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-- Total revenues for the 13-week period ended April 3, 2004, were $9,483,000, a record first quarter for the company and an increase of 10.6% over total revenues for the 13 weeks ended March 29, 2003. The increase primarily is the result of improvements in same-store sales at company-operated restaurants during the 13-week period ended April 3, 2004. Royalty fees also rose over the year-earlier period due to a net increase of 13 franchised restaurants since March 29, 2003.
-- The company reported record first quarter net income for the 13-week period ended April 3, 2004. Net income for the first quarter of 2004 was $292,000, or $0.06 per diluted share, an increase of 16.8% over net income for the first quarter of 2003 of $250,000, or $0.05 per diluted share. The increase is primarily due to the revenue growth described above.
-- For the first quarter of 2004, same-store sales for company-operated restaurants increased 9.4% from the comparable period in 2003 while same-store sales for franchised restaurants declined 2.3% for the same period.
-- Unit activity for the quarter included five franchised store openings and two franchised store closings.
Under the terms of a Development Agreement entered into in January 2002 with YUM! Brands, Inc., the company granted YUM! the right to use Back Yard Burgers' trademarks in connection with the establishment and operation of up to ten Back Yard Burgers outlets as part of multi-brand units with Taco Bell, Pizza Hut and/or KFC operations. The Development Agreement also granted YUM! an option to co-brand up to 500 additional Back Yard Burgers restaurants within certain geographic areas if certain conditions were satisfied. YUM! did not exercise its option, but has entered into a non-binding term sheet which contemplates that the Development Agreement would be amended to provide YUM! with the right to license and sublicense the Back Yard Burgers concept and trademarks in connection with the establishment and operation of up to 500 stand-alone and multi-brand outlets. While no binding agreement has been reached with YUM! to amend the terms of the Development Agreement to provide for the operation of more than ten co-branded stores, the company is currently holding discussions with YUM! with respect to the terms and conditions under which such a license and sublicense would be granted.
As of April 3, 2004, the company's restaurant system comprised 135 units, including 42 company-operated stores and 93 franchised stores (of which nine were co-branded restaurants under the agreement with Yum! Brands, Inc.). Expansion plans for the remainder of 2004 include the opening of three company-operated stores and 25 franchised stores.
Back Yard Burgers operates and franchises quick-service restaurants in 17 states, primarily in markets throughout the Southeast region of the United States. The restaurants specialize in charbroiled, freshly prepared, great-tasting food. As its name implies, Back Yard Burgers strives to offer the same high-quality ingredients and special care typified by outdoor grilling in the backyard. Its menu features made-to-order gourmet Black Angus hamburgers and chicken sandwiches - charbroiled over an open flame, fresh salads, chili and other specialty items, including hand-dipped milkshakes, fresh-made lemonade and fresh-baked cobblers.
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