UNITED STATES | ||
FORM 8-K | ||
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||
Date of Report (Date of earliest event reported): January 21, 2015 | ||
RUTH’S HOSPITALITY GROUP, INC. (Exact name of Registrant as specified in its charter) | ||
Delaware |
000-51485 |
72-1060618 |
1030 W. Canton Avenue, Ste. 100, Winter Park, FL 32789 | ||
(407) 333-7440 | ||
(Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
Item 2.01. Completion of Acquisition or Disposition of Assets.
As previously reported, on November 16, 2014, Ruth’s Hospitality Group, Inc. and certain of its affiliates (collectively, the “Company”) and Landry’s, Inc. and Mitchell’s Entertainment, Inc., an affiliate of Landry’s Inc. (together with Landry’s Inc., “Landry’s”), entered into an asset purchase agreement pursuant to which the Company agreed to sell its Mitchell’s Fish Market and Mitchell’s/Cameron’s Steakhouse restaurants (collectively, the “Mitchell’s Restaurants”) and related assets to Landry’s.
On January 21, 2015, the Company closed the sale of the Mitchell’s Restaurants and related assets for a purchase price of $10 million. The assets sold consist primarily of leasehold interests, leasehold improvements, restaurant equipment and furnishings, inventory, and related intangible assets, including brand names and trademarks associated with the 21 Mitchell’s Restaurants.
Item 2.02. Results of Operations and Financial Condition.
On January 27, 2015, the Company released preliminary and unaudited quarterly condensed consolidated financial statements for the thirty-nine weeks ended September 28, 2014 and the fiscal year ended December 29, 2013, which have been revised to reclassify the Mitchell’s Restaurants’ operating results as discontinued operations. The unaudited quarterly condensed consolidated financial statements, along with reconciliations of non-GAAP measures used therein, are attached hereto as Exhibit 99.1 and furnished herewith.
The information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective January 21, 2015 and in connection with the closing of the sale of the Mitchell’s Restaurants and related assets, Peter J. Beaudrault ceased to serve as President and Chief Operating Officer of Mitchell’s Fish Market. Mr. Beaudrault remains employed with the Company in a non-executive officer capacity.
The Company expects to provide Mr. Beaudrault with compensation and benefits consistent with the severance provisions governing resignation with good reason and termination without cause set forth in his employment agreement. A copy of Mr. Beaudrault’s employment agreement was attached as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on April 30, 2012.
Item 7.01. Regulation FD Disclosure.
On January 21, 2015, the Company issued a press release announcing the closing of the sale of the Mitchell’s Restaurants and related assets. A copy of the press release is attached hereto as Exhibit 99.2 and furnished herewith.
The information set forth in the attached Exhibit 99.2 shall not be deemed “filed” for the purpose of Section 18 of the Exchange Act, shall not be subject to liabilities of that section and shall not be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.
Item 9.01. Financial Statements and Exhibits.
(b) Pro forma financial information
Unaudited pro forma consolidated financial statements and accompanying notes of the Company giving effect to the sale of the Mitchell’s Restaurants and related assets are attached hereto as Exhibit 99.3, filed herewith and incorporated by reference into this Item 9.01.
(d) Exhibits. |
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Exhibit No. |
Description | |
99.1 |
Preliminary and Unaudited Quarterly Condensed Consolidated Statements of Income (Loss) and Non-GAAP Financial Measures. | |
99.2 |
Press release dated January 21, 2015. | |
99.3 | Unaudited Pro Forma Consolidated Financial Information of the Company. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RUTH’S HOSPITALITY GROUP, INC. | |||
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/s/ John F. McDonald, III |
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Date: January 27, 2015 |
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John F. McDonald, III |
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Title: Vice President - General Counsel Chief Compliance Officer |
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EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 | Preliminary and Unaudited Quarterly Condensed Consolidated Statements of Income (Loss) and Non-GAAP Financial Measures. | |
99.2 |
Press release dated January 21, 2015. | |
99.3 |
Unaudited Pro Forma Consolidated Financial Information of the Company. |
Exhibit 99.1
PRELIMINARY AND UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND NON-GAAP FINANCIAL MEASURES
The preliminary and unaudited quarterly condensed consolidated statements of income (loss) and the non-GAAP financial measures have been prepared as a supplement to the pro forma financial statements to illustrate the quarterly impact of the reclassification of the Mitchell’s Restaurants’ operating results to discontinued operations for fiscal years 2014 and 2013. The fiscal year 2013 operating results of three additional locations closed in fiscal year 2014 have also been reclassified to the discontinued operations line of the quarterly condensed consolidated statements of income. Therefore, the quarterly condensed consolidated statements of income do not agree to the pro forma financial statements presented in Exhibit 99.3 for fiscal year 2013.
