DEL TACO RESTAURANTS, INC., 10-Q filed on 5/4/2020
Quarterly Report
v3.20.1
Cover Page - shares
3 Months Ended
Mar. 24, 2020
Apr. 27, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 24, 2020  
Document Transition Report false  
Entity Registrant Name DEL TACO RESTAURANTS, INC.  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   37,080,960
Amendment Flag false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Entity Central Index Key 0001585583  
Current Fiscal Year End Date --12-29  
v3.20.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 24, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 38,138 $ 1,421
Accounts and other receivables, net 2,254 3,580
Inventories 3,037 3,123
Prepaid expenses and other current assets 1,852 2,289
Assets held for sale 0 8,411
Total current assets 45,281 18,824
Property and equipment, net 156,553 156,921
Operating lease right-of-use assets 258,573 258,278
Goodwill 108,979 192,739
Trademarks 208,400 220,300
Intangible assets, net 10,998 10,827
Other assets, net 4,600 4,568
Total assets 793,384 862,457
Current liabilities:    
Accounts payable 18,601 19,652
Other accrued liabilities 41,150 34,577
Current portion of finance lease obligations and other debt 212 220
Current portion of operating lease liabilities 21,107 17,848
Total current liabilities 81,070 72,297
Long-term debt, finance lease obligations and other debt, excluding current portion, net 174,356 144,581
Operating lease liabilities, excluding current portion 261,781 257,361
Deferred income taxes 59,369 69,510
Other non-current liabilities 16,004 16,601
Total liabilities 592,580 560,350
Commitments and contingencies (Note 15)
Shareholders’ equity:    
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding 0 0
Common stock, $0.0001 par value; 400,000,000 shares authorized; 37,080,960 shares issued and outstanding at March 24, 2020; 37,059,202 shares issued and outstanding at December 31, 2019 4 4
Additional paid-in capital 334,499 333,379
Accumulated other comprehensive loss (7) (52)
Accumulated deficit (133,692) (31,224)
Total shareholders’ equity 200,804 302,107
Total liabilities and shareholders’ equity $ 793,384 $ 862,457
v3.20.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 24, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized (in shares) 1,000,000 1,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized (in shares) 400,000,000 400,000,000
Common stock, shares issued (in shares) 37,080,960 37,059,202
Common stock, shares outstanding (in shares) 37,080,960 37,059,202
v3.20.1
Consolidated Statements of Comprehensive (Loss) Income - USD ($)
$ in Thousands
3 Months Ended
Mar. 24, 2020
Mar. 26, 2019
Revenue:    
Total revenue $ 109,810 $ 114,197
Restaurant operating expenses:    
Labor and related expenses 34,936 35,900
Occupancy and other operating expenses 24,408 24,433
General and administrative 9,866 10,465
Franchise advertising expenses 3,211 3,131
Depreciation and amortization 6,137 5,907
Occupancy and other - franchise subleases and other 1,595 854
Pre-opening costs 233 100
Impairment of goodwill 87,277 0
Impairment of trademarks 11,900 0
Impairment of long-lived assets 8,287 0
Restaurant closure charges, net 494 640
Loss on disposal of assets and adjustments to assets held for sale, net 122 290
Total operating expenses 216,761 110,538
(Loss) income from operations (106,951) 3,659
Other expense (income), net    
Interest expense 1,508 1,784
Other income 0 (104)
Total other expense, net 1,508 1,680
(Loss) income from operations before (benefit) provision for income taxes (108,459) 1,979
(Benefit) provision for income taxes (5,991) 554
Net (loss) income (102,468) 1,425
Other comprehensive income (loss):    
Change in fair value of interest rate cap, net of tax 0 (139)
Reclassification of interest rate cap amortization included in net income, net of tax 45 21
Total other comprehensive income (loss), net 45 (118)
Comprehensive (loss) income $ (102,423) $ 1,307
(Loss) earnings per share:    
Basic (in dollars per share) $ (2.76) $ 0.04
Diluted (in dollars per share) $ (2.76) $ 0.04
Weighted-average shares outstanding    
Basic (in shares) 37,075,994 37,155,978
Diluted (in shares) 37,075,994 37,346,319
Company restaurant sales    
Revenue:    
Revenue $ 100,333 $ 105,903
Franchise revenue    
Revenue:    
Revenue 4,391 4,065
Franchise advertising contributions    
Revenue:    
Revenue 3,211 3,131
Franchise sublease and other income    
Revenue:    
Revenue 1,875 1,098
Food and paper costs    
Restaurant operating expenses:    
Cost, Direct Material $ 28,295 $ 28,818
v3.20.1
Consolidated Statements of Shareholders' Equity - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income (Loss)
Retained Earnings (Accumulated Deficit)
Adjustment for adoption of accounting standards, net of tax $ 1,912       $ 1,912
Beginning Balance, Shares at Jan. 01, 2019   37,305,342      
Beginning Balance at Jan. 01, 2019 422,274 $ 4 $ 336,941 $ 180 85,149
Net income (loss) 1,425       1,425
Other comprehensive income (loss), net of tax (118)     (118)  
Comprehensive income (loss) 1,307        
Stock-based compensation 1,577   1,577    
Issuance of vested restricted stock, net of shares withheld for tax withholding, shares   13,172      
Issuance of vested restricted stock, net of shares withheld for tax withholding (84)   (84)    
Exercise of stock options, shares   1,500      
Exercise of stock options 16   16    
Repurchase of common stocks and warrants, shares   (270,874)      
Repurchase of common stocks and warrants (4,306)   (4,306)    
Ending Balance, Shares at Mar. 26, 2019   37,049,140      
Ending Balance at Mar. 26, 2019 422,696 $ 4 334,144 62 88,486
Beginning Balance, Shares at Dec. 31, 2019   37,059,202      
Beginning Balance at Dec. 31, 2019 302,107 $ 4 333,379 (52) (31,224)
Net income (loss) (102,468)       (102,468)
Other comprehensive income (loss), net of tax 45     45  
Comprehensive income (loss) (102,423)        
Stock-based compensation 1,225   1,225    
Issuance of vested restricted stock, net of shares withheld for tax withholding, shares   21,758      
Issuance of vested restricted stock, net of shares withheld for tax withholding (105)   (105)    
Ending Balance, Shares at Mar. 24, 2020   37,080,960      
Ending Balance at Mar. 24, 2020 $ 200,804 $ 4 $ 334,499 $ (7) $ (133,692)
v3.20.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
Mar. 24, 2020
Mar. 26, 2019
Operating activities    
Net (loss) income $ (102,468) $ 1,425
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Depreciation and amortization 6,137 5,907
Amortization of deferred financing costs, debt discount and interest rate cap 123 118
Amortization of operating lease assets 5,112 4,963
Stock-based compensation 1,225 1,577
Impairment of goodwill 87,277 0
Impairment of trademarks 11,900 0
Impairment of long-lived assets 8,287 0
Deferred income taxes (10,158) 196
Loss on disposal of assets and adjustments to assets held for sale, net 122 290
Restaurant closure charges 46 118
Changes in operating assets and liabilities:    
Accounts and other receivables, net 1,326 (48)
Inventories 86 259
Prepaid expenses and other current assets 3,357 2,297
Other assets (95) (18)
Accounts payable (711) (1,317)
Operating lease liabilities (4,863) (4,695)
Other accrued liabilities 6,796 (1,051)
Other non-current liabilities (940) (118)
Net cash provided by operating activities 12,559 9,903
Investing activities    
Purchases of property and equipment (7,983) (7,007)
Proceeds from disposal of property and equipment, net 1,440 10,040
Purchases of other assets (384) (515)
Acquisition of franchisees 0 (3,120)
Proceeds from sale of company-operated restaurants 1,219 2,090
Net cash (used in) provided by investing activities (5,708) 1,488
Financing activities    
Proceeds from issuance of common stock 0 0
Repurchase of common stock and warrants 0 (4,306)
Payment of tax withholding related to restricted stock vesting (105) (84)
Payments on finance leases and other debt (29) (146)
Proceeds from revolving credit facility 40,000 9,000
Payments on revolving credit facility (10,000) (14,000)
Proceeds from exercise of stock options 0 16
Net cash provided by (used in) financing activities 29,866 (9,520)
Increase in cash and cash equivalents 36,717 1,871
Cash and cash equivalents at beginning of period 1,421 7,153
Cash and cash equivalents at end of period 38,138 9,024
Supplemental cash flow information:    
Cash paid during the period for interest 854 1,134
Cash paid during the period for income taxes 0 0
Supplemental schedule of non-cash activities:    
Accrued property and equipment purchases 5,039 4,342
Amortization of interest rate cap into net income, net of tax 45 21
Change in other asset for fair value of interest rate cap recorded to other comprehensive (loss) income, net of tax 0 (139)
Operating lease right-of-use assets obtained in exchange for lease obligations 9,358 240,160
Finance lease right-of-use assets obtained in exchange for lease obligations 0 1,185
Impairment on operating lease right-of-use assets related to the adoption of new accounting pronouncements $ 0 $ 3,116
v3.20.1
Description of Business
3 Months Ended
Mar. 24, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business Description of BusinessDel Taco Restaurants, Inc. is a Delaware corporation headquartered in Lake Forest, California. The consolidated financial statements include the accounts of Del Taco Restaurants, Inc. and its wholly owned subsidiaries (collectively, the “Company” or “Del Taco”). The Company develops, franchises, owns, and operates Del Taco quick-service Mexican-American restaurants. At March 24, 2020, there were 296 company-operated and 300 franchise-operated Del Taco restaurants located in 15 states, including one franchise-operated unit in Guam. At March 26, 2019, there were 312 company-operated and 271 franchise-operated Del Taco restaurants located in 14 states, including one franchise-operated unit in Guam.
v3.20.1
Basis of Presentation and Summary of Significant Accounting Policies
3 Months Ended
Mar. 24, 2020
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). For additional information, these unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Form 10-K").
 
