Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 04, 2021 | Aug. 17, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 4, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Registrant Name | J. Alexander’s Holdings, Inc. | |
Entity Incorporation, State or Country Code | TN | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Central Index Key | 0001617227 | |
Entity Shell Company | false | |
Entity File Number | 1-37473 | |
Entity Tax Identification Number | 47-1608715 | |
Entity Address, Address Line One | 3401 West End Avenue | |
Entity Address, Address Line Two | Suite 260 | |
Entity Address, Address Line Three | P.O. Box 24300 | |
Entity Address, City or Town | Nashville | |
Entity Address, State or Province | TN | |
Entity Address, Postal Zip Code | 37202 | |
City Area Code | 615 | |
Local Phone Number | 269-1900 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --01-02 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 15,079,893 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | JAX | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jul. 04, 2021 | Jan. 03, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 22,611 | $ 12,363 |
Accounts and other receivables | 9,094 | 8,756 |
Inventories | 3,017 | 2,538 |
Prepaid expenses and other current assets | 2,563 | 2,105 |
Total current assets | 37,285 | 25,762 |
Other assets | 6,583 | 6,195 |
Property and equipment, at cost, less accumulated depreciation and amortization of $80,970 and $75,327 as of July 4, 2021 and January 3, 2021, respectively | 99,422 | 102,188 |
Right-of-use lease assets, net | 73,030 | 72,515 |
Tradename and other indefinite-lived assets | 25,648 | 25,648 |
Deferred income taxes, net | 5,738 | 4,627 |
Deferred charges, less accumulated amortization of $413 and $392 as of July 4, 2021 and January 3, 2021, respectively | 163 | 184 |
Total assets | 247,869 | 237,119 |
Current liabilities: | ||
Accounts payable | 7,631 | 5,147 |
Accrued expenses and other current liabilities | 13,981 | 9,422 |
Unearned revenue | 2,905 | 3,761 |
Current portion of long-term debt | 1,667 | 1,667 |
Current portion of lease liabilities | 5,000 | 5,428 |
Total current liabilities | 31,184 | 25,425 |
Long-term debt, net of portion classified as current and deferred loan costs | 11,000 | 12,746 |
Long-term lease liabilities | 78,960 | 78,968 |
Deferred compensation obligations | 8,255 | 7,973 |
Other long-term liabilities | 1,892 | 1,902 |
Total liabilities | 131,291 | 127,014 |
Stockholders' equity: | ||
Common stock, par value $0.001 per share: authorized 30,000,000 shares; issued and outstanding of 15,090,077 and 15,070,077 shares as of July 4, 2021 and January 3, 2021, respectively | 15 | 15 |
Preferred stock, par value $0.001 per share: authorized 10,000,000 shares; no shares issued and outstanding as of July 4, 2021 or January 3, 2021 | ||
Additional paid-in capital | 106,745 | 105,915 |
Retained earnings | 8,260 | 2,617 |
Total stockholders' equity attributable to J. Alexander's Holdings, Inc. | 115,020 | 108,547 |
Non-controlling interests | 1,558 | 1,558 |
Total stockholders' equity | 116,578 | 110,105 |
Commitments and contingencies | ||
Total liabilities and stockholders' equity | $ 247,869 | $ 237,119 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jul. 04, 2021 | Jan. 03, 2021 |
Statement Of Financial Position [Abstract] | ||
Property and equipment, at cost, less accumulated depreciation and amortization | $ 80,970 | $ 75,327 |
Deferred charges, accumulated amortization | $ 413 | $ 392 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 15,090,077 | 15,070,077 |
Common stock, shares outstanding | 15,090,077 | 15,070,077 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2021 | Jun. 28, 2020 | Jul. 04, 2021 | Jun. 28, 2020 | |
Income Statement [Abstract] | ||||
Net sales | $ 68,101 | $ 27,602 | $ 125,476 | $ 84,574 |
Costs and expenses: | ||||
Food and beverage costs | 22,899 | 10,471 | 39,986 | 29,038 |
Restaurant labor and related costs | 19,046 | 12,554 | 35,721 | 32,892 |
Depreciation and amortization of restaurant property and equipment | 2,988 | 3,060 | 5,871 | 6,154 |
Other operating expenses | 13,479 | 8,536 | 25,201 | 20,490 |
Total restaurant operating expenses | 58,412 | 34,621 | 106,779 | 88,574 |
Transaction and other related expenses | 1,888 | (66) | 1,934 | 623 |
General and administrative expenses | 5,442 | 4,095 | 10,595 | 8,835 |
Goodwill impairment | 15,737 | |||
Long-lived asset impairment charges and restaurant closing costs | (1) | 178 | 2 | 867 |
Pre-opening expenses | 71 | 72 | 516 | 91 |
Total operating expenses | 65,812 | 38,900 | 119,826 | 114,727 |
Operating income (loss) | 2,289 | (11,298) | 5,650 | (30,153) |
Other (expense) income: | ||||
Interest expense | (141) | (189) | (294) | (305) |
Other, net | 84 | 135 | 38 | 127 |
Total other expense | (57) | (54) | (256) | (178) |
Income (loss) from continuing operations before income taxes | 2,232 | (11,352) | 5,394 | (30,331) |
Income tax benefit (expense) | 24 | 4,419 | (343) | 5,806 |
(Loss) income from discontinued operations, net | (3) | (55) | 592 | (107) |
Net income (loss) | $ 2,253 | $ (6,988) | $ 5,643 | $ (24,632) |
Basic earnings (loss) per share: | ||||
Income (loss) from continuing operations, net of tax | $ 0.15 | $ (0.47) | $ 0.34 | $ (1.67) |
(Loss) income from discontinued operations, net | 0 | 0 | 0.04 | (0.01) |
Basic earnings (loss) per share | 0.15 | (0.48) | 0.38 | (1.68) |
Diluted earnings (loss) per share: | ||||
Income (loss) from continuing operations, net of tax | 0.15 | (0.47) | 0.34 | (1.67) |
(Loss) income from discontinued operations, net | 0 | 0 | 0.04 | (0.01) |
Diluted earnings (loss) per share | $ 0.15 | $ (0.48) | $ 0.37 | $ (1.68) |
Weighted-average common shares outstanding: | ||||
Basic | 14,757 | 14,695 | 14,757 | 14,695 |
Diluted | 15,285 | 14,695 | 15,073 | 14,695 |
Comprehensive income (loss) | $ 2,253 | $ (6,988) | $ 5,643 | $ (24,632) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Loss) | Non-controlling Interests |
Balances at Dec. 29, 2019 | $ 130,717 | $ 15 | $ 104,056 | $ 25,088 | $ 1,558 |
Balance, shares at Dec. 29, 2019 | 15,011,676 | ||||
Share-based compensation | 455 | 455 | |||
Net income (loss) | (17,644) | (17,644) | |||
Balances at Mar. 29, 2020 | 113,528 | $ 15 | 104,511 | 7,444 | 1,558 |
Balance, shares at Mar. 29, 2020 | 15,011,676 | ||||
Balances at Dec. 29, 2019 | 130,717 | $ 15 | 104,056 | 25,088 | 1,558 |
Balance, shares at Dec. 29, 2019 | 15,011,676 | ||||
Net income (loss) | (24,632) | ||||
Balances at Jun. 28, 2020 | 106,993 | $ 15 | 104,964 | 456 | 1,558 |
Balance, shares at Jun. 28, 2020 | 15,011,676 | ||||
Balances at Mar. 29, 2020 | 113,528 | $ 15 | 104,511 | 7,444 | 1,558 |
Balance, shares at Mar. 29, 2020 | 15,011,676 | ||||
Share-based compensation | 453 | 453 | |||
Net income (loss) | (6,988) | (6,988) | |||
Balances at Jun. 28, 2020 | 106,993 | $ 15 | 104,964 | 456 | 1,558 |
Balance, shares at Jun. 28, 2020 | 15,011,676 | ||||
Balances at Jan. 03, 2021 | 110,105 | $ 15 | 105,915 | 2,617 | 1,558 |
Balance, shares at Jan. 03, 2021 | 15,070,077 | ||||
Issuance of restricted stock awards, shares | 20,000 | ||||
Share-based compensation | 412 | 412 | |||
Net income (loss) | 3,390 | 3,390 | |||
Balances at Apr. 04, 2021 | 113,907 | $ 15 | 106,327 | 6,007 | 1,558 |
Balance, shares at Apr. 04, 2021 | 15,090,077 | ||||
Balances at Jan. 03, 2021 | 110,105 | $ 15 | 105,915 | 2,617 | 1,558 |
Balance, shares at Jan. 03, 2021 | 15,070,077 | ||||
Net income (loss) | 5,643 | ||||
Balances at Jul. 04, 2021 | 116,578 | $ 15 | 106,745 | 8,260 | 1,558 |
Balance, shares at Jul. 04, 2021 | 15,090,077 | ||||
Balances at Apr. 04, 2021 | 113,907 | $ 15 | 106,327 | 6,007 | 1,558 |
Balance, shares at Apr. 04, 2021 | 15,090,077 | ||||
Share-based compensation | 418 | 418 | |||
Net income (loss) | 2,253 | 2,253 | |||
Balances at Jul. 04, 2021 | $ 116,578 | $ 15 | $ 106,745 | $ 8,260 | $ 1,558 |
Balance, shares at Jul. 04, 2021 | 15,090,077 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 04, 2021 | Jun. 28, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 5,643 | $ (24,632) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization of property and equipment | 5,952 | 6,256 |
Share-based compensation expense | 830 | 908 |
Asset impairment charges | 16,426 | |
Deferred income taxes | (1,111) | (4,239) |
Other, net | 143 | 122 |
Changes in assets and liabilities: | ||
Accounts and other receivables | (338) | (469) |
Prepaid expenses and other current assets | (458) | 1,524 |
Accounts payable | 2,085 | 1,074 |
Accrued expenses and other current liabilities | 4,559 | (1,424) |
Lease right-of-use assets and liabilities | (951) | 714 |
Other assets and liabilities, net | (1,074) | (24) |
Net cash provided by (used in) operating activities | 15,280 | (3,764) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (2,827) | (3,030) |
