Worldwide Restaurant Concepts, Inc. Announces Preliminary Third
Quarter Fiscal 2005 Results HIGHLIGHTS: SHERMAN OAKS, Calif., March
24 /PRNewswire-FirstCall/ -- Worldwide Restaurant Concepts, Inc.
(NYSE:SZ) today reported preliminary financial results for the
third quarter ended February 6, 2005. The Company reported revenues
of $110.3 million for the third quarter of fiscal 2005, an increase
of 4.9 percent over the $105.2 million reported in the third
quarter of the prior year. Preliminary net income before any lease
accounting adjustment for the third quarter of fiscal 2005 was $3.9
million, or $0.14 per diluted share, compared to a net loss of $0.7
million, or $0.04 per diluted share, in the same period a year ago.
Strengthening sales at Pat & Oscar's and Sizzler USA, continued
strong sales growth at Sizzler Australia and KFC, insurance
proceeds related to the food-borne illness event at Pat &
Oscar's, and gains on Sizzler USA sale-leaseback transactions, all
contributed to the overall earnings results. A 4.3 percent increase
in the Australian dollar exchange rate compared to last year
contributed $3.0 million to 2005 third-quarter revenues and $0.2
million to net income. Total revenues at Sizzler USA declined $4.2
million from last year's quarter due to having fourteen fewer
company operated restaurants, which is the result of the plan to
exit the New York market and focus on core California restaurant
operations. Sizzler USA revenue declines were partially offset by
royalty revenues from an additional eight franchise locations.
Revenue and Cost Trends The Company's 4.9 percent increase in
revenues in the third quarter reflected an aggregate 4.4 percent
increase in same store sales across all brands. Same store sales
growth of 6.8 percent at KFC and 7.1 percent at Sizzler Australia
(company-owned only), as well as an increase of 1.0 percent for
Sizzler USA company owned units and 11.0 percent for Pat &
Oscar's, all contributed to the overall growth. Pat & Oscar's
sales increased $2.5 million over the third 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. Additionally, Pat &
Oscar's had one more location open during this period than in the
same period last year. During the third quarter of this year, the
division benefited from approximately $1.5 million in insurance
proceeds related to the food-borne illness event of last year.
Sizzler system-wide same store sales were up 1.2 percent in the
third quarter of fiscal 2005 compared to the same period of last
year. Additionally, margin improvements and the net gains from the
sale-leaseback transactions of approximately $1.6 million, all
contributed to the division's earnings performance. The Company's
provision for income tax this quarter, which primarily relates to
income from our Australian operations, was 35.0 percent of
consolidated pre-tax income. Minority interest expense for the
third quarter of 2005 includes 19.1 percent of the international
division's net income attributed to the ownership by local
management. Delayed Third Quarter 10-Q Filing and Lease Accounting
Issue On March 21, 2005, the Company announced that it would delay
its third quarter fiscal year 2005 earnings release and 10-Q filing
due to its on-going lease accounting review. The Company, with its
independent auditors and in consultation with its audit committee,
continues to thoroughly assess its lease accounting and
amortization practices, in light of the recent restatements made by
many other restaurant and retail companies under various items of
authoritative accounting literature. The Company currently
anticipates that it will need to restate its prior year financial
statements. Accordingly, management and the Audit Committee
determined that the Company's previously issued consolidated
financial statements, including for the years ending April 30,
2002, 2003, and 2004, and previously filed current year financial
statements, should no longer be relied upon. Further, the Company
believes that the year to date impact to current year net income
will be no more than $0.03 per diluted share. Strategic Study and
Operational Initiatives The Company continues to successfully
