UNITED
STATES
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) May 15, 2009
OSI
RESTAURANT PARTNERS, LLC
(Exact
name of registrant as specified in its charter)
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Delaware
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1-15935
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59-3061413
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||||
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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2202
North West Shore Boulevard, Suite 500, Tampa, Florida 33607
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code (813) 282-1225
N/A
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written communications pursuant to Rule
425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
7.01 REGULATION
FD DISCLOSURE
Basis of
Presentation
The
information furnished in this Current Report on Form 8-K provides supplemental
information regarding OSI Restaurant Partners, LLC’s (the “Company’s”) results
for the three months ended March 31, 2009 and should be read in conjunction with
the financial statements and notes thereto and the other information included in
the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009
(the “Form 10-Q”). The results for the three months ended March 31,
2009 are not necessarily indicative of a full year’s
results. Generally accepted accounting principles in the United
States (“U.S. GAAP”) require management to make estimates and assumptions that
affect the amounts reported in the financial statements. Actual
results may vary materially from these estimates and assumptions.
Certain
of this information will be discussed in the Company’s conference call being
held on Friday, May 15, 2009 at 10:00 a.m. EDT. This report includes
the reconciliations of non-GAAP financial measures to the most directly
comparable GAAP measure referenced in the conference call.
The
Company’s portfolio of brands consists of Outback Steakhouse, Carrabba’s Italian
Grill, Bonefish Grill, Fleming’s Prime Steakhouse & Wine Bar, Roy’s and
Cheeseburger in Paradise restaurants. The Company’s restaurant system
operates in 49 states and 20 countries internationally.
First Quarter – Comparable
Store Sales
Comparable
store sales for the Company’s significant restaurant brands for the quarter
ended March 31, 2009 compared to the same quarter in 2008 changed by
approximately:
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Quarter
ended March 31, 2009
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Company
- owned
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Franchise
and development joint venture (1)
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System-wide
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||
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Domestic
comparable store sales (stores open 18 months or more)
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|||||
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Outback
Steakhouse
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-8.4%
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-9.7%
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-8.6%
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Carrabba’s
Italian Grill
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-7.3%
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n/a
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-7.3%
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Bonefish
Grill
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-10.0%
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-10.4%
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-10.0%
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Fleming’s
Prime Steakhouse and Wine Bar
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-19.9%
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n/a
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-19.9%
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_________________
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(1)
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These
sales do not represent sales of OSI Restaurant Partners, LLC and are
presented only as an indicator of changes in the Company’s restaurant
system, which management believes is important information about the
Company’s restaurant brands.
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Reconciliation of Net Income
(Loss) Attributable to OSI Restaurant Partners, LLC to EBITDA, Adjusted EBITDA
and Adjusted EBITDAR
EBITDA
(earnings before interest, taxes, depreciation and amortization), Adjusted
EBITDA (a measure the Company is required to report to its banks, calculated by
adjusting EBITDA to exclude certain stock-based compensation expenses, non–cash
expenses and significant non–recurring items) and Adjusted EBITDAR (Adjusted
EBITDA before rent expense) are supplemental measures of profitability that are
not required by or presented in accordance with U.S. GAAP. They are
not measurements of the Company’s financial performance under U.S. GAAP and
should not be considered as alternatives to net income (loss) or any other
performance measures derived in accordance with U.S. GAAP or as alternatives to
cash flow from operating activities as measures of the Company’s
liquidity. The Company believes that EBITDA, Adjusted EBITDA and
Adjusted EBITDAR provide investors with helpful information about the Company’s
operations, cash flows and ability to meet its future debt service, capital
expenditures and working capital requirements.
