EX-99.3 5 tm1926425d1_ex99-3.htm EXHIBIT 99.3

 

EXHIBIT 99.3

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

On October 2, 2019 (the “Closing Date” or “Closing”), the Company completed its acquisition of North Italia and the remaining FRC business (the “Acquisition”).

 

The Acquisition was completed for consideration consisting of the following components: $286 million in cash at Closing, which was primarily funded by drawing on the Company’s credit facility; assumption of $10 million in debt previously owed by FRC to the Company; a $12 million indemnity escrow amount specifically related to North Italia due ratably over the next two years; and $45 million of deferred consideration due ratably over the next four years (including a $13 million indemnity escrow amount specifically related to the remaining FRC business). Additionally, included in consideration is the estimated Acquisition-date fair value of contingent consideration which is payable on the fifth anniversary of the Closing Date and is based on achievement of revenue and profitability targets for the FRC brands other than North Italia and Flower Child with considerations made in the event the Company undergoes a change in control or divests any FRC brand (other than North Italia and Flower Child) during the five years after Closing. The Company is also required to provide financing to FRC in an amount sufficient to support achievement of these targets during the five years after Closing.

 

The Company has concluded that the Acquisition represents a single business combination of related businesses under common control within the scope of Accounting Standards Codification Topic 805, “Business Combinations.” The Acquisition date was determined to be the Closing Date, which is the date the Company obtained control by legally transferring the consideration for the remaining ownership interests, acquiring the assets and assuming the liabilities of North Italia and the remaining FRC business.

 

The following unaudited pro forma condensed consolidated balance sheet gives effect to the Acquisition as if it had occurred on October 1, 2019. The unaudited pro forma condensed consolidated statements of income for the thirty-nine weeks ended October 1, 2019 and the fiscal year ended January 1, 2019 give effect to the Acquisition as if it had occurred on January 2, 2018. The unaudited pro forma condensed consolidated financial statements were based on and should be read in conjunction with (i) the unaudited consolidated financial statements of the Company included in its Quarterly Report on Form 10-Q for the quarterly period ended October 1, 2019; (ii) the unaudited consolidated financial statements of FRC for the thirty-nine weeks ended October 1, 2019; (iii) the audited consolidated financial statements of the Company included in its Annual Report on Form 10-K for the fiscal year ended January 1, 2019; (iv) the audited consolidated financial statements of FRC for the fiscal year ended January 1, 2019; and (v) the notes to the unaudited pro forma condensed consolidated financial statements.

 

In the opinion of the Company’s management, the unaudited pro forma condensed consolidated financial statements include all significant necessary adjustments that can be factually supported to reflect the effects of the Acquisition and related transactions. The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and are not necessarily indicative of what our actual results of operations would have been had the Acquisition and related transactions been completed as of the dates indicated or that may be achieved in the future due to a variety of factors, including the fact that the determination of the fair value of assets acquired and liabilities assumed and resulting goodwill in the unaudited pro forma condensed consolidated financial statements is based upon preliminary estimates. Furthermore, the Company expects to apply its own methodologies and judgments in accounting for the assets and liabilities acquired in the Acquisition, which may differ from those reflected in FRC’s historical financial statements and the pro forma condensed consolidated financial statements.

 

 

 

THE CHEESECAKE FACTORY INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
October 1, 2019
(In thousands)

 

   Historical   Historical   Pro Forma     Pro Forma 
   Company   FRC   Adjustments     Combined 
ASSETS                      
Current assets:                      
Cash and cash equivalents  $306,252   $6,894   $(276,168 )(a)  $36,978 
Accounts receivable   16,356    -    -      16,356 
Income taxes receivable   8,415    -    -      8,415 
Other receivables   31,445    3,913    (1,239 )(b)   34,119 
Inventories   47,778    2,569    -      50,347 
Prepaid expenses   38,895    19,676    (16,027 )(c)   42,544 
Total current assets   449,141    33,052    (293,434 )    188,759 
Property and equipment, net   759,243    91,210    (7,680 )(d)   842,773 
Other assets:                      
Intangible assets, net   20,271    1,089    277,893  (e)   299,253 
Goodwill   -    -    162,461  (f)   162,461 
Operating lease assets   984,838    -    223,455  (g)   1,208,293 
Investments in unconsolidated affiliates   69,328    -    (69,328 )(h)   - 
Other   98,949    5,842    (22,500 )(i)   82,291 
Total other assets   1,173,386    6,931    571,981      1,752,298 
Total assets  $2,381,770   $131,193   $270,867     $2,783,830 
                       
