Press Release 405 Lancaster Avenue
Greer, South Carolina 29650
(864) 879-1000
Contact: Fred T. Grant, Jr. For Immediate Release
Senior Vice President - Finance January 28, 2004
RYAN'S REPORTS RECORD FOURTH QUARTER 2003 RESULTS
_________________________________________
GREER, SOUTH CAROLINA - - Ryan's Family Steak Houses, Inc.
(NASDAQ:RYAN) today reported record financial results for the
fourth quarter of 2003.
Fourth quarter restaurant sales grew to $197.6 million from
$185.1 million during the comparable quarter of 2002. Net
earnings for the fourth quarter of 2003 increased to $12,399,000
from $10,011,000 in 2002. Earnings per share (diluted) for the
fourth quarter of 2003 reached a new record level of 28 cents
compared to 23 cents in 2002.
For the year ended December 31, 2003, restaurant sales grew
to $805.0 million, up from $773.8 million during 2002. Net
earnings amounted to $49.8 million in 2003 and $50.4 million in
2002. Earnings per share (diluted) increased to $1.14 in 2003
from $1.11 cents in 2002.
Management noted that both the fourth quarter's and full
year's results were impacted by a decrease in the Company's full-
year effective tax rate to 33.5% for 2003 from 36.2% for 2002,
resulting principally from higher federal and state tax credits
based on revised estimates made during the fourth quarter. The
fourth quarter's effective tax rate decreased to 23.8% for 2003
from 36.2% for 2002 in order to reflect this change. For
comparison purposes, earnings before income taxes for the fourth
quarter of 2003 increased by 3.7% over the comparable period in
2002. Earnings before income taxes for the full-year 2003
decreased by 5.1% compared to 2002's amount. Assuming that the
continuation of the Work Opportunity Tax Credit is legislated by
the U.S. Congress, management believes that the Company's
effective rate for 2004 should be approximately 33.8%.
Important achievements for the Company during 2003 included:
Average unit sales records were set for nine out of twelve
months and for three out of four quarters in 2003 and for the
year 2003 itself;
Same-store sales strengthened during the year with a 4%
increase during the fourth quarter;
New restaurants that were opened in 2003 produced excellent
sales results, averaging $3.5 million per location (annualized);
and
Share repurchases for 2003 amounted to 1.5 million shares,
resulting in lifetime share repurchases approximately 43.2
million shares, or 54% of the shares that were outstanding at the
start of the repurchase program in 1996.
Commenting on the quarter, Charles D. Way, Chairman and CEO
of the Company, said, "Our restaurant operations benefited from
good sales trends and strong food cost controls during the fourth
quarter. Same-store sales increased by 4% due to good results
from our lodge conversions and the beneficial impact of our local
store marketing program. We spent significant time during the
fourth quarter analyzing costs associated with our conversions
and now believe that we can implement the conversions at a lower
cost and with less closed-store time. In addition, food costs at
our converted units appear to be properly controlled. We have
converted 24 restaurants to the lodge prototype, which includes
display cooking, and plan to convert another 20 to 25 restaurants
during 2004. Also, our restaurant managers are very excited
about their involvement with our local store marketing program.
This program has focused our managers on effective merchandising
and being a part of their local communities with a goal of
bringing new customers to their restaurants. We expect to see
future benefits from this program during the upcoming year."
We are also pleased that, in spite of significantly higher
beef costs, our food costs for the quarter did not increase, as a
percent of sales, over the prior year. While we benefited from
lower poultry and seafood costs and also higher menu prices at
selected locations, our store managers focused on controlling
their food costs and favorably impacted these costs."
We look forward to a more profitable 2004. Our sales trends
are strong, and beef costs have decreased from their high fourth
quarter levels. Our variety makes Ryan's a great place for any
diet. We serve fresh fruits and vegetables as well as several
sugar-free desserts. We also serve many low-carbohydrate items
and in the near future will be introducing several new low-
carbohydrate specialties for our customers. Ryan's is for
everyone, and we look forward to continuing our tradition of
serving our customers great food at reasonable prices with
friendly service."
