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| P.F. Chang's Earns $0.30 Per Share |
SCOTTSDALE, Ariz.--(BUSINESS WIRE)--July 26, 2006--P.F. Chang's China Bistro, Inc. (NASDAQ:PFCB) today reported earnings of $8.1 million for the second quarter ended July 2, 2006 compared to $9.3 million for the second quarter of the prior year. Earnings per share for the second quarter were $0.30 as compared to $0.34 for the second quarter of the prior year.
(000 except per share data) 2Q06 2Q05
--------------------------
Revenues $ 225,981 $ 198,056
Net Income $ 8,089 $ 9,252
Diluted Earnings Per Share $ 0.30 $ 0.34
Shares Used in diluted EPS
calculation 27,258 26,977
As noted in the proforma schedules that follow, earnings for the second quarter reflect three accounting changes that affect year over year comparisons. First, the Company recorded $2.6 million in equity-based compensation expense this quarter under the new SFAS 123R rules implemented at the beginning of the year. Second, the Company modified its accounting policies related to utility and rebate accruals, recording an additional $2.2 million in utility costs and a credit of approximately $900,000 in additional rebates due from cost of sales and operating expense vendors. This change adjusts the balance sheet, and results in four months of utility expenses and two quarters of rebate credits being included in the second quarter. Third, the Company incurred approximately $500,000 in additional preopening expenses that previously would have been capitalized before FASB's Staff Position No. 13.1 regarding lease accounting went into effect earlier this year. 2006 Expectations Due primarily to our expectation of lower revenue trends at both of our concepts as well as wage rate pressures particularly at Pei Wei, the Company is revising its full year forecast earnings per share to $1.12. Expectations of comparable store sales growth at the Bistro declined from 2.6% and 1.5% to (0.1)% and (0.0)% in the third and fourth quarters, respectively. At Pei Wei, expectations of comparable store sales growth declined from 1.4% and 2.4% to (2.4)% and (1.1)%, in the third and fourth quarters, respectively. Authorization of Share Repurchase Program and Credit Facility On July 24th, 2006 the Company's Board of Directors authorized a program to repurchase up to $50 million of the Company's outstanding shares from time to time in the open market or in private during the twelve-month period ending July 31, 2007, at prevailing market prices. The Company intends to initially use cash on hand to repurchase shares under the program. The Board has also authorized management to negotiate a $50 million revolving credit facility to provide additional liquidity and offer flexibility in funding the repurchase. J.P. Morgan Securities, Inc. will act as agent for the Company's stock repurchase program. The Company is hosting a conference call today at 1:00 pm ET in which management will provide further details on the second quarter results as well as its expectations for the balance of the year. A webcast of the call can be accessed through the company's website at http://www.pfcb.com. P.F. Chang's China Bistro, Inc. owns and operates two restaurant concepts in the Asian niche. P.F. Chang's China Bistro features a blend of high-quality, traditional Chinese cuisine and American hospitality in a sophisticated, contemporary bistro setting. Pei Wei Asian Diner offers a modest menu of freshly prepared Asian cuisine in a relaxed, warm environment offering attentive counter service and take-out flexibility. Note with respect to non-GAAP financial measures contained within Supplemental Financial Information In addition to using GAAP results in evaluating our business, management also believes it is useful to measure results on a pro forma basis excluding the impact of equity-based compensation, the current quarter's utility and rebate accrual adjustment and the additional preopening rental costs during the construction period which we now expense versus capitalize. Estimated equity-based compensation, which impacts both labor and G&A costs, is excluded in part because of the unpredictability of equity based compensation charges. These equity-based compensation charges are affected by factors that may change on each grant date, including the Company's stock price, stock market volatility, expected option term, risk-free interest rates and expected dividends, all of which can create great variability from period to period. Additionally, the pro forma presentation provides a more comparable set of financial performance measures for the Company on a year over year basis, due to the fact that none of these expenses and adjustments was included in the comparable period of 2005. This also allows investors, as well as management, to focus on the cash generating capacity and performance of our restaurant concepts, both of which are material to our rate of growth and ability to finance that growth from our operations. The non-GAAP pro forma financial information presented herein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Please see the GAAP to non-GAAP reconciliation on pages ten and eleven of this press release, for a comparison of each non-GAAP measure to the most comparable GAAP measure, as well as a reconciliation of the two measures. Note with respect to forward-looking statements The statements contained in this press release that are not purely historical, including the Company's estimates of its revenues, earnings and comparable sales, as well as statements concerning the Company's development schedule, are forward-looking statements. The accuracy of these forward-looking statements may be affected by certain risks and uncertainties, including, but not limited to, the Company's ability to operate its restaurants profitably; the Company's ability to hire, train and retain skilled management and other personnel; changes in consumer tastes and trends, and national, regional and local economic and weather conditions; changes in costs related to food, utilities, labor shortages, our ability to develop and construct our restaurants within projected budgets and time periods; the inherent unpredictability of estimating equity-based compensation expense under FAS 123R; changes to existing accounting rules or differing interpretations to our current accounting practices and other risks described in the Company's recent SEC filings.
P.F. Chang's China Bistro, Inc.
