Benihana Inc. Reports Total Restaurant Sales and Comparable Restaurant Sales for the Second Four-Week Period of the Third Fiscal Quarter 2011

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Benihana Inc. (NASDAQ: BNHNA; BNHN), operator of the nation’s largest chain of Japanese theme and sushi restaurants, today reported total restaurant sales and comparable restaurant sales for the second four-week period (November 8 – December 5, 2010) of the third fiscal quarter 2011.

For the second four-week period, total restaurant sales increased 3.7% to $22.7 million from $21.9 million, while Company-wide comparable restaurant sales increased 4.5%, representing the tenth consecutive period of comparable restaurant sales increases. By concept, comparable restaurant sales increased 8.9% at Benihana Teppanyaki, but decreased 3.7% at RA Sushi and 1.8% at Haru. There were a total of 386 store-operating weeks in the second four-week period of the third fiscal quarter 2011 compared to a total of 392 store-operating weeks in the second four-week period of the third fiscal quarter 2010.

Richard C. Stockinger, Chairman and Chief Executive Officer, said, “The continued success of our Renewal Program, combined with our ‘Chef’s Special’ promotion, helped us achieve an impressive 12.6% increase in guest count during the four-week period. This is our largest year-over-year same period gain since the onset of the Renewal Program in September 2009. While we are pleased with the comparable sales performance of our flagship Teppanyaki brand, we also appreciate our need to address the renewed softness at both RA Sushi and Haru, and intend to do so through various menu, promotional, and marketing initiatives.”

McDonald’s November Global Comparable Sales Rise 4.8%

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McDonald’s Corporation (NYSE: MCD) today announced global comparable sales growth of 4.8% in November. Performance by segment was as follows:

  • U.S. up 4.9%
  • Europe up 4.9%
  • Asia/Pacific, Middle East and Africa up 2.4%

“McDonald’s continued strong performance reflects the benefits of our global alignment around the Plan to Win,” said McDonald’s Chief Executive Officer Jim Skinner. “Contemporary locations, quality food and beverages at an outstanding value and operations excellence continue to be the key ingredients to becoming our customers’ favorite place and way to eat and drink.”

In the U.S., comparable sales increased 4.9% for November fueled by McDonald’s iconic McRib sandwich, continued strong demand for McCafe beverages and everyday value throughout the menu.

In Europe, November comparable sales rose 4.9% due to strong performance in France, Germany, Russia and the U.K. Europe’s focus on premium products such as the McWraps in Germany, four-tiered menu pricing and ongoing restaurant modernization contributed to these results.

Comparable sales in Asia/Pacific, Middle East and Africa rose 2.4% for the month driven by Australia with positive results in China and most other markets, partly offset by Japan. APMEA’s results benefitted from initiatives that are differentiating the McDonald’s experience: compelling value, conveniences such as delivery and drive-thru, and restaurant reimaging.

Systemwide sales increased 4.7%, or 6.1% in constant currencies, for the month.  Separately, foreign currencies have weakened.  At current rates, currency translation is expected to negatively impact fourth quarter earnings by $0.01 to $0.02 per share. 

Percent Increase/(Decrease)          Comparable      Systemwide Sales
                                       Sales             As  Constant
Month ended November 30,           2010     2009    Reported Currency
---------------------------------------------------------------------
McDonald's Corporation              4.8      0.7         4.7      6.1
Major Segments:
  U.S.                              4.9     (0.6)        5.6      5.6
  Europe                            4.9      2.5         0.0      7.4
  APMEA*                            2.4     (1.0)        9.2      2.8
---------------------------------------------------------------------

Year-To-Date November 30,
---------------------------------------------------------------------
McDonald's Corporation              5.2      3.9         7.2      6.6
Major Segments:
  U.S.                              3.9      2.8         4.5      4.5
  Europe                            4.9      5.2         4.1      7.2
  APMEA*                            5.7      3.6        15.2      7.2
---------------------------------------------------------------------
    * Asia/Pacific, Middle East and Africa

Definitions

  • Comparable sales represent sales at all restaurants in operation at least thirteen months including those temporarily closed, excluding the impact of currency translation. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction and natural disasters. Management reviews the increase or decrease in comparable sales compared with the same period in the prior year to assess business trends.
  • Constant currency results exclude the effects of currency translation and are calculated by translating current year results at prior year average exchange rates.
  • Systemwide sales include sales at all restaurants, whether operated by the Company or by franchisees. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company’s financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base.
  • The number of weekdays and weekend days can impact our reported comparable sales. In November 2010, this calendar shift/trading day adjustment consisted of one less Sunday and one more Tuesday compared with November 2009. The resulting adjustment varied by area of the world, ranging from approximately -1.8% to 0.1%. In addition, the timing of holidays can impact comparable sales.

Upcoming Communications

McDonald’s tentatively plans to release fourth quarter results before the market opens on January 24, 2011 and will host an investor webcast.  This webcast will be broadcast live and available for replay for a limited time thereafter on www.investor.mcdonalds.com.

McDonald’s is the leading global foodservice retailer with more than 32,000 local restaurants in more than 100 countries. More than 80% of McDonald’s restaurants worldwide are owned and operated by franchisees. Please visit our website at www.aboutmcdonalds.com to learn more about the Company.

Forward-Looking Statements

This release contains certain forward-looking statements, which reflect management’s expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in the Company’s filings with the Securities and Exchange Commission, such as its annual and quarterly reports and current reports on Form 8-K.

CKE Restaurants Reports Third Quarter Fiscal 2011 Results

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CKE Restaurants, Inc. announced today its third fiscal quarter results for the twelve weeks ended November 1, 2010. The Company expects to file its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”) on Wednesday, December 8, 2010, after the close of the financial markets.

As previously reported, on July 12, 2010, Columbia Lake Acquisition Holdings, Inc., an affiliate of Apollo Management VII, L.P., acquired all of the outstanding shares of the Company (the “Acquisition”). The discussion of the Company’s third fiscal quarter results compares the results of operations for the twelve weeks ended November 1, 2010 (the “Successor” period) to the results of operations for the twelve weeks ended November 2, 2009 (the “Predecessor” period), which precedes the Acquisition. The accompanying condensed consolidated statement of operations for the forty weeks ended November 1, 2010 and related information have been prepared by adding the operating results for the Successor sixteen weeks ended November 1, 2010 and the Predecessor twenty-four weeks ended July 12, 2010. This presentation does not comply with generally accepted accounting principles; however, the Company believes that it provides a meaningful method of comparison.

Third Fiscal Quarter Results

The Company reported total revenue of $284.5 million for the fiscal 2011 third quarter, a decrease of $39.7 million, or 12.2%, compared to the fiscal 2010 third quarter. The decrease was primarily attributable to the sale of the Carl’s Jr. distribution business on July 2, 2010. Total revenue, excluding Carl’s Jr. distribution center revenue, increased 1.5%.

Blended same-store sales for Company-operated restaurants increased 0.9% in the fiscal 2011 third quarter. Hardee’s same-store sales increased 8.3% and Carl’s Jr. same-store sales declined 5.0%. To date, the Company’s fourth fiscal quarter blended same-store sales are tracking positive in the low single digit range.

              Q3     Year-to-date
        Brand     FY11     FY10     FY11     FY10
        Carl’s Jr.     -5.0 %     -5.2 %     -6.2 %     -5.5 %
        Hardee’s     8.3 %     -1.8 %     4.0 %     -0.4 %
        Blended     0.9 %     -3.7 %     -1.7 %     -3.3 %
                                         

“Hardee’s continued to generate strong same-store sales results during the third quarter. Including period 10, the last period of our third quarter, Hardee’s has now had nine consecutive periods of positive same-store sales. Carl’s Jr. same-store sales results have been challenged by difficult economic conditions, especially the high unemployment rate among our core target audience of young men in the state of California, where 86% of our company-operated restaurants are located. Third quarter Adjusted EBITDA was $38.5 million representing an increase of nearly $2.6 million over the prior year quarter,” said Andrew F. Puzder, Chief Executive Officer. “We remain focused on maintaining our premium-quality brands and improving same-store sales with innovative products and cutting-edge advertising that focuses on the taste, quality, and value of our products.”

Company-operated restaurant-level adjusted EBITDA margin decreased 80 basis points, primarily due to a 130 basis point increase in food and packaging costs as a result of higher commodity costs for beef, pork and cheese. Occupancy and other expense, excluding depreciation and amortization, increased 20 basis points as the unfavorable impacts of acquisition accounting more than offset the net favorable impact of sales leverage. These cost increases were partially offset by decreases in labor and advertising expenses. Labor decreased 30 basis points, primarily due to the impact of sales leverage at Hardee’s restaurants and a temporary reduction in employer payroll taxes due to recently enacted legislation, partially offset by the impact of sales deleveraging at Carl’s Jr. restaurants. Advertising expense decreased by 40 basis points due to incremental media spending in the prior year quarter that did not recur in the current year quarter. Refer to further discussion of company-operated restaurant-level adjusted EBITDA margin within “Non-GAAP Measures” included below.

General and administrative expense for the fiscal 2011 third quarter decreased $1.0 million from the prior year quarter.

Adjusted EBITDA was $38.5 million in the fiscal 2011 third quarter compared to $35.9 million in the same quarter of the prior year. The schedule of Adjusted EBITDA is included below, along with a discussion of Adjusted EBITDA and a reconciliation of net (loss) income to Adjusted EBITDA.

At November 1, 2010, cash and cash equivalents were $49.5 million and the Company had $65.1 million available under its credit facility.

Capital expenditures for the forty weeks ended November 1, 2010 were $52.3 million, of which $31.1 million related to new store openings, dual-branding, and remodeling projects. Capital expenditures for the forty weeks ended November 2, 2009 were $77.6 million.

        Unit Count by Brand as of November 1, 2010
         
              Carl’s Jr.     Hardee’s     Total
        Company-operated     424     467     891
        Domestic franchised     675     1,222     1,897
        Total domestic     1,099     1,689     2,788
        International licensed     146     207     353
        Total franchised and licensed     821     1,429     2,250
        Total     1,245     1,896     3,141

Conference Call Information

The Company will host its third fiscal quarter conference call on Wednesday, December 8, 2010, at 12:00 p.m. (PST). The call-in number is (857) 350-1683. The access code is 88268670. You may also access the conference call via the Company’s website at www.ckr.com under “Investors.”

Company Overview

CKE Restaurants, Inc. is a privately held company headquartered in Carpinteria, Calif. As of the end of its third quarter of fiscal 2011, CKE, through its subsidiaries, had a total of 3,153 franchised, licensed or company-operated restaurants in 42 states and in 18 countries, including 1,245 Carl’s Jr.® Restaurants and 1,896 Hardee’s® restaurants. For more information about CKE, please visit www.ckr.com.

Forward-looking Statements

Matters discussed in this press release contain forward-looking statements relating to the Company’s strategies to maintain its brand and improve same-store sales, which are based on management’s current beliefs and assumptions. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control. Factors that could cause the Company’s results to differ materially from those described include, but are not limited to, the Company’s ability to compete with other restaurants, delicatessens, supermarkets and convenience stores for customers, employees, restaurant locations and franchisees; changes in consumer preferences, perceptions and spending patterns; the ability of the Company’s key suppliers to continue to deliver premium-quality products to the Company at moderate prices; the Company’s ability to successfully enter new markets, complete remodels of existing restaurants and complete construction of new restaurants; changes in general economic conditions and the geographic concentration of the Company’s restaurants, which may affect the Company’s business; the Company’s ability to attract and retain key personnel; the Company’s franchisees’ willingness to participate in the Company’s strategy; the operational and financial success of the Company’s franchisees; the Company’s ability to expand into international markets and the risks associated with operating in international locations; changes in the price or availability of commodities; the effect of the media’s reports regarding food-borne illnesses, food tampering and other health-related issues on the Company’s reputation and its ability to procure or sell food products; the seasonality of the Company’s operations; the Company’s ability to hire and retain qualified personnel; the effect of increasing labor costs including healthcare related costs; increased insurance and/or self-insurance costs; the Company’s ability to comply with existing and future health, employment, environmental and other government regulations; the potentially conflicting interests of the Company’s sole stockholder and the Company’s creditors, the Company’s substantial leverage which could limit its ability to raise capital, react to economic changes or meet obligations under its indebtedness; the effect of restrictive covenants in the Company’s indenture and credit facility on the Company’s business; and other factors as discussed in the Company’s filings with the SEC.

 
 
CKE RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE WEEKS ENDED NOVEMBER 1, 2010 AND NOVEMBER 2, 2009
(In thousands)
(Unaudited)
 
      Successor     Predecessor
    Twelve Weeks Ended     Twelve Weeks Ended
    November 1, 2010     November 2, 2009
Revenue:            
Company-operated restaurants     $ 250,097       $ 246,696  
Franchised and licensed restaurants and other       34,430         77,521  
Total revenue       284,527         324,217  
Operating costs and expenses:            
Restaurant operating costs:            
Food and packaging       73,879         69,665  
Payroll and other employee benefits       71,592         71,386  
Occupancy and other       62,567         60,874  
Total restaurant operating costs       208,038         201,925  
Franchised and licensed restaurants and other       16,943         58,854  
Advertising       14,880         15,679  
General and administrative       29,977         30,977  
Facility action charges, net       770         520  
Other operating expenses, net       167         —  
Total operating costs and expenses       270,775         307,955  
Operating income       13,752         16,262  
Interest expense       (17,685 )       (6,430 )
Other income, net       748         704  
(Loss) income before income taxes       (3,185 )       10,536  
Income tax (benefit) expense       (2,855 )       4,379  
Net (loss) income     $ (330 )     $ 6,157  
                     
                     
 
 
CKE RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FORTY WEEKS ENDED NOVEMBER 1, 2010 AND NOVEMBER 2, 2009
(In thousands)
(Unaudited)
 
      Successor     Predecessor     Successor/ Predecessor     Predecessor
    Sixteen Weeks Ended November 1, 2010     Twenty-Four Weeks Ended July 12, 2010     Forty Weeks Ended November 1, 2010     Forty Weeks Ended November 2, 2009
Revenue:                        
Company-operated restaurants     $ 336,048       $ 500,531       $ 836,579       $ 847,654  
Franchised and licensed restaurants and other       45,419         151,588         197,007         259,334  
Total revenue       381,467         652,119         1,033,586         1,106,988  
Operating costs and expenses:                        
Restaurant operating costs:                        
Food and packaging       99,188         148,992         248,180         242,066  
Payroll and other employee benefits       95,940         147,187         243,127         241,142  
Occupancy and other       83,393         119,076         202,469         201,461  
Total restaurant operating costs       278,521         415,255         693,776         684,669  
Franchised and licensed restaurants and other       22,178         115,089         137,267         196,680  
Advertising       19,728         29,647         49,375         51,451  
General and administrative       49,641         58,806         108,447         103,061  
Facility action charges, net       907         590         1,497         3,022  
Other operating expenses, net (1,2)       19,828         10,249         30,077         —  
Total operating costs and expenses       390,803         629,636         1,020,439         1,038,883  
Operating (loss) income       (9,336 )       22,483         13,147         68,105  
Interest expense       (23,541 )       (8,617 )       (32,158 )       (14,834 )
Other income (expense), net (3)       896         (13,609 )       (12,713 )       1,991  
(Loss) income before income taxes       (31,981 )       257         (31,724 )       55,262  
Income tax (benefit) expense       (8,626 )       7,772         (854 )       22,460  
Net (loss) income     $ (23,355 )     $ (7,515 )     $ (30,870 )     $ 32,802  
                                         

(1) Other operating expenses, net includes transaction-related costs consisting of accounting, investment banking, legal, and other costs of $19,828, $13,691, and $33,519 for the sixteen weeks ended November 1, 2010 (Successor), twenty-four weeks ended July 12, 2010 (Predecessor), and forty weeks ended November 1, 2010 (Successor/Predecessor), respectively.

(2) The twenty-four weeks ended July 12, 2010 (Predecessor) and forty weeks ended November 1, 2010 (Successor/Predecessor) also include a $3,442 gain on the sale of the distribution center assets.

(3) Other income (expense), net includes transaction-related costs, related to the termination of a prior merger agreement of $14,283 for both the twenty-four weeks ended July 12, 2010 (Predecessor) and forty weeks ended November 1, 2010 (Successor/Predecessor).

             
             
CKE RESTAURANTS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except shares and par values)

(Unaudited)
             
      Successor     Predecessor
      November 1, 2010     January 31, 2010
ASSETS            
Current assets:            
Cash and cash equivalents     $ 49,494     $ 18,246
Accounts receivable, net of allowance for doubtful accounts of $46 as of November 1, 2010 and $358 as of January 31, 2010     34,995     35,016
Related party trade receivables     324     5,037
Inventories, net     14,077     24,692
Prepaid expenses     13,417     13,723
Assets held for sale     451     500
Advertising fund assets, restricted     18,510     18,295
Deferred income tax assets, net     17,183     26,517
Other current assets     4,032     3,829
Total current assets     152,483     145,855
Notes receivable, net of allowance for doubtful accounts of $0 as of November 1, 2010 and $379 as of January 31, 2010     473     1,075
Property and equipment, net of accumulated depreciation and amortization of $19,771 as of November 1, 2010 and $445,033 as of January 31, 2010     630,637     568,334
Property under capital leases, net of accumulated amortization of $1,741 as of November 1, 2010 and $46,090 as of January 31, 2010     31,761     32,579
Deferred income tax assets, net     —     40,299
Goodwill     193,443     24,589
Intangible assets, net     439,561     2,317
Other assets, net     23,006     8,495
Total assets     $ 1,471,364     $ 823,543
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities:            
Current portion of bank indebtedness and other long-term debt     $ 29     $ 12,262
Current portion of capital lease obligations     5,367     7,445
Accounts payable     38,908     65,656
Advertising fund liabilities     18,510     18,295
Other current liabilities     100,592     95,605
Total current liabilities     163,406     199,263
Bank indebtedness and other long-term debt, less current portion     589,765     266,202
Capital lease obligations, less current portion     31,924     43,099
Deferred income tax liabilities, net     172,913     —
Other long-term liabilities     85,246     78,804
Total liabilities     1,043,254     587,368
             
Stockholders’ equity:            
Predecessor: Common stock, $0.01 par value; 100,000,000 shares authorized; 55,290,626 shares issued and outstanding as of January 31, 2010     —     553
Successor: Common stock, $0.01 par value; 100 shares authorized, issued and outstanding as of November 1, 2010     —     —
Additional paid-in capital     451,465     282,904
Accumulated deficit     (23,355)     (47,282)
Total stockholders’ equity     428,110     236,175
Total liabilities and stockholders’ equity     $ 1,471,364     $ 823,543
             
             

Non-GAAP Measures

Adjusted EBITDA

Adjusted EBITDA represents net (loss) income before provision for income taxes, interest income and expense, asset impairments, facility action charges, depreciation and amortization, management fees, pro-forma cost savings as a result of becoming privately held, and certain non-cash and unusual items. Management uses Adjusted EBITDA as an important tool to assess operating performance. Management considers Adjusted EBITDA to be a useful measure in highlighting trends in the Company’s business and in analyzing the profitability of similar enterprises. Management believes that Adjusted EBITDA is effective, when used in conjunction with net (loss) income, in evaluating asset performance, and differentiating efficient operators in the industry. Furthermore, management believes that Adjusted EBITDA provides useful information to potential investors and analysts because it provides insight into management’s evaluation of the Company’s results of operations. The calculation of Adjusted EBITDA may not be consistent with “EBITDA” for the purpose of the covenants in the agreements governing the Company’s indebtedness.

Adjusted EBITDA is not a measure of financial performance under U.S. GAAP, is not intended to represent cash flow from operations under U.S. GAAP and should not be used as an alternative to net (loss) income as an indicator of operating performance or to cash flow from operating, investing or financing activities as a measure of liquidity. Management compensates for the limitations of using Adjusted EBITDA by using it only to supplement the Company’s U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the Company’s business. Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company’s results as reported under U.S. GAAP.

Some of the limitations of Adjusted EBITDA are:

  • Adjusted EBITDA does not reflect cash used for capital expenditures;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and Adjusted EBITDA does not reflect the cash requirements for such replacements;
  • Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital requirements; and
  • Adjusted EBITDA does not reflect the cash necessary to make payments of interest or principal on the Company’s indebtedness.

While Adjusted EBITDA is frequently used as a measure of operations and the ability to meet indebtedness service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation.

 
 
CKE RESTAURANTS, INC.
ADJUSTED EBITDA
FOR THE FOUR QUARTERS ENDED AUGUST 9, 2010
THE TWELVE WEEKS ENDED NOVEMBER 1, 2010 AND NOVEMBER 2, 2009
AND THE FOUR QUARTERS ENDED NOVEMBER 1, 2010
(In thousands)
(Unaudited)
 
      Successor/
Predecessor		     Successor     Predecessor     Successor/
Predecessor
      Four Quarters
EndedAugust 9, 2010		     Twelve Weeks
Ended
November 1, 2010		     Twelve Weeks
Ended
November 2,
2009		     Four Quarters
Ended
November 1,
2010
                         
Net (loss) income     $ (8,609 )     $ (330 )     $ 6,157       $ (15,096 )
                         
Interest expense       25,323         17,685         6,430         36,578  
Income tax (benefit) expense       (768 )       (2,855 )       4,379         (8,002 )
Depreciation and amortization       71,907         17,817         16,505         73,219  
Facility action charges, net       2,920         770         520         3,170  
Gain on sale of distribution center assets       (3,442 )       -         -         (3,442 )
Transaction-related costs(1)       48,458         167         -         48,625  
Management fees(2)       62         575         -         637  
Share-based compensation expense(3)       19,385         1,291         2,000         18,676  
Losses on asset and other disposals       3,905         307         511         3,701  
                                         
Difference between U.S. GAAP rent and cash rent       292         1,317         268         1,341  
Cost savings(4)       1,403         -         204         1,199  
Other, net(5)       (2,791 )       1,743         (1,071 )       23  
Adjusted EBITDA     $ 158,045       $ 38,487       $ 35,903       $ 160,629  
                                         

(1) Transaction-related costs include investment banking, legal, and other costs related to the Acquisition, as well as costs related to the termination of a prior merger agreement.

(2) Management fees are paid to Apollo Management per the management services agreement by and among the Company, Columbia Lake Acquisition Holdings, Inc. and Apollo Management VII, L.P. and are included in general and administrative expense.

(3) Share-based compensation expense includes $12,108 resulting from accelerated vesting of stock options and restricted stock awards in connection with the Acquisition for the fifty-two weeks ended November 1, 2010 and is included in general and administrative expense.

(4) Cost savings reflects pro-forma cost savings amounts expected to be realized as a result of becoming a privately held company.

(5) Other, net includes the net impact of purchase accounting, executive retention bonus, disposition business expense, and adjusted EBITDA from the Company’s distribution business, which it no longer owns or operates.

