EX-99.1 2 a06-13308_1ex99d1.htm EX-99

Exhibit 99.1

 

VICORP Restaurants, Inc. Announces

Fiscal Second Quarter 2006 Results

 

DENVER, CO (June 5, 2006) – VICORP Restaurants, Inc., today announced financial results for its fiscal 2006 second quarter ended April 20, 2006. Net revenues for the second quarter of 2006 were $106.3 million, a 9.0% increase from net revenues of $97.5 million reported in the second quarter of 2005. The increase in the net revenue resulted from sales at the 26 new restaurants, net of closures, opened since the end of the second quarter of fiscal 2005. Comparable restaurant sales for the second quarter of 2006 declined 2.2% versus the previous year’s second quarter. Comparable restaurant sales for Village Inn and Bakers Square decreased 2.6% and 1.7%, respectively. The net loss for the second quarter of 2006 was $1.3 million versus a net income of $0.5 million in the comparable period of 2005. Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA” – as calculated in the accompanying Consolidated Statements of Adjusted EBITDA and Adjusted EBITDAR and discussed further below under the caption entitled “Factors Affecting Comparability and Non-GAAP Financial Information”) for the second quarter of 2006 was $11.1 million versus $11.8 million for the second quarter of 2005.

 

Operating profit was $4.8 million in the second quarter of 2006 versus $6.8 million in the second quarter of 2005, principally due to lower restaurant operating contribution, non-cash asset impairments recognized in the quarter and somewhat higher net manufacturing loss on outside sales at VICOM. Food cost as a percentage of restaurant sales declined 0.9 pt in the second quarter of 2006 versus the comparable period of 2005, as increased pricing more than offset increases in commodity costs on a percentage basis. Labor costs as a percentage of restaurant sales increased to 34.0% in the second quarter of 2006 versus 32.5% in the comparable quarter of 2005. Labor costs increased as a percentage of restaurant sales partially due to negative leverage associated with year-over-year store-level wage increases during a quarter of same store sales decline, as well as higher percentage labor costs in the significant number of restaurants opened over recent quarters. Other operating expenses increased by 1.7 pts as a percentage of restaurant sales primarily due to higher percentage pre-opening and occupancy costs incurred in the fiscal 2006 second quarter versus that of the comparable quarter of 2005. The increase in preopening costs was a result of increased new restaurant opening activity in the second quarter of 2006 and early in 2006 versus the comparable period of last year. The increase in percentage occupancy costs in the second quarter of 2006 versus the comparable period of 2005 was largely a result of negative leverage associated with normal increases in occupancy costs relative to the decline in comparable restaurant sales, as well as higher percentage occupancy costs associated with the immature newly opened restaurants.

 

Debra Koenig, CEO, commented, “We are disappointed with the comparable sales declines in both of our concepts in the second quarter. The weakness is consistent with current casual dining trends, which are being impacted by lower consumer spending due to higher gas prices. Nonetheless, we are pleased with the overall results to date of our new store strategy. During the second quarter, we opened 6 new restaurants, bringing the total for fiscal 2006 to 12 new Village Inn restaurants. In addition, in the first half of fiscal 2006, we acquired 4 Village Inn franchise

 


 

restaurants in the Tulsa, Oklahoma market. In fiscal 2006, we plan to open or acquire between 29 and 34 restaurants, predominantly under the Village Inn brand.”

 

“To strengthen the focus on the Bakers Square and Village Inn brands, we made organizational changes in early 2006. We appointed Jeff Guido as President of the Village Inn brand and initiated a search for a Bakers Square President. I am pleased to report that Tim Casey has joined VICORP as President of the Bakers Square Restaurants. Tim’s business credentials are primarily multi-unit retail, including Southland Corporation and, more recently, Starbucks. We look forward to Tim’s infusion of energy combined with his business savvy in leading Bakers Square to capitalize on the future.”

