DALLAS, Feb. 5, 2001 (PRIMEZONE) -- Romacorp, Inc. today announced results for its third quarter ended December 24, 2000. Revenue for the quarter increased $3.2 million, or 11.3%, to $31.5 million as compared with the same quarter of the prior year. On a year-to-date basis, revenues increased $13.0 million, or 15.2%, to $98.8 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 1.7% for the quarter and 3.7% for the year to date. During the quarter, the Company opened one new restaurant in Fort Worth, Texas and franchisees opened three domestic and three international franchised restaurants.
For the quarter, EBITDA decreased 11.6% to $3.2 million from $3.6 million during the same quarter of the prior year while on a year-to-date basis, EBITDA of $9.4 million was 21.7% lower than the prior year amount of $12.0 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 has continued to experience higher rib and beef costs during the quarter and year-to-date periods and is projecting rib costs to remain at these higher levels during the next two fiscal quarters. The Company also experienced higher restaurant labor costs and increases in lease and utility costs for the quarter and year-to-date periods.
The net loss for the quarter was $2.1 million compared with a net loss of $359,000 during the same quarter of the prior year. On a year-to-date basis, the Company has experienced a net loss of $2.2 million compared with a net loss of $648,000 during the prior year. During the quarter, the Company recorded an impairment charge of $2.3 million (pre-tax) necessary to reduce the asset carrying value of four under- performing restaurants. 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.
The Company also announced that it has received a waiver of its primary credit agreement loan covenants for the quarter ended December 24, 2000. In addition, the Company announced that its primary credit agreement has recently been amended, reducing the required consolidated EBITDA (as defined) from $15.0 million to $13.0 million and reducing the required interest coverage ratio (as defined) from 1.7 to 1.5. These amended terms will remain in effect for the next four fiscal quarters ending December 2001, and will be reinstated to the aforementioned previous levels for the quarter ending March 2002.
Frank H. Steed, Chief Executive Officer, commented, "As we enter our fourth quarter, we are making the organizational changes that we feel will position us to improve our operating results, including two key additions to our executive staff. Sam Rothschild, Senior Vice President of Operations, is reviewing all facets of company and franchise operations to identify opportunities to increase sales, reduce operating costs and improve organizational and operational efficiencies. Jon Ostrov, Senior Vice President, Business Strategy, is leading us in our efforts to identify the strategic initiatives and marketing strategies that will position the Tony Roma's brand for continued growth in domestic and international markets."
Romacorp, Inc. operates and franchises Tony Roma's restaurants, the world's largest casual dining restaurant chain specializing in ribs. The Company operates 62 restaurants and franchises 173 restaurants in 30 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 Thirty-Nine Weeks Ended
December 24, December 26, December 24, December 26,
2000 1999 2000 1999
Net restaurant
sales $ 29,003 $ 25,854 $ 91,539 $ 79,021
Net franchise
revenue 2,504 2,444 7,277 6,777
Total revenues 31,507 28,298 98,816 85,798
Cost of sales 10,299 8,317 33,122 25,360
Direct labor 9,723 8,296 29,710 24,771
Other 7,773 6,691 23,423 19,534
General and
administrative
expenses 2,371 3,111 8,626 9,058
Impairment of
long-lived assets 2,303 -- 2,303 --
Total operating
expenses 32,469 26,415 97,184 78,723
Operating
income (loss) (962) 1,883 1,632 7,075
Other income
(expense):
Interest expense (2,333) (2,473) (6,967) (7,385)
Miscellaneous
income 41 37 91 102
Loss before
income taxes,
cumulative
effect of a
change in
accounting
principle and
extraordinary
item (3,254) (553) (5,244) (208)
Income tax
benefit (1,139) (194) (1,838) (73)
Income (loss)
before
cumulative
effect of a
change in
accounting
principle and
extraordinary
item (2,115) (359) (3,406) (135)
Cumulative effect
of a change in
accounting
principle, net
of tax -- -- -- (513)
Extraordinary gain
on early
retirement of
debt, net of tax -- -- 1,214 --
Net loss $ (2,115) $ (359) $ (2,192) $ (648)
Memo:
EBITDA $ 3,205 $ 3,625 $ 9,368 $ 11,959
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