Advantica Reports Second Quarter Results.Business Editors SPARTANBURG Spartanburg, city (1990 pop. 43,467), seat of Spartanburg co., NW S.C., in the Piedmont (see under piedmont) near the N.C. line; inc. 1831. The city is noted for its textile production. , S.C.--(BUSINESS WIRE)--Aug. 2, 2001 Advantica Restaurant Group, Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB: DINE) today reported that systemwide sales from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , which include sales from company-owned, franchised and licensed restaurants, increased by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4 percent to $578 million for the second quarter ended June June: see month. 27, 2001 compared with $557 million in the prior year quarter. This increase is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a modest gain in same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. as well as to a higher number of units during this year's quarter. During the second quarter, Denny's Denny's is the largest full-service family restaurant chain in the United States. It operates over 2,500 restaurants in the United States (including Puerto Rico), Canada, Curaçao, Costa Rica, El Salvador, Japan, Mexico, and New Zealand. same-store sales for company-owned restaurants increased 2.0 percent while franchised units increased 0.3 percent. Commenting on the Company's results for the second quarter, Nelson J. Marchioli, Advantica's president and chief executive officer, said, "Denny's continued its positive sales momentum through the second quarter in a challenging economic environment. Last quarter I mentioned the need to increase customer traffic as a step towards improving profitability. Accordingly, during the second quarter we ran two marketing promotions aimed at increasing customer counts: Kids Eat Free in April and May and $2.99 Grand Slam grand slam n. 1. The winning of all the tricks during the play of one hand in bridge and other whist-derived card games. 2. Sports The winning of all the major or specified events, especially on a professional circuit. in June. The $2.99 Grand Slam campaign continues through the summer and features the actors who portrayed por·tray tr.v. por·trayed, por·tray·ing, por·trays 1. To depict or represent pictorially; make a picture of. 2. To depict or describe in words. 3. To represent dramatically, as on the stage. George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). and Louise Jefferson Louise Jefferson (née Mills) was a supporting character portrayed by Emmy Award-winning actress Isabel Sanford, is a fictional character who appeared first on the television series All in the Family and then became a main character on its spinoff, on the popular '70s and '80s television show, `The Jeffersons.' While these recent promotions have allowed us to achieve positive customer counts for the quarter, we continue to strive to improve the customer's overall experience which is the key to our 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." Marchioli continued, "During my first six months at Denny's, we have been focused on evaluating the performance and potential profitability of each of our restaurants. One of our first initiatives was to develop a list of capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. needed to ensure all of our restaurant facilities are up to Denny's brand standards. Through our remodeling remodeling /re·mod·el·ing/ (re-mod´el-ing) reorganization or renovation of an old structure. bone remodeling efforts and facilities improvements, we continue to focus on investing the necessary capital in our restaurants to improve both their appearance and function. During our restaurant evaluation process, we identified 63 company-owned units that we do not believe can achieve a level of profitability to warrant further capital investment. Accordingly, we have closed 34 of these units since the beginning of the second quarter and expect to close the other 29 in the coming months." Regarding Denny's refranchising program, Marchioli continued, "During the second quarter we sold 11 units to franchisees, bringing the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. total to 39. Refranchising activity continues at a slow pace as financial markets remain tight which will likely contribute to a reduced number of refranchising transactions during the second half of 2001." FRD FRD Ford (street type) FRD Federal Research Division FRD Free Radical Design (game developer) FRD Formerly Restricted Data FRD Foundation for Research Development FRD Functional Requirements Document Acquisition Co., an Advantica subsidiary, remains active in its efforts to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. its Coco's and Carrows Carrows is a chain of casual dining restaurants operating in the western portion of the United States. As of 2004, the chain operates over 100 restaurants, mostly in California and with locations in New Mexico, Nevada, Oregon, Texas, and Washington. concepts. As such, FRD is classified as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. for financial reporting purposes. On February February: see month. 