ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
90-0712224
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
7300 North Kendall Drive, 8th Floor
Miami, Florida
|
|
33156
|
(Address of principal executive office)
|
|
(Zip Code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
|
|
|
|
Non-accelerated filer
|
ý
|
Smaller reporting company
|
¨
|
(Do not check if smaller reporting company)
|
|
|
|
|
Page
|
PART I FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2
|
||
|
|
|
Item 3
|
||
|
|
|
Item 4
|
||
|
|
|
|
||
|
|
|
Item 1
|
||
|
|
|
Item 1A
|
||
|
|
|
Item 2
|
||
|
|
|
Item 3
|
||
|
|
|
Item 4
|
||
|
|
|
Item 5
|
||
|
|
|
Item 6
|
|
July 1,
2012 |
|
January 1,
2012 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
2,733
|
|
|
$
|
13,670
|
|
Trade receivables
|
6,202
|
|
|
4,842
|
|
||
Inventories
|
2,124
|
|
|
2,264
|
|
||
Prepaid rent
|
2,331
|
|
|
2,397
|
|
||
Prepaid expenses and other current assets
|
2,685
|
|
|
2,660
|
|
||
Deferred income taxes
|
1,830
|
|
|
1,776
|
|
||
Total current assets
|
17,905
|
|
|
27,609
|
|
||
Property and equipment, net
|
120,672
|
|
|
195,122
|
|
||
Goodwill (Note 3)
|
123,484
|
|
|
123,484
|
|
||
Intangible assets, net
|
243
|
|
|
301
|
|
||
Deferred income taxes
|
14,369
|
|
|
11,659
|
|
||
Deferred financing costs, net
|
6,397
|
|
|
6,908
|
|
||
Other assets
|
2,891
|
|
|
5,083
|
|
||
Total assets
|
$
|
285,961
|
|
|
$
|
370,166
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt (Note 7)
|
$
|
61
|
|
|
$
|
59
|
|
Due to former related party (Note 6)
|
—
|
|
|
1,511
|
|
||
Accounts payable
|
6,124
|
|
|
7,515
|
|
||
Accrued interest
|
6,660
|
|
|
7,152
|
|
||
Accrued income taxes
|
372
|
|
|
—
|
|
||
Accrued payroll, related taxes and benefits
|
11,047
|
|
|
12,154
|
|
||
Accrued real estate taxes
|
2,887
|
|
|
3,197
|
|
||
Other liabilities
|
5,454
|
|
|
5,085
|
|
||
Total current liabilities
|
32,605
|
|
|
36,673
|
|
||
Long-term debt, net of current portion (Note 7)
|
200,918
|
|
|
200,949
|
|
||
Lease financing obligations (Note 8)
|
3,025
|
|
|
123,019
|
|
||
Deferred income—sale-leaseback of real estate
|
35,622
|
|
|
4,055
|
|
||
Other liabilities (Note 5)
|
11,232
|
|
|
10,142
|
|
||
Total liabilities
|
283,402
|
|
|
374,838
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Stockholders' equity (deficit):
|
|
|
|
||||
Common stock, par value $.01; authorized 100,000,000 shares, issued 23,353,400 shares and outstanding 22,742,014 shares
|
227
|
|
|
227
|
|
||
Additional paid-in capital
|
8,520
|
|
|
3,345
|
|
||
Accumulated deficit (Note 6)
|
(6,188
|
)
|
|
(8,244
|
)
|
||
Total stockholders' equity (deficit)
|
2,559
|
|
|
(4,672
|
)
|
||
Total liabilities and stockholders' equity (deficit)
|
$
|
285,961
|
|
|
$
|
370,166
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 1, 2012
|
|
July 3, 2011
|
|
July 1, 2012
|
|
July 3, 2011
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
$
|
128,208
|
|
|
$
|
120,748
|
|
|
$
|
253,774
|
|
|
$
|
235,999
|
|
Franchise royalty revenues and fees
|
625
|
|
|
501
|
|
|
1,201
|
|
|
866
|
|
||||
Total revenues
|
128,833
|
|
|
121,249
|
|
|
254,975
|
|
|
236,865
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
41,301
|
|
|
39,675
|
|
|
82,085
|
|
|
76,019
|
|
||||
