Buffets, Inc. Announces Fourth Quarter 1997 Results
EDEN PRAIRIE, Minn., Feb. 18 /PRNewswire/ -- Clark C. Grant, Executive Vice President of Finance and Treasurer of Buffets, Inc. (Nasdaq: BOCB), reported that for the fourth quarter of 1997 net earnings were up 102.7% on a 7.8% increase in sales versus the same period in 1996. Average weekly sales and comparable restaurant sales were also up 2.6% and 1.4%, respectively. For the fourth quarter (12 weeks) of 1997, net earnings increased 102.7% to $5,551,000 from $2,739,000 in 1996. Basic earnings per share increased 100% to $.12 on 45,363,000 shares in 1997 compared to $.06 on 45,089,000 in 1996. Restaurant sales for the 1997 quarter increased 7.8% to $183,107,000 from $169,870,000 for the fourth quarter in 1996. During the quarter, average weekly sales increased by 2.6% to $42,771 from $41,702 in 1996 and comparable restaurant sales were up 1.4% For the fifty-two weeks ended December 31, 1997, restaurant sales increased 7.7% to $808,529,000 from $750,707,000 in 1996. Net earnings increased 12.3% in 1997 to $28,598,000 compared to net earnings of $25,463,000 in 1996, before taking into account the 1996 third quarter pre-tax non-cash and merger charges of $49,572,000 ($32,666,000 after related tax benefit or $.72 per share). Basic earnings per share increased to $.63 in 1997 on 45,257,000 shares from $.56 on 45,068,000 shares. Average weekly sales per restaurant increased during the fifty-two weeks by 1.3% to $44,242 from $43,669 for the same period in 1996. Comparable restaurant sales were down .9%. Commenting on the fourth quarter, Roe H. Hatlen, Buffets' Chairman and Chief Executive Officer, stated, "The game plan set in place at the beginning of the 1997 year is working and producing strong financial results. For the second quarter in a row, we have been able to grow same store sales and profits versus prior year thanks to the dedicated efforts of our restaurant management and operational teams across the country. Our marketing program (benefiting 181 restaurants) continues to drive sales and our new menu, which was rolled out late in the second quarter, continues to enable us to achieve operational efficiencies. The 1997 efforts to strengthen local store marketing and implement a certified hourly training program, coupled with a new management incentive system, were also key elements in enabling us to achieve improved results." In regards to development, Mr. Hatlen stated, "three restaurants were opened during the quarter (18 for the year) and three new restaurants, one conversion and one relocation, have opened subsequent to the close of the fourth quarter. Included in these openings were two new restaurant concepts that the company is testing as possible Buffet conversion concepts as well as new growth vehicles. Both opened in previously closed Old Country Buffet restaurants. Pizza Play(SM) opened in December in Columbus, Ohio and features a pizza, pasta, and salad buffet as well as a large game room. The restaurant experienced a modest opening, but has been building business and will initiate its first marketing campaign during the first quarter of 1998. The first Country Roadhouse Buffet & Grill(SM) opened in January in Winston-Salem, and features a relaxed country western atmosphere, complete with a display grill for steaks, pork chops, and ribs. It also features rotisserie chicken and numerous other new products in an exciting new buffet setting particularly appealing to southern markets. Country Roadhouse Buffet & Grill opened strong. It is still too early to gauge success, however we are cautiously optimistic that one, if not both, of these restaurants will provide us with future growth opportunities." In regards to 1998, Mr. Hatlen stated, "the Company is off to a strong start aided by a mild winter in the Midwest as well as continued strong marketing and operational achievements. For the first six weeks of 1998, average weekly sales were up 3.5% and comparable restaurant sales were up 3.3% compared to the first six weeks of 1997." Mr. Hatlen further stated, "we are excited about our opportunities in 1998. We will continue to focus on operational excellence and we plan to double our marketing expenditures to $18 million. We believe we have the operational team in place that will enable us to grow our restaurant sales and profits so that we can produce strong financial gains in 1998. Development plans for 1998 call for 25 new restaurants and several additional conversions of the new concepts we are testing." Buffets, Inc. currently operates 363 restaurants (241 Old Country Buffet(R), 116 HomeTown Buffet(R), 4 Roadhouse Grill, 1 Pizza Play(SM), 1 Country Roadhouse Buffet & Grill(SM) in 34 states and franchises 24 restaurants (5 Old Country Buffet(R) and 19 HomeTown Buffet(R)) in ten states. This press release contains forward-looking statements, including statements regarding the Company's prospects related to new restaurant concepts, including Pizza Play(SM) and Country Roadhouse Buffet & Grill(SM), the success of the Company's conversion efforts, the perceived success of the Company's strategies, planned operational initiatives, amount of planned marketing expenditures in 1998, and