Published:
Perkins & Marie Callender's Inc. Reports Results for the Second Quarter Ended July 13, 2008
MEMPHIS, Tenn., Aug. 28 /PRNewswire/ -- Perkins & Marie Callender's Inc.
(together with its consolidated subsidiaries, the "Company" or "we") is
reporting today the financial results for its second quarter ended July 13,
2008.
Highlights for the second quarter of 2008 as compared to the second
quarter of 2007 were:
-- Total revenues were up 0.7% to $131.0 million in the second quarter of
2008, primarily due to the operation of eleven new Company-operated
Perkins restaurants. Since the second quarter of 2007, the Company has
opened eight new Perkins restaurants and acquired three Perkins
restaurants from franchisees.
-- One Company-operated Perkins restaurant opened during the second
quarter of 2008; no Company-operated Perkins restaurants were closed.
One Perkins franchised restaurant and one Company-operated Marie
Callender's restaurant were closed during the second quarter of 2008.
-- Perkins restaurants' comparable sales decreased by 1.9% and Marie
Callender's restaurants' comparable sales decreased by 3.9% in the
second quarter of 2008 as compared to the second quarter of 2007. These
declines in comparable sales resulted primarily from a decrease in
comparable guest counts at both concepts.
J. Trungale, President and Chief Executive Officer of Perkins & Marie
Callender's Inc., commented, "During the second quarter of 2008, top line
sales for both Perkins & Marie Callender's continued to be impacted by the
difficult economic environment and shifts in consumer spending habits. It has
been a delicate balancing act taking price increases on both brands while
maintaining a strong price/value ratio, managing food costs and continuing to
offer a favorable guest experience. Our management team at Foxtail Foods has
diligently addressed a broad range of issues including pricing, productivity,
increasing efficiencies and standardization of accounting systems and
departmental functions. We are focused on doing what we do best, stressing
our rich heritage, looking at products and ways to advantageously present
them, positioning ourselves competitively and maintaining positive approval
ratings."
Second Quarter of 2008 Financial Results
Revenues in the second quarter of 2008 increased 0.7% to $131.0 million
from $130.1 million in the second quarter of 2007. The increase was primarily
due to a $1.5 million increase in sales in the restaurant segment offset by a
$0.2 million decrease in sales in the Foxtail segment and a $0.5 million
decrease in the franchise segment.
Food cost for the second quarter of 2008 increased to 30.0% of food sales
from 27.5% in the second quarter of 2007. Restaurant segment food cost was up
by 0.9% to 27.3% of food sales in the second quarter of 2008 as higher
commodity costs were partially offset by menu price increases. In the Foxtail
segment, food cost increased to 72.9% of food sales in the second quarter of
2008 from 56.5% in the second quarter of 2007 due primarily to higher
commodity costs.
Labor and benefits costs, as a percentage of total revenues, increased by
0.7% to 33.0% in the second quarter of 2008 compared to the second quarter of
2007. In the second quarter of 2008, a 0.7% increase in the restaurant
segment resulting from increases in average wage rates was partially offset by
decreases resulting from headcount reductions in the Foxtail segment.
Operating expenses for the second quarter of 2008 were $34.2 million, or
26.1% of total revenues, compared to $32.6 million, or 25.0% of total revenues
in the second quarter of 2007. Restaurant segment operating expenses
increased by 0.7% to 27.8% of restaurant sales in the second quarter of 2008
due primarily to increased advertising, utilities, general liability insurance
and rent expense. Operating expenses in the Foxtail segment increased by $0.4
million or 2.9% to 13.9% of segment food sales due primarily to higher repair
and maintenance and freight costs.
General and administrative expenses were 7.7% of total revenues, a
decrease of 0.5% from the second quarter of 2007. The decrease is due
primarily to a reduction in legal costs and vacation expense.
Depreciation and amortization was 4.4% of revenues in the second quarters
of both 2008 and 2007.