Company-Operated Restaurant-Level Non-GAAP Measures

Company-operated restaurant-level adjusted EBITDA is expressed in dollars and defined as company-operated restaurants revenue less restaurant operating costs excluding depreciation and amortization expense and including advertising expense. Restaurant operating costs are the expenses incurred directly by company-operated restaurants in generating revenues and do not include advertising costs, general and administrative expenses or facility action charges. Company-operated restaurant-level adjusted EBITDA margin is expressed as a percentage and defined as company-operated restaurant-level adjusted EBITDA divided by company-operated restaurants revenue.

Company-operated restaurant-level adjusted EBITDA and company-operated restaurant-level adjusted EBITDA margin are non-GAAP measures utilized by management internally to evaluate and compare the Company’s operating performance for company-operated restaurants between periods. Because not all companies calculate these measures identically, the Company’s presentation of such measures may not be comparable to similarly titled measures of other companies. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable GAAP measures.

The following is a reconciliation of company-operated restaurant-level adjusted EBITDA and company-operated restaurant-level adjusted EBITDA margin (unaudited):

      Successor     Predecessor
    Twelve Weeks Ended     Twelve Weeks Ended
    November 1, 2010     November 2, 2009
Company-operated restaurant-level adjusted EBITDA:            
Company-operated restaurants revenue     $ 250,097       $ 246,696  
Less: restaurant operating costs       (208,038 )       (201,925 )
Add: depreciation and amortization expense       15,006         14,602  
Less: advertising expense       (14,880 )       (15,679 )
Company-operated restaurant-level adjusted EBITDA     $ 42,185       $ 43,694  
Company-operated restaurant-level adjusted EBITDA margin       16.9 %       17.7 %

Frisch’s Restaurants, Inc. Declares 200th Consecutive Quarterly Dividend

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Frisch’s Restaurants, Inc. (NYSE Amex: FRS), announced today that the Board of Directors declared a $.15 per share quarterly dividend payable January 10, 2011 to shareholders of record at the close of business on December 20, 2010.  This will be the 200th consecutive quarterly dividend paid by Frisch’s. The Company has reported a profit every year since going public in 1960, and paid cash dividends to shareholders every quarter over the same period.

Frisch’s Restaurants, Inc. is a regional company that operates full service family-style restaurants under the name of Frisch’s Big Boy. The Company owns the trademark “Frisch’s” and has exclusive, irrevocable ownership of the rights to the “Big Boy” trademark, trade name and service mark in the states of Kentucky and Indiana, and in most of Ohio and Tennessee. The Company also licenses Big Boy restaurants to other operators in certain parts of Ohio, Kentucky and Indiana.

In addition, the Company operates grill buffet-style restaurants under the name Golden Corral under certain licensing agreements. Golden Corral restaurants currently operate primarily in the greater metropolitan areas of Cincinnati, Cleveland, Columbus, Dayton and Toledo, Ohio, Louisville, Kentucky and Pittsburgh, Pennsylvania.

McCormick & Schmick’s Seafood Restaurants, Inc. Amends Revolving Credit Agreement

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McCormick & Schmick’s Seafood Restaurants, Inc. (Nasdaq: MSSR) today announced that two of its subsidiaries have entered into a Third Amendment to the Amended and Restated Revolving Credit Agreement with Bank of America, N.A. as Administrative Agent and Collateral Agent; Bank of America, N.A. and Wells Fargo Bank, N.A. as the lenders; Wells Fargo Bank, N.A. as Syndication Agent; and Merrill Lynch, Pierce, Fenner & Smith Incorporated, successor by merger to Banc of America Securities LLC, and Wells Fargo Bank, N.A., as Joint Lead Arrangers and Joint Book Runners. The amendment modifies several financial covenants to make them less restrictive, reduces the facility from $90 million to $40 million (which can be increased to $60 million under certain circumstances) and extends the term to November 17, 2015.

Michelle Lantow, Chief Financial Officer, said, “We are happy to have concluded a five-year extension on our existing credit line. The amended facility contains less restrictive financial covenants than our former arrangement, and we believe these terms allow us to undertake a variety of measures to reinvest in our existing restaurant portfolio and opportunistically expand our fresh seafood concept through new development. We are pleased that we were able to structure an amended loan agreement that is more in line with our future strategic initiatives.”

Cracker Barrel Reports 29% Increase in First-Quarter EPS

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Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL):

  • Fully diluted net income per share of $1.01 for the first quarter of fiscal 2011, an increase of 29.5%
  • Operating income margin in the first quarter was 7.6% compared with 6.5% in the prior-year quarter
  • Comparable store restaurant and retail sales increased 2.4% and 1.5%, respectively with guest traffic up 0.5%
  • Comparable store restaurant traffic outpaced the Knapp-Track™ Traffic Index for the 17th consecutive quarter
  • Revenue for the first quarter increased 3.0% to $598.7 million

Cracker Barrel Old Country Store, Inc. (“Cracker Barrel” or the “Company”) (Nasdaq: CBRL) today reported net income per diluted share of $1.01 for the first quarter of fiscal 2011, compared with $0.78 per diluted share in the first quarter of fiscal 2010, an increase of 29.5%. Net income for the first quarter of fiscal 2011 was $23.7 million compared with $18.0 million in the first quarter of fiscal 2010, which reflects 20% higher operating income.

First-Quarter Fiscal 2011 Results

Revenue

In the first quarter of fiscal 2011, total revenue of $598.7 million represented an increase of 3.0% from the first quarter of fiscal 2010. Comparable store restaurant sales for the period increased 2.4% over the prior-year period, including a 1.9% higher average check. The average menu price increase for the quarter was approximately 2.0%. Comparable store restaurant traffic was up 0.5%. Comparable store retail sales were up 1.5% for the quarter. During the quarter, the Company opened three new Cracker Barrel stores. Since the end of the first quarter, the Company has opened one additional store.

Comparable store restaurant and retail sales for the fiscal months of August, September and October and the quarter were as follows:

                   
    August   September   October   FirstQuarter  
Comparable restaurant traffic   2.6%   0.1%   -0.9%   0.5%  
Average check   2.3%   1.9%   1.6%   1.9%  
Comparable restaurant sales   4.9%   2.0%   0.7%   2.4%  
Comparable retail sales   2.8%   -0.3%   1.9%   1.5%  

Operating Income

In the first quarter of fiscal 2011, operating income of $45.4 million was 7.6% of total revenue compared with $38.0 million, or 6.5% of total revenue, in the first quarter of fiscal 2010. The increase in operating income was the result of higher store operating income. Higher revenues, lower labor expenses and lower retail cost of goods sold were partially offset by higher other store operating expenses, which resulted in higher store operating margin.

Commenting on the first-quarter results, Cracker Barrel Old Country Store, Inc. Chairman and Chief Executive Officer Michael A. Woodhouse said, “These first quarter results demonstrate our success in providing great value to our guests. At the same time, we’re focused on keeping the menu fresh with exciting new items and improving the retail experience at the front of the store. We reported positive comparable restaurant sales and traffic for the second consecutive quarter, and we have now outperformed the Knapp-Track™ traffic index for the 17th consecutive quarter. We also achieved another growth milestone this year as we opened our first store in Maine extending our reach to 42 states with 597 stores.”

Fiscal 2011 Outlook Reaffirmed

The Company commented that its outlook for fiscal 2011 reflects many assumptions, the accuracy of which is not yet known. Based on current trends and estimates, the Company is reaffirming its guidance for fiscal 2011. The Company presently expects fiscal 2011 total revenue to increase approximately 3.0% to 4.5% over revenue in fiscal 2010. The revenue increase reflects the expected opening of eleven new Cracker Barrel units during the year, comparable store restaurant sales projected to increase between 1.5% and 3.0% and comparable store retail sales projected to increase between 2.0% and 4.0%. Depreciation for the year is expected to be between $64 and $66 million. The Company expects fiscal 2011 operating income margin as a percent of revenues to be between 7.1% and 7.3% compared with 6.8% in fiscal 2010. Net interest expense is estimated to be between $48 and $49 million, and average diluted shares outstanding are expected to be between 23.5 and 24 million. The Company expects its full year 2011 effective tax rate to be between 27.0% and 28.0%. Based on the assumptions outlined above, full-year income per diluted share is projected to be in the range of $3.95 to $4.10 per share. The Company expects capital expenditures during fiscal 2011 to be between $110 and $120 million. As in fiscal 2010, the Company expects to repurchase shares solely to offset dilution that results from employee share issuances in fiscal 2011. The Company expects to repay $25 million of its long-term debt in fiscal 2011.

Commenting on the outlook, Mr. Woodhouse said, “We’re very pleased with the strong first quarter which was in line with our expectations. As we also expected, commodity costs will be higher for the remainder of the fiscal year, especially in the second quarter. Our response will be to focus aggressively on controllable costs, and we look forward to achieving full year margin improvements with strengthening in the second half, and we’re pleased to reaffirm our guidance for the year.”

Fiscal 2011 First-Quarter Conference Call

As previously announced, the live broadcast of Cracker Barrel’s quarterly conference call will be available to the public on-line at investor.crackerbarrel.com today beginning at 11:00 a.m. (ET). The on-line replay will be available at 2:00 p.m. (ET) and continue through December 24, 2010.

The Company plans to announce its fiscal 2011 second-quarter earnings and comparable restaurant and retail sales on Tuesday, February 22, 2011.

About Cracker Barrel

Cracker Barrel Old Country Store® restaurants provide a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that’s surprisingly unique, genuinely fun and reminiscent of America’s country heritage…all at a fair price. The restaurant serves up delicious, home-style country food such as meatloaf and homemade chicken n’ dumplins as well as its signature biscuits using an old family recipe. The authentic old country retail store is fun to shop and offers unique gifts and self-indulgences.

Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) was established in 1969 in Lebanon, Tenn. and operates 597 company-owned locations in 42 states. Every Cracker Barrel unit is open seven days a week with hours Sunday through Thursday, 6 a.m. – 10 p.m., and Friday and Saturday, 6 a.m. – 11 p.m. For more information, visit: crackerbarrel.com.

CBRL-F

Except for specific historical information, certain of the matters discussed in this press release may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. These, and similar statements are forward-looking statements concerning matters that involve risks, uncertainties and other factors which may cause the actual performance of Cracker Barrel Old Country Store, Inc. and its subsidiaries to differ materially from those expressed or implied by this discussion. All forward-looking information is provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “trends,” “assumptions,” “target,” “guidance,” “outlook,” “opportunity,” “future,” “plans,” “goals,” “objectives,” “expectations,” “near-term,” “long-term,” “projection,” “may,” “will,” “would,” “could,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “potential,” “regular,” ”should,” “projects,” “forecasts,” or “continue” (or the negative or other derivatives of each of these terms) or similar terminology and include our fiscal 2011 outlook, expected number of new units, and additional operational improvement initiatives. Factors which could materially affect actual results include, but are not limited to: the effects of uncertain consumer confidence, higher costs for energy, or general or regional economic weakness, or weather on sales and customer travel, discretionary income or personal expenditure activity of our customers; our ability to identify, acquire and sell successful new lines of retail merchandise and new menu items at our restaurants; our ability to sustain or the effects of plans intended to improve operational or marketing execution and performance; changes in or implementation of additional governmental or regulatory rules, regulations and interpretations affecting tax, wage and hour matters, health and safety, pensions, insurance or other undeterminable areas; the effects of plans intended to promote or protect our brands and products; commodity price increases; the ability of and cost to us to recruit, train, and retain qualified hourly and management employees in an escalating wage environment; the effects of increased competition at our locations on sales and on labor recruiting, cost, and retention; workers’ compensation, group health and utility price changes; consumer behavior based on negative publicity or concerns over nutritional or safety aspects of our food or products or those of the restaurant industry in general, including concerns about pandemics, as well as the possible effects of such events on the price or availability of ingredients used in our restaurants; the effects of our substantial indebtedness and associated restrictions on our financial and operating flexibility and ability to execute or pursue our operating plans and objectives; changes in interest rates or capital market conditions affecting our financing costs and ability to refinance all or portions of our indebtedness; the effects of business trends on the outlook for individual restaurant locations and the effect on the carrying value of those locations; our ability to retain key personnel; the availability and cost of suitable sites for restaurant development and our ability to identify those sites; changes in land, building materials and construction costs; the actual results of pending, future or threatened litigation or governmental investigations and the costs and effects of negative publicity associated with these activities; practical or psychological effects of natural disasters or terrorist acts or war and military or government responses; disruptions to our restaurant or retail supply chain; changes in foreign exchange rates affecting our future retail inventory purchases; implementation of new or changes in interpretation of existing accounting principles generally accepted in the United States of America (“GAAP”); and other factors described from time to time in our filings with the Securities and Exchange Commission, press releases, and other communications.

       
CRACKER BARREL OLD COUNTRY STORE, INC.CONDENSED CONSOLIDATED INCOME STATEMENT

(Unaudited)

(In thousands, except share amounts)
       
      First Quarter Ended
        10/29/10       10/30/09     PercentageChange
Total revenue     $ 598,691     $ 581,183     3 %
Cost of goods sold       179,753       177,471     1  
Gross profit       418,938       403,712     4  
Labor and other related expenses       224,604       224,760     –  
Store closing charges       83       –     –  
Other store operating expenses       111,959       105,466     6  
Store operating income       82,292       73,486     12  
General and administrative expenses       36,876       35,501     4  
Operating income       45,416       37,985     20  
Interest expense       11,714       11,770     –  
Pretax income       33,702       26,215     29  
Provision for income taxes       9,968       8,191     22  
Net income     $ 23,734     $ 18,024     32  
               
Earnings per share:              
Basic     $ 1.04     $ 0.79     32  
Diluted     $ 1.01     $ 0.78     29  
               
Weighted average shares:              
Basic       22,832,393       22,762,048     –  
Diluted       23,593,882       23,136,385     2  
               
Ratio Analysis              
Total revenue:              
Restaurant       80.5 %     80.3 %    
Retail       19.5       19.7      
Total revenue       100.0       100.0      
Cost of goods sold       30.0       30.5      
Gross profit       70.0       69.5      
Labor and other related expenses       37.6       38.7      
Store closing charges       –       –      
Other store operating expenses       18.7       18.2      
Store operating income       13.7       12.6      
General and administrative expenses       6.1       6.1      
Operating income       7.6       6.5      
Interest expense       2.0       2.0      
Pretax income       5.6       4.5      
Provision for income taxes       1.6       1.4      
Net income       4.0 %     3.1 %    
                       
             
CRACKER BARREL OLD COUNTRY STORE, INC.CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited and in thousands, except share amounts)
             
        10/29/10       7/30/10
Assets            
Cash and cash equivalents     $ 24,661     $ 47,700
Inventories       165,790       144,079
Other current assets       47,470       44,480
Property and equipment, net       1,006,536       1,004,103
Other long-lived assets       53,479       51,705
Total assets     $ 1,297,936     $ 1,292,067
             
Liabilities and Shareholders’ Equity            
Accounts payable     $ 101,627     $ 116,218
Current liabilities       177,472       193,330
Long-term debt       572,005       573,744
Other long-term obligations       222,806       217,158
Shareholders’ equity       224,026       191,617
Total liabilities and shareholders’ equity     $ 1,297,936     $ 1,292,067
             
Common shares outstanding       23,092,639       22,732,781
                 
         
CRACKER BARREL OLD COUNTRY STORE, INC.CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)

  
         
      Three Months Ended  
        10/29/10           10/30/09    
                 
Cash flows from operating activities:                
Net income     $ 23,734         $ 18,024    
Depreciation and amortization       15,027           14,118    
Loss on disposition of property and equipment       792           945    
Share-based compensation, net of excess tax benefit       1,624           2,589    
Increase in inventories       (21,711 )         (15,264 )  
(Decrease) increase in accounts payable       (14,591 )         1,611    
Net changes in other assets and liabilities       (14,812 )         1,384    
Net cash (used in) provided by operating activities       (9,937 )         23,407    
Cash flows from investing activities:                
Purchase of property and equipment, net of insurance recoveries       (18,153 )         (14,871 )  
Proceeds from sale of property and equipment       196           50    
Net cash used in investing activities       (17,957 )         (14,821 )  
Cash flows from financing activities:                
Net payments from credit facilities and capital lease obligations       (1,743 )         (1,857 )  
Proceeds from exercise of share-based compensation awards       10,307           715    
Excess tax benefit from share-based compensation       838           324    
Dividends on common stock       (4,547 )         (4,627 )  
Net cash provided by (used in) financing activities       4,855           (5,445 )  
                 
Net (decrease) increase in cash and cash equivalents       (23,039 )         3,141    
Cash and cash equivalents, beginning of period       47,700           11,609    
Cash and cash equivalents, end of period     $ 24,661         $ 14,750    
                         
           
CRACKER BARREL OLD COUNTRY STORE, INC.Supplemental Information

(Unaudited)
           
  First Quarter Ended
        10/29/10       10/30/09
           
Units in operation:          
Open at beginning of period       593       588
Opened during period       3       3
Open at end of period       596       591
           
Total revenue: (In thousands)          
Restaurant     $ 481,815     $ 466,832
Retail       116,876       114,351
Total     $ 598,691     $ 581,183
           
Operating weeks:       7,728       7,665
           
Average unit volume: (In thousands)          
Restaurant     $ 810.5     $ 791.8
Retail       196.6       193.9
Total     $ 1,007.1     $ 985.7
           
           
      Q1 2011 vs. Q1 2010
           
Comparable store sales increase:          
Restaurant       2.4 %    
Retail       1.5 %    
           
Number of locations in comparable store base       584    

Jack in the Box Inc. Reports Fourth Quarter FY 2010 Earnings; Issues Guidance for FY 2011

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Jack in the Box Inc. (NASDAQ: JACK) today reported net earnings of $4.0 million, or 7 cents per diluted share, for the fourth quarter ended Oct. 3, 2010, compared with earnings from continuing operations of $40.6 million, or 70 cents per diluted share, for the fourth quarter of fiscal 2009. Fiscal 2010 net earnings totaled $70.2 million, or $1.26 per diluted share, compared with earnings from continuing operations of $131.0 million, or $2.27 per diluted share, in fiscal 2009.

As previously announced, the company closed 40 Jack in the Box® company restaurants during the fourth quarter of fiscal 2010. In connection with the closures, the company recorded pre-tax charges totaling $28.0 million (included in “impairment and other charges, net” in the accompanying consolidated statements of earnings), which reduced diluted earnings per share by approximately 33 cents in fiscal 2010. These charges, as well as higher work opportunity tax credits and positive mark-to-market adjustments on investments supporting the company’s non-qualified retirement plans, resulted in a tax benefit in the fourth quarter of 2010 versus a tax rate of 35.1 percent in the fourth quarter of 2009, and a 33.8 percent tax rate for fiscal 2010 compared with 37.7 percent in fiscal 2009.

The fourth quarter and fiscal year ended Oct. 3, 2010, included 13 weeks and 53 weeks, respectively, as compared to 12 weeks and 52 weeks in the fourth quarter and fiscal year ended Sept. 27, 2009, respectively. The company estimates that the extra week benefitted diluted earnings per share by approximately 3 cents in both the fourth quarter and fiscal 2010.

Increase (decrease) in same-store sales:

      13 Weeks Ended
October 3, 2010		   12 Weeks Ended
September 27, 2009		   53 Weeks Ended
October 3, 2010		   52 Weeks Ended
September 27, 2009
Jack in the Box:                
  Company   (4.0 %)   (6.0 %)   (8.6 %)   (1.2 %)
  Franchise   (2.8 %)   (7.0 %)   (7.8 %)   (1.3 %)
  System   (3.3 %)   (6.5 %)   (8.2 %)   (1.3 %)
Qdoba System   5.6 %   (3.1 %)   2.8 %   (2.3 %)
                         

Linda A. Lang, chairman, chief executive officer and president, said, “Jack in the Box company same-store sales declined 4.0 percent in the fourth quarter and continued to be impacted by high unemployment in our major markets for our key customer demographics. With that said, we believe the investments we have made around service consistency and making noticeable quality improvements to some of our signature products are beginning to resonate with our guests. We remain focused on enhancing the entire guest experience, including the substantial completion of our restaurant re-imaging program system-wide, which is targeted by the end of 2011. We believe these actions will increase the customer appeal of the Jack in the Box brand and provide a catalyst for sales growth when unemployment and consumer spending begin to improve.

“Qdoba’s same-store sales momentum continued in the fourth quarter with an increase of 5.6 percent, driven by our Craft 2™ menu and higher catering sales, as well as increased spending by consumers in the fast-casual segment,” Lang said.

Consolidated restaurant operating margin was 12.5 percent of sales in the fourth quarter of 2010, compared with 15.8 percent of sales in the year-ago quarter. The company estimates that sales deleverage negatively impacted margins by approximately 110 basis points in the fourth quarter of 2010. For fiscal 2010, consolidated restaurant operating margin was 14.1 percent of sales, consistent with the company’s expectations.

Food and packaging costs in the fourth quarter were 90 basis points higher than prior year. Overall commodity costs were approximately 3 percent higher in the quarter, driven primarily by higher beef, cheese and pork costs which were partially offset by lower costs for poultry, shortening and bakery products.

Payroll and employee benefits costs were 29.9 percent of restaurant sales versus 29.6 percent in the year-ago quarter. An increase in workers’ compensation and other insurance costs negatively impacted payroll and employee benefits costs by approximately 50 basis points as compared to prior year.

Occupancy and other costs increased 210 basis points in the fourth quarter due primarily to sales deleverage, higher depreciation resulting from the company’s ongoing restaurant re-image program, increased repairs and maintenance, and additional costs relating to guest service initiatives.

Franchise costs for the fourth quarter increased to 45.5 percent of franchise revenues from 40.8 percent last year due primarily to sales deleverage against fixed rental costs.

Beginning in the fourth quarter of fiscal 2010, “impairment and other charges, net,” have been reclassified from “selling, general and administrative (‘SG&A’) expenses” in the company’s consolidated statements of earnings. A schedule reflecting this additional disclosure for each quarter of fiscal years 2009 and 2010 is included in the supplemental information at the end of this press release.

SG&A expense for the fourth quarter increased by $3.8 million and was 10.8 percent of revenues compared with 10.6 percent last year. SG&A expense for fiscal 2010 decreased by $17.3 million and was 10.6 percent of revenues compared with 10.5 percent last year. The variances in SG&A were attributable primarily to the following:

  • The 53rd week added approximately $3.6 million to SG&A in both the fourth quarter and fiscal 2010.
  • Pension expense, which is non-cash in nature, increased by $4.7 million in the fourth quarter and by $17.6 million for fiscal 2010, due primarily to lower discount rates. Cash pension contributions for the full year were similar to last year. In September 2010, the company’s board of directors approved changes to the pension plan whereby participants will no longer accrue benefits after December 31, 2015.
  • The company’s refranchising strategy and planned overhead reductions resulted in lower general and administrative costs of approximately $2.4 million for the fourth quarter and $14.8 million for the full year.
  • Advertising costs were $1.4 million lower in the fourth quarter and $11.7 million lower in fiscal 2010, as the impact of refranchising and the decline in Jack in the Box same-store sales was partially offset by incremental spending during the third and fourth quarters.
  • Incentive compensation declined by $2.2 million in the fourth quarter and $6.1 million in fiscal 2010.
  • Insurance recoveries related to Hurricane Ike resulted in a $1.2 million benefit in the fourth quarter and a $4.2 million benefit in fiscal 2010.
  • Mark-to-market adjustments on investments supporting the company’s non-qualified retirement plans positively impacted SG&A by $2.1 million in the fourth quarter as compared to a positive impact of $2.6 million in last year’s fourth quarter, resulting in a year-over-year increase in SG&A of $0.5 million. For fiscal 2010, mark-to-market adjustments positively impacted SG&A by $2.7 million as compared to a negative impact of $0.3 million last year, resulting in a year-over-year decrease in SG&A of $3.0 million.

