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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 3, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-33174
CARROLS RESTAURANT GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware83-3804854
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
968 James Street
Syracuse,
New York13203
(Address of principal executive office)(Zip Code)
Registrant’s telephone number, including area code: (315424-0513 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareTASTThe NASDAQ Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of November 8, 2021, Carrols Restaurant Group, Inc. had 51,273,538 shares of its common stock, $.01 par value, outstanding.


Table of Contents
CARROLS RESTAURANT GROUP, INC.
FORM 10-Q
QUARTER ENDED OCTOBER 3, 2021
 
  Page
Item 1
Item 2
Item 3
Item 4
Item 1
Item 1A
Item 2
Item 3
Item 4
Item 5
Item 6
2


PART I—FINANCIAL INFORMATION
ITEM 1—INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CARROLS RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
October 3, 2021January 3, 2021
ASSETS
Current assets:
Cash and cash equivalents$89,373 $64,964 
Trade and other receivables18,335 19,862 
Inventories13,674 11,595 
Prepaid rent8,452 8,046 
Prepaid expenses and other current assets10,374 7,309 
Refundable income taxes134 169 
Total current assets140,342 111,945 
Property and equipment, net of accumulated depreciation of $474,897 and $434,328, respectively
341,328 349,555 
Franchise rights, net of accumulated amortization of $144,010 and $133,632, respectively (Note 3)
329,849 334,597 
Goodwill (Note 3)123,971 122,619 
Franchise agreements, at cost less accumulated amortization of $14,364 and $14,653, respectively
31,519 31,584 
Operating right-of-use assets, net (Note 6)799,663 799,962 
Other assets7,792 6,823 
Total assets$1,774,464 $1,757,085 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and finance lease liabilities (Notes 6 and 7)$5,031 $5,525 
Current portion of operating lease liabilities (Note 6)43,945 41,815 
Accounts payable30,487 27,596 
Accrued payroll, related taxes and benefits44,532 49,417 
Accrued real estate taxes9,055 7,774 
Other liabilities57,374 24,214 
Total current liabilities190,424 156,341 
Long-term debt and finance lease liabilities, net of current portion (Notes 6 and 7)510,899 475,695 
Operating lease liabilities (Note 6)810,678 809,969 
Deferred income taxes, net (Note 8)7,825 11,362 
Accrued postretirement benefits1,264 1,523 
Other liabilities (Note 5)25,945 30,663 
Total liabilities1,547,035 1,485,553 
Commitments and contingencies (Note 10)
Stockholders’ equity (Note 12):
Preferred stock, par value $.01; authorized 20,000,000 shares, issued and outstanding—100 shares
  
Voting common stock, par value $.01; authorized—100,000,000 shares, issued—53,378,491 and 52,653,964 shares, respectively, and outstanding—49,927,583 and 49,389,382 shares, respectively
520 515 
Additional paid-in capital286,123 306,469 
Accumulated deficit (44,996)(18,367)
Accumulated other comprehensive loss(91)(3,015)
Treasury stock, at cost(14,127)(14,070)
Total stockholders’ equity227,429 271,532 
Total liabilities and stockholders’ equity$1,774,464 $1,757,085 
See notes to unaudited condensed consolidated financial statements.
3


CARROLS RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except share and per share amounts)
(Unaudited)
Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Restaurant sales$421,703 $407,036 $1,236,237 $1,126,972 
Operating expenses:
Food, beverage and packaging costs131,103 121,228 371,317 328,858 
Restaurant wages and related expenses141,303 126,040 408,541 362,503 
Restaurant rent expense30,551 30,536 91,456 88,974 
Other restaurant operating expenses66,733 60,486 193,280 172,774 
Advertising expense16,619 15,989 48,927 44,281 
General and administrative expenses (including stock-based compensation of $1,458, $1,303, $4,541 and $3,543, respectively)
19,209 20,440 61,276 59,808 
Depreciation and amortization20,101 19,620 61,131 60,947 
Impairment and other lease charges (Note 4)784 1,954 1,281 7,776 
Other expense (income), net(1,053)515 (111)(1,432)
Total operating expenses425,350 396,808 1,237,098 1,124,489 
Income (loss) from operations(3,647)10,228 (861)2,483 
Loss on extinguishment of debt  8,538  
Interest expense7,724 6,649 21,392 20,159 
Income (loss) before income taxes(11,371)3,579 (30,791)(17,676)
Provision for (benefit from) income taxes (Note 8)(1,469)48 (4,162)(6,840)
Net income (loss)$(9,902)$3,531 $(26,629)$(10,836)
Basic and diluted net income (loss) per share (Note 13)$(0.20)$0.06 $(0.53)$(0.21)
Shares used in computing net income (loss) per share:
Weighted average common shares outstanding:
Basic weighted average common shares outstanding49,927,583 50,923,686 49,889,673 50,887,182 
Diluted weighted average common shares outstanding49,927,583 60,542,580 49,889,673 50,887,182 
Comprehensive income (loss), net of tax:
Net income (loss)$(9,902)$3,531 $(26,629)$(10,836)
Change in valuation of interest rate swap (Notes 5 and 7)269 169 2,924 (7,218)
Comprehensive income (loss)$(9,633)$3,700 $(23,705)$(18,054)
See notes to unaudited condensed consolidated financial statements.
4


