FIESTA RESTAURANT GROUP, INC., 10-K filed on 3/1/2013
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 30, 2012
Feb. 22, 2013
Jul. 1, 2012
Entity Information [Line Items]
 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Public Float
 
 
$ 214,932,000 
Entity Registrant Name
FIESTA RESTAURANT GROUP, INC. 
 
 
Entity Central Index Key
0001534992 
 
 
Current Fiscal Year End Date
--12-30 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 30, 2012 
 
 
Document Fiscal Year Focus
2012 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
23,644,639 
 
Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Dec. 30, 2012
Jan. 1, 2012
Current assets:
 
 
Cash
$ 15,533 
$ 13,670 
Trade receivables
5,935 
4,842 
Inventories
2,750 
2,264 
Prepaid rent
2,094 
2,397 
Prepaid expenses and other current assets
2,596 
2,660 
Deferred income taxes
2,049 
1,776 
Total current assets
30,957 
27,609 
Property and equipment, net
126,516 
195,122 
Goodwill
123,484 
123,484 
Intangible assets, net
202 
301 
Deferred income taxes
13,101 
11,659 
Deferred financing costs, net
5,690 
6,908 
Other assets
3,779 
5,083 
Total assets
303,729 
370,166 
Current liabilities:
 
 
Current portion of long-term debt
60 
59 
Due to related party
1,511 
Accounts payable
10,411 
7,515 
Accrued interest
6,761 
7,152 
Accrued income taxes
287 
Accrued payroll, related taxes and benefits
14,719 
12,154 
Accrued real estate taxes
3,366 
3,197 
Other liabilities
5,674 
5,085 
Total current liabilities
41,278 
36,673 
Long-term debt, net of current portion
200,889 
200,949 
Lease financing obligations
3,029 
123,019 
Deferred income--sale-leaseback of real estate
36,096 
4,055 
Other liabilities
11,933 
10,142 
Total liabilities
293,225 
374,838 
Commitments and contingencies
   
   
Stockholder's equity (deficit):
 
 
Common stock, par value $.01
227 
227 
Additional paid-in capital
10,254 
3,345 
Retained earnings (deficit)
23 
(8,244)
Total stockholder's equity (deficit)
10,504 
(4,672)
Total liabilities and stockholder's equity (deficit)
$ 303,729 
$ 370,166 
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
Dec. 30, 2012
Jan. 1, 2012
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
23,514,437 
23,161,822 
Common stock, shares outstanding
22,748,241 
23,161,822 
Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 30, 2012
Jan. 1, 2012
Jan. 2, 2011
Revenues:
 
 
 
Restaurant sales
$ 507,351 
$ 473,249 
$ 437,538 
Franchise revenue
2,375 
1,719 
1,533 
Total revenues
509,726 
474,968 
439,071 
Costs and expenses:
 
 
 
Cost of sales
163,514 
152,711 
135,236 
Restaurant wages and related expenses
136,265 
129,083 
122,519 
Restaurant rent expense
22,006 
16,930 
16,620 
Other restaurant operating expenses
64,819 
61,877 
60,041 
Advertising expense
17,047 
16,264 
15,396 
General and administrative
43,870 
37,459 
32,865 
Depreciation and amortization
18,278 
19,537 
19,075 
Impairment and other lease charges
7,039 
2,744 
6,614 
Other expense (income)
(92)
146 
Total operating expenses
472,746 
436,751 
408,366 
Income from operations
36,980 
38,217 
30,705 
Interest Expense
24,424 
24,041 
19,898 
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest
12,556 
14,176 
10,807 
Provision for income taxes
4,289 
4,635 
3,764 
Net income
$ 8,267 
$ 9,541 
$ 7,043 
Basic and diluted net income per share
$ 0.35 
$ 0.41 
$ 0.30 
Basic and diluted weighted average common shares outstanding
22,890,018 
23,161,822 
23,161,822 
Consolidated Statements of Operations (Parenthetical) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 30, 2012
Jan. 1, 2012
Jan. 2, 2011
Stock-based Compensation
$ 2,036 
$ 1,708 
$ 1,002 
Labour and Related Expense
 
 
 
Stock-based Compensation
11 
18 
28 
General and Administrative Expense
 
 
 
Stock-based Compensation
$ 2,025 
$ 1,690 
$ 974 
Consolidated Statements of Changes in Stockholder's Equity (USD $)
In Thousands, except Share data
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Stockholders' Equity Attributable to Parent at Jan. 03, 2010
$ 50,868 
$ 227 
$ 0 
$ 50,641 
Common Stock, Shares, Outstanding at Jan. 03, 2010
23,161,822 
 
 
 
Net income
7,043 
7,043 
Stock-based Compensation
1,002 
 
 
 
Stockholders' Equity Attributable to Parent at Jan. 02, 2011
57,911 
227 
57,684 
Common Stock, Shares, Outstanding at Jan. 02, 2011
23,161,822 
 
 
 
Net income
9,541 
9,541 
Capital Contributions
3,345 
3,345 
Cash Dividends Paid to Parent Company by Consolidated Subsidiaries
(75,469)
(75,469)
Stock-based Compensation
1,708 
 
 
 
Stockholders' Equity Attributable to Parent at Jan. 01, 2012
(4,672)
227 
3,345 
(8,244)
Common Stock, Shares, Outstanding at Jan. 01, 2012
23,161,822 
 
 
 
Net income
8,267 
8,267 
Capital Contributions
5,075 
5,075 
Stock-based Compensation
1,834 
1,834 
Outstanding Common Stock, Other Decrease
 
(434,397)
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period
20,816 
 
 
 
Stockholders' Equity Attributable to Parent at Dec. 30, 2012
$ 10,504 
$ 227 
$ 10,254 
$ 23 
Common Stock, Shares, Outstanding at Dec. 30, 2012
22,748,241 
 
 
 
Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 30, 2012
Jan. 1, 2012
Jan. 2, 2011
Cash flows provided from (used for) operating activities:
 
 
 
Net income
$ 8,267 
$ 9,541 
$ 7,043 
Adjustments to reconcile net income (loss) to net cash provided from (used for) operating activities:
 
 
 
Loss on disposals of property and equipment
186 
325 
327 
Stock-based Compensation
1,834 
1,708 
1,002 
Stock-based Compensation
2,036 
1,708 
1,002 
Impairment and other lease charges
7,039 
2,744 
6,614 
Loss on settlement of lease financing obligations
120 
Depreciation and amortization
18,278 
19,537 
19,075 
Amortization of deferred financing costs
1,628 
840 
234 
Amortization of deferred gains from sale-leaseback transactions
(2,328)
(270)
(259)
Accretion of interest on lease financing obligations
222 
48 
409 
Increase (Decrease) in Deferred Income Taxes
(1,030)
(44)
(2,950)
Deferred income taxes
(1,175)
(169)
(2,936)
Accounts receivable
(1,093)
(1,361)
901 
Accounts payable
2,398 
1,892 
(173)
Accrued payroll, related taxes and benefits
2,565 
1,718 
276 
Accrued interest
(391)
7,152 
Other liabilities - current
141 
817 
(1,638)
Other liabilities - long term
728 
(817)
1,531 
Changes in other operating assets and liabilities:
(589)
(663)
137 
Net cash provided from (used for) operating activities
37,975 
43,167 
32,529 
Capital expenditures:
 
 
 
New restaurant development
(23,614)
(12,576)
(11,382)
Restaurant remodeling
(8,673)
(4,435)
(6,685)
Other restaurant capital expenditures
(6,917)
(5,040)
(5,178)
Corporate and restaurant information systems
(1,792)
(814)
(153)
Total capital expenditures
(40,996)
(22,865)
(23,398)
Properties purchased for sale-leaseback
(2,082)
(1,345)
Proceeds from Sale of Other Real Estate
2,426 
Proceeds from sale-leaseback transactions
7,934 
7,783 
3,363 
Net cash used for investing activities
(32,718)
(15,082)
(21,380)
Cash flows provided by (used for) financing activities:
 
 
 
Proceeds from Issuance of Senior Long-term Debt
200,000 
Payments to former parent company, net
500 
(138,953)
(18,040)
Capital contribution from former parent company
2,500 
3,345 
Cash Dividends Paid to Former Parent Company
(75,469)
Borrowings on revolving credit facility
2,100 
Repayments on revolving credit facility
(2,100)
Principal payments on capital leases
(59)
(56)
(45)
Payments of Financing Costs
(288)
(7,512)
Settlement of lease financing obligations
(6,047)
Proceeds from issuance of lease financing obligations
1,736 
5,915 
Payments of Financing Cost Associated With Lease Financing Obligations
(89)
(250)
Net cash provided by (used for) financing activities
(3,394)
(16,998)
(12,420)
Net increase (decrease) in cash
1,863 
11,087 
(1,271)
Cash, beginning of period
13,670 
2,583 
3,854 
Cash, end of period
15,533 
13,670 
2,583 
Supplemental disclosures:
 
 
 
