Exhibit 99.1
FIESTA RESTAURANT GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
On August 16, 2021, Fiesta Restaurant Group, Inc. ("Fiesta" or the "Company") completed the previously announced divestiture of Taco Cabana, Inc. ("Taco Cabana"). Beginning in the second quarter of fiscal 2021, and for periods reported in our Quarterly Report on Form 10-Q for the quarter ended July 4, 2021, financial results of Taco Cabana are reported as discontinued operations in the consolidated financial statements of Fiesta and the prior period amounts presented have been recast for comparability. The unaudited pro forma consolidated financial statements were prepared to assist readers in understanding the nature and effects of the sale.
The unaudited pro forma consolidated balance sheet as of July 4, 2021 presents our consolidated financial position giving pro forma effect to the disposition of Taco Cabana as if it had occurred on July 4, 2021. The unaudited pro forma consolidated statements of operations for the years ended January 3, 2021, December 29, 2019, and December 30, 2018 reflect the pro forma effect of the discontinued operations of Taco Cabana as if the transaction occurred on January 1, 2018. There were no pro forma adjustments applicable for those periods. An unaudited pro forma consolidated statement of operations for the six months ended July 4, 2021 is omitted as no pro forma adjustments are applicable and Taco Cabana was previously classified as a discontinued operation in the historical consolidated financial statements for the six months ended July 4, 2021, which were included in the Quarterly Report on Form 10-Q for the quarter ended July 4, 2021 that was filed on August 12, 2021 with the Securities and Exchange Commission (the "SEC").
The pro forma adjustments are described in the accompanying notes to the unaudited pro forma consolidated financial statements. The statements have been derived from, and should be read in conjunction with, the audited consolidated financial statements and notes thereto included in the Company's Annual Reports on Form 10-K for the fiscal years ended January 3, 2021, December 29, 2019, and December 30, 2018, filed with the SEC.
The unaudited pro forma consolidated financial statements as of and for the periods presented are for illustrative and informational purposes only and are not intended to represent, or be indicative of, what the Company's financial position or results of operations would have been had the disposition been completed on the dates noted above. The unaudited pro forma consolidated financial statements also should not be considered representative of the Company's future financial position or results of operations. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. These pro forma financial statements should not be considered a substitute for the actual historical financial information prepared in accordance with generally accepted accounting principles, as presented in the Fiesta's filings on Forms 10-Q and 10-K.
The pro forma adjustments are based on currently available factual information, estimates and assumptions that the Company believes are reasonable in order to reflect, on a pro forma basis, the impact of this disposition on our historical financial information. Actual amounts could differ materially from these estimates.
FIESTA RESTAURANT GROUP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
(Unaudited) | | | | | | | | | | | | | | | | | |
| July 4, 2021 |
| As Reported | | Transaction Accounting Adjustments | | Pro Forma |
| ASSETS | | | | | |
| Current assets: | | | | | |
| Cash | $ | 65,830 | | | $ | (2,084) | | (a) | $ | 63,746 | |
| Restricted cash | 3,837 | | | — | | | 3,837 | |
| Accounts receivable | 4,580 | | | — | | | 4,580 | |
| Inventories | 2,022 | | | — | | | 2,022 | |
| Prepaid rent | 109 | | | — | | | 109 | |
| Income tax receivable | 2,606 | | | — | | | 2,606 | |
| Prepaid expenses and other current assets | 6,671 | | | — | | | 6,671 | |
| Current assets held for sale | 159,564 | | | (159,564) | | (b) | — | |
| Total current assets | 245,219 | | | (161,648) | | | 83,571 | |
| Property and equipment, net | 94,773 | | | — | | | 94,773 | |
| Operating lease right-of-use assets | 157,533 | | | — | | | 157,533 | |
| Goodwill | 56,307 | | | — | | | 56,307 | |
| | | | | |
| Other assets | 6,557 | | | — | | | 6,557 | |
| | | | | |
| Total assets | $ | 560,389 | | | $ | (161,648) | | | $ | 398,741 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | |
| Current liabilities: | | | | | |
