Attached files
file | filename |
---|---|
EX-31.1 - EXHIBIT 31.1 - P F CHANGS CHINA BISTRO INC | c99707exv31w1.htm |
EX-32.1 - EXHIBIT 32.1 - P F CHANGS CHINA BISTRO INC | c99707exv32w1.htm |
EX-31.2 - EXHIBIT 31.2 - P F CHANGS CHINA BISTRO INC | c99707exv31w2.htm |
EX-32.2 - EXHIBIT 32.2 - P F CHANGS CHINA BISTRO INC | c99707exv32w2.htm |
EX-32.3 - EXHIBIT 32.3 - P F CHANGS CHINA BISTRO INC | c99707exv32w3.htm |
EX-31.3 - EXHIBIT 31.3 - P F CHANGS CHINA BISTRO INC | c99707exv31w3.htm |
EX-10.38 - EXHIBIT 10.38 - P F CHANGS CHINA BISTRO INC | c99707exv10w38.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 4, 2010
or
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number: 0-25123
P.F. Changs China Bistro, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 86-0815086 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
7676 East Pinnacle Peak Road | 85255 | |
Scottsdale, Arizona | (Zip Code) | |
(Address of principal executive offices) |
Registrants telephone number, including area code:
(480) 888-3000
(480) 888-3000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports, and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files). Yes o No þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
As of April 4, 2010, there were 23,156,663 outstanding shares of the registrants Common Stock.
TABLE OF CONTENTS
1
Table of Contents
PART I
FINANCIAL INFORMATION
FINANCIAL INFORMATION
Item 1. Financial Statements
P.F. CHANGS CHINA BISTRO, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
April 4, | January 3, | |||||||
2010 | 2010 | |||||||
(Unaudited) | (Note 1) | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 71,544 | $ | 63,499 | ||||
Inventories |
5,489 | 5,291 | ||||||
Other current assets |
34,272 | 38,449 | ||||||
Total current assets |
111,305 | 107,239 | ||||||
Property and equipment, net |
487,492 | 497,928 | ||||||
Goodwill |
6,819 | 6,819 | ||||||
Intangible assets, net |
21,681 | 22,241 | ||||||
Other assets |
18,793 | 17,923 | ||||||
Total assets |
$ | 646,090 | $ | 652,150 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 20,162 | $ | 19,825 | ||||
Construction payable |
2,736 | 1,600 | ||||||
Accrued expenses |
61,354 | 77,088 | ||||||
Unearned revenue |
29,649 | 35,844 | ||||||
Current portion of long-term debt, including $314 and $976 due to related parties at April 4,
2010 and January 3, 2010, respectively |
40,521 | 41,236 | ||||||
Total current liabilities |
154,422 | 175,593 | ||||||
Lease obligations |
114,728 | 116,547 | ||||||
Long-term debt |
1,223 | 1,212 | ||||||
Other liabilities |
18,847 | 18,488 | ||||||
Total liabilities |
289,220 | 311,840 | ||||||
Commitments and contingencies (Note 12) |
| | ||||||
Equity: |
||||||||
PFCB common stockholders equity: |
||||||||
Common stock, $0.001 par value, 40,000,000 shares authorized: 23,156,663 shares
and 22,911,054 shares issued and outstanding at April 4, 2010 and January 3, 2010, respectively |
23 | 28 | ||||||
Additional paid-in capital |
227,124 | 217,181 | ||||||
Treasury
stock, at cost, 5,113,533 shares and 5,064,733 shares at April 4, 2010 and January 3, 2010, respectively |
(148,122 | ) | (146,022 | ) | ||||
Accumulated other comprehensive loss |
(132 | ) | (294 | ) | ||||
Retained earnings |
273,147 | 264,456 | ||||||
Total PFCB common stockholders equity |
352,040 | 335,349 | ||||||
Noncontrolling interests |
4,830 | 4,961 | ||||||
Total equity |
356,870 | 340,310 | ||||||
Total liabilities and equity |
$ | 646,090 | $ | 652,150 | ||||
See accompanying notes to unaudited consolidated financial statements.
2
Table of Contents
P.F. CHANGS CHINA BISTRO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | ||||||||
April 4, | March 29, | |||||||
2010 | 2009 | |||||||
Revenues |
$ | 310,371 | $ | 309,837 | ||||
Costs and expenses: |
||||||||
Cost of sales |
84,013 | 83,072 | ||||||
Labor |
104,475 | 100,707 | ||||||
Operating |
52,753 | 50,691 | ||||||
Occupancy |
17,838 | 17,378 | ||||||
General and administrative |
19,053 | 19,814 | ||||||
Depreciation and amortization |
19,001 | 18,496 | ||||||
Preopening expense |
133 | 488 | ||||||
Partner investment expense |
11 | (464 | ) | |||||
Total costs and expenses |
297,277 | 290,182 | ||||||
Income from operations |
13,094 | 19,655 | ||||||
Interest and other income (expense), net |
(415 | ) | (940 | ) | ||||
Income from continuing operations before taxes |
12,679 | 18,715 | ||||||
Provision for income taxes |
(3,788 | ) | (4,953 | ) | ||||
Income from continuing operations, net of tax |
8,891 | 13,762 | ||||||
Income (loss) from discontinued operations, net of tax |
6 | (43 | ) | |||||
Net income |
8,897 | 13,719 | ||||||
Less: Net income attributable to noncontrolling interests |
206 | 370 | ||||||
Net income attributable to PFCB |
$ | 8,691 | $ | 13,349 | ||||
Basic income per share: |
||||||||
Income from
continuing operations attributable to PFCB common stockholders
|
$ | 0.38 | $ | 0.57 | ||||
Income (loss) from discontinued operations, net of tax,
attributable to PFCB common stockholders |
0.00 | (0.00 | ) | |||||
Net income attributable to PFCB common stockholders |
$ | 0.38 | $ | 0.57 | ||||
Diluted income per share: |
||||||||
Income from continuing operations attributable to PFCB
common stockholders |
$ | 0.38 | $ | 0.56 | ||||
Income (loss) from discontinued operations, net of tax,
attributable to PFCB common stockholders |
0.00 | (0.00 | ) | |||||
Net income attributable to PFCB common stockholders |
$ | 0.38 | $ | 0.56 | ||||
Weighted average shares used in computation: |
||||||||
Basic |
22,631 | 23,442 | ||||||
Diluted |
23,104 | 23,795 | ||||||
Amounts attributable to PFCB: |
||||||||
Income from continuing operations, net of tax |
$ | 8,685 | $ | 13,392 | ||||
Income (loss) from discontinued operations, net of tax |
6 | (43 | ) | |||||
Net income attributable to PFCB |
$ | 8,691 | $ | 13,349 | ||||
See accompanying notes to unaudited consolidated financial statements.
3
Table of Contents
P.F. CHANGS CHINA BISTRO, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
(Unaudited)
PFCB Common Stockholders | ||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||
other | ||||||||||||||||||||||||||||||||
Common Stock | Additional | Treasury | comprehensive | Retained | Noncontrolling | |||||||||||||||||||||||||||
Shares | Amount | paid-in capital | stock | loss | earnings | interests | Total | |||||||||||||||||||||||||
Balances, December 28, 2008 |
24,114 | $ | 27 | $ | 206,667 | $ | (106,372 | ) | $ | (755 | ) | $ | 221,259 | $ | 8,581 | $ | 329,407 | |||||||||||||||
Issuance of common stock
under stock option plans |
66 | 1 | 773 | | | | | 774 | ||||||||||||||||||||||||
Issuance of common stock under
employee stock purchase plan |
21 | | 349 | | | | | 349 | ||||||||||||||||||||||||
Issuance of restricted stock under
incentive plans, net of forfeitures |
(11 | ) | | | | | | | | |||||||||||||||||||||||
Purchases of treasury stock |
(479 | ) | | | (9,364 | ) | | | | (9,364 | ) | |||||||||||||||||||||
Share-based compensation expense
(1) |
| | 2,113 | | | | | 2,113 | ||||||||||||||||||||||||
Tax benefit from share-based
compensation, net |
| | 74 | | | | | 74 | ||||||||||||||||||||||||
Unrealized gain on derivatives |
| | | | 56 | | | 56 | ||||||||||||||||||||||||
Distributions to noncontrolling
interest partners |
| | | | | | (601 | ) | (601 | ) | ||||||||||||||||||||||
Contributions from noncontrolling
interest partners |
| | | | | | 10 | 10 | ||||||||||||||||||||||||
Purchases of noncontrolling interests |
| | (428 | ) | | | | (1,279 | ) | (1,707 | ) | |||||||||||||||||||||
Partner investment expense |
| | | | | | (464 | ) | (464 | ) | ||||||||||||||||||||||
Partner bonus expense, imputed |
| | | | | | 141 | 141 | ||||||||||||||||||||||||
Net income |
| | | | | 13,349 | 370 | 13,719 | ||||||||||||||||||||||||
Balances, March 29, 2009 |
23,711 | $ | 28 | $ | 209,548 | $ | (115,736 | ) | $ | (699 | ) | $ | 234,608 | $ | 6,758 | $ | 334,507 | |||||||||||||||
Balances, January 3, 2010 |
22,911 | $ | 28 | $ | 217,181 | $ | (146,022 | ) | $ | (294 | ) | $ | 264,456 | $ | 4,961 | $ | 340,310 | |||||||||||||||
Issuance of common stock
under stock option plans |
279 | | 6,289 | | | | | 6,289 | ||||||||||||||||||||||||
Issuance of common stock under
employee stock purchase plan |
27 | | 984 | | | | | 984 | ||||||||||||||||||||||||
Shares withheld for taxes on
restricted
stock, net of forfeitures |
(11 | ) | | | | | | | | |||||||||||||||||||||||
Purchases of treasury stock |
(49 | ) | (5 | ) | | (2,100 | ) | | | | (2,105 | ) | ||||||||||||||||||||
Share-based compensation expense
(1) |
| | 1,148 | | | | | 1,148 | ||||||||||||||||||||||||
Tax benefit from share-based
compensation, net |
| | 1,606 | | | | | 1,606 | ||||||||||||||||||||||||
Unrealized gain on derivatives |
| | | | 162 | | | 162 | ||||||||||||||||||||||||
Distributions to noncontrolling
interest partners |
| | | | | | (372 | ) | (372 | ) | ||||||||||||||||||||||
Contributions from noncontrolling
interest partners |
| | | | | | 10 | 10 | ||||||||||||||||||||||||
Purchases of noncontrolling interests |
| | (84 | ) | | | | (90 | ) | (174 | ) | |||||||||||||||||||||
Partner investment expense |
| | | | | | 11 | 11 | ||||||||||||||||||||||||
Partner bonus expense, imputed |
| | | | | | 104 | 104 | ||||||||||||||||||||||||
Net income |
| | | | | 8,691 | 206 | 8,897 | ||||||||||||||||||||||||
Balances, April 4, 2010 |
23,157 | $ | 23 | $ | 227,124 | $ | (148,122 | ) | $ | (132 | ) | $ | 273,147 | $ | 4,830 | $ | 356,870 | |||||||||||||||
See accompanying notes to unaudited consolidated financial statements.
