Sbarro, Inc. Announces Results of Operations for the Third Quarter and Nine Months Ended September 27, 2009

Sbarro, Inc. announced today results of operations for the third quarter and nine months ended September 27, 2009. The Company's detailed results are included in its Quarterly Report on Form 10-Q, which was filed with the SEC on November 12, 2009.

Third Quarter Financial Results

Revenues were $85.5 million for the quarter ended September 27, 2009 as compared to revenues of $91.9 million for the quarter ended September 28, 2008. The decrease in revenues was due to a 5.2% decrease in Company-owned comparable-unit sales and lost sales from stores strategically closed, partially offset by sales generated by new Company-owned stores opened in 2009 and 2008. The decrease in comparable-unit sales primarily reflects continued reduced mall traffic throughout the United States as a result of the current economic environment. Domestic franchise comparable-unit sales declined 7.1% while international franchise comparable-unit sales declined 27.3%, primarily due to the strengthening of the U.S. Dollar relative to virtually all foreign currencies. Without consideration for foreign currency fluctuations, the international franchise comparable-unit sales decline would have been 13%.

EBITDA, as calculated in accordance with the terms of the Company's bank credit agreements, was $10.2 million for the quarter ended September 27, 2009 as compared to $11.6 million for the quarter ended September 28, 2008. The decline was primarily the result of the decline in Company-owned comparable-unit sales and royalties on franchise sales, partially offset by cost savings initiatives and reduced commodity costs during the quarter.

Net loss attributable to Sbarro, Inc. for the quarter ended September 27, 2009 was $24.5 million as compared to a net loss of $1.2 million for the quarter ended September 28, 2008. Included in the third quarter of 2009 net loss was goodwill and other intangible asset impairments of $31.5 million offset by an income tax benefit of $9.8 million. Without consideration for impairment charges and taxes, net loss attributable to Sbarro, Inc. increased approximately $1.5 million. This increase in net loss was primarily the result of increased interest expense, a decrease in comparable unit sales and royalties on franchise sales, partially offset by cost savings initiatives and reduced commodity costs.

As discussed in Exhibit A, EBITDA is a non-GAAP financial measure that management believes is an important metric for us to report to our investors, as we consider it a helpful additional indicator of our ability to meet future debt obligations and to comply with certain covenants in our borrowing agreements which are tied to this metric. Exhibit A includes a reconciliation of EBITDA to net loss, which is the most directly comparable financial measure under United States Generally Accepted Accounting Principles ('GAAP'). Exhibit A also identifies adjustments to EBITDA that are provided for under the Company's bank credit agreements.

Year to Date Financial Results

Revenues were $245.2 million for the nine months ended September 27, 2009 as compared to revenues of $260.5 million for the nine months ended September 28, 2008. The decrease in revenues was primarily due to a 5.0% decrease in Company-owned comparable-unit sales and lost sales from stores strategically closed, offset by revenues generated by new Company-owned stores opened in 2008 and 2009. The decrease in comparable-unit sales primarily reflects the reduced mall traffic throughout the United States as a result of the current economic environment. Domestic franchise comparable-unit sales declined 5.4% while international franchise comparable-unit sales declined 25.9%, primarily due to the strengthening of the U.S. Dollar. Without consideration for foreign currency fluctuations, the international franchise comparable-unit sales decline would have been 9%.

EBITDA, as calculated in accordance with the terms of the Company's bank credit agreements, was $27.7 million for the nine months ended September 27, 2009 as compared to $25.4 million for the nine months ended September 28, 2008. The improvement was primarily the result of cost savings initiatives and reduced commodity costs, partially offset by the decline in Company-owned comparable-unit sales and royalties on franchise sales during the first three quarters of 2009.

Net loss attributable to Sbarro, Inc. was $36.7 million for the first nine months of 2009 as compared to a net loss of $8.9 million for the first nine months of 2008. Included in the first nine months of 2009 net loss was goodwill and other intangible asset impairments of $31.5 million offset by an income tax benefit of $9.5 million. Without consideration for impairment charges and taxes, the net loss attributable to Sbarro, Inc. increased approximately $900 thousand. This increase in net loss was primarily the result of a decrease in comparable unit sales and royalties on franchise sales, partially offset by cost savings initiatives and reduced commodity costs.

The Company was in compliance with all covenants as calculated in accordance with the terms of the Company's bank credit agreements for the nine months ended September 27, 2009.

Peter Beaudrault, Chairman of the Board, President and CEO of Sbarro, commented, 'Our results for the first nine months of 2009 continue to be impacted by the current economic environment and the strengthening of the U.S. Dollar; however, as a result of aggressive cost controls and lower commodity costs, we were able to produce higher year over year EBITDA for 2009 in line with expectations as set forth in our amended credit agreement.'

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