execute against its growth strategies, as evidenced by the
preliminary results this quarter. "I am pleased that we continue to
see improvement in our domestic divisions and strong performance in
our international group, and am optimistic about the on-going
performance of all our brands," said Chuck Boppell, Chief Executive
Officer of Worldwide Restaurant Concepts. During the third quarter
Pat & Oscar's exited its Downtown San Diego, California
location. The division is still expected to open two new
restaurants by the summer of 2005 and another three to five by the
end of fiscal 2006. All the new locations are expected to be in
Southern California. Also during the third quarter the Company
announced the opening of the first Sizzler in Beijing, China. The
opening was in conjunction with the joint venture agreement with
the Minor Food Group Pcl, a subsidiary of Royal Garden Resorts Pcl,
to develop franchise opportunities for Sizzler restaurants in
China. In addition to operational and growth initiatives, the
Company continues to focus on increasing shareholder value through
other strategic options. In September 2004, the Company announced
the hiring of Houlihan Lokey Howard & Zukin, an
investment-banking firm, to review different strategies to optimize
shareholder value. The firm is continuing to work with all
divisions in assessing the opportunities available to them as well
as with the Company as a whole. The project is progressing on
schedule. As mentioned earlier in this release, and detailed on a
Form 8-K in February 2005, the Company entered into a sale lease
back transaction on seven domestic Sizzler properties that allowed
it to unlock a substantial amount of value. The transaction
generated approximately $16.1 million in proceeds, which allowed
the Company to retire approximately $6.9 million in debt. The rest
of the monies will be used for brand development and other
corporate purposes. Investor Conference Call Worldwide Restaurant
Concepts will be holding an investor conference call Thursday,
March 24th 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 309
Sizzler(R) restaurants worldwide, 112 KFC(R) restaurants located
primarily in Queensland, Australia, and 22 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; the opening of one or two new Pat & Oscar's
restaurants by the summer of 2005 and another three to five new
restaurants by April 30, 2006; on-going expansion in China; and the
impact of the Company's on-going lease accounting review. 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 impact of the Company's on-going
lease accounting review. (c) the ability to design marketing and
product initiatives resulting in same store sales growth; (d) the
availability of capital to upgrade the facilities at its domestic
Sizzler(R) locations and build new Pat & Oscar's restaurants;
(e) Pat & Oscar's ability to improve dine-in and catering sales
through the implementation of marketing and operational programs;
(f) Pat & Oscar's ability to acquire a sufficient number of
suitable sites to open the proposed number of new locations; (g)
the Company's ability to identify new and existing franchisees or
third parties to purchase New York area restaurants; (h) economic
conditions, both generally and as they affect the restaurant
industry in particular; and (i) 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. AT THE COMPANY: Keith Wall Liz Baskerville Vice
President and CFO Director, Planning (818) 662-9800 (818) 662-9800
AT FINANCIAL RELATIONS BOARD: Laurie Berman Tricia Ross General
Information Investor/Analyst Contact (310) 854-8315 (617) 520-7064
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES PRELIMINARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE SIXTEEN WEEKS
ENDED FEBRUARY 6, 2005 AND FEBRUARY 1, 2004 (Unaudited) (In
thousands, except per share data) February 6, February 1, 2005 2004
Revenues Restaurant sales $107,518 $102,591 Franchise revenues
2,813 2,570 Total revenues 110,331 105,161 Costs and Expenses Cost
of sales 37,146 36,083 Labor and related expenses 28,732 28,420
Other operating expenses 26,233 26,705 Depreciation and