Restaurant wages and related expenses (including stock-based compensation expense of $4, $7, $8 and $12 respectively)
|
34,136
|
|
|
32,769
|
|
|
67,961
|
|
|
64,402
|
|
||||
Restaurant rent expense
|
5,422
|
|
|
4,232
|
|
|
9,389
|
|
|
8,292
|
|
||||
Other restaurant operating expenses
|
16,241
|
|
|
15,744
|
|
|
32,070
|
|
|
30,487
|
|
||||
Advertising expense
|
4,023
|
|
|
3,774
|
|
|
8,318
|
|
|
7,893
|
|
||||
General and administrative (including stock-based compensation expense of $169, $436, $1,215 and $847, respectively)
|
10,522
|
|
|
9,052
|
|
|
21,602
|
|
|
17,973
|
|
||||
Depreciation and amortization
|
4,377
|
|
|
4,949
|
|
|
9,217
|
|
|
9,746
|
|
||||
Impairment and other lease charges (Note 4)
|
(39
|
)
|
|
820
|
|
|
6,861
|
|
|
1,084
|
|
||||
Total operating expenses
|
115,983
|
|
|
111,015
|
|
|
237,503
|
|
|
215,896
|
|
||||
Income from operations
|
12,850
|
|
|
10,234
|
|
|
17,472
|
|
|
20,969
|
|
||||
Interest expense
|
6,329
|
|
|
4,842
|
|
|
14,298
|
|
|
9,687
|
|
||||
Income before income taxes
|
6,521
|
|
|
5,392
|
|
|
3,174
|
|
|
11,282
|
|
||||
Provision for income taxes (Note 9)
|
2,600
|
|
|
1,757
|
|
|
1,118
|
|
|
4,033
|
|
||||
Net income
|
$
|
3,921
|
|
|
$
|
3,635
|
|
|
$
|
2,056
|
|
|
$
|
7,249
|
|
Basic and diluted net income per share
|
$
|
0.17
|
|
|
$
|
0.16
|
|
|
$
|
0.09
|
|
|
$
|
0.31
|
|
Basic and diluted weighted average common shares outstanding (Note 11)
|
22,902,944
|
|
|
23,161,822
|
|
|
23,032,383
|
|
|
23,161,822
|
|
|
Six Months Ended
|
||||||
|
July 1, 2012
|
|
July 3, 2011
|
||||
Cash flows provided from operating activities:
|
|
|
|
||||
Net income
|
$
|
2,056
|
|
|
$
|
7,249
|
|
Adjustments to reconcile net income to net cash provided from operating activities:
|
|
|
|
||||
Loss on disposals of property and equipment
|
132
|
|
|
153
|
|
||
Stock-based compensation
|
1,021
|
|
|
859
|
|
||
Impairment and other lease charges
|
6,861
|
|
|
1,084
|
|
||
Loss on settlement of lease financing obligations
|
120
|
|
|
—
|
|
||
Depreciation and amortization
|
9,217
|
|
|
9,746
|
|
||
Amortization of deferred financing costs
|
841
|
|
|
121
|
|
||
Amortization of deferred gains from sale-leaseback transactions
|
(661
|
)
|
|
(132
|
)
|
||
Accretion of interest on lease financing obligations
|
218
|
|
|
24
|
|
||
Deferred income taxes
|
(2,764
|
)
|
|
531
|
|
||
Changes in other operating assets and liabilities:
|
(5,188
|
)
|
|
548
|
|
||
Net cash provided from operating activities
|
11,853
|
|
|
20,183
|
|
||
Cash flows used for investing activities:
|
|
|
|
||||
Capital expenditures:
|
|
|
|
||||
New restaurant development
|
(10,426
|
)
|
|
(7,124
|
)
|
||
Restaurant remodeling
|
(2,977
|
)
|
|
(2,241
|
)
|
||
Other restaurant capital expenditures
|
(3,491
|
)
|
|
(2,232
|
)
|
||
Corporate and restaurant information systems
|
(530
|
)
|
|
(405
|
)
|
||
Total capital expenditures
|
(17,424
|
)
|
|
(12,002
|
)
|
||
Properties purchased for sale-leaseback
|
(2,082
|
)
|
|
—
|
|
||
Proceeds from sale-leaseback transactions
|
—
|
|
|
5,012
|
|
||
Net cash used for investing activities
|
(19,506
|
)
|
|
(6,990
|
)
|
||
Cash flows used for financing activities:
|
|
|
|
||||
Borrowings (payments to) Carrols Restaurant Group, Inc., net
|
500
|
|
|
(10,995
|
)
|
||
Capital contribution from Carrols Restaurant Group, Inc.
