ALBANY, N.Y. -- Aug. 19, 1996 -- Trans World Entertainment Corporation (Nasdaq National Market: TWMC) today announced sales of $97 million for the 13 weeks ended
August 3, 1996, compared to $104 million for the same period last
year.
The net loss for the quarter narrowed by approximately 60% to
$2.4 million, or ($.25) per share, compared to a net loss of $6.1
million, or ($.63) per share, last year. Comparable store sales for
the second quarter of 1996 increased 3%.
For the 26-week year-to-date period of 1996, the Company
reported total sales of $203 million compared to $216 million for
the same period in 1995. The net loss was $5.1 million, or ($.53)
per share, compared to a net loss of $10.2 million, or ($1.05) per
share for the respective 26-week periods of 1996 and 1995.
Comparable store sales for the first half of 1996 increased 5%.
Robert J. Higgins, Trans World's Chairman, President and Chief
Executive Officer, commented, "Trans World was the first to identify
the overcapacity that affected the entire prerecorded entertainment
industry and implement a restructuring program. By moving boldly on
several fronts reducing store count by 20%, renegotiating long-term
debt and improving inventory mix and merchandising presentation
Trans World is taking advantage of opportunities in prerecorded
music and video."
Gross profit as a percentage of sales in the second quarter of
1996 increased to 35.8% from 33.9% in the second quarter of 1995.
Selling, general and administrative expenses decreased to 32.7% of
sales in the second quarter of 1996 from 36.0% in the second quarter
of 1995. This improvement was due primarily to the comparable
stores sales increase and to the receipt of $2.5 million upon the
termination of a business development agreement.
Interest expense decreased to $3.1 million in the second quarter
of 1996 from $3.8 million in the comparable period in 1995.
Although interest rates were higher in the second quarter of 1996,
amounts outstanding under the Company's loan agreements were lower
than in the same period of 1995.
On July 26, 1996, the Company finalized its loan agreements with
its lenders, at which time the Company paid down $3.5 million of its
long-term debt and resumed normal borrowing arrangements under its
revolving credit facilities.
Trans World Entertainment is a leading specialty retailer of
music and video products. The Company operates over 500 retail
stores under Record Town, Tape World, F.Y.E., Saturday Matinee and
Coconuts Music and Movies.
TRANS WORLD ENTERTAINMENT CORPORATION
INCOME STATEMENTS:
(in thousands, except per share data)
Thirteen Weeks Ended
August 3, % of July 29, % of
1996 Sales 1995 Sales
(unaudited)
Sales $96,717 100.0% $104,292 100.0%
Cost of sales 62,101 64.2% 68,977 66.1%
Gross profit 34,616 35.8% 35,315 33.9%
Selling, general and
administrative expenses 31,666 32.7% 37,558 36.0%
Depreciation and amortization 3,527 3.6% 4,110 3.9%
Loss from operations (577) -0.6% (6,353) -6.1%
Interest expense 3,106 3.2% 3,845 3.7%
Loss before income tax benefit (3,683) -3.8% (10,198) -9.8%
Income tax benefit (1,291) -1.3% (4,069) -3.9%
NET LOSS ($2,392) -2.5% ($6,129) -5.9%
NET LOSS PER SHARE ($0.25) ($0.63)
Weighted average number of
shares outstanding 9,739 9,733
Twenty-six Weeks Ended
August 3, % of July 29, % of
1996 Sales 1995 Sales
(unaudited)
Sales $203,339 100.0% $216,204 100.0%
Cost of sales 131,554 64.7% 141,235 65.3%
Gross profit 71,785 35.3% 74,969 34.7%
Selling, general and
administrative expenses 66,363 32.6% 76,291 35.3%
Depreciation and amortization 7,180 3.5% 8,355 3.9%
Loss from operations (1,758) -0.9% (9,677) -4.5%
Interest expense 6,143 3.0% 7,319 3.4%
Loss before income tax benefit (7,901) -3.9% (16,996) -7.9%
Income tax benefit (2,770) -1.4% (6,781) -3.1%
NET LOSS ($5,131) -2.5% ($10,215) -4.7%
NET LOSS PER SHARE ($0.53) ($1.05)
Weighted average number of
shares outstanding 9,737 9,726
SELECTED BALANCE SHEET HIGHLIGHTS:
(in thousands, except store data)