Other investing activities | (378) | (236) |
Net cash used in investing activities | (3,205) | (3,266) |
Cash flows from financing activities: | ||
Proceeds from borrowing under debt agreement | 5,000 | 32,100 |
Payments on long-term debt | (6,833) | (16,350) |
Other financing activities | 6 | (208) |
Net cash (used in) provided by financing activities | (1,827) | 15,542 |
Increase in cash and cash equivalents | 10,248 | 8,512 |
Cash and cash equivalents at beginning of period | 12,363 | 8,803 |
Cash and cash equivalents at end of period | 22,611 | 17,315 |
Supplemental disclosures: | ||
Property and equipment obligations accrued at beginning of period | 879 | 1,116 |
Property and equipment obligations accrued at end of period | 1,278 | 860 |
Cash paid for interest | 277 | 109 |
Cash paid for income taxes | $ 1,272 | $ 83 |
Organization and Business
Organization and Business | 6 Months Ended |
Jul. 04, 2021 | |
Organization And Business [Abstract] | |
Organization and Business | Note 1 – Organization and Business J. Alexander’s Holdings, Inc. (the “Company”) was incorporated on August 15, 2014 in the state of Tennessee and is a holding company which is the sole managing member of and owns all of the outstanding Class A Units of J. Alexander’s Holdings, LLC, the parent company of all of the Company’s operating subsidiaries. The Company is a publicly-traded company, with its stock listed on the New York Stock Exchange under the symbol “JAX.” The Company, through J. Alexander’s Holdings, LLC and its subsidiaries, owns and operates full service, upscale restaurants including J. Alexander’s, Redlands Grill, Overland Park Grill, Merus Grill and Stoney River Steakhouse and Grill (“Stoney River”). At July 4, 2021 and January 3, 2021, the Company operated 47 and 46 restaurants, respectively, in 16 states. The Company’s restaurants are concentrated primarily in the East, Southeast, and Midwest regions of the United States. The Company does not have any restaurants operating under franchise agreements. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jul. 04, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 2 – Basis of Presentation (a) Interim Financial Statements The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter and six-month period ended July 4, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January 2, 2022. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021, filed with the SEC on March 18, 2021, and amended on April 29, 2021 (the “2020 Annual Report”). Total comprehensive income (loss) is comprised solely of net income (loss) for all periods presented. There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s 2020 Annual Report. (b) Effects of COVID-19 The onset of the novel coronavirus (“COVID-19”) pandemic in the first quarter of 2020 resulted in significant disruption to the restaurant industry and adversely affected the Company’s business. In response to the COVID-19 pandemic, many states and local jurisdictions in which the Company operates restaurants issued stay-at-home orders and other measures, including the closure of all in-restaurant dining, aimed at slowing the spread of COVID-19 beginning in March 2020. These measures resulted in the closure of the Company’s dining rooms beginning in mid-March 2020 and a shift to an entirely off-premise operations platform until late April 2020 when certain states began to allow for partial reopening of dining rooms. As a result of the government-mandated restrictions and related public health concerns, the Company’s net sales, results of operations and cash flows were negatively impacted in fiscal 2020, and the impact continued throughout the first half of 2021 due to reductions in guest counts from capacity restrictions, particularly during January and early February of 2021. Each of the Company’s 47 locations were open for in‑restaurant dining at full capacity as of the end of the second quarter of 2021 and remain fully open as of the date of this report in accordance with their state’s or local government’s guidelines. This capacity status was only reached in the final weeks of the second quarter at certain locations due to restrictions imposed by their respective state and local governments. During the first half of 2020, the Company incurred approximately $3,275 of additional costs related primarily to the continuing benefits and payments to furloughed restaurant employees under the Company’s Emergency Sick Leave Policy (“ESLP”), vacation and other sick leave benefits and related payroll taxes as well as write-offs of inventory. During the same period of 2021, the Company incurred approximately $103 related to payments made to employees pursuant to the ESLP and other sick leave benefits and related payroll taxes. Additionally, during the first half of 2020, the Company recorded certain impairment charges which are discussed in Note 2(k) below 7 The full impact of the COVID-19 pandemic continues to evolve as of the date of this report. Despite the fact that vaccines are now widely available across the country, there are widespread increases in diagnosed cases reported since the end of the second quarter largely due to the spread of COVID-19 variants. There can be no assurance that state or local authorities will allow dining rooms to remain open even at reduced capacity if there is a surge in cases or variants of COVID-19 in their respective areas. The extent of the impact of the COVID-19 pandemic on our operations and financial results depends on future developments, and the Company cannot reasonably predict if all of its restaurants will be allowed to continue to operate their dining rooms at full or limited capacities. Due to the rapid development and fluidity of this situation, the Company cannot determine the ultimate impact that the COVID-19 pandemic will have on its consolidated financial condition, liquidity and future results of operations, and therefore, any prediction as to the ultimate material adverse impact on these performance measures is uncertain. The Company does expect that its results of operations, cash flows and liquidity will continue to be negatively affected to some extent by the COVID-19 pandemic, either by potential future governmental restrictions or lingering impacts on the economy and the labor market, during at least a portion of the remainder of fiscal 2021. (c) Principles of Consolidation The unaudited Condensed Consolidated Financial Statements include the accounts of the Company as well as the accounts of its subsidiaries. All intercompany profits, transactions, and balances between the Company and its subsidiaries have been eliminated. It is the Company’s policy to reclassify prior year amounts to conform to the current year’s presentation for comparative purposes, if such a reclassification is warranted. The Company is a holding company with no direct operations and that holds as its sole asset an equity interest in J. Alexander’s Holdings, LLC and, as a result, relies on J. Alexander’s Holdings, LLC to provide it with funds necessary to meet its financial obligations. ( d ) Fiscal Year The Company’s fiscal year ends on the Sunday closest to December 31, and each quarter typically consists of 13 weeks. The quarters and six-month periods ended July 4, 2021 and June 28, 2020 each included 13 and 26 weeks of operations, respectively. Fiscal year 2021 will include 52 weeks of operations while fiscal year 2020 included 53 weeks of operations. ( e ) Discontinued Operations and Restaurant Closures Losses from discontinued operations totaled $3 and $55 for the quarters ended July 4, 2021 and June 28, 2020, respectively. For the six-month periods ended July 4, 2021 and June 28, 2020, the income and loss from discontinued operations totaled $592 and $107, respectively. During the first half of 2021, the Company entered into a termination agreement related to a lease agreement for a location that was closed in 2013, which has been accounted for as a discontinued operation since that time. As a result of the termination agreement, the Company recorded a gain of approximately $630, representing the difference between recorded lease liabilities and the termination fee paid to the landlord by the Company during the first quarter of 2021. The gain was partially offset by ongoing lease and other exit costs incurred during fiscal 2021. The loss from discontinued operations recorded in the second quarter and first half of 2020 consisted solely of exit and disposal costs related to the Company’s obligations under this same lease agreement. ( f ) Transaction and other Related Expenses Transaction and other related expenses totaled $1,888 and $(66) for the quarters ended July 4, 2021 and June 28, 2020, respectively, and $1,934 and $623 for six-month periods ended July 4, 2021 and June 28, 2020, respectively. During the second quarter of 2021, the Company incurred consulting, investment banking and legal fees related to the Company’s evaluation of strategic alternatives. In the first quarter of 2020, the Company incurred legal fees, other professional fees and consulting fees related to the same project. The Company received a discount for legal services rendered during that period resulting in income for the second quarter of fiscal 2020. As noted below, on July 2, 2021, the Company announced that it entered into a merger agreement under which SPB Hospitality LLC (“SPB Hospitality”) will acquire the Company in an all-cash transaction valued at approximately $220,000. If the merger is consummated, the Company’s shareholders will receive $14.00 in cash per share of common stock of the Company. 