|
2,500
|
|
|
—
|
|
||
Principal payments on capital leases
|
(29
|
)
|
|
(27
|
)
|
||
Deferred financing costs
|
(208
|
)
|
|
(697
|
)
|
||
Settlement of lease financing obligations
|
(6,047
|
)
|
|
—
|
|
||
Proceeds from lease financing obligations
|
—
|
|
|
1,736
|
|
||
Financing costs associated with issuance of lease financing obligations
|
—
|
|
|
(89
|
)
|
||
Net cash used for financing activities
|
(3,284
|
)
|
|
(10,072
|
)
|
||
Net increase (decrease) in cash
|
(10,937
|
)
|
|
3,121
|
|
||
Cash, beginning of period
|
13,670
|
|
|
2,583
|
|
||
Cash, end of period
|
$
|
2,733
|
|
|
$
|
5,704
|
|
Supplemental disclosures:
|
|
|
|
||||
Interest paid on long-term debt
|
$
|
9,654
|
|
|
$
|
—
|
|
Interest paid on lease financing obligations
|
$
|
4,025
|
|
|
$
|
5,610
|
|
Accruals for capital expenditures
|
$
|
732
|
|
|
$
|
432
|
|
Income tax payments, net
|
$
|
2,171
|
|
|
$
|
—
|
|
Non-cash reduction of lease financing obligations
|
$
|
114,165
|
|
|
$
|
—
|
|
Non-cash reduction of assets subject to lease financing obligations
|
$
|
80,419
|
|
|
$
|
—
|
|
•
|
Current Assets and Liabilities.
The carrying values of cash and accrued liabilities approximate fair value because of the short maturity of those instruments, which are considered Level 1.
|
•
|
Senior Secured Second Lien Notes.
The fair value of outstanding senior secured second lien notes is based on recent trading values, which are considered Level 2, and at
July 1, 2012
, was approximately
$210.0 million
.
|
•
|
Revolving Credit Facility.
There were
no
outstanding borrowings under the Company’s revolving credit facility at
July 1, 2012
. Market values for any borrowings would be considered Level 3.
|
|
|
|
Weighted
|
|||
|
|
|
Average
|
|||
|
|
|
Grant Date
|
|||
|
Shares
|
|
Price
|
|||
Nonvested at January 1, 2012
|
—
|
|
|
$
|
—
|
|
Dividend from Spin-Off
|
434,397
|
|
|
11.10
|
|
|
Granted
|
199,002
|
|
|
12.71
|
|
|
Vested
|
(14,592
|
)
|
|
11.10
|
|
|
Forfeited
|
(7,424
|
)
|
|
11.10
|
|
|
|
|
|
|
|
||
Nonvested at July 1, 2012
|
611,383
|
|
|
$
|
11.62
|
|
|
Pollo
Tropical
|
|
Taco
Cabana
|
|
Total
|
||||||
Balance, July 1, 2012
|
$
|
56,307
|
|
|
$
|
67,177
|
|
|
$
|
123,484
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 1, 2012
|
|
July 3, 2011
|
|
July 1, 2012
|
|
July 3, 2011
|
||||||||
Pollo Tropical
|
$
|
(42
|
)
|
|
$
|
364
|
|
|
$
|
5,837
|
|
|
$
|
636
|
|
Taco Cabana
|
3
|
|
|
456
|
|
|
1,024
|
|
|
448
|
|
||||
|
$
|
(39
|
)
|
|
$
|
820
|
|
|
$
|
6,861
|
|
|
$
|
1,084
|
|
|
July 1, 2012
|
|
January 1, 2012
|
||||
Accrued occupancy costs
|
$
|
8,194
|
|
|
$
|
7,459
|
|
Accrued workers’ compensation and general liability claims
|
1,434
|
|
|
1,251
|
|
||
Deferred compensation
|
796
|
|
|
710
|
|
||
Other
|
808
|
|
|
722
|
|
||
|
$
|
11,232
|
|
|
$
|
10,142
|
|
|
Six Months Ended
July 1, 2012 |
|
Year Ended January 1, 2012
|
||||
Balance, beginning of period
|
$
|
2,246
|
|
|
$
|
1,665
|
|
Provisions for restaurant closures
|
1,796
|
|
|
800
|
|
||
Accruals (recoveries) for additional lease charges
|
(106
|
)
|
|
649
|
|
||
Payments, net
|
(792
|
)
|
|
(1,021
|
)
|
||
Other adjustments
|
136
|
|
|
153
|
|
||
Balance, end of period
|
$
|
3,280
|
|
|
$
|
2,246
|
|
•
|
Tax Matters Agreement.
