SZ Worldwide Restaurant Concepts

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/

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