----------------------------------------------------------------------
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
13 Weeks 13 Weeks
Ended Ended
--------------------------
Jul 2 Jul 3
2006 2005
--------------------------
Revenues $ 225,981 $ 198,056
Cost of sales 61,285 54,493
Labor 75,380 64,765
Operating 36,210 29,505
Occupancy 12,725 10,767
General & administrative 14,037 10,495
Depreciation & amortization 10,565 8,519
Preopening expenses 2,817 2,496
Partner investment expense 925 1,581
--------------------------
Total costs and expenses 213,944 182,621
--------------------------
Income from operations 12,037 15,435
Interest income, net and other income 568 447
Minority interest (2,033) (2,176)
--------------------------
Income before provision for income taxes 10,572 13,706
Provision for income taxes (2,483) (4,454)
--------------------------
Net income $ 8,089 $ 9,252
==========================
Basic net income per share $ 0.30 $ 0.35
Diluted net income per share $ 0.30 $ 0.34
Shares used in calculation of basic EPS 26,546 26,221
Shares used in calculation of diluted EPS 27,258 26,977
Percentage of Revenues
--------------------------
Jul 2 Jul 3
2006 2005
--------------------------
Revenues 100.0% 100.0%
Cost of sales 27.1% 27.5%
Labor 33.4% 32.7%
Operating 16.0% 14.9%
Occupancy 5.6% 5.4%
General & administrative 6.2% 5.3%
Depreciation & amortization 4.7% 4.3%
Preopening expenses 1.2% 1.3%
Partner investment expense 0.4% 0.8%
--------------------------
Total costs and expenses 94.7% 92.2%
--------------------------
Income from operations 5.3% 7.8%
Interest income, net and other income 0.3% 0.2%
Minority interest -0.9% -1.1%
--------------------------
Income before provision for income taxes 4.7% 6.9%
Provision for income taxes -1.1% -2.2%
--------------------------
Net income 3.6% 4.7%
==========================
Certain percentage amounts do not sum to total due to rounding.
P.F. Chang's China Bistro, Inc.
----------------------------------------------------------------------
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
26 Weeks 26 Weeks
Ended Ended
---------------------------
Jul 2 Jul 3
2006 2005
---------------------------
Revenues $ 454,594 $ 392,270
Cost of sales 124,725 108,475
Labor 152,317 128,293
Operating 71,051 57,755
Occupancy 25,218 21,041
General & administrative 27,289 21,077
Depreciation & amortization 20,920 16,653
Preopening expenses 4,511 3,830
Partner investment expense 1,125 1,854
---------------------------
Total costs and expenses 427,156 358,978
---------------------------
Income from operations 27,438 33,292
Interest income, net and other income 1,060 905
Minority interest (4,055) (4,452)
---------------------------
Income before provision for income taxes 24,443 29,745
Provision for income taxes (6,541) (9,667)
---------------------------
Net income $ 17,902 $ 20,078
===========================
Basic net income per share $ 0.68 $ 0.77
Diluted net income per share $ 0.66 $ 0.75
Shares used in calculation of basic EPS 26,516 26,169
Shares used in calculation of diluted EPS 27,249 26,935
Percentage of Revenues
---------------------------
Jul 2 Jul 3
2006 2005
---------------------------
Revenues 100.0% 100.0%
Cost of sales 27.4% 27.7%
Labor 33.5% 32.7%
Operating 15.6% 14.7%
Occupancy 5.5% 5.4%
General & administrative 6.0% 5.4%
Depreciation & amortization 4.6% 4.2%
Preopening expenses 1.0% 1.0%
Partner investment expense 0.2% 0.5%
---------------------------
Total costs and expenses 94.0% 91.5%
---------------------------
Income from operations 6.0% 8.5%
Interest income, net and other income 0.2% 0.2%
Minority interest -0.9% -1.1%
---------------------------
Income before provision for income taxes 5.4% 7.6%
Provision for income taxes -1.4% -2.5%
---------------------------
Net income 3.9% 5.1%
===========================
Certain percentage amounts do not sum to total due to rounding.
P.F. Chang's China Bistro, Inc.
----------------------------------------------------------------------
Supplemental Financial Information - Pro Forma Forecast
53 weeks
2003 2004
----------------
Units 130 168
Sales weeks 5,749 7,931
AWS 93,915 89,136
Sales 539,917 706,941
per FDS $20.57 $26.60
Operating costs
COS 152,788 200,736
Labor 176,428 233,325
Operating 73,660 99,528
Occupancy 28,914 37,693
Minority interest 7,887 10,078
G&A 28,692 34,662
Restaurant cash
operating income 71,548 90,919
Development costs
Preopening 8,790 7,995
Partner investment
expense 4,196 17,671
Other expenses
Depreciation &
amortization 21,817 29,155
Equity-based
compensation - -
Utility and rebate
accrual adjustment - -
Preopening during
construction period - -
Interest (income)
expense (466) (612)
Tax provision 12,424 10,656
Net income 24,787 26,054
per FDS $0.94 $0.98
Fully diluted shares
(FDS) 26,250 26,575
Sales 100.0% 100.0%
