Press Release 405 Lancaster Avenue
Greer, South Carolina 29650
(864) 879-1000
Contact: Fred T. Grant, Jr. For Immediate Release
Senior Vice President - Finance October 22, 2003
RYAN'S ANNOUNCES THIRD QUARTER 2003 RESULTS
______________________
GREER, SOUTH CAROLINA - - Ryan's Family Steak Houses, Inc.
(NASDAQ:RYAN) reported its third quarter 2003 results today.
Third quarter restaurant sales were $205,686,000 in 2003
compared to $194,115,000 for the third quarter of 2002. Net
earnings for the quarter amounted to $10,997,000 in 2003 compared
to $11,527,000 in 2002. Earnings per share (diluted) amounted to
25 cents in 2003 compared to 26 cents in 2002.
For the nine months ended October 1, 2003, restaurant sales
increased to $607,382,000 compared to $588,712,000 for the first
nine months of 2002. Net earnings for the nine months amounted
to $37,424,000 in 2003 compared to $40,374,000 in 2002. Earnings
per share (diluted) amounted to 86 cents in 2003 compared to 88
cents in 2002.
Commenting on the quarter, Charles D. Way said, "The
dynamics leading to the third quarter's results are mixed. Our
same-store sales strengthened during the quarter, up 2% for both
August and September and amounting to +1.2% for the quarter.
We're pleased with the sales performance at our remodeled
restaurants, which have seen sales gains in excess of 10% during
the quarter. Our challenge is to better control the costs
associated with the remodeling process. These restaurants are
typically closed for 5 to 8 weeks for construction purposes, and
the third quarter loss of profits for these temporary closings
was approximately $770,000 before taxes. They also incur
additional pre-opening costs as we maintain our team member base,
train new team members and get ready to re-open the store. Such
costs during the quarter amounted to approximately $490,000
before taxes. Finally, when these stores re-open, they initially
incur higher food costs and receive additional payroll allowances
for several months. Consequently, we are slowing down the
conversion rate from 40 to about 20 locations per year while we
examine these costs and modify our procedures.
Other cost issues during the quarter were principally with
other restaurant expenses and interest expense. As a percent of
sales, store-level payroll and benefits actually decreased, and
food costs remained consistent with last year. However, higher-
than-normal beef costs resulting from the current Canadian beef
embargo are expected to adversely impact store-level profits
during at least the fourth quarter. Natural gas costs continue
to be high, and, due to our emphasis on local marketing costs,
store-level advertising costs have also increased. Finally,
interest expense increased due to a new long-term refinancing
arrangement for $100 million of 4.65% senior notes that closed in
July 2003.
We believe that we are on track with our sales growth and
that a more strategic remodeling program will continue to result
in sales growth and better profits. Our new stores continue to
produce excellent sales results, and during the fourth quarter of
2003 we plan to open 3 restaurants, including one relocation.
Our plans for 2004 call for 15 to 18 new restaurants, including
five potential remodels."
At October 1, 2003, the Company owned and operated 332 and
was franchiser of 19 restaurants.
In connection with this press release, members of Ryan's
executive management will be holding a conference call with
investment analysts today at 4:00 p.m. EDT. The public can
listen to a live webcast of this call by logging on to the web at
either www.ryansinc.com or www.prnewswire.com and following the
appropriate links.
Certain matters discussed in this press release are forward-
looking statements within the meaning of the federal securities
laws and are subject to uncertainties and risks, including, but
not limited to, general economic conditions, including consumer
confidence levels; competition; developments affecting the
public's perception of buffet-style restaurants; real estate
availability; food and labor supply costs; food and labor
availability; weather fluctuations; interest rate fluctuations;
stock market conditions; political environment (including acts of
terrorism and wars); and other such risks described from time to
time in the Company's reports filed with the Securities and
Exchange Commission.
