efficiencies and unit-level margins. We believe that while we have made significant progress in recent quarters, there remains meaningful opportunity to improve our operational consistency as well as our overall unit level margins. We are actively enhancing our supply chain and food preparation procedures to reduce inbound ingredient costs and improve labor efficiency. During 2018, we completed the national roll out of self-busing stations, which reduced labor hours and improved cleanliness in our restaurants. In 2019, we began incorporating pick-up windows into many of our new restaurants to reflect the evolution of overall guest preference towards the off-premise occasion. Additionally, we continue to optimize our equipment package and operating processes and expect to begin retrofitting our existing restaurants in 2020 with a new kitchen design engineered to increase efficiency while also improving throughput, food quality, off-premise ease of pick-up and flexibility for future culinary innovation. In 2020, we will begin incorporating the new kitchen design and operating model into new restaurants.
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•
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Enhancing convenience for our customers. We believe there is significant opportunity to increase convenience for our customers. In 2018, we completed a national roll out of dedicated pickup areas for customers who order and pay ahead so that they can have a faster and more convenient takeout experience. In 2019, we relaunched our digital platform making it easier for guests to navigate our menu and customize their orders. Additionally, we introduced a new and improved Noodles Rewards program that incorporates points and tier-based rewards to further customer engagement. Finally, we continue to offer an additional level of convenience for our customers through our third-party delivery program.
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•
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Improving manager selection, training and development of our teams. We have increased our focus on the selection, training and development of our restaurant teams. We have implemented certain changes to our restaurant compensation program
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•
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Our Menu Offerings. We focus some of our marketing efforts on new menu offerings to broaden our appeal to our customers. We promote these items through a variety of formats including public relations events, social media marketing, television appearances, radio promotions, and messaging to our Noodles Rewards members. In addition to increasing brand awareness, these promotions also encourage prompt consumer action, resulting in more immediate increases in our customer traffic.
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•
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Online, Social and Other Media Tools. We rely on our website, www.noodles.com, to promote our business and increase brand awareness. The information on or available through our website is not, and should not be considered, a part of this report. Our customers are encouraged to sign up to receive communications through our Noodles Rewards program, updating them on new menu offerings and promotional opportunities. As of December 31, 2019, more than 4.1 million of our customers have signed up to receive communication through our rewards and e-club programs. We also communicate with our customers using social media, such as our Facebook and Instagram pages, and our Twitter feed. Our online and social media engagement provides exciting opportunities to engage with our customers.
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•
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Digital and Search Advertising. We use targeted digital advertising in many of our markets. We believe this helps to increase top of mind awareness with potential customers and drives both frequency and trial. In addition, digital advertising provides us with the opportunity to promote specific product platforms and offerings such as online ordering and catering.
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•
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Creating New Meal Occasions. We also focus on ways Noodles & Company can serve customers at different times and in new places. For example, our Kids Meal menu was created for the future foodies of the world: children aged ten and under
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•
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Making Noodles & Company Easier to Use. Some of our marketing efforts focus on making our restaurants easier to use. We seek to deliver superior customer service at every opportunity, generating consumer awareness of menu offerings with in-restaurant communications such as displays of our menu offerings that are visible upon entry and tabletop cards that highlight healthy food offerings. We also continue to implement initiatives to improve convenience for our customers, such as expanding the availability of third-party delivery and introducing dedicated pick-up shelving to increase the speed of the to-go transaction.
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State
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Company-
owned |
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Franchised
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Total
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Arizona
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5
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—
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5
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California
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17
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—
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17
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Colorado
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60
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—
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60
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Connecticut
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—
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4
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4
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District of Columbia
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1
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—
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1
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Florida
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5
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1
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6
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Idaho
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5
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—
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5
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Illinois
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49
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5
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54
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Indiana
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21
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1
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22
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Iowa
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10
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1
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11
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Kansas
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10
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—
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10
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Kentucky
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1
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4
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5
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Maryland
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23
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—
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23
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Michigan
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—
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23
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23
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Minnesota
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44
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1
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45
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Missouri
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3
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8
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11
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Montana
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—
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2
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2
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Nebraska
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—
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5
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5
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New York
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1
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—
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1
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North Carolina
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13
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—
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13
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North Dakota
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—
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4
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4
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Ohio
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17
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—
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17
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Oregon
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6
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—
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6
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Pennsylvania
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9
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—
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9
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South Dakota
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—
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2
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2
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Tennessee
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—
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4
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4
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Utah
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16
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—
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16
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Virginia
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26
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—
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26
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Washington
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2
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—
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2
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Wisconsin
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45
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3
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48
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389
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68
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457
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ITEM 5.
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Fiscal Year
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2019
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2018
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2017
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2016
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2015
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(in thousands)
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Revenue:
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Restaurant revenue
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$
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456,671
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$
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453,671
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$
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451,599
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$
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482,544
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$
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450,482
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Franchising royalties and fees, and other
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5,740
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4,170
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4,893
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4,930
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4,969
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Total revenue
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462,411
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457,841
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456,492
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487,474
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455,451
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Costs and Expenses:
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Restaurant operating costs (exclusive of depreciation and amortization, shown separately below):
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Cost of sales
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117,179
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121,102
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121,473
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130,630
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120,455
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Labor
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150,565
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149,746
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150,161
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161,219
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143,145
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Occupancy
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48,863
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49,020
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51,877
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55,912
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50,300
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Other restaurant operating costs
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66,684
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65,575
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64,091
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73,011
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63,549
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General and administrative(1)(2)
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43,446
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46,092
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39,746
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55,654
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37,244
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Depreciation and amortization
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22,086
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22,872
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24,613
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28,134
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27,802
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Pre-opening
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402
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50
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935
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3,131
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4,407
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Restaurant impairments, closure costs and asset disposals(3)
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7,747
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7,142
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37,446
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47,311
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29,616
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Total costs and expenses
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456,972
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461,599
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490,342
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555,002
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476,518
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Income (loss) from operations
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5,439
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(3,758
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)
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(33,850
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)
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(67,528
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)
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(21,067
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)
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Loss on extinguishment of debt
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746
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626
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—
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—
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—
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Interest expense, net
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2,942
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4,305
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|
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3,839
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2,916
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|
|
1,432
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|||||
Income (loss) before income taxes
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1,751
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(8,689
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)
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(37,689
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)
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(70,444
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)
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(22,499
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)
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Provision (benefit) for income taxes
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104
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(248
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)
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|
(207
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)
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1,233
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(8,734
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)
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|||||
Net income (loss)
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1,647
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|
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(8,441
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)
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(37,482
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)
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(71,677
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)
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(13,765
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)
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Accretion of preferred stock to redemption value(4)
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—
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—
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(7,967
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)
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—
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—
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|||||
Net income (loss) attributable to common stockholders
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$
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1,647
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$
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(8,441
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)
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$
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(45,449
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)
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$
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(71,677
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)
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$
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(13,765
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)
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(1)
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General and administrative expenses in 2016 include a $10.6 million charge for estimated losses associated with claims and anticipated claims by payment card companies from the data security incident, a $2.7 million charge for severance expenses and a $3.0 million charge for an employment-related litigation settlement.
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(2)
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General and administrative expenses in 2018 include 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 a Delaware gift card matter.
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(3)
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Restaurant impairments, closure costs and asset disposals include $6.2 million, $1.5 million, $16.2 million, $41.6 million and $25.4 million of charges in 2019, 2018, 2017, 2016 and 2015, respectively related to restaurant impairment charges in 2019 and the write down of assets related to the sale of nine company-owned restaurants to a franchisee that was completed in January of 2020. Included in the impairment charges are 34 restaurants in 2017, 54 restaurants in 2016 and 39 restaurants in 2015 that were identified as impaired. Additionally, we recognized $0.4 million, $4.1 million, $20.1 million, $2.3 million, and $3.1 million in 2019, 2018, 2017, 2016 and 2015, respectively, of closure costs which are also included in restaurant impairments, closure costs and asset disposals. The closure costs recognized during 2019 and 2018 include closure costs of five and 19 restaurants closed throughout 2019 and 2018, most of which were at or approaching the expiration of their leases, 2017 includes closure costs of 55 restaurants closed during the first quarter of 2017 and 2015 includes closure costs of the 16 restaurants closed in the fourth quarter of 2015. Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed.
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(4)
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Represents the accretion of the preferred stock issued to L Catterton to its full redemption value.
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Fiscal Year
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2019
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2018
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2017
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2016
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2015
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(in thousands, except share and per share data and restaurants)
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Earnings (loss) per Class A and Class B common share, combined:
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||||||||||
Basic
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$
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0.04
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$
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(0.20
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)
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$
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(1.20
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)
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$
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(2.58
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)
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$
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(0.48
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)
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Diluted
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$
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0.04
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$
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(0.20
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)
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$
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(1.20
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)
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$
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(2.58
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)
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$
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(0.48
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)
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Weighted average Class A and Class B common shares outstanding, combined:
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||||||||||
Basic
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44,036,947
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|
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42,329,556
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37,759,497
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27,808,708
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28,938,901
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|||||
Diluted
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44,976,436
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42,329,556
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37,759,497
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27,808,708
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28,938,901
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|||||
Selected Operating Data:
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||||||||||
Company-owned restaurants at end of period
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389
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|
|
394
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|
|
412
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|
|
457
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|
|
422
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|
|||||
Franchise-owned restaurants at end of period
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68
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|
|
65
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|
|
66
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|
|
75
|
|
|
70
|
|
|||||
Company-owned:
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|
|
|
|
|
|
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|
||||||||||
Average unit volumes (1)
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|
$
|
1,163
|
|
|
$
|
1,119
|
|
|
$
|
1,072
|
|
|
$
|
1,075
|
|
|
$
|
1,103
|
|
Comparable restaurant sales (2)
|
|
2.9
|
%
|
|
3.4
|
%
|
|
(2.7
|
)%
|
|
(0.9
|
)%
|
|
(0.2
|
)%
|
|||||
Restaurant contribution (3)
|
|
$
|
73,380
|
|
|
$
|
68,228
|
|
|
$
|
63,997
|
|
|
$
|
61,772
|
|
|
$
|
73,033
|
|
Restaurant contribution margin (3)
|
|
16.1
|
%
|
|
15.0
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%
|
|
14.2
|
%
|
|
12.8
|
%
|
|
16.2
|
%
|
(1)
|
Average unit volumes (“AUVs”) consist of average annualized sales of all company-owned restaurants over the trailing 12 periods.
|
(2)
|
Comparable restaurant sales represent year-over-year sales for restaurants open for at least 18 full periods.