the number of restaurants expected to open or be converted during 1998. In addition to the factors discussed above, other factors that could cause actual results to differ materially include the highly competitive nature of the restaurant industry, the level of success in integrating the merged companies' operations, the timing of television advertising planned for 1998 and the cost and effectiveness of this and other marketing initiatives, changes in the cost and supply of food and labor, weather conditions, health and regulatory developments and general economic conditions. The decision to expand the Company's Roadhouse Grill(SM), Country Roadhouse Buffet & Grill(SM) and PizzaPlay(SM) concepts is contingent on the development cost and profitability associated with those concepts and the Company's development priorities. In addition, the ability of the Company to open new restaurants depends on a number of factors, including its ability to find suitable locations and negotiate acceptable leases and land purchases, its ability to attract and retain qualified restaurant managers and the availability of capital. The Company assumes no obligation to publicly release the results of any revision or updates to these forward-looking statements to reflect future events or unanticipated occurrences. To hear the latest recorded quarterly financial results call 888-731-9401. To receive a release via a fax, please call "Company News On-Call" 800-758-5804 extension 122825. To access the Company's website via the Internet our address is: http://www.buffet.com Buffets, Inc. and Subsidiaries Results of Operations (Unaudited) (In thousands, except for per share amounts and average weekly sales) Fifty-Two Weeks Ended January 1, December 31, 1997 Percent 1997 Percent Restaurant sales $750,707 100.0% $808,529 100.0% Restaurant costs: Food costs 263,137 35.0% 273,942 33.9% Labor costs 218,121 29.1% 240,956 29.8% Direct and occupancy costs 178,526 23.8% 197,106 24.4% Total restaurant costs 659,784 87.9% 712,004 88.1% Restaurant profits 90,923 12.1% 96,525 11.9% Selling, general and administrative expenses 47,594 6.3% 48,158 6.0% Merger and other merger related costs 6,584 0.9% Duplicate site closing costs 10,702 1.4% Impairment of assets 27,739 3.7% 258 0.0% Other site closing costs 4,547 0.6% 1,242 0.1% (6,243)* -0.8% 46,867** 5.8% Other income (expense) (520) -0.1% (359) -0.0% Earnings (loss) before income taxes (6,763)* -0.9% 46,508** 5.8% Income taxes 440 0.1% 17,910 2.3% Net earnings (loss) ($7,203)* -1.0% $28,598** 3.5% Earnings (loss) per share Basic *** ($0.16)* $0.63 ** Diluted **** ($0.16)* $0.62 ** Weighted average common shares assumed outstanding Basic *** 45,068 45,257 Diluted **** 45,068 49,140 Number of Company-owned restaurants open at end of period 346 360 Average weekly sales of Company-owned restaurants open at end of period $43,669 $44,242 1.3% (In thousands, except for per share amounts and average weekly sales) Twelve Weeks Ended January 1, December 31, 1997 Percent 1997 Percent Restaurant sales $169,870 100.0% $183,107 100.00% Restaurant costs: Food costs 61,053 36.0% 61,333 33.5% Labor costs 51,691 30.4% 54,631 29.8% Direct and occupancy costs 41,961 24.7% 45,239 24.7% Total restaurant costs 154,705 91.1% 161,203 88.0% Restaurant profits 15,165 8.9% 21,904 12.0% Selling, general and administrative expenses 10,727 6.3% 11,857 6.5% Merger and other merger related costs Duplicate site closing costs Impairment of assets 258 0.1% Other site closing costs 1,242 0.7% 4,438 2.6% 8,547** 4.7% Other income (expense) 41 0.0% 174 0.1% Earnings (loss) before income taxes 4,479 2.6% 8,721** 4.8% Income taxes 1,740 1.0% 3,170 1.8% Net earnings (loss) $2,739 1.6% $5,551** 3.0% Earnings (loss) per share Basic *** $0.06 $0.12** Diluted **** $0.06 $0.12** Weighted average common shares assumed outstanding Basic *** 45,089 45,363 Diluted **** 45,089 49,162 Number of Company-owned restaurants open at end of period 346 360 Average weekly sales of Company-owned restaurants open at end of period $41,702 $42,771 2.6% * Reflects a non-cash and merger charge totaling $49,572,000 ($32,666,000 or $.72 per share after tax). ** Reflects a non-cash charge totaling $1,500,000 ($923,000 or $.02 per share after tax). *** "Basic" earnings (loss) per share is calculated by dividing net earnings applicable to common shares outstanding. This replaces "primary" earnings (loss) per share, which included common stock equivalents in the calculation. Prior period per share amounts have been restated to reflect the current presentation. **** "Diluted" earnings (loss) per share includes options and convertible securities, if dilutive, in the calculation. Condensed Consolidated Balance Sheet (Unaudited) Assets January 1, December 31, 1997 1997 (in thousands) Current assets $34,463 $65,111 Property and equipment (net) 327,721 330,647 Goodwill (net) 5,974 5,624 Other assets 2,525 2,194 $370,683 $403,576 Liabilities and Stockholders' Equity Current liabilities $83,643 $85,528 Long-term debt 46,578 44,454 Deferred income 405 212 Deferred income taxes 3,266 6,695 Stockholders' equity 236,791 266,687 $370,683 $403,576
SOURCE Buffets, Inc.
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