DALLAS, Nov. 2, 2001 (PRIMEZONE) -- Romacorp, Inc. today announced results for its second quarter ended September 23, 2001.
Revenue for the quarter decreased $1.4 million, or 4.2% to $31.6 million as compared with the same quarter of the prior year. On a year-to-date basis, revenues decreased $2.0 million, or 3.0%, to $65.1 million as compared with the same period of the prior year. The lower revenue is due primarily to a decrease in sales at comparable restaurants of 5.2% for the quarter and 5.0% for the year to date. Sales during the last two weeks of the quarter were dramatically impacted by the events of September 11, 2001, prior to which sales at comparable restaurants were down 3.4% for the quarter.
For the quarter, EBITDA decreased 22.7% to $2.7 million from $3.4 million during the same quarter of the prior year while on a year-to-date basis, EBITDA of $6.1 million was 8.8% lower than the prior year amount of $6.7 million. For the quarter and year-to-date periods, the EBITDA decrease is due to the sales shortfall and higher group insurance, utilities and rent expenses offset by reductions in advertising expenditures and lower costs of sales as the elimination of a discounted lunch promotion, various menu modifications and operational efficiencies cushioned the impact of higher rib costs.
Effective March 26, 2001, the Company adopted Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS No. 142") that requires that goodwill no longer be amortized to earnings, but instead is reviewed for impairment. The adoption of SFAS No. 142 resulted in a decrease in amortization expense of $184,000 for the quarter and $367,000 for the year to date.
The net loss for the quarter was $634,000 compared with a net loss of $650,000 during the same quarter of the prior year. On a year-to-date basis, the net loss was $635,000 compared to a net loss of $77,000 during the prior year. During the first quarter of the prior year, an extraordinary gain of $1.2 million, net of tax, was recognized related to the purchase of Senior Notes at a discount from par. Eliminating the impact of this prior year extraordinary gain, the year-to-date net loss of $635,000 in the current year compared favorably to the loss before extraordinary item of $1.3 million during the same period of the prior year.
Frank H. Steed, Chief Executive Officer and President, commented, "The tragic events of September 11th and the subsequent reduction in both business and tourist travel have had a significantly negative effect on our business. Over one-third of our Company-owned restaurants are in Florida markets or in Las Vegas, Nevada, markets particularly sensitive to tourism fluctuations. While many of our restaurants have returned to sales levels experienced before the attacks, restaurants in Florida and Nevada remain depressed. We continue to focus on cost controls at every level of our Company to ensure that we are maximizing our profits during this challenging period for our country."
Romacorp, Inc. operates and franchises Tony Roma's restaurants, the world's largest casual dining restaurant chain specializing in ribs. The Company currently operates 60 restaurants and franchises 182 restaurants in 29 states and 22 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. 23, Sept. 24, Sept. 23, Sept. 24,
2001 2000 2001 2000
--------- --------- --------- ---------
Net restaurant
sales $29,213 $30,655 $60,314 $62,353
Net franchise
revenue 2,411 2,356 4,825 4,773
-------- -------- -------- --------
Total revenues 31,624 33,011 65,139 67,126
Cost of sales 9,705 10,417 20,081 21,347
Direct labor 9,870 9,824 20,254 19,987
Other 8,708 8,682 17,378 16,943
General and
administrative
expenses 2,232 2,784 4,439 6,255
-------- -------- -------- --------
Total operating
expenses 30,515 31,707 62,152 64,532
-------- -------- -------- --------
Operating income 1,109 1,304 2,987 2,594
Other income
(expense):
Interest expense (2,107) (2,363) (4,256) (4,634)
Miscellaneous
income 20 54 290 50
-------- -------- -------- --------
Loss before income
taxes and
extraordinary
item (978) (1,005) (979) (1,990)
Benefit for
income taxes (344) (355) (344) (699)
-------- -------- -------- --------
Loss before
extraordinary
item (634) (650) (635) (1,291)
Extraordinary gain
on early retirement
of debt, net of tax -- -- -- 1,214
-------- -------- -------- --------
Net loss $ (634) $ (650) $ (635) $ (77)
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Memo:
EBITDA $ 2,659 $ 3,439 $ 6,097 $ 6,684
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