<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 17, 1999
EINSTEIN/NOAH BAGEL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 0-21097 84-1294908
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
14103 Denver West Parkway, P.O. Box 4086, Golden, Colorado 80401
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(Address of principal executive offices)
(303) 215-9300
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changes since last report)
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Item 5. Other Events
On February 17, 1999, the Company reported its earnings for the fourth
quarter and fiscal year ended December 27, 1998. Attached to this Current Report
on Form 8-K as Exhibit 99 is a copy of the Company's related press release dated
February 17, 1999.
Item 7. Financial Statements and Exhibits
Exhibit 99 Press release of the Company dated February 17, 1999.
SIGNATURE
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 hereunto duly authorized.
Dated: February 17, 1999
EINSTEIN/NOAH BAGEL CORP.
By: /s/ Paul A. Strasen
---------------------------------
Paul A. Strasen
Senior Vice President
<PAGE>
Exhibit 99
Contact: Nancy Shipp
303-216-3738
EINSTEIN/NOAH BAGEL CORP. ANNOUNCES 4th QUARTER and
FISCAL YEAR END RESULTS
GOLDEN, Colo., February 17, 1999 - Einstein/Noah Bagel Corp. (Nasdaq: ENBX)
today reported financial results for its fourth quarter and fiscal year ended
December 27, 1998. Highlights include:
Fourth Quarter:
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. Systemwide net revenue increased 8.3% to $86,220,000 from $79,583,000 for the
fourth quarter of fiscal 1997.
. Systemwide average net weekly per store sales for the quarter was $13,320.
. Systemwide store-level cash flow for the quarter was $12,561,000 representing
a margin of 14.6% of net revenue.
. Earnings before interest, taxes, depreciation and amortization (EBITDA) for
the quarter, excluding a non-recurring, non-cash charge for impairment of
store fixed assets, goodwill and other intangibles of $212,371,000, was
$4,998,000.
. Net loss for the quarter, excluding a non-recurring, non-cash charge for
impairment of store fixed assets, goodwill and other intangibles of
$212,371,000, was $5,071,000 or $0.15 loss per share. Reported net loss for
the quarter was $177,128,000 or $5.32 loss per share.
. At the end of the quarter, there were 546 stores open, 433 Einstein Bros.(R)
Bagels and 113 Noah's New York Bagels(R) stores.
Fiscal Year:
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. Systemwide net revenue increased 22.7% to $371,919,000 from $302,995,000 for
fiscal 1997.
. Systemwide average net weekly per store sales for the year was $13,103.
. Systemwide store-level cash flow for the year was $49,834,000 representing a
margin of 13.4% of net revenue.
. Earnings before interest, taxes, depreciation and amortization (EBITDA) for
the year excluding a non-recurring, non-cash charge for impairment of store
fixed assets, goodwill and other intangibles of $212,371,000 was $12,263,000.
. Net loss for the year, excluding a non-recurring, non-cash charge for
impairment of store fixed assets, goodwill and other intangibles of
$212,371,000, was $31,870,000 or $0.97 loss per share. Reported net loss for
the year was $203,927,000 or $6.18 loss per share.
"Because of the holidays, the fourth quarter has historically been a challenge
for us. However, our emphasis on store operations and product innovation has
helped offset some of the seasonal weakness in sales that we normally experience
during the holidays. Our improved 4th quarter store performance versus a year
ago is evidenced in our solid 5% increase in comparable store sales for the ENBC
system," said Eric Carlborg, Chief Financial Officer.
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Einstein/Noah Bagel Corp.
Page 2
"In the fourth quarter, the Company took a $212,371,000 non-recurring, non-cash
charge for impairment of store fixed assets, goodwill and other intangibles
associated with the acquisition of Noah's and the consolidation and acquisition
of ENBC's franchisees in 1997. The non-cash charge does not affect our bank
facility or cash resources. After the impairment, the goodwill, fixed assets
and other intangibles on the balance sheet reflect the current state of the
business," added Carlborg.
