Richtree's 3rd Quarter Results Released

TORONTO--(BUSINESS WIRE)--July 2, 2002--Richtree Inc. today released its second quarter operating results for the thirteen-week period and year-to-date ended April 28, 2002.
The results reflect the Company's continuing trend towards a stronger overall financial position, despite the very challenging market conditions that now appear to be coming to an end. In the quarter, the Company finalized two financing transactions with third parties for a total of $3 million that added additional strength to the balance sheet to facilitate the planned launch of the Marchelino franchise concept. In addition the Company met $1.45 million of debt retirements scheduled for July 31, 2002 earlier than required, with the next payment now scheduled for July 31, 2003. Overall, the Company maintained solid cash flow performance in its market concept restaurant operations in Canada.
In Richtree's Canadian market concept operations, overall EBITDA performance in the third quarter was 10.9% of sales, including a very acceptable 13.7% of sales for the Marchelino segment. Year to date, the Canadian market concept generated EBITDA of $3.4 million on sales of $30.6 million, or 11.3% of sales overall, led by 13.9% of sales from the Marchelino segment. The Company is proceeding with plans to franchise additional future Marchelino restaurants, and intends to complete negotiations for the first new franchised locations in Canada within the near future.
The Company's U.S. locations in Boston were severely affected by the after-math of 9/11, the fall-out in the high-tech sector and the continued restricted access and visibility of the premises as a result of the redevelopment of the Prudential Center. The good news is that the addition of 1.2 million square feet of new office space, additional high-end retail space and an up-scale residential condominium building has just now been completed after a three-year major construction period. The Company believes that its location in this premier center is now significantly improved.
The innovative and highly successful Richtree Day program has continued throughout the quarter, and has already accumulated $900,000 of management and employee earnings needed to acquire or redeem the $1 million of preferred shares presently owned by Movenpick, thereby relieving the Company of this debt obligation and further enhancing the balance sheet. The 90% of management and staff employees participating will receive Class B Subordinate Voting shares as a reward for their enormous voluntary contribution to the Company's well being.
In the quarter, consolidated EBITDA was $159,000 compared to $892,000 for the 3rd quarter last year. Income from restaurant operations was $800,000 versus $1.4 million a year earlier, and year to date was $1.4 compared to $3.5 last year. Consolidated revenue in the quarter was $16.9 million, compared to $18.6 million (adjusted for discontinued operations of its partnership with Loblaws) last year, and year to date consolidated sales were $51.7 million, compared to $56.3 million (adjusted). The consolidated net loss in the quarter was $1.8 million, or 12.2 cents per share compared to $1 million or 8.3 cents per share last year, and year to date, the consolidated net loss was $3.7 million or 24.9 cents per share compared to $2 million or 16.3 cents last year. The impact of 9/11 and the follow on downward effects on the economy in general and the hospitality sector specifically is the principal reason for the decline.

Richtree is listed on The Toronto Stock Exchange under the symbol MOO.b.

Logos, product and company names mentioned are the property of their respective owners.

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