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RYAN'S FAMILY STEAK HOUSES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Quarter Ended
October 1, October 2,
2003 2002
<s> <c> <c>
Restaurant sales $205,686,000 194,115,000
Cost of sales:
Food and beverage 73,185,000 69,152,000
Payroll and benefits 64,899,000 61,636,000
Depreciation 8,049,000 7,586,000
Other restaurant expenses 29,820,000 26,551,000
Total cost of sales 175,953,000 164,925,000
General and administrative
expenses 10,429,000 9,650,000
Interest expense 2,764,000 2,297,000
Revenues from franchised restaurants (358,000) (399,000)
Other income, net (339,000) (427,000)
Earnings before income taxes 17,237,000 18,069,000
Income taxes 6,240,000 6,542,000
Net earnings $10,997,000 11,527,000
Net earnings per common share:
Basic $ .26 .27
Diluted .25 .26
Weighted-average shares:
Basic 42,210,000 43,264,000
Diluted 43,881,000 44,778,000
</table>
<table>
RYAN'S FAMILY STEAK HOUSES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Nine Months Ended
October 1, October 2,
2003 2002
<s> <c> <c>
Restaurant sales $607,382,000 588,712,000
Cost of sales:
Food and beverage 214,991,000 211,354,000
Payroll and benefits 189,456,000 181,263,000
Depreciation 24,046,000 22,289,000
Other restaurant expenses 85,124,000 78,579,000
Total cost of sales 513,617,000 493,485,000
General and administrative
expenses 30,542,000 28,437,000
Interest expense 7,492,000 6,898,000
Revenues from franchised
restaurants (1,165,000) (1,294,000)
Other income, net (1,763,000) (2,098,000)
Earnings before income taxes 58,659,000 63,284,000
Income taxes 21,235,000 22,910,000
Net earnings $37,424,000 40,374,000
Net earnings per common share:
Basic $ .89 .92
Diluted .86 .88
Weighted-average shares:
Basic 42,279,000 43,944,000
Diluted 43,752,000 45,964,000
</table>
<table>
RYAN'S FAMILY STEAK HOUSES, INC.
CONSOLIDATED BALANCE SHEETS
October 1, January 1,
2003 2003
ASSETS (Unaudited)
Current assets:
<s> <c> <c>
Cash and cash equivalents $ 20,144,000 2,654,000
Receivables 4,916,000 5,010,000
Inventories 5,698,000 5,119,000
Prepaid expenses 1,604,000 1,266,000
Income taxes receivable - 2,739,000
Deferred income taxes 4,676,000 4,676,000
Total current assets 37,038,000 21,464,000
Property and equipment:
Land and improvements 152,989,000 144,859,000
Buildings 443,104,000 413,700,000
Equipment 248,758,000 231,244,000
Construction in progress 22,699,000 29,245,000
867,550,000 819,048,000
Less accumulated depreciation 257,228,000 234,627,000
Net property and equipment 610,322,000 584,421,000
Other assets 7,885,000 7,194,000
$655,245,000 613,079,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 8,466,000 10,896,000
Income taxes payable 6,167,000 -
Accrued liabilities 41,352,000 35,748,000
Total current liabilities 55,985,000 46,644,000
Long-term debt 202,000,000 202,000,000
Deferred income taxes 39,588,000 39,375,000
Other long-term liabilities 5,293,000 4,579,000
Total liabilities 302,866,000 292,598,000
Shareholders' equity:
Common stock of $1.00 par value;
authorized 100,000,000 shares;
issued 42,280,000 shares in 2003
and 42,745,000 shares in 2002 42,280,000 42,745,000
Additional paid-in capital 1,326,000 2,066,000
Retained earnings 308,773,000 275,670,000
Total shareholders' equity 352,379,000 320,481,000
Commitments and contingencies
$655,245,000 613,079,000
</table>
<table>
RYAN'S FAMILY STEAK HOUSES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
October 1, October 2,
2003 2002
Cash flows from operating
activities:
<s> <c> <c>
Net earnings $37,424,000 40,374,000
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 25,538,000 23,363,000
Gain on sale of property and
equipment (110,000) (10,000)
Tax benefit from exercise of
stock options 631,000 1,090,000
Deferred income taxes 213,000 229,000
Decrease (increase) in:
Receivables 94,000 223,000
Inventories (579,000) 45,000
Prepaid expenses (338,000) (760,000)
Income taxes receivable 2,739,000 -
Other assets (893,000) (599,000)
Increase (decrease) in:
Accounts payable (2,430,000) 2,421,000
Income taxes payable 6,167,000 3,049,000
Accrued liabilities 5,604,000 (609,000)
Other long-term liabilities 714,000 751,000
Net cash provided by operating
activities 74,774,000 69,567,000
Cash flows from investing activities:
Proceeds from sale of property
and equipment 5,845,000 5,373,000
Capital expenditures (56,814,000)(56,607,000)
Net cash used in investing
activities (50,969,000)(51,234,000)
Cash flows from financing activities:
Net proceeds from (repayment of)
revolving credit facility (100,000,000) 24,000,000
Proceeds from issuance of
senior notes 100,000,000 -
Debt issuance costs (158,000) -
Proceeds from stock options
exercised 1,684,000 2,868,000
Purchase of common stock (7,841,000)(45,980,000)
Net cash used in financing
activities (6,315,000)(19,112,000)
Net increase (decrease) in cash
and cash equivalents 17,490,000 (779,000)
Cash and cash equivalents -
beginning of period 2,654,000 13,323,000
Cash and cash equivalents -
end of period $ 20,144,000 12,544,000
Supplemental disclosures
Cash paid during period for:
Interest, net of amount
capitalized $ 9,224,000 8,441,000
Income taxes 17,995,000 24,868,000
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