Exhibit 99.1
Friendly Ice Cream Corporation Reports First Quarter 2003 Results
WILBRAHAM, Mass.--(BUSINESS WIRE)--April 28, 2003--Friendly Ice
Cream Corporation (AMEX: FRN) today reported a net loss for the
three-months-ended March 30, 2003 of $1.5 million, or $0.20 per share
compared to a net loss of $0.4 million, or $0.06 per share, reported
for the three-months-ended March 31, 2002.
Comparable restaurant sales increased 0.3% for the first quarter
2003 following an 8.8% increase in the first quarter of 2002. Total
revenues for the three-months-ended March 30, 2003 were $128.7 million
compared to $129.2 million for the three-months-ended March 31, 2002.
"We are extremely pleased to report positive comparable restaurant
sales for the ninth consecutive quarter, despite record, severe
weather in the Northeast," stated John L. Cutter, Chief Executive
Officer and President of Friendly Ice Cream. "These results were well
within our expectations due to effective controls in all business
areas and reflect improved guest satisfaction and the strength of the
Friendly's brand. It is important to note that because of the
seasonality of our business, historically; the Company reports a net
loss for the first quarter."
"Our top priority continues to be guest satisfaction, supported by
training initiatives and management incentive programs. In 2003, we
plan to remodel 50 to 60 restaurants as part of our Impact program.
During the first quarter, eleven projects were completed. The Impact
program improves the appearance of our restaurants and reinforces our
68-year ice cream heritage. We plan to open two new company
restaurants during the year."
Business Segment Results
In the 2003 first quarter, pre-tax income in the restaurant
segment was $6.3 million, or 6.1% of restaurant revenues, compared to
$8.0 million, or 7.7% of restaurant revenues, in the first quarter
2002. The decrease in pre-tax income was the result of increased
fringe benefit costs and higher expenses for snow removal, natural
gas, and advertising. Partially offsetting these decreases was a 0.3%
improvement in comparable sales.
Pre-tax income in the Company's foodservice segment was $2.5
million in the first quarter of 2003 compared to $2.7 million in the
first quarter 2002. The decline was mainly due to an unfavorable
product mix resulting from less ice cream sales versus the prior year.
Partially offsetting these decreases was a 5.4% increase in case
volume in the retail supermarket business.
Pre-tax income in the franchise segment increased $0.2 million in
the 2003 first quarter to $1.5 million from $1.3 million in the prior
year. The improvement is primarily due to higher royalty revenue from
increased comparable franchised restaurant sales.
Corporate expenses of $12.0 million in the first quarter of 2003
decreased by $0.5 million, or 4%, as compared to the first quarter of
2002 mainly due to lower depreciation expense associated with certain
purchased software at the Company's headquarters and lower interest
expense resulting from reduced debt levels. These decreases were
partially offset by a reduction in the benefit realized from the
Company's pension plan when compared to the prior year.
For the 2003 first quarter, the benefit from income taxes was
unfavorable when compared to the prior year due to a change in the
effective tax rate. The effective tax rates were 28.0% and 62.2% for
the three-months-ended March 30, 2003 and March 31, 2002,
respectively. The 2002 rate was reduced in subsequent quarters as tax
credits and changes to state valuation allowances reduced the rate.
The tax rate at the end of the 2002 fiscal year was 24.0%. At this
time, the Company estimates that the effective tax rate for 2003 will
be 28%.
