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8-K - FORM 8-K - POPEYES LOUISIANA KITCHEN, INC. | g21265e8vk.htm |
Exhibit 99.1
AFC Reports Financial Results for Fiscal Third Quarter 2009; Updates Earnings Guidance
for Fiscal 2009
ATLANTANov. 12, 2009 AFC Enterprises, Inc. (NASDAQ: AFCE), the franchisor and
operator of Popeyes®, today reported results for its third fiscal quarter of 2009 which
ended October 4, 2009. The Company also updated earnings guidance for fiscal 2009 and
provided an update on its strategic plan.
Third Quarter 2009 Highlights Compared to Third Quarter 2008:
| Net income was $3.4 million, or $0.13 per diluted share, compared to $4.0 million, or $0.16 per diluted share, last year. Excluding $1.9 million, or $0.05 per diluted share, of charges associated with the Companys recent credit facility amendment, adjusted earnings per diluted share were $0.18. Adjusted earnings per diluted share is a supplemental non-GAAP measure of performance. See the heading entitled Managements Use of Non-GAAP Financial Measures. | ||
| System-wide sales increased by 0.5 percent compared to flat sales last year. | ||
| Global same-store sales decreased 0.3 percent compared to a decrease of 1.9 percent last year. Domestic same-store sales decreased 0.3 percent compared to a decrease of 2.8 percent last year. International same-store sales decreased 1.0 percent compared to an increase of 7.4 percent last year. | ||
| The Popeyes system opened 21 restaurants and closed 8 restaurants, resulting in 13 net openings. At the end of the third quarter, total unit count was 1,918 compared to 1,905 at the end of the third quarter last year. | ||
| The Company used available cash to reduce its outstanding debt by $26.2 million, bringing its total debt to $88.6 million at the end of the third quarter. At the end of the third quarter last year, the total outstanding debt was $131.3 million. | ||
| Year-to-date, the Company has generated $19.0 million of free cash flow, compared to $22.3 million during the same period last year. AFCs free cash flow computation and reconciliation to GAAP measures are described in detail under the heading Use of Non-GAAP Financial Measures. | ||
| As previously stated, on August 14, 2009, the Company completed an amendment and restatement of its 2005 Credit Facility to extend the maturity dates of its revolving credit facility and term loan by two years to May 2012 and May 2013, respectively. |
AFC Enterprises Chief Executive Officer Cheryl Bachelder stated, Our relatively flat
same-store sales in the third quarter met our expectations and outpaced the QSR
category. Guest traffic continued to increase in our restaurants at a time of steep
traffic declines in QSR. We believe this positive momentum was driven by our famous
Louisiana food offered through compelling national advertising with a competitive value
proposition. As we move into 2010, our attention will remain focused on growing market
share and enhancing restaurant profitability in support of our strategy of accelerating
our growth in the U.S. and around the globe.
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Strategic Plan Update
1. Build the Popeyes Brand
| In September, Popeyes promoted its Bonafide® chicken featuring 5 wings for $2.99 and 11 pieces of bone-in chicken for $9.99. These promotions, which were supported with three weeks of national media advertising, delivered strong positive guest counts. | ||
| Popeyes is currently running national media advertising promoting its First Annual Crawfish Festival, featuring its spicy, crispy Crawfish Tackle Box with Cajun fries and a buttermilk biscuit for only $4.99. |
2. Run Great Restaurants
| Popeyes continues to see steady improvement in its Guest Experience Monitor (GEM) scores, with Overall Delighted scores at the end of the third quarter up 15 percentage points since the implementation of the program last year. | ||
| With new drive-thru equipment in place throughout the system, the Company is now rolling out new speed of service training and tools and expects to have the programs in place system-wide by the beginning of 2010. Longer-term, management believes this speed of service initiative will provide significant improvement to Popeyes system-wide sales performance. |
3. Grow Profitability
| The Company remains committed to lowering restaurant operating costs and improving profitability while maintaining excellent food quality for its guests. |
| During the third quarter, Popeyes restaurants benefited from a 5 percent decline in commodity costs over a year ago. The Company expects to see additional commodity cost savings in the fourth quarter of 2009, as it continues to lap record highs from last year. | ||
| The Company is also evaluating other supply chain cost savings such as packaging and shipping alternatives which will benefit the system in 2010 and beyond. |
| The Company is continuing to generate a stronger pipeline of current and new franchise developers to open new restaurants, both in the U.S. and abroad, so the brand will be better positioned to accelerate new unit development as the credit markets and economy recover. |
4. Align People and Resources to Deliver Results
| At the beginning of October, over 100 Popeyes franchisees and operators met for its first Best Practices Conference held in Atlanta. The interactive sessions featured a panel of |
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top-performing franchisees who shared their best practices on delivering value, driving speed of service and running profitable restaurants. |
Third Quarter Financial Performance Review Compared to Third Quarter Last Year
System-wide sales increased by 0.5 percent compared to flat sales last year. System-wide
sales were comprised of $394.4 million in franchise restaurant sales and $11.3 million
in company-operated restaurant sales.
