For the 26-week period ended July 1, 2007, the Company reported net income of $60,338 or $0.02 per diluted share, compared with net income of $1,772,414 or $0.48 per diluted share for the 26-week period of fiscal year 2006.
The Company's revenues for the second quarter of fiscal year 2007 increased $20,257 or 0.1% to $20.9 million compared with $20.8 million for the same quarter in fiscal year 2006. Restaurant sales for the second quarter of fiscal 2007 increased $175,075 or 0.9% to $20.7 million compared with $20.5 million for the second quarter of fiscal year 2006. The increase in revenue reflects new restaurant additions and revenues from the Company's Mission Burritos stores of $849,000 partially offset by a $674,000 decline in same-restaurant sales and lost sales due to one closed restaurant for remodeling. For the second quarter ended July 1, 2007, Company-owned same-restaurant sales decreased approximately 2.1% and franchised-owned same-restaurant sales, as reported by franchisees, increased approximately 1.4%.
On a year-to-date basis, the Company's revenue decreased $275,412 or 0.7% to $41.4 million compared with $41.6 million for the same 26-week period in fiscal year 2006. Restaurant sales for 2007 year-to-date decreased $114,140 or 0.3% to $41.0 million compared with $41.1 million for the same 26-week period of fiscal year 2006. The decrease in revenue reflects a $2.2 million decline in same-restaurant sales, partially offset by net new restaurant additions and revenues from the Company's Mission Burritos stores of $2.1 million. For the 26-week period ended July 1, 2007, Company-owned same-restaurant sales decreased approximately 4.6% and franchised-owned same-restaurant sales, as reported by franchisees, decreased approximately 0.6%.
Commenting on the Company's second quarter results, Curt Glowacki, Chief Executive Officer, stated, "Although we reported a decline in same-store restaurant sales for the second quarter, we are starting to see a positive turn as some of the concepts delivered positive comps for the quarter. Also impacting sales, the Casa Ole located in Victoria, Texas, was closed for eight weeks during the second quarter of 2007 for a major remodel, resulting in lost sales of approximately $250,000.
"We are still facing challenges in controlling our food and labor costs. During the second quarter, we raised menu prices at most of our concepts to partially offset rising commodity prices. On July 24, 2007, the federal minimum wage increased, increasing our payroll costs by approximately $7,000 per week. We are continuing to monitor food and labor costs, and if necessary, we intend to make further menu price increases later on in the fiscal year.
"Moving into the third quarter, we have signed leases for our two new Mission Burritos sites, which we plan to open in the fourth quarter of this year. We are extremely excited to be on track with our growth plans for expanding our fast casual concept. We have also signed a lease for a new Casa Ole restaurant located in Katy, Texas, with construction scheduled to begin in the fourth quarter. As always, we will continue to offer our loyal customers a reasonably priced menu combined with superior service which results in an enjoyable dining experience."
Mexican Restaurants, Inc. operates and franchises 78 Mexican restaurants. The current system includes 58 Company-operated restaurants, 19 franchisee-operated restaurants and one licensed restaurant.
