(Logo - Ryan's logo appears here)
(Photograph - appears here) (Photograph - appears here)
(Photograph - appears here) (Photograph - appears here)
ANNUAL REPORT 1994
1 Ryan's Family Steak Houses, Inc.
COMPANY PROFILE
Since 1977, Ryan's Family Steak Houses, Inc. has been engaged in
the development, operation and franchising of family restaurants. A Ryan's
restaurant features "Steaks, Buffet & Bakery" and provides a great meal to
its customers at a reasonable price. At March 1, 1995, 212 Company-owned
and 30 franchised Ryan's were in operation. The Company also operated 2
other restaurant concepts, each consisting of 1 unit, on a test basis.
Twenty-two Company-owned restaurants, including the two test units, were
opened during 1994.
Sales by Company-owned restaurants amounted to $448 million in 1994 and
$394 million in 1993. Systemwide sales, which include sales by franchised
restaurants, for 1994 and 1993 were approximately $499 million and $450
million, respectively.
The Company, headquartered in Greer, South Carolina, employed approximately
15,000 persons at March 1, 1995.
(Map of states where Ryan's Locations are and the number of
restaurants located there)
RYAN'S LOCATIONS AT MARCH 1, 1995
ALABAMA GEORGIA KENTUCKY NORTH CAROLINA TENNESSEE
Anniston Albany Bowling Green Asheboro Bartlett
Birmingham-2 Athens Elizabethtown Asheville Chattanooga-3
Decatur Augusta Florence Cary Clarksville
Florence Brunswick Lexington Charlotte* Cleveland
Gadsden Cartersville Louisville-4 Fayetteville Hermitage
Huntsville-2 Columbus Paducah Garner Jackson
Mobile* Conyers Gastonia Johnson City
Montgomery Douglasville LOUISIANA Greenville Kingsport
Tuscaloosa Duluth Alexandria Hendersonville Knoxville-2
Gainesville Baton Rouge-3 Kannapolis Memphis-2
ARKANSAS Jonesboro Bossier City Lumberton Murfreesboro
Conway La Grange Gretna Raleigh Oak Ridge
Fayetteville Lawrenceville Hammond Rocky Mount
Little Rock Mableton Houma Salisbury TEXAS
Rogers Macon Lafayette Arlington
Marietta-2 Lake Charles OHIO Austin
FLORIDA Martinez Monroe Akron Baytown
Apopka* Morrow New Iberia Centerville Beaumont
Clearwater* Norcross-2 Shreveport Columbus-3 Conroe
Daytona Beach* Riverdale Slidell Dayton Garland
Gainesville* Rome Kettering Greenville
Hudson* Roswell MICHIGAN Lima Houston-4
Jacksonville-6* Savannah Battle Creek Middletown Lake Johnson
Lake City* Smyrna Flint Ontario Longview
Lakeland-2* Snellville Grand Rapids Sylvania Mesquite
Melbourne* Warner-Robins Kalamazoo Toledo New Braunfels
Neptune Beach* Kenwood Union Township North Richland Hills
New Port Richey* ILLINOIS Lansing-2 Pasadena
Ocala* Champaign Saginaw OKLAHOMA San Antonio-3
Orlando-2* Marion Taylor Lawton Tyler
Panama City Rockford Westland Norman Victoria
Pensacola Springfield Oklahoma City Waco
Tallahassee* Swansea MISSISSIPPI Tulsa-2 Webster
Tampa-2* Columbus White Settlement
Winter Haven* INDIANA Gulfport SOUTH CAROLINA
Bloomington Aiken VIRGINIA
Clarksville MISSOURI Anderson-2 Bristol
Fort Wayne Bridgeton Charleston Chesapeake
Indianapolis-4 Columbia Columbia-3 Christianburg
Kokomo Farmington Easley Danville
Lafayette Gladstone Florence Lynchburg
Mishawaka Independence Greenville-2 Newport News
Richmond Joplin Greenwood Richmond-3*
St. Joseph Greer Suffolk
IOWA Springfield Lancaster
Cedar Rapids Webster Grove Mount Pleasant AUSTRALIA
Davenport North Charleston Ballarat*
Des Moines North Myrtle Beach
Rock Hill
KANSAS Seneca
Shawnee Simpsonville
Wichita-2 Spartanburg
Summerville
Sumter
* Denotes franchised restaurant
Restaurant Sales Chart appears here, plot point as follows (in millions of
dollars):
1990...........$270
1991...........$296
1992...........$349
1993...........$394
1994...........$448
Net Earnings Chart appears here, plot point as follows (in millions of
dollars):
1990...........$24.1
1991...........$23.3
1992...........$29.3
1993...........$28.5
1994...........$30.5
Earnings Per Share chart appears here, plot point as follows (in cents):
1990...........$.46
1991...........$.44
1992...........$.55
1993...........$.53
1994...........$.57
Restaurants Open At Year-End Chart appears here, plot point as follows
[Company-Owned Franchised:
1990...........159
1991...........177
1992...........200
1993...........228
1994...........242
TO OUR SHAREHOLDERS
Fiscal 1994 was a good year for Ryan's in terms of both results and focus.
For the year ended December 28, 1994, restaurant sales amounted to $448,214,000,
up from $393,865,000 during 1993. Net earnings for 1994 increased to $30,544,000
compared to $28,542,000 in 1993, resulting in net earnings per share of 57 cents
in 1994 versus 53 cents in 1993. During the year, we focused extensively on our
customers...increasing their frequency and number, making sure our food is high
quality and presented well and providing excellent service. In the process, we
showed significant sales improvement and moved into several potentially
rewarding areas.
(Photograph - Charles D. Way)
To be successful in the restaurant business, you need to continually attract
new customers. Traditionally, Ryan's has relied on word-of-mouth advertising.
Today we have the resources and the opportunity to capture additional market
share through increased promotion of our name, products and service. During
1994, our marketing activities were greatly expanded. We ran our first
significant advertising campaign in Charleston, South Carolina, utilizing both
television and radio. The results of the campaign proved that, although Ryan's
already had tremendous awareness in Charleston, the additional exposure helped
increase customer traffic and improve our sales. We ran newspaper ads and
placed billboards in other markets. Additionally, we promoted entree sales at
lunch with our "Square Meal Lunch Deals" and developed in-store merchandising
designed to increase steak sales. Our marketing activities are planned to
expand again in 1995 and will remain an important factor in the development and
retention of market share.
To remain ahead in an ever expanding and competitive restaurant environment,
you need to continually improve both the variety and value of your product.
Starting in 1993, we began to install scatter bar systems in our restaurants.
