SHERMAN OAKS, Calif., July 10, 1996 -- Hamburger Hamlet
Restaurants Inc. and its 41 affiliated entities ("HHR") announced
that HHR filed a joint plan of reorganization ("Plan") on July 8,
1996 in the bankruptcy court having jurisdiction over HHR's Chapter
The Plan is based on a transaction proposal received by HHR from
Grill Concepts, Inc., the owner of the Daily Grill restaurants and
the Grill restaurant in Beverly Hills. Under the proposed
transaction, a subsidiary of Grill Concepts, Inc. ("Purchaser"),
would purchase certain operating assets of HHR in exchange for cash,
notes, the assumption of certain obligations and additional
consideration as may be agreed upon by Purchaser and Banque Paribas,
HHR's principal lender. HHR and Purchaser have not yet executed
binding agreements with respect to the proposed transaction and
various negotiations are continuing.
Under the Plan, the assets of HHR which are not sold to
Purchaser plus the amounts to be paid by the Purchaser will be
distributed to pay the costs of HHR's Chapter 11 cases and the
claims of its creditors. The equity interests in HHR held by
stockholders would be canceled and stockholders would not receive
any property in respect of their stock.
The consummation of the proposed transaction is contingent upon
the execution of definitive agreements, the satisfactory completion
of Purchaser's due diligence, the obtaining of the necessary
financing and the confirmation of the Plan by the bankruptcy court.
CONTACT: Jack Lavine of Hamburger Hamlet, 818-995-7333/
VANCOUVER, British Columbia -- July 10,
1996 -- Brio Industries Inc. (NASDAQ: BRIOF), announced today its
results for its fiscal year ended Feb. 29, 1996 and its first
quarter ended May 31, 1996.
For the fiscal year ended Feb. 29, 1996 the company and its
subsidiaries reported a net loss of $10,828,171(a) or $2.15 per
share on sales of $46,647,000 versus a net loss of $4,688,000 or
$1.03 on sales of $36,145,000 during fiscal 1995. The results for
fiscal 1996 included writedowns of approximately $8,000,000 to the
capital assets of the company, and restructuring costs of more than
$1,000,000 associated with the change in management and focus of
Brio. These adjustments which were equal to $1.59 per share reflect
an effort by present management to be more conservative in matters
of asset valuation and operational forecasts. (Brio's new
management took responsibility in March, 1996). The benefit over
time of these write-downs is a substantial saving of depreciation
For the quarter ended May 31, 1996, Brio reported a net loss of
$462,000 or $.08 on sales of $13,700,000 versus net income of
$380,000 or $.06 on sales of $12,147,000 in the same quarter a year
In its announcement the company said that Brio's financial
results over the past three years can best be put in perspective by
reference to the plant capacity that Brio has either purchased or
developed. At the end of fiscal 1994, Brio's plants had the
capacity to produce approximately 12.2 million cases of water,
juices and carbonated soft drinks. By the end of fiscal 1995, that
capacity had risen to almost 22 million cases, and by this last
fiscal year, to more than 35 million cases, generated by four modern
During the course of bringing these plants on-line, the company
encountered substantial commissioning costs which were, to a great
extent, capitalized by former management as part of the value of
those assets. The company has adopted a more conservative practice,
which results in the expensing more of these commissioning and
related expenses. In addition, 1995 and 1996 saw the company start
to build the volumes and customer base necessary to see those plants
run profitably. In order to do so, former management saw the need
to add the administrative and operational infrastructure to
accommodate those anticipated volumes. Although fiscal 1996 saw an
almost 30% increase in revenues by the company, throughout fiscal
1996 the company's plants operated at only about 29% of actual
capacity. That level of volume was simply insufficient for
profitable performance given the operational and administrative
overhead that the company had built.
Commenting on the recent developments at the company, Robert
Hunt, Brio's president and CEO said, "When we took over management
of Brio Industries Inc., in March, the first quarter of our 1997
fiscal year was already well underway. Immediately upon our arrival
we were faced with several important issues that required resolution
and at the same time worked to set the stage for the future growth
and development of the company. The following summarizes several of
the significant matters we have addressed.
"The company's second financial quarter is our busiest. More
than 40% of our annual sales fall in that period. This places heavy
demands upon the company's working capital. In order to accommodate
our generally increasing sales levels and the summer inventory build
up, we set about raising approximately $1,400,000(a) by way of
issuance of share capital and have been arranging increases of our
term loan facilities to replenish working capital committed in prior
years to constructing our plants"
"In our view, the level of infrastructure and resultant general
and administrative expenses that the company had encountered over
the previous year were simply too high. We are pleased to inform
you that in the first quarter of this year we have been able to
reduce those costs by approximately $550,000, on an annualized
basis, without negatively impacting the performance levels of our
Management Information Systems:
"In order for us to properly monitor our operations and timely
respond to our customers' needs, the company requires a
sophisticated management information system that can better track
production efficiencies, yield rates, waste levels, inventory
management and other performance items. We are in the process of
developing and implementing such a system and anticipate that much
of it will be working before the end of next quarter."