14, 2001, FRD filed a voluntary Chapter 11 bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most petition petition Written instrument directed to an individual, government official, legislative body, or court in order to seek redress of grievances or to request a favour. to facilitate the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of Coco's and Carrows. FRD remains active in its efforts to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose Coco's and Carrows; however, there can be no assurance that these efforts will be successful. At June 27, 2001, Advantica's $200 million credit facility had outstanding revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to advances of $55 million compared with no outstanding balances at year end 2000. The revolver advances result from Advantica's satisfaction of the Coco's/Carrows credit facility guarantee in January January: see month. 2001. Outstanding letters of credit decreased from $65.3 million at year end to $51.6 million, leaving a net availability of $93.4 million at the end of the second quarter. Second Quarter Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Operations The Company reported a loss from continuing operations for the quarter of $30.9 million, or $0.77 per common share, compared with last year's second quarter loss of $11.3 million, or $0.28 per share. This year's second quarter results include restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges of $8.5 and $8.3 million, respectively, while second quarter last year included no such charges. The restructuring and impairment charges consist primarily of expenses related to the 63 units identified for closure. This year's second quarter results include amortization of excess reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. value of approximately $7.2 million compared with $10.6 million in last year's quarter. Due to the significant noncash depreciation and amortization charges related to fresh start reporting, the Company reports EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become as a measure of financial performance. Year-to-Date Consolidated Operations The Company reported a loss from continuing operations for the two quarters ending June 27, 2001 of $52.0 million, or $1.30 per common share, compared with a loss of $48.6 million, or $1.21 per share, in the same period last year. The current year-to-date results include restructuring and impairment charges of $8.5 and $8.3 million, respectively, while the loss in the same period last year included a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $7.2 million. Year-to-date results include amortization of excess reorganization value of approximately $14.7 million, compared with $21.3 million in same period last year. Second Quarter Concept Results Denny's second quarter revenue decreased to $264 million from $297 million in the prior year as a result of a 170-unit reduction in company-owned restaurants, primarily due to its refranchising program. Revenue benefited from a 2.0 percent increase in same-store sales. Denny's EBITDA decreased to $35.9 million from $48.1 million in the prior year quarter. The decrease in EBITDA was primarily attributable to an $11.5 million reduction in the amount of refranchising gains. Company-owned restaurant operating costs operating costs npl → gastos mpl operacionales as a percentage of sales were comparable to the prior year as increases in store labor, repairs and maintenance and utility expenses were offset by reductions in food costs and advertising expense. Franchise and licensing revenue increased approximately 27 percent to $22.3 million compared with $17.5 million in the prior year quarter, while franchise operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased to $11.7 million from $9.1 million in last year's quarter. The increase in both franchise revenue and operating income is attributable to a 172-unit increase in franchised units compared to the prior year quarter. During the quarter, the Denny's system opened 13 restaurants and closed 40, resulting in 1,791 restaurants at the end of the second quarter. During the second quarter, revenue at FRD declined to $87.9 million from $93.8 million in the prior year quarter, resulting primarily from decreases in same-store sales at Coco's and Carrows. EBITDA at FRD decreased to $5.8 million versus $10.8 million in the prior year quarter. In addition to the sales decreases, EBITDA at Coco's and Carrows was negatively impacted by higher utility expenses and increased wage rates. Coco's second quarter EBITDA declined to $3.0 million from $6.3 million in the prior year quarter. Carrows' second quarter EBITDA decreased to $2.8 million from $4.5 million in the prior year quarter. Year-to-Date Concept Results Denny's systemwide sales for the two quarters ended June 27, 2001 increased by approximately 4 percent to $1.13 billion compared with $1.09 billion in the prior year period. This increase is attributable to a higher number of units during the period as well as to an increase in same-store sales for company and franchised units of 2.1 percent and 0.4 percent, respectively. For the two quarters ended June 27, 2001, Denny's revenue decreased to $523 million from $581 million in the prior year period. A 2.1 percent increase in same-store sales was offset by a lower number of company-owned units. Denny's EBITDA decreased to $65.1 million from $77.1 million in the prior