The tax matters agreement dated April 24, 2012, (the "Tax Matters Agreement"), (1) governs the allocation of the tax assets and liabilities between the Company and Carrols and Carrols Corporation, a subsidiary of Carrols ("Carrols Corp.") , (2) provides for certain restrictions and indemnities in connection with the tax treatment of the Spin-off and (3) addresses certain other tax related matters, including, without limitation, those relating to (a) the obligations of Carrols, Carrols Corp. and the Company with respect to the preparation or filing of tax returns for all periods, and (b) the control of any income tax audits and any indemnities with respect thereto. The Tax Matters Agreement provides that if the Company takes any actions after Carrols’ distribution of our shares in the Spin-off that result in or cause the distribution to be taxable to Carrols, the Company will be responsible under the Tax Matters Agreement for any resulting taxes imposed on us or on Carrols or Carrols Corp. Further, the Tax Matters Agreement provides that the Company will be responsible for 50% of the losses and taxes of Carrols and its affiliates resulting from the Spin-off not attributable to any such action of the Company or an equivalent action by Carrols.
|
•
|
Transition Services Agreement.
Under the TSA, Carrols and Carrols Corp. agreed to provide certain support services (including accounting, tax accounting, treasury management, internal audit, financial reporting and analysis, human resources and employee benefits management, information systems, restaurant systems support, legal, property management and insurance and risk management services) to the Company, and the Company agreed to provide certain limited management services (including certain legal services) to Carrols and Carrols Corp. The charge for transition
|
|
July 1,
2012 |
|
January 1,
2012 |
||||
Collateralized:
|
|
|
|
||||
Fiesta Restaurant Group 8.875% Senior Secured Second Lien Notes
|
$
|
200,000
|
|
|
$
|
200,000
|
|
Capital leases
|
979
|
|
|
1,008
|
|
||
|
200,979
|
|
|
201,008
|
|
||
Less: current portion of long-term debt
|
(61
|
)
|
|
(59
|
)
|
||
|
$
|
200,918
|
|
|
$
|
200,949
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 1, 2012
|
|
July 3, 2011
|
|
July 1, 2012
|
|
July 3, 2011
|
||||||||
Current
|
$
|
3,283
|
|
|
$
|
953
|
|
|
$
|
3,882
|
|
|
$
|
3,502
|
|
Deferred
|
(683
|
)
|
|
804
|
|
|
(2,764
|
)
|
|
531
|
|
||||
|
$
|
2,600
|
|
|
$
|
1,757
|
|
|
$
|
1,118
|
|
|
$
|
4,033
|
|
Three Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
July 1, 2012:
|
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
|
$
|
57,190
|
|
|
$
|
71,643
|
|
|
$
|
—
|
|
|
$
|
128,833
|
|
Cost of sales
|
|
18,729
|
|
|
22,572
|
|
|
—
|
|
|
41,301
|
|
||||
Restaurant wages and related expenses
|
|
13,199
|
|
|
20,937
|
|
|
—
|
|
|
34,136
|
|
||||
Restaurant rent expense
|
|
1,997
|
|
|
3,425
|
|
|
—
|
|
|
5,422
|
|
||||
Other restaurant operating expenses
|
|
6,793
|
|
|
9,448
|
|
|
—
|
|
|
16,241
|
|
||||
Advertising expense
|
|
1,009
|
|
|
3,014
|
|
|
—
|
|
|
4,023
|
|
||||
General and administrative expense
|
|
5,092
|
|
|
5,430
|
|
|
—
|
|
|
10,522
|
|
||||
Depreciation and amortization
|
|
1,960
|
|
|
2,417
|
|
|
—
|
|
|
4,377
|
|
||||
Adjusted Segment EBITDA
|
|
10,450
|
|
|
6,911
|
|
|
|
|
|
||||||
Capital expenditures
|
|
4,710
|
|
|
4,089
|
|
|
82
|
|
|
8,881
|
|
||||
July 3, 2011:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
52,642
|
|
|
$
|
68,607
|
|
|
$
|
—
|
|
|
$
|
121,249
|
|
Cost of sales
|
|
17,413
|
|
|
22,262
|
|
|
—
|
|
|
39,675
|
|
||||
Restaurant wages and related expenses
|
|
12,312
|
|
|
20,457
|
|
|
—
|
|
|
32,769
|
|
||||
Restaurant rent expense
|
|
1,490
|
|
|
2,742
|
|
|
—
|
|
|
4,232
|
|
||||
Other restaurant operating expenses
|
|
6,588
|
|
|
9,156
|
|
|
—
|
|
|
15,744
|
|
||||
Advertising expense
|
|
1,014
|
|
|
2,760
|
|
|
—
|
|
|
3,774
|
|
||||
General and administrative expense
|
|
4,557
|
|
|
4,495
|
|
|
—
|
|
|
9,052
|
|
||||
Depreciation and amortization
|
|
2,346
|
|
|
2,603
|
|
|
—
|
|
|
4,949