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(3)
|
Restaurant contribution represents restaurant revenue less restaurant operating costs, which are the cost of sales, labor, occupancy and other operating items. Restaurant contribution margin represents restaurant contribution as a percentage of restaurant revenue. Restaurant contribution and restaurant contribution margin are non-GAAP measures that are neither required by, nor presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and the calculations thereof may not be comparable to similar measures reported by other companies. These measures are supplemental measures of the operating performance of our restaurants and are not reflective of the underlying performance of our business because corporate-level expenses are excluded from these measures.
|
|
|
Fiscal Year
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Income (loss) from operations
|
|
$
|
5,439
|
|
|
$
|
(3,758
|
)
|
|
$
|
(33,850
|
)
|
|
$
|
(67,528
|
)
|
|
$
|
(21,067
|
)
|
Less: Franchising royalties and fees, and other
|
|
5,740
|
|
|
4,170
|
|
|
4,893
|
|
|
4,930
|
|
|
4,969
|
|
|||||
Add: General and administrative
|
|
43,446
|
|
|
46,092
|
|
|
39,746
|
|
|
55,654
|
|
|
37,244
|
|
|||||
Depreciation and amortization
|
|
22,086
|
|
|
22,872
|
|
|
24,613
|
|
|
28,134
|
|
|
27,802
|
|
|||||
Pre-opening
|
|
402
|
|
|
50
|
|
|
935
|
|
|
3,131
|
|
|
4,407
|
|
|||||
Restaurant impairments, closure costs and asset disposals
|
|
7,747
|
|
|
7,142
|
|
|
37,446
|
|
|
47,311
|
|
|
29,616
|
|
|||||
Restaurant contribution
|
|
$
|
73,380
|
|
|
$
|
68,228
|
|
|
$
|
63,997
|
|
|
$
|
61,772
|
|
|
$
|
73,033
|
|
|
|
As of
|
||||||||||||||||||
|
|
December 31, 2019
|
|
January 1, 2019
|
|
January 2, 2018
|
|
January 3, 2017
|
|
December 29, 2015
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total current assets
|
|
$
|
29,322
|
|
|
$
|
23,351
|
|
|
$
|
22,058
|
|
|
$
|
25,788
|
|
|
$
|
25,401
|
|
Total assets (4)
|
|
378,519
|
|
|
172,032
|
|
|
185,233
|
|
|
209,461
|
|
|
239,961
|
|
|||||
Total current liabilities
|
|
58,034
|
|
|
33,147
|
|
|
43,869
|
|
|
49,033
|
|
|
32,914
|
|
|||||
Total long-term debt
|
|
40,497
|
|
|
44,183
|
|
|
57,624
|
|
|
84,676
|
|
|
67,732
|
|
|||||
Total liabilities (4)
|
|
327,948
|
|
|
119,351
|
|
|
149,372
|
|
|
183,643
|
|
|
146,189
|
|
|||||
Total stockholders' equity
|
|
50,571
|
|
|
52,681
|
|
|
35,861
|
|
|
25,818
|
|
|
93,772
|
|
(4)
|
Total assets and total liabilities as of December 31, 2019 include the adoption of ASU 2016-02.
|
•
|
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 Year
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Net income (loss)
|
|
$
|
1,647
|
|
|
$
|
(8,441
|
)
|
|
$
|
(37,482
|
)
|
Depreciation and amortization
|
|
22,086
|
|
|
22,872
|
|
|
24,613
|
|
|||
Interest expense, net
|
|
2,942
|
|
|
4,305
|
|
|
3,839
|
|
|||
Provision (benefit) for income taxes
|
|
104
|
|
|
(248
|
)
|
|
(207
|
)
|
|||
EBITDA
|
|
$
|
26,779
|
|
|
$
|
18,488
|
|
|
$
|
(9,237
|
)
|
Restaurant impairments, closure costs and asset disposals (1)
|
|
7,747
|
|
|
7,142
|
|
|
37,446
|
|
|||
Litigation settlements and data breach assessments (2)
|
|
—
|
|
|
3,796
|
|
|
(401
|
)
|
|||
Fees and costs related to transactions and other acquisition/disposition costs (3)
|
|
190
|
|
|
53
|
|
|
679
|
|
|||
Loss on extinguishment of debt (4)
|
|
746
|
|
|
626
|
|
|
—
|
|
|||
Severance costs (5)
|
|
522
|
|
|
278
|
|
|
581
|
|
|||
Stock-based compensation expense (6)
|
|
2,443
|
|
|
2,979
|
|
|
1,513
|
|
|||
Adjusted EBITDA
|
|
$
|
38,427
|
|
|
$
|
33,362
|
|
|
$
|
30,581
|
|
(1)
|
Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed. Additionally, 2019 includes closure costs of five restaurants closed in 2019, $2.6 million of impairment charges and $3.6 million related to the write down of assets for the sale of nine company-owned restaurants to a franchisee that was completed in January of 2020. 2018 includes closure costs of the 19 restaurants closed during 2018 and impairment charges and 2017 includes the closure costs related to the 55 restaurants closed in the first quarter of 2017 and the impairment of 34 restaurants. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals.
|
(2)
|
Fiscal year 2018 includes a charge of $3.4 million for the final settlement related to data breach liabilities, and a $0.3 million charge for a litigation settlement related to a Delaware gift card matter. Fiscal year 2017 includes a gain on an employment-related litigation settlement due to final settlement being less than what the Company had previously accrued.
|
(3)
|
Fiscal year 2019 includes expenses related to transaction and acquisition costs related to the purchase of one franchise restaurant and other refranchising costs. Fiscal year 2018 includes expenses related to the registration statement the Company filed in the second quarter of 2018. Fiscal year 2017 includes expenses related to the registration statement the Company filed in the first quarter of 2017, which registration statement was later withdrawn.
|
(4)
|
Fiscal year 2019 includes the loss on extinguishment of debt resulting from writing off certain remaining unamortized debt issuance costs related to our credit facility with U.S. Bank National Association (the “2018 Credit Facility”) which was amended in November 2019. Fiscal year 2018 includes the loss on extinguishment of debt, which resulted from writing off certain remaining unamortized balances of debt issuance costs related to the outstanding indebtedness with Bank of America, N.A. (the “Prior Credit Facility”) when it was repaid in full in the second quarter of 2018.
|
(5)
|
Severance costs are related to departmental structural changes and the departure of certain executives.
|
(6)
|
Fiscal year 2019 includes an adjustment related to the departure of Paul Murphy, our former Executive Chairman. Fiscal year 2018 includes additional expense due to the 2017 and 2018 annual grants both being granted in 2018.
|
|
|
Fiscal Year
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Company-Owned Restaurants
|
|
|
|
|
|
|
|||
Beginning of period
|
|
394
|
|
|
412
|
|
|
457
|
|
Openings
|
|
4
|
|
|
1
|
|
|
12
|
|
Acquisition (1)
|
|
1
|
|
|
—
|
|
|
—
|
|
Divestitures (1)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
Closures
|
|
(5
|
)
|
|
(19
|
)
|
|
(57
|
)
|
End of period
|
|
389
|
|
|
394
|
|
|
412
|
|
Franchise Restaurants
|
|
|
|
|
|
|
|||
Beginning of period
|
|
65
|
|
|
66
|
|
|
75
|
|
Openings
|
|
1
|
|
|
—
|
|
|
3
|
|
Acquisitions (1)
|
|
5
|
|
|
—
|
|
|
—
|
|
Divestiture (1)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
Closures
|
|
(2
|
)
|
|
(1
|
)
|
|
(12
|
)
|
End of period
|
|
68
|
|
|
65
|
|
|
66
|
|
Total restaurants
|
|
457
|
|
|
459
|
|
|
478
|
|
(1)
|
During the first quarter of 2019 we acquired one franchise restaurant and during the third quarter of 2019 we sold five company-owned restaurants to a franchisee.