CARROLS RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)
(Unaudited)
Accumulated
AdditionalRetainedOtherTotal
Common StockPreferred StockPaid-InEarningsComprehensiveTreasury StockStockholders'
SharesAmountSharesAmountCapital(Deficit)Income (Loss)SharesAmountEquity
Balance, January 3, 202151,486,116 $515 100 $ $306,469 $(18,367)$(3,015)(2,096,734)$(14,070)$271,532 
Stock-based compensation— — — — 1,469 — — — — 1,469 
Vesting of non-vested shares and RSUs522,406 5 — — (5)— — — —  
Net loss— — — — — (7,168)— — — (7,168)
Purchase of treasury stock— — — — — — — (8,219)(57)(57)
Change in valuation of interest rate swap, net of income taxes of $1,046 (Note 7)
— — — — — — 3,159 — — 3,159 
Balance, April 4, 202152,008,522 $520 100 $ $307,933 $(25,535)$144 (2,104,953)$(14,127)$268,935 
Stock-based compensation— — — — 1,614 — — — — 1,614 
Vesting of non-vested shares24,014 — — — — — — — —  
Net loss— — — — — (9,559)— — — (9,559)
Change in valuation of interest rate swap, net of income taxes of $167 (Note 7)
— — — — — — (504)— — (504)
Balance, July 4, 202152,032,536 $520 100 $ $309,547 $(35,094)$(360)(2,104,953)$(14,127)$260,486 
Stock-based compensation— — — — 1,458 — — — — 1,458 
Special cash dividend declared— — — — (24,882)— — — — (24,882)
Net loss— — — — — (9,902)— — — (9,902)
Change in valuation of interest rate swap, net of income taxes of $89 (Note 7)
— — — — — — 269 — — 269 
Balance, October 3, 202152,032,536 $520 100 $ $286,123 $(44,996)$(91)(2,104,953)$(14,127)$227,429 
Balance, December 29, 201951,049,377 $510 100 $— $301,251 $11,096 $622 (553,112)$(4,017)$309,462 
Stock-based compensation— — — — 1,132 — — — — 1,132 
Vesting of non-vested shares and RSUs424,963 5 — — (5)— — — —  
Net loss— — — — — (22,209)— — — (22,209)
Purchase of treasury stock— — — — — — — (9,318)(54)(54)
Change in valuation of interest rate swap (Note 7)— — — — — — (5,209)— — (5,209)
Balance, March 29, 202051,474,340 $515 100 $ $302,378 $(11,113)$(4,587)(562,430)$(4,071)$283,122 
Stock-based compensation— — — — 1,109 — — — — 1,109 
Vesting of non-vested shares 11,776  — —  — — — —  
Net income— — — — — 7,842 — — — 7,842 
Change in valuation of interest rate swap (Note 7)— — — — — — (2,178)— — (2,178)
Balance, June 28, 202051,486,116 $515 100 $ $303,487 $(3,271)$(6,765)(562,430)$(4,071)$289,895 
Stock-based compensation— — — — 1,303 — — — — 1,303 
Net income— — — — — 3,531 — — — 3,531 
Change in valuation of interest rate swap (Note 7)— — — — — — 169 — — 169 
Balance, September 27, 202051,486,116 $515 100 $ $304,790 $260 $(6,596)(562,430)$(4,071)$294,898 
See notes to unaudited condensed consolidated financial statements.
5

Table of Contents
CARROLS RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


Nine Months Ended
October 3, 2021September 27, 2020
Cash flows provided by operating activities:
Net loss$(26,629)$(10,836)
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on disposals of property and equipment, including sale-leasebacks(111)(1,316)
Stock-based compensation4,541 3,543 
Impairment and other lease charges1,281 7,776 
Depreciation and amortization61,131 60,947 
Amortization of deferred financing costs1,903 1,600 
Amortization of discount on debt455 342 
Deferred income taxes(4,138)(6,983)
Non-cash loss on extinguishment of debt8,538  
Change in refundable income taxes35 6 
Changes in other operating assets and liabilities3,221 25,699 
Net cash provided by operating activities50,227 80,778 
Cash flows used for investing activities:
Capital expenditures:
New restaurant development(5,768)(15,694)
Restaurant remodeling(9,660)(11,615)
Other restaurant capital expenditures(13,455)(8,798)
Corporate and restaurant information systems(8,660)(6,714)
Total capital expenditures(37,543)(42,821)
Acquisition of restaurants, net of cash acquired (Note 2)(30,819) 
Proceeds from sale of other assets229  
Properties purchased for sale-leaseback (13,399)
Proceeds from sale-leaseback transactions20,186 20,342 
Proceeds from insurance recoveries1,244 1,833 
Net cash used for investing activities(46,703)(34,045)
Cash flows provided by (used in) financing activities:
Proceeds from issuance of 5.875% Senior Notes due 2029300,000  
Principal payments on Term B and B-1 Loans(320,313)(3,188)
Proceeds from borrowing of Term B-1 Loans 71,250 
Borrowings under revolving credit facility47,063 150,000 
Repayments under revolving credit facility (195,750)
Payments on finance lease liabilities(404)(1,464)
Costs associated with issuance of long-term debt(5,404)(2,793)
Purchase of treasury shares(57) 
Net cash provided by financing activities 20,885 18,055 
Net increase in cash and cash equivalents24,409 64,788 
Cash and cash equivalents, beginning of period64,964 2,974 
Cash and cash equivalents, end of period$89,373 $67,762 
Supplemental disclosures:
Interest paid on long-term debt$14,577 $18,431 
Interest paid on lease financing obligations78 78 
Accruals for capital expenditures2,059 2,736 
Finance lease obligations incurred2,798  
Income taxes paid (refunded)(26)139 
See notes to unaudited condensed consolidated financial statements.
6

