EX-99.1 2 c84302exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
P.F. CHANG’S CHINA BISTRO, INC.
P.F. CHANG’S EARNS $0.56 PER SHARE AND
INCREASES FISCAL 2009 EARNINGS GUIDANCE
SCOTTSDALE, ARIZONA, April 22, 2009 — P.F. Chang’s China Bistro, Inc. (NASDAQ: PFCB) today reported consolidated income from continuing operations(1) of $13.4 million for the first quarter ended March 29, 2009 compared to $10.0 million for the first quarter of the prior year. Net income (2) for the first quarter of fiscal 2009 totaled $13.3 million compared to $9.6 million for the first quarter of the prior year.
Income from continuing operations(1) per diluted share for the first quarter of fiscal 2009 was $0.56 compared to $0.41 for the first quarter of the prior year. Net income(2) per diluted share was $0.56 compared to $0.40 in the prior year.
                 
(000 except per share data)   1Q09     1Q08  
Revenues
   $ 309,837     $ 305,917  
 
                
Income from continuing operations(1)
   $ 13,392     $ 9,978  
Net income(2)
  $ 13,349     $ 9,649  
 
                
Diluted income per share:
                
Income from continuing operations(1)
   $ 0.56     $ 0.41  
Net income(2)
   $ 0.56     $ 0.40  
 
                
Weighted average shares — diluted
     23,795       24,295  
     
(1)  
Income from continuing operations refers to Income from continuing operations, net of tax attributable to PFCB common stockholders.
 
(2)  
Net income refers to Net income attributable to PFCB common stockholders.
For the first quarter of 2009, consolidated revenues were $309.8 million compared to $305.9 million for the first quarter of 2008. Sales at company-owned P.F. Chang’s China Bistro restaurants accounted for $235.1 million of consolidated revenues and sales at the Company’s Pei Wei Asian Diner restaurants accounted for $74.7 million of consolidated revenues.
During the first quarter of fiscal 2009, both restaurant concepts experienced a reduction in overall guest traffic as well as a slight decline in average check reflecting the net impact of menu mix changes. Comparable store sales at the Bistro declined 6.6% during the first quarter with decreases of 4.8%, 7.0%, and 8.5% in January, February and March, respectively. Comparable store sales at Pei Wei declined 2.2% during the first quarter with decreases of 4.1% and 2.5% in January and February, respectively, and an increase of 0.3% in March.
During the first quarter of 2009, the Company opened one new Bistro and one new Pei Wei restaurant.

 

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2009 Expectations
Due to expectations that the current negative sales environment will continue through the remainder of 2009, the Company anticipates a significant decline in average weekly sales during fiscal 2009, with an estimated decrease of approximately 6% to 7% at the Bistro and approximately 4% to 5% at Pei Wei. Consolidated revenues for fiscal 2009 are expected to increase 1% to 2% compared to fiscal 2008.
Despite lower anticipated average weekly sales, the Company currently projects that fiscal 2009 restaurant operating margins will be better than previously expected due to incremental operational improvement opportunities. As a result, the Company has increased full year earnings expectations and anticipates fiscal 2009 EPS from continuing operations will range from $1.45 to $1.50 per share.
The Company currently expects to open eight new Bistro restaurants and six new Pei Wei restaurants during fiscal 2009. As a result, the Company continues to anticipate a significant reduction in preopening expenses for fiscal 2009 compared to fiscal 2008. Gross capital expenditures for fiscal 2009 are expected to approximate $45.0 million to $55.0 million.
International Expansion
As previously announced, the Company is pursuing the international expansion of its P.F. Chang’s China Bistro restaurants and has recently entered into a development and license agreement with M.H. Alshaya, the Middle East’s leading retailer, to develop 34 Bistro restaurants throughout the Middle East over the next 10 years.
SFAS 160 — Noncontrolling Interests
As a result of adopting SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, at the start of fiscal 2009, the Company has changed its income statement presentation of noncontrolling interests (previously shown as minority interest). Minority interest is no longer separately reported as a reduction to net income but is instead shown below net income under the heading “net income attributable to noncontrolling interests”. The calculation of earnings per share remains unchanged and continues to be based on income attributable to PFCB. The Company’s first quarter Form 10-Q filing with the SEC will contain additional information regarding the accounting and reporting impact of the Company’s adoption of SFAS 160.
The Company is hosting a conference call today at 1:00 pm ET in which management will provide further details on the current quarter results. A webcast of the call can be accessed through the company’s website at http://www.pfcb.com.
P.F. Chang’s China Bistro owns and operates two restaurant concepts in the Asian niche. P.F. Chang’s China Bistro features a blend of high-quality, traditional Chinese 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.