|
|
|
Fiscal Year
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Revenue:
|
|
|
|
|
|
|
|||
Restaurant revenue
|
|
98.8
|
%
|
|
99.1
|
%
|
|
98.9
|
%
|
Franchising royalties and fees, and other
|
|
1.2
|
%
|
|
0.9
|
%
|
|
1.1
|
%
|
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|||
Restaurant operating costs (exclusive of depreciation and amortization, shown separately below):
|
|
|
|
|
|
|
|||
Cost of sales
|
|
25.7
|
%
|
|
26.7
|
%
|
|
26.9
|
%
|
Labor
|
|
33.0
|
%
|
|
33.0
|
%
|
|
33.3
|
%
|
Occupancy
|
|
10.7
|
%
|
|
10.8
|
%
|
|
11.5
|
%
|
Other restaurant operating costs
|
|
14.6
|
%
|
|
14.5
|
%
|
|
14.2
|
%
|
General and administrative
|
|
9.4
|
%
|
|
10.1
|
%
|
|
8.7
|
%
|
Depreciation and amortization
|
|
4.8
|
%
|
|
5.0
|
%
|
|
5.4
|
%
|
Pre-opening
|
|
0.1
|
%
|
|
—
|
%
|
|
0.2
|
%
|
Restaurant impairments, closure costs and asset disposals
|
|
1.7
|
%
|
|
1.6
|
%
|
|
8.2
|
%
|
Total costs and expenses
|
|
98.8
|
%
|
|
100.8
|
%
|
|
107.4
|
%
|
Income (loss) from operations
|
|
1.2
|
%
|
|
(0.8
|
)%
|
|
(7.4
|
)%
|
Loss on extinguishment of debt
|
|
0.2
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Interest expense, net
|
|
0.6
|
%
|
|
1.0
|
%
|
|
0.9
|
%
|
Income (loss) before income taxes
|
|
0.4
|
%
|
|
(1.9
|
)%
|
|
(8.3
|
)%
|
Provision (benefit) for income taxes
|
|
—
|
%
|
|
(0.1
|
)%
|
|
(0.1
|
)%
|
Net income (loss)
|
|
0.4
|
%
|
|
(1.8
|
)%
|
|
(8.2
|
)%
|
|
|
Fiscal Year
|
|
Increase / (Decrease)
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
|
(in thousands)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant revenue
|
|
$
|
456,671
|
|
|
$
|
453,671
|
|
|
$
|
3,000
|
|
|
0.7
|
%
|
Franchising royalties and fees, and other
|
|
5,740
|
|
|
4,170
|
|
|
1,570
|
|
|
37.6
|
%
|
|||
Total revenue
|
|
462,411
|
|
|
457,841
|
|
|
4,570
|
|
|
1.0
|
%
|
|||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant operating costs (exclusive of depreciation and amortization, shown separately below):
|
|
|
|
|
|
|
|
|
|||||||
Cost of sales
|
|
117,179
|
|
|
121,102
|
|
|
(3,923
|
)
|
|
(3.2
|
)%
|
|||
Labor
|
|
150,565
|
|
|
149,746
|
|
|
819
|
|
|
0.5
|
%
|
|||
Occupancy
|
|
48,863
|
|
|
49,020
|
|
|
(157
|
)
|
|
(0.3
|
)%
|
|||
Other restaurant operating costs
|
|
66,684
|
|
|
65,575
|
|
|
1,109
|
|
|
1.7
|
%
|
|||
General and administrative
|
|
43,446
|
|
|
46,092
|
|
|
(2,646
|
)
|
|
(5.7
|
)%
|
|||
Depreciation and amortization
|
|
22,086
|
|
|
22,872
|
|
|
(786
|
)
|
|
(3.4
|
)%
|
|||
Pre-opening
|
|
402
|
|
|
50
|
|
|
352
|
|
|
*
|
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
7,747
|
|
|
7,142
|
|
|
605
|
|
|
8.5
|
%
|
|||
Total costs and expenses
|
|
456,972
|
|
|
461,599
|
|
|
(4,627
|
)
|
|
(1.0
|
)%
|
|||
Income (loss) from operations
|
|
5,439
|
|
|
(3,758
|
)
|
|
9,197
|
|
|
*
|
|
|||
Loss on extinguishment of debt
|
|
746
|
|
|
626
|
|
|
120
|
|
|
19.2
|
%
|
|||
Interest expense, net
|
|
2,942
|
|
|
4,305
|
|
|
(1,363
|
)
|
|
(31.7
|
)%
|
|||
Income (loss) before income taxes
|
|
1,751
|
|
|
(8,689
|
)
|
|
10,440
|
|
|
*
|
|
|||
Provision (benefit) from income taxes
|
|
104
|
|
|
(248
|
)
|
|
352
|
|
|
*
|
|
|||
Net income (loss)
|
|
$
|
1,647
|
|
|
$
|
(8,441
|
)
|
|
$
|
10,088
|
|
|
*
|
|
Company-owned:
|
|
|
|
|
|
|
|
|
|||||||
Average unit volumes
|
|
$
|
1,163
|
|
|
$
|
1,119
|
|
|
$
|
44
|
|
|
3.9
|
%
|
Comparable restaurant sales
|
|
2.9
|
%
|
|
3.4
|
%
|
|
|
|
|
*
|
Not meaningful.
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
December 31, 2019
|
|
October 1, 2019
|
|
July 2, 2019
|
|
April 2, 2019
|
|
January 1, 2019
|
|
October 2, 2018
|
|
July 3, 2018
|
|
April 3, 2018
|
||||||||||||||||
|
(in thousands, except restaurants, unaudited)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Restaurant revenue
|
$
|
112,289
|
|
|
$
|
116,759
|
|
|
$
|
118,858
|
|
|
$
|
108,765
|
|
|
$
|
112,055
|
|
|
$
|
115,552
|
|
|
$
|
116,451
|
|
|
$
|
109,613
|
|
Franchising royalties and fees, and other
|
1,582
|
|
|
1,545
|
|
|
1,332
|
|
|
1,281
|
|
|
1,138
|
|
|
1,175
|
|
|
944
|
|
|
913
|
|
||||||||
Total revenue
|
$
|
113,871
|
|
|
$
|
118,304
|
|
|
$
|
120,190
|
|
|
$
|
110,046
|
|
|
$
|
113,193
|
|
|
$
|
116,727
|
|
|
$
|
117,395
|
|
|
$
|
110,526
|
|
Income (loss) from operations
|
$
|
247
|
|
|
$
|
5,044
|
|
|
$
|
1,238
|
|
|
$
|
(1,090
|
)
|
|
$
|
950
|
|
|
$
|
2,132
|
|
|
$
|
(4,162
|
)
|
|
$
|
(2,678
|
)
|
Net (loss) income(1)(2)
|
$
|
(1,183
|
)
|
|
$
|
4,243
|
|
|
$
|
438
|
|
|
$
|
(1,851
|
)
|
|
$
|
19
|
|
|
$
|
1,050
|
|
|
$
|
(5,935
|
)
|
|
$
|
(3,575
|
)
|
Selected Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Company-owned restaurants at end of period
|
389
|
|
|
391
|
|
|
395
|
|
|
395
|
|
|
394
|
|
|
401
|
|
|
404
|
|
|
411
|
|
||||||||
Franchise-owned restaurants at end of period
|
68
|
|
|
67
|
|
|
62
|
|
|
64
|
|
|
65
|
|
|
65
|
|
|
65
|
|
|
65
|
|
||||||||
Company-owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Average unit volumes
|
$
|
1,163
|
|
|
$
|
1,157
|
|
|
$
|
1,148
|
|
|
$
|
1,131
|
|
|
$
|
1,119
|
|
|
$
|
1,107
|
|
|
$
|
1,092
|
|
|
$
|
1,080
|
|
Comparable restaurant sales
|
1.4
|
%
|
|
2.2
|
%
|
|
4.8
|
%
|
|
3.0
|
%
|
|
3.7
|
%
|
|
5.2
|
%
|
|
5.0
|
%
|
|
(0.3
|
)%
|
||||||||
Restaurant contribution margin
|
17.2
|
%
|
|
17.1
|
%
|
|
17.1
|
%
|
|
12.6
|
%
|
|
15.2
|
%
|
|
16.4
|
%
|
|
15.5
|
%
|
|
12.9
|
%
|
(1)
|
Fiscal year 2019 includes $0.4 million of closure costs primarily related to five restaurants closed in 2019, most of which were at or approaching the expiration of their leases and ongoing costs related to previously closed restaurants. Additionally, in 2019 we recognized $2.6 million of impairment charges and $3.6 million related to the write down of assets held for sale for nine restaurants subsequently sold to a franchisee.
|
(2)
|
Fiscal year 2018 includes costs related to seven restaurants closed in the fourth quarter of 2018, three restaurants closed in the third quarter of 2018, seven restaurants closed in the second quarter of 2018 and two restaurants that closed in the first quarter of 2018, most of which were at or approaching the expiration of their leases. The closure costs recognized were $0.6 million in the fourth quarter of 2018, $1.5 million in the third quarter of 2018, $1.5 million in the second quarter of 2018 and $0.6 million in the first quarter of 2018. Each period in 2018 presented above includes ongoing costs of restaurants closed in previous years. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals, for additional disclosure on closures. Lastly, the second quarter of 2018 includes a $3.4 million charge for the final assessment related to data breach liabilities.
