DenAmerica Completes Sale of 71 Restaurants to Denny's Franchisee, Focusing Company's Operations On Black-Eyed Pea Concept; Reports Fourth Quarter and Year-End Results.SCOTTSDALE Scottsdale, city (1990 pop. 130,069), Maricopa co., central Ariz.; settled in 1895 by Winfield Scott, inc. 1951. It is a resort and retirement center in the Phoenix metropolitan area. , Ariz.--(BUSINESS WIRE)--March 27, 1998--DenAmerica Corp. (AMEX AMEX See: American Stock Exchange : DEN (Directory Enabled Networks) The management of a network from a central depository of information about users, applications and network resources. Originally an initiative from Microsoft and Cisco, DEN was turned over to the DMTF in 1998, and its extensions were made ), the owner and franchisor of the Black-eyed Black´-eyed` a. 1. Having black eyes. Pea (BEP BEP Black Eyed Peas (band) BEP Brevet d’Études Professionnelles (French: vocational qualification) BEP Business Entry Point BEP Break-Even Point BEP Bit Error Probability BEP Bureau of Engraving & Printing ) restaurant chain and the largest franchisee of 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. restaurants, today announced that it has completed a $28.7 million sale of 71 restaurants (63 Denny's and eight unbranded units) located primarily in the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians and Southeast to Houston- based Denny's franchisee, Olajuwon Holdings, Inc, the chain's second largest franchisee. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the sale will primarily be used to reduce the Company's debt. Under its long- long- Adverb (in combination) for or lasting a long time: long-established, long-lasting term strategic plan to bolster This article is about the pillow called a bolster. For other meanings of the word "bolster", see bolster (disambiguation). A bolster (etymology: Middle English, derived from Old English, and before that the Germanic word bulgstraz shareholder value, the Company will focus its efforts on expanding its BEP operations, and it will continue to pursue complementary restaurant acquisitions while de-emphasizing its role as a Denny's franchisee. As a result of the Olajuwon Holdings sale, DenAmerica will realize an approximate $2.4 million discount for early payment of the note for the balance of the purchase price for its BEP restaurants, and will cancel options to purchase approximately one million shares of its common stock as a result of its early payment. In addition, as a result of the sale, the Company incurred a non-recurring $14.1 million 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. loss in its 1997 fourth quarter results associated with the $29 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of goodwill and other intangibles resulting from the transaction. DenAmerica Chairman and Chief Executive Officer Jack M. Lloyd commented, "We are pleased to have completed the 71-unit sale to Olajuwon Holdings, and wish them continued success with their growing business. It was difficult to part with many of the restaurants included in the transaction and to say goodbye to many loyal, hardworking employees at those units. "In an unrelated transaction, we recently sold an additional five Denny's units for $1.1 million in Wyoming Wyoming, city, United States Wyoming, city (1990 pop. 63,891), Kent co., W Mich., in the greater Grand Rapids metropolitan area, on the Grand River; settled 1832, inc. 1959. , the proceeds of which will be realized in our 1998 first quarter results." DenAmerica also announced results for the fourth quarter (13 weeks) and 12-month (52 weeks) periods ended December 31, 1997. The corresponding year ago periods are the 13 weeks and 53 weeks ended January 1, 1997. Revenue and operating results for the 53 weeks ended January 1, 1997 include results for BEP from June 24, 1996, the effective date of the acquisition, and for the merger with American Family American Family is a photographic artwork exhibition by Renée Cox. See also
Revenues for the 1997 fourth quarter were $72,792,000, compared to revenues of $77,708,000 for the 1996 fourth quarter. The decrease in revenues was largely due to the Company operating fewer restaurants as a result of previous divestitures. The restaurant operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was $10,202,000 ($3,898,000 restaurant 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. before the impairment loss) for the quarter, compared to operating income of $6,141,000 in the year-earlier period. The Company recorded a net loss for the 13-week period ended December 31, 1997 of $20,569,000, or $1.53 per share, compared to a net loss of $187,000, or $0.01 per share, in the year-ago period. The 1997 fourth quarter results were impacted by the impairment loss. Per share results for the 1997 and 1996 fourth quarter periods are based on 13,437,000 and 13,399,000 weighted average shares outstanding, respectively. Black-eyed Pea same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of declined 5.3% for the 1997 12- month period, although the Company's 64 restaurants in the core Texas