Ryan's Announces Second Quarter 2006 Results

GREER, S.C., Aug. 2  /PRNewswire-FirstCall/ -- 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 administration 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.

                      RYAN'S RESTAURANT GROUP, INC.
                   CONSOLIDATED STATEMENTS OF EARNINGS
                               (Unaudited)

                                                      Quarter Ended
                                                  June 28,       June 29,
                                                      2006           2005

  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



                      RYAN'S RESTAURANT GROUP, INC.
                   CONSOLIDATED STATEMENTS OF EARNINGS
                               (Unaudited)

                                                     Six Months Ended
                                                  June 28,       June 29,
                                                      2006           2005

  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



                      RYAN'S RESTAURANT GROUP, INC.
                       CONSOLIDATED BALANCE SHEETS

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



                        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:
    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


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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