Total Entertainment Restaurant Corp. Reports Financial Results for the Fiscal Quarter Ended December 28, 2004
Total Entertainment Restaurant Corp. (NasdaqNM:TENT) announced record revenues and earnings for the sixteen-week fourth quarter ended December 28, 2004.
Highlights for the sixteen-week fourth quarter ended December 28, 2004 compared to the sixteen-week fourth quarter ended December 30, 2003:
• Total revenues increased 19.4% to $52,715,000
• Net income was $4,322,000 versus $2,315,000
• Net income excluding asset impairment charges was $4,322,000 versus $3,569,000
• Diluted earnings per share excluding asset impairment charges was $0.42 versus $0.34
• Diluted earnings per share was $0.42 versus $0.22
• Average weekly sales per restaurant increased 0.5% to $44,379
• Comparable store sales increased 1.4%
• Three (3) new units were opened
Highlights for the fifty-two week period ended December 28, 2004 compared to the fifty-two week period ended December 30, 2003:
• Total revenues increased 22.6% to $149,164,000
• Net income was $6,199,000 versus $5,769,000
• Net income excluding asset impairment charges was $7,713,000 versus $7,025,000
• Diluted earnings per share excluding asset impairment charges was $0.75 versus $0.68
• Diluted earnings per share was $0.60 versus $0.56
• Average weekly sales per restaurant increased 3.3% to $41,195
• Comparable store sales increased 1.1%
• Eleven (11) new units were opened
During the fourth quarter, the Company opened three (3) new restaurants -- Bloomingdale, IL; Crystal City, VA; and Raleigh, NC. The Company opened a total of eleven (11) restaurants during the 2004 fiscal. The Company expects to open 10-12 new restaurants in fiscal 2005. One (1) restaurant was opened on February 9, 2005 in Cary, NC, four (4) units are under construction, contracts have been executed on six (6) more sites, and negotiations have begun on three (3) additional sites.
Like numerous companies in the restaurant industry, the Company has recently reviewed its accounting treatment for leases and depreciation of related leasehold improvements. The Company has discussed its lease accounting practices with its independent external auditors and its audit committee and has determined that it will restate certain of its prior period financial statements. The adjustments made in the restatement are all non-cash and will have no material impact on the Company's cash flows, cash position, revenues, comparable store sales, or compliance with the covenants under its line of credit.
The issue requiring restatement relates to the Company's historic accounting practice of using the initial lease term when determining whether each of its leases was an operating lease or a capital lease and when calculating straight-line rent expense. The Company has historically depreciated its buildings on leased land and leasehold improvements over a period that included both the initial term of the lease and its option periods -- not to exceed 20 years. In addition, tenant incentives received from the landlord were netted against the cost of leasehold improvements and depreciated over the life of the related assets. The Company believed that its longstanding accounting treatments were permitted under GAAP. The Company and its auditors now believe that the authoritative accounting literature is interpreted to require that the company use the same lease term for depreciation as it uses in determining capital versus operating lease classifications and in calculating straight-line rent expense.
As a result of its analysis, the Company has adopted the following policy: The Company will generally limit the depreciable lives for its buildings on leased land and leasehold improvements to the initial term of the lease plus the option periods which the Company reasonably expects to exercise at the inception of the lease -- not to exceed 15 years. The Company's policy will require consistency when calculating the depreciation period, in classifying the lease, and in computing straight-line rent expense for each of its leases. In addition, tenant incentives will be recorded as a liability and amortized over the same period as depreciation. The Company has provided a comparison at the end of this press release that shows the fiscal 2003 fourth quarter and full-year results and the results for the thirty-six weeks ended September 7, 2004 and September 9, 2003 based on the method of accounting for leases previously employed by the Company compared to the newly adopted accounting practice.
The Company currently operates 76 restaurants under the ``Fox and Hound'' and ``Bailey's'' brand names that each provide a social gathering place offering high quality food, drinks and entertainment in an upscale, casual environment.
• Total revenues increased 19.4% to $52,715,000
• Net income was $4,322,000 versus $2,315,000
• Net income excluding asset impairment charges was $4,322,000 versus $3,569,000
• Diluted earnings per share excluding asset impairment charges was $0.42 versus $0.34
• Diluted earnings per share was $0.42 versus $0.22
• Average weekly sales per restaurant increased 0.5% to $44,379
• Comparable store sales increased 1.4%
• Three (3) new units were opened
Highlights for the fifty-two week period ended December 28, 2004 compared to the fifty-two week period ended December 30, 2003:
• Total revenues increased 22.6% to $149,164,000
• Net income was $6,199,000 versus $5,769,000
• Net income excluding asset impairment charges was $7,713,000 versus $7,025,000
• Diluted earnings per share excluding asset impairment charges was $0.75 versus $0.68
• Diluted earnings per share was $0.60 versus $0.56
• Average weekly sales per restaurant increased 3.3% to $41,195
• Comparable store sales increased 1.1%
• Eleven (11) new units were opened
During the fourth quarter, the Company opened three (3) new restaurants -- Bloomingdale, IL; Crystal City, VA; and Raleigh, NC. The Company opened a total of eleven (11) restaurants during the 2004 fiscal. The Company expects to open 10-12 new restaurants in fiscal 2005. One (1) restaurant was opened on February 9, 2005 in Cary, NC, four (4) units are under construction, contracts have been executed on six (6) more sites, and negotiations have begun on three (3) additional sites.
Like numerous companies in the restaurant industry, the Company has recently reviewed its accounting treatment for leases and depreciation of related leasehold improvements. The Company has discussed its lease accounting practices with its independent external auditors and its audit committee and has determined that it will restate certain of its prior period financial statements. The adjustments made in the restatement are all non-cash and will have no material impact on the Company's cash flows, cash position, revenues, comparable store sales, or compliance with the covenants under its line of credit.
The issue requiring restatement relates to the Company's historic accounting practice of using the initial lease term when determining whether each of its leases was an operating lease or a capital lease and when calculating straight-line rent expense. The Company has historically depreciated its buildings on leased land and leasehold improvements over a period that included both the initial term of the lease and its option periods -- not to exceed 20 years. In addition, tenant incentives received from the landlord were netted against the cost of leasehold improvements and depreciated over the life of the related assets. The Company believed that its longstanding accounting treatments were permitted under GAAP. The Company and its auditors now believe that the authoritative accounting literature is interpreted to require that the company use the same lease term for depreciation as it uses in determining capital versus operating lease classifications and in calculating straight-line rent expense.
As a result of its analysis, the Company has adopted the following policy: The Company will generally limit the depreciable lives for its buildings on leased land and leasehold improvements to the initial term of the lease plus the option periods which the Company reasonably expects to exercise at the inception of the lease -- not to exceed 15 years. The Company's policy will require consistency when calculating the depreciation period, in classifying the lease, and in computing straight-line rent expense for each of its leases. In addition, tenant incentives will be recorded as a liability and amortized over the same period as depreciation. The Company has provided a comparison at the end of this press release that shows the fiscal 2003 fourth quarter and full-year results and the results for the thirty-six weeks ended September 7, 2004 and September 9, 2003 based on the method of accounting for leases previously employed by the Company compared to the newly adopted accounting practice.
The Company currently operates 76 restaurants under the ``Fox and Hound'' and ``Bailey's'' brand names that each provide a social gathering place offering high quality food, drinks and entertainment in an upscale, casual environment.