8 shareholders, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as other customary closing conditions. See “Note 10 – Merger Agreement with SPB Hospitality” below for additional discussion of the merger. ( g ) Earnings (Loss) per Share Basic earnings (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares outstanding for the reporting period. Diluted earnings (loss) per share of common stock is computed similarly to basic earnings (loss) per share except the weighted average shares outstanding are increased to include potential shares outstanding resulting from share-based compensation awards and additional shares from the assumed exercise of any common stock equivalents, if dilutive. In periods of net loss, no potential common shares are included in the diluted shares outstanding as the effect is anti-dilutive. J. Alexander’s Holdings, LLC Class B Units are considered common stock equivalents for this purpose. The number of additional shares of common stock related to these common stock equivalents is calculated using the if-converted method, if dilutive. The number of additional shares of common stock related to stock option awards and unvested restricted share awards subject to only a service condition is calculated using the treasury stock method, if dilutive. Unvested restricted share awards that are subject to a performance condition are regarded as contingently issuable common shares and are included in the denominator of the diluted earnings (loss) per share calculation using the treasury stock method as of the beginning of the period in which the performance condition has been satisfied, if dilutive. Refer to Note 3 – Earnings (Loss) per Share for the basic and diluted earnings (loss) per share calculations and additional discussion. ( h ) Non-controlling Interests Non-controlling interests presented on the Condensed Consolidated Balance Sheets represent the portion of net assets of the Company attributable to the non-controlling J. Alexander’s Holdings, LLC Class B Unit holders. As of each of July 4, 2021 and January 3, 2021, the non-controlling interests presented on the Condensed Consolidated Balance Sheets were $1,558 and consist of the previously recognized non-cash compensation expense relative to the Class B Units held by management. The Hypothetical Liquidation at Book Value method was used as of each of July 4, 2021 and June 28, 2020 to determine allocations of non-controlling interests in respect of vested grants consistent with the terms of the Second Amended and Restated LLC Agreement of J. Alexander’s Holdings, LLC, and pursuant to those calculations, no allocation of net income (loss) was made to non-controlling interests for either of the quarters or six months ended July 4, 2021 or June 28, 2020. ( i ) Use of Estimates Management has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the periods presented to prepare these unaudited Condensed Consolidated Financial Statements in conformity with GAAP. Significant items subject to such estimates and assumptions include those related to the accounting for gift card breakage, determination of uncertain tax positions and the valuation allowance relative to deferred tax assets, if any, estimates of useful lives of property and equipment and leasehold improvements, the carrying amount of intangible assets, fair market valuations, determination of lease terms, and accounting for impairment losses, contingencies, and litigation. Actual results could differ from these estimates. ( j ) Share Repurchase Program 9 On November 1, 2018, the Company’s Board of Directors authorized a share repurchase program which replaced the previous share repurchase program that expired on October 29, 2018 , and allows for the repurchase of shares up to an aggregate purchase price of $ 15,000 over the three-year period ending November 1, 2021 . Any share repurchases under the current program are expected to be made solely from cash on hand and available operating cash flow. Repurchases will be made in accordance with applicable securities laws and may be made from time to time in the open market. The timing, prices and amount of repurchases will depend upon prevailing market prices, general economic and market conditions and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of stock. There was no common stock repurchase activity under the program during the second quarter s or first halves of 202 1 or 2020 . ( k ) Goodwill Impairment and Long-lived Asset Impairment Charges As a result of the decline in the market price of the Company’s common stock that occurred during the first quarter of 2020, the impact of mandated dining room closures on financial results last year, the severe reduction in economic activity that followed, and the general economic and market volatility at the time, the Company determined that these factors constituted an interim triggering event as of the end of the Company’s first quarter of 2020, and performed impairment analyses with regard to its indefinite-lived intangible assets, property and equipment (including its right-of-use assets for operating leases) and goodwill. As a result, the Company recorded asset impairment charges totaling $16,426 in the first half of 2020, which included $15,737 related to the full impairment of the carrying amount of goodwill. The goodwill impairment charge is presented as a separate line on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Additionally, during the first half of 2020, the Company recorded a long-lived asset impairment charge of $689 related to one location which was subsequently closed and sold during fiscal 2020. This impairment charge is presented as “Long-lived asset impairment charges and restaurant closing costs” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The Company assessed its remaining intangible and fixed assets for indicators of impairment as of quarter-end, for both July 4, 2021 and June 28, 2020, and assessed recoverability of certain fixed assets as warranted. No impairment was recorded for either of these periods. |
Earnings (Loss) per Share
Earnings (Loss) per Share | 6 Months Ended |
Jul. 04, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) per Share | Note 3 – Earnings (Loss) per Share The following table sets forth the computation of basic and diluted earnings (loss) per share: Quarter Ended Six Months Ended (Dollars and shares in thousands, except per share amounts) July 4, June 28, July 4, June 28, 2021 2020 2021 2020 Numerator: Income (loss) from continuing operations, net of tax $ 2,256 $ (6,933 ) $ 5,051 $ (24,525 ) Income (loss) from discontinued operations, net (3 ) (55 ) 592 (107 ) Net income (loss) $ 2,253 $ (6,988 ) $ 5,643 $ (24,632 ) Denominator: Weighted average shares (denominator for basic earnings (loss) per share) 14,757 14,695 14,757 14,695 Effect of dilutive securities 528 - 316 - Adjusted weighted average shares and assumed conversions (denominator for diluted earnings (loss) per share) 15,285 14,695 15,073 14,695 Basic earnings (loss) per share: Income (loss) from continuing operations, net of tax $ 0.15 $ (0.47 ) $ 0.34 $ (1.67 ) Income (loss) from discontinued operations, net (0.00 ) (0.00 ) 0.04 (0.01 ) Basic earnings (loss) per share $ 0.15 $ (0.48 ) $ 0.38 $ (1.68 ) Diluted earnings (loss) per share: Income (loss) from continuing operations, net of tax $ 0.15 $ (0.47 ) $ 0.34 $ (1.67 ) Income (loss) from discontinued operations, net (0.00 ) (0.00 ) 0.04 (0.01 ) Diluted earnings (loss) per share $ 0.15 $ (0.48 ) $ 0.37 $ (1.68 ) Note: Per share amounts may not sum due to rounding. 