Interest paid on long-term debt
18,699 
280 
Interest paid on lease financing obligations
4,207 
11,240 
10,865 
Accruals for capital expenditures
802 
161 
430 
Income tax payments, net
3,454 
Capital lease obligations incurred
123 
Lease Financing Obligations, Reduction in Period
114,165 
1,740 
Assets Subject to Lease Financing, Reduction in Period
80,419 
Non-cash capital contribution from former parent
$ 2,575 
$ 0 
$ 0 
Basis of Presentation
Basis of Presentation
Basis of Presentation
Business Description. Fiesta Restaurant Group, Inc. ("Fiesta Restaurant Group", "Fiesta", or the "Company") owns, operates and franchises two fast-casual restaurant brands through its wholly-owned subsidiaries Pollo Operations, Inc. and Pollo Franchise, Inc., (collectively “Pollo Tropical”) and Taco Cabana, Inc. and its subsidiaries (collectively “Taco Cabana”). Unless the context otherwise requires, Fiesta and its subsidiaries, Pollo Tropical and Taco Cabana, are collectively referred to as the “Company”. At December 30, 2012, Fiesta operated 91 Pollo Tropical® restaurants, of which 89 were located in Florida and two were located in Georgia, and franchised a total of 35 Pollo Tropical restaurants, 20 in Puerto Rico, two in Ecuador, two in Honduras, one in the Bahamas, one in Trinidad, three in Venezuela, two in Costa Rica, one in Panama and three on college campuses in Florida. At December 30, 2012, Fiesta also owned and operated 160 Taco Cabana® restaurants located primarily in Texas and franchised four Taco Cabana restaurants in New Mexico, three in Texas and one in Georgia.
Spin-Off from Carrols Restaurant Group, Inc. On May 7, 2012, Carrols Restaurant Group, Inc. ("Carrols Restaurant Group" or "Carrols") completed the spin-off of Fiesta into an independent public company, through the distribution of all of the outstanding shares of Fiesta Restaurant Group's common stock to the stockholders of Carrols Restaurant Group (the "Spin-off"). As a result of the Spin-off, Fiesta Restaurant Group is now an independent public company whose common stock is traded on The NASDAQ Global Select Market under the symbol “FRGI.”     
In connection with the Spin-off, Fiesta and Carrols entered into several agreements that govern Carrols' post Spin-off relationship with Fiesta, including a Separation and Distribution Agreement, Employee Matters Agreement, Tax Matters Agreement and Transition Services Agreement ("TSA"). See Note 7—Former Related Party Transactions.
Basis of Consolidation. The consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. These consolidated financial statements have been prepared as if the Company was in existence for all periods presented. All intercompany transactions have been eliminated in consolidation.
Through the date of the Spin-off, these consolidated financial statements have been prepared on a stand-alone basis from the separate records maintained by Carrols and may not necessarily be indicative of the results of operations or cash flows that would have resulted had allocations and other related-party transactions been consummated with unrelated parties or had the Company been an independent, publicly traded company during all of the periods presented. The consolidated financial statements reflect the historical financial position, results of operations and cash flows of Fiesta as it has historically operated, in conformity with U.S. Generally Accepted Accounting Principles ("GAAP"). All intercompany transactions have been eliminated in consolidation.
In connection with the Spin-off, the board of directors of the Company authorized a 23,161.8 for one split of its outstanding common stock that was effective on April 19, 2012. Accordingly, all references to share and per share amounts related to common stock included in the consolidated financial statements and accompanying notes have been adjusted to reflect the stock split and change in the number of authorized shares. The stock split has been retroactively applied to the Company’s financial statements.
Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The fiscal years ended December 30, 2012, January 1, 2012 and January 2, 2011 each contained 52 weeks.
Allocations. Through the date of the consummation of the Spin-off, Carrols provided administrative support to the Company for executive management, information systems and certain accounting, legal and other administrative functions. The cost of these services were allocated to the Company based primarily on a pro-rata share of either the Company’s revenues, number of restaurants or number of employees. The allocations may not reflect the expense the Company would have incurred as an independent, publicly traded company for the periods presented. Following the Spin-off, certain of these functions continue to be provided by Carrols under the TSA and the Company is performing certain functions using its own resources or purchased services from third parties. Refer to Note 7—Former Related Party Transactions for further discussion related to agreements entered into effective as of the Spin-off.
The consolidated financial statements for the years ended January 1, 2012 and January 2, 2011 also reflect interest expense allocated by Carrols to the Company. Effective with the refinancing discussed in Note 8, on August 5, 2011 the Company secured its own financing and interest allocations from Carrols ceased.
Management believes that its allocations are reasonable and based on a systematic and rational method; however, they are not necessarily indicative of the actual financial results of the Company, including such expenses that would have been incurred by the Company had it been operating as a separate, stand-alone entity for the periods presented. As a stand-alone entity, the Company expects to incur expenses that may not be comparable in future periods to what is presented for the historical periods presented in the consolidated financial statements. Consequently, the financial information herein may not reflect the financial position, results of operations and cash flows of the Company in the future or if the Company had been an independent stand-alone entity during all of the periods presented. In our opinion, the consolidated financial statements include all adjustments necessary for a fair presentation of its results of operations.
Use of Estimates. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: allocations of Carrols' general and administrative expenses and interest expense on amounts due to Carrols prior to the Spin-off, accrued occupancy costs, insurance liabilities, evaluation for impairment of goodwill and long-lived assets and lease accounting matters. Actual results could differ from those estimates.
Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Inventories. Inventories, primarily consisting of food and paper, are stated at the lower of cost (first-in, first-out) or market.
Property and Equipment. The Company capitalizes all direct costs incurred to construct and substantially improve its restaurants. These costs are depreciated and charged to expense based upon their property classification when placed in service. Property and equipment is recorded at cost. Repair and maintenance activities are expensed as incurred. Depreciation and amortization is provided using the straight-line method over the following estimated useful lives:
 
Buildings
5
to
30 years
Equipment
3
to
7 years
Computer hardware and software
3
to
7 years
Assets subject to capital lease
Shorter of useful life or lease term

Leasehold improvements are depreciated over the shorter of their estimated useful lives or the underlying lease term. In circumstances where an economic penalty would be presumed by the non-exercise of one or more renewal options under the lease, the Company includes those renewal option periods when determining the lease term. For significant leasehold improvements made during the latter part of the lease term, the Company amortizes those improvements over the shorter of their useful life or an extended lease term. The extended lease term would consider the exercise of renewal options if the value of the improvements would imply that an economic penalty would be incurred without the renewal of the option. Building costs incurred for new restaurants on leased land are depreciated over the lease term, which is generally a twenty-year period.
Goodwill. Goodwill represents the excess purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets acquired by Carrols from its acquisitions of Pollo Tropical in 1998 and Taco Cabana in 2000. Goodwill is not amortized but is tested for impairment at least annually as of the last day of the fiscal year.
Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable.
Deferred Financing Costs. Financing costs incurred in obtaining long-term debt and lease financing obligations are capitalized and amortized over the life of the related obligation as interest expense using the effective interest method.
Leases.  All leases are reviewed for capital or operating classification at their inception. The majority of the Company's leases are operating leases. Many of the lease agreements contain rent holidays, rent escalation clauses and/or contingent rent provisions. Rent expense for leases that contain scheduled rent increases or rent holidays is recognized on a straight-line basis over the lease term, including any option periods included in the determination of the lease term. Contingent rentals are generally based upon a percentage of sales or a percentage of sales in excess of stipulated amounts and are not considered minimum rent payments but are recognized as rent expense when incurred.
Lease Financing Obligations. Lease financing obligations pertain to real estate sale-leaseback transactions accounted for under the financing method. In accordance with ASC 840-40-25-16 “Sale-Leaseback Transactions”, the Company has recorded lease financing obligations for sale-leaseback transactions that did not qualify for sale-leaseback accounting due to certain forms of continuing involvement. The assets (land and building) subject to these obligations remain on the Company's consolidated balance sheet at their historical costs and such assets (excluding land) continue to be depreciated over their remaining useful lives. The proceeds received by the Company from these transactions are recorded as lease financing obligations, and the lease payments are applied as payments of principal and interest. The selection of the interest rate on lease financing obligations is evaluated at inception of the lease based on the Company's incremental borrowing rate adjusted to the rate required to prevent recognition of a non-cash loss or negative amortization of the obligation through the end of the primary lease term.
Revenue Recognition. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percent of gross sales and are recorded as income when earned. Franchise fees, which are associated with opening new franchised restaurants, and area development fees, which are associated with opening new franchised restaurants in a given market, are recognized as income when all required activities have been performed by the Company.
Income Taxes. The Company's taxable income has historically been included in the consolidated U.S. federal income tax return of Carrols and in income tax returns filed by Carrols with certain state taxing jurisdictions. The Company's income tax liability has been computed and presented in these consolidated financial statements as if it were a separate taxpaying entity for the periods presented.
Deferred income tax assets and liabilities are based on the difference between the financial statement and tax bases of assets and liabilities as measured by the tax rates that are anticipated to be in effect when those differences reverse. The deferred tax provision generally represents the net change in deferred tax assets and liabilities during the period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established when it is necessary to reduce deferred tax assets to amounts for which realization is more likely than not. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Advertising Costs. All advertising costs are expensed as incurred.
Cost of Sales. The Company includes the cost of food, beverage and paper, net of any discounts, in cost of sales.
Pre-opening Costs. The Company's pre-opening costs are expensed as incurred and generally include payroll costs and travel expenditures associated with opening the new restaurant, rent and promotional costs.
Insurance. During 2012, 2011 and 2010, the Company was insured for workers' compensation, general liability and medical insurance claims under policies covering both Carrols and the Company. All claims are paid, subject to stop-loss limitations both for individual claims and claims in the aggregate. Losses are accrued based upon estimates of the aggregate liability for claims based on the Company's experience and certain actuarial methods used to measure such estimates. The Company does not discount any of its self-insurance obligations.
 Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect our own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
Current Assets and Liabilities. The carrying values reported on the balance sheet of cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.
Senior Secured Second Lien Notes. The fair value of outstanding senior secured second lien notes is based on recent trading values, which are considered Level 1, and at December 30, 2012, was approximately $214.5 million.
See Note 4 for discussion of the fair value measurement of non-financial assets.

