NEWS BULLETIN
RE: [LOGO OF WORLDWIDE RESTAURANT CONCEPTS]
15301 Ventura Blvd., Bldg B, Suite 300
Sherman Oaks, CA 91403
(818) 662-9800
NYSE: SZ
FROM: [LOGO OF FRB - WEBER SHANDWICK FINANCIAL COMMUNICATIONS]
FOR FURTHER INFORMATION:
AT THE COMPANY: | | | | AT FRB ¦ WEBER SHANDWICK: |
| Keith Wall | | Kim Forster | | James Hoyne | | Tricia Ross |
| Vice President and CFO | | Vice President, Planning | | General Information | | Investor/Analyst Contact |
| (818) 662-9800 | | (818) 662-9800 | | (310) 407-6546 | | (310) 407-6540 |
FOR IMMEDIATE RELEASE
August 22, 2002
WORLDWIDE RESTAURANT CONCEPTS, INC. ANNOUNCES FIRST
QUARTER FISCAL 2003 RESULTS
HIGHLIGHTS:
| | • | | Total revenues increased by 10.5 percent to $67.7 million |
| | • | | Revenue growth attributed to Pat & Oscar’s expansion, same store sales growth of 11.4 percent at Sizzler Australia and 8.6 percent at KFC, and a stronger Australian dollar |
| | • | | Earnings per share increased by 100 percent to $0.12 per diluted share |
| | • | | Pat & Oscar’s real estate pipeline on track to increase unit count by 30 to 40 percent this year |
SHERMAN OAKS, Calif.—August 22, 2002—Worldwide Restaurant Concepts, Inc. (NYSE: SZ) today reported financial results for the first quarter of fiscal 2003, ended July 21, 2002.
For the first quarter, the Company reported revenues of $67.7 million, an increase of 10.5 percent over the $61.3 million in the comparable period in fiscal 2002. Net income for the quarter was $3.3 million, or $0.12 per diluted share, compared to net income of $1.7 million, or $0.06 per diluted share in the same period a year ago. The increase in net income for the quarter was primarily the result of increased sales, tight cost controls, and a tax benefit from the utilization of tax loss carry forwards.
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Total Revenues Increase by $6.4 million
For the first quarter, the Company grew total revenues by $6.4 million, a 10.5 percent increase over the prior year. Operations in Australia continued to report strong sales. Same store sales grew by 11.4 percent at Sizzler Australia and 8.6 percent at KFC. Both concepts reported increases in guest counts, despite a price increase of approximately 2 percent during the quarter to pass on labor and commodity price increases. The strengthening of the Australian dollar exchange rate by 8.0% compared to the prior year also contributed approximately $2.3 million to revenue growth for the quarter.
Sizzler USA continued to execute its strategy of promoting high value entrées priced at $7.99 to $9.99 by offering a $8.99 shrimp platter and $9.99 steak and scampi entrée during the quarter. These promotions were the primary drivers of the division’s 0.6% increase in same store sales and 1.1% increase in guest counts compared to the same quarter in the prior year.
Pat & Oscar’s contributed $2.0 million of the quarterly revenue increase, primarily from the four new restaurants that opened last year. Pat & Oscar’s same store sales declined by 1.2% during the quarter, due to softening in the San Diego economy and expected continuing cannibalization in the San Diego market. Excluding the effect of cannibalization at one San Diego restaurant, same store sales would have increased by 1.0 percent.
“We’ve continued to execute our strategies for revenue growth and generated very tangible results this quarter,” said Charles Boppell, President and Chief Executive Officer of Worldwide Restaurant Concepts. “We’ve been facing economic uncertainty both domestically and internationally. By positioning our brands to provide great value as well as exciting flavors, we believe that we’re correctly positioned for this type of economic environment. Our Sizzler operations in the USA and Australia and our KFCs all reported same store sales increases this quarter. We’re convinced that Pat & Oscar’s can also do well in this environment. We’ve strengthened their team by hiring a Vice President of Marketing and retaining a new advertising agency during the quarter, and we’re currently testing an equity-based incentive program for restaurant and market managers.”
