Jay Jacobs Inc. reports profitable fourth
quarter
SEATTLE, WA--May 9, 1997--Jay Jabobs
Inc. (JAYJ) today reported results for its fourth quarter and
fiscal year ended Feb. 1, 1997.
For the fourth quarter, the company reported a profit of
$351,000, or $0.06 per share, on sales of $17,795,000. This
compares to a profit of $261,000 or $0.04 per share on sales of
$18,625,000 for the fourth quarter of the previous year.
Comparable store sales increased 4% over the same quarter last
year.
For the twelve month fiscal year ended Feb. 1, 1997, the
company incurred a loss of $3,361,000, or $0.55 per share, on
sales of $61,571,000. This compares to a loss for the previous
year of $2,811,000 on sales of $72,886,000 or $0.47 per share.
Comparable store sales during the year decreased by 4%.
"We are pleased with our fourth quarter
performance," said Rex Steffey, president and CEO. "The
fourth quarter profit, which represents a thirty-four percent
increase over the prior year quarter, was accomplished in spite
of significant restraints on our working capital. The company
continues to pursue an outside investor and our improved
performance enhances our ability to get that done."
Jay Jacobs is a Seattle based specialty apparel retailer
selling to men and women, operating at year end 123 stores
located in 20 states. During the fourth quarter the company
closed seven stores.
JAY JACOBS, INC. AND
SUBSIDIARY
CONSOLIDATED BALANCE
SHEET
(Dollar amounts in
thousands)
A S S E T S
February
1,
January
27,
1997
1996
Current assets:
Cash and cash equivalents $ 249
$ 705 Accounts receivable
540 442 Inventories
7,935 7,323 Prepaid
expenses 276
219 Total current assets
9,000 8,689
Property and equipment, net 5,297
5,558 Total assets
$14,297 $14,247
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 4,735
$1,401 Accrued payroll
217 529 Accrued reorganization
expenses 2,618 3,188 Sales
taxes payable 575
237 Other accrued expenses
311 313 Line of credit
3,177 - Total current
liabilities 11,633 5,668
Deferred rental credits 331
995
Federal income tax refund reserve 1,955
Accrued reorganization expenses 334
4,249 Total liabilities
14,253 10,912
Shareholders' equity:
Preferred stock: 5,000,000 shares
authorized; none issued or outstanding 0
0
Common stock: 20,000,000 shares
authorized; 6,124,000 and 6,054,000
issued and outstanding 12,990
12,920
Accumulated deficit (12,946)
(9,585)
Total shareholders' equity 44
3,335
$14,297
$14,247
JAY JACOBS, INC. AND
SUBSIDIARY
CONSOLIDATED STATEMENT
OF OPERATIONS
(In thousands, except per
share amounts)
Yea
r
Yea
r
end
ed
end
ed
Febru
ary
1,
Janua
ry
27,
199
7
19
96
Net sales $ 61,571
$ 72,886
Operating costs and expenses:
Cost of sales, buying and occupancy
costs 47,676
55,052 Selling, general and
administrative expenses 18,122
20,924 Interest and other income, net
(55) ( 279)
Net operating expenses 65,743
75,697
Loss before reorganization
items and income taxes
(4,172) (2,811)
Reorganization expense (income)
(340) 0 Income tax benefit
(471) 0
Net loss $
(3,361) $ (2,811)
Loss per share
$(0.55) $(0.47)
Weighted average number of
shares outstanding 6,102
5,981
CONTACT: Jay Jacobs Inc. Bill Lawrence, 206/622-5400 x 217
Nets Inc. Files for Protection Under
Chapter 11
CAMBRIDGE, Mass., May 9, 1997 - Nets
Inc. today announced that its inability to secure additional
long-term financing has forced it to seek protection under the
provisions of Chapter 11. The company, whose focus is on
business-to-business electronic commerce, has filed a Chapter 11
petition in U.S. Bankruptcy Court for the District of
Massachusetts.
