Red Robin Gourmet Burgers, Inc., (NASDAQ: RRGB), a casual dining
restaurant chain focused on serving an innovative selection of
high-quality gourmet burgers in a family-friendly atmosphere, today
reported financial results for the 12 weeks and 52 weeks ended
December 28, 2008.
Financial and Operational Highlights
Highlights for the 12 weeks ended December 28, 2008, compared to
the 12 weeks ended December 30, 2007, are as follows:
- Total revenues increased 8.0% to
$198.6 million.
- Restaurant revenue increased
8.4% to $195.6 million.
- Company-owned comparable
restaurant sales decreased 7.4%.
- Restaurant-level operating
profit was 17.1% or $33.4 million.
- GAAP diluted earnings per share
were $0.38, which included $0.05 per diluted share of asset
impairment charges vs. GAAP diluted earnings per share of $0.60
last year.
- A total of seven new Red Robin�
restaurants, four company-owned and three franchised locations were
opened during the 12-week period.
Highlights for the 52 weeks ended December 28, 2008, compared to
the 52 weeks ended December 30, 2007, are as follows:
- Total revenues increased 13.9%
to $869.2 million.
- Restaurant revenue increased
14.3% to $854.7 million.
- Company-owned comparable
restaurant sales decreased 1.4%.
- Restaurant-level operating
profit was 18.4% or $157.2 million.
- GAAP diluted earnings per share
were $1.69 which included $0.09 per diluted share of asset
impairment charges, $0.02 per diluted share of reacquired franchise
costs, and $0.01 per diluted share of acquisition-related
integration costs vs. GAAP diluted earnings per share of $1.82 last
year, which included $0.08 per diluted share for reacquired
franchise costs, $0.01 per diluted share for acquisition-related
integration expenses, and $0.07 per diluted share in legal
settlement expense.
- A total of 41 new Red Robin�
restaurants, 31 company-owned and 10 franchised locations were
opened during the 52-week period.
�We are in the midst of a very difficult environment for
restaurant operators and customers alike, and we are working
through the challenges we face with a focus on the factors that we
can control,� said Dennis Mullen, chairman and chief executive
officer. �It is difficult to predict the business impact of the
current macroeconomic environment along with the elimination of our
national cable advertising, which led to our decision to not
provide earnings or revenue guidance for 2009 at this time. We are
continuing to take actions to drive efficiencies across all levels
of our organization to overcome the challenges, and we�re proud of
our talented Team Members for their hard work and dedication to
taking care of our Guests.�
As of the end of fiscal year 2008, there were 294 company-owned
and 129 franchised Red Robin� restaurants, including one franchised
restaurant managed by the Company, which was acquired by the
Company on December 31, 2008.
Tender Offer
On February 11, 2009, the Company completed the previously
announced cash tender offer for certain stock options held by 514
current employees and officers. As a result of the tender offer,
the Company will incur a one-time non-cash pretax charge of
approximately $4.0 million, or $0.19 per diluted share, which will
be reflected in the fiscal first quarter 2009 financial results and
represents the compensation expense related to the acceleration of
vesting on the unvested options tendered in the offer, which would
have otherwise been expensed over their vesting period in the
future if they had not been tendered. There were approximately
1,576,000 options tendered in the offer by 433 employees, which
represented 96% of eligible options offered for tender. The gross
cash proceeds to be paid for the tendered options will be $3.5
million.
Granting stock options and other equity incentives is a material
component of the Company�s long-term compensation philosophy. After
a comprehensive review by the Company of its compensation program
and the impact of the decline in its common stock price on
incentive awards, the Company determined that the tender offer was
consistent with restoring the incentive value of its long-term
awards. Future compensation expense associated with tendered
unvested options will be eliminated, as will the overhang
associated with outstanding options that were no longer an
effective incentive. Any options tendered that were granted under
the Company�s Amended and Restated 2007 Performance Incentive Plan
will also provide additional capacity for future incentive grants
under that plan. The Company expects that the majority of after-tax
proceeds received by its senior executives from the tender offer
will be used to purchase shares of the Company�s common stock in
the open market during the Company�s open stock trading
windows.