amortization 3,831 3,493 General and administrative expenses 9,546
8,678 Gain on sale-leaseback and legal settlement (3,161) -- Total
operating costs 102,327 103,379 Operating income 8,004 1,782
Interest expense 791 1,060 Investment income 251 162 Income before
income taxes and minority interest 7,464 884 Provision for income
taxes 2,616 1,654 Minority interest expense (benefit) 900 (83) Net
income $3,948 $(687) Basic earnings per share $0.14 $(0.03) Diluted
earnings per share $0.14 $(0.04) WORLDWIDE RESTAURANT CONCEPTS,
INC. AND SUBSIDIARIES PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS
OF INCOME FOR THE FORTY WEEKS ENDED FEBRUARY 6, 2005 AND FEBRUARY
1, 2004 (Unaudited) (In thousands, except per share data) February
6, February 1, 2005 2004 Revenues Restaurant sales $264,511
$252,662 Franchise revenues 7,188 6,661 Total revenues 271,699
259,323 Costs and Expenses Cost of sales 90,864 87,162 Labor and
related expenses 71,350 69,523 Other operating expenses 65,452
64,517 Depreciation and amortization 9,446 8,617 General and
administrative expenses 23,529 20,849 Gain on sale-leaseback and
legal settlement (3,161) -- Total operating costs 257,480 250,668
Operating income 14,219 8,655 Interest expense 2,154 2,311
Investment income 492 423 Income before income taxes and minority
interest 12,557 6,767 Provision for income taxes 5,276 3,704
Minority interest expense (benefit) 1,877 (121) Net income $5,404
$3,184 Basic earnings per share $0.20 $0.12 Diluted earnings per
share $0.19 $0.08 WORLDWIDE RESTAURANT CONCEPTS, INC. AND
SUBSIDIARIES PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands) February 6, April 30, ASSETS 2005 2004
Current Assets: Cash and cash equivalents $28,182 $24,755
Restricted cash 6,072 5,131 Receivables, net of an allowance of
$465 at February 6, 2005 and $641 at April 30, 2004 2,834 2,042
Inventories 5,928 4,807 Deferred income taxes 3,169 3,169 Prepaid
expenses and other current assets 2,547 2,718 Assets related to
restaurants held for sale 2,838 5,417 Total current assets 51,570
48,039 Property and equipment, net 69,117 74,232 Long-term notes
receivable, net (including $200 related party receivables at
February 6, 2005 and $200 at April 30, 2004) 1,698 912 Deferred
income taxes 10,543 10,690 Goodwill, net 23,647 23,647 Intangible
assets, net of accumulated amortization of $1,269 at February 6,
2005 and $1,068 at April 30, 2004 2,037 2,090 Other assets 966
1,127 Total assets $159,578 $160,737 WORLDWIDE RESTAURANT CONCEPTS,
INC. AND SUBSIDIARIES PRELIMINARY CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) (in thousands, except par value) February 6,
April 30, LIABILITIES AND STOCKHOLDERS' EQUITY 2005 2004 Current
Liabilities: Current portion of long-term debt $6,847 $7,125
Accounts payable 13,594 12,396 Other current liabilities 22,191
21,255 Income taxes payable 5,919 6,135 Total current liabilities
48,551 46,911 Long-term debt, net of current portion 7,462 29,217
Deferred gains and revenues 15,577 8,738 Pension liability 13,566
14,031 Total liabilities 85,156 98,897 Minority interest 26,667 14
Stockholders' Equity: Capital stock -- Preferred, authorized 1,000
shares, $5 par value; no shares issued and outstanding -- --
Common, authorized 50,000 shares, $0.01 par value; issued and
outstanding 29,661 and 27,661 shares and 29,438 and 27,438 shares
at February 6, 2005 and April 30, 2004, respectively 297 294
Additional paid-in capital 260,505 280,442 Accumulated deficit
(195,829) (201,233) Treasury stock, 2,000 shares at February 6,
2005 and at April 30, 2004, at cost (4,135) (4,135) Accumulated
other comprehensive loss (13,083) (13,542) Total stockholders'
equity 47,755 61,826 Total liabilities and stockholders' equity
$159,578 $160,737 DATASOURCE: Worldwide Restaurant Concepts, Inc.
CONTACT: Keith Wall, Vice President and CFO, or Liz Baskerville,
Director, Planning, both of Worldwide Restaurant Concepts, Inc.,
+1-818-662-9800; or Laurie Berman, General Information,
+1-310-854-8315, or Tricia Ross, Investor/Analyst, +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/
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