EX-99.1 2 g02594exv99w1.htm EX-99.1 PRESS RELEASE Ex-99.1
 

EXHIBIT 99.1
         
FOR IMMEDIATE RELEASE
  Contact:   R. Gregory Lewis
 
      615-269-1900
J. ALEXANDER’S CORPORATION REPORTS
SECOND QUARTER RESULTS FOR 2006
     NASHVILLE, TN., July 27, 2006 -— J. Alexander’s Corporation (AMEX: JAX) today reported operating results for the second quarter and first half of 2006.
     Highlights for the most recent quarter compared to the second period of 2005 were as follows:
  •   Net sales increased 7.7% to $33,341,000 from $30,953,000.
 
  •   Weekly average same store sales per restaurant rose 3.3% to $90,900 from $88,000.
 
  •   Net income decreased 27.7% to $711,000, or $.10 per diluted share, from $984,000, or $.14 per diluted share.
     Commenting on the performance, J. Alexander’s Corporation chairman, president and chief executive officer Lonnie J. Stout II said, “Our results for the quarter just ended were generally in line with our business plan. As expected, our earnings comparison for the most recent quarter to the second period of 2005 was difficult due to several factors, including the effect of a change in pricing format in April of 2005 and other operating efficiencies which had a positive impact on profitability in last year’s second quarter.”
     Stout said the Company was “pleased with the gain in same store sales in the second quarter of 2006 with the exception of softness in sales of most of its Midwestern restaurants.” The Company’s average guest check, including alcoholic beverage sales, increased by approximately 5% in the second quarter of 2006 over the corresponding period a year earlier while average guest counts declined on a same store basis by approximately 2.1%. Average

 

 

J. Alexander’s Corporation Reports Second Quarter Results for 2006 — Page 2
weekly sales per restaurant for the second period of 2006 rose 4% to $91,500 from $88,000 reported in the comparable quarter of 2005.
     “We were also pleased that cost of sales as a percentage of net sales in the second quarter of 2006 was in line with the cost of sales during the same period a year ago,” Stout continued. He said, however, that the Company had lower restaurant operating margins in the most recent quarter because of increases in labor and restaurant operating expenses. The higher labor expenses were due in part to minimum wage increases and to focused training and development efforts associated with one of the Company’s under-performing restaurants. The higher restaurant operating expenses resulted from increases in repairs and maintenance expenses, losses related to disposals of assets replaced, credit card fees and occupancy costs associated with the Company’s restaurant opened in the fourth quarter of 2005.
     The Company’s results for the second quarter of 2006 were also affected by the cost of marketing research conducted during the quarter and by lower gift card revenues and income than were recorded in the same quarter of 2005. In addition, results for the second quarter of 2005 included other income of $57,000 related to a gain recognized on the sale of stock held as an investment.
     For the first six months of 2006, J. Alexander’s Corporation recorded net sales of $68,579,000, up 8.7% from $63,107,000 posted in the first half of 2005. The Company’s net income for the first half of 2006 was $2,148,000, or $.31 per diluted share, an increase of 11.1% from net income of $1,933,000, or $.28 per diluted share, posted in the comparable two quarters of 2005.
     J. Alexander’s Corporation had weekly average same store sales per restaurant of $93,500 through the first half of 2006, up 4.2% over $89,700 recorded in the corresponding six

 

 

J. Alexander’s Corporation Reports Second Quarter Results for 2006 — Page 3
months a year ago. The Company had average weekly sales per restaurant of $94,100 in the first two quarters of 2006, up 4.9% from $89,700 reported in the same period a year earlier. The average guest check, including alcoholic beverage sales, rose 5.5% in the first half of 2006 over the first half of 2005 while average guest counts declined on a same store basis by approximately 1.6%.
     Stout noted that J. Alexander’s Corporation continues to have a favorable outlook for the balance of 2006, but does anticipate continued pressure on restaurant margins from increases in various operating costs and a continued softness in sales of several Midwestern restaurants. “We remain cautious in our outlook for the last half of 2006 as we expect continued increases in operating costs due to higher commodity costs and inflationary pressures,” Stout said. “While utility costs did not increase as much as expected in the second quarter, higher gasoline prices continue to impact the cost of many of the products we use in our restaurants.”
     Stout said the Company will consider increasing prices on selected menu items to compensate for higher input costs. “As we have noted in the past, we are constantly monitoring our restaurant margins and will continue to carefully consider selected menu price increases to maintain or improve them.”
     J. Alexander’s Corporation operates its 28 J. Alexander’s restaurants in Alabama, Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Michigan, Ohio, Tennessee and Texas. J. Alexander’s is an upscale, contemporary American restaurant known for its wood-fired cuisine. 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 Reports Second Quarter Results for 2006 — Page 4
     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 increase sales and operating margins in its restaurants; changes in business or economic conditions, including rising food costs and product shortages; the effect of higher gasoline prices 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; expenses incurred if the Company is the subject of claims or litigation or increased governmental regulation; 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 American Stock Exchange. 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.

