Worldwide Restaurant Concepts (NYSE:SZ)
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Worldwide Restaurant Concepts, Inc. Announces Second Quarter
Fiscal 2005 Results
HIGHLIGHTS:
SHERMAN OAKS, Calif., Nov. 23 /PRNewswire-FirstCall/ -- Worldwide Restaurant
Concepts, Inc. (NYSE:SZ) today reported financial results for the second
quarter ended October 17, 2004.
The Company reported revenues of $79.4 million for the second quarter of fiscal
2005, an increase of 4.0 percent over the $76.3 million reported in the
second quarter of the prior year. Net income for the second quarter of fiscal
2005 was $0.9 million, or $0.03 per diluted share, compared to net income of
$0.3 million, or $0.00 per diluted share, in the same period a year ago.
Strengthening sales at Pat & Oscar's and Sizzler USA and continued strong sales
growth at Sizzler Australia and KFC drove overall results. A 7.4 percent
increase in the Australian dollar exchange rate compared to last year
contributed $3.3 million to 2005 second-quarter revenues and $0.2 million to
net income. Total revenues at Sizzler USA declined $3.3 million from last
year's quarter due to having 12 fewer company operated restaurants reflecting
the successful sale and conversion of nine Company-owned stores to franchisees.
Revenue and Cost Trends
The Company's 4.0 percent increase in revenues in the second quarter reflected
an aggregate 3.7 percent increase in same store sales across all company-owned
restaurants. Same store sales growth of 6.6 percent at KFC and 10.1 percent at
Sizzler Australia (company-owned only) were offset by declines of 1.4 percent
for Sizzler USA company owned units and 1.3 percent for Pat & Oscar's.
Pat & Oscar's sales increased $0.5 million over the second quarter of last
fiscal year and same store sales comparisons benefited from annualizing over
the food borne illness incident that occurred in the last week of the second
quarter of fiscal 2004 and to having two more stores. At quarter end same
store sales reached the level they were at prior to the incident due to the
successful television advertising campaign in San Diego and a new catering
sales force put in place in the first quarter. Same store sales trends have
now turned positive in the first few weeks of the third quarter of fiscal 2005
due in part to annualizing over the food borne illness incident. Pat & Oscar's
earnings also improved in the second quarter and was flat with the loss last
year. Menu price increases taken during the middle of the quarter helped
improve operating margins along with a continued strong focus on controls.
"We're pleased with the strides Pat & Oscar's has made in rapidly recovering
from last year's E.coli event, but recognize further sales improvements are
needed to continue to move the brand forward," said Charles Boppell, CEO of
Worldwide Restaurant Concepts. "We have the right programs and initiatives in
place to grow the top line and to bring those results to the bottom line and
expect that Pat & Oscar's will continue to improve in the third and fourth
quarters."
Sizzler system-wide same store sales were up 2.0 percent in the second quarter
of fiscal 2005 compared to the same period of last year. Profitability was up
36.3 percent, helped by margin improvements and lower operating expenses in the
U.S. and to continued strong performance of our international operations. "We
believe we are now very close to finally exiting the New York market's company
operations which have continued to burden the division's same store sales
growth and profitability. Once we have exited this market I am confident we
will see stronger growth in our core California operations," said Mr. Boppell.
KFC same store sales and operating profit were up 6.6 and 39.5 percent,
respectively, compared to the second quarter of fiscal 2004 due to strong
promotions and continued strong operations.
The Company's provision for income tax this quarter, which primarily relates to
income from our Australian operations, was 51.6 percent of consolidated pre-tax
income due to a pre-tax loss from domestic operations and corporate general and
administrative overhead expenses.
Minority interest expense for the second quarter of 2005 includes 19.1 percent
of the international division's net income attributed to the ownership by local
management.
Building on Strategic Initiatives
The company continues to execute against its growth strategies and the improved
results this quarter over the prior year are a continued indication that the
strategies at both domestic divisions are working and will continue to add to
the strong performance of the Sizzler Australia and KFC operations. In line
with the evaluation of the remodel and training programs at Sizzler in the
U.S., all company and franchise restaurants are being updated with key branding
elements that will bring consistency to the chain as a whole by the end of the
current fiscal year. In addition, re-training is nearly complete and employees
are being re-certified on updated procedures that directly tie independent
guest satisfaction surveys to manager pay incentives.
