Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CARROLS RESTAURANT GROUP, INC. | d351156d8k.htm |
Exhibit 99.1
Unaudited Condensed Consolidated Pro Forma Financial Statements
Carrols Restaurant Group, Inc. (“we, “us”, “our” or the “Company”) has prepared the unaudited condensed consolidated pro forma financial information by applying pro forma adjustments to our historical consolidated financial statements. The unaudited condensed consolidated financial information gives effect to certain transactions and events related to the spin-off (the “Spin-off”) of Fiesta Restaurant Group, Inc. (“Fiesta Restaurant Group”) by the Company, which occurred on May 7, 2012.
The unaudited condensed consolidated pro forma statements of operations and balance sheet give effect to the following:
| • | the Spin-off; |
| • | the elimination of certain non-recurring expenses incurred by the Company in connection with the Spin-off; and |
| • | payments the Company anticipates it will receive from Fiesta Restaurant Group after the Spin-off pursuant to a Transition Services Agreement (the “Transition Services Agreement”) dated as of April 24, 2012 among the Company, Carrols Corporation (“Carrols”) and Fiesta Restaurant Group. Prior to the Spin-off, the Company provided support services (including accounting, tax accounting, treasury management, internal audit, financial reporting and analysis, human resources and employee benefit management, information systems and restaurant systems support, legal, property management and insurance and risk management services) to Fiesta Restaurant Group and allocated costs associated with these support services to Fiesta Restaurant Group on a systematic and rational basis. After the Spin-off, the Company will provide certain of these services to Fiesta Restaurant Group in exchange for a fee pursuant to the Transition Services Agreement. The fees reflected in the pro forma financial statements are an estimate and may not be indicative of actual fees to be received from Fiesta Restaurant Group under the Transition Services Agreement and may vary depending upon the type and level of services provided thereunder. In addition, Fiesta Restaurant Group may terminate the Transition Services Agreement with respect to any service thereunder at any time upon 90 days prior written notice. |
We use a 52 or 53 week fiscal year ending on the Sunday closest to December 31. For convenience, all references herein to the fiscal years ended January 3, 2010, January 2, 2011 and January 1, 2012 will hereinafter be referred to as the fiscal years ended December 31, 2009, 2010 and 2011, respectively. All references herein to the three months ended April 3, 2011 and April 1, 2012 will hereinafter be referred to as the three months ended March 31, 2011 and 2012, respectively. The fiscal years ended December 31,2010 and 2011 each contained 52 weeks and the fiscal year ended December 31, 2009 contained 53 weeks. The three months ended March 31, 2011 and 2012 each contained thirteen weeks.
The unaudited condensed consolidated pro forma statements of operations for the three months ended March 31, 2011 and 2012, and the years ended December 31, 2009, 2010 and 2011 give effect to the transactions described above as if they occurred on January 1, 2009. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2012, gives effect to the transactions described above as if they occurred on March 31, 2012.
The unaudited condensed consolidated pro forma financial statements should be read in conjunction with our historical financial statements for the three months ended March 31, 2011 and 2012 which can be found in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“the SEC”) on May 10, 2012 and for the fiscal years ended December 31, 2009, 2010 and 2011 which can be found in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2012, as amended on March 13, 2012. The historical financial information for Fiesta Restaurant Group has been derived from the Company’s internal records. The unaudited condensed consolidated pro forma financial statements do not include all disclosures required by generally accepted accounting principles. Due to the Spin-off, when we issue financial statements for the period ending June 30, 2012 and for the year ending December 31, 2012, the historical results of Fiesta Restaurant Group will be reclassified as a discontinued operation in accordance with Financial Accounting Standards Board Codification Topic 205–20, Presentation of Financial Statements – Discontinued Operations.
Pro forma adjustments to the historical financial information of the Company include adjustments that we deem reasonable and appropriate and are factually supported based on currently available information. These unaudited condensed consolidated pro forma financial statements are included for comparative purposes only, and may not be indicative of what actual results would have been had the Spin-off and related transactions occurred on the dates indicated. The unaudited condensed consolidated pro forma financial statements do not purport to present our financial results for future periods and may differ from the adjustments that will be calculated to report Fiesta Restaurant Group’s business as a discontinued operation in our future filings.
