Press Release 405 Lancaster Avenue
Greer, South Carolina 29650
(864) 879-1000
Contact: Fred T. Grant, Jr.For Immediate Release
Senior Vice President - Finance February 1, 2006
RYAN'S REPORTS FOURTH QUARTER AND FISCAL YEAR 2005 RESULTS
_________________________________________
GREER, SOUTH CAROLINA - - Ryan's Restaurant Group, Inc.
(NASDAQ:RYAN) today reported financial results for the fourth
quarter and fiscal year 2005.
Fourth quarter restaurant sales amounted to $196.9 million
compared to $193.5 million during the comparable quarter of 2004.
Net earnings were $4,143,000 for the fourth quarter of 2005 and
$8,170,000 for the fourth quarter of 2004. Earnings per share
(diluted) were 10 cents and 19 cents for the fourth quarters of
2005 and 2004, respectively.
For the year ended December 28, 2005, restaurant sales
amounted to $825.0 million compared to $827.0 million during
2004. Net earnings were $26.4 million in 2005 and $46.9 million
in 2004. Earnings per share (diluted) were $0.62 in 2005
compared to $1.09 in 2004.
Commenting on the quarter, Charles D. Way, Chairman and CEO
of the Company, said, "The fourth quarter of 2005 concludes a
very difficult year for Ryan's. Our sales were adversely
affected throughout much of 2005 by high gasoline and utility
costs which impacted our customers' discretionary spending.
During the fourth quarter, our sales results improved with same-
store sales up by 0.6% for the quarter compared to a 3.6%
decrease for the first nine months of the year. We believe that
this improvement resulted from lower gasoline prices and
affordable utility costs, resulting from the moderate winter
temperatures experienced during the quarter. Our breakfast
program also had significant impact as we implemented breakfast
in 119 restaurants during the quarter. For example, breakfast
sales added 1.0% to December's reported same-store sales decrease
of 0.7%. At year-end, breakfast was in 157 restaurants. All new
restaurants will open with breakfast, and we plan to add
breakfast to our remaining 181 restaurants throughout 2006. We
look forward to improved sales results during 2006. So far, our
same-store sales for January 2006 have been consistently
positive.
"Our fourth quarter's cost of sales was impacted primarily
by higher electricity and natural gas costs, which increased by a
combined 1.1% of sales, and by higher impairment charges, which
were also up 1.1% of sales. During the fourth quarter we
impaired one and closed three underperforming units. Our hourly
labor costs also increased during the quarter (+0.3% of sales)
due to our year-long efforts to improve customer service through
increased staffing levels. Absent an increase in the minimum
wage rate, we expect our hourly labor costs to stabilize in 2006
as we implemented the higher staffing in late-2004.
"General and administrative costs increased principally
during the quarter due to an additional $1 million accrual
towards the settlement of a wage and hour collective-action
lawsuit in Tennessee, which, as disclosed in our SEC filings, has
been proceeding since November 2002. At year-end, we had accrued
$6 million in total for this case, representing our estimate of
the minimum settlement amount. We have been in negotiation with
the plaintiffs' attorney throughout the fourth quarter and
currently cannot estimate either the settlement date or the
ultimate effect on the Company's financial results or cash flow.
"Regarding 2006, in addition to implementing breakfast
throughout our restaurants, we also plan to open four new
restaurants, including one potential relocation. We are
currently re-evaluating our remodeling program in order to
develop a more cost-efficient prototype that can produce a higher
return-on-investment. We have developed a lower-cost prototype
and are encouraged with its early results, but intend to proceed
slowly with future conversions until we are confident that they
will consistently produce the desired returns. Until then, our
plans are focused on the paydown of debt in order to position us
in a strong financial condition for future growth."