Pat & Oscar’s Expansion On Track
Although Pat & Oscar’s did not plan to open any new restaurants this quarter, it is on track to open five to six restaurants this fiscal year. Five sites are already under lease or signed letters of intent, including three in Los Angeles County, as part of the Company’s development plan to widen its geographic reach. The next Pat & Oscar’s is expected to open in December. “Based on extensive consumer and real estate research, we’ve developed an extensive real estate pipeline that will support a 30 percent to 40 percent increase in our Pat & Oscar’sSM restaurant count this fiscal year, and will position us to continue to grow at this rate over the next few years,” commented Mr. Boppell.
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Outlook For Fiscal 2003
“We’ve continued to deliver top line and bottom line growth in an increasingly tough economic environment. We can’t influence the economic climate we’ll face in the coming months, but we can and will continue to deliver a dining experience that exceeds our guests’ expectations while we manage our costs. We’re confident that each of our divisions is focused on the appropriate growth strategies and that they have the leadership they need to succeed,” concluded Mr. Boppell.
Investor Conference Call
Worldwide Restaurant Concepts will be holding an investor conference call to discuss the Company’s financial and operational results today at 11:00 a.m. EST. Investors will have the opportunity to listen to the conference call over the Internet at www.companyboardroom.com. To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay, also at www.companyboardroom.com, will be available shortly after the call.
About Worldwide Restaurant Concepts
Worldwide Restaurant Concepts, Inc., formerly known as Sizzler International, Inc., operates, franchises or joint ventures 337 Sizzler®restaurants worldwide, 107 KFC®restaurants primarily located in Queensland, Australia, and 15 Pat & Oscar’sSM restaurants.
Certain statements contained in this document may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. These statements may include but are not limited to, statements regarding: (i) continuing growth in revenues and earnings; (ii) continuation of same store sales growth at all divisions; and (iii) the opening of five to six additional Pat & Oscar’sSM restaurants through the end of this fiscal year and continued growth of 30 percent to 40 percent per year in unit counts.
Worldwide Restaurant Concepts cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected in the forward looking statements contained herein. Such factors include, but are not limited to: (a) the Company’s ability to implement its strategic plan and manage its costs and expenses; (b) the continuing successful marketing and product initiatives resulting in positive same store sales growth; (c) the availability of capital to upgrade the facilities at its domestic and international Sizzler® locations and its Australian KFCs®and build new Pat & Oscar’s restaurants; (d) Pat & Oscar’s ability to acquire a sufficient number of suitable sites to open five to six new restaurants this year and increase its restaurant count by a rate of 30 percent to 40 percent per year thereafter; (e) economic conditions, both generally and as they affect the restaurant industry in particular; and (f) other risks as detailed from time to time in the Company’s SEC reports, including Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Annual Reports on Form 10-K .
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Worldwide Restaurant Concepts, Inc.