|
|
||||
Adjusted Segment EBITDA
|
|
9,467
|
|
|
6,979
|
|
|
|
|
|
||||||
Capital expenditures
|
|
2,890
|
|
|
3,987
|
|
|
—
|
|
|
6,877
|
|
||||
Six Months Ended
|
|
|
|
|
|
|
|
|
||||||||
July 1, 2012:
|
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
|
115,024
|
|
|
139,951
|
|
|
—
|
|
|
254,975
|
|
||||
Cost of sales
|
|
37,897
|
|
|
44,188
|
|
|
—
|
|
|
82,085
|
|
||||
Restaurant wages and related expenses
|
|
26,491
|
|
|
41,470
|
|
|
—
|
|
|
67,961
|
|
||||
Restaurant rent expense
|
|
3,198
|
|
|
6,191
|
|
|
—
|
|
|
9,389
|
|
||||
Other restaurant operating expenses
|
|
13,766
|
|
|
18,304
|
|
|
—
|
|
|
32,070
|
|
||||
Advertising expense
|
|
2,269
|
|
|
6,049
|
|
|
—
|
|
|
8,318
|
|
||||
General and administrative expense
|
|
10,302
|
|
|
11,300
|
|
|
—
|
|
|
21,602
|
|
||||
Depreciation and amortization
|
|
4,183
|
|
|
5,034
|
|
|
—
|
|
|
9,217
|
|
||||
Adjusted Segment EBITDA
|
|
21,664
|
|
|
13,109
|
|
|
|
|
|
||||||
Capital expenditures
|
|
9,260
|
|
|
7,989
|
|
|
175
|
|
|
17,424
|
|
||||
July 3, 2011:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
104,877
|
|
|
131,988
|
|
|
—
|
|
|
236,865
|
|
||||
Cost of sales
|
|
34,562
|
|
|
41,457
|
|
|
—
|
|
|
76,019
|
|
||||
Restaurant wages and related expenses
|
|
24,606
|
|
|
39,796
|
|
|
—
|
|
|
64,402
|
|
||||
Restaurant rent expense
|
|
2,858
|
|
|
5,434
|
|
|
—
|
|
|
8,292
|
|
||||
Other restaurant operating expenses
|
|
12,921
|
|
|
17,566
|
|
|
—
|
|
|
30,487
|
|
||||
Advertising expense
|
|
2,320
|
|
|
5,573
|
|
|
—
|
|
|
7,893
|
|
||||
General and administrative expense
|
|
8,663
|
|
|
9,310
|
|
|
—
|
|
|
17,973
|
|
||||
Depreciation and amortization
|
|
4,549
|
|
|
5,197
|
|
|
—
|
|
|
9,746
|
|
||||
Adjusted Segment EBITDA
|
|
19,337
|
|
|
13,321
|
|
|
|
|
|
||||||
Capital expenditures, including acquisitions
|
|
4,157
|
|
|
7,845
|
|
|
—
|
|
|
12,002
|
|
||||
Identifiable Assets:
|
|
|
|
|
|
|
|
|
||||||||
July 1, 2012:
|
|
126,214
|
|
|
150,580
|
|
|
9,167
|
|
|
285,961
|
|
||||
January 1, 2012
|
|
156,093
|
|
|
206,807
|
|
|
7,266
|
|
|
370,166
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 1, 2012
|
|
July 3, 2011
|
|
July 1, 2012
|
|
July 3, 2011
|
||||||||
Adjusted Segment EBITDA:
|
|
|
|
|
|
|
|
||||||||
Pollo Tropical
|
$
|
10,450
|
|
|
$
|
9,467
|
|
|
$
|
21,664
|
|
|
$
|
19,337
|
|
Taco Cabana
|
6,911
|
|
|
6,979
|
|
|
13,109
|
|
|
13,321
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
4,377
|
|
|
4,949
|
|
|
9,217
|
|
|
9,746
|
|
||||
Impairment and other lease charges
|
(39
|
)
|
|
820
|
|
|
6,861
|
|
|
1,084
|
|
||||
Interest expense
|
6,329
|
|
|
4,842
|
|
|
14,298
|
|
|
9,687
|
|
||||
Provision for income taxes
|
2,600
|
|
|
1,757
|
|
|
1,118
|
|
|
4,033
|
|
||||
Stock-based compensation
|
173
|
|
|
443
|
|
|
1,223
|
|
|
859
|
|
||||
Net income
|
$
|
3,921
|
|
|
$
|
3,635
|
|
|
$
|
2,056
|
|
|
$
|
7,249
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 1, 2012
|
|
July 3, 2011
|
|
July 1, 2012
|
|
July 3, 2011
|
||||||||
Basic and diluted net income per share:
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
3,921
|
|
|
$
|
3,635
|
|
|
$
|
2,056
|
|
|
$
|
7,249
|
|
Less: income allocated to participating securities
|
|
(52
|
)
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
||||
Net income available to common stockholders
|
|
$
|
3,869
|
|
|
$
|
3,635
|
|
|
$
|
2,042
|
|
|
$
|
7,249
|
|
Weighted average common shares outstanding
|
|
22,902,944
|
|
|
23,161,822
|
|
|
23,032,383
|
|
|
23,161,822
|
|
||||
Basic and diluted net income per share
|
|
$
|
0.17
|
|
|
$
|
0.16
|
|
|
$
|
0.09
|
|
|
$
|
0.31
|
|
•
|
Restaurant sales
consist of food and beverage sales, net of discounts, at our company-owned and operated restaurants. Restaurant sales are influenced by menu price increases, new restaurant openings, closures of restaurants and changes in comparable restaurant sales. Restaurants are included in comparable restaurant sales after they have been open for 18 months. For comparative purposes, the calculation of the changes in comparable restaurant sales is based on a 52-week year.