Gift cards. The Company sells gift cards to its customers in its restaurants and through select third parties. The Company recognizes revenue from gift cards upon redemption by the customer. The gift cards have no stated expiration dates and are subject to escheatment rights in certain states. Revenues from unredeemed gift cards are not material to the Company's financial statements.
Subsequent Events. The Company reviewed and evaluated subsequent events through the issuance date of the Company’s financial statements. The American Taxpayer Relief Act of 2013 (the "Act") was signed into law on January 2, 2013. The Act included a provision to retroactively restore several expired business tax provisions, including the Work Opportunity Tax Credit, as of January 1, 2012, with a new expiration date of December 31, 2013.  Because a change in tax law is accounted for in the period of enactment, and the Act was enacted after Fiesta's fiscal year-end, the retroactive effect of renewing the Work Opportunity Tax Credit is not reflected in the 2012 provision for income taxes, but will instead be recorded as a discrete item in the first quarter of 2013, which is expected to total approximately $0.6 million.
Property and Equipment
Property, Plant and Equipment Disclosure [Text Block]
Property and Equipment
Property and equipment consisted of the following:  
 
December 30, 2012
 
January 1, 2012
Land
$
19,904

 
$
69,617

Owned buildings
16,706

 
67,830

Leasehold improvements
113,679

 
104,292

Equipment
118,489

 
111,590

Assets subject to capital leases
1,151

 
1,151

 
269,929

 
354,480

Less accumulated depreciation and amortization
(143,413
)
 
(159,358
)
 
$
126,516

 
$
195,122


Assets subject to capital leases primarily pertain to buildings leased for certain restaurant locations and certain office equipment and had accumulated amortization at December 30, 2012 and January 1, 2012 of $0.5 million and $0.4 million, respectively. At December 30, 2012 and January 1, 2012, land of $1.3 million and $55.6 million, respectively and owned buildings of $1.5 million and $55.5 million, respectively were subject to lease financing obligations accounted for under the lease financing method. See Note 9—Lease Financing Obligations. Accumulated depreciation pertaining to owned buildings subject to lease financing obligations at December 30, 2012 and January 1, 2012 was $0.6 million and $23.8 million, respectively.
Depreciation and amortization expense for all property and equipment for the years ended December 30, 2012, January 1, 2012 and January 2, 2011 was $18.2 million, $19.4 million, and $19.0 million, respectively.
Goodwill
Goodwill Disclosure [Text Block]
Goodwill
The Company is required to review goodwill for impairment annually or more frequently when events and circumstances indicate that the carrying amount may be impaired. If the determined fair value of goodwill is less than the related carrying amount, an impairment loss is recognized. The Company performs its annual impairment assessment as of the last day of the fiscal year and has determined its reporting units to be its operating segments, Pollo Tropical and Taco Cabana.

In performing its goodwill impairment test, the Company compared the net book values of its reporting units to their estimated fair values, the latter determined by employing a discounted cash flow analyses, which was corroborated with other value indicators where available, such as comparable company earnings multiples.
There have been no changes in goodwill or goodwill impairment losses recorded during the year ended December 30, 2012 or the year ended January 1, 2012. Goodwill balances are summarized below: 
 
Pollo
Tropical
 
Taco
Cabana
 
Total
Balance, December 30, 2012 and January 1, 2012
$
56,307

 
$
67,177

 
$
123,484

Impairment of Long-Lived Assets and Other Lease Charges
Impairment of Long Lived Assets and Other Lease Charges [Text Block]
Impairment of Long-Lived Assets and Other Lease Charges
The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries.
The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions and the Company’s history of using these assets in the operation of its business. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the year ending December 30, 2012 totaled $0.4 million.
Impairment on long-lived assets for the Company’s segments and other lease charges recorded were as follows:
         
 
Year Ended
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
Pollo Tropical
$
6,035

 
$
2,457

 
$
4,671

Taco Cabana
1,004

 
287

 
1,943

 
$
7,039

 
$
2,744

 
$
6,614


During the year ended December 30, 2012, the Company recorded other lease charges, net of recoveries, of $1.5 million and impairment charges of $4.1 million associated with the closure of the Company’s five Pollo Tropical restaurants in New Jersey in the first quarter of 2012. The remaining charges recorded in 2012 primarily consist of an impairment charge of $0.5 million related to a Pollo Tropical restaurant, $1.0 million related to two Taco Cabana restaurants and a recovery of $0.2 million related to a non-operating Pollo Tropical restaurant.
During the year ended January 1, 2012, the Company recorded other lease charges of $1.2 million associated with five closed Pollo Tropical restaurants and $0.1 million of lease charges for two closed Taco Cabana restaurants. The Company also recorded fixed asset impairment charges of $1.3 million for an underperforming Pollo Tropical restaurant.

During the year ended January 2, 2011, the Company recorded impairment and other lease charges of $6.6 million which included fixed asset impairment charges of $3.9 million for four underperforming Pollo Tropical restaurants and $1.4 million for two underperforming Taco Cabana restaurants. The Company also recorded other lease charges of $0.7 million for non-operating Pollo Tropical properties and $0.5 million in charges for non-operating Taco Cabana restaurant properties.
Other Liabilities, Long-Term
Other Liabilities Disclosure [Text Block]
Other Liabilities, Long-Term
Other liabilities, long-term, consisted of the following:
 
December 30, 2012
 
January 1, 2012
Accrued occupancy costs
$
8,493

 
$
7,459

Accrued workers’ compensation and general liability claims
1,270

 
1,251

Deferred compensation
812

 
710

Other
1,358

 
722

 
$
11,933

 
$
10,142


Accrued occupancy costs include obligations pertaining to closed restaurant locations, contingent rent and accruals to expense operating lease rental payments on a straight-line basis over the lease term.
The following table presents the activity in the closed-store reserve, of which $1.7 million and $1.1 million are included in long-term accrued occupancy costs above at December 30, 2012 and January 1, 2012, respectively, with the remainder in other current liabilities:
 
 
Year Ended
 
 December 30, 2012
 
January 1, 2012
Balance, beginning of period
$
2,246

 
$
1,665

Provisions for restaurant closures
1,796

 
800

Accruals (recoveries) for additional lease charges
(377
)
 
649

Payments, net
(1,496
)
 
(1,021
)
Other adjustments
263

 
153

Balance, end of period
$
2,432

 
$
2,246

Leases
Leases of Lessee Disclosure [Text Block]
6. Leases
The Company utilizes land and buildings in its operations under various lease agreements. The Company does not consider any one of these individual leases material to the Company's operations. Initial lease terms are generally for twenty years and, in many cases, provide for renewal options and in most cases rent escalations. Certain leases require contingent rent, determined as a percentage of sales as defined by the terms of the applicable lease agreement. For most locations, the Company is obligated for occupancy related costs including payment of property taxes, insurance and utilities.
During the years ended December 30, 2012 , January 1, 2012 and January 2, 2011 the Company sold five, five and two restaurant properties in each year, respectively, in sale-leaseback transactions for net proceeds of $7.9 million, $7.8 million and $3.4 million, respectively. These leases have been classified as operating leases and generally contain a twenty-year initial term plus renewal options.
Deferred gains on sale-leaseback transactions of $34.3 million, $0.4 million, and $0.1 million were recognized during the years ended December 30, 2012, January 1, 2012, and January 2, 2011, respectively and are being amortized over the term of the related leases. The amount recognized in 2012 includes $32.1 million resulting from the qualification for sale treatment of certain sale-leaseback transactions upon the Spin-off. (See Note 9 for further discussion.) The amortization of deferred gains on sale-leaseback transactions was $2.3 million, $0.3 million and $0.3 million for the years ended December 30, 2012, January 1, 2012 and January 2, 2011, respectively.
  