(1) | Share-based compensation expense includes equity-settled awards only. |
4
Table of Contents
P.F. CHANGS CHINA BISTRO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended | ||||||||
April 4, | March 29, | |||||||
2010 | 2009 | |||||||
Operating Activities: |
||||||||
Net income |
$ | 8,897 | $ | 13,719 | ||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||
Depreciation and amortization |
19,001 | 18,496 | ||||||
Share-based compensation |
2,965 | 2,328 | ||||||
Partner investment expense |
11 | (464 | ) | |||||
Partner bonus expense, imputed |
104 | 141 | ||||||
Deferred income taxes |
(2,198 | ) | (837 | ) | ||||
Tax (benefit) shortfall from share-based compensation, net |
(1,668 | ) | (74 | ) | ||||
Other |
39 | 38 | ||||||
Changes in operating assets and liabilities: |
||||||||
Inventories |
(198 | ) | 98 | |||||
Other current assets |
5,566 | 19,074 | ||||||
Other assets |
(529 | ) | (963 | ) | ||||
Accounts payable |
337 | (4,158 | ) | |||||
Accrued expenses |
(15,464 | ) | (9,759 | ) | ||||
Unearned revenue |
(6,195 | ) | (7,113 | ) | ||||
Lease obligations |
(1,771 | ) | (55 | ) | ||||
Other liabilities |
701 | 766 | ||||||
Net cash provided by operating activities |
9,598 | 31,237 | ||||||
Investing Activities: |
||||||||
Capital expenditures |
(6,741 | ) | (8,186 | ) | ||||
Receivable under Loan Facility (Note 12) |
(330 | ) | | |||||
Capitalized interest |
(19 | ) | (39 | ) | ||||
Net cash used in investing activities |
(7,090 | ) | (8,225 | ) | ||||
Financing Activities: |
||||||||
Proceeds from stock options exercised and employee stock purchases |
7,273 | 1,122 | ||||||
Purchases of treasury stock |
(2,105 | ) | (9,364 | ) | ||||
Repayments of long-term debt |
(715 | ) | (12,461 | ) | ||||
Distributions to noncontrolling interest partners |
(372 | ) | (601 | ) | ||||
Purchases of noncontrolling interests |
(174 | ) | (1,707 | ) | ||||
Payments of capital lease obligations |
(48 | ) | (44 | ) | ||||
Contributions from noncontrolling interest partners |
10 | 10 | ||||||
Tax benefit (shortfall) from share-based compensation, net |
1,668 | 74 | ||||||
Net cash provided by (used in) financing activities |
5,537 | (22,971 | ) | |||||
Net increase in cash and cash equivalents |
8,045 | 41 | ||||||
Cash and cash equivalents at the beginning of the period |
63,499 | 40,951 | ||||||
Cash and cash equivalents at the end of the period |
$ | 71,544 | $ | 40,992 | ||||
Supplemental Disclosure of Cash Flow Information: |
||||||||
Cash paid for interest |
$ | 706 | $ | 1,095 | ||||
Cash paid for income taxes, net of refunds |
$ | 8,196 | $ | 117 | ||||
Supplemental Disclosure of Non-Cash Items: |
||||||||
Change in construction payable |
$ | 1,136 | $ | (1,306 | ) |
See accompanying notes to unaudited consolidated financial statements.
5
Table of Contents
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Basis of Presentation
As of April 4, 2010, P.F. Changs China Bistro, Inc. (the Company or PFCB) owned and operated
197 full service restaurants throughout the United States under the name of P.F. Changs China
Bistro (the Bistro). The Company also owned and operated 167 quick casual restaurants under the
name of Pei Wei Asian Diner (Pei Wei). Additionally, there are two Bistro restaurants in international
markets that are operated by business partners under licensing agreements, and two Bistro restaurants operated in
Hawaii under a joint venture arrangement in which we own a noncontrolling interest.
The accompanying unaudited consolidated financial statements have been prepared in accordance with
U.S. generally accepted accounting principles (GAAP) for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by GAAP for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for the three month period
ended April 4, 2010 are not necessarily indicative of the results that may be expected for the year
ending January 2, 2011.
The consolidated balance sheet at January 3, 2010 has been derived from the audited consolidated
financial statements at that date, but does not include all of the information and footnotes
required by GAAP for complete financial statements. For further information, refer to the
consolidated financial statements and notes thereto included in the Companys Annual Report on Form
10-K for the fiscal year ended January 3, 2010.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation and Presentation
The Companys consolidated financial statements include the accounts and operations of the Company
and its majority-owned subsidiaries. All material balances and transactions between the
consolidated entities have been eliminated. Noncontrolling interests are reported below net income
under the heading Net income attributable to noncontrolling interests in the consolidated income
statements and shown as a component of equity in the consolidated balance sheets.
Recent Accounting Literature
Consolidation of Variable Interest Entities Amended
(Included in ASC 810 Consolidation, SFAS No. 167 Amendments to FASB Interpretation No. 46(R))
(Included in ASC 810 Consolidation, SFAS No. 167 Amendments to FASB Interpretation No. 46(R))
SFAS No. 167 amends FASB Interpretation No. 46(R) Consolidation of Variable Interest Entities
regarding certain guidance for determining whether an entity is a variable interest entity and
modifies the methods allowed for determining the primary beneficiary of a variable interest entity.
The amendments include: (1) the elimination of the exemption for qualifying special purpose
entities, (2) a new approach for determining who should consolidate a variable-interest entity, and
(3) changes to when it is necessary to reassess who should consolidate a variable-interest entity.
SFAS No. 167 is effective for the first annual reporting period beginning after November 15, 2009,
with earlier adoption prohibited. The adoption of SFAS No. 167 in fiscal 2010 did not have a
material impact on the Companys consolidated financial statements.
Improving Disclosures about Fair Value Measurements (ASU No. 2010-06)
(Included in ASC 820 Fair Value Measurements and Disclosures)
(Included in ASC 820 Fair Value Measurements and Disclosures)
Accounting Standards Update (ASU) No. 2010-06 requires new disclosures regarding recurring or
nonrecurring fair value measurements. Entities will be required to separately disclose significant
transfers into and out of Level 1 and Level 2 measurements in the fair value hierarchy and describe
the reasons for the transfers. Entities will also be required to provide information on purchases,
sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value
measurements. In addition, entities must provide fair value measurement disclosures for each class
of assets and liabilities, and disclosures about the valuation techniques used in determining fair
value for Level 2 or Level 3 measurements. ASU 2010-06 is effective for interim and annual
reporting periods
beginning after December 15, 2009, except for the gross basis reconciliation for the Level 3 fair
value measurements, which is effective for fiscal years beginning after December 15, 2010. The
adoption of ASU 2010-06 did not have a material impact on the Companys consolidated financial
statements. There were no transfers between Level 1 and Level 2 measurements in the fair value
hierarchy during the three months ended April 4, 2010.
6
Table of Contents
2. Discontinued Operations
Discontinued operations include results attributable to 10 Pei Wei restaurants that were closed
during the fourth quarter of 2008. Income (loss) from discontinued operations includes both the
historical results of operations as well as estimated and actual lease termination costs associated
with the 10 closed Pei Wei restaurants.