 

Year-to-date through the second quarter net revenues were $218.6 million in 2006, an increase of 2.7% over the $212.9 million reported in 2005, primarily due to the incremental sales at the 26 net newly opened restaurants since the end of the second quarter of fiscal 2005. Comparable restaurant sales for fiscal 2006 declined 1.1% versus fiscal 2005. Comparable restaurant sales for Village Inn decreased 1.2%, while Bakers Square comparable restaurant sales decreased 1.0%. Net loss for the year-to-date through the second quarter 2006 was $1.2 million versus net income in the comparable period in 2005 of $2.7million. Adjusted EBITDA was $23.7 million for the first half of 2006, versus $27.0 million in the first half of 2005.

 

Factors Affecting Comparability and Non-GAAP Financial Information

 

Our fiscal year is comprised of 52 or 53 weeks divided into four fiscal quarters of 12 or 13, 12, 12, and 16 weeks. Our second quarter of both fiscal 2006 and fiscal 2005 was comprised of 12 weeks, or 84 days. Fiscal 2006 will consist of 52 weeks, or 364 total days, while fiscal 2005 consisted of 53 weeks, or 371 total days.

 

We believe that, in addition to other financial measures, earnings before interest, taxes, depreciation and amortization, “EBITDA”, “Adjusted EBITDA” and “Adjusted EBITDAR” are appropriate indicators to assist in the evaluation of our operating performance because they provide additional information with respect to our ability to meet our future debt service, capital expenditures and working capital needs and are used by securities analysts and others in evaluating companies in our industry. However, “EBITDA”, “Adjusted EBITDA” and “Adjusted EBITDAR” are not prescribed terms under accounting principles generally accepted in the United States, do not directly correlate to cash provided by or used in operating activities and should not be considered in isolation, nor as an alternative to more meaningful measures of performance determined in accordance with accounting principles generally accepted in the United States. Because “EBITDA”, “Adjusted EBITDA” and “Adjusted EBITDAR” are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures of other companies. Refer to the accompanying Consolidated Statements of Adjusted EBITDA and Adjusted EBITDAR for a reconciliation of these non-GAAP financial performance measures to the GAAP measures and other information.

 


 

Conference Call Information

 

VICORP will conduct a conference call on Tuesday, June 6, 2006, at 1:00 p.m. Eastern Standard Time. The conference call can be accessed by dialing 1-800-967-7144, Conference I.D. Number 8547508. A recording of the conference call will be available after 7:00 p.m. Eastern Standard Time on June 6, 2006, and can be accessed by dialing 1-888-203-1112, Conference I.D. Number 8547508.

 

About VICORP Restaurants, Inc.

 

VICORP Restaurants, Inc. operates family-dining restaurants under two proven and well-recognized brands, Village Inn and Bakers Square. As of April 20, 2006, VICORP, founded in 1958, has 396 restaurants in 26 states, consisting of 300 company-operated restaurants and 96 franchised restaurants. Village Inn is known for serving fresh breakfast items throughout the day, and we have also successfully leveraged its strong breakfast heritage to offer traditional American fare for lunch and dinner. Bakers Square offers delicious food for breakfast, lunch and dinner complimented by its signature pies, including dozens of varieties of multi-layer specialty pies made from premium ingredients. Our headquarters are located at 400 West 48th Avenue, Denver, Colorado 80216.

 

Safe Harbor Statement

 

This announcement includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this announcement. See the “Risk Factors” section of our Annual Report on Form 10-K for the year ended November 3, 2005, filed with the Securities and Exchange Commission, for a discussion of some of the factors that may affect the Company and its operations. Such factors include the following:  competitive pressures within the restaurant industry; changes in consumer preferences; the level of success of our operating strategy and growth initiatives; the level of our indebtedness and the terms and availability of capital; fluctuations in commodity prices; changes in economic conditions; government regulation; litigation; and seasonality and weather conditions. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Any forward-looking statements which we make in this announcement speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

 


 

#  #  #

 

VICORP Restaurants, Inc., Village Inn and Bakers Square are either registered trademarks or trademarks of VICORP Restaurants, Inc., or its subsidiaries in the United States and/or other countries.

