Advantica Reports Third 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)--Nov. 1, 2001 Advantica Restaurant Group, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : 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. 3 percent to $611 million for the third quarter ended September September: see month. 26, 2001 compared with $594 million in the prior year 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 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. grew 3.2 percent in company-owned restaurants and 1.1 percent in franchised units. Commenting on the Company's results for the third quarter, Nelson J. Marchioli, Advantica's president and chief executive officer, said, "Denny's summer promotion highlighting the $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. contributed to positive guest counts in July July: see month. and August. Our guest traffic started to soften in late August as the promotion and its associated media began to wind down. The tragic events of September 11 further reduced sales as consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. slowed considerably. Accordingly, we expect fourth quarter results to be lower if customer counts do not improve." Marchioli continued, "As we remain focused on improving store level profitability in an uncertain economic environment, we must also take decisive steps to conform our cost structure to best position Denny's for long term success. In response to these challenges, we are implementing a 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. of out-of-restaurant support staff to reduce general and administrative expenses, resulting in the elimination of approximately 90 positions. A related 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. will be recorded in the fourth quarter. This workforce reduction, while difficult, will allow Denny's to better leverage profitability improvements at the restaurant level and enhance its competitive position long term." Marchioli continued, "During the third quarter we sold 9 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 48. Due to the tightened financial markets combined with our strict standards for new franchisees, we expect refranchising activity to continue at a slow pace during the fourth quarter and through 2002. In addition, as outlined in our second quarter release, Denny's identified 63 underperforming company-owned restaurants for closure of which 46 have been closed by the end of the third quarter. We expect to continue to sell or close a limited number of company-owned restaurants as part of the ongoing evaluation of our restaurant portfolio." Third Quarter Denny's third quarter revenue decreased to $270 million from $303 million in the prior year as the result of a 146-unit reduction in company restaurants, partially offset by a 3.2 percent increase in same-store sales. The reduction in company restaurants since the third quarter of last year resulted from refranchising transactions and the recent store closings. Denny's 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 decreased to $42.9 million from $52.0 million in the prior year quarter. The decrease in EBITDA was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to $14.5 million less in refranchising gains. Company-owned restaurant operating costs operating costs npl → gastos mpl operacionales benefited from lower food costs and advertising expenses, partially offset by higher store labor, utility and repairs and maintenance expenses. Franchise and licensing revenue increased approximately 21 percent to $24.2 million compared with $20.0 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 $15.1 million from $11.0 million in last year's quarter. The increase in franchise revenue resulted from a 111-unit increase in franchised units compared to the prior year quarter. In addition to the unit increase, franchise operating income benefited from a $1.4 million decrease in bad debt expense primarily related to the collection of past due franchise receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed . During the quarter, the Denny's system opened 11 restaurants and closed 26, resulting in 1,776 restaurants at the end of the third quarter. The Company reported a loss from continuing operations for the quarter of $4.8 million, or $0.12 per common share, compared with last year's third quarter loss of $7.3 million, or $0.18 per share. This year's third quarter results include amortization of excess reorganization value of approximately $7.1 million compared with $10.3 million in last year's quarter. At September 26, 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 $73.3 million compared with no outstanding balances at year end 2000. The revolver advances primarily 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 $52.6 million, leaving a net availability of $74.1 million at the end of the third quarter. Year to Date Denny's systemwide sales for the three quarters ended September 26, 2001 increased by 3.4 percent to $1.74 billion compared with $1.68 billion in the prior year period. Denny's same-store sales grew 2.5 percent in company-owned restaurants and 0.7 percent in franchised units. For the three quarters ended September 26, 2001, Denny's revenue decreased to $793 million from $883 million in the prior year period. A 2.5 percent increase in same-store sales was offset by fewer company-owned units. Denny's EBITDA decreased to $108.1 million from $129.0 million in the prior year. Lower EBITDA resulted from reduced gains on fewer refranchising transactions. The Company reported a loss from continuing operations for the three quarters ending September 26, 2001 of $56.8 million, or $1.41 per common share, compared with a loss of $55.9 million, or $1.39 per share, in the same period last year. The year-to-date 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 the prior year period included a restructuring charge of $7.2 million. Year-to-date results include amortization of excess reorganization value of approximately $21.8 million, compared with $31.6 million in same period last year. Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. 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, continues to market for 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). 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; however, there can be no assurance that these efforts will be successful. 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 of Coco's and Carrows. During the third quarter, revenue at FRD declined to $87.7 million from $90.9 million in the prior year quarter, resulting primarily from a decrease in same-store sales at Coco's. EBITDA at FRD decreased to $5.9 million versus $7.1 million in the prior year quarter. EBITDA at Coco's and Carrows was negatively impacted by higher utility expenses and increased wage rates. Coco's third quarter EBITDA declined to $2.7 million from $3.8 million in the prior year quarter. Carrows' third quarter EBITDA decreased to $3.2 million from $3.3 million in the prior year quarter. Year to date, revenue at FRD declined to $265.0 million from $279.4 million in the prior year period, resulting primarily from decreases in same-store sales at Coco's. EBITDA at FRD decreased to $17.8 million versus $26.7 million in the prior year. Further Information Investors and interested parties are invited to listen to a live broadcast of Advantica's third quarter 2001 conference call with senior management. The call may be accessed through the Company's website, www.advantica-dine.com on November November: see month. 2 at 10:00 am 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 approximately 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 Quarter
Ended Ended
(In thousands, except per share amounts) 9/26/01 9/27/00
------- -------
Revenue:
Company restaurant sales $245,870 $282,619
Franchise and licensing revenue 24,202 20,023
-------- --------
Total operating revenue 270,072 302,642
-------- --------
Cost of company restaurant sales:
Product costs 60,504 73,568
Payroll and benefits 96,266 111,341
Occupancy 13,246 15,359
Other operating expenses 36,248 41,848
-------- --------
Total costs of company restaurant sales 206,264 242,116
Franchise restaurant costs 9,115 9,014
General and administrative expenses 13,608 15,850
Amortization of excess reorganization value 7,067 10,342
Depreciation and other amortization 22,151 28,274
Gains on refranchising and other, net (1,827) (16,315)
-------- --------
Total operating costs and expenses 256,378 289,281
-------- --------
Operating income (loss) 13,694 13,361
-------- --------
Other expenses:
Interest expense, net 18,261 20,578
Other nonoperating expenses (income), net 1 (418)
-------- --------
Total other expenses, net 18,262 20,160
-------- --------
Income (loss) before income taxes (4,568) (6,799)
Provision for income taxes 212 478
-------- --------
Income (loss) from continuing operations (4,780) (7,277)
Income (loss) from discontinued operations --- ---
-------- --------
Net income (loss) applicable to common
shareholders $ (4,780) $ (7,277)
======== ========
Basic and diluted income (loss) per share:
Income (loss) from continuing operations $ (0.12) $ (0.18)
Income (loss) from discontinued operations --- ---
-------- --------
Net income (loss) $ (0.12) $ (0.18)
======== ========
Average outstanding and equivalent shares 40,143 40,079
======== ========
ADVANTICA RESTAURANT GROUP, INC.
Statements of Consolidated Operations
(Unaudited)
Three Three
Quarters Quarters
(In thousands, except per share amounts) Ended Ended
9/26/01 9/27/00
---------- ----------
Revenue:
Company restaurant sales $ 724,779 $ 829,658
Franchise and licensing revenue 68,036 53,577
---------- ----------
Total operating revenue 792,815 883,235
---------- ----------
Cost of company restaurant
sales:
Product costs 180,611 215,561
Payroll and benefits 291,360 330,875
Occupancy 43,294 47,641
Other operating expenses 107,548 122,184
---------- ----------
Total costs of company
restaurant sales 622,813 716,261
Franchise restaurant costs 29,403 24,622
General and administrative expenses 44,669 51,650
Amortization of excess
reorganization value 21,792 31,637
Depreciation and other amortization 70,184 83,938
Impairment charges 8,343 ---
Restructuring charges 8,495 7,248
Gains on refranchising and other,
net (12,123) (38,339)
---------- ----------
Total operating costs and
expenses 793,576 877,017
---------- ----------
Operating income (loss) (761) 6,218
---------- ----------
Other expenses:
Interest expense, net 54,732 62,322
Other nonoperating expenses
(income), net 12 (1,398)
---------- ----------
Total other expenses, net 54,744 60,924
---------- ----------
Income (loss) before income taxes (55,505) (54,706)
Provision for income taxes 1,280 1,175
---------- ----------
Income (loss) from continuing
operations (56,785) (55,881)
Income (loss) from discontinued
operations --- (17,330)
---------- ----------
Income (loss) before extraordinary
gain (56,785) (73,211)
Extraordinary gain 7,778 ---
---------- ----------
Net income (loss) applicable to
common shareholders $ (49,007) $ (73,211)
========== ==========
Basic and diluted income (loss)
per share:
Income (loss) from continuing
operations $ (1.41) $ (1.39)
Income (loss) from discontinued
operations --- (0.44)
---------- ----------
Income (loss) before extraordinary
gain (1.41) (1.83)
Extraordinary gain 0.19 ---
---------- ----------
Net income (loss) $ (1.22) $ (1.83)
========== ==========
Average outstanding and equivalent
shares 40,134 40,073
========== ==========
ADVANTICA RESTAURANT GROUP, INC.