The Company’s fiscal year ends on the Tuesday closest to December 31. Fiscal year 2020 is a fifty-two week period ending December 29, 2020. Fiscal year 2019 is the fifty-two week period ended December 31, 2019. In a fifty-two week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes sixteen weeks of operations. For fiscal year 2020, the Company’s accompanying financial statements reflect the twelve weeks ended March 24, 2020. For fiscal year 2019, the Company’s accompanying financial statements reflect the twelve weeks ended March 26, 2019.
In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full fiscal year.
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided in business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances.
Recently Issued Accounting Standards
In December 2019, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing the following exceptions: (1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a subsidiary becomes an equity method investment; and (3) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. Furthermore, ASU 2019-12 simplifies the accounting for income taxes by doing the following: (1) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for
any incremental amount incurred as a non-income-based tax; (2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part if the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; (3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and (4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated financial statements.
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Financial Statements - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2019. There was no material impact on the Company's consolidated financial statements and related disclosures as a result of adopting this standard.
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which clarifies the accounting implementation costs in cloud computing arrangements. The standard is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. There was no material impact on the Company's consolidated financial statements and related disclosures as a result of adopting this standard.
Summary of Significant Accounting Policies
There have been no changes to our significant accounting policies described in the 2019 Form 10-K filed with the SEC on March 13, 2020 that have had a material impact on our consolidated financial statements and related notes.
v3.20.1
Impairment of Long-Lived Assets and Restaurant Closure Charges
3 Months Ended
Mar. 24, 2020
Restructuring and Related Activities [Abstract]  
Restaurant Closure Charges, Net Impairment of Long-Lived Assets and Restaurant Closure Charges
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. The Company evaluates such cash flows for individual restaurants and franchise agreements on an undiscounted basis. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their estimated fair values. We generally estimate fair value using the discounted value of the estimated cash flows associated with the respective restaurant or agreement, using Level 3 inputs. The impairment charges represent the excess of each operating lease right-of-use asset, furniture, fixtures and equipment and leasehold improvement's carrying amount over its estimated fair value.
During the twelve weeks ended March 24, 2020, the Company evaluated certain restaurants having indicators of impairment based on operating performance, taking into consideration the negative impact of the COVID-19 pandemic on forecast restaurant performance which resulted in elevated impairment charges for the twelve weeks ended March 24, 2020. As a result, the Company recorded a non-cash impairment charge totaling $8.3 million related to eight restaurants based on the estimate of future recoverable cash flows. As part of the impairment charge, the Company wrote-off $4.2 million of operating lease right-of-use assets, $1.3 million of furniture, fixtures and equipment and $2.8 million of leasehold improvements. No impairment charges were recorded during the twelve weeks ended March 26, 2019.
Restaurant Closure Charges
Restaurant closure liability was $0.4 million at both March 24, 2020 and December 31, 2019 which relates to the non-lease executory costs associated with company-operated restaurants that were closed during the fourth quarter of 2015. A summary of the restaurant closure liability activity for these closed restaurants consisted of the following (in thousands):
12 Weeks Ended
March 24, 2020March 26, 2019
Beginning Balance$437  $2,092  
Reclassified to operating lease right-of-use assets—  (1,900) 
Cash payments—  (192) 
Adjustments to estimates based on current activity—  118  
Accretion —  
Ending Balance$445  $118  