13 Weeks Ended 26 Weeks Ended
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
Cash and cash equivalents $7,783 $8,248 $7,783 $8,248
Merchandise inventory 168,718 207,640 168,718 207,640
Fixed assets (net) 65,442 81,162 65,442 81,162
Accounts payable 76,517 70,778 76,517 70,778
Long-term debt, less
current portion 46,024 59,716 46,024 59,716
Shareholders' equity 89,084 109,262 89,084 109,262
Stores in operation 503 616 503 616
CONTACT: MWW/Strategic Communications Inc., East Rutherford
201/507-9500
Media Contact:
Michael Kempner, mkempner@mww.com
Carreen Winters, cwinters@mww.com
Investor Contact:
Ronald Stack, rstack@mww.com
ATLANTA, GA -- Aug. 19, 1996 -- Perma-Fix Environmental
Services Inc. (NASDAQ:PESI) Monday announced that it has completed a
restructuring of the loan agreements with its two major lenders,
Heller Financial Inc. and Ally Capital Corp., whereby, among other
things, the existing events of default were waived, the financial
covenants were amended and certain other provisions of the loan
agreements were amended.
Dr. Louis F. Centofanti, president of PESI, stated that: "The
loan restructuring removes the default conditions, reduces our
interest rate and strengthens Perma-Fix's balance sheet. Combined
with the improved financial performance of the company and the
recent equity financing with an institutional investor, this puts
Perma-Fix in a much stronger position. These financial changes will
allow us to continue to grow and expand in the waste and recycling
industry."
Perma-Fix Environmental Services Inc. provides hazardous, mixed
and industrial waste management services, along with environmental
engineering and consulting services. The company is widely
recognized for meeting customer needs with technologically advanced
alternatives to traditional landfill and incinerations methods.
CONTACT: Perma-Fix Environmental Services Inc.
Dr. Louis F. Centofanti, 404/847-9990
or
Search Group Capital Inc.
Investor Relations, 404/233-6999
LAS VEGAS, NV -- Aug. 19, 1996 -- Elsinore Corp.
(ASE/PSE:ELS) Monday reported financial results for the company's
second quarter ended June 30, 1996.
Elsinore reported revenues of $15,116,000 for the second
quarter, compared with $14,032,000 for the comparable period of
1995. The company reported net income of $340,000, or $0.02 per
share on 15,891,793 weighted average shares outstanding, compared
with a net loss of $3,145,000, or $0.20 per share on 15,635,218
weighted average shares outstanding, for the second quarter of 1995.
For the six months ended June 30, 1996, the company reported
revenues of $31,002,000 compared with $29,293,000 for the same
period last year. Net income for the six-month period was $684,000,
or $0.04 per share on 15,891,793 weighted average shares
outstanding, compared with a net loss of $7,277,000, or $0.48 per
share on 15,220,853 weighted average shares outstanding for the same
period a year ago.
Operating results and cash flows improved because of the
increase in patronage, as discussed below, and the protection
afforded the company by the bankruptcy laws (contractual interest as
reflected in the accompanying condensed table of operations) as
reorganization proceedings continued during 1996.
The company reported that second-quarter revenues from the Four
Queens Hotel and Casino increased to $15,116,000 from $13,654,000.
The increase resulted primarily from an overall growth in the number
of visitors to Las Vegas and by a greater number of gaming and hotel
patrons attracted to the downtown Las Vegas Fremont Street
Experience, which features a 10-story "celestial vault" canopy with
an electronic light show choreographed to music, that opened on Dec.
13, 1995.
The Fremont Street Experience project has connected the Four
Queens and nine other major entertainment venues in a downtown
pedestrian mall that offers a total of 17,000 slot machines, 650
blackjack and other table games, 41 restaurants and 8,000 hotel
rooms.