10 Basic earnings (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares outstanding for the reporting period. Diluted earnings (loss) per share of common stock gives effect during the reporting period to all dilutive potential shares outstanding resulting from share-based compensation awards and additional shares from the assumed exercise of any common stock equivalents, if dilutive. The Company incurred a net loss for the quarter and six-month period ended June 28, 2020, and therefore, diluted shares outstanding equaled basic shares outstanding. The J. Alexander’s Holdings, LLC Class B Units are considered common stock equivalents, and the number of additional shares of common stock related to these Class B Units is calculated using the if-converted method. The 833,346 Class B Units associated with management’s profits interest awards are considered to be dilutive for the quarter and six-month period ended July 4, 2021, and the impact on the number of weighted average shares in the diluted earnings per share calculation was 127,664 and 63,832, respectively. The number of additional shares of common stock related to stock option awards is calculated using the treasury stock method, if dilutive. There were 1,739,250 and 1,495,750 stock option awards outstanding as of July 4, 2021 and June 28, 2020, respectively. The dilutive impact of the awards outstanding as of July 4, 2021 on the number of weighted average shares in the diluted earnings per share calculation was 282,200 and 169,164 for the quarter and six-month period ended July 4, 2021, respectively. As of July 4, 2021 and June 28, 2020, there were 281,003 and 264,000 unvested restricted share awards outstanding, respectively, which were subject to only a service condition. All unvested restricted share awards outstanding as of July 4, 2021 were considered dilutive for the second quarter and six-month period then ended, and the impact on the number of weighted average shares in the diluted earnings per share calculation was 118,601 and 83,038, respectively. As of July 4, 2021 and June 28, 2020, there were 52,500 performance share awards outstanding. The performance condition associated with such awards had not been met at either July 4, 2021 or June 28, 2020, and, therefore, the portion of the awards that had satisfied the applicable service condition as of these dates was excluded from the weighted average shares outstanding for basic earnings (loss) per share calculations. These awards also did not impact the diluted earnings per share calculation since the performance condition has not yet been satisfied. |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 04, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 4 – Income Taxes The interim tax provision for the quarter and six-month period ended July 4, 2021 was prepared on an estimated annual effective rate basis while the interim tax provision for the quarter and six-month period ended June 28, 2020 was prepared on an actual effective tax rate basis. The Company recognized income tax expense of $343 and income tax benefit of $5,806 for the six-month periods ended July 4, 2021 and June 28, 2020, respectively. The net effective tax rate (including the impact of discrete items) for the first six months of 2021 was 5.7%. The factors that caused the net effective tax rate to vary from the federal statutory rate of 21% for the six-month period ended July 4, 2021 primarily related to the impact of the Federal Insurance Contribution Act (“FICA”) tip credit offset by state income taxes and discrete items primarily related to return to provision adjustments. The net effective tax rate for the first half of 2020 was 19.1%. The factors that caused the net effective tax rate to vary from the federal statutory rate of 21% for the six-month period ended June 28, 2020 primarily related to the impact of the nondeductible book goodwill impairment charge recorded during 2020, partially offset by the FICA tip credit, state income taxes, the anticipated carryback of the net operating losses (“NOLs”) generated during 2020 to prior years, including the impact of the correction of the qualified improvement property (“QIP”) regulations on the anticipated carryback and other items. |
Commitment and Contingencies
Commitment and Contingencies | 6 Months Ended |
Jul. 04, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 5 – Commitments and Contingencies (a) Contingent Leases As a result of the disposition of the Company’s predecessor’s Wendy’s operations in 1996, subsidiaries of the Company may remain secondarily liable for certain real property leases with remaining terms of one to five years. The total estimated amount of lease payments remaining on these four leases at July 4, 2021 was approximately $859. In connection with the sale of the Company’s predecessor’s Mrs. Winner’s Chicken & Biscuit restaurant operations in 1989 and certain previous dispositions, subsidiaries of the Company also may remain secondarily liable for one real property lease. The total estimated amount of lease payments remaining on this lease at July 4, 2021 was approximately $215. There have been no payments by subsidiaries of the Company of such contingent liabilities in the history of the Company. Management believes the likelihood of any significant loss is remote. 11 (b) Tax Contingencies The Company and its subsidiaries are subject to real property, personal property, business, franchise, income, withholding, unemployment, unclaimed property, sales and use taxes in various jurisdictions within the United States and are regularly under audit by tax authorities. This is believed to be common for the restaurant industry. Management believes the ultimate disposition of these matters will not have a material adverse effect on the consolidated financial position or results of operations of the Company. (c) Litigation Contingencies The Company and its subsidiaries are defendants from time to time in various claims or legal proceedings arising in the ordinary course of business, including claims relating to workers’ compensation matters, labor-related claims, discrimination and similar matters, claims resulting from guest accidents while visiting a restaurant, claims relating to lease and contractual obligations, federal and state tax matters, and claims from guests or employees alleging illness, injury or other food quality, health or operational concerns, and injury or wrongful death under “dram shop” laws that allow a person to sue the Company and its subsidiaries based on any injury caused by an intoxicated person who was wrongfully served alcoholic beverages at one of the Company’s restaurants. Management does not believe that any of the legal proceedings pending against the Company and its subsidiaries as of the date of this report will have a material adverse effect on the Company’s liquidity, consolidated results of operations or financial condition. The Company may incur liabilities, settle disputes, sustain judgments, or accrue expenses relating to legal proceedings in a particular fiscal year, which may adversely affect its consolidated results of operations, or on occasion, receive settlements that favorably affect its consolidated results of operations. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 04, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 6 – Fair Value Measurements As of July 4, 2021 and January 3, 2021, the fair value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximated their carrying value due to their short-term nature. The carrying amounts of long‑term debt approximate fair value as interest rates and negotiated terms and conditions are consistent with current market rates because of the close proximity of recent refinancing transactions to the dates of these unaudited Condensed Consolidated Financial Statements (Level 2). Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis As discussed in Note 2(k) above, during the first quarter of fiscal year 2020, primarily due to the impacts of the COVID-19 pandemic, the Company determined that a triggering event had occurred requiring an impairment evaluation of its long-lived assets, indefinite‑lived intangible assets and goodwill. As a result of these analyses, the Company recorded a $689 impairment charge related to the long-lived assets at one restaurant location (Level 3) that management determined would be permanently closed and a $15,737 impairment charge related to the Company’s recorded goodwill. The impairment charges were measured based on the amounts by which the carrying values of the assets exceeded their relative fair values. No impairment was recorded for indefinite‑lived intangible assets as their fair values were determined to substantially exceed their carrying values. Fair values for goodwill and long-lived assets that were impaired during the first quarter of 2020 were estimated utilizing a market approach, and fair value estimates for indefinite-lived intangibles were determined based on an income approach. Fair value estimates utilized market participant assumptions reflecting all available information as of the impairment date. The fair value of goodwill was $0 (Level 3) and the impaired restaurant location was sold during the third quarter of 2020. There were no non-financial assets measured at fair value on a non‑recurring basis as of July 4, 2021 or January 3, 2021. The ultimate severity and longevity of the COVID-19 pandemic is unknown, and, therefore, it is possible that additional impairments could be identified in future periods, and such amounts could be material. 