COS 28.3% 28.4%
Labor 32.7% 33.0%
Operating 13.6% 14.1%
Occupancy 5.4% 5.3%
Minority interest 1.5% 1.4%
G&A 5.3% 4.9%
----------------
Restaurant cash
operating income 13.3% 12.9%
----------------
Preopening 1.6% 1.1%
Partner investment
expense 0.8% 2.5%
Depreciation &
amortization 4.0% 4.1%
Equity-based
compensation 0.0% 0.0%
Utility and rebate
accrual adjustment 0.0% 0.0%
Preopening during
construction period 0.0% 0.0%
Interest (income)
expense -0.1% -0.1%
Tax provision 2.3% 1.5%
----------------
Net income 4.6% 3.7%
----------------
--------
1Q05 2Q05 3Q05 4Q05 2005
----------------------------------------
Units 170 182 193 208 208
Sales weeks 2,190 2,273 2,438 2,596 9,497
AWS 88,682 87,134 83,285 82,371 85,201
Sales 194,214 198,056 203,049 213,834 809,153
per FDS $7.22 $7.34 $7.50 $7.90 $29.97
Operating costs
COS 53,982 54,493 56,010 60,149 224,634
Labor 63,528 64,765 67,836 70,114 266,243
Operating 28,250 29,505 31,490 33,002 122,247
Occupancy 10,274 10,767 11,182 10,570 42,793
Minority interest 2,276 2,176 1,974 1,801 8,227
G&A 10,582 10,495 9,759 10,281 41,117
Restaurant cash
operating income 25,322 25,855 24,798 27,917 103,892
Development costs
Preopening 1,334 2,496 2,712 2,703 9,245
Partner investment
expense 273 1,581 1,472 1,474 4,800
Other expenses
Depreciation &
amortization 8,134 8,519 9,258 11,039 36,950
Equity-based
compensation - - - - -
Utility and rebate
accrual adjustment - - - - -
Preopening during
construction period - - - - -
Interest (income)
expense (458) (447) (530) (406) (1,841)
Tax provision 5,213 4,454 3,447 3,828 16,942
Net income 10,826 9,252 8,439 9,279 37,796
per FDS $0.40 $0.34 $0.31 $0.34 $1.40
Fully diluted shares
(FDS) 26,893 26,977 27,073 27,058 27,000
Sales 100.0% 100.0% 100.0% 100.0% 100.0%
COS 27.8% 27.5% 27.6% 28.1% 27.8%
Labor 32.7% 32.7% 33.4% 32.8% 32.9%
Operating 14.5% 14.9% 15.5% 15.4% 15.1%
Occupancy 5.3% 5.4% 5.5% 4.9% 5.3%
Minority interest 1.2% 1.1% 1.0% 0.8% 1.0%
G&A 5.4% 5.3% 4.8% 4.8% 5.1%
----------------------------------------
Restaurant cash
operating income 13.0% 13.1% 12.2% 13.1% 12.8%
----------------------------------------
Preopening 0.7% 1.3% 1.3% 1.3% 1.1%
Partner investment
expense 0.1% 0.8% 0.7% 0.7% 0.6%
Depreciation &
amortization 4.2% 4.3% 4.6% 5.2% 4.6%
Equity-based
compensation 0.0% 0.0% 0.0% 0.0% 0.0%
Utility and rebate
accrual adjustment 0.0% 0.0% 0.0% 0.0% 0.0%
Preopening during
construction period 0.0% 0.0% 0.0% 0.0% 0.0%
Interest (income)
expense -0.2% -0.2% -0.3% -0.2% -0.2%
Tax provision 2.7% 2.2% 1.7% 1.8% 2.1%
----------------------------------------
Net income 5.6% 4.7% 4.2% 4.3% 4.7%
----------------------------------------
Forecast YOY
------------------------
1Q06A 2Q06A 3Q06 4Q06 2006 Change
---------------------------------------- -------
Units 214 225 239 260 260
Sales weeks 2,751 2,840 3,006 3,274 11,871 25.0%
AWS 83,102 79,571 77,071 77,837 79,278 -7.0%
Sales 228,613 225,981 231,675 254,838 941,107 16.3%
per FDS $8.39 $8.29 $8.49 $9.33 $34.51
Operating costs
COS 63,440 61,862 63,699 70,170 259,171
Labor 76,593 75,008 77,445 85,241 314,287
Operating 34,841 34,271 35,342 38,589 143,043
Occupancy 12,493 12,725 13,259 14,525 53,002
Minority interest 2,022 2,033 2,041 2,273 8,370
G&A 11,406 11,848 12,644 13,007 48,905
Restaurant cash
operating income 27,818 28,234 27,246 31,033 114,331 10.0%
Development costs
Preopening 1,405 2,304 3,613 3,764 11,086 19.9%
Partner investment
expense 200 925 1,621 2,940 5,686 18.5%
Other expenses
Depreciation &
amortization 10,355 10,565 10,960 11,660 43,541 17.8%
Equity-based
compensation 2,190 2,561 3,222 3,222 11,195
Utility and rebate
accrual adjustment - 1,362 - - 1,362
Preopening during
construction period 289 513 539 384 1,725
Interest (income)
expense (492) (568) (485) (480) (2,025) 10.0%
Tax provision 4,058 2,483 2,158 2,648 11,347 -33.0%
Net income 9,813 8,089 5,618 6,895 30,414 -19.5%
per FDS $0.36 $0.30 $0.21 $0.25 $1.12 -20.3%
Fully diluted shares
(FDS) 27,239 27,258 27,275 27,300 27,268 1.0%
Sales 100.0% 100.0% 100.0% 100.0% 100.0%
COS 27.7% 27.4% 27.5% 27.5% 27.5%
Labor 33.5% 33.2% 33.4% 33.4% 33.4%
Operating 15.2% 15.2% 15.3% 15.1% 15.2%
Occupancy 5.5% 5.6% 5.7% 5.7% 5.6%
Minority interest 0.9% 0.9% 0.9% 0.9% 0.9%
G&A 5.0% 5.2% 5.5% 5.1% 5.2%
----------------------------------------
Restaurant cash
operating income 12.2% 12.5% 11.8% 12.2% 12.1%
----------------------------------------
Preopening 0.6% 1.0% 1.6% 1.5% 1.2%
Partner investment
expense 0.1% 0.4% 0.7% 1.2% 0.6%
Depreciation &
amortization 4.5% 4.7% 4.7% 4.6% 4.6%
Equity-based
compensation 1.0% 1.1% 1.4% 1.3% 1.2%
Utility and rebate
accrual adjustment 0.0% 0.6% 0.0% 0.0% 0.1%
Preopening during
construction period 0.1% 0.2% 0.2% 0.2% 0.2%
Interest (income)
expense -0.2% -0.3% -0.2% -0.2% -0.2%
Tax provision 1.8% 1.1% 0.9% 1.0% 1.2%
----------------------------------------