|
•
|
Cost of sales
consists of food, paper and beverage costs including packaging costs, less purchase discounts. Cost of sales is generally influenced by changes in commodity costs, the sales mix of items sold and the effectiveness of our restaurant-level controls to manage food and paper costs. Key commodities, including chicken and beef, are generally purchased under contracts for future periods up to one year.
|
•
|
Restaurant wages and related expenses
include all restaurant management and hourly productive labor costs, employer payroll taxes, restaurant-level bonuses and related benefits. Payroll and related taxes and benefits are subject to inflation, including minimum wage increases and increased costs for health insurance, workers' compensation insurance and state unemployment insurance.
|
•
|
Restaurant rent expense
includes base rent and contingent rent on our leases characterized as operating leases, reduced by the amortization of gains on sale-leaseback transactions.
|
•
|
Other restaurant operating expenses
include all other restaurant-level operating costs, the major components of which are utilities, repairs and maintenance, real estate taxes and credit card fees.
|
•
|
Advertising expense
includes all promotional expenses including television, radio, billboards and other sponsorships and promotional activities.
|
•
|
General and administrative expenses
are comprised primarily of (1) salaries and expenses associated with the development and support of our brands and the management oversight of the operation of our restaurants; (2) legal, auditing and other professional fees and stock-based compensation expense; and (3) subsequent to the Spin-off, costs incurred under a transition services agreement with Carrols for administrative support services.
|
•
|
Adjusted Segment EBITDA
, which is the measure of segment profit or loss used by our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance, is defined as earnings attributable to the applicable segment before interest, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense, other income and expense and gains and losses on the extinguishment of debt. Adjusted Segment EBITDA may not be necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. Adjusted Segment EBITDA for each of our segments includes an allocation of general and administrative expenses associated with administrative support for executive management, information systems and certain accounting, legal and other administrative functions.
|
•
|
Depreciation and amortization expense
primarily includes the depreciation of fixed assets, including equipment, owned buildings and leasehold improvements utilized in our restaurants and the depreciation of assets under lease financing obligations.
|
•
|
Impairment and other lease charges
are determined through our assessment of the recoverability of property and equipment and intangible assets by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. A potential impairment charge is evaluated whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Lease charges are recorded for our obligations under the related leases for closed locations net of estimated sublease recoveries.
|
•
|
Interest expense
subsequent to August 5, 2011 consists of interest expense associated with our $200.0 million of 8.875% Senior Secured Second Lien Notes due 2016 (“the Notes”), borrowings under our senior secured credit facility, the amortization of deferred financing costs, imputed interest expense on leases entered into in connection with sale-leaseback transactions which are accounted for as lease financing obligations and any gains and losses from the settlement of lease financing obligations. Prior to August 5, 2011, interest expense included an allocation of interest expense due to Carrols, based on amounts due to Carrols in each respective period and imputed interest expense on leases entered into in connection with sale-leaseback transactions which are accounted for as lease financing obligations and any gains and losses from the settlement of lease financing obligations.