Table of Contents
CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except share and per share amounts)

1. Basis of Presentation
Business Description. At October 3, 2021, Carrols Restaurant Group, Inc. (“Carrols Restaurant Group”) operated as a franchisee 1,027 Burger King® restaurants in 23 Northeastern, Midwestern, Southcentral and Southeastern states and 65 Popeyes® restaurants in seven Southeastern states.
Basis of Consolidation. Carrols Restaurant Group, Inc. is a holding company and conducts all of its operations through its direct and indirect wholly-owned subsidiaries Carrols Corporation and New CFH, LLC and their wholly-owned subsidiaries. Carrols Corporation's material wholly-owned subsidiary is Carrols LLC, a Delaware limited liability company. New CFH LLC's material direct and indirect wholly-owned subsidiaries include Frayser Quality, LLC and Nashville Quality, LLC (and together with New CFH, LLC's immaterial direct and indirect subsidiaries, collectively, “New CFH”). Unless the context otherwise requires, Carrols Restaurant Group and its direct and indirect wholly-owned subsidiaries are collectively referred to as the “Company.” All intercompany transactions have been eliminated in consolidation.
Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The three and nine months ended October 3, 2021 and September 27, 2020 each contained thirteen and thirty-nine weeks, respectively. The 2021 fiscal year will end January 2, 2022 and will contain 52 weeks.
Basis of Presentation. The unaudited condensed consolidated financial statements as of and for the three and nine months ended October 3, 2021 and September 27, 2020 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. The results of operations for the three and nine months ended October 3, 2021 are not necessarily indicative of the results to be expected for the full year.
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended January 3, 2021. The January 3, 2021 consolidated balance sheet data is derived from those audited consolidated financial statements.
Use of Estimates. The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates include accrued occupancy costs, insurance liabilities, lease accounting matters, the valuation of acquired assets and liabilities, interest rate swap valuation, the valuation of deferred income tax assets and liabilities, and the evaluation for impairment of goodwill, long-lived assets and franchise rights. Actual results could differ from those estimates.
Segment Information. Operating segments are components of an entity for which discrete financial information is available and is regularly reviewed by the chief operating decision maker in order to allocate resources and assess performance. The Company's chief operating decision-maker, our Chief Executive Officer (“CEO”), currently evaluates the Company's operations from a number of different operational perspectives; however, resource allocation decisions are determined based on the chief operating decision-maker's evaluation of the total Company operations. The Company derives all significant revenues from a single operating segment, its restaurant business. Accordingly, the Company views the operating results of its restaurants as one reportable segment.
Business Combinations. In accordance with ASC 805, the Company allocates the purchase price of an acquired business to its net identifiable assets and liabilities based on the estimated fair values. The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill. The excess
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

value of the net identifiable assets and liabilities acquired over the purchase price, if any, is recorded as a bargain purchase gain. The Company uses all available information to estimate fair values of identifiable intangible assets and property acquired. In making these determinations, the Company may engage an independent third-party valuation specialist to assist with the valuation of certain leasehold improvements, franchise rights and favorable and unfavorable leases.
The Company estimates that the seller's carrying value of acquired restaurant equipment, subject to certain adjustments, is equivalent to the fair value of this equipment at the date of the acquisition. The fair values of assumed franchise agreements are valued as if the remaining term of the agreement is at the market rate. The fair values of acquired land, buildings, certain leasehold improvements and restaurant equipment subject to finance leases are determined using both the cost approach and market approach using significant inputs observable in the open market. The Company categorizes these inputs as Level 2 inputs under ASC 820. The fair value of acquired franchise rights and favorable or unfavorable leases positions are determined using the income approach and include unobservable inputs. The Company categorizes these inputs as Level 3 inputs under ASC 820.
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. At both October 3, 2021 and January 3, 2021, the Company did not have any cash invested in money market funds classified as cash equivalents on the condensed consolidated balance sheets.
Food, beverage and packaging costs. The Company includes food, beverage and packaging costs and delivery commissions, net of any vendor purchase discounts and rebates, as food, beverage, and packaging costs on the condensed consolidated statements of comprehensive income (loss).
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 the Company's own assumptions. Financial instruments include cash and cash equivalents, trade and other receivables, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, trade and other receivables and accounts payable approximate fair value because of the short-term nature of these financial instruments. The carrying amount of the Term B Loans at October 3, 2021 approximate fair value because of their variable rates. The fair value of the Carrols Restaurant Group 5.875% Senior Notes due 2029 is based on a recent trading value, which is considered a Level 2 input, and at October 3, 2021 was approximately $279.8 million.
The Company recognizes its derivative arrangements on the balance sheet at fair value, which is considered a Level 2 input. The Company’s only derivative is an interest rate swap which is designated as a cash flow hedge. Accordingly, the effective portion of the changes in the fair value of this arrangement is recognized in accumulated other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of the changes in the fair value of this arrangement is immediately recognized in earnings as interest expense. The Company classifies cash inflows and outflows from derivatives within operating activities on the condensed consolidated statements of cash flows.
Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of long-lived assets, goodwill and intangible assets. Long-lived assets and definite-lived intangible assets are measured at fair value on a nonrecurring basis using Level 3 inputs. As described in Note 4, the Company recorded long-lived asset impairment charges of $0.6 million and $0.9 million during the three and nine months ended October 3, 2021 and $1.0 million and $5.4 million during the three and nine months ended September 27, 2020.