CARROLS RESTAURANT GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
MARCH 31, 2012
| Historical | Spin off of Fiesta Restaurant Group |
Pro Forma | ||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash |
$ | 5,271 | $ | (4,727 | ) | $ | 544 | |||||
| Trade and other receivables |
8,186 | (4,824 | ) | 3,362 | ||||||||
| Inventories |
5,784 | (2,127 | ) | 3,657 | ||||||||
| Prepaid rent |
4,027 | (2,346 | ) | 1,681 | ||||||||
| Prepaid expenses and other current assets |
6,143 | (2,854 | ) | 3,289 | ||||||||
| Refundable income taxes |
4,759 | — | 4,759 | |||||||||
| Deferred income taxes |
4,542 | (1,845 | ) | 2,697 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total current assets |
38,712 | (18,723 | ) | 19,989 | ||||||||
| Property and equipment, net |
196,894 | (115,767 | ) | 81,127 | ||||||||
| Franchise rights, net |
66,440 | — | 66,440 | |||||||||
| Goodwill |
124,934 | (123,484 | ) | 1,450 | ||||||||
| Intangible assets, net |
272 | (272 | ) | — | ||||||||
| Franchise agreements, at cost less accumulated amortization of $6,584 |
5,080 | — | 5,080 | |||||||||
| Deferred financing fees |
8,257 | (6,657 | ) | 1,600 | ||||||||
| Other assets |
5,670 | (2,660 | ) | 3,010 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total assets |
$ | 446,259 | $ | (267,563 | ) | $ | 178,696 | |||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: |
||||||||||||
| Current portion of long-term debt |
$ | 6,554 | $ | (60 | ) | $ | 6,494 | |||||
| Accounts payable |
13,988 | (7,854 | ) | 6,134 | ||||||||
| Accrued interest |
2,348 | (2,325 | ) | 23 | ||||||||
| Accrued payroll, related taxes and benefits |
18,566 | (9,861 | ) | 8,705 | ||||||||
| Accrued real estate taxes |
3,244 | (1,902 | ) | 1,342 | ||||||||
| Other liabilities |
11,698 | (5,704 | ) | 5,994 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total current liabilities |
56,398 | (27,706 | ) | 28,692 | ||||||||
| Long-term debt, net of current portion |
257,227 | (200,933 | ) | 56,294 | ||||||||
| Lease financing obligations |
10,266 | (9,072 | ) | 1,194 | ||||||||
| Deferred income—sale-leaseback of real estate |
36,556 | (17,305 | ) | 19,251 | ||||||||
| Deferred income taxes |
3,391 | 7,506 | 10,897 | |||||||||
| Accrued postretirement benefits |
1,943 | — | 1,943 | |||||||||
| Other liabilities |
22,458 | (12,987 | ) | 9,471 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities |
388,239 | (260,497 | ) | 127,742 | ||||||||
| Commitments and contingencies |
||||||||||||
| Total stockholders’ equity |
58,020 | (7,066 | ) | 50,954 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities and stockholders’ equity |
$ | 446,259 | $ | (267,563 | ) | $ | 178,696 | |||||
|
|
|
|
|
|
|
|||||||
See accompanying Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.
CARROLS RESTAURANT GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
Three months ended March 31, 2012
(Dollars in thousands, except per share amounts)
| Historical | Less: Fiesta Restaurant Group |
Pro
Forma Adjustments |
Pro Forma | |||||||||||||
| Revenues |
||||||||||||||||
| Restaurant sales |
$ | 211,016 | $ | (125,566 | ) | $ | — | $ | 85,450 | |||||||
| Franchise royalty revenues and fees |
576 | (576 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
211,592 | (126,142 | ) | — | 85,450 | |||||||||||
| Costs and Expenses |
||||||||||||||||
| Cost of sales |
66,906 | (40,784 | ) | — | 26,122 | |||||||||||
| Restaurant wages and related expenses |
61,696 | (33,825 | ) | — | 27,871 | |||||||||||
| Restaurant rent expense |
11,933 | (6,250 | ) | — | 5,683 | |||||||||||
| Other restaurant operating expenses |
29,472 | (15,829 | ) | — | 13,643 | |||||||||||
| Advertising expense |
6,991 | (4,295 | ) | — | 2,696 | |||||||||||
| General and administrative |
17,370 | (11,080 | ) | (54 | ) (a) | 6,236 | ||||||||||
| Depreciation and amortization |
9,014 | (4,321 | ) | — | 4,693 | |||||||||||
| Impairment and lease charges |
6,926 | (6,900 | ) | — | 26 | |||||||||||
| Other income |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses (c) |
210,308 | (123,284 | ) | (54 | ) | 86,970 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations |
1,284 | (2,858 | ) | 54 | (1,520 | ) | ||||||||||
| Interest expense |
6,297 | (5,382 | ) | — | 915 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations before income taxes |
(5,013 | ) | 2,524 | 54 | (2,435 | ) | ||||||||||
| Provision (benefit) for income taxes |
(1,486 | ) | 1,075 | 22 | (b) | (389 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations, net of tax |
$ | (3,527 | ) | $ | 1,449 | $ | 32 | $ | (2,046 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) per share from continuing operations: |
||||||||||||||||
| Basic and diluted net income (loss) per share |
$ | (0.16 | ) | $ | (0.09 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Shares used in per share calculations: |
||||||||||||||||
| Basic and diluted weighted average common shares outstanding |
21,856,466 | 21,856,466 | ||||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.