Gains on the sale of 108 company-operated Jack in the Box restaurants to franchisees totaled $18.9 million in the fourth quarter, or an average of $175,000. Total proceeds for the fourth quarter of 2010 related to refranchising were $37.2 million, or an average of $344,000 per restaurant. Fourth quarter transactions included the sale of an entire market with lower-than-average sales and cash flows. Excluding this transaction, average gains and proceeds for the fourth quarter were $352,000 and $510,000, respectively. The company provided $23.1 million in financing during the quarter for two of the six refranchising transactions, including the entire market sale discussed above, of which $18.7 million has been repaid thus far in the first quarter of 2011.

For fiscal 2010, gains on the sale of 219 company-operated restaurants to franchisees totaled $55.0 million, or approximately 65 cents per diluted share, compared with $78.6 million, or approximately 85 cents per diluted share in fiscal 2009 from the sale of 194 company-operated restaurants. Total proceeds for fiscal 2010 related to refranchising, including cash and notes receivable, were $92.0 million, or an average of $420,000 per restaurant.

“Refranchising is a critical element in transforming the company to a business model that is less capital intensive and not as susceptible to cost fluctuations,” Lang said. “Over the last five years, we have refranchised 680 restaurants and increased franchise ownership from 25 percent to nearly 57 percent of the system. We are ahead of our plan to achieve our goal to increase the percentage of franchise ownership in the Jack in the Box system to 70 to 80 percent by the end of fiscal year 2013.”

The company repurchased approximately 2,346,000 shares of its common stock in the fourth quarter of 2010 at an average price of $20.01 per share and approximately 4,914,000 shares of its common stock in fiscal 2010 at an average price of $19.71 per share. These repurchases completed the company’s stock-buyback program authorized by its board of directors in November 2007. In November 2010, the company’s board of directors authorized a $100 million stock-buyback program that expires in November 2011.

Capital expenditures decreased to $95.6 million in fiscal year 2010 versus expenditures of $153.5 million last year. Fiscal 2010 spending was lower than the company’s guidance of $125 to $135 million due to lower-than-anticipated costs for new restaurants, re-images and capital maintenance projects completed during the year, as well as lower construction-in-progress spending for new restaurants and re-images slated for completion in early 2011.

Restaurant openings

Fourteen new Jack in the Box restaurants opened in the fourth quarter, including 2 franchised locations, compared with 15 new restaurants opened system-wide during the same quarter last year, of which 7 were franchised. For the full year, 46 new Jack in the Box restaurants opened, including 16 franchised locations, compared with 64 new restaurants in fiscal 2009, 21 of which were franchised.

A key element of the company’s growth strategy is to expand the Jack in the Box brand into new markets. Earlier this month, the company opened the first of several restaurants planned in the Kansas City market.

In the fourth quarter, 13 Qdoba restaurants opened, including 6 franchised locations, versus 21 new restaurants in the year-ago quarter, 11 of which were franchised. For the full year, 36 Qdoba restaurants opened, including 21 franchised locations, compared with 62 new restaurants in fiscal 2009, 38 of which were franchised.

At Oct. 3, 2010, the company’s system total comprised 2,206 Jack in the Box restaurants, including 1,250 franchised locations, and 525 Qdoba restaurants, including 337 franchised locations.

Fourth quarter FY 2010 initiatives

The chain’s fourth-quarter advertising supported a value-priced combo meal featuring a new product, Jack’s Really Big Chicken Sandwich. The sandwich includes two breaded chicken patties, lettuce, tomato, bacon, cheese and mayo-onion sauce served on a jumbo bakery bun. The combo meal, which was priced at $3.99, featured the new sandwich, a small fountain drink and small order of seasoned curly fries.

In addition to this value promotion, a new premium product, the Pastrami Grilled Sandwich, debuted in late August. Made with hot pastrami, the item is a line extension of the brand’s popular Grilled Sandwich platform, which currently includes a Grilled Breakfast Sandwich, the Deli Trio and the Turkey, Bacon & Cheddar sandwiches, each served on grilled artisan bread.

To build upon the continued strength of its breakfast daypart, Jack in the Box expanded its breakfast menu during the quarter with a Breakfast Pita Pocket. The new Breakfast Pita Pocket, which features scrambled eggs, bacon, ham and American cheese stuffed in a pita made with whole grains, is served with a side of fire-roasted salsa and available in most markets for $2.69.

In addition to these value, premium and breakfast messages, media also featured the Raspberry Trio, which includes a Raspberry Real Fruit Smoothie, a Raspberry Shake made with real ice cream, and Raspberry Iced Tea.

During the fourth quarter, Jack in the Box implemented a comprehensive, system-wide program to improve guest service by delivering a more consistent dining experience. Along with evaluating restaurant performance via the chain’s Voice of Guest surveys, additional resources are being committed to more closely measure how restaurants are executing the key drivers of guest satisfaction.

Another driving factor of guest satisfaction is the restaurant environment. In the fourth quarter, 128 company and franchised restaurants were re-imaged with interior enhancements including new flooring, seating, lighting, wall coverings and other decorative treatments. At fiscal year end, nearly 68 percent of company restaurants – and more than 55 percent of the Jack in the Box system – featured all interior and exterior elements of the re-image program.

First quarter FY 2011 initiatives

In addition to increasing the restaurants’ focus on guest service, Jack in the Box is making noticeable, quality improvements to several of the chain’s signature products. Jack’s iconic tacos are among the chain’s top-selling favorites that were recently enhanced. To promote the improved tacos, last Tuesday from 2 p.m. to midnight, Jack in the Box gave away two free tacos to guests upon request.

Along with promoting premium products in its advertising, like the Pastrami Grilled Sandwich, Jack in the Box is also emphasizing value in its first-quarter media messages. In early October, Jack in the Box introduced a value promotion offering guests two Croissant Sandwiches for just $3. Jack in the Box offers three varieties of Croissant Sandwiches: Sausage, Extreme Sausage and Supreme, the latter of which includes new hickory-smoked bacon.

Jack in the Box launched a second value promotion last week featuring the double-patty Bonus Jack®, a popular guest favorite from the 1970s. For a limited time, the Bonus Jack is available in a combo meal with a small order of fries and small drink for just $3.99.

Guidance

The following guidance and underlying assumptions reflect the company’s current expectations for the first quarter ending Jan. 23, 2011, and the fiscal year ending Oct. 2, 2011. Fiscal 2011 is a 52-week year, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters. Fiscal 2010 was a 53-week year, with the additional week occurring in the fourth quarter.

First quarter fiscal year 2011 guidance

  • Same-store sales are expected to range from down 1 percent to up 1 percent at Jack in the Box company restaurants versus an 11.1 percent decrease in the year-ago quarter.
  • Same-store sales are expected to increase approximately 4 to 6 percent at Qdoba system restaurants versus a 1.7 percent decrease in the year-ago quarter.

Fiscal year 2011 guidance

  • Same-store sales are expected to range from down 2 percent to up 2 percent at Jack in the Box company restaurants.
  • Same-store sales are expected to increase approximately 2 to 4 percent at Qdoba system restaurants.
  • Overall commodity costs are expected to increase by 1 to 2 percent for the full year, with higher inflation in the first half of the fiscal year.
  • Restaurant operating margin for the full year is expected to range from 14.0 to 14.5 percent, depending on same-store sales and commodity inflation.
  • 30 to 35 new Jack in the Box restaurants, including approximately 25 company locations.
  • 50 to 60 new Qdoba restaurants, including approximately 25 company locations.
  • $55 to $65 million in gains on the sale of 175 to 225 Jack in the Box restaurants to franchisees, with $85 to $95 million in total proceeds resulting from the sales.
  • Capital expenditures of $135 to $145 million, including the carryover of projects from fiscal 2010. Following the planned completion of the Jack in the Box re-image program, annual capital expenditures are anticipated to be approximately $110 million or less.
  • SG&A expense in the mid-10 percent range, excluding impairment and other charges.
  • Tax rate of approximately 37 to 38 percent.
  • Diluted earnings per share of $1.41 to $1.68, with the range reflecting uncertainty in the timing of anticipated refranchising transactions as well as same-store sales volatility. Gains from refranchising are expected to contribute from $0.66 to $0.78 to diluted earnings per share, as compared to $0.65 in fiscal 2010. Operating earnings per share, which the company defines as diluted earnings per share on a GAAP basis less gains from refranchising, are expected to range from $0.75 to $0.90 per diluted share. Diluted earnings per share includes approximately $0.10 to $0.12 of incremental re-image incentive payments to franchisees in fiscal 2011 as compared to fiscal 2010.

Conference call

The company will host a conference call for financial analysts and investors on Tuesday, November 23, 2010, beginning at 8:30 a.m. PT (11:30 a.m. ET). The conference call will be broadcast live over the Internet via the Jack in the Box website. To access the live call through the Internet, log onto the Investors section of the Jack in the Box Inc. website at http://investors.jackinthebox.com at least 15 minutes prior to the event in order to download and install any necessary audio software. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days, beginning at approximately 11:00 a.m. PT on November 23.

About Jack in the Box Inc.

Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 19 states. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Grill®, a leader in fast-casual dining, with more than 500 restaurants in 43 states and the District of Columbia. For more information, visit www.jackinthebox.com.

Safe harbor statement

This press release contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to substantial risks and uncertainties. A variety of factors could cause the company’s actual results to differ materially from those expressed in the forward-looking statements, including the success of new products and marketing initiatives, the impact of competition, unemployment and trends in consumer spending patterns. These factors are discussed in the company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission which are available online at www.jackinthebox.com or in hard copy upon request. The company undertakes no obligation to update or revise any forward-looking statement, whether as the result of new information or otherwise.

 
JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)
                     
        Thirteen Weeks Ended   Twelve Weeks Ended   Fifty-Three Weeks Ended   Fifty-Two Weeks Ended
        October 3,   September 27,   October 3,   September 27,
        2010   2009   2010   2009
                     
Revenues:                    
Company restaurant sales   $ 391,989     $ 421,281     $ 1,668,527     $ 1,975,842  
Distribution sales     108,558       70,618       397,977       302,135  
Franchise revenues     62,666       48,391       231,027       193,119  
          563,213       540,290       2,297,531       2,471,096  
Company restaurant costs:                
Food and packaging     126,328       131,704       530,613       639,916  
Payroll and employee benefits     117,127       124,866       505,138       587,551  
Occupancy and other     99,644       98,297       398,066       428,979  
Total company restaurant costs     343,099       354,867       1,433,817       1,656,446  
Distribution costs     108,776       70,864       399,707       300,934  
Franchise costs         28,535       19,763       104,845       78,414  
Selling, general and administrative expenses     60,902       57,132       243,353       260,662  
Impairment and other charges, net     35,653       5,323       48,887       22,014  
Gains on the sale of company-operated restaurants, net     (18,934 )     (34,322 )     (54,988 )     (78,642 )
          558,031       473,627       2,175,621       2,239,828  
                     
Earnings from operations     5,182       66,663       121,910       231,268  
                     
Interest expense, net     4,165       4,095       15,894       20,767  
                     
Earnings from continuing operations and before income taxes     1,017       62,568       106,016       210,501  
                     
Income taxes         (3,024 )     21,951       35,806       79,455  
                     
Earnings from continuing operations     4,041       40,617       70,210       131,046  
                     
Earnings (losses) from discontinued operations, net     -       (25 )     -       (12,638 )
Net earnings       $ 4,041     $ 40,592     $ 70,210     $ 118,408  
                     
Net earnings per share – basic:                
Earnings from continuing operations   $ 0.08     $ 0.71     $ 1.27     $ 2.31  
Earnings (losses) from discontinued operations, net     -       -       -       (0.23 )
Net earnings per share   $ 0.08     $ 0.71     $ 1.27     $ 2.08  
                     
Net earnings per share – diluted:                
Earnings from continuing operations   $ 0.07     $ 0.70     $ 1.26     $ 2.27  
Earnings (losses) from discontinued operations, net     -       -       -       (0.22 )
Net earnings per share   $ 0.07     $ 0.70     $ 1.26     $ 2.05  
                     
Weighted-average shares outstanding:                
Basic     53,836       57,016       55,070       56,795  
Diluted     54,579       57,864       55,843       57,733  
                                 

 

 
JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

(Unaudited)
         
    October 3,   September 27,
    2010   2009
         
ASSETS        
Current assets:        
Cash and cash equivalents   $ 10,607     $ 53,002  
Accounts and other receivables, net     81,150       49,036  
Inventories     37,391       37,675  
Prepaid expenses     33,563       8,958  
Deferred income taxes     46,185       44,614  
Assets held for sale     59,897       99,612  
Other current assets     6,129       7,152  
Total current assets     274,922       300,049  
         
Property and equipment, at cost:        
Land     101,206       101,576  
Buildings     965,312       936,351  
Restaurant and other equipment     437,547       506,185  
Construction in progress     58,664       58,135  
      1,562,729       1,602,247  
Less accumulated depreciation and amortization     (684,690 )     (665,957 )
Property and equipment, net     878,039       936,290  
         
Intangible assets, net     17,986       18,434  
Goodwill     85,041       85,843  
Other assets, net     151,104       115,294  
    $ 1,407,092     $ 1,455,910  
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Current liabilities:        
Current maturities of long-term debt   $ 13,781     $ 67,977  
Accounts payable     101,216       63,620  
Accrued liabilities     168,186       206,100  
Total current liabilities     283,183       337,697  
         
Long-term debt, net of current maturities     352,630       357,270  
         
Other long-term liabilities     250,440       234,190  
         
Deferred income taxes     376       2,264  
         
Stockholders’ equity:        
Preferred stock $.01 par value, 15,000,000 shares authorized, none issued     -       -  
Common stock $.01 par value, 175,000,000 shares authorized, 74,461,632 and 73,987,070 issued, respectively     745       740  
Capital in excess of par value     187,544       169,440  
Retained earnings     982,420       912,210  
Accumulated other comprehensive loss, net     (78,787 )     (83,442 )
Treasury stock, at cost, 21,640,400 and 16,726,032 shares, respectively     (571,459 )     (474,459 )
Total stockholders’ equity     520,463       524,489  
    $ 1,407,092     $ 1,455,910  
                 

 

 
JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)
                 
        Fiscal Year
          2010       2009       2008  
                 
Cash flows from operating activities:            
  Net earnings   $ 70,210     $ 118,408     $ 119,279  
  Losses (earnings) from discontinued operations, net     -       12,638       (1,070 )
  Net earnings from continuing operations     70,210       131,046       118,209  
  Adjustments to reconcile net earnings to net cash provided by operating activities:            
    Depreciation and amortization     101,514       100,830       96,943  
    Deferred finance cost amortization     1,658       1,461       1,462  
    Deferred income taxes     (27,554 )     (15,331 )     6,643  
    Share-based compensation expense     10,605       9,341       10,566  
    Pension and postretirement expense     29,140       12,243       14,433  
    Losses (gains) on cash surrender value of company-owned life insurance     (6,199 )     1,910       8,172  
    Gains on the sale of company-operated restaurants, net     (54,988 )     (78,642 )     (66,349 )
    Gains on the acquisition of franchise-operated restaurants     -       (958 )     -  
    Losses on the disposition of property and equipment, net     10,757       11,418       17,373  
    Impairment charges and other     12,970       6,586       3,507  
    Loss on early retirement of debt     513       -       -  
  Changes in assets and liabilities, excluding acquisitions and dispositions:            
    Accounts and other receivables     (8,174 )     3,519       (9,172 )
    Inventories     284       7,596       (4,452 )
    Prepaid expenses and other current assets     (22,967 )     11,496       7,026  
    Accounts payable     (2,219 )     (14,975 )     4,167  
    Pension and postretirement contributions     (24,072 )     (26,233 )     (25,012 )
    Other     (27,440 )     (13,983 )     (16,481 )
    Cash flows provided by operating activities from continuing operations     64,038       147,324       167,035  
    Cash flows provided by (used in) operating activities from discontinued operations     (2,172 )     1,426       5,349  
    Cash flows provided by operating activities     61,866       148,750       172,384  
                 
Cash flows from investing activities:            
  Purchases of property and equipment     (95,610 )     (153,500 )     (178,605 )
  Proceeds from the sale of company-operated restaurants     66,152       94,927       57,117  
  Proceeds from (purchases of) assets held for sale and leaseback, net     45,348       (36,824 )     (14,003 )
  Collections on notes receivable     8,322       31,539       7,942  
  Acquisition of franchise-operated restaurants     (8,115 )     (6,760 )     -  
  Other     3,076       (989 )     (4,857 )
                 
    Cash flows provided by (used in) investing activities from continuing operations     19,173       (71,607 )     (132,406 )
    Cash flows provided by (used in) investing activities from discontinued operations     -       30,648       (1,964 )
    Cash flows provided by (used in) investing activities     19,173       (40,959 )     (134,370 )
Cash flows from financing activities:            
  Borrowings on revolving credit facility     881,000       541,000       650,000  
  Repayments of borrowings on revolving credit facility     (721,000 )     (632,000 )     (559,000 )
  Proceeds from issuance of debt     200,000       -       -  
  Principal repayments on debt     (418,836 )     (2,334 )     (5,722 )
  Debt issuance costs     (9,548 )     -       -  
  Proceeds from issuance of common stock     5,186       4,574       8,642  
  Repurchase of common stock     (97,000 )     -       (100,000 )
  Excess tax benefits from share-based compensation arrangements     2,037       664       3,346  
  Change in book overdraft     34,727       (14,577 )     (3,098 )
    Cash flows used in financing activities     (123,434 )     (102,673 )     (5,832 )
                 
Net increase (decrease) in cash and cash equivalents     (42,395 )     5,118       32,182  
Cash and cash equivalents at beginning of period     53,002       47,884       15,702  
Cash and cash equivalents at end of period   $ 10,607     $ 53,002     $ 47,884  
                         

 

 
JACK IN THE BOX INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Unaudited)
 
The following table sets forth, unless otherwise indicated, the percentage relationship to total revenues of certain items included in our condensed consolidated statements of earnings. Percentages may not add due to rounding.
                 
    Thirteen Weeks Ended   Twelve Weeks Ended   Fifty-Three Weeks Ended   Fifty-Two Weeks Ended
    October 3,   September 27,   October 3,   September 27,
    2010   2009   2010   2009
Statement of Earnings Data:                
Revenues:                
Company restaurant sales   69.6 %   78.0 %   72.6 %   80.0 %
Distribution sales   19.3 %   13.1 %   17.3 %   12.2 %
Franchise revenues   11.1 %   9.0 %   10.1 %   7.8 %
Total revenues   100.0 %   100.0 %   100.0 %   100.0 %
                 
Food and packaging (1)   32.2 %   31.3 %   31.8 %   32.4 %
Payroll and employee benefits (1)   29.9 %   29.6 %   30.3 %   29.7 %
Occupancy and other (1)   25.4 %   23.3 %   23.9 %   21.7 %
Total company restaurant costs (1)   87.5 %   84.2 %   85.9 %   83.8 %
Distribution costs (1)   100.2 %   100.3 %   100.4 %   99.6 %
Franchise costs (1)   45.5 %   40.8 %   45.4 %   40.6 %
Selling, general and administrative expenses   10.8 %   10.6 %   10.6 %   10.5 %
Impairment and other charges, net   6.3 %   1.0 %   2.1 %   0.9 %
Gains on the sale of company-operated restaurants, net   (3.4 )%   (6.4 )%   (2.4 )%   (3.2 )%
Earnings from operations   0.9 %   12.3 %   5.3 %   9.4 %
                 
Income tax rate (2)   (297.3 )%   35.1 %   33.8 %   37.7 %
                         
                         
(1) As a percentage of the related sales and/or revenues
(2) As a percentage of earnings from continuing operations and before income taxes.
 
Beginning in the fourth quarter of fiscal 2010, we have separated impairment and other charges, net from selling, general and administrative expenses (“SG&A”) in our consolidated statements of earnings. SG&A and Impairment and other charges, net for each quarter of fiscal years 2010 and 2009 were as follows:
                               
          16 Weeks Ended   12 Weeks Ended   13 Weeks Ended
Fiscal Year 2010       Jan. 17, 2010   Apr. 11, 2010   July 4, 2010   Oct. 3, 2010
Selling, general and administrative expenses     $ 70,678 10.4 %   $ 54,742 10.3 %   $ 57,031 10.9 %   $ 60,902 10.8 %
Impairment and other charges, net     $ 2,679 0.4 %   $ 3,452 0.7 %   $ 7,103 1.4 %   $ 35,653 6.3 %
                               
          16 Weeks Ended   12 Weeks Ended
Fiscal Year 2009       Jan. 18, 2009   Apr. 12, 2009   July 5, 2009   Sept. 27, 2009
Selling, general and administrative expenses     $ 84,876 10.9 %   $ 61,082 10.6 %   $ 57,572 10.0 %   $ 57,132 10.6 %
Impairment and other charges, net     $ 5,903 0.8 %   $ 5,827 1.0 %   $ 4,961 0.9 %   $ 5,323 1.0 %
                                           

 

 
JACK IN THE BOX INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Unaudited)
               
The following table summarizes the changes in the number of Jack in the Box and Qdoba company-operated and franchised restaurants:
               
        Year Ended October 3, 2010   Year Ended September 27, 2009
        Company   Franchised   Total   Company   Franchised   Total
Jack in the Box:                        
  Beginning of period   1,190     1,022     2,212     1,346     812     2,158  
    New   30     16     46     43     21     64  
    Acquired from franchisees   1     (1 )   -     1     (1 )   -  
    Refranchised   (219 )   219     -     (194 )   194     -  
    Closed   (46 )   (6 )   (52 )   (6 )   (4 )   (10 )
  End of period   956     1,250     2,206     1,190     1,022     2,212  
    % of system   43 %   57 %   100 %   54 %   46 %   100 %
Qdoba:                        
  Beginning of period   157     353     510     111     343     454  
    New   15     21     36     24     38     62  
    Acquired from franchisees   16     (16 )   -     22     (22 )   -  
    Closed   -     (21 )   (21 )   -     (6 )   (6 )
  End of period   188     337     525     157     353     510  
    % of system   36 %   64 %   100 %   31 %   69 %   100 %
                             
Consolidated:                        
  Total system   1,144     1,587     2,731     1,347     1,375     2,722  
    % of system   42 %   58 %   100 %   49 %   51 %   100 %

Bob Evans Declares Quarterly Dividend

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Bob Evans Farms, Inc. (Nasdaq: BOBE) today announced that its board of directors has approved a quarterly cash dividend of 20 cents per share on the company’s outstanding common stock. The dividend is payable on Dec. 13 to stockholders of record at the close of business on Nov. 29.