During the twelve weeks ended March 26, 2019, in connection with the adoption of ASU 2016-02, Leases, the Company reclassified $1.9 million of the lease-related restaurant closure liability to offset the respective operating lease right-of-use assets.
The current portion of the restaurant closure liability was $0.2 million and $0.1 million as of March 24, 2020 and December 31, 2019, respectively, and is included in other accrued liabilities in the consolidated balance sheets. The non-current portion of the restaurant closure liability is $0.3 million as of both March 24, 2020 and December 31, 2019 and is included in other non-current liabilities in the consolidated balance sheets. The restaurant closure liability is expected to be settled by 2022.
v3.20.1
Summary of Refranchising and Franchise Acquisitions
3 Months Ended
Mar. 24, 2020
Franchise Acquisitions [Abstract]  
Summary of Refranchising and Franchise Acquisitions Summary of Refranchising and Franchise Acquisitions
Refranchising
In connection with the sale of company-operated restaurants to franchisees, the Company typically enters into several agreements, in addition to an asset purchase agreement, with franchisees including franchise and lease agreements. The Company typically sells restaurants’ inventory and equipment and retains ownership of the leasehold interest to the real estate to sublease to the franchisee. The Company has determined that its restaurant dispositions usually represent multiple-element arrangements, and as a result, the cash consideration received is allocated to the separate elements based on their relative selling price. Cash consideration generally includes up-front consideration for the sale of the restaurants and franchise fees and future cash consideration for royalties and lease payments. The Company considers the future lease payments in allocating the initial cash consideration received. The Company compares the stated rent under the lease and/or sublease agreements with comparable market rents, and the Company records sublease assets/liabilities with a corresponding offset to the gain or loss on the sale of the company-operated restaurants. Sublease assets represent subleases with stated rent above comparable market rents. Sublease assets are amortized to sublease income over the term of the related sublease. Sublease liabilities represent subleases with stated rent below comparable market rents and are amortized to sublease income over the term of the related sublease. Both sublease assets and sublease liabilities arise from the sale of company-operated restaurants to franchisees. The cash consideration per restaurant for franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements. The Company initially defers and subsequently recognizes the franchise fees over the term of the franchise agreement. Future royalty income is also recognized in franchise revenue as earned.
The Company sold five company-operated restaurants to a franchisee in the first quarter of 2020 and 13 company-operated restaurants to franchisees in the first quarter of 2019. The following table summarizes the net loss recognized related to these transactions during the twelve weeks ended March 24, 2020 and March 26, 2019 (dollars in thousands):
12 Weeks Ended
March 24, 2020
12 Weeks Ended
March 26, 2019
Company-operated restaurants sold to franchisees 13  
Proceeds from the sale of company-operated restaurants, net of selling costs$1,219  $2,090  
Net assets sold (primarily furniture, fixtures and equipment) (a)
(731) (2,051) 
Goodwill related to the company-operated restaurants sold to franchisees(1,196) (83) 
Allocation to deferred franchise fees(159) (281) 
Sublease assets, net220  260  
Loss on sale of company-operated restaurants (b)
$(647) $(65) 

(a) Of the net assets sold during the twelve weeks ended March 24, 2020, $0.69 million was included in assets held for sale as of December 31, 2019. The net assets sold during the twelve weeks ended March 26, 2019 were all included in assets held for sale as of January 1, 2019.
(b) Of the loss related to the five company-operated restaurants sold during the twelve weeks ended March 24, 2020, $0.58 million was previously recognized during the fifty-two weeks ended December 31, 2019 as a fair value adjustment to the assets held for sale balance. The loss on sale of company-operated restaurants is included in loss on disposal of assets and adjustments to assets held for sale, net on the consolidated statements of comprehensive (loss) income.
Assets Held for Sale
Assets held for sale includes the net book value of property and equipment for Company-operated restaurants that the Company plans to sell within the next year to new or existing franchisees. Long-lived assets that meet the held for sale criteria are held for sale and reported at the lower of their carrying value or fair value, less estimated costs to sell.
As of December 31, 2019, the Company classified 19 company-operated restaurants as held for sale. During the twelve weeks ended March 24, 2020, the Company sold five company-operated restaurants as discussed in the Refranchising section above and determined that the remaining 14 company-operated restaurants would not be sold within the next year and therefore reclassified the related long-lived assets back to held for use. The Company reclassified the assets back to held for use at their carrying amount before they were classified as held for sale, adjusted for depreciation expense that would have been recognized had the assets been continuously classified as held and used. As such, the Company recognized a loss of $0.5 million related to the reclassification which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statement of comprehensive (loss) income. Assets held for sale at March 24, 2020 and December 31, 2019 consisted of the following (in thousands):
March 24, 2020December 31, 2019
Other property and equipment held for sale$—  $4,025  
Goodwill—  4,386  
$—  $8,411  