12 Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present the Company’s financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated: July 4, 2021 Level 1 Level 2 Level 3 Cash and cash equivalents * $ 110 $ - $ - U.S. government obligations * 189 - - Corporate bonds * 2,226 - - Mutual and money market funds ** 1,672 - - Total $ 4,197 $ - $ - January 3, 2021 Level 1 Level 2 Level 3 Cash and cash equivalents * $ 81 $ - $ - U.S. government obligations * 276 - - Corporate bonds * 2,241 - - Mutual and money market funds ** 1,222 - - Total $ 3,820 $ - $ - * - As held in the Trust (as defined below). ** - As held in the 409a Trust (as defined below). Cash and cash equivalents are classified as Level 1 of the fair value hierarchy as they represent cash held in a rabbi trust established under a retirement benefit arrangement with certain of the Company’s current and former officers (the “Trust”). Cash held in the Trust is invested through an overnight repurchase agreement the investments of which may include U.S. Treasury securities, such as bonds or Treasury bills, and other agencies of the U.S. government. Such investments are valued using quoted market prices in active markets. U.S. government obligations held in the Trust include U.S. Treasury Bonds. These bonds as well as the corporate bonds listed above are considered to be trading securities and are classified as Level 1 of the fair value hierarchy given their readily available quoted prices in active markets. At July 4, 2021 and January 3, 2021, the Company held investments in mutual and money market funds classified as trading securities that were also held in a rabbi trust (the “409a Trust”) to support its future obligations to participants of its nonqualified deferred compensation plan, which are carried at fair value based on quoted market prices in active markets for identical assets (Level 1). There were no transfers between the levels listed above during either of the reporting periods. Unrealized gains or losses on investments held in either the Trust or the 409a Trust are presented as a component of “Other, net” on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The assets of both the Trust and the 409a Trust disclosed above are presented as a component of “Other assets” on the Condensed Consolidated Balance Sheets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jul. 04, 2021 | |
Accounting Changes And Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Note 7 – Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments 13 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU No. 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 , amending the interim-period accounting for enacted changes in tax law and amending the requirements related to the accounting for “hybrid” tax regimes . This standard is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods, with early adoption permitted. The Company adopted this guidance at the beginning of fiscal year 2021 , and it did not have a significant impact on its unaudited Condensed Consolidated Financial Statements and related disclosures. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Net Sales
Net Sales | 6 Months Ended |
Jul. 04, 2021 | |
Revenue From Contract With Customer [Abstract] | |
Net Sales | Note 8 – Net Sales The following table presents the Company’s net sales disaggregated by source for the periods presented: Quarter Ended Six Months Ended July 4, June 28, July 4, June 28, 2021 2020 2021 2020 Restaurant $ 67,998 $ 27,544 $ 125,126 $ 84,288 Gift card breakage 103 58 350 286 Net sales $ 68,101 $ 27,602 $ 125,476 $ 84,574 The Company recognized revenue associated with gift cards redeemed by guests of $865 and $379 during the quarters ended July 4, 2021 and June 28, 2020, respectively, and $1,924 and $1,813 during the , respectively. and by $1,418 and $953 during the , respectively, |
Leases
Leases | 6 Months Ended |
Jul. 04, 2021 | |
Leases [Abstract] | |
Leases | Note 9 – Leases As of July 4, 2021, the Company was party to 30 separate operating leases for real estate under which it currently operates its restaurants and has its corporate office space. The Company commenced operations at its new Redlands Grill location in San Antonio, Texas, on March 29, 2021. Additionally, the Company took possession of a new restaurant property during the first half of 2021, which is currently under construction in Madison, Alabama, and the J. Alexander’s location is slated to open in early 2022. The Company modified certain of its leases during fiscal year 2020 for matters unrelated to the COVID-19 pandemic and updated the ROU assets, lease liabilities and related incremental borrowing rates as required. During fiscal year 2020, the Company was granted COVID-19 related rent concessions for certain of its restaurant locations and for its corporate office. The Company elected to account for lease concessions resulting directly from COVID-19 as though the enforceable rights and obligations to the concessions existed in the respective agreements at lease inception and did not account for the 14 concessions as lease modifications, unless the concession result ed in a substantial increase in the Company’s obligations, taking into consideration the guidance issued by the FASB in its Staff Q uestion-and- A nswer document regarding rent concessions related to the effects of the COVID-19 pandemic. The cash paid during the first half of 2021 for amounts included in the measurement of lease liabilities totaled $5,458. Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows: July 4, 2021 2021 (1) $ 4,850 2022 9,391 2023 9,560 2024 9,547 2025 8,863 2026 and thereafter 92,958 Total minimum lease payments 135,169 Less: Imputed interest (2) 51,209 Present value of lease liabilities $ 83,960 (1) Excluding the 26 weeks ended July 4, 2021. (2) Amount necessary to reduce net minimum lease payments to present value calculated using the Company’s incremental borrowing rates, which are consistent with the lease terms at adoption date (for those leases in existence as of the adoption date of Topic 842) or lease inception or modification date (for those leases entered into or modified after the adoption date). |
Merger Agreement with SPB Hospi
Merger Agreement with SPB Hospitality | 6 Months Ended |
Jul. 04, 2021 | |
Business Combinations [Abstract] | |
Merger Agreement with SPB Hospitality | Note 10 – Merger Agreement with SPB Hospitality On July 2, 2021, the Company announced that it entered into a merger agreement under which SPB Hospitality will acquire the Company in an all-cash transaction valued at approximately $220,000. If the merger is consummated, the Company’s shareholders will receive $14.00 in cash per share of common stock of the Company. Certain of the Company’s officers, directors and shareholders including Newport Global Opportunities Fund I-A LP and Ancora Holdings LLC, holding, in the aggregate, as of July 1, 2021, over 20% of the outstanding shares of Company common stock, entered into voting agreements with SPB Hospitality pursuant to which they agreed, among other things, to vote their respective shares of Company common stock in favor of the merger. The merger was approved by the Company’s Board of Directors following a review of a wide range of strategic alternatives, which was first announced in August 2019, and continued in 2020 (until the onset of the COVID-19 pandemic) and 2021. The merger is expected to be completed in the fourth quarter of 2021, subject to approval by the Company’s shareholders, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as other customary closing conditions. 15 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jul. 04, 2021 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | (a) Interim Financial Statements The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter and six-month period ended July 4, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January 2, 2022. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021, filed with the SEC on March 18, 2021, and amended on April 29, 2021 (the “2020 Annual Report”). Total comprehensive income (loss) is comprised solely of net income (loss) for all periods presented. There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s 2020 Annual Report. |
