-----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, V7ve2cyOYP8G5tXbnbUqqxQbsEJlI7aB+sQ/f4ESgMpEiusVfu2DeSwhdOpg0ODP Dh8Wf4XZluEdnLzQTxDzHw== 0001157523-03-005760.txt : 20031023 0001157523-03-005760.hdr.sgml : 20031023 20031023100914 ACCESSION NUMBER: 0001157523-03-005760 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031023 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031023 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: 03953205 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 a4499515.txt FRIENDLY ICE CREAM CORPORATION 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): October 23, 2003 FRIENDLY ICE CREAM CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 0-3930 04-2053130 (I.R.S. Employer (State of Incorporation) (Commission File Number) 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 October 23, 2003 Press Release by Friendly Ice Cream Corporation 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. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS On October 23, 2003 Friendly Ice Cream issued a press release describing selected financial results of the Company for the quarter ended September 28, 2003, included herewith as exhibit 99.1. 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: October 23, 2003 Exhibit Index 99.1 October 23, 2003 Press Release by Friendly Ice Cream Corporation EX-99 3 a4499515ex991.txt FRIENDLY ICE CREAM CORPORATION PRESS RELEASE Exhibit 99.1 Friendly Ice Cream Corporation Reports Record Results; 52% Increase in Third Quarter 2003 Net Income WILBRAHAM, Mass.--(BUSINESS WIRE)--Oct. 23, 2003--Friendly Ice Cream Corporation (AMEX: FRN) today reported record net income for the three-months-ended September 28, 2003 of $5.3 million, or $0.70 per share, an increase of 52% when compared to the net income of $3.5 million, or $0.46 per share, reported for the three-months-ended September 29, 2002. Comparable systemwide restaurant sales increased 3.5% for the 2003 third quarter as compared to the prior year (2.9% increase for company restaurants and 5.1% increase for franchise restaurants). This increase marks the Company's eleventh consecutive quarter of positive comparable systemwide restaurant sales growth. Total company revenues for the three-months-ended September 28, 2003 were $160.4 million, an increase of 1.3%, as compared to total revenues of $158.3 million for the three-months-ended September 29, 2002. Net income for the nine-months-ended September 28, 2003 was $6.9 million, or $0.91 per share compared to net income of $6.9 million, or $0.91 per share, reported for the nine-months-ended September 29, 2002. Included in 2002 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. Total company revenues increased $5.0 million, or 1.1%, to $444.7 million for the nine-months-ended September 28, 2003 from $439.7 million for the same period in 2002. Year-to-date, comparable systemwide restaurant sales increased 2.8% (1.9% increase for company restaurants and 4.9% increase for franchise restaurants). "We are very pleased with the Company's continued revenue growth and profitability," stated John L. Cutter, Chief Executive Officer and President of Friendly Ice Cream. "Eleven consecutive quarters of positive comparable systemwide restaurant sales is the result of continued improvements to guest satisfaction and targeted marketing. Guest satisfaction, supported by training initiatives and management incentive programs, continues to be the top priority for Friendly's." Cutter continued, "During the third quarter, we re-modeled two restaurants as part of our Impact Re-model program. The Impact program enhances the guest experience by improving the appearance of our restaurants and reinforces our 68-year ice cream heritage. Also during the quarter, our franchisees opened one new franchise restaurant. Year-to-date, we opened one new company restaurant and our franchisees opened three new franchise restaurants. We plan to open two new company restaurants and our franchisees plan to open three new franchise