A company spokesman said Nets Inc. will maintain its
Industry.net service as it examines its options for reorganizing
the company under Chapter 11.
"As I said on the day I made my initial investment in
this company, there is a great business concept here with great
potential," said Jim Manzi, chairman of Nets Inc.
"However, that same day I also said the company needed
stronger financial support than it had previously received.
"While we were initially successful in raising a
substantial amount of money from investors, our efforts in recent
months to secure adequate long-term financing have not been as
successful.
"In the past few weeks, I've personally provided bridge
financing to the company to provide us the opportunity to
successfully execute the business concept," Mr. Manzi said.
"But our financing deadline has passed and we do not have
the capital to build from strength. As a result, the board of
directors has decided to reorganize the company utilizing Chapter
11."
Nets Inc., with headquarters in Cambridge, Mass., and an
operations and production facility in Pittsburgh, Pa., has 200
employees. The company's primary service is Industry.net
(http://www.industry.net),an electronic marketplace
where buyers and sellers of industrial goods and services connect
with one another to lower the costs of buying and selling. While
serving the broader industrial market, the Industry.net service
focuses primarily on meeting the needs of buyers andsellers of
maintenance, repair and operations (MRO) goods and services.
NOTE: Nets Inc. and Industry.net are service marks of Nets
Inc.
SOURCE Nets Inc./CONTACT: Richard Eckel of Nets Inc.,
617-252-5214 or richard.eckelnetsinc.com/
Dow Chemical Silicone Breast Plant Cases to
be Consolidated in Federal Court
CINCINNATI, OH - May 9, 1997 -The end may be in sight for the
protracted and costly legal battle over silicone breast implants.
The thousands of implant lawsuits languishing in state courts
around the country can soon be consolidated for a faster
resolution in federal court, according to a ruling here today by
the U.S. Court of Appeals for the Sixth Circuit.
Upholding its April 1996 decision, the court reaffirmed that
lawsuits against shareholders in former implant manufacturer
implant manufacturers belong in federal court. "We're now on
a path to a final resolution for the women, companies and the
judicial system alike," said John G. Scriven, vice president
and general counsel of The Dow Chemical Company.
Dow Chemical and Corning Incorporated each own 50 percent of
the shares in Dow Corning. The disposition of thousands of
lawsuits against them and other co-defendant implant
manufacturers has been pending since July 1996 when the U.S.
District Court of the Eastern District of Michigan in Detroit
granted a plaintiffs' motion to abstain from handling the cases
in the context of Dow Corning's reorganization under U.S.
bankruptcy law in July 1996.
"This ruling means that the process of resolving claims
involving Dow Corning's products will be a part of the bankruptcy
resolution process," commented Dow Chemical's Scriven.
"It fulfills Dow Corning's plan to provide fair treatment
for all women by eliminating any bias in favor of who was first
with a court date, who filed in a specific court, or with a
specific attorney. Consolidation of the cases means that Dow
Corning can focus its energy and its resources on succeeding with
its reorganization plan and emerging from Chapter 11 having
appropriately addressed the claims of its creditors."
The Sixth Circuit's decision today declared, "...it makes
little practical sense to transfer the claims against Dow Corning
while refusing to transfer those against the shareholders. The
claims against the shareholders arise from an identical set of
facts and are merely duplicates of those against Dow Corning. The
shareholders have never manufactured a silicone-implant product
and are only named in the suits because of their association with
Dow Corning." The court went on to say, "We therefore
believe that transferring these claims to a single jurisdiction
is the only way to achieve an efficient resolution to this
litigation, the development of a successful reorganization plan,
and the adequate compensation of deserving claimants."
The cases subject to this decision are before U.S. District
Court Judge Sam C. Pointer, Jr. In Birmingham, Ala. Judge Pointer
was appointed to oversee all federal breast implant cases in a
consolidate pretrial proceeding.