13-Week 13-Week 26-Week 26-Week
Period Period Period Period
Ended Ended Ended Ended
Non-GAAP Calculation 7/01/2007 7/02/2006 7/01/2007 7/02/2006
---------------------- ----------- ----------- ----------- -----------
Income from continuing
operations $ 266,772 $1,594,336 $ 238,416 $2,783,836
Impairment costs -- 78,131 -- 78,131
Business Interruption
Proceeds -- (59,621) -- (59,621)
Hurricane Rita Gains -- (386,270) -- (366,808)
(Gain) loss on sale of
assets 84,367 (16,912) 91,682 (10,953)
Severance pay 98,515 -- 98,515 --
Write-off of prior
debt loan fees 21,874 -- 25,000 --
----------- ----------- ----------- -----------
Income from continuing
operations before
taxes, as adjusted 471,528 1,209,664 453,613 2,424,585
----------- ----------- ----------- -----------
Income tax expense 145,796 415,278 143,432 821,692
----------- ----------- ----------- -----------
Income from continuing
operations, as
adjusted 325,732 794,386 310,181 1,602,893
Loss from discontinued
operations, net of
taxes (54,398) (40,603) (102,684) (68,021)
----------- ----------- ----------- -----------
Net Income, as
adjusted $ 271,334 $ 753,783 $ 207,497 $1,534,872
=========== =========== =========== ===========
Weighted average
number of shares
(diluted) 3,427,983 3,666,712 3,460,690 3,654,962
=========== =========== =========== ===========
Diluted income per
share, as adjusted $ 0.08 $ 0.21 $ 0.06 $ 0.42
=========== =========== =========== ===========
Mexican Restaurants, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
13-Week 13-Week 26-Week 26-Week
Period Ended Period Ended Period Ended Period Ended
7/01/2007 7/02/2006 7/01/2007 7/02/2006
------------ ------------ ------------ ------------
Revenues:
Restaurant sales $20,700,473 $20,525,398 $41,028,292 $41,142,432
Franchise fees,
royalties and
other 169,716 264,913 331,960 433,611
Business
Interruption - 59,621 - 59,621
------------ ------------ ------------ ------------
20,870,189 20,849,932 41,360,252 41,635,664
------------ ------------ ------------ ------------
Costs and
expenses:
Cost of sales 5,896,176 5,648,178 11,643,175 11,305,863
Labor 6,631,254 6,632,939 13,480,073 13,173,066
Restaurant
operating
expenses 5,080,626 4,625,352 10,178,792 9,278,369
General and
administrative 1,926,749 1,837,579 3,835,630 3,699,669
Depreciation and
amortization 856,462 757,569 1,678,235 1,479,952
Pre-opening
costs 19,993 14,510 19,993 64,248
Impairment costs - 78,131 - 78,131
Hurricane Rita
gain - (386,270) - (366,808)
(Gain) loss on
sale of assets 84,367 (16,912) 91,682 (10,953)
------------ ------------ ------------ ------------
20,495,627 19,191,076 40,927,580 38,701,537
------------ ------------ ------------ ------------
Operating
income 374,562 1,658,856 432,672 2,934,127
------------ ------------ ------------ ------------
Other income
(expense):
Interest income 1,861 630 3,824 1,260
Interest expense (123,951) (88,793) (223,583) (198,992)
Other, net 14,300 23,643 25,503 47,441
------------ ------------ ------------ ------------
(107,790) (64,520) (194,256) (150,291)
------------ ------------ ------------ ------------
Income from
continuing
operations
before income
taxes 266,772 1,594,336 238,416 2,783,836
Income tax
expense 82,492 547,266 75,394 943,401
------------ ------------ ------------ ------------
Income from
continuing
operations 184,280 1,047,070 163,022 1,840,435
Discontinued
Operations:
Income (loss)
from
discontinued
operations 24,543 (62,108) 3,090 (105,895)
Restaurant
closure costs (110,529) - (169,549) -
Gain (loss) on
sale of assets - (2,737) 3,412 (2,737)
------------ ------------ ------------ ------------
Loss from
discontinued
operations
before income
taxes (85,986) (64,845) (163,047) (108,632)
------------ ------------ ------------ ------------
Income tax
benefit 31,588 24,242 60,363 40,611
------------ ------------ ------------ ------------
Loss from
discontinued
operations (54,398) (40,603) (102,684) (68,021)
------------ ------------ ------------ ------------
Net income 129,882 1,006,467 60,338 1,772,414
============ ============ ============ ============
Basic income
(loss) per share
Income from
continuing
operations $ 0.06 $ 0.31 $ 0.05 $ 0.55
Loss from
discontinued
operations (0.02) (0.01) (0.03) (0.02)
------------ ------------ ------------ ------------
Net income $ 0.04 $ 0.30 $ 0.02 $ 0.53
============ ============ ============ ============
Diluted income
(loss) per share
Income from
continuing
operations $ 0.06 $ 0.28 $ 0.05 $ 0.50
Loss from
discontinued
operations (0.02) (0.01) (0.03) (0.02)
------------ ------------ ------------ ------------
Net income $ 0.04 $ 0.27 $ 0.02 $ 0.48
============ ============ ============ ============
Weighted average
number of shares
(basic) 3,416,488 3,389,526 3,438,405 3,373,252
============ ============ ============ ============
Weighted average
number of shares
(diluted) 3,427,983 3,666,712 3,460,690 3,654,962
============ ============ ============ ============
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