year. The decrease in EBITDA was attributable to a lower company restaurant base as well as reduced gains from fewer refranchising transactions. Year-to-date, revenue at FRD declined to $177.3 million from $188.5 million in the prior year period, resulting primarily from decreases in same-store sales at Coco's and Carrows. EBITDA at FRD decreased to $11.9 million versus $19.6 million in the prior year. Further Information Investors and interested parties are invited to listen to a live broadcast of Advantica's second quarter 2001 conference call with senior management. The call may be accessed through the Company's website, www.advantica-dine.com on August 2 at 1:00 pm EST EST electroshock therapy. EST abbr. electroshock therapy . From the main page follow the link to "Investor Info INFO Information INFO Information (logging abbreviation) INFO Inform(ed/ation) INFO Ionic Difluoroamino Oxidizer " and then click the "Webcast" icon. A replay of the call may be accessed at the same location later in the day. Advantica Restaurant Group, Inc. is one of the largest restaurant companies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , operating over 2,400 moderately priced restaurants in the mid-scale dining segment. Advantica owns and operates the Denny's, Coco's and Carrows restaurant brands. For further information on the Company, including news releases, links to SEC filings and other financial information, please visit Advantica's website at www.advantica-dine.com . Certain matters discussed in this release constitute forward looking statements and involve risks, uncertainties, and other factors that may cause the actual performance of Advantica Restaurant Group, Inc., its subsidiaries and underlying concepts to be materially different from the performance indicated or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such statements. Words such as "expects," "anticipates," "believes," "projects," "intends," "plans" and "hopes," and variations of such words and similar expressions are intended to identify such forward looking statements. Factors that could cause actual performance to differ materially from the performance indicated by such statements include, among others: the outcome of FRD's pending Chapter 11 proceedings Chapter 11 Proceedings Provisions of the Bankruptcy Reform Act under which the debtor firm is reorganized by a court because the estimated value of the reorganized firm exceeds the expected proceeds from its liquidation. , divestiture efforts and related matters; the competitive pressures from within the restaurant industry; the level of success of the Company's operating initiatives and advertising and promotional efforts, including the initiatives and efforts specifically mentioned above; adverse publicity; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy, particularly at the retail level; and other factors from time to time set forth in the Company's SEC reports, including but not limited to the discussion in Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial 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 December: see month. 27, 2000 (and in the Company's subsequent quarterly reports on Form 10-Q Form 10-Q See 10-Q. ).
ADVANTICA RESTAURANT GROUP, INC.
Statements of Consolidated Operations
(Unaudited)
Quarter Ended Quarter Ended
6/27/01 6/28/00
(In thousands, except
per share amounts)
-------------- --------------
Revenue:
Company restaurant
sales $ 242,122 $ 279,412
Franchise and
licensing revenue 22,270 17,521
-------------- --------------
Total operating
revenue 264,392 296,933
-------------- --------------
Cost of company
restaurant sales:
Product costs 60,435 73,360
Payroll and benefits 97,955 110,432
Occupancy 14,979 16,341
Other operating
expenses 35,425 40,972
-------------- --------------
Total costs of
company restaurant
sales 208,794 241,105
Franchise restaurant
costs 10,565 8,419
General and
administrative expenses 15,031 16,629
Amortization of excess
reorganization value 7,151 10,564
Depreciation and other
amortization 24,196 28,516
Impairment charges 8,343 ---
Restructuring charges 8,495 ---
Gains on refranchising
and other, net (5,896) (17,346)
-------------- --------------
Total operating
costs and expenses 276,679 287,887
-------------- --------------
Operating income (loss) (12,287) 9,046
-------------- --------------
Other expenses:
Interest expense, net 18,011 20,259
Other nonoperating
expenses (income), net 18 (241)
-------------- --------------
Total other expenses,
net 18,029 20,018
-------------- --------------
Income (loss) before
income taxes (30,316) (10,972)
Provision for income taxes 535 337
-------------- --------------
Income (loss) from
continuing operations (30,851) (11,309)
Income (loss) from
discontinued operations --- (8,150)
-------------- --------------
Net income (loss)
applicable to common
shareholders $ (30,851) $ (19,459)
============== ==============
============== ==============
Basic and diluted
income (loss) per share:
Income (loss) from
continuing operations $ (0.77) $ (0.28)
Income (loss) from
discontinued operations --- (0.21)
-------------- --------------
Net income (loss) $ (0.77) $ (0.49)
============== ==============
Average outstanding and
equivalent shares 40,143 40,079
============== ==============
ADVANTICA RESTAURANT GROUP, INC.
