Taco Cabana Inc. (Nasdaq:TACO) reported strong sales and earnings growth for its fiscal third quarter ended October 1, 2000.

Highlights for the quarter included:

• A 12% increase in pro-forma diluted earnings per share to $.19, from $.17 (including a pro-forma statutory income tax expense of 37% for both periods and excluding an accrual for interest income relating to a refund of federal income taxes);

• An increase in comparable store sales of 3.7% for the quarter, the Company’s eleventh consecutive quarter of positive comparable store sales;• A 9% increase in revenues to $45.3 million.

• Total revenues for the third quarter of fiscal 2000 compared to the same quarter last year increased 9% to $45.3 million from $41.4 million due to an increase of 9% in restaurant sales to $45.2 million.

Diluted earnings per share (inclusive of pro-forma income tax expense of 37% for both periods and excluding an accrual for interest income relating to a refund of federal income taxes) increased 12% to 19 cents for the third quarter of fiscal 2000 compared to 17 cents in the third quarter of fiscal 1999.

The growth in earnings and sales was led by an increase of 3.7% in comparable store sales. Management attributes the continuing strength in sales to several factors including a strong marketing program featuring a value meal message, the introduction of a new product during the quarter, and continued improvement in operational execution at existing restaurants. The increase in earnings per share recorded during the third quarter of fiscal 2000 compared to the same quarter last year is due to higher sales at existing restaurants, the contribution from the ten restaurants opened during 1999, continued strong cost controls, and fewer shares outstanding.

For the thirty-nine weeks ended October 1, 2000 compared to the same period in 1999, restaurant sales increased 9% to $129.7 million from $119.5 million while total revenues increased 9% to $130.0 million from $119.8 million. Comparable store sales increased 3.3% during the thirty-nine week period. Diluted earnings per share (inclusive of pro-forma income tax expense of 37% for both periods and excluding an accrual for interest income relating to a refund of federal income taxes) increased 17% to 55 cents for the thirty-nine weeks in fiscal 2000 compared to 47 cents for the same period of fiscal 1999.

We are very pleased with our third quarter results, says Stephen Clark, president and CEO. “We saw the in momentum comparable store sales increase during the quarter, with September registering an increase of 4.7%, compared to 3.7% for the entire quarter. This is especially encouraging as these results were in addition to an increase of 5.2% in the third quarter of 1999. We have now completed eleven consecutive quarters of positive comparable store sales, and continue to see positive operating results during the first four weeks of the fourth quarter.”

On October 6, 2000, Taco Cabana announced that it had entered into a definitive Agreement and Plan of Merger with Carrols Corporation under which all of the outstanding shares of Taco Cabana would be purchased for cash by Carrols at a price of $9.04 per share.

Taco Cabana opened four company-owned restaurants during the third quarter of 2000 for a total of 116 company-owned, and 10 franchised restaurants at October 1, 2000. Subsequent to the end of the quarter, the Company has opened two and closed one company-owned restaurants.

The Company will host a conference call to discuss results of the thirty-nine weeks ended October 1, 2000 at 9:30 a.m. CST on October 31, 2000. The call will be simulcast on the Company’s web site, www.tacocabana.com and can be monitored by clicking on the “Financial” section of the site.

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