-----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, DchShQIJPuLzMtHnqo/QPoRhB480WYRMDST3m/5HiGrIJKIXT3gndnVqNAyL0QKW N5zRMgTsTMJFCojGkZVjXA== 0001157523-04-010080.txt : 20041029 0001157523-04-010080.hdr.sgml : 20041029 20041029070124 ACCESSION NUMBER: 0001157523-04-010080 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041029 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041029 DATE AS OF CHANGE: 20041029 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: 041104200 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 a4753739.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 Exchange Act of 1934 Date of Report (Date of earliest event reported) October 29, 2004 ---------------- FRIENDLY ICE CREAM CORPORATION - -------------------------------------------------------------------------------- (Exact Name Of Registrant As Specified In Its Charter) MASSACHUSETTS - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 001-13579 04-2053130 --------- ---------- (Commission File Number) (I.R.S. Employer Identification No.) 1855 Boston Road, Wilbraham, MA 01095 - ------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) (413) 543-2400 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable - -------------------------------------------------------------------------------- (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 (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition On October 29, 2004, Friendly Ice Cream Corporation (the "Company") issued a press release announcing selected financial results of the Company for the quarter ended September 26, 2004, included herewith as Exhibit 99.1. Item 9.01 Financial Statements and Exhibits (c) Exhibits -------- Exhibit Number Exhibit Description - -------------- ------------------- 99.1 Friendly Ice Cream Corporation Press Release dated October 29, 2004 announcing its financial results for the third quarter ended September 26, 2004. (This press release is attached hereto as Exhibit 99.1 and is being furnished, not filed, pursuant to Item 2.02, Results of Operations and Financial Condition, to this Report on Form 8-K). 2 SIGNATURE --------- 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, thereunto duly authorized. Dated: October 29, 2004 FRIENDLY ICE CREAM CORPORATION By: /s/ PAUL V. HOAGLAND ------------------------------------------ Name: Paul V. Hoagland Title: Executive Vice President of Administration and Chief Financial Officer EXHIBIT INDEX Exhibit Number Exhibit Description - ------------- ------------------- 99.1 Friendly Ice Cream Corporation Press Release dated October 29, 2004 announcing its financial results for the third quarter September 26, 2004. (This press release is attached hereto as Exhibit 99.1 and is being furnished, not filed, pursuant to Item 2.02, Results of Operations and Financial Condition, to this Report on Form 8-K). EX-99.1 2 a4753739ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Friendly Ice Cream Corporation Reports Third Quarter 2004 Results WILBRAHAM, Mass.--(BUSINESS WIRE)--Oct. 29, 2004--Friendly Ice Cream Corporation (AMEX: FRN) today reported net income for the three months ended September 26, 2004 of $3.6 million, or $0.46 per share, compared to $5.3 million, or $0.70 per share, reported for the three months ended September 28, 2003. Comparable restaurant sales decreased 1.7% for company-operated restaurants and increased 2.7% for franchised restaurants. Including the results of the current quarter, franchise-operated restaurants have reported fourteen consecutive quarters of positive comparable restaurant sales growth. Total company revenues for the three months ended September 26, 2004 were $153.1 million as compared to total revenues of $160.4 million for the three months ended September 28, 2003. During the quarter, restaurant revenues declined by $5.3 million compared to the same quarter in the prior year as a result of the re-franchising of eighteen company-operated restaurants over the last fifteen months. The net loss for the nine months ended September 26, 2004 was $2.8 million, or $0.37 per share, compared to net income of $6.9 million, or $0.91 per share, reported for the nine months ended September 28, 2003. The 2004 results include $8.2 million in expenses ($5.7 million after-tax or $0.77 per share) for debt retirement and restructuring costs, partially offset by a gain on litigation settlement. Comparable restaurant sales decreased 0.9% for company-operated restaurants and increased 2.7% for franchise restaurants. Total company revenues for the nine months ended September 26, 2004 were $431.3 million as compared to total revenues of $444.7 million for the same period in 2003. Year to date, restaurant revenues declined by $13.0 million compared to the same period in the prior year as a result of the re-franchising of eighteen company-operated restaurants