EX-99 3 a4451772ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Main Street and Main Inc. Announces Its 2003 Second Quarter Results PHOENIX--(BUSINESS WIRE)--Aug. 12, 2003--Main Street and Main Inc. (Nasdaq: MAIN), the world's largest franchisee of T.G.I. Friday's restaurants and the owner and operator of the Bamboo Club and the Redfish Seafood Grill and Bar restaurant concepts, today announced its operating results for the second quarter ended June 30, 2003. For the quarter ended June 30, 2003, the company reported net income of $1.5 million, or $0.11 per diluted share (14.1 million diluted shares outstanding), compared with net income of $1.3 million, or $0.08 per diluted share (15.3 million diluted shares outstanding), for the comparable quarter in 2002. During the second quarter of 2003, the company recorded no income tax expense as a result of the utilization of operating loss carryforwards. In the prior year's quarter we incurred an income tax expense of 18%, our effective tax rate at that time, which amounted to approximately $.02 per share. The earnings increase in 2003 from the comparable quarter in 2002 was primarily a result of improving economic conditions and stronger profit margins, five more restaurants open in this quarter versus the prior year's quarter, and lower pre-opening, income taxes and general and administrative costs. These increases were offset by higher interest expense as a result of higher borrowings in 2003 versus 2002. Revenue for the quarter ended June 30, 2003, was $60.1 million compared with revenue of $57.9 million for the comparable quarter in 2002. This net 3.8% increase in revenue was primarily due to the impact of new restaurants opened in 2002 and a same-store sales increase of 1.3%, compared with a 1.5% increase in same-store sales for the comparable quarter in 2002. Bart Brown, chief executive officer, and Bill Shrader, president and COO, stated, "The economy during the early part of the second quarter of 2003 exhibited the same sluggish characteristics as we saw in the last half of the first quarter as a result of the Iraq War. But in June, the Friday's media campaign was effective in attracting customers and gave a nice boost to our revenue. We are very pleased to see a return of positive same-store sales. In fact, revenue of $60 million for a quarter is an all-time company record." Our measure of operating cash flow is known as EBITDA, which was $4.8 million in the second quarter 2003 and $4.3 million in the same quarter last year, computed as follows (in millions): Quarter ended Quarter ended June 2003 June 2002 ---------------- -------------- Net Income $1.5 $1.3 Add-Income taxes - .2 -Interest expense 1.0 .8 -Depreciation 2.1 1.9 -Amortization .2 .1 EBITDA $4.8 $4.3 Brown and Shrader continued, "We are pleased with our financial results for the quarter, which reflected our efforts to strengthen profitability in all of our key brands (T.G.I. Friday's, Redfish and the Bamboo Club), and to reduce expenses with a more conservative new store development schedule. These factors combined to help us preserve our cash, and, along with a good level of EBITDA in both the first and second quarters of 2003, allowed us to meet our debt covenants at the end of the second quarter." New Store Openings As we have previously announced, we remain focused on a conservative approach to new store development and have cancelled some selected leases for sites where we have not started construction. During the second quarter, we expensed $25,000 for lease termination costs for one additional lease (which is still in the process of negotiation) and have paid approximately $377,000 (previously accrued) on two sites in connection with the cancellation of signed leases. During the quarter, we opened our newest Bamboo Club location in Novi, Mich., just outside of Detroit, and one T.G.I. Friday's location in the Desert Ridge Mall, Phoenix. Our last planned opening for 2003 will be a Bamboo Club location in the Desert Ridge Mall, Phoenix, which we plan to open in the fourth quarter of 2003. In August, the company competed negotiations to settle its lawsuit involving the Bamboo Club location in Raleigh, N.C. The settlement includes a lease modification and commitment by us to build the restaurant. Construction is scheduled to start very soon and we expect to be open before the end of this year. Additional Bamboo Club sites will be considered depending on the economy and the performance of our existing Bamboo Club restaurants. No new lease agreements have been completed or signed. Future new sites will be considered only when there is greater clarity relative to the positive progress of our economy. Sale of Assets As we have previously mentioned, we periodically evaluate our assets and consider sales when we deem appropriate. In July 2003, we announced the sale of three of our T.G.I. Friday's restaurants in the greater Sacramento, Calif. area to Capital City Restaurants Inc. which is based in Sacramento. Brown, chief executive officer, said, "This was an opportunity for us to sell assets in a non-core location for a good premium to generate cash to provide a cushion for working capital. When we pay off debt and payables associated with these locations we should have approximately $3.4 million in new cash. We will use this cash for managing our debt repayments and new store development." Earnings Conference Call As a reminder, our earnings conference call is scheduled for today, Tuesday, Aug. 12, 2003, at 5 p.m. EST. The toll-free dial-in number is 800-901-5213 (or 617-786-2962 for international calls), and the participant passcode is 53035205. You can visit our Web site at http://www.mainandmain.com for a replay. Main Street and Main Inc. is the world's largest franchisee of T.G.I. Friday's restaurants, operating 57 T.G.I. Friday's, five Redfish, 10 Bamboo Club, and one Cooper'stown restaurants. This press release contains forward-looking statements regarding the company's business strategies, business outlook, anticipated new store openings, and revenue and earnings expectations. These forward-looking statements are based primarily on the company's expectations and are subject to a number of risks and uncertainties, some of which are beyond the company's control. Actual results could differ materially from the