RUTH'S HOSPITALITY GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Loss) - Preliminary and Unaudited
(Amounts in thousands, except share and per share data)
Quarter Ended |
Quarter Ended |
|||||||||||||||||||||||||||||||||||
March 31, |
June 30, |
September 29, |
December 29, |
Fiscal Year |
March 30, |
June 29, |
September 28, |
Year to Date |
||||||||||||||||||||||||||||
2013 |
2013 |
2013 |
2013 |
2013 |
2014 |
2014 |
2014 |
Q3 2014 |
||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||||||
Restaurant sales |
$ | 81,325 | $ | 73,744 | $ | 64,432 | $ | 84,699 | $ | 304,200 | $ | 85,070 | $ | 77,989 | $ | 69,283 | $ | 232,342 | ||||||||||||||||||
Franchise income |
3,663 | 3,647 | 3,498 | 4,203 | 15,011 | 4,036 | 3,807 | 3,517 | 11,360 | |||||||||||||||||||||||||||
Other operating income |
891 | 2,802 | 721 | (1,271 | ) | 3,143 | 1,248 | 1,210 | 995 | 3,453 | ||||||||||||||||||||||||||
Total revenues |
85,879 | 80,193 | 68,651 | 87,631 | 322,354 | 90,354 | 83,006 | 73,795 | 247,155 | |||||||||||||||||||||||||||
Costs and expenses: |
||||||||||||||||||||||||||||||||||||
Food and beverage costs |
25,104 | 22,097 | 19,867 | 26,318 | 93,386 | 26,667 | 24,828 | 22,165 | 73,661 | |||||||||||||||||||||||||||
Restaurant operating expenses |
37,083 | 35,624 | 34,668 | 38,289 | 145,664 | 38,843 | 37,741 | 37,238 | 113,821 | |||||||||||||||||||||||||||
Marketing and advertising |
1,579 | 3,087 | 1,362 | 3,312 | 9,340 | 1,746 | 1,923 | 1,990 | 5,658 | |||||||||||||||||||||||||||
General and administrative costs |
6,635 | 6,695 | 6,642 | 7,836 | 27,808 | 6,225 | 5,847 | 5,352 | 17,424 | |||||||||||||||||||||||||||
Depreciation and amortization expenses |
2,689 | 2,539 | 2,452 | 2,550 | 10,230 | 2,510 | 2,714 | 2,693 | 7,918 | |||||||||||||||||||||||||||
Pre-opening costs |
1 | 142 | 316 | 232 | 691 | 409 | 119 | 395 | 924 | |||||||||||||||||||||||||||
Gain on settlements, net |
- | - | (1,719 | ) | - | (1,719 | ) | - | - | - | - | |||||||||||||||||||||||||
Total costs and expenses |
73,091 | 70,184 | 63,588 | 78,537 | 285,400 | 76,400 | 73,172 | 69,833 | 219,406 | |||||||||||||||||||||||||||
Operating income |
12,788 | 10,009 | 5,063 | 9,094 | 36,954 | 13,954 | 9,834 | 3,962 | 27,749 | |||||||||||||||||||||||||||
Other income (expense): |
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Interest expense |
(516 | ) | (415 | ) | (414 | ) | (295 | ) | (1,640 | ) | (287 | ) | (298 | ) | (297 | ) | (881 | ) | ||||||||||||||||||
Other |
25 | (1 | ) | (101 | ) | (1 | ) | (77 | ) | 9 | 12 | 5 | 25 | |||||||||||||||||||||||
Income from continuing operations before income tax expense |
12,297 | 9,593 | 4,548 | 8,798 | 35,237 | 13,676 | 9,548 | 3,670 | 26,893 | |||||||||||||||||||||||||||
Income tax expense |
3,881 | 2,452 | 1,623 | 2,787 | 10,744 | 4,686 | 2,880 | 1,472 | 9,038 | |||||||||||||||||||||||||||
Income from continuing operations |
8,416 | 7,141 | 2,925 | 6,011 | 24,493 | 8,990 | 6,668 | 2,198 | 17,855 | |||||||||||||||||||||||||||
Discontinued operations: |
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Income (loss) from discontinued operations, net of income taxes |
(755 | ) | 626 | (38 | ) | (1,836 | ) | (2,004 | ) | (125 | ) | 236 | (9,496 | ) | (9,385 | ) | ||||||||||||||||||||
Net income (loss) |
$ | 7,661 | $ | 7,767 | $ | 2,887 | $ | 4,175 | $ | 22,489 | $ | 8,865 | $ | 6,904 | $ | (7,298 | ) | $ | 8,470 | |||||||||||||||||
Basic earnings (loss) per common share: |
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Continuing operations |
$ | 0.24 | $ | 0.20 | $ | 0.08 | $ | 0.17 | $ | 0.71 | $ | 0.25 | $ | 0.19 | $ | 0.06 | $ | 0.51 | ||||||||||||||||||
Discontinued operations |
(0.02 | ) | $ | 0.02 | (0.00 | ) | (0.05 | ) | (0.06 | ) | (0.00 | ) | 0.01 | (0.27 | ) | (0.27 | ) | |||||||||||||||||||
Basic earnings (loss) per share |
$ | 0.22 | $ | 0.22 | $ | 0.08 | $ | 0.12 | $ | 0.65 | $ | 0.25 | $ | 0.20 | $ | (0.21 | ) | $ | 0.24 | |||||||||||||||||
Diluted earnings (loss) per common share: |
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Continuing operations |
$ | 0.24 | $ | 0.20 | $ | 0.08 | $ | 0.17 | $ | 0.69 | $ | 0.25 | $ | 0.18 | $ | 0.06 | $ | 0.51 | ||||||||||||||||||
Discontinued operations |
(0.02 | ) | 0.02 | (0.00 | ) | (0.05 | ) | (0.06 | ) | (0.00 | ) | $ | 0.01 | (0.27 | ) | $ | (0.27 | ) | ||||||||||||||||||