Global same-store sales decreased 0.3 percent compared to a decrease of 1.9 percent
during the same time last year. Domestic same-store sales decreased 0.3 percent,
compared to a decrease of 2.8 percent last year, with this improvement being driven by
positive transactions. According to independent data, domestic same-store sales have
continued to outpace the chicken QSR category for the sixth consecutive quarter.
International same-store sales decreased 1.0 percent compared to an increase of 7.4
percent last year. The elevated sales in the third quarter of 2008 were primarily
related to restaurants in the Middle East which benefited from the timing of the Islamic
holiday of Eid, marking the end of the fasting period of Ramadan. The third quarter
same-store sales decrease in 2009 primarily reflects weaker sales in the Middle East due
to economic slowdown.
Total revenues were $31.9 million compared to $38.3 million last year. Total revenues
were lower primarily due to the Companys successful re-franchising of 27
company-operated restaurants in the Atlanta and Nashville markets.
Company-operated restaurant expenses for food, beverages and packaging as a percentage
of sales were 32.7 percent compared to 33.9 percent last year. This improvement was
primarily attributable to commodity cost savings and the re-franchising of
company-operated restaurants. Company-operated restaurant employee, occupancy and other
expenses as a percentage of sales were 52.2 percent, compared to 55.7 percent last year.
This improvement of 3.5 percent was primarily attributable to lower workers compensation
expense, utility costs and other operating costs, and the closure of three
underperforming company-operated restaurants.
General and administrative expenses were $12.0 million or 3.0 percent of system-wide
sales, compared to $12.8 million or 3.2 percent of system-wide sales last year. The
decrease was primarily attributable to the Companys lower net investment in national
media advertising during the third quarter compared to the same time last year.
Due to the continuing challenges of the financial and credit markets, which have
affected franchisees throughout the industry, the Company has increased its reserve for
bad debt expense related to franchise revenues by an additional $0.8 million, or $0.02
per diluted share, during the third quarter.
Year-to-date, EBITDA was $33.8 million, at 29.3 percent of total revenues, compared to
$39.3
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million, at 30.0 percent of total revenues, last year. Although the Companys
national media advertising investment was lower in the third quarter compared to last
year, the year-to-date decrease in EBITDA was primarily due to an incremental $2.1
million for the Companys investment in national media advertising and $2.5 million in
lower net other income related to non-operating net gains from property sales,
impairments and insurance settlements. AFCs EBITDA computation and reconciliation to
GAAP measures is described in detail under the heading Use of Non-GAAP Financial
Measures.
Interest expense, net was $3.5 million, compared to $1.6 million last year. This
increase was primarily due to $1.9 million in charges related to the credit facility
amendment.
The Companys effective income tax rate was 37.0 percent, compared to an effective tax
rate of 38.5 percent in the prior year.
