For the 2007 first quarter ended April 1, 2007, Mexican Restaurants, Inc. (Nasdaq:CASA) reported a net loss of $69,544 or $0.02 per diluted share, compared with net income of $765,946 or $0.21 per diluted share for the first quarter of fiscal year 2006.

The Company's revenues for the first quarter of fiscal year 2007 decreased $0.3 million or 1.4% to $20.5 million compared with $20.8 million for the same quarter in fiscal year 2006. Restaurant sales for first quarter 2007 decreased $0.3 million or 1.4% to $20.3 million compared with $20.6 million for the first quarter of fiscal year 2006. The decrease in revenue reflects a $1.6 million decline in same-restaurant sales, partially offset by net new restaurant additions and Mission Burritos of $1.3 million. For the first quarter ended April 1, 2007, total system same-restaurant sales decreased approximately 6.3%, Company-owned same-restaurant sales decreased approximately 7.5% and franchised-owned same-restaurant sales decreased approximately 2.5%.

Commenting on the Company's first quarter results, Curt Glowacki, Chief Executive Officer, stated, ?The decline in same-restaurant sales for the first quarter resulted from lower consumer traffic, rising gas prices and inclement winter weather. In addition, we were up against some incredible comparative same-store sales from the first quarter last year. Despite current challenges, we are confident that our brands' value proposition and positioning will continue to resonate with loyal customers. As we move forward, we plan to expand our catering and to-go business, selectively raise menu prices to compensate for rising commodity prices and the anticipated minimum wage hike, and reduce our general and administrative expenses.?

Mr. Glowacki added, ?We will continue to move forward with our growth plans for building new Casa Olé restaurants and Mission Burritos, our new fast casual concept. MRI was built by a team of people who understand consumers' needs, can drive the fundamentals of our business and have weathered the peaks and valleys of the marketplace.?

Mexican Restaurants, Inc. operates and franchises 78 Mexican restaurants. The current system includes 59 Company-operated restaurants, 18 franchisee operated restaurants and one licensed restaurant.

Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: growth strategy; dependence on executive officers; geographic concentration; increasing susceptibility to adverse conditions in the region; changes in consumer tastes and eating habits; national, regional or local economic and real estate conditions; demographic trends; inclement weather; traffic patterns; the type, number and location of competing restaurants; inflation; increased food, labor and benefit costs; the availability of experienced management and hourly employees; seasonality and the timing of new restaurant openings; changes in governmental regulations; dram shop exposure; and other factors not yet experienced by the Company. The use of words such as ?believes?, ?anticipates?, ?expects?, ?intends? and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Readers are urged to carefully review and consider the various disclosures made by the Company in this release and in the Company's most recent Annual Report and Form 10-K , that attempt to advise interested parties of the risks and factors that may affect the Company's business.

Mexican Restaurants, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
 
13-Week 13-Week
Period Ended Period Ended
4/1/2007  4/2/2006 
Revenues:

 

Restaurant sales

$ 20,327,818  $ 20,617,034 
Franchise fees, royalties and other 162,244  168,699 
20,490,062  20,785,733 
Costs and expenses:
Cost of sales 5,746,999  5,657,685 
Labor 6,848,819  6,540,127 
Restaurant operating expenses 5,098,166  4,653,018 
General and administrative 1,908,880  1,862,091 
Depreciation and amortization 821,773  722,383 
Pre-opening costs --  49,737 
Hurricane Rita loss --  19,463 
Loss on sale of assets 7,315  5,959 
20,431,952  19,510,463 
   

 

Operating income

58,110  1,275,270 
 
Other income (expense):
Interest income 1,963  630 
Interest expense (99,632) (110,199)
Other, net 11,203  23,798 
(86,466) (85,771)
 
Income (loss) from continuing operations before income taxes (28,356) 1,189,499 
Income tax expense (benefit) (7,098) 396,135 
Income (loss) from continuing operations (21,258) 793,364 
 
Discontinued Operations:
Loss from discontinued operations (21,453) (43,787)
Restaurant closure costs (59,020) -- 
Gain on sale of assets 3,412  -- 
Loss from discontinued operations before income taxes (77,061) (43,787)

 

Income tax benefit

28,775  16,369 

 

Loss from discontinued operations

(48,286) (27,418)

 

 

Net Income (loss)

$ (69,544) $ 765,946 
 
Basic income (loss) per share
Income (loss) from continuing operations $ (0.01) $ 0.24 
Loss from discontinued operations (0.01) (0.01)
Net income (loss) $ (0.02) $ 0.23 
 
Diluted income (loss) per share
Income (loss) from continuing operations $ (0.01) $ 0.22 
Loss from discontinued operations (0.01) (0.01)
Net income (loss) $ (0.02) $ 0.21 
 
Weighted average number of shares (basic) 3,460,322  3,356,977 
Weighted average number of shares (diluted) 3,460,322  3,634,802