Income (loss) from discontinued operations, net of tax is comprised of the following (in
thousands):
Three Months Ended | ||||||||
April 4, | March 29, | |||||||
2010 | 2009 | |||||||
Revenues |
$ | | $ | | ||||
Income (loss) from discontinued operations before
income tax benefit(1) |
10 | (70 | ) | |||||
Income tax benefit (expense) |
(4 | ) | 27 | |||||
Income (loss) from discontinued operations, net of tax |
$ | 6 | $ | (43 | ) | |||
(1) | Includes lease termination charges, deferred rent write-offs upon lease termination
and deferred rent amortization |
The Company is pursuing lease termination agreements with each of the closed Pei Wei restaurants
landlords as well as potential sub-tenant agreements. Lease termination agreements for seven of the
ten locations have been executed as of April 4, 2010.
Activity associated with the lease termination accrual is summarized below (in thousands):
April 4, 2010 | March 29, 2009 | |||||||
Beginning balance |
$ | 1,416 | $ | 2,379 | ||||
Cash payments |
(118 | ) | (1,023 | ) | ||||
Charges |
| 492 | ||||||
Ending balance |
$ | 1,298 | $ | 1,848 | ||||
Charges include additional amounts recognized based on availability of new information, which led
to updated estimates of anticipated lease termination costs for certain closed locations where the
accrual recorded at the time of lease termination was insufficient. Cash payments include
settlement payments as well as ongoing rent and other property-related payments. From store closure
date through April 4, 2010, the Company has recognized and reported in discontinued operations a
total of $4.0 million in lease termination charges for the closed Pei Wei locations. The lease
termination accrual is included in accrued expenses on the consolidated balance sheets with the
timing of payments uncertain.
3. Income from Continuing Operations Attributable to PFCB per Share
Basic income from continuing operations attributable to PFCB per share is computed based on the
weighted average number of common shares outstanding during the period. Diluted income from
continuing operations attributable to PFCB per share is computed based on the weighted average
number of shares of common stock and potentially dilutive securities, which includes options,
restricted stock and restricted stock units (RSUs) outstanding under the Companys equity plans
and employee stock purchase plan. For the three months ended April 4, 2010 and March 29, 2009, 1.2
million and 2.3 million, respectively, of the Companys options were excluded from the calculation
due to their anti-dilutive effect.
7
Table of Contents
4. Other Current Assets
Other current assets consist of the following (in thousands):
April 4, 2010 | January 3, 2010 | |||||||
Receivables |
$ | 5,603 | $ | 15,752 | ||||
Current portion of deferred tax asset |
10,757 | 11,036 | ||||||
Prepaid rent |
5,525 | 5,508 | ||||||
Income taxes receivable |
6,162 | 2,388 | ||||||
Other |
6,225 | 3,765 | ||||||
Total other current assets |
$ | 34,272 | $ | 38,449 | ||||
5. Other Assets
Other assets consist of the following (in thousands):
April 4, 2010 | January 3, 2010 | |||||||
Software, net |
$ | 5,392 | $ | 5,459 | ||||
Liquor licenses, net |
6,805 | 6,836 | ||||||
Restoration Plan investments |
4,273 | 3,454 | ||||||
Deposits |
1,335 | 1,411 | ||||||
Other assets, net |
988 | 763 | ||||||
Total other assets |
$ | 18,793 | $ | 17,923 | ||||
6. Accrued Expenses
Accrued expenses consist of the following (in thousands):
April 4, 2010 | January 3, 2010 | |||||||
Accrued payroll |
$ | 15,933 | $ | 26,262 | ||||
Accrued insurance |
17,466 | 17,426 | ||||||
Sales and use tax payable |
7,052 | 7,104 | ||||||
Property tax payable |
3,221 | 3,638 | ||||||
Accrued rent |
2,070 | 3,730 | ||||||
Derivative liability |
201 | 471 | ||||||
Other accrued expenses |
15,411 | 18,457 | ||||||
Total accrued expenses |
$ | 61,354 | $ | 77,088 | ||||
7. Long-Term Debt
Credit Facility
On August 31, 2007, the Company entered into a senior credit facility (Credit Facility) with
several commercial financial institutions, which allowed for borrowings of up to $150.0 million. On
December 15, 2009, the Company amended the Credit Facility which reduced the borrowings allowed to
$75.0 million and modified certain restrictive language regarding restricted payments such as
dividends and share repurchases. The Credit Facility expires on August 30, 2013 and contains
customary representations, warranties, negative and affirmative covenants, including a requirement
to maintain a maximum leverage ratio, as defined, of 2.5:1 and a minimum fixed charge coverage
ratio, as defined, of 1.25:1, as well as customary events of default and certain default provisions
that could result in acceleration of the Credit Facility. The Company was in compliance with these
restrictions and conditions as of April 4, 2010 as the Companys leverage ratio was 1.27:1 and the
fixed charge coverage ratio was 2.25:1.
8
Table of Contents
The Credit Facility is guaranteed by the Companys material existing and future domestic
subsidiaries. As of April 4, 2010, the Company had borrowings outstanding under the Credit Facility
totaling $40.0 million as well as $14.1 million committed for the issuance of letters of credit,
which is required by insurance companies for the Companys workers compensation and general
liability insurance programs. Available borrowings under the Credit Facility were $20.9 million at
April 4, 2010.
Interest Rate Swap
During the second quarter of fiscal 2008, the Company entered into an interest rate swap with a
notional amount of $40.0 million. The purpose of this transaction is to provide a hedge against the
effects of changes in interest rates on a portion of the Companys current variable rate
borrowings. The Company has designated the interest rate swap as a cash flow hedge of its exposure
to variability in future cash flows attributable to interest payments on a $40.0 million tranche of
floating rate debt.
Under the terms of the interest rate swap, the Company pays a fixed rate of 3.32% on the $40.0
million notional amount and receives payments from its counterparty based on the 1-month LIBOR rate
for a term ending on May 20, 2010, effectively resulting in a fixed rate on the LIBOR component of
the $40.0 million notional amount. Interest rate differentials paid or received under the swap
agreement are recognized as adjustments to interest expense.
At April 4, 2010 and January 3, 2010, the recorded fair value of the interest rate swap was a
liability of $0.2 million and $0.5 million, respectively ($0.1 million and $0.3 million, net of
tax, respectively). The interest rate swap is reported in the consolidated balance sheets within
accrued expenses and is offset by a corresponding amount in equity, representing net unrealized
losses included in accumulated other comprehensive loss. Such amounts will be recognized in the
consolidated income statement over the remainder of the term ending on May 20, 2010. During the
three months ended April 4, 2010 and March 29, 2009, unrealized gains of $0.2 million and $0.1
million, respectively, are included within other comprehensive loss. There was no hedge
ineffectiveness recognized during the three month periods ended April 4, 2010 and March 29, 2009.
8. Other Liabilities
Other liabilities consist of the following (in thousands):
April 4, 2010 | January 3, 2010 | |||||||
Deferred income tax liability |
$ | 7,129 | $ | 9,436 | ||||
Deferred compensation |
4,547 | 3,653 | ||||||
Performance units |
3,408 | 2,402 | ||||||
Cash-settled awards |
2,264 | 1,453 | ||||||
Other |
1,499 | 1,544 | ||||||
Total other liabilities |
$ | 18,847 | $ | 18,488 | ||||
9. Fair Value Measurements
The Companys financial assets and financial liabilities measured at fair value at April 4, 2010
and January 3, 2010 are summarized below (in thousands):
Quoted Prices in | ||||||||||||||||||
Active Markets | Significant | |||||||||||||||||
for Identical | Significant Other | Unobservable | ||||||||||||||||
Assets/Liabilities | Observable Inputs | Inputs | ||||||||||||||||
April 4, 2010 | (Level 1) | (Level 2) | (Level 3) | Valuation Technique | ||||||||||||||
Money markets |
$ | 66,565 | $ | | $ | 66,565 | $ | | market approach | |||||||||
Restoration Plan investments |
4,273 | | 4,273 | | market approach | |||||||||||||
Interest rate swap liability |
(201 | ) | | (201 | ) | | income approach | |||||||||||
Total |
$ | 70,637 | $ | | $ | 70,637 | $ | | ||||||||||
9
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Quoted Prices in | ||||||||||||||||||
Active Markets | Significant | |||||||||||||||||
for Identical | Significant Other | Unobservable | ||||||||||||||||
Assets/Liabilities | Observable Inputs | Inputs | ||||||||||||||||
January 3, 2010 | (Level 1) | (Level 2) | (Level 3) | Valuation Technique | ||||||||||||||
Money markets |
$ | 54,655 | $ | | $ | 54,655 | $ | | market approach | |||||||||
Restoration Plan investments |
3,454 | | 3,454 | | market approach | |||||||||||||
Interest rate swap liability |
(471 | ) | | (471 | ) | | income approach | |||||||||||
Total |
$ | 57,638 | $ | | $ | 57,638 | $ | | ||||||||||
The Company invests excess cash in money market funds and reflects these amounts within cash and
cash equivalents on the consolidated balance sheet at a net value of 1:1 for each dollar invested.
Money market investments held by the Company were invested primarily in government backed
securities at April 4, 2010.
The Companys Restoration Plan investments are considered trading securities and are reported at
fair value based on third party broker statements. Such amounts are reflected within other assets
in the consolidated balance sheets. The realized and unrealized holding gains and losses related to
these investments are recorded in interest and other income (expense), net in the consolidated
income statements.
The fair value of the Companys interest rate swap is estimated using the net present value of a
series of cash flows on both the fixed and floating legs of the swap and is reflected within
accrued expenses in the consolidated balance sheets. These cash flows are based on yield curves
which take into account the contractual terms of the derivative, including the period to maturity
and market-based parameters such as interest rates and volatility. The yield curves used in the
valuation model are based on published data for counterparties with an AA rating. Market practice
in pricing derivatives initially assumes all counterparties have the same credit quality. The
Company mitigates derivative credit risk by transacting with highly rated counterparties.