2
Reconciliation of Net Income
(Loss) Attributable to OSI Restaurant Partners, LLC to EBITDA, Adjusted EBITDA
and Adjusted EBITDAR (continued)
The
following table reconciles net income (loss) attributable to OSI Restaurant
Partners, LLC to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the three
months ended March 31, 2009 and 2008 (in thousands):
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Three
months ended
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March
31,
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2009
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2008
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Net
income (loss) attributable to OSI Restaurant Partners, LLC
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$ | 82,347 | $ | (9,697 | ) | |||
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Provision
(benefit) for income taxes
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42,890 | (16,731 | ) | |||||
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Interest
expense, net
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26,815 | 47,040 | ||||||
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Depreciation
and amortization
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46,372 | 47,051 | ||||||
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EBITDA
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$ | 198,424 | $ | 67,663 | ||||
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Impairments,
closings and disposals (1)
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8,998 | 5,218 | ||||||
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Stock-based
and other compensation expense (2)
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7,610 | 9,034 | ||||||
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Non-cash
rent expense (3)
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6,139 | 6,874 | ||||||
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Income
from operations of unconsolidated affiliates, net (4)
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(472 | ) | (877 | ) | ||||
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Transaction
costs (5)
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- | 197 | ||||||
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Pre-opening
expense (6)
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1,353 | 3,151 | ||||||
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Management
fee (7)
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2,496 | 2,411 | ||||||
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Unusual
and non-recurring expenses (8)
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(126,172 | ) | 75 | |||||
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Other,
net (9)
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7,932 | 4,125 | ||||||
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Adjusted
EBITDA
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$ | 106,308 | $ | 97,871 | ||||
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Cash
rent (10)
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45,082 | 45,636 | ||||||
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Adjusted
EBITDAR
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$ | 151,390 | $ | 143,507 | ||||
_________________
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(1)
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Represents
the elimination of non-cash impairment charges for fixed assets and
intangible assets of $5,997,000 and $2,541,000 for the three months ended
March 31, 2009 and 2008, respectively, cash and non-cash expense from
restaurant closings and net gains or losses on the sale of fixed
assets.
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(2)
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Includes
ongoing Partner Equity Plan (“PEP”) expense (net of certain PEP
distributions) of $3,159,000 and $4,776,000, expenses associated with the
vesting of restricted stock and other non-cash charges (net of certain
cash distributions) related to compensation programs provided to
management, area operating partners and/or restaurant general managers of
$5,410,000 and $6,559,000 and income earned as a result of losses on PEP
deferred compensation participant investment accounts of $959,000 and
$2,301,000 for the three months ended March 31, 2009 and 2008,
respectively.
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(3)
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Represents
the amortization of favorable and unfavorable leases as well as the
difference between straight-line and cash rent
expenses. Includes approximately $1,745,000 and $1,753,000 of
non-cash rent expense related to the Company’s sister company, Private
Restaurant Properties, LLC (“PRP”), for the three months ended March 31,
2009 and 2008, respectively.
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(4)
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Represents
the elimination of income from operations of unconsolidated affiliates,
net of dividends and distributions received, if
any.
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(5)
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Represents
the non-recurring fees incurred as a result of the merger transaction on
June 14, 2007 and subsequent related
filings.
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(6)
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Reflects
the elimination of employee travel, training, legal and other costs
incurred prior to the opening of new
restaurants.
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(7)
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Represents
the management fees paid to a management company owned by affiliates of
Bain Capital Partners, LLC, Catterton Partners and Company
founders.
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(8)
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Includes
a $158,061,000 gain on extinguishment of debt, a $24,500,000 loss related
to our guarantee of an uncollateralized line of credit for our Roy’s joint
venture partner, severance, non-recurring compensation program expense,
certain bad debt expenses and expenses related to legal claims for the
three months ended March 31, 2009.
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(9)
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Includes
foreign currency transaction loss of $5,783,000 and $482,000 for the three
months ended March 31, 2009 and 2008, respectively, loss on the cash
surrender value of life insurance of $1,116,000 and $2,313,000 for the
three months ended March 31, 2009 and 2008, respectively, loss (gain) on
diesel fuel and natural gas derivative instruments, respectively, and
franchise tax expense.
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(10)
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Includes
cash rent paid to PRP, exclusive of any amounts included in pre-opening
expense above, of approximately $17,481,000 and $17,438,000 for the three
months ended March 31, 2009 and 2008,
respectively.