Diluted earnings (loss) per share |
$ | 0.22 | $ | 0.22 | $ | 0.08 | $ | 0.12 | $ | 0.63 | $ | 0.25 | $ | 0.19 | $ | (0.21 | ) | $ | 0.24 | |||||||||||||||||
Shares used in computing earnings (loss) per common share: |
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Basic |
34,456,380 | 34,660,149 | 34,956,353 | 34,978,903 | 34,761,160 | 35,094,652 | 35,122,131 | 34,925,592 | 35,047,458 | |||||||||||||||||||||||||||
Diluted |
35,505,778 | 35,681,077 | 35,795,508 | 35,858,859 | 35,784,430 | 35,822,458 | 35,587,975 | 34,925,592 | 35,567,738 | |||||||||||||||||||||||||||
Dividends declared per common share |
$ | - | $ | 0.04 | $ | 0.04 | $ | 0.04 | $ | 0.12 | $ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.15 |
NON-GAAP FINANCIAL MEASURES
We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). Within our press releases announcing quarterly earnings, we have made reference to non-GAAP net income and non-GAAP diluted earnings per common share. These non-GAAP measurements were calculated by excluding certain non-recurring items and losses from discontinued operations. These non-GAAP measurements have been included as supplemental information. We believe that this measure represents a useful internal measure of performance. Accordingly, where these non-GAAP measures are provided, it is done so that investors have the same financial data that management uses in evaluating performance with the belief that it will assist the investment community in assessing our underlying performance on a quarter-over-quarter basis. However, because these measures are not determined in accordance with accounting principles generally accepted in the United States, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, the aforementioned measures as presented may not be directly comparable to similarly titled measures presented by other companies. These non-GAAP financial measure are presented as supplemental information and not as an alternative to any GAAP measurements.
Reconciliation of Non-GAAP Financial Measure - Unaudited
(Amounts in thousands, except share data)
Quarter Ended |
Quarter Ended |
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March 31, |
June 30, |
September 29, |
December 29, |
Fiscal Year |
March 30, |
June 29, |
September 28, |
Year to Date |
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2013 |
2013 |
2013 |
2013 |
2013 |
2014 |
2014 |
2014 |
Q3 2014 |
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GAAP net income |
$ | 7,661 | $ | 7,767 | $ | 2,887 | $ | 4,175 | $ | 22,489 | $ | 8,865 | $ | 6,904 | (7,298 | ) | $ | 8,470 | ||||||||||||||||||
Net of tax impact of excluding a cumulative adjustment from a change in accounting estimate related to gift card breakage revenue |
- | - | - | 1,306 | 1,306 | - | - | - | - | |||||||||||||||||||||||||||
Net of tax impact of excluding gain on settlements |
- | - | (1,049 | ) | - | (1,049 | ) | - | - | - | - | |||||||||||||||||||||||||
Impact of excluding certain income tax items |
- | (616 | ) | - | - | (784 | ) | - | - | - | - | |||||||||||||||||||||||||
Net of tax impact of excluding loss (income) on discontinued operations |
755 | (626 | ) | 38 | 1,836 | 2,004 | 125 | (236 | ) | 9,496 | 9,385 | |||||||||||||||||||||||||
Non-GAAP net income |
$ | 8,416 | $ | 6,525 | $ | 1,876 | $ | 7,317 | $ | 23,966 | $ | 8,990 | $ | 6,668 | $ | 2,198 | $ | 17,855 | ||||||||||||||||||
Non-GAAP diluted earnings per share |
$ | 0.24 | $ | 0.18 | $ | 0.05 | $ | 0.20 | $ | 0.67 | $ | 0.25 | $ | 0.19 | $ | 0.06 | $ | 0.50 | ||||||||||||||||||
Shares: |
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Weighted average number of common shares outstanding - basic |
34,456,380 | 34,660,149 | 34,956,353 | 34,978,903 | 34,761,160 | 35,094,652 | 35,122,131 | 34,925,592 | 35,047,458 | |||||||||||||||||||||||||||
Dilutive shares |
1,049,398 | 1,020,928 | 839,155 | 879,956 | 1,023,270 | 727,806 | 465,844 | 379,814 | 520,280 | |||||||||||||||||||||||||||
Weighted-average number of common shares outstanding - diluted |
35,505,778 | 35,681,077 | 35,795,508 | 35,858,859 | 35,784,430 | 35,822,458 | 35,587,975 | 35,305,406 | 35,567,738 |
Exhibit 99.2
For Immediate Release
Ruth’s Hospitality Group, Inc. Completes Sale of
Mitchell’s Restaurants to Landry’s, Inc.