Pat & Oscar's is expected to open two new stores by the summer of 2005 and
another four by the end of fiscal 2006. All locations are in Southern
California, outside San Diego County.
Investor Conference Call
Worldwide Restaurant Concepts will be holding an investor conference call today
at 11:00 a.m. EST to discuss the Company's financial and operational results.
Investors will have the opportunity to listen to the conference call over the
Internet at http://www.wrconcepts.com/ or http://www.fulldisclosure.com/. To
listen to the live call, please go to either web site at least fifteen minutes
early to register, download, and install any necessary audio software. For
those who cannot listen to the live broadcast, a replay, also at
http://www.wrconcepts.com/ and http://www.fulldisclosure.com/, will be
available shortly after the call ends.
About Worldwide Restaurant Concepts
Worldwide Restaurant Concepts, Inc. operates, franchises or joint ventures 306
Sizzler(R) restaurants worldwide, 112 KFC(R) restaurants located primarily in
Queensland, Australia, and 23 Pat & Oscar's(R) restaurants. Additional
information about the Company can be found at http://www.wrconcepts.com/.
Certain statements contained in this document may contain forward-looking
statements that are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements may include but are
not limited to statements regarding: improving revenues and earnings; that Pat
& Oscar's sales trends will continue to improve and are expected to turn
positive in the third quarter of this fiscal year; commencement of construction
on additional remodels at Sizzler USA; the opening of two new Pat & Oscar's
restaurants by the summer of 2005 and another four new restaurants by April 30,
2006; and the transitioning of Company-owned Sizzler locations in New York and
other areas to franchisees or third parties.
Worldwide Restaurant Concepts cautions that these statements are qualified by
important factors that could cause actual results to differ materially from
those reflected in the forward looking statements contained herein. Such
factors include, but are not limited to: (a) the Company's ability to implement
its strategic plan and manage its costs and expenses; (b) the ability to design
marketing and product initiatives resulting in same store sales growth; (c) the
availability of capital to upgrade the facilities at its domestic Sizzler(R)
locations and build new Pat & Oscar's restaurants; (d) Pat & Oscar's ability to
improve dine-in and catering sales through the implementation of marketing and
operational programs; (e) Pat & Oscar's ability to acquire a sufficient number
of suitable sites to open the proposed number of new locations; (f) the
Company's ability to identify new and existing franchisees or third parties to
purchase New York area restaurants; (g) economic conditions, both generally and
as they affect the restaurant industry in particular; and (h) other risks as
detailed from time to time in the Company's SEC reports, including Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and Annual Reports on Form
10-K.
For further information, please contact: Keith Wall, Vice President and CFO,
or Liz Baskerville, Director, Planning, both of Worldwide Restaurant Concepts,
Inc., +1-818-662-9800; or General Information, Laurie Berman, +1-310-854-8315,
or Investor/Analyst Contact, Tricia Ross, +1-617-520-7064, both of Financial
Relations Board, for Worldwide Restaurant Concepts, Inc.