Management has evaluated credit and nonperformance risks and believes them to be insignificant and
not warranting a credit adjustment at April 4, 2010. See Note 7 for a discussion of the Companys
interest rate swap.
10. Share-Based Compensation
The Company has granted equity-classified awards in the form of stock options, restricted stock and
restricted stock units (RSUs), and has issued liability-classified awards in the form of
performance units, cash-settled stock appreciation rights (SARs) and cash-settled stock-based
awards (restricted cash units or RCUs) to certain employees and directors.
Equity-Classified Awards
Stock options were granted for a fixed number of shares with an exercise price equal to or greater
than the fair value of the shares at the date of grant. Restricted stock and RSUs were granted with
the fair value determined based on the Companys closing stock price on the date of grant.
Share-based compensation expense for equity-classified awards is amortized to expense over the
vesting period. There were no equity-classified awards granted during the three month periods
ended April 4, 2010 and March 29, 2009.
Liability-Classified Awards
Performance Units
The cash value of the performance units will be equal to the amount, if any, by which the Companys
final average stock price as defined in the agreements, exceeds the strike price. The fair value
of the performance units is remeasured at each reporting period until the awards are settled. At
April 4, 2010 and March 29, 2009, the fair value per performance unit was $7.23 and $4.58,
respectively, calculated using a Monte-Carlo simulation model which incorporates the historical
performance, volatility and correlation of the Companys stock price and the Russell 2000 Index. At
April 4, 2010 and January 3, 2010, the recorded liability of the performance units was $3.4 million
and $2.4 million, respectively. There were no performance unit awards granted during the three
months ended April 4, 2010.
10
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Cash-Settled Awards
The cash value of the SARs will be based on the appreciation of the Companys stock price on the
date of settlement compared to the Companys stock price on the date of grant, and the cash value
of the RCUs will be based on the Companys stock price on the date of settlement. The fair value
of SARs is equal to the value calculated per the Black-Scholes model and the fair value of RCUs is
equal to the sum of the value calculated per the Black-Scholes model and the Companys stock price
at the reporting date. The fair value of SARs and RCUs is remeasured at each reporting period
until the awards are settled. At April 4, 2010 and January 3, 2010, the recorded liability of
cash-settled awards was $2.3 million and $1.5 million, respectively.
SARs were awarded/granted to a member of the Board of Directors who joined the Board during the
first quarter of fiscal 2010. No RCUs were granted during the three months ended April 4, 2010. No
RCUs or SARs were granted during the three months ended March 29, 2009.
Share-based compensation expense for performance units, SARs and RCUs is recognized ratably over
the service period with the impact of updated fair value recognized as cumulative adjustments to
share-based compensation expense at the end of each reporting period.
The fair value of the SARs and RCUs was estimated using a Black-Scholes option pricing model with
the following weighted average assumptions:
Three Months Ended | ||||||||
April 4, 2010 | ||||||||
RCUs | SARs | |||||||
Weighted average risk-free interest rate |
1.4 | % | 2.3 | % | ||||
Expected life of cash-settled awards (years) |
2.9 | 4.4 | ||||||
Expected stock volatility |
51.8 | % | 44.7 | % | ||||
Expected dividend yield |
0.0 | % | 0.0 | % |
Share-Based Compensation Expense
Share-based compensation expense from continuing operations for equity and liability-classified
awards is classified as follows (in thousands):
Three Months Ended | ||||||||
April 4, 2010 | March 29, 2009 | |||||||
Equity-classified awards: |
||||||||
Labor |
$ | 45 | $ | 103 | ||||
General and administrative |
1,103 | 2,010 | ||||||
Liability-classified awards: |
||||||||
General and administrative |
1,817 | 215 | ||||||
Total share-based compensation |
2,965 | 2,328 | ||||||
Less: tax benefit |
(901 | ) | (629 | ) | ||||
Total share-based compensation, net of
tax |
$ | 2,064 | $ | 1,699 | ||||
Non-Vested Share-Based Compensation Expense
At April 4, 2010, non-vested share-based compensation for equity-classified awards (net of actual
forfeitures for options and estimated forfeitures for restricted stock), totaled $3.3 million for
stock options and $2.7 million for restricted stock. This expense will be recognized over the
remaining weighted average vesting period, which is approximately 1.6 years for stock options and
1.4 years for restricted stock.
At April 4, 2010, non-vested share-based compensation for liability-classified awards (based on
current fair value, which is updated each reporting period), totaled $5.3 million for performance
units and $5.1 million for RCU and SAR awards. This expense will be recognized over the remaining
weighted average vesting period, which is approximately 1.7 years for performance units and 2.3
years for RCU and SAR awards.
11
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11. Segment Reporting
The Company operates primarily in the United States food-service industry and has determined that
its reportable segments are those that are based on the Companys methods of internal reporting and
management structure. The Companys reportable segments are Bistro and Pei Wei. Additionally, royalty fees related to Bistro
restaurants operated by business partners pursuant to development and licensing agreements are reported
within Shared Services and Other. There were no
material amounts of revenues or transfers among reportable segments.
The following table presents information about reportable segments (in thousands):
Shared Services | ||||||||||||||||
Total | and Other | Bistro | Pei Wei | |||||||||||||
For the Three Months Ended April 4, 2010: |
||||||||||||||||
Revenues |
$ | 310,371 | $ | 129 | $ | 230,767 | $ | 79,475 | ||||||||
Segment profit (loss) |
32,085 | (371 | ) | 24,753 | 7,703 | |||||||||||
Capital expenditures |
6,741 | 449 | 5,263 | 1,029 | ||||||||||||
Depreciation and amortization |
19,001 | 500 | 13,854 | 4,647 | ||||||||||||
For the Three Months Ended March 29,
2009: |
||||||||||||||||
Revenues |
$ | 309,837 | $ | | $ | 235,141 | $ | 74,696 | ||||||||
Segment profit (loss) |
39,123 | (418 | ) | 32,806 | 6,735 | |||||||||||
Capital expenditures |
8,186 | 1,622 | 5,296 | 1,268 | ||||||||||||
Depreciation and amortization |
18,496 | 418 | 13,728 | 4,350 | ||||||||||||
As of April 4, 2010: |
||||||||||||||||
Total assets |
$ | 646,090 | $ | 21,905 | $ | 519,848 | $ | 104,337 | ||||||||
Goodwill |
6,819 | | 6,566 | 253 | ||||||||||||
As of January 3, 2010: |
||||||||||||||||
Total assets |
$ | 652,150 | $ | 20,293 | $ | 522,940 | $ | 108,917 | ||||||||
Goodwill |
6,819 | | 6,566 | 253 |
In addition to using consolidated results in evaluating the Companys financial results, a primary
measure used by executive management in assessing the performance of existing restaurant concepts
is segment profitability (sometimes referred to as restaurant operating income). Segment
profitability is defined as income from operations before general and administrative, preopening
and partner investment expenses, but including a deduction for net income attributable to
noncontrolling interests. Because preopening and partner investment expenses are associated with
expansion of the Companys business and vary in timing and magnitude, they make an accurate
assessment of ongoing operations more difficult and are therefore excluded. Additionally, general
and administrative expenses are only included in the Companys consolidated financial results as
these costs relate to support of both restaurant businesses and are generally not specifically
identifiable to individual restaurant operations. As the Companys expansion is funded entirely
from its ongoing restaurant operations, segment profitability is one consideration when determining
whether and when to open additional restaurants.
Reconciliation of Segment profit to Income from continuing operations before taxes (in
thousands):
For the Three Months Ended | ||||||||
April 4, | March 29, | |||||||
2010 | 2009 | |||||||
Segment profit |
$ | 32,085 | $ | 39,123 | ||||
Less: General and administrative |
(19,053 | ) | (19,814 | ) | ||||
Less: Preopening expense |
(133 | ) | (488 | ) | ||||
Less: Partner investment expense |
(11 | ) | 464 | |||||
Less: Interest and other income (expense), net |
(415 | ) | (940 | ) | ||||
Add: Net income attributable to noncontrolling
interests |
206 | 370 | ||||||
Income from continuing operations before taxes |
$ | 12,679 | $ | 18,715 | ||||
12
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12. Commitments and Contingencies
The Company is engaged in various legal actions, which arise in the ordinary course of its
business. The Company is also currently under examination by various taxing authorities for years
not closed by the statute of limitations. Although there can be no assurance as to the ultimate
disposition of these matters, it is the opinion of the Companys management, based upon the
information available at this time, that the outcome of these matters, individually or in the
aggregate, will not have a material adverse effect on the results of operations, liquidity or
financial condition of the Company.
In August 2009, the Company entered into an agreement with FRC Balance LLC, d/b/a True Food
Kitchen, to provide debt capital for the early-stage development of True Food Kitchen restaurants.
The agreement provides for up to a $10.0 million loan facility to develop True Food Kitchen
restaurants and can, under certain conditions, be converted by P.F. Changs into a majority equity
position in True Food Kitchen. As of April 4, 2010, $0.3 million in borrowings was outstanding
under the loan facility.