WINTER PARK, Fla. — (BUSINESS WIRE) — January 21, 2015-- Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) today announced that it has completed its previously announced sale of substantially all of the assets related to the Mitchell’s Fish Market and Mitchell’s/Cameron’s Steakhouse businesses.
The Company expects to file a Current Report on Form 8-K within four business days containing unaudited pro forma consolidated financial statements giving effect to the sale of substantially all of the assets related to the Mitchell’s Fish Market and Mitchell’s/Cameron’s Steakhouse businesses. Excluding customary transaction-related costs, the transaction is not expected to have a material impact on the Company’s previously stated fiscal 2014 guidance.
ABOUT RUTH’S HOSPITALITY GROUP, INC.
Ruth's Hospitality Group, Inc. (NASDAQ: RUTH) is a leading restaurant company, uniquely focused on the upscale dining segment and owns the Ruth's Chris Steak House concept. Ruth's Hospitality Group, Inc., headquartered in Winter Park, Florida, was founded in 1965 and currently has more than 140 Company-owned and franchisee-owned restaurants worldwide.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” that reflect, when made, the Company’s expectations or beliefs concerning future events that involve risks and uncertainties. Forward-looking statements frequently are identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “targeting,” “will be,” “will continue,” “will likely result,” or other similar words and phrases. Similarly, statements herein that describe the Company’s objectives, plans or goals also are forward-looking statements. Actual results could differ materially from those projected, implied or anticipated by the Company’s forward-looking statements. For a discussion of risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2013, which is available on the Securities and Exchange Commission’s website at www.sec.gov. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof. You should not assume that material events subsequent to the date of this press release have not occurred.
Contacts:
Media
Alecia Pulman
(646) 277-1220
apulman@icrinc.com
Investor Relations
Fitzhugh Taylor
(203) 682-8261
ftaylor@icrinc.com
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On November 16, 2014, Ruth’s Hospitality Group, Inc. and certain of its affiliates (collectively, the “Company”) and Landry’s, Inc. and Mitchell’s Entertainment, Inc., an affiliate of Landry’s Inc. (together with Landry’s Inc., “Landry’s”), entered into an asset purchase agreement (the “Agreement”). Pursuant to the Agreement, the Company agreed to sell its Mitchell’s Fish Market and Mitchell’s/Cameron’s Steakhouse restaurants (collectively, the “Mitchell’s Restaurants”) and related assets to Landry’s for $10 million. The sale of the Mitchell’s Restaurants closed on January 21, 2015. The assets sold consist primarily of leasehold interests, leasehold improvements, restaurant equipment and furnishings, inventory, and related intangible assets, including brand names and trademarks associated with the 21 Mitchell’s Restaurants. Under the terms of the Agreement, Landry’s assumed the Mitchell’s Restaurants’ facility lease obligations and the Company will reimburse Landry’s for gift cards that are sold prior to the closing date and used at the Mitchell’s Restaurants during the 18 months following the closing date. In the Agreement, the Company and Landry’s have made customary representations and warranties and have agreed to customary covenants relating to the sale of the Mitchell’s Restaurants. Specifically, (i) before the closing date, the Company was subject to certain business conduct restrictions with respect to its operation of the Mitchell’s Restaurants, and (ii) for 18 months following the closing date, neither the Company nor Landry’s will knowingly solicit or employ, or seek to solicit or employ, certain key employees of the other party, subject to certain limited exceptions. It is anticipated that Landry’s will offer employment to substantially all of the employees of the Mitchell’s Restaurants. The Company and Landry’s have agreed to indemnify each other for losses arising from certain breaches of the Agreement and for certain other liabilities.
The unaudited pro forma condensed consolidated financial information has been prepared to illustrate the effect of the sale of the Mitchell’s Restaurants. The historical financial information has been adjusted to give effect to matters that are (1) directly attributable to the sale of the Mitchell’s Restaurants, (2) factually supportable, and (3) with respect to the statements of income, expected to have a continuing impact on the operating results of the Company. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the accompanying Notes to the unaudited pro forma condensed consolidated financial information and the historical unaudited consolidated financial statements of the Company included in our Quarterly Report on Form 10-Q for the period ended September 28, 2014 and the historical audited consolidated financial statements of the Company included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2013, and filed with the Securities and Exchange Commission (SEC).