over the past fifteen months. "Weaker restaurant sales, higher commodity costs and increased competition and discounting in the retail supermarket business impacted third quarter results," stated John L. Cutter, Chief Executive Officer and President of Friendly Ice Cream. "During the third quarter, we opened four new company-operated restaurants and our franchisees opened two new franchise restaurants. We are pleased with the opening sales volumes of these new restaurants. Year-to-date, franchisees have opened six new franchise restaurants." Business Segment Results In the 2004 third quarter, pre-tax income in the restaurant segment was $8.2 million, or 6.8% of restaurant revenues, compared to $13.7 million, or 10.7% of restaurant revenues, in the third quarter 2003. The decrease in pre-tax income was mainly due to a 1.7% decline in comparable company-operated restaurant sales, the re-franchising of eighteen company restaurants over the past fifteen months, higher commodity costs, increased marketing spending due to timing and pre-opening expenses for four new company-operated restaurants. Pre-tax income in the Company's foodservice segment was $2.5 million in the third quarter of 2004 compared to $4.8 million in the third quarter of 2003. The decrease was mainly due to a decrease in sales to foodservice retail supermarket customers, increased retail promotional allowances and higher commodity costs. Case volume in the Company's retail supermarket business declined by 14.5% for the third quarter of 2004 compared to the third quarter of 2003. Pre-tax income in the franchise segment increased in the third quarter of 2004 to $2.4 million from $1.7 million in the third quarter of 2003. The improvement is mainly due to increased royalty revenue from comparable franchised restaurant sales of 2.7% and from the opening of eleven new franchised restaurants and the re-franchising of eighteen restaurants over the past fifteen months. Initial franchise fees were higher than in the same period for the prior year due to the addition of six franchise locations during the current year quarter. Also, increased rental income from leased and sub-leased franchise locations contributed to the revenue growth in the current year quarter. Corporate expenses of $10.1 million in the third quarter of 2004 decreased by $2.4 million, or 19%, as compared to the third quarter of 2003 primarily due to lower expenses for interest, corporate bonus and salaries and wages. These decreases were partially offset by higher costs for group insurance, computer equipment rentals and increased legal, accounting and other professional and recruitment fees. Debt Retirement Costs In the 2004 first quarter, the Company completed the private offering of $175 million aggregate principal amount of 8.375% Senior Notes due 2012. The net proceeds from the offering, together with available cash and borrowings under the Company's revolving credit facility, were used to purchase or redeem the Company's 10.5% Senior Notes due December 1, 2007. In March 2004, $127.8 million of aggregate principal amount of 10.5% Senior Notes were purchased in a cash tender offer and in April 2004, the remaining $48.2 million of 10.5% Senior Notes were redeemed at 103.5% of the principal amount in accordance with the Senior Notes indenture. For the nine months ended September 26, 2004, debt retirement costs of $9.2 million were recorded, consisting of $6.8 million in premium costs and $2.4 million for the write-off of unamortized financing fees in connection with the cash tender offer. Investor Conference Call An investor conference call to review third quarter 2004 results will be held on Friday, October 29, 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 4,500 supermarkets and other retail locations. With a 69-year operating history, Friendly's enjoys strong brand recognition and is currently remodeling 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). Forward Looking Statements Statements contained in this release that are not historical facts constitute "forward looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements include statements relating to the expected results and benefits from the Company's remodeling and re-imaging initiatives, restaurant sales trends and the expected results of any newly opened restaurants. All forward looking statements are subject to risks and uncertainties which could cause results to differ materially from those anticipated. These factors include the Company's highly competitive business environment, exposure to fluctuating commodity prices, risks associated with the foodservice industry, the ability to retain and attract new employees, new or changing government regulations, the Company's high geographic concentration in the Northeast and its attendant weather patterns, conditions needed to meet restaurant re-imaging and new opening targets, the Company's ability to service its debt and other obligations, the Company's ability to meet ongoing financial covenants contained in the Company's debt instruments, loan agreements, leases and other long-term commitments, and costs associated with improved service and other similar initiatives. Other factors that may cause actual results to differ from the forward looking statements contained herein and that may affect the Company's prospects in general are included in the Company's other filings with the Securities and Exchange Commission. As a result the Company can provide no assurance that its future results will not be materially different from those projected. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such forward looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. -- Financial Statements to follow - Friendly Ice Cream Corporation Consolidated Statements of Operations -------------------------------------- (In thousands, except per share and unit data) (unaudited) ------------------------------------- Quarter Ended Nine Months Ended ------------------- ------------------- Sep 26, Sep 28, Sep 26, Sep 28, 2004 2003 2004 2003 --------- --------- --------- --------- Restaurant Revenues $120,436 $127,605 $339,230 $353,775 Foodservice Revenues 29,110 30,174 82,273 83,377 Franchise Revenues 3,509 2,571 9,822 7,536 --------- --------- --------- --------- REVENUES 153,055 160,350 431,325 444,688 COSTS AND EXPENSES: Cost of sales 57,368 56,561 158,915 157,717 Labor and benefits 42,990 45,402 125,079 127,326 Operating expenses 29,997 28,739 82,855 82,784 General and administrative expenses 9,054 10,710 29,505 30,725 Restructuring expenses - - 2,627 - Gain on litigation settlement - - (3,644) - Write-downs of property and equipment - 26 91 26 Depreciation and amortization 5,407 5,391 16,583 16,764 Gain on franchise sales of restaurant operations and properties (189) - (1,102) - Loss on disposals of other property and equipment, net 153 91 661 1,499 --------- --------- --------- --------- OPERATING INCOME 8,275 13,430 19,755 27,847 OTHER EXPENSES: Interest expense, net 5,235 6,048 16,667 18,242 Other expenses, principally debt retirement costs - - 9,235 - --------- --------- --------- --------- INCOME (LOSS) BEFORE BENEFIT FROM (PROVISION FOR) INCOME TAXES 3,040 7,382 (6,147) 9,605 Benefit from (provision for) income taxes 563 (2,067) 3,319 (2,689) --------- --------- --------- --------- NET INCOME (LOSS) $3,603 $5,315 $(2,828) $6,916 ========= ========= ========= ========= NET INCOME (LOSS) PER SHARE: Basic $0.47 $0.71 $(0.37) $0.93 ========= ========= ========= ========= Diluted $0.46 $0.70 $(0.37) $0.91 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES: Basic 7,695 7,452 7,611 7,436 ========= ========= ========= ========= Diluted 7,869 7,606 7,611 7,577 ========= ========= ========= ========= NUMBER OF COMPANY UNITS: Beginning of period 360 382 380 387 Openings 4 - 4 1 Refranchised closings - - (18) - Closings (6) (2) (8) (8) --------- --------- --------- --------- End of period 358 380 358 380 ========= ========= ========= ========= NUMBER OF FRANCHISED UNITS: Beginning of period 186 162 163 162 Refranchised openings - - 18 - Openings 2 1 7 3 Closings (2) (2) (2) (4) --------- --------- --------- --------- End of period 186 161 186 161 ========= ========= ========= ========= Friendly Ice Cream Corporation Consolidated Statements of Operations Percentage of Total Revenues ------------------------------------ (unaudited) Quarter Nine Months Ended Ended --------------- --------------- Sep 26, Sep 28, Sep 26, Sep 28, 2004 2003 2004 2003 ------- ------- ------- ------- Restaurant Revenues 78.7 % 79.6 % 78.6 % 79.6 % Foodservice Revenues 19.0 % 18.8 % 19.1 % 18.7 % Franchise Revenues 2.3 % 1.6 % 2.3 % 1.7 % ------- ------- ------- ------- REVENUES 100.0 % 100.0 % 100.0 % 100.0 % COSTS AND EXPENSES: Cost of sales 37.5 % 35.3 % 36.8 % 35.5 % Labor and benefits 28.1 % 28.3 % 29.0 % 28.6 % Operating expenses 19.6 % 17.9 % 19.2 % 18.6 % General and administrative expenses 5.9 % 6.7 % 6.8 % 6.9 % Restructuring expenses - - 0.6 % - Gain on litigation settlement - - (0.8)% - Write-downs of property and equipment - - - - Depreciation and amortization 3.5 % 3.4 % 3.8 % 3.8 % Gain on franchise sales of restaurant operations and properties (0.1)% - (0.2)% - Loss on disposals of other property and equipment, net 0.1 % - 0.2 % 0.3 % ------- ------- ------- ------- OPERATING INCOME 5.4 % 8.4 % 4.6 % 6.3 % OTHER EXPENSES: Interest expense, net 3.4 % 3.8 % 3.9 % 4.1 % Other expenses, principally debt retirement costs - - 2.1 % - ------- ------- ------- ------- INCOME (LOSS) BEFORE BENEFIT FROM (PROVISION FOR) INCOME TAXES 2.0 % 4.6 % (1.4)% 2.2 % Benefit from (provision for) income taxes 0.4 % (1.3)% 0.7 % (0.6)% ------- ------- ------- ------- NET INCOME (LOSS) 2.4 % 3.3 % (0.7)% 1.6 % ======= ======= ======= ======= Friendly Ice Cream Corporation Condensed Consolidated Balance Sheets --------------------------------------- (In thousands) Sept. 26, Dec.28, 2004 2003 ------------ --------- (unaudited) Assets ------------- Current Assets: Cash and cash equivalents $17,234 $25,631 Other current assets 43,560 37,358 ------------ --------- Total Current Assets 60,794 62,989 Deferred Income Taxes 2,030 - Property and Equipment, net 165,536 165,661 Intangibles and Other Assets, net 27,849 23,802 ------------ --------- $256,209 $252,452 ============ ========= Liabilities and Stockholders' Deficit -------------------------------------- Current Liabilities: Current maturities of debt, capital lease and finance obligations $2,714 $2,038 Other current liabilities 69,900 63,680 ------------ --------- Total Current Liabilities 72,614 65,718 Deferred Income Taxes - 1,289 Capital Lease and Finance Obligations 7,596 5,773 Long-Term Debt 226,034 227,937 Other Long-Term Liabilities 49,480 49,761 Stockholders' Deficit (99,515) (98,026) ------------ --------- $256,209 $252,452 ============ ========= Friendly Ice Cream Corporation Selected Segment Reporting Information ------------------------------- (in thousands) ----------------------------- For the Three For the Nine Months Ended Months Ended ------------------ ------------------- Sept. Sept. Sept. Sept. 2004 2003 2004 2003 ------------------ ------------------- Revenues before elimination of intersegment revenues: Restaurant $120,436 $127,605 $339,230 $353,775 Foodservice 65,088 66,352 182,364 183,311 Franchise 3,509 2,571 9,822 7,536 ------------------ ------------------- Total $189,033 $196,528 $531,416 $544,622 ================== =================== Intersegment revenues: Foodservice $(35,978)$(36,178) $(100,091)$(99,934) ================== =================== Revenues: Restaurant $120,436 $127,605 $339,230 $353,775 Foodservice 29,110 30,174 82,273 83,377 Franchise 3,509 2,571 9,822 7,536 ------------------ ------------------- Total $153,055 $160,350 $431,325 $444,688 ================== =================== EBITDA (1): Restaurant (2) $11,932 $17,308 $32,688 $41,791 Foodservice (2) 3,323 5,573 9,726 14,020 Franchise (2) 2,506 1,769 6,909 5,332 Corporate (2) (4,084) (5,539) (14,211) (15,019) (Loss) gain on property and equipment, net 5 (264) 300 (1,487) Restructuring expenses - - (2,627) - Gain on litigation settlement - - 3,644 - Less pension benefit included in reporting segments (529) (281) (1,587) (851) ------------------ ------------------- Total $13,153 $18,566 $34,842 $43,786 ================== =================== Interest expense, net $5,235 $6,048 $16,667 $18,242 ================== =================== Other expenses, principally debt retirement costs $- $- $9,235 $- ================== =================== Depreciation and amortization: Restaurant $3,723 $3,648 $11,417 $11,412 Foodservice 818 770 2,514 2,253 Franchise 67 39 183 116 Corporate 799 934 2,469 2,983 ------------------ ------------------- Total $5,407 $5,391 $16,583 $16,764 ================== =================== Other non-cash expense (income): Write-downs of property and equipment $- $26 $91 $26 Net periodic pension benefit (529) (281) (1,587) (851) ------------------ ------------------- Total $(529) $(255) $(1,496) $(825) ================== =================== Income (loss) before benefit from income taxes (2): Restaurant $8,209 $13,660 $21,271 $30,379 Foodservice 2,505 4,803 7,212 11,767 Franchise 2,439 1,730 6,726 5,216 Corporate (10,118) (12,521) (33,347) (36,244) ------------------ ------------------- 3,035 7,672 1,862 11,118 (Loss) gain on property and equipment, net 5 (290) 209 (1,513) Restructuring expenses - - (2,627) - Gain on litigation settlement - - 3,644 - Other expenses, principally debt retirement costs - - (9,235) - ------------------ ------------------- Total $3,040 $7,382 $(6,147) $9,605 ================== =================== Certain amounts have been reclassified to conform with the current period presentation. (1) EBITDA represents net income (loss) before (i) benefit from (provision for) income taxes, (ii) other expenses, principally debt retirement costs, (iii) interest expense, net, (iv) depreciation and amortization, (v) write-downs of property and equipment, (vi) net periodic pension benefit and (vii) other non-cash items. The Company has included information concerning EBITDA in this schedule and its Form 10-Q because the Company's incentive plan pays bonuses based on achieving EBITDA targets and the Company's management 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. (2) Amounts are prior to gain (loss) on property and equipment, net. CONTACT: Friendly Ice Cream Investment Contact: Deborah Burns, 413-543-2400 x3317 or Media Contact: Maura Tobias, 413-543-2400 x2814 -----END PRIVACY-ENHANCED MESSAGE-----