Meanwhile in August 1996, Judge Pointer appointed a national
panel of neutral experts "to evaluate and critique pertinent
scientific literature and studies bearing on issues in breast
implant litigation" in federal courts.
SOURCE The Dow Chemical Company /CONTACT: Bob Charlton,
Corporate Public Affairs of Dow Chemical Company, 517-636-1797/
Flagstar reports first quarter results
SPARTANBURG, S.C.--May 9, 1997--Flagstar Companies, Inc.
(NASDAQ:FLST) today reported revenue of $676 million for the
first quarter ended April 2, 1997, compared with $550 million in
the same period last year. Earnings before interest, taxes,
depreciation, amortization (EBITDA) and restructuring expenses
were $57.7 million, compared with $56.5 million in the prior year
quarter. Operating income was $23.0 million, versus $27.5 million
in the same quarter last year.
"We are pleased to report increased first quarter revenue
and EBITDA due to last year's acquisition of Coco's and Carrows,
as well as improved profitability at Denny's," said James B.
Adamson, chairman and chief executive officer of Flagstar.
"Denny's profitability continued to benefit from an increase
in average guest check resulting from a September 1996 pricing
increase. We fully anticipated guest count declines in Denny's,
but felt that the check increase would have a positive net impact
on margins and profitability."
"As we indicated previously, overall sales were soft at
the start of the first quarter and continued that pattern through
the end of the period, especially at Hardee's and Quincy's,"
continued Adamson. "El Pollo Loco faced a very difficult
sales comparison with the prior year quarter, yet still recorded
an increase in restaurant profitability. Operating performance at
Coco's and Carrows continues to meet our expectations."
"The Company is proceeding with its proposed financial
restructuring plan which is designed to achieve a stronger,
healthier capital structure that will enable us to invest in the
future of our businesses," said Adamson. "The proposed
restructuring will not affect our operating subsidiaries."
On March 24, 1997, the Company filed a Form S-4 Registration
Statement with the Securities and Exchange Commission which
details the Company's restructuring plan. The plan has received
the approval of an ad hoc committee of the Company's Senior
Subordinated Debentureholders.
Due to the continued substantial debt and interest expense, as
well as a decline in operating income, the Company recorded a
first quarter net loss of $51.7 million, or $1.30 per share,
compared with a net loss of $27.3 million, or $0.73 per share, in
the prior year quarter.
Effective January 1, 1997, the Company changed its fiscal year
end from December 31 to the last Wednesday of the calendar year.
Concurrent with this change, the Company changed to a
four-four-five week quarterly closing calendar which will
generally result in four thirteen-week quarters during the year
with each quarter ending on a Wednesday. Due to the timing of
this change, the extra day impact of the first quarter of 1997
versus the prior year quarter was five days at Denny's, one day
at Hardee's and Quincy's, and seven days at El Pollo Loco.
Concept Results
Denny's first quarter restaurant operating income increased to
24.0 million, from $20.9 million in the same period last year.
The improvement in operating income was driven primarily by a
substantial increase in average check resulting from price
increases enacted late last year. Denny's company-owned
comparable store sales decreased 2.4 percent due to lower
customer traffic, but the increase in average check somewhat
offset the decline. The Denny's domestic system opened 21 new
restaurants and closed seven restaurants during the quarter.
Hardee's first quarter operating income was $2.8 million, a
decline from last year due to a 6.5 percent decrease in
comparable store sales. Quincy's recorded operating income of
$0.3 million, which also represented a decline from the prior
year quarter due to a 6.8 percent decrease in comparable store
sales.
El Pollo Loco's operating income, excluding the impact of
prior year gains on sale of restaurants, improved to $2.9 million
during he quarter, versus $2.6 million in the same period last
year. Comparable store sales declined 3.6 percent primarily due
to a difficult comparison with the prior year when comparable
store sales increased 7.9 percent. During the quarter, El Pollo
Loco opened three new domestic system restaurants.