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
December 31, 2019
|
|
October 1, 2019
|
|
July 2, 2019
|
|
April 2, 2019
|
|
January 1, 2019
|
|
October 2, 2018
|
|
July 3, 2018
|
|
April 3, 2018
|
||||||||||||||||
|
(in thousands, unaudited)
|
||||||||||||||||||||||||||||||
Income (loss) from operations
|
$
|
247
|
|
|
$
|
5,044
|
|
|
$
|
1,238
|
|
|
$
|
(1,090
|
)
|
|
$
|
950
|
|
|
$
|
2,132
|
|
|
$
|
(4,162
|
)
|
|
$
|
(2,678
|
)
|
Less: Franchising royalties and fees, and other
|
1,582
|
|
|
1,545
|
|
|
1,332
|
|
|
1,281
|
|
|
1,138
|
|
|
1,175
|
|
|
944
|
|
|
913
|
|
||||||||
Add: General and administrative
|
11,022
|
|
|
10,436
|
|
|
11,848
|
|
|
10,140
|
|
|
10,612
|
|
|
10,399
|
|
|
14,813
|
|
|
10,268
|
|
||||||||
Depreciation and amortization
|
5,460
|
|
|
5,458
|
|
|
5,661
|
|
|
5,507
|
|
|
5,465
|
|
|
5,790
|
|
|
5,797
|
|
|
5,820
|
|
||||||||
Pre-opening
|
71
|
|
|
266
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
47
|
|
||||||||
Restaurant impairments, closure costs and asset disposals
|
4,107
|
|
|
336
|
|
|
2,884
|
|
|
420
|
|
|
1,190
|
|
|
1,792
|
|
|
2,580
|
|
|
1,580
|
|
||||||||
Restaurant contribution
|
$
|
19,325
|
|
|
$
|
19,995
|
|
|
$
|
20,364
|
|
|
$
|
13,696
|
|
|
$
|
17,079
|
|
|
$
|
18,938
|
|
|
$
|
18,087
|
|
|
$
|
14,124
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 31,
2019 |
|
January 1,
2019 |
|
January 2,
2018 |
||||||
|
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
30,060
|
|
|
$
|
5,346
|
|
|
$
|
4,102
|
|
Net cash used in investing activities
|
|
(18,439
|
)
|
|
(13,838
|
)
|
|
(20,828
|
)
|
|||
Net cash (used in) provided by financing activities
|
|
(5,817
|
)
|
|
9,786
|
|
|
18,265
|
|
|||
Effect of exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|||
Net increase in cash and cash equivalents
|
|
$
|
5,804
|
|
|
$
|
1,294
|
|
|
$
|
1,524
|
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
|
Total
|
|
1 Year
|
|
2 - 3
Years
|
|
4 - 5
Years
|
|
After 5
Years
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Lease obligations (1)
|
|
$
|
361,646
|
|
|
$
|
43,782
|
|
|
$
|
85,146
|
|
|
$
|
79,996
|
|
|
$
|
152,722
|
|
Purchase obligations (2)
|
|
60,725
|
|
|
42,065
|
|
|
9,698
|
|
|
8,962
|
|
|
—
|
|
|||||
Long-term debt (3)
|
|
42,618
|
|
|
750
|
|
|
2,594
|
|
|
39,274
|
|
|
—
|
|
|||||
Other liabilities (4)
|
|
423
|
|
|
379
|
|
|
22
|
|
|
22
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
465,412
|
|
|
$
|
86,976
|
|
|
$
|
97,460
|
|
|
$
|
128,254
|
|
|
$
|
152,722
|
|
(1)
|
We are obligated under non-cancelable leases for our restaurants, administrative offices and equipment. Some restaurant leases provide for contingent rental payments based on sales thresholds, which are excluded from this table. In addition to the lease obligations reflected in the table, we have legally binding minimum lease payments for leases signed but not yet commenced amounting to $11.0 million.
|
(2)
|
We enter into various purchase obligations in the ordinary course of business. Our binding purchase obligations relate to volume commitments for beverage and food products.
|
(3)
|
Reflects the minimum required quarterly principal payments and full payment of our long-term debt at maturity of our credit facility in November 2024. Interest payments associated with variable-rate long-term debt have not been included in the table. Assuming that the remaining unpaid balance on the term loan after minimum required quarterly payments and our $17.8 million outstanding revolving line of credit as of December 31, 2019 are repaid at maturity, and utilizing a weighted-average of interest rates in effect as of December 31, 2019, our annual interest payments (including commitment fees and letter of credit fees) on variable-rate long-term debt as of December 31, 2019 is anticipated to be approximately $2.0 million over the next five years through maturity. The future annual interest obligations noted herein are estimated only in relation to debt outstanding as of December 31, 2019 and do not reflect interest obligations on potential future debt. See “Liquidity and Capital Resources” for a discussion of the terms of the revolving credit facility.
|
(4)
|
Reflects the expected payments associated with our commitment under our non-qualified deferred compensation plan.
|
ITEM 8.
|
Financial Statements and Supplementary Data
|
Consolidated Financial Statements
|
|
|
|
December 31,
2019 |
|
January 1,
2019 |
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
10,459
|
|
|
$
|
4,655
|
|
Accounts receivable
|
|
3,503
|
|
|
2,391
|
|
||
Inventories
|
|
9,871
|
|
|
9,646
|
|
||
Prepaid expenses and other assets
|
|
5,386
|
|
|
6,474
|
|
||
Income tax receivable
|
|
103
|
|
|
185
|
|
||
Total current assets
|
|
29,322
|
|
|
23,351
|
|
||
Property and equipment, net
|
|
128,867
|
|
|
138,774
|
|
||
Operating lease assets, net
|
|
209,717
|
|
|
—
|
|
||
Goodwill
|
|
7,154
|
|
|
6,400
|
|
||
Intangibles, net
|
|
883
|
|
|
1,291
|
|
||
Other assets, net
|
|
2,576
|
|
|
2,216
|
|
||
Total long-term assets
|
|
349,197
|
|
|
148,681
|
|
||
Total assets
|
|
$
|
378,519
|
|
|
$
|
172,032
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
9,351
|
|
|
$
|
7,854
|
|
Accrued payroll and benefits
|
|
13,479
|
|
|
13,391
|
|
||
Accrued expenses and other current liabilities
|
|
11,679
|
|
|
11,183
|
|
||
Current operating lease liabilities
|
|
22,775
|
|
|
—
|
|
||
Current portion of long-term debt
|
|
750
|
|
|
719
|
|
||
Total current liabilities
|
|
58,034
|
|
|
33,147
|
|
||
Long-term debt, net
|
|
40,497
|
|
|
44,183
|
|
||
Long-term operating lease liabilities, net
|
|
225,014
|
|
|
—
|
|
||
Deferred rent
|
|
—
|
|
|
37,334
|
|
||
Deferred tax liabilities, net
|
|
200
|
|
|
133
|
|
||
Other long-term liabilities
|
|
4,203
|
|
|
4,554
|
|
||
Total liabilities
|
|
327,948
|
|
|
119,351
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock—$0.01 par value, 1,000,000 shares authorized and undesignated as of December 31, 2019 and January 1, 2019; no shares issued or outstanding
|
|
—
|
|
|
—
|
|
||
Common stock—$0.01 par value, 180,000,000 shares authorized as of December 31, 2019 and January 1, 2019; 46,557,934 issued and 44,134,063 outstanding as of December 31, 2019 and 46,353,309 issued and 43,929,438 outstanding as of January 1, 2019
|
|
466
|
|
|
464
|
|
||
Treasury stock, at cost, 2,423,871 shares as of December 31, 2019 and January 1, 2019, respectively
|
|
(35,000
|
)
|
|
(35,000
|
)
|
||
Additional paid-in capital
|
|
200,585
|
|
|
198,352
|
|
||
Accumulated deficit
|
|
(115,480
|
)
|
|
(111,135
|
)
|
||
Total stockholders’ equity
|
|
50,571
|
|
|
52,681
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
378,519
|
|
|
$
|
172,032
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 31,
2019 |
|
January 1,
2019 |
|
January 2,
2018 |
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Restaurant revenue
|
|
$
|
456,671
|
|
|
$
|
453,671
|
|
|
$
|
451,599
|
|
Franchising royalties and fees, and other
|
|
5,740
|
|
|
4,170
|
|
|
4,893
|
|
|||
Total revenue
|
|
462,411
|
|
|
457,841
|
|
|
456,492
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
|
|
|
|
|
|
|
||||||
Cost of sales
|
|
117,179
|
|
|
121,102
|
|
|
121,473
|
|
|||
Labor
|
|
150,565
|
|
|
149,746
|
|
|
150,161
|
|
|||
Occupancy
|
|
48,863
|
|
|
49,020
|
|
|
51,877
|
|
|||
Other restaurant operating costs
|
|
66,684
|
|
|
65,575
|
|
|
64,091
|
|
|||
General and administrative
|
|
43,446
|
|
|
46,092
|
|
|
39,746
|
|
|||
Depreciation and amortization
|
|
22,086
|
|
|
22,872
|
|
|
24,613
|
|
|||
Pre-opening
|
|
402
|
|
|
50
|
|
|
935
|
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
7,747