 

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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 these costs are solely related to expansion of the Company’s business, 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 primary 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.
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 food costs; the financial performance of restaurants concentrated in certain geographic areas; litigation; the Company’s inability to retain key personnel; potential labor shortages that may delay planned openings; changes in government legislation that may increase labor costs; intense competition in the restaurant industry; tax returns that may be subjected to audits and could have material adverse impact; rising insurance costs; the inability to develop and construct the Company’s restaurants within projected budgets and time periods; failure to comply with governmental regulations; changes in how the Company accounts for certain aspects of the its partnership program; the Company’s ability to successfully expand its operations; implementation of new accounting software; 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  
    March 29,     March 30,  
    2009     2008  
Revenues
   $ 309,837     $ 305,917  
Costs and expenses:
                
Cost of sales
     83,072       83,530  
Labor
     100,707       103,381  
Operating
     50,691       48,061  
Occupancy
     17,378       17,626  
General and administrative
     19,814       18,521  
Depreciation and amortization
     18,496       16,370  
Preopening expense
     488       2,819  
Partner investment expense
     (464 )     411  
 
            
Total costs and expenses
     290,182       290,719  
 
            
Income from operations
     19,655       15,198  
Interest and other income (expense), net
     (940 )     (934 )
 
            
Income from continuing operations before taxes
     18,715       14,264  
Provision for income taxes
     (4,953 )     (3,581 )
 
            
Income from continuing operations, net of tax
     13,762       10,683  
Loss from discontinued operations, net of tax
     (43 )     (329 )
 
            
Net income
     13,719       10,354  
Less: Net income attributable to noncontrolling interests
     370       705  
 
            
Net income attributable to PFCB
   $ 13,349     $ 9,649  
 
            
 
                
Basic income per share:
                
Income from continuing operations attributable to PFCB common stockholders
   $ 0.57     $ 0.42  
Loss from discontinued operations, net of tax, attributable to PFCB common stockholders
     (0.00 )     (0.02 )
 
            
Net income attributable to PFCB common stockholders
   $ 0.57     $ 0.40  
 
            
 
                
Diluted income per share:
                
Income from continuing operations attributable to PFCB common stockholders
   $ 0.56     $ 0.41  
Loss from discontinued operations, net of tax, attributable to PFCB common stockholders
     (0.00 )     (0.01 )
 
            
Net income attributable to PFCB common stockholders
   $ 0.56     $ 0.40  
 
            
 
                
Weighted average shares used in computation:
                
Basic
     23,442       23,972  
 
            
Diluted
     23,795       24,295  
 
            
 
                
Amounts attributable to PFCB common stockholders:
                
Income from continuing operations, net of tax
   $ 13,392     $ 9,978  
Loss from discontinued operations, net of tax
     (43 )     (329 )
 
            
Net income
   $ 13,349     $ 9,649  
 
            

 

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P.F. Chang’s China Bistro, Inc.
Supplemental Financial Information
                                                         
    2007     1Q08     2Q08     3Q08     4Q08     2008     1Q09  
 
        
Units
     306       322       331       337       348       348       350  
Sales weeks
     14,443       4,122       4,256       4,328       4,464       17,170       4,531  
AWS
     75,067       74,216       70,849       68,363       66,039       69,780       68,382  
Revenues
     1,084,193       305,917       301,533       295,877       294,797       1,198,124       309,837  
 
                                                        
Operating costs
                                                        
Cost of sales
     297,242       83,530       82,132       80,368       79,600       325,630       83,072  
Labor
     364,074       103,381       99,971       98,059       95,500       396,911       100,707  
Operating
     172,147       48,061       49,366       52,201       49,339       198,967       50,691  
Occupancy
     62,164       17,626       17,511       17,270       17,402       69,809       17,378  
Net income attributable to noncontrolling interests
     4,169       705       487       367       374       1,933       370  
Depreciation & amortization
     55,988       16,370       17,150       17,235       17,956       68,711       18,496  
Restaurant operating income
     128,409       36,244       34,916       30,377       34,626       136,163       39,123  
 
