Sbarro, Inc. News
Sbarro, Inc. Announces Results of Operations for the Quarter Ended March 30, 2008
First Quarter Financial Results
Revenues were
Net loss for the quarter ended
EBITDA, as calculated in accordance with the terms of the Company's bank credit agreement, was
As discussed in Exhibit A, EBITDA is a non-GAAP financial measure that management believes is an important metric for us to report to our investors, as we consider it a helpful additional indicator of our ability to meet future debt obligations and to comply with certain covenants in our borrowing agreements which are tied to this metric. Exhibit A includes a reconciliation of EBITDA to net loss, which is the most directly comparable financial measure under United States Generally Accepted Accounting Principles ("GAAP"). Exhibit A also identifies adjustments to EBITDA that are provided for under our bank credit agreement. The combined results of the Successor and Predecessor periods in 2007 do not comply with generally accepted accounting principles; however, we believe these results provide useful information to assess the relative performance of the businesses in all periods presented in the financial statements on an ongoing basis.
MidOcean Partners' Acquisition of Sbarro
On
In addition, the former shareholders received a distribution of the cash on hand in excess of (i)
In connection with the Merger, the Company transferred interests in certain non-core assets to a newly formed company owned by certain of our former shareholders. There was no additional consideration given for the transfer of these assets as they were treated as a dividend. The assets and related costs that we transferred (the "Withdrawn Assets") were:
— the interests in Broadhollow Realty LLC. and Broadhollow Fitness Center LLC., which owned the corporate headquarters of the Company, the fitness center and the assets of the Sbarro CafĂ© located at the corporate headquarters; — a parcel of undeveloped real property located in East Northport, New York; — the interests in Boulder Creek Ventures, LLC and Boulder Creek Holdings, LLC, which own a 40% interest in a joint venture that operates 15 steakhouses under \"Boulder Creek\" and other names; and — the interest in Two Mex-SS, LLC, which owns a 50% interest in a joint venture that operates two tex-mex restaurants under the \"Baja Grill\" name.
About the Company
Based in
Forward-Looking Statement Disclosure
This press release contains "forward-looking statements," as such term is used in the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements about non-historical matters and often are identified by the words "believe," "expect," "anticipate," "project," "plan," "estimate," "will," or "intend" and similar expressions. These forward- looking statements include statements about anticipated future store openings and growth and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of Sbarro and its affiliates to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include: (1) general economic, inflation, national security, weather and business conditions; (2) the availability of suitable restaurant sites in appropriate regional shopping malls and other locations on reasonable rental terms; (3) changes in consumer tastes; (4) changes in population and traffic patterns, including the effects that military action and terrorism or other events may have on the willingness of consumers to frequent malls, airports or downtown areas which are the predominant areas in which our restaurants are located; (5) our ability to continue to attract franchisees; (6) the success of our present, and any future, joint ventures and other expansion opportunities; (7) changes in the prices of food (particularly cheese and tomatoes), beverage and paper products; (8) our ability to pass along cost increases to our customers; (9) increases in minimum wage; (10) the continuity of services of members of our senior management team; (11) our ability to attract and retain competent restaurant and executive managerial personnel; (12) competition; (13) the level of, and our ability to comply with, government regulations; (14) our ability to generate sufficient cash flow to make interest and principal payments under our borrowing agreements; (15) our ability to comply with financial covenants and ratios and the effects which the restrictions imposed by those financial covenants and ratios contained in our borrowing agreements may have on our ability to operate our business; (16) our ability to repurchase and/or repay amounts under our borrowing agreements to the extent required in the event of certain circumstances as defined in our borrowing agreements; and (17) other factors discussed in our filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. The Company assumes no obligation to update or supplement forward- looking statements that become untrue because of subsequent events.