The scatter bars reformat our famous Mega Bar(R) into five new and exciting
island bars that provide easier access to the food and a greater variety of
product for our customers. During 1994, all new Ryan's opened with scatter
bars, and 62 existing Ryan's were converted. At the end of the year,
approximately one-half of our restaurants had scatter bars. Sales improvements
have been significant, contributing to positive same-store sales during the
fourth quarter. The number of installations will increase during 1995, and we
anticipate that substantially all of our restaurants will have scatter bars by
the end of the year.
To provide excellent service, you need trained personnel that respond well
to customers. Accordingly, we have renewed our commitment to quality customer
service by implementing new training programs directed at empowering our
employees, particularly our managers and servers, to make those decisions that
benefit our customers. Also, the training and selection of team leaders has
created an on-the-job training program that will help alleviate some of the
supervision demands placed upon our store management so that they can better
manage the restaurants. Some additional payroll cost will be necessary to
implement these programs. However, we believe that improved customer service
will result in higher sales volumes, thereby leading to increased unit
profitability.
During the year the Company opened 20 new Ryan's and closed 4
underperforming units, resulting in 210 Company-owned Ryan's at the end of 1994.
Franchisees operated another 30 Ryan's, including our newest franchisee in
Ballarat, Australia. The Company also opened two casual-dining restaurants in
late 1994. One restaurant serves Tex-Mex fare, and the other is an upscale
western-style steakhouse. We believe that the changing demographics of the
American population make the casual-dining segment look very promising. Sales
results at the two new restaurants are encouraging. Expansion of these two
concepts will be limited during 1995 while financial results are being
evaluated.
The future looks bright as Ryan's is well-positioned to capitalize on our
quality concept, experienced management and sound financial position. I
particularly wish to acknowledge those people at the heart of our success, our
restaurant managers and staff, who have daily contact with our customers and who
keep them coming back. I would also like to thank our shareholders for their
continued support and confidence in our Company. The stock market was not kind
to the restaurant industry during much of 1994. Success in the restaurant
business during the remainder of the 1990's will come to those organizations
that are innovative and provide high quality food with excellent service. Ryan's
has a long history of these attributes, and we will continue to implement
programs that build upon these strengths. The Company will remain strong,
profitable and growth-oriented.
(Signature - Charles D. Way)
Charles D. Way
Chairman, President and Chief Executive Officer March 24, 1995
3 Ryan's Family Steak Houses, Inc.
TEN YEAR FINANCIAL SUMMARY
1994 1993 1992
CONSOLIDATED STATEMENTS OF EARNINGS DATA:
Restaurant sales........................................ $448,214,000 393,865,000 349,378,000
Operating expenses:
Food and beverage..................................... 181,743,000 161,886,000 142,468,000
Payroll and benefits.................................. 125,338,000 110,834,000 95,446,000
Depreciation and amortization......................... 19,775,000 17,462,000 17,377,000
Other operating expenses.............................. 54,764,000 45,154,000 38,306,000
Total operating expenses.......................... 381,620,000 335,336,000 293,597,000
General and administrative expenses................... 19,249,000 16,143,000 13,730,000
Interest expense...................................... 873,000 178,000 144,000
Revenues from franchised restaurants.................. (755,000) (2,546,000) (2,813,000)
Other income.......................................... (806,000) (566,000) (619,000)
Earnings before income taxes and cumulative effect
of change in method of accounting..................... 48,033,000 45,320,000 45,339,000
Income taxes............................................ 17,489,000 16,778,000 17,032,000
Earnings before cumulative effect of change in method
of accounting......................................... 30,544,000 28,542,000 28,307,000
Cumulative effect on prior years of change in method
of accounting......................................... - - 1,000,000(C)
Net earnings...................................... $ 30,544,000 28,542,000 29,307,000
Per share amounts: (a)
Earnings before cumulative effect of
change in method of accounting...................... .57 .53 .53
Cumulative effect of change in method of accounting... - - .02
Net earnings...................................... $ .57 .53 .55
Weighted average shares................................. 53,603,000 53,696,000 53,636,000
SELECTED OTHER CONSOLIDATED DATA:
Working capital (deficit)....................... $ (90,934,000) (75,350,000) (49,105,000)
Current ratio................................... 0.1/1 0.1/1 0.1/1
Cash provided by operations..................... $ 54,749,000 48,602,000 43,134,000
Property and equipment additions................ 66,748,000 71,282,000 54,239,000
Total assets.................................... 379,756,000 333,521,000 274,539,000
Long-term debt.................................. - - -
Total current and long-term debt................ 65,700,000 58,100,000 36,000,000
Shareholders' equity............................ 269,355,000 238,706,000 209,679,000
Company-owned restaurants open at end of year... 212 194 165
(a) Per share amounts have been retroactively adjusted to reflect all common
stock splits, each effected in the form of a dividend. See "Stock Split History"
on page 23 for further details.
(b) Indicates a 53-week period.
(c) The Company adopted Financial Accounting Standards Board's Statement 109,
"Accounting for Income Taxes," effective January 2, 1992.
4 Ryan's Family Steak Houses, Inc.
1991 1990 1989(B) 1988 1987 1986 1985
296,117,000 270,274,000 238,176,000 190,681,000 152,929,000 103,307,000 53,545,000
124,831,000 114,854,000 104,057,000 83,547,000 66,304,000 45,501,000 24,153,000
80,847,000 70,931,000 61,305,000 45,122,000 33,959,000 22,257,000 11,619,000
12,153,000 10,520,000 9,015,000 7,070,000 4,812,000 3,092,000 1,714,000
32,654,000 27,511,000 23,596,000 18,284,000 13,630,000 9,007,000 5,268,000
250,485,000 223,816,000 197,973,000 154,023,000 118,705,000 79,857,000 42,754,000
11,695,000 11,333,000 9,225,000 8,379,000 7,282,000 4,630,000 2,467,000
102,000 103,000 - - - - -
(2,846,000) (2,827,000) (2,629,000) (1,910,000) (1,353,000) (908,000) (555,000)
(373,000) (447,000) (621,000) (433,000) (970,000) (774,000) (584,000)
37,054,000 38,296,000 34,228,000 30,622,000 29,265,000 20,502,000 9,463,000
13,747,000 14,233,000 12,777,000 11,360,000 12,435,000 9,691,000 4,038,000
23,307,000 24,063,000 21,451,000 19,262,000 16,830,000 10,811,000 5,425,000
- - - - - - -
23,307,000 24,063,000 21,451,000 19,262,000 16,830,000 10,811,000 5,425,000
.44 .46 .41 .37 .32 .21 .12
- - - - - - -
.44 .46 .41 .37 .32 .21 .12
53,238,000 52,675,000 52,682,000 52,398,000 52,580,000 50,685,000 47,106,000
(44,008,000) (36,974,000) (25,043,000) (15,185,000) (10,162,000) 13,871,000 3,933,000
0.1/1 0.1/1 0.1/1 0.2/1 0.2/1 3.3/1 2.4/1
37,810,000 36,459,000 30,214,000 29,879,000 24,530,000 17,538,000 8,648,000
43,905,000 46,060,000 32,035,000 44,445,000 48,052,000 22,637,000 17,649,000
237,520,000 205,454,000 165,172,000 141,787,000 105,273,000 78,252,000 44,542,000
- - - 10,000,000 - - 772,000
30,700,000 26,600,000 16,500,000 16,800,000 5,200,000 - 802,000
176,863,000 152,099,000 127,182,000 105,352,000 85,581,000 67,907,000 38,287,000
142 126 110 96 76 55 41
5 Ryan's Family Steak Houses, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Shown for the years indicated are (i) items in the consolidated statements
of earnings as a percent of restaurant sales and (ii) the number of restaurants
open at the end of each year.
Percent Change
Percent of 1994 1993
Restaurant Sales vs vs
1994 1993 1992 1993 1992
Restaurant sales............................... 100.0% 100.0% 100.0% 13.8% 12.7%
Operating expenses:
Food and beverage.......................... 40.5 41.1 40.7 12.3 13.6
Payroll and benefits....................... 28.0 28.1 27.3 13.1 16.1
Depreciation............................... 3.9 3.9 3.7 12.9 18.2
Amortization of pre-opening costs.......... 0.5 0.5 1.3 15.6 (52.3)
Other operating expenses................... 12.2 11.5 11.0 21.3 17.9
Total operating expenses............... 85.1 85.1 84.0 13.8 14.2
General and administrative expenses............ 4.3 4.1 4.0 19.2 17.6
Interest expense............................... 0.2 - - 390.4 23.6
Revenues from franchised restaurants........... (0.1) (0.6) (0.8) (70.3) (9.5)
Other income................................... (0.2) (0.1) (0.2) 42.4 (8.6)
Earnings before income taxes and cumulative
effect of change in method of accounting... 10.7 11.5 13.0 6.0 -
Income taxes................................... 3.9 4.3 4.9 4.2 (1.5)
Earnings before cumulative effect of change
in method of accounting.................... 6.8 7.2 8.1 7.0 0.8
Cumulative effect on prior years of change
in method of accounting for income taxes... - - 0.3 - (100.0)
Net earnings........................... 6.8% 7.2% 8.4% 7.0% (2.6%)
Restaurants Open
at End of Year
Ryan's:
Company-owned......... 210 194 165 8.2% 17.6%
Franchised............ 30 34 35 (11.8) (2.9)
240 228 200 5.3 14.0
Other restaurant concepts:
Company-owned......... 2 - - 100.0 -
Total............. 242 228 200 6.1% 14.0%
6 Ryan's Family Steak Houses, Inc.
RESULTS OF OPERATIONS
1994 Compared To 1993
Total restaurant sales increased by $54.3 million, or 13.8%, to $448.2
million in 1994 from $393.9 million in 1993. Substantially all of the increase
resulted from the unit growth of Company-owned restaurants, which totaled 212
and 194 at the end of 1994 and 1993, respectively. During 1994, the Company
opened 22 new restaurants, including 2 casual-dining concepts, and closed 4
underperforming units, one of which was converted to a casual-dining concept.
(Photograph - appears here)
The sales increases resulting from new restaurants were partially offset by
a 0.5% decline in same-store sales. In computing same-store sales, the Company
averages weekly sales for those units operating for at least 18 months. Same-
store sales were flat during the first quarter, down 1.6% on average during the
second and third quarters, and up 1.1% during the fourth quarter. The first
quarter benefited from favorable weather conditions when compared to 1993. From
September 1994 onward, sales trends improved monthly, and, as noted, the fourth
quarter's same-store sales were positive. Management attributes most of the
improvement to the rollout of scatter bars into its restaurants. This format
breaks the Mega Bar(R) into five island bars for easier customer access and more
food variety. At December 28, 1994, scatter bars had been installed in 105
Ryan's restaurants, or 50% of all company-owned units. Included in these
installations were 74 retrofits, of which 49 were completed during the second
half of 1994. Certain new restaurants in 1993 and all new 1994 restaurants have
opened with scatter bars. Management anticipates that substantially all Ryan's
will have scatter bars by the end of 1995.
Total operating expenses increased 13.8% to $381.6 million in 1994 from
$335.3 million in 1993. Such costs, as a percent of sales, were 85.1% during
both 1994 and 1993. Thus, the Company's operating margins at the restaurant
level were 14.9% in both 1994 and 1993.
The major factors affecting 1994's operating costs were lower food and
beverage costs and higher other operating expenses. Food and beverage costs
decreased to 40.5% of sales in 1994 from 41.1% in 1993. Decreases in beef,
chicken and soft drink syrup prices were partially offset by higher potato
costs. Other operating expenses increased to 12.2% of sales in 1994 from 11.5%
in 1993 due principally to significantly higher store closing costs, which
amounted to $1.7 million in 1994 compared to $100,000 in 1993. These costs
represent the expected carrying and disposal costs of closed restaurants held
for sale. From inception through December 1994, the Company has closed 5
restaurants
7 Ryan's Family Steak Houses, Inc.
(4 during 1994) and sold or converted 2 such properties, thereby holding 3
properties for sale at December 28, 1994. Other operating expenses were also
affected by higher utility and store advertising and promotional costs. Payroll
and benefit costs decreased slightly to 28.0% of sales in 1994 from 28.1% in
1993. Depreciation and amortization of pre-opening costs remained steady at 4.4%
of sales in both 1994 and 1993.
General and administrative expenses increased 19.2% from $16.1 million in
1993 (4.1% of sales) to $19.2 million in 1994 (4.3% of sales). Increases in
personnel and advertising costs were partially offset by lower legal costs.
Interest expense amounted to $873,000 in 1994 compared to $178,000 in 1993.
The increase results principally from less capitalized interest, which reflects
1994's lower level of construction activity in relation to the Company's
outstanding debt. Approximately 68% of interest incurred in 1994 was
capitalized as part of the cost of construction in progress compared to 88% in
1993. Also, the Company's effective average interest rate increased to 4.7% in
1994 compared to 3.6% in 1993.
(Black box appears here)
Revenues from franchised restaurants declined significantly from $2.5
million in 1993 to $755,000 in 1994. While the number of franchised units
decreased from 34 at the end of 1993 to 30 at the end of 1994, the most
important factor affecting franchise revenues was the nonrecognition of royalty
income from the Company's largest franchisee, Family Steak Houses of Florida,
Inc. ("Family"). Prior to the third quarter of 1994, this franchisee had not
paid any royalty fees since August 1993. In July 1994, an agreement was reached
with Family regarding both past-due and future royalty fees. This agreement
provided for a $236,000 cash payment by Family, the relinquishment of Family's
exclusive development rights in certain counties in South Florida and the
Florida panhandle (subject to first refusal and buy-back rights of Family), an
$800,000 long-term note payable to the Company and a reduction in the royalty
fee rate from 4.25% to 3% until April 30, 1997, at which time the rate will
increase to 4%. The relinquishment of development rights was valued at $500,000
and treated as a partial write-off of Family's past-due royalty fees. In
addition, the agreement with Family decreased the required number of Ryan's
restaurants in operation to 24 through the end of 1996 and to 25 at the end of
1997. Pursuant to the agreement, the required number of restaurants in
operation will then increase by 1 for each year after 1997. All required
payments from Family to the Company subsequent to the agreement have been
received in a timely manner. However, due to Family's payment history, the
Company's accounting policy regarding Family's royalty fees was changed during
1994 to a cash basis pending collection of an outstanding $579,000 receivable
balance at December 29, 1993. This receivable was fully paid during 1994 and,
accordingly, all royalty fees received thereafter, including payments required
under the long-term note payable, have been recognized as revenue when
received. Based on scheduled payment dates and recent payment trends,
management anticipates that 1995 revenues from franchised restaurants will
increase to approximately $1.8 million. However, there can be no assurance that
these scheduled payments will be collected and therefore recognized as
revenues.
Based upon the above changes to revenues and expenses, earnings before
income taxes and cumulative effect of change in method of accounting increased
to $48.0 million in 1994 from $45.3 million in 1993.
The effective income tax rate for 1994 was 36.4% compared to 37.0% in 1993.
The lower 1994 effective rate can be attributed to the full year's impact of
tax-planning strategies that were implemented in May 1993.
8 Ryan's Family Steak Houses, Inc.
Net earnings increased to $30.5 million in 1994 (6.8% of sales) from $28.5
million in 1993 (7.2% of sales). Earnings per share amounted to 57 cents in 1994
and 53 cents in 1993.
1993 COMPARED TO 1992
Total restaurant sales increased by $44.5 million, or 12.7%, to $393.9
million in 1993 from $349.4 million in 1992. Substantially all of the increase
resulted from the unit growth of Company-owned restaurants, which totaled 194
and 165 at the end of 1993 and 1992, respectively. The Company opened 30 new
restaurants and closed one underperforming unit during 1993.
The sales increases from new restaurants were partially offset by a 2.7%
decline in same-store sales. Management attributes the decline principally to
1992's difficult sales comparisons. During 1992, same-store sales increased 3.6%
following the bakery bar rollout, which was substantially completed by July
1992. Also, severe winter weather affected 1993's first quarter sales,
particularly during March when winter storms either closed or severely curtailed
a weekend's operations at approximately one-half of the Company's restaurants.
Total operating expenses increased 14.2% to $335.3 million in 1993 from
$293.6 million in 1992. Such costs, as a percent of sales, were 85.1% in 1993
compared to 84.0% in 1992. Thus, the Company's operating margins at the
restaurant level were 14.9% and 16.0% in 1993 and 1992, respectively.
(Black box appears here)
The major factor behind 1993's lower operating margin was higher payroll and
benefit costs, which increased to 28.1% of sales in 1993 from 27.3% in 1992. The
increase in payroll and benefits resulted from (1) increased restaurant staffing
hours in order to improve customer service levels and (2) the unfavorable impact
of manager salaries due to lower average unit sales. Food and beverage costs
increased to 41.1% of sales in 1993 from 40.7% in 1992 due to higher commodity
prices, particularly beef during the first and second quarters and potatoes
during the fourth quarter. Depreciation and amortization of pre-opening costs
decreased to 4.4% of sales in 1993 from 5.0% in 1992. It should be noted that
1992's costs included a $2.8 million one-time charge, or 0.8% of 1992 sales,
related to the change in the amortization period of pre-opening costs from 5
years to 1 year . Other operating expenses increased to 11.5% of sales in 1993
from 11.0% in 1992 principally due to higher utility and store advertising and
promotional costs.
9 Ryan's Family Steak Houses, Inc.
General and administrative expenses increased 17.6% from $13.7 million in
1992 (4.0% of sales) to $16.1 million in 1993 (4.1% of sales). Interest expense
totaled $178,000 in 1993 compared to $144,000 in 1992. Approximately 88% of
interest incurred in 1993 was capitalized as part of the cost of construction in
progress.
Revenues from franchised restaurants declined 9.5% to $2.5 million in 1993
from $2.8 million in 1992 due to a 6.5% decline in average unit sales at
franchised restaurants and a slightly lower effective royalty rate during 1993.
At the end of 1993 and 1992, franchisees operated 34 and 35 Ryan's,
respectively. During the fourth quarter, the Company's largest franchisee
informed the Company that it would be unable to pay its royalty fees for the
months from August through December 1993. Discussions are underway to resolve
this issue (see 1994 Compared To 1993). During 1993, royalty income from this
franchisee amounted to $2,207,000, and at December 29, 1993, the net receivable
from this franchisee amounted to $579,000.
Based upon the above changes to revenues and expenses, earnings before
income taxes and cumulative effect of change in method of accounting amounted
to $45.3 million in both 1993 and 1992. The effective income tax rate for 1993
was 37.0% compared to 37.6% in 1992.
Earnings before cumulative effect of change in method of accounting
amounted to $28.5 million in 1993 (7.2% of sales) and $28.3 million in 1992
(8.1% of sales).
Net earnings for 1992 were favorably affected by the Company's adoption of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," effective January 2, 1992. The cumulative effect of the change amounted
to $1.0 million and was reported as a separate component of 1992 net earnings.
Net earnings for 1993 amounted to $28.5 million, or 53 cents per share,
compared to $29.3 million in 1992, or 55 cents per share.
(Photo appears here)
LIQUIDITY AND CAPITAL RESOURCES
The Company's restaurant sales are primarily derived from cash. Inventories
are purchased on credit and are rapidly converted to cash. Therefore, the
Company does not maintain significant receivables or inventories, and other
working capital requirements for operations are not significant.
At December 28, 1994, the Company's working capital was a $90.9 million
deficit compared to a $75.4 million deficit at December 29, 1993. Included in
these amounts are borrowings of $65.7 million and $58.1 million, respectively,
under bank lines of credit (see third succeeding paragraph). The increased
deficit is due principally to $7.6 million of additional borrowings incurred
during 1994 for capital expenditures and increases in current liabilities,
particularly accounts payable and self-insurance accruals. The Company does not
anticipate any adverse effect from the current working capital deficit due to
significant cash flow provided by operations, which amounted to $54.7 million in
1994 and $48.6 million in 1993.
Total capital expenditures decreased from $71.3 million in 1993 to $66.7
million in 1994. Lower expenditures resulting from a decrease in new Company-
owned restaurants (22 in 1994 compared to 30 in 1993) were significantly offset
by (1) higher unit construction and equipment costs of the new restaurants, (2)
higher remodel costs, which include 62 scatter bar installations, and (3) the
purchase of a new plane and additional warehouse space. In 1994, 82% of the
financing for capital expenditures was obtained from internally generated funds.
Another $7.6 million was obtained from borrowings under bank lines of credit. In
1993, borrowings of $22.1 million were required.
10 Ryan's Family Steak Houses, Inc.
The Company is also actively progressing with several casual-dining
concepts. Included in 1994's new restaurants were 2 such units, each
representing a different concept. One of these restaurants was converted from an
existing Ryan's, while the other was new construction. Both restaurants are
currently serving as test units, and further expansion of these concepts will be
limited pending review of their operating results. The Company plans to test
another concept, which should open during the second quarter of 1995.
(Photograph - appears here)
During 1995, total capital expenditures are estimated at approximately $69
million. The Company plans to build and open 20 to 25 new restaurants, remodel
another 20 restaurants, and install scatter bars in approximately 100
restaurants. Management estimates that external funding requirements in 1995
will range from $10 million to $15 million. The Company has several uncommitted
bank lines totaling $105 million at various short-term rates of which $65.7
million was utilized at December 28, 1994. During 1994, the average effective
interest rate on this debt approximated 4.7%. Management believes that the
Company's current borrowing arrangements are sufficient to meet 1995
requirements.
IMPACT OF INFLATION
The Company's operating costs that may be affected by inflation consist
principally of food, payroll and utility costs. A significant number of the
Company's restaurant employees are paid at the minimum wage, and, accordingly,
legislated changes to the minimum wage will affect the Company's payroll costs.
The Federal minimum wage last increased in April 1991, and, while no additional
increases to the Federal minimum wage have been legislated, the topic continues
to be actively debated within the Federal government. Also, future benefit costs
may be affected by future legislated changes in medical insurance coverage.
The Company considers its current price structure to be very competitive.
This factor, among others, is considered by the Company when passing cost
increases on to its customers. Sales prices were increased approximately 2% in
1994, 1% in 1993 and 2% in 1992.
11 Ryan's Family Steak Houses, Inc.
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended
December 28, December 29, December 30,
1994 1993 1992
Restaurant sales......................................... $448,214,000 393,865,000 349,378,000
Operating expenses:
Food and beverage...................................... 181,743,000 161,886,000 142,468,000
Payroll and benefits................................... 125,338,000 110,834,000 95,446,000
Depreciation........................................... 17,367,000 15,379,000 13,007,000
Amortization of pre-opening costs...................... 2,408,000 2,083,000 4,370,000
Other operating expenses............................... 54,764,000 45,154,000 38,306,000
Total operating expenses.......................... 381,620,000 335,336,000 293,597,000
General and administrative expenses...................... 19,249,000 16,143,000 13,730,000
Interest expense......................................... 873,000 178,000 144,000
Revenues from franchised restaurants..................... (755,000) (2,546,000) (2,813,000)
Other income............................................. (806,000) (566,000) (619,000)
Earnings before income taxes and cumulative effect of
change in method of accounting......................... 48,033,000 45,320,000 45,339,000
Income taxes............................................. 17,489,000 16,778,000 17,032,000
Earnings before cumulative effect of change
in method of accounting................................ 30,544,000 28,542,000 28,307,000
Cumulative effect on prior years (to January 1, 1992)
of change in method of accounting for income taxes..... - - 1,000,000
Net earnings....................................... $ 30,544,000 28,542,000 29,307,000
Earnings per common and common equivalent share:
Earnings before cumulative effect of change
in method of accounting.............................. .57 .53 .53
Cumulative effect on prior years (to January 1, 1992)
of change in method of accounting for income
taxes.............................................. - - .02
Net earnings....................................... $ .57 .53 .55
Weighted average shares.................................. 53,603,000 53,696,000 53,636,000
See accompanying notes to consolidated financial statements.
12 Ryan's Family Steak Houses, Inc.
CONSOLIDATED BALANCE SHEETS
December 28, December 29,
1994 1993
CONSOLIDATED BALANCE SHEETS
ASSETS
Current assets:
Cash and cash equivalents................................. $ 695,000 1,946,000
Receivables............................................... 1,665,000 1,851,000
Inventories............................................... 2,843,000 2,684,000
Deferred income taxes..................................... 2,563,000 1,469,000
Other current assets...................................... 1,227,000 1,562,000
Total current assets................................. 8,993,000 9,512,000
Property and equipment:
Land and improvements..................................... 86,154,000 77,601,000
Buildings................................................. 200,997,000 170,236,000
Equipment................................................. 137,968,000 116,357,000
Construction in progress.................................. 27,845,000 27,525,000
452,964,000 391,719,000
Less accumulated depreciation............................. 87,988,000 71,866,000
Net property and equipment............................ 364,976,000 319,853,000
Other assets................................................ 5,787,000 4,156,000
$379,756,000 333,521,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable............................................. 65,700,000 58,100,000
Accounts payable.......................................... 12,615,000 10,944,000
Income taxes payable...................................... 438,000 1,303,000
Accrued liabilities....................................... 21,174,000 14,515,000
Total current liabilities............................ 99,927,000 84,862,000
Deferred income taxes....................................... 10,474,000 9,953,000
Shareholders' equity:
Common stock, $1.00 par value; authorized 100,000,000
shares; issued and
outstanding 53,434,000 shares in 1994 and
53,415,000 shares in 1993............................ 53,434,000 53,415,000
Additional paid-in capital.............................. 6,599,000 6,513,000
Retained earnings......................................... 209,322,000 178,778,000
Total shareholders' equity............................ 269,355,000 238,706,000
$379,756,000 333,521,000
See accompanying notes to consolidated financial statements.
