EX-99.1 2 c99998exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
P.F. Chang’s China Bistro, Inc.
 
P.F. CHANG’S REPORTS FIRST QUARTER 2010 RESULTS
SCOTTSDALE, ARIZONA, April 28, 2010 — P.F. Chang’s China Bistro, Inc. (NASDAQ: PFCB) today reported financial results for the first quarter ended April 4, 2010.
                         
(000 except per share data)   Q1 2010     Q1 2009     % Change  
Revenues
   $ 310,371     $ 309,837       0.2 %
Net income
   $ 8,691     $ 13,349       -34.9 %
Diluted net income per share
   $ 0.38     $ 0.56       -32.1 %
Weighted average shares — diluted
     23,104       23,795       -2.9 %
Highlights for the first quarter of 2010 compared to the prior year quarter include:
  •  
Consolidated revenues increased 0.2% to $310.4 million, including $0.1 million in revenues related to the Company’s two international Bistro restaurants operated under licensing agreements
 
  •  
Comparable store sales declined 2.7% at the Bistro and increased 2.2% at Pei Wei
 
  •  
Net income decreased 34.9% to $8.7 million
 
  •  
Net income per diluted share decreased 32.1% to $0.38
First quarter comparable store sales
                                 
    Fiscal 2010  
    January     February     March     Total Q1  
Bistro
                                
Traffic effect
     -1.4 %     2.1 %     2.1 %     0.8 %
Average ticket effect
     -3.0 %     -3.9 %     -3.5 %     -3.5 %
 
                        
Total comparable store sales
     -4.4 %     -1.8 %     -1.4 %     -2.7 %
 
                        
 
                                
Pei Wei
                                
Traffic effect
     2.1 %     1.9 %     0.6 %     1.5 %
Average ticket effect
     -0.5 %     2.0 %     0.5 %     0.7 %
 
                        
Total comparable store sales
     1.6 %     3.9 %     1.1 %     2.2 %
 
                        
Bistro
The Bistro achieved positive traffic during the quarter notwithstanding the negative impact of winter weather throughout the country during January and February. Average ticket at the Bistro declined during the entire quarter due to greater sales discounts, including the impact of a new happy hour rollout at the start of fiscal 2010.
Pei Wei
Pei Wei achieved positive traffic throughout the first quarter of 2010. Average ticket at Pei Wei was positive for the first quarter but was negatively impacted during January as a result of sales discounts related to initial trials of a limited-time offer menu item.
Comparable store sales for the first quarter of fiscal 2010 reflect results from the 13 week operating period in the current year compared to the same 13 week operating period in the prior year.

 

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2010 Expectations
The Company continues to anticipate that fiscal 2010 consolidated revenues will be flat compared to fiscal 2009, including expectations of slightly higher average weekly sales at Pei Wei and slightly lower average weekly sales at the Bistro. The Company intends to prospectively bolster its average ticket at the Bistro through fewer sales discounts and a slight increase to menu prices. Consequently, the Company continues to expect fiscal 2010 restaurant operating margins to be consistent with fiscal 2009 and consolidated diluted earnings per share for fiscal 2010 to approximate $2.00.
The Company expects to open four new Bistro restaurants and three new Pei Wei restaurants during fiscal 2010. The Company also plans to fully repay its outstanding credit line borrowings of $40 million and repurchase approximately $40 million in common shares under its current share repurchase authorization during fiscal 2010.
Quarterly dividend
The Company’s Board of Directors has authorized a cash dividend payment of $0.17 per share on the Company’s outstanding common stock. The dividend is payable on May 19, 2010 to shareholders of record at the close of business on May 5, 2010. The amount of the cash dividend was computed based on 45% of the Company’s net income for the quarter ended April 4, 2010.
Definitions
The following definitions apply to these terms as used throughout this release:
  •  
Net income refers to Net income attributable to PFCB common stockholders
 
