Prime Restaurants Inc.
TSX : EAT

Prime Restaurants Inc.

November 10, 2010 15:54 ET

Prime Restaurants Inc. Announces Continued Strong Growth in Third Quarter 2010

MISSISSAUGA, ONTARIO--(Marketwire - Nov. 10, 2010) - Prime Restaurants Inc. ("PRI" or the "Company") (TSX:EAT) today reported strong same store sales growth ("SSSG") for the 13 and 39 weeks ended October 3, 2010. Effective April 5, 2010 Prime Restaurants Royalty Income Fund (the "Fund") was reorganized (the "Reorganization") into a public corporation named Prime Restaurants Inc. The 13 and 39-week periods ended October 3, 2010 of PRI are compared below to the three and nine-month periods ended September 30, 2009 of the Fund. As PRI's operations are substantially different from the operations of the Fund, some of the information in this press release is not directly comparable.

Q3 2010 HIGHLIGHTS:

  • Strong SSSG of 4.6% in quarter, up 4.2% year-to-date
  • Solid growth across all brands and geographic regions
  • Solid recovery at East Side Mario's with strong 5.5% SSSG
  • Casey's and Pubs post SSSG of 2.0% and 5.8% respectively

PRI generated a solid increase in SSSG in the third quarter and first 39 weeks of 2010 as the Company's proven sales and marketing programs successfully capitalized on the slowly improving Canadian economy and resurgence in consumer sentiment. Same store sales for the 13 weeks ended October 3, 2010 increased by 4.6% compared to negative same store sales of (6.3%) for the same period last year. For the 39 weeks ended October 3, 2010 same store sales were up 4.2% compared to a decline of (6.6%) for the same period last year.

All of the Company's brands posted positive SSSG in the quarter, with Prime pubs leading the way with strong SSSG of 5.8%, while East Side Mario's posted SSSG of 5.5% and Casey's had 2.0% SSSG. For the 39 weeks ended October 3, 2010, East Side Mario's posted SSSG of 4.9%, while Casey's and the pubs posted SSSG of 2.5% and 5.2% respectively. All of PRI's geographic regions in Canada posted positive SSSG, with Ontario up 5.0%, Québec rising 2.7%, Atlantic Canada up 6.6% and Western Canada posting SSSG of 2.9% for the 13 weeks ended October 3, 2010. For the first 39 weeks of 2010, Ontario generated SSSG of 4.1%, Québec was up 5.6%, Atlantic Canada 6.0% and Western Canada rose 3.0%. There were 155 restaurant and pub locations on October 3, 2010.

Subsequent to the third quarter Casey's launched a new core food menu across its network. Incorporated into this new menu is an innovative coding system that provides instant access to nutritional and allergen information for every menu item, as well as the brand's Heart and Stroke Foundation Check™ dishes. The new system makes it easy for guests to make an informed decision about their meal. Casey's is the first casual dining chain in Canada to offer this new interactive menu feature.

"We are extremely pleased with our strong growth so far this year, a testament to the success of our sales and marketing programs and our commitment to providing our guests with the highest quality experience and the best value," commented John Rothschild, Chief Executive Officer of PRI. "Looking ahead, we are confident same store sales growth will continue while at the same time we augment this organic growth through the expansion of our restaurant and pub network across North America."

Operational Review

During the 13 weeks ended October 3, 2010, PRI opened one new pub in Ontario. Additionally, two Casey's restaurants were renovated during the quarter, bringing the total number of renovated restaurants for the year-to-date period to four. Sales at these locations have cumulatively risen 17.3% and 16.7% for the 13 and 39 weeks ended October 3, 2010, respectively, from their pre-renovation sales levels.

Reorganization

Effective April 5, 2010 the Fund was reorganized into a public corporation named Prime Restaurants Inc. The new corporate structure includes the combination of the businesses of Prime Restaurants of Canada Inc. ("PRC"), the Fund and PRC Trademarks Inc. ("TradeMarkCo"). The Fund was dissolved and unitholders and limited voting unitholders of the Fund received, for each unit and limited voting unit of the Fund, one class A limited voting share ("Class A Limited Voting Shares") of PRI.