Bob Evans reduced its total debt by $17.9 million during the first half of fiscal 2011. The Company’s board of directors has previously authorized share repurchases of up to $25 million for fiscal 2011, which ends April 29, 2011. The Company repurchased 325,000 shares for a total of $8.9 million in the second quarter of fiscal 2011 and has repurchased 495,000 shares for a total of $13.3 million in the fiscal year to date.

About Bob Evans Farms, Inc.

Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans and Mimi’s Café brand names. At the end of the second fiscal quarter (Oct. 29, 2010), Bob Evans owned and operated 569 family restaurants in 18 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States, while Mimi’s Café owned and operated 145 casual restaurants located in 24 states, primarily in California and other western states. Bob Evans Farms, Inc. is also a leading producer and distributor of pork sausage and a variety of complementary homestyle convenience food items under the Bob Evans and Owens brand names.  For more information about Bob Evans Farms, Inc., visit www.bobevans.com.

Yum! Brands Inc. Declares Quarterly Dividend of $0.25 Per Share

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Yum! Brands Inc. (NYSE: YUM) Board of Directors declared a dividend of $0.25 per share of common stock, which will be distributed February 4, 2011, to shareholders of record at the close of business on January 14, 2011.

Yum! continues to return significant cash to shareholders through its dividend program, first initiated in 2004. Since then, the dividend has increased each year with the most recent increase of 19% announced in September. Over time, Yum! targets a payout ratio of 35-40% of annual net income.

Yum! Brands, Inc., based in Louisville, Kentucky, is the world’s largest restaurant company in terms of system restaurants, with more than 37,000 restaurants in over 110 countries and territories. The company is ranked #216 on the Fortune 500 List, with revenues of nearly $11 billion in 2009. Four of the company’s restaurant brands – KFC, Pizza Hut, Taco Bell and Long John Silver’s – are the global leaders of the chicken, pizza, Mexican–style food and quick–service seafood categories, respectively. A&W Restaurants is the longest running quick-service franchise chain in America. Outside the United States in 2009, the Yum! Brands system opened more than four new restaurants each day of the year, making it a leader in international retail development.

Perkins & Marie Callender’s Inc. Reports Results for the Third Quarter

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Perkins & Marie Callender’s Inc. (together with its consolidated subsidiaries, the “Company”, “PMCI” or “we”) is reporting its financial results for the third quarter ended October 3, 2010.

Highlights for the Third Quarter of 2010:

  • Perkins restaurants’ comparable sales decreased by 2.8% and Marie Callender’s restaurants’ comparable sales decreased by 4.1% in the third quarter of 2010 compared to the third quarter of 2009.  
  • Since the beginning of 2010, five Perkins franchised restaurants have opened and two corporate restaurants have closed. In addition, two corporate and two franchised Marie Callender’s restaurants have closed.

J. Trungale, President and Chief Executive Officer of Perkins & Marie Callender’s Inc., commented, “During the third quarter 2010, sales and traffic trends at both Perkins and Marie Callender’s continued to be adversely affected by the languishing economy, including declines in consumer confidence and sluggish consumer spending and increased commodity costs. While we remain consistently focused on ensuring positive dining experiences at all of our restaurants and serving high quality food at a strong price-value ratio, we continue to strive for operational, financial and capital efficiencies to ease the burdens stemming from the negative economic environment.”

Financial Results for the Third Quarter of 2010

Revenues in the third quarter of 2010 decreased 5.9% to $108.7 million from $115.5 million in the third quarter of 2009.  The decrease resulted from a $4.3 million decrease in sales in the restaurant segment and a $2.5 million decrease in the Foxtail segment.  Company-owned Perkins comparable restaurant sales decreased by 2.8% and Company-owned Marie Callender’s comparable restaurant sales decreased by 4.1% in the third quarter of 2010 as compared to the third quarter of 2009.

Food cost for the quarter ended October 3, 2010 decreased to 25.4% of food sales from 25.7% for the quarter ended October 4, 2009.  Restaurant segment food cost was up by 1.0 percentage point to 25.4% of food sales in the quarter ended October 3, 2010, primarily due to higher sugar, pork, coffee, dairy, seafood and egg costs.  In the Foxtail segment, food cost decreased to 52.9% of food sales in the third quarter of 2010 from 57.9% in the third quarter of 2009, primarily due to higher sales margins and improved pie manufacturing efficiencies.

Labor and benefits costs, as a percentage of total revenues, increased by 0.3 percentage points to 34.5% in the third quarter of 2010 as compared to the prior year’s third quarter.  Restaurant segment labor and benefits remained constant at 37.8% in the third quarter of 2010, while the Foxtail segment labor and benefits expense increased from 12.5% in the third quarter of 2009 to 12.8% in the third quarter of 2010.  This increase was due primarily to the impact of fixed labor and benefit costs on a lower sales base as labor and benefits expenses for this segment decreased by approximately $0.3 million during the third quarter of 2010.

Operating expenses for the quarter ended October 3, 2010 were $32.6 million, or 30.0% of total revenues, compared to $33.2 million, or 28.7% of total revenues in the quarter ended October 4, 2009.  Restaurant segment operating expenses increased by 1.1 percentage points to 32.4% of restaurant sales in the third quarter of 2010, due primarily to a decline in revenues and increases in advertising expenses and utilities.  Operating expenses in the Foxtail segment decreased by 1.0 percentage point to 10.4% of segment food sales.

General and administrative expenses were 8.8% of total revenues, a decrease of 0.1 percentage point from the third quarter of 2009.  This decrease is primarily due to lower incentive compensation accruals and legal costs.

Depreciation and amortization was 4.4% and 4.8% of revenues in the third quarters of 2010 and 2009, respectively.  

Interest, net was 9.5% of revenues in the quarter ended October 3, 2010, compared to 8.9% in the quarter ended October 4, 2009.  This expense increased due to an approximate $9.2 million increase in the average debt outstanding during the third quarter of 2010.

Adjusted EBITDA

The Company defines adjusted EBITDA as net income or loss attributable to PMCI before income taxes or benefits, interest expense (net), depreciation and amortization, asset impairments and closed store expenses, pre-opening expenses, management fees, certain non-recurring income and expense items and other income and expense items unrelated to operating performance.  The Company considers adjusted EBITDA to be an important measure of the performance of core operations because adjusted EBITDA excludes various income and expense items that are not indicative of the Company’s operating performance.  The Company believes that adjusted EBITDA is useful to investors in evaluating the Company’s ability to incur and service debt, make capital expenditures and meet working capital requirements.  The Company also believes that adjusted EBITDA is useful to investors in evaluating the Company’s operating performance compared to that of other companies in the same industry, as the calculation of adjusted EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending, all of which may vary from one company to another for reasons unrelated to overall operating performance.  The Company’s calculation of adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.  Adjusted EBITDA is not a presentation made in accordance with U.S. generally accepted accounting principles and accordingly should not be considered as an alternative to, or more meaningful than, earnings from operations, cash flows from operations or other traditional indications of a company’s operating performance or liquidity.  The following table provides a reconciliation of net loss to adjusted EBITDA:

Third Quarter Third Quarter Year-to-Date Year-to-Date  
Ended Ended Ended Ended  
(in thousands) October 3, 2010 October 4, 2009 October 3, 2010 October 4, 2009  
 
Net loss attributable to PMCI $    (12,349)       (11,248)       (38,108)       (26,882)  
Provision for (benefit from) income taxes         (4,888)              142         (4,888)              142  
Interest, net         10,336         10,260         34,200         34,005  
Depreciation and amortization           4,818           5,498         16,783         18,411  
Asset impairments and closed store expenses              642              187           2,747           1,395  
Pre-opening expenses                 –                    8                 –                  41  
Management fees              919              919           3,064           2,856  
Settlement with former owner           4,555                 –             4,555                 –    
Other items                 –                   –                   –           (2,195)  
Adjusted EBITDA $        4,033           5,766         18,353         27,773  
 
               

About the Company

Perkins & Marie Callender’s Inc. operates two restaurant concepts:  (1) full-service family dining restaurants, which serve a wide variety of high quality, moderately-priced breakfast, lunch and dinner entrees, under the name Perkins Restaurant and Bakery, and (2) mid-priced, casual-dining restaurants specializing in the sale of pies and other bakery items under the name Marie Callender’s Restaurant and Bakery.  As of October 3, 2010, the Company owned and operated 161 Perkins restaurants and franchised 319 Perkins restaurants.  The Company also owned and operated 75 Marie Callender’s restaurants, two Callender’s Grill restaurants, an East Side Mario’s restaurant and 12 Marie Callender’s restaurants under partnership agreements.  Franchisees owned and operated 37 Marie Callender’s restaurants and one Marie Callender’s Grill.

Conference Call

Perkins & Marie Callender’s Inc. has scheduled a conference call for Thursday, December 2, 2010, at 1:00 p.m. (CST) to review third quarter of 2010 earnings.  The dial-in number for the conference call is (866) 207-2203, and the conference ID number is 24726624.  A taped playback of this call will be available two hours following the call through midnight (EST) on Thursday, December 9, 2010.  The taped playback can be accessed by dialing (800) 642-1687 and by using access code number 24726624.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements, written, oral or otherwise made, may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will,” or the negative thereof or other variations thereon or comparable terminology.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections.  While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control.  These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.  Factors affecting these forward-looking statements include, among others, the following:

  • macroeconomic conditions, consumer preferences and demographic patterns, both nationally and in particular regions in which we operate;
  • our substantial indebtedness;
  • our liquidity and capital resources;
  • competitive pressures and trends in the restaurant industry;
  • prevailing prices and availability of food, labor, raw materials, supplies and energy;
  • a failure to obtain timely deliveries from our suppliers or other supplier issues;
  • our ability to successfully implement our business strategy;
  • relationships with franchisees and the financial health of franchisees;
  • legal proceedings and regulatory matters; and
  • our development and expansion plans.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements.  The forward-looking statements included in this press release are made only as of the date hereof.  We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.

PERKINS & MARIE CALLENDER’S INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands)

  
Quarter Quarter Year-to-Date Year-to-Date  
Ended Ended Ended Ended  
October 3, October 4, October 3, October 4,  
2010 2009 2010 2009  
REVENUES:  
Food sales $ 102,296 109,086 357,184 385,024  
Franchise and other revenue 6,404 6,384 21,474 21,575  
   Total revenues 108,700 115,470 378,658 406,599  
COSTS AND EXPENSES:  
Cost of sales (excluding depreciation shown below):  
   Food cost 25,999 28,058 90,715 101,333  
   Labor and benefits 37,535 39,474 129,743 135,703  
   Operating expenses 32,587 33,183 108,856 110,956  
General and administrative 9,515 10,313 34,456 34,531  
Settlement with former owner 4,555 - 4,555 -  
Depreciation and amortization 4,818 5,498 16,783 18,411  
Interest, net 10,336 10,260 34,200 34,005  
Asset impairments and closed store expenses 642 187 2,747 1,395  
Other, net (41) (392) (399) (3,069)  
   Total costs and expenses 125,946 126,581 421,656 433,265  
Loss before income taxes (17,246) (11,111) (42,998) (26,666)  
Benefit from (provision for) income taxes 4,888 (142) 4,888 (142)  
Net loss   (12,358) (11,253) (38,110) (26,808)  
Less: net (loss) earnings attributable to  
   non-controlling interests (9) (5) (2) 74  
Net loss attributable to Perkins & Marie  
   Callender’s Inc. $ (12,349) (11,248) (38,108) (26,882)  
 
                       
PERKINS & MARIE CALLENDER’S INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par and share amounts)

  
October 3, December 27,  
2010 2009  
ASSETS (Unaudited)  
CURRENT ASSETS:  
Cash and cash equivalents $                   9,397 4,288  
Restricted cash 5,696 8,110  
Receivables, less allowances for doubtful accounts of $1,028 and $829 in 2010 and 2009, respectively 15,945 18,125  
Inventories 12,195 11,062  
Prepaid expenses and other current assets 2,180 1,864  
Assets held for sale, net 310 -  
    Total current assets 45,723 43,449  
 
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $159,073 and $156,898 in 2010 and 2009, respectively 61,717 75,219  
INVESTMENT IN UNCONSOLIDATED PARTNERSHIP 19 50  
GOODWILL 23,100 23,100  
INTANGIBLE ASSETS, net of accumulated amortization of $20,983 and $20,179 in 2010 and 2009, respectively 145,375 147,013  
OTHER ASSETS 14,064 16,074  
TOTAL ASSETS $               289,998 304,905  
 
LIABILITIES AND DEFICIT  
 
CURRENT LIABILITIES:  
Accounts payable 15,085 14,657  
Accrued expenses 44,453 41,605  
Franchise advertising contributions 5,696 4,327  
Current maturities of long-term debt and capital lease obligations 340 503  
    Total current liabilities 65,574 61,092  
 
LONG-TERM DEBT, less current maturities 338,434 326,042  
CAPITAL LEASE OBLIGATIONS, less current maturities 13,205 11,054  
DEFERRED RENT 18,992 17,092  
OTHER LIABILITIES 24,736 22,277  
DEFERRED INCOME TAXES 45,457 45,457  
 
DEFICIT:  
Common stock, $.01 par value; 100,000 shares authorized;  
    10,820 issued and outstanding 1 1  
Additional paid-in capital 150,870 150,870  
Accumulated other comprehensive income 54 45  
Accumulated deficit (367,441) (329,333)  
    Total Perkins & Marie Callender’s Inc. stockholder’s deficit (216,516) (178,417)  
Non-controlling interests 116 308  
    Total deficit (216,400) (178,109)  
TOTAL LIABILITIES AND DEFICIT $               289,998 304,905  
 
         
PERKINS & MARIE CALLENDER’S INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

  
Year-to-Date Year-to-Date  
Ended Ended  
October 3, October 4,  
2010 2009  
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net loss $      (38,110) (26,808)  
Adjustments to reconcile net loss to net cash  
used in operating activities:  
 Depreciation and amortization 16,783 18,411  
 Asset impairments 2,489 571  
 Amortization of debt discount 1,352 1,184  
 Other non-cash income items (177) (2,427)  
 Loss on disposition of assets 258 824  
 Equity in net loss of unconsolidated partnership 31 25  
 Net changes in operating assets and liabilities 14,804 3,383  
 Total adjustments 35,540 21,971  
Net cash used in operating activities (2,570) (4,837)  
 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of property and equipment (3,790) (5,941)  
Proceeds from sale of assets 1,007 494  
Net cash used in investing activities (2,783) (5,447)  
 
CASH FLOWS FROM FINANCING ACTIVITIES:  
Proceeds from revolving credit facilities 24,684 26,501  
Repayment of revolving credit facilities (13,644) (16,726)  
Repayment of capital lease obligations (373) (318)  
Repayment of other debt (15) (15)  
Debt financing costs - (142)  
Distributions to non-controlling interest holders (190) (104)  
Net cash provided by financing activities 10,462 9,196  
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,109 (1,088)  
 
CASH AND CASH EQUIVALENTS:  
 Balance, beginning of period 4,288 4,613  
 Balance, end of period $          9,397 3,525  
 
         
 

Diversified Restaurant Holdings Reports Third Quarter Revenue Increase

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Diversified Restaurant Holdings, Inc. (OTCBB:DFRH), the owner/operator and franchisor of the unique, full-service, ultra-casual restaurant and bar, Bagger Dave’s Legendary Burger Tavern (“Bagger Dave’s”) and a leading franchisee for Buffalo Wild Wings (“BWW”), today announced financial results for its third quarter 2010, which ended September 26, 2010.

Revenue for the third quarter of 2010 was $11.4 million, 129% above prior year third quarter revenue of $5.0 million on a non-GAAP basis. Third quarter 2010 revenue included food and beverage sales for 18 BWW and three Bagger Dave’s locations while the non-GAAP measure for the 2009 quarter included sales from seven BWW and two Bagger Dave’s locations as well as management fees for nine BWW restaurants which were acquired by the Company in the first quarter of this year. On a GAAP basis, which includes results of the nine restaurants under common control, our third quarter revenue for 2010 was 9% above prior year revenue of $10.5 million, which included sales from 16 BWW and two Bagger Dave’s restaurants.

Net income for the 2010 third quarter was $200 thousand compared with net income in last year’s third quarter of $174 thousand (on a non-GAAP basis) and $183 thousand (on a GAAP basis), a 15% and 9% improvement, respectively, as DRH continued to reinvest operational cash in new restaurant development.

On a GAAP basis, operating cash flow for the first nine months of 2010 was $2.9 million, or 9% of revenue.

Michael Ansley, President and Chief Executive Officer of DRH, commented, “Our revenue for the quarter improved measurably and is a result of our February 1, 2010 acquisition of nine Buffalo Wild Wings restaurants coupled with the opening of three additional locations in 2010. We are currently realizing the benefits of our nineteenth Buffalo Wild Wings restaurant, which opened in Fort Myers, Florida on November 7, 2010. We look forward to opening our fourth Bagger Dave’s restaurant, along with our twentieth and twenty-first Buffalo Wild Wings restaurants, in the first quarter of 2011. The Company is also evaluating additional restaurant openings during 2011 which will enable us to maintain our aggressive growth strategy.”

Note regarding GAAP v. Non-GAAP Financial Measures

On February 1, 2010, the Company completed an acquisition of nine BWW restaurants that were previously under common control (the “Affiliates Acquisition”). Under Generally Accepted Accounting Principles (“GAAP”), the Affiliates Acquisition was reported as if the transaction had occurred at the beginning of the Company’s 2010 fiscal year. Financial results of the Company’s existing operations were combined, or “pooled”, with the results of the acquired affiliates and reported accordingly. Consistent with GAAP, comparative financial information for prior years was also combined for reporting purposes. Prior to the Affiliates Acquisition, and for a period dating back to 2006, the Company received a fee to manage the acquired affiliates and reported its financial results without regard to “pooling” treatment. Given this historical financial reporting practice, the Company believes a presentation of comparative financial information on both a “pooled” (GAAP) and “unpooled” (non-GAAP) basis provides meaningful financial measures for its shareholders.

Spicy Pickle Franchising Reports Third Quarter Results

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Spicy Pickle Franchising, Inc. (OTCBB: SPKL), fast casual restaurant operator and franchisor of its Spicy Pickle U.S. and BG Urban Café Canadian brands, today announced results for its third quarter and nine months ended September 30, 2010. 

For the third quarter, the first full quarter under new management, revenues increased to $1,132,631 from $954,188. For the nine months, revenues increased to $3,321,222 from $3,181,641. Revenues were higher due to increases in franchise fees, royalties and rebates which totaled $487,375 for the quarter vs $295,979 in the year ago quarter, and $1,383,206 for the nine months, up from $1,094,367 for the nine months the year before. 

The loss from operations totaled $810,616 for the quarter compared with $608,190 for the year ago quarter and $1,851,663 for the nine months vs $1,570,875 for the nine months of 2009.

“Approximately $350,000 in expenses for the quarter was either non-cash or severance related and we have increased our investments in re-branding the Spicy Pickle and Urban Cafés concepts. Additionally, we have increased our advertising spending for both brands and have invested in strengthening our management team and board of directors,” reported CEO Mark Laramie.

“Most importantly, we are now seeing increased restaurant average weekly sales. Furthermore, we are beginning to experience improved unit level economics as a result of our new supply chain. However, company owned store revenue has been reduced due to closing one of our company owned restaurants pending relocation. Thus, we are now operating six rather than seven company owned units. A full discussion is included in our current 10Q report and we encourage interested parties to review it,” said Mr. Laramie.

The company had total assets of $5.3 million at September 30, 2010, versus $5.8 million at the same time a year ago. Current assets amounted to $1.13 million versus current liabilities of $1.45 million of which the $350,000 in deferred franchise revenue is a non-cash obligation. The company reported it has borrowed about $1 million on its $2 million line of credit.

Outlook:

“We are still somewhat dependent on the economy and consumer spending, but we believe we have accomplished a great deal in a short time. We believe that through the marketing and re-branding investments we are making, and will continue to make, we are positioning both of our brands for future growth and development. We are optimistic 2011 will be a very active year in terms of franchisee development activities,” concluded Laramie.

Benihana Inc. Reports Total Restaurant Sales and Comparable Restaurant Sales for the First Four-Week Period of the Third Fiscal Quarter 2011

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Benihana Inc. (NASDAQ: BNHNA; BNHN), operator of the nation’s largest chain of Japanese theme and sushi restaurants, today reported total restaurant sales and comparable restaurant sales for the first four-week period (October 11 – November 7, 2010) of the third fiscal quarter 2011.

For the first four-week period, total restaurant sales increased 3.7% to $23.0 million from $22.2 million, while Company-wide comparable restaurant sales increased 4.8%, representing the ninth consecutive period of comparable restaurant sales increases. By concept, comparable restaurant sales increased 8.2% at Benihana Teppanyaki, but fell 1.3% at RA Sushi with Haru decreasing slightly at 0.2%. There were a total of 384 store-operating weeks in the first four-week period of the third fiscal quarter 2011 compared to a total of 392 store-operating weeks in the first four-week period of the third fiscal quarter 2010.

Richard C. Stockinger, Chairman, Chief Executive Officer and President, said, “We are extremely pleased with our comparable sales results as the exceptionally strong guest counts (up 11.8%) at Benihana Teppanyaki more than offset the slightly negative trends at our sushi brands. Our flagship concept’s top-line performance, while impressive in absolute terms, is especially noteworthy since the anniversary of the introduction of the Renewal Program occurred during the recent four-week period. Given the continued benefits we realized from the program itself, along with the success of our ongoing promotional and marketing initiatives, we are confident in our positioning and look forward to celebrating the upcoming Holiday season with our guests.”

EPL Intermediate, Inc. Announces Results for the 13 Weeks and 39 Weeks Ended September 29, 2010

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EPL Intermediate, Inc. (“El Pollo Loco” or the “Company”), parent company of El Pollo Loco, Inc., has reported results for the 13-week third quarter and 39 weeks ended September 29, 2010.

El Pollo Loco reported total operating revenue for the 13-week third quarter ended September 29, 2010 of $68.2 million, which is a decrease of $0.3 million, or 0.4%, below total operating revenue for the 13-week quarter ended September 30, 2009 of $68.5 million. Total operating revenue includes sales at company-operated stores and franchise revenue.