Acquisitions of Franchised Restaurants
In the first quarter of 2008, the Company acquired 15 existing
Red Robin franchised restaurants and one franchised restaurant that
was under construction and subsequently opened early in the second
quarter of 2008, from three franchisees (the �2008 Acquired
Restaurants�). These acquisitions added $25.4 million of revenue
and $0.06 per diluted share to earnings in fiscal year
2008.
Fiscal Fourth Quarter 2008 Results
Comparable restaurant sales decreased 7.4% for company-owned
restaurants in the fiscal fourth quarter of 2008 compared to the
fiscal fourth quarter of 2007, driven by a 2.2% increase in the
average guest check, which was more than offset by a 9.6% decline
in guest counts. Average weekly comparable sales for company-owned
restaurants were $57,073 for the 241 comparable restaurants in the
fiscal fourth quarter of 2008, compared to $62,873 for the 192
comparable restaurants in the same period a year ago. Average
weekly sales for the 39 non-comparable company-owned restaurants
were $55,188 in the fiscal fourth quarter of 2008, compared to
$54,022 for the 41 non-comparable restaurants in the fiscal fourth
quarter a year ago. Average weekly comparable sales for the 2008
Acquired Restaurants were $50,228 in the fiscal fourth quarter of
2008.
Total Company revenues, which include company-owned restaurant
sales and franchise royalties and fees, increased 8.0% to $198.6
million in the fiscal fourth quarter of 2008, versus $183.8 million
last year. Franchise royalties and fees in the fiscal fourth
quarter of 2008 were $3.0 million, a 14.1% decrease compared to the
same period a year ago, primarily driven by the reduction of
royalty revenue from the 2008 Acquired Restaurants.
For the fiscal fourth quarter of 2008, the Company�s franchise
system reported a 9.2% decrease in total U.S. franchise restaurant
sales to $68.4 million, compared to $75.3 million in the prior year
period, due primarily to the 2008 Acquired Restaurants. Comparable
sales in the fiscal fourth quarter of 2008 for franchise
restaurants in the U.S. decreased 5.3% and for franchise
restaurants in Canada increased 0.5% compared to the fiscal fourth
quarter of 2007. Average weekly sales in the fiscal fourth quarter
of 2008 for the Company�s comparable franchise restaurants were
$52,161 in the U.S., versus $54,237 for the same period the prior
year, and C$49,072 in Canada versus C$48,809 in the same period
last year. Canadian results are in Canadian dollars.
Restaurant-level operating profit margins at company-owned
restaurants were 17.1% in the fiscal fourth quarter of 2008,
compared to 21.4% in the fiscal fourth quarter of 2007. The
decrease is attributed to increased cost of sales and cost
deleverage on fixed expenses from the reduction in average
restaurant sales volumes.
The Company's restaurant-level operating profit metric does not
represent income from operations or net income calculated in
accordance with generally accepted accounting principles ("GAAP").
Schedule I of this earnings release reconciles restaurant-level
operating profit to income from operations and net income for all
periods presented.
General and administrative expense was $11.8 million in the
fiscal fourth quarter of 2008 and $14.0 million in the fiscal
fourth quarter of 2007, which were 5.9% and 7.6% of total revenue,
respectively. Included in the fourth quarter of 2007 general and
administrative expense was $2.4 million, or 1.3% of total revenue,
of performance-based and acquisition bonus expense compared to a
reversal of $1.2 million, or 0.6% of total revenue, of
performance-based bonus expense in the fourth quarter of 2008. Also
included in fiscal fourth quarter of 2008 general and
administrative expense was a reversal of $1.5 million of
expenditures related to the Company�s national advertising fund,
compared to $1.4 million reversed in the same period last year.
Interest expense was $2.1 million in the fiscal fourth quarter
of 2008 and $2.5 million in the fiscal fourth quarter of 2007. The
decrease is due to lower average quarterly interest rate of 4.0%
compared to 7.2% in the prior year, partially offset by additional
borrowings under the Company�s credit facilities related to the
franchise acquisitions and share repurchases during the second
quarter of 2008.