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WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE WEEKS ENDED JULY 21, 2002 AND JULY 22, 2001
(In thousands, except per share data)
| | | July 21, 2002
| | July 22, 2001
|
Revenues | | | | | | |
| Restaurant sales | | $ | 65,683 | | $ | 59,273 |
| Franchise revenues | | | 2,004 | | | 1,999 |
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| Total revenues | | | 67,687 | | | 61,272 |
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Costs and Expenses | | | | | | |
| Cost of sales | | | 22,259 | | | 20,201 |
| Labor and related expenses | | | 18,187 | | | 16,899 |
| Other operating expenses | | | 15,611 | | | 14,274 |
| Depreciation and amortization | | | 2,171 | | | 2,160 |
| General and administrative expenses | | | 5,464 | | | 5,477 |
| | |
|
| |
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| Total operating costs | | | 63,692 | | | 59,011 |
| | |
|
| |
|
|
| Operating income | | | 3,995 | | | 2,261 |
| | |
|
| |
|
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| Interest expense | | | 817 | | | 869 |
| Investment income | | | 191 | | | 222 |
| Other income | | | | | | 412 |
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Income before provision for income taxes | | | 3,369 | | | 2,026 |
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|
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| Provision for income taxes | | | 112 | | | 362 |
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Net income | | $ | 3,257 | | $ | 1,664 |
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| Basic and diluted earnings per share | | $ | 0.12 | | $ | 0.06 |
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WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| | | July 21, 2002
| | April 30, 2002
|
ASSETS | | | | |
| Current Assets: | | | | | | |
| Cash and cash equivalents | | $ | 25,163 | | $ | 25,943 |
| Restricted cash | | | 2,246 | | | 2,096 |
| Receivables, net of an allowance of $872 at July 21, 2002 and $814 at April 30, 2002 | | | 2,468 | | | 2,101 |
| Inventories | | | 4,352 | | | 4,367 |
| Current deferred income tax asset | | | 2,653 | | | 2,191 |
| Prepaid expenses and other current assets | | | 2,689 | | | 1,686 |
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| Total current assets | | | 39,571 | | | 38,384 |
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| Property and equipment, net | | | 60,507 | | | 61,334 |
| Property held for sale, net | | | 2,276 | | | 2,632 |
| Long-term notes receivables (including $200 of related party receivables at July 21, 2002 and April 30, 2002), net of reserves of $3 at July 21, 2002 and April 30, 2002 | | | 941 | | | 974 |
| Deferred income asset | | | 5,413 | | | 5,346 |
| Goodwill, net | | | 20,940 | | | 20,940 |
| | | | | | | |
| Intangible assets, net of accumulated amortization of $750 at July 21, 2002 and $734 at April 30, 2002 | | | 2,043 | | | 2,031 |
| Other assets | | | 1,796 | | | 1,866 |
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| Total assets | | $ | 133,487 | | $ | 133,507 |
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WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| | | July 21, 2002
| | | April 30, 2002
| |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Current portion of long-term debt | | $ | 6,072 | | | $ | 5,971 | |
| Accounts payable | | | 9,295 | | | | 11,304 | |
| Other current liabilities | | | 14,936 | | | | 14,531 | |
| Income taxes payable | | | 2,311 | | | | 2,669 | |
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| Total current liabilities | | | 32,614 | | | | 34,475 | |
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| Long-term debt, net of current portion | | | 21,986 | | | | 23,369 | |
| Deferred gains and revenues | | | 8,691 | | | | 8,737 | |
| Pension liability | | | 11,600 | | | | 11,725 | |
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| Total liabilities | | | 74,891 | | | | 78,306 | |
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| Stockholders’ Equity: | | | | | | | | |
| Capital stock— | | | | | | | | |
Preferred, authorized 1,000,000 shares, $5 par value;
no shares issued | | | — | | | | — | |
Common, authorized 50,000,000 shares, $0.01 par value;
issued and outstanding 29,230,135 and 27,230,135 shares
and 29,205,491 and 27,205,491 shares at July 21, 2002
and April 30, 2002, respectively | | | 292 | | | | 292 | |
| Additional paid-in capital | | | 279,948 | | | | 279,904 | |
| Accumulated deficit | | | (209,309 | ) | | | (212,566 | ) |
Treasury stock, 2,000,000 shares at July 21, 2002
and 2,000,000 shares at April 30, 2002, at cost | | | (4,135 | ) | | | (4,135 | ) |
| Accumulated other comprehensive loss | | | (8,200 | ) | | | (8,294 | ) |
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| Total stockholders’ equity | | | 58,596 | | | | 55,201 | |
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| Total liabilities and stockholders’ equity | | $ | 133,487 | | | $ | 133,507 | |
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