LIABILITIES AND STOCKHOLDERS' EQUITY                      
Current liabilities:                      
Accounts payable  $36,095   $7,758   $(1,811 )(j)  $42,042 
Notes payable, current portion   -    53,552    (53,552 )(k)   - 
Gift card liabilities   135,566    5,941    -      141,507 
Deferred rent, current portion   -    587    (587 )(l)   0 
Operating lease liabilities   90,027    -    20,417  (m)   110,444 
Other accrued expenses   172,098    31,902    6,496  (n)   210,496 
Total current liabilities   433,786    99,740    (29,037 )    504,489 
Deferred income taxes   38,449    -    8,600  (o)   47,049 
Deferred rent liabilites   -    11,626    (11,626 )(p)   0 
Deemed landlord financing liability   -    11,819    (11,819 )(q)   0 
Long-term debt   335,000    -    -      335,000 
Operating lease liabilities   959,632    -    202,433  (m)   1,162,065 
Other noncurrent liabilities   81,087    5,162    51,348  (r)   137,597 
Total liabilities   1,847,954    128,347    209,899      2,186,200 
Stockholders' equity:                      
Preferred stock                      
Common stock   975    -    -      975 
Additional paid-in capital   850,485    -    -      850,485 
Retained earnings   1,375,690    2,846    60,968  (s)   1,439,504 
Treasury Stock   (1,692,701)   -    -      (1,692,701)
Other comprehensive income   (633)   -    -      (633)
Total stockholders' equity   533,816    2,846    60,968      597,630 
Total liabilities and stockholders' equity  $2,381,770   $131,193   $270,867     $2,783,830 

 

2

 

 

THE CHEESECAKE FACTORY INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Thirty-Nine Weeks Ended October 1, 2019
(In thousands, except per share data)

 

   Historical   Historical   Pro Forma     Pro Forma 
   Company   FRC   Adjustments     Combined 
Revenues  $1,788,662   $250,209   $-     $2,038,871 
Costs and expenses:                      
Cost of sales   403,566    62,034    -      465,600 
Labor expenses   648,831    91,284    -      740,115 
Other operating costs and expenses   451,724    61,884    3,523  (t)   517,131 
General and administrative expenses   116,116    32,565    (9,739 )(u)   138,942 
Depreciation and amortization expenses   64,363    14,670    (4,607 )(v)   74,426 
Impairment of assets and lease terminations   -    15,395    -      15,395 
Preopening costs   6,851    10,541    -      17,392 
Total costs and expenses   1,691,451    288,373    (10,823 )    1,969,001 
Income/(loss) from operations   97,211    (38,164)   10,823      69,870 
Income/(loss) on investment in unconsolidated affiliates   (13,439)   3,719    13,439  (w)   3,719 
Interest and other income/(expense), net   (17)   (2,706)   (4,267 )(x)   (6,990)
Income/(loss) before income taxes   83,755    (37,151)   19,995      66,599 
Income tax provision/(benefit)   5,171    -    (4,375 )(y)   796 
Net income/(loss)  $78,584   $(37,151)  $24,370     $65,803 
                       
Net income per share:                      
Basic  $1.78           (z)  $1.49 
Diluted  $1.76           (z)  $1.47 
                       
Weighted average shares outstanding:                      
Basic   44,034           (z)   44,034 
Diluted   44,643           (z)   44,643 

 

3

 

 

THE CHEESECAKE FACTORY INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Fiscal Year Ended January 1, 2019
(In thousands, except per share data)

                 

