DALLAS, July 19, 2002 (PRIMEZONE) -- Romacorp, Inc. today announced results for its fourth quarter and fiscal year ended March 24, 2002.
Revenue for the quarter decreased $2.5 million, or 6.9% to $33.8 million as compared with the same quarter of the prior year. For the fiscal year, revenues decreased $6.7 million, or 5.0%, to $128.2 million as compared with the prior year. The lower revenue is due primarily to a decrease in sales at comparable restaurants of 5.8% for the quarter and 5.7% for the fiscal year.
During the fourth quarter, franchisees opened five restaurants in five different countries including Australia, Canada, Spain, the United States and Venezuela. The restaurant in Sydney, Australia represents the first Tony Roma's restaurant in that country.
During the fourth quarter, the Company closed four restaurants. The Company recorded a pre-tax charge of $1.3 million during the fourth quarter to establish a reserve for future lease and facility expenses at these locations. The Company also recorded an impairment charge of $4.8 million (pre-tax) related to closed restaurants and four other under-performing restaurants.
For the fourth quarter, EBITDA, inclusive of the restaurant closure reserve, decreased 29.6% to $3.0 million from $4.3 million during the same quarter of the prior year while for the fiscal year, EBITDA, inclusive of the restaurant closure reserve, of $11.7 million was 17.9% lower than the prior year amount of $14.3 million. This decrease in EBITDA is due primarily to the sales shortfall and the restaurant closure reserve partially offset by an increase in net franchise revenue and reduced general and administrative expenses.
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 $734,000 for the fiscal year.
The net loss for the fourth quarter was $4.3 million compared with net income of $158,000 during the same quarter of the prior year. For the fiscal year, the Company experienced a net loss of $5.5 million compared with a net loss of $2.0 million during the prior year. The decrease for the quarter and fiscal year was due primarily to the sales shortfall, asset impairments, restaurant closure reserves and the recording of a valuation allowance to reduce deferred tax assets, partially offset by increased net franchise revenue and lower amortization, restaurant pre-opening, and interest expenses. In addition, during the third quarter of the prior year, an impairment charge of $2.3 million was recorded related to under-performing assets and 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.
Frank H. Steed, Chief Executive Officer and President commented: "Our results for the fourth quarter and fiscal year were in line with the recently issued guidance. These results reflect the continuing challenge that our Company faces as we seek to increase sales and control costs during a period of economic uncertainty and reduced business and personal travel. We are anticipating positive guest feedback as we roll out a new menu in July that features several new menu items for our guests."
The Company also announced that it has recently completed an amendment to its primary credit agreement that lowered the maximum aggregate principal amount to $18.0 million until September 30, 2002 at which time the maximum borrowing is reduced by $250,000, with subsequent reductions in the maximum borrowing of $250,000 occurring on the last day of each calendar month thereafter, until June 2003, when the maximum borrowing is reduced to $5.5 million. Under terms of the amendment to the credit agreement, certain loan covenants were modified and the interest rate was increased to the prime rate plus 1.5% until January 2003 at which time the interest rate increases by 0.25% each month until the credit agreement is refinanced.
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 198 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.
Romacorp, Inc. And Subsidiaries
Condensed Consolidated Statements of Operations
(Dollars in Thousands)
(UNAUDITED)
Thirteen Weeks Ended Fifty-Two Weeks Ended
--------------------- ---------------------
March 24, March 25, March 24, March 25,
2002 2001 2002 2001
--------- --------- --------- ---------
Net restaurant sales $ 31,097 $ 33,692 $ 117,893 $ 124,964
Net franchise revenue 2,735 2,663 10,321 9,939
--------- --------- --------- ---------
Total revenues 33,832 36,355 128,214 134,903
Cost of sales 10,461 11,256 39,070 42,213
Direct labor 9,512 10,582 39,151 40,293
Other 8,530 9,074 33,953 34,393
General and admin-
istrative expenses 2,571 3,105 9,187 11,731
Impairment of
long-lived assets 4,822 -- 4,822 2,303
Other loss provisions 1,293 -- 1,293 --
--------- --------- --------- ---------
Total operating
expenses 37,189 34,017 127,476 130,933
--------- --------- --------- ---------
Operating income (loss) (3,357) 2,338 738 3,970
Other income (expense):
Interest expense (2,100) (2,152) (8,413) (9,119)
Miscellaneous 45 56 387 147
--------- --------- --------- ---------
Loss before income
taxes and
extraordinary item (5,412) 242 (7,288) (5,002)
Income tax provision
(benefit) (1,135) 84 (1,795) (1,754)
--------- --------- --------- ---------
Income (loss) before
extraordinary item (4,277) 158 (5,493) (3,248)
Extraordinary gain on
early retirement of
debt, net of tax -- -- -- 1,214
--------- --------- --------- ---------
Net income (loss) $ (4,277) $ 158 $ (5,493) $ (2,034)
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Memo:
EBITDA $ 3,003 $ 4,267 $ 11,741 $ 14,308
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