WICHITA, Kan., Feb. 24, 2005 (PRIMEZONE) -- Total Entertainment Restaurant Corp. (Nasdaq:TENT) announced record revenues and earnings for the sixteen-week fourth quarter ended December 28, 2004.
Highlights for the sixteen-week fourth quarter ended December 28,
2004 compared to the sixteen-week fourth quarter ended December 30,
2003:
-- Total revenues increased 19.4% to $52,715,000
-- Net income was $4,322,000 versus $2,315,000
-- Net income excluding asset impairment charges was $4,322,000
versus $3,569,000
-- Diluted earnings per share excluding asset impairment charges
was $0.42 versus $0.34
-- Diluted earnings per share was $0.42 versus $0.22
-- Average weekly sales per restaurant increased 0.5% to $44,379
-- Comparable store sales increased 1.4%
-- Three (3) new units were opened
Highlights for the fifty-two week period ended December 28, 2004
compared to the fifty-two week period ended December 30, 2003:
-- Total revenues increased 22.6% to $149,164,000
-- Net income was $6,199,000 versus $5,769,000
-- Net income excluding asset impairment charges was $7,713,000
versus $7,025,000
-- Diluted earnings per share excluding asset impairment charges was
$0.75 versus $0.68
-- Diluted earnings per share was $0.60 versus $0.56
-- Average weekly sales per restaurant increased 3.3% to $41,195
-- Comparable store sales increased 1.1%
-- Eleven (11) new units were opened
During the fourth quarter, the Company opened three (3) new restaurants -- Bloomingdale, IL; Crystal City, VA; and Raleigh, NC. The Company opened a total of eleven (11) restaurants during the 2004 fiscal. The Company expects to open 10-12 new restaurants in fiscal 2005. One (1) restaurant was opened on February 9, 2005 in Cary, NC, four (4) units are under construction, contracts have been executed on six (6) more sites, and negotiations have begun on three (3) additional sites.
Like numerous companies in the restaurant industry, the Company has recently reviewed its accounting treatment for leases and depreciation of related leasehold improvements. The Company has discussed its lease accounting practices with its independent external auditors and its audit committee and has determined that it will restate certain of its prior period financial statements. The adjustments made in the restatement are all non-cash and will have no material impact on the Company's cash flows, cash position, revenues, comparable store sales, or compliance with the covenants under its line of credit.
The issue requiring restatement relates to the Company's historic accounting practice of using the initial lease term when determining whether each of its leases was an operating lease or a capital lease and when calculating straight-line rent expense. The Company has historically depreciated its buildings on leased land and leasehold improvements over a period that included both the initial term of the lease and its option periods -- not to exceed 20 years. In addition, tenant incentives received from the landlord were netted against the cost of leasehold improvements and depreciated over the life of the related assets. The Company believed that its longstanding accounting treatments were permitted under GAAP. The Company and its auditors now believe that the authoritative accounting literature is interpreted to require that the company use the same lease term for depreciation as it uses in determining capital versus operating lease classifications and in calculating straight-line rent expense.
As a result of its analysis, the Company has adopted the following policy: The Company will generally limit the depreciable lives for its buildings on leased land and leasehold improvements to the initial term of the lease plus the option periods which the Company reasonably expects to exercise at the inception of the lease -- not to exceed 15 years. The Company's policy will require consistency when calculating the depreciation period, in classifying the lease, and in computing straight-line rent expense for each of its leases. In addition, tenant incentives will be recorded as a liability and amortized over the same period as depreciation. The Company has provided a comparison at the end of this press release that shows the fiscal 2003 fourth quarter and full-year results and the results for the thirty-six weeks ended September 7, 2004 and September 9, 2003 based on the method of accounting for leases previously employed by the Company compared to the newly adopted accounting practice.
The Company currently operates 76 restaurants under the "Fox and Hound" and "Bailey's" brand names that each provide a social gathering place offering high quality food, drinks and entertainment in an upscale, casual environment.
Chief Executive Officer, Steven M. Johnson, and Chief Financial Officer, James K. Zielke, will host a conference call at 10:00 a.m. EST on February 25, 2005 to discuss the fiscal 2004 fourth quarter earnings release. The call in number is 1-800-857-1738 and the confirmation code is "TENT". A recorded replay of the conference call will be available beginning February 25, 2005 through March 11, 2005. The replay call in number is 1-866-378-0633.
