DALLAS, Aug. 3, 2001 (PRIMEZONE) -- Romacorp, Inc. today announced results for its first quarter ended June 24, 2001.
Revenue for the quarter decreased $601,000, or 1.8% to $33.5 million as compared with the same quarter of the prior year. This decrease is due primarily to a 4.8% decrease in sales at comparable restaurants versus the same period of the prior year.
During the first quarter, franchisees opened restaurants in Union City, California and Fitchberg, Wisconsin while the Company closed one restaurant in Clearwater, Florida. During July, franchisees opened one international restaurant in Marbella, Spain and two domestic locations in Longview, Texas and Phoenix, Arizona.
For the quarter, EBITDA increased 5.9% to $3.4 million from $3.2 million during the same quarter of the prior year. The positive EBITDA variance was generated by a reduction in general and administrative expense due to lower management training salaries, reductions in the number of field supervisory positions and the impact of severance costs related to the management transition that occurred during the same quarter of the prior year. The favorable variance in general and administrative expense was partially offset by the sales shortfall and the impact of higher group insurance, utilities and rent expenses. Although rib prices reached historically high levels during the quarter, the introduction of a new line of steaks, elimination of a discounted lunch promotion, and 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"), which 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 $183,000 versus the same quarter of 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. The net loss for the first quarter was $1,000, which compares favorably with the net loss of $641,000 before this extraordinary item for the same quarter of the prior year. Including the impact of this extraordinary item during the prior year, the net loss during the first quarter was $1,000 compared with net income of $573,000 during the prior year quarter.
Frank H. Steed, Chief Executive Officer and President, commented, "I am pleased with the efforts of our new management team to control cost of sales in the face of higher rib costs and softer industry sales. We look for continued reductions in cost of sales as market prices of baby back rib product have begun to decrease in recent weeks. Also, several marketing initiatives are being implemented to improve the sales trends we experienced during the recent quarter. We are also excited to see our franchisees continue to open new restaurants domestically and internationally and we currently project the addition of 15-20 new franchised restaurants during this fiscal year."
Romacorp, Inc. operates and franchises Tony Roma's restaurants, the world's largest casual dining restaurant chain specializing in ribs. The Company currently operates 61 restaurants and franchises 184 restaurants in 30 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
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June 24, 2001 June 25, 2000
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Net restaurant sales $ 31,101 $ 31,700
Net franchise revenue 2,414 2,416
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Total revenues 33,515 34,116
Cost of sales 10,376 10,931
Direct labor 10,384 10,163
Other 8,670 8,261
General and administrative expenses 2,207 3,471
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Total operating expenses 31,637 32,826
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Operating income 1,878 1,290
Other income (expense):
Interest expense (2,149) (2,271)
Miscellaneous 270 (4)
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Loss before income taxes
and extraordinary item (1) (985)
Income tax benefit -- (344)
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Loss before extraordinary item (1) (641)
Extraordinary gain on early
retirement of debt, net of tax -- 1,214
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Net income (loss) $ (1) $ 573
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Memo:
EBITDA $ 3,438 $ 3,245
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