Franchise Acquisitions
There were no franchise acquisitions during the twelve weeks ended March 24, 2020. The Company acquired three franchise-operated restaurants during the twelve weeks ended March 26, 2019. The Company accounts for the acquisition of franchise-operated restaurants using the acquisition method of accounting for business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3). The goodwill recorded primarily relates to the market position and future growth potential of the markets acquired and is expected to be deductible for income tax purposes. The following table provides detail of the combined acquisitions for the twelve weeks ended March 26, 2019 (dollars in thousands):
12 Weeks Ended
March 26, 2019
Franchise-operated restaurants acquired from franchisees3
Goodwill$2,672  
Restaurant and other equipment and leasehold improvements578  
Operating lease right-of-use assets858  
Operating lease liabilities(858) 
Unfavorable lease liabilities(130) 
Total consideration$3,120  

The unfavorable lease liability of $0.1 million was recorded as an adjustment to the respective operating lease right-of-use asset.
v3.20.1
Goodwill and Other Intangible Assets
3 Months Ended
Mar. 24, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Goodwill and Other Intangible AssetsChanges in the carrying amount of goodwill for the twelve weeks ended March 24, 2020 are as follows (in thousands):
Goodwill
Balance as of December 31, 2019$192,739  
Goodwill reclassified from held for sale3,517  
Impairment of goodwill(87,277) 
Balance as of March 24, 2020$108,979  

The decrease in goodwill was primarily due to an impairment of $87.3 million. In March 2020, the outbreak of the COVID-19 pandemic prompted authorities in most jurisdictions where the Company operates to issue stay-at-home orders, leading to an unexpected significant disruption to the Company's business requiring the Company to close restaurant dining rooms and operate with only drive-thru, take-out and delivery orders. As such, the consequences of the outbreak of the COVID-19 pandemic coupled with a sustained decline in the Company's stock price were determined to be indicators of impairment. As such, using Level 3 inputs, the Company performed a quantitative goodwill impairment assessment using both the discounted cash flow method and guideline public company method to determine the fair value of its reporting unit. Significant assumptions and estimates used in determining fair value include future revenues, operating costs, working capital changes, capital expenditures, a discount rate that approximates the Company's weighted average cost of capital and a selection of comparable companies. Based on the quantitative assessment, the Company determined that the fair value of its reporting unit was less than its carrying value and recognized a non-cash goodwill impairment charge of $87.3 million, equal to the excess of the reporting unit's carrying value above its fair value. The impairment charge was recorded in impairment of goodwill on the consolidated statements of comprehensive (loss) income. Accumulated goodwill impairment losses were $205.5 million and $118.3 million as of March 24, 2020 and December 31, 2019, respectively.
In conjunction with the quantitative goodwill impairment assessment, the Company also performed a quantitative impairment assessment of its indefinite-lived trademarks. Using Level 3 inputs, the Company used the relief from royalty method to determine the fair value of its trademark. Significant assumptions and estimates used in determining fair value include future revenues, the royalty rate, franchise attrition, brand maintenance expenses and a discount rate that approximates the Company's weighted average cost of capital. Based on the quantitative assessment, the Company determined the fair value of its trademark was less than its carrying value and recognized a non-cash impairment charge of $11.9 million, equal to the excess of the trademark's carrying value above its fair value. The impairment charge was recorded in impairment of trademarks on the consolidated statements of comprehensive (loss) income.
The Company’s other intangible assets at March 24, 2020 and December 31, 2019 consisted of the following (in thousands):

 March 24, 2020December 31, 2019
 Gross
Carrying
Amount
Accumulated
Amortization
NetGross
Carrying
Amount
Accumulated
Amortization
Net
Sublease assets1,820  (103) 1,717  1,340  (82) 1,258  
Franchise rights14,298  (5,727) 8,571  14,298  (5,465) 8,833  
Reacquired franchise rights943  (233) 710  943  (207) 736  
Total amortized other intangible assets$17,061  $(6,063) $10,998  $16,581  $(5,754) $10,827  

The Company recorded sublease assets of $0.5 million and $1.0 million during the twelve weeks ended March 24, 2020 and March 26, 2019, respectively, in connection with the sale of company-operated restaurants (see Note 4 for more information).

During the twelve weeks ended March 26, 2019, the Company reclassified $0.4 million respectively of franchise rights as reacquired franchise rights related to the Company's acquisition of three franchise-operated restaurants and wrote off $11,000 of franchise rights associated with the closure of one franchise-operated restaurant.
v3.20.1
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities
3 Months Ended
Mar. 24, 2020
Debt Disclosure [Abstract]  
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities Debt and Obligations Under Finance Leases
The Company’s long-term debt, finance lease obligations and other debt at March 24, 2020 and December 31, 2019 consisted of the following (in thousands):
 
 March 24, 2020December 31, 2019
Senior Credit Facility, as amended, net of unamortized debt discount of $219 and $231 and deferred financing costs of $988 and $1,038 at March 24, 2020 and December 31, 2019, respectively
$173,793  $143,731  
Total outstanding indebtedness173,793  143,731  
Obligations under finance leases and other debt775  1,070  
Total debt174,568  144,801  
Less: amounts due within one year212  220  
Total amounts due after one year, net$174,356  $144,581  
 
At March 24, 2020 and December 31, 2019, the Company assessed the amounts recorded under the Senior Credit Facility and determined that such amounts approximated fair value.
Senior Credit Facility
On August 4, 2015, the Company refinanced its then existing senior credit facility and entered into a new credit agreement (the “Senior Credit Facility”). The Senior Credit Facility, which was to mature on August 4, 2020, provided for a $250 million revolving credit facility.