The unaudited pro forma condensed consolidated financial information is presented for informational purposes only. It has been prepared in accordance with the regulations of the SEC and is not necessarily indicative of what our financial position or results of operations actually would have been had we completed the sale of the Mitchell’s Restaurants at the dates indicated, nor does it purport to project the future financial position or operating results of the Company.
Ruth’s Hospitality Group, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Thirty-nine Weeks Ended September 28, 2014
(Dollars amounts in thousands, except share and per share data)
Historical Ruth's Hospitality Group, Inc. |
Less: Sale of the Mitchell's Restaurants (1) |
Pro Forma Ruth's Hospitality Group, Inc. |
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Revenues: |
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Restaurant sales |
$ | 287,675 | $ | 55,333 | $ | 232,342 | ||||||
Franchise income |
11,360 | - | 11,360 | |||||||||
Other operating income |
3,664 | 211 | 3,453 | |||||||||
Total revenues |
302,699 | 55,544 | 247,155 | |||||||||
Costs and expenses: |
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Food and beverage costs |
91,631 | 17,970 | 73,661 | |||||||||
Restaurant operating expenses |
146,233 | 32,412 | 113,821 | |||||||||
Marketing and advertising |
7,352 | 1,694 | 5,658 | |||||||||
General and administrative costs |
19,445 | 2,021 | 17,424 | |||||||||
Depreciation and amortization expenses |
9,813 | 1,895 | 7,918 | |||||||||
Pre-opening costs |
924 | - | 924 | |||||||||
Loss on impairment |
15,295 | 15,295 | - | |||||||||
Total costs and expenses |
290,693 | 71,287 | 219,406 | |||||||||
Operating income (loss) |
12,006 | (15,743 | ) | 27,749 | ||||||||
Other income (expense): |
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Interest expense, net |
(881 | ) | - | (881 | ) | |||||||
Other |
47 | 22 | 25 | |||||||||
Income (loss) from continuing operations before income tax expense |
11,172 | (15,721 | ) | 26,893 | ||||||||
Income tax expense (benefit) |
2,376 | (6,662 | ) | 9,038 | ||||||||
Income (loss) from continuing operations |
$ | 8,796 | $ | (9,059 | ) | $ | 17,855 | |||||
Basic earnings (loss) per common share: |
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Continuing operations |
$ | 0.25 | $ | (0.26 | ) | $ | 0.51 | |||||
Diluted earnings (loss) per common share: |
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Continuing operations |
$ | 0.25 | $ | (0.26 | ) | $ | 0.51 | |||||
Shares used in computing earnings (loss) per common share: |
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Basic |
35,047,458 | 35,047,458 | 35,047,458 | |||||||||
Diluted |
35,567,738 | 35,567,738 | 35,567,738 | |||||||||
Dividends declared per common share |
$ | 0.15 | $ | 0.15 |
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
Ruth’s Hospitality Group, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year Ended December 29, 2013
(Dollars amounts in thousands, except share and per share data)
Historical Ruth's Hospitality Group, Inc. |
Less: Sale of the Mitchell's Restaurants (1) |
Pro Forma Ruth's Hospitality Group, Inc. |
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Revenues: |
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Restaurant sales |
$ | 388,083 | $ | 78,109 | $ | 309,974 | ||||||
Franchise income |
15,012 | - | 15,012 | |||||||||
Other operating income |
3,554 | 348 | 3,206 | |||||||||
Total revenues |
406,649 | 78,457 | 328,192 | |||||||||
Costs and expenses: |
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Food and beverage costs |
120,612 | 25,391 | 95,221 | |||||||||
Restaurant operating expenses |
194,515 | 45,360 | 149,155 | |||||||||
Marketing and advertising |
11,673 | 2,216 | 9,457 | |||||||||
General and administrative costs |
30,404 | 2,596 | 27,808 | |||||||||
Depreciation and amortization expenses |
13,060 | 2,795 | 10,265 | |||||||||
Pre-opening costs |
692 | - | 692 | |||||||||
Loss on impairment and asset disposals, net |
3,262 | 3,262 | - | |||||||||
Gain on settlements, net |
(2,156 | ) | (437 | ) | (1,719 | ) | ||||||
Total costs and expenses |
372,062 | 81,183 | 290,879 | |||||||||
Operating income (loss) |
34,587 | (2,726 | ) | 37,313 | ||||||||
Other income (expense): |
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Interest expense, net |
(1,640 | ) | - | (1,640 | ) | |||||||
Other |
(50 | ) | 22 | (72 | ) | |||||||