  •  
Comparable store sales changes include company-operated restaurants and represent the change in period-over-period sales for the comparable restaurant base. A restaurant becomes comparable in its eighteenth month of operation.
Conference call information
The Company is hosting a conference call today at 1:00 pm ET in which management will provide further details on the first quarter results. A webcast of the call can be accessed through the company’s website at http://www.pfcb.com.
About the Company
P.F. Chang’s China Bistro, Inc. owns and operates two restaurant concepts in the Asian niche. P.F. Chang’s China Bistro features a blend of high-quality, Chinese-inspired cuisine and American hospitality in a sophisticated, contemporary bistro setting. Pei Wei Asian Diner offers a modest menu of freshly prepared pan-Asian cuisine in a relaxed, warm environment offering attentive counter service and take-out flexibility.
Note with respect to non-GAAP financial measures contained within Supplemental Financial Information
In addition to using GAAP results in evaluating the Company’s business, management measures restaurant operating income to assess the performance of its existing restaurant concepts. Restaurant operating income includes all ongoing costs related to operating the Company’s restaurants but excludes preopening expenses and partner investment expense. Because preopening and partner investment expenses are associated with expansion of the Company’s business and vary in timing and magnitude, they make an accurate assessment of the health of its ongoing operations more difficult and are therefore excluded. Additionally, general and administrative expenses are only included in the Company’s consolidated financial presentation as these costs relate to support of both restaurant concepts and are generally not specifically identifiable to individual restaurant operations. As the Company’s expansion is funded entirely from its ongoing restaurant operations, restaurant operating income is a consideration of management when determining whether and when to open additional restaurants. The non-GAAP financial information presented herein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Please see the non-GAAP to GAAP reconciliation at the bottom of pages 5 through 7 of this press release for a reconciliation of restaurant operating income to the most directly comparable GAAP measure, income from operations.

 

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Note with respect to forward looking statements
The statements contained in this press release that are not purely historical, including the Company’s estimates of its earnings, revenues and anticipated new restaurants are forward-looking statements. The accuracy of these forward-looking statements may be affected by certain risks and uncertainties, including, but not limited to, failure of the Company’s existing or new restaurants to achieve expected results; changes in general economic and political conditions that affect consumer spending; changes in government legislation that may increase labor costs; the dependency on sales concentrated in certain geographic areas or generated by corporate spending; intense competition in the restaurant industry; Global Brand Development initiatives that may impact our brand; damage to our brands or reputation; litigation; adverse public or medical opinions about the health effects of consuming our products; failure to comply with governmental regulations; changes in food costs; the inability to retain key personnel; the Company’s ability to successfully expand its operations; federal and state tax rules could negatively impact results of operations and financial position; fluctuating insurance requirements and costs; marketing programs may not be successful; potential labor shortages that may delay planned openings; the inability to develop and construct restaurants within projected budgets and time periods; seasonality of the Company’s business and other risks described in the Company’s recent SEC filings.
Contacts:
             
Investor:
  Allison Schulder   (480) 888-3000   allison.schulder@pfcb.com
 
            
Media:
  Pete Marino   (312) 339-8833   pmarino@digcommunications.com
 
  Dig Communications        

 

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P.F. Chang’s China Bistro, Inc.
Consolidated Statements of Operations
 
(In thousands, except per share amounts)
(Unaudited)
                 
    13 Weeks Ended  
    April 4,     March 29,  
    2010     2009  
Revenues
   $ 310,371     $ 309,837  
Costs and expenses:
                
Cost of sales
     84,013       83,072  
Labor
     104,475       100,707  
Operating
     52,753       50,691  
Occupancy
     17,838       17,378  
General and administrative
     19,053       19,814  
Depreciation and amortization
     19,001       18,496  
Preopening expense
     133       488  
Partner investment expense
     11       (464 )
 
            
Total costs and expenses
     297,277       290,182  
 
            
Income from operations
     13,094       19,655  
Interest and other income (expense), net
     (415 )     (940 )
 
