Ryan's Reports Fourth Quarter and Fiscal Year 2005 Results

GREER, S.C., Feb. 1  /PRNewswire-FirstCall/ -- Ryan's Restaurant Group, Inc. (NASDAQ:RYAN) today reported financial results for the fourth quarter and fiscal year 2005.

Fourth quarter restaurant sales amounted to $196.9 million compared to $193.5 million during the comparable quarter of 2004.  Net earnings were $4,143,000 for the fourth quarter of 2005 and $8,170,000 for the fourth quarter of 2004.  Earnings per share (diluted) were 10 cents and 19 cents for the fourth quarters of 2005 and 2004, respectively.

For the year ended December 28, 2005, restaurant sales amounted to $825.0 million compared to $827.0 million during 2004.  Net earnings were $26.4 million in 2005 and $46.9 million in 2004.  Earnings per share (diluted) were $0.62 in 2005 compared to $1.09 in 2004.

Commenting on the quarter, Charles D. Way, Chairman and CEO of the Company, said, "The fourth quarter of 2005 concludes a very difficult year for Ryan's.  Our sales were adversely affected throughout much of 2005 by high gasoline and utility costs which impacted our customers' discretionary spending.  During the fourth quarter, our sales results improved with same- store sales up by 0.6% for the quarter compared to a 3.6% decrease for the first nine months of the year.  We believe that this improvement resulted from lower gasoline prices and affordable utility costs, resulting from the moderate winter temperatures experienced during the quarter.  Our breakfast program also had significant impact as we implemented breakfast in 119 restaurants during the quarter.  For example, breakfast sales added 1.0% to December's reported same-store sales decrease of 0.7%.  At year-end, breakfast was in 157 restaurants.  All new restaurants will open with breakfast, and we plan to add breakfast to our remaining 181 restaurants throughout 2006.  We look forward to improved sales results during 2006.  So far, our same-store sales for January 2006 have been consistently positive.

"Our fourth quarter's cost of sales was impacted primarily by higher electricity and natural gas costs, which increased by a combined 1.1% of sales, and by higher impairment charges, which were also up 1.1% of sales. During the fourth quarter we impaired one and closed three underperforming units. Our hourly labor costs also increased during the quarter (+0.3% of sales) due to our year-long efforts to improve customer service through increased staffing levels.  Absent an increase in the minimum wage rate, we expect our hourly labor costs to stabilize in 2006 as we implemented the higher staffing in late-2004.

"General and administrative costs increased principally during the quarter due to an additional $1 million accrual towards the settlement of a wage and hour collective-action lawsuit in Tennessee, which, as disclosed in our SEC filings, has been proceeding since November 2002.  At year-end, we had accrued $6 million in total for this case, representing our estimate of the minimum settlement amount.  We have been in negotiation with the plaintiffs' attorney throughout the fourth quarter and currently cannot estimate either the settlement date or the ultimate effect on the Company's financial results or cash flow.

"Regarding 2006, in addition to implementing breakfast throughout our restaurants, we also plan to open four new restaurants, including one potential relocation.  We are currently re-evaluating our remodeling program in order to develop a more cost-efficient prototype that can produce a higher return-on-investment.  We have developed a lower-cost prototype and are encouraged with its early results, but intend to proceed slowly with future conversions until we are confident that they will consistently produce the desired returns.  Until then, our plans are focused on the paydown of debt in order to position us in a strong financial condition for future growth."

At December 28, 2005, the Company owned and operated 338 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. ET.  The public can listen to a live webcast of this call by logging on to the web at http://www.ryansinc.com/ 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; weather fluctuations; interest rate fluctuations; stock market conditions; political environment (including acts of terrorism and wars); legislative decisions involving tax issues by both federal and state governments; 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             Year Ended
                        December 28, December 29, December 28, December 29,
                            2005         2004         2005         2004

  Restaurant sales     $196,870,000  193,481,000  824,986,000  827,015,000

  Cost of sales:
     Food and beverage   67,700,000   66,430,000  286,833,000  288,083,000
     Payroll and
      benefits           66,128,000   64,198,000  272,043,000  267,698,000
     Depreciation         8,517,000    8,223,000   33,651,000   32,685,000
     Impairment charges   2,463,000      371,000    6,527,000    1,539,000
     Other restaurant
      expenses           33,799,000   29,181,000  132,916,000  117,199,000

        Total cost of
         sales          178,607,000  168,403,000  731,970,000  707,204,000

  General and
   administrative
   expenses              11,868,000   10,654,000   49,369,000   41,416,000
  Interest expense        2,553,000    2,608,000    9,696,000   10,640,000
  Revenues from
   franchised restaurants         -     (210,000)    (344,000)  (1,161,000)
  Other income, net      (1,541,000)    (905,000)  (4,430,000)  (2,602,000)

