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 26, 2005
RYAN'S REPORTS FOURTH QUARTER AND FISCAL YEAR 2004 RESULTS
GREER, SOUTH CAROLINA - - Ryan's Restaurant Group, Inc.
(NASDAQ:RYAN) today reported financial results for the fourth
quarter and fiscal year 2004.
Fourth quarter restaurant sales amounted to $193.5 million
compared to $197.6 million during the comparable quarter of 2003.
Net earnings were $9,233,000 for the fourth quarter of 2004 and
$12,399,000 for the fourth quarter of 2003. Earnings per share
(diluted) were 22 cents and 28 cents for the fourth quarters of
2004 and 2003, respectively.
For the year ended December 29, 2004, restaurant sales
amounted to $827.0 million compared to $805.0 million during
2003. Net earnings were $48.0 million in 2004 and $49.8 million
in 2003. Earnings per share (diluted) were $1.11 in 2004
compared to $1.14 cents in 2003.
Commenting on the quarter, Charles D. Way, Chairman and CEO
of the Company, said, "Our fourth quarter was impacted
principally by weak sales levels. Total restaurant sales
deceased by 2%, and same-store sales decreased by 4%. We believe
that sales were impacted principally by continuing uncertain
economic conditions and high energy costs, resulting in more
careful spending and less restaurant visits by our customers. In
addition, our December sales were adversely affected by severe
winter weather during the second half of the month and by the
timing of Christmas. We typically close our restaurants on
Christmas Eve and Christmas Day, which fell on two significant
sales days, Friday and Saturday, in 2004 compared to two lesser
sales days, Wednesday and Thursday, in 2003."
Costs were well-controlled during the quarter, although
margins were significantly impacted by the weak sales levels.
Beef costs, which have been very high during the first nine
months of 2004, improved during the fourth quarter and were
essentially flat compared to the fourth quarter of 2003. Store-
level costs were impacted by higher electricity and gas costs,
and general and administrative expenses were impacted by costs
related to Sarbanes-Oxley compliance. Substantially all other
margin declines resulted principally from the impact of weaker
sales levels on the fixed costs incurred at the restaurants, such
as manager pay, depreciation and many costs included in "other
restaurant expenses"."
As we look forward into 2005, we have recently seen some
improvements in our sales trends and are optimistic that these
improvements will continue throughout 2005. Our new operations
leadership team is focused on building average unit sales and has
implemented new staffing parameters in order to improve customer
service. Our store managers are actively pursuing local
marketing opportunities designed to bring new customers to our
restaurants. We are also upgrading the curb appeal of our
restaurants in order to improve their visibility and impact. Our
sales comparisons will continue to be difficult during the first
quarter, but become easier during the second quarter and forward.
Accordingly, we believe that it is very likely that we will show
positive same-store sales starting during the second quarter.
Sales growth during 2005 will also come from new restaurants and
Fire Mountain conversions. We currently plan to build 17 to 21
new restaurants, including 4 to 6 potential relocations, and
convert 20 to 25 existing restaurants to our Fire Mountain
brand."
At December 29, 2004, the Company owned and operated 341
restaurants and was the franchiser of 7 restaurants. As noted in
Company's annual report on Form 10-K for the fiscal year ended
December 31, 2003 and other filings with the Securities and
Exchange Commission, the franchise relationship with the Company's
sole franchisee is expected to end by no later than June 30, 2005.