At December 28, 2005, the Company owned and operated 338
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
www.ryansinc.com 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 28, December 29, December 28, December 29,
2005 2004 2005 2004
<s> <c> <c> <c> <c>
Restaurant sales $196,870,000 193,481,000 824,986,000 827,015,000
Cost of sales:
Food and beverage 67,700,000 66,430,000 286,833,000 288,083,000
Payroll and
benefits 66,128,000 64,198,000 272,043,000 267,698,000
Depreciation 8,517,000 8,223,000 33,651,000 32,685,000
Impairment charges 2,463,000 371,000 6,527,000 1,539,000
Other restaurant
expenses 33,799,000 29,181,000 132,916,000 117,199,000
Total cost
of sales 178,607,000 168,403,000 731,970,000 707,204,000
General and
administrative
expenses 11,868,000 10,654,000 49,369,000 41,416,000
Interest expense 2,553,000 2,608,000 9,696,000 10,640,000
Revenues from
franchised
restaurants - (210,000) (344,000) (1,161,000)
Other income, net (1,541,000) (905,000) (4,430,000) (2,602,000)
Earnings before
income taxes 5,383,000 12,931,000 38,725,000 71,518,000
Income taxes 1,240,000 4,761,000 12,345,000 24,592,000
Net earnings $4,143,000 8,170,000 26,380,000 46,926,000
Earnings per
common share:
Basic $ .10 .20 .63 1.12
Diluted $ .10 .19 .62 1.09
Weighted-average
shares:
Basic 42,051,000 41,811,000 41,969,000 41,803,000
Diluted 42,530,000 42,923,000 42,689,000 43,235,000
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<table>
RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
December 28, December 29,
2005 2004
ASSETS (Unaudited)
Current assets:
<s> <c> <c>
Cash and cash equivalents $5,120,000 7,354,000
Receivables 5,007,000 4,639,000
Inventories 5,176,000 5,611,000
Prepaid expenses 985,000 1,016,000
Deferred income taxes 7,417,000 5,110,000
Total current assets 23,705,000 23,730,000
Property and equipment:
Land and improvements 170,424,000 162,082,000
Buildings 513,932,000 480,781,000
Equipment 287,581,000 271,431,000
Construction in progress 23,405,000 31,531,000
995,342,000 945,825,000
Less accumulated depreciation 323,012,000 295,852,000
Net property and equipment 672,330,000 649,973,000
Other assets 10,793,000 10,643,000
$706,828,000 684,346,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 6,468,000 5,963,000
Current portion of long-term debt 18,750,000 18,750,000
Income taxes payable 4,118,000 1,842,000
Accrued liabilities 46,691,000 42,569,000
Total current liabilities 76,027,000 69,124,000
Long-term debt 154,500,000 164,250,000
Deferred income taxes 46,768,000 47,674,000
Other long-term liabilities 5,899,000 7,692,000
Total liabilities 283,194,000 288,740,000
Shareholders' equity:
Common stock of $1.00 par value;
authorized 100,000,000 shares;
issued 42,122,000 shares in
2005 and 41,890,000 shares in
2004 42,122,000 41,890,000
Additional paid-in capital 5,294,000 3,878,000
Retained earnings 376,218,000 349,838,000
Total shareholders' equity 423,634,000 395,606,000
Commitments and contingencies
$706,828,000 684,346,000
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<table>
RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended
December 28, December 29,
2005 2004
Cash flows from operating activities:
<s> <c> <c>
Net earnings $26,380,000 46,926,000
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 35,610,000 34,459,000
Impairment charges 6,527,000 1,539,000
Gain on sale of property and
equipment (1,022,000) (1,706,000)
Tax benefit related to stock
option programs 1,082,000 3,337,000
Deferred income taxes (3,213,000) 4,890,000
Decrease (increase) in:
Receivables (368,000) (346,000)
Inventories 435,000 37,000
Prepaid expenses 31,000 742,000
Other assets (258,000) (2,206,000)
Increase (decrease) in:
Accounts payable 505,000 (617,000)
Income taxes payable 2,276,000 554,000
Accrued liabilities 4,122,000 643,000
Other long-term liabilities (1,793,000) 1,561,000
Net cash provided by operating
activities 70,314,000 89,813,000
Cash flows from investing
activities:
Proceeds from sale of property
and equipment 14,078,000 9,877,000
Capital expenditures (77,236,000) (75,754,000)
Net cash used in investing
activities (63,158,000) (65,877,000)
Cash flows from financing
activities:
Net borrowings (repayment) of
revolving credit facility 9,000,000 (13,000,000)
Repayment of senior notes (18,750,000) -
Debt issuance costs (206,000) (602,000)
Proceeds from stock options
exercised 2,418,000 6,611,000
Repurchases of common stock (1,852,000) (18,208,000)
Net cash used in financing
activities (9,390,000) (25,199,000)
Net decrease in cash and cash
equivalents (2,234,000) (1,263,000)
Cash and cash equivalents -
beginning of period 7,354,000 8,617,000
Cash and cash equivalents -
end of period $5,120,000 7,354,000
Supplemental disclosures
Cash paid during period for:
Interest, net of amount
capitalized $ 10,333,000 10,760,000
Income taxes 12,767,000 16,488,000
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