Minimum rent commitments due under capital and non-cancelable operating leases at December 30, 2012 were as follows:
    
 
Capital
 
Operating
2013
$
139

 
$
29,190

2014
132

 
28,968

2015
120

 
28,400

2016
116

 
27,960

2017
116

 
26,827

Thereafter
949

 
192,349

Total minimum lease payments
1,572

 
$
333,694

Less amount representing interest
(623
)
 
 
Total obligations under capital leases
949

 
 
Less current portion
(60
)
 
 
Long-term debt under capital leases
$
889

 
 


 Total rent expense on operating leases, including contingent rentals, was as follows:
 
Year Ended
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
Minimum rent on real property
$
21,760

 
$
16,721

 
$
16,534

Additional rent based on percentage of sales
246

 
209

 
86

Restaurant rent expense
22,006

 
16,930

 
16,620

Administrative and equipment rent
781

 
819

 
763

 
$
22,787

 
$
17,749

 
$
17,383

Long-term Debt (Text Block)
Long-term Debt
Long-term Debt
Long term debt at December 30, 2012 and January 1, 2012 consisted of the following:
 
 
December 30,
2012
 
January 1,
2012
Collateralized:
 
 
 
Fiesta Restaurant Group 8.875% Senior Secured Second Lien Notes
$
200,000

 
$
200,000

Capital leases
949

 
1,008

 
200,949

 
201,008

Less: current portion of long-term debt
(60
)
 
(59
)
 
$
200,889

 
$
200,949



Senior Secured Credit Facility. On August 5, 2011 the Company entered into a first lien senior secured credit facility providing for aggregate revolving credit borrowings of up to $25.0 million (including $10.0 million available for letters of credit) which was undrawn at closing. The facility also provides for incremental increases of up to $5.0 million, in the aggregate, to the revolving credit borrowings available under the senior credit facility, and matures on February 5, 2016. On December 30, 2012 and January 1, 2012, there were no outstanding borrowings under the Company’s senior credit facility.
Borrowings under the senior credit facility bear interest at a per annum rate, at the Company’s option, of either (all terms as defined in the senior credit facility):
1) the Alternate Base Rate plus the applicable margin of 2.00% to 2.75% based on the Company’s Adjusted Leverage Ratio (with a margin of 2.25% at December 30, 2012), or
2) the LIBOR Rate plus the applicable margin of 3.00% to 3.75% based on the Company’s Adjusted Leverage Ratio (with a margin of 3.25% at December 30, 2012).
The Company’s obligations under its senior credit facility are guaranteed by all of the Company's material subsidiaries and are secured by a first priority lien on substantially all of the Company’s assets and its material subsidiaries, as guarantors (including a pledge of all of the capital stock and equity interests of its material subsidiaries).

The Company's senior credit facility contains certain covenants, including without limitation, those limiting the Company's and its guarantor subsidiaries' ability to, among other things, incur indebtedness, incur liens, sell or acquire assets or businesses, change the character of its business in all material respects, engage in transactions with related parties, make certain investments, make certain restricted payments or pay dividends. In addition, the senior credit facility requires the Company to meet certain financial ratios, including a Fixed Charge Coverage Ratio and Adjusted Leverage Ratio (all as defined under the senior credit facility).
The Company’s senior credit facility contains customary default provisions, including without limitation, a cross default provision pursuant to which it is an event of default under this facility if there is a default under any indebtedness of the Company having an outstanding principal amount of $2.5 million or more which results in the acceleration of such indebtedness prior to its stated maturity or is caused by a failure to pay principal when due. As of December 30, 2012, the Company was in compliance with the covenants under its senior credit facility. After reserving $9.4 million for letters of credit guaranteed by the senior credit facility, $15.6 million was available for borrowing at December 30, 2012.
Senior Secured Second Lien Notes. On August 5, 2011, the Company issued $200.0 million of 8.875% Senior Secured Second Lien Notes due 2016 (the "Notes") pursuant to an indenture dated as of August 5, 2011 governing such Notes. The proceeds from the issuance of the Notes were used by Carrols to repay amounts outstanding under Carrols LLC's senior credit facility and Carrols Corp.'s 9% senior subordinated notes due 2013, as well as to pay related fees and expenses. The Notes mature and are payable on August 15, 2016. Interest is payable semi-annually on February 15 and August 15. The Notes are guaranteed by all of the Company’s subsidiaries and are secured by second-priority liens on substantially all of the Company’s and its subsidiaries’ assets (including a pledge of all of the capital stock and equity interests of its material subsidiaries).
The indenture governing the Notes and the security agreement provide that any capital stock and equity interests of any of the Company’s subsidiaries will be excluded from the collateral to the extent that the par value, book value or market value of such capital stock or equity interests exceeds 20% of the aggregate principal amount of the Notes then outstanding. As of December 30, 2012, no subsidiaries had been excluded from the collateral pursuant to these terms.
The Notes are redeemable at the Company’s option in whole or in part at any time after February 15, 2014 at a price of 104.438% of the principal amount plus accrued and unpaid interest, if any, if redeemed before February 15, 2015, 102.219% of the principal amount plus accrued and unpaid interest, if any, if redeemed after February 15, 2015 but before February 15, 2016 and 100% of the principal amount plus accrued and unpaid interest, if any, if redeemed after February 15, 2016. Prior to February 14, 2014, the Company may redeem some or all of the Notes at a redemption price of 100% of the principal amount of each note plus accrued and unpaid interest, if any, and a make-whole premium. In addition, at any time prior to February 15, 2014, the Company may redeem up to 35% of the Notes with the net cash proceeds from specified equity offerings at a redemption price equal to 108.875% of the principal amount of each note to be redeemed, plus accrued and unpaid interest, if any, to the date of redemption.
The Notes are jointly and severally guaranteed, unconditionally and in full by all of the Company’s subsidiaries which are directly or indirectly wholly-owned by the Company. Separate condensed consolidating information is not included because the Company is a holding company with all of its operations conducted through the guarantor subsidiaries (all 100% owned). There are no significant restrictions on the ability of the Company or any of the guarantor subsidiaries to obtain funds from its respective subsidiaries. All consolidated amounts in the Company’s financial statements are representative of the combined guarantors.
The indenture governing the Notes includes certain covenants, including limitations and restrictions on the Company and its subsidiaries who are guarantors under such indenture to incur additional debt, issue preferred stock, pay dividends or make distributions in respect of capital stock or make certain other restricted payments or investments, incur liens, sell assets, enter into transactions with affiliates, agree to payment restrictions affecting certain of its subsidiaries and enter into mergers, consolidations or sales of all or substantially all of the Company’s or its subsidiaries’ assets.
The indenture governing the Notes contains customary default provisions, including without limitation, a cross default provision pursuant to which it is an event of default under the Notes and the indenture if there is a default under any indebtedness of the Company having an outstanding principal amount of $15.0 million or more which results in the acceleration of such indebtedness prior to its stated maturity or is caused by a failure to pay principal when due. The Company was in compliance as of December 30, 2012 with the restrictive covenants of the indenture governing the Notes.
At December 30, 2012, principal payments required on long-term debt are as follows:
2013
$
60

2014
57

2015
48

2016
200,048

2017
53

Thereafter
683

 
$
200,949


The weighted average interest rate on all debt, excluding lease financing obligations, was 8.9% for each of the years ended December 30, 2012 and January 1, 2012 . Interest expense on the Company's long-term debt, excluding lease financing obligations, was $19.9 million, $8.0 million and $0.1 million for the years ended December 30, 2012, January 1, 2012 and January 2, 2011, respectively.
Lease Financing Obligations
Lease Financing Obligations [Text Block]
Lease Financing Obligations
The Company entered into sale-leaseback transactions in various years that did not qualify for sale-leaseback accounting due to certain forms of continuing involvement and, as a result, the leases were classified as financing transactions in the Company’s consolidated financial statements.
Under the financing method, the assets remain on the consolidated balance sheet and the net proceeds received by the Company from these transactions are recorded as a lease financing liability. Payments under these leases are applied as payments of imputed interest and deemed principal on the underlying financing obligations.
These leases generally provide for an initial term of 20 years plus renewal options. The rent payable under such leases includes a minimum rent provision and in some cases, includes rent based on a percentage of sales. These leases also require payment of property taxes, insurance and utilities.
During the second quarter of 2012, the Company exercised its purchase options under the leases for five restaurant properties previously accounted for as lease financing obligations and purchased these properties from the lessor. As a result, the Company reduced its lease financing obligations by $6.0 million during the year ended December 30, 2012. The Company also recorded a loss of $0.1 million included in interest expense representing the net amount by which the purchase price of the restaurant properties acquired exceeded the balance of the respective lease financing obligations.
For certain of the Company’s historical sale-leaseback transactions, Carrols has guaranteed the lease payments on an unsecured basis or is the primary lessee on the leases associated with certain of the Company’s sale-leaseback transactions. Prior to the Spin-off, ASC 840-40 “Sale-Leaseback Transactions” required the Company to classify these leases as lease financing transactions in the Company’s consolidated financial statements because the guarantee from a related party constituted continuing involvement and caused the sale to not qualify for sale-leaseback accounting. The accompanying consolidated balance sheets include lease financing obligations associated with these transactions of $114.1 million at January 1, 2012.
At the time of the Spin-off, these sale-leaseback transactions qualified for sale-leaseback accounting (and the treatment of such related leases as operating leases) due to the cure or elimination of the provisions that previously precluded sale-leaseback accounting in the Company's financial statements. As a result of the qualification for sale-leaseback accounting during the second quarter of 2012, the Company removed the associated lease financing obligations, property and equipment, and deferred financing costs from its balance sheet, and recognized deferred gains on sale-leaseback transactions related to the qualification of $32.1 million that will be amortized as a reduction of rent expense over the individual remaining lease terms. This resulted in a decrease in lease financing obligations of $114.2 million, a decrease in assets under lease financing obligations of $80.4 million, and a decrease of $1.6 million in deferred financing fees.
At December 30, 2012, payments required on all lease financing obligations were as follows:
2013
$
255

2014
258

2015
260

2016
263

2017
266

Thereafter, through 2030
4,485

Total minimum lease payments
5,787

Less: Interest implicit in obligations
(2,758
)
Total lease financing obligations
$
3,029