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. Our actual results may differ materially from the forward-looking statements contained herein. Factors that could cause actual results to differ from the results discussed in the forward-looking statements include, but are not limited to, potential increases in food, alcohol, labor, and other operating costs, changes in competition, the inability to find suitable new locations, changes in consumer preferences or spending patterns, changes in demographic trends, the effectiveness of our operating and growth initiatives and promotional efforts, and changes in government regulation. Further information about the factors that might affect the Company's financial and other results are included in the Company's 10-K and 10-Q, filed with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
Total Entertainment Restaurant Corp.
Unaudited Summary Financial Data
($ in thousands except per share amounts)
Condensed Income Statements
---------------------------
For the sixteen weeks ended
As Reported As Restated
Dec. 28, 2004 Dec. 30, 2003 Adj. Dec. 30, 2003
-------------- -------------- ---- --------------
$ % $ % $ $ %
------- ----- ------- ----- ---- ------- -----
Food and
beverage $49,885 94.6 $41,191 93.3 -- $41,191 93.3
Entertainment
and other 2,830 5.4 2,959 6.7 -- 2,959 6.7
------- ----- ------- ----- ---- ------- -----
Total net
sales 52,715 100.0 44,150 100.0 -- 44,150 100.0
Costs and
expenses:
Costs of
sales 14,190 26.9 11,842 26.8 -- 11,842 26.8
Restaurant
operating
expenses 26,575 50.4 22,118 50.1 106 22,224 50.3
Depreciation
and
amortization 2,894 5.5 1,793 4.1 280 2,073 4.7
Preopening
costs 358 0.7 637 1.4 -- 637 1.4
Asset
Impairment -- -- 2,008 4.6 (36) 1,972 4.5
------- ----- ------- ----- ---- ------- -----
Restaurant
costs and
expenses 44,017 83.5 38,398 87.0 350 38,748 87.7
------- ----- ------- ----- ---- ------- -----
Restaurant
operating
income 8,698 16.5 5,752 13.0 (350) 5,402 12.3
General and
administra-
tive expenses 2,503 4.8 2,056 4.7 -- 2,056 4.7
Loss on
disposal of
assets (1) -- 16 0.0 -- 16 --
------- ----- ------- ----- ---- ------- -----
Income from
operations 6,196 11.7 3,680 8.3 (350) 3,330 7.6
Other income/
expense:
Other income/
(expense) 1 -- 1 -- -- 1 --
Interest
expense (71) (0.1) (136) (0.3) (23) (159) (0.4)
------- ----- ------- ----- ---- ------- -----
Income before
income taxes 6,126 11.6 3,545 8.0 (373) 3,172 7.2
Income tax
expense 1,804 3.4 990 2.2 (133) 857 2.0
------- ----- ------- ----- ---- ------- -----
Net income $ 4,322 8.2 $ 2,555 5.8 $(240) $ 2,315 5.2
======= ===== ======= ===== ==== ======= =====
Earnings per
share:
Basic $0.44 $0.26 $(0.02) $0.24
Diluted $0.42 $0.25 $(0.03) $0.22
Shares used in
computing
earnings per
share
(in thousands):
Basic 9,930 9,808 -- 9,808
Diluted 10,290 10,328 -- 10,328
Restaurants open
at end of period 75 64 64
Comparable sales
growth 1.4% (2.6)% (2.6)%
Analysis of Components of Net Income
and Earnings per Share Amounts
-------------------------------------
Net earnings
excluding asset
impairment $4,322 $3,835 $ (266) $3,569
Provision for
asset impair-
ment, net of tax -- (1,280) 26 (1,254)
------ ------ ------ ------
Net income $4,322 $2,555 $ (240) $2,315
====== ====== ====== ======
Diluted earnings
per share:
Net earnings
excluding asset
impairment $ 0.42 $ 0.37 $(0.03) $ 0.34
Provision for
asset impairment,
net of tax -- (0.12) -- (0.12)
------ ------ ------ ------
Net income $ 0.42 $ 0.25 $(0.03) $ 0.22
====== ====== ====== ======
For the fifty-two weeks ended
As Reported As Restated
Dec. 28, 2004 Dec. 30, 2003 Adj. Dec. 30, 2003
--------------- --------------- ---- ---------------
$ % $ % $ $ %
-------- ----- -------- ----- ---- -------- -----
Food and