| Current portion of long-term debt | $ | 71,541 | | | $ | (71,471) | | (c) | $ | 70 | |
| Accounts payable | 10,264 | | | — | | | 10,264 | |
| | | | | |
| Accrued payroll, related taxes and benefits | 8,108 | | | — | | | 8,108 | |
| Accrued real estate taxes | 2,775 | | | — | | | 2,775 | |
| Other current liabilities | 18,795 | | | — | | | 18,795 | |
| Current liabilities held for sale | 120,956 | | | (120,956) | | (b) | — | |
| Total current liabilities | 232,439 | | | (192,427) | | | 40,012 | |
| Long-term debt, net of current portion | 810 | | | — | | | 810 | |
| | | | | |
| | | | | |
| Operating lease liabilities | 166,793 | | | — | | | 166,793 | |
| Deferred tax liabilities | 2,353 | | | — | | | 2,353 | |
| Other non-current liabilities | 9,981 | | | — | | | 9,981 | |
| | | | | |
| Total liabilities | 412,376 | | | (192,427) | | | 219,949 | |
| Commitments and contingencies | | | | | |
| Stockholders' equity: | | | | | |
| Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued | — | | | — | | | — | |
| Common stock, $0.01 par value; 100,000,000 shares authorized, 28,454,149 shares issued and 25,529,468 shares outstanding | 275 | | | — | | | 275 | |
| Additional paid-in capital | 179,016 | | | — | | | 179,016 | |
| Retained earnings (accumulated deficit) | (10,499) | | | 30,779 | | (d) | 20,280 | |
| Treasury stock, at cost; 1,993,495 shares | (20,779) | | | — | | | (20,779) | |
| Total stockholders' equity | 148,013 | | | 30,779 | | | 178,792 | |
| Total liabilities and stockholders' equity | $ | 560,389 | | | $ | (161,648) | | | $ | 398,741 | |
FIESTA RESTAURANT GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Year Ended January 3, 2021 |
| As Reported | | Transaction Accounting Adjustments (e) | | Pro Forma |
| Revenues: | | | | | |
| Restaurant sales | $ | 552,797 | | | $ | (238,685) | | | $ | 314,112 | |
| Franchise royalty revenues and fees | 2,006 | | | (760) | | | 1,246 | |
| Total revenues | 554,803 | | | (239,445) | | | 315,358 | |
| Costs and expenses: | | | | | |
| Cost of sales | 170,513 | | | (70,433) | | | 100,080 | |
| Restaurant wages and related expenses | 149,145 | | | (74,817) | | | 74,328 | |
| Restaurant rent expense | 45,361 | | | (22,588) | | | 22,773 | |
| Other restaurant operating expenses | 82,180 | | | (34,357) | | | 47,823 | |
| Advertising expense | 14,839 | | | (6,460) | | | 8,379 | |
| General and administrative | 53,077 | | | (13,229) | | | 39,848 | |
| Depreciation and amortization | 38,206 | | | (16,197) | | | 22,009 | |
| Pre-opening costs | 69 | | | (69) | | | — | |
| Impairment and other lease charges | 9,139 | | | (1,116) | | | 8,023 | |
| | | | | |
| Closed restaurant rent expense, net of sublease income | 6,487 | | | (2,156) | | | 4,331 | |
| Other expense (income), net | (1,697) | | | (401) | | | (2,098) | |
| Total operating expenses | 567,319 | | | (241,823) | | | 325,496 | |
| Loss from operations | (12,516) | | | 2,378 | | | (10,138) | |
| Interest expense | 4,756 | | | (4,464) | | | 292 | |
| Loss on extinguishment of debt | 1,241 | | | (1,241) | | | — | |
| Loss before income taxes | (18,513) | | | 8,083 | | | (10,430) | |
| Benefit from income taxes | (8,302) | | | (3,989) | | | (12,291) | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Net income (loss) | $ | (10,211) | | | $ | 12,072 | | | $ | 1,861 | |
| Earnings (loss) per common share: | | | | | |
| Basic | $ | (0.40) | | | | | $ | 0.07 | |
| Diluted | (0.40) | | | | | 0.07 | |
| Weighted average common shares outstanding: | | | | | |
| Basic | 25,341,415 | | | | | 25,341,415 | |
| Diluted | 25,341,415 | | | | | 25,341,415 | |
FIESTA RESTAURANT GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Year Ended December 29, 2019 |
| As Reported | | Transaction Accounting Adjustments (e) | | Pro Forma |
| Revenues: | | | | | |
| Restaurant sales | $ | 658,263 | | | $ | (296,570) | | | $ | 361,693 | |
| Franchise royalty revenues and fees | 2,680 | | | (900) | | | 1,780 | |
| Total revenues | 660,943 | | | (297,470) | | | 363,473 | |
| Costs and expenses: | | | | | |
| Cost of sales | 207,453 | | | (92,334) | | | 115,119 | |
| Restaurant wages and related expenses | 179,178 | | | (94,269) | | | 84,909 | |
| Restaurant rent expense | 47,805 | | | (25,755) | | | 22,050 | |
| Other restaurant operating expenses | 91,897 | | | (41,623) | | | 50,274 | |
| Advertising expense | 23,179 | | | (10,826) | | | 12,353 | |
| General and administrative | 56,195 | | | (14,290) | | | 41,905 | |
| Depreciation and amortization | 39,195 | | | (17,009) | | | 22,186 | |
