Press Release 405 Lancaster Avenue
Greer, South Carolina 29650
(864) 879-1000
Contact: Fred T. Grant, Jr. For Immediate Release
Senior Vice President - Finance July 21, 2004
RYAN'S ANNOUNCES SECOND QUARTER 2004 RESULTS
______________________
GREER, SOUTH CAROLINA - - Ryan's Restaurant Group, Inc.
(NASDAQ:RYAN) reported second quarter 2004 results today.
Second quarter restaurant sales were $216,546,000 in 2004
compared to $208,504,000 for the second quarter of 2003. Net
earnings for the quarter amounted to $14,170,000 in 2004 and
$14,329,000 in 2003. Earnings per share (diluted) amounted to 33
cents for the second quarters of both 2004 and 2003.
For the six months ended June 30, 2004, restaurant sales
increased to $428,203,000 compared to $401,696,000 for the first
six months of 2003. Net earnings for the six months amounted to
$29,530,000 in 2004 compared to $26,427,000 in 2003. Earnings
per share (diluted) amounted to 68 cents in 2004 compared to 60
cents in 2003.
Commenting on the quarter, Charles D. Way, President and CEO
of the Company, said, "Our financial results for the second
quarter were impacted by both softer sales and higher costs.
Same-store sales were up 2.0% in April, but suddenly weakened in
May. This weakness continued into June, resulting in same-store
sales being down 1.5% during the combined May and June periods.
Given the suddenness of the downturn, we believe that economic
factors, and particularly the significant increase in gasoline
prices and the surrounding publicity, were behind this sales
shift. Our customers are very value-driven, and given the
inevitable increase in their transportation expenses, it is
reasonable to expect that they would cut back on other
discretionary expenses, such as dining out. We further believe
that as consumers become accustomed to higher gasoline costs,
they will gradually go back to their prior spending (and eating-
out) habits."
We were also affected by higher beef costs during the
quarter with our average sirloin price up 21% compared to the
second quarter of 2003. Although July's beef costs have
continued to be high, we have recently seen beef prices drop by
about 20%, due principally to reduced retail demand, and have
purchased sufficient quantities so that our food costs should be
at more moderate levels during the third quarter. Our store-
level costs were also impacted by higher medical and workers'
compensation insurance claims and by higher electricity costs.
In addition, although total outstanding debt decreased by $11
million since June 2003, interest expense increased due to higher
cost fixed-rate debt that replaced a significant portion of our
lower cost floating-rate debt in July 2003. Finally, similar to
the first quarter, our effective income tax rate for the second
quarter benefited from certain federal income tax credit hiring
programs, such as the Work Opportunity Tax Credit program, and
from lower state income tax expense, but will increase relative
to 2003 during subsequent quarters if these tax credit hiring
programs are not re-enacted by the U.S. Congress."
Our plan for the remainder of 2004 is to continue building
sales through a combination of new store growth, our lodge-look
remodeling program and local store marketing. We currently plan
to open nine restaurants, including two potential relocations,
and remodel 9 to 11 existing restaurants during the remainder of
the year. Our local store marketing program is fully implemented
in all of our restaurants, and we believe that our store managers
and team members are making a positive difference in attracting
new customers to our restaurants through a combination of
community involvement and effective merchandising."
At June 30, 2004, the Company owned and operated 337 and was
franchiser of 12 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; an adverse food safety event; 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.
<table>
RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Quarter Ended
June 30, July 2,
2004 2003
<s> <c> <c>
Restaurant sales $ 216,546,000 208,504,000
Cost of sales:
Food and beverage 76,273,000 73,801,000
Payroll and benefits (1) 69,175,000 65,069,000
Depreciation 8,188,000 8,049,000
Other restaurant expenses 29,355,000 28,092,000
Total cost of sales 182,991,000 175,011,000
General and administrative
expenses (1) 10,255,000 9,591,000
Interest expense 2,749,000 2,322,000
Royalties from franchised restaurants (323,000) (404,000)
Other income, net (531,000) (475,000)
Earnings before income taxes 21,405,000 22,459,000
Income taxes 7,235,000 8,130,000
Net earnings $14,170,000 14,329,000
Net earnings per common share:
Basic $ .34 .34
Diluted .33 .33
Weighted-average shares:
Basic 41,639,000 42,143,000
Diluted 43,258,000 43,670,000
</table>
(1) Certain 2003 incentive bonus amounts for store
management and hourly team members have been
reclassified to store-level payroll and benefits from
general and administrative expenses to conform to the
2004 presentation. These costs amounted to
$1,204,000 in 2004 and $708,000 in 2003. This
reclassification does not change either net earnings
or shareholders' equity for 2003.
