The restatement corrects historic accounting errors for the following:

  • Lease accounting issues related to the timing for recognizing deferred rent expenses;
  • Accounting related to fixed asset capitalization, useful lives and disposals (including demolition expenses in certain locations unrelated to new store development) and timing of related depreciation; and
  • Other miscellaneous items identified during the accounting review, including the timing for recognizing advertising production costs and vacation accruals between calendar quarters within the same fiscal year, the classification of liquor license acquisition costs on the Company’s statement of cash flows, the timing for the recognition of a portion of the professional fees incurred in connection with the IPO and tax adjustments related to changes in the valuation allowance on deferred tax assets in quarterly periods and the recognition of uncertain tax positions.

These restatement adjustments reduce both income from operations and income before income taxes for fiscal year 2011 and first quarter 2012 by $2.6 million and $836,000, respectively. The adjustments and related tax effects increase fiscal year 2011 net income by $810,000 and decrease first quarter 2012 net income by $606,000. The impact of each of these adjustments on the Company’s income from operations, income before income taxes and net income for all periods since the Company’s inception is detailed in the table below (amounts in thousands, except per share data):
         
Fiscal Year Ended Twelve Weeks Ended Fiscal Years 2006 - 2011 Through
Fiscal Years 2006 - 2008 December 28, 2009   January 3, 2011   January 2, 2012 March 26, 2012 First Quarter 2012
Income from operations
As reported $ 8,801 $ 12,800 $ 16,152 $ 19,429 $ 5,366 $ 62,548
Adjustments:
Depreciation expense 334 423 217 15 (20 ) 969
Repairs and maintenance expense (1,936 ) (489 ) (426 ) (634 ) (89 ) (3,574 )
Loss on disposal of property andequipment (1,806 ) (227 ) (445 ) (474 ) (89 ) (3,041 )
Deferred rent (244 ) (328 ) (1,136 ) (1,337 ) (547 ) (3,592 )
Other 24 42 38 (138 ) (91 ) (125 )
Net adjustment to income from operations (3,628 ) (579 ) (1,752 ) (2,568 ) (836 ) (9,363 )
As restated $ 5,173 $ 12,221 $ 14,400 $ 16,861 $ 4,530 $ 53,185
 
Net income (loss)
As reported $ (9,038 ) $ 9,870 $ 11,848 $ 11,253 $ 2,491 $ 26,424
Adjustments:
Net adjustment to income from operations (3,628 ) (579 ) (1,752 ) (2,568 ) (836 ) (9,363 )
Gain on insurance settlements (355 ) (355 )
Adjustment to income beforeincome taxes (3,628 ) (579 ) (2,107 ) (2,568 ) (836 ) (9,718 )
Income tax effect of restatementadjustments 241 3,421 277 3,939
Income tax error adjustments (252 ) (280 ) (43 ) (47 ) (622 )
Net adjustment to net income (loss) (3,628 ) (831 ) (2,146 ) 810 (606 ) (6,401 )
As restated $ (12,666 ) $ 9,039 $ 9,702 $ 12,063 $ 1,885 $ 20,023
 
Net income per share
As reported $ 0.51 $ 0.62 $ 0.59 $ 0.13
Adjustments (0.04 ) (0.11 ) 0.04 (0.03 )
As restated $ 0.47 $ 0.51 $ 0.63 $ 0.10
 

(1) Share count used for calculation of net income (loss) per share is the post-split pre-IPO share count of 19.2 million shares. The calculation of net income (loss) per share in the periods presented above is not affected by the additional 6.4 million shares issued as part of the IPO, which was completed in May 2012.

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