|
|
July 1, 2012
|
|
July 3, 2011
|
||
Restaurant sales:
|
|
|
|
||
Pollo Tropical
|
44.2
|
%
|
|
43.2
|
%
|
Taco Cabana
|
55.8
|
%
|
|
56.8
|
%
|
Consolidated restaurant sales
|
100.0
|
%
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
||
Cost of sales
|
32.2
|
%
|
|
32.9
|
%
|
Restaurant wages and related expenses
|
26.6
|
%
|
|
27.1
|
%
|
Restaurant rent expense
|
4.2
|
%
|
|
3.5
|
%
|
Other restaurant operating expenses
|
12.7
|
%
|
|
13.0
|
%
|
Advertising expense
|
3.1
|
%
|
|
3.1
|
%
|
General and administrative
|
8.2
|
%
|
|
7.5
|
%
|
|
July 1, 2012
|
|
July 3, 2011
|
||
Restaurant sales:
|
|
|
|
||
Pollo Tropical
|
44.9
|
%
|
|
44.1
|
%
|
Taco Cabana
|
55.1
|
%
|
|
55.9
|
%
|
Consolidated restaurant sales
|
100.0
|
%
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
||
Cost of sales
|
32.3
|
%
|
|
32.2
|
%
|
Restaurant wages and related expenses
|
26.8
|
%
|
|
27.3
|
%
|
Restaurant rent expense
|
3.7
|
%
|
|
3.5
|
%
|
Other restaurant operating expenses
|
12.6
|
%
|
|
12.9
|
%
|
Advertising expense
|
3.3
|
%
|
|
3.3
|
%
|
General and administrative
|
8.5
|
%
|
|
7.6
|
%
|
•
|
restaurant operations are primarily conducted on a cash basis;
|
•
|
rapid turnover results in a limited investment in inventories; and
|
•
|
cash from sales is usually received before related liabilities for food, supplies and payroll become due.
|
|
Pollo
Tropical
|
|
Taco
Cabana
|
|
Other
|
|
Consolidated
|
||||||||
Six Months Ended July 1, 2012
|
|
|
|
|
|
|
|
||||||||
New restaurant development
|
$
|
7,236
|
|
|
$
|
3,190
|
|
|
$
|
—
|
|
|
$
|
10,426
|
|
Restaurant remodeling
|
315
|
|
|
2,662
|
|
|
—
|
|
|
2,977
|
|
||||
Other restaurant capital expenditures (1)
|
1,645
|
|
|
1,846
|
|
|
—
|
|
|
3,491
|
|
||||
Corporate and restaurant information systems
|
64
|
|
|
291
|
|
|
175
|
|
|
530
|
|
||||
Total capital expenditures
|
$
|
9,260
|
|
|
$
|
7,989
|
|
|
$
|
175
|
|
|
$
|
17,424
|
|
Number of new restaurant openings
|
3
|
|
|
1
|
|
|
|
|
4
|
|
|||||
Six months ended July 3, 2011:
|
|
|
|
|
|
|
|
||||||||
New restaurant development
|
$
|
1,348
|
|
|
$
|
5,776
|
|
|
$
|
—
|
|
|
$
|
7,124
|
|
Restaurant remodeling
|
1,399
|
|
|
842
|
|
|
—
|
|
|
2,241
|
|
||||
Other restaurant capital expenditures (1)
|
1,034
|
|
|
1,198
|
|
|
—
|
|
|
2,232
|
|
||||
Corporate and restaurant information systems
|
376
|
|
|
29
|
|
|
—
|
|
|
405
|
|
||||
Total capital expenditures
|
$
|
4,157
|
|
|
$
|
7,845
|
|
|
$
|
—
|
|
|
$
|
12,002
|
|
Number of new restaurant openings
|
—
|
|
|
3
|
|
|
|
|
3
|
|
1)
|
Excludes restaurant repair and maintenance expenses included in other restaurant operating expenses in our consolidated financial statements. For the six months ended July 1, 2012 and July 3, 2011, total restaurant repair and maintenance expenses were approximately $6.0 million and $5.2 million, respectively.
|
|
Payments due by period
|
||||||||||||||
Contractual Obligations
|
Total
|
Less than
1 Year
|
1 - 3
Years
|
3 - 5
Years
|
More than
5 Years
|
||||||||||
Long-term debt obligations, including interest(1)
|
$
|
288,750
|
|
$
|
17,750
|
|
$
|
35,500
|
|
$
|
235,500
|
|
$
|
—
|
|
Capital lease obligations, including interest(2)
|
1,757
|
|
141
|
|
264
|
|
229
|
|
1,123
|
|
|||||
Operating lease obligations(3)
|
314,458
|
|
28,383
|
|
55,275
|
|
53,183
|
|
177,617
|
|
|||||
Lease financing obligations, including interest(4)
|
5,914
|
|
255
|
|
516
|
|
526
|
|
4,617
|
|
|||||
Total contractual obligations
|
$
|
610,879
|
|
$
|
46,529
|
|
$
|
91,555
|
|
$
|
289,438
|
|
$
|
183,357
|
|
(1)
|
Our long term debt at July 1, 2012 included $200.0 million of Notes. Total interest payments on the Notes of $88.8 million for all years presented are included at the coupon rate of 8.875%.