During the fiscal fourth quarter of 2008, the Company determined
that two restaurants were impaired based on a review of each
restaurant�s past, present and projected operating performance. The
carrying value of each restaurant�s assets was compared to the fair
value of those assets, resulting in a $978,000 pretax asset
impairment charge, or a $0.05 impact on diluted earnings per
share.
Net income for the fiscal fourth quarter of 2008 was $5.8
million or $0.38 per diluted share, which included the $0.05 per
diluted share of asset impairment charges, compared to net income
of $10.1 million, or $0.60 per diluted share, in the fiscal fourth
quarter of 2007.
Schedule II of this earnings release reconciles the impact on
the net income and diluted earnings per share as reported on a GAAP
basis in the fiscal fourth quarter of 2008 and 2007 to adjusted
amounts excluding certain asset impairment charges and acquisition
costs.
In the fiscal fourth quarter of 2008, the Company realized a
reduction in the effective tax rate to 24.9%, less than the 27.0%
previously estimated.
Fiscal Year 2008 Results
Comparable restaurant sales decreased 1.4% for company-owned
restaurants in the fiscal year ended December 28, 2008, versus the
fiscal year ended December 30, 2007, driven by a 3.5% increase in
the average guest check, which was more than offset by a 4.9%
decrease in guest counts. Average weekly comparable sales for
company-owned restaurants were $62,128 for the restaurants in the
comparable base in fiscal year 2008, compared to $64,047 for the
restaurants in the comparable base in fiscal year 2007. Average
weekly sales for the company-owned restaurants in the
non-comparable base were $55,640 in fiscal year 2008, compared to
$56,635 for the company-owned restaurants in the non-comparable
base in fiscal year 2007. Average weekly comparable sales for the
2008 Acquired Restaurants were $53,057 for the time period post
acquisition through the end of fiscal year 2008.
Total Company revenues, which include company-owned restaurant
sales and franchise royalties and fees, increased 13.9% to $869.2
million for the fiscal year ended December 28, 2008, compared to
$763.5 million for the fiscal year ended December 30, 2007.
Franchise royalties and fees in the fiscal year 2008 decreased 9.3%
to $14.3 million compared to $15.8 million in the same period a
year ago. Franchise royalties in the fiscal year ended December 30,
2007, included $2.7 million from royalties attributed to the 2008
Acquired Restaurants and from the 2007 acquired restaurants in
California.
For the fiscal year 2008, the Company�s franchise system
reported a decrease in total U.S. franchise restaurant sales of
9.6% to $320.9 million, compared to $354.8 million in fiscal year
2007, due primarily to franchise restaurants acquired during the
2007 and 2008 fiscal years. Comparable sales in the fiscal year
2008 for franchise restaurants in the U.S. decreased 1.1% and for
franchise restaurants in Canada increased 3.6% compared to the
comparable period in 2007. Average weekly sales in fiscal year 2008
for the Company�s comparable franchise restaurants were $56,020 in
the U.S., versus $56,698 for the same period in the prior year, and
C$51,567 in Canada, versus C$49,763 in the same period last year.
Canadian results are in Canadian dollars.
Restaurant-level operating profit margins from company-owned
restaurants were 18.4% for fiscal year 2008 compared to 20.5% for
the fiscal year of 2007. The decrease is attributed to increased
cost of sales, as well as higher occupancy and other operating
costs, including an additional 0.5% of marketing expense in 2008,
partially offset by improved labor costs.
General and administrative expense was $64.4 million for the
fiscal year 2008 compared to $61.8 million for the same period of
2007, which were 7.4% and 8.1% of total revenue in their respective
periods. Included in the general and administrative expense for
fiscal year 2007 was $6.4 million of performance-based and
acquisition bonus expense, for which there was no expense accrued
for fiscal year 2008.
During the fiscal year 2008, the Company determined that four
restaurants were impaired based on a review of each restaurant�s
past, present and projected operating performance. The carrying
value of each restaurant�s assets was compared to the fair value of
those assets, resulting in a $1.9 million pretax asset impairment
charge, or a $0.09 impact on diluted earnings per share.