   Historical   Historical   Pro Forma     Pro Forma 
   Company   FRC   Adjustments     Combined 
Revenues  $2,332,331   $246,688   $-     $2,579,019 
Costs and expenses:                      
Cost of sales   532,880    61,698    -      594,578 
Labor expenses   834,134    88,237    -      922,371 
Other operating costs and expenses   566,825    61,696    -      628,521 
General and administrative expenses   154,770    25,577    1,871  (u)   182,218 
Depreciation and amortization expenses   95,976    12,384    (2,421 )(v)   105,939 
Impairment of assets and lease terminations   17,861    -    -      17,861 
Preopening costs   10,937    15,851    -      26,788 
Total costs and expenses   2,213,383    265,443    (550 )    2,478,276 
Income/(loss) from operations   118,948    (18,755)   550      100,743 
Income/(loss) on investment in unconsolidated affiliates   (4,754)   (1,729)   6,470  (w)   (13)
Interest and other income/(expense), net   (6,783)   (939)   (7,882 )(x)   (15,604)
Income/(loss) before income taxes   107,411    (21,423)   (862 )    85,126 
Income tax provision/(benefit)   8,376    -    (5,683 )(y)   2,693 
Net income/(loss)  $99,035   $(21,423)  $4,821     $82,433 
                       
Net income per share:                      
Basic  $2.19            (z)  $1.82 
Diluted  $2.14            (z)  $1.78 
                       
Weighted average shares outstanding:                      
Basic   45,263            (z)   45,263 
Diluted   46,215            (z)   46,215 

 

4

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1. Preliminary Purchase Price Allocation

 

On October 2, 2019, the Company completed its acquisition of FRC as described in the introduction above. The following table summarizes the preliminary calculation of consideration transferred and allocation of the purchase price to the net assets acquired (in thousands):

  

Preliminary purchase consideration:    
Cash at closing  $286,000 
Assumption of debt previously owed by FRC   10,000 
Deferred payments   52,720 
Contingent consideration   15,231 
Preliminary consideration transferred   363,951 
Fair value of previously-held equity interests   134,000 
Total   497,951 
      
Less net assets acquired:     
Current assets   17,025 
Property and equipment   83,530 
Intangible assets   278,982 
Operating lease assets   223,455 
Other assets   5,842 
Current liabilities   (57,085)
Operating lease liabilities   (202,433)
Other noncurrent liabilities   (13,825)
Total net assets acquired   335,491 
      
Goodwill  $162,461 

 

This preliminary purchase price allocation has been used to prepare pro forma adjustments in the pro forma balance sheet and income statements. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from this preliminary allocation and may include changes in fair values of contingent consideration, property and equipment and intangible assets and other changes to assets and liabilities, as well as any corresponding impacts to depreciation or amortization expenses.

 

5

 

 

2. Reclassifications

 

Certain reclassification adjustments have been made to conform FRC’s financial statement presentation to that of the Company’s as indicated in the tables below.

 

a)The reclassification adjustments to conform FRC’s balance sheet presentation to that of the Company’s have no impact on net assets and are summarized below:

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
October 1, 2019
(In thousands)
             
   Historical
FRC		   Reclassification to
the Company's Presentation		   Historical
FRC as presented		 
ASSETS            
Current assets:               
Cash and cash equivalents  $6,894   $-   $6,894 
Accounts receivable   -    -    - 
Other receivables   3,913    -    3,913 
Inventories   2,569    -    2,569 
Prepaid expenses   19,546    130    19,676 
Total current assets   32,922    130    33,052 
Property and equipment, net   91,210    -    91,210 
Other assets:               
Intangible assets, net   -    1,089    1,089 
Deferred compensation plan assets   5,684    (5,684)   0 
Other   1,125    4,717    5,842 
Total other assets   6,809    122    6,931 
Total assets  $130,941   $252   $131,193 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
Current liabilities:               
Accounts payable  $7,758   $-   $7,758 
Notes payable, bank   9,034    (9,034)   0 
Current portion of long-term debt   19,518    (19,518)   0 
Current portion of capital leases   178    (178)   (0)
Notes payable, related parties   25,000    (25,000)   - 
Notes payable   -    53,552    53,552 
Gift card liabilities   5,941    -    5,941 
Deferred revenue, current portion   40    (40)   - 
Deferred rent, current portion   409    178    587 
Other accrued expenses   36,683    (4,781)   31,902 
Total current liabilities   104,561    (4,821)   99,740 
Capital leases, net of current portion   199    (199)   0 
Deferred revenue, net of current portion   90    (90)   - 
Deferred rent liabilities   11,426    200    11,626 
Deemed landlord financing liability   11,819    -    11,819 
Other noncurrent liabilities   -    5,162    5,162 
Total liabilities   128,095    252    128,347 
Stockholders' equity:               
Retained earnings   2,846    -    2,846 
Total stockholders' equity   2,846    -    2,846 
Total liabilities and stockholders' equity  $130,941   $252   $131,193 

