DALLAS, August 7, 2000 (PRIMEZONE) - Romacorp, Inc. today announced results for its first quarter ended June 25, 2000. Revenue for the quarter increased $5.5 million, or 19.2%, to $34.2 million as compared with the same quarter of the prior year. This increase is due to the opening of additional Company-owned restaurants and an increase in comparable store sales of 4.1% for the quarter. During the quarter, the Company opened one new restaurant and closed one restaurant and franchisees opened three new restaurants and closed four restaurants.
For the quarter, EBITDA decreased 31.4% to $3.0 million from $4.4 million during the same quarter of the prior year due primarily to significant increases in costs of sales and labor. As disclosed in a prior press release, the Company's usage of ribs during the quarter exceeded contracted commitments from its suppliers, resulting in product purchases on the open market during a period of low availability. Cost of sales increased 500 basis points to 36.7% during the quarter and the Company expects rib costs to remain high during the second quarter. EBITDA was also negatively impacted by higher restaurant labor costs and increased general and administrative expenses resulting from one-time charges for severance payments associated with management changes during the quarter.
Net income during the first quarter was $573,000 compared with a net loss of $208,000 during the same quarter of the prior year. During the quarter, an extraordinary gain of $1.2 million, net of tax, was recognized related to the utilization of the Company's revolving credit facility to purchase Senior Notes with a face value of $12 million. Interest expense, inclusive of loan cost amortization, was $162,000 below the same quarter of the prior year. In addition, net income during the first quarter of the prior year was negatively impacted by a charge of $513,000 related to the adoption of Statement of Position 98-5 Accounting for Costs of Start-up Activities.
Richard Peabody, acting president, commented, "We are pleased to report another quarter of strong comparable store sales increases. We are committed to improving our cost of sales and profitability by applying enhanced purchasing procedures, and we have recently hired industry veteran Terry Hamblen to fill our Vice President, Purchasing position. The Company is actively engaged in a search for a new chief executive officer, and we are optimistic that this position will be filled in the near term."
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 167 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.
(Table to Follow)
ROMACORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(UNAUDITED)
Thirteen Weeks Ended
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June 25, 2000 June 27, 1999
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Net restaurant sales $31,796 $26,516
Net franchise revenue 2,417 2,188
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Total revenues 34,213 28,704
Cost of sales 11,677 8,412
Direct labor 10,163 8,174
Other 7,612 6,225
General and administrative expenses 3,471 3,018
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Total operating expenses 32,923 25,829
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Operating income 1,290 2,875
Other income (expense):
Interest expense (2,271) (2,433)
Miscellaneous income (expense) (4) 28
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Income (loss) before income taxes, cumulative effect of
a change in accounting principle
and extraordinary item (985) 470
Provision (benefit) for income taxes (344) 165
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Income (loss) before cumulative effect of a change
in accounting principle and
extraordinary item (641) 305
Cumulative effect of a change in
accounting
principle, net of tax - (513)
Extraordinary gain on early retiremen
of debt, net of tax 1,214 -
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Net income (loss) $573 $(208)
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Memo:
EBITDA $3,012 $4,392
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