restaurants during the fourth quarter." Business Segment Results In the 2003 third quarter, pre-tax income in the restaurant segment increased 23.4% to $13.7 million, or 10.7% of restaurant revenues, from $11.1 million, or 8.9% of restaurant revenues, in the third quarter 2002. The increase in pre-tax income was the result of a 2.9% improvement in comparable company restaurant sales, a 0.4% reduction in restaurant cost of sales due in part to improved food cost controls and lower restaurant operating expenses for maintenance and advertising. Partially offsetting these items was an increase in restaurant labor and fringe benefit costs. Pre-tax income in the Company's foodservice segment was $4.8 million in the third quarter of 2003 compared to $4.6 million in the third quarter 2002. The increase was mainly due to higher sales to franchisees and efficiencies in the Company's manufacturing facilities as a result of increased manufactured volumes of ice cream and related products. Partially offsetting this increase was a 7.6% decrease in case volume in the retail supermarket business. Retail case volume, however, has increased by 3.6% year-to-date. Pre-tax income in the franchise segment decreased slightly in the 2003 third quarter to $1.7 million from $1.8 million in the prior year. The decrease is due to lower franchise rental income and fees. Partially offsetting these decreases is higher royalty revenue from increased comparable franchise restaurant sales of 5.1% for the quarter. Corporate expenses of $12.5 million in the third quarter of 2003 increased by $0.2 million, or 1%, as compared to the third quarter of 2002 primarily due to salary merit increases and a reduction in the benefit realized from the Company's pension plan when compared to the prior year. These increases were partially offset by lower depreciation expense associated with certain purchased software at the Company's headquarters and lower interest expense resulting from reduced debt levels. On October 2, 2003, Moody's Investors Service confirmed all ratings of Friendly Ice Cream Corporation and changed the company's rating outlook to positive from stable. The revision in the outlook was based on Moody's expectation that the company will continue the recent pattern of operating progress and improvements in financial flexibility. An investor conference call to review third quarter 2003 results will be held on Friday, October 24, 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 530 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). Friendly Ice Cream Corporation Consolidated Statements of Operations (In thousands, except per share and unit data) (unaudited) Quarter Ended Nine Months Ended Sep 28, Sep 29, Sep 28, Sep 29, 2003 2002 2003 2002 Restaurant Revenues $127,605 $124,885 $353,775 $351,034 Foodservice Revenues 30,174 30,766 83,377 81,293 Franchise Revenues 2,571 2,663 7,536 7,342 REVENUES 160,350 158,314 444,688 439,669 COSTS AND EXPENSES: Cost of sales 56,561 57,079 157,717 156,071 Labor and benefits 45,402 43,457 127,326 123,618 Operating expenses 29,510 30,946 85,112 84,408 General and administrative expenses 9,939 9,369 28,397 26,649 Reduction of restructuring reserve - - - (400) Write-downs of property and equipment 26 - 26 431 Depreciation and amortization 5,391 6,097 16,764 19,170 Loss on franchise sales of restaurant operations and properties - 21 - 21 Loss (gain) on sales of other property and equipment, net 91 (150) 1,499 491 OPERATING INCOME 13,430 11,495 27,847 29,210 Interest expense, net 6,048 6,212 18,242 18,764 INCOME BEFORE PROVISION FOR INCOME TAXES 7,382 5,283 9,605 10,446 Provision for income taxes (2,067) (1,795) (2,689) (3,551) NET INCOME AND COMPREHENSIVE INCOME $5,315 $3,488 $6,916 $6,895 NET INCOME PER SHARE: Basic $0.71 $0.47 $0.93 $0.94 Diluted $0.70 $0.46 $0.91 $0.91 WEIGHTED AVERAGE SHARES: Basic 7,452 7,379 7,436 7,366 Diluted 7,606 7,607 7,577 7,574 NUMBER OF COMPANY UNITS: Beginning of period 382 390 387 393 Openings - - 1 - Closings (2) (1) (8) (4) End of period 380 389 