            
Income from continuing operations before taxes
     12,679       18,715  
Provision for income taxes
     (3,788 )     (4,953 )
 
            
Income from continuing operations, net of tax
     8,891       13,762  
Income (loss) from discontinued operations, net of tax
     6       (43 )
 
            
Net income
     8,897       13,719  
Less: Net income attributable to noncontrolling interests
     206       370  
 
            
Net income attributable to PFCB
   $ 8,691     $ 13,349  
 
            
 
                
Basic income per share:
                
Income from continuing operations attributable to PFCB common stockholders
   $ 0.38     $ 0.57  
Income (loss) from discontinued operations, net of tax, attributable to PFCB common stockholders
     0.00       (0.00 )
 
            
Net income attributable to PFCB common stockholders
   $ 0.38     $ 0.57  
 
            
 
                
Diluted income per share:
                
Income from continuing operations attributable to PFCB common stockholders
   $ 0.38     $ 0.56  
Income (loss) from discontinued operations, net of tax, attributable to PFCB common stockholders
     0.00       (0.00 )
 
            
Net income attributable to PFCB common stockholders
   $ 0.38     $ 0.56  
 
            
 
                
Weighted average shares used in computation:
                
Basic
     22,631       23,442  
 
            
Diluted
     23,104       23,795  
 
            
 
                
Amounts attributable to PFCB:
                
Income from continuing operations, net of tax
   $ 8,685     $ 13,392  
Income (loss) from discontinued operations, net of tax
     6       (43 )
 
            
Net income attributable to PFCB
   $ 8,691     $ 13,349  
 
            

 

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P.F. Chang’s China Bistro, Inc.
Supplemental Financial Information
                                                         
    2008     1Q09     2Q09     3Q09     4Q09     2009     1Q10  
 
                                                        
Units
     348       350       351       356       363       363       364  
Sales weeks
     17,170       4,531       4,563       4,604       5,058       18,756       4,731  
AWS
     69,780       68,382       66,044       63,060       64,581       65,482       65,604  
Revenues (1)
     1,198,124       309,837       301,360       290,329       326,653       1,228,179       310,371  
 
                                                        
Operating costs
                                                        
Cost of sales
     325,630       83,072       79,657       76,364       87,328       326,421       84,013  
Labor
     396,911       100,707       98,111       95,713       107,052       401,583       104,475  
Operating
     198,967       50,691       48,809       50,883       53,476       203,859       52,753  
Occupancy
     69,809       17,378       17,403       17,566       18,288       70,635       17,838  
Net income attributable to noncontrolling interests
     1,933       370       288       155       595       1,408       206  
Depreciation & amortization
     68,711       18,496       18,575       19,055       18,303       74,429       19,001  
Restaurant operating income
     136,163       39,123       38,517       30,593       41,611       149,844       32,085  
 
                                                        
Development costs
                                                        
Preopening expenses
     8,457       488       461       1,550       1,420       3,919       133  
Partner investment expense
     (354 )     (464 )     (91 )     18       (92 )     (629 )     11  
 
                                                        
Other expenses
                                                        
General and administrative (2)
     77,488       19,814       20,523       20,408       22,004       82,749       19,053  
Interest and other (income) expense, net
     3,362       940       437       (85 )     345       1,637       415  
Provision for income taxes
     12,193       4,953       5,108       2,477       5,954       18,492       3,788  
Income from continuing operations
     35,017       13,392       12,079       6,225       11,980       43,676       8,685  
Income (loss) from discontinued operations, net of tax
     (7,591 )     (43 )     (474 )     (17 )     55       (479 )     6  
Net income attributable to PFCB
     27,426       13,349       11,605       6,208       12,035       43,197       8,691  
 
                                                        
Income from continuing operations per FDS
   $ 1.45     $ 0.56     $ 0.51     $ 0.27     $ 0.52     $ 1.87     $ 0.38  
 
                                                        
Fully diluted shares (FDS)
     24,080       23,795       23,526       23,285       23,045       23,413       23,104  
 