 

Contact:

 

Anthony J. Carroll

 

 

Chief Financial Officer

 

 

VICORP Restaurants, Inc.

 

 

Direct: (303) 672-2266

 

 

Email: tony.carroll@vicorpinc.com

 


 

VI Acquisition Corp.

Consolidated Statements of Operations

(Unaudited)

(In thousands)

 

 

 

For the 84 days
ended

 

For the 84 days
ended

 

For the 168 days
ended

 

For the 175 days
ended

 

 

 

April 20,

 

April 21,

 

April 20,

 

April 21,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Restaurant operations

 

$

98,116

 

$

92,339

 

$

202,242

 

$

196,862

 

Franchise operations

 

1,165

 

1,191

 

2,331

 

2,420

 

Manufacturing operations

 

6,978

 

4,017

 

13,990

 

13,600

 

 

 

106,259

 

97,547

 

218,563

 

212,882

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Restaurant costs:

 

 

 

 

 

 

 

 

 

Food

 

24,719

 

24,086

 

53,036

 

52,629

 

Labor

 

33,333

 

30,042

 

66,274

 

62,282

 

Other operating expenses

 

28,545

 

25,336

 

58,672

 

53,102

 

Franchise operating expenses

 

503

 

521

 

986

 

1,032

 

Manufacturing operating expenses

 

7,565

 

4,325

 

15,078

 

13,576

 

General and administrative expenses

 

6,084

 

6,271

 

11,905

 

12,878

 

Transaction expenses

 

—

 

—

 

—

 

15

 

Management fees

 

196

 

196

 

392

 

392

 

Asset impairments

 

513

 

—

 

821

 

—

 

Operating profit

 

4,801

 

6,770

 

11,399

 

16,976

 

Interest expense

 

(7,090

)

(6,476

)

(14,029

)

(13,454

)

Other income, net

 

113

 

138

 

284

 

226

 

Income (loss) before income taxes

 

(2,176

)

432

 

(2,346

)

3,748

 

Provision for income taxes (benefit)

 

(886

)

(24

)

(1,121

)

1,023

 

Net income (loss)

 

(1,290

)

456

 

(1,225

)

2,725

 

Preferred stock dividends and accretion

 

(2,242

)

(1,928

)

(4,427

)

(3,975

)

Net loss attributable to common stockholders

 

$

(3,532

)

$

(1,472

)

$

(5,652

)

$

(1,250

)

 


 

The following consolidated statements of adjusted EBITDA and adjusted EBITDAR  show “EBITDA”, “Adjusted EBITDA”, and “Adjusted EBITDAR” because we believe that, in addition to other financial measures, they are appropriate indicators to assist in the evaluation of our operating performance because they provide additional information with respect to our ability to meet our future debt service, capital expenditures and working capital needs and are used by securities analysts and others in evaluating companies in our industry. However, “EBITDA”, “Adjusted EBITDA”, and “Adjusted EBITDAR” are not prescribed terms under accounting principles generally accepted in the United States, do not directly correlate to cash provided by or used in operating activities and should not be considered in isolation, nor as an alternative to more meaningful measures of performance determined in accordance with accounting principles generally accepted in the United States. Because “EBITDA”, “Adjusted EBITDA”, and “Adjusted EBITDAR” are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures of other companies.

 

VI Acquisition Corp.

Consolidated Statements of Adjusted EBITDA and Adjusted EBITDAR

(Unaudited)

(In thousands)

 

 

 

For the 84 days
ended

 

For the 84 days
ended

 

For the 168 days
ended

 

For the 175 days
ended

 

 

 

April 20,

 

April 21,

 

April 20,

 

April 21,

 

 

 

2006

 

2005

 

2006

 

2005

 

Net income (loss)

 

$

(1,290

)

$

456

 

$

(1,225

)

$

2,725

 

Provision for income taxes (benefit)

 

(886

)

(24

)

(1,121

)

1,023

 

Interest expense

 

7,090

 

6,476

 

14,029

 

13,454

 

Depreciation & amortization

 

5,197

 

4,520

 

10,340

 

9,000

 