Net income 4.3% 3.6% 2.4% 2.7% 3.2%
----------------------------------------
Shared Services
----------------------------------------------------------------------
Supplemental Financial Information - Pro Forma Forecast
53
weeks
--------
2003 2004 1Q05 2Q05 3Q05 4Q05 2005
------------ ------- ------- ------- ------- --------
Units
Sales weeks
AWS
Comp sales
change
Sales
per FDS
Operating costs
COS
Labor
Operating
Occupancy
Minority
interest
G&A (inc. in
concepts for
'03 & '04) 4,895 4,906 4,384 4,513 18,698
Restaurant cash
operating
income (4,895) (4,906) (4,384) (4,513) (18,698)
Development costs
Preopening
Partner
investment
expense
Other expenses
Depreciation
& amortization 149 142 263 326 880
Equity-based
compensation
Utility and
rebate
accrual
adjustment
Preopening
during
construction
period
Interest
(income)
expense (343) (420) (381) (431) (1,575)
Tax provision (1,528) (1,504) (1,237) (1,303) (5,572)
Net income (3,173) (3,124) (3,029) (3,105) (12,431)
per FDS $(0.12) $(0.12) $(0.11) $(0.11) $(0.46)
Fully diluted
shares (FDS) 26,893 26,977 27,073 27,058 27,000
--------
Forecast
------------------------
1Q06A 2Q06A 3Q06 4Q06 2006
--------- ------- ------- ------- --------
Units
Sales weeks
AWS
Comp sales
change
Sales
per FDS
Operating
costs
COS
Labor
Operating
Occupancy
Minority
interest
G&A (inc. in
concepts for
'03 & '04) 4,631 4,797 5,265 5,780 20,472
Restaurant cash
operating
income (4,631) (4,797) (5,265) (5,780) (20,472)
Development costs
Preopening
Partner
investment
expense
Other expenses
Depreciation
& amortization 280 281 290 290 1,141
Equity-based
compensation 988 1,219 1,602 1,602 5,411
Utility and
rebate
accrual
adjustment -
Preopening
during
construction
period -
Interest
(income)
expense (489) (535) (485) (480) (1,989)
Tax provision (1,677) (1,355) (1,852) (1,996) (6,879)
Net income (3,733) (4,407) (4,821) (5,196) (18,156)
per FDS $(0.14) $(0.16) $(0.18) $(0.19) $(0.67)
Fully diluted
shares (FDS) 27,239 27,258 27,275 27,300 27,268
--------
Concept: P.F. Chang's China Bistro
----------------------------------------------------------------------
Supplemental Financial Information - Pro Forma Forecast
53 weeks
2003 2004
----------------
Units 97 115
Sales weeks 4,494 5,613
AWS 108,280 108,938
Comp sales
change 5.1% 3.0%
Sales 486,609 611,468
per FDS $18.54 $23.01
Operating costs
COS 136,983 173,128
Labor 158,497 201,352
Operating 66,044 85,073
Occupancy 25,533 31,896
Minority interest 7,360 9,177
G&A 24,767 28,555
Restaurant cash
operating income 67,425 82,287
Development costs
Preopening 7,026 5,852
Partner investment
expense 3,941 15,075
Other expenses
Depreciation &
amortization 19,414 24,778
Equity-based
compensation
Utility and rebate
accrual
adjustment
Preopening during
construction
period
Interest (income)
expense (461) (612)
Tax provision 12,522 10,796
Net income 24,983 26,398
per FDS $0.95 $0.99
Fully diluted shares
(FDS) 26,250 26,575
Sales 100.0% 100.0%
COS 28.2% 28.3%
Labor 32.6% 32.9%
Operating 13.6% 13.9%
Occupancy 5.2% 5.2%
Minority interest 1.5% 1.5%
G&A 5.1% 4.7%
----------------
Restaurant cash
operating income 13.9% 13.5%
----------------
Preopening 1.4% 1.0%
Partner investment
expense 0.8% 2.5%
Depreciation &
amortization 4.0% 4.1%
Equity-based
compensation 0.0% 0.0%
Utility and rebate
accrual adjustment 0.0% 0.0%
Preopening during
construction period 0.0% 0.0%
Interest (income)
expense -0.1% -0.1%
Tax provision 2.6% 1.8%
----------------
Net income 5.1% 4.3%
----------------
--------
1Q05 2Q05 3Q05 4Q05 2005
----------------------------------------
Units 116 121 125 131 131
Sales weeks 1,492 1,531 1,594 1,649 6,266
AWS 109,637 108,699 105,779 107,092 107,757
Comp sales
change 2.9% 1.9% -0.8% 1.0% 1.2%
Sales 163,579 166,418 168,612 176,595 675,204
per FDS $6.08 $6.17 $6.23 $6.53 $25.01
Operating costs
COS 45,317 45,726 46,359 49,671 187,073
Labor 53,601 54,250 55,947 57,328 221,126
Operating 23,599 24,298 25,654 26,648 100,199
Occupancy 8,465 8,883 9,102 8,250 34,700
Minority interest 1,935 1,881 1,723 1,579 7,118
G&A 4,086 3,816 3,667 3,943 15,512
Restaurant cash
operating income 26,576 27,564 26,160 29,176 109,476
Development costs
Preopening 965 1,544 1,651 1,868 6,028
Partner investment
expense 208 1,126 1,303 889 3,526
Other expenses
Depreciation &
amortization 6,679 7,033 7,462 8,919 30,093
Equity-based
compensation
Utility and rebate
accrual
adjustment
Preopening during
construction
period
Interest (income)
expense (115) (20) (146) 30 (251)
Tax provision 6,123 5,811 4,608 5,148 21,690
Net income 12,716 12,070 11,282 12,322 48,390
per FDS $0.47 $0.45 $0.42 $0.46 $1.79
Fully diluted shares
(FDS) 26,893 26,977 27,073 27,058 27,000
Sales 100.0% 100.0% 100.0% 100.0% 100.0%
COS 27.7% 27.5% 27.5% 28.1% 27.7%
Labor 32.8% 32.6% 33.2% 32.5% 32.7%
Operating 14.4% 14.6% 15.2% 15.1% 14.8%
