Worldwide Restaurant Concepts, Inc. Announces First Quarter Fiscal
2005 Results HIGHLIGHTS: SHERMAN OAKS, Calif., Sept. 2
/PRNewswire-FirstCall/ -- Worldwide Restaurant Concepts, Inc.
(NYSE:SZ) today reported financial results for the first quarter
ended July 25, 2004. The Company reported revenues of $82.0 million
for the first quarter of fiscal 2005, an increase of 5.3 percent
over the $77.8 million reported in the first quarter of the prior
year. Net income for the first quarter of fiscal 2005 was $0.6
million, or $0.02 per diluted share, compared to net income of $3.6
million, or $0.12 per diluted share, in the same period a year ago.
Continued weak sales results at Pat & Oscar's, stemming from
the fiscal 2004 second quarter food borne illness incident, was
partially offset by positive domestic Sizzler system sales and
strong same store sales growth at Sizzler Australia and KFC. The
strengthening of the Australian dollar compared to last year
contributed $3.4 million to 2005 first quarter revenues and $0.1
million to net income. Revenue and Cost Trends The Company's 5.3
percent increase in revenues in the first quarter reflected an
aggregate 2.5 percent increase in same store sales across all
company-owned restaurants. Same store sales growth of 7.7 percent
at KFC and 8.0 percent at Sizzler Australia (company-owned only)
were offset by declines of 2.2 percent for Sizzler USA company
owned units and 12.1 percent for Pat & Oscar's. Pat &
Oscar's sales trends improved over those in the fourth quarter of
fiscal 2004, however, they continue to be disappointing. The
ongoing effect of the negative publicity stemming from the
food-borne illness incident in the second quarter of fiscal 2004
has continued to have an adverse impact on dine-in and catering
sales. To reverse these trends, the Company plans to continue their
television advertising campaign in the San Diego, California
market, implement a catering sales force, continue to pursue
non-traditional channels of distribution, and enhance and expand
lunch value menu offerings with initiatives including soups and
sandwiches, to further appeal to the value-oriented guest. The
Company believes Pat & Oscar's sales trends will continue to
improve and are expected to turn positive by the third quarter of
this fiscal year. Also during the quarter, Pat & Oscar's
profitability was impacted by increasing commodities costs and the
creeping labor expenses that are due, in part, to the shortfall in
sales. To offset cost increases, the Company has taken a price
increase on selected items and installed menu boards designed to
increase check averages via menu mix. "We are disappointed with the
slow recovery at Pat & Oscar's, but we believe we have the
right programs in place to reverse the trend," said Charles
Boppell, CEO of Worldwide Restaurant Concepts. "We need to build
new guest trial, and although we've laid the groundwork, the
process can, and has been slow. We remain optimistic that Pat &
Oscar's will continue to improve throughout this year." Sizzler
system-wide sales trends were positive for the first quarter of
fiscal 2005, but profitability was hurt by poor results in the New
York market, and increasing labor and labor related costs. The
Company has refocused on labor initiatives and continues its
strategy of transitioning the New York market to franchisees or
third party ownership. In the first quarter of this fiscal year,
general and administrative expenses increased by $1.6 million
compared to the same period a year ago. In the prior year, general
and administrative expenses were reduced by a $1.0 million foreign
exchange gain from the repatriation of proceeds from an
inter-company loan. No material foreign exchange gain was
recognized in the current quarter. Additionally, in the prior year,
reimbursements for certain legal fees also reduced general and
administrative expenses. Due to a pre-tax net loss from domestic
operations this quarter, the Company's provision for income tax
that primarily relates to the Australian operations was
approximately 53 percent of the consolidated pre-tax income. In the
first quarter of fiscal 2005, the Australian management group
exercised options for approximately 19 percent of the Australian
operating company. The Company's first quarter's net income
reflects the impact of the income attributable to minority interest
of $0.4 million associated with the exercise of these options.