  Earnings before
   income taxes           5,383,000   12,931,000   38,725,000   71,518,000
  Income taxes            1,240,000    4,761,000   12,345,000   24,592,000

        Net earnings     $4,143,000    8,170,000   26,380,000   46,926,000

  Earnings per common share:
     Basic                     $.10          .20          .63         1.12
     Diluted                   $.10          .19          .62         1.09

  Weighted-average shares:
     Basic               42,051,000   41,811,000   41,969,000   41,803,000
     Diluted             42,530,000   42,923,000   42,689,000   43,235,000



                      RYAN'S RESTAURANT GROUP, INC.
                       CONSOLIDATED BALANCE SHEETS

                                               December 28,   December 29,
                                                  2005           2004
  ASSETS                                       (Unaudited)
  Current assets:
     Cash and cash equivalents                  $5,120,000      7,354,000
     Receivables                                 5,007,000      4,639,000
     Inventories                                 5,176,000      5,611,000
     Prepaid expenses                              985,000      1,016,000
     Deferred income taxes                       7,417,000      5,110,000

        Total current assets                    23,705,000     23,730,000

  Property and equipment:
     Land and improvements                     170,424,000    162,082,000
     Buildings                                 513,932,000    480,781,000
     Equipment                                 287,581,000    271,431,000
     Construction in progress                   23,405,000     31,531,000
                                               995,342,000    945,825,000
     Less accumulated depreciation             323,012,000    295,852,000

        Net property and equipment             672,330,000    649,973,000

  Other assets                                  10,793,000     10,643,000

                                              $706,828,000    684,346,000

  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
     Accounts payable                            6,468,000      5,963,000
     Current portion of long-term debt          18,750,000     18,750,000
     Income taxes payable                        4,118,000      1,842,000
     Accrued liabilities                        46,691,000     42,569,000

        Total current liabilities               76,027,000     69,124,000

  Long-term debt                               154,500,000    164,250,000
  Deferred income taxes                         46,768,000     47,674,000
  Other long-term liabilities                    5,899,000      7,692,000

        Total liabilities                      283,194,000    288,740,000

  Shareholders' equity:
     Common stock of $1.00 par value;
      authorized 100,000,000 shares; issued
      42,122,000 shares in 2005 and
      41,890,000 shares in 2004                 42,122,000     41,890,000
     Additional paid-in capital                  5,294,000      3,878,000
     Retained earnings                         376,218,000    349,838,000

        Total shareholders' equity             423,634,000    395,606,000

  Commitments and contingencies

                                              $706,828,000    684,346,000



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

                                                      Year Ended
                                               December 28,   December 29,
                                                   2005           2004
  Cash flows from operating activities:
     Net earnings                              $26,380,000     46,926,000
     Adjustments to reconcile net earnings to
      net cash provided by operating activities:
        Depreciation and amortization           35,610,000     34,459,000
        Impairment charges                       6,527,000      1,539,000
        Gain on sale of property and equipment  (1,022,000)    (1,706,000)
        Tax benefit related to stock
         option programs                         1,082,000      3,337,000
        Deferred income taxes                   (3,213,000)     4,890,000
        Decrease (increase) in:
           Receivables                            (368,000)      (346,000)
           Inventories                             435,000         37,000
           Prepaid expenses                         31,000        742,000
           Other assets                           (258,000)    (2,206,000)
        Increase (decrease) in:
           Accounts payable                        505,000       (617,000)
           Income taxes payable                  2,276,000        554,000
           Accrued liabilities                   4,122,000        643,000
           Other long-term liabilities          (1,793,000)     1,561,000

  Net cash provided by operating activities     70,314,000     89,813,000

  Cash flows from investing activities:
     Proceeds from sale of property
      and equipment                             14,078,000      9,877,000
     Capital expenditures                      (77,236,000)   (75,754,000)

  Net cash used in investing activities        (63,158,000)   (65,877,000)

  Cash flows from financing activities:
     Net borrowings (repayment) of
      revolving credit facility                  9,000,000    (13,000,000)
     Repayment of senior notes                 (18,750,000)             -
     Debt issuance costs                          (206,000)      (602,000)
     Proceeds from stock options exercised       2,418,000      6,611,000
     Repurchases of common stock                (1,852,000)   (18,208,000)
  Net cash used in financing activities         (9,390,000)   (25,199,000)

  Net decrease in cash and cash equivalents     (2,234,000)    (1,263,000)

  Cash and cash equivalents - beginning
   of period                                     7,354,000      8,617,000

  Cash and cash equivalents - end of period     $5,120,000      7,354,000

  Supplemental disclosures
  Cash paid during period for:
     Interest, net of amount capitalized       $10,333,000     10,760,000
     Income taxes                               12,767,000     16,488,000


First Call Analyst: 

FCMN Contact: 

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.ryansinc.com/

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