and Oklahoma markets had same store sales declines of 3.3%. Same store Denny's sales fell 4.3% during 1997. For the 52-week period ended December 31, 1997, the Company had revenues of $300,579,000, versus $241,480,000 for the comparable year-earlier 53-week period. Restaurant operating income in 1997 was $9,101,000 ($23,201,000 before the impairment loss), compared to $22,137,000 in 1996. For the 1997 12-month period, DenAmerica reported a net loss of $20,977,000, or $1.56 per share, compared to net income (including an extraordinary loss of $497,000 for the early retirement of debt) of $969,000, or $0.08 per share, in the year-ago period. The net loss for the year was primarily a result of the impairment loss that the Company recorded in its 1997 fourth quarter. Per share results for the 1997 and 1996 twelve-month periods are based on 13,437,000 and 11,784,000 weighted average shares outstanding, respectively. Mr. Lloyd said, "We are encouraged by the results to date of our ongoing plan to streamline our operations, to expand our BEP concept and to sell many of our Denny's and unbranded units. Our remaining Denny's units are concentrated primarily in the West, Southwest and Florida, preferred, proven geographic areas where we have historically done well. "During 1997, the Company made significant progress with our BEP operations. We acquired nine franchised units and developed four new units last year, and plan to open eight new BEPs in 1998. We are also currently test marketing breakfast service at some of our Oklahoma restaurants. We believe that incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. breakfast sales could be significant for us in the future." Mr. Lloyd added, "In redirecting the Company's focus, we will also seriously evaluate complementary restaurant concepts that meet our strict acquisition criteria. We plan to continue effecting our present strategy, with an eye toward improving the profitability of our existing operations and enhancing shareholder value over the long term." DenAmerica Corp. operates full-service, family-oriented and casual dining restaurants, based primarily on DenAmerica's own Black-eyed Pea restaurant concept and the Denny's brand. The Company operates 104 Black-eyed Pea restaurants, franchises or licenses another three and operates 103 franchised Denny's units. Except for the historical information in this press release, this press release includes 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. that involve risks and uncertainties, including, but not limited to, competitive pressures from within the restaurant industry, changes in the prices of food and beverages F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. , quarterly fluctuations in results, the management of growth and other risks detailed from time to time in the Company's Securities and Exchange Commission filings. Actual results may differ materially from management expectations. -0-
DENAMERICA CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Twelve Months
Ended Ended
(unaudited) (audited)
12/31/97 1/1/97 12/31/97 1/1/97
(13 weeks)(13 weeks)(52 weeks)(53 weeks)
Restaurant sales $ 72,792 $ 77,708 $300,579 $241,480
Restaurant operating expenses:
Cost of food and beverages 20,158 20,994 82,255 65,966
Payroll and payroll related
costs 25,453 27,309 103,451 82,794
Depreciation and amortization 2,545 1,785 9,367 7,000
Other restaurant operating
costs 20,738 21,479 82,305 63,583
Impairment loss 14,100 -- 14,100 --
Total restaurant operating
expenses 82,994 71,567 291,478 219,343
Restaurant operating income
(loss) (10,202) 6,141 9,101 22,137
Administrative expenses 3,105 3,899 13,684 10,303
Operating income (loss) (13,307) 2,242 (4,583) 11,834
Interest expense, net 4,068 3,024 13,655 9,605
Income (loss) before minority
interest in joint venture,
income taxes and
extraordinary item (17,375) (782) (18,238) 2,229
Minority interest in joint
ventures (335) (260) (519) (256)
Income (loss) before income
taxes and extraordinary
item (17,040) (522) (17,719) 2,485
Income tax (benefit) expense 3,529 (335) 3,258 870
Income (loss) before
extraordinary item (20,569) (187) (20,977) 1,615
Extraordinary item - loss on
extinguishment of debt -- -- -- 497
Net income (loss) (20,569) (187) (20,977) 1,118
Preferred stock dividend and
accretion -- -- -- (149)
Net income (loss) applicable
to common shareholders $(20,569) $ (187) $(20,977) $ 969
Net income (loss) per common
share before extraordinary
item $ (1.53) $ (0.01) $ (1.56) $ 0.14
Net income (loss) per common
share
Basic $ (1.53) $ (0.01) $ (1.56) $ 0.08
Diluted $ (1.53) $ (0.01) $ (1.56) $ 0.08
Weighted average shares
outstanding
Basic 13,437 13,399 13,437 11,784
Diluted 13,437 13,399 13,437 11,784
CONTACT: Todd S Todd , Sir Alexander Robertus 1907-1997. British chemist. He won a 1957 Nobel Prize for his study of nucleic acids and nucleotide structures. . Brown Robert L. Rinderman Chief Financial Officer Joseph N. Jaffoni DenAmerica Corp. Jaffoni & Collins Incorporated 602/483-7055 212/835-8500 or rinderman@jcir.com |
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