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 RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Quarter Ended Year Ended
December 29, December 31, December 29, December 31,
2004 2003 2004 2003
<s> <c> <c> <c> <c>
Restaurant sales $193,481,000 197,627,000 827,015,000 805,009,000
Cost of sales:
Food and beverage 66,430,000 68,544,000 288,083,000 283,535,000
Payroll and
benefits 64,198,000 64,790,000 267,698,000 256,574,000
Depreciation 8,592,000 8,457,000 34,194,000 32,503,000
Other restaurant
expenses 29,183,000 27,748,000 117,229,000 112,872,000
Total cost of
sales 168,403,000 169,539,000 707,204,000 685,484,000
General and
administrative
expenses 10,654,000 10,386,000 41,416,000 38,600,000
Interest expense 2,608,000 2,724,000 10,640,000 10,216,000
Revenues from
franchised
restaurants (210,000) (338,000) (1,161,000) (1,503,000)
Other income, net (905,000) (946,000) (2,602,000) (2,709,000)
Earnings before
income taxes 12,931,000 16,262,000 71,518,000 74,921,000
Income taxes 3,698,000 3,863,000 23,529,000 25,098,000
Net earnings $9,233,000 12,399,000 47,989,000 49,823,000
Earnings per
common share:
Basic $ .22 .30 1.15 1.18
Diluted $ .22 .28 1.11 1.14
Weighted-average
shares:
Basic 41,811,000 42,004,000 41,803,000 42,210,000
Diluted 42,923,000 43,758,000 43,235,000 43,745,000
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
December 29, December 31,
2004 2003
ASSETS (Unaudited)
Current assets:
<s> <c> <c>
Cash and cash equivalents $7,354,000 8,617,000
Receivables 4,639,000 4,293,000
Inventories 5,611,000 5,648,000
Prepaid expenses 1,016,000 1,758,000
Deferred income taxes 5,094,000 5,150,000
Total current assets 23,714,000 25,466,000
Property and equipment:
Land and improvements 162,082,000 154,528,000
Buildings 480,781,000 449,561,000
Equipment 271,431,000 252,611,000
Construction in progress 31,531,000 25,789,000
945,825,000 882,489,000
Less accumulated depreciation 295,852,000 264,339,000
Net property and equipment 649,973,000 618,150,000
Other assets 10,643,000 8,073,000
$684,330,000 651,689,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 5,963,000 7,080,000
Current portion of long-term debt 18,750,000 -
Income taxes payable 910,000 1,288,000
Accrued liabilities 43,291,000 42,090,000
Total current liabilities 68,914,000 50,458,000
Long-term debt 164,250,000 196,000,000
Deferred income taxes 47,527,000 42,824,000
Other long-term liabilities 6,970,000 5,467,000
Total liabilities 287,661,000 294,749,000
Shareholders' equity:
Common stock of $1.00 par value;
authorized 100,000,000 shares;
issued 41,890,000 shares in
2004 and 41,843,000 shares
in 2003 41,890,000 41,843,000
Additional paid-in capital 3,878,000 1,412,000
Retained earnings 350,901,000 313,685,000
Total shareholders' equity 396,669,000 356,940,000
Commitments and contingencies
$684,330,000 651,689,000
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended
December 29, December 31,
2004 2003
Cash flows from operating
activities:
<s> <c> <c>
Net earnings $47,989,000 49,823,000
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 35,968,000 34,445,000
Gain on sale of property and
equipment (1,097,000) (150,000)
Tax benefit related to stock
option programs 3,337,000 1,412,000
Deferred income taxes 4,759,000 2,975,000
Decrease (increase) in:
Receivables (346,000) 717,000
Inventories 37,000 (529,000)
Prepaid expenses 742,000 (492,000)
Income taxes receivable - 2,739,000
Other assets (2,206,000) (1,130,000)
Increase (decrease) in:
Accounts payable (617,000) (3,816,000)
Income taxes payable (378,000) 1,288,000
Accrued liabilities 701,000 6,342,000
Other long-term liabilities 1,503,000 888,000
Net cash provided by operating
activities 90,392,000 94,512,000
Cash flows from investing
activities:
Proceeds from sale of property
and equipment 9,877,000 9,240,000
Capital expenditures (76,333,000) (76,853,000)
Net cash used in investing
activities (66,456,000) (67,613,000)
Cash flows from financing
activities:
Net repayment of revolving
credit facility (13,000,000) (106,000,000)
Proceeds from issuance of
senior notes - 100,000,000
Debt issuance costs (602,000) (160,000)
Proceeds from stock options
exercised 6,611,000 3,688,000
Repurchases of common stock (18,208,000) (18,464,000)
Net cash used in financing
activities (25,199,000) (20,936,000)
Net increase (decrease) in cash
and cash equivalents (1,263,000) 5,963,000
Cash and cash equivalents -
beginning of period 8,617,000 2,654,000
Cash and cash equivalents -
end of period $7,354,000 8,617,000
Supplemental disclosures
Cash paid during period for:
Interest, net of amount
capitalized $10,723,000 9,914,000
Income taxes 16,488,000 17,262,000
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