-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Eawj9BmAziZdcwRUPOR6MnjcVXrsPWdJcq7CSHzsx2hx3bQ+p0BMovkvZtY93jNN 7rfN+3F4iGkbUH/vh1CoZg== 0001157523-03-003292.txt : 20030724 0001157523-03-003292.hdr.sgml : 20030724 20030724115604 ACCESSION NUMBER: 0001157523-03-003292 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030724 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRIENDLY ICE CREAM CORP CENTRAL INDEX KEY: 0000039135 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 042053130 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13579 FILM NUMBER: 03800103 BUSINESS ADDRESS: STREET 1: 1855 BOSTON ROAD CITY: WILBRAHAM STATE: MA ZIP: 01095 BUSINESS PHONE: 4135432400 MAIL ADDRESS: STREET 1: 1855 BOSTON ROAD CITY: WILBRAHAM STATE: MA ZIP: 01095 8-K 1 a4440716.txt FRIENDLY'S 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 24, 2003 FRIENDLY ICE CREAM CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 0-3930 04-2053130 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 1855 Boston Road Wilbraham, Massachusetts 01095 (Address, including zip code of registrant's principal executive offices) Registrant's telephone number, including area code: (413) 543-2400 Not Applicable (Former Name or Former Address, if Changed Since Last Report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits: 99.1 July 24, 2003 Press Release by Friendly Ice Cream Corporation ITEM 9. REGULATION FD DISCLOSURE (INFORMATION BELOW IS BEING FURNISHED UNDER ITEM 12) On July 24, 2003 Friendly Ice Cream issued a press release describing selected financial results of the Company for the quarter ended June 29, 2003. Pursuant to SEC Release No. 33-8216, this press release is attached hereto as Exhibit 99.1 and is being furnished, not filed, under Item 12, results of Operations and Financial Condition, to this Report on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRIENDLY ICE CREAM CORPORATION By: /s/ PAUL V. HOAGLAND ----------------------- Name: Paul V. Hoagland Title: Executive Vice President of Administration and Chief Financial Officer Date: July 24, 2003 Exhibit Index 99.1 July 24, 2003 Press Release by Friendly Ice Cream Corporation EX-99 3 a4440716_ex991.txt FRIENDLY'S EXHIBIT 99.1 Exhibit 99.1 Friendly Ice Cream Corporation Reports Second Quarter 2003 Results; Tenth Consecutive Quarter of Positive Comparable Restaurant Sales WILBRAHAM, Mass.--(BUSINESS WIRE)--July 24, 2003--Friendly Ice Cream Corporation (AMEX: FRN) today reported net income for the three-months-ended June 29, 2003 of $3.1 million, or $0.41 per share, compared to net income of $3.8 million, or $0.49 per share, reported for the three-months-ended June 30, 2002. Included in the 2002 second quarter results was the favorable impact of $0.4 million pre-tax, or $0.03 per share, from the reduction of the Company's restructuring reserve. Comparable restaurant sales increased 2.4% for the 2003 second quarter as compared to the 2002 second quarter. This increase marks the Company's tenth consecutive quarter of comparable restaurant sales growth. Total revenues for the three-months-ended June 29, 2003 were $155.6 million, an increase of 2.3%, when compared to total revenues of $152.2 million for the three-months-ended June 30, 2002. Case volume in the Company's retail supermarket business increased 15.6% for the quarter when compared to the prior year. Net income for the six-months-ended June 29, 2003 was $1.6 million, or $0.21 per share compared to net income of $3.4 million, or $0.44 per share, reported for the six-months-ended June 30, 2002. Total revenues increased $2.9 million, or 1.1%, to $284.3 million for the six-months-ended June 29, 2003 from $281.4 million for the same period in 2002. Year-to-date, comparable restaurant sales increased 1.4% and case volume in the retail supermarket business increased by 11.2%. "We are pleased with the Company's continued revenue growth despite the above average rainfall and unseasonably cool weather which negatively impacted our ice cream snack business," stated John L. Cutter, Chief