In September 2019, the Company refinanced the Senior Credit Facility, pursuant to Amendment No. 4 to the Credit Agreement among Del Taco, as borrower, the Company and its subsidiaries, as guarantors, Bank of America, N.A. as administrative agent and letter of credit issuer, the lenders party thereto, and other parties thereto, which provides for a $250 million five-year senior secured revolving facility. The Senior Credit Facility, as amended, includes a sub limit of $35 million for letters of credit. The Senior Credit Facility, as amended, will mature on September 19, 2024.

The Senior Credit Facility, as amended, contains certain financial covenants, including the maintenance of a consolidated total lease adjusted leverage ratio and a consolidated fixed charge coverage ratio. The Company was in compliance with the financial covenants as of March 24, 2020. Substantially all of the assets of the Company are pledged as collateral under the Senior Credit Facility.
At March 24, 2020, the weighted-average interest rate on the outstanding balance of the Senior Credit Facility, as amended, was 3.45%. At March 24, 2020, the Company had a total of $57.7 million of availability for additional borrowings under the Senior Credit Facility, as amended, as the Company had $175.0 million of outstanding borrowings and $17.3 million of letters of credit outstanding, which reduce availability under the Senior Credit Facility, as amended.
On March 30, 2020, the Company borrowed an additional $25.0 million under its Senior Credit Facility, which reduced the availability for additional borrowings under the Senior Credit Facility to $32.7 million.
v3.20.1
Leases
3 Months Ended
Mar. 24, 2020
Leases [Abstract]  
Leases Leases
The Company's material leases consist of restaurant locations and its executive offices with expiration dates through 2044. In general, the leases have remaining terms of 1-20 years, most of which include options to extend the leases for additional five-year periods. The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determines that it is reasonably certain of exercising the option at inception or when a triggering event occurs.
The Company has subleased certain properties to other third parties where the Company remains primarily liable to the landlord for the performance of all obligations in the event that the sub-lessee does not perform its obligations under the lease. As a
result of the sublease arrangements, future rental commitments under operating leases will be offset by sublease amounts to be paid by the sub-lessee. In general, the terms of the sublease are similar to the terms of the master lease.
The components of lease cost were as follows (in thousands):
ClassificationTwelve Weeks Ended March 24, 2020Twelve Weeks Ended March 26, 2019
Operating lease costOccupancy and other operating expenses, Occupancy and other - franchise subleases and other, Pre-opening costs, Restaurant closure charges, net and General and administrative$9,446  $8,799  
Finance lease cost:
Amortization of right of use assetsDepreciation and amortization55  133  
Interest on lease liabilitiesInterest expense12  27  
Short-term lease costOccupancy and other operating expenses72  101  
Variable lease costOccupancy and other operating expenses, Occupancy and other - franchise subleases and other and Restaurant closure charges, net323  390  
Sublease incomeFranchise sublease and other income(1,582) (912) 
Total lease cost$8,326  $8,538  

Supplemental balance sheet information related to the Company's operating and finance leases (noting the financial statement caption each is included with) as of March 24, 2020 and December 31, 2019 was as follows (in thousands):
March 24, 2020December 31, 2019
Operating lease assets:
  Operating lease right-of-use assets$258,573  $258,278  
Operating lease liabilities:
Current portion of operating lease liabilities$21,107  $17,848  
Operating lease liabilities, excluding current portion261,781  257,361  
Total operating lease liabilities$282,888  $275,209  
Finance lease assets:
Buildings under finance leases$495  $871  
Accumulated depreciation(227) (334) 
Finance lease assets, net$268  $537  
Finance lease obligations:
Current portion of finance lease obligations and other debt$153  $162  
Long-term debt, finance lease obligations and other debt, excluding current portion, net140  412  
Total finance lease obligations$293  $574  

Weighted Average Remaining Lease Term (in years)March 24, 2020
Operating leases12.7
Finance leases2.3
Weighted Average Discount RateMarch 24, 2020
Operating leases6.59 %
Finance leases10.48 %

Supplemental cash flow information related to leases was as follows (in thousands):
Twelve Weeks Ended March 24, 2020Twelve Weeks Ended March 26, 2019
Cash paid for amounts in the measurement of lease liabilities:
Operating cash flows used for operating leases$6,012  $5,835  
Operating cash flows used for finance leases$12  $27  
Financing cash flows used for finance leases$54  $133  

The estimated future lease payments as of March 24, 2020, are as follows (in thousands):

Finance Lease LiabilitiesOperating Lease LiabilitiesOperating SubleasesNet Lease Commitments
2020$134  $29,012  $(4,761) $24,385  
2021138  39,100  (6,247) 32,991  
202219  40,845  (6,802) 34,062  
202317  35,751  (6,120) 29,648  
202416  29,975  (5,463) 24,528  
Thereafter 252,220  (60,760) 191,464  
Total lease payments$328  $426,903  $(90,153) $337,078  
Amounts representing interest(35) (144,015) (144,050) 
Present value of lease obligations$293  $282,888  $193,028  