Net income was $3.4 million, or $0.13 per diluted share, compared to $4.0 million, or
$0.16 per diluted share, last year. Excluding $1.9 million, $0.05 per diluted share, of
charges associated with the credit facility amendment, adjusted earnings per diluted
share were $0.18. Adjusted earnings per diluted share is a supplemental non-GAAP measure
of performance. See the heading entitled Managements Use of Non-GAAP Financial
Measures.
Year-to-date, the Company generated $19.0 million in free cash flow, at 16.5 percent of
total revenues, compared to $22.3 million, at 17.0 percent of total revenues, during the
same period last year. AFCs free cash flow computation and reconciliation to GAAP
measures is described in detail under the heading Use of Non-GAAP Financial Measures.
During the third quarter the Company also received payment of $10.2 million from a note
receivable.
During the third quarter, the Company used available cash to reduce its outstanding term
loan by $26.2 million, including $19.0 million of voluntary prepayments and $7.0 million
associated with the credit facility amendment. At the end of the third quarter, the
Companys total outstanding debt was $88.6 million, compared to $131.3 million in the
third quarter last year.
In the third quarter, the Popeyes system opened 21 restaurants, including 9 domestic and
12 international, compared to 28 restaurant openings during the same period last year.
The Popeyes system had 8 restaurant closures in the third quarter compared to 24
restaurant closures last year. Closures consisted of 5 domestic restaurants and 3
international restaurants.
On a system-wide basis, Popeyes had 1,918 restaurants operating at the end of the third
quarter, compared to 1,905 restaurants last year. Total unit count was comprised of
1,571 domestic restaurants and 347 international restaurants in 26 foreign countries and
two territories. Of this total, 1,881 were franchised restaurants and 37 were
company-operated restaurants.
Amendment to 2005 Credit Facility
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As previously indicated, on August 14, 2009, the Company completed an amendment and
restatement of its 2005 Credit Facility to extend the maturity dates of its revolving
credit facility and term loan for two years to May 2012 and to May 2013, respectively.
In conjunction with the amendment, the Company reduced its outstanding term loan by $7.0
million and reduced the revolving credit facility commitment to $48 million from $60
million. The rate of interest for borrowings under the credit facility is LIBOR plus
4.50 percent, with a minimum LIBOR of 2.50 percent. To reduce the Companys exposure to
interest rate increases, management put in place interest rate swaps on $30 million of
its outstanding debt at a fixed rate of approximately 7.4 percent.
In the third quarter, the Company recognized a total of $1.9 million of additional
interest expense, including $1.1 million of fees and $0.8 million of old debt issuance
costs and losses on terminated swaps. In addition, approximately $1.8 million of fees
related to the new amendment were paid and recorded as deferred debt issuance costs and
will be amortized over the remaining life of the facility.
Fiscal 2009 Guidance
The Companys projection for global same-store sales for fiscal 2009 is at the lower end
of the range of its previous guidance at 0.0 percent to positive 2.0 percent.
The Company now expects its global new openings to be in the range of 100-110
restaurants compared to previous guidance in the range of 90-110 restaurants. Due to the
year-to-date restaurant closure rate, the Company now expects closures to be
approximately 100 restaurants, compared to previous guidance of 110-120 restaurants. Net
restaurant openings are now expected to be in the range of 0 to positive 10, compared to
previous guidance of 0 to negative 30. Popeyes restaurant closures typically have sales
significantly lower than the system average.
The Company expects fiscal 2009 general and administrative expenses to be consistent
with its previous guidance of 3.1-3.2 percent of system-wide sales, among the lowest in
the restaurant industry. The Company will continue to tightly manage its general and
administrative expenses and invest in key strategic initiatives, including its continued
commitment to national media advertising and operations improvements, which management
believes are essential for the long-term growth of the brand.
Given the improved expectations for net restaurant openings, the Company expects 2009
earnings to be at the upper end of its guidance of $0.66-$0.70 per diluted share.
Adjusted earnings per diluted share are expected to be at the upper end of its guidance
of $0.65-$0.69 in 2009 as compared to $0.65 in the prior year.