Continued Focus On Strategic Initiatives The Company remains
committed to its growth strategies at each division, including the
recovery of sales from the food borne illness incident and then
development and expansion of the Pat & Oscar's chain, the
ongoing repositioning of the Sizzler brand, and the continued
strengthening of its KFC operations. In order to continue to move
the brand forward, we are evaluating our remodel and training
programs at both our Company and franchised Sizzler restaurants and
remain optimistic about those results. The Company continues to
review its portfolio of locations and to pursue a plan to
strategically transition stores from Company to franchisee or third
party ownership. The transitioning of the New York market has been
and continues to be hampered by restrictive existing lease terms,
however the Company did franchise two of its remaining locations in
the first quarter of this fiscal year, and anticipates
transitioning most of the remaining units to third parties or
franchisees by the end of this fiscal year. In the first quarter,
Pat & Oscar's opened their first location in Ventura County in
Thousand Oaks, California, which brings the total number of Pat
& Oscar's restaurants to 23. This location is the farthest
north of the restaurants, and was chosen using a more refined site
selection process and is currently generating solid sales. The
Company expects to open four to six additional locations over the
next 12 to 15 months. Investor Conference Call Worldwide Restaurant
Concepts will be holding an investor conference call today at 11:00
a.m. EDT 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 312 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 four to six new Pat & Oscar's restaurants over
the next 12 to 15 months; 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 continuation of television
advertising and implementation of other marketing and operational
programs; (e) Pat & Oscar's ability to acquire a sufficient
number of suitable sites to increase restaurant count by four to
six units over the next 12 to 15 months; (e) the Company's ability
to identify new and existing franchisees or third parties to
purchase New York area restaurants; (f) economic conditions, both
generally and as they affect the restaurant industry in particular;
and (g) 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,
+1-818-662-9800, or Liz Baskerville, Director, Planning,
+1-818-662-9800, both of Worldwide Restaurant Concepts, Inc.; or
Laurie Berman, General Information, +1-310-407-6547, or Tricia
Ross, Investor/Analyst, +1-310-407-6540, 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 JULY 25, 2004 AND
JULY 20, 2003 (Unaudited) (In thousands, except per share data)
July 25, July 20, 2004 2003 Revenues Restaurant sales $79,874
$75,767 Franchise revenues 2,078 2,053 Total revenues 81,952 77,820
Costs and Expenses Cost of sales 27,618 25,555 Labor and related
expenses 21,596 20,498 Other operating expenses 20,091 18,665
Depreciation and amortization 2,792 2,625 General and
administrative expenses 7,077 5,408 Total operating costs 79,174
72,751 Operating income 2,778 5,069 Interest expense 696 552
Investment income 124 108 Income before income taxes and minority
interest 2,206 4,625 Provision for income taxes 1,169 1,070
Minority interest 442 2 Net income $595 $3,553 Basic earnings per
share $ 0.02 $ 0.13 Diluted earnings per share $ 0.02 $ 0.12
Weighted average common shares outstanding: Basic 27,485 27,312
Diluted 28,532 28,240 WORLDWIDE RESTAURANT CONCEPTS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in
thousands) July 25, April 30, ASSETS 2004 2004 Current Assets: Cash
and cash equivalents $22,804 $24,755 Restricted cash 6,499 5,131
Receivables, net of an allowance of $676 at July 25, 2004 and $641
at April 30, 2004 1,957 2,042 Inventories 4,541 4,807 Deferred
income taxes 3,169 3,169 Prepaid expenses and other current assets
2,653 2,718 Assets related to restaurants held for sale 5,532 5,417
Total current assets 47,155 48,039 Property and equipment, net
74,168 74,232 Long-term notes receivable (including $191 of related
party receivables at July 25, 2004 and $200 at April 30, 2004) 899
912 Deferred income taxes 10,513 10,690 Goodwill, net 23,647 23,647
Intangible assets, net of accumulated amortization of $1,101 at
July 25, 2004 and $1,068 at April 30, 2004 2,062 2,090 Other assets
990 1,127 Total assets $159,434 $160,737 WORLDWIDE RESTAURANT
CONCEPTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) (in thousands, except par value) July 25, April
30, LIABILITIES AND STOCKHOLDERS' EQUITY 2004 2004 Current
Liabilities: Current portion of long-term debt $7,020 $ 7,125
Accounts payable 13,781 12,396 Other current liabilities 20,394
23,334 Income taxes payable 3,302 4,056 Total current liabilities
44,497 46,911 Long-term debt, net of current portion 24,576 29,217
Deferred gains and revenues 8,661 8,738 Pension liability 13,891
14,031 Total liabilities 91,625 98,897 Minority interest 18,347 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
29,501 and 27,501 shares and 29,438 and 27,438 shares at July 25,
2004 and April 30, 2004, respectively 295 294 Additional paid-in
capital 267,340 280,442 Accumulated deficit (200,638) (201,233)
Treasury stock, 2,000 shares at July 25, 2004 and at April 30,
2004, at cost (4,135) (4,135) Accumulated other comprehensive loss
(13,400) (13,542) Total stockholders' equity 49,462 61,826 Total
liabilities and stockholders' equity $159,434 $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 Laurie Berman, General Information, +1-310-407-6547, or
Tricia Ross, Investor/Analyst, +1-310-407-6540, both of Financial
Relations Board, for Worldwide Restaurant Concepts, Inc. Web site:
http://www.fulldisclosure.com/ Web site: http://www.wrconcepts.com/
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