                                                        
Development costs
                                                        
Preopening expenses
     14,310       2,819       1,808       1,519       2,311       8,457       488  
Partner investment expense
     (2,012 )     411       (500 )     99       (364 )     (354 )     (464 )
 
                                                        
Other expenses
                                                        
General and administrative (1)
     66,968       18,521       19,128       18,152       21,687       77,488       19,814  
Interest and other (income) expense, net
     100       934       949       895       584       3,362       940  
Provision for income taxes
     12,420       3,581       3,636       2,057       2,919       12,193       4,953  
Income from continuing operations
     36,623       9,978       9,895       7,655       7,489       35,017       13,392  
Loss from discontinued operations, net of tax
     (4,560 )     (329 )     (525 )     (4,693 )     (2,044 )     (7,591 )     (43 )
Net income attributable to PFCB
     32,063       9,649       9,370       2,962       5,445       27,426       13,349  
 
        
Income from continuing operations per FDS
   $ 1.41     $ 0.41     $ 0.41     $ 0.32     $ 0.31     $ 1.45     $ 0.56  
 
        
Fully diluted shares (FDS)
     25,899       24,295       24,247       23,927       23,851       24,080       23,795  
 
        
Revenues
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
Cost of sales
     27.4 %     27.3 %     27.2 %     27.2 %     27.0 %     27.2 %     26.8 %
Labor
     33.6 %     33.8 %     33.2 %     33.1 %     32.4 %     33.1 %     32.5 %
Operating
     15.9 %     15.7 %     16.4 %     17.6 %     16.7 %     16.6 %     16.4 %
Occupancy
     5.7 %     5.8 %     5.8 %     5.8 %     5.9 %     5.8 %     5.6 %
Net income attributable to noncontrolling interests
     0.4 %     0.2 %     0.2 %     0.1 %     0.1 %     0.2 %     0.1 %
Depreciation & amortization
     5.2 %     5.4 %     5.7 %     5.8 %     6.1 %     5.7 %     6.0 %
 
                                          
Restaurant operating income
     11.8 %     11.8 %     11.6 %     10.3 %     11.7 %     11.4 %     12.6 %
 
                                          
Preopening expenses
     1.3 %     0.9 %     0.6 %     0.5 %     0.8 %     0.7 %     0.2 %
Partner investment expense
     (0.2 %)     0.1 %     (0.2 %)     0.0 %     (0.1 %)     (0.0 %)     (0.1 %)
General and administrative (1)
     6.2 %     6.1 %     6.3 %     6.1 %     7.4 %     6.5 %     6.4 %
Interest and other (income) expense, net
     0.0 %     0.3 %     0.3 %     0.3 %     0.2 %     0.3 %     0.3 %
Provision for income taxes
     1.1 %     1.2 %     1.2 %     0.7 %     1.0 %     1.0 %     1.6 %
 
                                          
Income from continuing operations
     3.4 %     3.3 %     3.3 %     2.6 %     2.5 %     2.9 %     4.3 %
 
                                          
Loss from discontinued operations, net of tax
     (0.4 %)     (0.1 %)     (0.2 %)     (1.6 %)     (0.7 %)     (0.6 %)     (0.0 %)
 
                                          
Net income attributable to PFCB
     3.0 %     3.2 %     3.1 %     1.0 %     1.8 %     2.3 %     4.3 %
 
                                          
 
        
Reconciliation of Non-GAAP Financial Information to GAAP measures:
                                                        
Restaurant operating income
     128,409       36,244       34,916       30,377       34,626       136,163       39,123  
Add: Net income attributable to noncontrolling interests
     4,169       705       487       367       374       1,933       370  
Less: General and administrative (1)
     (66,968 )     (18,521 )     (19,128 )     (18,152 )     (21,687 )     (77,488 )     (19,814 )
Less: Preopening expenses
     (14,310 )     (2,819 )     (1,808 )     (1,519 )     (2,311 )     (8,457 )     (488 )
Less: Partner investment expense
     2,012       (411 )     500       (99 )     364       354       464  
 
                                          
Income from operations
     53,312       15,198       14,967       10,974       11,366       52,505       19,655  
 
                                          
     
Note:  
Consolidated results include the impact of Shared Services and Other as well as the Bistro and Pei Wei concepts.
 
