Ignite Restaurant Group Announces Completion Of Restatement, Refinancing Transaction And Second And Third Quarter Results

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events and results may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Examples of forward-looking statements in this press release include the expected impact of the revised accounting policies, the refinancing and related fees and charges in fiscal year 2012 and 2013 and the effectiveness of investments and new measures in the Company’s accounting and finance function to improve its internal controls over financial reporting.

A number of other important factors could cause actual events and results to differ materially from those contained in or implied by the forward-looking statements included in this press release, including the risk factors discussed in the Company’s Registration Statement on Form S-1/A, filed on May 8, 2012 with the SEC, as supplemented by the risk factors included in the Company’s Quarterly Report on Form 10-Q for the twelve and twenty-four weeks ended June 18, 2012 (which can both be found at the SEC’s website www.sec.gov) and each such risk factor is specifically incorporated into this press release. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

IGNITE RESTAURANT GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited)
			Twelve Weeks Ended									Thirty-Six Weeks Ended
			September 10, 2012				September 12, 2011					September 10, 2012				September 12, 2011
							(As restated)									(As restated)
Revenues			$	129,137			$	113,233				$	352,453			$	303,852
Costs and expenses
Restaurant operating costs
Cost of sales			40,363				36,043					110,450				95,566
Labor and benefits			33,411				28,943					93,428				81,771
Occupancy expenses			8,196				7,683					23,445				21,540
Other operating expenses			21,996				19,440					60,219				53,376
General and administrative			7,374				5,220					21,641				16,397
Depreciation and amortization			4,404				3,856					12,553				10,737
Pre-opening costs			551				1,222					3,509				3,448
Restaurant impairments and closures			27				15					133				52
Loss on disposal of property and equipment			180				90					440				354
Total costs and expenses			116,502				102,512					325,818				283,241
Income from operations			12,635				10,721					26,635				20,611
Interest expense, net			(1,229		)		(1,960		)			(5,994		)		(6,484		)
Gain on insurance settlements			—				1					217				1
Income before income taxes			11,406				8,762					20,858				14,128
Income tax expense			2,481				530					4,562				1,058
Net income			$	8,925			$	8,232				$	16,296			$	13,070
Basic and diluted net income per share data:
Net income per share
Basic and diluted			$	0.35			$	0.43				$	0.73			$	0.68
Weighted average shares outstanding
Basic			25,624				19,178					22,312				19,178
Diluted			25,627				19,178					22,313				19,178

IGNITE RESTAURANT GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited)
			Twelve Weeks Ended									Twenty-Four Weeks Ended
			June 18, 2012				June 20, 2011					June 18, 2012				June 20, 2011
							(As restated)									(As restated)
Revenues			$	119,886			$	103,188				$	223,316			$	190,619
Costs and expenses
Restaurant operating costs
Cost of sales			37,172				32,004					70,087				59,523
Labor and benefits			31,970				28,262					60,017				52,828
Occupancy expenses			7,717				7,260					15,249				13,857
Other operating expenses			19,655				18,465					38,223				33,936
General and administrative			8,044				5,596					14,267				11,177
Depreciation and amortization			4,200				3,558					8,149				6,881
Pre-opening costs			1,430				1,241					2,958				2,226
Restaurant impairments and closures			57				9					106				37
Loss on disposal of property and equipment			171				119					260				264
Total costs and expenses			110,416				96,514					209,316				180,729
Income from operations			9,470				6,674					14,000				9,890
Interest expense, net			(2,768		)		(1,966		)			(4,765		)		(4,524		)
Gain on insurance settlements			217				—					217				—
Income before income taxes			6,919				4,708					9,452				5,366
Income tax expense			1,433				414					2,081				528
Net income			$	5,486			$	4,294				$	7,371			$	4,838
Basic and diluted net income per share data:
Net income per share
Basic and diluted			$	0.25			$	0.22				$	0.36			$	0.25
Weighted average shares outstanding
Basic			22,136				19,178					20,666				19,178
Diluted			22,137				19,178					20,666				19,178