The decrease in total operating revenue was primarily attributed to a 2.2% decrease in system-wide same-store sales for the 13-week third quarter of 2010 compared to the 13-week third quarter of 2009. Restaurants enter the comparable restaurant base for same-store sales the first full week after that restaurant’s 15-month anniversary.

Commenting on results for the third quarter of 2010, Steve Sather, acting president and CEO of El Pollo Loco, Inc. said, “Traffic frequency in our restaurants continues to be adversely affected by the challenging economy and high level of unemployment in our core markets, and in particular among Hispanics which are a key demographic for our brand. During the quarter, we had a limited time offer for our Queso Crunch Burrito, which we launched with a new twist– a choice of flame-grilled chicken or steak, and our Double Your Chicken for $5 offer with the purchase of any 8, 10 or 12-piece meal. We believe that the key to driving sales in this challenging environment is to remain keenly focused on striking the right balance between value and check performance while continuing our system-wide focus on operational excellence and exceptional guest service.”

Operating income increased $0.2 million, or 3.3%, to $4.9 million for the 13 weeks ended September 29, 2010 from $4.7 million for the 13 weeks ended September 30, 2009. This increase in operating income was mainly due to lower restaurant asset impairment charges and a decrease in our product cost, which were partially offset by higher payroll and benefit costs.

Interest expense, net of interest income, increased $0.4 million, or 4.8%, to $9.5 million for the 13 weeks ended September 29, 2010 from $9.1 million for the 13 weeks ended September 30, 2009.

Despite having a loss for the 13 weeks ended September 29, 2010 and September 30, 2009, we had an income tax provision of $0.2 million and $0.3 million, respectively, primarily related to the effect of changes in our deferred taxes and the related effect of maintaining a full valuation allowance against certain of our deferred tax assets as of September 29, 2010.

As a result of the factors cited above, there was a net loss for the 13 weeks ended September 29, 2010 of $4.8 million compared to a net loss of $4.6 million for the 13 weeks ended September 30, 2009.

Total operating revenue for the 39 weeks ended September 29, 2010 was $207.4 million, which was a decrease of $4.4 million, or 2.1%, from total operating revenue for the 39 weeks ended September 30, 2009 of $211.8 million. The decrease was primarily due to a decrease in same-store sales of 4.7% for the system for the 39 weeks ended September 29, 2010 compared to the corresponding period of 2009.

Operating income increased $3.6 million, or 27.6%, to $16.5 million for the 39 weeks ended September 29, 2010 from $12.9 million for the same period of 2009. This increase in operating income was due primarily to a decrease in our product cost, lower legal settlements and lower restaurant asset impairment charges, which were partially offset by lower total operating revenue and an increase in our closed store reserve.

Despite having a loss for the 39 weeks ended September 29, 2010, we had an income tax provision of $1.0 million, primarily related to the effect of changes in our deferred taxes and the related effect of maintaining a full valuation allowance against certain of our deferred tax assets as of September 29, 2010. For the 39 weeks ended September 30, 2009, we had an income tax provision of $19.8 million as we recorded a valuation allowance against our deferred tax assets and the effect of changes in our deferred taxes.

As a result of the factors noted above, the company had a net loss for the 39 weeks ended September 29, 2010 of $12.5 million compared to a net loss of $30.4 million for the 39 weeks ended September 30, 2009.

Commenting on the remainder of 2010, Sather said, “With the economy continuing to negatively impact consumer spending, we are taking this time to align our entire team, company members and franchisees, around a sharpened focus on quality, service, and cleanliness as a platform to strengthen our position in the marketplace and set ourselves up for momentum when the economy turns around. We will also continue to strive to provide our guests value, while protecting profits, with new menu items that leverage our flame-grilling expertise; greater menu variety with both chicken and steak; our Loco Value Menu; and compelling family meal offers.”

El Pollo Loco’s restaurant count changes for the 13 weeks ended September 29, 2010 are as follows:

    Company   Franchised Stores   Total
At June 30, 2010   171   241   412
Opened   -   1   1
Closed   (1)   -   (1)
At September 29, 2010   170   242   412

Addressing the Company’s development plans, Sather commented, “As we shared earlier this year, we expect to open fewer restaurants this year than last, due in part to the continued difficulty franchisees have securing financing in this tough environment and the impact that the challenging economy has had on our franchisees, several of whom have delayed or reduced the number of new restaurants they plan to open. During the third quarter of 2010, one new franchise restaurant opened in San Diego, CA and we closed one company restaurant in Sanger, CA. Since the end of the third quarter, one additional franchise restaurant opened in Rohnert Park, CA.

“We plan to open one more restaurant before the end of 2010, a company-operated restaurant in Anaheim, CA, which will reflect a lower investment cost and several new features to further enhance our guests’ experience.”

System-wide Sales

Included above is system-wide same-store sales information. System-wide same-store sales are a financial measure that includes sales at all company-owned stores and franchise-owned stores, as reported by franchisees. Management uses system-wide same-store sales information internally in connection with store development decisions, planning and budgeting analyses. Management believes system-wide same-store sales information is useful in assessing consumer acceptance of the Company’s brand and facilitates an understanding of financial performance as the Company’s franchisees pay royalties and contribute to advertising pools based on a percentage of their sales.

Safe Harbor Statement

This news release may be deemed to contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company intends that all such statements be subject to the safe harbor provisions contained in those sections. Forward-looking statements are statements that do not relate solely to historical fact. They include, but are not limited to, statements which begin with phrases such as “we believe that the key to driving sales in the months ahead, …” “commenting on the remainder of 2010, …” “we will also strive to provide our guests value…” “we expect to open fewer restaurants this year than last,” and “we plan to open one more restaurant before the end of 2010,” and any other statements that may predict, forecast, indicate or imply future results, performance, achievements or events. Forward-looking statements generally contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” “will,” “should,” “may,” “could” or words or phrases of similar meaning. Forward-looking statements reflect management’s current expectations regarding future results, performance, achievements or events that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and many important factors, including factors outside of the control of the Company, could cause actual results, performance, achievements or events to differ materially from those discussed in the forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include but are not limited to: the adverse impact of economic conditions on our operating results and financial condition, on our ability to comply with the terms and covenants of our debt agreements, and on our ability to pay or to refinance our existing debt or to obtain additional financing; our substantial level of indebtedness; food-borne-illness incidents; risks arising from the delay or inability to hire new executives for our currently vacant president/Chief Executive Officer and Chief Marketing Officer positions since the Company depends on the unique abilities and knowledge of its officers; negative publicity, whether or not valid; increases in the cost of chicken; our dependence upon frequent deliveries of food and other supplies; our vulnerability to changes in consumer preferences and economic conditions; our sensitivity to events and conditions in the Southern California area, our largest market; our ability to compete successfully with other quick service and fast casual restaurants; our ability to expand into new markets; our reliance on our franchisees, who have also been adversely impacted by the challenging economic condition; matters relating to labor laws and the adverse impact of related litigation, including wage and hour class actions; our ability to support our franchise system; our ability to renew leases at the end of their term; the impact of applicable federal, state or local government regulations; our ability to protect our name and logo and other proprietary information; litigation we face in connection with our operations; and other risk factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, the Company cannot assure the reader that the results, performance, achievements or events contemplated by the forward-looking statements will be realized in the timeframe anticipated or at all. In light of the significant uncertainties inherent in forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s objectives or plans will be achieved. Accordingly, readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as the result of new information, future events or otherwise. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, as each may be amended from time to time. Statements about the Company’s past performance are not necessarily indicative of its future results.

About the Company

El Pollo Loco® is the nation’s leading restaurant concept specializing in flame-grilled chicken. Headquartered in Costa Mesa, California, El Pollo Loco, Inc. operates a restaurant system comprised of 170 company-operated and 242 franchised restaurants (as of September 29, 2010) located primarily in California, with additional restaurants in Arizona, Colorado, Connecticut, Georgia, Illinois, Missouri, Nevada, New Jersey, Oregon, Texas, Utah and Virginia. El Pollo Loco’s menu features the Company’s signature citrus-marinated, flame-grilled chicken in individual and family-size meals served with a choice of corn or flour tortillas, freshly-prepared salsas and an assortment of side orders. El Pollo Loco also serves a variety of contemporary, Mexican-inspired entrees featuring the chain’s citrus-marinated, flame-grilled chicken and carne asada, including Pollo Bowl® entrees, pollo salads, grilled burritos, tacos, quesadillas and more. For more information about the Company, visit www.elpolloloco.com.

Summary of Financial Information
EPL INTERMEDIATE, INC.
(A Wholly Owned Subsidiary of El Pollo Loco Holdings, Inc.)
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands)
             
    13 Weeks Ended     39 Weeks Ended  
                         
    September 30,     September 29,     September 30,     September 29,  
    2009     2010     2009     2010  
OPERATING REVENUE:                        
Restaurant revenue   $ 63,740     $ 63,756     $ 197,444     $ 193,686  
Franchise revenue     4,764       4,457       14,357       13,754  
                                 
Total operating revenue     68,504       68,213       211,801       207,440  
                                 
OPERATING EXPENSES:                                
Product cost     20,587       19,919       63,747       60,465  
Payroll and benefits     16,621       17,359       52,391       52,266  
Depreciation and amortization     3,015       2,755       8,651       7,949  
Other operating expenses     23,544       23,285       74,090       70,271  
                                 
Total operating expenses     63,767       63,318       198,879       190,951  
                                 
OPERATING INCOME     4,737       4,895       12,922       16,489  
                                 
INTEREST EXPENSE—Net     9,075       9,506       23,501       27,981  
                                 
OTHER EXPENSE     -       -       443       -  
                                 
OTHER INCOME     -       -       (452 )     -  
                                 
LOSS BEFORE PROVISION FOR INCOME TAXES     (4,338 )     (4,611 )     (10,570 )     (11,492 )
                                 
PROVISION FOR INCOME TAXES     306       221       19,848       994  
                                 
NET LOSS   $ (4,644 )   $ (4,832 )   $ (30,418 )   $ (12,486 )
 
 
                 
    13 Weeks Ended   39 Weeks Ended
    September 30,   September 29,   September 30,   September 29,
    2009   2010   2009   2010
                                 
Operating Statement Data:                                
Restaurant revenue     100.0 %     100.0 %     100.0 %     100.0 %
Product cost     32.3       31.2       32.3       31.2  
Payroll and benefits     26.1       27.2       26.5       27.0  
Depreciation and amortization     4.7       4.3       4.4       4.1  
Other operating expenses     36.9       36.5       37.5       36.3  
Operating income     7.4       7.7       6.5       8.5  
Interest expense-net     14.2       14.9       11.9       14.4  
                                 
Other expense     0.0       0.0       0.2       0.0  
Other income     0.0       0.0       (0.2)       0.0  
                                 
Loss before provision for income taxes     (6.8)       (7.2)       (5.4)       (5.9)  
Provision for income taxes     0.5       0.3       10.1       0.5  
Net loss     (7.3)       (7.6)       (15.4)       (6.4)  
                                 
Supplementary Operating Statement Data:                                
Restaurant other operating expense     24.7       24.2       23.6       24.0  
Franchise expense     1.5       1.8       1.5       1.6  
General and administrative expense (1)(2)     10.7       10.5       12.4       10.7  
Total other operating expenses     36.9       36.5       37.5       36.3  
                                 
(1) General and administrative expenses as a percent of total operating revenue for the 13 weeks ended
September 30, 2009 was 10.0% and 9.8% for the 13 weeks ended September 29, 2010.          
                                 
(2) General and administrative expenses as a percent of total operating revenue for the 39 weeks ended
September 30, 2009 was 11.6% and 10.0% for the 39 weeks ended September 29, 2010.

Wendy’s/Arby’s Group Reports Third Quarter 2010 Results

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Wendy’s/Arby’s Group, Inc. (NYSE: WEN), the third largest quick-service restaurant company in the United States, today reported results for the third quarter ended October 3, 2010.

Roland Smith, President and Chief Executive Officer of Wendy’s/Arby’s Group, stated: “The third quarter was a difficult one for both brands. While the Wendy’s® brand outperformed many quick service restaurant peers with systemwide same-store sales of -1.7%, the lack of growth resulted in sales deleverage. This deleverage effect combined with commodity cost increases caused Wendy’s third quarter restaurant margins to fall by approximately 200 basis points year-over-year, excluding the impact of incremental advertising for Wendy’s new breakfast. Arby’s® systemwide same-store sales were -5.9%. Company-operated restaurant margins were impacted by sales deleverage and commodity cost increases as restaurant margins fell by 170 basis points. On a consolidated basis, adjusted EBITDA1 was slightly lower than our expectations at approximately $100 million; however, we are reiterating our adjusted EBITDA guidance for 2010.

“These third quarter results are simply not satisfactory to us. We will not be satisfied until we are driving consistent and positive same-store sales, capturing the operating leverage inherent in the business and growing free cash flow. We continue to believe Wendy’s/Arby’s Group has significant long-term earnings growth potential. In addition to developing more high quality, differentiated menu items at both brands, we will use our balance sheet strength to expand the breakfast daypart at Wendy’s, continue our remodeling program at both brands and significantly grow our international presence. The Arby’s brand turnaround is also a key focus and we are encouraged with results from our everyday value menu, evidenced by a 5.5% company-operated same-store sales increase in October,” Smith said.

“Our goal is to create superior and sustainable value for stockholders. As a strong cash flow generator, in addition to investing in organic growth opportunities, we believe in the importance of returning capital to our stockholders. Since the beginning of our repurchase activity last year, we have purchased approximately $245 million of our common stock and are pleased to announce an additional $170 million authorization today, bringing the current amount available for repurchase up to $250 million. Additionally, our Board of Directors has authorized a 33% increase in our quarterly cash dividend, which further demonstrates a commitment to delivering stockholder value as we implement our longer-term growth initiatives,” Smith said.

Consolidated Third Quarter 2010 Summary

  • Adjusted EBITDA was $100.0 million, excluding pre-tax incremental advertising for Wendy’s new breakfast of $5.5 million and integration-related costs of $0.6 million, and decreased 19.6% as compared to third quarter 2009 adjusted EBITDA of $124.4 million, excluding pre-tax integration-related costs of $5.0 million.
  • Consolidated revenues were $861.2 million as compared to third quarter 2009 revenues of $903.2 million. Net loss was $0.9 million, or $0.00 per share, including net after-tax special charges of $20.7 million, or $0.05 per share. Third quarter 2009 net income was $14.7 million, or $0.03 per share, including after-tax special charges of $12.8 million, or $0.03 per share.

Consolidated Year-to-Date 2010 Summary

  • Adjusted EBITDA was $312.9 million, excluding pre-tax integration-related costs and non-recurring charges of $9.2 million and incremental advertising for Wendy’s new breakfast of $5.5 million, and decreased 2.8% as compared to year-to-date 2009 adjusted EBITDA of $321.8 million excluding pre-tax integration-related costs of $20.1 million.
  • Consolidated revenues were $2.6 billion as compared to year-to-date 2009 revenues of $2.7 billion.
  • Net income was $6.4 million, or $0.01 per share, including net after-tax special charges of $48.2 million, or $0.11 per share, as compared to year-to-date 2009 net income of $18.7 million, or $0.04 per share, including after-tax special charges of $40.2 million, or $0.09 per share.

Wendy’s Third Quarter 2010 Brand Summary

Wendy’s total revenue was $600.7 million compared to revenue of $613.6 million in the third quarter a year ago, a year-over-year decrease of $12.9 million due primarily to the decline in company same-store sales.

  • Wendy’s North America systemwide same-store sales decreased 1.7%.
  • Wendy’s North America company-operated same-store sales decreased 3.1% and Wendy’s North America franchise same-store sales decreased 1.3%. Franchisee sales reflected higher pricing relative to those of company stores.
  • Wendy’s company-operated restaurant margin was 14.5% compared to 16.5% in the third quarter 2009, a decrease of 200 basis points, as adjusted to exclude incremental advertising for Wendy’s new breakfast in 2010. The year-over-year difference was due to sales deleveraging and higher commodity costs. Including the incremental advertising for Wendy’s new breakfast, third quarter 2010 company-operated restaurant margin was 13.4%.

“Wendy’s strategy during the third quarter was to reinforce our ‘Real’ quality and value position with our four new entree salads and $0.99 promotions. We believe that the key to Wendy’s success is significant quality differentiation versus our competitors. Wendy’s is already known as having high quality core menu items, highlighted by its fresh, never frozen hamburgers, and we were pleased that in August 2010, Zagat® rated Wendy’s as having the best food among the mega-chains,” said Smith.

“A significant event for the brand will be our late November launch of all-new, natural cut, skin-on french fries with sea salt, which we believe will be the best quality french fries in the quick service restaurant segment. Test results succeeded in driving sales and transactions as well as increasing our combo mix. We believe this major improvement to one of our core products will contribute to sustainable same-store sales growth. We have also developed an exciting new premium cheeseburger line that is being tested this quarter. In addition, Wendy’s is planning to leverage its existing restaurant base by expanding into breakfast. Initial results from breakfast test markets are encouraging and we are moving toward a national roll-out beginning in late 2011. We believe these key initiatives will drive future growth and we remain excited about the earnings potential of the brand,” Smith stated.

“As for the fourth quarter of 2010, market conditions remain challenging and we continue to face higher commodity costs. However, we were encouraged that October sales trends at company-operated stores improved compared to the third quarter as same-store sales were down less than 2%. We anticipate same-store sales for the remaining months in the fourth quarter will continue to improve,” Smith concluded.

Arby’s Third Quarter 2010 Brand Summary

Arby’s total revenue was $260.5 million compared to $289.6 million in the third quarter a year ago, a decrease of $29.1 million, which was primarily due to the decrease in company same-store sales.

  • Arby’s North America systemwide same-store sales decreased 5.9%.
  • Arby’s North America company-operated same-store sales declined 9.5% and North America franchise same-store sales declined 4.1%. Franchise same-store sales were comparing to weaker 2009 sales levels than company-owned restaurants as a result of franchisees offering fewer in-store value promotions during the 2009 third quarter.
  • Arby’s company-operated restaurant margin was 10.4%, compared to 12.1% in the third quarter 2009. The year-over-year difference was due to sales deleveraging and commodity cost increases.

“Arby’s third quarter performance was weaker than planned, but the brand has built momentum and delivered a 5.5% company-operated same-store sales increase in October, reflecting the success of our everyday value menu. We believe that rebuilding customer transactions is the first step towards a longer-term plan of improved financial performance and October traffic was up double-digits. October will be the only month in the fourth quarter supported by national media and so we anticipate November and December same-store sales will soften. In the future, we believe the brand will be a solid contributor to consolidated profitability,” Smith concluded.

Regular Quarterly Cash Dividend Increased to $0.02 per Share, a 33% Increase

The Company announced the declaration of a regular quarterly cash dividend of $0.02 per share, a 33% increase, compared to its previous regular quarterly dividend of $0.015 per share. The dividend is payable on December 15, 2010 to Wendy’s/Arby’s Group, Inc. stockholders of record as of December 1, 2010. As of November 2, 2010, Wendy’s/Arby’s Group, Inc. had approximately 418 million shares of common stock outstanding.

There can be no assurance that any additional regular quarterly cash dividends will be declared or paid after the date hereof, or of the amount or timing of such dividends, if any. Future dividend payments, if any, are subject to applicable law, will be made at the discretion of the Board and will be based on such factors as the Company’s earnings, financial condition, cash requirements and other factors.

Stock Repurchase Program

The Company announced today that the Board of Directors has authorized an additional $170 million for its common stock repurchase program. In addition, the program expiration date has been extended from January 2, 2011 to January 1, 2012. This $170 million authorization, along with the $80 million that the Company had authorized and available as of November 2, 2010, brings the total amount authorized and available to $250 million.

Since the Board of Directors authorized a stock repurchase program in 2009, the Company has repurchased approximately 52 million shares of common stock for $245 million as of November 2, 2010, at an average price of $4.69 per share. The common stock repurchase program will allow the Company to make repurchases as market conditions warrant and to the extent legally permissible.

2010 Outlook

Given the Company’s year-to-date results and updated expectations for the remainder of the year, the Company now anticipates 2010 adjusted EBITDA to be at the lower end of its previously communicated range, which was an estimated 3% to 5% decline as compared to 2009 adjusted EBITDA of $411.6 million. 2009 was normalized for the effect of the 53rd week (2009 net income was $5.1 million). As previously disclosed, the outlook for adjusted EBITDA excludes the incremental spending to support the expansion of Wendy’s new breakfast program to additional company and franchise test markets.

The updated 2010 EBITDA outlook includes the following annual expectations:

  • Same-store sales at Wendy’s North America company-operated restaurants down approximately 1%.
  • Improvement of 30 basis points in Wendy’s company-operated restaurant margin.
  • Negative same-store sales at Arby’s North America company-operated restaurants, but improving on a year-over-year basis.
  • Capital expenditures of approximately $145 million.

Investor Day

The Company is planning to host an Investor Day on January 27, 2011 at The Lighthouse at Chelsea Piers in New York City beginning at 8:30 a.m. ET. Management plans to provide investors a comprehensive overview of its performance and a greater understanding of its growth plans for the next few years. At that time, the Company will provide preliminary results for 2010 and an outlook for 2011.

Additional details will follow in the coming weeks. The Investor Day and slides will also be webcast live from the investor relations page of the Company’s website at www.wendysarbys.com.

Management to Host Conference Call Today – November 12, 2010

Management will host a conference call with slides to discuss its financial results today (November 12, 2010) at 8:30 a.m. ET. Hosting the call will be Roland Smith, President and Chief Executive Officer; Steve Hare, Chief Financial Officer; and John Barker, Chief Communications Officer.

The conference call can be accessed live over the phone by dialing 877-572-6014 or for international callers by dialing 281-913-8524. A replay will be available two hours after the call and can be accessed by dialing 800-642-1687, or for international callers by dialing 706-645-9291; the conference ID for the replay is 17731547. The replay will be available until midnight ET on Thursday, November 25, 2010. The webcast and accompanying slides will also be archived on the company’s website at www.wendysarbys.com.

The conference call and slides will also be webcast live from the investor relations page of the Company’s website at www.wendysarbys.com. The webcast will be archived on the Company’s website at www.wendysarbys.com.

About Wendy’s/Arby’s Group, Inc.

Wendy’s/Arby’s Group, Inc. is the third largest quick-service restaurant company in the United States and includes Wendy’s International, Inc., the franchisor of the Wendy’s restaurant system, and Arby’s Restaurant Group, Inc., the franchisor of the Arby’s restaurant system. The combined restaurant systems include more than 10,000 restaurants in the U.S. and 24 countries and U.S. territories worldwide.