The interest rates on lease financing obligations ranged from 8.6% to 8.8% at December 30, 2012. Interest expense associated with lease financing obligations was $4.5 million, $11.3 million and $10.9 million for the years ended December 30, 2012, January 1, 2012, and January 2, 2011, respectively.
Income Taxes
Income Tax Disclosure [Text Block]
Income Taxes
Prior to the Spin-off, the Company’s taxable income has been included in the consolidated U.S. federal income tax return of Carrols and in income tax returns filed by Carrols on a consolidated basis with certain state taxing jurisdictions. Subsequent to the Spin-off, the Company is responsible for filing its own consolidated U.S. federal and state tax returns. Prior to the Spin-off, the Company determined its provision for income taxes on a separate return basis.
The Tax Matters Agreement governs the methodology for allocating responsibility for federal, state, local and foreign income and other taxes related to taxable periods prior to and subsequent to the Spin-off. Under the Tax Matters Agreement, Carrols is generally responsible for Federal income taxes related to the Company for all periods prior to the date of the Spin-off and the Company is responsible for Federal income taxes for periods after the date of the Spin-off. The Company is also responsible for all state taxes that were filed on a consolidated basis both before and after the date of Spin-off, specifically Florida and Texas, and any other states where the Company was filing or will file separate state tax returns.
The Company’s income tax provision was comprised of the following:
    
 
Year Ended
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
Current:
 
 
 
 
 
Federal
$
4,197

 
$
2,761

 
$
5,095

Foreign
365

 
286

 
256

State
757

 
1,632

 
1,363

 
5,319

 
4,679

 
6,714

Deferred (prepaid):
 
 
 
 
 
Federal
(1,405
)
 
155

 
(2,608
)
State
230

 
(324
)
 
(328
)

(1,175
)
 
(169
)
 
(2,936
)
Valuation allowance
145

 
125

 
(14
)
 
$
4,289

 
$
4,635

 
$
3,764


Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. The components of deferred income tax assets and liabilities at December 30, 2012 and January 1, 2012 were as follows:
 
 
December 30, 2012
 
January 1, 2012
Current deferred income tax assets (liabilities):
 
 
 
 
  Inventory and other reserves
 
$
(173
)
 
$
4

  Accrued vacation benefits
 
1,446

 
1,346

  Other accruals
 
776

 
426

Current deferred income tax assets
 
2,049

 
1,776

Long term deferred income tax assets (liabilities):
 
 
 
 
  Deferred income on sale-leaseback of certain real estate
 
13,126

 
6,414

  Lease financing obligations
 
258

 
906

  Lease financing obligations - guaranteed by former parent
 

 
5,752

  Property and equipment depreciation
 
(2,217
)
 
(3,428
)
  Amortization of other intangibles, net
 
(3,031
)
 
(2,905
)
  Occupancy costs
 
3,104

 
3,935

  Tax credit carryforwards
 
819

 
674

  Other
 
1,861

 
985

Long-term net deferred income tax assets
 
13,920

 
12,333

  Less: Valuation allowance
 
(819
)
 
(674
)
Total long-term deferred income tax assets
 
13,101

 
11,659

Carrying value of net deferred income tax assets
 
$
15,150

 
$
13,435


The Company establishes a valuation allowance to reduce the carrying amount of deferred income tax assets when it is more likely than not that it will not realize some portion or all of the tax benefit of its deferred tax assets. The Company evaluates whether its deferred income tax assets are probable of realization on a quarterly basis. In performing this analysis, the Company considers all available evidence including historical operating results, the estimated timing of future reversals of existing taxable temporary differences and estimated future taxable income exclusive of reversing temporary differences and carryforwards. At December 30, 2012 and January 1, 2012, the Company had a valuation allowance of $819 and $674 respectively, against net deferred income tax assets due to foreign income tax credit carryforwards where it was determined to be more likely than not that the deferred income tax asset amounts would not be realized. The estimation of future taxable income for federal and state purposes and the Company's ability to realize deferred income tax assets can significantly change based on future events and operating results. Thus, recorded valuation allowances may be subject to future changes that could be material.
The Company's effective tax rate was 34.2%, 32.7%, and 34.8% for the years ended December 30, 2012, January 1, 2012 and January 2, 2011, respectively. A reconciliation of the statutory federal income tax provision to the effective tax provision was as follows:
 
Year Ended
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
Statutory federal income tax provision
$
4,395

 
$
4,962

 
$
3,782

State income taxes, net of federal benefit
520

 
850

 
673

Change in valuation allowance
145

 
125

 
(14
)
Increase in deferred tax assets at Spin-off
(182
)
 

 

Non-deductible expenses
94

 
67

 
47

Foreign taxes
365

 
286

 
256

Employment tax credits
(202
)
 
(1,321
)
 
(510
)
Foreign tax credits
(365
)
 
(229
)
 
(205
)
Miscellaneous
(481
)
 
(105
)
 
(265
)
 
$
4,289

 
$
4,635

 
$
3,764



The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. As of December 30, 2012 and January 1, 2012, the Company had no unrecognized tax benefits and no accrued interest related to uncertain tax positions.
The tax years 2009-2012 remain open to examination by the taxing jurisdictions to which the Company is subject. Although it is not reasonably possible to estimate the amount by which unrecognized tax benefits may increase within the next twelve months due to uncertainties regarding the timing of any examinations, the Company does not expect unrecognized tax benefits to significantly change in the next twelve months.
Stockholders' Equity
Stockholders' Equity Note Disclosure [Text Block]
11. Stockholders' Equity
Prior to the Spin-off, certain of the Company's employees participated in the Carrols Restaurant Group, Inc. 2006 Stock Incentive Plan, as amended (the "Carrols Plan"). In conjunction with the Spin-off, the Company established the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan (the "Fiesta Plan") in order to be able to compensate its employees and directors by issuing stock options, stock appreciation rights, or stock awards to them under this plan. For the period from May 7, 2012 through December 30, 2012, the consolidated statement of operations includes expenses related to the Company's employees' and directors' participation in both the Carrols Plan and the Fiesta Plan. For the period from January 1, 2012 through the Spin-off, and the years ended January 1, 2012 and January 2, 2011, the consolidated statement of operations includes expenses related to the Company's employees' and directors' participation in the Carrols Plan.

Effective as of the completion of the Spin-off, all holders of Carrols non-vested stock on April 26, 2012, the record date of the Spin-off, received one share of Fiesta Restaurant Group non-vested stock for every one share of Carrols non-vested stock held, with terms and conditions substantially similar to the terms and conditions applicable to the Carrols non-vested stock. Future stock compensation expense on all non-vested Carrols or Fiesta stock awards held by Fiesta employees will be recorded by the Company.
On June 8, 2012, the Company’s Chief Executive Officer was granted 165,563 shares of non-vested Fiesta common stock with an aggregate value of $2.0 million. These non-vested shares of Fiesta common stock vest over four years at the rate of 25% per annum beginning on the first anniversary of the date of grant and are subject to the Fiesta Plan.
Additionally, during the year ended December 30, 2012, the Company granted in the aggregate 203,693 non-vested shares to certain employees and directors. In general, these shares vest and become non-forfeitable over vesting periods ranging from three to five years and will be expensed according to the specific vesting period.

Stock-based compensation expense for the years ended December 30, 2012, January 1, 2012 and January 2, 2011 was $2.0 million, $1.7 million and $1.0 million. Included in the year ended December 30, 2012 is $0.4 million of expense related to the accelerated vesting of the non-vested shares of the former Chairman of the Company's board of directors upon his departure from the Company's board of directors in the first quarter of 2012. As of December 30, 2012, the total unrecognized stock-based compensation expense relating to non-vested shares was approximately $5.2 million. At December 30, 2012, the remaining weighted average vesting period for non-vested shares was 2.4 years .
Non-vested Shares
A summary of all non-vested shares activity for the year ended December 30, 2012 was as follows:
 
 
 
 
Weighted
 
 
 
Average
 
 
 
Grant Date
 
Shares
 
Price
Nonvested at January 1, 2012

 
$

Conversion to non-vested shares upon Spin-off
434,397

 
11.10

Granted
369,256

 
14.00

Vested
(20,816
)
 
11.10

Forfeited
(16,641
)
 
11.23

Nonvested at December 30, 2012
766,196

 
$
12.49


The fair value of each non-vested share award was determined based on the closing price of the Company's stock on the date of grant.
Business Segment Information
Business Segment Information
The Company is engaged in the fast-casual restaurant industry, with two restaurant concepts: Pollo Tropical and Taco Cabana. Pollo Tropical is a fast-casual restaurant brand offering a wide selection of tropical and Caribbean inspired food, featuring grilled chicken marinated in a proprietary blend of tropical fruit juices and spices. Taco Cabana is a fast-casual restaurant brand offering a wide selection of fresh Tex-Mex and traditional Mexican food, including sizzling fajitas, quesadillas, enchiladas, burritos and other Tex-Mex dishes.
The accounting policies of each segment are the same as those described in the summary of significant accounting policies discussed in Note 1. The following table includes Adjusted Segment EBITDA which is the measure of segment profit or loss reported to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance. Adjusted Segment EBITDA is defined as earnings attributable to the applicable segment before interest, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense, other income and expense and gains and losses on extinguishment of debt.
The “Other” column includes corporate related items not allocated to reportable segments and consists primarily of corporate owned property and equipment and capitalized debt issuance costs associated with the issuance of indebtedness in 2011 discussed in Note 8.
 
