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

Stocks in this article: IRG

Jeffrey L. Rager, Chief Financial Officer for the Ignite Restaurant Group, Inc. added, “We are pleased to have secured this new debt facility at favorable rates, which we believe is a testament to the long-term potential of our business. Not only does it provide a significant savings opportunity, but we have strengthened our capital structure and maintained ample access to liquidity. With this facility in place, we are well positioned to continue to execute our business strategies and grow our brands.”

Projected Impact of Revised Accounting Policies, Refinancing and Related Fees and Charges on Future Periods

The projected range of the impact of revised accounting policies necessary in light of the restatement, the refinancing and related fees and charges on income before income taxes for fiscal years 2012 and 2013 is detailed in the table below (amounts in thousands):

     
Fiscal Year 2012 (Unf)/Fav Fiscal Year 2013 (Unf)/Fav
(Low)   (High) (Low)   (High)
Revised accounting policies
General and administrative expenses $ 200 $ 200 $ $
Repairs and maintenance expense (400 ) (500 ) (400 ) (500 )
Loss on disposal of property and equipment (400 ) (500 ) (400 ) (500 )
Deferred rent (1,500 ) (1,600 ) (2,200 ) (2,700 )
Total impact of revised accounting policies $ (2,100 ) $ (2,400 ) $ (3,000 ) $ (3,700 )
 
Refinancing
 
Impact of refinancing $ 600 $ 400 $ 3,700 $ 3,500
 
Impact before fees and charges $ (1,500 ) $ (2,000 ) $ 700 $ (200 )
 
Related fees and charges
One-time professional fees associated with restatement $ (2,250 ) $ (2,250 ) $ $
Loss on extinguishment of debt from refinancing (2,200 ) (2,200 )
Total impact of related fees and charges (4,450 ) (4,450 )
 
Total impact on income before income taxes $ (5,950 ) $ (6,450 ) $ 700 $ (200 )
 

The revised accounting policies in light of the restatement will not impact fiscal years 2012 or 2013 revenues, comparable restaurant sales or free cash flows. Free cash flows are expected to be favorably impacted during both periods as a result of the lower interest rate of the Company’s new credit facility compared to the prior credit facility.

The Company’s estimates regarding the impact of the revised accounting policies on future periods are projections based on its current expectations and its general performance outlook. There can be no assurance that the actual impact of the revised accounting policies on future periods will not differ materially from these estimates. The projected impact of the revised accounting policies driven by the restatement in future periods is based on a number of key assumptions, including: (1) repairs and maintenance expenses and loss on disposals will remain relatively consistent with the restated average levels experienced between fiscal year 2009 through 2011 and excludes the potential impacts of any catastrophic events that may impact the Company’s restaurants during fiscal 2012 or 2013 and the potential impacts of conversions, remodels or closures; and (2) new unit openings will be at projected levels for fiscal year 2012 and 2013 with average investments consistent with recent restaurant openings.

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