The Company calculates adjusted earnings per diluted share by excluding Other income,
net of $2.6 million or $0.06 per diluted share in 2009 and $4.6 million or $0.11 per
diluted share in 2008, and $1.9 million or $0.05 per diluted share of interest expense
associated with the credit
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amendment in 2009. Adjusted earnings per diluted share is a
supplemental non-GAAP measure of performance. See the heading entitled Managements Use
of Non-GAAP Financial Measures.
Conference Call
The Company will host a conference call and internet webcast with the investment
community at 9:00 A.M. Eastern Time on November 13, 2009, to review the results of the
third quarter of fiscal 2009. To access the Companys webcast, go to www.afce.com,
select Investor Relations and then select Q3 2009 AFC Enterprises, Inc. Earnings
Conference Call. A replay of the conference call will be available for 90 days at the
Companys website or through a dial-in number for a limited time following the call.
Corporate Profile
AFC Enterprises, Inc. is the franchisor and operator of Popeyes® restaurants, the
worlds second-largest quick-service chicken concept based on number of units. As of
October 4, 2009, Popeyes had 1,918 restaurants in the United States, Puerto Rico, Guam
and 26 foreign countries. AFCs primary objective is to offer excellent investment
opportunities in its Popeyes brand and provide exceptional franchisee support systems
and services to its owners. AFC Enterprises can be found at www.afce.com.
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AFC Enterprises, Inc.
Condensed
Balance Sheets (unaudited)
As of October 4, 2009 and December 28, 2008
(In millions, except share data)
10/04/2009 | 12/28/2008 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 5.0 | $ | 2.1 | ||||
Accounts and current notes receivable, net |
13.6 | 13.6 | ||||||
Assets held for sale |
| 4.5 | ||||||
Other current assets |
12.7 | 13.8 | ||||||
Total current assets |
31.3 | 34.0 | ||||||
Long-term assets: |
||||||||
Property and equipment, net |
22.0 | 25.3 | ||||||
Goodwill |
11.1 | 11.1 | ||||||
Trademarks and other intangible assets, net |
47.8 | 48.2 | ||||||
Noncurrent notes receivable and other long-term assets, net |
3.5 | 13.4 | ||||||
Total long-term assets |
84.4 | 98.0 | ||||||
Total assets |
$ | 115.7 | $ | 132.0 | ||||
LIABILITIES AND SHAREHOLDERS DEFICIT |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 17.1 | $ | 19.3 | ||||
Other current liabilities |
13.4 | 13.6 | ||||||
Current debt maturities |
1.1 | 4.7 | ||||||
Total current liabilities |
31.6 | 37.6 | ||||||
Long-term liabilities: |
||||||||
Long-term debt |
87.5 | 114.5 | ||||||
Deferred credits and other long-term liabilities |
19.5 | 19.2 | ||||||
Total long-term liabilities |
107.0 | 133.7 | ||||||
Total liabilities |
138.6 | 171.3 | ||||||
Commitments and contingencies |
||||||||
Shareholders deficit: |
||||||||
Preferred stock ($.01 par value; 2,500,000 shares
authorized;
0 issued and outstanding) |
| | ||||||
Common stock ($.01 par value; 150,000,000 shares
authorized;
25,459,662 and 25,294,973 shares issued and outstanding
at October 4, 2009 and December 28, 2008, respectively) |
0.3 | 0.3 | ||||||
Capital in excess of par value |
111.7 | 110.5 | ||||||
Accumulated deficit |
(134.3 | ) | (149.1 | ) | ||||
Accumulated other comprehensive loss |
(0.6 | ) | (1.0 | ) | ||||
Total shareholders deficit |
(22.9 | ) | (39.3 | ) | ||||
Total liabilities and shareholders deficit |
$ | 115.7 | $ | 132.0 |
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AFC Enterprises, Inc.
Condensed
Statements of Operations (unaudited)
(In millions, except share data)
12 Weeks Ended | 40 Weeks Ended | |||||||||||||||
10/04/2009 | 10/05/2008 | 10/04/2009 | 10/05/2008 | |||||||||||||
Revenues: |
||||||||||||||||
Sales by
company-operated
restaurants |
$ | 11.3 | $ | 17.4 | $ | 46.2 | $ | 62.6 | ||||||||
Franchise revenues |
19.5 | 20.0 | 65.8 | 65.4 | ||||||||||||
Rent and other revenues |
1.1 | 0.9 | 3.5 | 2.9 | ||||||||||||
Total revenues |
31.9 | 38.3 | 115.5 | 130.9 | ||||||||||||
Expenses: |
||||||||||||||||
Restaurant employee,
occupancy and other
expenses |
5.9 | 9.7 | 24.2 | 32.9 | ||||||||||||
Restaurant food,
beverages and
packaging |
3.7 | 5.9 | 15.3 | 21.7 | ||||||||||||
Rent and other
occupancy expenses |
0.6 | 0.5 | 1.9 | 1.7 | ||||||||||||
General and
administrative
expenses |
12.0 | 12.8 | 42.9 | 40.4 | ||||||||||||
Depreciation and
amortization |
0.9 | 1.3 | 3.6 | 5.0 | ||||||||||||
Other income, net |
(0.1 | ) | | (2.6 | ) | (5.1 | ) | |||||||||
Total expenses |
23.0 | 30.2 | 85.3 | 96.6 | ||||||||||||
Operating profit |
8.9 | 8.1 | 30.2 | 34.3 | ||||||||||||
Interest expense, net |
3.5 | 1.6 | 6.5 | 6.3 | ||||||||||||
Income before income
taxes |
5.4 | 6.5 | 23.7 | 28.0 | ||||||||||||
Income tax expense |
2.0 | 2.5 | 8.9 | 11.0 | ||||||||||||
Net income |
$ | 3.4 | $ | 4.0 | $ | 14.8 | $ | 17.0 | ||||||||
Earnings per common
share, basic |
$ | 0.13 | $ | 0.16 | $ | 0.58 | $ | 0.66 | ||||||||
Earnings per common
share, diluted |
$ | 0.13 | $ | 0.16 | $ | 0.58 | $ | 0.66 | ||||||||
Weighted-average
shares outstanding: |
||||||||||||||||
Basic |
25.3 | 25.2 | 25.2 | 25.7 | ||||||||||||
Diluted |
25.4 | 25.3 | 25.4 | 25.8 |
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AFC Enterprises, Inc.
Condensed Statements of Cash Flows (unaudited)
(In millions)
40 Weeks Ended | ||||||||
10/04/2009 | 10/05/2008 | |||||||
Cash flows provided by (used in) operating
activities: |
||||||||
Net income |
$ | 14.8 | $ | 17.0 | ||||
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities: |
||||||||
Depreciation and amortization |
3.6 | 5.0 | ||||||
Asset write-downs |
0.2 | 8.4 | ||||||
Net gain on sale of assets |
(3.1 | ) | (0.9 | ) | ||||
Deferred income taxes |
0.9 | (1.0 | ) | |||||
Non-cash interest, net |
1.4 | (0.2 | ) | |||||
Provision for credit losses |
1.1 | 0.2 | ||||||
Stock-based compensation expense |
1.4 | 1.9 | ||||||
Change in operating assets and liabilities: |
||||||||
Accounts receivable |
(0.3 | ) | 0.4 | |||||
Prepaid income taxes |
0.9 | 0.5 | ||||||
Other operating assets |
1.2 | 0.7 | ||||||
Accounts payable and other operating
liabilities |
(3.0 | ) | (8.8 | ) | ||||
Net cash provided by operating activities |
19.1 | 23.2 | ||||||
Cash flows provided by (used in) investing
activities: |
||||||||
Capital expenditures |
(0.8 | ) | (2.3 | ) | ||||
Proceeds from dispositions of property and
equipment |
7.7 | 3.8 | ||||||
Property insurance proceeds |
0.2 | | ||||||
Proceeds from notes receivable |
10.8 | 0.7 | ||||||
Net cash provided by investing activities |
17.9 | 2.2 | ||||||
Cash flows provided by (used in) financing
activities: |
||||||||
Principal payments 2005 Credit Facility
(term loan) |
(29.9 | ) | (8.9 | ) | ||||
Principal payments 2005 revolving credit
facility |
(0.5 | ) | (0.1 | ) | ||||
Borrowings under 2005 revolving credit
facility |
| 7.5 | ||||||
Special cash dividend |
| (0.5 | ) | |||||
Stock repurchases |
| (19.0 | ) | |||||
(Increase) decrease in restricted cash |
(1.2 | ) | 1.2 | |||||
Debt issuance costs |
(1.8 | ) | | |||||
Other, net |
(0.7 | ) | (0.2 | ) | ||||
Net cash used in financing activities |
(34.1 | ) | (20.0 | ) | ||||
Net increase in cash and cash equivalents |
2.9 | 5.4 | ||||||
Cash and cash equivalents at beginning of
year |
2.1 | 5.0 | ||||||
Cash and cash equivalents at end of quarter |
$ | 5.0 | $ | 10.4 |
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Q3 Ended | Q3 Ended | Year-to-date | Year-to-date | |||||||||||||
10/04/2009 | 10/05/2008 | 10/04/2009 | 10/05/2008 | |||||||||||||
Total Same-Store Sales |
||||||||||||||||
Company-operated |
3.0 | % | (6.1 | %) | (0.6 | %) | (5.5 | %) | ||||||||
Franchised a |
(0.4 | %) | (2.6 | %) | 1.2 | % | (1.9 | %) | ||||||||
Total Domestic |
(0.3 | %) | (2.8 | %) | 1.1 | % | (2.1 | %) | ||||||||
International b |
(1.0 | %) | 7.4 | % | 2.7 | % | 4.1 | % | ||||||||
Global |
(0.3 | %) | (1.9 | %) | 1.3 | % | (1.5 | %) | ||||||||
Total Franchised (a and b) |
(0.4 | %) | (1.7 | %) | 1.3 | % | (1.3 | %) | ||||||||
New Unit Openings |
||||||||||||||||
Company-operated |
0 | 0 | 0 | 1 | ||||||||||||
Franchised |
9 | 12 | 19 | 45 | ||||||||||||
Total Domestic |
9 | 12 | 19 | 46 | ||||||||||||
International |
12 | 16 | 32 | 51 | ||||||||||||
Global |
21 | 28 | 51 | 97 | ||||||||||||
Unit Count |
||||||||||||||||
Company-operated |
37 | 56 | 37 | 56 | ||||||||||||
Franchised |
1,534 | 1,515 | 1,534 | 1,515 | ||||||||||||
Total Domestic |
1,571 | 1,571 | 1,571 | 1,571 | ||||||||||||
International |
347 | 334 | 347 | 334 | ||||||||||||
Global |
1,918 | 1,905 | 1,918 | 1,905 |
Use of Non-GAAP Financial Measures
EBITDA: Calculation and Definition
The following table reconciles on a historical basis for third quarter year-to-date of 2009 and
third quarter year-to-date of 2008, the Companys earnings before interest expense, taxes,
depreciation and amortization (EBITDA) on a condensed basis to the line on its condensed
statement of operations entitled net income, which the Company believes is the most directly
comparable GAAP measure on its condensed statement of operations to EBITDA:
10
Year-to-date | Year-to-date | |||||||
(dollars in millions) | 10/04/2009 | 10/05/2008 | ||||||
Net income |
$ | 14.8 | $ | 17.0 | ||||
Interest expense, net |
$ | 6.5 | $ | 6.3 | ||||
Income tax expense |
$ | 8.9 | $ | 11.0 | ||||
Depreciation and amortization |
$ | 3.6 | $ | 5.0 | ||||
EBITDA |
$ | 33.8 | $ | 39.3 | ||||
Total Revenues |
$ | 115.5 | $ | 130.9 | ||||
EBITDA as a percentage of
Total Revenues (EBITDA
margin) |
29.3 | % | 30.0 | % |
Free cash flow: Calculation and Definition
The following table reconciles on a historical basis for third quarter year-to-date of 2009 and
third quarter year-to-date of 2008, the Companys free cash flow on a condensed basis to the line
on its condensed statement of operations entitled net income, which the Company believes is the
most directly comparable GAAP measure on its condensed statement of operations to free cash flow:
Year-to-date | Year-to-date | |||||||
(dollars in millions) | 10/04/2009 | 10/05/2008 | ||||||
Net income |
$ | 14.8 | $ | 17.0 | ||||
Depreciation and amortization |
$ | 3.6 | $ | 5.0 | ||||
Stock-based compensation expense |
$ | 1.4 | $ | 1.9 | ||||
Maintenance capital expenses |
$ | (0.8 | ) | $ | (1.6 | ) | ||
Free cash flow |
$ | 19.0 | $ | 22.3 | ||||
Total Revenues |
$ | 115.5 | $ | 130.9 | ||||
Free cash flow as a percentage
of Total Revenues |
16.5 | % | 17.0 | % |
Managements Use of Non-GAAP Financial Measures
EBITDA, free cash flow and Adjusted earnings per diluted share are supplemental non-GAAP
financial measures. The Company uses EBITDA, free cash flow and Adjusted earnings per
diluted share, in addition to net income, operating profit, cash flows from operating
activities and earnings per share, to assess its performance and believes it is
