DALLAS, Nov. 7, 2000 (PRIMEZONE) -- Romacorp, Inc. today announced results for its second quarter ended September 24, 2000. Revenue for the quarter increased $4.3 million, or 14.9%, to $33.1 million as compared with the same quarter of the prior year. On a year-to-date basis, revenues increased $9.8 million, or 17.0%, to $67.3 million as compared with the same period of the prior year. These increases are due to the opening of additional Company-owned restaurants during the current and prior year and an increase in comparable store sales of 5.3% for the quarter and 4.7% for the year to date. During the quarter, the Company opened one new restaurant in Owings Mills, Maryland, and one new international franchised restaurant opened in Alberta, Canada.
For the quarter, EBITDA decreased 20.1% to $3.2 million from $3.9 million during the same quarter of the prior year while on a year-to-date basis, EBITDA of $6.2 million was 26.1% lower than the prior year amount of $8.3 million. This decrease in EBITDA is due primarily to significant increases in costs of sales that remained at levels significantly above the prior year. The Company continued to experience higher rib and beef costs during the quarter and year-to-date periods. The Company also experienced higher restaurant labor and advertising costs for the quarter and year-to-date periods. The advertising expense variance is the result of a modified media placement schedule that increased advertising expenditures in the second quarter with comparable reductions projected to occur during the fourth quarter of the fiscal year.
The net loss for the quarter was $650,000 compared with a net loss of $81,000 during the same quarter of the prior year. On a year-to-date basis, the Company has experienced a net loss of $77,000 compared with a net loss of $289,000 during the prior year. During the first quarter of the current fiscal year, 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. 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.
Frank H. Steed, Romacorp's new Chief Executive Officer, commented, "I look forward to aggressively tackling food and labor cost issues and returning Tony Roma's to its previous level of profitability. We are reviewing our purchasing procedures and opportunities and assessing our restaurant cost control systems to ensure that we are operating as efficiently as possible. We are currently interviewing candidates for the Vice President of Operations position who will be integral in integrating into each of our Company stores the best practices that can be learned from our worldwide system of 230 company and franchised locations."
Romacorp, Inc. operates and franchises Tony Roma's restaurants, the world's largest casual dining restaurant chain specializing in ribs. The Company operates 61 restaurants and franchises 169 restaurants in 29 states and 21 foreign countries and territories.
Forward-Looking Comments
Statements that 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(UNAUDITED)
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------- ------------------------
Sept. 24, Sept. 26, Sept. 24, Sept. 26,
2000 1999 2000 1999
---------- --------- --------- ----------
Net restaurant
sales $ 30,740 $ 26,651 $ 62,536 $ 53,167
Net franchise
revenue 2,356 2,145 4,773 4,333
-------- -------- -------- --------
Total revenues 33,096 28,796 67,309 57,500
Cost of sales 11,146 8,631 22,823 17,043
Direct labor 9,824 8,301 19,987 16,475
Other 8,038 6,618 15,650 12,843
General and
administrative
expenses 2,784 2,929 6,255 5,947
-------- -------- -------- --------
Total operating
expenses 31,792 26,479 64,715 52,308
-------- -------- -------- --------
Operating income 1,304 2,317 2,594 5,192
Other income
(expense):
Interest expense (2,363) (2,479) (4,634) (4,912)
Miscellaneous
income 54 37 50 65
-------- -------- -------- --------
Income (loss)
before income
taxes, cumulative
effect of a
change in
accounting
principle and
extraordinary item (1,005) (125) (1,990) 345
Provision (benefit)
for income taxes (355) (44) (699) 121
-------- -------- -------- --------
Income (loss)
before cumulative
effect of a change
in accounting
principle and
extraordinary
item (650) (81) (1,291) 224
Cumulative effect
of a change in
accounting
principle,
net of tax -- -- -- (513)
Extraordinary
gain on early
retirement of
debt, net of tax -- -- 1,214 --
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Net loss $ (650) $ (81) $ (77) $ (289)
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Memo:
EBITDA $ 3,151 $ 3,944 $ 6,163 $ 8,336
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CONTACT: Romacorp, Inc.
Richard A. Peabody
Vice President and Chief Financial Officer
(214) 343-7812