 

6

 

 

b)The reclassification adjustments to conform FRC’s statements of income presentation to that of the Company’s have no impact on net income and are summarized below:

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Thirty-Nine Weeks Ended October 1, 2019
(In thousands)
             
   Historical   Reclassification to   Historical 
   FRC   the Company's Presentation   FRC as presented 
Revenues  $250,209   $-   $250,209 
Costs and expenses:               
Cost of sales   62,034    -    62,034 
Labor expenses   114,354    (23,070)   91,284 
Other operating costs and expenses   -    61,884    61,884 
General and administrative expenses   53,067    (20,502)   32,565 
Rent expense   17,821    (17,821)   -
Depreciation and amortization expenses   14,623    47    14,670 
Loss on disposal of assets   47    (47)   - 
Impairment of assets and lease terminations   15,395    -    15,395 
Preopening costs   10,159    382    10,541 
Total costs and expenses   287,500    873    288,373 
Income/(loss) from operations   (37,291)   (873)   (38,164)
Dead site costs   (28)   28    - 
Interest income   11    (11)   -
Interest expense   (3,462)   3,462    - 
Management fee income   60    (60)   - 
Miscellaneous expense   (160)   160    - 
Income/(loss) on investment in unconsolidated affiliates   3,719    -    3,719 
Interest and other income/(expense), net   -    (2,706)   (2,706)
Income/(loss) before income taxes   (37,151)   -    (37,151)
Income tax provision   -    -    - 
Net income/(loss)  $(37,151)  $-   $(37,151)

 

 7 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Fiscal Year Ended January 1, 2019

(In thousands)

 

   Historical   Reclassification to   Historical 
   FRC   the Company's Presentation   FRC as presented 
Revenues  $246,688   $-   $246,688 
Costs and expenses:               
Cost of sales   61,698    -    61,698 
Labor expenses   107,114    (18,877)   88,237 
Other operating costs and expenses   -    61,696    61,696 
General and administrative expenses   52,937    (27,360)   25,577 
Rent expense   16,839    (16,839)   - 
Depreciation and amortization expenses   12,223    161    12,384 
Loss on disposal of assets   161    (161)   - 
Impairment of assets and lease terminations   -    -    - 
Preopening costs   14,094    1,757    15,851 
Total costs and expenses   265,066    377    265,443 
Income/(loss) from operations   (18,378)   (377)   (18,756)
Dead site costs   (265)   265    - 
Loss from other equity method investee   (38)   38    - 
Income from cost method investee   13    (13)   - 
Interest income   43    (43)   - 
Interest expense   (2,016)   2,016    - 
Management fee income   1,255    (1,255)   - 
Miscellaneous expense   (308)   308    - 
Income/(loss) on investment in unconsolidated affiliates   (1,729)   -    (1,729)
Interest and other income/(expense), net   -    (939)   (939)
Income/(loss) before income taxes   (21,423)   -    (21,423)
Income tax provision   -    -    - 
Net income/(loss)  $(21,423)  $-   $(21,423)

 

3. Adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet

 

a)Cash and cash equivalents – The reduction in cash and cash equivalents represents $286.0 million of cash consideration paid at Closing and transaction costs which were either included in accounts payable or incurred between the Closing Date and the date of this filing of $2.8 million, partially offset by the repayment at Closing of $12.5 million in loans extended by the Company to FRC prior to the Acquisition.

 

b)Other receivables – The decrease in other receivables reflects elimination of the Company’s receivable balance for items paid by the Company on behalf of FRC prior to the Acquisition.

 

c)Prepaid expenses – The decrease in prepaid expenses reflects a reduction in FRC prepaid rent as if Accounting Standards Codification Topic 842, Leases (“ASC 842”) had been adopted as of January 2, 2019 to align with the Company’s adoption date.