                                                        
Revenues
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
Cost of sales
     27.2 %     26.8 %     26.4 %     26.3 %     26.7 %     26.6 %     27.1 %
Labor
     33.1 %     32.5 %     32.6 %     33.0 %     32.8 %     32.7 %     33.7 %
Operating
     16.6 %     16.4 %     16.2 %     17.5 %     16.4 %     16.6 %     17.0 %
Occupancy
     5.8 %     5.6 %     5.8 %     6.1 %     5.6 %     5.8 %     5.7 %
Net income attributable to noncontrolling interests
     0.2 %     0.1 %     0.1 %     0.1 %     0.2 %     0.1 %     0.1 %
Depreciation & amortization
     5.7 %     6.0 %     6.2 %     6.6 %     5.6 %     6.1 %     6.1 %
 
                                          
Restaurant operating income
     11.4 %     12.6 %     12.8 %     10.5 %     12.7 %     12.2 %     10.3 %
 
                                          
Preopening expenses
     0.7 %     0.2 %     0.2 %     0.5 %     0.4 %     0.3 %     0.0 %
Partner investment expense
     (0.0 %)     (0.1 %)     (0.0 %)     0.0 %     (0.0 %)     (0.1 %)     0.0 %
General and administrative (2)
     6.5 %     6.4 %     6.8 %     7.0 %     6.7 %     6.7 %     6.1 %
Interest and other (income) expense, net
     0.3 %     0.3 %     0.1 %     (0.0 %)     0.1 %     0.1 %     0.1 %
Provision for income taxes
     1.0 %     1.6 %     1.7 %     0.9 %     1.8 %     1.5 %     1.2 %
 
                                          
Income from continuing operations
     2.9 %     4.3 %     4.0 %     2.1 %     3.7 %     3.6 %     2.8 %
 
                                          
Income (loss) from discontinued operations, net of tax
     (0.6 %)     (0.0 %)     (0.2 %)     (0.0 %)     0.0 %     (0.0 %)     0.0 %
 
                                          
Net income attributable to PFCB
     2.3 %     4.3 %     3.9 %     2.1 %     3.7 %     3.5 %     2.8 %
 
                                          
 
                                                        
Reconciliation of Non-GAAP Financial Information to GAAP measures:
                                                        
Restaurant operating income
     136,163       39,123       38,517       30,593       41,611       149,844       32,085  
Add: Net income attributable to noncontrolling interests
     1,933       370       288       155       595       1,408       206  
Less: General and administrative (2)
     (77,488 )     (19,814 )     (20,523 )     (20,408 )     (22,004 )     (82,749 )     (19,053 )
Less: Preopening expenses
     (8,457 )     (488 )     (461 )     (1,550 )     (1,420 )     (3,919 )     (133 )
Less: Partner investment expense
     354       464       91       (18 )     92       629       (11 )
 
                                          
Income from operations
     52,505       19,655       17,912       8,772       18,874       65,213       13,094  
 
                                          
     
Note: Consolidated results include the impact of Shared Services and Other as well as the Bistro and Pei Wei concepts
 
(1)  
Consolidated revenues include revenues related to the Bistro and Pei Wei concepts as well as Global Brand Development initiatives
 
(2)  
Consolidated general and administrative expenses includes the costs of supporting the Company, including all concepts

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Concept: P.F. Chang’s China Bistro
Supplemental Financial Information
                                                         
    2008     1Q09     2Q09     3Q09     4Q09     2009     1Q10  
 
                                                        
Units
     189       190       190       192       197       197       197  
Sales weeks
     9,373       2,458       2,470       2,486       2,736       10,150       2,561  
AWS
     98,127       95,661       91,958       87,324       89,884       91,161       90,077  
Revenues
     919,963       235,141       227,144       217,093       245,943       925,321       230,767  
 