beverage $139,741 93.7 $112,594 92.5 $ -- $112,594 92.5
Entertain-
ment and
other 9,423 6.3 9,114 7.5 -- 9,114 7.5
-------- ----- -------- ----- ---- -------- -----
Total net
sales 149,164 100.0 121,708 100.0 -- 121,708 100.0
Costs and
expenses:
Costs of
sales 40,619 27.2 32,006 26.3 -- 32,006 26.3
Restaurant
operating
expenses 79,139 53.1 63,490 52.2 323 63,813 52.5
Depreciation
and amorti-
zation 8,298 5.6 6,037 5.0 832 6,869 5.6
Preopening
costs 1,986 1.3 1,822 1.5 -- 1,822 1.5
Asset
Impairment 2,469 1.7 2,008 1.6 (36) 1,972 1.6
-------- ----- -------- ----- ---- -------- -----
Restaurant
costs and
expenses 132,511 88.9 105,363 86.6 1,119 106,482 87.5
-------- ----- -------- ----- ---- -------- -----
Restaurant
operating
income 16,653 11.1 16,345 13.4 (1,119) 15,226 12.5
General and
administra-
tive expenses 7,520 5.0 6,293 5.2 -- 6,293 5.2
Loss on
disposal of
assets (1) -- 57 -- -- 57 --
-------- ----- -------- ----- ---- -------- -----
Income from
operations 9,134 6.1 9,995 8.2 (1,119) 8,876 7.3
Other income/
expense:
Other income/
(expense) 4 -- 1 -- -- 1 --
Interest
expense (243) (0.1) (266) (0.2) (74) (340) (0.3)
-------- ----- -------- ----- ---- -------- -----
Income before
income taxes 8,895 6.0 9,730 8.0 (1,193) 8,537 7.0
Income tax
expense 2,696 1.8 3,192 2.6 (424) 2,768 2.3
-------- ----- -------- ----- ---- -------- -----
Net income $ 6,199 4.2 $ 6,538 5.4 $(769) $ 5,769 4.7
======== ===== ======== ===== ==== ======== =====
Earnings
per share:
Basic $ 0.63 $ 0.67 $ (0.08) $ 0.59
Diluted $ 0.60 $ 0.64 $ (0.08) $ 0.56
Shares used
in computing
earnings per
share (in
thousands):
Basic 9,898 9,792 -- 9,792
Diluted 10,400 10,228 -- 10,228
Restaurants
open at end
of period 75 64 64
Comparable
sales growth 1.1% (2.2)% (2.2)%
Analysis of Components of Net Income
and Earnings per Share Amounts
------------------------------------
Net earnings
excluding asset
impairment $7,713 $ 7,818 $ (793) $ 7,025
Provision for
asset impairment,
net of tax (1,514) (1,280) 24 (1,256)
------ ------- ------ -------
Net income $6,199 $ 6,538 $ (769) $ 5,769
====== ======= ====== =======
Diluted earnings
per share:
Net earnings
excluding asset
impairment $ 0.75 $ 0.76 $(0.08) $ 0.68
Provision for
asset impairment,
net of tax (0.15) (0.12) -- (0.12)
------ ------- ------ -------
Net income $ 0.60 $ 0.64 $(0.08) $ 0.56
====== ======= ====== =======
For the thirty-six weeks ended
As Reported As Restated
Sep. 7, 2004 Adj. Sep. 7, 2004
---------------- ----- ----------------
$ % $ $ %
-------- ------ ----- -------- ------
Food and beverage $ 89,856 93.2 $ -- $ 89,856 93.2
Entertainment and
other 6,593 6.8 -- 6,593 6.8
-------- ------ ----- -------- ------
Total net sales 96,449 100.0 -- 96,449 100.0
Costs and expenses:
Costs of sales 26,429 27.4 -- 26,429 27.4
Restaurant operating
expenses 52,465 54.4 99 52,564 54.5
Depreciation and
amortization 4,720 4.9 684 5,404 5.6
Preopening costs 1,628 1.7 -- 1,628 1.7
Asset Impairment 2,365 2.4 104 2,469 2.6
-------- ------ ----- -------- ------
Restaurant costs
and expenses 87,607 90.8 887 88,494 91.8
-------- ------ ----- -------- ------
Restaurant operating
income 8,842 9.2 (887) 7,955 8.2
General and
administrative
expenses 5,017 5.2 -- 5,017 5.2
Loss on disposal
of assets -- -- -- -- --
-------- ------ ----- -------- ------
Income from operations 3,825 4.0 (887) 2,938 3.0
Other income/expense:
Other income/(expense) 3 -- -- 3 --
Interest expense (121) (0.1) (51) (172) (0.2)
-------- ------ ----- -------- ------
Income before income
taxes 3,707 3.9 (938) 2,769 2.8
Income tax expense 1,227 1.3 (335) 892 0.9
-------- ------ ----- -------- ------
Net income $ 2,480 2.6 $(603) $ 1,877 1.9
======== ====== ===== ======== ======
Earnings per share:
Basic $ 0.25 $(0.06) $ 0.19
Diluted $ 0.24 $(0.06) $ 0.18
Shares used in computing