13. Subsequent Event
Cash Dividends
During February 2010, the Board of Directors approved the initiation of a quarterly variable cash
dividend based on the Companys desire to consistently return excess cash flow to its shareholders.
The amount of the cash dividend will be computed based on 45% of the Companys quarterly net income
and is expected to total approximately $0.90 per share during fiscal 2010. Based on seasonal
fluctuations in the Companys quarterly net income, the amount of cash dividend payments, which are
based on a fixed percentage of net income, may fluctuate between quarters.
Based on the Board of Directors authorization, on April 28, 2010 the Company announced a cash
dividend of $0.17 per share to be paid May 19, 2010 to all shareholders of record at the close of
business on May 5, 2010. Based on shares outstanding at April 4, 2010, total dividend payments paid
during the second quarter of fiscal 2010 will approximate $3.9 million.
13
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
This information should be read in conjunction with the consolidated financial statements and notes
thereto included in Item 1 of Part I of this Quarterly Report and the audited consolidated
financial statements and notes thereto and Managements Discussion and Analysis of Financial
Condition and Results of Operations for the year ended January 3, 2010 contained in our 2009 Annual
Report on Form 10-K.
Some
of the statements in this section contain forwardlooking statements, which involve risks and
uncertainties. In some cases, forward-looking statements can be identified by terms such as may,
will, should, expect, plan, intend, forecast, anticipate, believe, estimate,
predict, potential, continue or the negative of these terms or other comparable terminology.
The forward-looking statements contained in this section involve known and unknown risks,
uncertainties and situations that may cause our or our industrys actual results, level of
activity, performance or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these statements. Factors that might
cause actual events or results to differ materially from those indicated by these forward-looking
statements may include the matters listed under Risk Factors in Item 1A (a detailed description
of which can be found under the caption Risk Factors in our most recently filed Form 10-K) and
elsewhere in this Form 10-Q, including, but not limited to, failure of our existing or new
restaurants to achieve predicted results, changes in general economic and political conditions that
affect consumer spending; changes in government legislation may increase our labor costs; our
dependence on the financial performance of restaurants concentrated in certain geographic areas;
and intense competition in the restaurant industry. Because we cannot guarantee future results,
levels of activity, performance or achievements, undue reliance should not be placed on these
forward-looking statements.
Overview
We own and operate two restaurant concepts in the Asian niche: P.F. Changs China Bistro (Bistro)
and Pei Wei Asian Diner (Pei Wei).
Bistro
As of April 4, 2010, we owned and operated 197 full service Bistro restaurants that feature a blend
of high quality, Chinese-inspired cuisine and attentive service in a high energy contemporary
bistro setting. P.F. Changs was formed in early 1996 with the acquisition of the four original
Bistro restaurants and the hiring of an experienced management team. Utilizing a partnership
management philosophy, we embarked on a strategic expansion of the concept targeted at major
metropolitan areas throughout the United States. We own and operate all of our restaurants in the
U.S. with the exception of two Bistro restaurants located in Hawaii which are operated under a
joint venture arrangement in which we own a noncontrolling interest. Additionally, two
international Bistro restaurants were opened in Mexico City and Kuwait City during fiscal 2009
under international development and licensing agreements.
We intend to open four new Bistro restaurants during fiscal 2010, none of which were open by the
end of the first quarter of 2010. Our Bistro restaurants typically range in size from 6,000 to
7,500 square feet, and require an average total invested capital of approximately $3.5 million to
$4.0 million per restaurant (net of estimated tenant incentives). This total capitalized investment
includes the capitalized lease value of the property, which can vary greatly depending on the
specific trade area. We expect that our planned future restaurants will require, on average, a
total cash investment per restaurant of approximately $2.5 million to $3.0 million (net of
estimated tenant incentives). Preopening expenses are expected to average approximately $350,000
to $400,000 per restaurant during fiscal 2010.
Pei Wei
As of April 4, 2010, we owned and operated 167 quick casual Pei Wei restaurants that serve freshly
prepared, wok-seared, contemporary pan-Asian cuisine in a relaxed, warm environment with friendly,
attentive counter service and take-out flexibility. We opened our first Pei Wei restaurant in July
2000 in the Phoenix, Arizona area and have expanded the concept significantly since that time.
We intend to open three new Pei Wei restaurants during fiscal 2010, one of which was open by the
end of the first quarter of 2010. Our Pei Wei restaurants are generally 2,800 to 3,400 square feet
in size and require an average total invested capital of approximately $1.5 million per restaurant
(net of estimated tenant incentives). This total capitalized investment cost includes the
capitalized lease value of the property, which can vary greatly depending on the specific trade
area. We expect that our planned future restaurants will
require, on average, a total cash investment per restaurant of approximately $750,000 to $850,000
(net of estimated tenant incentives). Preopening expenses are expected to average approximately
$140,000 to $160,000 per restaurant during fiscal 2010.
14
Table of Contents
Global Brand Development
International
We are selectively pursuing international expansion of our Bistro restaurants. During fiscal 2009,
we signed two development and licensing agreements with partners who will develop and operate
Bistro restaurants in international markets. We also signed one development and licensing agreement
with a new partner in early fiscal 2010. Our license agreements typically provide for us to
receive an initial territory fee, store opening fees and ongoing royalty revenues based on a
percentage of international restaurant sales. Our partners collectively expect to open four to six
restaurants during fiscal 2010.
We continue to engage in discussions with additional potential partners regarding expansion of the
Bistro into various international markets.
Retail
During 2009, we entered into an exclusive licensing agreement with Unilever to develop and launch a
new premium line of frozen Asian-style entrées in the U.S., under the P.F. Changs brand. The new
products will be available in retail outlets during the first half of fiscal 2010. We will receive
ongoing royalty revenues based on a percentage of product sales. These percentages will escalate
over the first three years of the agreement.
Other Ventures
During 2009, we entered into an agreement with FRC Balance LLC, d/b/a True Food Kitchen, to provide
debt capital for the early-stage development of True Food Kitchen restaurants. The agreement
provides for up to a $10.0 million loan facility to develop True Food Kitchen restaurants and can,
under certain conditions, be converted by us into a majority equity position in True Food Kitchen.
As of April 4, 2010, $0.3 million in borrowings was outstanding under the loan facility.
Critical Accounting Policies
Our critical accounting policies are those that require significant judgment. There have been no
material changes to the critical accounting policies previously reported in our 2009 Annual Report
on Form 10-K.
Results of Operations
The following tables set forth certain unaudited quarterly information for the three month periods
ended April 4, 2010 and March 29, 2009, respectively. This quarterly information has been prepared
on a basis consistent with the audited financial statements and, in the opinion of management,
includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair
presentation of the information for the periods presented. Our quarterly operating results may
fluctuate significantly as a result of a variety of factors, and operating results for any quarter
are not necessarily indicative of results for a full fiscal year.
15
Table of Contents
Results for the three month periods ended April 4, 2010 and March 29, 2009
Our consolidated operating results were as follows (dollars in thousands):
Three Months Ended | ||||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
April 4, 2010 | Revenues | March 29, 2009 | Revenues | Change | Change | |||||||||||||||||||
Revenues |
$ | 310,371 | 100.0 | % | $ | 309,837 | 100.0 | % | $ | 534 | 0.2 | % | ||||||||||||
Costs and expenses: |
||||||||||||||||||||||||
Cost of sales |
84,013 | 27.1 | % | 83,072 | 26.8 | % | 941 | 1.1 | % | |||||||||||||||
Labor |
104,475 | 33.7 | % | 100,707 | 32.5 | % | 3,768 | 3.7 | % | |||||||||||||||
Operating |
52,753 | 17.0 | % | 50,691 | 16.4 | % | 2,062 | 4.1 | % | |||||||||||||||
Occupancy |
17,838 | 5.7 | % | 17,378 | 5.6 | % | 460 | 2.6 | % | |||||||||||||||
General and administrative |
19,053 | 6.1 | % | 19,814 | 6.4 | % | (761 | ) | (3.8 | %) | ||||||||||||||
Depreciation and amortization |
19,001 | 6.1 | % | 18,496 | 6.0 | % | 505 | 2.7 | % | |||||||||||||||
Preopening expense |
133 | 0.0 | % | 488 | 0.2 | % | (355 | ) | (72.7 | %) | ||||||||||||||
Partner investment expense |
11 | 0.0 | % | (464 | ) | (0.1 | %) | 475 | | |||||||||||||||
Total costs and expenses |
297,277 | 95.8 | % | 290,182 | 93.7 | % | 7,095 | 2.4 | % | |||||||||||||||
Income from operations |
13,094 | 4.2 | % | 19,655 | 6.3 | % | (6,561 | ) | (33.4 | %) | ||||||||||||||
Interest and other income (expense), net |
(415 | ) | (0.1 | %) | (940 | ) | (0.3 | %) | 525 | (55.9 | %) | |||||||||||||
Income from continuing operations before taxes |
12,679 | 4.1 | % | 18,715 | 6.0 | % | (6,036 | ) | (32.3 | %) | ||||||||||||||
Provision for income taxes |
(3,788 | ) | (1.2 | %) | (4,953 | ) | (1.6 | %) | 1,165 | (23.5 | %) | |||||||||||||
Income from continuing operations, net of tax |
8,891 | 2.9 | % | 13,762 | 4.4 | % | (4,871 | ) | (35.4 | %) | ||||||||||||||
Income (loss) from discontinued operations, net of tax |
6 | 0.0 | % | (43 | ) | (0.0 | %) | 49 | | |||||||||||||||
Net income |
8,897 | 2.9 | % | 13,719 | 4.4 | % | (4,822 | ) | (35.1 | %) | ||||||||||||||
Less: Net income attributable to noncontrolling
interests |
206 | 0.1 | % | 370 | 0.1 | % | (164 | ) | (44.3 | %) | ||||||||||||||
Net income attributable to PFCB |
$ | 8,691 | 2.8 | % | $ | 13,349 | 4.3 | % | $ | (4,658 | ) | (34.9 | %) | |||||||||||
Certain percentage amounts may not sum due to rounding. Percentages over 100% are not displayed.