"In addition to the changes within the board of directors and
executive management of the company, it was necessary for us to
bolster certain operational positions. Most notably, we have
appointed a new plant manager and quality control supervisor in our
"We have created working teams in purchasing, quality control
and maintenance to enable the entire company to take advantage of
its considerable buying power and to share efficiencies and better
practices. We have already seen promising results from the efforts
of those groups including the saving of substantial sums by way of
quantity discounts and the improvement of quality control standards.
"The first quarter of our fiscal year coincides with the slowest
part of the year. Only about 20% of our annual revenues are
produced during this period. The company's loss for the first
quarter was $461,739 or $.08 per share on revenues of $13,601,000.
Despite that, our operations generated positive operating cash flow
of $114,266 during the period.
"During the first quarter of last year (ended May 31, 1995) the
company was building and commissioning two major plants. Former
management elected to capitalize substantial operational,
administrative, interest and other carrying costs during this period
and no depreciation on those facilities was charged to operations.
The consequence was that the company reported a net income for the
period of $380,010 or $.08 per share on revenues of $12,147,000.
During the first quarter of this year, these costs were no longer
capitalized and, as a result, our financial results bore the full
operational and depreciation costs of plants that were still running
at only about 29% of capacity during this slow period.
"Our principal focus on this division during the quarter was on
our new Vancouver plant. We initiated several positive personnel
changes there. We were joined in April by Ed Lagos, who took over
responsibility for management of the plant and in May by George
Hoffman who became responsible for quality control in Vancouver.
Together they have more than 20 years experience in the beverage
industry and are welcome additions to our organization. Even though
our Edmonton plant continues to operate consistently at peak
efficiencies we have managed to introduce some cost savings which
should have an immediate impact on that division's contribution. We
have also concentrated our marketing efforts in our beverages
division with a view to both increasing plant utilization and
reducing the company's reliance upon its four principal customers.
"With the first full quarter of operation now behind its new
Edmonton plant, the future looks bright indeed for Brio Juices.
Many of that division's long term marketing efforts are now bearing
fruit and plant efficiencies are approaching expected levels. In
the first quarter of this year, Brio Juices generated 14.2% of the
company's consolidated gross revenue, up from 9.6% during the same
period last year. This is a trend that we believe will continue.
"Our water distribution division continued to grow and prosper
during the first quarter of this year. Some very good news concerns
the resolution late last year of a labor dispute at Springfield that
resulted in the de-certification of the labor union which had
previously certified the division. This division remains
"Daytimer continues to provide positive operating results and
has solidified its position as the dominant beverage distribution
company in Alberta. Due to the fact that it was acquired in
November 1995, Daytimer only accounted for approximately $900,000 of
the company's revenues for fiscal 1996 and is budgeted to contribute
almost $5,000,000 in revenues this year.
Looking ahead to fiscal 1997:
"During the year ended Feb. 28, 1997 management has targeted the
company to achieve sales growth of approximately 30% over last year.
Based upon our current product and customer mix this would result in
annual revenues in excess of $60,000,000 and equate to an increase
in plant utilization from approximately 29% during fiscal 1996 to
approximately 35% during fiscal 1997. At these levels the company
should experience a marked improvement in performance from the
$2,800,000 operating loss suffered last year. The company is
presently in a strong positive cash flow position that should be
enhanced with the anticipated volumes.
"Many of the initiatives that we have implemented are only just
beginning to have a positive impact on the company's financial
performance. Although there is much work still in front of us, we
believe that Brio is well placed to achieve the goals established in
our annual report. In order to finance the company's continued
growth, management plans to pursue a significant share offering
during the third quarter of this year."
Brio and its subsidiaries are engaged in the packaging and
distribution of juices, water and private label carbonated beverages
in western Canada and distribution into the northwestern United
(a) All amounts are expressed in Canadian dollars.
Brio Industries Inc.
Consolidated Statement of Income (Loss)
(Expressed in Canadian dollars)
Year Ended Year Ended
Feb. 29, Feb. 28,
Sales $46,647,342 $36,144,506
Cost of goods sold 40,603,731 30,359,873
Gross profit 6,043,611 5,784,633
Selling, general and
administrative expenses 6,940,668 3,388,096
Earnings (loss) before
depreciation and interest (897,057) 2,396,537
Depreciation and amortization 1,860,655 1,587,187
Interest expense (revenue) - net 82,917 (806,534)
Operating (loss) income before
undernoted items (2,840,629) 1,615,884
Restructuring costs 1,116,306 0
Write-down of capital assets,
goodwill and deferred
contract costs 7,876,993 98,037
Write-down and loss on
investments 52,178 7,695,464
Settlement of lawsuits 275,000 1,252,140
Income from discontinued
operations 0 (617,305)
Loss before income taxes (12,161,106) (6,812,452)
Income taxes recovery (expense)
Current (2,102) 2,950,412
Deferred 1,335,037 (825,951)
Net loss for the year $(10,828,171) $(4,687,991)
Loss per share
Basic $(2.15) $(1.03)
Fully diluted $(2.15) $(1.03)
Weighted average number of
shares 5,045,916 4,555,970
Brio Industries Inc.