Consolidated Balance Sheets
(Unaudited)
(In thousands) 9/26/01 12/27/00
----------- ------------
ASSETS
Current Assets
Cash and cash equivalents $ 3,665 $ 27,260
Other 37,712 27,269
----------- ------------
41,377 54,529
Property and equipment, net 369,652 425,327
Reorganization value in excess
of amounts allocable to
identifiable assets, net 35,385 61,177
Other assets 183,722 202,400
----------- ------------
Total Assets $ 630,136 $ 743,433
=========== ============
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities
Current maturities of notes
and debentures $ 679 $ 1,086
Current maturities of capital
lease obligations 4,702 10,510
Net liabilities of discontinued
operations 13,534 69,400
Accounts payable and other
accrued liabilities 149,850 213,560
------------- -------------
168,765 294,556
------------- -------------
Long-Term Liabilities
Notes and debentures, less
current maturities 624,721 553,730
Capital lease obligations,
less current maturities 36,783 39,980
Other 95,109 101,428
------------- -------------
756,613 695,138
------------- -------------
Total Liabilities 925,378 989,694
------------- -------------
Shareholder's Deficit (295,242) (246,261)
------------- -------------
Total Liabilities and
Shareholder's Deficit $ 630,136 $ 743,433
============= =============
ADVANTICA RESTAURANT GROUP, INC.
Results by Operating Entity
(Unaudited)
Quarter Ended Three Quarters Ended
------------------- ---------------------
9/26/01 9/27/00 9/26/01 9/27/00
--------- --------- --------- --------
(In millions)
Continuing Operations
Denny's:
Revenue $ 270.1 $ 302.6 $ 792.8 $ 883.2
EBITDA (a) $ 42.9 $ 52.0 $ 108.1 $ 129.0
Gains on
refranchising and
other, net $ 1.8 $ 16.3 $ 12.1 $ 38.3
Discontinued Operations (b)
------------------------
Coco's:
Revenue $ 48.6 $ 51.8 $ 149.6 $ 161.3
EBITDA (a) $ 2.7 $ 3.8 $ 9.3 $ 15.5
Carrows:
Revenue $ 39.1 $ 39.1 $ 115.4 $ 118.1
EBITDA (a) $ 3.2 $ 3.3 $ 8.5 $ 11.2
(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) 9/26/01
--------------
Same-Store
Sales
--------------
Denny's 3.2%
Coco's (4.9%)
Carrows 2.1%
Guest Check
Average
--------------
Denny's 1.2%
Coco's 4.1%
Carrows 4.0%
Quarter Quarter
Average Unit Sales Ended Ended Increase/
(in thousands) 9/26/01 9/27/00 (Decrease)
----------- ----------- -----------
Denny's
Company-owned $ 379.2 $ 349.5 8.5%
Franchised $ 321.9 $ 314.5 2.4%
Coco's
Company-owned $ 336.6 $ 351.3 (4.2%)
Franchised $ 327.3 $ 333.7 (1.9%)
Carrows
Company-owned $ 338.8 $ 329.8 2.7%
Franchised $ 241.8 $ 245.4 (1.5%)
ADVANTICA RESTAURANT GROUP, INC.
Statistical Data by Operating Entity
(Unaudited)
Three
Same-Store Data (Company-owned) Quarters
(increase/(decrease) vs. prior year) Ended
9/26/01
--------------
Same-Store
Sales
--------------
Denny's 2.5%
Coco's (6.0%)
Carrows (0.3%)
Guest Check
Average
--------------
Denny's 2.1%
Coco's 2.5%
Carrows 3.3%
Three Three
Average Unit Sales Quarters Quarters Increase/
(in thousands) Ended Ended (Decrease)
9/26/01 9/27/00
------------ ----------- -----------
Denny's
Company-owned $ 1,062.1 $ 1,012.3 4.9%
Franchised $ 906.1 $ 883.7 2.5%
Coco's
Company-owned $ 1,029.4 $ 1,089.1 (5.5%)
Franchised $ 982.1 $ 1,007.8 (2.6%)
Carrows
Company-owned $ 999.1 $ 991.9 0.7%
Franchised $ 733.6 $ 763.2 (3.9%)
ADVANTICA RESTAURANT GROUP, INC.
Statistical Data by Operating Entity
(Unaudited)
Restaurant Units 9/26/01 9/27/00
--------- ---------
Denny's
Company-owned 638 784
Franchised 1,124 1,013
Licensed 14 19
--------- ---------
1,776 1,816
Discontinued Operations:
Coco's
Company-owned 141 144
Franchised 38 36
Licensed 300 300
--------- ---------
479 480
Carrows
Company-owned 113 116
Franchised 29 28
--------- ---------
142 144
--------- ---------
2,397 2,440
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