Ryan's Announces First Quarter 2006 Results

GREER, S.C., April 26  /PRNewswire-FirstCall/ -- 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 http://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.

                      RYAN'S RESTAURANT GROUP, INC.
                   CONSOLIDATED STATEMENTS OF EARNINGS
                               (Unaudited)
                                                    Quarter Ended
                                                March 29,    March 30,
                                                  2006         2005

  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



                      RYAN'S RESTAURANT GROUP, INC.

                       CONSOLIDATED BALANCE SHEETS

                                               March 29,    December 28,
                                                 2006           2005
  ASSETS                                      (Unaudited)
  Current assets:
    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



                      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:
    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


DATASOURCE: Ryan's Restaurant Group, Inc.



CONTACT:  Fred T. Grant, Jr., Senior Vice President - Finance of Ryan's

Restaurant Group, Inc., [phone]



Web site:  http://www.ryansrg.com/

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