On March 1, 1996, Elsinore announced that it had filed with the
U.S. Bankruptcy Court for the District of Nevada, a proposed Plan of
Reorganization and an accompanying Disclosure Statement related to
the company's filing for Chapter 11 protection on Oct. 31, 1995
under the U.S. Bankruptcy Code.
In a press release dated Aug. 13, 1996, the company announced
that on Aug. 8, 1996, in the Chapter 11 proceedings of Elsinore and
a number of subsidiaries pending in the United States Bankruptcy
Court for the District of Nevada, the Bankruptcy Court entered an
order (the "Confirmation Order") confirming a modified plan of
reorganization for Elsinore and certain of the other debtors.
The confirmed plan contemplates the ongoing operation of
Elsinore and at least three of its subsidiaries, Four Queens Inc.
("FQI"), Elsub Management Corporation ("Elsub") and Palm Springs
East Limited Partnership ("PSELP"). The plan calls for a
restructuring of the debts of the Elsinore entities, and it calls
for a redistribution of equity interests in the companies.
Creditors and former shareholders of Elsinore, FQI, Elsub and
PSELP will receive the distributions provided under the plan as
modified by the Confirmation Order that was entered by the
Bankruptcy Court. Distributions will be made out of cash flow
generated by the ongoing operations of the businesses, supplemented
by a $5 million rights offering and the issuance of stock in the
reorganized companies which is called for under the plan.
Trading in the company's common stock continues to be halted by
the American Stock Exchange. As previously reported, the Exchange
intends to review the company's continued listing eligibility
concurrently with its progress in the Chapter 11 proceeding. There
can be no assurance that the listings on the American Stock Exchange
and the Pacific Stock Exchange will be continued.
Elsinore owns and operates the Four Queens, a downtown Las Vegas
Hotel and Casino offering 690 rooms, meeting facilities, four
restaurants, 1050 slot machines, and numerous blackjack, craps and
other table games.
ELSINORE CORP. (Debtor in Possession)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Net revenues $ 15,116 $ 14,032 $ 31,002 $
29,293
Costs and expenses,
before interest and
reorganization items 13,921 14,666 28,665
31,308
Interest expense (contractual
interest expense of $2,348
and $4,701 for the three
and six months periods ended
June 30, 1996 respectively) 251 2,511 515
5,262
14,172 17,177 29,180 36,570
Income loss before
reorganization items 944 (3,145) 1,822
(7,277)
Reorganization items 604 -- 1,138
--
Net income (loss) $ 340 (3,145) 684
(7,277)
Income (loss) per common share $0.02 $(0.20) $0.04
$(0.48)
Weighted average number of
common shares outstanding 15,891,793 15,635,218 15,891,793
15,220,853
CONSOLIDATED BALANCE SHEET DATA
(Dollars in thousands)
(unaudited)
June 30, June 30,
1996 1995
Current assets $ 8,445 $ 6,527
Total assets 38,501 65,828
Current liabilities 7,287 14,175
Long-term debt 62,928 56,663
Shareholders' equity (deficit) $(42,757) $
(5,199)
CONTACT: Elsinore Corp.
Thomas E. Martin, 702/387-5110
or
The Financial Relations Board
Daniel Saks, 310/442-0599
AUSTIN, Texas -- Aug. 19, 1996 -- SI Diamond
Technology Inc. (NASDAQ:SIDT) Monday reported its second quarter
results and the completion of its corporate restructuring.
For the second quarter, SIDT reported revenues of $2,035,985, a
318 percent increase from the $639,127 in revenues during the 1995
second quarter. The net loss from continuing operations was
$3,969,512. The loss per share of 44 cents included an additional
charge of $923,128 related to below market conversions of the
company's Series E Preferred stock.
The company had a net loss from continuing operations of
$2,652,051, or 29 cents a share for the 1995 second quarter.
There were 11,169,930 weighted average shares outstanding for
the quarter compared to 8,108,389 weighted average shares
outstanding for the 1995 second quarter. The increase in shares was
due to the issuance of shares of the company's common stock in
private placement transactions and the conversion of Series E
Preferred stock by some holders into the company's common stock.
"Our revenues have more than tripled over the same period last
year as we continue to progress toward our goal of transforming SI
Diamond from a research and development company to a company that is
focused on increasing revenues in order to achieve profitability,"
said Marc Eller, SIDT's chairman and chief executive officer.
"Except for some fine tuning, the restructuring is essentially
complete and we expect to reap the benefits beginning in the current
(third) quarter."
Currently the company has a contract research backlog of
approximately $1.65 million compared with $3.6 million for the same
period last year. The commercial backlog as of June 30, 1996, was
approximately $1,462,000 as compared to $896,000 for the same
period.
"Interest continues in our Diamond Field Emission Lamps and we
expect to have a demonstrable unit for large area signage completed
by the end of September," stated Eller.
Austin based SI Diamond is an innovative developer of thin-film
diamond technology with potential for a variety of applications
including flat panel displays and high luminance lamps. Through its
Plasmatron subsidiary, the company also develops and installs
industrial coating systems.
SIDT's Diamond Tech One subsidiary provides advanced packaging,
assembly, and prototyping services for electronic components and
systems. SI Diamond trades on NASDAQ under the symbol "SIDT."
This press release contains forward looking information within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended,
and is subject to the safe harbor created by those sections.
The company's actual results could differ materially from those
projected in the forward looking information. Future results may be
impacted by risk factors listed from time-to-time in SIDT's SEC
reports.
SI Diamond Technology Inc. and Subsidiaries
Consolidated Balance Sheets
ASSETS June 30, Dec. 31,
1996 1995
(Unaudited)
Current assets:
Cash and cash equivalents $2,207,863 $293,593
Restricted cash 157,971 259,880
Accounts receivable, trade 1,789,994 267,318
Stock subscriptions receivable -- 9,583,750
Notes receivable 15,000 400,000
Costs and estimated earnings
in excess of billings on
uncompleted contracts 374,732 300,485
Prepaid expenses and other
assets 235,382 147,466
Total current assets 4,780,942 11,252,492
Property, plant and equipment,
net 3,334,362 4,147,849
Intangible assets, net 709,847 788,530
Net assets of discontinued
operations and assets held
for sale 754,548 513,216
Other assets, net 130,374 36,766
Total assets 9,710,073 16,738,853
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,834,954 $794,154
Notes payable 529,751 862,513
Capital lease obligations -- 190,326
Accrued liabilities 774,742 2,215,357
Billings in excess of costs
and estimated earnings on
uncompleted contracts 438,479 49,891
Total current liabilities 5,577,926 4,112,241
Notes payable, long-term 56,120 86,687
Capital lease obligations, long-term -- 77,422
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $1.00 par value,
2 million shares authorized;
Series A convertible preferred,
100 shares issued and outstanding
at June 30, 1996, and Dec. 31,
1995 ($100,000 aggregate
liquidation preference) 100 100
Series E convertible preferred,
843 shares issued and outstanding
at June 30, 1996 ($8.43 million
aggregate liquidation preference) 843 --
Common Stock, $.001 par value,
120 million shares authorized,
11,784,125 shares issued and
outstanding at June 30, 1996;
10,858,889 shares issued and
outstanding at Dec. 31, 1995 11,784 10,859
Additional paid-in capital 45,304,291 34,681,872
Preferred stock subscribed, but
unissued -- 8,905,072
Accumulated deficit (41,131,134) (30,991,571)
Unearned compensation (109,857) (143,829)
Total stockholders' equity 4,076,027 12,462,503
Total liabilities and 9,710,073 16,738,853
stockholders' equity
The accompanying notes are an integral part of the financial
statements.