SBARRO, INC. AND SUBSIDIARIES COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) GAAP GAAP \"Combined\" For the For the Three period period Three months January 31 January 1 months ended through through ended March 30, April 1, January 30, April 1, 2008 2007 2007 2007* SUCCESSOR SUCCESSOR PREDECESSOR Revenues: Restaurant sales $79,753 $53,092 $23,594 $76,686 Franchise related income 3,485 2,477 993 3,470 Real estate - - 323 323 Total revenues 83,238 55,569 24,910 80,479 Costs and expenses: Cost of food and paper products 17,382 10,697 4,308 15,005 Payroll and other employee benefits 22,313 14,973 6,762 21,735 Other operating costs 30,009 18,999 8,839 27,838 Other income, net (1,219) (425) (497) (922) Depreciation and amortization 4,118 2,916 1,272 4,188 General and administrative 7,235 4,423 2,843 7,266 Special event bonuses - - 31,395 31,395 Asset impairment and restaurant closings/remodels 167 83 74 157 Total costs and expenses, net 80,005 51,666 54,996 106,662 Operating income (loss) 3,233 3,903 (30,086) (26,183) Other (expense) income: Interest expense (7,736) (5,304) (2,570) (7,874) Interest income 73 332 108 440 Equity in net income (loss) of unconsolidated affiliates (150) - 12 12 Net other expense (7,813) (4,972) (2,450) (7,422) Loss before income taxes (4,580) (1,069) (32,536) (33,605) Income tax (benefit) expense (1,829) (440) 44 (396) Net (loss) income $(2,751) $(629) $(32,580)$(33,209) * The combined results of the successor and predecessor for the periods in 2007 do not comply with generally accepted accounting principles; however, we believe these results provide useful information to assess the relative performance of the businesses in all periods presented in the financial statements on an ongoing basis. Sbarro, Inc. EBITDA Reconciliation Quarters Ended March 30, 2008 and April 1, 2007 (unaudited)
EBITDA represents earnings before interest income, interest expense, taxes, depreciation and amortization. EBITDA, as calculated under our bank credit agreement, includes certain additional adjustments, as set forth in the reconciliation that follows. EBITDA is a non-GAAP financial measure and should not be considered in isolation from, or as a substitute for, net income, cash flow from operations or other cash flow statement data prepared in accordance with
Our calculation of EBITDA may not be comparable to a similarly titled measure reported by other companies, since all companies do not calculate this non-GAAP measure in the same manner. Our EBITDA calculations are not intended to represent cash provided by (used in) operating activities since they do not include interest and taxes and changes in operating assets and liabilities, nor are they intended to represent a net increase in cash since they do not include cash provided by (used in) investing and financing activities. The calculation of EBITDA under our bank agreement and under the indenture governing our Senior Notes may differ, because of differences in the definitions contained in those two documents. We provide a calculation of EBITDA under our bank credit agreement because we are required to satisfy a quarterly financial measurement that uses EBITDA as a compliance metric. Our indenture does not include a similar quarterly compliance covenant.
The following table reconciles the Predecessor, Successor and Combined net loss for the quarter ended March 30, 2008 and the combined quarter ended April 1, 2007, respectively, to EBITDA as defined in the Company's Bank Credit Agreement for the same periods. We believe that net income (loss) is the most directly comparable GAAP financial measure to EBITDA. All amounts below are in thousands. For the For the period For the period January Combined quarter January 1 31 Quarter ended through through ended March 30, January April 1, April 1, 2008 30, 2007 2007 2007 SUCCESSOR PREDECESSOR SUCCESSOR Net loss $(2,751) $(32,580) $(629) $(33,209) Interest expense 7,736 2,570 5,304 7,874 Interest income (73) (108) (332) (440) Income tax expense (benefit) (1,829) 44 (440) (396) Depreciation and amortization 4,118 1,272 2,916 4,188 EBITDA 7,201 (28,802) 6,819 (21,983) Special event bonuses (1) - 31,395 - 31,395 Eliminated expenses (2) - 183 (230) (47) Non-recurring income (3) (500) - - - Non cash adjustments (4) 268 (96) 239 143 Management fee 258 - 167 167 Asset impairment, restaurant closings 468 96 112 208 and store pre-opening costs (5) - Litigation charges, net (6) (100) - - - Severance 2 - - - EBITDA in accordance with the bank $7,597 $2,776 $7,107 $9,883 credit agreement (1) Adjustment to exclude the payment of the special event bonuses net of the reversal of an accrual for a long-term incentive award, all in connection with the Merger. (2) \"Eliminated expenses\" refers to certain costs and expenses related to our former shareholders including salaries, bonuses, benefits, payroll taxes, travel and entertainment and earnings from withdrawn assets. (3) Non-recurring income is compensation received from a landlord for a lease on a location that was terminated involuntarily. (4) Non cash adjustments include deferred rent and amortization relating to purchase accounting in connection with the Merger. (5) Adjustments related to restaurant closing costs of $167 thousand and pre-opening costs of $301 thousand in 2008 and $157 thousand related to restaurant closing cost and $51 thousand related to pre-opening costs in 2007. (6) Net cash paid for litigation settlements accrued in 2007.
SOURCE Sbarro, Inc.
Search Our News Using Google Search
Can't find what you want? Try using Google:
