Press Release 405 Lancaster Avenue
Greer, South Carolina 29650
(864) 879-1000
Contact: Fred T. Grant, Jr. For Immediate Release
Senior Vice President - Finance August 2, 2006
RYAN'S ANNOUNCES SECOND QUARTER 2006 RESULTS
______________________
GREER, SOUTH CAROLINA - - Ryan's Restaurant Group, Inc.
(NASDAQ:RYAN) reported second quarter 2006 results today.
Second quarter restaurant sales were $208,871,000 in 2006
compared to $215,510,000 for the comparable quarter in 2005. Net
earnings for the quarter amounted to $6,863,000 in 2006 and
$6,260,000 in 2005. Earnings per share (diluted) amounted to 16
cents in 2006 compared to 15 cents in 2005.
For the six months ended June 28, 2006, restaurant sales
amounted to $422,588,000 compared to $425,149,000 for the
comparable period in 2005. Net earnings were $17,659,000 in the
first six months of 2006 and $18,073,000 in the first six months
of 2005. Earnings per share (diluted) were 41 cents in the first
six months of 2006 compared to 42 cents in the first six months
of 2005.
Management noted that the second quarter's results included
the following:
* Average weekly sales decreased by 0.5% during the second
quarter of 2006 compared to the comparable period in 2005.
Using the same comparison periods, same-store sales
decreased by 1.7%;
* Food and payroll costs declined by a combined 1.6% of
sales during the quarter compared to the same period in
2005;
* Other restaurant expenses in the quarter included credits
amounting to almost $2.0 million in total from (a)
insurance proceeds related to hurricanes Katrina and Rita
($1.5 million) and (b) settlement proceeds from a
class-action credit card lawsuit ($476,000); and
* General and administrative expenses in the quarter included
an $8.4 million charge for the Tennessee class-action
litigation that has been disclosed in the Company's prior
filings with the Securities and Exchange Commission ("SEC").
A $5.0 million charge related to this same litigation was
made during the second quarter of 2005. Based on claims
administrative results, management believes that all
amounts ($14.4 million in total) related to this matter
have now been charged against earnings and
that no further charges will be required. General and
administrative expenses in the second quarter of 2006
also included a non-recurring charge amounting to $1.4
million for retiree medical benefits.
At June 28, 2006, the Company owned and operated 334
restaurants.
As noted in a press release dated July 25, 2006, the Company
has entered into an agreement under which a subsidiary of
Buffets, Inc. will merge with Ryan's, and Ryan's shareholders
will receive a cash payment of $16.25 per share upon the close of
the transaction. Completion of the transaction, which is expected
to occur in the fourth quarter of 2006, is subject to approval by
Ryan's shareholders, regulatory approvals, receipt of financing and
other customary closing conditions.
In light of the proposed merger transaction and the near-
term filing of the second quarter's Form 10-Q (which is
anticipated to occur on or about Monday, August 7, 2006), the
Company does not intend to hold an investor call to discuss the
Company's second quarter's results.
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 SEC.
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Quarter Ended
June 28, June 29,
2006 2005
<s> <c> <c>
Restaurant sales $208,871,000 215,510,000
Cost of sales:
Food and beverage 71,288,000 76,351,000
Payroll and benefits 66,965,000 69,930,000
Depreciation 8,349,000 8,401,000
Impairment charges 203,000 1,121,000
Other restaurant expenses 31,474,000 32,913,000
Total cost of sales 178,279,000 188,716,000
General and administrative
expenses 20,304,000 15,761,000
Interest expense 2,062,000 2,405,000
Revenues from franchised
restaurants - (135,000)
Other income, net (1,565,000) (562,000)
Earnings before income taxes 9,791,000 9,325,000
Income taxes 2,928,000 3,065,000
Net earnings $6,863,000 6,260,000
Net earnings per common share:
Basic $ .16 .15
Diluted .16 .15
Weighted-average shares:
Basic 42,252,000 41,952,000
Diluted 42,639,000 42,569,000
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Six Months Ended
June 28, June 29,
2006 2005
<s> <c> <c>
Restaurant sales $422,588,000 425,149,000