Occupancy 5.2% 5.3% 5.4% 4.7% 5.1%
Minority interest 1.2% 1.1% 1.0% 0.9% 1.1%
G&A 2.5% 2.3% 2.2% 2.2% 2.3%
----------------------------------------
Restaurant cash
operating income 16.2% 16.6% 15.5% 16.5% 16.2%
----------------------------------------
Preopening 0.6% 0.9% 1.0% 1.1% 0.9%
Partner investment
expense 0.1% 0.7% 0.8% 0.5% 0.5%
Depreciation &
amortization 4.1% 4.2% 4.4% 5.1% 4.5%
Equity-based
compensation 0.0% 0.0% 0.0% 0.0% 0.0%
Utility and rebate
accrual adjustment 0.0% 0.0% 0.0% 0.0% 0.0%
Preopening during
construction period 0.0% 0.0% 0.0% 0.0% 0.0%
Interest (income)
expense -0.1% 0.0% -0.1% 0.0% 0.0%
Tax provision 3.7% 3.5% 2.7% 2.9% 3.2%
----------------------------------------
Net income 7.8% 7.3% 6.7% 7.0% 7.2%
----------------------------------------
Forecast YOY
------------------------
1Q06A 2Q06A 3Q06 4Q06 2006 Change
---------------------------------------- --------
Units 133 137 142 152 152
Sales weeks 1,720 1,751 1,798 1,935 7,204 15.0%
AWS 108,677 104,914 103,264 105,093 105,449 -2.1%
Comp sales
change 1.3% -1.0% -0.1% 0.0% 0.0%
Sales 186,924 183,705 185,668 203,355 759,652 12.5%
per FDS $6.86 $6.74 $6.81 $7.45 $27.86
Operating costs
COS 51,771 50,235 50,873 55,719 208,598
Labor 62,308 60,381 61,270 67,107 251,066
Operating 27,897 27,067 27,559 29,992 112,515
Occupancy 9,859 9,928 10,117 11,013 40,917
Minority interest 1,733 1,753 1,729 1,894 7,109
G&A 4,386 4,498 4,767 4,670 18,321
Restaurant cash
operating income 28,970 29,843 29,353 32,961 121,127 10.6%
Development costs
Preopening 908 1,295 2,507 2,537 7,247 20.2%
Partner investment
expense 426 570 1,090 2,180 4,266 21.0%
Other expenses
Depreciation &
amortization 8,096 8,220 8,396 8,808 33,520 11.4%
Equity-based
compensation 1,075 1,193 1,451 1,451 5,171
Utility and rebate
accrual adjustment 1,161 1,161
Preopening during
construction
period 158 280 341 205 984
Interest (income)
expense - - -
Tax provision 5,432 4,024 4,320 4,934 18,710 -13.7%
Net income 12,875 13,100 11,248 12,845 50,068 3.5%
per FDS $0.47 $0.48 $0.41 $0.47 $1.84
Fully diluted shares
(FDS) 27,239 27,258 27,275 27,300 27,268
Sales 100.0% 100.0% 100.0% 100.0% 100.0%
COS 27.7% 27.3% 27.4% 27.4% 27.5%
Labor 33.3% 32.9% 33.0% 33.0% 33.1%
Operating 14.9% 14.7% 14.8% 14.7% 14.8%
Occupancy 5.3% 5.4% 5.4% 5.4% 5.4%
Minority interest 0.9% 1.0% 0.9% 0.9% 0.9%
G&A 2.3% 2.4% 2.6% 2.3% 2.4%
----------------------------------------
Restaurant cash
operating income 15.5% 16.2% 15.8% 16.2% 15.9%
----------------------------------------
Preopening 0.5% 0.7% 1.4% 1.2% 1.0%
Partner investment
expense 0.2% 0.3% 0.6% 1.1% 0.6%
Depreciation &
amortization 4.3% 4.5% 4.5% 4.3% 4.4%
Equity-based
compensation 0.6% 0.6% 0.8% 0.7% 0.7%
Utility and rebate
accrual adjustment 0.0% 0.6% 0.0% 0.0% 0.2%
Preopening during
construction period 0.1% 0.2% 0.2% 0.1% 0.1%
Interest (income)
expense 0.0% 0.0% 0.0% 0.0% 0.0%
Tax provision 2.9% 2.2% 2.3% 2.4% 2.5%
----------------------------------------
Net income 6.9% 7.1% 6.1% 6.3% 6.6%
----------------------------------------
Concept: Pei Wei Asian Diner
----------------------------------------------------------------------
Supplemental Financial Information - Pro Forma Forecast
53
weeks
--------
2003 2004 1Q05 2Q05 3Q05 4Q05 2005
-------------- ------------------------------------
Units 33 53 54 61 68 77 77
Sales weeks 1,255 2,318 698 742 844 947 3,231
AWS 42,476 41,188 43,888 42,639 40,802 39,323 41,457
Comp sales
change 0.3% 2.0% 6.0% 6.3% 2.8% 1.9% 4.0%
Sales 53,308 95,473 30,635 31,638 34,437 37,239 133,949
per FDS $2.03 $3.59 $1.14 $1.17 $1.27 $1.38 $4.96
Operating costs
COS 15,805 27,608 8,665 8,767 9,651 10,478 37,561
Labor 17,931 31,973 9,927 10,515 11,889 12,786 45,117
Operating 7,616 14,455 4,651 5,207 5,836 6,354 22,048
Occupancy 3,381 5,797 1,809 1,884 2,080 2,320 8,093
Minority interest 527 901 341 295 251 222 1,109
G&A 3,925 6,107 1,601 1,773 1,708 1,825 6,907
Restaurant cash
operating income 4,123 8,632 3,641 3,197 3,022 3,254 13,114
Development costs
Preopening 1,764 2,143 369 952 1,061 835 3,217
Partner
investment
expense 255 2,596 65 455 169 585 1,274
Other expenses
Depreciation &
amortization 2,403 4,377 1,306 1,344 1,533 1,794 5,977
Equity-based
compensation
Utility and
rebate accrual
adjustment
Preopening
during
construction
period
Interest
(income)
expense (5) - (7) (3) (5) (15)
Tax provision (98) (141) 618 147 76 (17) 824
Net income (196) (343) 1,283 306 186 62 1,837
per FDS $(0.01)$(0.01) $0.05 $0.01 $0.01 $0.00 $0.07
Fully diluted
shares (FDS) 26,250 26,575 26,893 26,977 27,073 27,058 27,000
Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
COS 29.6% 28.9% 28.3% 27.7% 28.0% 28.1% 28.0%
Labor 33.6% 33.5% 32.4% 33.2% 34.5% 34.3% 33.7%
Operating 14.3% 15.1% 15.2% 16.5% 16.9% 17.1% 16.5%
Occupancy 6.3% 6.1% 5.9% 6.0% 6.0% 6.2% 6.0%
Minority interest 1.0% 0.9% 1.1% 0.9% 0.7% 0.6% 0.8%