Statements of Consolidated Operations
(Unaudited)
Two Quarters Two Quarters
Ended Ended
(In thousands, except
per share amounts) 6/27/01 6/28/00
-------------- --------------
Revenue:
Company restaurant
sales $ 478,909 $ 547,039
Franchise and
licensing revenue 43,834 33,554
-------------- --------------
Total operating
revenue 522,743 580,593
-------------- --------------
Cost of company
restaurant sales:
Product costs 120,107 141,993
Payroll and benefits 195,094 219,534
Occupancy 30,048 32,282
Other operating
expenses 71,300 80,336
-------------- --------------
Total costs of
company restaurant
sales 416,549 474,145
Franchise restaurant
costs 20,288 15,608
General and
administrative
expenses 31,061 35,800
Amortization of excess
reorganization value 14,725 21,295
Depreciation and other
amortization 48,033 55,664
Impairment charges 8,343 ---
Restructuring charges 8,495 7,248
Gains on refranchising
and other, net (10,296) (22,024)
-------------- --------------
Total operating
costs and expenses 537,198 587,736
-------------- --------------
Operating income (loss) (14,455) (7,143)
-------------- --------------
Other expenses:
Interest expense, net 36,471 41,744
Other nonoperating
expenses (income), net 11 (980)
-------------- --------------
Total other expenses,
net 36,482 40,764
-------------- --------------
Income (loss) before
income taxes (50,937) (47,907)
Provision for income
taxes 1,068 697
-------------- --------------
Income (loss) from
continuing operations (52,005) (48,604)
Income (loss) from
discontinued operations --- (17,330)
-------------- --------------
Income (loss) before
extraordinary gain (52,005) (65,934)
Extraordinary gain 7,778 ---
-------------- --------------
Net income (loss)
applicable to common
shareholders $ (44,227) $ (65,934)
============== ==============
============== ==============
Basic and diluted
income (loss) per share:
Income (loss) from
continuing operations $ (1.30) $ (1.21)
Income (loss) from
discontinued operations --- (0.44)
-------------- --------------
Income (loss) before
extraordinary gain (1.30) (1.65)
Extraordinary gain 0.20 ---
-------------- --------------
Net income (loss) $ (1.10) $ (1.65)
============== ==============
Average outstanding and
equivalent shares 40,130 40,071
============== ==============
ADVANTICA RESTAURANT GROUP, INC.
Consolidated Balance Sheets
(Unaudited)
(In thousands) 6/27/01 12/27/00
-------------- --------------
ASSETS
Current Assets
Cash and cash
equivalents $ 4,145 $ 27,260
Other 35,671 27,269
-------------- --------------
39,816 54,529
Property and equipment,
net 377,924 425,327
Reorganization value
in excess of amounts
allocable to identifiable
assets, net 43,452 61,177
Other assets 188,813 202,400
-------------- --------------
Total Assets $ 650,005 $ 743,433
============== ==============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of
notes and debentures $ 701 $ 1,086
Current maturities of
capital lease obligations 4,998 10,510
Net liabilities of
discontinued operations 11,970 69,400
Accounts payable and
other accrued liabilities 179,879 213,560
-------------- --------------
197,548 294,556
-------------- --------------
Long-Term Liabilities
Notes and debentures,
less current maturities 607,479 553,730
Capital lease obligations,
less current maturities 37,774 39,980
Other 97,357 101,428
-------------- --------------
742,610 695,138
-------------- --------------
Total Liabilities 940,158 989,694
-------------- --------------
Shareholders' Equity (290,153) (246,261)
-------------- --------------
Total Liabilities and
Shareholders' Deficit $ 650,005 $ 743,433
============== ==============
ADVANTICA RESTAURANT GROUP, INC.