| Pre-opening costs | 972 | | | (592) | | | 380 | |
| Impairment and other lease charges | 13,101 | | | (13,086) | | | 15 | |
| Goodwill impairment | 67,909 | | | (67,909) | | | — | |
| Closed restaurant rent expense, net of sublease income | 4,163 | | | (903) | | | 3,260 | |
| Other expense (income), net | 1,041 | | | (179) | | | 862 | |
| Total operating expenses | 732,088 | | | (378,775) | | | 353,313 | |
| Income (loss) from operations | (71,145) | | | 81,305 | | | 10,160 | |
| Interest expense | 3,872 | | | (3,547) | | | 325 | |
| | | | | |
| Income (loss) before income taxes | (75,017) | | | 84,852 | | | 9,835 | |
| Provision for income taxes | 9,369 | | | 4,048 | | | 13,417 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Net loss | $ | (84,386) | | | $ | 80,804 | | | $ | (3,582) | |
| Earnings (loss) per common share: | | | | | |
| Basic | $ | (3.18) | | | | | $ | (0.14) | |
| Diluted | (3.18) | | | | | (0.14) | |
| Weighted average common shares outstanding: | | | | | |
| Basic | 26,500,356 | | | | | 26,500,356 | |
| Diluted | 26,500,356 | | | | | 26,500,356 | |
FIESTA RESTAURANT GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Year Ended December 30, 2018 |
| As Reported | | Transaction Accounting Adjustments (e) | | Pro Forma |
| Revenues: | | | | | |
| Restaurant sales | $ | 685,925 | | | $ | (311,544) | | | $ | 374,381 | |
| Franchise royalty revenues and fees | 2,672 | | | (857) | | | 1,815 | |
| Total revenues | 688,597 | | | (312,401) | | | 376,196 | |
| Costs and expenses: | | | | | |
| Cost of sales | 218,946 | | | (95,904) | | | 123,042 | |
| Restaurant wages and related expenses | 188,131 | | | (101,106) | | | 87,025 | |
| Restaurant rent expense | 36,034 | | | (18,577) | | | 17,457 | |
| Other restaurant operating expenses | 100,828 | | | (48,684) | | | 52,144 | |
| Advertising expense | 23,695 | | | (10,627) | | | 13,068 | |
| General and administrative | 54,525 | | | (13,693) | | | 40,832 | |
| Depreciation and amortization | 37,604 | | | (15,147) | | | 22,457 | |
| Pre-opening costs | 1,716 | | | (783) | | | 933 | |
| Impairment and other lease charges | 21,144 | | | (7,557) | | | 13,587 | |
| | | | | |
| | | | | |
| Other expense (income), net | (3,007) | | | 1,782 | | | (1,225) | |
| Total operating expenses | 679,616 | | | (310,296) | | | 369,320 | |
| Income from operations | 8,981 | | | (2,105) | | | 6,876 | |
| Interest expense | 3,966 | | | (3,691) | | | 275 | |
| | | | | |
| Income before income taxes | 5,015 | | | 1,586 | | | 6,601 | |
| Provision for (benefit from) income taxes | (2,772) | | | 3,063 | | | 291 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Net income | $ | 7,787 | | | $ | (1,477) | | | $ | 6,310 | |
| Earnings per common share: | | | | | |
| Basic | $ | 0.29 | | | | | $ | 0.23 | |
| Diluted | 0.29 | | | | | 0.23 | |
| Weighted average common shares outstanding: | | | | | |
| Basic | 26,890,577 | | | | | 26,890,577 | |
| Diluted | 26,894,083 | | | | | 26,894,083 | |
FIESTA RESTAURANT GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
(a)Represents the proceeds from the sale of $85.0 million, less $10.0 million of transaction costs and expenses associated with selling the business, as well as the use of $77.1 million of the proceeds to fully repay the Company's term loan borrowings under its senior credit facility, inclusive of a loan prepayment fee of 3% of the principal repaid of $2.2 million. The purchase price is subject to certain post-closing adjustments.
(b)Represents the elimination of the assets and liabilities of Taco Cabana classified as current assets and current liabilities held for sale in the Form 10-Q for the quarter ended July 4, 2021, as filed on August 12, 2021 with the SEC.
(c)Represents the elimination of the outstanding term loan borrowings under the senior credit facility and associated unamortized discount and debt issuance costs that was repaid at the close of the disposition as required by the terms of the senior credit facility.
(d)Represents the net effect of the removal of the disposed net assets, net proceeds and debt repayment had the transaction closed on July 4, 2021. The preliminary gain on the sale of Taco Cabana, excluding any potential post-closing adjustments, is based on the carrying value of the net assets of Taco Cabana as of July 4, 2021, and is offset by the loss on debt extinguishment. Based on the structure of the stock purchase agreement, no tax liability on the gain is expected.
(e)Represents the classification of revenues and expenses attributable to Taco Cabana as discontinued operations.