|
|
|
7,142
|
|
|
37,446
|
|
|||
Total costs and expenses
|
|
456,972
|
|
|
461,599
|
|
|
490,342
|
|
|||
Income (loss) from operations
|
|
5,439
|
|
|
(3,758
|
)
|
|
(33,850
|
)
|
|||
Loss on extinguishment of debt
|
|
746
|
|
|
626
|
|
|
—
|
|
|||
Interest expense, net
|
|
2,942
|
|
|
4,305
|
|
|
3,839
|
|
|||
Income (loss) before income taxes
|
|
1,751
|
|
|
(8,689
|
)
|
|
(37,689
|
)
|
|||
Provision (benefit) for income taxes
|
|
104
|
|
|
(248
|
)
|
|
(207
|
)
|
|||
Net income (loss)
|
|
1,647
|
|
|
(8,441
|
)
|
|
(37,482
|
)
|
|||
Accretion of preferred stock to redemption value
|
|
—
|
|
|
—
|
|
|
(7,967
|
)
|
|||
Net income (loss) attributable to common stockholders
|
|
$
|
1,647
|
|
|
$
|
(8,441
|
)
|
|
$
|
(45,449
|
)
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per Class A and Class B common stock, combined
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.04
|
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
Diluted
|
|
$
|
0.04
|
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
Weighted average Class A and Class B common stock outstanding, combined
|
|
|
|
|
|
|
||||||
Basic
|
|
44,036,947
|
|
|
42,329,556
|
|
|
37,759,497
|
|
|||
Diluted
|
|
44,976,436
|
|
|
42,329,556
|
|
|
37,759,497
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 31,
2019 |
|
January 1,
2019 |
|
January 2,
2018 |
||||||
Net income (loss)
|
|
$
|
1,647
|
|
|
$
|
(8,441
|
)
|
|
$
|
(37,482
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
(109
|
)
|
|||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(109
|
)
|
|||
Comprehensive income (loss)
|
|
$
|
1,647
|
|
|
$
|
(8,441
|
)
|
|
$
|
(37,591
|
)
|
|
|
Common Stock(1) (2)
|
|
Treasury
|
|
Additional
Paid-In Capital |
|
Accumulated
Other Comprehensive Loss |
|
Retained
Earnings (Accumulated Deficit) |
|
Total
Stockholders’ Equity |
Temporary Equity
|
||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||
Balance—January 3, 2017
|
|
30,300,925
|
|
|
$
|
303
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
124,272
|
|
|
$
|
(51
|
)
|
|
$
|
(63,706
|
)
|
|
$
|
25,818
|
|
$
|
—
|
|
Issuance of preferred stock and warrants to L Catterton in connection with the private placement, net of transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,056
|
|
|
—
|
|
|
—
|
|
|
6,056
|
|
10,533
|
|
|||||||
Issuance of common stock in connection with the Mill Road private placement, net of transaction expenses
|
|
8,873,240
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
29,021
|
|
|
—
|
|
|
—
|
|
|
29,110
|
|
—
|
|
|||||||
Accretion of preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,967
|
)
|
|
—
|
|
|
—
|
|
|
(7,967
|
)
|
7,967
|
|
|||||||
Conversion of preferred stock to L Catterton
|
|
4,252,873
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
18,457
|
|
|
—
|
|
|
—
|
|
|
18,500
|
|
(18,500
|
)
|
|||||||
Stock plan transactions and other
|
|
123,291
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
83
|
|
—
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,692
|
|
|
—
|
|
|
—
|
|
|
1,692
|
|
—
|
|
|||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,482
|
)
|
|
(37,482
|
)
|
—
|
|
|||||||
Other comprehensive income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
51
|
|
—
|
|
|||||||
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
|
|
|
—
|
|
|
—
|
|
|
22,967
|
|
|
—
|
|
|
—
|
|
|
22,992
|
|
—
|
|
|||||||
Stock plan transactions and other
|
|
302,980
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
746
|
|
|
—
|
|
|
—
|
|
|
749
|
|
—
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,026
|
|
|
—
|
|
|
—
|
|
|
3,026
|
|
—
|
|
|||||||
Cumulative catch-up adjustment for ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,506
|
)
|
|
(1,506
|
)
|
—
|
|
|||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,441
|
)
|
|
(8,441
|
)
|
—
|
|
|||||||
Balance—January 1, 2019
|
|
46,353,309
|
|
|
464
|
|
|
2,423,871
|
|
|
(35,000
|
)
|
|
198,352
|
|
|
—
|
|
|
(111,135
|
)
|
|
52,681
|
|
—
|
|
|||||||
Stock plan transactions and other
|
|
204,625
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(254
|
)
|
|
—
|
|
|
—
|
|
|
(252
|
)
|
—
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,487
|
|
|
—
|
|
|
—
|
|
|
2,487
|
|
—
|
|
|||||||
Cumulative catch-up adjustment for ASC 842
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,992
|
)
|
|
(5,992
|
)
|
—
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,647
|
|
|
1,647
|
|
—
|
|
|||||||
Balance—December 31, 2019
|
|
46,557,934
|
|
|
$
|
466
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
200,585
|
|
|
$
|
—
|
|
|
$
|
(115,480
|
)
|
|
$
|
50,571
|
|
$
|
—
|
|
(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 are outstanding as of the fiscal year ended January 1, 2019.
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
December 31,
2019 |
|
January 1,
2019 |
|
January 2,
2018 |
||||||
Operating activities
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
1,647
|
|
|
$
|
(8,441
|
)
|
|
$
|
(37,482
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
22,086
|
|
|
22,872
|
|
|
24,613
|
|
|||
Deferred income taxes, net
|
|
68
|
|
|
(283
|
)
|
|
(228
|
)
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
7,808
|
|
|
6,992
|
|
|
30,859
|
|
|||
Loss on extinguishment of debt
|
|
746
|
|
|
626
|
|
|
—
|
|
|||
Amortization of debt issuance costs
|
|
474
|
|
|
607
|
|
|
465
|
|
|||
Stock-based compensation
|
|
2,443
|
|
|
2,979
|
|
|
1,514
|
|
|||
Loss on liquidation of Canadian subsidiary
|
|
—
|
|
|
—
|
|
|
70
|
|
|||
Gain on insurance proceeds received for property damage
|
|
(489
|
)
|
|
(370
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(630
|
)
|
|
91
|
|
|
2,976
|
|
|||
Inventories
|
|
(625
|
)
|
|
(541
|
)
|
|
(387
|
)
|
|||
Prepaid expenses and other assets
|
|
(690
|
)
|
|
185
|
|
|
332
|
|
|||
Accounts payable
|
|
406
|
|
|
(1,580
|
)
|
|
(1,302
|
)
|
|||
Deferred rent
|
|
—
|
|
|
(1,396
|
)
|
|
1,597
|
|
|||
Operating lease assets and liabilities
|
|
(2,202
|
)
|
|
—
|
|
|
—
|
|
|||
Income taxes
|
|
82
|
|
|
(109
|
)
|
|
180
|
|
|||
Accrued expenses and other liabilities
|
|
(1,064
|
)
|
|
(16,286
|
)
|
|
(19,105
|
)
|
|||
Net cash provided by operating activities
|
|
30,060
|
|
|
5,346
|
|
|
4,102
|
|
|||
Investing activities
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(17,404
|
)
|
|
(14,338
|
)
|
|
(20,828
|
)
|
|||
Franchise restaurant acquisition, net of cash acquired
|
|
(1,387
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from disposal of property and equipment
|
|
352
|
|
|
—
|
|
|
—
|
|
|||
Insurance proceeds received for property damage
|
|
—
|
|
|
500
|
|
|
—
|
|
|||
Net cash used in investing activities
|
|
(18,439
|
)
|
|
(13,838
|
)
|
|
(20,828
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
||||||
Net repayments from swing line loan
|
|
—
|
|
|
(101
|
)
|
|
(96
|
)
|
|||
Proceeds from borrowings on long-term debt
|
|
1,917
|
|
|
74,889
|
|
|
10,532
|
|
|||
Payments on long-term debt
|
|
(5,875
|
)
|
|
(87,030
|
)
|
|
(37,015
|
)
|
|||
Debt issuance costs
|
|
(917
|
)
|
|
(1,713
|
)
|
|
(938
|
)
|
|||
Payment of finance leases
|
|
(690
|
)
|
|
—
|
|
|
—
|
|
|||
Issuance of preferred stock and common stock warrants, net of transaction expenses
|
|
—
|
|
|
—
|
|
|
16,589
|
|
|||
Issuance of common stock, net of transaction expenses (see Note 8)
|
|
—
|
|
|
22,992
|
|
|
29,110
|
|
|||
Stock plan transactions and tax withholding on share-based compensation awards
|
|
(252
|
)
|
|
749
|
|
|
83
|
|
|||
Net cash (used in) provided by financing activities
|
|
(5,817
|
)
|
|
9,786
|
|
|
18,265
|
|
|||
Effect of exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|||