Year Ended
 
Pollo Tropical
 
Taco Cabana
 
Other
 
Consolidated
December 30, 2012:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
227,428

 
$
279,923

 
$

 
$
507,351

Franchise revenue
 
1,915

 
460

 

 
2,375

Cost of sales
 
75,388

 
88,126

 

 
163,514

Restaurant wages and related expenses
 
53,624

 
82,641

 

 
136,265

Restaurant rent expense
 
7,838

 
14,168

 

 
22,006

Other restaurant operating expenses
 
27,538

 
37,281

 

 
64,819

Advertising expense
 
5,950

 
11,097

 

 
17,047

General and administrative expense
 
21,358

 
22,512

 

 
43,870

Adjusted Segment EBITDA (1)
 
38,592

 
25,649

 
 
 
 
Depreciation and amortization
 
8,153

 
10,100

 
25

 
18,278

Capital expenditures
 
17,482

 
22,355

 
1,159

 
40,996

January 1, 2012:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
208,115

 
$
265,134

 
$

 
$
473,249

Franchise revenue
 
1,410

 
309

 

 
1,719

Cost of sales
 
69,466

 
83,245

 

 
152,711

Restaurant wages and related expenses
 
49,025

 
80,058

 

 
129,083

Restaurant rent expense
 
6,034

 
10,896

 

 
16,930

Other restaurant operating expenses
 
26,095

 
35,782

 

 
61,877

Advertising expense
 
5,752

 
10,512

 

 
16,264

General and administrative expense
 
18,355

 
19,104

 

 
37,459

Adjusted Segment EBITDA (1)
 
35,567

 
26,785

 
 
 
 
Depreciation and amortization
 
9,121

 
10,416

 

 
19,537

Capital expenditures
 
10,241

 
12,523

 
101

 
22,865

January 2, 2011
 
 
 
 
 
 
 
 
Restaurant sales
 
$
186,045

 
$
251,493

 
$

 
$
437,538

Franchise revenue
 
1,248

 
285

 

 
1,533

Cost of sales
 
60,045

 
75,191

 

 
135,236

Restaurant wages and related expenses
 
45,890

 
76,629

 

 
122,519

Restaurant rent expense
 
5,971

 
10,649

 

 
16,620

Other restaurant operating expenses
 
24,165

 
35,876

 

 
60,041

Advertising expense
 
5,158

 
10,238

 

 
15,396

General and administrative expense
 
16,447

 
16,418

 

 
32,865

Adjusted Segment EBITDA (1)
 
30,062

 
27,334

 
 
 
 
Depreciation and amortization
 
9,049

 
10,026

 

 
19,075

Capital expenditures
 
9,981

 
13,417

 

 
23,398

Identifiable Assets:
 
 
 
 
 
 
 
 
December 30, 2012
 
$
128,593

 
$
167,348

 
$
7,788

 
$
303,729

January 1, 2012
 
156,093

 
206,807

 
7,266

 
370,166

January 2, 2011
 
158,627

 
199,259

 

 
357,886



(1) Stock-based compensation expense of $2.0 million$1.7 million, $1.0 million has been excluded from Adjusted Segment EBITDA for the year ended December 30, 2012, January 1, 2012 and January 2, 2011, respectively.

A reconciliation of Adjusted Segment EBITDA to consolidated net income follows:
 
 
Year Ended
 
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
Adjusted Segment EBITDA:
 
 
 
 
 
 
Pollo Tropical
 
$
38,592

 
$
35,567

 
$
30,062

Taco Cabana
 
25,649

 
26,785

 
27,334

Less:
 
 
 
 
 
 
Depreciation and amortization
 
18,278

 
19,537

 
19,075

Impairment and other lease charges
 
7,039

 
2,744

 
6,614

Interest expense
 
24,424

 
24,041

 
19,898

Provision for income taxes
 
4,289

 
4,635

 
3,764

Stock-based compensation
 
2,036

 
1,708

 
1,002

Other expense (income)
 
(92
)
 
146

 

Net income
 
$
8,267

 
$
9,541

 
$
7,043

Net Income (Loss) per Share
Earnings Per Share [Text Block]
Net Income per Share
 We compute basic earnings per share by dividing net income applicable to common shares by the weighted average number of common shares outstanding during each period. Our non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities, and the impact is included in the computation of basic earnings per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Earnings per common share was computed by dividing undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the pro-rata weighted average shares outstanding during the period.
For 2012, in determining the weighted average number of shares outstanding for basic income per share, the 23.2 million shares distributed from Carrols on May 7, 2012 were assumed to be outstanding for the period from January 2, 2012 through May 6, 2012. The computations of basic and diluted net income per share for 2011 and 2010 are calculated assuming the number of shares of Fiesta common stock outstanding on May 7, 2012 had been outstanding at the beginning of each period presented. The same share amount as basic net income per share is also being used for diluted income per share for periods prior to 2012 as there were no dilutive securities outstanding for any prior period.
The computation of basic and diluted net income per share is as follows:
 
  
Year Ended
 
  
December 30, 2012
 
January 1, 2012
 
January 2, 2011
Basic and diluted net income per share:
  
 
 
 
 
 
Net income
  
$
8,267

 
$
9,541

 
$
7,043

Less: income allocated to participating securities
  
247

 

 

Net income available to common stockholders
  
$
8,020

 
$
9,541

 
$
7,043

Weighted average common shares outstanding
  
22,890,018

 
23,161,822

 
23,161,822

Basic and diluted net income per share
  
$
0.35

 
$
0.41

 
$
0.30

Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
The Company is a party to various litigation matters incidental to the conduct of business. The Company does not believe that the outcome of any of these matters will have a material effect on its consolidated financial statements.
Retirement Plans (Notes)
Compensation and Employee Benefit Plans [Text Block]
15. Retirement Plans
Fiesta offers the Company's salaried employees the option to participate in the Fiesta Corporation Retirement Savings Plan (the “Retirement Plan”). The Retirement Plan includes a savings option pursuant to section 401(k) of the Internal Revenue Code in addition to a post-tax savings option. Fiesta may elect to contribute to the Retirement Plan on an annual basis. Fiesta's contribution, if any, is equal to 50% of the employee's contribution to a maximum Fiesta contribution of $0.5 per participating employee annually for any plan year that Fiesta participates in an employee match. Under the Retirement Plan, Fiesta contributions begin to vest after 1 year and fully vest after 5 years of service. A year of service is defined as a plan year during which an employee completes at least 1,000 hours of service. Participating employees may contribute up to 50% of their salary annually to either of the savings options, subject to other limitations. The employees have various investment options available under a trust established by the Retirement Plan. Contributions made by Fiesta to the Retirement Plan for the Company's employees were $157 for the year ended December 30, 2012.
Fiesta also has an Amended and Restated Deferred Compensation Plan which permits employees not eligible to participate in the Retirement Plan because they have been excluded as “highly compensated” employees (as so defined in the Retirement Plan) to voluntarily defer portions of their base salary and annual bonus. All amounts deferred by the participants earn interest at 8% per annum. There is no Company matching on any portion of the funds. At December 30, 2012 and January 2, 2011, a total of $812 and $710, respectively, was deferred by the Company's employees under the Retirement Plan, including accrued interest.
Prior to fiscal 2012, Fiesta employees participated in the Carrols Corporation Retirement Savings Plan (the "Carrols Retirement Plan"), which had provisions similar to the Fiesta Corporation Retirement Savings Plan. Contributions made by Carrols were $147 and $127 for the years ended January 1, 2012 and January 2, 2011, respectively.
Selected Quarterly Financial and Earningd Data (Unaudited) (Notes)
Quarterly Financial Information [Text Block]
16. Selected Quarterly Financial and Earnings Data (Unaudited)
 
Year Ended December 30, 2012
 
 
First Quarter
 
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
 
Revenue
$
126,142

 
 
$
128,833

 
$
128,173

 
$
126,578

 
Income from operations
4,622

(1)
(2)
12,850

(2)
10,911

 
8,597

 
Net income (loss)
(1,865
)
 
 
3,921

 
3,649

 
2,562

 
Basic and diluted net income (loss) per share
$
(0.08
)
 
 
$
0.17

 
$
0.16

 
$
0.11

 
 
 
 
 
 
 
 
 
 
 
 
Year Ended January 1, 2012
 
 
First Quarter
 
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
 
Revenue
$
115,616

 
 
$
121,249

 
$
121,157

 
$
116,946

 
Income from operations
10,735

(3)
 
10,234

(3)
10,482

 
6,766

(4)
Net income (loss)
3,614

 
 
3,635

 
2,422

 
(130
)
 
Basic and diluted net income (loss) per share
$
0.16

 
 
$
0.16

 
$
0.10

 
$
(0.01
)
 

(1) The Company recorded impairment and other lease charges of $6.9 million in the first quarter of 2012 (see Note 4).
(2) Costs related to the Spin-off of $0.6 million and $0.1 million are included in the first and second quarters of 2012, respectively.
(3) The Company recorded impairment and other lease charges of $0.3 million in the first quarter of 2011 and $0.8 million in the second quarter of 2011 (See Note 4).
(4) The fourth quarter of 2011 includes expenses of $0.6 million for the Spin-off and related costs.
Schedule II--Valuation and Qualifying Accounts Schedule II
Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]
 
 
Column B
 
Column C
 
Column D
 
Column E
 
 
Balance at
 
Charged to
Charged to
 
 
 
Balance
 
 
beginning
 
costs and
other
 
 
 
at end of
Description
 
of period
 
expenses
accounts
 
Deduction
 
period
Year Ended December 30, 2012:
 
 
 
 
 
 
 
 
 
Deferred income tax valuation allowance
 
$
674

 
145


 

 
819

Year Ended January 1, 2012:
 
 
 
 
 
 
 
 
 
Deferred income tax valuation allowance
 
549

 
125


 

 
674

Year Ended January 2, 2011:
 