FRD Acquisition Co., a wholly-owned subsidiary of Flagstar
Corporation and holding company for Coco's and Carrows,
contributed a full quarter of operating results for the first
quarter of 1997 but was not included in the prior year period.
Revenue and operating income for the quarter were $127.1 million
and $7.1 million, respectively. Coco's contributed $4.3 million
in operating income, while Carrows contributed $2.8 million in
operating income for the period. Comparable store sales at each
of these concepts declined 0.8 percent during the quarter. During
the quarter, Coco's opened one new domestic system restaurant and
four new international restaurants in Japan and Korea. One
international restaurant was closed during the quarter. Carrows
opened one new domestic system restaurant and closed two during
the quarter.
Flagstar is one of the nation's largest restaurant companies
with over 3,200 moderately-priced restaurants and annualized
revenue of approximately $2.7 billion. Flagstar owns and operates
the Carrows, Coco's, Denny's, El Pollo Loco and Quincy's Family
Steakhouse restaurant brands and is the largest franchisee of
Hardee's.
Certain matters discussed in this release constitute forward
looking statements and involve risks, uncertainties, and other
factors which may cause the actual performance of Flagstar
Companies, Inc., its subsidiaries and underlying concepts to be
materially different from the performance indicated or implied by
such statements. Such factors include, among others: 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 in the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (and in the Company's
subsequent quarterly reports on Form 10-Q).
FLAGSTAR COMPANIES, INC.
Statements of Consolidated Operations
(Unaudited)
Quarter Quarter
Ended Ended
(in millions, except per share amounts) 4/2/97(a) 3/31/96
Operating Revenue $ 675.8 $ 550.4
Operating Expenses:
Product costs 197.7 160.0
Payroll and benefits 256.8 214.5
Depreciation and amortization 34.7 29.0
Utilities expense 27.5 22.8
Other 136.1 96.6
652.8 522.9
Operating Income 23.0 27.5
Other Charges:
Interest and debt expense - net 68.6 57.7
Other - net 1.5 --
Loss Before Reorganization Expenses
and Taxes (47.1) (30.2)
Reorganization Expenses (b) 4.0 --
Loss Before Taxes (51.1) (30.2)
Provision For (Benefit From)
Income Taxes 0.6 (2.9)
Net Loss (51.7) (27.3)
Dividends on Preferred Stock (c) (3.5) (3.5)
Net Loss Applicable to
Common Shareholders $ (55.2) $ (30.8)
Loss Per Share Applicable to
Common Shareholders $ (1.30) $ (0.73)
Average Outstanding and Equivalent
Common Shares 42.4 42.4
NOTES:
(a) Includes results of operations of Coco's and Carrows which
were acquired on May 23, 1996. Interest and debt expense
for Coco's and Carrows for the quarter ended April 2, 1997
was $7.5 million.
(b) Reorganization expenses include professional fees and other
expenditures incurred in conjunction with the planned
reorganization under Chapter 11 of the Bankruptcy Code.
(c) Amounts for 1997 include undeclared dividends of $3.5 million.
FLAGSTAR COMPANIES, INC.
Results by Operating Entity
(Unaudited)
Quarter Quarter
Ended Ended
(in millions) 4/2/97 3/31/96
Revenue:
Denny's (d) $ 315.0 $ 305.7
Hardee's 137.5 145.1
Quincy's 64.2 68.5
El Pollo Loco 32.0 31.1
Subtotal 548.7 550.4
Coco's 71.5 --
Carrows 55.6 --
Total Revenue $ 675.8 $ 550.4
Operating Income:
Denny's (e) $ 24.0 $ 20.9
Hardee's 2.8 4.6
Quincy's 0.3 5.2
El Pollo Loco (e) 2.9 2.9
Processing operation (f) -- 2.4
Corporate and other (14.1) (8.5)
Subtotal 15.9 27.5
Coco's 4.3 --
Carrows 2.8 --
Total Operating Income $ 23.0 $ 27.5
EBITDA:
Denny's (e) $ 36.1 $ 35.0
Hardee's 12.0 14.0
Quincy's 3.3 8.1
El Pollo Loco (e) 4.3 4.3
Processing operation (f) -- 2.8
Corporate and other (12.6) (7.7)
Subtotal 43.1 56.5
Coco's 8.4 --
Carrows 6.2 --
Total EBITDA $ 57.7 $ 56.5
NOTES:
(d) Includes the revenue of the food processing operation in 1996.
