DALLAS, March 27, 2002 (PRIMEZONE) -- Romacorp, Inc. today announced that it has negotiated an amendment to its primary credit agreement loan covenants. Under terms of the amendment, for the quarter ended March 24, 2002, required consolidated EBITDA (as defined therein) was reduced to $11.5 million and the required interest coverage ratio (as defined therein) was reduced to 1.4. Under terms of the amendment, the required consolidated EBITDA (as defined therein) will increase to $12.0 million for the quarter ending September 22, 2002 and to $14.0 million for the quarter ending March 23, 2003.
The Company also announced that it has closed four restaurants during March 2002. The four restaurants were located in Mobile, Alabama; Knoxville, Tennessee; Plano, Texas; and Redondo Beach, California. At the Redondo Beach location, the closure coincided with the expiration of the lease. The remaining three restaurants are leased properties and the Company is actively seeking to sublease these properties. The Company will record a pre-tax charge of approximately $1.3 million during its fourth quarter ended March 24, 2002 to establish a reserve for future lease and facility expenses at these locations. The Company also announced that it will record an impairment charge of approximately $5.0 million (pre-tax) related to closed restaurants and four other under-performing restaurants.
The Company also announced that for the quarter and fiscal year ended March 24, 2002, it is providing EBITDA range estimates of $4.2 million to $4.6 million for the quarter and $13.0 million to $13.4 million for the fiscal year, excluding the effect of the reserves established during the quarter related to the restaurant closures. The lower end of the EBITDA range represents a decline from previous year levels of approximately 1.6% and 9.1%, respectively. Sales at comparable restaurants are expected to be down 5.5% to 6.0% for both the quarter and fiscal year ended March 24, 2002.
Frank H. Steed, Chief Executive Officer and President commented, "Our Company has faced significant challenges during the last 12 months relating to the Mad Cow and Foot and Mouth disease outbreaks in Europe and the aftereffects of the September 11 terrorist attacks in the United States. Unfortunately, a number of our restaurants did not respond favorably to our efforts to improve financial performance. The closure of these restaurants will ultimately enable us to improve our Company's cash flow and to focus our efforts and resources in more profitable markets."
Romacorp, Inc. operates and franchises Tony Roma's restaurants, the world's largest casual dining restaurant chain specializing in ribs. The Company currently operates 56 restaurants and franchises 196 restaurants in 29 states and 25 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.