An investor conference call to review first quarter 2003 results
will be held on Tuesday, April 29, 2003 at 2:00 PM 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 550 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
Mar 30, 2003 Mar 31, 2002
Restaurant Revenues $103,168 $104,256
Foodservice Revenues 23,267 22,789
Franchise Revenues 2,255 2,129
REVENUES 128,690 129,174
COSTS AND EXPENSES:
Cost of sales 45,977 46,040
Labor and benefits 38,127 37,918
Operating expenses 25,063 24,040
General and administrative expenses 9,288 8,599
Write-downs of property and equipment - 120
Depreciation and amortization 5,627 6,686
Loss on sales of other property and
equipment, net 574 512
OPERATING INCOME 4,034 5,259
Interest expense, net 6,102 6,337
LOSS BEFORE
BENEFIT FROM INCOME TAXES (2,068) (1,078)
Benefit from income taxes 579 670
NET LOSS AND COMPREHENSIVE LOSS $(1,489) $(408)
BASIC AND DILUTED NET LOSS PER SHARE $(0.20) $(0.06)
WEIGHTED AVERAGE BASIC AND DILUTED SHARES 7,415 7,353
NUMBER OF COMPANY UNITS:
Beginning of period 387 393
Openings - -
Re-franchised - -
Closings (2) (3)
End of period 385 390
NUMBER OF FRANCHISED UNITS:
Beginning of period 162 167
Re-franchised - -
Openings 2 2
Closings - (3)
End of period 164 166
Friendly Ice Cream Corporation
Consolidated Statements of Operations
Percentage of Total Revenues
(unaudited)
Quarter Ended
Mar 30, 2003 Mar 31, 2002
Restaurant Revenues 80.2 % 80.7 %
Foodservice Revenues 18.1 % 17.6 %
Franchise Revenues 1.7 % 1.7 %
REVENUES 100.0 % 100.0 %
COSTS AND EXPENSES:
Cost of sales 35.7 % 35.6 %
Labor and benefits 29.6 % 29.3 %
Operating expenses 19.5 % 18.6 %
General and administrative expenses 7.2 % 6.7 %
Write-downs of property and equipment - 0.1 %
Depreciation and amortization 4.4 % 5.2 %
Loss on sales of other property and
equipment, net 0.5 % 0.4 %
OPERATING INCOME 3.1 % 4.1 %
Interest expense, net 4.7 % 4.9 %
LOSS BEFORE
BENEFIT FROM INCOME TAXES (1.6)% (0.8)%
Benefit from income taxes 0.4 % 0.5 %
NET LOSS AND COMPREHENSIVE LOSS (1.2)% (0.3)%
Friendly Ice Cream Corporation
Condensed Consolidated Balance Sheets
(In thousands)
March 30, December 29,
2003 2002
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $30,128 $34,341
Other current assets 38,116 38,964
Total Current Assets 68,244 73,305
Property and Equipment, net 157,758 158,373
Intangibles and Other Assets, net 25,043 25,520
$251,045 $257,198
Liabilities and Stockholders' Deficit
Current Liabilities:
Current maturities of debt, capital
lease and finance obligations $2,074 $2,393
Other current liabilities 68,132 70,344
Total Current Liabilities 70,206 72,737
Deferred Income Taxes 954 1,533
Capital Lease and Finance Obligations 4,890 5,044
Long-Term Debt 231,554 231,830
Other Long-Term Liabilities 48,440 49,756
Stockholders' Deficit (104,999) (103,702)
$251,045 $257,198
Friendly Ice Cream Corporation
Selected Segment Reporting Information:
(in thousands)
(Unaudited)
For the Three Months Ended
March March
2003 2002 (1)
Revenues before elimination of intersegment
revenues:
Restaurant $103,168 $104,256
Foodservice 52,326 51,712
Franchise 2,255 2,129
Total $157,749 $158,097
Intersegment revenues:
Foodservice $(29,059) $(28,923)
Revenues:
Restaurant $103,168 $104,256
Foodservice 23,267 22,789
Franchise 2,255 2,129
Total $128,690 $129,174
EBITDA (2):
Restaurant (3) $10,081 $12,105
Foodservice (3) 3,189 3,566
Franchise (3) 1,561 1,381
Corporate (3) (4,764) (4,402)
Loss on property and equipment, net,
excluding write-downs of property
and equipment (341) (515)
Total $9,726 $12,135
Interest expense, net $6,102 $6,337
Depreciation and amortization:
Restaurant $3,799 $4,097
Foodservice 736 843
Franchise 39 74
Corporate 1,053 1,672
Total $5,627 $6,686
Other non cash expenses:
Corporate $65 $70
Write-downs of property and equipment - 120
Total $65 $190
Loss before benefit from income taxes:
Restaurant (3) $6,282 $8,008
Foodservice (3) 2,453 2,723
Franchise (3) 1,522 1,307
Corporate (3) (11,984) (12,481)
(1,727) (443)
Loss on property and equipment, net,
including write-downs of property
and equipment (341) (635)
Total $(2,068) $(1,078)
(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
Friendly Ice Cream Corporation
Media Contact
Maura Tobias, 413/543-2400 x2814