(1)  
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
                                                         
    2007     1Q08     2Q08     3Q08     4Q08     2008     1Q09  
 
                                                        
Units
     172       177       182       182       189       189       190  
Sales weeks
     8,289       2,275       2,330       2,355       2,413       9,373       2,458  
AWS
     102,486       103,763       99,502       96,139       93,427       98,127       95,661  
Revenues
     849,743       236,089       231,972       226,443       225,459       919,963       235,141  
 
                                                        
Operating costs
                                                        
Cost of sales
     232,578       64,410       62,999       61,430       61,072       249,911       62,963  
Labor
     282,919       79,318       76,153       74,387       72,109       301,967       76,051  
Operating
     131,863       36,324       36,603       38,556       37,600       149,083       36,973  
Occupancy
     47,059       12,981       12,730       12,536       12,423       50,670       12,441  
Net income attributable to noncontrolling interests
     3,351       497       370       271       223       1,361       179  
Depreciation & amortization
     42,294       12,265       12,794       12,771       13,261       51,091       13,728  
Restaurant operating income
     109,679       30,294       30,323       26,492       28,771       115,880       32,806  
 
                                                        
Revenues
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
Cost of sales
     27.4 %     27.3 %     27.2 %     27.1 %     27.1 %     27.2 %     26.8 %
Labor
     33.3 %     33.6 %     32.8 %     32.9 %     32.0 %     32.8 %     32.3 %
Operating
     15.5 %     15.4 %     15.8 %     17.0 %     16.7 %     16.2 %     15.7 %
Occupancy
     5.5 %     5.5 %     5.5 %     5.5 %     5.5 %     5.5 %     5.3 %
Net income attributable to noncontrolling interests
     0.4 %     0.2 %     0.2 %     0.1 %     0.1 %     0.1 %     0.1 %
Depreciation & amortization
     5.0 %     5.2 %     5.5 %     5.6 %     5.9 %     5.6 %     5.8 %
 
                                          
Restaurant operating income
     12.9 %     12.8 %     13.1 %     11.7 %     12.7 %     12.6 %     14.0 %
 
                                          
 
                                                        
Reconciliation of Non-GAAP Financial Information to GAAP measures:
                                                        
Restaurant operating income
     109,679       30,294       30,323       26,492       28,771       115,880       32,806  
Add: Net income attributable to noncontrolling interests
     3,351       497       370       271       223       1,361       179  
Less: Preopening expenses
     (9,012 )     (1,729 )     (1,271 )     (732 )     (1,945 )     (5,677 )     (294 )
Less: Partner investment expense
     3,358       245       500       103       218       1,066       148  
 
                                          
Income from operations
     107,376       29,307       29,922       26,134       27,267       112,630       32,839  
 
                                          
     
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
                                                         
    2007     1Q08     2Q08     3Q08     4Q08     2008     1Q09  
 
                                                        
Units
     134       145       149       155       159       159       160  
Sales weeks
     6,154       1,847       1,926       1,973       2,051       7,797       2,073  
AWS
     38,095       37,806       36,117       35,192       33,806       35,675       36,011  
Revenues
     234,450       69,828       69,561       69,434       69,338       278,161       74,696  
 
                                                        
Operating costs
                                                        
Cost of sales
     64,664       19,120       19,133       18,938       18,528       75,719       20,109  
Labor
     81,155       24,063       23,818       23,672       23,391       94,944       24,656  
Operating
     40,284       11,737       12,763       13,645       11,739       49,884       13,718  
Occupancy
     15,105       4,645       4,781       4,734       4,979       19,139       4,937  
Net income attributable to noncontrolling interests
     818       208       117       96       151       572       191  
Depreciation & amortization
     12,278       3,774       3,995       4,119       4,270       16,158       4,350  
Restaurant operating income
     20,146       6,281       4,954       4,230       6,280       21,745       6,735  
 