Bob Hartnett, Chairman, CEO and President, said "I am pleased with ENBC's
progress and accomplishments in 1998. We successfully consolidated store
operations and in the process of doing so, we significantly streamlined
corporate and field overhead. We increased weekly per store revenue and
improved store cash flow margins at our stores. We improved our breakfast menu
and introduced broader lunch offerings such as bagel focaccia, new bagel and
baguette sandwiches, and new soups and salads. We implemented a General Manager
(GM) Human Resources Model that rewards both top-line and bottom-line
performance. In a nutshell, we focused our energy toward providing our
customers with high quality and interesting food, combined with superior
customer service in a friendly and upbeat environment. For 1999, our focus
continues to be store operations and execution to ensure that our stores
maximize their potential."
The Company also announced that it plans to test the Einstein Bros. concept in
the Los Angeles area by converting 3-5 of the 39 Noah's New York Bagel Stores
in that market. If the test proves successful, the Company intends to convert
the remaining Noah's stores in the Los Angeles market to Einstein Bros. The San
Francisco Bay Area and Pacific Northwest Noah's stores will continue to operate
as Noah's New York Bagels.
"We believe the Einstein Bros. concept and the strength of its extensive product
offerings will appeal to a wider audience in Los Angeles. Our decision to test
the conversion of Noah's stores to Einstein Bros. in the Los Angeles market is
based on the success we have experienced in other Einstein Bros. markets where
we are the dominant bagel retailer," said Hartnett.
In the fourth quarter, the Company also officially launched its new website at
www.einsteinbros.com. The comprehensive website reflects the look and feel of
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Einstein Bros. The website features the latest product news, current menus, a
store locator, employment on-line capabilities and investor relations
information.
On December 5, 1997, the Company converted its loans to its area developers into
majority ownership of the area developers. Concurrently, the area developers
merged into one entity, Einstein/Noah Bagel Partners L.P. (ENBP), which is
approximately 78% owned by ENBC. As a result of the loan conversions, store
sales and profits, as well as area developer overhead, are reflected on ENBC's
consolidated financial statements. Currently, there are 546 ENBC retail bagel
stores in 29 states and the District of Columbia operating under the Einstein
Bros.(R) Bagels and Noah's New York Bagels(R) brand names. Einstein Bros. and
Noah's stores are unique bagel cafes and bakeries featuring fresh-baked bagels,
a variety of cream cheese spreads, specialty coffee drinks, soups, sandwiches
and salads.
Certain statements in this release constitute "forward-looking statements" and
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements of the Company,
Einstein/Noah Bagel Partners, L.P., Einstein Bros. Bagels stores and Noah's New
York Bagels stores to be materially different from any performance or
achievements expressed or implied by such forward looking statements. Such
factors include, among others, the following: competition; success of operating
initiatives; development and operating costs; advertising and promotional
efforts; brand awareness; availability and terms of capital; adverse publicity;
acceptance of new product offerings; changes in business strategy or development
plans; food, labor and employee benefit costs; changes in government regulation;
regional weather conditions; availability, locations and terms of sites for
store development and other factors referenced in the Company's filings with the
Securities and Exchange Commission.