FINANCIAL HIGHLIGHTS:                  
                   
    13 weeks ended October 3, 2010   Three months ended September 30, 2009   39 weeks ended October 3, 2010     Nine months ended September 30, 2009
Entity   PRI   Fund   PRI & Fund     Fund
                   
Gross revenue – reported by PRI restaurants   88,380   -   174,719     -
Total revenue   12,056   1,803   24,638     5,565
Operating costs & administrative expenses   9,809   31   19,603     94
                   
Earnings before the undernoted   2,247   1,772   5,035     5,472
                   
Interest and amortization expenses   25   -   140     -
Write-down of investments   -   -   11,949     -
Forgiveness of inter-company payable   -   -   (302 )   -
Forgiveness of interest receivable   -   -   258     -
Reorganization costs   55   -   2,436     -
Stock option expense   157   -   157     -
Income/(Loss) before taxes   2,010   1,772   (9,603 )   5,472
Income taxes   181   -   1,784     -
Income/(Loss) for the period   1,829   1,772   (11,387 )   5,472
Income / (loss) attributed to non-controlling interest   11   -   11     -
Income / (loss) attributed to shareholders equity   1,818   1,772   (11,398 )   5,472
Total assets   48,266   59,176   48,266     59,176
Total liabilities   11,885   697   11,885     697
Shareholder's Equity   36,357   58,479   36,357     58,479
Non-controlling interest   24   -   24     -

Revenue reported by PRI for the 13 and 39 weeks ended October 3, 2010 includes royalties and franchise- related income, sales from corporate-owned restaurants, and income from PRI's ownership interest in The Ricmar Limited Partnership which owns one Casey's restaurant. Prior to the Reorganization, the Fund's revenues included interest income on a promissory note issued by TradeMarkCo, common share dividend and amortization of deferred financing fees.

PRI's financial statements and management discussion and analysis (the "MD&A") for the 13 and 39 weeks ended October 3, 2010 as well as historical financial statements and MD&As of PRC and the Fund are available at www.primerestaurants.com and www.sedar.com.

Dividend Payable on Class A Limited Voting Shares

PRI will pay a quarterly dividend of $0.12 per Class A Limited Voting Share on January 17, 2011 to shareholders of record on December 31, 2010. This dividend would be considered an eligible dividend for income tax reporting.

Conference Call

A conference call hosted by the Company's senior management team will be held on Thursday, November 11, 2010 at 10.30 am ET. The telephone numbers for the conference call are: Local Toronto (416) 915-8110 or North American Toll Free (866) 838-1265. The conference call will also be broadcast live, and will archived and available after the live call, on the Company's web site at www.primerestaurants.com.

About Prime Restaurants Inc.

PRI franchises, owns and operates one of Canada's leading networks of casual dining restaurants and pubs. With such well-respected brands as East Side Mario's, Casey's, Fionn MacCool's, D'Arcy McGee's, Paddy Flaherty's, Tir nan Óg, and Bier Markt, Prime has been delivering quality, value and a superior guest experience for more than thirty years. Prime's Class A Limited Voting Shares are listed on the Toronto Stock Exchange under the symbol "EAT".

Forward-Looking Statements

The public communications of PRI often include written or oral forward-looking statements. Statements of this type are included in this news release, and may be included in filings with Canadian securities regulators, or in other communications. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives for 2010 and beyond, our strategies or planned future actions, and our targets or expectations for our financial performance and condition. All statements, other than statements of historical fact, contained in this news release are forward-looking statements, including, without limitation, statements regarding the future financial position and operations, business strategy, plans and objectives of or involving PRI. Readers can identify many of these statements by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" and similar words or the negative thereof. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties including those discussed in the MD&A and the Fund's annual information form dated March 2, 2010, (the "AIF") under "Narrative Description of the Business – Risk Factors" which are available at www.sedar.com. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.

The information set forth in the MD&A and AIF identifies factors that could affect operating results and performance. We caution that the list of factors discussed in the MD&A and the AIF is not exhaustive, and that, when relying on forward-looking statements to make decisions with respect to PRI, investors and others should carefully consider the factors discussed, as well as other uncertainties and potential events, and the inherent risks and uncertainties of forward-looking statements.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release. Except as required by applicable securities laws, PRI does not undertake to update any forward-looking statement, whether written or oral, that may make or that may be made, from time to time.

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