                                                        
Operating costs
                                                        
Cost of sales
     249,911       62,963       59,749       56,624       65,480       244,816       62,711  
Labor
     301,967       76,051       73,286       71,216       80,222       300,775       78,192  
Operating
     149,083       36,973       36,373       37,487       40,050       150,883       38,546  
Occupancy
     50,670       12,441       12,412       12,390       12,943       50,186       12,640  
Net income attributable to noncontrolling interests
     1,361       179       145       104       110       538       71  
Depreciation & amortization
     51,091       13,728       13,646       13,900       13,247       54,521       13,854  
Restaurant operating income
     115,880       32,806       31,533       25,372       33,891       123,602       24,753  
 
                                                        
Revenues
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
Cost of sales
     27.2 %     26.8 %     26.3 %     26.1 %     26.6 %     26.5 %     27.2 %
Labor
     32.8 %     32.3 %     32.3 %     32.8 %     32.6 %     32.5 %     33.9 %
Operating
     16.2 %     15.7 %     16.0 %     17.3 %     16.3 %     16.3 %     16.7 %
Occupancy
     5.5 %     5.3 %     5.5 %     5.7 %     5.3 %     5.4 %     5.5 %
Net income attributable to noncontrolling interests
     0.1 %     0.1 %     0.1 %     0.0 %     0.0 %     0.1 %     0.0 %
Depreciation & amortization
     5.6 %     5.8 %     6.0 %     6.4 %     5.4 %     5.9 %     6.0 %
 
                                          
Restaurant operating income
     12.6 %     14.0 %     13.9 %     11.7 %     13.8 %     13.4 %     10.7 %
 
                                          
 
                                                        
Reconciliation of Non-GAAP Financial Information to GAAP measures:
                                                        
Restaurant operating income
     115,880       32,806       31,533       25,372       33,891       123,602       24,753  
Add: Net income attributable to noncontrolling interests
     1,361       179       145       104       110       538       71  
Less: Preopening expenses
     (5,677 )     (294 )     (280 )     (1,004 )     (1,257 )     (2,835 )     (26 )
Less: Partner investment expense
     1,066       148       20       —       68       236       —  
 
                                          
Income from operations
     112,630       32,839       31,418       24,472       32,812       121,541       24,798  
 
                                          
Note: General and administrative expenses are reflected in the Company’s consolidated results

 

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Concept: Pei Wei Asian Diner (A)
Supplemental Financial Information
                                                         
    2008     1Q09     2Q09     3Q09     4Q09     2009     1Q10  
 
                                                        
Units
     159       160       161       164       166       166       167  
Sales weeks
     7,797       2,073       2,093       2,118       2,322       8,606       2,170  
AWS
     35,675       36,011       35,459       34,578       34,701       35,171       36,597  
Revenues
     278,161       74,696       74,216       73,236       80,576       302,724       79,475  
 
                                                        
Operating costs
                                                        
Cost of sales
     75,719       20,109       19,908       19,740       21,848       81,605       21,302  
Labor
     94,944       24,656       24,825       24,497       26,830       100,808       26,283  
Operating
     49,884       13,718       12,436       13,396       13,426       52,976       14,207  
Occupancy
     19,139       4,937       4,991       5,176       5,345       20,449       5,198  
Net income attributable to noncontrolling interests
     572       191       143       51       485       870       135  
Depreciation & amortization
     16,158       4,350       4,440       4,647       4,666       18,103       4,647  
Restaurant operating income
     21,745       6,735       7,473       5,729       7,976       27,913       7,703  
 
                                                        
Revenues
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
Cost of sales
     27.2 %     26.9 %     26.8 %     27.0 %     27.1 %     27.0 %     26.8 %
Labor
     34.1 %     33.0 %     33.4 %     33.4 %     33.3 %     33.3 %     33.1 %
Operating
     17.9 %     18.4 %     16.8 %     18.3 %     16.7 %     17.5 %     17.9 %
Occupancy
     6.9 %     6.6 %     6.7 %     7.1 %     6.6 %     6.8 %     6.5 %
Net income attributable to noncontrolling interests
     0.2 %     0.3 %     0.2 %     0.1 %     0.6 %     0.3 %     0.2 %
Depreciation & amortization
     5.8 %     5.8 %     6.0 %     6.3 %     5.8 %     6.0 %     5.8 %
 
