Romacorp, Inc. Announces Third Quarter Results

Dallas, Texas, UNITED STATES

DALLAS, Feb. 5, 2001 (PRIMEZONE) -- Romacorp, Inc. today announced results for its third quarter ended December 24, 2000. Revenue for the quarter increased $3.2 million, or 11.3%, to $31.5 million as compared with the same quarter of the prior year. On a year-to-date basis, revenues increased $13.0 million, or 15.2%, to $98.8 million as compared with the same period of the prior year. These increases are due to the opening of additional Company-owned restaurants during the current and prior year and an increase in comparable store sales of 1.7% for the quarter and 3.7% for the year to date. During the quarter, the Company opened one new restaurant in Fort Worth, Texas and franchisees opened three domestic and three international franchised restaurants.

For the quarter, EBITDA decreased 11.6% to $3.2 million from $3.6 million during the same quarter of the prior year while on a year-to-date basis, EBITDA of $9.4 million was 21.7% lower than the prior year amount of $12.0 million. This decrease in EBITDA is due primarily to significant increases in costs of sales that remained at levels significantly above the prior year. The Company has continued to experience higher rib and beef costs during the quarter and year-to-date periods and is projecting rib costs to remain at these higher levels during the next two fiscal quarters. The Company also experienced higher restaurant labor costs and increases in lease and utility costs for the quarter and year-to-date periods.

The net loss for the quarter was $2.1 million compared with a net loss of $359,000 during the same quarter of the prior year. On a year-to-date basis, the Company has experienced a net loss of $2.2 million compared with a net loss of $648,000 during the prior year. During the quarter, the Company recorded an impairment charge of $2.3 million (pre-tax) necessary to reduce the asset carrying value of four under- performing restaurants. During the first quarter of the current fiscal year, an extraordinary gain of $1.2 million, net of tax, was recognized related to the utilization of the Company's revolving credit facility to purchase Senior Notes with a face value of $12 million. In addition, net income during the first quarter of the prior year was negatively impacted by a charge of $513,000 related to the adoption of Statement of Position 98-5 Accounting for Costs of Start-up Activities.

The Company also announced that it has received a waiver of its primary credit agreement loan covenants for the quarter ended December 24, 2000. In addition, the Company announced that its primary credit agreement has recently been amended, reducing the required consolidated EBITDA (as defined) from $15.0 million to $13.0 million and reducing the required interest coverage ratio (as defined) from 1.7 to 1.5. These amended terms will remain in effect for the next four fiscal quarters ending December 2001, and will be reinstated to the aforementioned previous levels for the quarter ending March 2002.

Frank H. Steed, Chief Executive Officer, commented, "As we enter our fourth quarter, we are making the organizational changes that we feel will position us to improve our operating results, including two key additions to our executive staff. Sam Rothschild, Senior Vice President of Operations, is reviewing all facets of company and franchise operations to identify opportunities to increase sales, reduce operating costs and improve organizational and operational efficiencies. Jon Ostrov, Senior Vice President, Business Strategy, is leading us in our efforts to identify the strategic initiatives and marketing strategies that will position the Tony Roma's brand for continued growth in domestic and international markets."

Romacorp, Inc. operates and franchises Tony Roma's restaurants, the world's largest casual dining restaurant chain specializing in ribs. The Company operates 62 restaurants and franchises 173 restaurants in 30 states and 21 foreign countries and territories.

Forward-Looking Comments

Statements that are not historical facts contained herein are forward-looking statements that involve estimates, risks and uncertainties, including but not limited to: consumer demand and market acceptance risk; the level of and the effectiveness of marketing campaigns by the Company; training and retention of skilled management and other restaurant personnel; the Company's ability to locate and secure acceptable restaurant sites; the effect of economic conditions, including interest rate fluctuations, the impact of competing restaurants and concepts, new product introductions, product mix and pricing, the cost of commodities and other food products, labor shortages and costs and other risks detailed in filings with the Securities and Exchange Commission.

                        (Dollars in Thousands)

                   Thirteen Weeks Ended      Thirty-Nine Weeks Ended
                 December 24, December 26, December 24,   December 26,
                      2000        1999         2000           1999

 Net restaurant 
  sales            $ 29,003   $ 25,854     $ 91,539         $ 79,021
 Net franchise 
  revenue             2,504      2,444        7,277            6,777
  Total revenues     31,507     28,298       98,816           85,798
  Cost of sales      10,299      8,317       33,122           25,360
 Direct labor         9,723      8,296       29,710           24,771
 Other                7,773      6,691       23,423           19,534
 General and
  expenses            2,371      3,111        8,626            9,058
 Impairment of
  long-lived assets   2,303        --         2,303             --
  Total operating
   expenses          32,469     26,415       97,184           78,723

  income (loss)        (962)     1,883        1,632            7,075
 Other income
   Interest expense  (2,333)    (2,473)      (6,967)          (7,385)
   income                41         37           91              102
 Loss before
  income taxes,
  effect of a
  change in
  principle and
  item               (3,254)      (553)      (5,244)            (208)
 Income tax
  benefit            (1,139)      (194)      (1,838)             (73)
 Income (loss)
  effect of a
  change in
  principle and
  item               (2,115)      (359)      (3,406)            (135)
 Cumulative effect
  of a change in
  principle, net
  of tax               --          --          --               (513)
 Extraordinary gain
  on early
  retirement of
  debt, net of tax     --          --         1,214             --
 Net loss          $ (2,115)   $  (359) $    (2,192)      $     (648)

 EBITDA            $  3,205    $ 3,625  $     9,368       $   11,959



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