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

(2) Impairment charges were recorded in connection with the determination that the carrying value of certain of the Company’s restaurants exceeded their estimated fair value. Also consists of expenses incurred following the closure of restaurants.

(3) Non-cash loss on disposal of property and equipment represents the net book value of property and equipment less proceeds received, if applicable, on assets abandoned or sold.

(4) Sponsor management fees consist of fees and expenses paid to J.H. Whitney under the management services agreement. We terminated this agreement in connection with the completion of the IPO.

(5) Gain on insurance settlements consists of proceeds in excess of the net book value of assets lost and related costs from property insurance claims at restaurants temporarily closed due to hurricane damage, flooding and/or foundational issues.

(6) Pre-opening costs include expenses directly associated with the opening of new restaurants and are incurred prior to the opening of a new restaurant.

(7) Transaction costs consist of fees and expenses related to corporate transactions such as debt or equity issuances, including the IPO, amendments to debt agreements or acquisitions.

(8) Stock-based compensation represents the non-cash compensation expense associated with equity awards granted to our employees and directors.

(9) Other expenses consists of costs related to abandoned new restaurant developments, fees payable to the agent under historic credit facilities, certain general and administrative expenses, and compensation and expenses paid to certain members of our board of directors and prior to the IPO, the management committee of our former parent company, JCS Holdings, LLC.

(10) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues.

TABLE 2—Calculation of restaurant-level profit (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)
Revenues $ 119,886 $ 103,188 $ 223,316 $ 190,619
Less: Licensing and other revenues (113 ) (141 ) (178 ) (249 )
Restaurant sales 119,773 103,047 223,138 190,370
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
Deferred rent (323 ) (414 ) (770 ) (797 )
Restaurant-level profit $ 23,582 $ 17,470 $ 40,332 $ 31,023
Restaurant-level profit margin 19.7 % 17.0 % 18.1 % 16.3 %
 
       
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
Less: Licensing and other revenues (44 ) (152 ) (222 ) (401 )
Restaurant sales 129,093 113,081 352,231 303,451
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
Deferred rent (321 ) (429 ) (1,091 ) (1,226 )
Restaurant-level profit $ 25,448 $ 21,401 $ 65,780 $ 52,424
Restaurant-level profit margin (1) 19.7 % 18.9 % 18.7 % 17.3 %
 
 

(1) Restaurant-level profit margin is calculated by dividing restaurant-level profit by restaurant sales .

TABLE 3—Reconciliation of GAAP net income to adjusted pro forma net income, and adjusted pro forma net income per share (in thousands, except per share data):

    Twelve Weeks Ended   Twenty-Four Weeks Ended   Year Ended
June 18, 2012   June 20, 2011 June 18, 2012   June 20, 2011 January 2, 2012
(As restated) (As restated) (As restated)
Net income 5,486 4,294 7,371 4,838 12,063
Add (deduct):
Interest expense, net (1) 2,768 1,966 4,765 4,524 9,215
Pro forma interest expense based upon reduced debt balance (2) (1,246 ) (1,246 ) (2,492 ) (2,492 ) (5,399 )
Management fees and expenses (3) 143 245 388 490 1,060
Strategic transaction expenses (4) 1,824 204 1,864 204 579
Incremental public company costs (6) (402 ) (402 ) (804 ) (804 ) (1,743 )
Income tax expense on adjustments (7) (1,204 ) (1,314 ) (1,451 ) (1,871 ) (6,106 )
 
Adjusted proforma net income (8) 7,369 3,747 9,641 4,889 9,669
 
Adjusted proforma net income per share:
Basic - pro forma $ 0.29 $ 0.15 $ 0.38 $ 0.19 $ 0.38
Diluted - pro forma $ 0.29 $ 0.15 $ 0.38 $ 0.19 $ 0.38
 
Weighted-average shares outstanding-pro forma (9):
Basic - pro forma 25,624 25,624 25,624 25,624 25,624
Diluted - pro forma 25,624 25,624 25,624 25,624 25,624
 
    Twelve Weeks Ended     Thirty-Six Weeks Ended  
September 10, 2012   September 12, 2011 September 10, 2012   September 12, 2011 Year Ended January 2, 2012
(As restated) (As restated) (As restated)
Net income 8,925 8,232 16,296 13,070 12,063
Add (deduct):
Interest expense, net (1) 1,229 1,960 5,994 6,484 9,215
Pro forma interest expense based upon reduced debt balance (2) (1,246 ) (1,246 ) (3,738 ) (3,738 ) (5,399 )
Management fees and expenses (3) 244 388 734 1,060
Strategic transaction expenses (4) 56 1,864 260 579
Restatement expenses (5) 1,048 1,048
Incremental public company costs (6) (402 ) (804 ) (1,207 ) (1,743 )
Income tax expense adjustments (7) (402 ) (1,575 ) (1,853 ) (3,446 ) (6,106 )
 
Adjusted proforma net income (8) 9,554 7,269 19,195 12,157 9,669
 
Adjusted proforma net income per share:
Basic - pro forma $ 0.37 $ 0.28 $ 0.75 $ 0.47 $ 0.38
Diluted - pro forma $ 0.37 $ 0.28 $ 0.75 $ 0.47 $ 0.38
 
Weighted-average shares outstanding-pro forma (9):
Basic - pro forma 25,624 25,624 25,624 25,624 25,624
Diluted - pro forma 25,627 25,624 25,625 25,624 25,624
 
 

(1) Reflects the adjustment to eliminate the historical interest expense for all periods presented that were based upon actual outstanding balances before the application of the net proceeds from the Company’s IPO. Historic expense includes cash interest as well as amortization of deferred loan costs and write downs of those deferred loan costs associated with the March 2011 refinancing and the $42.5 million paydown of the current term loan associated with IPO proceeds.

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