(b) Reflects certain expenses incurred in conjunction with our initial public offering. Amount includes $2.0 million of stock-based compensation related to accelerated vesting of outstanding stock options, $1.2 million of stock-based compensation related to stock options granted to our Chief Executive Officer and President and Chief Operations Officer of which 50% were vested at grant, $1.7 million of transaction bonuses and related payroll tax and $0.8 million in transaction payments to our Equity Sponsors.
(c) Reflects $0.7 million of offering expenses related to our follow-on offering completed in December of 2013.
|Noodles & Company|
|Reconciliation of Net Income to Adjusted Net Income|
|(in thousands, except share and per share data, unaudited)|
|Fiscal Quarter Ende d||Fiscal Year Ende d|
|December 31, 2013||January 1, 2013||December 31, 2013||January 1, 201 3|
|(in thousands, unaudited )|
|Net income||$ 2,407||$ 1,559||$ 6,665||$ 5,163|
|Interest expense (a)||—||1,133||2,067||5,028|
|Debt extinguishment expense (b)||579||—||624||2,646|
|Adjusted interest expense using reduced debt balances (c)||—||(86)||(301)||(475)|
|Pre-IPO management fees (d)||—||250||500||1,000|
|IPO related expenses (e)||—||—||5,667||—|
|Follow-on offering expenses (f)||696||—||696||—|
|Tax impact of follow-on offering, other miscellaneous (g)||354||—||286||—|
|Estimated incremental public costs (h)||—||(357)||(714)||(1,428)|
|Tax effect of adjustments (i)||(500)||(368)||(3,347)||(2,654)|
|Adjusted net income||$ 3,536||$ 2,131||$ 12,143||$ 9,280|
|Adjusted earnings per Class A and Class B common stock, combined (i)|
|Basic||$ 0.12||$ 0.07||$ 0.41||$ 0.32|
|Diluted||$ 0.11||$ 0.07||$ 0.40||$ 0.32|
|Pro forma weighted average Class A and Class B common stock outstanding, combined (j)|
Adjusted net income is a supplemental measure of financial performance that is not required by, or presented in accordance with GAAP. We define adjusted net income as net income plus: i) a net savings in interest expense as a result of the pay down of debt using IPO proceeds, ii) IPO related expenses, iii) follow-on offering expenses, iv) pre-IPO management fees v) the tax rate impact follow-on offering expenses and other miscellaneous tax items; less: i) estimated incremental costs of being a public company and ii) the tax effects of these adjustments. Adjusted net income is presented because management believes it helps convey supplemental information to investors regarding our performance excluding the impact of the IPO and other special items that affect the comparability of results in past quarters and expected in future quarters. Adjusted net income as presented may not be comparable to other similarly-titled measures of other companies and our presentation of adjusted net income should not be construed as an inference that our future results will be unaffected by excluded or unusual items. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.
(a) 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 our IPO.
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