Interest, net was 6.1% of revenues in the second quarter of 2008 compared
to 5.5% in the prior year's second quarter. The 0.6% increase resulted mainly
from an increase in the interest rate margins on the Company's Term Loan and
Revolver and from an approximate $6.8 million increase in the average debt
outstanding during the second quarter of 2008 compared to the second quarter
of 2007.
Adjusted EBITDA
The Company defines adjusted EBITDA as net income or loss before income
taxes or benefits, interest expense (net), depreciation and amortization,
transaction costs, asset impairments and closed store expenses and other
income and expense items unrelated to operating performance. The Company
considers adjusted EBITDA to be an important measure of performance from 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:
Second Second Year-to- Year-to-
Quarter Quarter Date Date
Ended Ended Ended Ended
July 13, July 15, July 13, July 15,
(unaudited; in thousands) 2008 2007 2008 2007
Net loss $(8,065) (2,723) (15,653) (5,472)
Provision for income taxes 141 - 322 -
Interest, net 8,026 7,217 18,303 16,698
Depreciation and amortization 5,764 5,769 13,370 12,890
Transaction costs - 568 - 752
Asset impairments and closed store
expenses 477 (146) 553 9
Pre-opening expenses 164 271 325 434
Management fees 825 825 1,926 1,926
Other items 17 370 529 351
Adjusted EBITDA $7,349 12,151 19,675 27,588
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 pie and other bakery items under the name Marie
Callender's Restaurant and Bakery. As of July 13, 2008, the Company owned and
operated 164 Perkins' restaurants and franchised 318 Perkins' restaurants.
The Company also owned and operated 77 Marie Callender's restaurants, one
Callender's Grill, the East Side Mario's restaurant and 12 Marie Callender's
restaurants under partnership agreements. Franchisees owned and operated 41
Marie Callender's restaurants and one Marie Callender's Grill.
Conference Call
Perkins & Marie Callender's Inc. has scheduled a conference call for
Wednesday, September 3, 2008, at 10:00 a.m. (CT) to review the second quarter
of 2008 earnings. The dial-in number for the conference call is
(866) 207-2203 and the access code number is 59911422. A taped playback of
this call will be available two hours following the call on Wednesday,
September 3, 2008, through midnight (CT) on Tuesday, September 9, 2008. The
taped playback can be accessed by dialing (800) 642-1687 and by using access
code number 59911422.
Forward-Looking Statements
This press release contains "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 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.
Perkins & Marie Callender's Inc. has based these forward-looking
statements on its current expectations, assumptions, estimates and
projections. While the Company believes 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 its control. Some of the key factors that could cause its
actual results, performance or achievements to differ materially from any
future results, performance or achievements expressed or implied by these
forward-looking statements include the following:
-- general economic conditions and demographic patterns;
-- our substantial indebtedness and our ability to comply with the
covenants in our debt instruments;
-- competitive pressures and trends in the restaurant industry;
-- prevailing prices and availability of food, supplies and labor;
-- relationships with franchisees and financial health of franchisees;
-- our ability to integrate acquisitions;
-- our development and expansion plans; and
-- statements covering our business strategy.