Net increase in cash and cash equivalents
|
|
5,804
|
|
|
1,294
|
|
|
1,524
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|
|
||||||
Beginning of year
|
|
4,655
|
|
|
3,361
|
|
|
1,837
|
|
|||
End of year
|
|
$
|
10,459
|
|
|
$
|
4,655
|
|
|
$
|
3,361
|
|
Property and Equipment
|
|
Estimated Useful Lives
|
Leasehold improvements
|
|
Shorter of lease term or estimated useful life, not to exceed 20 years
|
Furniture and fixtures
|
|
3 to 15 years
|
Equipment
|
|
3 to 7 years
|
|
January 1,
2019 |
|
Adjustments Due to the Adoption of Topic 842
|
|
January 2,
2019 |
||||||
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
|
|
|
|
2019
|
|
2018
|
||||
Tenant improvement receivables
|
|
$
|
—
|
|
|
$
|
82
|
|
Insurance receivable
|
|
744
|
|
|
69
|
|
||
Vendor rebate receivables
|
|
788
|
|
|
639
|
|
||
Franchise and other receivables
|
|
1,971
|
|
|
1,601
|
|
||
|
|
$
|
3,503
|
|
|
$
|
2,391
|
|
|
|
2019
|
|
2018
|
||||
Prepaid occupancy related costs
|
|
$
|
834
|
|
|
$
|
4,053
|
|
Other prepaid expenses
|
|
2,799
|
|
|
2,416
|
|
||
Other current assets
|
|
1,753
|
|
|
5
|
|
||
|
|
$
|
5,386
|
|
|
$
|
6,474
|
|
|
|
2019
|
|
2018
|
||||
Leasehold improvements
|
|
$
|
200,580
|
|
|
$
|
197,571
|
|
Furniture, fixtures and equipment
|
|
122,752
|
|
|
121,479
|
|
||
Construction in progress
|
|
2,890
|
|
|
3,620
|
|
||
|
|
326,222
|
|
|
322,670
|
|
||
Accumulated depreciation and amortization
|
|
(197,355
|
)
|
|
(183,896
|
)
|
||
|
|
$
|
128,867
|
|
|
$
|
138,774
|
|
|
|
2019
|
||
Assets
|
|
|
||
Current assets, total
|
|
$
|
339
|
|
Current operating lease assets
|
|
1,408
|
|
|
Current assets held for sale
|
|
1,747
|
|
|
Liabilities
|
|
|
||
Current operating lease liabilities
|
|
1,710
|
|
|
Net assets held for sale
|
|
$
|
37
|
|
|
|
2019
|
|
2018
|
||||
Accrued payroll and related liabilities
|
|
$
|
6,364
|
|
|
$
|
6,333
|
|
Accrued bonus
|
|
3,505
|
|
|
4,250
|
|
||
Insurance liabilities
|
|
3,610
|
|
|
2,808
|
|
||
|
|
$
|
13,479
|
|
|
$
|
13,391
|
|
|
|
2019
|
|
2018
|
||||
Gift card liability
|
|
$
|
2,398
|
|
|
$
|
3,284
|
|
Occupancy related
|
|
1,458
|
|
|
2,600
|
|
||
Utilities
|
|
1,379
|
|
|
1,582
|
|
||
Deferred revenue
|
|
555
|
|
|
—
|
|
||
Current portion of finance lease liability
|
|
510
|
|
|
264
|
|
||
Other current liabilities
|
|
5,379
|
|
|
3,453
|
|
||
|
|
$
|
11,679
|
|
|
$
|
11,183
|
|
|
|
2019
|
|
2018
|
||||
Balance at beginning of year
|
|
$
|
6,400
|
|
|
$
|
6,400
|
|
Acquisition(1)
|
|
754
|
|
|
—
|
|
||
Balance at end of year
|
|
$
|
7,154
|
|
|
$
|
6,400
|
|
|
|
2019
|
|
2018
|
||||
Amortized intangible assets:
|
|
|
|
|
||||
Reacquired franchise rights
|
|
$
|
992
|
|
|
$
|
1,125
|
|
Favorable leases
|
|
—
|
|
|
150
|
|
||
|
|
992
|
|
|
1,275
|
|
||
Accumulated Amortization
|
|
(388
|
)
|
|
(436
|
)
|
||
|
|
604
|
|
|
839
|
|
||
Non-amortized intangible assets:
|
|
|
|
|
||||
Trademark rights and transferable liquor licenses
|
|
279
|
|
|
452
|
|
||
|
|
$
|
883
|
|
|
$
|
1,291
|
|
2020
|
|
$
|
70
|
|
2021
|
|
70
|
|
|
2022
|
|
72
|
|
|
2023
|
|
70
|
|
|
2024
|
|
70
|
|
|
Thereafter
|
|
252
|
|
|
|
|
$
|
604
|
|
Year 1
|
$
|
750
|
|
Year 2
|
938
|
|
|
Year 3
|
1,656
|
|
|
Year 4
|
2,219
|
|
|
Year 5
|
37,055
|
|
|
Total
|
$
|
42,618
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Restaurant impairments(1)
|
$
|
6,218
|
|
|
$
|
1,453
|
|
|
$
|
16,154
|
|
Closure costs(1)
|
(54
|
)
|
|
4,149
|
|
|
20,052
|
|
|||
Loss on disposal of assets and other
|
1,583
|
|
|
1,540
|
|
|
1,240
|
|
|||
|
$
|
7,747
|
|
|
$
|
7,142
|
|
|
$
|
37,446
|
|
(1)
|
Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic income (loss)
|
|
$
|
1,751
|
|
|
$
|
(8,689
|
)
|
|
$
|
(42,047
|
)
|
Foreign income
|
|
—
|
|
|
—
|
|
|
4,358
|
|
|||
|
|
$
|
1,751
|
|
|
$
|
(8,689
|
)
|
|
$
|
(37,689
|
)
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current tax provision:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
|
36
|
|
|
35
|
|
|
21
|
|
|||
Foreign
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
36
|
|
|
35
|
|
|
21
|
|
|||
Deferred tax provision (benefit):
|
|
|
|
|
|
|
||||||
Federal
|
|
52
|
|
|
(202
|
)
|
|
(252
|
)
|
|||
State
|
|
16
|
|
|
(81
|
)
|
|
24
|
|
|||
Foreign
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
68
|
|
|
(283
|
)
|
|
(228
|
)
|
|||
Total provision (benefit) for income taxes
|
|
$
|
104
|
|
|
$
|
(248
|
)
|
|
$
|
(207
|
)
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Federal income tax provision (benefit) at federal rate
|
|
$
|
368
|
|
|
$
|
(1,825
|
)
|
|
$
|
(12,814
|
)
|
State income tax provision (benefit), net of federal tax
|
|
168
|
|
|
(623
|
)
|
|
(1,790
|
)
|
|||
Other permanent differences
|
|
327
|
|
|
70
|
|
|
674
|
|
|||
Foreign rate differential
|
|
—
|
|
|
—
|
|
|
(463
|
)
|
|||
Tax credits
|
|
(408
|
)
|
|
(602
|
)
|
|
(808
|
)
|
|||
Change in valuation allowance
|
|
(913
|
)
|
|
2,600
|
|
|
(159
|
)
|
|||
Tax rate change
|
|
23
|
|
|
(248
|
)
|
|
13,632
|
|
|||
Deferred tax asset write-off
|
|
566
|
|
|
212
|
|
|
2,618
|
|
|||
Other items, net
|
|
(27
|
)
|
|
168
|
|
|
(1,097
|
)
|
|||
Provision (benefit) for income taxes
|
|
$
|
104
|
|
|
$
|
(248
|
)
|
|
$
|
(207
|
)
|
Effective income tax rate
|
|
5.9
|
%
|
|
2.9
|
%
|
|
0.5
|
%
|
|
|
2019
|
|
2018
|
||||
Deferred tax assets
|
|
$
|
104,931
|
|
|
$
|
50,851
|
|
Deferred tax liabilities
|
|
(65,715
|
)
|
|
(12,212
|
)
|
||
Total deferred tax assets
|
|
39,216
|
|
|
38,639
|
|
||
Valuation allowance
|
|
(39,416
|
)
|
|
(38,772
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(200
|
)
|
|
$
|
(133
|
)
|
|
|
2019
|
|
2018
|
||||
Deferred tax assets (liabilities):
|
|
|
|
|
||||
Loss carry forwards
|
|
$
|
30,255
|
|
|
$
|
32,896
|
|
Deferred rent and franchise revenue
|
|
909
|
|
|
10,433
|
|
||
Property, equipment and intangible assets
|
|
(8,242
|
)
|
|
(10,472
|
)
|
||
Stock-based compensation
|
|
1,376
|
|
|
1,242
|
|
||
Tax credit carry forwards
|
|
3,936
|
|
|
3,528
|
|
||
Interest expense
|
|
—
|
|
|
998
|
|
||
Inventory smallwares
|
|
(1,748
|
)
|
|
(1,740
|
)
|
||
Other accrued expenses
|
|
533
|
|
|
959
|
|
||
Operating lease assets
|
|
(55,725
|
)
|
|
—
|
|
||
Operating lease liabilities
|
|
67,166
|
|
|
—
|
|
||
Other
|
|
756
|
|
|
795
|
|
||
Total net deferred tax assets
|
|
39,216
|
|
|
38,639
|
|
||
Valuation allowance
|
|
(39,416
|
)
|
|
(38,772
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(200
|
)
|
|
$
|
(133
|
)
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Risk-free interest rate
|
|
1.8
|
%
|
|
2.7
|
%
|
|
2.0
|
%
|
|||
Expected term (average in years)
|
|
6.2
|
|
|
6.2
|
|
|
6.1
|
|
|||
Expected dividend yield
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Expected volatility
|
|
55.7
|
%
|
|
51.0
|
%
|
|
39.6
|
%
|
|||
Weighted-average Black-Scholes fair value per share at date of grant
|
|
$
|
4.16
|
|
|
$
|
5.11
|
|
|
$
|
1.74
|
|
|
|
Awards
|
|
Weighted-
Average Exercise Price |
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate
Intrinsic Value (1) (in thousands) |
|||||
Outstanding—January 1, 2019
|
|
1,174,256
|
|
|
$
|
11.78
|
|
|
|
|
|
||
Granted
|
|
222,067
|
|
|
7.68
|
|
|
|
|
|
|||
Forfeited or expired
|
|
(182,252
|
)
|
|
7.51
|
|
|
|
|
|
|||
Exercised
|
|
(2,000
|
)
|
|
4.58
|
|
|
|
|
|
|||
Outstanding—December 31, 2019
|
|
1,212,071
|
|
|
$
|
11.67
|
|
|
5.88
|
|
$
|
152
|
|
Vested and expected to vest
|
|
1,170,681
|
|
|
$
|
11.80
|
|
|
5.77
|
|
$
|
150
|
|
Exercisable as of December 31, 2019
|
|
829,273
|
|
|
$
|
13.45
|
|
|
4.53
|
|
$
|
73
|
|
(1)
|
Aggregate intrinsic value represents the amount by which fair value of the Company’s stock exceeds the exercise price of the option as of December 31, 2019.