                                                        
Revenues
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
Cost of sales
     27.6 %     27.4 %     27.5 %     27.3 %     26.7 %     27.2 %     26.9 %
Labor
     34.6 %     34.5 %     34.2 %     34.1 %     33.7 %     34.1 %     33.0 %
Operating
     17.2 %     16.8 %     18.3 %     19.7 %     16.9 %     17.9 %     18.4 %
Occupancy
     6.4 %     6.7 %     6.9 %     6.8 %     7.2 %     6.9 %     6.6 %
Net income attributable to noncontrolling interests
     0.3 %     0.3 %     0.2 %     0.1 %     0.2 %     0.2 %     0.3 %
Depreciation & amortization
     5.2 %     5.4 %     5.7 %     5.9 %     6.2 %     5.8 %     5.8 %
 
                                          
Restaurant operating income
     8.6 %     9.0 %     7.1 %     6.1 %     9.1 %     7.8 %     9.0 %
 
                                          
 
                                                        
Reconciliation of Non-GAAP Financial Information to GAAP measures:
                                                        
Restaurant operating income
     20,146       6,281       4,954       4,230       6,280       21,745       6,735  
Add: Net income attributable to noncontrolling interests
     818       208       117       96       151       572       191  
Less: Preopening expenses
     (5,298 )     (1,090 )     (537 )     (787 )     (366 )     (2,780 )     (194 )
Less: Partner investment expense
     (1,346 )     (656 )     —       (202 )     146       (712 )     316  
 
                                          
Income from operations
     14,320       4,743       4,534       3,337       6,211       18,825       7,048  
 
                                          
     
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     Total  
 
                                                                                
Units
     64       14       18       18       18       20       20       17       1       190  
 
                                                                                
Sales (000)
 
                                                                                
1Q09
     90,049       17,380       23,552       18,967       19,752       22,320       23,344       19,653       118       235,135  
 
                                                                                
Average Weekly Sales (AWS)
 
                                                                                
1Q09
     108,231       95,496       100,651       81,054       84,412       85,846       89,784       88,928       118,392       95,661  
 
                                                                                
Year-Over-Year Change in AWS (2)
 
                                                                                
1Q09
     -6.6 %     -5.1 %     -6.4 %     -6.5 %     -6.5 %     -6.2 %     -13.5 %     -20.0 %     —       -7.4 %
 
                                                                                
Year-Over-Year Change Comp Store Sales (3)
 
                                                                                
Units
     64       14       18       18       18       20       16       —       —       168  
 
                                                                                
1Q09
     -6.6 %     -5.1 %     -6.4 %     -6.5 %     -6.5 %     -6.2 %     -10.4 %     —       —       -6.6 %
     
(1)  
Includes all restaurants opened in the period indicated.
 
(2)  
A unit is included in the year-over-year change in AWS in the thirteenth month of operation.
 
(3)  
A unit becomes comparable in the eighteenth month of operation.

 

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     Total  
 
                                                                                
Units
     5       11       17       19       23       27       32       25       1       160  
 
                                                                                
Sales (000)
 
                                                                                
1Q09
     2,690       5,502       8,729       10,036       10,874       12,762       13,386       10,374       298       74,651  
 
                                                                                
Average Weekly Sales (AWS)
 
                                                                                
1Q09
     41,380       38,474       39,498       40,632       36,367       36,359       32,179       31,920       49,652       36,011  
 
                                                                                
Year-Over-Year Change in AWS (2)
 
                                                                                
1Q09
     -4.5 %     -3.9 %     -2.4 %     -2.3 %     -2.1 %     -0.3 %     -3.6 %     -22.7 %     —       -3.6 %
 
                                                                                
Year-Over-Year Change Comp Store Sales (3)
 
                                                                                
Units
     5       11       17       19       23       27       31       —       —       133  
 
                                                                                
1Q09
     -4.5 %     -3.9 %     -2.4 %     -2.3 %     -2.1 %     -0.3 %     -2.9 %     —       —       -2.2 %
     
(1)  
Includes all restaurants opened in the period indicated.
 
(2)  
A unit is included in the year-over-year change in AWS in the thirteenth month of operation.
 
(3)  
A unit becomes comparable in the eighteenth month of operation.

 

Page 9 of 9