Dairy Mart Reports Fourth Quarter and Year-End Results.Business Editors HUDSON, Ohio--(BUSINESS WIRE)--May 7, 2001 Dairy Mart Convenience Stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. , Inc. (AMEX AMEX See: American Stock Exchange :DMC DMC Devil May Cry (video game) DMC Detroit Medical Center DMC Darryl McDaniels (rapper) DMC Destination Management Company DMC Del Mar College (Corpus Christi, TX) ) today announced significantly reduced operating results for the fiscal fourth quarter and year ended February 3, 2001. The Company also announced that it has reinitiated and modified a previously announced comprehensive program to improve the Company's profitability and reduce debt, and in conjunction with a recently announced merger, has filed a preliminary Proxy Statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. with the Securities and Exchange Commission. Dairy Mart, as in recent fiscal quarters, continues to be impacted by three significant operating trends: 1) lower gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by margins; 2) lower merchandise gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. ; and 3) increases in store operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , related primarily to store labor. The results of the fourth fiscal quarter were further impacted by harsher than normal winter weather and a general downturn in the U.S. economy. During fiscal year 2001, the Company also incurred additional pre-tax expenses of $2.0 million associated with the sale or closure of 65 non-strategic or underperforming stores, $1.3 million associated with the settlement of certain 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. , and $1.7 million associated with corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. activities. Revenues for fiscal 2001 increased 23% to $723.7 million compared to revenues of $588.5 million in fiscal 2000. For the fourth fiscal quarter, revenues were $174.2 million compared to $150.3 million in the same quarter last year. Revenue growth occurred primarily from an increase in the amount of gasoline gallons sold and the average retail price per gallon. Gasoline revenues for the year increased 49%, to $347.7 million compared with $233.9 million in the prior year. The average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. of gasoline increased 31 cents per gallon and total gallons of gasoline sold increased 17% percent, to 238.1 million gallons from 202.6 million gallons for fiscal 2000. Merchandise sales of company-operated stores open at least a year increased 2.8% in fiscal 2001 but were flat in the fourth fiscal quarter due primarily to the factors mentioned above. Additionally, fiscal 2001 included 53 weeks compared to 52 weeks in fiscal 2000. "Fiscal year 2001 was indeed a difficult year for Dairy Mart," said Robert B. Stein Stein , William Howard 1911-1980. American biochemist. He shared a 1972 Nobel Prize for pioneering studies of ribonuclease. , Jr., Dairy Mart's Chairman, President and Chief Executive Officer. "The Company's review of strategic alternatives, which resulted in the previously announced proposed merger, made employee recruitment, retention and morale difficult in an already challenged operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. . Additionally, operating expenses again reflected rising wages, employee benefits and payroll taxes Payroll Tax Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax. and the Company was not able to sustain a level of merchandise sales growth or an increase in merchandise gross margin to offset these quickly escalating costs. I am personally pleased that the Company has filed a preliminary proxy statement with the SEC, an integral step in our efforts to complete the previously announced acquisition of Dairy Mart by DM Acquisition Corp." The results for the fourth quarter and fiscal year ended February 3, 2001 include a non-cash tax provision of $9.7 million and $4.8 million, respectively, to provide a valuation allowance associated with the Company's uncertainty as to its ability to utilize historical net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. to offset potential future income tax liabilities. As a result of this non-cash provision and other previously mentioned factors, the Company had a net loss of $29.5 million, or $5.96 per share for the year ended February 3, 2001 compared with a net loss of $2.5 million, or $0.51 per share for the prior fiscal year. Net loss for the fourth quarter was $22.5 million, or $4.51 per share, compared to a net loss of $4.3 million, or $0.88 per share for the same quarter last year. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Additionally, the Company has reinitiated and modified a previously announced comprehensive program to improve the Company's profitability and reduce debt (the "Business Segmentation Plan"). Under the Business Segmentation Plan, the Company will attempt to sell or otherwise close approximately 200 stores that do not meet internal profitability criteria, reduce corporate and field overhead and apply proceeds from the sale of stores to reduce debt. However, as a result of recent operating trends, the Company has modified and accelerated the portion of the Business Segmentation Plan that relates to a reduction in corporate overhead. Under this modification, the Company has commenced a business 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). plan (the "Business Restructuring Plan") pursuant to which certain general and administrative overhead costs overhead costs see fixed costs. have been reduced in advance of those cost reductions which can only be achieved after the underperforming stores are sold or closed. Accordingly, in the first quarter of fiscal year 2002, approximately 30 executive, managerial and administrative positions were eliminated. The Company has commenced implementing each of these plans and intends to complete them whether or not the previously announced merger is completed. There can be no assurance, however, that either of these plans will be successfully completed as contemplated. Dairy Mart owns or operates approximately 547 retail stores in seven states located in the Midwest and Southeast. For more information, visit Dairy Mart's web site at www.dairymart.com. Any statements contained in this release that are not historical facts, including those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future operating results; a sale or closure of underperforming stores; a reduction in debt or overhead; and a possible sale of the Company, that may be considered 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. are subject to risks, uncertainties and other factors that could cause actual results to differ materially. Factors that could cause actual results to differ from those forward-looking statements include competition, general economic conditions, the ability to successfully operate the business with the recent reductions made to overhead, the ability to find one or more suitable buyers for individual stores at acceptable prices, the ability of such buyers to finance the store purchases, the ability to complete the financing contemplated by the merger and other factors discussed in periodic reports filed by the Company with the Securities and Exchange Commission. (Table Follows)
Dairy Mart Convenience Stores, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share amounts)
FOR THE FOURTH FISCAL FOR THE FISCAL
QUARTER ENDED YEAR ENDED
--------------------------------------------------
February 3, January 29, February 3, January 29,
2001 2000 2001 2000
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Revenues $ 174,204 $ 150,285 $ 723,671 $ 588,551
Cost of goods sold
and expenses:
Cost of goods
sold 140,412 115,389 576,042 443,559
Operating and
administrative
expenses 41,383 38,444 157,519 137,069
Interest expense 4,390 3,469 14,183 11,583
--------- --------- --------- ---------
186,185 157,302 747,744 592,211
--------- --------- --------- ---------
Income (loss)
before income
taxes (11,981) (7,017) (24,073) (3,660)
Benefit from
(provision for)
income taxes (10,535) 2,757 (5,378) 1,164
--------- --------- --------- ---------
Net income
(loss) $ (22,516) $ (4,260) $ (29,451) $ (2,496)
========= ========= ========= =========
Earnings (loss)
per basic share $ (4.51) $ (0.88) $ (5.96) $ (0.51)
Earnings (loss)
per diluted share $ (4.51) $ (0.88) $ (5.96) $ (0.51)
Weighted average
number of basic
shares 4,987 4,891 4,945 4,869
Weighted average
number of diluted
shares 5,072 4,969 5,114 4,952
AMEX TRADING SYMBOL - DMC
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