earnings per share
(in thousands):
Basic 9,883 -- 9,883
Diluted 10,433 -- 10,433
Restaurants open at
end of period 72 72
Comparable sales growth 1.0% 1.0%
Analysis of Components of Net Income
and Earnings per Share Amounts
------------------------------------
Net earnings excluding
asset impairment $3,994 $ (536) $3,458
Provision for asset
impairment, net of tax (1,514) (67) (1,581)
------ ------ ------
Net income $2,480 $ (603) $1,877
====== ====== ======
Diluted earnings per share:
Net earnings excluding
asset impairment $ 0.38 $(0.05) $ 0.33
Provision for asset
impairment, net of tax (0.14) (0.01) (0.15)
------ ----- ------
Net income $ 0.24 $(0.06) $ 0.18
====== ====== ======
As Reported As Restated
Sep. 9, 2003 Adj. Sep. 9, 2003
---------------- ----- ----------------
$ % $ $ %
-------- ------ ----- -------- ------
Food and beverage $ 71,403 92.1 $ -- $ 71,403 92.1
Entertainment and other 6,155 7.9 -- 6,155 7.9
-------- ------ ----- -------- ------
Total net sales 77,558 100.0 -- 77,558 100.0
Costs and expenses:
Costs of sales 20,164 26.0 -- 20,164 26.0
Restaurant operating
expenses 41,372 53.3 217 41,589 53.6
Depreciation and
amortization 4,244 5.5 552 4,796 6.2
Preopening costs 1,185 1.5 -- 1,185 1.5
Asset Impairment -- -- -- -- --
-------- ------ ----- -------- ------
Restaurant costs
and expenses 66,965 86.3 769 67,734 87.3
-------- ------ ----- -------- ------
Restaurant operating
income 10,593 13.7 (769) 9,824 12.7
General and
administrative
expenses 4,237 5.5 -- 4,237 5.5
Loss on disposal
of assets 41 0.1 -- 41 0.1
-------- ------ ----- -------- ------
Income from operations 6,315 8.1 (769) 5,546 7.1
Other income/expense:
Other income/(expense) -- -- -- -- --
Interest expense (130) (0.2) (51) (181) (0.2)
-------- ------ ----- -------- ------
Income before income
taxes 6,185 7.9 (820) 5,365 6.9
Income tax expense 2,202 2.8 (291) 1,911 2.5
-------- ------ ----- -------- ------
Net income $ 3,983 5.1 $(529) $ 3,454 4.4
======== ====== ===== ======== ======
Earnings per share:
Basic $ 0.41 $(0.06) $ 0.35
Diluted $ 0.39 $(0.05) $ 0.34
Shares used in
computing earnings per
share (in thousands):
Basic 9,785 -- 9,785
Diluted 10,183 -- 10,183
Restaurants open at
end of period 60 60
Comparable sales growth (1.9)% (1.9)%
Analysis of Components of Net Income
and Earnings per Share Amounts
------------------------------------
Net earnings excluding
asset impairment $3,983 $(529) $3,454
Provision for asset
impairment, net of tax -- -- --
------ ------ ------
Net income $3,983 $(529) $3,454
====== ===== ======
Diluted earnings
per share:
Net earnings excluding
asset impairment $ 0.39 $(0.05) $ 0.34
Provision for asset
impairment, net of tax -- -- --
------ ------ ------
Net income $ 0.39 $(0.05) $ 0.34
====== ====== ======
Condensed Balance Sheets
------------------------
As As
Reported Restated
Dec. 28, Dec. 30, Dec. 30,
2004 2003 Adj. 2003
------- ------- ------- -------
Current assets:
Cash $ 812 $ 813 $ -- $ 813
Other current assets 6,093 4,912 -- 4,912
------- ------- ------- -------
6,905 5,725 -- 5,725
Property and equipment,
net 67,178 56,401 86 56,487
Intangibles and other
assets 5,281 5,487 -- 5,487
------- ------- ------- -------
$79,364 $67,613 $ 86 $67,699
======= ======= ======= =======
Current liabilities:
Current portion of
capital leases $ 8 $ -- $ 8 $ 8
Other current
liabilities 13,133 11,587 -- 11,587
------- ------- ------- -------
13,141 11,587 8 11,595
Notes payable 3,680 3,635 -- 3,635
Obligations under
capital lease, net of
current portion 889 -- 897 897
Accrued Rent 6,630 547 4,048 4,595
Other noncurrent liabilities 1,867 2,524 (1,751) 773
Stockholders' equity 53,157 49,320 (3,116) 46,204
------- ------- ------- -------
$79,364 $67,613 $ 86 $67,699
======= ======= ======= =======