8


CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)


Goodwill. Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of the businesses acquired. Goodwill is not amortized, but is tested for impairment annually, or more frequently when events and circumstances indicate that the carrying amount may be impaired. The Company determined the decline in market value below the Company's net asset value during the third quarter of 2021 was a sufficient indicator to trigger an interim goodwill impairment analysis as of the end of the eighth month of the Company's fiscal year. Due to the proximity of the interim goodwill impairment analysis date to the Company's annual assessment date, and to allow for a greater amount of time to analyze the assessment of goodwill in advance of the Company's annual report filing deadline in future years, the Company updated its accounting policy to shift the annual impairment test from the last day of the fiscal year to the last day of the eighth month of the fiscal year in 2021 and future fiscal years. This change in date of the annual impairment test is not deemed material as the new measurement date of the eighth month of the fiscal year is in relative close proximity to the previous measurement date and the year-end balance sheet date, is not expected to materially impact the goodwill analysis, and allows for more timely financial reporting on these estimates (See Note 3).
Recently Issued Accounting Pronouncements. In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04 (“ASU 2020-04”) and subsequently ASU No. 2021-01, Reference Rate Reform (Topic 848) in March 2020 and January 2021, respectively. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, including derivative instruments impacted by changes in the interest rates used for discounting cash flows for computing variable margin settlements, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or other reference rates expected to be discontinued in 2022 or 2023. The ASUs establish certain contract modification principles that entities can apply in other areas that may be affected by reference rate reform and certain elective hedge accounting expedients and exceptions. The ASUs may be applied prospectively and are effective for all entities as of March 12, 2020 through December 31, 2022. The Company will adopt this guidance at the discontinuance of LIBOR. The Company is currently evaluating the guidance to determine the timing and extent to which it will apply to the Company's borrowing and interest rate swap arrangements. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.
In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the COVID-19 pandemic consistent with how those concessions would be accounted for under ASC Topic 842, Leases (“ASC 842”), as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. The Company elected to apply this interpretive guidance to certain rent relief received in 2020 resulting directly from COVID-19, and has assumed that enforceable rights and obligations for those concessions exist in the lease contract. Accordingly, the Company recognized abatements in 2020 that did not result in an extension of lease term as reductions in variable lease payments, and deferrals that did not result in an extension of lease term as an increase in other current liabilities. This election will continue while these abatements or deferrals are in effect.
COVID-19. In March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic. The COVID-19 pandemic has significantly impacted the communities the Company's restaurants operate in as federal, state and local governments have taken a series of actions to contain its spread. In March 2020, the Company closed its dining rooms in all restaurants and modified operating hours in line with local ordinances and day-part sales trends. Over the course of the pandemic, each restaurant has operated according to its respective local governmental guidelines as well as safety procedures developed by Burger King and Popeyes. The COVID-19 pandemic and its impact on restaurants in communities in which the Company operates continues to evolve. During
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

2021, we saw a modest shift in guests returning to dining rooms, with take-out and dine-in representing approximately 13% of net sales in September of 2021, as compared to 10% of net sales in December of 2020 and 30% of net sales for all of 2019.
Subsequent events. The Company reviewed and evaluated subsequent events through the issuance date of the Company’s unaudited condensed consolidated financial statements.
2. Acquisitions
In 2021, the Company acquired an aggregate of 19 Burger King restaurants from other franchisees in the following transactions (in thousands except number of restaurants):
Closing DateNumber of RestaurantsPurchase PriceFee-Owned (1)Market Location
June 17, 2021
14
$27,603 12 Fort Wayne, Indiana
June 23, 2021
5
3,216 1 Battle Creek, Michigan
19 $30,819 13 
(1) The 2021 acquisitions included the purchase of 13 fee-owned restaurants, of which 12 were sold in sale-leaseback transactions during the three months ended October 3, 2021 for net proceeds of approximately $20.2 million.
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

The Company allocated the aggregate purchase price for the 2021 acquisitions at their estimated fair values. The following table summarizes the preliminary allocation of the aggregate purchase price for the 2021 acquisitions reflected in the condensed consolidated balance sheets as of October 3, 2021:
Inventory$229 
Land and buildings21,403 
Restaurant equipment850 
Restaurant equipment - subject to finance leases29 
Right-of-use assets2,997 
Leasehold improvements550 
Franchise fees411 
Franchise rights 5,629 
Deferred income taxes332 
Goodwill 1,352 
Operating lease liabilities(2,899)
Finance lease liabilities for restaurant equipment(35)
Accounts payable(29)
Net assets acquired$30,819 
Goodwill recorded in connection with the 2021 acquisitions represents costs in excess of fair values assigned to the underlying net assets of acquired restaurants. Acquired goodwill that is expected to be deductible for income tax purposes was $1.4 million in 2021.
The results of operations for the restaurants acquired are included from the closing date of the respective acquisition. The 2021 acquired restaurants contributed restaurant sales of $6.1 million and $7.1 million in the three and nine months ended October 3, 2021. It is impracticable to disclose net earnings for the post-acquisition period for the acquired restaurants as net earnings of these restaurants were not tracked on a collective basis due to the integration of administrative functions, including field supervision.
The unaudited pro forma impact on the results of operations for the restaurants acquired in 2021 for the three and nine months ended October 3, 2021 and September 27, 2020 are included below. The unaudited pro forma results of operations are not necessarily indicative of the results that would have occurred had the acquisitions been consummated at the beginning of the periods presented, nor are they necessarily indicative of any future consolidated operating results. The following table summarizes the Company's unaudited pro forma operating results:
Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Total revenue$421,703 $413,500 $1,247,727 $1,144,429 
Net income (loss)$(9,821)$4,056 $(25,395)$(9,524)
Basic and diluted net income (loss) per share $(0.20)$0.07 $(0.51)$(0.19)
This unaudited pro forma financial information does not give effect to any anticipated synergies, operating efficiencies, cost savings or integration costs related to the acquired restaurants. The unaudited pro forma financial results exclude transaction costs recorded as general and administrative expenses of $0.1 million and $0.4 million during the three and nine months ended October 3, 2021, respectively.
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

3. Intangible Assets
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. During the third quarter of 2021, the Company evaluated the impact of the decline in market value below the Company’s net asset value to determine whether there was a triggering event requiring it to perform a goodwill impairment test. The Company determined a triggering event occurred and performed an interim goodwill quantitative impairment test for its reporting units. As part of this interim goodwill impairment test, the Company considered certain qualitative factors, such as the Company’s performance, business forecasts and expansion plans. In addition, revisions to projected cash flows and future revenue for reporting units were compared to the results of the Company’s annual quantitative impairment test performed during the last quarter of 2020. Using both the income approach and the market approach, the Company compared the fair value of each of its reporting units to carrying value. Based on the results of this analysis, the fair value of each reporting unit exceeded carrying value and goodwill was not impaired as of October 3, 2021. There were no recorded goodwill impairment losses during the three and nine months ended October 3, 2021 and September 27, 2020. The change in goodwill for the nine months ended October 3, 2021 is summarized below:
Balance at January 3, 2021$122,619 
Acquisitions of restaurants (Note 2)1,352 
Balance at October 3, 2021
$123,971 
Franchise Rights. Amounts allocated to franchise rights for each acquisition of Burger King and Popeyes restaurants are amortized using the straight-line method over the average remaining term of the acquired franchise agreements plus one twenty-year renewal period.
The Company assesses the potential impairment of franchise rights whenever events or changes in circumstances indicate that the carrying value may not be recoverable, which include consideration of the impact of a decline in the Company's market value. If an indicator of impairment exists, an estimate of the aggregate undiscounted cash flows from the acquired restaurants is compared to the respective carrying value of franchise rights for each acquisition. 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. No impairment charges were recorded related to the Company’s franchise rights for the three and nine months ended October 3, 2021 and September 27, 2020. The change in franchise rights for the nine months ended October 3, 2021 is summarized below:
Balance at January 3, 2021$334,597 
Acquisitions of restaurants (Note 2)5,629 
Amortization expense(10,377)
Balance at October 3, 2021$329,849 
Amortization expense related to franchise rights was $3.5 million and $3.4 million for the three months ended October 3, 2021 and September 27, 2020, respectively, and $10.4 million and $10.7 million for the nine months ended October 3, 2021 and September 27, 2020, respectively. The Company expects annual amortization expense to be $13.9 million in 2021 and $14.2 million in each of the following five years.
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

4. 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 the 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. The Company determines the fair value of right-of-use lease assets based on an assessment of market rents and a discounted future cash flow model. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy.
During the three months ended October 3, 2021, the Company recorded impairment and other lease charges of $0.8 million consisting of $0.5 million of initial impairment charges for three underperforming restaurants, capital expenditure impairment of $0.1 million and $0.2 million of other lease charges. During the nine months ended October 3, 2021, the Company recorded impairment and other lease charges of $1.3 million consisting of $0.5 million related to initial impairment charges for four underperforming restaurants, capital expenditure impairment of $0.4 million at previously impaired restaurants and $0.4 million of other lease charges.
During the three months ended September 27, 2020, the Company recorded impairment and other lease charges of $2.0 million consisting of $0.7 million of initial impairment charges for four underperforming restaurants, capital expenditure impairment of $0.2 million at underperforming restaurants, and $1.0 million of other lease charges primarily for three restaurants closed in the third quarter of 2020. During the nine months ended September 27, 2020, the Company recorded impairment and other lease charges of $7.8 million consisting of $4.9 million related to initial impairment charges for thirteen underperforming restaurants, capital expenditure impairment of $0.5 million at previously impaired restaurants and $2.4 million of other lease charges primarily from twelve restaurants closed during the first nine months of 2020.
13


CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

5. Other Liabilities, Long-Term
Other liabilities, long-term, at October 3, 2021 and January 3, 2021 consisted of the following:
October 3, 2021January 3, 2021
Accrued occupancy costs$1,819 $2,394 
Accrued workers’ compensation and general liability claims5,017 5,499 
Interest rate swap (Note 7)2,171 6,062 
Deferred compensation4,643 4,419 
Deferred federal payroll taxes10,808 10,808 
Lease finance obligations1,187 1,191 
Other300 290 
$25,945 $30,663 
On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (as amended, the “CARES Act”) as a response to the economic uncertainty resulting from COVID-19. The CARES Act provided for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. In 2020, the Company deferred $21.6 million related to this provision. As of both October 3, 2021 and January 3, 2021, $10.8 million was recorded in accrued payroll, related taxes and benefits and $10.8 million was recorded in other liabilities, long-term in the condensed consolidated balance sheets.
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 provide for renewal options with rent escalations. The exercise of such renewal options is generally at the Company’s sole discretion. The Company evaluates renewal options at lease commencement and upon any lease amendments or remodeling activity to determine if such options are reasonably certain to be exercised based on economic factors. Certain leases also require variable 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.
Right-of-use (“ROU”) lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make payments in exchange for that right of use. As the rate implicit within our leases is not readily determinable, the Company uses market and term-specific incremental borrowing rates which consider the rate of interest it expects to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. ROU assets are also reduced by lease incentives, increased by initial direct costs and adjusted by favorable lease assets and unfavorable lease liabilities.
Variable lease components represent amounts that are contractually fixed as a percentage of sales and are recognized in expense as incurred. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets and are recognized as lease expense on a straight-line basis over the lease term. The Company does not account for lease components (e.g., fixed payments including rent) separately from non-lease components (e.g. common area maintenance).
The Company also utilizes certain restaurant equipment under various finance lease agreements with initial terms of generally three to eight years. The Company does not consider any one of these individual leases material to the Company's operations.
For certain leases where rent escalates based upon a change in a financial index, such as the Consumer Price Index, the difference between the index at lease inception and the subsequent fluctuations in that index are included in variable lease costs. Additionally, because the Company has elected to not separate lease and non-lease components, in limited instances variable costs also include payments to the landlord for common area
14


CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

maintenance, real estate taxes, insurance and other operating expenses. Lease expense is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those costs are incurred.
As a result of the COVID-19 pandemic and the resulting economic uncertainty in the restaurant industry in 2020, the Company contacted each of its landlords to potentially negotiate accommodations to preserve cash. For certain leases the Company was able to modify existing payment terms, in some cases through deferral of existing payments until future periods and in some cases through a reduction in payments that would otherwise have been due. The Company elected the practical expedient to not evaluate whether a deferral of rent within the current term is a lease modification. Any concessions which resulted in an extension of the existing lease term were accounted for as a lease modification under current U.S. GAAP guidance. The total rent that was or will be deferred or abated as a result of requests for pandemic-related relief from landlords other than Burger King Corporation (“BKC”, see Note 11) was $5.8 million, of which $4.8 million has been or remains to be repaid over various schedules which began in the third quarter of 2020. As of October 3, 2021, $0.6 million remains to be repaid to landlords related to these deferrals.
Lease Cost
The components and classification of lease expense for the three and nine months ended October 3, 2021 and September 27, 2020 are as follows:
Three Months Ended
Nine Months Ended
Lease costClassificationOctober 3, 2021September 27, 2020October 3, 2021September 27, 2020
Operating lease cost (1)Restaurant rent expense$25,951 $26,126 $77,410 $77,088 
Operating lease cost (2)General and administrative213 171 693 436 
Variable lease costRestaurant rent expense4,599 4,410 14,046 11,886 
Finance lease cost:
Amortization of right-of-use assetsDepreciation and amortization240 221 549 1,103 
Interest on lease liabilitiesInterest expense35 26 86 108 
Total lease cost$31,038 $30,954 $92,784 $90,621 
(1)Includes short-term leases which are not material.
(2)Represents operating lease costs for property and equipment not directly related to restaurant operations.
Other Information
Supplemental cash flow information related to leases for the nine months ended October 3, 2021 and September 27, 2020 are as follows:
Nine Months Ended
October 3, 2021September 27, 2020
Gain on sale-leaseback transactions$17 $226 
Operating lease assets and liabilities resulting from lease modifications and new leases35,128 47,209 
Finance lease assets acquired through finance lease obligations2,798  
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases75,389 73,749 
Operating cash flows related to finance leases86 108 
Financing cash flows related to finance leases404 1,464 
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

7. Long-Term Debt
Long-term debt at October 3, 2021 and January 3, 2021 consisted of the following:
October 3, 2021January 3, 2021
Senior Credit Facility:
Term B Loans$172,938 $419,375 
Term B-1 Loans 73,875 
Revolving credit borrowings47,063  
Senior Notes Due 2029300,000  
Finance lease liabilities3,306 908 
Total Funded debt523,307 494,158 
Less: current portion of long-term debt and finance lease liabilities(5,031)(5,525)
Less: unamortized debt issuance costs(6,766)(7,777)
Less: unamortized original issue discount(611)(5,161)
Total Long-term debt$510,899 $475,695 
Senior Credit Facility. On April 30, 2019, the Company entered into senior secured credit facilities in an aggregate principal amount of $550.0 million, consisting of (i) a Term Loan B Facility in an aggregate principal amount of $425.0 million (the “Term Loan B Facility”) maturing on April 30, 2026 and (ii) a revolving credit facility (including a sub-facility of $35.0 million for standby letters of credit) in an aggregate principal amount of $125.0 million maturing on April 30, 2024 (the “Revolving Credit Facility” and, together with the Term Loan B Facility, the “Senior Credit Facilities”).
On December 13, 2019, the Company entered into the First Amendment to Credit Agreement (the “First Amendment”) which amended a financial covenant under the Senior Credit Facilities applicable solely with respect to the Revolving Credit Facility that previously required the Company to maintain quarterly a Total Net Leverage Ratio (as defined in the Senior Credit Facilities) of not greater than 4.75 to 1.00 (measured on a most recent four quarter basis), to now require that the Company maintain only a First Lien Leverage Ratio (as defined in the Senior Credit Facilities) of not greater than 5.75 to 1.00 (as measured on a most recent four quarter basis) if, and only if, on the last day of any fiscal quarter (beginning with the fiscal quarter ended December 29, 2019), the sum of the aggregate principal amount of outstanding revolving credit borrowings under the Revolving Credit Facility and the aggregate face amount of letters of credit issued under the Revolving Credit Facility (excluding undrawn letters of credit in an aggregate face amount up to $12.0 million) exceeds 35% of the aggregate amount of the maximum revolving credit borrowings under the Revolving Credit Facility. The First Amendment also reduced the aggregate maximum revolving credit borrowings under the Revolving Credit Facility by $10.0 million to a total of $115.0 million.
On March 25, 2020, the Company entered into the Second Amendment to its Senior Credit Facilities (the “Second Amendment”). The Second Amendment, among other things, (i) increased the aggregate maximum commitments available for revolving credit borrowings (including standby letters of credit) under the Revolving Credit Facility (the “Revolving Committed Amount”) by $15.4 million to a total of $130.4 million, (ii) amended the definition of Applicable Margin (such definition and all other definitions used herein and otherwise not defined herein shall be the meanings set forth in the Senior Credit Facilities), (iii) provided for a commitment fee (the “Ticking Fee”) beginning on the 180th day after the Second Amendment Effective Date and for so long as the Revolving Committed Amount remained greater than $115.0 million, and (iv) provided that the Company shall use the proceeds of an Extension of Credit which results in the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate amount of LOC Obligations equaling an amount in excess of $115.0 million solely for ongoing operations of the Company and its subsidiaries and shall not be held as cash on the balance sheet. The terms outlined as (ii), (iii) and (iv) were removed in the Sixth Amendment described below.
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

On April 8, 2020, the Company entered into the Third Amendment to its Senior Credit Facilities which increased the aggregate maximum commitments available for revolving credit borrowings (including standby letters of credit) under the Revolving Credit Facility by $15.4 million to a total of $145.8 million.
On April 16, 2020, the Company entered into the Fourth Amendment to its Senior Credit Facilities (the “Fourth Amendment”). The Fourth Amendment permits the Company to incur and, if necessary, repay indebtedness incurred pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. Subsequent to the Fourth Amendment, the Company withdrew its application for relief under the PPP and returned the funds upon receipt.
On June 23, 2020 (the “Fifth Amendment Effective Date”), the Company entered into the Fifth Amendment to its Senior Credit Facilities (the “Fifth Amendment”). The Fifth Amendment increased the Term Loan (as defined in the Senior Credit Facilities) borrowings in the aggregate principal amount of $75 million of Incremental Term B-1 Loans (as defined in the Senior Credit Facilities). The Incremental Term B-1 Loans constituted a new tranche of Term Loans ranking pari passu in right of payment and security with the Initial Term Loans for all purposes under the Senior Credit Facilities. The Incremental Term B-1 Loans had the same terms as outstanding borrowings under the Company's existing Term Loan B facility pursuant to and in accordance with the Senior Credit Facilities, provided that (i) borrowings under the Incremental Term B-1 Loans bore interest at a rate per annum, at the Company’s option, of (a) the Alternate Base Rate (as defined in the Senior Credit Facilities) plus the applicable margin of 5.25% or (b) the LIBOR Rate (as defined in the Senior Credit Facilities) (which shall not be less than 1% for Incremental Term B-1 Loans) plus the applicable margin of 6.25% and (ii) certain prepayments of the Incremental Term B-1 Loans by the Company prior to the first anniversary of the Fifth Amendment Effective Date would be subject to a premium to the Administrative Agent (as defined in the Senior Credit Facilities), for the ratable account of each applicable Term Loan Lender (as defined in the Senior Credit Facilities) holding Incremental Term B-1 Loans on the date of such prepayment equal to the Applicable Make-Whole Amount (as defined in the Senior Credit Facilities) with respect to the principal amount of the Incremental Term B-1 Loans so prepaid. The principal amount of the Incremental Term B-1 Loans amortized in an aggregate annual amount equal to 1% of the original principal amount of the Incremental Term B-1 Loans and were repayable in consecutive quarterly installments on the last day of the Company's fiscal quarters beginning on the third fiscal quarter of 2020. The remaining outstanding principal amount of the Incremental Term B-1 Loan and all accrued but unpaid interest and other amounts payable with respect to the Incremental Term B-1 Loan would be due on April 30, 2026, which is the Term Loan Maturity Date (as defined in the Senior Credit Facilities). The net proceeds of the Incremental Term B-1 Loans were $71.3 million after original issue discount and were used for general corporate purposes, including repayment of the outstanding balance of the Revolving Credit Facility. The Term B-1 Loans were repaid in full on June 28, 2021.
On April 6, 2021, the Company entered into the Sixth Amendment to its Senior Credit Facilities (the “Sixth Amendment”) which increased the aggregate maximum commitments available for revolving credit borrowings (including standby letters of credit) under the Revolving Credit Facility by $29.2 million to a total of $175.0 million. The Sixth Amendment also amended the definitions in the Senior Credit Facilities of (i) Applicable Margin, to provide that the Applicable Margin for borrowings under the Revolving Credit Facility (including Letter of Credit Fees) shall be at a rate per annum equal to 3.25% for LIBOR Rate Loans and 2.25% for Alternate Base Rate Loans, and (ii) Revolving Maturity Date, to provide that the Revolving Maturity Date is extended to January 29, 2026. In addition, the Sixth Amendment amended the Senior Credit Facilities to remove the obligation by the Company to (i) pay a Ticking Fee pursuant to the Ticking Fee Rate and (ii) use the proceeds of an Extension of Credit which results in the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate amount of LOC Obligations equaling an amount in excess of $115.0 million solely for ongoing operations of the Company and its subsidiaries and not to hold as cash on the balance sheet.
On June 28, 2021, the Company entered into the Seventh Amendment to its Senior Credit Facilities (the “Seventh Amendment”). The Seventh Amendment revised (a) the initial amount for calculating the Available Amount (as defined in the Senior Credit Facilities) from $27.0 million to $50.0 million which is utilized, among other items, in determining the amount of Restricted Payments (as defined in the Senior Credit Facilities) and Permitted Investments (as defined in the Senior Credit Facilities), (b) the calculation of the Company's ability to
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