Effects of COVID-19 | (b) Effects of COVID-19 The onset of the novel coronavirus (“COVID-19”) pandemic in the first quarter of 2020 resulted in significant disruption to the restaurant industry and adversely affected the Company’s business. In response to the COVID-19 pandemic, many states and local jurisdictions in which the Company operates restaurants issued stay-at-home orders and other measures, including the closure of all in-restaurant dining, aimed at slowing the spread of COVID-19 beginning in March 2020. These measures resulted in the closure of the Company’s dining rooms beginning in mid-March 2020 and a shift to an entirely off-premise operations platform until late April 2020 when certain states began to allow for partial reopening of dining rooms. As a result of the government-mandated restrictions and related public health concerns, the Company’s net sales, results of operations and cash flows were negatively impacted in fiscal 2020, and the impact continued throughout the first half of 2021 due to reductions in guest counts from capacity restrictions, particularly during January and early February of 2021. Each of the Company’s 47 locations were open for in‑restaurant dining at full capacity as of the end of the second quarter of 2021 and remain fully open as of the date of this report in accordance with their state’s or local government’s guidelines. This capacity status was only reached in the final weeks of the second quarter at certain locations due to restrictions imposed by their respective state and local governments. During the first half of 2020, the Company incurred approximately $3,275 of additional costs related primarily to the continuing benefits and payments to furloughed restaurant employees under the Company’s Emergency Sick Leave Policy (“ESLP”), vacation and other sick leave benefits and related payroll taxes as well as write-offs of inventory. During the same period of 2021, the Company incurred approximately $103 related to payments made to employees pursuant to the ESLP and other sick leave benefits and related payroll taxes. Additionally, during the first half of 2020, the Company recorded certain impairment charges which are discussed in Note 2(k) below 7 The full impact of the COVID-19 pandemic continues to evolve as of the date of this report. Despite the fact that vaccines are now widely available across the country, there are widespread increases in diagnosed cases reported since the end of the second quarter largely due to the spread of COVID-19 variants. There can be no assurance that state or local authorities will allow dining rooms to remain open even at reduced capacity if there is a surge in cases or variants of COVID-19 in their respective areas. The extent of the impact of the COVID-19 pandemic on our operations and financial results depends on future developments, and the Company cannot reasonably predict if all of its restaurants will be allowed to continue to operate their dining rooms at full or limited capacities. Due to the rapid development and fluidity of this situation, the Company cannot determine the ultimate impact that the COVID-19 pandemic will have on its consolidated financial condition, liquidity and future results of operations, and therefore, any prediction as to the ultimate material adverse impact on these performance measures is uncertain. The Company does expect that its results of operations, cash flows and liquidity will continue to be negatively affected to some extent by the COVID-19 pandemic, either by potential future governmental restrictions or lingering impacts on the economy and the labor market, during at least a portion of the remainder of fiscal 2021. |
Principles of Consolidation | (c) Principles of Consolidation The unaudited Condensed Consolidated Financial Statements include the accounts of the Company as well as the accounts of its subsidiaries. All intercompany profits, transactions, and balances between the Company and its subsidiaries have been eliminated. It is the Company’s policy to reclassify prior year amounts to conform to the current year’s presentation for comparative purposes, if such a reclassification is warranted. The Company is a holding company with no direct operations and that holds as its sole asset an equity interest in J. Alexander’s Holdings, LLC and, as a result, relies on J. Alexander’s Holdings, LLC to provide it with funds necessary to meet its financial obligations. |
Fiscal Year | ( d ) Fiscal Year The Company’s fiscal year ends on the Sunday closest to December 31, and each quarter typically consists of 13 weeks. The quarters and six-month periods ended July 4, 2021 and June 28, 2020 each included 13 and 26 weeks of operations, respectively. Fiscal year 2021 will include 52 weeks of operations while fiscal year 2020 included 53 weeks of operations. |
Discontinued Operations and Restaurant Closure | ( e ) Discontinued Operations and Restaurant Closures Losses from discontinued operations totaled $3 and $55 for the quarters ended July 4, 2021 and June 28, 2020, respectively. For the six-month periods ended July 4, 2021 and June 28, 2020, the income and loss from discontinued operations totaled $592 and $107, respectively. During the first half of 2021, the Company entered into a termination agreement related to a lease agreement for a location that was closed in 2013, which has been accounted for as a discontinued operation since that time. As a result of the termination agreement, the Company recorded a gain of approximately $630, representing the difference between recorded lease liabilities and the termination fee paid to the landlord by the Company during the first quarter of 2021. The gain was partially offset by ongoing lease and other exit costs incurred during fiscal 2021. The loss from discontinued operations recorded in the second quarter and first half of 2020 consisted solely of exit and disposal costs related to the Company’s obligations under this same lease agreement. |
Transaction and Other Related Expenses | ( f ) Transaction and other Related Expenses Transaction and other related expenses totaled $1,888 and $(66) for the quarters ended July 4, 2021 and June 28, 2020, respectively, and $1,934 and $623 for six-month periods ended July 4, 2021 and June 28, 2020, respectively. During the second quarter of 2021, the Company incurred consulting, investment banking and legal fees related to the Company’s evaluation of strategic alternatives. In the first quarter of 2020, the Company incurred legal fees, other professional fees and consulting fees related to the same project. The Company received a discount for legal services rendered during that period resulting in income for the second quarter of fiscal 2020. As noted below, on July 2, 2021, the Company announced that it entered into a merger agreement under which SPB Hospitality LLC (“SPB Hospitality”) will acquire the Company in an all-cash transaction valued at approximately $220,000. If the merger is consummated, the Company’s shareholders will receive $14.00 in cash per share of common stock of the Company. 8 shareholders, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as other customary closing conditions. See “Note 10 – Merger Agreement with SPB Hospitality” below for additional discussion of the merger. |
Earnings (Loss) per Share | ( g ) Earnings (Loss) per Share Basic earnings (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares outstanding for the reporting period. Diluted earnings (loss) per share of common stock is computed similarly to basic earnings (loss) per share except the weighted average shares outstanding are increased to include potential shares outstanding resulting from share-based compensation awards and additional shares from the assumed exercise of any common stock equivalents, if dilutive. In periods of net loss, no potential common shares are included in the diluted shares outstanding as the effect is anti-dilutive. J. Alexander’s Holdings, LLC Class B Units are considered common stock equivalents for this purpose. The number of additional shares of common stock related to these common stock equivalents is calculated using the if-converted method, if dilutive. The number of additional shares of common stock related to stock option awards and unvested restricted share awards subject to only a service condition is calculated using the treasury stock method, if dilutive. Unvested restricted share awards that are subject to a performance condition are regarded as contingently issuable common shares and are included in the denominator of the diluted earnings (loss) per share calculation using the treasury stock method as of the beginning of the period in which the performance condition has been satisfied, if dilutive. Refer to Note 3 – Earnings (Loss) per Share for the basic and diluted earnings (loss) per share calculations and additional discussion. |