At December 31, 2003, the Company owned and operated 334 and
was franchiser of 18 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. ET. 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); legislative decisions involving tax issues by
both federal and state governments; 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 Year Ended
December 31, January 1, December 31, January 1,
2003 2003 2003 2003
<s> <c> <c> <c> <c>
Restaurant sales $197,627,000 185,105,000 805,009,000 773,817,000
Cost of sales:
Food and beverage 68,544,000 64,320,000 283,535,000 275,674,000
Payroll and benefits 63,696,000 60,157,000 253,152,000 241,420,000
Depreciation 8,457,000 7,937,000 32,503,000 30,226,000
Other restaurant
expenses 27,748,000 25,758,000 112,872,000 104,337,000
Total cost of
sales 168,445,000 158,172,000 682,062,000 651,657,000
General and
administrative
expenses 11,480,000 9,597,000 42,022,000 38,034,000
Interest expense 2,724,000 2,404,000 10,216,000 9,302,000
Revenues from
franchised restaurants(338,000) (369,000) (1,503,000) (1,663,000)
Other income, net (946,000) (388,000) (2,709,000) (2,486,000)
Earnings before
income taxes 16,262,000 15,689,000 74,921,000 78,973,000
Income taxes 3,863,000 5,678,000 25,098,000 28,588,000
Net earnings $12,399,000 10,011,000 49,823,000 50,385,000
Earnings per common share:
Basic $ .30 .23 1.18 1.15
Diluted $ .28 .23 1.14 1.11
Weighted-average shares:
Basic 42,004,000 42,886,000 42,210,000 43,680,000
Diluted 43,758,000 44,180,000 43,754,000 45,518,000
</table>
<table>
RYAN'S FAMILY STEAK HOUSES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, January 1,
2003 2003
ASSETS (Unaudited)
Current assets:
<s> <c> <c>
Cash and cash equivalents $8,617,000 2,654,000
Receivables 4,293,000 5,010,000
Inventories 5,648,000 5,119,000
Prepaid expenses 1,758,000 1,266,000
Income taxes receivable - 2,739,000
Deferred income taxes 5,150,000 4,676,000
Total current assets 25,466,000 21,464,000
Property and equipment:
Land and improvements 154,528,000 144,859,000
Buildings 449,561,000 413,700,000
Equipment 252,611,000 231,244,000
Construction in progress 25,789,000 29,245,000
882,489,000 819,048,000
Less accumulated depreciation 264,339,000 234,627,000
Net property and equipment 618,150,000 584,421,000
Other assets 8,073,000 7,194,000
$651,689,000 613,079,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 7,080,000 10,896,000
Income taxes payable 1,288,000 -
Accrued liabilities 42,090,000 35,748,000
Total current liabilities 50,458,000 46,644,000
Long-term debt 196,000,000 202,000,000
Deferred income taxes 42,824,000 39,375,000
Other long-term liabilities 5,467,000 4,579,000
Total liabilities 294,749,000 292,598,000
Shareholders' equity:
Common stock of $1.00 par
value; authorized 100,000,000
shares; issued 41,843,000 shares
in 2003 and 42,745,000 shares in
2002 41,843,000 42,745,000
Additional paid-in capital 1,412,000 2,066,000
Retained earnings 313,685,000 275,670,000
Total shareholders' equity 356,940,000 320,481,000
Commitments and contingencies
$651,689,000 613,079,000
</table>
<table>
RYAN'S FAMILY STEAK HOUSES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended
December 31, January 1,
2003 2003
Cash flows from operating
activities:
<s> <c> <c>
Net earnings $49,823,000 50,385,000
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 34,445,000 31,644,000
Gain on sale of property
and equipment (150,000) (28,000)
Tax benefit related to stock
option programs 1,412,000 1,784,000
Deferred income taxes 2,975,000 8,328,000
Decrease (increase) in:
Receivables 717,000 (204,000)
Inventories (529,000) (28,000)
Prepaid expenses (492,000) (450,000)
Income taxes receivable 2,739,000 (2,739,000)
Other assets (1,130,000) (528,000)
Increase (decrease) in:
Accounts payable (3,816,000) (2,576,000)
Income taxes payable 1,288,000 (3,238,000)
Accrued liabilities 6,342,000 (585,000)
Other long-term liabilities 888,000 666,000
Net cash provided by operating
activities 94,512,000 82,431,000
Cash flows from investing activities:
Proceeds from sale of
property and equipment 9,240,000 5,467,000
Capital expenditures (76,853,000) (74,125,000)
Net cash used in investing
activities (67,613,000) (68,658,000)
Cash flows from financing activities:
Net proceeds from (repayment of)
revolving credit facility (106,000,000) 24,000,000
Proceeds from issuance of
senior notes 100,000,000 -
Debt issuance costs (160,000) -
Proceeds from stock options
exercised 3,688,000 3,508,000
Purchase of common stock (18,464,000) (51,950,000)
Net cash used in financing
activities (20,936,000) (24,442,000)
Net increase (decrease) in cash
and cash equivalents 5,963,000 (10,669,000)
Cash and cash equivalents -
beginning of period 2,654,000 13,323,000
Cash and cash equivalents -
end of period $8,617,000 2,654,000
Supplemental disclosures
Cash paid during period for:
Interest, net of amount
capitalized $9,914,000 8,794,000
Income taxes 17,262,000 24,784,000
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