Income (loss) from continuing operations before income tax expense |
32,897 | (2,704 | ) | 35,601 | ||||||||
Income tax expense (benefit) |
9,102 | (1,679 | ) | 10,781 | ||||||||
Income (loss) from continuing operations |
$ | 23,795 | $ | (1,025 | ) | $ | 24,820 | |||||
Basic earnings (loss) per common share: |
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Continuing operations |
$ | 0.69 | $ | (0.03 | ) | $ | 0.71 | |||||
Diluted earnings (loss) per common share: |
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Continuing operations |
$ | 0.67 | $ | (0.03 | ) | $ | 0.69 | |||||
Shares used in computing earnings (loss) per common share: |
||||||||||||
Basic |
34,761,160 | 34,761,160 | 34,761,160 | |||||||||
Diluted |
35,784,430 | 35,784,430 | 35,784,430 | |||||||||
Dividends declared per common share |
$ | 0.12 | $ | 0.12 |
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
Ruth’s Hospitality Group, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year Ended December 30, 2012
(Dollars amounts in thousands, except share and per share data)
Historical Ruth's Hospitality Group, Inc. |
Less: Sale of the Mitchell's Restaurants (1) |
Pro Forma Ruth's Hospitality Group, Inc. |
||||||||||
Revenues: |
||||||||||||
Restaurant sales |
$ | 378,445 | $ | 80,033 | $ | 298,412 | ||||||
Franchise income |
13,836 | - | 13,836 | |||||||||
Other operating income |
3,774 | 177 | 3,597 | |||||||||
Total revenues |
396,055 | 80,210 | 315,845 | |||||||||
Costs and expenses: |
||||||||||||
Food and beverage costs |
120,215 | 25,837 | 94,378 | |||||||||
Restaurant operating expenses |
190,742 | 45,982 | 144,760 | |||||||||
Marketing and advertising |
11,178 | 1,901 | 9,276 | |||||||||
General and administrative costs |
28,299 | 2,687 | 25,612 | |||||||||
Depreciation and amortization expenses |
14,556 | 3,486 | 11,070 | |||||||||
Pre-opening costs |
540 | 0 | 540 | |||||||||
Loss on impairment and asset disposals, net |
4,955 | 1,693 | 3,262 | |||||||||
Gain on settlements, net |
(683 | ) | - | (683 | ) | |||||||
Total costs and expenses |
369,802 | 81,587 | 288,215 | |||||||||
Operating income (loss) |
26,253 | (1,377 | ) | 27,630 | ||||||||
Other income (expense): |
||||||||||||
Interest expense, net |
(2,365 | ) | - | (2,365 | ) | |||||||
Debt issuance costs written-off |
(807 | ) | - | (807 | ) | |||||||
Other |
4 | 24 | (20 | ) | ||||||||
Income (loss) from continuing operations before income tax expense |
23,085 | (1,353 | ) | 24,438 | ||||||||
Income tax expense (benefit) |
6,687 | (1,198 | ) | 7,885 | ||||||||
Income (loss) from continuing operations |
$ | 16,398 | $ | (155 | ) | $ | 16,553 | |||||
Basic earnings (loss) per common share: |
||||||||||||
Continuing operations |
$ | (0.58 | ) | $ | - | $ | (0.58 | ) | ||||
Diluted earnings (loss) per common share: |
||||||||||||
Continuing operations |
$ | (0.58 | ) | $ | - | $ | (0.58 | ) | ||||
Shares used in computing earnings (loss) per common share: |
||||||||||||
Basic |
34,313,636 | 34,313,636 | 34,313,636 | |||||||||
Diluted |
34,313,636 | 34,313,636 | 34,313,636 |
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
Ruth’s Hospitality Group, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year Ended December 25, 2011
(Dollars amounts in thousands, except share and per share data)
Historical Ruth's Hospitality Group, Inc. |
Less: Sale of the Mitchell's Restaurants (1) |
Pro Forma Ruth's Hospitality Group, Inc. |
||||||||||
Revenues: |
||||||||||||
Restaurant sales |
$ | 351,380 | $ | 76,491 | $ | 274,889 | ||||||
Franchise income |
12,464 | - | 12,464 | |||||||||
Other operating income |
3,493 | 222 | 3,271 | |||||||||
Total revenues |
367,337 | 76,713 | 290,624 | |||||||||
Costs and expenses: |
||||||||||||
Food and beverage costs |
108,880 | 24,718 | 84,162 | |||||||||
Restaurant operating expenses |
181,683 | 43,572 | 138,111 | |||||||||
Marketing and advertising |
11,748 | 2,268 | 9,480 | |||||||||
General and administrative costs |
22,803 | 1,726 | 21,077 | |||||||||
Depreciation and amortization expenses |
14,859 | 3,329 | 11,530 | |||||||||
Pre-opening costs |
192 | - | 192 | |||||||||
Loss on impairment and asset disposals, net |
3,478 | 3,042 | 436 | |||||||||
Restructuring benefit |
(502 | ) | (502 | ) | - | |||||||
Total costs and expenses |
343,141 | 78,153 | 264,988 | |||||||||
Operating income (loss) |
24,196 | (1,440 | ) | 25,636 | ||||||||
Other income (expense): |
||||||||||||
Interest expense, net |
(2,892 | ) | - | (2,892 | ) | |||||||