Cost of sales:
Food and beverage 144,800,000 148,964,000
Payroll and benefits 135,131,000 138,113,000
Depreciation 16,807,000 16,686,000
Impairment charges 447,000 1,288,000
Other restaurant expenses 64,948,000 64,242,000
Total cost of sales 362,133,000 369,293,000
General and administrative
expenses 31,769,000 26,231,000
Interest expense 4,461,000 4,765,000
Revenues from franchised
restaurants - (309,000)
Other income, net (2,394,000) (1,762,000)
Earnings before income taxes 26,619,000 26,931,000
Income taxes 8,960,000 8,858,000
Net earnings $17,659,000 18,073,000
Net earnings per common share:
Basic $ .42 .43
Diluted .41 .42
Weighted-average shares:
Basic 42,203,000 41,945,000
Diluted 42,608,000 42,602,000
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
June 28, December 28,
2006 2005
ASSETS (Unaudited)
Current assets:
<s> <c> <c>
Cash and cash equivalents $ 13,580,000 5,120,000
Receivables 7,761,000 5,007,000
Inventories 5,438,000 5,176,000
Prepaid expenses 1,520,000 985,000
Deferred income taxes 10,395,000 7,417,000
Total current assets 38,694,000 23,705,000
Property and equipment:
Land and improvements 168,945,000 170,424,000
Buildings 511,162,000 513,932,000
Equipment 283,032,000 287,581,000
Construction in progress 17,319,000 23,405,000
980,458,000 995,342,000
Less accumulated depreciation 324,953,000 323,012,000
Net property and equipment 655,505,000 672,330,000
Other assets 10,927,000 10,793,000
Total assets $705,126,000 706,828,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 6,346,000 6,468,000
Current portion of long-term
debt 18,750,000 18,750,000
Income taxes payable 9,577,000 4,118,000
Accrued liabilities 59,164,000 46,691,000
Total current liabilities 93,837,000 76,027,000
Long-term debt 120,750,000 154,500,000
Deferred income taxes 39,221,000 46,768,000
Other long-term liabilities 7,206,000 5,899,000
Total liabilities 261,014,000 283,194,000
Shareholders' equity:
Common stock of $1.00 par
value; authorized 100,000,000
shares; issued 42,323,000
shares in 2006 and 42,122,000
shares in 2005 42,323,000 42,122,000
Additional paid-in capital 7,912,000 5,294,000
Retained earnings 393,877,000 376,218,000
Total shareholders' equity 444,112,000 423,634,000
Commitments and contingencies
Total liabilities and
shareholders' equity $705,126,000 706,828,000
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RYAN'S RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 28, June 29,
2006 2005
Cash flows from operating activities:
<s> <c> <c>
Net earnings $17,659,000 18,073,000
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 17,752,000 17,962,000
Impairment charges 447,000 1,288,000
Gain on sale of property and
equipment (2,342,000) (588,000)
Tax benefit from exercise of
stock options - 292,000
Stock option compensation 800,000 -
Deferred income taxes (10,525,000) (483,000)
Decrease (increase) in:
Receivables (2,754,000) 6,000
Inventories (262,000) (947,000)
Prepaid expenses (535,000) (387,000)
Other assets (241,000) 12,000
Increase (decrease) in:
Accounts payable (122,000) 2,969,000
Income taxes payable 5,459,000 561,000
Accrued liabilities 12,473,000 9,891,000
Other long-term liabilities 1,307,000 413,000
Net cash provided by operating
activities 39,116,000 49,062,000
Cash flows from investing activities:
Proceeds from sale of property
and equipment 12,643,000 4,099,000
Capital expenditures (11,568,000)(40,779,000)
Net cash provided by (used in)
investing activities 1,075,000 (36,680,000)
Cash flows from financing activities:
Net borrowing from (repayment of)
revolving credit facility (15,000,000) 16,000,000
Repayment of senior notes (18,750,000)(18,750,000)
Proceeds from stock options
exercised 1,668,000 1,074,000
Tax benefit from exercise of
stock options 351,000 -
Purchase of common stock - (1,552,000)
Net cash used in financing
activities (31,731,000) (3,228,000)
Net increase in cash and cash
equivalents 8,460,000 9,154,000
Cash and cash equivalents -
beginning of period 5,120,000 7,354,000
Cash and cash equivalents -
end of period $ 13,580,000 16,508,000
Supplemental disclosures
Cash paid during period for:
Interest, net of amount
capitalized $ 5,315,000 5,481,000
Income taxes 6,176,000 8,488,000
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