CARROLS RESTAURANT GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
Three months ended March 31, 2011
(Dollars in thousands, except per share amounts)
| Historical | Less: Fiesta Restaurant Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Revenues |
||||||||||||||||
| Restaurant sales |
$ | 196,873 | $ | (115,251 | ) | $ | — | $ | 81,622 | |||||||
| Franchise royalty revenues and fees |
365 | (365 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
197,238 | (115,616 | ) | — | 81,622 | |||||||||||
| Costs and Expenses |
||||||||||||||||
| Cost of sales |
60,315 | (36,344 | ) | — | 23,971 | |||||||||||
| Restaurant wages and related expenses |
58,568 | (31,633 | ) | — | 26,935 | |||||||||||
| Restaurant rent expense |
12,054 | (6,344 | ) | — | 5,710 | |||||||||||
| Other restaurant operating expenses |
27,924 | (14,743 | ) | — | 13,181 | |||||||||||
| Advertising expense |
7,503 | (4,119 | ) | — | 3,384 | |||||||||||
| General and administrative |
13,856 | (8,921 | ) | 176 | (a) | 5,111 | ||||||||||
| Depreciation and amortization |
8,108 | (4,279 | ) | — | 3,829 | |||||||||||
| Impairment and lease charges |
1,080 | (266 | ) | — | 814 | |||||||||||
| Other income |
(106 | ) | — | — | (106 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses (c) |
189,302 | (106,649 | ) | 176 | 82,829 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations |
7,936 | (8,967 | ) | (176 | ) | (1,207 | ) | |||||||||
| Interest expense |
4,613 | (2,252 | ) | — | 2,361 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations before income taxes |
3,323 | (6,717 | ) | (176 | ) | (3,568 | ) | |||||||||
| Provision (benefit) for income taxes |
1,077 | (2,244 | ) | (70 | ) (b) | (1,237 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations, net of tax |
$ | 2,246 | $ | (4,471 | ) | $ | (106 | ) | $ | (2,331 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share from continuing operations: |
||||||||||||||||
| Basic and diluted net income (loss) per share |
$ | 0.10 | $ | (0.11 | ) | |||||||||||
|
|
|
|
|
|||||||||||||
| Shares used in per share calculations: |
||||||||||||||||
| Basic weighted average common shares outstanding |
21,642,718 | 21,642,718 | ||||||||||||||
| Diluted weighted average common shares outstanding |
22,067,753 | 21,642,718 | ||||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.