 

d)Property and equipment, net – The reduction in property and equipment, net represents the change from FRC’s historical net book value to the preliminary estimated fair value of property and equipment acquired, including the impact of ASC 842 adoption as of January 2, 2019 as follows (in thousands):

 

 8 

 

Asset Class  Useful Life  Historical
Book Value		   Reclassification
to Company's
Presentation		   ASC 842
Adoption		   Pro Forma
Adjustments		   Preliminary
Estimated Fair
Value		 
Leasehold improvements  10-30 years  $70,218   $9,410   $(26,742)  $(22,788)  $30,098 
Furnishings, fixtures and equipment  3-15 years   64,640    (12,205)   -    (6,561)   45,874 
Computer software and equipment  5 years   -    2,795    (138)   (1,762)   895 
Construction in progress      6,625    -    -    38    6,663 
Property and equipment, total      141,483    -    (26,880)   (31,073)   83,530 
Less: Accumulated depreciation      (50,273)   -    5,498    44,775    - 
Property and equipment, net     $91,210   $-   $(21,382)  $13,702   $83,530 

 

e)Intangible assets, net – The increase in intangible assets, net represents the change from FRC’s historical net book value to preliminary estimated fair value as follows (in thousands):

 

   Historical
Book Value		   Pro Forma
Adjustments		   Preliminary
Estimated
Fair Value		 
Intellectual property - North Italia  $-   $117,000   $117,000 
Intellectual property - Flower Child   -    72,000    72,000 
Intellectual property - Other FRC        84,000    84,000 
Other   1,089    4,893    5,982 
Total intangible assets, net  $1,089   $277,893   $278,982 

 

The acquired intellectual property was preliminarily deemed to be indefinite-lived and, therefore, would not be subject to amortization. The final determination of intangible asset lives could materially impact the valuations and resulting amortization expense.

 

f)Goodwill – The goodwill balance presented is a preliminary estimate resulting from the excess of consideration transferred and the estimated fair value of the Company’s previously-held equity interest in FRC over the estimated net fair value of the assets acquired and liabilities assumed in the Acquisition.

 

g)Operating lease assets – The increase in operating lease assets represents the $224.5 million impact from ASC 842 adoption by FRC as of January 2, 2019, partially offset by an estimated $1.1 million impact of below-market leases.

 

h)Investments in unconsolidated affiliates – The decrease in investments in unconsolidated affiliates reflects elimination of the Company’s previously-held equity interest in FRC.

 

i)Other assets – The decrease in other assets represents the repayment at Closing of $12.5 million of loans extended by the Company to FRC prior to the Acquisition and assumption at Closing of $10.0 million of loans extended by the Company to FRC prior to the Acquisition.

 

j)Accounts payable – The reduction in accounts payable reflects transaction costs included in accounts payable at Closing.

 

k)Notes payable, current portion – The reduction in notes payable, current portion represents elimination of historical FRC balances that were contractually excluded from the Acquisition.

 

l)Deferred rent – The elimination of deferred rent reflects the impact of ASC 842 adoption by FRC as of January 2, 2019.

 

 9 

 

m)Operating lease liabilities – The increase in operating lease liabilities represents the impact of ASC 842 adoption by FRC as of January 2, 2019.

 

n)Other accrued expenses – The increase in other accrued expenses is primarily due to the addition of $16.7 million for the fair market value of the current portion of deferred purchase price payments, partially offset by elimination of $8.3 million of transaction-related costs accrued by FRC, including $7.0 million of closing bonuses funded by sellers’ proceeds to be paid by FRC after the Closing (determined to be part of the transaction in accordance with ASC Topic 805, Business Combinations), a $1.2 million impact from ASC 842 adoption by FRC as of January 2, 2019 and elimination of FRC’s $1.2 million payable balance to the Company for items paid by the Company on behalf of FRC prior to the Acquisition.

 

o)Deferred income taxes – The increase in deferred income taxes reflects the estimated impact of the fair value adjustments discussed above and is based on a tax rate of 24.6%, reflecting the rate expected to be in effect at the time the deferred items reverse.

 

p)Deferred rent liabilities – The elimination of the deferred rent liabilities balance reflects the impact of ASC 842 adoption by FRC as of January 2, 2019.

 

q)Deemed landlord financing liability – The elimination of the deemed landlord financing balance reflects the impact of ASC 842 adoption by FRC as of January 2, 2019.