 
 
 
 
 
 
 
 
Deferred income tax valuation allowance
 
563

 
(14
)

 

 
549

Basis of Presentation Accounting Policies (Policies)
Gift cards. The Company sells gift cards to its customers in its restaurants and through select third parties. The Company recognizes revenue from gift cards upon redemption by the customer. The gift cards have no stated expiration dates and are subject to escheatment rights in certain states. Revenues from unredeemed gift cards are not material to the Company's financial statements.
Basis of Consolidation. The consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. These consolidated financial statements have been prepared as if the Company was in existence for all periods presented. All intercompany transactions have been eliminated in consolidation.
Through the date of the Spin-off, these consolidated financial statements have been prepared on a stand-alone basis from the separate records maintained by Carrols and may not necessarily be indicative of the results of operations or cash flows that would have resulted had allocations and other related-party transactions been consummated with unrelated parties or had the Company been an independent, publicly traded company during all of the periods presented. The consolidated financial statements reflect the historical financial position, results of operations and cash flows of Fiesta as it has historically operated, in conformity with U.S. Generally Accepted Accounting Principles ("GAAP"). All intercompany transactions have been eliminated in consolidation.
In connection with the Spin-off, the board of directors of the Company authorized a 23,161.8 for one split of its outstanding common stock that was effective on April 19, 2012. Accordingly, all references to share and per share amounts related to common stock included in the consolidated financial statements and accompanying notes have been adjusted to reflect the stock split and change in the number of authorized shares. The stock split has been retroactively applied to the Company’s financial statements.
Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The fiscal years ended December 30, 2012, January 1, 2012 and January 2, 2011 each contained 52 weeks.
Allocations. Through the date of the consummation of the Spin-off, Carrols provided administrative support to the Company for executive management, information systems and certain accounting, legal and other administrative functions. The cost of these services were allocated to the Company based primarily on a pro-rata share of either the Company’s revenues, number of restaurants or number of employees. The allocations may not reflect the expense the Company would have incurred as an independent, publicly traded company for the periods presented. Following the Spin-off, certain of these functions continue to be provided by Carrols under the TSA and the Company is performing certain functions using its own resources or purchased services from third parties. Refer to Note 7—Former Related Party Transactions for further discussion related to agreements entered into effective as of the Spin-off.
Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Inventories. Inventories, primarily consisting of food and paper, are stated at the lower of cost (first-in, first-out) or market.
Property and Equipment. The Company capitalizes all direct costs incurred to construct and substantially improve its restaurants. These costs are depreciated and charged to expense based upon their property classification when placed in service. Property and equipment is recorded at cost. Repair and maintenance activities are expensed as incurred. Depreciation and amortization is provided using the straight-line method over the following estimated useful lives:
 
Buildings
5
to
30 years
Equipment
3
to
7 years
Computer hardware and software
3
to
7 years
Assets subject to capital lease
Shorter of useful life or lease term

Leasehold improvements are depreciated over the shorter of their estimated useful lives or the underlying lease term. In circumstances where an economic penalty would be presumed by the non-exercise of one or more renewal options under the lease, the Company includes those renewal option periods when determining the lease term. For significant leasehold improvements made during the latter part of the lease term, the Company amortizes those improvements over the shorter of their useful life or an extended lease term. The extended lease term would consider the exercise of renewal options if the value of the improvements would imply that an economic penalty would be incurred without the renewal of the option. Building costs incurred for new restaurants on leased land are depreciated over the lease term, which is generally a twenty-year period.
Deferred Financing Costs. Financing costs incurred in obtaining long-term debt and lease financing obligations are capitalized and amortized over the life of the related obligation as interest expense using the effective interest method.
Leases.  All leases are reviewed for capital or operating classification at their inception. The majority of the Company's leases are operating leases. Many of the lease agreements contain rent holidays, rent escalation clauses and/or contingent rent provisions. Rent expense for leases that contain scheduled rent increases or rent holidays is recognized on a straight-line basis over the lease term, including any option periods included in the determination of the lease term. Contingent rentals are generally based upon a percentage of sales or a percentage of sales in excess of stipulated amounts and are not considered minimum rent payments but are recognized as rent expense when incurred.
Lease Financing Obligations. Lease financing obligations pertain to real estate sale-leaseback transactions accounted for under the financing method. In accordance with ASC 840-40-25-16 “Sale-Leaseback Transactions”, the Company has recorded lease financing obligations for sale-leaseback transactions that did not qualify for sale-leaseback accounting due to certain forms of continuing involvement. The assets (land and building) subject to these obligations remain on the Company's consolidated balance sheet at their historical costs and such assets (excluding land) continue to be depreciated over their remaining useful lives. The proceeds received by the Company from these transactions are recorded as lease financing obligations, and the lease payments are applied as payments of principal and interest. The selection of the interest rate on lease financing obligations is evaluated at inception of the lease based on the Company's incremental borrowing rate adjusted to the rate required to prevent recognition of a non-cash loss or negative amortization of the obligation through the end of the primary lease term.
Revenue Recognition. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percent of gross sales and are recorded as income when earned.
Income Taxes. The Company's taxable income has historically been included in the consolidated U.S. federal income tax return of Carrols and in income tax returns filed by Carrols with certain state taxing jurisdictions. The Company's income tax liability has been computed and presented in these consolidated financial statements as if it were a separate taxpaying entity for the periods presented.
Deferred income tax assets and liabilities are based on the difference between the financial statement and tax bases of assets and liabilities as measured by the tax rates that are anticipated to be in effect when those differences reverse. The deferred tax provision generally represents the net change in deferred tax assets and liabilities during the period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established when it is necessary to reduce deferred tax assets to amounts for which realization is more likely than not. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Prior to the Spin-off, the Company’s taxable income has been included in the consolidated U.S. federal income tax return of Carrols and in income tax returns filed by Carrols on a consolidated basis with certain state taxing jurisdictions. Subsequent to the Spin-off, the Company is responsible for filing its own consolidated U.S. federal and state tax returns. Prior to the Spin-off, the Company determined its provision for income taxes on a separate return basis.
The Tax Matters Agreement governs the methodology for allocating responsibility for federal, state, local and foreign income and other taxes related to taxable periods prior to and subsequent to the Spin-off. Under the Tax Matters Agreement, Carrols is generally responsible for Federal income taxes related to the Company for all periods prior to the date of the Spin-off and the Company is responsible for Federal income taxes for periods after the date of the Spin-off. The Company is also responsible for all state taxes that were filed on a consolidated basis both before and after the date of Spin-off, specifically Florida and Texas, and any other states where the Company was filing or will file separate state tax returns.
Advertising Costs. All advertising costs are expensed as incurred.
Cost of Sales. The Company includes the cost of food, beverage and paper, net of any discounts, in cost of sales.
Pre-opening Costs. The Company's pre-opening costs are expensed as incurred and generally include payroll costs and travel expenditures associated with opening the new restaurant, rent and promotional costs.
Insurance. During 2012, 2011 and 2010, the Company was insured for workers' compensation, general liability and medical insurance claims under policies covering both Carrols and the Company. All claims are paid, subject to stop-loss limitations both for individual claims and claims in the aggregate. Losses are accrued based upon estimates of the aggregate liability for claims based on the Company's experience and certain actuarial methods used to measure such estimates. The Company does not discount any of its self-insurance obligations.
 Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect our own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
Current Assets and Liabilities. The carrying values reported on the balance sheet of cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.
Senior Secured Second Lien Notes. The fair value of outstanding senior secured second lien notes is based on recent trading values, which are considered Level 1, and at December 30, 2012, was approximately $214.5 million.
See Note 4 for discussion of the fair value measurement of non-financial assets.
.
Subsequent Events. The Company reviewed and evaluated subsequent events through the issuance date of the Company’s financial statements.
Goodwill Goodwill Policy (Policies)
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]
The Company is required to review goodwill for impairment annually or more frequently when events and circumstances indicate that the carrying amount may be impaired. If the determined fair value of goodwill is less than the related carrying amount, an impairment loss is recognized. The Company performs its annual impairment assessment as of the last day of the fiscal year and has determined its reporting units to be its operating segments, Pollo Tropical and Taco Cabana.