Selected operating statistics for the Bistro were as follows (dollars in thousands):
Three Months Ended | ||||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
April 4, 2010 | Revenues | March 29, 2009 | Revenues | Change | Change | |||||||||||||||||||
Revenues |
$ | 230,767 | 100.0 | % | $ | 235,141 | 100.0 | % | $ | (4,374 | ) | (1.9 | %) | |||||||||||
Costs and expenses: |
||||||||||||||||||||||||
Cost of sales |
62,711 | 27.2 | % | 62,963 | 26.8 | % | (252 | ) | (0.4 | %) | ||||||||||||||
Labor |
78,192 | 33.9 | % | 76,051 | 32.3 | % | 2,141 | 2.8 | % | |||||||||||||||
Operating |
38,546 | 16.7 | % | 36,973 | 15.7 | % | 1,573 | 4.3 | % | |||||||||||||||
Occupancy |
12,640 | 5.5 | % | 12,441 | 5.3 | % | 199 | 1.6 | % | |||||||||||||||
Depreciation and amortization |
13,854 | 6.0 | % | 13,728 | 5.8 | % | 126 | 0.9 | % | |||||||||||||||
Preopening expense |
26 | 0.0 | % | 294 | 0.1 | % | (268 | ) | (91.2 | %) | ||||||||||||||
Partner investment expense |
| 0.0 | % | (148 | ) | -0.1 | % | 148 | (100.0 | %) | ||||||||||||||
Net income attributable to
noncontrolling interests |
71 | 0.0 | % | 179 | 0.1 | % | (108 | ) | (60.3 | %) |
16
Table of Contents
Selected operating statistics for Pei Wei were as follows (dollars in thousands):
Three Months Ended | ||||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
April 4, 2010 | Revenues | March 29, 2009 | Revenues | Change | Change | |||||||||||||||||||
Revenues |
$ | 79,475 | 100.0 | % | $ | 74,696 | 100.0 | % | $ | 4,779 | 6.4 | % | ||||||||||||
Costs and expenses: |
||||||||||||||||||||||||
Cost of sales |
21,302 | 26.8 | % | 20,109 | 26.9 | % | 1,193 | 5.9 | % | |||||||||||||||
Labor |
26,283 | 33.1 | % | 24,656 | 33.0 | % | 1,627 | 6.6 | % | |||||||||||||||
Operating |
14,207 | 17.9 | % | 13,718 | 18.4 | % | 489 | 3.6 | % | |||||||||||||||
Occupancy |
5,198 | 6.5 | % | 4,937 | 6.6 | % | 261 | 5.3 | % | |||||||||||||||
Depreciation and amortization |
4,647 | 5.8 | % | 4,350 | 5.8 | % | 297 | 6.8 | % | |||||||||||||||
Preopening expense |
107 | 0.1 | % | 194 | 0.3 | % | (87 | ) | (44.8 | %) | ||||||||||||||
Partner investment expense |
11 | 0.0 | % | (316 | ) | (0.4 | %) | 327 | | |||||||||||||||
Net income attributable to
noncontrolling interests |
135 | 0.2 | % | 191 | 0.3 | % | (56 | ) | (29.3 | %) |
Percentages over 100% are not displayed.
Revenues
Our revenues are derived primarily from food and beverage sales. Each segment contributed as
follows:
Bistro: The decrease in revenues was primarily attributable to a $13.3 million decline in
revenues for stores that opened prior to the first quarter of 2009 driven by a decline in the
average check and partially offset by a slight increase in overall guest traffic. The decrease
was also partially offset by incremental new store revenues of $8.9 million, comprised of a full
quarter of revenues from the eight new stores that opened during fiscal 2009.
Pei Wei: The increase in revenues was primarily attributable to incremental new store revenues
of $3.2 million, comprised of a full quarter of revenues from the seven new stores that opened
during fiscal 2009 and revenues generated by the one new Pei Wei restaurant that opened during
2010. The increase was also due to a $1.4 million increase in revenues for stores that opened
prior to the first quarter of 2009 driven by an increase in overall guest traffic and a slight
increase in the average check.
Costs and Expenses
Cost of Sales
Cost of sales is comprised of the cost of food and beverages. Each segment contributed as
follows:
Bistro: Cost of sales as a percentage of revenues increased primarily due to the impact of
greater sales discounts, including a new happy hour rollout, and, to
a lesser extent, unfavorable product yields on lettuce due to first
quarter of fiscal 2010 weather impacts. These increases were slightly offset by the net impact
of product mix shifts and favorable beef and produce pricing.
Pei Wei: Cost of sales as a percentage of revenues decreased slightly primarily due to
favorable beef and produce pricing as well as the net impact of product mix shifts, partially
offset by the impact of higher costs related to limited time offer menu items.
Labor
Labor expenses consist of restaurant management salaries, hourly staff payroll costs, other
payroll-related items and imputed partner bonus expense. Imputed partner bonus expense represents
the portion of restaurant level operating results that is allocable to certain noncontrolling
partners, but is presented as bonus expense for accounting purposes. Each segment contributed as
follows:
Bistro: Labor expenses as a percentage of revenues increased primarily due to higher hourly
wage rates, the impact of greater sales discounts and additional hospitality labor costs
(principally related to a new happy hour rollout) and higher state unemployment taxes. These
increases were partially offset by improved operational efficiencies and lower management
incentive costs.
Pei Wei: Labor expenses as a percentage of revenues increased slightly primarily due to higher
culinary labor costs.
17
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Operating
Operating expenses consist primarily of various restaurant-level costs such as repairs and
maintenance, utilities and marketing, certain of which are variable and may fluctuate with
revenues. Also, expenditures associated with marketing programs are discretionary in nature and
the timing and amount of marketing spend will vary. Each segment contributed as follows:
Bistro: Operating expenses as a percentage of revenues increased primarily due to increased
marketing spend, the impact of decreased leverage on lower average weekly sales on the portion
of operating costs that is fixed in nature, higher menu printing costs and higher repairs and
maintenance expense. These increases were partially offset by lower utilities costs resulting
from lower usage.
Pei Wei: Operating expenses as a percentage of revenues decreased primarily due to lower
facilities costs and increased leverage on higher average weekly sales, partially offset by
increased marketing spend.
Occupancy
Occupancy costs include both fixed and variable portions of rent, common area maintenance charges,
property and general liability insurance and property taxes. Each segment contributed as follows:
Bistro: Occupancy costs as a percentage of revenues increased primarily due to the impact of
decreased leverage on lower average weekly sales, partially offset by lower contingent rent
expense resulting from lower sales.
Pei Wei: Occupancy costs as a percentage of revenues decreased slightly primarily due to the
impact of increased leverage on higher average weekly sales.
General and Administrative
General and administrative expenses are comprised of costs associated with corporate and
administrative functions that support restaurant development and operations and provide
infrastructure to support future growth including, but not limited to, management and staff
compensation, employee benefits, travel, legal and professional fees, technology and market
research.
Consolidated general and administrative costs decreased primarily due to lower management
incentive accruals, partially offset by higher share-based compensation expense principally
resulting from our liability-classified awards.
Depreciation and Amortization
Depreciation and amortization expenses include the depreciation of fixed assets, gains and losses
on disposal of assets and the amortization of intangible assets, software and non-transferable
liquor license fees. Each segment contributed as follows:
Bistro: Depreciation and amortization increased primarily due to additional depreciation on
restaurants that opened during fiscal 2009. The increase, as a percentage of revenues, was
driven by the impact of decreased leverage resulting from lower average weekly sales.
Pei Wei: Depreciation and amortization increased primarily due to additional depreciation on
restaurants that opened during fiscal 2009 and the first quarter of 2010. As a percentage of
revenues, depreciation and amortization remained consistent with prior year primarily due to the
impact of increased leverage resulting from higher average weekly sales offset by additional
depreciation related to new digital menu boards installed during fiscal 2009.
Preopening Expense
Preopening expenses, which are expensed as incurred, consist of expenses incurred prior to opening
a new restaurant and are comprised principally of manager salaries, employee payroll and related
training costs. Preopening expenses also include straight-line rent expense for the period between
the possession date of leased premises and the restaurant opening date. Each segment contributed
as follows:
Bistro: Preopening expense decreased primarily due to the impact of no new restaurant openings
during the first quarter of 2010 compared to one new restaurant opening during the first quarter
of 2009.
Pei Wei: Preopening expense decreased primarily due to the timing of expenses for new
restaurant openings scheduled for fiscal 2010 compared to fiscal 2009.