important for investors to be able to evaluate the Company using the same measures used
by management. The Company believes these measures are important indicators of its
operational strength and performance of its business because they provide a link between
profitability and operating cash flow. EBITDA,
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free cash flow and Adjusted earnings per
diluted share as calculated by the Company are not necessarily comparable to similarly
titled measures reported by other companies. In addition, EBITDA, free cash flow and
Adjusted earnings per diluted share: (a) do not represent net income, cash flows from
operations or earnings per share as defined by GAAP; (b) are not necessarily indicative
of cash available to fund cash flow needs; and (c) should not be considered as an
alternative to net income, operating profit, cash flows from operating activities,
earnings per share or other financial information determined under GAAP.
Forward-Looking Statement: Certain statements in this release contain forward-looking
statements within the meaning of the federal securities laws. Statements regarding
future events and developments and our future performance, as well as managements
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. Examples of such
statements in this press release include discussions regarding the Companys planned
implementation of its strategic plan, projections and expectations regarding same-store
sales for fiscal 2009 and beyond, the Companys ability to improve restaurant level
margins, guidance for new openings and restaurant closures, and the Companys
anticipated 2009 performances including projections regarding general and administrative
expenses, net earnings per diluted share, EBITDA margins and free cash flows and similar
statements of belief or expectation regarding future events. Among the important factors
that could cause actual results to differ materially from those indicated by such
forward-looking statements are: competition from other restaurant concepts and food
retailers, disruptions in the financial markets, the loss of franchisees and other
business partners, labor shortages or increased labor costs, increased costs of our
principal food products, changes in consumer preferences and demographic trends, as well
as concerns about health or food quality, instances of avian flu or other food-borne
illnesses, general economic conditions, the loss of senior management and the inability
to attract and retain additional qualified management personnel, limitations on our
business under our Credit Facility, our ability to comply with the repayment
requirements, covenants, tests and restrictions contained in our Credit Facility,
failure of our franchisees, a decline in the number of franchised units, a decline in
our ability to franchise new units, slowed expansion into new markets, unexpected and
adverse fluctuations in quarterly results, increased government regulation, adverse
effects of regulatory actions arising in connection with the restatement of our
previously issued financial statements, effects of volatile gasoline prices, supply and
delivery shortages or interruptions, currency, economic and political factors that
affect our international operations, inadequate protection of our intellectual property
and liabilities for environmental contamination and the other risk factors detailed in
our 2008 Annual Report on Form 10-K and other documents we file with the Securities and
Exchange Commission. Therefore, you should not place undue reliance on any
forward-looking statements.
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