Non-controlling Interests | ( h ) Non-controlling Interests Non-controlling interests presented on the Condensed Consolidated Balance Sheets represent the portion of net assets of the Company attributable to the non-controlling J. Alexander’s Holdings, LLC Class B Unit holders. As of each of July 4, 2021 and January 3, 2021, the non-controlling interests presented on the Condensed Consolidated Balance Sheets were $1,558 and consist of the previously recognized non-cash compensation expense relative to the Class B Units held by management. The Hypothetical Liquidation at Book Value method was used as of each of July 4, 2021 and June 28, 2020 to determine allocations of non-controlling interests in respect of vested grants consistent with the terms of the Second Amended and Restated LLC Agreement of J. Alexander’s Holdings, LLC, and pursuant to those calculations, no allocation of net income (loss) was made to non-controlling interests for either of the quarters or six months ended July 4, 2021 or June 28, 2020. |
Use of Estimates | ( i ) Use of Estimates Management has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the periods presented to prepare these unaudited Condensed Consolidated Financial Statements in conformity with GAAP. Significant items subject to such estimates and assumptions include those related to the accounting for gift card breakage, determination of uncertain tax positions and the valuation allowance relative to deferred tax assets, if any, estimates of useful lives of property and equipment and leasehold improvements, the carrying amount of intangible assets, fair market valuations, determination of lease terms, and accounting for impairment losses, contingencies, and litigation. Actual results could differ from these estimates. |
Share Repurchase Program | ( j ) Share Repurchase Program 9 On November 1, 2018, the Company’s Board of Directors authorized a share repurchase program which replaced the previous share repurchase program that expired on October 29, 2018 , and allows for the repurchase of shares up to an aggregate purchase price of $ 15,000 over the three-year period ending November 1, 2021 . Any share repurchases under the current program are expected to be made solely from cash on hand and available operating cash flow. Repurchases will be made in accordance with applicable securities laws and may be made from time to time in the open market. The timing, prices and amount of repurchases will depend upon prevailing market prices, general economic and market conditions and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of stock. There was no common stock repurchase activity under the program during the second quarter s or first halves of 202 1 or 2020 . |
Goodwill Impairment and Long-lived Asset Impairment Charges | ( k ) Goodwill Impairment and Long-lived Asset Impairment Charges As a result of the decline in the market price of the Company’s common stock that occurred during the first quarter of 2020, the impact of mandated dining room closures on financial results last year, the severe reduction in economic activity that followed, and the general economic and market volatility at the time, the Company determined that these factors constituted an interim triggering event as of the end of the Company’s first quarter of 2020, and performed impairment analyses with regard to its indefinite-lived intangible assets, property and equipment (including its right-of-use assets for operating leases) and goodwill. As a result, the Company recorded asset impairment charges totaling $16,426 in the first half of 2020, which included $15,737 related to the full impairment of the carrying amount of goodwill. The goodwill impairment charge is presented as a separate line on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Additionally, during the first half of 2020, the Company recorded a long-lived asset impairment charge of $689 related to one location which was subsequently closed and sold during fiscal 2020. This impairment charge is presented as “Long-lived asset impairment charges and restaurant closing costs” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The Company assessed its remaining intangible and fixed assets for indicators of impairment as of quarter-end, for both July 4, 2021 and June 28, 2020, and assessed recoverability of certain fixed assets as warranted. No impairment was recorded for either of these periods. |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 6 Months Ended |
Jul. 04, 2021 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted (Loss) Earnings per Share | The following table sets forth the computation of basic and diluted earnings (loss) per share: Quarter Ended Six Months Ended (Dollars and shares in thousands, except per share amounts) July 4, June 28, July 4, June 28, 2021 2020 2021 2020 Numerator: Income (loss) from continuing operations, net of tax $ 2,256 $ (6,933 ) $ 5,051 $ (24,525 ) Income (loss) from discontinued operations, net (3 ) (55 ) 592 (107 ) Net income (loss) $ 2,253 $ (6,988 ) $ 5,643 $ (24,632 ) Denominator: Weighted average shares (denominator for basic earnings (loss) per share) 14,757 14,695 14,757 14,695 Effect of dilutive securities 528 - 316 - Adjusted weighted average shares and assumed conversions (denominator for diluted earnings (loss) per share) 15,285 14,695 15,073 14,695 Basic earnings (loss) per share: Income (loss) from continuing operations, net of tax $ 0.15 $ (0.47 ) $ 0.34 $ (1.67 ) Income (loss) from discontinued operations, net (0.00 ) (0.00 ) 0.04 (0.01 ) Basic earnings (loss) per share $ 0.15 $ (0.48 ) $ 0.38 $ (1.68 ) Diluted earnings (loss) per share: Income (loss) from continuing operations, net of tax $ 0.15 $ (0.47 ) $ 0.34 $ (1.67 ) Income (loss) from discontinued operations, net (0.00 ) (0.00 ) 0.04 (0.01 ) Diluted earnings (loss) per share $ 0.15 $ (0.48 ) $ 0.37 $ (1.68 ) Note: Per share amounts may not sum due to rounding. 10 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 04, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present the Company’s financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated: July 4, 2021 Level 1 Level 2 Level 3 Cash and cash equivalents * $ 110 $ - $ - U.S. government obligations * 189 - - Corporate bonds * 2,226 - - Mutual and money market funds ** 1,672 - - Total $ 4,197 $ - $ - January 3, 2021 Level 1 Level 2 Level 3 Cash and cash equivalents * $ 81 $ - $ - U.S. government obligations * 276 - - Corporate bonds * 2,241 - - Mutual and money market funds ** 1,222 - - Total $ 3,820 $ - $ - * - As held in the Trust (as defined below). ** - As held in the 409a Trust (as defined below). |
Net Sales (Tables)
Net Sales (Tables) | 6 Months Ended |
Jul. 04, 2021 | |
Disaggregation Of Revenue [Abstract] | |
Disaggregation of Net Sales | The following table presents the Company’s net sales disaggregated by source for the periods presented: Quarter Ended Six Months Ended July 4, June 28, July 4, June 28, 2021 2020 2021 2020 Restaurant $ 67,998 $ 27,544 $ 125,126 $ 84,288 Gift card breakage 103 58 350 286 Net sales $ 68,101 $ 27,602 $ 125,476 $ 84,574 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jul. 04, 2021 | |
Leases [Abstract] | |
Schedule of Maturities of Lease Liabilities for Operating Leases | Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows: July 4, 2021 2021 (1) $ 4,850 2022 9,391 2023 9,560 2024 9,547 2025 8,863 2026 and thereafter 92,958 Total minimum lease payments 135,169 Less: Imputed interest (2) 51,209 Present value of lease liabilities $ 83,960 (1) Excluding the 26 weeks ended July 4, 2021. (2) Amount necessary to reduce net minimum lease payments to present value calculated using the Company’s incremental borrowing rates, which are consistent with the lease terms at adoption date (for those leases in existence as of the adoption date of Topic 842) or lease inception or modification date (for those leases entered into or modified after the adoption date). |
Organization and Business - Add
Organization and Business - Additional Information (Details) | 6 Months Ended | |
Jul. 04, 2021RestaurantOperatingplace | Jan. 03, 2021RestaurantOperatingplace | |
Organization And Business [Abstract] | ||
Date of incorporation | Aug. 15, 2014 | |
Number of restaurants | Restaurant | 47 | 46 |
Number of states in entity operates | Operatingplace | 16 | 16 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Jul. 02, 2021USD ($)$ / shares | Nov. 01, 2018USD ($) | Jul. 04, 2021USD ($)Restaurantshares | Apr. 04, 2021USD ($) | Jun. 28, 2020USD ($)shares | Jul. 04, 2021USD ($)Restaurantshares | Jun. 28, 2020USD ($)shares | Jan. 03, 2021USD ($)Restaurant |
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Number of restaurants | Restaurant | 47 | 47 | 46 | |||||
(Loss) income from discontinued operations, net | $ (3) | $ (55) | $ 592 | $ (107) | ||||
Gain on termination of lease agreement | $ 630 | |||||||
Transaction and other related expenses | 1,888 | $ (66) | 1,934 | $ 623 | ||||
Non-controlling interests | $ 1,558 | $ 1,558 | $ 1,558 | |||||
Aggregate purchase price for repurchase of company stock outstanding | $ 15,000 | |||||||