 

r)Other noncurrent liabilities – The increase in other noncurrent liabilities represents the fair market value of the long-term portion of deferred purchase price payments and contingent consideration.

 

s)Retained earnings – The increase in retained earnings represents a $64.7 million gain on remeasurement of the Company’s previously-held equity interest in FRC immediately before the Acquisition date to estimated fair value, partially offset by the elimination of FRC’s historical equity balance of $2.8 million and transaction costs incurred between the Closing Date and the date of this filing totaling $0.9 million.

 

4. Adjustments to the Unaudited Pro Forma Condensed Consolidated Statements of Income

 

t)Other operating expenses – The increase in other operating expenses primarily represents additional rent expense related to the impact of ASC 842 adoption by FRC as of January 2, 2019.

 

u)General and administrative expenses – The adjustment to general and administrative expenses relates to the following items (in thousands):

 

   Thirty-Nine
Weeks Ended
October 1, 2019		   Fiscal Year
Ended
January 1, 2019		 
Elimination of nonrecurring transaction costs (1)  $(10,784)  $- 
Contingent consideration expense   1,307    1,743 
Other   (262)   128 
Total  $(9,739)  $1,871 

 

(1) $2.4 million incurred by the Company and $8.4 million incurred by FRC, including $7.0 million of closing bonuses funded by sellers’ proceeds to be paid by FRC after the Closing (determined to be part of the transaction in accordance with ASC Topic 805, Business Combinations)

 

v)Depreciation and amortization expenses – The decrease in depreciation and amortization expenses relates to the following items (in thousands):

 

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   Thirty-Nine
Weeks Ended
October 1, 2019		   Fiscal Year
Ended
January 1, 2019		 
Elimination of depreciation expense on assets that were contractually excluded from the acquisition  $(2,849)  $(2,031)
Adoption of ASC 842 by FRC as of January 2, 2019   (1,466)   - 
Fair market value adjustments to property and equipment and amortizable intangible assets   (292)   (390)
Total  $(4,607)  $(2,421)

 

A 10% change in the valuation of property and equipment and amortizable intangible assets would cause a corresponding increase or decrease in annual depreciation and amortization expense of approximately $1.1 million, assuming an overall weighted-average useful life of 12 years.

 

w)Income/(loss) on investment in unconsolidated affiliates – The adjustment to income/(loss) on investment in unconsolidated affiliates represents elimination of the Company’s loss on its previously-held equity interest in FRC.

 

 

x)Interest and other income/(expense) – The Company borrowed $280 million under its credit facility during the third quarter of fiscal 2019 in preparation for funding the Acquisition on October 2, 2019. The increase in interest and other income/(expense) represents interest incurred on this debt at 3.5%, the Company’s effective borrowing rate as of the date of this filing, totaling $7.4 million and $9.9 million for the thirty-nine weeks ended October 1, 2019 and the fiscal year ended January 1, 2019, respectively. This increase is partially offset by the elimination of historical FRC interest expense totaling $3.1 million and $2.0 million for the thirty-nine weeks ended October 1, 2019 and the fiscal year ended January 1, 2019, respectively.

 

As interest on the Company’s credit facility is variable, financing costs are sensitive to changes in interest rates. For each 0.125% change in interest rates, annual interest expense would fluctuate by approximately $0.4 million. For each $25 million change in the principal amount of indebtedness, annual interest expense would fluctuate by approximately $0.9 million.

 

y)Income tax provision – The increase to the income tax provision represents the estimated impact of the pro forma adjustments and additional estimated federal income tax assuming FRC was a taxable entity using a statutory rate of 25.5%. The Company’s effective tax rate could be materially different from the rate presented in this unaudited pro forma condensed financial information.

 

 

z)Net income per share – The unaudited pro forma basic and diluted net income per share amounts are based on the historical basic and diluted weighted average shares outstanding of the Company (in thousands, except per share data):

 

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   Thirty-Nine
Weeks Ended
October 1, 2019		   Fiscal Year
Ended
January 1, 2019		 
Pro forma net income  $65,803   $82,433 
           
Basic weighted average shares outstanding   44,034    45,263 
Diluted weighted average shares outstanding   44,643    46,215 
           
Basic net income per share  $1.49   $1.82 
Diluted net income per share  $1.47   $1.78 

 

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