EBITDA

 

10,111

 

11,428

 

22,023

 

26,202

 

Adjustments to EBITDA:

 

 

 

 

 

 

 

 

 

Impairment of assets

 

513

 

—

 

821

 

—

 

Asset retirement expense

 

161

 

(6

)

177

 

22

 

Transaction expense

 

—

 

—

 

—

 

15

 

Amortization of rent related adjustments (a)

 

318

 

360

 

668

 

746

 

Total Adjustments

 

992

 

354

 

1,666

 

783

 

ADJUSTED EBITDA

 

11,103

 

11,782

 

23,689

 

26,985

 

Net rent expense

 

5,151

 

4,454

 

10,241

 

9,428

 

ADJUSTED EBITDAR

 

$

16,254

 

$

16,236

 

$

33,930

 

$

36,413

 

 

(a) Includes amortization of the fair market rent adjustments which we were required to recognize under purchase accounting at the time of the June 2003 acquisition.

 


 

VI Acquisition Corp.

Consolidated Balance Sheets

(Unaudited)

(In Thousands, Except Share Data)

 

 

 

April 20, 2006

 

November 3, 2005

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,954

 

$

2,099

 

Receivables, net

 

9,953

 

15,756

 

Inventories

 

10,973

 

12,425

 

Deferred income taxes, short-term

 

2,317

 

1,431

 

Prepaid expenses and other current assets

 

2,513

 

3,175

 

Prepaid Rent

 

737

 

2,172

 

Income tax receivable

 

3,288

 

733

 

Total current assets

 

31,735

 

37,791

 

Property and equipment, net

 

91,562

 

86,459

 

Assets under deemed landlord financing liability, net

 

133,416

 

126,146

 

Goodwill

 

91,881

 

91,881

 

Trademarks and tradenames

 

42,600

 

42,600

 

Franchise rights, net

 

10,445

 

10,765

 

Deferred income taxes

 

1,542

 

3,010

 

Other assets, net

 

12,002

 

13,613

 

Total assets

 

$

415,183

 

$

412,265

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt and capitalized lease obligations

 

$

48

 

$

63

 

Cash overdraft

 

3,005

 

6,341

 

Accounts payable

 

12,171

 

13,291

 

Accrued compensation

 

8,437

 

8,066

 

Accrued taxes

 

9,606

 

7,746

 

Other accrued expenses

 

13,594

 

12,992

 

Total current liabilities

 

46,861

 

48,499

 

Long-term debt

 

146,239

 

147,013

 

Capitalized lease obligations

 

173

 

185

 

Deemed landlord financing liability

 

138,943

 

132,038

 

Deferred income taxes, long-term

 

—

 

—

 

Other noncurrent liabilities

 

12,003

 

11,596

 

Total liabilities

 

344,219

 

339,331

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stock subject to repurchase

 

1,055

 

1,063

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, $0.0001 par value:

 

 

 

 

 

Series A, 100,000 shares authorized, 68,942 shares issued and outstanding at April 20, 2006 and 68,944 shares issued and outstanding at November 3, 2005 (aggregate liquidation preference of $92,630 and $88,178, respectively)

 

93,133

 

89,287

 

Unclassified preferred stock, 100,000 shares authorized, no shares issued or outstanding

 

—

 

—

 

Common stock $0.0001 par value:

 

 

 

 

 

Class A, 2,800,000 shares authorized, 1,343,163 shares issued and outstanding at April 20, 2006 and 1,395,255 shares issued and outstanding at November 3, 2005

 

—

 

—

 

Paid-in capital

 

2,362

 

2,465

 

Treasury stock, at cost, 1,371.11 shares of preferred stock and 132,695 shares of common stock at April 20, 2006 and 923.87 shares of preferred stock and 80,603 shares of common stock at November 3, 2005

 

(1,057

)

(1,004

)

Accumulated deficit

 

(24,529

)

(18,877

)

Total stockholders’ equity

 

69,909

 

71,871

 

Total liabilities and stockholders’ equity

 

$

415,183

 

$

412,265