G&A 7.4% 6.4% 5.2% 5.6% 5.0% 4.9% 5.2%
-------------- ------------------------------------
Restaurant cash
operating income 7.7% 9.0% 11.9% 10.1% 8.8% 8.7% 9.8%
-------------- ------------------------------------
Preopening 3.3% 2.2% 1.2% 3.0% 3.1% 2.2% 2.4%
Partner investment
expense 0.5% 2.7% 0.2% 1.4% 0.5% 1.6% 1.0%
Depreciation &
amortization 4.5% 4.6% 4.3% 4.2% 4.5% 4.8% 4.5%
Equity-based
compensation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Utility and rebate
accrual adjustment 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Preopening during
construction
period 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Interest (income)
expense 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Tax provision -0.2% -0.1% 2.0% 0.5% 0.2% 0.0% 0.6%
-------------- ------------------------------------
Net income -0.4% -0.4% 4.2% 1.0% 0.5% 0.2% 1.4%
-------------- ------------------------------------
Forecast YOY
----------------------
1Q06A 2Q06A 3Q06 4Q06 2006 Change
------------------------------------ -----------
Units 81 88 97 107 107
Sales weeks 1,031 1,089 1,208 1,326 4,654 44.0%
AWS 40,435 38,822 38,086 38,090 38,780 -6.5%
Comp sales
change -2.0% -3.9% -2.4% -1.1% -2.3%
Sales 41,689 42,276 46,007 50,508 180,480 34.7%
per FDS $1.53 $1.55 $1.69 $1.85 $6.62
Operating costs
COS 11,669 11,627 12,826 14,115 50,237
Labor 14,285 14,627 16,175 17,749 62,836
Operating 6,944 7,204 7,783 8,398 30,329
Occupancy 2,634 2,797 3,142 3,447 12,020
Minority interest 289 280 312 379 1,261
G&A 2,194 2,363 2,355 2,355 9,267
Restaurant cash
operating income 3,674 3,378 3,415 4,065 14,531 10.8%
Development costs
Preopening 474 923 956 1,062 3,415 6.2%
Partner investment
expense (226) 355 531 590 1,250 -1.9%
Other expenses
Depreciation &
amortization 1,979 2,064 2,274 2,510 8,827 47.7%
Equity-based
compensation 105 122 145 145 518
Utility and rebate
accrual adjustment 201 201
Preopening
during
construction
period 129 203 173 179 684
Interest (income)
expense (3) (33) (36)
Tax provision 377 (107) (185) (117) (32) -103.9%
Net income 839 (350) (480) (305) (296) -116.1%
per FDS $0.03 $(0.01)$(0.02)$(0.01) $(0.01)
Fully diluted
shares (FDS) 27,239 27,258 27,275 27,300 27,268
Sales 100.0% 100.0% 100.0% 100.0% 100.0%
COS 28.0% 27.5% 27.9% 27.9% 27.8%
Labor 34.3% 34.6% 35.2% 35.1% 34.8%
Operating 16.7% 17.0% 16.9% 16.6% 16.8%
Occupancy 6.3% 6.6% 6.8% 6.8% 6.7%
Minority interest 0.7% 0.7% 0.7% 0.8% 0.7%
G&A 5.3% 5.6% 5.1% 4.7% 5.1%
------------------------------------
Restaurant cash
operating income 8.8% 8.0% 7.4% 8.0% 8.1%
------------------------------------
Preopening 1.1% 2.2% 2.1% 2.1% 1.9%
Partner investment
expense -0.5% 0.8% 1.2% 1.2% 0.7%
Depreciation &
amortization 4.7% 4.9% 4.9% 5.0% 4.9%
Equity-based
compensation 0.3% 0.3% 0.3% 0.3% 0.3%
Utility and rebate
accrual adjustment 0.0% 0.5% 0.0% 0.0% 0.1%
Preopening during
construction
period 0.3% 0.5% 0.4% 0.4% 0.4%
Interest (income)
expense 0.0% -0.1% 0.0% 0.0% 0.0%
Tax provision 0.9% -0.3% -0.4% -0.2% 0.0%
------------------------------------
Net income 2.0% -0.8% -1.0% -0.6% -0.2%
------------------------------------
Concept: Taneko Japanese Tavern
----------------------------------------------------------------------
Supplemental Financial Information - Pro Forma Forecast
Forecast
---------------------
1Q06A 2Q06A 3Q06 4Q06 2006
-----------------------------------
Units 1 1
Sales weeks 13 13
AWS 75 75
Comp sales
change
Sales 975 975
per FDS $- $- $- $0.04 $0.04
Operating costs
COS 336 336
Labor 385 385
Operating 199 199
Occupancy 65 65
Minority interest
G&A G&A
expenses
incurred
in 2005
are shown
under
Shared
Services 195 190 257 202 845
Restaurant cash
operating income (195) (190) (257) (212) (855)
Development costs
Preopening 23 86 150 165 424
Partner investment
expense 170 170
Other expenses
Depreciation &
amortization 52 52
Equity-based
compensation 22 27 23 23 95
Utility and rebate
accrual adjustment -
Preopening during
construction period 2 30 25 - 57
Interest (income)
expense -
Tax provision (74) (78) (126) (173) (451)
Net income (168) (255) (329) (450)(1,202)
per FDS $(0.01)$(0.01)$(0.01)$(0.02)$(0.04)
Fully diluted shares
(FDS) 27,239 27,258 27,275 27,300 27,268
-------
Sales 100.0% 100.0%
COS 34.5% 34.5%
Labor 39.5% 39.5%
Operating 20.4% 20.4%
Occupancy 6.7% 6.7%
Minority interest 0.0% 0.0%
G&A 20.8% 86.6%
--------------
Restaurant cash
operating income -21.8% -87.7%
--------------
Preopening 16.9% 43.5%
Partner investment
expense 17.4% 17.4%
Depreciation &
amortization 5.4% 5.4%
Equity-based
compensation 2.4% 9.8%
Utility and rebate accrual
adjustment 0.0% 0.0%
Preopening during
construction period 0.0% 5.8%
Interest (income)
expense 0.0% 0.0%
Tax provision -17.7% -46.3%
--------------
Net income -46.2%-123.3%
--------------
P.F. Chang's China Bistro, Inc.