|
|
|
Awards
|
|
Weighted-
Average Grant Date Fair Value |
|||
Outstanding—January 1, 2019
|
|
908,082
|
|
|
$
|
7.48
|
|
Granted
|
|
396,552
|
|
|
7.65
|
|
|
Vested
|
|
(231,161
|
)
|
|
7.37
|
|
|
Forfeited
|
|
(330,892
|
)
|
|
7.48
|
|
|
Non-vested at December 31, 2019
|
|
742,581
|
|
|
$
|
7.60
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss) attributable to common stockholders
|
|
$
|
1,647
|
|
|
$
|
(8,441
|
)
|
|
$
|
(45,449
|
)
|
Shares:
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
|
44,036,947
|
|
|
42,329,556
|
|
|
37,759,497
|
|
|||
Effect of dilutive securities
|
|
939,489
|
|
|
—
|
|
|
—
|
|
|||
Diluted weighted average number of shares outstanding
|
|
44,976,436
|
|
|
42,329,556
|
|
|
37,759,497
|
|
|||
Earnings (loss) per share:
|
|
|
|
|
|
|
||||||
Basic earnings (loss) per share
|
|
$
|
0.04
|
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
Diluted earnings (loss) per share
|
|
$
|
0.04
|
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
Classification
|
|
December 31, 2019
|
|||
Assets
|
|
|
|
||
Operating
|
Operating lease assets, net
|
|
$
|
209,717
|
|
Finance
|
Finance lease assets, net (1)
|
|
771
|
|
|
Total leased assets
|
|
|
$
|
210,488
|
|
Liabilities
|
|
|
|
||
Current lease liabilities
|
|
|
|
||
Operating
|
Current operating lease liabilities
|
|
$
|
22,775
|
|
Finance
|
Current finance lease liabilities (2)
|
|
510
|
|
|
Long-term lease liabilities
|
|
|
|
||
Operating
|
Long-term operating lease liabilities
|
|
225,014
|
|
|
Finance
|
Long-term finance lease liabilities (2)
|
|
281
|
|
|
Total lease liabilities
|
|
|
$
|
248,580
|
|
(1)
|
The finance lease assets are included in property and equipment, net in the 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 is included in other long-term liabilities in the Consolidated Balance Sheets.
|
|
|
|
Year Ended
|
||
Classification
|
|
December 31, 2019
|
|||
Operating lease cost
|
Occupancy, other restaurant operating costs, and general and administrative expenses
|
|
$
|
40,753
|
|
Finance lease cost
|
|
|
|
||
Amortization of lease assets
|
Depreciation and amortization
|
|
661
|
|
|
Interest on lease liabilities
|
Interest expense, net
|
|
73
|
|
|
|
|
|
41,487
|
|
|
Sublease income
|
Franchising royalties and fees, and other
|
|
(651
|
)
|
|
Total lease cost, net
|
|
|
$
|
40,836
|
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
2020
|
$
|
43,236
|
|
|
$
|
546
|
|
|
$
|
43,782
|
|
2021
|
42,530
|
|
|
225
|
|
|
42,755
|
|
|||
2022
|
42,340
|
|
|
51
|
|
|
42,391
|
|
|||
2023
|
40,988
|
|
|
14
|
|
|
41,002
|
|
|||
2024
|
38,986
|
|
|
8
|
|
|
38,994
|
|
|||
Thereafter
|
152,721
|
|
|
1
|
|
|
152,722
|
|
|||
Total lease payments
|
360,801
|
|
|
845
|
|
|
361,646
|
|
|||
Less: Imputed interest
|
113,012
|
|
|
54
|
|
|
113,066
|
|
|||
Present value of lease liabilities
|
$
|
247,789
|
|
|
$
|
791
|
|
|
$
|
248,580
|
|
2019
|
$
|
42,652
|
|
2020
|
39,626
|
|
|
2021
|
35,609
|
|
|
2022
|
30,611
|
|
|
2023
|
24,440
|
|
|
Thereafter
|
54,414
|
|
|
|
$
|
227,352
|
|
Cash paid for lease liabilities:
|
|
|
||
Operating leases
|
|
$
|
43,203
|
|
Finance leases
|
|
763
|
|
|
|
|
$
|
43,966
|
|
Right-of-use assets obtained in exchange for new lease liabilities:
|
|
|
||
Operating leases
|
|
$
|
11,211
|
|
Finance leases
|
|
253
|
|
|
|
|
$
|
11,464
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Interest paid (net of amounts capitalized)
|
|
$
|
2,800
|
|
|
$
|
3,800
|
|
|
$
|
3,482
|
|
Income taxes (refunded) paid
|
|
(98
|
)
|
|
42
|
|
|
(158
|
)
|
|||
Changes in purchases of property and equipment accrued in accounts payable, net
|
|
1,149
|
|
|
(1,339
|
)
|
|
(842
|
)
|
|||
Conversion of Series A convertible preferred stock to common stock
|
|
—
|
|
|
—
|
|
|
18,500
|
|
|
Fiscal 2019
|
||||||||||||||
|
December 31, 2019
|
|
October 1, 2019
|
|
July 2, 2019
|
|
April 2, 2019
|
||||||||
Revenue
|
$
|
113,871
|
|
|
$
|
118,304
|
|
|
$
|
120,190
|
|
|
$
|
110,046
|
|
Income (loss) from operations (1)
|
$
|
247
|
|
|
$
|
5,044
|
|
|
$
|
1,238
|
|
|
$
|
(1,090
|
)
|
Net (loss) income
|
$
|
(1,183
|
)
|
|
$
|
4,243
|
|
|
$
|
438
|
|
|
$
|
(1,851
|
)
|
Basic (loss) income per share
|
$
|
(0.03
|
)
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
$
|
(0.04
|
)
|
Diluted (loss) income per share
|
$
|
(0.03
|
)
|
|
$
|
0.09
|
|
|
$
|
0.10
|
|
|
$
|
(0.04
|
)
|
|
|
||||||||||||||
|
Fiscal 2018
|
||||||||||||||
|
January 1, 2019
|
|
October 2, 2018
|
|
July 3, 2018
|
|
April 3, 2018
|
||||||||
Revenue
|
$
|
113,193
|
|
|
$
|
116,727
|
|
|
$
|
117,395
|
|
|
$
|
110,526
|
|
Income (loss) from operations (2)(3)(4)
|
$
|
950
|
|
|
$
|
2,132
|
|
|
$
|
(4,162
|
)
|
|
$
|
(2,678
|
)
|
Net income (loss)
|
$
|
19
|
|
|
$
|
1,050
|
|
|
$
|
(5,935
|
)
|
|
$
|
(3,575
|
)
|
Basic income (loss) per share
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
(0.14
|
)
|
|
$
|
(0.09
|
)
|
Diluted income (loss) per share
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
(0.14
|
)
|
|
$
|
(0.09
|
)
|
(1)
|
The second quarter of 2019 includes an impairment charge of $2.2 million. The Company did not impair any restaurants in the third and fourth quarters of 2019. The fourth quarter includes a write down of $3.6 million related to assets held for sale.
|
(2)
|
The second quarter of 2018 includes a $3.4 million charge for the final assessment related to data breach liabilities and a $0.3 million charge for the settlement of a Delaware gift card litigation.
|
(3)
|
Includes closure costs related to the seven restaurants that closed in the fourth quarter of 2018, three restaurants closed in the third quarter of 2018, seven restaurants that closed in the second quarter of 2018 and two restaurants that closed in the first quarter of 2018, most of which were approaching the expiration of their leases, as well as ongoing costs from restaurants closed in previous years. The closure costs recognized were $0.6 million in the fourth quarter of 2018, $1.5 million in the third quarter of 2018, $1.5 million in the second quarter of 2018 and $0.6 million in the first quarter of 2018. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals, for additional disclosure on closures.
|
(4)
|
The first quarter of 2018 includes an impairment charge of $0.4 million related to the impairment of one restaurant. The Company did not impair any restaurants in the second, third and fourth quarters of 2018.
|
/s/ Ernst & Young LLP
|
|
|
/s/ Ernst & Young LLP
|
|
|
ITEM 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
ITEM 14.
|
Principal Accounting Fees and Services
|
ITEM 15.
|
Exhibits, Financial Statement Schedules
|
1.
|
Our Consolidated Financial Statements and Notes thereto are included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.
|
2.
|
All financial schedules have been omitted either because they are not applicable or because the required information is provided in our Consolidated Financial Statements and Notes thereto, included in Item 8 of this Annual Report on Form 10-K.
|
3.
|
The Index to Exhibits is incorporated herein by reference and is filed as part of this 10-K.