 

 

J. Alexander’s Corporation Reports Second Quarter Results for 2006 — Page 5
J. Alexander’s Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited in thousands, except per share amounts)
                                 
    Quarter Ended     Six Months Ended  
    July 2     July 3     July 2     July 3  
    2006     2005     2006     2005  
Net sales
  $ 33,341     $ 30,953     $ 68,579     $ 63,107  
Costs and expenses:
                                
Cost of sales
    10,870       10,104       22,419       20,868  
Restaurant labor and related costs
    10,810       9,791       21,809       19,781  
Depreciation and amortization of restaurant property and equipment
    1,307       1,198       2,605       2,386  
Other operating expenses
    6,551       5,866       13,348       12,087  
 
                        
Total restaurant operating expenses
    29,538       26,959       60,181       55,122  
General and administrative expenses
    2,488       2,326       4,879       4,616  
 
                        
Operating income
    1,315       1,668       3,519       3,369  
Other income (expense):
                                
Interest expense, net
     (400 )     (447 )     (825 )     (909 )
Other, net
     22       75       51       86  
 
                        
Total other expense
    (378 )     (372 )     (774 )     (823 )
 
                        
Income before income taxes
    937       1,296       2,745       2,546  
Income tax provision
    (226 )     (312 )     (597 )     (613 )
 
                        
Net income
  $ 711     $ 984     $ 2,148     $ 1,933  
 
                        
Earnings per share:
                                
Basic earnings per share
  $ .11     $ .15     $ .33     $ .30  
 
                        
Diluted earnings per share
  $ .10     $ .14     $ .31     $ .28  
 
                        
Weighted average number of shares:
                                
Basic earnings per share
    6,542       6,469       6,537       6,465  
Diluted earnings per share
    6,835       6,792       6,828       6,788  

 

 

J. Alexander’s Corporation Reports Second Quarter Results for 2006 — Page 6
J. Alexander’s Corporation and Subsidiaries
Consolidated Statements of Income
Percentages of Net Sales (Unaudited)
                                 
    Quarter Ended     Six Months Ended  
    July 2     July 3     July 2     July 3  
    2006     2005     2006     2005  
Net sales
    100.0 %     100.0 %     100.0 %     100.0 %
Costs and expenses:
                                
Cost of sales
    32.6       32.6       32.7       33.1  
Restaurant labor and related costs
    32.4       31.6       31.8       31.3  
Depreciation and amortization of restaurant property and equipment
    3.9       3.9       3.8       3.8  
Other operating expenses
    19.6       19.0       19.5       19.2  
 
                        
Total restaurant operating expenses
    88.6       87.1       87.8       87.3  
General and administrative expenses
    7.5       7.5       7.1       7.3  
 
                        
Operating income
    3.9       5.4       5.1       5.3  
Other income (expense):
                                
Interest expense, net
     (1.2 )     (1.4 )     (1.2 )     (1.4 )
Other, net
    0.1       0.2       0.1       0.1  
 
                        
Total other expense
    (1.1 )     (1.2 )     (1.1 )     (1.3 )
 
                        
Income before income taxes
    2.8       4.2       4.0       4.0  
Income tax provision
    (0.7 )     (1.0 )     (0.9 )     (1.0 )
 
                        
Net income
    2.1 %     3.2 %     3.1 %     3.1 %
 
                        
 
                                
Note: Certain percentage totals do not sum due to rounding.
                          
 
                                
Average Weekly Sales Information:
                                
 
                                
Average weekly sales per restaurant
  $ 91,500     $ 88,000     $ 94,100     $ 89,700  
Percent increase
    +4.0 %             +4.9 %        
 
                                
Same store weekly sales per restaurant (1)
  $ 90,900     $ 88,000     $ 93,500     $ 89,700  
Percent increase
    +3.3 %             +4.2 %        
     (1) Includes the twenty-seven restaurants open for more than eighteen months.

 

 

J. Alexander’s Corporation Reports Second Quarter Results for 2006 — Page 7
J. Alexander’s Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited dollars in thousands)
                 
    July 2     January 1  
    2006     2006  
ASSETS
                
Current Assets
                
Cash and cash equivalents
  $ 8,600     $ 8,200  
Deferred income taxes
    964       964  
Other current assets
    4,667       4,542  
 
            
Total current assets
    14,231       13,706  
Other assets
    1,224       1,164  
Property and equipment, net
    73,016       74,187  
Deferred income taxes
    4,510       4,510  
Deferred charges, net
    705       733  
 
            
 
   $ 93,686     $ 94,300  
 
            
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities
  $ 10,219     $ 12,897  
Long-term debt and capital lease obligations
    22,755       23,193  
Other long-term liabilities
    5,351       5,103  
Stockholders’ equity
    55,361       53,107  
 
            
 
   $ 93,686     $ 94,300