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EINSTEIN/NOAH BAGEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Third
Quarter Quarter Ended Year Ended
Ended ------------------------ --------------------
October 4, Dec 28, Dec 27, Dec 28, Dec 27,
1998 1997 1998 1997 1998
----------- ----------- ----------- -------- ----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Revenue:
Store revenue........................... $87,325 $ 26,333 $ 86,220 $28,436 $ 371,919
Royalties and franchise-related fees.... - 8,070 - 49,852 -
------- -------- --------- ------- ---------
Total revenue......................... 87,325 34,403 86,220 78,288 371,919
Costs and Expenses:
Store:
Cost of products sold................. 29,559 8,775 29,535 9,479 127,573
Salaries and benefits................. 26,789 10,125 26,768 10,734 116,226
Other controllable costs.............. 6,829 2,282 6,306 2,404 29,392
Rent, occupancy and related costs..... 8,171 4,530 8,841 4,680 35,603
Marketing expenses.................... 3,625 - 2,209 126 13,291
Depreciation and amortization......... 4,553 1,617 4,810 1,683 20,411
------- -------- --------- ------- ---------
Total store costs and expenses...... 79,526 27,329 78,469 29,106 342,496
Non-Store:
Salaries, benefits, general and
administrative...................... 7,149 25,813 7,563 38,700 37,571
Impairment of long-lived assets....... - - 212,371 - 212,371
Depreciation and amortization
(excluding goodwill amortization)... 823 1,115 944 4,154 3,588
Goodwill amortization................. 2,463 1,123 2,606 2,664 10,778
------- -------- --------- ------- ---------
Total non-store costs and expenses.. 10,435 28,051 223,484 45,518 264,308
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Total costs and expenses............ 89,961 55,380 301,953 74,624 606,804
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Income (Loss) from Operations............ (2,636) (20,977) (215,733) 3,664 (234,885)
Other Income (Expense):
Interest income......................... 5 339 9 1,969 282
Interest expense........................ (2,694) (2,402) (2,649) (6,098) (11,811)
Other................................... (1) 0 1 0 (3,409)
------- -------- --------- ------- ---------
Total other income (expense).......... (2,690) (2,063) (2,639) (4,129) (14,938)
------- -------- --------- ------- ---------
Income (Loss) before Income Taxes and
Minority Interest....................... (5,326) (23,040) (218,372) (465) (249,823)
Income Taxes............................. - (1,946) 221 4,973 221
Minority Interest in Loss of Subsidiary.. (893) (4,036) (41,465) (4,036) (46,117)
------- -------- --------- ------- ---------
Net Income (Loss)........................ $(4,433) $(17,058) $(177,128) $(1,402) $(203,927)
======= ======== ========= ======= =========
Basic Earnings (Loss) per Share.......... $(.13) $(0.52) $(5.32) $(0.04) $(6.18)
======= ======== ========= ======= =========
Diluted Earnings (Loss) per Share........ $(.13) $(0.52) $(5.32) $(0.04) $(6.18)
======= ======== ========= ======= =========
Weighted Average Number of Common
Shares Outstanding:
Basic................................. 33,271 33,052 33,271 32,956 33,024
======= ======== ========= ======= =========
Diluted............................... 33,271 33,052 33,271 32,956 33,024
======= ======== ========= ======= =========
</TABLE>
<PAGE>
EINSTEIN/NOAH BAGEL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
October 4, December 27,
1998 1998
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(unaudited)
<S> <C> <C>
ASSETS
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Current Assets:
Cash and cash equivalents........................................ $ 6,251 $ 3,766
Accounts receivable.............................................. 922 1,716
Inventories...................................................... 9,385 9,672
Prepaid expenses and other current assets........................ 747 1,699
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Total current assets.......................................... 17,305 16,853
Property and Equipment, net........................................ 191,068 122,403
Goodwill, net...................................................... 357,048 223,482
Trademarks, net.................................................... 22,600 2,065
Recipes, net....................................................... 6,574 2,670
Other Assets, net.................................................. 8,179 7,669
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Total assets.................................................. $602,774 $ 375,142
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities:
Accounts payable................................................. $ 13,042 $ 17,804
Accrued expenses................................................. 36,419 23,284
Current portion of senior term loan.............................. 6,000 6,000
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Total current liabilities..................................... 55,461 47,088
Revolving Credit Facility.......................................... 1,200 5,625
Long-Term Portion of Senior Term Loan.............................. 19,500 18,000
Convertible Subordinated Debentures................................ 125,000 125,000
Other Noncurrent Liabilities....................................... 19,731 16,140
Minority Interest.................................................. 75,396 33,931
Stockholders' Equity:
Preferred Stock - $.01 par value; 20,000,000 shares authorized;
no shares issued and outstanding.............................. - -
Common Stock - $.01 par value; 200,000,000 shares authorized;
issued: 34,083,681 shares in October and December 1998....... 341 341
Additional paid-in capital....................................... 377,616 377,616
Treasury stock, at cost (813,146 shares)......................... (5,261) (5,261)
Accumulated deficit.............................................. (66,210) (243,338)
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Total stockholders' equity.................................... 306,486 129,358
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Total liabilities and stockholders' equity.................. $602,774 $ 375,142
======== =========
</TABLE>
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