Perkins & Marie Callender's Inc. Reports Results for the Quarter Ended July 11, 2010

MEMPHIS, Tenn., Aug. 31 /PRNewswire/ -- Perkins & Marie Callender's Inc. (together with its consolidated subsidiaries, the "Company", "PMCI" or "we") is reporting today its financial results for the second quarter ended July 11, 2010.

Highlights for the Second Quarter of 2010:

• Perkins restaurants' comparable sales decreased by 5.1% and Marie Callender's restaurants' comparable sales decreased by 5.6% in the second quarter of 2010 compared to the second quarter of 2009.  
• Since the beginning of 2010, five Perkins franchised restaurants have opened. In addition, one corporate and two franchised Marie Callender's restaurants have closed.

J. Trungale, President and Chief Executive Officer of Perkins & Marie Callender's Inc., commented, "While the difficult economy continues to negatively impact away-from-home dining trends, increased franchise activity since the second quarter of 2009 at Perkins is encouraging, as are overall steady sales margins and improved pie manufacturing efficiencies at Foxtail.  We will continue our efforts to hold margins and improve store level execution for the Perkins and Marie Callender's brands, while simultaneously focusing on the strategic development of both concepts."

Financial Results for the Second Quarter of 2010

Revenues in the second quarter of 2010 decreased 6.3% to $114.2 million from $121.9 million in the second quarter of 2009.  The decrease resulted from a $5.5 million decrease in sales in the restaurant segment, a $2.0 million decrease in the Foxtail segment and a $0.2 million decrease in licensing and other revenues.  Company-owned Perkins comparable restaurant sales decreased by 5.1% and Company-owned Marie Callender's comparable restaurant sales decreased by 5.6% in the second quarter of 2010 as compared to the second quarter of 2009.

Food cost for the quarter ended July 11, 2010 decreased to 25.5% of food sales from 26.3% for the quarter ended July 12, 2009.  Restaurant segment food cost was up by 0.3 percentage points to 25.5% of food sales in the quarter ended July 11, 2010, primarily due to higher dairy, coffee and seafood costs.  In the Foxtail segment, food cost decreased to 55.0% of food sales in the second quarter of 2010 from 57.6% in the second 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 0.4 percentage points to 34.0% in the second quarter of 2010 as compared to the prior year's second quarter.  The labor and benefits ratio increased by 0.3 percentage points in the restaurant segment due primarily to the decline in revenues, while the Foxtail segment labor and benefits expense decreased from 13.4% in the second quarter of 2009 to 12.2% in the second quarter of 2010.  This decrease was due primarily to improved production efficiencies, which resulted in lower production wages.

Operating expenses for the quarter ended July 11, 2010 were $32.5 million, or 28.5% of total revenues, compared to $32.1 million, or 26.3% of total revenues in the quarter ended July 12, 2009.  Restaurant segment operating expenses increased by 1.5 percentage points to 30.4% of restaurant sales in the second quarter of 2010, due primarily to a decline in revenues and increases in rent, real estate taxes and utilities.  Operating expenses in the Foxtail segment increased by 1.6 percentage points to 12.1% of segment food sales, due primarily to a decrease in food sales in the Foxtail segment, as operating expenses for this segment decreased by 3.2% during the second quarter of 2010.

General and administrative expenses were 9.5% of total revenues, an increase of 1.2 percentage points from the second quarter of 2009.  The percentage increase is primarily due to decreased revenues, higher incentive compensation accruals and legal costs, which were partially offset by lower audit fees.

Depreciation and amortization was 4.4% and 4.6% of revenues in the second quarters of 2010 and 2009, respectively.  

Interest, net was 9.0% of revenues in the quarter ended July 11, 2010, compared to 8.3% in the quarter ended July 12, 2009.  This expense increased due to an approximate $7.1 million increase in the average debt outstanding during the second 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:

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 July 11, 2010, the Company owned and operated 163 Perkins restaurants and franchised 319 Perkins restaurants.  The Company also owned and operated 76 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 Tuesday, September 7, 2010, at 10:00 a.m. (CDT) to review second quarter of 2010 earnings.  The dial-in number for the conference call is (866) 207-2203, and the conference ID number is 93324512.  A taped playback of this call will be available two hours following the call through midnight (EDT) on Tuesday, September 14, 2010.  The taped playback can be accessed by dialing (800) 642-1687 and by using access code number 93324512.

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, either nationally or 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

SOURCE Perkins & Marie Callender's Inc.