(e) Operating income and EBITDA include gains on sale of
restaurants of $0.1 million in 1997 at Denny's and $0.3 million
in 1996 at El Pollo Loco.
(f) The food processing operation was sold on September 30, 1996.
EBITDA -- Operating income before depreciation and amortization
exp.
FLAGSTAR COMPANIES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions) 4/2/97(g) 12/31/96
Assets
Current Assets:
Cash and cash equivalents $ 31.8 $ 92.4
Other current assets 83.0 98.3
114.8 190.7
Long-Term Assets:
Property - net 1,153.3 1,168.6
Other 323.7 328.1
Total Assets $1,591.8 $1,687.4
Liabilities
Current Liabilities:
Current maturities of
long-term debt $1,001.0 $ 62.9
Accounts payable and other
accrued liabilities 402.7 420.4
1,403.7 483.3
Long-Term Liabilities:
Debt, less current maturities 1,226.7 2,179.4
Other 240.7 252.2
1,467.4 2,431.6
Total Liabilities 2,871.1 2,914.9
Shareholders' Deficit (1,279.3) (1,227.5)
Total Liabilities and
Shareholders' Deficit $1,591.8 $1,687.4
NOTES:
(g) Includes Coco's and Carrows, which were acquired on May 23,
1996.
FLAGSTAR COMPANIES, INC.
Statistical Data by Operating Entity
(Unaudited)
Quarter Quarter
Ended Ended Increas
Average Unit Sales (in thousands): 4/2/97 3/31/96 (Decr.)
Denny's:
Company Operated $336.3 $316.0 6.4%
Franchise $276.3 $260.1 6.2%
Hardee's $237.2 $250.4 -5.3%
Quincy's $322.5 $342.9 -6.0%
El Pollo Loco:
Company Operated $301.0 $276.0 9.1%
Franchise $220.9 $208.8 5.8%
Coco's (h):
Company $385.6 $357.2 7.9%
Franchise $441.7 $444.3 -0.6%
Carrows (h) $349.3 $323.6 7.9%
Quarter Quarter
Ended Ended Increas
Average Guest Check -- Company Operated: 4/2/97 3/31/96
(Decr.)
(Comparable Store Basis)
Denny's $5.39 $4.85 11.1%
Hardee's $3.21 $3.13 2.6%
Quincy's $6.30 $6.08 3.6%
El Pollo Loco $6.58 $6.64 -0.9%
Coco's (h) $6.60 $6.76 -2.4%
Carrows (h) $6.37 $6.13 3.9%
NOTES:
(h) Coco's and Carrows were acquired on May 23,1996. Prior year
data is provided for informational purposes only.
FLAGSTAR COMPANIES, INC.
Statistical Data by Operating Entity
(Unaudited)
Restaurant Units: 4/2/97 3/31/96
Denny's:
Company Operated 891 919
Franchise 694 610
International licensees 25 25
1,610 1,554
Hardee's 580 580
Quincy's 199 199
El Pollo Loco:
Company Operated 95 100
Franchise 139 120
International licensees 10 5
244 225
Coco's (i):
Company Operated 184 186
Franchise 5 6
International licensees 281 255
470 447
Carrows (i):
Company Operated 158 162
Franchise 1 --
159 162
3,262 3,167
NOTES:
(i) Coco's and Carrows were acquired on May 23,1996. Prior year
data is provided for informational purposes only.
CONTACT: Flagstar Companies, Inc. Investor Contact: Larry
Gosnell, 864-597-8658 Media Contact: Karen Randall, 864-597-8440