During the twelve weeks ended March 24, 2020, the Company entered into one sale leaseback arrangement with a third party private investor. The sale-leaseback transaction does not provide for any continuing involvement by the Company other than a normal lease where the Company intends to use the property during the lease term. The lease has been accounted for as an operating lease. The net proceeds from the transactions totaled approximately $1.4 million. Under the arrangement, the Company sold the land and building of an existing restaurant and leased it back for a term of 20 years. The sale of this property resulted in a gain of approximately $0.6 million which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive (loss) income.
During the twelve weeks ended March 26, 2019, the Company entered into two sale leaseback arrangements with third party private investors. These sale-leaseback transactions do not provide for any continuing involvement by the Company other than normal leases where the Company intends to use the property during the lease term. The leases have been accounted for as operating leases. The net proceeds from the transactions totaled approximately $10.0 million. Under one of the arrangements, the Company sold the land and building related to a restaurant constructed during 2018 and leased it back for a term of 20 years. Under the other arrangement, the Company sold the land related to a restaurant constructed during 2018 and leased it back for a term of 20 years. The sale of these properties resulted in a loss of approximately $0.1 million which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive (loss) income. The assets sold were included in assets held for sale as of January 1, 2019.
In response to the COVID-19 pandemic, subsequent to the twelve weeks ended March 24, 2020, we negotiated temporary deferral of certain second quarter of fiscal 2020 rent payments until future periods. We intend to consider recent FASB staff guidance to account for these lease arrangements.
Leases Leases
The Company's material leases consist of restaurant locations and its executive offices with expiration dates through 2044. In general, the leases have remaining terms of 1-20 years, most of which include options to extend the leases for additional five-year periods. The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determines that it is reasonably certain of exercising the option at inception or when a triggering event occurs.
The Company has subleased certain properties to other third parties where the Company remains primarily liable to the landlord for the performance of all obligations in the event that the sub-lessee does not perform its obligations under the lease. As a
result of the sublease arrangements, future rental commitments under operating leases will be offset by sublease amounts to be paid by the sub-lessee. In general, the terms of the sublease are similar to the terms of the master lease.
The components of lease cost were as follows (in thousands):
ClassificationTwelve Weeks Ended March 24, 2020Twelve Weeks Ended March 26, 2019
Operating lease costOccupancy and other operating expenses, Occupancy and other - franchise subleases and other, Pre-opening costs, Restaurant closure charges, net and General and administrative$9,446  $8,799  
Finance lease cost:
Amortization of right of use assetsDepreciation and amortization55  133  
Interest on lease liabilitiesInterest expense12  27  
Short-term lease costOccupancy and other operating expenses72  101  
Variable lease costOccupancy and other operating expenses, Occupancy and other - franchise subleases and other and Restaurant closure charges, net323  390  
Sublease incomeFranchise sublease and other income(1,582) (912) 
Total lease cost$8,326  $8,538  

Supplemental balance sheet information related to the Company's operating and finance leases (noting the financial statement caption each is included with) as of March 24, 2020 and December 31, 2019 was as follows (in thousands):
March 24, 2020December 31, 2019
Operating lease assets:
  Operating lease right-of-use assets$258,573  $258,278  
Operating lease liabilities:
Current portion of operating lease liabilities$21,107  $17,848  
Operating lease liabilities, excluding current portion261,781  257,361  
Total operating lease liabilities$282,888  $275,209  
Finance lease assets:
Buildings under finance leases$495  $871  
Accumulated depreciation(227) (334) 
Finance lease assets, net$268  $537  
Finance lease obligations:
Current portion of finance lease obligations and other debt$153  $162  
Long-term debt, finance lease obligations and other debt, excluding current portion, net140  412  
Total finance lease obligations$293  $574  

Weighted Average Remaining Lease Term (in years)March 24, 2020
Operating leases12.7
Finance leases2.3
Weighted Average Discount RateMarch 24, 2020
Operating leases6.59 %
Finance leases10.48 %

Supplemental cash flow information related to leases was as follows (in thousands):
Twelve Weeks Ended March 24, 2020Twelve Weeks Ended March 26, 2019
Cash paid for amounts in the measurement of lease liabilities:
Operating cash flows used for operating leases$6,012  $5,835  
Operating cash flows used for finance leases$12  $27  
Financing cash flows used for finance leases$54  $133  

The estimated future lease payments as of March 24, 2020, are as follows (in thousands):

Finance Lease LiabilitiesOperating Lease LiabilitiesOperating SubleasesNet Lease Commitments
2020$134  $29,012  $(4,761) $24,385  
2021138  39,100  (6,247) 32,991  
202219  40,845  (6,802) 34,062  
202317  35,751  (6,120) 29,648  
202416  29,975  (5,463) 24,528  
Thereafter 252,220  (60,760) 191,464  
Total lease payments$328  $426,903  $(90,153) $337,078  
Amounts representing interest(35) (144,015) (144,050) 
Present value of lease obligations$293  $282,888  $193,028  