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Partner Investment Expense
Partner investment expense represents the difference between the imputed fair value of
noncontrolling interests at the time our partners invest in our restaurants and our partners cash
contributions for those ownership interests. Additionally, for those interests that are bought out
prior to the restaurant reaching maturity (typically after five years of operation), partner
investment expense includes a reversal of previously recognized expense for the difference between
the fair value of the noncontrolling interest at inception date and the fair value at the date of
repurchase, to the extent that the former is greater. Each segment contributed as follows:
Bistro: All partner investment expense activity for the Bistro is related to early buyouts of
noncontrolling interests. The change in partner investment expense resulted from having fewer
early buyouts of noncontrolling interests during the first quarter of 2010 compared to the
first quarter of 2009.
Pei Wei: Partner investment expense increased primarily due to the impact of fewer buyouts
during the first quarter of 2010 compared to the first quarter of 2009.
Interest and Other Income (Expense), Net
Interest expense primarily consists of interest costs in excess of amounts capitalized related to
our outstanding credit line and other borrowings, as well as accretion expense related to our
conditional asset retirement obligations. Interest income earned primarily relates to
interest-bearing overnight deposits. Realized and unrealized holding gains (losses) related to
investments in the Restoration Plan are included within other income (expense), with a
corresponding offset in general and administrative expense.
The change in consolidated interest and other income (expense), net was primarily due to lower
interest expense resulting from the repayment of $40.0 million of our outstanding credit line
borrowings during fiscal 2009. Additionally, unrealized holding gains during the current year
compared to unrealized holding losses in the prior year associated with investments in the
Restoration Plan, and to a lesser extent, lower interest income also contributed to the change. We
expect to continue to recognize net interest expense until such time as we further lower our
outstanding debt levels or increase our development.
Provision for Income Taxes
Our effective tax rate from continuing operations, including discrete items and deduction for
noncontrolling interests, was 30.4% for the first quarter of 2010 compared to 27.0% for the first
quarter of 2009. The income tax rate for both fiscal 2010 and fiscal 2009 differed from the
expected provision for income taxes, which is derived by applying the statutory income tax rate,
primarily as a result of FICA tip credits. Our effective tax rate for 2010 is expected to be higher
than our historic rate due to the impact of income from continuing operations from non-tipped
concepts as well as higher anticipated income from operations. Because there are no tipped
employees at Pei Wei, as Pei Wei contributes more net income, and if Bistros income from
operations grows at a rate greater than revenue growth, the impact of Bistros tip credit on the
companys effective tax rate will continue to decrease.
Management has evaluated all positive and negative evidence concerning the realizability of
deferred tax assets and has determined that, with the exception of a small amount of state net
operating losses, we will recognize sufficient future taxable income to realize the benefit of our
deferred tax assets.
Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests represents the portion of our net income which
is attributable to the collective ownership interests of our noncontrolling partners. In certain of
our restaurants, we employ a partnership management structure whereby we have entered into a series
of partnership agreements with our regional managers, certain of our general managers and certain
of our executive chefs. Each segment contributed as follows:
Bistro: The change in net income attributable to noncontrolling interests was primarily due to
the full year impact of noncontrolling interest buyouts that occurred during fiscal 2009 and, to
a lesser extent, the impact of noncontrolling interest buyouts occurring during fiscal 2010.
These buyouts reduced the number of noncontrolling interests from 40 at the beginning of fiscal
2009 to 18 as of April 4, 2010.
Pei Wei: Net income attributable to noncontrolling interests as a percentage of revenues
decreased from the prior year primarily due to the impact of 78 noncontrolling interest buyouts
occurring since the beginning of fiscal 2009.
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Liquidity and Capital Resources
Cash Flow
Our primary sources of liquidity are cash provided by operations and borrowings under our credit
facility. Historically, our need for capital resources has been driven by our construction of new
restaurants. More recently, our need for capital resources has also been driven by repayments of
long-term debt, repurchases of our common stock, and purchases of noncontrolling interests.
The following table presents a summary of our cash flows for the three months ended April 4, 2010
and March 29, 2009 (in thousands):
April 4, 2010 | March 29, 2009 | |||||||
Net cash provided by operating activities |
$ | 9,598 | $ | 31,237 | ||||
Net cash used in investing activities |
(7,090 | ) | (8,225 | ) | ||||
Net cash provided by (used in) financing
activities |
5,537 | (22,971 | ) | |||||
Net increase in cash and cash equivalents |
$ | 8,045 | $ | 41 | ||||
Operating Activities
Our funding requirements since inception have been met through sales of equity securities, debt
financing and cash flows from operations. Net cash provided by operating activities exceeded net
income for the periods shown principally due to the effect of depreciation and amortization, a net
increase in operating liabilities and share-based compensation expense as well as lease termination
charges. The change in operating activities is primarily due to lower net income, cash paid for
income taxes, change in incentive compensation balances and timing of rent payments.
Investing Activities
We have historically used cash primarily to fund the development and construction of new
restaurants. Investment activities were primarily related to capital expenditures of $6.7 million
and $8.2 million during the first quarter of fiscal years 2010 and 2009, respectively. Capital
expenditures were relatively lower compared to the prior year quarter primarily due to the number
of new restaurant openings in the first quarter (one new restaurant during fiscal 2010 compared to
two new restaurants during the first quarter 2009).
We intend to open four new Bistro restaurants and three new Pei Wei restaurants in fiscal year
2010, of which one Pei Wei restaurant was open by the end of the first quarter of 2010. We expect
that our planned future Bistro restaurants will require, on average, a total cash investment per
restaurant of approximately $2.5 million to $3.0 million (net of estimated tenant incentives). We
expect to spend approximately $350,000 to $400,000 per restaurant for preopening costs. Total cash
investment per each Pei Wei restaurant is expected to average $750,000 to $850,000 (net of
estimated tenant incentives) and we expect to spend $140,000 to $160,000 per restaurant for
preopening costs. We expect total gross capital expenditures for fiscal 2010 to approximate $30.0
million to $40.0 million ($25.0 million to $35.0 million, net of tenant incentives).
Financing Activities
Financing activities during the first quarter of fiscal 2010 and 2009 included $0.7 million and
$12.5 million, respectively, in debt repayments and $2.1 million and $9.4 million, respectively, in
repurchases of common stock. Additionally, financing activities included proceeds from stock
options exercised and employee stock purchases of $7.3 million and $1.1 million, respectively.
Financing activities also included purchases of noncontrolling interests, distributions to
noncontrolling interest partners, and the tax benefit from share-based compensation.
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Future Capital Requirements
Our capital requirements, including development costs related to the opening of additional
restaurants, have historically been significant. Our future capital requirements and the adequacy
of our available funds will depend on many factors, including the operating performance of our
restaurants, the pace of expansion, real estate markets, site locations, the nature of the
arrangements negotiated with landlords and any potential repurchases of our common stock.
For fiscal 2010, we believe that our cash flow from operations will significantly exceed our
projected capital requirements. As a result, we plan to continue evaluating other uses of capital,
including, but not limited to, debt repayment, cash dividends and repurchases of our common stock.
In the longer term, in the unlikely event that additional capital is required, we may seek to
raise such capital through public or private equity or debt financing. Future capital funding
transactions may result in dilution to current shareholders. We cannot ensure that such capital
will be available on favorable terms, if at all.
Credit Facility
On August 31, 2007, we entered into a senior credit facility (Credit Facility) with several
commercial financial institutions, which allowed for borrowings of up to $150.0 million. On
December 15, 2009, we amended the Credit Facility which reduced the borrowings allowed to $75.0
million and modified certain restrictive language regarding restricted payments such as dividends
and share repurchases. The Credit Facility is guaranteed by our material existing and future
domestic subsidiaries. The Credit Facility expires on August 30, 2013 and contains customary
representations, warranties, and negative and affirmative covenants, including a requirement to
maintain a maximum leverage ratio, as defined, of 2.5:1 and a minimum fixed charge coverage ratio,
as defined, of 1.25:1, as well as customary events of default and certain default provisions that
could result in acceleration of the Credit Facility. We were in compliance with these restrictions
and conditions as of April 4, 2010 as our leverage ratio was 1.27:1 and the fixed charge coverage
ratio was 2.25:1.
As of April 4, 2010, we had borrowings outstanding under the Credit Facility totaling $40.0 million
as well as $14.1 million committed for the issuance of letters of credit, which is required by
insurance companies for our workers compensation and general liability insurance programs. We
intend to fully repay the outstanding borrowings of $40.0 million under the Credit Facility during
fiscal 2010. Available borrowings under the Credit Facility were $20.9 million at April 4, 2010.
See Item 3 below for a discussion of interest rates and our interest rate swap.
Cash Dividends
During February 2010, the Board of Directors approved the initiation of a quarterly variable cash
dividend based on the Companys desire to consistently return excess cash flow to its shareholders.
The amount of the cash dividend will be computed based on 45% of the Companys quarterly net income
and is expected to total approximately $0.90 per share during fiscal 2010. Based on seasonal
fluctuations in the Companys quarterly net income, the amount of cash dividend payments, which are
based on a fixed percentage of net income, may fluctuate between quarters.
Based on the Board of Directors authorization, on April 28, 2010 the Company announced a cash
dividend of $0.17 per share to be paid May 19, 2010 to all shareholders of record at the close of
business on May 5, 2010. Based on shares outstanding at April 4, 2010, total dividend payments paid
during the second quarter of fiscal 2010 will approximate $3.9 million.