Forward-Looking Statements

This news release contains certain statements that are not historical facts, including, importantly, information concerning possible or assumed future results of operations of Wendy’s/Arby’s Group, Inc. and its subsidiaries (collectively “Wendy’s/Arby’s Group” or the “Company”). Those statements, as well as statements preceded by, followed by, or that include the words “may,” “believes,” “plans,” “expects,” “anticipates,” or the negation thereof, or similar expressions, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). All statements that address future operating, financial or business performance; strategies or expectations; future synergies, efficiencies or overhead savings; anticipated costs or charges; future capitalization; future domestic or international business development; future daypart expansion; and anticipated financial impacts of recent or pending transactions are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are based on our expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. Our actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by our forward-looking statements. For all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Many important factors could affect our future results and could cause those results to differ materially from those expressed in, or implied by our forward-looking statements. Such factors, all of which are difficult or impossible to predict accurately, and many of which are beyond our control, include, but are not limited to: (1) changes in the quick-service restaurant industry, such as consumer trends toward value-oriented products and promotions or toward consuming fewer meals away from home; (2) prevailing economic, market and business conditions affecting the Company, including competition from other food service providers, increasing unemployment and decreasing consumer spending; (3) the ability to successfully integrate acquired businesses and to achieve related synergies, cost reductions and operational improvements; (4) cost and availability of capital; (5) cost fluctuations associated with food, supplies, energy, fuel, distribution or labor; (6) the financial condition of our franchisees, with a significant number of Arby’s franchisees and some Wendy’s franchisees having experienced declining sales and profitability; (7) food safety events, including instances of food-borne illness involving Wendy’s or Arby’s or their supply chains; (8) conditions beyond the Company’s control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company’s customers or food supplies, or acts of war or terrorism; (9) the availability of suitable locations and terms for the development of new restaurants; (10) adoption of new, or changes in, laws, regulations or accounting policies and practices; (11) changes in debt, equity and securities markets; (12) goodwill and long-lived asset impairments; (13) changes in the interest rate environment; and (14) other factors discussed from time to time in the Company’s news releases, public statements and/or filings with the SEC, including those identified in the “Risk Factors” sections of our Annual and Quarterly Reports on Forms 10-K and 10-Q.

All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We assume no obligation to update any forward-looking statements as a result of new information, future events or developments, except as required by federal securities laws. In addition, it is our policy generally not to make any specific projections as to future earnings, and we do not endorse any projections regarding future performance that may be made by third parties.

Disclosure Regarding Non-GAAP Financial Measures

EBITDA is used by the Company as a performance measure for benchmarking against the Company’s peers and competitors. The Company believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in the restaurant industry. The Company also uses adjusted EBITDA and other adjusted financial measures, which exclude integration-related expenses included within general and administrative expense, expenses for the Strategic Sourcing Group purchasing co-op, incremental advertising for Wendy’s new breakfast and facilities relocation and corporate restructuring expenses, as an internal measure of business operating performance. The Company believes such financial measures provide a meaningful perspective of the underlying operating performance of the Company’s current business. EBITDA and adjusted EBITDA are not recognized terms under U.S. Generally Accepted Accounting Principles (“GAAP”). Because all companies do not calculate EBITDA or similarly titled financial measures in the same way, those measures as used by other companies may not be consistent with the way the Company calculates EBITDA or similarly titled financial measures and should not be considered as alternative measures of operating profit (loss) or net income (loss).

Because certain income statement items needed to calculate net income vary from quarter to quarter, the Company is unable to provide projections of net income and a reconciliation of projected adjusted EBITDA to net income.

The Company’s presentation of EBITDA and adjusted EBITDA is not intended to replace the presentation of the Company’s financial results in accordance with GAAP.

 
 
Wendy’s/Arby’s Group, Inc. and Subsidiaries

Consolidated Statements of Operations

Third Quarter and Nine Month Periods Ended October 3, 2010 and September 27, 2009
                 
(In Thousands Except Per Share Amounts)       Third Quarter       Nine Months
(Unaudited)       2010     2009       2010     2009
Revenues:                            
Sales       $ 765,988       $ 806,038         $ 2,296,868       $ 2,395,476  
Franchise revenues         95,226         97,183           278,814         284,416  
          861,214         903,221           2,575,682         2,679,892  
Costs and expenses:                            
Cost of sales         667,063         684,071           1,967,569         2,046,475  
General and administrative         97,948         97,909           305,942         320,533  
Depreciation and amortization         46,178         47,020           137,448         143,369  
Impairment of long-lived assets         27,409         15,528           41,424         31,108  
Facilities relocation and corporate restructuring         -         1,725           -         8,899  
Other operating expense, net         2,271         146           3,958         2,245  
          840,869         846,399           2,456,341         2,552,629  
Operating profit         20,345         56,822           119,341         127,263  
Interest expense         (33,868 )       (36,457 )         (104,535 )       (89,671 )
Loss on early extinguishment of debt         -         -           (26,197 )       -  
Investment income (expense), net         77         737           5,256         (3,850 )
Other than temporary losses on investments         -         -           -         (3,916 )
Other income, net         268         1,319           2,974         303  
(Loss) income before income taxes         (13,178 )       22,421           (3,161 )       30,129  
Benefit from (provision for) income taxes         12,269         (8,155 )         9,594         (11,895 )
(Loss) income from continuing operations         (909 )       14,266           6,433         18,234  
Income from discontinued operations, net of taxes         -         422           -         422  
Net (loss) income       $ (909 )     $ 14,688         $ 6,433       $ 18,656  
                             
Basic and diluted income per share       $ 0.00       $ 0.03         $ 0.01       $ 0.04  
                             
Number of shares used to calculate basic income per share         417,985         468,008           428,968         468,670  
Number of shares used to calculate diluted income per share         417,985         471,393           429,974         471,093  
                                             
                            Oct. 3, 2010         Jan. 3, 2010
Balance Sheet Data:                           (Unaudited)         (Audited)
Cash and cash equivalents                           $ 520,514         $ 591,719
Total assets                           4,854,680         4,975,416
Long-term debt, including current portion                           1,577,557         1,522,911
Total stockholders’ equity                           2,174,587         2,336,339
 
 
Wendy’s/Arby’s Group, Inc. and Subsidiaries

Calculation and Comparison of EBITDA and a Reconciliation of EBITDA to Net Income
                 
(In Thousands)       Third Quarter       Nine Months
(Unaudited)       2010     2009       2010     2009
EBITDA       $ 93,932       $ 119,370         $ 298,213       $ 301,740  
Depreciation and amortization         (46,178 )       (47,020 )         (137,448 )       (143,369 )
Impairment of long-lived assets         (27,409 )       (15,528 )         (41,424 )       (31,108 )
Operating profit         20,345         56,822           119,341         127,263  
Interest expense         (33,868 )       (36,457 )         (104,535 )       (89,671 )
Loss on early extinguishment of debt         -         -           (26,197 )       -  
Investment income (expense), net         77         737           5,256         (3,850 )
Other than temporary losses on investments         -         -           -         (3,916 )
Other income, net         268         1,319           2,974         303  
(Loss) income before income taxes         (13,178 )       22,421           (3,161 )       30,129  
Benefit from (provision for) income taxes         12,269         (8,155 )         9,594         (11,895 )
(Loss) income from continuing operations       $ (909 )     $ 14,266         $ 6,433       $ 18,234  
 
Reconciliation of EBITDA to Adjusted EBITDA
             
(In Thousands)     Third Quarter     Nine Months
(Unaudited)     2010     2009     2010     2009
EBITDA     $ 93,932       $ 119,370     $ 298,213       $ 301,740
Plus:                                    
Integration costs in general and administrative (G&A)       579         3,292       4,329         11,210
SSG purchasing cooperative expense in G&A       -         -       4,900         -
Incremental advertising for Wendy’s new breakfast       5,454         -       5,454         -
Facilities relocation and corporate restructuring       -         1,725       -         8,899
Adjusted EBITDA     $ 99,965       $ 124,387     $ 312,896       $ 321,849
                         
Adjusted EBITDA change %       -19.6 %             -2.8 %      
 
 
Wendy’s/Arby’s Group, Inc. and Subsidiaries

Selected Brand Financial Highlights
               
Wendy’s (Unaudited)       Third Quarter     Nine Months
        2010   2009     2010   2009
North America same-store sales:                      
Systemwide         -1.7 %   -0.1 %     -0.9 %     0.2 %
Company-owned         -3.1 %   -1.4 %     -2.0 %     -0.8 %
Franchised         -1.3 %   0.4 %     -0.6 %     0.5 %
                       
Revenues (in Millions):                      
Restaurant sales       $ 500.3     $514.1       $1,495.6     $ 1,511.3  
Bakery and kids’ meal promotion items sold to franchisees         24.8     22.8       74.6       71.6  
Franchise revenues         75.6     76.7       222.6       224.0  
        $ 600.7     $613.6       $1,792.8     $ 1,806.9  
                       
Cost of sales (% of Sales):                      
Food and paper         33.2 %   31.6 %     32.1 %     32.3 %
Restaurant labor         29.6 %   29.5 %     29.7 %     30.2 %
Occupancy, advertising and other operating costs       22.8%*   22.4 %     22.8%*     22.9 %
                       
Restaurant margin %       14.5%*   16.5 %     15.4%*     14.6 %
Restaurant margin $’s (in Millions)       $72.6*   $84.6       $231.0*   $ 220.3  
                 
Restaurant count:       Company-owned   Franchised   Systemwide
Restaurant count at July 4, 2010       1,391     5,155    6,546  
Opened       1     18    19  
Closed       (1 )   (10)   (11 )
Restaurant count at October 3, 2010       1,391     5,163    6,554  

* Excludes impact of incremental advertising for Wendy’s new breakfast of $5.5 million, which is 1.1% and 0.3% of restaurant sales in the three and nine month periods, respectively. Including the incremental breakfast advertising, restaurant margins were 13.4% and 15.1% for the three and nine month periods, respectively.

               
Arby’s (Unaudited)       Third Quarter     Nine Months
        2010   2009     2010   2009
North America same-store sales:                      
Systemwide         -5.9 %   -9.0 %     -8.2 %     -8.0 %
Company-owned         -9.5 %   -6.5 %     -9.9 %     -6.8 %
Franchised         -4.1 %   -10.2 %     -7.3 %     -8.6 %
                       
Revenues (in Millions):                      
Sales       $ 240.9     $269.2       $726.7     $ 812.6  
Franchise revenues         19.6     20.4       56.2       60.4  
        $ 260.5     $289.6       $782.9     $ 873.0  
                       
Cost of Sales (% of Sales):                      
Food and paper         27.8 %   29.3 %     27.0 %     27.7 %
Restaurant labor         33.3 %   31.3 %     33.4 %     31.3 %
Occupancy, advertising and other operating costs         28.5 %   27.3 %     28.0 %     27.2 %
                       
Restaurant margin %         10.4 %   12.1 %     11.6 %     13.8 %
Restaurant margin $’s (in Millions)       $ 25.1     $32.6       $84.1     $ 111.9  
                 
Restaurant count:       Company-owned   Franchised   Systemwide
Restaurant count at July 4, 2010       1,152     2,533    3,685  
Opened       -     8    8  
Closed       (6 )   (25)   (31 )
Restaurant count at October 3, 2010       1,146     2,516    3,662  
     
     
    Wendy’s/Arby’s Group, Inc. and Subsidiaries

Calculation of EBITDA and a Reconciliation of EBITDA to Net Income
             
    (In Thousands)       2009
    (Unaudited)       53 weeks
    EBITDA       $ 384,359  
    Depreciation and amortization         (190,251 )
    Impairment of long-lived assets         (82,132 )
    Operating profit         111,976  
    Interest expense         (126,708 )
    Investment expense, net         (3,008 )
    Other than temporary losses on investments         (3,916 )
    Other income, net         1,523  
    Loss from continuing operations before income taxes         (20,133 )
    Benefit from income taxes         23,649  
    Income from continuing operations         3,516  
    Income from discontinued operations, net of income taxes         1,546  
    Net income       $ 5,062  
 
Reconciliation of EBITDA to Adjusted EBITDA (53 weeks) and Normalized (52 weeks) EBITDA
                 
    (In Thousands)            
    (Unaudited)       2009    
    EBITDA – 53 weeks       $ 384,359      
    Plus:            
    Integration costs in general and administrative (G&A)         16,598      
    Wendy’s purchasing co-op start-up costs in G&A         15,500      
    Facilities relocation and corporate restructuring         11,024      
    Pension withdrawal expense in cost of sales         4,975      
    Benefit from vacation policy standardization in G&A         (3,339 )    
    Benefit from vacation policy standardization in cost of sales         (3,925 )    
    Adjusted EBITDA – 53 weeks       $ 425,192      
                 
    Less:            
    53rd Week effect on fiscal year EBITDA         (13,600 )    
    Normalized 52 weeks adjusted EBITDA       $ 411,592      

_______________________________________
1 See reconciliation of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP measure, to GAAP results detailed on page 7.

J. Alexander’s Corporation Reports Results for Third Quarter and First Nine Months of 2010 Fiscal Year

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J. Alexander’s Corporation (NASDAQ: JAX) today reported operating results for the third quarter and first nine months of fiscal 2010 which ended on October 3, 2010.

A summary of the third quarter of 2010, compared to the third quarter of 2009, follows:

  • Net sales increased 8.5% to $35,164,000 from $32,423,000.
  • Average weekly same store sales per restaurant advanced 8.6%.
  • The loss before income taxes was $1,012,000 compared to a loss before income taxes of $2,608,000 in the third quarter of 2009.
  • An income tax benefit of $2,490,000 was recorded for the third quarter of 2010 compared to a benefit of $1,289,000 in the third quarter of 2009.
  • Net income was $1,478,000 compared to a net loss of $1,319,000 in the third quarter of 2009, and the diluted earnings per share were $.25 compared to a loss per share of $.22 in the third quarter of 2009.

Commenting on results for the third quarter of 2010, Lonnie J. Stout II, Chairman, President and CEO, said, “We were pleased with our sales results in the third quarter. It was the fourth consecutive period of higher same store sales. This improvement in the most recent quarter was larger than expected and helped us exceed financial performance targets in almost all categories.”

For the third quarter of 2010, J. Alexander’s Corporation recorded average weekly same store sales per restaurant of $82,000, up from $75,500 in the corresponding quarter a year earlier. The Company’s average weekly sales per restaurant for the third quarter of 2010 were the same as the same store average because same store sales calculations are based on restaurants open for more than 18 months and no new restaurants have opened since December of 2008.

Stout said that many of J. Alexander’s more mature restaurants are either at or near pre-recession sales levels. He said that the Company’s newer restaurants are “still struggling to gain traction” and that while all showed improvement in performance for the quarter, they continued to have a significant negative impact on the Company’s results.

In the quarter just ended, J. Alexander’s Corporation reported an increase of 3.9% in average guest counts from the comparable period of 2009. The average guest check, including alcoholic beverage sales for the quarter, rose 4.0% to $25.23. The effect of menu price increases for the most recent quarter was approximately 2.7% compared to the same period a year earlier.

The Company’s increases in same store sales contributed to lower labor and related costs and other restaurant operating expenses as percentages of net sales during the third quarter of the current year. Total labor and related costs decreased from 37.6% of net sales to 35.2% of net sales. Other restaurant operating expenses decreased to 23.3% of net sales from 24.5% of net sales. Depreciation and amortization of restaurant property and equipment decreased to 4.2% of net sales for the third quarter of 2010 from 5.0% for the third quarter of 2009 because asset impairment charges recorded at the end of 2009 significantly lowered the depreciable basis for the assets of two restaurants and because of the increase in same store sales.

Cost of sales for the third quarter of 2010 increased to 32.3% of net sales from 31.7% of net sales in the corresponding quarter of the previous year.

“Food and beverage costs are still above our targeted levels,” Stout said. “We have started to take some modest price increases and may need to continue raising prices in the fourth quarter. We have been very cautious in taking price increases under current economic conditions. However, we believe food costs will continue rising, especially beef and probably seafood and produce as well.”

For the third quarter of 2010, J. Alexander’s Corporation’s restaurant operating margins (net sales minus total restaurant operating expenses divided by net sales) increased to 5.0% from 1.1% in the same period of 2009.

Stout noted that the significant income tax benefit recorded in the third quarter of 2010 is primarily the result of additional depreciation deductions based on an asset cost segregation study performed by the Company which increased the federal net operating loss for the 2009 tax year and the net operating loss carryback available to offset taxable income in previous years.

Finally, Stout said that based on J. Alexander’s Corporation’s available resources and projected cash position, during the third quarter of 2010 the Company prepaid the balance of $2.4 million outstanding on its bank term loan.

For the first nine months of 2010, J. Alexander’s Corporation recorded net sales of $110,225,000, up from $105,198,000 reported in the first three quarters of 2009. The Company recorded net income of $2,301,000, or $.38 per diluted share, compared to a net loss of $1,663,000, or $.26 per share, posted in the comparable three quarters of 2009.

J. Alexander’s Corporation had average weekly same store sales per restaurant of $85,900 in the first nine months of 2010, up 4.9% from $81,900 recorded in the first nine months of 2009. The Company’s average weekly sales per restaurant for the first three quarters of 2010 were $85,700, up 4.9% from $81,700 reported in the corresponding quarters of 2009.

The Company’s average guest counts for the first nine months of 2010 increased 2.5% on a same store basis from the comparable nine months of 2009. The average guest check, including alcoholic beverage sales, increased 2.3% to $25.16. The effect of menu price increases for the first three quarters of 2010 was approximately 1.5% compared to the same period of the prior year.

Total cost of sales for the first nine months of 2010 was 32.1%, up from 31.4% in the comparable nine month period of 2009. Restaurant labor and related costs for the first three quarters of the current year decreased to 34.2% of net sales from 35.4% of net sales in the same three quarters of 2009, and other restaurant operating expenses decreased to 22.5% of net sales for the first nine months of 2010 compared to 23.3% for the first nine months of 2009. For the first nine months of 2010, J. Alexander’s Corporation had restaurant operating margins of 7.1%, up from 5.1% in the first three quarters of 2009.

Stout said that the Company’s outlook for upscale casual dining restaurants is improving around the country. He pointed out, however, that improvement varies considerably by market.

“We believe one of the reasons we have been able to continue to strengthen our Company’s unit level sales performance is because during the recession we avoided damaging our restaurants by any discounting or promotional programs that would devalue us. We believe we are well positioned to continue to gain market share in the future as the economy improves.

“In summary,” Stout added, “we achieved much improved results in the third quarter and have continued to post solid same store sales increases for the first five weeks of the fourth quarter. We recognize that much work remains to be done to restore sales and profitability to the levels we earned prior to the start of the recent recession.”

J. Alexander’s Corporation operates 33 J. Alexander’s restaurant in thirteen states: Alabama, Arizona, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Michigan, Ohio, Tennessee and Texas. The Company’s menu features a wide selection of American classics, including steaks, prime rib of beef and fresh seafood, as well as a large assortment of interesting salads, sandwiches and desserts. J. Alexander’s also has a full-service bar that features an outstanding selection of wines by the glass and bottle.

J. Alexander’s Corporation is headquartered in Nashville, Tennessee.

This press release contains forward-looking statements that involve risks and uncertainties. Actual results, performance or developments could differ materially from those expressed or implied by those forward-looking statements as a result of known or unknown risks, uncertainties and other factors. These risks, uncertainties and factors include the Company’s ability to maintain satisfactory guest count levels and maintain or increase sales and operating margins in its restaurants under weak economic conditions, which may continue indefinitely and which could worsen, potentially resulting in additional asset impairment charges and/or restaurant closures and charges associated therewith; fluctuations in the Company’s operating results which could affect compliance with its debt covenants and ability to borrow funds; conditions in the U.S. credit markets and the availability of bank financing on acceptable terms; changes in business or economic conditions, including rising food costs and product shortages as well as mandated increases in the minimum wage the Company is required to pay; the effect of higher gasoline prices or commodity prices, unemployment and other economic factors on consumer demand; availability of qualified employees; increased cost of utilities, insurance and other restaurant operating expenses; potential fluctuations of quarterly operating results due to seasonality and other factors; the effect of hurricanes and other weather disturbances which are beyond the control of the Company; the number and timing of new restaurant openings and the Company’s ability to operate them profitably; competition within the casual dining industry, which is very intense; competition by the Company’s new restaurants with its existing restaurants in the same vicinity; changes in consumer spending, consumer tastes, and consumer attitudes toward nutrition and health; the potential impact of mandated food content labeling and disclosure legislation; expenses incurred if the Company is the subject of claims or litigation or increased governmental regulation; the impact associated with recently passed federal health care reform legislation, including the operating costs necessary to comply with applicable health care benefit requirements; changes in accounting standards, which may affect the Company’s reported results of operations; and expenses the Company may incur in order to comply with changing corporate governance and public disclosure requirements of the Securities and Exchange Commission and The NASDAQ Stock Market. These as well as other factors are discussed in detail in the Company’s filings made with the Securities and Exchange Commission and other communications.

-tables to follow-

   
J. Alexander’s Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited in thousands, except per share amounts)
   
      Quarter Ended     Nine Months Ended
      Oct. 3     Sept. 29     Oct. 3     Sept. 29
      2010     2009     2010     2009
Net sales     $ 35,164       $ 32,423       $ 110,225       $ 105,198  
Costs and expenses:                          
Cost of sales       11,357         10,286         35,332         33,075  
Restaurant labor and related costs       12,375         12,205         37,726         37,254  
Depreciation and amortization of restaurant property and equipment       1,469         1,636         4,488         4,961  
Other operating expenses       8,200         7,949         24,819         24,547  
Total restaurant operating expenses       33,401         32,076         102,365         99,837  
General and administrative expenses       2,291         2,477         6,730         7,554  
Operating (loss) income       (528 )       (2,130 )       1,130         (2,193 )
Other income (expense):                          
Interest expense       (465 )       (491 )       (1,432 )       (1,447 )
Other, net       (19 )       13         14         48  
Total other expense       (484 )       (478 )       (1,418 )       (1,399 )
Loss before income taxes       (1,012 )       (2,608 )       (288 )       (3,592 )
Income tax benefit       2,490         1,289         2,589         1,929  
Net income (loss)     $ 1,478       $ (1,319 )     $ 2,301       $ (1,663 )
                           
Earnings (loss) per share:                          
Basic earnings (loss) per share     $ .25       $ (.22 )     $ .39       $ (.26 )
Diluted earnings (loss) per share     $ .25       $ (.22 )     $ .38       $ (.26 )
                           
Weighted average number of shares:                          
Basic earnings (loss) per share       5,960         5,947         5,953       6,373  
Diluted earnings (loss) per share       5,991         5,947         5,990       6,373  
 
J. Alexander’s Corporation and Subsidiaries

Consolidated Statements of Operations

Percentages of Net Sales (Unaudited)
 
      Quarter Ended     Nine Months Ended
      Oct. 3     Sept. 29     Oct. 3     Sept. 29
      2010     2009     2010     2009
Net sales       100.0 %       100.0 %       100.0 %       100.0 %
Costs and expenses:                        
Cost of sales       32.3         31.7         32.1         31.4  
Restaurant labor and related costs       35.2         37.6         34.2         35.4  
Depreciation and amortization of restaurant property and equipment       4.2         5.0         4.1         4.7  
Other operating expenses       23.3         24.5         22.5         23.3  
Total restaurant operating expenses       95.0         98.9         92.9         94.9  
General and administrative expenses       6.5         7.6         6.1         7.2  
Operating (loss) income       (1.5 )       (6.6 )       1.0         (2.1 )
Other income (expense):                        
Interest expense       (1.3 )       (1.5 )       (1.3 )       (1.4 )
Other, net       (0.1 )       —         —         —  
Total other expense       (1.4 )       (1.5 )       (1.3 )       (1.3 )
Loss before income taxes       (2.9 )       (8.0 )       (0.3 )       (3.4 )
Income tax benefit       7.1         4.0         2.3         1.8  
Net income (loss)       4.2 %       (4.1 )%       2.1 %       (1.6 )%
                         
Note: Certain percentage totals do not sum due to rounding.
                         