Net income for the 52 weeks ended December 28, 2008 was $27.1
million or $1.69 per diluted share, compared to net income of $30.7
million or $1.82 per diluted share in the prior year period. In the
fiscal year 2008, the Company incurred a total of $1.9 million in
after-tax charges, or a total of $0.12 per diluted share relating
to asset impairment charges, reacquired franchise costs for the
2008 Acquired Restaurants and charges related to integration of the
acquisition recorded in general and administrative expenses.
Net income in the fiscal year 2007 included a total of $0.16 per
diluted share of one-time charges relating to reacquired franchise
costs, general and administrative expenses related to the
integration of the acquisition and legal settlement expenses.
Schedule II of this earnings release reconciles the impact on
the net income and diluted earnings per share as reported on a GAAP
basis in the fiscal year of 2008 and 2007 to adjusted amounts
excluding certain asset impairment charges, acquisition costs and
legal settlements.
The Company�s effective tax rate for the 2008 fiscal year was
26.6%, slightly lower than the 27.0% previously estimated.
Balance Sheet and Liquidity
On December 28, 2008, the Company held $11.2 million in cash and
equivalents and had a total outstanding debt balance of $222.6
million, including $133.0 million in borrowings under the $150
million term loan, $82.0 million of borrowing and $4.1 million of
letters of credit outstanding under the $150 million revolving
credit facility.
The Company is subject to a number of customary covenants under
the various credit agreements, including limitations on additional
borrowings, acquisitions, dividend payments, and requirements to
maintain certain financial ratios. As of December 28, 2008, the
Company was in compliance with all debt covenants and expects to
remain in compliance through fiscal year 2009.
Based on the Company�s development plans and other
infrastructure and maintenance capital expenditures, the Company
expects fiscal year 2009 capital expenditures to be approximately
$45 million. The Company expects to fund its fiscal year 2009
capital expenditures out of operating cash flow. The Company will
make scheduled payments of $15 million required by the term loan
portion of its existing credit facility from free cash flow after
capital expenditures in fiscal year 2009 and expects to use the
remaining free cash flow to make payments on the Company�s
revolving credit facility and may make opportunistic purchases of
its common stock.
Outlook
For the fiscal first quarter of 2009, which is a 16-week
quarter, the Company expects to open seven new company-owned and
three new franchised restaurants. Three new company-owned and two
new franchised restaurants have already opened during the fiscal
first quarter of 2009, and 10 company-owned and one franchised
restaurant are currently under construction. During fiscal year
2009, the Company now expects to open 13 to 14 new company-owned
units, and franchisees are expected to open seven to eight new
restaurants.
The Company has not made any development decisions for fiscal
year 2010 at this time. The Company will maintain broad flexibility
and strong discipline in any commitments it makes to enable the
Company to alter plans depending on the Company�s performance, the
macroeconomic environment and the status of individual development
projects. The Company expects to have many options available
ranging from conversions of former restaurants and shopping center
end-caps to free-standing restaurants.
As previously announced, for fiscal year 2009, the Company has
reduced the amount that all company-owned and franchised
restaurants in the system will contribute to the National
Advertising Fund to 0.25% of their restaurant revenue, which is
down from the contribution of 1.5% of revenue in 2008. Depending on
actual revenue performance in fiscal year 2009, this contribution
change could result in approximately $11 million less in marketing
expenditures in fiscal year 2009. The fiscal year 2009 marketing
investment will be directed to a national on-line advertising
effort as well as targeted direct mail campaigns and local
restaurant marketing initiatives. The Company does not plan to run
national cable advertising in fiscal year 2009.
Comparable restaurant sales comparisons are most difficult in
the fiscal first quarter of 2009, as the Company is overlapping its
most successful quarter of 2008 and began its 2008 national cable
advertising on February 4th. Through February 15, 2009, the first
seven weeks of the Company�s 16-week fiscal first quarter of 2009,
comparable restaurant sales decreased 4.6% from the prior year
comparable period for company-owned restaurants.