In performing its goodwill impairment test, the Company compared the net book values of its reporting units to their estimated fair values, the latter determined by employing a discounted cash flow analyses, which was corroborated with other value indicators where available, such as comparable company earnings multiples.
Impairment of Long-Lived Assets and Other Lease Charges Impairment Accounting Policy (Policies)
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]
The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries.
The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions and the Company’s history of using these assets in the operation of its business. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the year ending December 30, 2012 totaled $0.4 million.
Lease Financing Obligations (Policies)
Lease Financing Obligations [Policy Text Block]
The Company entered into sale-leaseback transactions in various years that did not qualify for sale-leaseback accounting due to certain forms of continuing involvement and, as a result, the leases were classified as financing transactions in the Company’s consolidated financial statements.
Under the financing method, the assets remain on the consolidated balance sheet and the net proceeds received by the Company from these transactions are recorded as a lease financing liability. Payments under these leases are applied as payments of imputed interest and deemed principal on the underlying financing obligations.
These leases generally provide for an initial term of 20 years plus renewal options. The rent payable under such leases includes a minimum rent provision and in some cases, includes rent based on a percentage of sales. These leases also require payment of property taxes, insurance and utilities.
Income Taxes Income Taxes (Policies)
Income Tax, Policy [Policy Text Block]
Income Taxes. The Company's taxable income has historically been included in the consolidated U.S. federal income tax return of Carrols and in income tax returns filed by Carrols with certain state taxing jurisdictions. The Company's income tax liability has been computed and presented in these consolidated financial statements as if it were a separate taxpaying entity for the periods presented.
Deferred income tax assets and liabilities are based on the difference between the financial statement and tax bases of assets and liabilities as measured by the tax rates that are anticipated to be in effect when those differences reverse. The deferred tax provision generally represents the net change in deferred tax assets and liabilities during the period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established when it is necessary to reduce deferred tax assets to amounts for which realization is more likely than not. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Prior to the Spin-off, the Company’s taxable income has been included in the consolidated U.S. federal income tax return of Carrols and in income tax returns filed by Carrols on a consolidated basis with certain state taxing jurisdictions. Subsequent to the Spin-off, the Company is responsible for filing its own consolidated U.S. federal and state tax returns. Prior to the Spin-off, the Company determined its provision for income taxes on a separate return basis.
The Tax Matters Agreement governs the methodology for allocating responsibility for federal, state, local and foreign income and other taxes related to taxable periods prior to and subsequent to the Spin-off. Under the Tax Matters Agreement, Carrols is generally responsible for Federal income taxes related to the Company for all periods prior to the date of the Spin-off and the Company is responsible for Federal income taxes for periods after the date of the Spin-off. The Company is also responsible for all state taxes that were filed on a consolidated basis both before and after the date of Spin-off, specifically Florida and Texas, and any other states where the Company was filing or will file separate state tax returns.
Business Segment Information Business Segment Policy (Policies)
Segment Reporting, Policy [Policy Text Block]
The accounting policies of each segment are the same as those described in the summary of significant accounting policies discussed in Note 1.
Net Income (Loss) per Share (Policies)
Earnings Per Share, Policy [Policy Text Block]
 We compute basic earnings per share by dividing net income applicable to common shares by the weighted average number of common shares outstanding during each period. Our non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities, and the impact is included in the computation of basic earnings per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Earnings per common share was computed by dividing undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the pro-rata weighted average shares outstanding during the period.
Retirement Plans (Policies)
Pension and Other Postretirement Plans, Policy [Policy Text Block]
Fiesta offers the Company's salaried employees the option to participate in the Fiesta Corporation Retirement Savings Plan (the “Retirement Plan”). The Retirement Plan includes a savings option pursuant to section 401(k) of the Internal Revenue Code in addition to a post-tax savings option. Fiesta may elect to contribute to the Retirement Plan on an annual basis. Fiesta's contribution, if any, is equal to 50% of the employee's contribution to a maximum Fiesta contribution of $0.5 per participating employee annually for any plan year that Fiesta participates in an employee match. Under the Retirement Plan, Fiesta contributions begin to vest after 1 year and fully vest after 5 years of service. A year of service is defined as a plan year during which an employee completes at least 1,000 hours of service. Participating employees may contribute up to 50% of their salary annually to either of the savings options, subject to other limitations.
Basis of Presentation Basis of Presentation (Tables)
Property, Plant and Equipment [Table Text Block]
Depreciation and amortization is provided using the straight-line method over the following estimated useful lives:
 
Buildings
5
to
30 years
Equipment
3
to
7 years
Computer hardware and software
3
to
7 years
Assets subject to capital lease
Shorter of useful life or lease term
Property and equipment consisted of the following:  
 
December 30, 2012
 
January 1, 2012
Land
$
19,904

 
$
69,617

Owned buildings
16,706

 
67,830

Leasehold improvements
113,679

 
104,292

Equipment
118,489

 
111,590

Assets subject to capital leases
1,151

 
1,151

 
269,929

 
354,480

Less accumulated depreciation and amortization
(143,413
)
 
(159,358
)
 
$
126,516

 
$
195,122

Property and Equipment Property and Equipment (Tables)
Property, Plant and Equipment [Table Text Block]
Depreciation and amortization is provided using the straight-line method over the following estimated useful lives:
 
Buildings
5
to
30 years
Equipment
3
to
7 years
Computer hardware and software
3
to
7 years
Assets subject to capital lease
Shorter of useful life or lease term
Property and equipment consisted of the following:  
 
December 30, 2012
 
January 1, 2012
Land
$
19,904

 
$
69,617

Owned buildings
16,706

 
67,830

Leasehold improvements
113,679

 
104,292

Equipment
118,489

 
111,590

Assets subject to capital leases
1,151

 
1,151

 
269,929

 
354,480

Less accumulated depreciation and amortization
(143,413
)
 
(159,358
)
 
$
126,516

 
$
195,122

Goodwill (Tables)
Schedule of Intangible Assets and Goodwill [Table Text Block]
Goodwill balances are summarized below: 
 
Pollo
Tropical
 
Taco
Cabana
 
Total
Balance, December 30, 2012 and January 1, 2012
$
56,307

 
$
67,177

 
$
123,484

Impairment of Long-Lived Assets and Other Lease Charges Impairment by segment (Tables)
Impairment of long lived assets and other lease charge [Table Text Block]
Impairment on long-lived assets for the Company’s segments and other lease charges recorded were as follows:
         
 
Year Ended
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
Pollo Tropical
$
6,035

 
$
2,457

 
$
4,671

Taco Cabana
1,004

 
287

 
1,943

 
$
7,039

 
$
2,744

 
$
6,614

Other Liabilities, Long-Term Other Liabilities (Tables)
Other liabilities, long-term, consisted of the following:
 
December 30, 2012
 
January 1, 2012
Accrued occupancy costs
$
8,493

 
$
7,459

Accrued workers’ compensation and general liability claims
1,270

 
1,251

Deferred compensation
812

 
710

Other
1,358

 
722

 
$
11,933

 
$
10,142

The following table presents the activity in the closed-store reserve, of which $1.7 million and $1.1 million are included in long-term accrued occupancy costs above at December 30, 2012 and January 1, 2012, respectively, with the remainder in other current liabilities:
 
 
Year Ended
 
 December 30, 2012
 
January 1, 2012
Balance, beginning of period
$
2,246

 
$
1,665

Provisions for restaurant closures
1,796

 
800

Accruals (recoveries) for additional lease charges
(377
)
 
649

Payments, net
(1,496
)
 
(1,021
)
Other adjustments
263

 
153

Balance, end of period
$
2,432

 
$
2,246

Leases (Tables)
Minimum rent commitments due under capital and non-cancelable operating leases at December 30, 2012 were as follows:
    
 
Capital
 
Operating
2013
$
139

 
$
29,190

2014
132

 
28,968

2015
120

 
28,400

2016
116

 
27,960

2017
116

 
26,827

Thereafter
949

 
192,349

Total minimum lease payments
1,572

 
$
333,694

Less amount representing interest
(623
)
 
 
Total obligations under capital leases
949

 
 
Less current portion
(60
)
 
 
Long-term debt under capital leases
$
889

 
 
Total rent expense on operating leases, including contingent rentals, was as follows:
 
Year Ended
 
December 30, 2012
 
January 1, 2012
 
January 2, 2011
Minimum rent on real property
$
21,760

 
$
16,721

 
$
16,534

Additional rent based on percentage of sales
246

 
209

 
86

Restaurant rent expense
22,006

 
16,930

 
16,620

Administrative and equipment rent
781

 
819

 
763

 
$
22,787

 
$
17,749

 
$
17,383

Long-term Debt (Tables)
At December 30, 2012, principal payments required on long-term debt are as follows:
2013
$
60

2014
57

2015
48

2016
200,048

2017
53

Thereafter
683

 
$
200,949

Long term debt at December 30, 2012 and January 1, 2012 consisted of the following:
 
 
December 30,
2012
 
January 1,
2012
Collateralized:
 
 
 
Fiesta Restaurant Group 8.875% Senior Secured Second Lien Notes
$
200,000

 
$
200,000

Capital leases
949

 
1,008

 
200,949

 
201,008

Less: current portion of long-term debt
(60
)
 
(59
)
 
$
200,889

 
$
200,949

Lease Financing Obligations (Tables)
Future Payments on Lease Financing Obligations [Table Text Block]
At December 30, 2012, payments required on all lease financing obligations were as follows:
2013
$
255

2014
258

2015
260

2016
263

2017
266

Thereafter, through 2030
4,485

Total minimum lease payments
5,787

Less: Interest implicit in obligations
(2,758
)
Total lease financing obligations
$
3,029

Income Taxes Income Taxes (Tables)
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. The components of deferred income tax assets and liabilities at December 30, 2012 and January 1, 2012 were as follows:
 
 
December 30, 2012
 
January 1, 2012
Current deferred income tax assets (liabilities):
 
 
 
 
  Inventory and other reserves
 
$
(173
)
 
$
4

  Accrued vacation benefits
 
1,446

 
1,346

  Other accruals
 
776

 
426

Current deferred income tax assets
 
2,049

 
1,776

Long term deferred income tax assets (liabilities):
 
 
 
 
  Deferred income on sale-leaseback of certain real estate
 
13,126

 
6,414

  Lease financing obligations
 
258

 
906

  Lease financing obligations - guaranteed by former parent
 

 
5,752

  Property and equipment depreciation
 
(2,217
)
 
(3,428
)
  Amortization of other intangibles, net
 
(3,031
)
 
(2,905
)
  Occupancy costs
 
3,104

 
3,935

  Tax credit carryforwards
 
819

 
674

  Other
 
1,861