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3
Cost Savings Initiatives
Adjustment to Adjusted EBITDA
The
Company’s Credit Agreement’s definition of Adjusted EBITDA permits the Company
to include the pro forma effects of certain cost savings initiatives, including
those implemented within the first eighteen months after June 14, 2007, as if
those initiatives had been in place for the last four fiscal quarters. The
following table calculates the EBITDA adjustment from the Company’s cost savings
initiatives, net of actual benefits realized, for the twelve months ended March
31, 2009:
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Pro
Forma
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Cost
Savings Initiatives
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Pro
Forma
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EBITDA
Adjustment
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Savings
to
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Twelve-Month
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Twelve
Months Ended
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Cost
Savings Category (in millions):
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Date
(4)
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Run-Rate
(5)
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March
31, 2009 (6)
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Food
(1)
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$ | 34.7 | $ | 58.9 | $ | 24.2 | ||||||
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Labor
(2)
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20.8 | 39.9 | 19.1 | |||||||||
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Other
(3)
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9.8 | 34.7 | 24.9 | |||||||||
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Total
Cost Savings
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$ | 65.3 | $ | 133.5 | $ | 68.2 | ||||||
__________________
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(1)
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Cost
savings realized and projected from specific menu item changes.
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(2)
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Cost
savings realized and projected from initiatives to reduce restaurant
labor hours.
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(3)
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Cost
savings realized and projected from supplier contract negotiations and
other supply chain efficiency
initiatives.
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(4)
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Realized
savings for the trailing twelve months ended March 31,
2009. Realized savings are not necessarily indicative of the
pro forma twelve-month run-rate since these food, labor and other
initiatives were not in place for the entire trailing twelve months ended
March 31, 2009.
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(5)
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Pro
forma cost savings from the food, labor and other initiatives as if they
had been in place for the entire twelve-month period ended March 31,
2009.
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(6)
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Portion
of the pro forma cost savings run-rate not yet realized in the last twelve
months financial statements; EBITDA adjustment is limited to $20,000,000
(see below).
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Based on
the costs savings initiatives adjustment to Adjusted EBITDA calculated above,
the Company’s pro forma Adjusted EBITDA for purposes of the Credit Agreement is
as follows:
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Pro
Forma Adjusted EBITDA (in
millions):
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Adjusted
EBITDA, last 12 months
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$ | 311.1 | ||
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Cost
savings initiatives adjustment (1)
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20.0 | |||
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Pro
forma Adjusted EBITDA
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$ | 331.1 | ||
_________________
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(1)
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Cost
savings initiatives adjustment is limited to $20,000,000 per the
Consolidated EBITDA definition in the Company’s Credit
Agreement.
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4
Cautionary
Statement
This Form
8-K includes statements that do not directly or exclusively relate to historical
facts. Such statements are “forward-looking statements” within the meaning of
Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. These statements
are based on the current expectations of management. The Company is
subject to a number of risks and uncertainties that could cause actual results
to differ materially from historical periods and from the forward-looking
statements included in this document, including, but not limited to, price and
availability of commodities, such as beef, chicken, shrimp, pork, seafood,
dairy, potatoes, onions and energy supplies, which are subject to fluctuation
and could increase or decrease more than the Company expects; interest rate
changes, compliance with debt covenants and the Company’s ability to make debt
payments since it is significantly leveraged as a result of the merger
transaction on June 14, 2007; inflation; increased labor and insurance costs;
changes in consumer tastes and the level of acceptance of the Company's
restaurant concepts (including consumer acceptance of price increases); consumer
reaction to public health issues such as an outbreak of H1N1 flu (swine flu);
consumer perception of food safety; local, regional, national and international
economic conditions; the seasonality of the Company’s business; demographic
trends; the cost of advertising and media; and government actions and
policies. Further information on potential factors that could affect
the financial results of the Company is included in its Annual Report on Form
10-K filed with the SEC on March 31, 2009 and in its Form 10-Q. The Company
assumes no obligation to update the information in this Form 8-K, except as
required by law.
5
SIGNATURE
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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.
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OSI
RESTAURANT PARTNERS, LLC
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(Registrant)
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Date: May
15, 2009
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By:
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/s/ Dirk
A. Montgomery
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Dirk
A. Montgomery
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Chief
Financial Officer
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6