380 389 NUMBER OF FRANCHISED UNITS: Beginning of period 162 165 162 167 Openings 1 1 3 4 Closings (2) (4) (4) (9) End of period 161 162 161 162 Friendly Ice Cream Corporation Consolidated Statements of Operations Percentage of Total Revenues (unaudited) Quarter Nine Months Ended Ended Sep 28, Sep 29, Sep 28, Sep 29, 2003 2002 2003 2002 Restaurant Revenues 79.6 % 78.9 % 79.6 % 79.8 % Foodservice Revenues 18.8 % 19.4 % 18.7 % 18.5 % Franchise Revenues 1.6 % 1.7 % 1.7 % 1.7 % REVENUES 100.0 % 100.0 % 100.0 % 100.0 % COSTS AND EXPENSES: Cost of sales 35.3 % 36.1 % 35.5 % 35.5 % Labor and benefits 28.3 % 27.4 % 28.6 % 28.1 % Operating expenses 18.4 % 19.5 % 19.1 % 19.2 % General and administrative expenses 6.2 % 5.9 % 6.4 % 6.1 % Reduction of restructuring reserve - - - (0.1)% Write-downs of property and equipment - - - 0.1 % Depreciation and amortization 3.4 % 3.9 % 3.8 % 4.4 % Loss on franchise sales of restaurant operations and properties - - - - Loss (gain) on sales of other property and equipment, net - (0.1)% 0.3 % 0.1 % OPERATING INCOME 8.4 % 7.3 % 6.3 % 6.6 % Interest expense, net 3.8 % 4.0 % 4.1 % 4.2 % INCOME BEFORE PROVISION FOR INCOME TAXES 4.6 % 3.3 % 2.2 % 2.4 % Provision for income taxes (1.3)% (1.1)% (0.6)% (0.8)% NET INCOME AND COMPREHENSIVE INCOME 3.3 % 2.2 % 1.6 % 1.6 % Friendly Ice Cream Corporation Condensed Consolidated Balance Sheets (In thousands) September 28, December 29, 2003 2002 (unaudited) Assets Current Assets: Cash and cash equivalents $31,551 $34,341 Other current assets 38,446 38,964 Total Current Assets 69,997 73,305 Property and Equipment, net 163,518 158,373 Intangibles and Other Assets, net 24,132 25,520 $257,647 $257,198 Liabilities and Stockholders' Deficit Current Liabilities: Current maturities of debt, capital lease and finance obligations $1,852 $2,393 Other current liabilities 65,750 70,344 Total Current Liabilities 67,602 72,737 Deferred Income Taxes 3,856 1,533 Capital Lease and Finance Obligations 5,135 5,044 Long-Term Debt 228,258 231,830 Other Long-Term Liabilities 49,170 49,756 Stockholders' Deficit (96,374) (103,702) $257,647 $257,198 Friendly Ice Cream Corporation Selected Segment Reporting Information: (in thousands) For the Three For the Nine Months Ended Months Ended September September September September 2003 2002 (1) 2003 2002 (1) Revenues before elimination of intersegment revenues: Restaurant $127,605 $124,885 $353,775 $351,034 Foodservice 66,352 66,331 183,311 180,007 Franchise 2,571 2,663 7,536 7,342 Total $196,528 $193,879 $544,622 $538,383 Intersegment revenues: Foodservice $(36,178) $(35,565) $(99,934) $(98,714) Revenues: Restaurant $127,605 $124,885 $353,775 $351,034 Foodservice 30,174 30,766 83,377 81,293 Franchise 2,571 2,663 7,536 7,342 Total $160,350 $158,314 $444,688 $439,669 EBITDA (2): Restaurant (3) $17,308 $15,088 $41,791 $42,356 Foodservice (3) 5,573 5,439 14,020 14,403 Franchise (3) 1,769 1,862 5,332 4,998 Corporate (3) (5,484) (4,771) (14,836) (13,154) (Loss) gain on property and equipment, net, excluding write-downs of property and equipment (265) 143 (1,487) 110 Reduction of restructure reserve - - - 400 Total $18,901 $17,761 $44,820 $49,113 Interest expense, net $6,048 $6,212 $18,242 $18,764 Depreciation and amortization: Restaurant $3,648 $4,019 $11,412 $12,006 Foodservice 770 798 2,253 2,469 Franchise 39 63 116 202 Corporate 934 1,217 2,983 4,493 Total $5,391 $6,097 $16,764 $19,170 Other non-cash expenses: Corporate $54 $169 $183 $302 Write-downs of property and equipment 26 - 26 431 Total $80 $169 $209 $733 Income (loss) before benefit from income taxes: Restaurant (3) $13,660 $11,069 $30,379 $30,350 Foodservice (3) 4,803 4,641 11,767 11,934 Franchise (3) 1,730 1,799 5,216 4,796 Corporate (3) (12,520) (12,369) (36,244) (36,713) 7,673 5,140 11,118 10,367 (Loss) gain on property and equipment, net, excluding write-downs of property and equipment (291) 143 (1,513) (321) Reduction of restructure reserve - - - 400 Total $7,382 $5,283 $9,605 $10,446 (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-----