Executive Officer and President of Friendly Ice Cream. "Our food business in the lunch and dinner dayparts has remained strong and drove the second quarter comparable restaurant sales increase. Ten consecutive quarters of positive comparable restaurant sales is the result of continued improvements to guest satisfaction, targeted marketing and the strength of the Friendly's brand. Guest satisfaction, supported by training initiatives and management incentive programs, continues to be the top priority for Friendly's." "During the second quarter, thirteen restaurants were re-modeled as part of our Impact Re-model program. The Impact program improves the appearance of our restaurants while reinforcing our 68-year ice cream heritage. For the year, twenty-four restaurants have been re-modeled. One new company restaurant was opened in the quarter and we plan to open three new company restaurants in total for the year." Business Segment Results In the 2003 second quarter, pre-tax income in the restaurant segment was $10.4 million, or 8.5% of restaurant revenues, compared to $11.3 million, or 9.2% of restaurant revenues, in the second quarter 2002. Restaurant labor expense was higher than in the prior year due to less than anticipated snack daypart sales, which decreased in the current period due to cooler temperatures, and higher fringe benefit costs. Results were also unfavorably impacted by increased advertising costs. These higher costs were partially offset by a 2.4% increase in restaurant comparable sales and a 0.4% reduction in restaurant cost of sales due in part to improved food cost controls. Pre-tax income in the Company's foodservice segment was $4.5 million in the second quarter of 2003 compared to $4.6 million in the second quarter 2002. The slight decline was mainly due to an unfavorable product mix resulting from less restaurant ice cream sales versus the prior year. Partially offsetting this decline was a 15.6% increase in case volume in the retail supermarket business. Pre-tax income in the franchise segment increased $0.3 million in the 2003 second quarter to $2.0 million from $1.7 million in the prior year. The improvement is primarily due to higher royalty revenue from increased comparable franchised restaurant sales. Corporate expenses of $11.7 million in the second quarter of 2003 decreased by $0.1 million, or 1%, as compared to the second quarter of 2002 mainly due to lower depreciation expense associated with certain purchased software at the Company's headquarters and lower interest expense resulting from reduced debt levels. These decreases were partially offset by a reduction in the benefit realized from the Company's pension plan when compared to the prior year. An investor conference call to review second quarter 2003 results will be held on Friday, July 25, 2003 at 10:00 A.M. Eastern Time. The conference call will be broadcast live over the Internet and will be hosted by John Cutter, Chief Executive Officer and President. To listen to the call, go to the Investor Relations section of the Company's website located at www.friendlys.com, or go to www.streetevents.com. An online replay will be available approximately one hour after the conclusion of the call. Friendly Ice Cream Corporation is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment in over 540 company and franchised restaurants throughout the Northeast. The company also manufactures ice cream, which is distributed through more than 3,500 supermarkets and other retail locations. With a 68-year operating history, Friendly's enjoys strong brand recognition and is currently revitalizing its restaurants and introducing new products to grow its customer base. Additional information on Friendly Ice Cream Corporation can be found on the Company's website (www.friendlys.com). -- Financial Statements to follow - Friendly Ice Cream Corporation ------------------------------ Consolidated Statements of Operations ------------------------------------- (In thousands, except per share and unit data) (unaudited) Quarter Ended Six