-- Comparable store sales growth at company-owned restaurants of 5.2% in the second quarter. Eleventh consecutive quarter of positive comparable store sale growth. -- Restaurant gross profit increased 7.6%to $18.9 million in the second quarter -- Average unit volume for company-owned stores increased to $884,000 for trailing 12 months -- Second quarter operating income increased 113% to $6.7 million. -- Opened 1 new company-owned restaurant and 6 new licensed locations in the quarter -- Successful completion of public offering and amended credit facility enabled substantial reduction in indebtedness and projected cash interest expense savings of approximately $11.7 million annually.LAKEWOOD, CO -- Einstein Noah Restaurant Group, Inc. (
EINSTEIN NOAH RESTAURANT GROUP, INC. CONSOLIDATED BALANCE SHEETS AS OF JANUARY 2, 2007 AND JULY 3, 2007 (in thousands, except share information) (unaudited) January 2, July 3, 2007 2007 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 5,477 $ 7,110 Restricted cash 2,403 1,715 Franchise and other receivables, net of allowance of $505 and $432, respectively 6,393 6,010 Inventories 4,948 4,966 Prepaid expenses and other current assets 4,529 4,780 Assets held for sale 1,144 - ----------- ----------- Total current assets 24,894 24,581 Restricted cash long-term 284 278 Property, plant and equipment, net 33,889 38,733 Trademarks and other intangibles, net 63,806 63,806 Goodwill 4,875 4,875 Debt issuance costs and other assets, net 5,406 3,853 ----------- ----------- Total assets $ 133,154 $ 136,126 =========== =========== LIABILITIES AND STOCKHOLDERS DEFICIT Current liabilities: Accounts payable $ 3,347 $ 4,834 Accrued expenses 25,855 21,067 Short term debt and current portion of long-term debt 3,605 1,180 Current portion of obligations under capital leases 76 77 ----------- ----------- Total current liabilities 32,883 27,158 Senior notes and other long-term debt, net of discount 166,556 89,380 Obligations under capital leases 124 84 Other liabilities 8,822 8,591 Mandatorily redeemable, Series Z Preferred Stock, $.001 par value, $1,000 per share liquidation value; 57,000 shares authorized; 57,000 shares issued and outstanding 57,000 57,000 ----------- ----------- Total liabilities 265,385 182,213 ----------- ----------- Commitments and contingencies (see Note 10) Stockholders deficit: Series A junior participating preferred stock, 700,000 shares authorized; no shares issued and outstanding Common stock, $.001 par value; 25,000,000 shares authorized; 10,596,419 and 15,739,355 shares issued and outstanding 11 16 Additional paid-in capital 176,797 262,055 Accumulated deficit (309,039) (308,158) ----------- ----------- Total stockholders deficit (132,231) (46,087) ----------- ----------- Total liabilities and stockholders deficit $ 133,154 $ 136,126 =========== =========== EINSTEIN NOAH RESTAURANT GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SECOND QUARTER AND YEAR TO DATE PERIODS ENDED JULY 4, 2006 AND JULY 3, 2007 (in thousands, except earnings per share and related share information) (unaudited) Second quarter ended: Year to date ended: ---------------------- ---------------------- July 4, July 3, July 4, July 3, 2006 2007 2006 2007 ---------- ---------- ---------- ----------- Revenues: Company-owned restaurant sales $ 91,507 $ 94,141 $ 182,087 $ 183,256 Manufacturing and commissary revenues 5,196 5,682 10,469 11,500 Franchise and license related revenues 1,253 1,232 2,476 2,554 ---------- ---------- ---------- ----------- Total revenues 97,956 101,055 195,032 197,310 Cost of sales: Company-owned restaurant costs 73,964 75,257 147,490 146,589 Manufacturing and commissary costs 5,502 5,380 10,507 10,802 ---------- ---------- ---------- ----------- Total cost of sales 79,466 80,637 157,997 157,391 ---------- ---------- ---------- ----------- Gross profit 18,490 20,418 37,035 39,919 Operating expenses: General and administrative expenses 9,727 10,855 20,288 21,587 Depreciation and amortization 5,594 2,623 11,598 5,042 Loss (gain) on sale, disposal or abandonment of assets, net (8) 31 13 405 Impairment charges and other related costs 7 166 83 185 ---------- ---------- ---------- ----------- Income from operations 3,170 6,743 5,053 12,700 Other expense: Interest expense, net 4,712 4,144 9,921 8,933 Write-off of debt discount upon redemption of senior notes - 528 - 528 Prepayment penalty upon redemption of senior notes - 240 4,800 240 Write-off of debt issuance costs upon redemption of senior notes - 2,071 3,956 2,071 Other - - 10 - ---------- ---------- ---------- ----------- Income (loss) before income taxes (1,542) (240) (13,634) 928 Provision for income taxes - 10 - 47 ---------- ---------- ---------- ----------- Net income (loss) $ (1,542) $ (250) $ (13,634) $ 881 ========== ========== ========== =========== Net income (loss) per common share - Basic $ (0.15) $ (0.02) $ (1.35) $ 0.08 ========== ========== ========== =========== Net income (loss) per common share - Diluted $ (0.15) $ (0.02) $ (1.35) $ 0.07 ========== ========== ========== =========== Weighted average number of common shares outstanding: Basic 10,171,236 11,775,597 10,118,154 11,190,612 ========== ========== ========== =========== Diluted 10,171,236 11,775,597 10,118,154 11,874,874 ========== ========== ========== =========== EINSTEIN NOAH RESTAURANT GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR TO DATE PERIODS ENDED JULY 4, 2006 AND JULY 3, 2007 (in thousands) (unaudited) July 4, July 3, 2006 2007 ----------- ----------- OPERATING ACTIVITIES: Net income (loss) $ (13,634) $ 881 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 11,598 5,042 Stock based compensation expense 408 1,250 Loss, net of gains, on disposal of assets 13 405 Impairment charges and other related costs 83 185 Provision for losses on accounts receivable, net 132 25 Amortization of debt issuance and debt discount costs 419 392 Write-off of debt issuance costs 3,956 2,071 Write-off of debt discount - 528 Paid-in-kind interest 643 904 Changes in operating assets and liabilities: Franchise and other receivables 433 358 Accounts payable and accrued expenses 332 (1,225) Other assets and liabilities (105) (2,500) ----------- ----------- Net cash provided by operating activities 4,278 8,316 INVESTING ACTIVITIES: Purchase of property and equipment (5,400) (12,404) Proceeds from the sale of equipment 153 1,164 ----------- ----------- Net cash used in investing activities (5,247) (11,240) FINANCING ACTIVITIES: Proceeds from secondary common stock offering - 90,000 Costs incurred with offering of our common stock - (6,417) Proceeds from line of credit 24 - Repayments of line of credit (24) - Payments under capital lease obligations (20) (39) Repayment of notes payable (160,000) - Borrowings under First Lien 80,000 11,900 Repayments under First Lien (475) (475) Borrowing under Second Lien 65,000 - Repayments under Second Lien - (65,000) Borrowings under Subordinated Note 24,375 - Repayments under Subordinated Note - (25,000) Debt issuance costs (4,916) (842) Proceeds upon stock option and warrant exercises 187 430 ----------- ----------- Net cash provided by financing activities 4,151 4,557 Net increase in cash and cash equivalents 3,182 1,633 Cash and cash equivalents, beginning of period 1,556 5,477 ----------- ----------- Cash and cash equivalents, end of period $ 4,738 $ 7,110 =========== ===========Use of Non-GAAP Financial Information In addition to the results reported in accordance with U.S. generally accepted accounting principles ("GAAP") included in this release, the Company has provided certain non-GAAP financial information, which is Adjusted EBITDA (as described in more detail in the next section). Management believes that the presentation of this non-GAAP financial information provides useful information to investors because this information may allow investors to better evaluate ongoing business performance and certain components of the Company's results. This information should be considered in addition to the results presented in accordance with GAAP, and should not be considered a substitute for the GAAP results. The Company has reconciled the non-GAAP financial information included in this release to the nearest GAAP measure in context. See the "Calculation of Adjusted EBITDA" table below. Adjusted EBITDA Adjusted EBITDA is defined as recurring earnings before interest, taxes, depreciation and amortization and represents operating profit plus other charges set forth in the attached Calculation of Adjusted EBITDA. Adjusted EBITDA is not adjusted for all non-cash expenses or for working capital, capital expenditures or other investment requirements and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. Thus, Adjusted EBITDA should not be considered in isolation or as a substitute for net earnings or cash provided by operating activities, each prepared in accordance with GAAP, when measuring Einstein Noah Restaurant Group, Inc.'s profitability or liquidity as more fully discussed in the Company's financial statements and filings with the Securities and Exchange Commission.