IGNITE RESTAURANT GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value)
			September 10, 2012					January 2, 2012
			(Unaudited)					(As restated)
ASSETS
Current assets
Cash and cash equivalents			$	49,245				$	3,725
Accounts receivable			6,104					7,848
Inventories			5,643					4,179
Deferred tax assets			868					905
Prepaid rent and other current assets			3,735					5,190
Total current assets			65,595					21,847
Property and equipment, net			165,696					143,021
Trademarks, net			1,891					2,198
Deferred charges, net			2,663					4,035
Deferred tax assets			3,402					3,741
Other assets			2,082					2,993
Total assets			$	241,329				$	177,835
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	15,635				$	14,157
Accrued liabilities			25,678					20,390
Current portion of debt obligations			—					3,007
Total current liabilities			41,313					37,554
Long-term debt obligations			74,500					114,750
Deferred rent			10,634					8,554
Other long-term liabilities			1,280					1,178
Total liabilities			127,727					162,036
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value per share, 500,000 shares authorized; 25,636 and 19,178 shares issued and outstanding, respectively			256					192
Additional paid-in capital			85,531					4,088
Accumulated earnings			27,815					11,519
Total stockholders’ equity			113,602					15,799
Total liabilities and stockholders’ equity			$	241,329				$	177,835

TABLE 1—Reconciliation of net income to Adjusted EBITDA (in thousands, except percentages):
			Twelve Weeks Ended									Twenty-Four Weeks Ended
			June 18, 2012				June 20, 2011					June 18, 2012				June 20, 2011
							(As restated)									(As restated)
Net income			$	5,486			$	4,294				$	7,371			$	4,838
Income tax expense			1,433				414					2,081				528
Interest expense, net			2,768				1,966					4,765				4,524
Depreciation and amortization			4,200				3,558					8,149				6,881
EBITDA			13,887				10,232					22,366				16,771
Adjustments:
Deferred rent (1)			333				412					790				807
Restaurant impairments and closures (2)			57				9					106				37
Non-cash loss on disposal of property and equipment (3)			145				112					234				245
Sponsor management fees (4)			115				218					387				490
Gain on insurance settlements (5)			(217		)		—					(217		)		—
Pre-opening costs (6)			1,430				1,241					2,958				2,226
Transaction costs (7)			1,674				205					1,714				205
Stock-based compensation (8)			231				—					240				—
Other expenses (9)			53				53					57				238
Adjusted EBITDA			$	17,708			$	12,482				$	28,635			$	21,019
Adjusted EBITDA margin (10)			14.8		%		12.1		%			12.8		%		11.0		%

			Twelve Weeks Ended									Thirty-Six Weeks Ended
			September 10, 2012				September 12, 2011					September 10, 2012				September 12, 2011
							(As restated)									(As restated)
Net income			$	8,925			$	8,232				$	16,296			$	13,070
Income tax expense			2,481				530					4,562				1,058
Interest expense, net			1,229				1,960					5,994				6,484
Depreciation and amortization			4,404				3,856					12,553				10,737
EBITDA			17,039				14,578					39,405				31,349
Adjustments:
Deferred rent (1)			314				428					1,104				1,235
Restaurant impairments and closures (2)			27				15					133				52
Non-cash loss on disposal of property and equipment (3)			180				83					414				328
Sponsor management fees (4)			—				244					387				734
Gain on insurance settlements (5)			—				(1		)			(217		)		(1		)
Pre-opening costs (6)			551				1,222					3,509				3,448
Transaction costs (7)			—				55					1,714				260
Stock-based compensation (8)			191				30					431				30
Other expenses (9)			32				30					89				268
Adjusted EBITDA			$	18,334			$	16,684				$	46,969			$	37,703
Adjusted EBITDA margin (10)			14.2		%		14.7		%			13.3		%		12.4		%

(1) Deferred rent represents the non-cash rent expense calculated as the difference in GAAP rent expense in any year and amounts payable in cash under the leases during the year. In measuring the Company’s operational performance, it focuses on its cash rent payments.

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