CARROLS RESTAURANT GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
Year ended December 31, 2011
(Dollars in thousands, except per share amounts)
| Historical | Less: Fiesta Restaurant Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Revenues |
||||||||||||||||
| Restaurant sales |
$ | 820,767 | $ | (473,249 | ) | $ | — | $ | 347,518 | |||||||
| Franchise royalty revenues and fees |
1,719 | (1,719 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
822,486 | (474,968 | ) | — | 347,518 | |||||||||||
| Costs and Expenses |
||||||||||||||||
| Cost of sales |
256,571 | (152,711 | ) | — | 103,860 | |||||||||||
| Restaurant wages and related expenses |
238,254 | (129,083 | ) | — | 109,171 | |||||||||||
| Restaurant rent expense |
48,727 | (26,062 | ) | — | 22,665 | |||||||||||
| Other restaurant operating expenses |
115,266 | (61,877 | ) | — | 53,389 | |||||||||||
| Advertising expense |
30,688 | (16,264 | ) | — | 14,424 | |||||||||||
| General and administrative |
57,088 | (37,459 | ) | 1,284 | (a) | 20,913 | ||||||||||
| Depreciation and amortization |
33,522 | (17,464 | ) | — | 16,058 | |||||||||||
| Impairment and lease charges |
4,037 | (2,744 | ) | — | 1,293 | |||||||||||
| Other income |
(574 | ) | (146 | ) | — | (720 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses (c) |
783,579 | (443,810 | ) | 1,284 | 341,053 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations |
38,907 | (31,158 | ) | (1,284 | ) | 6,465 | ||||||||||
| Interest expense |
21,031 | (13,678 | ) | — | 7,353 | |||||||||||
| Loss on extinguishment of debt |
2,470 | — | — | 2,470 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations before income taxes |
15,406 | (17,480 | ) | (1,284 | ) | (3,358 | ) | |||||||||
| Provision (benefit) for income taxes |
4,188 | (5,762 | ) | (514 | ) (b) | (2,088 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) from continuing operations, net of tax |
$ | 11,218 | $ | (11,718 | ) | $ | (770 | ) | $ | (1,270 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share from continuing operations: |
||||||||||||||||
| Basic net income (loss) per share |
$ | 0.52 | $ | (0.06 | ) | |||||||||||
|
|
|
|
|
|||||||||||||
| Diluted net income (loss) per share |
$ | 0.51 | $ | (0.06 | ) | |||||||||||
|
|
|
|
|
|||||||||||||
| Shares used in per share calculations: |
||||||||||||||||
| Basic weighted average common shares outstanding |
21,677,837 | 21,677,837 | ||||||||||||||
| Diluted weighted average common shares outstanding |
22,207,181 | 21,677,837 | ||||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.
CARROLS RESTAURANT GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
Year ended December 31, 2010
(Dollars in thousands, except per share amounts)
| Historical | Less: Fiesta Restaurant Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Revenues |
||||||||||||||||
| Restaurant sales |
$ | 794,611 | $ | (437,538 | ) | $ | — | $ | 357,073 | |||||||
| Franchise royalty revenues and fees |
1,533 | (1,533 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
796,144 | (439,071 | ) | — | 357,073 | |||||||||||
| Costs and Expenses |
||||||||||||||||
| Cost of sales |
240,635 | (135,236 | ) | — | 105,399 | |||||||||||
| Restaurant wages and related expenses |
235,075 | (122,519 | ) | — | 112,556 | |||||||||||
| Restaurant rent expense |
48,578 | (25,410 | ) | — | 23,168 | |||||||||||
| Other restaurant operating expenses |
114,643 | (60,041 | ) | — | 54,602 | |||||||||||
| Advertising expense |
30,362 | (15,396 | ) | — | 14,966 | |||||||||||
| General and administrative |
51,021 | (32,865 | ) | 1,031 | (a) | 19,187 | ||||||||||
| Depreciation and amortization |
32,459 | (17,105 | ) | — | 15,354 | |||||||||||
| Impairment and lease charges |
7,323 | (6,614 | ) | — | 709 | |||||||||||
| Other income |
(444 | ) | — | — | (444 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses (c) |
759,652 | (415,186 | ) | 1,031 | 345,497 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations |
36,492 | (23,885 | ) | (1,031 | ) | 11,576 | ||||||||||
| Interest expense |
18,805 | (9,848 | ) | — | 8,957 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations before income taxes |
17,687 | (14,037 | ) | (1,031 | ) | 2,619 | ||||||||||
| Provision for income taxes |
5,771 | (4,885 | ) | (412 | ) (b) | 474 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations, net of tax |
$ | 11,916 | $ | (9,152 | ) | $ | (619 | ) | $ | 2,145 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share from continuing operations: |
||||||||||||||||
| Basic and diluted net income per share |
$ | 0.55 | $ | 0.10 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Shares used in per share calculations: |
||||||||||||||||
| Basic weighted average common shares outstanding |
21,620,550 | 21,620,550 | ||||||||||||||
| Diluted weighted average common shares outstanding |
21,835,417 | 21,835,417 | ||||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.