<table>
RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Six Months Ended
June 30, July 2,
2004 2003
<s> <c> <c>
Restaurant sales $ 428,203,000 401,696,000
Cost of sales:
Food and beverage 148,773,000 141,806,000
Payroll and benefits (1) 136,045,000 126,017,000
Depreciation 16,745,000 15,997,000
Other restaurant expenses 58,167,000 55,304,000
Total cost of sales 359,730,000 339,124,000
General and administrative
expenses (1) 20,577,000 18,653,000
Interest expense 5,434,000 4,728,000
Royalties from franchised restaurants (686,000) (807,000)
Other income, net (1,459,000) (1,424,000)
Earnings before income taxes 44,607,000 41,422,000
Income taxes 15,077,000 14,995,000
Net earnings $29,530,000 26,427,000
Net earnings per common share:
Basic $ .71 .62
Diluted .68 .60
Weighted-average shares:
Basic 41,860,000 42,313,000
Diluted 43,584,000 43,689,000
</table>
(1) Certain 2003 incentive bonus amounts for store management
and hourly team members have been reclassified to store-level
payroll and benefits from general and administrative expenses to
conform to the 2004 presentation. These costs amounted to
$2,807,000 in 2004 and $1,460,000 in 2003. This reclassification
does not change either net earnings or shareholders' equity for
2003.
<table>
RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2004 2003
ASSETS (Unaudited)
<s> <c> <c>
Current assets:
Cash and cash equivalents $17,037,000 8,617,000
Receivables 4,373,000 4,293,000
Inventories 6,561,000 5,648,000
Prepaid expenses 1,687,000 1,758,000
Deferred income taxes 5,150,000 5,150,000
Total current assets 34,808,000 25,466,000
Property and equipment:
Land and improvements 158,878,000 154,528,000
Buildings 464,407,000 449,561,000
Equipment 262,118,000 252,611,000
Construction in progress 25,977,000 25,789,000
911,380,000 882,489,000
Less accumulated depreciation 279,502,000 264,339,000
Net property and equipment 631,878,000 618,150,000
Other assets 8,371,000 8,073,000
Total assets $675,057,000 651,689,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 9,628,000 6,580,000
Current portion of
long-term debt 34,750,000 -
Income taxes payable 842,000 1,288,000
Accrued liabilities 48,805,000 42,590,000
Total current liabilities 94,025,000 50,458,000
Long-term debt 156,250,000 196,000,000
Deferred income taxes 42,931,000 42,824,000
Other long-term liabilities 5,901,000 5,467,000
Total liabilities 299,107,000 294,749,000
Shareholders' equity:
Common stock of $1.00 par
value; authorized
100,000,000 shares; issued
41,654,000 shares in 2004
and 41,843,000 shares
in 2003 41,654,000 41,843,000
Additional paid-in capital 1,854,000 1,412,000
Retained earnings 332,442,000 313,685,000
Total shareholders' equity 375,950,000 356,940,000
Commitments and contingencies
Total liabilities and
shareholders' equity $675,057,000 651,689,000
</table>
<table>
RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30, July 2,
2004 2003
<s> <c> <c>
Cash flows from operating
activities:
Net earnings $29,530,000 26,427,000
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 17,635,000 16,858,000
Loss (gain) on sale of
property and equipment 502,000 (395,000)
Tax benefit from exercise
of stock options 2,679,000 284,000
Deferred income taxes 107,000 150,000
Decrease (increase) in:
Receivables (80,000) (631,000)
Inventories (913,000) (692,000)
Prepaid expenses 71,000 490,000
Income taxes receivable - 2,739,000
Other assets (410,000) (639,000)
Increase (decrease) in:
Accounts payable 3,048,000 49,000
Income taxes payable (446,000) 6,993,000
Accrued liabilities 6,215,000 4,995,000
Other long-term liabilities 434,000 464,000
Net cash provided by operating
activities 58,372,000 57,092,000
Cash flows from investing activities:
Proceeds from sale of property
and equipment 3,302,000 3,774,000
Capital expenditures (35,055,000)(36,334,000)
Net cash used in investing
activities (31,753,000)(32,560,000)
Cash flows from financing activities:
Net repayment of revolving credit
facility (5,000,000) -
Proceeds from stock options
exercised 5,008,000 832,000
Purchase of common stock (18,207,000) (7,841,000)
Net cash used in financing
activities (18,199,000) (7,009,000)
Net increase in cash and
cash equivalents 8,420,000 17,523,000
Cash and cash equivalents -
beginning of period 8,617,000 2,654,000
Cash and cash equivalents -
end of period $17,037,000 20,177,000
Supplemental disclosures
Cash paid during period for:
Interest, net of amount
capitalized $ 5,488,000 5,129,000
Income taxes 12,737,000 4,829,000
</table>