Results by Operating Entity
(Unaudited)
Quarter Ended Two Quarters Ended
----------------------- ---------------------
(In millions) 6/27/01 6/28/00 6/27/01 6/28/00
---------- ---------- ---------- ---------
Continuing
Operations
---------------
Denny's:
Revenue $ 264.4 $ 296.9 $ 522.7 $ 580.6
EBITDA (a) $ 35.9 $ 48.1 $ 65.1 $ 77.1
Gains on
refranchising
and other, net $ 5.9 $ 17.3 $ 10.3 $ 22.0
Discontinued
Operations (b)
---------------
Coco's:
Revenue $ 49.7 $ 53.9 $ 101.0 $ 109.5
EBITDA (a) $ 3.0 $ 6.3 $ 6.6 $ 11.8
Carrows:
Revenue $ 38.2 $ 39.9 $ 76.3 $ 79.0
EBITDA (a) $ 2.8 $ 4.5 $ 5.3 $ 7.9
(a) EBITDA is defined by the Company as operating income before
depreciation, amortization and charges for restructuring and
impairment.
(b) Reclassified as discontinued operations in anticipation of the
disposition of Coco's and Carrows.
ADVANTICA RESTAURANT GROUP, INC.
Statistical Data by Operating Entity
(Unaudited)
Quarter
Same-Store Data (Company-owned) Ended
(increase/(decrease) vs. prior year 6/27/01
---------------
Same-Store
Sales
---------------
Denny's 2.0%
Coco's (6.5%)
Carrows (2.3%)
Guest Check
Average
---------------
Denny's 1.4%
Coco's 1.8%
Carrows 1.5%
Quarter Quarter
Average Unit Sales Ended Ended Increase/
(in thousands) 6/27/01 6/28/00 (Decrease)
-------- --------- --------
Denny's
Company-owned $ 353.4 $ 340.1 3.9%
Franchised $ 298.0 $ 291.8 2.1%
Coco's
Company-owned $ 342.4 $ 363.8 (5.9%)
Franchised $ 325.5 $ 335.5 (3.0%)
Carrows
Company-owned $ 331.2 $ 334.8 (1.1%)
Franchised $ 241.3 $ 254.5 (5.2%)
ADVANTICA RESTAURANT GROUP, INC.
Statistical Data by Operating Entity
(Unaudited)
Two Quarters
Same-Store Data (Company-owned) Ended
(increase/(decrease) vs. prior year) 6/27/01
---------------
Same-Store
Sales
---------------
Denny's 2.1%
Coco's (6.5%)
Carrows (1.5%)
Guest Check
Average
---------------
Denny's 2.6%
Coco's 1.7%
Carrows 2.9%
Two Quarters Two Quarters
Average Unit Sales Ended Ended Increase/
(in thousands) 6/27/01 6/28/00 (Decrease)
-------- -------- -------
Denny's
Company-owned $ 684.8 $ 663.0 3.3%
Franchised $ 583.9 $ 568.3 2.7%
Coco's
Company-owned $ 692.7 $ 737.9 (6.1%)
Franchised $ 654.8 $ 674.1 (2.9%)
Carrows
Company-owned $ 660.3 $ 662.2 (0.3%)
Franchised $ 491.7 $ 517.8 (5.0%)
ADVANTICA RESTAURANT GROUP, INC.
Statistical Data by Operating Entity
(Unaudited)
Restaurant Units 6/27/01 6/28/00
---------- ----------
Denny's
Company-owned 663 833
Franchised 1,114 942
Licensed 14 18
---------- ----------
1,791 1,793
Discontinued Operations:
Coco's
Company-owned 142 144
Franchised 36 34
Licensed 300 301
---------- ----------
478 479
Carrows
Company-owned 113 116
Franchised 29 28
---------- ----------
142 144
---------- ----------
2,411 2,416
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