CARROLS RESTAURANT GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
Year ended December 31, 2009
(Dollars in thousands, except per share amounts)
| Historical | Less: Fiesta Restaurant Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Revenues |
||||||||||||||||
| Restaurant sales |
$ | 814,534 | $ | (430,514 | ) | $ | — | $ | 384,020 | |||||||
| Franchise royalty revenues and fees |
1,606 | (1,606 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
816,140 | (432,120 | ) | — | 384,020 | |||||||||||
| Costs and Expenses |
||||||||||||||||
| Cost of sales |
237,446 | (132,070 | ) | — | 105,376 | |||||||||||
| Restaurant wages and related expenses |
239,553 | (120,105 | ) | — | 119,448 | |||||||||||
| Restaurant rent expense |
49,709 | (25,728 | ) | — | 23,981 | |||||||||||
| Other restaurant operating expenses |
117,761 | (60,384 | ) | — | 57,377 | |||||||||||
| Advertising expense |
31,172 | (14,959 | ) | — | 16,213 | |||||||||||
| General and administrative |
51,851 | (32,148 | ) | 737 | (a) | 20,440 | ||||||||||
| Depreciation and amortization |
32,520 | (17,805 | ) | — | 14,715 | |||||||||||
| Impairment and lease charges |
2,771 | (2,284 | ) | — | 487 | |||||||||||
| Other income |
(720 | ) | 799 | — | 79 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses (c) |
762,063 | (404,684 | ) | 737 | 358,116 | |||||||||||
| Income from continuing operations |
54,077 | (27,436 | ) | (737 | ) | 25,904 | ||||||||||
| Interest expense |
19,638 | (10,731 | ) | — | 8,907 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations before income taxes |
34,439 | (16,705 | ) | (737 | ) | 16,997 | ||||||||||
| Provision for income taxes |
12,604 | (6,281 | ) | (295 | ) (b) | 6,028 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations, net of tax |
$ | 21,835 | $ | (10,424 | ) | $ | (442 | ) | $ | 10,969 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share from continuing operations: |
||||||||||||||||
| Basic net income per share |
$ | 1.01 | $ | 0.51 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Diluted net income per share |
$ | 1.00 | $ | 0.50 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Shares used in per share calculations: |
||||||||||||||||
| Basic weighted average common shares outstanding |
21,594,366 | 21,594,366 | ||||||||||||||
| Diluted weighted average common shares outstanding |
21,768,683 | 21,768,683 | ||||||||||||||
See accompanying Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements.
CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Dollars in thousands)
| (a) | Reflects the adjustment to general and administrative expense resulting from the Spin-off including corporate general and administrative expenses of the Company, payment for services provided by the Company to Fiesta Restaurant Group under a Transition Services Agreement and the elimination of non-recurring expenses incurred by the Company in connection with the Spin-off. |
The following table summarizes the components of incremental general and administrative expense for the respective periods:
| Years Ended December 31, | Three months ended March 31, | |||||||||||||||||||
| 2011 | 2010 | 2009 | 2012 | 2011 | ||||||||||||||||
| Corporate expenses previously allocated (1) |
$ | 9,256 | $ | 8,006 | $ | 7,432 | $ | 2,978 | $ | 2,147 | ||||||||||
| Expense for stock-conversion (2) |
— | — | — | (336 | ) | — | ||||||||||||||
| Net payments received under the Transition Services Agreement (3) |
(6,695 | ) | (6,695 | ) | (6,695 | ) | (1,674 | ) | (1,674 | ) | ||||||||||
| Expenses associated with the Spin-off |
(1,277 | ) | (280 | ) | — | (1,022 | ) | (297 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | 1,284 | $ | 1,031 | $ | 737 | $ | (54 | ) | $ | 176 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | The administrative support provided by Carrols to the Company was previously allocated based on estimated and a pro-rata percentage of Fiesta Restaurant Group revenues, number of restaurants or number of employees. Such costs previously allocated to Fiesta Restaurant Group have been added back to general and administrative expenses, net of costs that would have been directly attributable to Fiesta Restaurant Group. |
| (2) | For the three months ended March 31, 2012, corporate general and administrative expense have been reduced by $0.3 million (including stock-based compensation) related to the conversion of employee stock options to restricted and unrestricted common stock of the Company in connection with the Spin-off. |
| (3) | Net payments estimated to be received by the Company for providing services under the Transition Services Agreement are anticipated to be approximately $6.7 million per year. Pro forma adjustments reflect the historical payments assumed to have been made had the Company been providing such support services to Fiesta Restaurant Group under a similar arrangement for the years ended December 31, 2010 and 2009. A copy of the Transition Services Agreement is filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on April 26, 2012. |
| (b) | The income tax expense (benefit) related to the pre-tax effects of pro forma adjustments is based on an incremental tax rate of 40%. |
| (c) | After giving effect to the Spin-off stock based compensation for Carrols Restaurant Group was $1,037, $884 and $868 for the years ended December 31, 2011, 2010 and 2009, respectively, and $275 and $256 for the three months ended March 31, 2012 and 2011, respectively. |