Consolidated Statement of Income (Loss)
(Expressed in Canadian dollars)
Three Months Three Months
May 31, 1996 May 31, 1995
Sales $ 13,600,808 $ 12,146,623
Cost of goods sold 11,600,601 10,061,542
Gross Profit 2,000,207 2,085,081
expenses 1,765,672 1,270,924
Earnings before undernoted
items 234,535 814,157
Depreciation & amortization 576,005 414,810
Interest expense (net) 120,269 19,337
Income (loss) before income
taxes (461,739) 380,010
Income taxes 0 0
Net (loss) income for the
period $(461,739) $380,010
(Loss) earnings per share
Basic $(0.08) $0.08
Fully diluted $(0.08) $0.06
Weighted average number
of shares 5,762,008 4,648,245
CONTACT: BRIO Industries Inc.
Robert Hunt, 604/574-9220
Strategic Growth International Inc.
Stan Altschuler, 516/829-7111
SHERMAN OAKS, Calif., July 10, 1996 -- House of Fabrics,
Inc. (HF) today announced that the Bankruptcy Court in Los Angeles
has confirmed its joint plan of reorganization. Confirmation of the
plan clears the way for the reorganized House of Fabrics to emerge
from bankruptcy, which the company expects will occur on or about
July 31, 1996.
As part of the plan, the Court approved the company's request to
reduce to 5.1 million the total number of shares to be issued to
creditors and equity holders on the effective date of the plan. In
a previous announcement, the company said that it had asked to
reduce the number of shares issued in order to increase the price of
each share of common stock, thereby attempting to satisfy certain of
the requirements to allow the company's stock to trade on a
recognized exchange or the NASDAQ National Market System.
"House of Fabrics is now free to move ahead with a restructured
balance sheet and an improved cost structure," said Gary L. Larkins,
president and chief executive officer. "The new House of Fabrics is
a smaller company, but one that is considerably stronger than it has
been in many years. We are confident that the company will be able
to operate at reduced levels of revenue because of the reductions in
overhead and debt which have been achieved over the past 20 months.
"While this marks the end of the restructuring process, we will
continue to implement plans to reduce costs and enhance revenues.
For instance, we are in the process of expanding the point-of-sale
(POS) systems in our stores; implementing a new integrated
management information system; and refining and improving our
merchandise mix as we continue to move forward."
Confirmation followed the acceptance of the plan by the
requisite number of creditor classes. The plan had been endorsed by
the company's secured lenders, led by Bank of America as agent, and
the official committees representing the unsecured creditors and
House of Fabrics' plan of reorganization provides for a
discounted payment of $76.5 million in cash and the cash repayment
of borrowings against its debtor-in-possession (DIP) financing to
the bank group, plus five (5) percent of the stock in the
reorganized House of Fabrics. Unsecured creditors will receive 93
percent of the stock in the reorganized company, to be distributed
on the effective date of the plan. Existing shareholders will
receive two (2) percent of the stock in the reorganized company, as
well as warrants to purchase additional shares.
Since filing to reorganize 20 months ago, House of Fabrics has:
Once the plan becomes effective, there will be three additions
to the newly reorganized company's board of directors. Carl C.
Gregory III, chairman and chief executive officer of MIP Properties,
Inc.; John E. Labbett, executive vice president and chief financial
officer of House of Fabrics; and Allison L. May, past president and
general manager of Patagonia Inc. have been named to the board.
Current members of the board who will remain are: Gary L. Larkins,
president and chief executive officer of House of Fabrics; R. N.
Hankin, founder, senior partner and chief executive officer of
Hankin & Co.; H. Michael Hecht, president of Dickson Trading (North
America) Inc.; and Mitchell G. Lynn, president and chief executive
officer of Combined Resources International. The latter three
independent members of the Board were appointed in 1995.
House of Fabrics operates 269 company-owned House of Fabrics,
Sofro Fabrics, Fabricland and Fabric King retail fabric and craft
stores in 34 states and employs approximately 7,000 people. The
company and its subsidiaries filed to restructure under Chapter 11
on November 2, 1994.
CONTACT: Sandra Sternberg, or Rivian Bell, of Sitrick and Company