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Del Frisco's Restaurant Group, Inc. Announces Second Quarter 2013 Results

For further information about our restaurants, to make reservations, or to purchase gift cards, please visit: www.DelFriscos.com, www.SullivansSteakhouse.com, and www.DelFriscosGrille.com. For more information about Del Frisco's Restaurant Group, Inc., please visit www.DFRG.com .

Forward-Looking Statements

Certain statements in this press release, including statements under the heading "Outlook" are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We use words such as "anticipate", "believe", "could", "should", "estimate", "expect", "intend", "may", "predict", "project", "target", and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified employees; the uncertainty of our ability to achieve expected levels of comparable restaurant sales increases; the performance of new restaurants and their impact on existing restaurant sales; increases in the cost of food ingredients and other key supplies; the risk of food-borne illnesses and other health concerns about our food; the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities; risks relating to our expansion into new markets; the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages.  Additional factors that could cause actual results to differ materially from our forward-looking statements are set forth in our reports filed with the Securities and Exchange Commission.

DEL FRISCO'S RESTAURANT GROUP, INC.
Condensed Consolidated Income Statements - Unaudited
(dollar amounts in thousands, except share and per share data)
         
  12 Weeks Ending 24 Weeks Ending
  June 11, June 12, June 11, June 12,
  2013 2012 2013 2012
         
Revenues  $ 60,359  $ 50,736  $ 120,162  $ 103,678
         
Costs and expenses:        
Costs of sales  18,113  15,596  36,533  31,963
Restaurant operating expenses  26,909  21,462  53,454  43,778
Marketing and advertising costs  1,347  1,153  2,256  2,006
Pre-opening costs  328  832  919  902
General and administrative costs  4,163  2,754  7,938  5,400
Management and accounting fees paid to related party  --   452  --   1,196
Secondary public offering costs  --   --   412  -- 
Public offering transaction bonuses  --   --   1,805  -- 
Depreciation and amortization  2,564  1,876  5,006  3,570
         
Operating income  6,935  6,611  11,839  14,863
         
Other income (expense), net:        
Interest expense  (24)  (1,008)  (48)  (2,228)
Other  --   68  --   65
         
Income from continuing operations before income taxes  6,911  5,671  11,791  12,700
         
Income tax expense   2,480  2,043  3,791  4,172
         
Income from continuing operations  $ 4,431  $ 3,628  $ 8,000  $ 8,528
         
Discontinued operations, net of income tax  --   (2)  --   84
         
Net income  $ 4,431  $ 3,626  $ 8,000  $ 8,612
         
Basic income per common share:        
Continuing operations  $ 0.19  $ 0.20  $ 0.34  $ 0.47
Discontinued operations  --   0.00  --   0.01
Basic income per share  $ 0.19  $ 0.20  $ 0.34  $ 0.48
         
Diluted income per common share:        
Continuing operations  $ 0.19  $ 0.20  $ 0.34  $ 0.47
Discontinued operations  --   (0.00)  --   0.01
Diluted income per share  $ 0.19  $ 0.20  $ 0.34  $ 0.48
         
Shares used in computing net income per common share:        
Basic  23,794,667  17,994,667  23,794,667  17,994,667
Diluted  23,826,622  17,994,667  23,794,869  17,994,667
 
DEL FRISCO'S RESTAURANT GROUP, INC.
Selected Balance Sheet Data
(dollar amounts in thousands)
     
  June 11, December 25, 
  2013 2012
  (unaudited)  
     
Cash and cash equivalents  $ 14,443  $ 10,763
Total assets  266,244 258,385
Long-term debt  --   -- 
Total stockholders' equity  188,146  177,901