Debt issuance costs written-off |
- | - | - | |||||||||
Other |
(488 | ) | (27 | ) | (461 | ) | ||||||
Income (loss) from continuing operations before income tax expense |
20,816 | (1,467 | ) | 22,283 | ||||||||
Income tax expense (benefit) |
1,663 | (1,223 | ) | 2,886 | ||||||||
Income (loss) from continuing operations |
$ | 19,153 | $ | (244 | ) | $ | 19,397 | |||||
Basic earnings (loss) per common share: |
||||||||||||
Continuing operations |
$ | 0.38 | $ | (0.01 | ) | $ | 0.39 | |||||
Diluted earnings (loss) per common share: |
||||||||||||
Continuing operations |
$ | 0.38 | $ | (0.01 | ) | $ | 0.39 | |||||
Shares used in computing earnings (loss) per common share: |
||||||||||||
Basic |
34,093,104 | 34,093,104 | 34,093,104 | |||||||||
Diluted |
43,252,101 | 43,252,101 | 43,252,101 |
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
Ruth’s Hospitality Group, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Balance Sheet
September 28, 2014
(Dollars amounts in thousands, except share and per share data)
Historical Ruth's Hospitality Group, Inc. |
Less Mitchell's Restaurants (2) |
Proforma Ruth's Hospitality Group, Inc. |
||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 3,486 | $ | 10,000 | $ | 13,486 | ||||||
Accounts receivable, less allowance for doubtful accounts |
13,617 | - | 13,617 | |||||||||
Inventory |
7,506 | (859 | ) | 6,647 | ||||||||
Prepaid expenses and other |
1,891 | - | 1,891 | |||||||||
Deferred income taxes |
5,628 | 379 | 6,007 | |||||||||
Total current assets |
32,128 | 9,520 | 41,648 | |||||||||
Property and equipment, net of accumulated depreciation |
87,173 | (8,884 | ) | 78,289 | ||||||||
Goodwill |
24,293 | - | 24,293 | |||||||||
Franchise rights, net of accumulated amortization |
32,288 | - | 32,288 | |||||||||
Trademarks |
2,965 | (2,847 | ) | 118 | ||||||||
Other intangibles, net of accumulated amortization |
5,631 | (2,328 | ) | 3,303 | ||||||||
Deferred income taxes |
26,421 | - | 26,421 | |||||||||
Other assets |
1,955 | - | 1,955 | |||||||||
Total assets |
$ | 212,854 | $ | (4,539 | ) | $ | 208,315 | |||||
Liabilities and Shareholders' Equity |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable |
$ | 9,202 | $ | - | $ | 9,202 | ||||||
Accrued payroll |
11,849 | - | 11,849 | |||||||||
Accrued expenses |
9,357 | 961 | 10,318 | |||||||||
Deferred revenue |
24,797 | - | 24,797 | |||||||||
Other current liabilities |
5,923 | (127 | ) | 5,796 | ||||||||
Total current liabilities |
61,128 | 834 | 61,962 | |||||||||
Long-term debt |
30,000 | - | 30,000 | |||||||||
Deferred rent |
22,999 | (3,326 | ) | 19,673 | ||||||||
Other liabilities |
4,310 | (1,466 | ) | 2,844 | ||||||||
Total liabilities |
118,437 | (3,958 | ) | 114,479 | ||||||||
Commitments and contingencies |
- | - | - | |||||||||
Shareholders' equity: |
||||||||||||
Common stock, par value $.01 per share; 100,000,000 shares authorized, 34,668,049 shares issued and outstanding at September 28, 2014 |
347 | - | 347 | |||||||||
Additional paid-in capital |
159,778 | - | 159,778 | |||||||||
Accumulated deficit |
(65,708 | ) | (581 | ) | (66,289 | ) | ||||||
Treasury stock, at cost; 71,950 shares at September 28, 2014 |
- | - | - | |||||||||
Total shareholders' equity |
94,417 | (581 | ) | 93,836 | ||||||||
Total liabilities and shareholders' equity |
$ | 212,854 | $ | (4,539 | ) | $ | 208,315 |
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
Basis of Presentation
The unaudited pro forma condensed consolidated financial information has been prepared to illustrate the effect of the sale of the Mitchell’s Restaurants. The unaudited pro forma condensed consolidated statements of income for the thirty-nine week period ended September 28, 2014 and fiscal years 2013, 2012 and 2011, and the unaudited pro forma condensed consolidated balance sheet as of September 28, 2014, have been derived from the historical consolidated financial statements of the Company, which are included in its Quarterly Report on Form 10-Q for the period ended September 28, 2014 and its Annual Report on Form 10-K for the year ended December 29, 2013. The unaudited pro forma condensed consolidated statements of income reflect the Company's results as if the sale of the Mitchell’s Restaurants had occurred as of December 27, 2010. The unaudited pro forma condensed consolidated balance sheet as of September 28, 2014 reflects the Company's position as if the sale of the Mitchell’s Restaurants had occurred on that date.