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE WEEKS ENDED OCTOBER 17, 2004 AND OCTOBER 12, 2003
(Unaudited)
(In thousands, except per share data)
October 17, October 12,
2004 2003
Revenues
Restaurant sales $77,119 $74,304
Franchise revenues 2,297 2,038
Total revenues 79,416 76,342
Costs and Expenses
Cost of sales 26,100 25,524
Labor and related expenses 21,022 20,605
Other operating expenses 19,128 19,147
Depreciation and amortization 2,823 2,499
General and administrative expenses 6,906 6,763
Total operating costs 75,979 74,538
Operating income 3,437 1,804
Interest expense 667 699
Investment income 117 153
Income before income taxes
and minority interest 2,887 1,258
Provision for income taxes 1,491 980
Minority interest expense (benefit) 535 (40)
Net income $861 $318
Basic earnings per share $0.03 $0.01
Diluted earnings per share $0.03 $--
Weighted average common shares outstanding:
Basic 27,554 27,365
Diluted 28,527 28,591
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWENTY-FOUR WEEKS ENDED OCTOBER 17, 2004 AND OCTOBER 12, 2003
(Unaudited)
(In thousands, except per share data)
October 17, October 12,
2004 2003
Revenues
Restaurant sales $156,993 $150,071
Franchise revenues 4,375 4,091
Total revenues 161,368 154,162
Costs and Expenses
Cost of sales 53,718 51,079
Labor and related expenses 42,618 41,103
Other operating expenses 39,219 37,812
Depreciation and amortization 5,615 5,124
General and administrative expenses 13,983 12,171
Total operating costs 155,153 147,289
Operating income 6,215 6,873
Interest expense 1,363 1,251
Investment income 241 261
Income before income taxes
and minority interest 5,093 5,883
Provision for income taxes 2,660 2,050
Minority interest expense (benefit) 977 (38)
Net income $1,456 $3,871
Basic earnings per share $0.05 $0.14
Diluted earnings per share $0.05 $0.12
Weighted average common shares outstanding:
Basic 27,526 27,328
Diluted 28,519 28,385
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
October 17, April 30,
ASSETS 2004 2004
Current Assets:
Cash and cash equivalents $22,419 $24,755
Restricted cash 6,514 5,131
Receivables, net of an allowance
of $454 at October 17, 2004 and
$641 at April 30, 2004 3,176 2,042
Inventories 4,993 4,807
Deferred income taxes 3,169 3,169
Prepaid expenses and other
current assets 2,548 2,718
Assets related to restaurants
held for sale 3,014 5,417
Total current assets 45,833 48,039
Property and equipment, net 74,536 74,232
Long-term notes receivable
(including $191 related party
receivables at October 17, 2004
and $200 at April 30, 2004) 1,727 912
Deferred income taxes 10,412 10,690
Goodwill, net 23,647 23,647
Intangible assets, net of accumulated
amortization of $1,159 at
October 17, 2004 and $1,068 at
April 30, 2004 2,049 2,090
Other assets 1,129 1,127
Total assets $159,333 $160,737
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except par value)
October 17, April 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 2004 2004
Current Liabilities:
Current portion of long-term debt $7,019 $7,125
Accounts payable 13,509 12,396
Other current liabilities 22,126 23,334
Income taxes payable 2,432 4,056
Total current liabilities 45,086 46,911
Long-term debt, net of
current portion 22,719 29,217
Deferred gains and revenues 8,292 8,738
Pension liability 13,751 14,031
Total liabilities 89,848 98,897
Minority interest 20,675 14
Stockholders' Equity:
Capital stock --
Preferred, authorized 1,000 shares,
$5 par value; no shares issued
or outstanding -- --
Common, authorized 50,000 shares,
$0.01 par value; issued and
outstanding 29,614 and 27,614 shares
and 29,438 and 27,438 shares at
October 17, 2004 and April 30, 2004,
respectively 296 294
Additional paid-in capital 265,720 280,442
Accumulated deficit (199,777) (201,233)
Treasury stock, 2,000 shares at
October 17, 2004 and at
April 30, 2004, at cost (4,135) (4,135)
Accumulated other comprehensive loss (13,294) (13,542)
Total stockholders' equity 48,810 61,826
Total liabilities and
stockholders' equity $159,333 $160,737
DATASOURCE: Worldwide Restaurant Concepts, Inc.
CONTACT: Keith Wall, Vice President and CFO, +1-818-662-9800, or Liz
Baskerville, Director, Planning, +1-818-662-9800, both of Worldwide Restaurant
Concepts, Inc.; or General Information, Laurie Berman, +1-310-854-8315, or
Investor/Analyst Contact, Tricia Ross, +1-617-520-7064, both of Financial
Relations Board, for Worldwide Restaurant Concepts, Inc.
Web site: http://www.fulldisclosure.com/
Web site: http://www.wrconcepts.com/