Brazil Fast Food Reports Fourth Quarter, 2005 Year-End Results; 2005 Per-Share Earnings Increase to R$0.55 from R$0.08 for 2004.RIO DE JANEIRO Rio de Janeiro, city, Brazil Rio de Janeiro (rē`ō də zhänā`rō, Port. rē`  thĭ zhənĕē`r , Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. -- Brazil Fast Food (OTC OTCSee: Over-the-counter. OTC See over-the-counter market (OTC). BB: BOBS.OB), a 451-outlet fast-food chain and the second largest fast-food chain operator in Brazil, today announced financial results for its fourth quarter ended Dec. 31, 2005. System-wide sales for the fourth quarter of 2005 were R$106.4 million, up 30 percent from R$81.7 million for the last three months of 2004. Net restaurant sales for Brazil Fast Food Corp.'s company-owned retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → increased 22 percent for the fourth quarter of 2005 to R$22.5 million from R$18.4 million for the fourth quarter of 2004. Net franchise revenue was R$3.7 million for the three-month period ended Dec. 31, 2005 - up 32 percent from 2004's fourth-quarter net franchise revenue of R$2.8 million. The Company's net operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. rose 44 percent to R$2.6 million for the fourth quarter of 2005 from R$1.8 million for the same period of 2004. Net income climbed dramatically for the fourth quarter of 2006 to R$2.6 million, or R$.32 per share, basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , from R$(102,000), or R$(0.02) per share, basic and diluted, for the fourth quarter of 2004. For the twelve-month period ended Dec. 31, 2005, Brazil Fast Food reported system-wide sales of R$346.1 million, versus R$269.2 million for 2004. Net restaurant sales increased 16 percent to R$75.6 million for 2005 from R$65.3 million for 2004. Net franchise revenue rose 27 percent to R$12.0 million for 2005 from R$9.4 million for 2004. The Company's net operating profit was R$6.2 million for the year of 2005, up 35 percent from R$4.6 million for 2004. Net income increased significantly on a year-over-year basis - R$4.4 million, or R$.55 per share, basic and diluted, compared with R$$601,000, or R$0.08 per share, basic and diluted, for 2005 and 2004, respectively. Ricardo Figueiredo Bomeny, Chief Executive Officer of Brazil Fast Food Corp., commented, "We are proud to report our results for 2005 - a year in which we not only made tremendous operational and financial progress, but also in which our efforts produced meaningful positive outcomes for our Company on nearly all fronts. In many respects, 2005 was a breakthrough year for Brazil Fast Food that confirmed to us that we are on the right track in terms of our business model and our management techniques. "During the course of 2005, we endeavored to address every area of need and exploit every relevant opportunity for growth in our efforts to secure the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. success of this Company. We examined all aspects of our financial and operational structure, and we constantly reassessed our methods, our processes, and our products to boost our competitive standing and our profitability. As a result, during 2005, we were able to reduce our debt, grow sales, and increase margins. "In addition to the dramatic improvements to our bottom line, there were many other highlights of 2005, including: --We expanded our chain by 69 outlets, net, ending the year with 451 stores and kiosks. --We substantially reduced our debt across the board, and completely eliminated four out of the six line items of our debt obligations. --We initiated a stock share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, and we are currently about halfway to our goal of repurchasing as many as 200,000 shares of our Company stock. --We began to invest our positive cash flow in highly liquid short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. government bonds. --We opened our first franchised store in Angola, one of the largest African nations. --We re-negotiated and extended our contract with our independent centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. warehouse to include transportation and supplies delivery, substantially reducing our related costs and improving our margins. --To keep our image fresh and boost our brand loyalty, we changed our advertising agency to one that is more adept at creating campaigns that appeal especially to our younger demographic." Mr. Bomeny continued, "For 2006, we are continuing to build on the progress we made last year, while keeping our debt obligations manageable. Indeed, we anticipate completely eliminating our short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. and incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. no additional debt during 2006. We are further expanding the chain both geographically in Brazil and in terms of the number of outlets. By the end of the year, we hope to have 580 points of sale, greatly increasing our franchised restaurant network. Our goal is to proportion this expansion with 40 percent traditional stores and 60 percent higher-margin kiosks. From a geographic standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , we are being quite strategic and deliberate with the expansion, focusing on denser-populated, relatively higher-income areas and locations that offer high growth potential and competitive advantage. We are also working to increase the profitability of our existing locations through better training and service, more efficient production, better technology, newer equipment and the introduction of Coffee Stations. We believe that these capital expenditures are a wise and necessary investment in our future growth. Mr. Bomeny concluded, "Our business is considerably sensitive to the Brazilian economic environment, which has historically been unsteady, alternates short periods of expansion with contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction , and could be extraordinarily affected by the election for governors and president next October. Besides we still have obstacles to overcome, especially the resolution of certain inconsistencies in reassessed taxes liabilities and other potential litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. that could adversely affect our cash flow and our investment capacity. Nevertheless, we are both motivated mo·ti·vate tr.v. mo·ti·vat·ed, mo·ti·vat·ing, mo·ti·vates To provide with an incentive; move to action; impel. mo and committed to realizing the full potential of our Company." ABOUT BRAZIL FAST FOOD CORP. Brazil Fast Food Corp. owns and operates, both directly and through franchisees, the second largest chain of hamburger fast-food restaurants in Brazil, through its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Venbo Comercio de Alimentos Ltda. Brazil Fast Food Corp. conducts business in Brazil under the trade name "Bob's." As of December 31, 2005, the Company had 451 points of sale, which includes traditional restaurants, kiosks and re-locatable trailers. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meanings of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities and Exchange Act of 1934, as amended. Such statements involve known or unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those expressed or implied by such forward-looking statements. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the disclosures in the Company's filings with the Securities and Exchange Commission, including the risk factors contained in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005, filed with the Securities and Exchange Commission on March 31, 2005.
BRAZIL FAST FOOD CORP.
CONSOLIDATED STATEMENT OF OPERATIONS (AUDITED)
(in thousands of Brazilian Reais, except per-share amounts)
Year ended Three Months, ended
12/31/05 12/31/04 12/31/05 12/31/04
---------- ---------- ---------- ----------
System-wide sales R$ 346,111 R$ 269,200 R$ 106,424 R$ 81,674
Net Restaurant Sales 75,559 65,338 22,465 18,405
Net Franchise Revenue 11,963 9,414 3,674 2,792
Net Operating Profit (Loss) 6,239 4,603 2,615 1,820
Net Income (Loss) 4,444 601 2,622 (102)
Net Income (Loss)
Per Common Share,
Basic and Diluted R$0.55 R$0.08 R$0.32 R$(0.02)
BRAZIL FAST FOOD CORP.
CONSOLIDATED BALANCE SHEET
(in thousands of Brazilian Reais)
Year ended
12/31/05 12/31/04
---------- ----------
Current Assets R$ 11,800 R$ 12,213
Total Assets 38,070 37,859
Current Liabilities 16,171 17,448
Total Liabilities 38,036 42,051
Shareholders' Equity 34 (4,192)
Treasury Stock (216) 0
Accumulated Deficit (58,687) (63,131)
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