|
|
|
|
|
Description of Exhibit Incorporated Herein by Reference
|
|
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
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|
Filing Date
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Exhibit Number
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Filed Herewith
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3.1
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|
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S-1
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333-192402
|
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November 19, 2013
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3.1
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|
|
|
3.2
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|
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8-K
|
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001-35987
|
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August 24, 2015
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|
3.1
|
|
|
|
4.1
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|
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S-1/A
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333-188783
|
|
June 17, 2013
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|
4.1
|
|
|
|
4.2
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|
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8-K
|
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001-35987
|
|
February 9, 2017
|
|
4.1
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|
|
|
4.3
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|
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8-K
|
|
001-35987
|
|
February 9, 2017
|
|
4.2
|
|
|
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10.1
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|
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S-1/A
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333-188783
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June 17, 2013
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10.1
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|
|
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10.2
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|
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S-1/A
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333-188783
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|
June 17, 2013
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|
10.2
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|
|
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10.3
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|
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S-1/A
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333-188783
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|
June 17, 2013
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|
10.3
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|
|
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10.4
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|
|
10-Q
|
|
001-35987
|
|
November 6, 2014
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|
10.1
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|
|
|
10.5
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|
|
10-Q
|
|
001-35987
|
|
May 11, 2018
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|
10.1
|
|
|
|
10.6
|
|
|
8-K
|
|
001-35987
|
|
November 21, 2019
|
|
10.1
|
|
|
|
10.7
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|
|
10-Q
|
|
001-35987
|
|
May 11, 2018
|
|
10.2
|
|
|
|
10.8
|
|
|
10-Q
|
|
001-35987
|
|
May 11, 2018
|
|
10.3
|
|
|
|
10.9
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|
|
S-1/A
|
|
333-188783
|
|
June 17, 2013
|
|
10.15
|
|
|
10.10
|
|
|
10-K
|
|
001-35987
|
|
February 24, 2015
|
|
10.9
|
|
|
|
10.11
|
|
|
10-K
|
|
001-35987
|
|
February 24, 2015
|
|
10.10
|
|
|
|
10.12
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.7
|
|
|
|
10.13
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.8
|
|
|
|
10.14
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.9
|
|
|
|
10.15
|
|
|
10-Q
|
|
001-35987
|
|
July 19, 2018
|
|
10.1
|
|
|
|
10.16
|
|
|
S-1/A
|
|
333-188783
|
|
June 17, 2013
|
|
10.22
|
|
|
|
10.17
|
|
|
S-1
|
|
333-192402
|
|
November 19, 2013
|
|
10.18
|
|
|
|
10.18*
|
|
|
8-K
|
|
001-35987
|
|
September 25, 2017
|
|
10.1
|
|
|
|
10.19*
|
|
|
10-Q
|
|
001-35987
|
|
October 23, 2018
|
|
10.1
|
|
|
|
10.20
|
|
|
8-K
|
|
001-35987
|
|
February 9, 2017
|
|
10.3
|
|
|
|
10.21
|
|
|
8-K
|
|
001-35987
|
|
March 14, 2017
|
|
10.2
|
|
|
|
10.22
|
|
|
8-K
|
|
001-35987
|
|
March 14, 2017
|
|
10.1
|
|
|
|
10.23*
|
|
|
10-Q
|
|
001-35987
|
|
August 11, 2017
|
|
10.3
|
|
|
|
10.24*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.1
|
|
|
|
10.25*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.2
|
|
|
|
10.26*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.3
|
|
|
|
10.27*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.4
|
|
|
10.28*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.5
|
|
|
|
10.29*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.6
|
|
|
|
10.30*
|
|
|
10-K
|
|
001-35987
|
|
March 15, 2019
|
|
10.32
|
|
|
|
10.31*
|
|
|
10-K
|
|
001-35987
|
|
March 15, 2019
|
|
10.33
|
|
|
|
10.32*
|
|
|
10-K
|
|
001-35987
|
|
March 15, 2019
|
|
10.34
|
|
|
|
10.33*
|
|
|
10-Q
|
|
001-35987
|
|
November 8, 2019
|
|
10.1
|
|
|
|
10.34*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.35
|
|
|
|
|
|
|
|
|
|
|
X
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
23.1
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|
|
|
|
|
|
|
|
|
|
X
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|
24.1
|
|
|
|
|
|
|
|
|
|
|
X
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|
31.1
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|
|
|
|
|
|
|
|
|
|
X
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|
31.2
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|
|
|
|
|
|
|
|
|
|
X
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32.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
Inline 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
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
|
|
|
|
|
|
|
|
X
|
ITEM 16.
|
Form 10-K Summary.
|
|
NOODLES & COMPANY
|
|
|
|
By: /s/ DAVE BOENNIGHAUSEN
|
|
Dave Boennighausen
|
|
Chief Executive Officer
|
Signature
|
Title
|
Date
|
/s/ DAVE BOENNIGHAUSEN
|
|
|
Dave Boennighausen
|
Director, Chief Executive Officer
(principal executive officer)
|
February 26, 2020
|
/s/ KEN KUICK
|
|
|
Ken Kuick
|
Chief Financial Officer
(principal financial officer)
|
February 26, 2020
|
/s/ KATHY LOCKHART
|
|
|
Kathy Lockhart
|
Vice President and Controller
(principal accounting officer)
|
February 26, 2020
|
/s/ JEFFREY JONES
|
|
|
Jeffrey Jones
|
Chairman
|
February 26, 2020
|
/s/ ROBERT HARTNETT
|
|
|
Robert Hartnett
|
Director
|
February 26, 2020
|
/s/ MARY EGAN
|
|
|
Mary Egan
|
Director
|
February 26, 2020
|
/s/ DREW MADSEN
|
|
|
Drew Madsen
|
Director
|
February 26, 2020
|
/s/ ELISA SCHREIBER
|
|
|
Elisa Schreiber
|
Director
|
February 26, 2020
|
/s/ ANDREW TAUB
|
|
|
Andrew Taub
|
Director
|
February 26, 2020
|
|
|
|
•
|
Your start date is December 30, 2019.
|
•
|
Your title is Chief Marketing Officer.
|
•
|
You will report to Dave Boennighausen.
|
•
|
Your base pay will be $325,000 on an annual basis, paid bi-weekly, less payroll deductions and all required withholdings.
|
•
|
We want you to have a continued stake in our success. As such, you will also receive an equity grant each year. You will receive an initial grant equal to $150,000 on your start date, with a 4-year level vesting period (3-year level vesting for the performance-based stock). This grant will be comprised of equal amounts ($50,000/each) nonqualified stock options, performance-based restricted stock units, and restricted stock units. Thereafter, equity grants are made during our annual grant process at the end of the second quarter each year. You will be eligible for the 2020 annual grant. While these grants are subject to change as directed by the Compensation Committee of the Company, the grant is currently valued at $300,000, comprised of 33 1/3% nonqualified stock options, 33 1/3% performance-based restricted stock units, and 33 1/3% restricted stock units. The terms of this plan are subject to change, and you must still be an employee when the grants are issued.
|
•
|
You will be eligible for an annual merit review for fiscal year 2020 so long as you remain employed with Noodles & Company. The review might lead to an increase in your compensation and is tied to your annual performance review and performance criteria.
|
•
|
You will be eligible to participate in the 2020 Company Bonus Program depending on both the company’s and your performance. Your bonus target is 60% of your annual salary. You must be actively employed by Noodles & Company at the time the bonus is paid out. The terms and conditions of the bonus plan may vary from year to year.
|
•
|
Noodles & Company offers a variety of benefits for you, your spouse or domestic partner, and your family. Please refer to the 2019-2020 Employee Benefits Summary included with this letter for additional information. You will be able to enroll for your benefits online 48 hours after your start date. If you choose to enroll, your benefits will be effective on the 1st of the month following 30 days from your start date. Employee health premiums are deducted from each bi-weekly paycheck on a pre-tax basis. Please note the deadline for benefits enrollment is 30 days from your benefits effective date.
|
•
|
Noodles & Company has agreed to provide you with a sign-on bonus of $100,000.00 (gross). Please review and sign the terms and conditions contained in Noodles & Company’s Signing Bonus / Cash Advance Payback Agreement.
|
•
|
You will be eligible for a monthly car allowance of $750.
|
•
|
You will be eligible for a monthly Cell Phone Reimbursement up to $150, dependent on your actual spend.
|
•
|
You will be entitled to a 9-month severance agreement if you are terminated without cause, subject to approval by the Compensation Committee of Noodles & Company Board of Directors.
|
THE COMPANY:
|
||
|
|
|
NOODLES & COMPANY
|
||
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
PARTICIPANT:
|
||
|
|
|
|
|
|
Name:
|
|
|
Address:
|
|
|
Tel:
|
|
|
Subsidiaries of the Registrant
|
Jurisdiction of Incorporation
|
TNSC, Inc.
|
Colorado, United States
|
The Noodle Shop, Co. - Colorado, Inc.
|
Colorado, United States
|
The Noodle Shop, Co. - Delaware, Inc.
|
Delaware, United States
|
The Noodle Shop, Co. - Illinois, Inc.
|
Illinois, United States
|
The Noodle Shop, Co. - Kansas, LLC
|
Kansas, United States
|
The Noodle Shop, Co. - Virginia, Inc.
|
Virginia, United States
|
The Noodle Shop, Co. - Wisconsin, Inc.
|
Wisconsin, United States
|
(1)
|
Registration Statement (Form S-8 No. 333-189877) pertaining to the Noodles & Company Employee Stock Purchase Plan,
|
(2)
|
Registration Statement (Form S-8 No. 333-189878) pertaining to the Noodles & Company Amended and Restated 2010 Stock Incentive Plan, and
|
(3)
|
Registration Statements (Form S-3 No. 333-217760 and No. 333-225238) pertaining to the Noodles & Company Class A Common Stock.
|
|
(a)
|
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;
|
|
(b)
|
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;
|
|
(c)
|
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
|
|
(d)
|
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.
|
|
(a)
|
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
|
|
(b)
|
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.
|
|
/s/ DAVE BOENNIGHAUSEN
|
|
|
Dave Boennighausen
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
(a)
|
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;
|
|
(b)
|
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;
|
|
(c)
|
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
|
|
(d)
|
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.
|
|
(a)
|
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
|
|
(b)
|
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.
|
|
/s/ KEN KUICK
|
|
|
Ken Kuick
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
By:
|
|
/s/ DAVE BOENNIGHAUSEN
|
|
Name:
|
|
Dave Boennighausen
|
|
Title:
|
|
Chief Executive Officer
|
|
By:
|
|
/s/ KEN KUICK
|
|
Name:
|
|
Ken Kuick
|
|
Title:
|
|
Chief Financial Officer
|