Share Repurchase Program
Under share repurchase programs authorized by our Board of Directors, we have repurchased a total
of 5.1 million shares of our common stock for $148.1 million at an average price of $28.97 since
July 2006. Included in this total are 48,800 shares of our common stock repurchased during the
first quarter of 2010 for $2.1 million at an average price of $43.15. At April 4, 2010, there
remains $98.2 million available under our current share repurchase authorization of $100.0 million,
which expires December 2011.
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Purchases of Noncontrolling Interests
As of April 4, 2010, there were 38 partners within our partnership system representing 138
partnership interests. During the first quarter of fiscal 2010, we had the opportunity to purchase
five additional noncontrolling interests which (i) had reached the end of their initial five-year
term in prior years (ii) related to partners who left the Company prior to the initial five-year
term or (iii) related to partners who requested an early buyout of their interest. We purchased
these five noncontrolling interests in their entirety for a total of $0.2 million, all of which was
paid in cash.
During fiscal 2010, we will have the opportunity to purchase 11 additional noncontrolling interests
which will reach their five-year anniversary. If all of those interests are purchased, the total
purchase price will approximate less than $1.0 million based upon the estimated fair value of the
respective interests at April 4, 2010.
New Accounting Standards
See Recent Accounting Literature section of Note 1 to our consolidated financial statements for a
summary of new accounting standards.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk primarily from fluctuations in interest rates on our revolving credit
facility and other borrowings as well as from changes in commodities prices.
Interest Rates
We have exposure to interest rate risk related to our variable rate borrowings. Our revolving
credit facility allows for borrowings of up to $75.0 million with outstanding amounts bearing
interest at variable rates equal to LIBOR plus an applicable margin which is subject to change
based on our leverage ratio. At April 4, 2010, we had borrowings of $40.0 million outstanding under
our credit facility.
During the second quarter of fiscal 2008, we entered into an interest rate swap with a notional
amount of $40.0 million to hedge a portion of the cash flows of our variable rate borrowings. We
have designated the interest rate swap as a cash flow hedge of our exposure to variability in
future cash flows attributable to interest payments on a $40.0 million tranche of floating rate
debt borrowed under our revolving credit facility. Under the terms of the swap, we pay a fixed rate
of 3.32% on the $40.0 million notional amount and receive payments from the counterparty based on
the 1-month LIBOR rate for a term ending on May 20, 2010, effectively resulting in a fixed rate on
the LIBOR component of the $40.0 million notional amount. The effective interest rate on the total
borrowings outstanding under our revolving credit facility, including the impact of the interest
rate swap agreement, was 4.8% as of April 4, 2010.
Additionally, by using a derivative instrument to hedge exposures to changes in interest rates, we
expose ourselves to credit risk. Credit risk is the failure of the counterparty to perform under
the terms of the derivative contract. We seek to minimize the credit risk by entering into
transactions with high-quality counterparties whose credit rating is evaluated on a quarterly
basis.
As of April 4, 2010, based on current interest rates and total borrowings outstanding, including
the impact of our interest rate swap, a hypothetical 100 basis point increase in interest rates
would have an insignificant pre-tax impact on our results of operations.
Commodities Prices
We purchase certain commodities such as beef, pork, poultry, seafood and produce. These commodities
are generally purchased based upon market prices established with vendors. These purchase
arrangements may contain contractual features that fix the price paid for certain commodities.
Historically, we have not used financial instruments to hedge commodity prices because these
purchase arrangements help control the ultimate cost paid and any significant commodity price
increases have historically been relatively short-term in nature.
22
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Cash-settled Awards
We issued cash-settled awards during fiscal 2009 and fiscal 2010, including performance units,
cash-settled stock appreciation rights and cash-settled stock-based awards. The fair value of these
awards is remeasured at each reporting period until the awards are settled and is affected by
market changes in our stock price and, in the case of performance units, the relative performance
of our stock price to the performance of the Russell 2000 Index. Fair value fluctuations are
recognized as cumulative adjustments to share-based compensation expense. See Note 10 to our
consolidated financial statements for further discussion of the fair value calculations and
fluctuations of our cash-settled awards.
Item 4. Controls and Procedures
An evaluation was performed under the supervision and with the participation of our management,
including the Co-CEOs and CFO, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that
evaluation, our Co-CEOs and CFO concluded that our disclosure controls and procedures were
effective as of April 4, 2010. These conclusions were communicated to the Audit Committee.
23
Table of Contents
PART II
OTHER INFORMATION
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
Risks that could have a negative impact on our business, revenues and performance results include
risks associated with the following: failure of our existing or new restaurants to achieve
expected results; changes in general economic and political conditions that affect consumer
spending; changes in government legislation that may increase labor costs;
the dependency of sales concentrated in certain geographic areas or generated by corporate spending; intense
competition in the restaurant industry; Global Brand Development initiatives that may impact our brand; damage to our brands
or reputation; litigation; adverse public or medical opinions about the health effects of consuming
our products; failure to comply with governmental regulations; changes in food costs; the inability
to retain key personnel; development is critical to our long-term success; federal, state and local
tax rules; fluctuating insurance requirements and costs; marketing programs may not be successful; potential labor
shortages that may delay planned openings; the inability to develop and construct our restaurants
within projected budgets and time periods; the seasonality of our business.
A more detailed description of each of these risk factors can be found under the caption Risk
Factors in our most recent Form 10-K, filed on February 17, 2010.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Under share repurchase programs authorized by our Board of Directors, we have repurchased a total
of 5.1 million shares of our common stock for $148.1 million at an average price of $28.97 since
July 2006. Included in this total are 48,800 shares of our common stock repurchased during the
first quarter of 2010 for $2.1 million at an average price of $43.15. At April 4, 2010, there
remains $98.2 million available under our current share repurchase authorization of $100.0 million,
which expires December 2011.
The following table sets forth our share repurchases of common stock during each period in the
first quarter of fiscal 2010:
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs | ||||||||||||
January 4, 2010 February 7,
2010 (1) |
6,900 | $ | 38.78 | 6,900 | $ | 100,000,000 | ||||||||||
February 8, 2010 March 7, 2010 |
4,000 | $ | 42.98 | 4,000 | $ | 99,828,080 | ||||||||||
March 8, 2010 April 4, 2010 |
37,900 | $ | 43.96 | 37,900 | $ | 98,161,996 | ||||||||||
Total |
48,800 | 48,800 | $ | 98,161,996 | ||||||||||||
(1) | Our previous share repurchase program expired on December 31, 2009. Prior to program
expiration, we repurchased an additional 6,900 shares at an average price of $38.78; however these
shares did not settle until after January 3, 2010 and thus are included in the amounts shown in the
January purchase period above. |
Item 3. Defaults Upon Senior Securities
None
Item 4. (Removed and Reserved)
Item 5. Other Information
None
24
Table of Contents
Item 6. Exhibits
Exhibit | ||||
Number | Description Document | |||
3( | i)(1) | Amended and Restated Certificate of Incorporation. |
||
3(i | i)(2) | Amended and Restated Bylaws. |
||
4. | 1(3) | Specimen Common Stock Certificate. |
||
4. | 2(3) | Amended and Restated Registration Rights Agreement dated May 1, 1997. |
||
10. | 38 | Amended and Restated Non-Employee Director Compensation Plan, effective April 22, 2010. |
||
31. | 1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 for Richard L. Federico. |
||
31. | 2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 for Robert T. Vivian. |
||
31. | 3 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 for Mark D. Mumford. |
||
32. | 1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 for Richard L. Federico. |
||
32. | 2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 for Robert T. Vivian. |
||
32. | 3 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 for Mark D. Mumford. |
| Management Contract or
Compensatory Plan. |
|
(1) | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q filed on April
25, 2002. |
|
(2) | Incorporated by reference to the Registrants Form 8-K filed on August 14, 2009. |
|
(3) | Incorporated by reference to the Registrants Registration Statement on Form S-1 (File No.
333-59749). |
25
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on
April 28, 2010.
P.F. CHANGS CHINA BISTRO, INC. | ||||||
By: | /s/ RICHARD L. FEDERICO
|
|||||
Chairman and Co-Chief Executive Officer | ||||||
By: | /s/ ROBERT T. VIVIAN
|
|||||
Co-Chief Executive Officer | ||||||
By: | /s/ MARK D. MUMFORD
|
|||||
Chief Financial Officer |
Date: April 28, 2010
26
Table of Contents
INDEX TO EXHIBITS
Exhibit | ||||
Number | Description Document | |||
3( | i)(1) | Amended and Restated Certificate of Incorporation. |
||
3(i | i)(2) | Amended and Restated Bylaws. |
||
4. | 1(3) | Specimen Common Stock Certificate. |
||
4. | 2(3) | Amended and Restated Registration Rights Agreement dated May 1, 1997. |
||
10. | 38 | Amended and Restated Non-Employee Director Compensation Plan, effective April 22, 2010. |
||
31. | 1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 for Richard L. Federico. |
||
31. | 2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 for Robert T. Vivian. |
||
31. | 3 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 for Mark D. Mumford. |
||
32. | 1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 for Richard L. Federico. |
||
32. | 2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 for Robert T. Vivian. |
||
32. | 3 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 for Mark D. Mumford. |
| Management Contract or
Compensatory Plan. |
|
(1) | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q filed on April
25, 2002. |
|
(2) | Incorporated by reference to the Registrants Form 8-K filed on August 14, 2009. |
|
(3) | Incorporated by reference to the Registrants Registration Statement on Form S-1 (File No.
333-59749). |
27