Reconciliation of Non-GAAP Measures and Segment Information

We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). Within our press release, we make reference to non-GAAP Adjusted Net Income and Restaurant-level EBITDA. Adjusted Net Income represents pre-tax income from continuing operations plus the sum of the related party management fees and expenses, secondary public offering costs, and the public offering transaction bonuses, minus income tax expense at an effective tax rate of 30%. We believe that this measure represents a useful internal measure of performance as it excludes certain one-time expenditures associated with our public offerings as well as the discontinuation of the asset advisory agreement. Restaurant-level EBITDA is calculated by adding back to operating income depreciation and amortization plus the sum of certain non-operating expenses, including pre-opening costs, management fees and expenses, public offering expenses, public offering transaction bonuses and general and administrative expenses. We believe that this measure also represents a useful internal measure of performance. Accordingly, we include these non-GAAP measures so that investors have the same financial data that management uses in evaluating performance, and we believe that it will assist the investment community in assessing our underlying performance on a quarter-over-quarter basis. However, because these measures are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate these measures in the same manner. As a result, these measures as presented may not be directly comparable to a similarly titled measure presented by other companies. These non-GAAP measures are presented as supplemental information and not as alternatives to any GAAP measurements. The following tables include a reconciliation of pre-tax income from continuing operations to adjusted net income and a reconciliation of restaurant-level EBITDA to operating income:

  12 Weeks Ending 24 Weeks Ending
  June 11, June 12, June 11, June 12,
  2013 2012 2012 2011
Adjusted Net Income:        
Pre-tax Income from continung operations  $ 6,911  $ 5,671  $ 11,791  $ 12,700
Management and accounting fees paid to related party  --   452  --   1,196
Secondary public offering costs  --   --   412  -- 
Public offering transaction bonuses  --   --   1,805  -- 
Proforma Adjustments  --   452  2,217  1,196
Adjusted Pre-tax Income  6,911  6,123  14,008  13,896
Income Tax (@ 30%)  2,073  1,837  4,202  4,169
Adjusted Net Income  $ 4,838  $ 4,286  $ 9,806  $ 9,727
Basic EPS (Adjusted)  $ 0.20  $ 0.24  $ 0.41  $ 0.54
Diluted EPS (Adjusted)  $ 0.20  $ 0.24  $ 0.41  $ 0.54
 
Segment Information and Restaurant-Level EBITDA Reconciliation
                 
  12 Weeks Ending June 11, 2013 (unaudited)
  Del Frisco's Sullivan's Del Frisco's Grille Consolidated
                 
Revenues  $ 32,615 100.0%  $ 18,186 100.0%  $ 9,558 100.0%  $ 60,359 100.0%
Costs and expenses:                
Cost of sales  9,784 30.0%  5,656 31.1%  2,673 28.0%  18,113 30.0%
Restaurant operating expenses  12,702 38.9%  9,384 51.6%  4,823 50.5%  26,909 44.6%
Marketing and advertising costs  552 1.7%  572 3.1%  223 2.3%  1,347 2.2%
Restaurant-level EBITDA  9,577 29.4%  2,574 14.2%  1,839 19.2%  13,990 23.2%
                 
Pre-opening costs              328 0.5%
General and administrative              4,163 6.9%
Depreciation and amortization              2,564 4.3%
                 
Operating Income              $ 6,935 11.5%
                 
Restaurant operating weeks  120    228    72    420  
Average unit volume  $ 3,262    $ 957    $ 1,593    $ 1,725  
                 
                 
  12 Weeks Ending June 12, 2012 (unaudited)
  Del Frisco's Sullivan's Del Frisco's Grille Consolidated
                 
Revenues  $ 27,777 100.0%  $ 18,699 100.0%  $ 4,260 100.0%  $ 50,736 100.0%
Costs and expenses:                
Cost of sales  8,774 31.6%  5,694 30.5%  1,128 26.5%  15,596 30.7%
Restaurant operating expenses  10,559 38.0%  8,967 47.9%  1,936 45.4%  21,462 42.3%
Marketing and advertising costs  503 1.8%  601 3.2%  49 1.2%  1,153 2.3%
Restaurant-level EBITDA  7,941 28.6%  3,437 18.4%  1,147 26.9%  12,525 24.7%
                 
Pre-opening costs              832 1.7%
General and administrative              2,754 5.4%
Management and accounting fees paid to related party              452 0.9%
Depreciation and amortization              1,876 3.7%
                 
Operating Income              $ 6,611 13.0%
                 
Restaurant operating weeks  108    228    25    361  
Average unit volume  $ 3,086    $ 984    $ 2,045    $ 1,687  
CONTACT: Investor Relations Contact:
         Raphael Gross
         203-682-8253
         investorrelations@dfrg.com
         
         Media Relations Contact:
         Liz Brady DiTrapano
         646-277-1226
         liz.ditrapano@icrinc.com

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