----------------------------------------------------------------------
Supplemental Financial Information - Reconciliation of Pro Forma
Forecast to GAAP Forecast
Pro Forma Forecast
------------------------
1Q06A 2Q06A 3Q06 4Q06 2006
----------------------------------------
Sales 228,613 225,981 231,675 254,838 941,107
per FDS $8.39 $8.29 $8.49 $9.33 $34.51
Operating costs
COS 63,440 61,862 63,699 70,170 259,171
Labor 76,593 75,008 77,445 85,241 314,287
Operating 34,841 34,271 35,342 38,589 143,043
Occupancy 12,493 12,725 13,259 14,525 53,002
Minority interest 2,022 2,033 2,041 2,273 8,370
G&A 11,406 11,848 12,644 13,007 48,905
Restaurant cash operating
income 27,818 28,234 27,246 31,033 114,331
Development costs
Preopening 1,405 2,304 3,613 3,764 11,086
Partner investment
expense 200 925 1,621 2,940 5,686
Other expenses
Depreciation &
amortization 10,355 10,565 10,960 11,660 43,541
Equity-based
compensation 2,190 2,561 3,222 3,222 11,195
Utility and rebate
accrual adjustment - 1,362 - - 1,362
Preopening during
construction period 289 513 539 384 1,725
Interest (income)
expense (492) (568) (485) (480) (2,025)
Tax provision 4,058 2,483 2,158 2,648 11,347
----------------------------------------
Net income 9,813 8,089 5,618 6,895 30,414
per FDS $0.36 $0.30 $0.21 $0.25 $1.12
Fully diluted shares
(FDS) 27,239 27,258 27,275 27,300 27,268
Sales 100.0% 100.0% 100.0% 100.0% 100.0%
COS 27.7% 27.4% 27.5% 27.5% 27.5%
Labor 33.5% 33.2% 33.4% 33.4% 33.4%
Operating 15.2% 15.2% 15.3% 15.1% 15.2%
Occupancy 5.5% 5.6% 5.7% 5.7% 5.6%
Minority interest 0.9% 0.9% 0.9% 0.9% 0.9%
G&A 5.0% 5.2% 5.5% 5.1% 5.2%
----------------------------------------
Restaurant cash operating
income 12.2% 12.5% 11.8% 12.2% 12.1%
----------------------------------------
Preopening 0.6% 1.0% 1.6% 1.5% 1.2%
Partner investment
expense 0.1% 0.4% 0.7% 1.2% 0.6%
Depreciation &
amortization 4.5% 4.7% 4.7% 4.6% 4.6%
Equity-based compensation 1.0% 1.1% 1.4% 1.3% 1.2%
Utility and rebate
accrual adjustment 0.0% 0.6% 0.0% 0.0% 0.1%
Preopening during
construction period 0.1% 0.2% 0.2% 0.2% 0.2%
Interest (income) expense -0.2% -0.3% -0.2% -0.2% -0.2%
Tax provision 1.8% 1.1% 0.9% 1.0% 1.2%
----------------------------------------
Net income 4.3% 3.6% 2.4% 2.7% 3.2%
----------------------------------------
Adjustments
----------------------------------------
1Q06A 2Q06A 3Q06 4Q06 2006
----------------------------------------
Sales
per FDS
Operating costs
COS (577) (577)
Labor 344 372 350 350 1,416
Operating 1,939 1,939
Occupancy
Minority interest
G&A 1,846 2,189 2,872 2,872 9,779
Restaurant cash operating
income (2,190) (3,923) (3,222) (3,222) (12,557)
Development costs
Preopening 289 513 539 384 1,725
Partner investment
expense
Other expenses
Depreciation &
amortization
Equity-based
compensation (2,190) (2,561) (3,222) (3,222) (11,195)
Utility and rebate
accrual adjustment (1,362) (1,362)
Preopening during
construction period (289) (513) (539) (384) (1,725)
Interest (income)
expense
Tax provision
----------------------------------------
Net income - - - - -
--------
per FDS
Fully diluted shares
(FDS)
Sales
COS
Labor
Operating
Occupancy
Minority
interest
G&A
Restaurant cash operating
income
Preopening
Partner investment
expense
Depreciation &
amortization
Equity-based compensation
Utility and rebate
accrual adjustment
Preopening during
construction period
Interest (income) expense
Tax provision
Net income
GAAP Forecast
------------------------
1Q06A 2Q06A 3Q06 4Q06 2006
----------------------------------------
Sales 228,613 225,981 231,675 254,838 941,107
per FDS $8.39 $8.29 $8.49 $9.33 $34.51
Operating costs
COS 63,440 61,285 63,699 70,170 258,594
Labor 76,937 75,380 77,795 85,591 315,703
Operating 34,841 36,210 35,342 38,589 144,982
Occupancy 12,493 12,725 13,259 14,525 53,002
Minority interest 2,022 2,033 2,041 2,273 8,370
G&A 13,252 14,037 15,516 15,879 58,684
Restaurant cash operating
income 25,628 24,311 24,024 27,811 101,774
Development costs
Preopening 1,694 2,817 4,152 4,148 12,811
Partner investment
expense 200 925 1,621 2,940 5,686
Other expenses
Depreciation &
amortization 10,355 10,565 10,960 11,660 43,541
Equity-based
compensation - - - - -
Utility and rebate
accrual adjustment - - - - -
Preopening during
construction period - - - - -
Interest (income)
expense (492) (568) (485) (480) (2,025)
Tax provision 4,058 2,483 2,158 2,648 11,347
----------------------------------------
Net income 9,813 8,089 5,618 6,895 30,414
per FDS $0.36 $0.30 $0.21 $0.25 $1.12
Fully diluted shares
(FDS) 27,239 27,258 27,275 27,300 27,268
Sales 100.0% 100.0% 100.0% 100.0% 100.0%
COS 27.7% 27.1% 27.5% 27.5% 27.5%