Average Weekly Sales Information:                        
                         
Average weekly sales per restaurant     $ 82,000       $ 75,500       $ 85,700       $ 81,700  
Percent change       8.6 %             4.9 %      
                         
Same store weekly sales per restaurant (1)     $ 82,000       $ 75,500       $ 85,900       $ 81,900  
Percent change       8.6 %             4.9 %      
 
(1)   The Company includes restaurants in the same store base after they have been in operation for more than 18 months. All of the Company’s restaurants were included in the same store sales base as of the beginning of the third quarter of 2010.
 
J. Alexander’s Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited in thousands)
 
      October 3     January 3
      2010     2010
ASSETS            
Current Assets            
Cash and cash equivalents     $ 1,532     $ 5,613
Income taxes receivable       3,600       839
Other current assets       5,305       5,363
Total current assets       10,437       11,815
             
Other assets       1,714       1,601
Property and equipment, net       75,299       77,914
Deferred income taxes       152       152
Deferred Charges, net       537       659
      $ 88,139     $ 92,141
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
Current liabilities     $ 11,040     $ 15,194
Long-term debt and capital lease obligations       18,748       21,796
Other long-term liabilities       10,455       9,903
Stockholders’ equity       47,896       45,248
      $ 88,139     $ 92,141

California Pizza Kitchen Announces Financial Results for the Third Quarter 2010

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California Pizza Kitchen, Inc. (Nasdaq: CPKI) today reported financial results for the third quarter ending October 3, 2010.

Highlights for the third quarter of 2010 relative to the third quarter of 2009 were as follows:

  • Total revenues decreased 0.2% to $164.5 million
  • Full service comparable restaurant sales increased 0.7%
  • Non-GAAP net income of $5.7 million, or $0.23 per diluted share, excluding the effects of the non-cash impairment write-down of 10 full service restaurants, the proposed settlement of a class-action lawsuit, store closure costs and the related tax benefits (please refer to the reconciliation table).
  • Net loss of $7.5 million, or negative $0.31 per diluted share, including the effects of the non-cash impairment write-down of 10 full service restaurants, the proposed settlement of a class-action lawsuit, store closure costs and the related tax benefits.

Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, stated, “Excluding the charges for impairment, legal settlement and store closures, we delivered a strong financial performance for our shareholders for the quarter, exceeding the top-end of our earnings guidance range by $0.04 per share. With our successfully executed Thank You Card Program, full service comparable restaurant sales were positive for the first time in more than two years. We also managed our labor, direct operating and occupancy costs which allowed us to drive non-GAAP net income compared to the prior year quarter.”

Rosenfield and Flax continued, “Looking ahead, we plan to drive traffic and comparable sales through menu innovation and by providing an exceptional dining experience for our guests. We are implementing strategies to further control expenses and identifying leverage opportunities to strengthen our full service platform. This in turn will drive growth in the key ancillary channels of franchise expansion and branded grocery products. We are focused on enhancing our brand equity and maximizing shareholder value by improving our free cash flow and return on invested capital both inside and outside the restaurants’ four walls.”

Average weekly sales for the Company’s 199 full service restaurants were $61,161 in the third quarter of 2010 compared to $60,945 in the same quarter last year.

During the third quarter, the Company opened full-service restaurants in Jacksonville, FL; Newark, DE; Northbrook, IL; and San Antonio, Texas. International franchise partners opened a full-service restaurant in Seoul, South Korea, the Company’s fourth location in the country, and the first full-service restaurant in India, located in Mumbai. A domestic franchise partner also opened a new quick-serve restaurant on the University of Southern California campus.

The Company also outlined its financial guidance for the fourth quarter of 2010 based on the following estimates and assumptions:

  • Full service comparable restaurant sales between negative 1% and 0%
  • Opening three Company-owned full service restaurants
  • Opening two international franchised full service restaurants
  • Opening one Company-owned full service restaurant in Shanghai, China

Earnings are estimated in the range of negative $0.01 to $0.01 per diluted share which includes an estimated negative $0.06 per diluted share impact from a high fourth quarter effective tax rate. The prior year fourth quarter also included an $0.11 per diluted share increase from one extra operating week (14 week compared to 13 week quarter).

The Company will host a conference call today at approximately 4:30 pm ET. A webcast of the conference call can be accessed at www.cpk.com.

California Pizza Kitchen, Inc., founded in 1985, is a leading casual dining chain featuring an imaginative line of hearth-baked pizzas, including the original BBQ Chicken Pizza, and a broad selection of distinctive pastas, salads, appetizers, soups, sandwiches and desserts. The average guest check is approximately $15.00. Of the chain’s 264 restaurants as of November 11, 2010, 208 are Company-owned and 56 operate under franchise or license agreements. CPK premium pizzas are available to sports and entertainment fans at three Southern California venues including Dodger Stadium, Angel Stadium of Anaheim and STAPLES Center. Included in the Company’s portfolio of concepts is LA Food Show Grill & Bar, which has locations in Manhattan Beach and Beverly Hills, California. The Company also has a licensing arrangement with Nestle S.A. to manufacture and distribute a line of California Pizza Kitchen premium frozen products. For more details, visit www.cpk.com.

This release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include projections of earnings, revenue or other financial items, statements of the plans, strategies and objectives of management for future operations, statements concerning proposed new products or developments, statements regarding future economic conditions or performance, statements of belief and statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “anticipate,” “guidance,” “forecast” and similar words.

This release includes measures that are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles (“GAAP”) and are not necessarily comparable to similar measures presented by other companies. This includes non-GAAP earnings per diluted share or other information. The Company believes that this non-GAAP information is useful as an additional means for investors to evaluate the Company’s operating performance, when reviewed in conjunction with the Company’s GAAP financial statements. This amount is not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the Company’s business and operations.

Investors are cautioned that forward-looking statements are not guarantees of future performance and, therefore, undue reliance should not be placed on them. Our actual results may differ materially from the expectations referred to herein. Among the key factors that may have a direct bearing on our operating results, performance and financial condition are changing consumer preferences and demands, the execution of our expansion strategy, the continued availability of qualified employees and our management team, the maintenance of reasonable food and supply costs, our relationships with our distributors and numerous other matters discussed in the Company’s filings with the Securities and Exchange Commission. California Pizza Kitchen undertakes no obligation to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Selected Unaudited Consolidated Financial and Operating Data
(Dollars in thousands, except for per share and operating data)
                 
                 
    13 Weeks Ended   39 Weeks Ended
    October 3,   September 27,   October 3,   September 27,
      2010       2009       2010       2009  
                 
Statement of Income:                
                 
Revenues:                
Restaurant sales   $ 161,295     $ 161,156     $ 475,990     $ 487,860  
Royalties from licensing agreement     1,760       2,501       4,230       5,425  
Domestic franchise revenues     839       714       2,323       2,039  
International franchise revenues     649       468       1,745       1,515  
Total revenues     164,543       164,839       484,288       496,839  
                 
Costs and expenses:                
Food, beverage and paper supplies     38,143       37,009       111,573       115,094  
Labor     60,472       60,929       179,151       184,608  
Direct operating and occupancy     35,402       35,819       107,089       106,633  
Cost of sales     134,017       133,757       397,813       406,335  
                 
General and administrative     12,006       12,199       38,029       37,746  
Pre-opening costs     1,377       243       2,279       1,944  
                 
Operating income before depreciation and amortization, loss on impairment of property and equipment, store closure costs and litigation and settlement costs (1)     17,143       18,640       46,167       50,814  
                 
Depreciation and amortization     9,370       10,032       28,012       28,607  
Loss on impairment of property and equipment     18,701       28       18,701       119  
Store closure costs     592       185       1,058       185  
Litigation and settlement costs     5,736       418       6,505       979  
Total costs and expenses     181,799       156,862       492,397       475,915  
                 
Operating income (loss)     (17,256 )     7,977       (8,109 )     20,924  
                 
Interest income (expense), net     8       (166 )     (22 )     (663 )
                 
Income (loss) before income tax provision (benefit)     (17,248 )     7,811       (8,131 )     20,261  
Income tax provision (benefit)     (9,710 )     2,020       (7,285 )     5,780  
Net income (loss)   $ (7,538 )   $ 5,791     $ (846 )   $ 14,481  
                 
Net income (loss) per common share:                
Basic   $ (0.31 )   $ 0.24     $ (0.03 )   $ 0.60  
Diluted   $ (0.31 )   $ 0.24     $ (0.03 )   $ 0.60  
                 
Shares used in computing net income (loss) per common share (in thousands):                
                 
Basic     24,578       24,123       24,453       24,029  
Diluted (2)     24,578       24,286       24,453       24,098  
                 
Operating Data:                
Locations open at end of period     263       255       263       255  
Company-owned full service restaurants open at end of period     199       197       199       197  
Average weekly company-owned full service restaurant sales   $ 61,161     $ 60,945     $ 59,973     $ 62,141  
18-month comparable company-owned full service restaurant sales increase (decrease)     0.7 %     -8.0 %     -2.6 %     -6.9 %
 
     
(1)   This is a non-GAAP measure and is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. We believe this measure provides additional information to facilitate the comparison of our past and present financial results and provides an additional means for investors to evaluate business performance. However, use of this measure should not be construed as an indication that our future results will be unaffected by excluded items.
     
(2)   For the 13 and 39 weeks ended October 3, 2010, stock options have been excluded from the shares used in the computation of net loss per diluted share because of their antidilutive effect.

 

 
    13 Weeks Ended   39 Weeks Ended
    October 3,   September 27,   October 3,   September 27,
    2010   2009   2010   2009
                 
Statement of Income Percentages (1):                
                 
Revenues:                
Restaurant sales   98.0%   97.8%   98.3%   98.2%
Royalties from licensing agreement   1.1%   1.5%   0.9%   1.1%
Domestic franchise revenues   0.5%   0.4%   0.5%   0.4%
International franchise revenues   0.4%   0.3%   0.3%   0.3%
Total revenues   100.0%   100.0%   100.0%   100.0%
                 
Costs and expenses:                
Food, beverage and paper supplies   23.6%   23.0%   23.5%   23.6%
Labor   37.5%   37.8%   37.6%   37.8%
Direct operating and occupancy   22.0%   22.2%   22.5%   21.9%
Cost of sales   83.1%   83.0%   83.6%   83.3%
                 
General and administrative   7.3%   7.4%   7.9%   7.6%
Pre-opening costs   0.8%   0.1%   0.5%   0.4%
                 
Operating income before depreciation and amortization, impairment of property and equipment, store closure costs and litigation and settlement costs   10.4%   11.3%   9.5%   10.2%
                 
Depreciation and amortization   5.7%   6.1%   5.8%   5.8%
Loss on impairment of property and equipment   11.4%   0.0%   3.9%   0.0%
Store closure costs   0.4%   0.1%   0.2%   0.0%
Litigation and settlement costs   3.5%   0.3%   1.3%   0.2%
Total costs and expenses   110.5%   95.2%   101.7%   95.8%
                 
Operating income (loss)   -10.5%   4.8%   -1.7%   4.2%
                 
Other expense:                
Interest income (expense), net   0.0%   -0.1%   0.0%   -0.1%
                 
Income (loss) before income tax provision (benefit)   -10.5%   4.7%   -1.7%   4.1%
Income tax provision (benefit)   -5.9%   1.2%   -1.5%   1.2%
Net income (loss)   -4.6%   3.5%   -0.2%   2.9%
 
     
(1)   Percentages are expressed as a percentage of total revenue except for cost of sales which is expressed as a percentage of restaurant sales.
 
Selected Consolidated Balance Sheet Information
(Dollars in thousands)
         
         
    October 3,   January 3,
    2010   2010
         
Cash and cash equivalents   $ 4,842   $ 21,424
Total assets     327,856     350,258
Total debt     -     22,300
Stockholders’ equity     193,197     189,250

 

California Pizza Kitchen, Inc.
Units Summary
                 
                 
    Total Units at           Total Units at
Third Quarter 2010   July 4, 2010   Opened   Closed   October 3, 2010
Company-owned full service domestic   196   4   1   199
Company-owned ASAP domestic   6   -   -   6
Company-owned LA Food Show   2   -   -   2
Franchised domestic   20   -   -   20
Franchised international   29   2   1   30
Campus, sports & entertainment venues (seasonal)   5   1   -   6
Total   258   7   2   263
 
The following reconciliation of net income (loss) to non-GAAP net income is provided to assist the reader with understanding the financial impact of the non-cash impairment charges, proposed legal settlement and related costs and store closure costs during the quarter and year (unaudited, in thousands, except per share data):
 
    13 Weeks Ended   39 Weeks Ended
    October 3,   September 27,   October 3,   September 27,
      2010       2009       2010       2009  
                 
                 
Net income (loss) as reported   $ (7,538 )   $ 5,791     $ (846 )   $ 14,481  
Impairment of property, plant and equipment     18,701       28       18,701       119  
Store closure costs     592       185       1,058       185  
Legal settlement and related costs     5,254       -       5,254       -  
Net change to income tax provision     (11,320 )     (102 )     (11,320 )     (102 )
Net income excluding impairment charges, store closure costs and legal settlement and related costs   $ 5,689     $ 5,902     $ 12,847     $ 14,683  
                 
                 
Basic net income (loss) per common share:                
Net income (loss) as reported   $ (0.31 )   $ 0.24     $ (0.03 )   $ 0.60  
Impairment of property, plant and equipment     0.76       -       0.76       -  
Store closure costs     0.03       -       0.04       0.01  
Legal settlement and related costs     0.21       -       0.21       -  
Net change to income tax provision     (0.46 )     -       (0.46 )     -  
Basic net income excluding impairment charges, store closure costs and legal settlement and related costs   $ 0.23     $ 0.24     $ 0.52     $ 0.61  
                 
                 
Diluted net income (loss) per common share:                
Net income (loss) as reported   $ (0.31 )   $ 0.24     $ (0.03 )   $ 0.60  
Impairment of property, plant and equipment     0.75       -       0.75       -  
Store closure costs     0.03       -       0.04       0.01  
Legal settlement and related costs     0.21       -       0.21       -  
Net change to income tax provision     (0.45 )     -       (0.45 )     -  
Diluted net income excluding impairment charges, store closure costs and legal settlement and related costs   $ 0.23     $ 0.24     $ 0.52     $ 0.61  
                 
                 
Basic     24,578       24,123       24,453       24,029  
Diluted (1)     24,889       24,286       24,842       24,098  
     
(1)   For the 13 and 39 weeks ended October 3, 2010, stock options have been included in the calculation of non-GAAP net income per diluted share because their effect is no longer antidilutive.

Caribou Coffee Reports Third Quarter 2010 Results

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Caribou Coffee Company, Inc. (NASDAQ:CBOU), the second largest company-owned gourmet coffeehouse operator in the United States based on the number of coffeehouses, today reported financial results for the third quarter of 2010 (thirteen weeks ended October 3, 2010).

HIGHLIGHTS FOR THE THIRD QUARTER OF 2010 INCLUDE:

  • Consolidated sales increased 11.8% compared to the same period in 2009
  • Comparable coffeehouse store sales increased 4.4%
  • Commercial and Franchise sales increased 64.0% compared to the third quarter of 2009
  • Net income attributable to Caribou Coffee Company, Inc. was $1.6 million compared to net income of $0.7 million for the same period in 2009
  • Earnings per share of $0.08 compared to $0.03 per share in the third quarter of 2009

Michael Tattersfield, the Company’s President and CEO commented, “Our third quarter results demonstrated successful execution across our three business lines as we delivered on our commitment to providing our shareholders with profitable growth. In addition to the continued momentum we experienced in our comparable coffeehouse sales, our commercial and franchise sales generated an exceptionally strong performance, reflecting increased traction in our consumer packaged goods business. With our success to date and long-term strategic growth initiatives in place, we are well on our way to building the Caribou brand through a disciplined multi-channel growth strategy.”

THIRD QUARTER 2010 RESULTS

Net sales of $70.2 million for the quarter increased $7.5 million, or 11.8%, from $62.7 million for the comparable quarter of 2009.

  • Coffeehouse sales were $56.6 million in the third quarter 2010, an increase of 3.9% as compared with $54.5 million in the third quarter of 2009. The increase reflects a 4.4% increase in comparable coffeehouse sales in the third quarter of 2010 as compared with the same period in fiscal 2009. The increase in comparable coffeehouse sales was driven by increased traffic in our coffeehouses and a higher average guest check, primarily due to higher food sales, attributable to the launch of hot cereal in all of our coffeehouses at the beginning of the year and the phased rollout of breakfast sandwiches during the quarter which are now in 200 of our coffeehouses.
  • Commercial sales were $11.3 million in the third quarter of 2010, an increase of 71.6% as compared with $6.6 million in the third quarter of 2009. We periodically align our inventory weeks of supply on hand across our various coffee blends, we took advantage of the 13-year highs in the coffee commodity market and sold $2.0 million of raw coffee beans for blends no longer needed. The remaining increase was primarily due to continued sales growth within our consumer packaged goods business.
  • Franchise sales were $2.3 million in the third quarter of 2010, an increase of 34.6% as compared with $1.7 million in the third quarter of 2009.

Cost of sales and related occupancy costs in the third quarter of 2010 were $32.7 million, an increase of $4.9 million or 17.4% compared to the third quarter of 2009. This increase was primarily related to our sales increase for the quarter. As a percentage of revenue, cost of sales were 46.6% in the third quarter of 2010 versus 44.4% in the third quarter of 2009. This increase as a percentage of sales was due to an overall mix change with a higher percentage of sales coming from the commercial and franchise segments.

Operating expenses in the third quarter of 2010 were $25.1 million, an increase of $0.7 million or 2.9% compared to $24.4 million in the same period of the prior year. This increase was primarily driven by the impact of our sales growth on our variable costs. As a percentage of revenue, operating costs were 35.8%, down from 38.9% in the same period of the prior year, as we were able to gain leverage on fixed costs within these categories from our increase in sales and lower marketing spend in the quarter.

General and administrative expenses increased $1.1 million, or 17.6%, to $7.4 million in the third quarter of 2010, from $6.3 million in the third quarter of 2009. As a percentage of total net sales, general and administrative expenses increased to 10.6% in the third quarter of 2010, from 10.1% in the third quarter of 2009. This increase was due to resources added in support of key initiatives, including marketing, product management, and real estate.

Depreciation and amortization decreased $0.4 million to $3.1 million during the third quarter of 2010. Depreciation and amortization was lower in the quarter from reduced capital spending in 2009 and the first half of 2010 compared with previous years.

The Company’s net income attributable to Caribou Coffee Company, Inc. for the third quarter of 2010 was $1.6 million or $0.08 per share compared to $0.7 million or $0.03 per share for the same period in 2009.

CONFERENCE CALL

Caribou Coffee will host a conference call on November 11, 2010, at 4:30 p.m. (Eastern Time) to discuss these results. Hosting the call will be Mike Tattersfield, Chief Executive Officer, and Tim Hennessy, Chief Financial Officer. The call will be webcast and can be accessed from the Company’s website at www.cariboucoffee.com. The webcast link is in the Investor Relations section. Dial in number: 1-888-245-0962 or for international callers 1-913-312-1500. To listen to a replay of the conference call, dial toll-free 1-877-870-5176 or 1-858-384-5517 for international callers and enter pin number 5439249. The replay will be available beginning at 7:30 p.m. Eastern Time on November 11, 2010 through 11:59 p.m. on November 18, 2010. In addition, the webcast will be archived on the Company’s website.

ABOUT THE COMPANY

Caribou Coffee Company, Inc., founded in 1992 and headquartered in Minneapolis, Minnesota, is the second largest company-owned premium coffeehouse operator in the United States based on the number of coffeehouses. As of October 3, 2010, Caribou Coffee had 410 company-owned coffeehouses and 129 franchised and licensed locations. Caribou Coffee offers its customers premium coffee and hand crafted espresso-based beverages, as well as specialty teas, baked goods, whole bean coffee, branded merchandise and other coffee lifestyle items. In addition, Caribou Coffee sells products to grocery stores, mass merchandisers, club stores, office coffee and foodservice providers, hotels, entertainment venues and e-commerce channels. In addition, Caribou Coffee licenses third parties to use the Caribou Coffee brand on quality food and merchandise items. Caribou Coffee focuses on delivering a guest experience with a unique blend of expertise, fun and authentic human connection in a comfortable and welcoming coffeehouse environment. For more information, visit the Caribou Coffee web site at www.cariboucoffee.com.

