DALLAS, June 21, 2000 (PRIMEZONE) -- Romacorp, Inc. today announced results for its fourth quarter and fiscal year ended March 26, 2000. Revenue for the quarter increased $4.8 million, or 16.9%, to $33.3 million as compared with the same quarter of the prior year. On an annual basis, revenues increased $17.2 million, or 16.8%, to $119.1 million as compared with the prior year. These increases are due to the opening of additional Company-owned restaurants and an increase in comparable store sales. Comparable store sales increased 4.4% for the quarter and 1.7% for the year. The Company opened two new restaurants during the fourth quarter and eight new restaurants during the fiscal year. During the fiscal year, fifteen franchised stores were opened and six were closed.
For the quarter, EBITDA before pre-opening expenses increased 8.9% to $6.0 million from $5.5 million during the same quarter of the prior year, and increased 10.4% to $19.2 million for the year compared with $17.4 million during the prior year. The increase during the quarter is attributed to higher sales offset by increased restaurant labor and management training costs. The increase for the year is attributed to higher sales and lower cost of sales, offset by increases in restaurant labor costs, advertising, general and administrative expenses and rent expense associated with the sale-leaseback of six properties. Effective March 29, 1999, the Company adopted Statement of Position 98-5 ("SOP 98-5") Accounting for Costs of Start-up Activities which requires the Company to expense pre-opening costs as incurred rather than the previous policy of amortizing those costs over a twelve-month period and to report the initial adoption as a cumulative effect of a change in accounting principle. EBITDA for the quarter and fiscal year after pre-opening expenses of $614,000 and $1,850,000 was $5.4 million and $17.4 million, respectively.
Net income during the fourth quarter was $394,000 compared with net income of $847,000 during the same quarter of the prior year. For the year, the Company experienced a net loss of $254,000 compared to net income of $1.7 million during the prior year. The decrease in net income for the quarter was largely due to charges of $1.5 million recorded by the Company related to the pending closure of an under-performing restaurant and its write-off of investments and related receivables in two joint ventures.
Theses charges were partially offset by an after-tax extraordinary gain of $592,000 related to the repurchase of Senior Notes with a face value of $6 million during the quarter. The decrease in net earnings on a year-to-date basis is also due in part to the net effect of the loss provisions recorded, offset by the gain realized on the repurchase of Senior Notes during the fourth quarter. Also impacting the annual net loss was a $1.6 million increase in interest expense that is primarily attributable to a full-year's interest on the $75 million of Senior Notes that were issued on July 1, 1998 in conjunction with the Company's recapitalization. The Company also incurred increased general and administrative expenses, partially due to the inclusion of pre-opening expenses that are now expensed when incurred. The cumulative after-tax effect of adopting SOP 98-5 was $513,000.
Richard Peabody, acting president, commented, "We are excited about the continued growth that has occurred with our concept during the recently completed year. The eight new restaurants that we opened, combined with an annual comparable store sales increase of 1.7% and continued increases in the number of domestic and international franchised units, enabled us to report a very impressive increase in revenue versus the prior year. We expect to open additional Company-operated units in the coming year. We are pleased that we were able to reduce our long-term debt by repurchasing Senior Notes at a price below face value."
The Company also announced that it has recently completed an amendment to its primary credit agreement that raised the maximum revolving commitment from $15 million to $25 million. The Company has utilized the incremental borrowing capacity under the revolver to repurchase an additional $12 million of Senior Notes during the first quarter of Fiscal Year 2001.
Romacorp, Inc. operates and franchises Tony Roma's restaurants, the world's largest casual dining restaurant chain specializing in ribs. The Company operates 60 restaurants and franchises 168 restaurants in 28 states and 20 foreign countries and territories.
Forward-Looking Comments
Statements which are not historical facts contained herein are forward looking statements that involve estimates, risks and uncertainties, including but not limited to: consumer demand and market acceptance risk; the level of and the effectiveness of marketing campaigns by the Company; training and retention of skilled management and other restaurant personnel; the Company's ability to locate and secure acceptable restaurant sites; the effect of economic conditions, including interest rate fluctuations, the impact of competing restaurants and concepts, new product introductions, product mix and pricing, the cost of commodities and other food products, labor shortages and costs and other risks detailed in filings with the Securities and Exchange Commission.
ROMACORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Thirteen Weeks Ended Fifty-two Weeks Ended
March 26, March 28, March 26, March 28,
2000 1999 2000 1999
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(Unaudited)
Net restaurant sales $ 30,932 $ 26,235 $ 109,952 $ 93,213
Net franchise revenue 2,367 2,248 9,145 8,723
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Total revenues 33,299 28,483 119,097 101,936
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Cost of sales 9,862 8,295 35,222 31,399
Direct labor 9,651 8,063 34,422 28,836
Other 6,951 5,659 26,375 21,819
General and
administrative expenses 3,336 2,690 12,504 9,415
Impairment of long-lived
assets 464 - 464 -
Other loss provisions 1,022 - 1,022 -
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Total operating
expenses 31,286 24,707 110,009 91,469
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Operating income 2,013 3,776 9,088 10,467
Other income (expense):
Interest expense (2,356) (2,489) (9,741) (8,147)
Miscellaneous 39 27 141 266
---------- ----------
Income (loss) before
income taxes, cumulative
effect of a change in
accounting principle
and extraordinary item (304) 1,314 (512) 2,586
Provision (benefit) for
income taxes (106) 467 (179) 925
---------- ----------
Income (loss) before
cumulative effect of a
change in accounting
principle and
extraordinary item (198) 847 (333) 1,661
Cumulative effect of a
change in accounting
principle, net of tax - - (513) -
Extraordinary gain on
early retirement of
debt, net of tax 592 - 592 -
Net income (loss) $ 394 $ 847 $ (254) $ 1,661
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Memo:
EBITDA $ 5,406 $ 5,527 $ 17,367 $ 17,403
EBITDA before pre-
opening expenses $ 6,020 $ 5,527 $ 19,217 $ 17,403
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CONTACT: Richard A. Peabody
Acting President and
Chief Financial Officer
(214) 343-7812