Months Ended ----------------- ------------------- June 29, June 30, June 29, June 30, 2003 2002 2003 2002 --------------------------------------- Restaurant Revenues $123,002 $121,893 $226,170 $226,149 Foodservice Revenues 29,936 27,738 53,203 50,527 Franchise Revenues 2,710 2,550 4,965 4,679 --------- --------- --------- --------- REVENUES 155,648 152,181 284,338 281,355 COSTS AND EXPENSES: Cost of sales 55,179 52,952 101,156 98,992 Labor and benefits 43,796 42,243 81,924 80,161 Operating expenses 30,539 29,422 55,602 53,462 General and administrative expenses 9,170 8,681 18,458 17,280 Reduction of restructuring reserve - (400) - (400) Write-downs of property and equipment - 311 - 431 Depreciation and amortization 5,746 6,387 11,373 13,073 Loss on sales of other property and equipment, net 835 129 1,408 641 --------- --------- --------- --------- OPERATING INCOME 10,383 12,456 14,417 17,715 Interest expense, net 6,092 6,215 12,194 12,552 --------- --------- --------- --------- INCOME BEFORE PROVISION FOR INCOME TAXES 4,291 6,241 2,223 5,163 Provision for income taxes (1,201) (2,426) (622) (1,756) --------- --------- --------- --------- NET INCOME AND COMPREHENSIVE INCOME $3,090 $3,815 $1,601 $3,407 ========= ========= ========= ========= NET INCOME PER SHARE: Basic $0.42 $0.52 $0.22 $0.46 ========= ========= ========= ========= Diluted $0.41 $0.49 $0.21 $0.44 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES: Basic 7,441 7,366 7,428 7,359 ========= ========= ========= ========= Diluted 7,574 7,722 7,564 7,668 ========= ========= ========= ========= NUMBER OF COMPANY UNITS: Beginning of period 385 390 387 393 Openings 1 - 1 - Closings (4) - (6) (3) --------- --------- --------- --------- End of period 382 390 382 390 ========= ========= ========= ========= NUMBER OF FRANCHISED UNITS: Beginning of period 164 166 162 167 Openings - 1 2 3 Closings (2) (2) (2) (5) --------- --------- --------- --------- End of period 162 165 162 165 ========= ========= ========= ========= Friendly Ice Cream Corporation ------------------------------ Consolidated Statements of Operations ------------------------------------- Percentage of Total Revenues ---------------------------- (unaudited) Quarter Ended Six Months Ended --------------- ----------------- June 29, June 30, June 29, June 30, 2003 2002 2003 2002 ----------------------------------- Restaurant Revenues 79.0 % 80.1 % 79.5 % 80.4 % Foodservice Revenues 19.2 % 18.2 % 18.7 % 17.9 % Franchise Revenues 1.8 % 1.7 % 1.8 % 1.7 % ------- ------- ------- ------- REVENUES 100.0 % 100.0 % 100.0 % 100.0 % COSTS AND EXPENSES: Cost of sales 35.5 % 34.8 % 35.6 % 35.2 % Labor and benefits 28.1 % 27.8 % 28.8 % 28.5 % Operating expenses 19.6 % 19.3 % 19.5 % 19.0 % General and administrative expenses 5.9 % 5.7 % 6.5 % 6.1 % Reduction of restructuring reserve - (0.3)% - (0.1)% Write-downs of property and equipment - 0.2 % - 0.2 % Depreciation and amortization 3.7 % 4.2 % 4.0 % 4.6 % Loss on sales of other property and equipment, net 0.5 % 0.1 % 0.5 % 0.2 % ------- ------- ------- ------- OPERATING INCOME 6.7 % 8.2 % 5.1 % 6.3 % Interest expense, net 3.9 % 4.1 % 4.3 % 4.5 % ------- ------- ------- ------- INCOME BEFORE PROVISION FOR INCOME TAXES 2.8 % 4.1 % 0.8 % 1.8 % Provision for income taxes (0.8)% (1.6)% (0.2)% (0.6)% ------- ------- ------- ------- NET INCOME AND COMPREHENSIVE INCOME 2.0 % 2.5 % 0.6 % 1.2 % ======= ======= ======= ======= Friendly Ice Cream Corporation ------------------------------ Condensed Consolidated Balance Sheets ------------------------------------- (In thousands) June 29, Dec. 29, 2003 2002 ------------ --------- (unaudited) Assets ------ Current Assets: Cash and cash equivalents $30,747 $34,341 Other current assets 42,395 38,964 ------------ --------- Total Current Assets 73,142 73,305 Property and Equipment, net 162,892 158,373 Intangibles and Other Assets, net 24,633 25,520 ------------ --------- $260,667 $257,198 ============ ========= Liabilities and Stockholders' Deficit ------------------------------------- Current Liabilities: Current maturities of debt, capital lease and finance obligations $1,840 $2,393 Other current liabilities 72,879 70,344 ------------ --------- Total Current Liabilities 74,719 72,737 Deferred Income Taxes 1,886 1,533 Capital Lease and Finance Obligations 4,743 5,044 Long-Term Debt 231,284 231,830 Other Long-Term Liabilities 49,819 49,756 Stockholders' Deficit (101,784) (103,702) ------------ --------- $260,667 $257,198 ============ ========= Friendly Ice Cream Corporation ------------------------------ Selected Segment Reporting Information: -------------------------- (in thousands) -------------- For the For the Three Months Ended Six Months Ended ------------------------------------- June June June June 2003 2002(1) 2003 2002(1) ------------------ ------------------ Revenues before elimination of intersegment revenues: Restaurant $123,002 $121,893 $226,170 $226,149 Foodservice 64,633 61,964 116,959 113,676 Franchise 2,710 2,550 4,965 4,679 ------------------ ------------------ Total $190,345 $186,407 $348,094 $344,504 ================== ================== Intersegment revenues: Foodservice $(34,697)$(34,226) $(63,756)$(63,149) ================== ================== Revenues: Restaurant $123,002 $121,893 $226,170 $226,149 Foodservice 29,936 27,738 53,203 50,527 Franchise 2,710 2,550 4,965 4,679 ------------------ ------------------ Total $155,648 $152,181 $284,338 $281,355 ================== ================== EBITDA (2): Restaurant (3) $14,402 $15,163 $24,483 $27,268 Foodservice (3) 5,258 5,398 8,447 8,964 Franchise (3) 2,002 1,755 3,563 3,136 Corporate (3) (4,587) (3,981) (9,351) (8,383) (Loss) gain on property and equipment, net, excluding write-downs of property and equipment (882) 482 (1,223) (33) Reduction of restructure reserve - 400 - 400 ------------------ ------------------ Total $16,193 $19,217 $25,919 $31,352 ================== ================== Interest expense, net $6,092 $6,215 $12,194 $12,552 ================== ================== Depreciation and amortization: Restaurant $3,965 $3,889 $7,765 $7,986 Foodservice 746 828 1,482 1,671 Franchise 38 66 77 139 Corporate 997 1,604 2,049 3,277 ------------------ ------------------ Total $5,746 $6,387 $11,373 $13,073 ================== ================== Other non cash expenses: Corporate $64 $63 $129 $133 Write-downs of property and equipment - 311 - 431 ------------------ ------------------ Total $64 $374 $129 $564 ================== ================== Income (loss) before benefit from income taxes: Restaurant (3) $10,437 $11,274 $16,718 $19,282 Foodservice (3) 4,512 4,570 6,965 7,293 Franchise (3) 1,964 1,689 3,486 2,997 Corporate (3) (11,740) (11,863) (23,723) (24,345) ------------------ ------------------ 5,173 5,670 3,446 5,227 (Loss) gain on property and equipment, net, excluding write-downs of property and equipment (882) 171 (1,223) (464) Reduction of restructure reserve - 400 - 400 ------------------ ------------------ Total $4,291 $6,241 $2,223 $5,163 ================== ================== (1) Certain amounts have been reclassified to conform with the current period presentation. (2) EBITDA represents net income before (i) benefit from income taxes, (ii) interest expense, net, (iii) depreciation and amortization, (iv) write-downs of property and equipment and (v) other non-cash items. The Company has included information concerning EBITDA in this schedule and its Form 10-Q because the Company's management incentive plan pays bonuses based on achieving EBITDA targets and the Company believes that such information is used by certain investors as one measure of a company's historical ability to service debt. EBITDA should not be considered as an alternative to, or more meaningful than, earnings (loss) from operations or other traditional indications of a company's operating performance. (3) Amounts are prior to gains (losses) on property and equipment CONTACT: Friendly Ice Cream Corporation Investment Contact: Deborah Burns, 413-543-2400 x3317 or Media Contact: Maura Tobias, 413-543-2400 x2814 -----END PRIVACY-ENHANCED MESSAGE-----