Press Release 405 Lancaster Avenue
Greer, South Carolina 29650
(864) 879-1000
Contact: Fred T. Grant, Jr. For Immediate Release
Senior Vice President - Finance April 26, 2006
RYAN'S ANNOUNCES FIRST QUARTER 2006 RESULTS
______________________
GREER, SOUTH CAROLINA - - Ryan's Restaurant Group, Inc.
(NASDAQ:RYAN) reported first quarter 2006 results today.
First quarter restaurant sales were $213,717,000 in 2006
compared to $209,639,000 for the comparable quarter in 2005. Net
earnings for the quarter amounted to $10,796,000 in 2006 and
$11,813,000 in 2005. Earnings per share (diluted) amounted to 25
cents in 2006 compared to 28 cents in 2005.
Commenting on the quarter, Charles D. Way, CEO of the
Company, said, "Our restaurants achieved good sales improvements
during the first quarter, with average weekly sales up 3.4% and
same-store sales up 1.7%. These higher sales occurred in spite
of an unfavorable mismatch in 2006 with the timing of Easter,
which took place during the first quarter of 2005 but falls in
the second quarter (April) of 2006. In addition, our average
weekly sales during the quarter set a new first quarter record.
Weekend breakfast was being served in 197 restaurants at the end
of the quarter, and we continue to be pleased with this program.
We are starting breakfast at about 20 restaurants per month and
plan to complete the roll-out by the end of the year."
"Costs were well-controlled during the quarter, and, despite
a $1.7 million increase in utility costs, we saw a slight
increase in store operating margin. Our operations staff focused
on strong food and hourly payroll controls, resulting in a
combined 60 basis point decrease in these costs as a percent of
sales. We also incurred lower pre-opening, repairs and
maintenance and general liability insurance costs. These cost
decreases were very important to the quarter's results because
they effectively offset a 90 basis point increase in utility
costs."
"Other notable first quarter items include a $516,000 pre-
tax charge for stock option compensation, resulting from a newly
effective accounting rule and largely included in general and
administrative expenses, and a 2.9% increase in our effective tax
rate due to higher state income taxes and the expiration of the
federal Work Opportunity Tax Credit ("WOTC") program. Although
Congress is considering the extension of the WOTC program and we
expect the extension to occur, we can only recognize expected
future WOTC benefits when the program is officially
reimplemented. In 2005, credits from the WOTC program reduced
our income taxes by approximately $700,000."
"We opened two new restaurants and closed four locations
during the quarter. We also re-opened two other restaurants in
the New Orleans metro area that closed as a result of Hurricane
Katrina. Our current plans call for two new restaurants during
the second half of the year. This reduced level of new store
activity is consistent with our previously disclosed plans to
reduce capital expenditures in 2006 and apply the resulting
excess cash to debt reduction. Although our balance sheets only
indicate a $1.5 million debt reduction during the first quarter,
we repaid $13.3 million in debt on March 30 (the first day of our
second fiscal quarter) and expect to see other significant
repayments during the second quarter. Finally, we continue to
see good results from the two cost-effective display cooking
conversions that were completed in October 2005 and January 2006.
We believe that future similar conversions will cost between
$100,000 and $350,000, depending on the layout and age of the
restaurant, and we currently plan to convert another five
locations during the first half of 2006 as we further evaluate
and adjust this program."
At March 29, 2006, the Company owned and operated 337
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
www.ryans.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.