FORWARD-LOOKING STATEMENTS

Certain statements in this release, and other written or oral statements made by or on behalf of Caribou Coffee are “forward-looking statements” within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management’s current expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: fluctuations in quarterly and annual results, incurrence of net losses, adverse effects of management focusing on implementation of a growth strategy, failure to develop and maintain the Caribou Coffee brand and other factors disclosed in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

         
CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         
    Thirteen Weeks Ended   Thirty-Nine Weeks Ended
    October 3,2010   September 27,2009   October 3,2010   September 27,2009
    (In thousands, except for per share amounts)
    (Unaudited)
Coffeehouse sales   $ 56,626     $ 54,479     $ 169,974     $ 162,637  
Commercial and franchise sales     13,547       8,260       36,134       23,436  
Total net sales     70,173       62,739       206,108       186,073  
Cost of sales and related occupancy costs     32,701       27,849       94,651       81,438  
Operating expenses     25,130       24,426       75,159       71,684  
Depreciation and amortization     3,099       3,465       9,271       10,776  
General and administrative expenses     7,421       6,313       21,563       19,708  
Operating income     1,822       686       5,464       2,467  
Other income (expense):                
Interest income     9       10       19       17  
Interest expense     (63 )     (68 )     (234 )     (189 )
Income before provision for (benefit from)                                
income taxes     1,768       628       5,249       2,295  
Provision for (benefit from) income taxes     32       (140 )     (106 )     (182 )
Net income     1,736       768       5,355       2,477  
Less: Net income attributable to                                
noncontrolling interest     129       114       289       309  
Net Income attributable to Caribou Coffee                                
Company, Inc.   $ 1,607     $ 654     $ 5,066     $ 2,168  
Basic net income attributable to Caribou                
Coffee Company, Inc. common shareholders                
per share   $ 0.08     $ 0.03     $ 0.26     $ 0.11  
Diluted net income attributable to Caribou                
Coffee Company, Inc. common shareholders                
per share   $ 0.08     $ 0.03     $ 0.25     $ 0.11  
Basic weighted average number of shares                
outstanding     19,610       19,470       19,599       19,418  
Diluted weighted average number of shares                
outstanding     20,710       20,169       20,540       19,830  
       
CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
 
CONDENSED CONSOLIDATED BALANCE SHEETS
       
    October 3,2010 January 3,2010
    In thousands, except per share amounts
    (Unaudited)
ASSETS      
Current assets:      
Cash and cash equivalents   $ 10,018 $ 23,578
Accounts receivable (net of allowance for doubtful accounts of $3 at October 3,      
2010 and January 3, 2010)   9,130 5,887
Other receivables (net of allowance for doubtful accounts of $202 and $128 at      
October 3, 2010 and January 3, 2010, respectively)   1,806 1,268
Income tax receivable   102 193
Inventories   31,182 13,278
Prepaid expenses and other current assets   1,085 1,546
Total current assets   53,323 45,750
Property and equipment, net of accumulated depreciation and amortization   42,228 47,135
Restricted cash   605 605
Other assets   403 237
Total assets   $ 96,559 $ 93,727
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable   $ 10,350 $ 9,042
Accrued compensation   6,821 6,296
Accrued expenses   6,476 7,563
Deferred revenue   5,847 8,747
Total current liabilities   29,494 31,648
       
Asset retirement liability   1,176 1,120
Deferred rent liability   6,716 7,955
Deferred revenue   2,072 2,072
Income tax liability   2 156
Total long term liabilities   9,966 11,303
       
Equity:      
Caribou Coffee Company, Inc. Shareholders’ equity:      
Preferred stock, par value $.01, 20,000 shares authorized; no shares issued      
and outstanding   — —
Common stock, par value $.01, 200,000 shares authorized; 20,042 and 19,814      
shares issued and outstanding at October 3, 2010 and January 3, 2010,      
respectively   200 198
Additional paid-in capital   127,964 126,770
Accumulated other comprehensive income (loss)   21 (7)
Accumulated deficit   (71,275) (76,341)
Total Caribou Coffee Company, Inc. shareholders’ equity   56,910 50,620
Noncontrolling interest   189 156
Total equity   57,099 50,776
Total liabilities and equity   $ 96,559 $ 93,727
         
     Coffeehouse Openings and Closings
         
    13 Weeks Ended   39 Weeks Ended
    October 3,
2010		   September 27,
2009		   October 3,
2010		   September 27,
2009
Operating Data:                
Percentage change in comparable coffeehouse net                        
sales (1)   4.4 %   (0.5 )%   4.8 %   (3.0 )%
                 
COFFEEHOUSE COUNT                
Company-Owned:                
Coffeehouses open at beginning of period   411     414     413     414  
Coffeehouses opened during the period   0     0     0     0  
Coffeehouses closed during the period   (1 )   (1 )   (3 )   (1 )
Total Company-Owned Open at Period End   410     413     410     413  
                 
Franchised:                
Coffeehouses open at beginning of period   128     108     121     97  
Coffeehouses opened during the period   6     4     13     18  
Coffeehouses closed during the period   (5 )   0     (5 )   (3 )
Total Franchised Open at Period End   129     112     129     112  
Total coffeehouses open at end of period   539     525     539     525  
     
    (1)   Percentage change in comparable coffeehouse net sales compares the net sales of coffeehouses during a fiscal period to the net sales from the same coffeehouses for the equivalent period in the prior year. A coffeehouse is included in this calculation beginning in its thirteenth full fiscal month of operations. A closed coffeehouse is included in the calculation for each full month that the coffeehouse was open in both fiscal periods. Franchised coffeehouses are not included in the comparable coffeehouse net sales calculations.
         
 
EBITDA RECONCILIATION
 
The following is a reconciliation of the Company’s net income to EBITDA.
         
    Thirteen Weeks Ended   Thirty-Nine Weeks Ended
    October 3, 2010   September 27, 2009   October 3, 2010   September 27, 2009
    (In thousands)
Net income attributable to Caribou Coffee                                
Company, Inc.   $ 1,607     $ 654     $ 5,066     $ 2,168  
Interest expense     63       68       234       189  
Interest income     (9 )     (10 )     (19 )     (17 )
Depreciation and amortization(1)     3,607       3,964       10,748       12,360  
Provision for (benefit from) income taxes     32       (140 )     (106 )     (182 )
EBITDA   $ 5,300     $ 4,536     $ 15,923     $ 14,518  
                                 
    (1)   Includes depreciation and amortization associated with the headquarters and roasting facility that are categorized as general and administrative expenses and cost of sales and related occupancy costs on the statement of operations.

EBITDA is equal to net income excluding: (a) interest expense; (b) interest income; (c) depreciation and amortization; and (d) income taxes.

Management believes EBITDA is useful to investors in evaluating the Company’s operating performance for the following reason:

  • Coffeehouse leases are generally short-term (5-10 years) and Caribou must depreciate all of the cost associated with those leases on a straight-line basis over the initial lease term excluding renewal options (unless such renewal periods are reasonably assured at the inception of the lease). The Company opened a net 207 company-operated coffeehouses from the beginning of fiscal 2003 through the end of the third quarter of fiscal 2010. As a result, management believes depreciation expense is disproportionately large when compared to the sales from a significant percentage of the coffeehouses that are in their initial years of operations. Also, many of the assets being depreciated have actual useful lives that exceed the initial lease term excluding renewal options. Consequently, management believes that adjusting for depreciation and amortization is useful for evaluating the operating performance of the coffeehouses.

Management uses EBITDA:

  • As a measurement of operating performance because it assists management in comparing its operating performance on a consistent basis as it removes the impact of items not directly resulting from coffeehouse operations;
  • For planning purposes, including the preparation of our internal annual operating budget;
  • To evaluate the Company’s capacity to incur and service debt, fund capital expenditures and expand the business.

EBITDA as calculated by Caribou Coffee is not necessarily comparable to similarly titled measures used by other companies. In addition, EBITDA: (a) does not represent net income or cash flows from operating activities as defined by GAAP; (b) is not necessarily indicative of cash available to fund cash flow needs; and (c) should not be considered an alternative to net income, operating income, cash flows from operating activities or Caribou Coffee’s other financial information as determined under GAAP.

Noble Roman’s Announces Results for Third Quarter 2010

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Noble Roman’s, Inc. (OTCBB:NROM), the Indianapolis based franchisor of Noble Roman’s Pizza and Tuscano’s Italian Style Subs, has announced results for the quarterly period ended September 30, 2010. Net income from continuing operations was $406,710 or $.02 per share basic and diluted, on weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 20.1 million. This compares to net income from continuing operations of $459,535 for the quarterly period ended September 30, 2009, or $.02 per share basic and diluted, on weighted average number of common shares outstanding of 19.4 million, and diluted weighted average shares of 19.9 million. Total revenues for the quarterly period ended September 30, 2010 were $1.9 million compared to total revenues of $1.9 million for the comparable period in 2009. During the quarterly period ended September 30, 2010, the company recorded a loss on discontinued operations in the amount of $935,237 resulting in a net loss for the quarterly period ended September 30, 2010 of $528,527, or $.03 per share basic and diluted.

For the nine-month period ended September 30, 2010, the company reported a net income from continuing operations of $1,133,050, or $.06 per share basic and diluted, on weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 20.1 million. This compares to net income from continuing operations of $1,291,529 for the nine-month period ended September 30, 2009, or $.07 per share basic and $.06 per share diluted weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 19.9 million. Total revenues for the nine-month period ended September 30, 2010 were $5.4 million compared to $5.7 million for the corresponding period in 2009. During the nine-month period ended September 30, 2010, the company recorded a loss on discontinued operations in the amount of $935,237 resulting in net income for the nine-month period ended September 30, 2010 of $197,813, or $.01 per share basic and diluted.  

In 2008 the company accrued for estimated costs to defend the Heyser lawsuit (the status of which is discussed below) in an amount representing the company’s best forecast at the time. Reviewing the current status of the lawsuit and forecasting estimated additional costs into the future, it was determined that an additional accrual was now required. Additionally, in reviewing accounts receivable, various receivables initiated in 2007 and 2008 and relating to the operations that were discontinued in 2008 were determined to be doubtful of collection and, therefore, charged to loss from discontinued operations.

Total revenue decreased from $1,934,323 to $1,852,897 and from $5,728,946 to $5,440,343 for the three-month and nine-month periods ended September 30, 2010 compared to the corresponding periods in 2009. One-time fees, franchisee fees and equipment commissions decreased from $109,773 to $60,378 and increased from $251,735 to $267,470 during the three-month and nine-month periods ended September 30, 2010 compared to the corresponding periods in 2009. Ongoing royalties and fees decreased from $1,668,457 to $1,651,697 and from $5,025,930 to $4,759,036 for the three-month and nine-month periods ended September 30, 2010 compared to the corresponding period in 2009. Of this decrease, $71,733 and $266,273 resulted from fewer traditional units being in operation during the three-month and nine-month periods in 2010, and $74,704 and $242,922 resulted from a decrease in ongoing royalties and fees from non-traditional units other than grocery stores. These were partially offset by an increase in ongoing royalties and fees from the grocery store take-n-bake additions in the amount of $129,677 and $242,301 for the three-month and nine-month periods in 2010. 

In the third quarter of 2009 the company began offering a take-n-bake version of its pizza as an addition to its menu offerings. The take-n-bake pizza is designed as an add-on component for new and existing convenience store franchisees and as a stand-alone offering for grocery store chains. The company has completed product research and development on five related products to be sold through the grocery stores and expects to begin distributing those products in late November or early December 2010. The five products are pasta sauce, deep-dish lasagna with Italian sausage, grated aged parmesan cheese, cheesy stix and spicy cheese dip. Unlike the company’s take-n-bake pizza which requires on-site assembly by the deli department, these products, except for the spicy cheese dip, arrive at the grocery store fully prepared and ready to display and sell. The products were designed to augment the take-n-bake pizza sales however the company can offer these products to any grocery store and is not limited to only those grocery stores that have signed license agreements since the products do not require any preparation or assembly. Even though the company has no sales experience with these products and the products have no proven market acceptance at this time, the company believes that the revenue generated from these products can potentially be significantly higher than the revenue from the take-n-bake pizza. 

As of November 9, 2010, the company had signed agreements for 413 grocery store locations to operate the take-n-bake pizza program, 248 of which were open. The company anticipates opening most of the remaining locations within the next 30 to 60 days. Many of the grocery store chains that have signed agreements for certain of their grocery store locations to operate the take-n-bake pizza program have indicated their intent to enter into agreements for the remainder of their locations. The company expects to sign several additional units with existing chains and is also in discussions with several other grocery store chains. 

The company previously announced the signing of an agreement with a grocery distribution company which services approximately 1,700 grocery stores in the western United States. This agreement provides for the grocery distributor to stock the company’s proprietary products for distribution to their customers and promote the company’s take-n-bake program to all of their 1,700 customers. To date we have signed agreements with 106 of their customers and are continuing to sign additional units on a regular basis. Recently the company signed a similar agreement with a grocery distribution company in Wisconsin which distributes to approximately 1,000 grocery stores in Wisconsin and surrounding states. The company, along with that distributor, began promoting our propriety products to their customers this week. We are currently in discussions with seven additional grocery distribution companies for similar type agreements. The company’s experience thus far indicates that, if successful in obtaining these agreements, it will further accelerate the company’s growth in grocery stores. 

As previously announced, the company recently redesigned its layout and equipment specifications for convenience stores to lower the initial investment to approximately $15,000 down from the old design of $30,000 without decreasing the revenue potential of the system. This redesign and reduced investment cost has ignited increased interest in this program by convenience stores. 

Earlier this year the company began bidding on military base locations through the Army and Air Force Exchange Service and has been awarded five contracts and has outstanding bids on several other Army/Air Force bases. When awarded a contract, the company locates a franchisee and assigns the contract. A franchise was opened on one of these bases on September 1st, one is expected to open within two weeks and the other three are expected to open over the next three months.

The company is a Defendant in a lawsuit styled Kari Heyser, Fred Eric Heyser and Meck Enterprises, LLC, et al v. Noble Roman’s, Inc. et al, filed in Superior Court in Hamilton County, Indiana on June 19, 2008 (Cause No. 29D01 0806 PL 739). The Plaintiffs are former franchisees of the Company’s traditional location venue. Originally, the Plaintiffs in this case were Kari and Fred Heyser and Meck Enterprises, LLC, Shawn and Jamie White and Casual Concepts of Texas, LLC, Afifa Abdelmalek and St. Markorios Corporation, Robert and Kathleen Hopkins and Withmere Restaurants, LLC, John and Mariann Dunn and D & G Restaurant, LLC, Jason Clark and Nican Enterprises, LLC, Thomas A. Brintle and Noble Roman’s Mt. Airy 100, LLC, Marikate and Paul Morris and Kapza, Inc., Kim Neal and Mopan Commerce, Inc., and Collett Eugene Harrington and Sazzip, LLC. Since the initiation of this lawsuit, however, Plaintiffs Marikate and Paul Morris and Kapza, Inc. have voluntarily dismissed their claims against the Defendants and the Court has issued an Order finding Plaintiffs Henry and Brenda Villasenor and H&B Villasenor Investments, Inc. in Contempt of Court and has accordingly dismissed with prejudice the claims filed by the Villasenor Plaintiffs in this action. The Defendants in this action originally were the company, certain of the company’s officers, and co-Defendants, CIT Small Business Lending Corporation and PNC Bank. The claims against co-Defendants CIT Small Business Lending Corporation and PNC Bank have since been dismissed with prejudice. 

The Plaintiffs allege that the Defendants fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises. As relief, the Plaintiffs seek compensatory and punitive damages. In the Complaint, the Plaintiffs that remain in the case claim damages collectively in the amount of $5.1 million. In addition, some claims include punitive damages, court costs and/or prejudgment interest. Discovery was completed July 19, 2010. To date, all of the Plaintiffs remaining in the case have been deposed except the Soltero Plaintiffs. Plaintiffs’ counsel withdrew his representation on behalf of the Soltero Plaintiffs and counsel for Defendants has been unable to locate the Soltero Plaintiffs. Therefore, the Soltero Plaintiffs remain parties to this action and remain unrepresented by counsel.

The company filed a Counter-Claim for Damages against all of the Plaintiffs in the approximate amount of $3.6 million plus attorney’s fees, cost of collection and punitive damages in certain instances.

The company also filed a Motion for Partial Summary Judgment as to several claims in the Complaint, which the Court granted in September, 2009. In February, 2010, counsel for the Plaintiffs filed a Notice of Appeal with the Indiana Court of Appeals as to the Partial Summary Judgment granted by the Court. On August 19, 2010, the Court of Appeals issued a ruling affirming the Judgment of the Trial Court. On September 20, 2010, Plaintiffs filed a Petition for a Rehearing with the Indiana Court of Appeals, which the Court denied on October 25, 2010. 

Defendants have filed Motions for Summary Judgment as to all of the Plaintiffs remaining in the case, based primarily on their deposition testimony and the lack of evidence substantiating the Plaintiffs’ claims.   Plaintiffs filed a consolidated Response to the Motions for Summary Judgment as to ten of the Plaintiff groups. The Soltero Plaintiffs and Heyser Plaintiffs did not file a Response to the Motion for Summary Judgment; therefore, Defendants Motions for Summary Judgment as to those two Plaintiff groups are unopposed. After receiving Plaintiffs’ Consolidated Response to the Motions for Summary Judgment, Defendants filed Reply Briefs in support of their Motions for Summary Judgment against each of the ten Plaintiff groups included in the Response. In the Reply Briefs, Defendants asked the Court to: 1) strike the improperly designated and inadmissible materials including affidavits by each of the Plaintiffs which were in conflict with their sworn testimony; 2) strike their statement of fact section as failing to comply with Indiana Trial Rule 56; 3) strike arguments about other states’ laws as an improper and belated attempt to amend the Complaint; 4) strike Plaintiffs’ choice of law arguments which includes arguments that have already been decided by the trial court and the Indiana Court of Appeals; and 5) enter summary judgment in favor of Defendants. A hearing on Defendants’ Motions for Summary Judgment has been set for November 22, 2010.

The Defendants’ counterclaims against all of the original Plaintiffs are still pending. While the counterclaims against the individuals Paul and Marikate Morris and Kari and Fred Heyser, were stayed due to their bankruptcy filings in their individual capacities, the counterclaims against their corporate entities, Kapza, Inc., and Meck Enterprises LLC, respectively, remain pending as the corporate entities did not file for bankruptcy. Similarly, the counterclaims against the Villasenor Plaintiffs also remain pending and were not affected by the court’s order dismissing that Plaintiff group with prejudice.

Although there can be no assurance regarding the outcome of litigation, the company believes that it has strong and meritorious legal and factual defenses to these claims, viable counter claims against the Plaintiffs and will vigorously defend its interests in this case.

The statements contained in this press release concerning the company’s future revenues, profitability, financial resources, market demand and product development are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the company that are based on the beliefs of the management of the company, as well as assumptions and estimates made by and information currently available to the company’s management. The company’s actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company’s operations and business environment, including, but not limited to, competitive factors and pricing pressures, the current litigation with certain former traditional franchisees, non-renewal of franchise agreements, shifts in market demand, general economic conditions and other factors including, but not limited to, changes in demand for the company’s products or franchises, the success or failure of individual franchisees, the impact of competitors’ actions and changes in prices or supplies of food ingredients and labor as well as the factors discussed under “Risk Factors” in the company’s annual report on Form 10-K for the year-ended December 31, 2009.  Since the company has no previous experience selling its products to retail channels, there can be no assurance that grocers will stock them or that customers will buy them. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.

Noble Roman’s, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
     
 Assets December 31,
 2009		  September 30,
 2010
Current assets:    
 Cash $ 333,204 $ 238,239
 Accounts and notes receivable – net 1,343,500 1,071,925
 Inventories 239,006 253,278
 Assets held for resale 243,527 243,582
 Prepaid expenses 241,852 492,619
 Deferred tax asset – current portion 1,050,500 1,050,500
 Total current assets 3,451,589 3,350,143
     
Property and equipment:    
 Equipment 1,133,312 1,137,843
 Leasehold improvements  96,512  96,512
  1,229,824 1,234,355
 Less accumulated depreciation and amortization  790,134  841,776
 Net property and equipment 439,690 392,579
Deferred tax asset (net of current portion) 10,703,594 10,564,837
Other assets including long-term portion of notes receivable  2,087,644  2,467,025
 Total assets  $ 16,682,517 $ 16,774,584
     
Liabilities and Stockholders’ Equity    
Current liabilities:    
 Current portion of long-term note payable $ 1,500,000 $ 1,500,000
 Accounts payable and accrued expenses  434,665   724,145
 Current portion of note payable to officer   –  300,000
 Total current liabilities 1,934,666 2,524,145
     
Long-term liabilities:    
 Note payable to bank (net of current portion) 4,125,000 3,000,000
 Note payable to officer (net of current portion)  –  465,821
 Total long-term liabilities 4,125,000 3,465,821
     
Stockholders’ equity:    
 Common stock – no par value (25,000,000 shares authorized,
 19,412,499 issued and outstanding as of December 31, 2009 and
 19,419,317 issued and outstanding as of September 30, 2010)		  
 
23,074,160		  
 
23,103,843
 Preferred stock (5,000,000 shares authorized and 20,625 issued and
 outstanding as of December 31, 2009 and September 30, 2010)		  
800,250		  
800,250
 Accumulated deficit (13,251,559) (13,119,475)
 Total stockholders’ equity  10,622,851  10,784,618
 Total liabilities and stockholders’ equity $ 16,682,517 $ 16,774,584
     
Noble Roman’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2009 2010 2009 2010
Royalties and fees $1,778,230 $1,712,075 $5,277,665 5,026,506
Administrative fees and other 7,818 5,485 45,373 26,193
Restaurant revenue  148,275  135,337  405,908  387,644
 Total revenue 1,934,323 1,852,897 5,728,946 5,440,343
         
Operating expenses:        
 Salaries and wages 252,048 244,396 795,778 729,912
 Trade show expense 77,032 75,463 229,259 226,304
 Travel expense 29,927 36,362 108,060 109,365
 Other operating expenses 172,268 167,994 564,158 534,552
 Restaurant expenses 131,706 131,472 382,531 378,715
Depreciation and amortization 19,557 14,574 59,456 42,792
General and administrative  375,158  394,227 1,097,917 1,204,003
 Total expenses 1,057,696 1,064,488 3,237,159  3,225,643
 Operating income 876,627 788,409 2,491,787 2,214,700
Interest and other expense  115,682  114,937  353,138  338,478
 Income before income taxes from
 continuing operations		  
760,945		  
673,472		  
2,138,649		  
1,876,222
Income tax expense  301,410  266,762  847,120  743,172
 Net income from continuing operations 459,535 406,710 1,291,529 1,133,050
Loss from discontinued operations net of
 Tax benefit of $604,415 for 2010		  
 –		  
(935,237)		  
 –		  
(935,237)
 Net income (loss) 459,535 (528,527) 1,291,529 197,813
 Cumulative preferred dividends  16,455  24,682  49,364  65,729
 Net income (loss) available to common
 stockholders		  
$ 443,080		  
$ (553,209)		  
$1,242,165		  
$ 132,084
Earnings per share – basic:        
 Net income from continuing operations  $ .02 $ .02 $ .07 $ .06
 Net loss from discontinued operations – (.05) – (.05)
 Net income (loss) .02 (.03) .07 .01
 Net income (loss) available to common
 stockholders		  
$ .02		  
$ (.03)		  
$ .06		  
$ .01
Weighted average number of common shares
 outstanding		  
19,412,499		  
19,413,092		  
19,412,499		  
19,412,699
Diluted earnings per share:        
 Net income from continuing operations  $ .02 $ .02 $ .06 $ .06
 Net loss from discontinued operations – (.05) – (.05)
 Net income (loss) .02 (.03) .06 .01
 Net income (loss) available to common
 stockholders		  
$ .02		  
$ (.03)		  
$ .06		  
$ .01
Weighted average number of common shares
 outstanding		  
19,922,242		  
20,112,463		  
19,922,242		  
20,112,070

Brinker International Board Declares Common Dividend and Share Repurchase Authorization

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Today, the Board of Directors for Brinker International, Inc. (NYSE: EAT) declared a quarterly dividend of $0.14 per share on the common stock of the company. The dividend will be paid on December 30, 2010 to shareholders of record as of December 10, 2010.

Brinker’s Board also authorized an additional $325 million in share repurchases.

Brinker International remains committed to returning capital to shareholders through the payment of quarterly dividends and ongoing share repurchases.

Brinker currently owns, operates, or franchises 1,555 restaurants under the names Chili’s Grill & Bar (1,510 restaurants) and Maggiano’s Little Italy (45 restaurants), and holds a minority investment in Romano’s Macaroni Grill.