|
(2)
|
Includes total interest of $0.7 million for all years presented.
|
(3)
|
Represents the aggregate minimum lease payments under operating leases. Many of our leases also require contingent rent based on a percentage of sales in addition to the minimum base rent and require expenses incidental to the use of the property all of which have been excluded from this table.
|
(4)
|
Includes total interest of $2.9 million for all years presented. As a result of the Spin-off, we reduced our lease financing obligations by $114.2 million during the six months ended July 1, 2012 due to the cure of the provisions that previously precluded sale-leaseback accounting. These leases are reflected as operating lease obligations in the above table. We also reduced lease financing obligations by $6.0 million in the six months ended July 1, 2012 by purchasing six restaurant properties previously accounted for as lease financing obligations. Refer to Note 8 of our consolidated financial statements further discussion.
|
•
|
The effect of the spin-off of Fiesta by Carrols;
|
•
|
The potential tax liability associated with the spin-off of Fiesta by Carrols;
|
•
|
Increases in food and other commodity costs;
|
•
|
Competitive conditions;
|
•
|
Regulatory factors;
|
•
|
Environmental conditions and regulations;
|
•
|
General economic conditions, particularly in the retail sector;
|
•
|
Weather conditions;
|
•
|
Fuel prices;
|
•
|
Significant disruptions in service or supply by any of our suppliers or distributors;
|
•
|
Changes in consumer perception of dietary health and food safety;
|
•
|
Labor and employment benefit costs;
|
•
|
The outcome of pending or future legal claims or proceedings;
|
•
|
Our ability to manage our growth and successfully implement our business strategy;
|
•
|
Risks associated with the expansion of our business;
|
•
|
Our ability to integrate any businesses we acquire;
|
•
|
Our borrowing costs and credit ratings, which may be influenced by the credit ratings of our competitors;
|
•
|
The availability and terms of necessary or desirable financing or refinancing and other related risks and uncertainties;
|
•
|
The risk of an act of terrorism or escalation of any insurrection or armed conflict involving the United States or any other national or international calamity; and
|
•
|
Factors that affect the restaurant industry generally, including recalls if products become adulterated or misbranded, liability if our products cause injury, ingredient disclosure and labeling laws and regulations, reports of cases of food borne illnesses such as “mad cow” disease and avian flu, and the possibility that consumers could lose confidence in the safety and quality of certain food products, as well as negative publicity regarding food quality, illness, injury or other health concerns.
|
|
|
|
Exhibit
No.
|
|
|
|
|
|
10.1
|
|
Offer letter between Fiesta Restaurant Group, Inc. and Lynn S. Schweinfurth+
|
|
|
|
31.1
|
|
Chief Executive Officer’s Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
|
|
|
|
31.2
|
|
Chief Financial Officer’s Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
|
|
|
|
32.1
|
|
Chief Executive Officer’s Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
|
|
|
|
32.2
|
|
Chief Financial Officer’s Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
|
|
|
|
*101.INS
|
|
XBRL Instance Document
|
|
|
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
*101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
As provided in Rule 406T of Regulation S-T, this information is deemed furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended.
|
+
|
Compensatory plan or arrangement
|
|
FIESTA RESTAURANT GROUP, INC.
|
|
|
Date: August 15, 2012
|
/
S
/ T
IMOTHY
P. T
AFT
|
|
(Signature)
|
|
Timothy P. Taft
Chief Executive Officer
|
|
|
Date: August 15, 2012
|
/
S
/ LYNN SCHWEINFURTH
|
|
(Signature)
|
|
Lynn Schweinfurth
Vice President, Chief Financial Officer and Treasurer
|
Date: August 15, 2012
|
/s/TIMOTHY P. TAFT
|
|
Timothy P. Taft
Chief Executive Officer
|
Date: August 15, 2012
|
/s/LYNN SCHWEINFURTH
|
|
Lynn Schweinfurth
Vice President, Chief Financial Officer and Treasurer
|
/s/ TIMOTHY P. TAFT
|
Timothy P. Taft
|
Chief Executive Officer
|
/s/ LYNN SCHWEINFURTH
|
Lynn Schweinfurth
|
Vice President, Chief Financial Officer and Treasurer
|