Pro forma net income represents our net income plus the sum of the net reduction in our interest expense and the reduction in our management fees and expenses as a result of our IPO and the application of the net proceeds of the IPO to repay $79.4 million of the Company’s debt, less the incremental costs of being a public company and the pro forma incremental income tax expense resulting from the aforementioned adjustments and to adjust the effective rate to the long-term estimated effective rate of 30%.

The following table includes a reconciliation of net income to restaurant-level EBITDA (in thousands):
               
Quarter Ended Fiscal Year Ended
December 30, December 25, December 30, December 25,
  2012     2011     2012     2011  
 
Net income as reported $ 2,555 $ 317 $ 5,457 $ 3,464
Income tax provision 1,000 386 2,243 1,634
Interest expense 145 1,228 5,596 4,362
General and administrative 2,939 1,867 9,358 7,478
Advisory agreement termination fee - - 2,000 -
Secondary offering costs 228 - 228 -
Settlement with former director - - - 245
Restaurant pre-opening expenses 469 817 3,383 3,385
Depreciation and amortization   1,856     1,307     6,528     4,448  
Restaurant-level EBITDA $ 9,192   $ 5,922   $ 34,793   $ 25,016  
 
Restaurant-level EBITDA margin (1)   19.7 %   17.8 %   20.2 %   19.2 %
 

(1)

Restaurant-level EBITDA margin is calculated by dividing restaurant-level EBITDA by revenue.
 

The following is a reconciliation of GAAP net income and net income per share to pro forma net income and pro forma net income per share (in thousands):
       
Quarter Ended Fiscal Year Ended
December 30,     December 25, December 30,     December 25,
  2012     2011     2012     2011  
 
Net income as reported $ 2,555 $ 317 $ 5,457 $ 3,464
Interest expense as reported (1) 145 1,228 5,596 4,362
Pro forma interest expense based upon
reduced debt balance (2) (107 ) (107 ) (428 ) (428 )
Management fees and expenses (3) - 94 2,094 373
Settlement with former director
and one-time bonus to management (4) - - - 1,264
Secondary offering costs (5) 228 - 228 -
Incremental public costs (6) - (338 ) (805 ) (1,350 )
Income tax expense on adjustments (7)   (146 )   (88 )   (2,073 )   (1,162 )
Pro forma net income $ 2,675   $ 1,106   $ 10,069   $ 6,523  
 
Net income per share - pro forma:
Basic - pro forma $ 0.17   $ 0.07   $ 0.63   $ 0.41  
Diluted - pro forma $ 0.16   $ 0.07   $ 0.60   $ 0.40  
 
Weighted-average shares outstanding-pro forma:
Basic - pro forma (8)   15,918,427     15,918,425     15,918,427     15,901,086  
Diluted - pro forma (8)   16,736,781     16,530,340     16,645,245     16,512,999  
 

Notes to reconciliation of GAAP net income to non-GAAP pro forma net income:

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 our IPO.
 

2.

Reflects interest expense assuming our current post-IPO long-term debt balance of $5.0 million was outstanding as of the beginning of fiscal year 2011. This balance reflects $79.4 million repayment of long-term debt from the net proceeds from our IPO. This interest expense calculation assumes a change in interest rate from 8.5% to 7.0% due to the reduction in our total leverage ratio to below 2.0 to 1.0 upon application of the net proceeds from the IPO. The interest adjustment is also based on the following assumptions:
 

a.
 

an unused facility fee on the unfunded $10.5 million of our revolver and delayed Term B Loan at an annual rate of 0.5%; and

b.

a lower annual amortization of deferred loan costs of approximately $25,000 after the write-off of approximately $1.6 million, which occurred in the third quarter of 2012 but is assumed to occur at the beginning of fiscal 2011.
 

3.

Reflects the elimination of the management fees and expenses paid and reimbursed to Goode Partners, LLC for the periods presented.
 

4.

Reflects the elimination of one-time charges in 2011 for the settlement with former director of $245,000 and a special one-time cash bonus payment of approximately $1.0 million made to certain members of management in conjunction with the successful completion of the Company’s refinancing of its credit facility in the third quarter of 2011.
 

5.

Reflects the elimination of the offering expenses associated with the follow-on offering of secondary shares of the Company.
 

6.

Reflects an estimate of recurring incremental legal, accounting, insurance and other compliance costs we expect to incur as a public company for the periods prior to being a public company.
 

7.

Reflects the tax expense associated with normalizing the tax rate to 30%, which reflects our estimated long-term effective tax rate.
 

8.

Reflects (i) 6,708,332 additional shares of common stock issued in the IPO, (ii) the repurchase by the Company of 1,655,662 shares of its common and preferred stock on April 6, 2012, and (iii) the conversion of all series of our outstanding preferred stock into common stock as if all of these transactions occurred at the beginning of fiscal year 2011.

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