Period to repurchase common stock | 3 years | |||||||
Stock repurchase program expiration date | Nov. 1, 2021 | Oct. 29, 2018 | ||||||
Common stock repurchase activity | shares | 0 | 0 | 0 | 0 | ||||
Asset impairment charges | $ 0 | $ 0 | $ 16,426 | |||||
Goodwill impairment charge | 15,737 | |||||||
Long-lived asset impairment charge | 689 | |||||||
Allocation of Net Income | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Non-controlling interests | 0 | 0 | $ 0 | 0 | ||||
SPB Hospitality LLC | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Cash transaction value | $ 220,000 | |||||||
Cash per share of common stock received by share holders | $ / shares | $ 14 | |||||||
Discontinued Operations | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
(Loss) income from discontinued operations, net | $ (3) | $ (55) | 592 | (107) | ||||
COVID-19 | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Cost incurred during period | $ 103 | $ 3,275 |
Earnings (Loss) per Share - Com
Earnings (Loss) per Share - Computation of Basic and Diluted (Loss) Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2021 | Jun. 28, 2020 | Jul. 04, 2021 | Jun. 28, 2020 | |
Numerator: | ||||
Income (loss) from continuing operations, net of tax | $ 2,256 | $ (6,933) | $ 5,051 | $ (24,525) |
Income (loss) from discontinued operations, net | (3) | (55) | 592 | (107) |
Net income (loss) | $ 2,253 | $ (6,988) | $ 5,643 | $ (24,632) |
Denominator: | ||||
Weighted average shares (denominator for basic earnings (loss) per share) | 14,757 | 14,695 | 14,757 | 14,695 |
Effect of dilutive securities | 528 | 316 | ||
Adjusted weighted average shares and assumed conversions (denominator for diluted earnings (loss) per share) | 15,285 | 14,695 | 15,073 | 14,695 |
Basic earnings (loss) per share: | ||||
Income (loss) from continuing operations, net of tax | $ 0.15 | $ (0.47) | $ 0.34 | $ (1.67) |
Income (loss) from discontinued operations, net | 0 | 0 | 0.04 | (0.01) |
Basic earnings (loss) per share | 0.15 | (0.48) | 0.38 | (1.68) |
Diluted earnings (loss) per share: | ||||
Income (loss) from continuing operations, net of tax | 0.15 | (0.47) | 0.34 | (1.67) |
Income (loss) from discontinued operations, net | 0 | 0 | 0.04 | (0.01) |
Diluted earnings (loss) per share | $ 0.15 | $ (0.48) | $ 0.37 | $ (1.68) |
Earnings (Loss) per Share - Add
Earnings (Loss) per Share - Additional Information (Details) - shares | 3 Months Ended | 6 Months Ended | |
Jul. 04, 2021 | Jul. 04, 2021 | Jun. 28, 2020 | |
Restricted Share Awards | |||
Antidilutive Securities Excluded From And Dilutive Securities Included In Computation Of Earnings Per Share [Line Items] | |||
Dilutive shares included in computation of earnings per share | 118,601 | 83,038 | |
Number of share awards outstanding | 281,003 | 264,000 | |
Performance Share Awards | |||
Antidilutive Securities Excluded From And Dilutive Securities Included In Computation Of Earnings Per Share [Line Items] | |||
Number of share awards outstanding | 52,500 | 52,500 | 52,500 |
Stock Option Awards | |||
Antidilutive Securities Excluded From And Dilutive Securities Included In Computation Of Earnings Per Share [Line Items] | |||
Dilutive shares included in computation of earnings per share | 282,200 | 169,164 | |
Number of stock option awards outstanding | 1,739,250 | 1,739,250 | 1,495,750 |
Management | Common Class B Units | |||
Antidilutive Securities Excluded From And Dilutive Securities Included In Computation Of Earnings Per Share [Line Items] | |||
Number of units outstanding | 833,346 | 833,346 | |
Dilutive shares included in computation of earnings per share | 127,664 | 63,832 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2021 | Jun. 28, 2020 | Jul. 04, 2021 | Jun. 28, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit (expense) | $ 24 | $ 4,419 | $ (343) | $ 5,806 |
Net effective tax rate | 5.70% | 19.10% | ||
Federal statutory rate | 21.00% | 21.00% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Thousands | 6 Months Ended |
Jul. 04, 2021USD ($)Lease | |
Commitments And Contingencies [Line Items] | |
Payments made to date relative to contingent leases | $ 0 |
Wendy's Operations | |
Commitments And Contingencies [Line Items] | |
Number of secondarily liable leases | Lease | 4 |
Estimated amount of secondarily liable lease payments due | $ 859 |
Wendy's Operations | Minimum | |
Commitments And Contingencies [Line Items] | |
Remaining lease term | 1 year |
Wendy's Operations | Maximum | |
Commitments And Contingencies [Line Items] | |
Remaining lease term | 5 years |
Mrs. Winner's Chicken and Biscuit Restaurant Operations | |
Commitments And Contingencies [Line Items] | |
Number of secondarily liable leases | Lease | 1 |
Estimated amount of secondarily liable lease payments due | $ 215 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 28, 2020Restaurant | Mar. 29, 2020USD ($) | Jul. 04, 2021USD ($) | Jun. 28, 2020USD ($) | Jan. 03, 2021USD ($) | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||
Impairment charge related to long-lived assets | $ 689 | ||||
Goodwill impairment charge | $ 15,737 | ||||
Impairment of indefinite-lived intangible assets | $ 0 | ||||
Fair Value Non-Recurring Basis | |||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||
Non-financial assets measured at fair value | 0 | $ 0 | |||
Level 3 | |||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||
Impairment charge related to long-lived assets | $ 689 | ||||
Number of restaurants closed | Restaurant | 1 | ||||
Goodwill impairment charge | $ 15,737 | ||||
Remaining carrying value of goodwill after impairment | $ 0 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value Measurements Recurring - Level 1 - USD ($) $ in Thousands | Jul. 04, 2021 | Jan. 03, 2021 |
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | $ 4,197 | $ 3,820 |
Cash and Cash Equivalents (as Held in the Trust) | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | 110 | 81 |
Corporate Bonds (as Held in the Trust) | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | 2,226 | 2,241 |
Mutual and Money Market Funds | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Nonqualified deferred compensation plan assets | 1,672 | 1,222 |
U.S. Government Obligations (as Held in the Trust) | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | $ 189 | $ 276 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements - Additional Information (Details) - ASU 2019-12 | Jul. 04, 2021 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Early Adoption [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 4, 2021 |
Net Sales - Disaggregation of N
Net Sales - Disaggregation of Net Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2021 | Jun. 28, 2020 | Jul. 04, 2021 | Jun. 28, 2020 | |
Disaggregation Of Revenue [Line Items] | ||||
Net sales | $ 68,101 | $ 27,602 | $ 125,476 | $ 84,574 |
Restaurant | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 67,998 | 27,544 | 125,126 | 84,288 |
Gift Card Breakage | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | $ 103 | $ 58 | $ 350 | $ 286 |
Net Sales - Additional Informat
Net Sales - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2021 | Jun. 28, 2020 | Jul. 04, 2021 | Jun. 28, 2020 | |
Revenue From Contract With Customer [Abstract] | ||||
Gift card redemptions during the period | $ 865 | $ 379 | $ 1,924 | $ 1,813 |
Current period gift card redemptions from the unearned revenue balance at the beginning of the period | 1,340 | 1,484 | ||
Gift cards sold during the period | $ 847 | $ 412 | $ 1,418 | $ 953 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 6 Months Ended |
Jul. 04, 2021USD ($)Lease | |
Leases [Abstract] | |
Number of real estate leases | Lease | 30 |
Right of use assets in exchange for new lease liability | $ 2,683 |
Operating lease liability derecognized | $ 1,196 |
Number of equipment leases | Lease | 1 |
Cash paid for amounts included in the measurement of lease liabilities | $ 5,458 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities for Operating Leases (Details) $ in Thousands | Jul. 04, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 4,850 |
2022 | 9,391 |
2023 | 9,560 |
2024 | 9,547 |
2025 | 8,863 |
2026 and thereafter | 92,958 |
Total minimum lease payments | 135,169 |
Less: Imputed interest | 51,209 |
Present value of lease liabilities | $ 83,960 |
Merger Agreement with SPB Hos_2
Merger Agreement with SPB Hospitality - Additional Information (Details) - SPB Hospitality LLC - USD ($) $ / shares in Units, $ in Thousands | Jul. 02, 2021 | Jul. 01, 2021 |
Business Acquisition [Line Items] | ||
Cash transaction value | $ 220,000 | |
Cash per share of common stock received by share holders | $ 14 | |
Minimum | ||
Business Acquisition [Line Items] | ||
Percent of outstanding shares of common stock entered into voting agreements | 20.00% |