13 Ryan's Family Steak Houses, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
December 28, December 29, December 30,
1994 1993 1992
Cash flows from operating activities:
Net earnings............................................. $ 30,544,000 28,542,000 29,307,000
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization.......................... 20,802,000 18,229,000 18,088,000
Loss (gain) on sale of property and equipment.......... 219,000 (83,000) (203,000)
Decrease (increase) in:
Receivables.......................................... 186,000 (649,000) 367,000
Inventories.......................................... (159,000) (430,000) (261,000)
Other current assets................................. (2,096,000) (2,747,000) (1,746,000)
Other assets......................................... (1,639,000) (1,057,000) (910,000)
Increase (decrease) in:
Accounts payable..................................... 1,671,000 2,261,000 (1,802,000)
Income taxes payable................................. (865,000) (138,000) (81,000)
Accrued liabilities.................................. 6,659,000 4,950,000 1,998,000
Deferred income taxes................................ (573,000) (276,000) (1,623,000)
Net cash provided by operating activities.................. 54,749,000 48,602,000 43,134,000
Cash flows from investing activities:
Proceeds from sale of property and equipment............. 3,043,000 311,000 1,454,000
Capital expenditures..................................... (66,748,000) (71,282,000) (54,239,000)
Net cash used in investing activities...................... (63,705,000) (70,971,000) (52,785,000)
Cash flows from financing activities:
Net proceeds from notes payable.......................... 7,600,000 22,100,000 5,300,000
Proceeds from the issuance of common stock............... 105,000 485,000 3,509,000
Net cash provided by financing activities.................. 7,705,000 22,585,000 8,809,000
Net increase (decrease) in cash and cash equivalents....... (1,251,000) 216,000 (842,000)
Cash and cash equivalents - beginning of year.............. 1,946,000 1,730,000 2,572,000
Cash and cash equivalents - end of year.................... $ 695,000 1,946,000 1,730,000
Supplemental disclosure - cash payments for income
taxes.................................................... $ 19,493,000 17,021,000 17,168,000
See accompanying notes to consolidated financial statements.
14 Ryan's Family Steak Houses, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Description of Business and Summary of Significant Accounting Policies
DESCRIPTION OF BUSINESS - Ryan's Family Steak Houses, Inc. operates a
chain of 212 company-owned and 30 franchised (as of December 28, 1994)
restaurants located principally in the southern and midwestern United States.
The Company was organized in 1977 and completed its initial public offering in
1982.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the financial statements of Ryan's Family Steak Houses, Inc. and its
six wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
FISCAL YEAR - The Company's fiscal year ends on the Wednesday nearest
December 31.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash and
short-term investments with initial maturities of three months or less that
are stated at cost plus accrued interest which approximates market value.
INVENTORIES - Inventories consist of menu ingredients and restaurant
supplies and are stated at the lower of cost or market. Cost is determined using
the first-in, first-out method.
OTHER CURRENT ASSETS - Other current assets consist of prepaid expenses and
unamortized pre-opening costs, which represent certain costs, including
employee training, incurred before a restaurant is opened. In 1992, the
amortization period of pre-opening costs, which and resulted in an increase in
amortization of pre-opening costs of $2.8 million and a decrease in net
earnings of $1.7 million, or $.03 per share, in 1992.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Depreciation is calculated principally on the straight-line method over the
following estimated useful lives: buildings and land improvements - 25 to 31
years and equipment - 5 to 10 years.
OTHER ASSETS - Other assets consist principally of a long-term prepayment
of store inventories and the cash surrender values of officer life insurance
policies.
INCOME TAXES - Effective January 2, 1992, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," and has reported the cumulative ef the 1992 consolidated
statement of earnings. Under the asset and liability method of Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
EARNINGS PER SHARE - Earnings per share are computed based on the weighted
average number of common and common equivalent shares outstanding. Common
equivalent shares are represented by shares under option.
FRANCHISE REVENUES - The Company grants franchises to operators who in turn
pay initial fees and royalties for each restaurant. The initial franchise fee
is recorded as income when each restaurant commences operations. Franchise
royalties, which are based on a percentage of monthly sales, are recognized as
income on the accrual basis. In the event that a franchisee experiences payment
dif in management's opinion, may be susceptible to such difficulties, future
franchise royalties may be recognized as income on the cash basis.
RECLASSIFICATIONS - Certain prior year amounts in the accompanying
consolidated financial statements have been reclassified to conform to the 1994
presentation.
15 Ryan's Family Steak Houses, Inc.
NOTE 2. OTHER CURRENT ASSETS
Other current assets consist of the following:
1994 1993
Unamortized pre-opening costs... $ 1,002,000 1,354,000
Prepaid expenses................ 225,000 208,000
$ 1,227,000 1,562,000
NOTE 3. INCOME TAXES
Total income taxes for the years ended December 28, 1994, December 29, 1993
and December 30, 1992 were allocated as follows:
1994 1993 1992
Income from operations.................................... $ 17,489,000 16,778,000 17,032,000
Shareholders' equity , for the current tax benefit related
to the exercise of nonqualified stock options......... (19,000) (118,000) (763,000)
$ 17,470,000 16,660,000 16,269,000
Income tax expense attributable to income from operations consists of:
1994 1993 1992
Current:
U.S. Federal...... $ 16,540,000 14,942,000 14,941,000
State and local... 1,522,000 2,112,000 2,714,000
18,062,000 17,054,000 17,655,000
Deferred:
U.S. Federal...... (298,000) 165,000 (524,000)
State and local... (275,000) (441,000) (99,000)
(573,000) (276,000) (623,000)
Income taxes.......... $ 17,489,000 16,778,000 17,032,000
16 Ryan's Family Steak Houses, Inc.
Income taxes differ from the amounts computed by applying the U. S. Federal
statutory corporate rate of 35 percent in 1994 and 1993 and 34 percent in 1992
to earnings before income taxes and cumulative effect of change in method of
accounting as follows:
1994 1993 1992
Tax at Federal statutory rate............................... $ 16,812,000 15,862,000 15,415,000
Increase (decrease) in taxes due to:
Adjustment to deferred tax assets and liabilities
for enacted
changes in tax laws and rates....................... - 213,000 -
State income taxes, net of Federal income tax
benefit............................................... 811,000 1,086,000 1,726,000
Other................................................... (134,000) (383,000) (109,000)
Income taxes................................................ $ 17,489,000 16,778,000 17,032,000
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
28, 1994 and December 29, 1993 are presented below:
1994 1993
Deferred tax assets:
Accounts receivable, principally due to allowance
for
doubtful accounts................................... $ 346,000 128,000
Self-insurance, principally due to accrual for
financial reporting purposes........................ 2,477,000 1,757,000
Other................................................... 100,000 125,000
Total gross deferred tax assets..................... 2,923,000 2,010,000
Less valuation allowance............................ - -
Net deferred tax assets............................. 2,923,000 2,010,000
Deferred tax liabilities:
Building and equipment, principally due to
differences in depreciation......................... (10,348,000) (9,863,000)
Deferral of pre-opening costs for financial
reporting purposes.................................... (363,000) (509,000)
Other................................................... (123,000) (122,000)
Total gross deferred tax liabilities................ (10,834,000) (10,494,000)
Net deferred taxes.................................. $ (7,911,000) (8,484,000)
The Company did not establish a valuation allowance for deferred tax assets
as of December 28, 1994, December 29, 1993 or December 30, 1992. In assessing
the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. In order to fully realize the
deferred tax asset, the Company will need to generate future aggregate taxable
income of approximately $8 million through 1998. Federal taxable income for the
years ended December 29, 1993 and December 30, 1992 was $44.5 million and $42.7
million, respectively. Based upon the level of historical taxable income and
projections for future taxable income over the periods which the deferred tax
assets are deductible, management believes it is more likely than not the
Company will realize the benefits of these deductible differences at December
28, 1994.