forward-looking statements as a result of numerous factors, including those set forth in the company's Form 10-K and 10Q Reports as filed with the Securities and Exchange Commission. MAIN STREET AND MAIN INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Par Value and Share Data) June 30, Dec. 30, 2003 2002 ----------- --------- (unaudited) ASSETS Current assets: Cash and cash equivalents $3,954 $5,621 Accounts receivable, net 1,705 1,997 Inventories 2,742 2,832 Prepaid expenses 2,533 2,104 ----------- --------- Total current assets 10,934 12,554 Property and equipment, net 71,396 71,265 Other assets, net 2,375 2,449 Goodwill, net 22,995 22,995 Franchise fees, net 3,088 3,132 ----------- --------- Total assets $110,788 $112,395 =========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $3,795 $3,502 Accounts payable 5,500 8,073 Other accrued liabilities 16,344 16,007 ----------- --------- Total current liabilities 25,639 27,582 Long-term debt, net of current portion 49,872 51,998 Other liabilities and deferred credits 3,509 3,205 ----------- --------- Total liabilities 79,020 82,785 ----------- --------- Commitments and contingencies Stockholders' equity: Preferred stock, $.001 par value, 2,000,000 shares authorized; no shares issued and outstanding in 2003 and 2002 -- -- Common stock, $.001 par value, 25,000,000 shares authorized; 14,142,000 shares issued and outstanding in 2003 and 2002 14 14 Additional paid-in capital 53,927 53,927 Accumulated deficit (19,209) (21,827) Other comprehensive loss (2,964) (2,504) ----------- --------- Total stockholders' equity 31,768 29,610 ----------- --------- Total stockholders' equity and liabilities $110,788 $112,395 =========== ========= The accompanying notes are an integral part of these condensed consolidated financial statements. MAIN STREET AND MAIN INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) Three Months Ended ---------------------- (unaudited) June 30, July 1, 2003 2002 ----------- ---------- Revenue $60,110 $57,898 ----------- ---------- Restaurant operating expenses Cost of sales 15,888 15,775 Payroll and benefits 18,654 18,032 Depreciation and amortization 2,083 1,935 Other operating expenses 18,143 16,852 ----------- ---------- Total restaurant operating expenses 54,768 52,594 ----------- ---------- Income from restaurant operations 5,342 5,304 Depreciation and amortization of intangible assets 149 85 General and administrative expenses 2,224 2,378 Preopening expenses 358 440 New manager training expenses 69 90 Impairment charges and other 25 - ----------- ---------- Operating income 2,517 2,311 Interest expense and other, net 971 770 ----------- ---------- Net income before income tax 1,546 1,541 Income tax expense - 277 ----------- ---------- Net Income $1,546 $1,264 =========== ========== Basic earnings per share Net Income $0.11 $0.09 =========== ========== Diluted earnings per share Net Income $0.11 $0.08 =========== ========== Weighted average number of shares outstanding -- Basic 14,142 14,084 =========== ========== Weighted average number of shares outstanding -- Diluted 14,142 15,258 =========== ========== The accompanying notes are an integral part of these condensed consolidated financial statements. MAIN STREET AND MAIN INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) Six Months Ended ----------------------- (unaudited) June 30, July 1, 2003 2002 ----------- ----------- Revenue $117,696 $113,227 ----------- ----------- Restaurant operating expenses Cost of sales 31,746 30,958 Payroll and benefits 36,352 35,166 Depreciation and amortization 4,268 3,767 Other operating expenses 35,217 32,684 ----------- ----------- Total restaurant operating expenses 107,583 102,575 ----------- ----------- Income from restaurant operations 10,113 10,652 Depreciation and amortization of intangible assets 298 176 General and administrative expenses 4,360 4,542 Preopening expenses 523 882 New manager training expenses 165 218 Impairment charges and other 25 - ----------- ----------- Operating income 4,742 4,834 Interest expense and other, net 2,125 1,736 ----------- ----------- Net income before income tax 2,617 3,098 Income tax expense - 566 ----------- ----------- Net income $2,617 $2,532 =========== =========== Basic earnings per share Net income $0.19 $0.18 =========== =========== Diluted earnings per share Net income $0.19 $0.17 =========== =========== Weighted average number of shares outstanding -- Basic 14,142 14,069 =========== =========== Weighted average number of shares outstanding -- Diluted 14,142 15,006 =========== =========== The accompanying notes are an integral part of these condensed consolidated financial statements. MAIN STREET AND MAIN INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Six Months Ended ----------------------- (unaudited) June 30, July 1, 2003 2002 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,617 $2,532 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,566 3,943 Changes in assets and liabilities: Accounts receivable, net 292 1,020 Inventories 90 (275) Prepaid expenses (429) (374) Other assets, net (17) (845) Accounts payable (2,573) (5,236) Other accrued liabilities and deferred credits 182 1,324 ----------- ----------- Cash provided by operating activities 4,728 2,089 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Net additions to property and equipment (4,512) (7,810) Cash paid to acquire franchise rights (50) (50) ----------- ----------- Cash used in investing activities (4,562) (7,860) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Long-term debt borrowings - 7,435 Principal payments on long-term debt (1,833) (2,528) Proceeds received from the exercise of stock options - 244 ----------- ----------- Cash provided (used) by financing activities (1,833) 5,151 ----------- ----------- NET CHANGE IN CASH AND CASH EQUIVALENTS (1,667) (620) CASH AND CASH EQUIVALENTS, BEGINNING 5,621 9,466 ----------- ----------- CASH AND CASH EQUIVALENTS, ENDING $3,954 $8,846 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for income taxes 3 47 Cash paid during the period for interest $2,388 $1,821 =========== =========== The accompanying notes are an integral part of these condensed consolidated financial statements. CONTACT: Main Street and Main Inc., Phoenix Michael Garnreiter, 602-852-9000 Michaelg@mstreetinc.com