Labor 33.7% 33.4% 33.6% 33.6% 33.5%
Operating 15.2% 16.0% 15.3% 15.1% 15.4%
Occupancy 5.5% 5.6% 5.7% 5.7% 5.6%
Minority interest 0.9% 0.9% 0.9% 0.9% 0.9%
G&A 5.8% 6.2% 6.7% 6.2% 6.2%
----------------------------------------
Restaurant cash operating
income 11.2% 10.8% 10.4% 10.9% 10.8%
----------------------------------------
Preopening 0.7% 1.2% 1.8% 1.6% 1.4%
Partner investment
expense 0.1% 0.4% 0.7% 1.2% 0.6%
Depreciation &
amortization 4.5% 4.7% 4.7% 4.6% 4.6%
Equity-based compensation 0.0% 0.0% 0.0% 0.0% 0.0%
Utility and rebate
accrual adjustment 0.0% 0.0% 0.0% 0.0% 0.0%
Preopening during
construction period 0.0% 0.0% 0.0% 0.0% 0.0%
Interest (income) expense -0.2% -0.3% -0.2% -0.2% -0.2%
Tax provision 1.8% 1.1% 0.9% 1.0% 1.2%
----------------------------------------
Net income 4.3% 3.6% 2.4% 2.7% 3.2%
----------------------------------------
P.F. Chang's, Inc.
Reconciliation of Non-GAAP to GAAP Measures
(in thousands, except per share data)
(Unaudited)
GAAP Presentation
--------------------------------------------------
Quarter Ended Quarter Ended
------------------------ ----------------------
Jul 3, % of Jul 2, % of
2005 Sales 2006 Sales
------------------------ ----------------------
Revenues 198,056 225,981
Costs and
expenses:
Cost of sales 54,493 27.5% 61,285 27.1%
Labor 64,765 32.7% 75,380 33.4%
Operating 29,505 14.9% 36,210 16.0%
Occupancy 10,767 5.4% 12,725 5.6%
General and
administrative 10,495 5.3% 14,037 6.2%
Depreciation
and
amortization 8,519 4.3% 10,565 4.7%
Preopening
expense 2,496 1.3% 2,817 1.2%
Partner
investment
expense 1,581 0.8% 925 0.4%
------------------------ ----------------------
Total costs
and
expenses 182,621 92.2% 213,944 94.7%
------------------------ ----------------------
Income from
operations 15,435 7.8% 12,037 5.3%
Interest and
other income,
net 447 0.2% 568 0.3%
------------------------ ----------------------
Income before
min. interest
& taxes 15,882 8.0% 12,605 5.6%
Minority
interest (2,176) -1.1% (2,033) -0.9%
------------------------ ----------------------
Income before
provision for
income taxes 13,706 6.9% 10,572 4.7%
Provision for
income taxes (4,454) -32.5% (2,483) -23.5%
------------------------ ----------------------
Net income 9,252 4.7% 8,089 3.6%
======================== ======================
Net income per
share:
Basic $0.35 $0.30
======================== ======================
Diluted $0.34 $0.30
======================== ======================
Weighted
average shares
used in
computation:
Basic 26,221 26,546
Diluted 26,977 27,258
Reconciling Items Non-GAAP
Presentation
----------------------------------------------------
Quarter Ended
Utility and Preopening
Rebate during --------------
Accrual Construction Equity-based Jul 2, % of
Adjustment Period Compensation
(a) (b) (c) 2006 Sales
------------------------------------ --------------
Revenues 225,981
Costs and
expenses:
Cost of sales 577 61,862 27.4%
Labor (372) 75,008 33.2%
Operating (1,939) 34,271 15.2%
Occupancy 12,725 5.6%
General and
administrative (2,189) 11,848 5.2%
Depreciation and
amortization 10,565 4.7%
Preopening
expense (513) 2,304 1.0%
Partner
investment
expense 925 0.4%
------------------------------------ --------------
Total costs
and
expenses (1,362) (513) (2,561) 209,508 92.7%
------------------------------------ --------------
Income from
operations 16,473 7.3%
Interest and
other income,
net 568 0.3%
------------------------------------ --------------
Income before
min. interest &
taxes 1,362 513 2,561 17,041 7.5%
Minority
interest (2,033) -0.9%
------------------------------------ --------------
Income before
provision for
income taxes 15,008 6.6%
Provision for
income taxes (378) (142) (711) (3,714)-24.7%
------------------------------------ --------------
Net income 984 371 1,850 11,294 5.0%
==================================== ==============
Net income per
share:
Basic $0.43
==============
Diluted $0.41
==============
Weighted average
shares used in
computation:
Basic 26,546
Diluted 27,258
(a) The Company modified its accounting policies related to utility
and rebate accruals, recording an additional $2.2 million in
utility costs and a credit of approximately $900,000 in additional
rebates due from cost of sales and operating expense vendors.
(b) The Company incurred approximately $500,000 in additional
preopening expenses that previously would have been capitalized
before FASB's Staff Position No. 13.1 went into effect earlier
this year.
(c) The Company recorded $2.6 million in equity-based compensation
expense this quarter under the new SFAS 123R rules implemented at
the beginning of the year.
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