QDIN Quality Dining - Common Stock (MM)

Quality Dining Reports Third Quarter Results MISHAWAKA, Ind., Sept. 15 /PRNewswire-FirstCall/ -- Quality Dining, Inc. (NASDAQ:QDIN) today announced total revenues of $56.9 million for the third quarter of fiscal 2004 versus $52.0 million during the same period in fiscal 2003. For the 40 weeks ended August 1, 2004, the Company reported total revenues of $173.2 million versus $166.9 million in the comparable period during fiscal 2003. The Company reported net income of $1,236,000, or $0.12 per diluted share, for the third quarter of fiscal 2004 compared to a net loss of $133,000, or $0.01 per diluted share, for the same period in fiscal 2003. For the first 40 weeks of fiscal 2004, the Company reported net income of $1,769,000, or $0.17 per diluted share, compared to a net loss of $233,000, or $0.02 per diluted share, for the comparable period in fiscal 2003. The Company also reported that it has concluded that there was an error in the calculation of the weighted average shares outstanding in the Company's financial statements for the sixteen weeks ended February 15, 2004 included in the Company's Form 10-Q for the quarterly period ended February 15, 2004, and the Company's financial statements for the twelve and twenty-eight weeks ended May 9, 2004 included in the Company's Form 10-Q for the quarterly period ended May 9, 2004. The error in the calculation of weighted average shares outstanding had no impact on the Company's previously reported financial position or results of operations including net income but did affect the calculation of basic and diluted net income (loss) per share for each reporting period. Specifically, the shares of the Company's common stock held by an affiliated real estate entity should have been excluded from the calculation of weighted average shares outstanding in the Company's financial statements for the sixteen weeks ended February 15, 2004 and the twelve and the twenty- eight weeks ended May 9, 2004. The affiliated real estate entity leases certain Burger King restaurants to the Company and is owned by the Company's Chairman and Chief Executive Officer. Beginning October 27, 2003, the Company has consolidated the affiliated real estate entity pursuant to the guidance in FASB Interpretation No. 46, "Consolidation of Variable Interest Entities", as amended (FIN 46R). The Company appropriately reflected the common stock held by the affiliated real estate entity as treasury stock on its consolidated balance sheets at February 15, 2004 and May 9, 2004. Accordingly, the Company will adjust the previously reported weighted average shares outstanding and resultant net income (loss) per share data in its financial statements for the sixteen weeks ended February 15, 2004 and the twelve and twenty-eight weeks ended May 9, 2004, to reflect the proper weighted average shares outstanding and the proper basic and diluted net income (loss) per share. This adjustment will have the following effect: Sixteen Weeks Ended February 15, 2004 ------------------------------------- As Restated As Previously Reported ------------------ ------------------ Basic net income per share: Continuing operations $ 0.01 $ 0.00 Discontinued operations 0.02 0.02 --------- -------- Basic net income per share $ 0.03 $ 0.02 ========= ======== Diluted net income per share: Continuing operations $ 0.01 $ 0.00 Discontinued operations 0.02 0.02 --------- -------- Diluted net income per share $ 0.03 $ 0.02 ========= ======== Weighted average shares outstanding: Basic 10,163,000 11,311,000 Diluted 10,195,000 11,343,000 Twelve Weeks Ended May 9, 2004 ------------------------------ As Restated As Previously Reported ------------------ ------------------ Basic net income (loss) per share: Continuing operations $ 0.11 $ 0.10 Discontinued operations (0.09) (0.08) --------- -------- Basic net income (loss) per share $ 0.02 $ 0.02 ========= ======== Diluted net income (loss) per share: Continuing operations $ 0.11 $ 0.10 Discontinued operations (0.09) (0.08) --------- -------- Diluted net income (loss) per share $ 0.02 $ 0.02 ========= ======== Weighted average shares outstanding: Basic 10,163,000 11,311,000 Diluted 10,189,000 11,337,000 Twenty-Eight Weeks Ended May 9, 2004 ------------------------------------ As Restated As Previously Reported ------------------ ------------------ Basic net income (loss) per share: Continuing operations $ 0.13 $ 0.11 Discontinued operations (0.08) (0.07) --------- -------- Basic net income (loss) per share $ 0.05 $ 0.04 ========= ======== Diluted net income (loss) per share: Continuing operations $ 0.13 $ 0.11 Discontinued operations (0.08) (0.07) --------- -------- Diluted net income (loss) per share $ 0.05 $ 0.04 ========= ======== Weighted average shares outstanding: Basic 10,163,000 11,311,000 Diluted 10,193,000 11,341,000 Quality Dining owns the Grady's American Grill(R), Papa Vino's Italian Kitchen(TM) and Spageddies Italian Kitchen(TM) concepts and operates Burger King(R) restaurants and Chili's Grill & Bar(R) restaurants as a franchisee. As of September 15, 2004, the Company operates 124 Burger King restaurants, 39 Chili's Grill & Bar restaurants, six Grady's American Grill restaurants, six Papa Vino's Italian Kitchen(TM) restaurants, three Spageddies Italian Kitchen restaurants and one Porterhouse restaurant. This press release contains and incorporates forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the Company's development plans and trends in the Company's operations and financial results. Forward-looking statements can be identified by the use of words such as "anticipates," "believes," "plans," "estimates," "expects," "intends," "may," and other similar expressions. Forward-looking statements are made based upon management's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that the Company will actually achieve the plans, intentions and expectations discussed in these forward-looking statements. Actual results may differ materially. Among the risks and uncertainties that could cause actual results to differ materially are the following: the availability and cost of suitable locations for new restaurants; the availability and cost of capital to the Company; the ability of the Company to develop and operate its restaurants; the ability of the Company to sustain sales and margins in the increasingly competitive environment; the hiring, training and retention of skilled corporate and restaurant management and other restaurant personnel; the integration and assimilation of acquired concepts; the overall success of the Company's franchisors; the ability to obtain the necessary government approvals and third-party consents; changes in governmental regulations, including increases in the minimum wage; the results of pending litigation; and weather and other acts of God. The Company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise. Quality Dining is not responsible for changes made to this document by wire services or Internet services. QUALITY DINING, INC. Unaudited Financial Highlights (in thousands, except per share amounts) 12 Weeks 12 Weeks 40 Weeks 40 Weeks Ended Ended Ended Ended August 1, August 3, August 1, August 3, 2004 2003 2004 2003 Restaurant sales: Burger King $31,561 $27,851 $90,446 $87,244 Chili's Grill & Bar 20,634 19,028 65,787 61,160 Italian Dining Division 3,581 3,864 12,473 13,671 Grady's American Grill 1,163 1,288 4,523 4,789 Total revenues 56,939 52,031 173,229 166,864 Operating expenses: Restaurant operating expenses: Food and beverage 16,011 13,893 47,867 44,742 Payroll and benefits 16,237 15,138 50,132 48,768 Depreciation and amortization 2,153 2,260 7,119 7,620 Other operating expenses 14,560 13,651 44,977 43,729 Total restaurant operating expenses 48,961 44,942 150,095 144,859 Income from restaurant operations 7,978 7,089 23,134 22,005 General and administrative 3,675 3,861 12,354 12,841 Trademark amortization 25 100 144 302 Operating income 4,278 3,128 10,636 8,862 Other income (expense): Recovery of note receivable - - - 3,459 Interest expense (1,462) (1,561) (4,985) (5,554) Loss on sale of property and equipment (26) (24) (101) (32) Minority interest in earnings (618) (604) (1,672) (1,974) Stock purchase expense - (1,294) - (1,294) Other income, net 15 125 165 872 Total other income (expense), net (2,091) (3,358) (6,593) (4,523) Income (loss) from continuing operations before income taxes 2,187 (230) 4,043 4,339 Income tax provision 784 181 1,343 777 Income (loss) from continuing operations 1,403 (411) 2,700 3,562 Income (loss) from discontinued operations (167) 278 (931) (3,795) Net income (loss) $1,236 $(133) $1,769 $(233) Basic net income (loss) per share: Continuing operations 0.14 (0.04) 0.26 0.32 Discontinued operations (0.02) 0.03 (0.09) (0.34) Basic net income (loss) per share $0.12 $(0.01) $0.17 $(0.02) Diluted net income (loss) per share: Continuing operations 0.14 (0.04) 0.26 0.32 Discontinued operations (0.02) 0.03 (0.09) (0.34) Diluted net income (loss) per share $0.12 $(0.01) $0.17 $(0.02) Weighted average shares: Basic 10,163 10,805 10,163 11,142 Diluted 10,212 10,805 10,212 11,156 DATASOURCE: Quality Dining, Inc. CONTACT: John C. Firth, Executive Vice President and General Counsel of Quality Dining, Inc., +1-574-243-6616

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