Discovery Zone Reports Improved Operating Results And New Revolving Credit Facility.ELMSFORD, N.Y.--(BUSINESS WIRE)--April 15, 1998--Discovery Zone, Inc. ("DZ") announced today its financial results for 1997, which represented a significant transition year for the company as it emerged from bankruptcy on July 29, 1997 and began implementation of an extensive store renovation program and brand repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. strategy designed to increase attendance and in-store spending. Despite a significant decline in revenues, operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. as measured by 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 (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.
Scott W. Bernstein, Chief Executive Officer, said that "1997 represented a year of critical change and momentum building for DZ. During the year we made numerous management changes, significantly reduced our 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. , emerged from bankruptcy and began implementation of an extensive, company-wide renovation and repositioning plan. Since "re-opening" the stores that have been renovated and initiating some of our new marketing and advertising programs in the early part of our first quarter, we have experienced comparable store sales growth at both renovated and unrenovated stores, and will be reporting comparable store sales growth for the first quarter of 1998. This marks the first quarter of comparable store sales growth over the prior year quarter that the company has experienced in at least 3 years. While 1998 results will continue to be impacted by investment spending in capital and the various new marketing and entertainment programs we are putting in place, we believe that 1998 will show continued improvement relative to 1997 and set the stage for the company's long-term success." Since emerging from bankruptcy, the company's strategy has been to reposition the DZ concept from that of an indoor playground to a fresh, exciting entertainment venue for kids and families. During the fourth quarter of 1997, DZ began an extensive store renovation program, which on a per store basis, was much broader in scope and costlier than originally planned, and included adding several new entertainment offerings, upgrading the facilities and giving them a "new look" consistent with the company's new brand repositioning campaign. These renovations included the addition of designated areas for laser tag Laser tag is a team or individual sport where players attempt to score points by engaging targets, typically with a hand-held infrared-emitting targeting device. Infrared-sensitive targets are commonly worn by each player and are sometimes integrated within arena in which the game , arts and crafts arts and crafts, term for that general field of applied design in which hand fabrication is dominant. The term was coined in England in the late 19th cent. as a label for the then-current movement directed toward the revivifying of the decorative arts. , stage events and promotional activities, while maintaining a significant amount of the ball bins and mazes that were a part of the original Discovery Zone concept. During the first phase of this program, through March 1998, the company has renovated approximately 60% of its stores. The company currently expects to complete a second phase of store renovations to another 15% of its stores by the end of 1998. In addition, through March 1998, approximately 80% of all stores have been converted to sell Pizza Hut menu items and approximately 25% have been converted to offer new weekday programs targeted at pre-schoolers under the "DZU" or "Discovery Zone University" brand name. The estimated cost of the first phase of the renovation program, including the Pizza Hut and DZU conversions, and of advanced purchases for future renovations, is approximately $21 million and $3 million, respectively. These costs exclude approximately $3 million of excess billings recently received from general contractors related to phase one of its renovation program which the company is disputing as material, unexpected cost overruns. Separately, DZ announced that it had secured a new $10 million senior secured revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility from Foothill Capital Corp. which will be used to fund working capital needs and continue its renovation program. Discovery Zone is the leading owner and operator of children's entertainment centers in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. with 205 locations across 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. , Canada and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. . -0- Any statements contained in this press release that are not statements of historical fact may be deemed to be 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. which may involve known and unknown risks. Reference is made to 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 Dec. 31, 1997 and the section entitled "Risk Factors Affecting Future Operating Performance" contained therein. CONTACT: Ketchum Public Relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most Seth Eisen 212/448-4349 |
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