Future income statements of the Company will treat the results of the Mitchell’s Restaurants as a discontinued operation.
Historical Ruth's Hospitality Group, Inc.
This column reflects the Company’s historical unaudited financial position as of September 28, 2014, the historical audited operating results for the fiscal years 2013, 2012 and 2011, and the unaudited historical operating results for the thirty-nine week period ended September 28, 2014, prior to any adjustment for the sale of the Mitchell’s Restaurants and the other adjustments described below.
On January 21, 2015 the Company completed the previously announced sale of the Mitchell’s Restaurants to Landry’s. Pursuant to the terms of the Agreement, the total cash consideration for Mitchell’s Restaurants was $10 million.
The following are included in the unaudited pro forma condensed consolidated statements of income for the thirty-nine week period ended September 28, 2014 and fiscal years 2013, 2012 and 2011, and the unaudited pro forma condensed consolidated balance sheet as of September 28, 2014.
(1) Results of the Mitchell’s Restaurants
This column includes amounts representing the revenues, and expenses attributable to the Mitchell’s Restaurants which were included in the Company's historical financial statements. In accordance with generally accepted accounting principles in the United States, the amounts eliminated on the unaudited pro forma condensed consolidated statements of income do not include certain indirect corporate overhead included in general and administrative as such amounts would have been absorbed by the Company in the absence of the Mitchell’s Restaurants.
Income taxes are comprised of (a) taxes calculated at the composite federal and state statutory tax rate times the pre-tax loss plus (b) the FICA tip credit benefit attributable to the restaurant sales of the Mitchell’s Restaurants. A reconciliation of the U.S. statutory tax rate to the effective tax rate applicable to operations for the Mitchell’s Restaurants for the thirty-nine week period ended September 28, 2014 and fiscal years 2013, 2012 and 2011 follows:
39 Weeks Ended |
Fiscal Year Ended |
|||||||||||||||||||
September 28, |
December 29, |
December 30, |
December 25, |
|||||||||||||||||
2014 |
2013 |
2012 |
2011 |
|||||||||||||||||
Income tax benefit at statutory rates |
35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||||||
Increase in income taxes resulting from: |
||||||||||||||||||||
State income taxes, net of federal benefit |
4.5 | % | 4.1 | % | 5.1 | % | 5.0 | % | ||||||||||||
Federal employment tax credits |
2.9 | % | 23.0 | % | 48.4 | % | 43.4 | % | ||||||||||||
Effective tax rate |
42.4 | % | 62.1 | % | 88.5 | % | 83.4 | % |
In fiscal years 2013, 2012 and 2011, the federal employment tax credits had a disproportionate impact on the income tax rate due to the Mitchell’s Restaurants generating relatively small losses from operations before income taxes.
(2) Assets and liabilities of the Mitchell’s Restaurants
This column includes amounts representing the assets and liabilities of the Mitchell’s Restaurants which were included in the Company’s historical financial statements, and the proceeds, net of related transaction costs, and the resulting net loss from the sale of the Mitchell’s Restaurants.
The net loss from the sale of the Mitchell’s Restaurants has been summarized below (in thousands):
Proceeds from the sale of the Mitchell's Restaurants |
$ | 10,000 | ||
Lease related liabilities extinguished |
4,919 | |||
Estimated transaction expenses |
(961 | ) | ||
Net proceeds |
13,958 | |||
Mitchell's assets sold |
14,918 | |||
Loss on sale before taxes |
(960 | ) | ||
Income tax benefit |
379 | |||
Net loss on sale |
$ | (581 | ) |
The calculation of the loss on the sale of the Mitchell’s Restaurants includes estimated transaction costs that are directly attributable to the sale, but are not reflected in the accompanying unaudited pro forma condensed consolidated statements of income. Transaction costs include professional fees and other costs directly related to the sale of the Mitchell’s Restaurants.
The above amounts are preliminary and are subject to adjustments in future periods.
(3) Earning Per Share
Basic earnings per common share for fiscal years 2012 and 2011 is computed under the two-class method in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 260. Under the two-class method, a portion of net income is allocated to participating securities, such as the Company’s preferred stock, and therefore is excluded from the calculation of basic earnings per share allocated to common shares. Diluted earnings per common share for fiscal years 2012 and 2011 is computed by dividing the net income applicable to preferred and common shareholders for the period by the weighted average number of common and potential common shares outstanding during the period. Income from continuing operations for fiscal years 2012 and 2011, in both the basic and diluted earnings per common share calculations, is reduced by the Company’s preferred stock dividends ($514 thousand and $2.5 million, respectively), accretion of the Company’s preferred stock to its redemption value ($73 thousand and $353 thousand, respectively) and the excess of redemption value over carrying value of preferred shares redeemed ($35.8 million and $0, respectively).
8