As discussed in Note 1, the Company adopted Statement 109 as of January 2,
1992. The cumulative effect of this change in accounting for income taxes of
$1,000,000 is determined as of January 2, 1992 and is reported separately in the
consolidated statement of earnings for the year ended December 30, 1992.
17 Ryan's Family Steak Houses, Inc.
NOTE 4. NOTES PAYABLE AND INTEREST COST
The Company has several unsecured lines of credit from banks aggregating
$105 million at various short-term rates, of which $65.7 million and $58.1
million had been utilized at December 28, 1994 and December 29, 1993,
respectively. All borrowings under these lines are unsecured and mature in 90
days or less.
The Company capitalizes interest cost as a component of the cost of new
restaurant construction. A summary of interest cost incurred follows:
1994 1993 1992
Interest cost capitalized......... $ 1,824,000 1,281,000 1,167,000
Interest cost charged to income... 873,000 178,000 144,000
Total interest cost incurred.... $ 2,697,000 1,459,000 1,311,000
NOTE 5. OTHER ACCRUED EXPENSES
Other accrued expenses consist of the following:
1994 1993
Accrued compensation................ $ 3,820,000 3,283,000
Accrued taxes (other than income)... 4,984,000 5,007,000
Self-insurance accruals............. 5,767,000 4,017,000
Other accrued expenses.............. 6,603,000 2,208,000
$ 21,174,000 14,515,000
NOTE 6. SHAREHOLDERS' EQUITY
The components of shareholders' equity are as follows:
Additional
Common Paid-In Retained
Stock Capital Earnings
Balances at January 1, 1992................................. $ 52,861,000 3,073,000 120,929,000
Net earnings............................................ - - 29,307,000
Issuance of common stock under Stock Option
Plans................................................. 476,000 2,270,000 -
Tax benefit from exercise of nonqualified stock
options............................................... - 763,000 -
Balances at December 30, 1992............................... 53,337,000 6,106,000 150,236,000
Net earnings............................................ - - 28,542,000
Issuance of common stock under Stock Option
Plans................................................. 78,000 289,000 -
Tax benefit from exercise of nonqualified stock
options............................................... - 118,000 -
Balances at December 29, 1993............................... 53,415,000 6,513,000 178,778,000
Net earnings............................................ - - 30,544,000
Issuance of common stock under Stock Option
Plans................................................. 19,000 67,000 -
Tax benefit from exercise of nonqualified stock
options............................................... - 19,000 -
Balances at December 28, 1994............................... $ 53,434,000 6,599,000 209,322,000
18 Ryan's Family Steak Houses, Inc.
NOTE 7. STOCK OPTION PLANS
The Company has adopted stock option plans which authorize the grant of
options to purchase common stock to directors, officers and key employees. Under
the terms of the latest plan, which expires in 2001, a committee of non-employee
directors has the authority to determine the eligibility, tax treatment, term,
vesting schedule and exercise price. Historically, the Company has always
granted options at
Further information relating to options is as follows:
1994 1993 1992
Options outstanding at beginning of year.................. 1,689,011 1,378,274 1,913,168
Options granted........................................... 1,087,570 468,400 20,000
Options exercised......................................... (18,800) (72,863) (484,243)
Options forfeited......................................... (195,700) (84,800) (70,651)
Options outstanding at end of year........................ 2,562,081 1,689,011 1,378,274
Options fully vested at end of year....................... 1,465,034 1,280,982 1,191,392
Common shares reserved for future grants at end of year... 960,055 1,854,450 2,238,200
Option prices per common share:
Exercised during the year............................. $ 4.00 to $ 4.00 to $ 4.00 to
$ 6.13 $ 8.13 $ 8.13
Outstanding at end of year............................ $ 4.00 to $ 4.00 to $ 4.00 to
$ 13.25 $ 13.25 $ 13.25
NOTE 8. EMPLOYEE RETIREMENT PLAN
On March 1, 1992, the Company implemented a defined contribution retirement
plan, which covers all employees who have at least one year of service and are
at least 21 years of age. Participating employees may contribute from 1% to 15%
of their compensation to the plan. The Company matches employee contributions up
to 6% of compensation at a 25% rate. All plan assets are invested in a
nationally recognized family of mutual funds. Retirement plan expense, including
administrative costs, amounted to $488,000 in 1994, $438,000 in 1993 and
$446,000 in 1992.
19 Ryan's Family Steak Houses, Inc.
NOTE 9. QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)
Quarterly consolidated financial results for 1994 and 1993 are summarized as
follows (in thousands, except per share data):
Quarter Total
First Second Third Fourth Year
1994:
Restaurant sales.................. $106,892 114,777 115,011 111,534 448,214
Restaurant operating profit (a)... 16,085 18,500 17,334 14,675 66,594
Net earnings...................... 7,269 8,827 7,840 6,608 30,544
Per share data:
Net earnings.................. 0.14 0.16 0.15 0.12 0.57
1993:
Restaurant sales.................. 90,388 101,277 104,102 98,098 393,865
Restaurant operating profit (a)... 14,083 15,345 15,414 13,687 58,529
Net earnings...................... 7,164 7,928 7,403 6,047 28,542
Per share data:
Net earnings.................. 0.13 0.15 0.14 0.11 0.53
(a) Restaurant sales less operating expenses.
NOTE 10. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's significant financial instruments are cash and cash
equivalents, receivables, notes payable, accounts payable and accrued
liabilities, all of which are classified as either current assets or current
liabilities. Their carrying amounts approximate their fair values because of the
short maturities of these instruments.
NOTE 11. SUBSEQUENT EVENT
On January 26, 1995, the Board of Directors adopted a Shareholder Rights
Agreement (the "Agreement") and declared a dividend of one Common Stock Purchase
Right (a "Right") for each outstanding share of Common Stock to shareholders of
record on February 10, 1995. Such Rights only become exercisable ten business
days after (i) a public announcement that a person or group, except for certain
exempt persons specified in the Agreement, (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the Company's Common Stock; or (ii) a
person or group commences or publicly announces its intention to commence a
tender or exchange offer for an amount of the Company's Common Stock that would
result in the ownership by such person or group of 15% or more of the Common
Stock.
Each Right may initially be exercised to acquire a one-half share of the
Company's Common Stock at an exercise price of $25, subject to adjustment.