The Company currently expects that traffic will remain negative
in fiscal year 2009. In addition to the general macro economic
pressures, the extent of the traffic declines may also be
influenced by prior-year marketing activities, which create more
difficult comparisons during certain periods. The Company also
expects certain costs, such as minimum wage increases and select
commodity cost increases, to continue to put pressure on
restaurant-level profitability. Based on these factors, the Company
currently anticipates that without any menu price increases,
restaurant-level operating margins could decline by 50 to 100 basis
points during fiscal year 2009, even after considering the benefit
from reduced national advertising contributions and other cost
reduction activities. For every 10 basis point change in restaurant
level operating profit during fiscal year 2009, diluted earnings
per share are estimated to be impacted by approximately $0.04.
As a result of the completion of the cash tender offer discussed
above, future compensation expense associated with tendered
unvested options has been eliminated. The Company expects to record
$2.5 million in stock compensation expense for the fiscal year
2009, excluding the $4.0 million one-time pretax charge related to
the Tender Offer. The Company recognized $6.8 million in pretax
stock compensation for the fiscal year 2008.
During the fiscal first quarter of 2009, the Company plans to
close four older, underperforming restaurants that are in declining
trade areas and/or in need of significant capital expenditures and
are not projected to provide acceptable returns in the foreseeable
future. In addition to the non-cash asset impairment charges of
$978,000 incurred in the fiscal fourth quarter of 2008 and
referenced above, the Company currently anticipates additional
charges of up to $800,000 will be recognized during the first
quarter of 2009 related to lease terminations and other
closing-related costs.
Investor Conference Call and
Webcast
Red Robin will host an investor conference call to discuss its
fiscal fourth quarter and year-end 2008 results today at 5:00 p.m.
ET. The conference call number is (800) 289-0463. To access the
webcast, please visit www.redrobin.com and select the �Investors�
link from the menu. The financial information that the Company
intends to discuss during the conference call is included in this
press release and will be available on the �Investors� link of the
Company's website at www.redrobin.com following the conference
call.
About Red Robin Gourmet Burgers,
Inc. (NASDAQ: RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), a casual
dining restaurant chain founded in 1969 that operates through its
wholly-owned subsidiary, Red Robin International, Inc., serves up
wholesome, fun, feel-good experiences in a kid- and family-friendly
environment. Red Robin� restaurants are famous for serving more
than two dozen insanely delicious, high-quality gourmet burgers in
a variety of recipes with Bottomless Steak Fries�, as well as
salads, soups, appetizers, entrees, desserts, and signature Mad
Mixology� Beverages. There are more than 420 Red Robin� restaurants
located across the United States and Canada, including
corporate-owned locations and those operating under franchise
agreements.
Forward-Looking
Statements:
Certain information and statements contained in this press
release, including those under the heading �Outlook,� are
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. Forward-looking
statements include statements regarding our expectations, beliefs,
intentions, plans, objectives, goals, strategies, future events or
performance and underlying assumptions and other statements which
are other than statements of historical facts. These statements may
be identified, without limitation, by the use of forward-looking
terminology such as �assumptions,� �believes,� �continue,�
�expects,� �guidance,� �plan,� �potential,� �projected,� �will� or
comparable terms or the negative thereof. All forward-looking
statements included in this press release are based on information
available to the Company on the date hereof. Such statements speak
only as of the date hereof and we undertake no obligation to update
any such statement to reflect events or circumstances arising after
the date hereof. These statements are based on assumptions believed
by us to be reasonable, and involve known and unknown risks and
uncertainties that could cause actual results to differ materially
from those described in the statements. These risks and
uncertainties include, but are not limited to, the following:�the
downturn in general economic conditions including severe volatility
in financial markets and decreasing consumer confidence, resulting
in changes in consumer preferences, or consumer discretionary
spending; potential fluctuation in our quarterly operating results
due to economic conditions, seasonality and other factors;
potential negative impact of the fluctuation of our stock price on
our results and financial position; changes in availability of
capital or credit facility borrowings to us and to our franchisees;
the adequacy of cash flows generated by our business to fund
operations and growth opportunities; our ability to achieve and
manage our planned expansion, including both in new markets and
existing markets; changes in the cost and availability of building
materials and restaurant supplies; the concentration of our
restaurants in the Western United States and the associated
disproportionate impact of macroeconomic factors; changes in
the availability and costs of food; changes in labor and energy
costs and changes in the ability of our vendors to meet our supply
requirements; labor shortages, particularly in new markets; the
effectiveness of our initiative to normalize new restaurant
operations; lack of awareness of our brand in new markets; the
effectiveness of our advertising strategy; higher percentage of
operating weeks from non-comparable restaurants; concentration of
less mature restaurants in the comparable restaurant base which
impacts profitability; our ability to successfully integrate the
acquired franchise restaurants;�the ability of our franchisees to
open and manage new restaurants; the effect of increased
competition in the casual dining market and discounting by
competitors; health concerns about our food products and food
preparation; our ability to protect our intellectual property and
proprietary information; the impact of federal, state or local
government regulations relating to our team members or the sale of
food or alcoholic beverages; our franchisees� adherence to our
practices, policies and procedures; and other risk factors
described from time to time in the Company�s 10-Q and 10-K filings
with the SEC.
