Asset Impairment, Estimated Lease Termination and Other Closing Costs
The following is a summary of the asset impairment, estimated lease termination and other closings costs we incurred for the periods presented:
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Three Months Ended
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Nine Months Ended
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(dollars in thousands)
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September 29, 2019
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September 30, 2018
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September 29, 2019
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September 30, 2018
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Asset impairments, net
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$
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129
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$
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21
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$
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479
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$
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173
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Lease termination charges (income) and related costs
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65
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(11)
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156
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(354)
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Restaurant closure expenses
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20
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21
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83
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324
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Asset impairment, estimated lease termination charges and other closing costs
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$
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214
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$
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31
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$
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718
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$
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143
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During the nine months ended September 29, 2019, we recognized an impairment charge on the lease right-of-use asset for a restaurant that is expected to close during fiscal 2019 of approximately $344,000. Asset impairments, net are expenses incurred for other charges related to closing restaurants, as well as ongoing expenses incurred after a restaurant is fully closed. In the third quarter of fiscal 2019, we closed two restaurants.
Income Tax Expense
Income tax benefit for the three months ended September 29, 2019 was approximately $174,000, or 77.7% of our pretax loss. Income tax expense for the three months ended September 30, 2018 was approximately $196,000, or 12.3% of our pretax income. Income tax expense for the nine months ended September 29, 2019 was approximately $25,000, or 2.3% of our pretax income. Income tax expense for the nine months ended September 30, 2018 was approximately $937,000, or 19.8% of our pretax income.
Basic and Diluted Net Income (Loss) per Common Share Attributable to Shareholders
Net income attributable to shareholders for the three months ended September 29, 2019 was approximately $17,000, or $0.00 per basic and diluted share. The basic and diluted weighted-average number of common shares outstanding for the three months ended September 29, 2019 were approximately 9,105,000 and 9,279,000, respectively. Net income for the three months ended September 30, 2018 was approximately $1.4 million, or $0.15 per basic and diluted share. The basic and diluted weighted-average number of common shares outstanding for the three months ended September 30, 2018 was approximately 9,090,000 and 9,111,000, respectively.
Net income attributable to shareholders for the nine months ended September 29, 2019 was approximately $1.1 million, or $0.13 per basic and $0.12 per diluted share. The basic and diluted weighted-average number of common shares outstanding for the nine months ended September 29, 2019 was approximately 9,095,000 and 9,193,000, respectively. Net income for the nine months ended September 30, 2018 was approximately $3.8 million, or $0.45 per basic and diluted share. The basic and diluted weighted-average number of common shares outstanding for the nine months ended September 30, 2018 was approximately 8,435,000 and 8,459,000, respectively.
Financial Condition, Liquidity and Capital Resources
Our balance of unrestricted cash and cash equivalents was approximately $4.9 million and $11.6 million September 29, 2019 and December 30, 2018, respectively. We used cash to purchase five stores in Colorado, six stores in the Michigan, Wisconsin, and Ohio markets, one store in Iowa, one store in Kentucky, and four stores in Arizona. We expect to utilize cash on hand to reinvest into our brand, including refreshing current corporate stores, repurchasing select franchisee owned stores, and developing a new concept. We have also been investing in the build out of the inaugural Clark Crew BBQ restaurant.
On June 20, 2019 we entered into a loan agreement with our lender, Choice Financial Group. The loan agreement provides for a term loan in the principal amount of up to $24.0 million. The term loan has a maturity date of June 20, 2025. The first year of the term loan provides for payments of interest only, with the remaining five years requiring payments of interest and principal based on a 60 month amortization period. Interest will be payable in an amount equal to the Wall Street Journal Prime Rate, but in no circumstances will the rate of interest be less than 5.00%. The term loan may be prepaid, partially or in full, at any time and for no prepayment penalty.
Proceeds from the term loan were used to repay our previous real estate loan, dated December 2, 2016, which had an outstanding balance as of June 20, 2019 of approximately $2.6 million.