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Quarter Ended
March 29, March 30,
2006 2005
<s> <c> <c>
Restaurant sales $213,717,000 209,639,000
Cost of sales:
Food and beverage 73,512,000 72,613,000
Payroll and benefits 68,166,000 67,991,000
Depreciation 8,458,000 8,285,000
Impairment charges 244,000 167,000
Other restaurant expenses 33,474,000 31,521,000
Total cost of sales 183,854,000 180,577,000
General and administrative
expenses 11,465,000 10,470,000
Interest expense 2,399,000 2,360,000
Royalties from franchised
restaurants - (174,000)
Other income, net (829,000) (1,200,000)
Earnings before income taxes 16,828,000 17,606,000
Income taxes 6,032,000 5,793,000
Net earnings $10,796,000 11,813,000
Net earnings per common share:
Basic $ .26 .28
Diluted .25 .28
Weighted-average shares:
Basic 42,153,000 41,938,000
Diluted 42,576,000 42,634,000
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
March 29, December 28,
2006 2005
ASSETS (Unaudited)
Current assets:
<s> <c> <c>
Cash and cash equivalents $ 33,770,000 5,120,000
Receivables 5,198,000 5,007,000
Inventories 5,856,000 5,176,000
Prepaid expenses 1,042,000 985,000
Deferred income taxes 7,951,000 7,417,000
Total current assets 53,817,000 23,705,000
Property and equipment:
Land and improvements 169,247,000 170,424,000
Buildings 510,610,000 513,932,000
Equipment 284,733,000 287,581,000
Construction in progress 15,130,000 23,405,000
979,720,000 995,342,000
Less accumulated depreciation 318,747,000 323,012,000
Net property and equipment 660,973,000 672,330,000
Other assets 11,102,000 10,793,000
Total assets $725,892,000 706,828,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 7,834,000 6,468,000
Current portion of long-term
debt 18,750,000 18,750,000
Income taxes payable 8,493,000 4,118,000
Accrued liabilities 49,469,000 46,691,000
Total current liabilities 84,546,000 76,027,000
Long-term debt 153,050,000 154,500,000
Deferred income taxes 46,936,000 46,768,000
Other long-term liabilities 5,878,000 5,899,000
Total liabilities 290,410,000 283,194,000
Shareholders' equity:
Common stock of $1.00
par value; authorized
100,000,000 shares; issued
42,182,000 shares in 2006
and 42,122,000 shares
in 2005 42,182,000 42,122,000
Additional paid-in capital 6,286,000 5,294,000
Retained earnings 387,014,000 376,218,000
Total shareholders' equity 435,482,000 423,634,000
Commitments and contingencies
Total liabilities and
shareholders' equity $725,892,000 706,828,000
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 29, March 30,
2006 2005
Cash flows from operating
activities:
<s> <c> <c>
Net earnings $10,796,000 11,813,000
Adjustments to reconcile net
earnings to net cash
provided by operating
activities:
Depreciation and
amortization 8,929,000 8,763,000
Impairment charges 244,000 167,000
Gain on sale of property
and equipment (1,253,000) (629,000)
Stock option compensation 516,000 -
Deferred income taxes (366,000) 196,000
Decrease (increase) in:
Receivables (191,000) 595,000
Inventories (680,000) (1,165,000)
Prepaid expenses (57,000) 79,000
Other assets (363,000) (237,000)
Increase (decrease) in:
Accounts payable 1,366,000 3,474,000
Income taxes payable 4,375,000 5,079,000
Accrued liabilities 2,778,000 738,000
Other long-term liabilities (21,000) 268,000
Net cash provided by operating
activities 26,073,000 29,141,000
Cash flows from investing
activities:
Proceeds from sale of property
and equipment 8,884,000 1,955,000
Capital expenditures (5,393,000) (22,177,000)
Net cash provided by (used in)
investing activities 3,491,000 (20,222,000)
Cash flows from financing
activities:
Net borrowings from revolving
credit facility 17,300,000 24,500,000
Repayment of senior notes (18,750,000) (18,750,000)
Proceeds from stock options
exercised 439,000 783,000
Tax benefit from exercise of
stock options 97,000 216,000
Purchase of common stock - (23,000)
Net cash provided by (used in)
financing activities (914,000) 6,726,000
Net increase in cash and cash
equivalents 28,650,000 15,645,000
Cash and cash equivalents -
beginning of period 5,120,000 7,354,000
Cash and cash equivalents -
end of period $ 33,770,000 22,999,000
Supplemental disclosures
Cash paid during period for:
Interest, net of amount
capitalized $ 3,793,000 4,226,000
Income taxes 1,926,000 302,000
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