incur an Incremental Term Loan (as defined in the Senior Credit Facilities) or an increase to the Revolving Committed Amount from $135.0 million to $180.0 million, and (c) the general basket for Restricted Payments, Permitted Investments and Restricted Junior Debt Payment (as defined in the Senior Credit Facilities) from an aggregate amount not to exceed the greater of (i) $27.0 million and (ii) 20% of Consolidated EBITDA (as defined in the Senior Credit Facilities) as of the most recently completed Reference Period (as defined in the Senior Credit Facilities) to (i) $50.0 million and (ii) 40% of Consolidated EBITDA as of the most recently completed Reference Period. In addition, the Seventh Amendment revises the Total Net Leverage Ratio required for the Company to make Restricted Payments or prepay Junior Debt (as defined in the Senior Credit Facilities) with unutilized Available Amount from 3.00 to 1.00 to 4.00 to 1.00. The Seventh Amendment also provided for affiliates of the Company to acquire up to 20% of the outstanding term loans pursuant to certain transactions.
On September 30, 2021, the Company entered into the Eighth Amendment to its Senior Credit Facilities (the “Eighth Amendment”). The Eighth Amendment increased the aggregate maximum commitments available for revolving credit borrowings under the revolving credit facility by $40.0 million to a total of $215.0 million.
The Company’s obligations under the Senior Credit Facilities are guaranteed by its subsidiaries and are secured by first priority liens on substantially all of the assets of the Company and its subsidiaries, including a pledge of all of the capital stock and equity interests of its subsidiaries.
Under the Senior Credit Facilities, the Company is required to make mandatory prepayments of borrowings in the event of dispositions of assets, debt issuances and insurance and condemnation proceeds (all subject to certain exceptions).
The Senior Credit Facilities contain certain covenants, including, without limitation, those limiting the Company’s and its 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 Facilities require the Company to meet a First Lien Leverage Ratio (as defined in the Senior Credit Facilities) if revolving credit borrowings exceed 35% of the aggregate borrowing capacity, as described under the First Amendment above. As the $47.1 million borrowings under the Revolving Credit Facility at October 3, 2021 did not exceed 35% of the aggregate borrowing capacity, no First Lien Leverage Ratio calculation was required. However, if the Company had been subject to the First Lien Leverage Ratio, the Company's First Lien Leverage Ratio was 1.24 to 1.00 as of October 3, 2021 which was below the required First Lien Leverage Ratio of 5.75 to 1.00. As a result, the Company does not expect to have to reduce its term loan borrowings mandatorily with Excess Cash Flow (as defined in the Senior Credit Facilities). The Company was in compliance with the covenants under its Senior Credit Facilities at October 3, 2021.
The Senior Credit Facilities contain customary default provisions, including that the lenders may terminate their obligation to advance and may declare the unpaid balance of borrowings, or any part thereof, immediately due and payable upon the occurrence and during the continuance of customary events of default which include, without limitation, payment default, covenant default, bankruptcy default, cross-default on other indebtedness, judgment default and the occurrence of a change of control.
The Term Loan B Facility requires quarterly installment payments, which began on September 30, 2019. Amounts outstanding at October 3, 2021 are due and payable as follows:
(i) eighteen remaining quarterly installments of $1.1 million;
(ii) one final payment of $153.8 million on April 30, 2026.
At October 3, 2021, borrowings under the Senior Credit Facilities bore interest as follows (subject to interest rate swap as described below):
(i) Revolving Credit Facility: at a rate per annum equal to (a) the Alternate Base Rate (as defined in the Senior Credit Facilities) plus 2.50% or (b) LIBOR Rate (as defined in the Senior Credit Facilities) plus 3.50%.
(ii) Term Loan B Facility: at a rate per annum equal to (a) the Alternate Base Rate (as defined in the Senior Credit Facilities) plus 2.25% or (b) LIBOR Rate (as defined in the Senior Credit Facilities) plus 3.25%.
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CARROLS RESTAURANT GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Tabular amounts in thousands, except share and per share amounts)

The weighted average interest rate for borrowings on long-term debt balances was 5.1% and 4.7% for the three and nine months ended October 3, 2021, respectively, and 4.4% and 4.5% for the three and nine months ended September 27, 2020, respectively.
As of October 3, 2021, there were $47.1 million revolving credit borrowings outstanding and $9.0 million of letters of credit issued under the Revolving Credit Facility. After reserving for issued letters of credit and outstanding revolving credit borrowings, $158.9 million was available for revolving credit borrowings under the Senior Credit Facilities at October 3, 2021.
Senior Notes due 2029. On June 28, 2021, the Company issued $300.0 million principal amount of