�
RED ROBIN GOURMET BURGERS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
amounts)
(Unaudited)
� �
December 28,2008 December 30,2007
Assets: Current Assets: Cash and cash equivalents $ 11,158 $
12,914 Accounts receivable, net 5,611 4,751 Inventories 13,123
10,367 Prepaid expenses and other current assets 9,032 9,246 Income
tax receivable 6,208 4,760 Deferred tax asset 3,366 3,159
Restricted current assets�marketing funds � 1,590 � 2,095 Total
current assets � 50,088 � 47,292 Property and equipment, net
442,012 399,270 Goodwill 60,982 56,299 Intangible assets, net
51,990 41,059 Other assets, net � 4,665 � 4,869 Total assets $
609,737 $ 548,789
Liabilities and Stockholders� Equity:
Current Liabilities: Trade accounts payable $ 11,966 $ 9,263
Construction related payables 9,747 13,416 Accrued payroll and
payroll related liabilities 25,489 29,146 Unredeemed gift
certificates 11,997 10,789 Accrued liabilities 20,385 19,404
Accrued liabilities�marketing funds 1,590 2,095 Current portion of
term loan notes payable 10,313 11,250 Current portion of long-term
debt and capital lease obligations � 696 � 558 Total current
liabilities � 92,183 � 95,921 Deferred rent 26,790 21,728 Long-term
portion of term loan notes payable 122,687 133,125 Other long-term
debt and capital lease obligations 88,876 8,813 Other non-current
liabilities � 10,293 � 4,760 Total liabilities � 340,829 � 264,347
� Stockholders� Equity: Common stock 17 17 Treasury stock 1,492,280
and 11,517 shares, at cost (50,125) (83) Paid-in capital 165,932
156,928 Accumulated other comprehensive loss, net of tax (1,622) �
Retained earnings � 154,706 � 127,580 Total stockholders� equity �
268,908 � 284,442 Total liabilities and stockholders� equity $
609,737 $ 548,789 � �
RED ROBIN GOURMET BURGERS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In thousands, except per share
data)
(Unaudited)
� �
Twelve Fifty-Two Weeks Ended Weeks
Ended December 28, 2008 �
December 30, 2007
December 28, 2008 �
December 30, 2007 � Revenues:
Restaurant revenue $ 195,604 $ 180,369 $ 854,690 $ 747,530
Franchise royalties and fees 2,956 3,443 14,323 15,792 Rent revenue
36 25 202 150 Total revenues 198,596 183,837 869,215 763,472 �
Costs and expenses: Restaurant operating costs: Cost of sales
46,905 41,157 203,463 171,236 Labor 67,307 59,824 289,702 254,279
Operating 34,256 29,342 147,395 122,686 Occupancy 13,713 11,397
56,908 46,340 Depreciation and amortization 12,910 10,840 51,687
43,659 General and administrative expenses 11,816 14,002 64,404
61,764 Pre-opening costs 844 1,279 8,109 7,463 Asset impairment
charge 978 � 1,906 � Reacquired franchise and other acquisition
costs � � 451 1,821 Legal settlement � � � 1,653 Total costs and
expenses 188,729 167,841 824,025 710,901 � Income from operations
9,867 15,996 45,190 52,571 Other expense (income): Interest
expense, net 2,133 2,469 8,237 9,231 Other 32 27 14 42 Total other
expenses 2,165 2,496 8,251 9,273 � Income before income taxes 7,702
13,500 36,939 43,298 Provision for income taxes 1,919 3,410 9,813
12,647 Net income $ 5,783 $ 10,090 $ 27,126 $ 30,651 Earnings per
share: Basic $ 0.38 $ 0.60 $ 1.70 $ 1.84 Diluted $ 0.38 $ 0.60 $
1.69 $ 1.82 Weighted average shares outstanding: Basic 15,308
16,685 15,927 16,647 Diluted 15,372 16,856 16,047 16,817 � �
RED ROBIN GOURMET BURGERS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
�
Year Ended December 28,2008 �
December
30,2007 Cash Flows From Operating Activities: � � Net
income $ 27,126 $ 30,651 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 51,687 43,659 Asset impairment charge 1,906 �
Provision (benefit) for deferred income taxes 6,670 (1,872 )
Amortization of debt issuance costs 310 387 Stock-based
compensation 6,831 6,871 Changes in operating assets and
liabilities, net of effects of acquired business (3,394) 13,862 Net
cash provided by operating activities 91,136 93,558 Cash Flows From
Investing Activities: Purchases of property and equipment (83,227 )
(77,798 ) Acquisition of franchise restaurants, net of cash
acquired (29,941 ) (47,854 ) Changes in marketing fund restricted
cash 72 457 Net cash used in investing activities (113,096 )
(125,195 ) Cash Flows From Financing Activities: Borrowings of
long-term debt 164,950 166,000 Payments of long-term debt and
capital leases (96,486 ) (126,225 ) Purchase of treasury stock
(50,042 ) � Proceeds from exercise of stock options and employee
stock purchase plan 1,456 2,245 Excess tax benefit related to
exercise of stock options 326 363 Debt issuance costs � (594 ) Net
cash provided by financing activities 20,204 41,789 Net increase
(decrease) in cash and cash equivalents $ (1,756 ) $ 10,152 Cash
and cash equivalents, beginning of year 12,914 2,762 Cash and cash
equivalents, end of year $ 11,158 $ 12,914 � �
Schedule I
Reconciliation of Non-GAAP
Restaurant-Level Operating Profit to Income
from Operations and Net
Income
(In thousands, except percentage
data)
The Company defines restaurant-level operating profit to be
restaurant revenues minus restaurant-level operating costs,
excluding restaurant closures and impairment costs. It does not
include general and administrative costs, depreciation and
amortization, pre-opening costs, reacquired franchise costs and
legal settlements. The Company believes that restaurant-level
operating profit is an important measure of financial performance
because it is widely regarded in the restaurant industry as a
useful metric by which to evaluate restaurant-level operating
efficiency and performance. The Company excludes restaurant closure
costs as they do not represent a component of the efficiency of
continuing operations. Restaurant impairment costs are excluded,
because, similar to depreciation and amortization, they represent a
non-cash charge for the Company�s investment in its restaurants and
not a component of the efficiency of restaurant operations.
Restaurant-level operating profit is not a measurement determined
in accordance with generally accepted accounting principles
(�GAAP�) and should not be considered in isolation, or as an
alternative, to income from operations or net income as indicators
of financial performance. Restaurant-level operating profit as
presented may not be comparable to other similarly titled measures
of other companies. The table below sets forth certain unaudited
information for the twelve and fifty-two weeks ended December 28,
2008 and December 30, 2007, expressed as a percentage of total
revenues, except for the components of restaurant operating costs,
which are expressed as a percentage of restaurant revenues.