                                          
Restaurant operating income
     7.8 %     9.0 %     10.1 %     7.8 %     9.9 %     9.2 %     9.7 %
 
                                          
 
                                                        
Reconciliation of Non-GAAP Financial Information to GAAP measures:
                                                        
Restaurant operating income
     21,745       6,735       7,473       5,729       7,976       27,913       7,703  
Add: Net income attributable to noncontrolling interests
     572       191       143       51       485       870       135  
Less: Preopening expenses
     (2,780 )     (194 )     (181 )     (546 )     (163 )     (1,084 )     (107 )
Less: Partner investment expense
     (712 )     316       71       (18 )     24       393       (11 )
 
                                          
Income from operations
     18,825       7,048       7,506       5,216       8,322       28,092       7,720  
 
                                          
     
Note: General and administrative expenses are reflected in the Company’s consolidated results
 
(A)  
All current and historical operating results related to closed Pei Wei restaurants are reflected within discontinued operations for all periods presented

 

Page 7 of 9

 

P.F. Chang’s China Bistro
Supplemental Sales Information (Company Owned)
                                                                                         
Year of Unit Opening (1)  
    Pre-2002     2002     2003     2004     2005     2006     2007     2008     2009     2010     Total  
Units
     64       14       18       18       18       20       20       17       8       —       197  
 
                                                                                        
Sales (000)
1Q10
     84,443       16,452       22,541       18,179       18,840       21,713       22,542       16,961       9,017       —       230,688  
 
                                                                                        
Average Weekly Sales (AWS)
1Q10
     101,494       90,396       96,331       77,688       80,514       83,510       86,700       76,747       86,697       —       90,077  
 
                                                                                        
Year-Over-Year Change Comparable Store Sales (2)(3)
Units
     64       14       18       18       18       20       20       12       —       —       184  
1Q10
     -4.0 %     -3.0 %     -1.7 %     -1.5 %     -1.8 %     -0.7 %     -0.9 %     -5.1 %     —       —       -2.7 %
     
(1)  
Includes all restaurants opened in the period indicated.
 
(2)  
A unit becomes comparable in the eighteenth month of operation.
 
(3)  
Comparable store sales for the first quarter of fiscal 2010 reflect results from the 13 week operating period in the current year compared to the same 13 week operating period in the prior year.

 

Page 8 of 9

 

Pei Wei Asian Diner
Supplemental Sales Information
                                                                                         
Year of Unit Opening (1)  
    Pre-2002     2002     2003     2004     2005     2006     2007     2008     2009     2010     Total  
Units
     5       11       17       19       23       27       32       25       7       1       167  
 
                                                                                        
Sales (000)
1Q10
     2,748       5,557       8,770       10,017       11,151       13,175       13,954       10,399       3,075       570       79,416  
 
                                                                                        
Average Weekly Sales (AWS)
1Q10
     42,270       38,861       39,683       40,556       37,295       37,535       33,543       31,997       33,796       47,443       36,597  
 
                                                                                        
Year-Over-Year Change Comparable Store Sales (2)(3)
Units
     5       11       17       19       23       27       32       23       —       —       157  
1Q10
     1.8 %     0.6 %     0.7 %     -0.2 %     2.5 %     3.5 %     4.1 %     2.4 %     —       —       2.2 %
     
(1)  
Includes all restaurants opened in the period indicated.
 
(2)  
A unit becomes comparable in the eighteenth month of operation.
 
(3)  
Comparable store sales for the first quarter of fiscal 2010 reflect results from the 13 week operating period in the current year compared to the same 13 week operating period in the prior year.

 

Page 9 of 9