During the twelve weeks ended March 24, 2020, the Company entered into one sale leaseback arrangement with a third party private investor. The sale-leaseback transaction does not provide for any continuing involvement by the Company other than a normal lease where the Company intends to use the property during the lease term. The lease has been accounted for as an operating lease. The net proceeds from the transactions totaled approximately $1.4 million. Under the arrangement, the Company sold the land and building of an existing restaurant and leased it back for a term of 20 years. The sale of this property resulted in a gain of approximately $0.6 million which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive (loss) income.
During the twelve weeks ended March 26, 2019, the Company entered into two sale leaseback arrangements with third party private investors. These sale-leaseback transactions do not provide for any continuing involvement by the Company other than normal leases where the Company intends to use the property during the lease term. The leases have been accounted for as operating leases. The net proceeds from the transactions totaled approximately $10.0 million. Under one of the arrangements, the Company sold the land and building related to a restaurant constructed during 2018 and leased it back for a term of 20 years. Under the other arrangement, the Company sold the land related to a restaurant constructed during 2018 and leased it back for a term of 20 years. The sale of these properties resulted in a loss of approximately $0.1 million which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive (loss) income. The assets sold were included in assets held for sale as of January 1, 2019.
In response to the COVID-19 pandemic, subsequent to the twelve weeks ended March 24, 2020, we negotiated temporary deferral of certain second quarter of fiscal 2020 rent payments until future periods. We intend to consider recent FASB staff guidance to account for these lease arrangements.
v3.20.1
Derivative Instruments
3 Months Ended
Mar. 24, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
2016 Interest Rate Cap Agreement
In June 2016, the Company entered into an interest rate cap agreement that became effective July 1, 2016, to hedge cash flows associated with interest rate fluctuations on variable rate debt, with a termination date of March 31, 2020 ("2016 Interest Rate Cap Agreement"). The 2016 Interest Rate Cap Agreement had an initial notional amount of $70.0 million of the Senior Credit Facility that effectively converted that portion of the outstanding balance of the Senior Credit Facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of one-month LIBOR plus the applicable margin (as provided by the Senior Credit Facility) to a capped interest rate of 2.00% plus the applicable margin. During the period from July 1, 2016 through March 24, 2020, the 2016 Interest Rate Cap Agreement had no hedge ineffectiveness.
To ensure the effectiveness of the 2016 Interest Rate Cap Agreement, the Company elected the one-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the interest rate cap agreement as of each reset date. The reset dates and other critical terms perfectly match with the interest rate cap reset dates and other critical terms during the twelve weeks ended March 24, 2020.
During the twelve weeks weeks ended March 24, 2020, the Company reclassified $62,000 of interest expense related to the hedges of these transactions into earnings. As of March 24, 2020, the Company was hedging forecasted transactions expected to occur through March 31, 2020. Assuming interest rates at March 24, 2020 remain constant and the hedge remains effective, $5,000 of interest expense related to hedges of these transactions will be reclassified into earnings over the next week until the expiration of the interest rate cap on March 31, 2020.
The effective portion of the 2016 Interest Rate Cap Agreement through March 24, 2020 was included in accumulated other comprehensive income.
v3.20.1
Fair Value Measurements
3 Months Ended
Mar. 24, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The fair values of cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate their carrying amounts due to their short maturities. The carrying value of the Senior Credit Facility, as amended, approximated its fair value. The 2016 Interest Rate Cap Agreement is recorded at fair value in the Company’s consolidated balance sheets.
As of March 24, 2020 and December 31, 2019, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. For both periods, this included a derivative instrument related to interest rates. The Company determined the fair value of the interest rate cap contract based on counterparty quotes, with appropriate adjustments for any significant impact of nonperformance risk of the parties to the interest rate cap contracts. Therefore, the Company categorized these interest rate cap contracts as Level 2 fair value measurements. The fair value of the 2016 Interest Rate Cap Agreement was $0.0 million at both March 24, 2020 and December 31, 2019, and is included in other assets in the Company's consolidated balance sheets.

The Company's assets and liabilities measured at fair value on a recurring basis as of March 24, 2020 and December 31, 2019 were as follows (in thousands):

March 24, 2020 (Unaudited) Markets for Identical Assets
(Level 1)
Observable Inputs (Level 2)Unobservable Inputs (Level 3)
2016 Interest Rate Cap Agreement$—  $—  $—  $—  
Total assets measured at fair value$—  $—  $—  $—  
December 31, 2019Markets for Identical Assets (Level 1)Observable Inputs (Level 2)Unobservable Inputs (Level 3)
2016 Interest Rate Cap Agreement$—  $—  $—  $—  
Total assets measured at fair value$—  $—  $—  $—  
v3.20.1
Other Accrued Liabilities and Other Non-current Liabilities
3 Months Ended
Mar. 24, 2020
Other Liabilities Disclosure [Abstract]  
Other Accrued Liabilities and Other Non-current Liabilities Other Accrued Liabilities and Other Non-current Liabilities
A summary of other accrued liabilities follows (in thousands):

March 24, 2020December 31, 2019
Employee compensation and related items$8,569  $10,008  
Accrued insurance5,923  5,900  
Accrued state income tax5,771  1,605  
Accrued sales tax5,249  4,099  
Accrued advertising3,210  1,345  
Accrued property and equipment purchases2,840  3,190  
Accrued real property tax2,475  1,652  
Deferred gift card income1,344  1,585  
Accrued rent and related items1,207  1,382  
Restaurant closure liabilities166  129  
Other4,396  3,682  
$41,150  $34,577  
 

A summary of other non-current liabilities follows (in thousands):

March 24, 2020December 31, 2019
Insurance reserves7,816  8,110  
Deferred development and initial franchise fees4,286  4,241  
Sublease liabilities1,460  1,223  
Deferred gift card income985  1,474  
Restaurant closure liability279  308  
Unearned trade discount, non-current246  320  
Other932  925  
$16,004  $16,601  
v3.20.1
Stock-Based Compensation
3 Months Ended
Mar. 24, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
The Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”) was approved by shareholders to offer eligible employees, directors and consultants cash and stock-based incentive awards. Awards under the 2015 Plan are generally not restricted to any specific form or structure and could include, without limitation, stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards, other cash-based compensation and performance awards. Under the plan, there were 3,300,000 shares of common stock reserved and authorized. At March 24, 2020, there were 617,315 shares of common stock available for grant under the 2015 Plan.
Stock-Based Compensation Expense
The total compensation expense related to the 2015 Plan was $1.2 million and $1.6 million for the twelve weeks ended March 24, 2020 and March 26, 2019, respectively.
Restricted Stock Awards
A summary of outstanding and unvested restricted stock activity as of March 24, 2020 and changes during the period from December 31, 2019 through March 24, 2020 are as follows:
 