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. Perkins &
Marie Callender's Inc. does not undertake and specifically declines 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)
Second Second Year-to- Year-to-
Quarter Quarter Date Date
Ended Ended Ended Ended
July 13, July 15, July 13, July 15,
2008 2007 2008 2007
REVENUES:
Food sales $123,953 122,702 297,421 291,590
Franchise and other revenue 7,013 7,408 15,945 16,806
Total revenues 130,966 130,110 313,366 308,396
COSTS AND EXPENSES:
Cost of sales (excluding
depreciation shown below):
Food cost 37,159 33,685 87,561 81,008
Labor and benefits 43,199 42,048 102,688 100,369
Operating expenses 34,168 32,590 81,121 76,684
General and administrative 10,098 10,676 25,115 24,900
Transaction costs - 568 - 752
Depreciation and amortization 5,764 5,769 13,370 12,890
Interest, net 8,026 7,217 18,303 16,698
Asset impairments and closed store
expenses 477 (146) 553 9
Other, net (31) 344 (90) 314
Total costs and expenses 138,860 132,751 328,621 313,624
Loss before income taxes and
minority interests (7,894) (2,641) (15,255) (5,228)
Provision for income taxes (141) - (322) -
Minority interests (30) (82) (76) (244)
NET LOSS $(8,065) (2,723) (15,653) (5,472)
PERKINS & MARIE CALLENDER'S INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par and share amounts)
July 13, December 30,
2008 2007
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $2,846 19,032
Restricted cash 8,757 10,098
Receivables, less allowances for
doubtful accounts of $732 and
$1,542 in 2008 and 2007, respectively 17,550 17,221
Inventories 14,151 13,239
Prepaid expenses and other current assets 5,887 5,732
Total current assets 49,191 65,322
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of $119,427
and $109,441 in 2008 and 2007, respectively 98,451 99,311
INVESTMENT IN UNCONSOLIDATED PARTNERSHIP 43 53
GOODWILL 30,038 30,038
INTANGIBLE ASSETS, net of accumulated
amortization of $18,824 and $17,494 in
2008 and 2007, respectively 151,986 153,316
DEFERRED INCOME TAXES 226 242
OTHER ASSETS 14,107 14,660
TOTAL ASSETS $344,042 362,942
LIABILITIES AND STOCKHOLDER'S INVESTMENT
CURRENT LIABILITIES:
Accounts payable $25,721 25,559
Accrued expenses 50,125 52,621
Accrued income taxes 235 -
Franchise advertising contributions 6,509 5,940
Current maturities of long-term debt
and capital lease obligations 1,386 9,464
Total current liabilities 83,976 93,584
CAPITAL LEASE OBLIGATIONS, less
current maturities 13,882 11,987
LONG-TERM DEBT, less current
maturities 301,626 298,009
DEFERRED RENT 14,467 13,467
OTHER LIABILITIES 15,710 15,520
MINORITY INTERESTS IN CONSOLIDATED
PARTNERSHIPS 185 333
STOCKHOLDER'S INVESTMENT:
Common stock, $.01 par value; 100,000
shares authorized;
10,820 issued and outstanding 1 1
Additional paid-in capital 137,738 137,923
Accumulated other comprehensive income 78 86
Accumulated deficit (223,621) (207,968)
Total stockholder's investment (85,804) (69,958)
TOTAL LIABILITIES AND STOCKHOLDER'S
INVESTMENT $344,042 362,942
PERKINS & MARIE CALLENDER'S INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Year-to-Date Year-to-Date
Ended Ended
July 13, 2008 July 15, 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(15,653) (5,472)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 13,370 12,890
Asset impairment costs 517 394
Amortization of debt discount 178 173
Other non-cash income and expense items (180) 309
Loss (gain) on disposition of assets 36 (385)
Minority interests 76 244
Equity in net loss of
unconsolidated partnership 10 35
Net changes in operating assets and
liabilities 1,107 (12,055)
Total adjustments 15,114 1,605
Net cash used in operating activities (539) (3,867)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (11,666) (11,190)
Proceeds from sale of assets - 3
Net cash used in investing activities (11,666) (11,187)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment of) revolver, net (3,800) 10,500
Repayment of capital lease obligations (242) (403)
Repayment of other long-term debt (760) (510)
Debt amendment costs (1,056) -
Lessor financing of new restaurants 2,286 -
Distributions to minority partners (224) (200)
Repurchase of equity ownership units (185) -
Net cash (used in) provided by
financing activities (3,981) 9,387
NET DECREASE IN CASH AND CASH EQUIVALENTS (16,186) (5,667)
CASH AND CASH EQUIVALENTS:
Balance, beginning of period 19,032 9,069
Balance, end of period $2,846 3,402
SOURCE Perkins & Marie Callender's Inc.
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Copyright © 2009, NewsBlaze,
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