Thereafter, upon the occurrence of certain events specified in the Agreement
(for example, if the Company is the surviving corporation of a merger with an
Acquiring Person), the Rights entitle holders other than the Acquiring Person to
acquire upon exercise Common Stock having a market value of twice the exercise
price of the Rights. Alternatively, upon the occurrence of certain other events
specified in the Agreement (for example, if the Company is acquired in a merger
or other business combination transaction in which the Company is not the
surviving corporation), the Rights would entitle holders other than the
Acquiring Person to acquire upon exercise Common Stock of the acquiring company
having a market value of twice the exercise price of the Rights.
The Rights may be redeemed by the Company at a redemption price of $.001
per Right at any time prior to the tenth business day following public
announcement that a 15% position has been acquired and before the final
expiration date of the Rights. After the redemption period has expired, the
Company's right of redemption may be reinstalled under certain circumstances
outlined in the Agreement. The Rights will expire on February 10, 2005.
20 Ryan's Family Steak Houses, Inc.
INDEPENDENT AUDITORS' REPORT
KPMG Peat Marwick LLP
Board of Directors and Shareholders
Ryan's Family Steak Houses, Inc.
We have audited the accompanying consolidated balance sheets of Ryan's
Family Steak Houses, Inc. and subsidiaries as of December 28, 1994 and December
29, 1993, and the related consolidated statements of earnings and cash flows for
each of the years in the three-year period ended December 28, 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ryan's
Family Steak Houses, Inc. and subsidiaries at December 28, 1994 and December 29,
1993, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 28, 1994, in conformity with
generally accepted accounting principles.
(Signature - KPMG PEAT MARWICK LLP)
Greenville, South Carolina
January 18, 1995, except for Note 11, as to
which the date is January 26, 1995
21 Ryan's Family Steak Houses, Inc.
CORPORATE DIRECTORS AND OFFICERS
DIRECTORS:
Charles D. Way
Chairman, President and Chief Executive Officer
James D. Cockman
Chairman and Chief Executive Officer,
Ocean Fresh Express International Seafood
Barry L. Edwards
Executive Vice President, Treasurer
and Chief Financial Officer, AMRESCO, Inc.
Brian S. MacKenzie
President and Chief Executive Officer,
Builder Marts of America, Inc.
G. Edwin McCranie
Executive Vice President
Harold K. Roberts, Jr.
Partner, Roberts and Morgan, CPA's;
Chairman and Chief Executive Officer, Statewide Title, Inc.
James M. Shoemaker, Jr.
Member, Wyche, Burgess, Freeman & Parham, P.A.
(Photograph - APPEARS HERE)
Left to right: Barry L. Edwards; Brian S. MacKenzie; James D. Cockman;
Charles D. Way; G. Edwin McCranie; Harold K. Roberts, Jr.; James M. Shoemaker,
Jr.
OFFICERS:
Charles D. Way
Chairman, President and Chief Executive Officer
G. Edwin McCranie
Executive Vice President
John C. Jamison
Vice President-Real Estate
Morgan A. Graham
Vice President-Construction
James R. Hart
Vice President-Human Resources
Fred T. Grant, Jr.
Vice President-Finance and Chief Financial Officer
Alan E. Shaw
Vice President-Operations
Janet J. Gleitz
Corporate Secretary
Philip J. Franklin
Regional Vice President
Timothy V. Barnhill
Regional Vice President
Richard B. Erwin
Regional Vice President
(Photograph - APPEARS HERE)
Left to right: Fred T. Grant, Jr.; Richard B. Erwin; John C. Jamison; Janet
J. Gleitz; Alan E. Shaw
(Photograph - APPEARS HERE)
Left to right: James R. Hart; Philip J. Franklin; G. Edwin McCranie; Charles
D. Way; Morgan A. Graham; Timothy V. Barnhill
22 Ryan's Family Steak Houses, Inc.
CORPORATE INFORMATION
EXECUTIVE OFFICES
Ryan's Family Steak Houses, Inc.
405 Lancaster Avenue (29650)
Post Office Box 100
Greer, South Carolina 29652
(803) 879-1000
GENERAL COUNSEL
Wyche, Burgess, Freeman & Parham, P.A.
Greenville, South Carolina
TRANSFER AGENT
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
Post Office Box 3001
Winston-Salem, North Carolina 27102
(800) 633-4236
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Greenville, South Carolina
FORM 10-K
A copy of the Company's Form 10-K Report for
fiscal 1994, as filed with the Securities and Exchange
Commission, may be obtained without charge by
writing to the Corporate Secretary at the executive
offices of the Company.
ANNUAL MEETING
The annual meeting will be held at:
Greenville/Spartanburg Airport Marriott
Greenville, South Carolina
Thursday, April 27, 1995 at 11:00 a.m.
All shareholders are cordially invited to attend.
COMMON STOCK DATA
The Company's common stock trades on The NASDAQ Stock Market under the
symbol RYAN.
The Company has never paid cash dividends on its common stock and does not
expect to pay such dividends in the foreseeable future. Management of the
Company presently intends to retain all available funds for expansion of the
business. Future dividend policy will depend upon the Company's earnings,
capital requirements, financial condition and other relevant matters.
STOCK SPLIT HISTORY
3-for-2 .................................................... January 1983
2-for-1 .................................................... April 1983
3-for-2 ....................................................February 1985
3-for-2 ....................................................February 1986
3-for-2 .................................................... May 1986
3-for-1 .................................................... May 1987
MARKET PRICE OF COMMON STOCK
1994 1993
Quarter: High Low High Low
First $ 9 1/8 7 1/4 11 1/4 8 3/4
Second 8 1/16 7 9 1/8 7
Third 7 1/4 5 3/8 8 7/8 7 1/2
Fourth 7 1/2 5 5/8 8 3/4 7 3/4
The closing price quotation on the Company's common stock on March 1, 1995
was $ 7 11/16 per share.
23 Ryan's Family Steak Houses, Inc.
MISSION STATEMENT
To be an innovative, profitable, growth company, committed to
customer satisfaction by always providing high quality food
at affordable prices with friendly service
in clean and pleasant surroundings.
WE STRIVE:
(BULLET) To put people first - customers and employees.
(BULLET) To attract and maintain a strong team of individuals
recognized as standouts in each area of focus.
(BULLET) To promote safety, responsibility and a high level of ethics in
our workplace.
(BULLET) To be environmentally aware and work to preserve our natural resources.
(BULLET) To utilize materials and services that provide the best
cost/value ratio
without sacrificing quality.
(BULLET) To enhance long-term shareholder wealth.
RYAN'S FAMILY STEAK HOUSES, INC.
405 Lancaster Avenue (29650)
Post Office Box 100
Greer, South Carolina 29652
(803) 879-1000