Second quarter ended Year to date ended July 4, July 3, July 4, July 3, 2006 2007 2006 2007 --------- --------- --------- ---------- Net income (loss) $ (1,542) $ (250) $ (13,634) $ 881 Adjustments Legal costs associated with amended First Lien Term Loan - 191 - 191 Interest expense, net 4,712 4,144 9,921 8,933 Write-off of debt discount upon redemption of senior notes - 528 - 528 Prepayment penalty upon redemption of senior notes - 240 4,800 240 Write-off of debt issuance costs upon redemption of senior notes - 2,071 3,956 2,071 Depreciation and amortization 5,594 2,623 11,598 5,042 Loss (gain) on sale, disposal or abandonment of assets, net (8) 31 13 405 Impairment charges and other related costs 7 166 83 185 Provision for income taxes - 10 - 47 --------- --------- --------- ---------- Consolidated adjusted EBITDA $ 8,763 $ 9,754 $ 16,737 $ 18,523 ========= ========= ========= ==========The following table reconciles our net income and earnings per share as reported under GAAP in the United States with those financial measures as adjusted by the items detailed below and presented in the accompanying news release and associated teleconference. These calculations are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP. We believe that the supplemental presentation of these calculations provides meaningful non-GAAP financial measures to help investors understand and compare business trends among different reporting periods on a consistent basis. These calculations set forth the pro forma effects of how our secondary public stock offering and our amendment of the First Lien Term Loan facility would have affected our consolidated statements of operations if the transactions had been consummated on the last day of the period prior to the beginning of the quarters and the year to date periods ended July 4, 2006 and July 3, 2007. As a result of these transactions, we were able to pay off our higher interest rate debt.
Second quarter ended Year to date period ended July 4, July 3, July 4, July 3, 2006 2007 2006 2007 ---------- ---------- ---------- ----------- Net income (loss) $ (1,542) $ (250) $ (13,634) $ 881 Add Legal costs associated with amended First Lien Term Loan - 191 - 191 Interest expense, net 4,712 4,144 9,921 8,933 Write-off of debt discount upon redemption of senior notes - 528 - 528 Prepayment penalty upon redemption of senior notes - 240 4,800 240 Write-off of debt issuance costs upon redemption of senior notes - 2,071 3,956 2,071 Interest Income 64 112 113 211 Less Interest expense under amended $90 Million First Lien Term Loan at 6.96% for 2006 and 7.39% for 2007 1,566 1,663 3,132 3,326 Other interest expense 76 15 156 32 Unused Line Fee of $13.3 million at 0.50% 17 17 33 33 Amortization of debt issuance costs 120 120 241 241 Letter of Credit Fee of $6.7 million at 2.50% 42 42 84 84 ---------- ---------- ---------- ----------- Pro forma pre-tax income $ 1,413 $ 5,180 $ 1,510 $ 9,339 ========== ========== ========== =========== Common shares outstanding as of April 4, 2006, April 3, 2007, January 3, 2006, and January 2, 2007 10,065,072 10,612,227 10,065,072 10,596,419 Shares issued in secondary public offering 5,000,000 5,000,000 5,000,000 5,000,000 Common stock issued upon stock option exercise 45,151 127,128 45,151 142,936 ---------- ---------- ---------- ----------- Pro-forma weighted average number of common shares outstanding as of July 4, 2006 and July 3, 2007 - Basic 15,110,223 15,739,355 15,110,223 15,739,355 Dilutive effect of stock options 435,912 821,551 418,168 684,262 ---------- ---------- ---------- ----------- Pro-forma weighted average number of common shares outstanding as of July 4, 2006 and July 3, 2007 - Diluted 15,546,135 16,560,906 15,528,391 16,423,617 ========== ========== ========== =========== Pro-forma EPS - Basic $ 0.09 $ 0.33 $ 0.10 $ 0.59 ========== ========== ========== =========== Pro-forma EPS - Diluted $ 0.09 $ 0.31 $ 0.10 $ 0.57 ========== ========== ========== ===========
Contact Information: Contacts: Jay Pfeiffer Pfeiffer High Investor Relations, Inc. 303-393-7044 Rick Dutkiewicz Chief Financial Officer 303-568-8004