�
Twelve Weeks Ended �
Fifty-Two Weeks Ended
December 28, 2008 �
December 30, 2007 December 28,
2008 �
December 30, 2007 � � � � Restaurant revenues
$195,604 98.5% $180,369 98.1% $854,690 98.3% $747,530 97.9%
Restaurant operating costs: Cost of sales 46,905 24.0 41,157 22.8
203,463 23.8 171,236 22.9
Labor
67,307 34.4 59,824 33.2 289,702 33.9 254,279 34.0 Operating 34,256
17.5 29,342 16.3 147,395 17.2 122,686 16.4 Occupancy 13,713 � 7.0 �
11,397 � 6.3 � 56,908 � 6.7 � 46,340 � 6.2 Restaurant-level
operating profit 33,423 � 17.1 � 38,649 � 21.4 � 157,222 � 18.4 �
152,989 � 20.5 � Add � other revenues 2,992 1.5 3,468 1.9 14,525
1.7 15,942 2.1 Deduct � other operating: Depreciation and
amortization 12,910 6.5 10,840 5.9 51,687 5.9 43,659 5.7 General
and administrative 11,816 5.9 14,002 7.6 64,404 7.4 61,764 8.1
Pre-opening costs 844 0.4 1,279 0.7 8,109 0.9 7,463 1.0 Asset
impairment charge 978 0.5 � � 1,906 0.2 � � Reacquired franchise
costs � � � � 451 0.1 1,821 0.2 Legal settlement � � � � � � � � �
� � � 1,653 � 0.2 Total other operating 26,548 � 13.3 � 26,121 �
14.2 � 126,557 � 14.5 � 116,360 � 15.2 � Income from operations
9,867 5.0 15,996 8.7 45,190 5.2 52,571 6.9 � Total other expenses
2,165 1.1 2,496 1.4 8,251 0.9 9,273 1.2 Provision for income taxes
1,919 � 1.0 � 3,410 � 1.9 � 9,813 � 1.1 � 12,647 � 1.7 Total other
4,084 2.1 5,906 3.3 18,064 2.0 21,920 2.9 � Net income $5,783 �
2.9% � $10,090 � 5.4% � $27,176 � 3.2% � $30,651 � 4.0%
Certain percentage amounts in the table above do not sum due to
rounding as well as the fact that restaurant operating costs are
expressed as a percentage of restaurant revenues, as opposed to
total revenues.
Schedule II
Reconciliation of Non-GAAP Results
to GAAP Results
(In thousands, except per share
and percentage data)
In addition to the results provided in accordance with generally
accepted accounting principles (�GAAP�) throughout this press
release, the Company has provided non-GAAP measurements which
present the twelve and fifty-two weeks ended December 28, 2008,
year-over-year change in net income and diluted net income per
share, asset impairment charges, the reacquired franchise costs and
other acquisition related costs, the legal settlement expense and
acquisition-related integration costs incurred during the twelve
and fifty-two weeks ended December 28, 2008 and December 30, 2007,
as described previously. The non-GAAP measurements are intended to
supplement the presentation of the Company�s financial results in
accordance with GAAP. The Company believes that the presentation of
these items provides additional information to facilitate the
comparison of past and present financial results.
�
Twelve Weeks Ended �
Year Over Year December 28,
2008 �
December 30, 2007 Percentage Change
Net
Income
�
Diluted
EPS
�
Net
Income
�
Diluted
EPS
�
Net
Income
�
Diluted
EPS
Reported $ 5,783 $ 0.38 $10,090 � $ 0.60 (42.7)% (36.7)% After-tax
impact of: Asset impairment charge 734 0.05 � � Acquisition-related
integration costs � � 6 � Adjusted $ 6,517 $ 0.43 $10,096 $ 0.60
(35.4)% (28.7)% � � �
Fifty-two Weeks Ended �
Year Over
Year December 28, 2008 �
December 30, 2007
Percentage Change
Net
Income
�
Diluted
EPS
�
Net
Income
�
Diluted
EPS
�
Net
Income
�
Diluted
EPS
Reported $ 27,126 $ 1.69 $30,651 � $ 1.82 (11.5)% (7.1)% After-tax
impact of: Asset impairment charge 1,399 0.09 � � Reacquired
franchise and other acquisition costs 331 0.02 1,289 0.08 Legal
settlement � � 1,170 0.07 Acquisition-related integration costs 193
0.01 194 0.01 Adjusted $ 29,049 $ 1.81 $33,304 $ 1.98 (12.8)%
(8.7)%
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