SharesWeighted-Average
Grant Date
Fair Value
Nonvested at December 31, 20191,142,718  $12.92  
Granted140,500  7.75  
Vested(35,625) 11.53  
Forfeited(67,750) 12.83  
Nonvested at March 24, 20201,179,843  $12.36  
For both the twelve weeks ended March 24, 2020 and March 26, 2019, the Company made payments of $0.1 million related to tax withholding obligations for the vesting of restricted stock awards in exchange for 13,867 and 8,078 shares withheld, respectively. As of March 24, 2020, there was $8.4 million of unrecognized stock compensation expense, net of estimated forfeitures, related to restricted stock awards that is expected to be recognized over a weighted-average remaining period of 2.4 years. The fair value of these awards was determined based on the Company’s stock price on the grant date.
Stock Options
A summary of stock option activity as of March 24, 2020 and changes during the period from December 31, 2019 through March 24, 2020 are as follows:
OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
(in years)(in thousands)
Options outstanding at December 31, 2019412,750  $11.71  3.8$—  
Granted55,000  7.93  
Exercised—  —  
Forfeited/Expired(26,250) 11.37  
Options outstanding at March 24, 2020441,500  $11.26  4.1$—  
Options exercisable at March 24,2020257,248  $11.04  3.2$—  
Options exercisable and expected to vest at March 24, 2020406,151  $11.31  3.9$—  

The aggregate intrinsic value in the table above is the amount by which the current market price of the Company's stock exceeds the exercise price on March 24, 2020 and December 31, 2019, respectively.
As of March 24, 2020, there was $0.4 million of unrecognized stock compensation expense, net of estimated forfeitures, related to stock option grants that is expected to be recognized over a weighted-average remaining period of 2.3 years.
v3.20.1
Shareholders' Equity
3 Months Ended
Mar. 24, 2020
Equity [Abstract]  
Shareholders' Equity Shareholders’ EquityOn February 26, 2016, the Company's Board of Directors authorized a share repurchase program covering up to $25.0 million in the aggregate of the Company's common stock and warrants which was effective immediately and expires upon completion of the repurchase program, unless terminated earlier by the Board of Directors. On August 23, 2016, the Company announced that the Board of Directors increased the repurchase program by $25.0 million to $50.0 million. The Board of Directors authorized an additional increase for the repurchase program effective July 23, 2018 of another $25.0 million to a total of $75.0 million. Purchases under the program may be made in open market or privately negotiated transactions. During the twelve
weeks ended March 24, 2020, the Company did not repurchase any shares or warrants. During the twelve weeks ended March 26, 2019, the Company repurchased (1) 270,874 shares of common stock for an average price per share of $10.30 for an aggregate cost of approximately $2.8 million, including incremental direct costs to acquire the shares, and (2) 840,255 warrants for an average price per warrant of $1.78 for an aggregate cost of approximately $1.5 million, including incremental direct costs to acquire the warrants. The Company accounted for the repurchased shares as constructively retired as of March 26, 2019.
As of March 24, 2020, there was approximately $22.3 million remaining under the share repurchase program. The Company has no obligations to repurchase shares or warrants under this authorization, and the timing and value of shares and warrants purchased will depend on the Company's stock price, warrant price, market conditions and other factors.
v3.20.1
(Loss) Earnings Per Share
3 Months Ended
Mar. 24, 2020
Earnings Per Share [Abstract]  
(Loss) Earnings Per Share (Loss) Earnings Per Share
Basic income per share is calculated by dividing net income attributable to Del Taco’s common shareholders for the period by the weighted average number of common shares outstanding for the period. In computing dilutive income per share, basic income per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including warrants, restricted stock, common stock options and restricted stock units.
Below are basic and diluted net income per share for the periods indicated (amounts in thousands except share and per share data):
 
12 Weeks Ended
March 24, 2020March 26, 2019
Numerator:
Net (loss) income$(102,468) $1,425  
Denominator:
Weighted-average shares outstanding - basic37,075,994  37,155,978  
Dilutive effect of unvested restricted stock—  188,934  
Dilutive effect of stock options—  1,407  
Dilutive effect of warrants—  —  
Weighted-average shares outstanding - diluted37,075,994  37,346,319  
Net (loss) income per share - basic$(2.76) $0.04  
Net (loss) income per share - diluted$(2.76) $0.04  
Antidilutive stock options, unvested restricted stock awards and warrants excluded from the computations6,612,980  6,546,264  
v3.20.1
Income Taxes
3 Months Ended
Mar. 24, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The effective income tax rates were 5.5% and 28.0% for the twelve weeks ended March 24, 2020 and March 26, 2019, respectively. The benefit for income taxes was $6.0 million for the twelve weeks ended March 24, 2020. The provision for income taxes was $0.6 million for the twelve weeks ended March 26, 2019.
The income tax benefit for the twelve weeks ended March 24, 2020 is driven by the estimated effective income tax rate of 5.5%. The benefit for income taxes of $6.0 million is primarily impacted by impairment of non-tax deductible goodwill of $87.3 million and reclassification of $3.5 million of goodwill from held for sale, as well as statutory federal and state tax rates based on apportioned income and the impact of non-tax deductible compensation to executives, partially offset by federal targeted job credits. The income tax expense for the twelve weeks ended March 26, 2019 is driven by the estimated effective income tax rate of 28.0%. The provision for income taxes of $0.6 million is primarily impacted by statutory federal and state tax rates based on apportioned income and the impact of non-tax deductible compensation to executives, partially offset by federal targeted job credits.
Management believes it is more likely than not that all deferred tax assets will be realized and therefore no valuation allowance as of March 24, 2020 and December 31, 2019 is required.