SI Diamond Technology Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues $2,035,985 $639,127 $2,884,352
$863,654
Cost of sales 1,208,024 480,623 2,260,138
622,271
Selling, general and
administrative expenses 2,314,074 1,464,306 4,534,652
2,138,272
Research and development 2,509,845 1,013,277 4,637,270
2,138,056
Loss on impairment of
assets -- -- 850,000
--
Operating costs and
expenses 6,031,943 2,958,206 12,282,060 4,898,599
Other income, net 26,446 19,028 257,645
83,401
Loss from continuing
operations (3,969,512) (2,300,051) (9,140,063)
(3,951,544)
Discontinued operations
Loss from discontinued
operations -- (352,000) (649,500) (632,533)
Provision for loss on
disposition of
discontinued
operations -- -- (350,000) --
Total losses on
discontinued
operations -- (352,000) (999,500) (632,533)
Net loss
$(3,969,512)$(2,652,051)$(10,139,563)$(4,584,077)
Less preferred stock
dividend (923,128) -- (923,128)
--
Net loss applicable to
common shareholders (4,892,640) (2,652,051)(11,062,691)
(4,584,077)
Net loss per common share:
Continuing operations $(0.44) $(0.29) $(0.91)
$(0.50)
Discontinued operations -- (0.04) (0.09)
(0.08)
Net loss per common
share $(0.44) $(0.33) $(1.00) $(0.58)
Average shares
outstanding 11,169,930 8,108,389 11,014,827
7,908,439
The accompanying notes are an integral part of the financial
statements.
SI Diamond Technology Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Continuing operations:
Net loss from continuing operations $(9,140,063)
$(3,951,544)
Adjustments to reconcile net loss to net
cash required by operating activities:
Stock compensation 33,972
19,586
Depreciation and amortization expense 595,502 305,062
Revaluation of stock warrants 450,000
--
Loss on settlement of note receivable 300,000
--
Loss on impairment of net assets 850,000
--
Changes in assets and liabilities:
Accounts receivable, trade (1,522,676) 443,309
Costs and estimated earnings in excess
of billings on uncompleted contracts (74,247) 27,500
Prepaid expenses (87,916) (100,415)
Accounts payable and accrued liabilities 1,602,425 563,723
Billings in excess of costs and estimated
earnings on uncompleted contracts 388,588 (160,340)
Total adjustments 2,535,648 1,098,425
Net cash required by continuing
operations (6,604,415) (2,853,119)
Discontinued operations:
Net loss from discontinued operations (999,500)
(632,533)
Increase in net assets of discontinued
operations (141,332) --
Net cash required by discontinued
operations (1,140,832) (632,533)
Net cash required by operations (7,745,247) (3,485,652)
Cash flows from investing activities:
Capital expenditures (595,597)
(3,383,536)
Proceeds from disposition of equipment 27,265
--
Net change in intangibles and other assets (93,608)
(881,575)
Net cash required by investing
activities (661,940) (4,265,111)
Cash flows from financing activities:
Restricted cash
-- (613,134)
Proceeds from notes payable
-- 1,203,956
Repayment of notes payable (529,167)
--
Proceeds of stock issuance, net of costs 10,850,624
9,860,351
Net cash provided by financing
activities 10,321,457 10,451,173
Net increase in cash and cash equivalents 1,914,270
2,700,410
Cash and cash equivalents, beginning of year 293,593
1,687,104
Cash and cash equivalents, end of the period $2,207,863
$4,387,514
The accompanying notes are an integral part of the financial
statements.
CLEARWATER, FL -- Aug. 16, 1996 -- Checkers Drive-In
Restaurants, Inc. (Nasdaq: CHKR) announced on July 30, 1996, that a
capital management firm had successfully consummated the acquisition
of its outstanding debt under a credit facility and that waivers of
defaults were granted through August 15, 1996. Checkers announced
today that the negotiations on debt restructuring with the new
lending group continue and that the default waivers have been
extended through August 30, 1996.
Checkers Drive-in Restaurants, Inc., celebrating its 1Oth
Anniversary this year, is one of the largest double drive-thru
restaurant chains in the United States. Checkers develops, owns,
operates and franchises restaurants that offer high-quality food,
fast service and everyday value prices. Checkers is headquartered
in Clearwater, Florida and is traded on the Nasdaq Stock Market
under the symbol "CHKR".
CONTACT: James T. Holder, Vice President and Chief Financial Officer,
Checkers Drive-In Restaurants, 813-441-3500
WORCESTER, MA -- Aug. 19, 1996 -- Cambridge Biotech
Corporation (NASD-OTC-BB: CBCXQ) reported today that on August 16,
1996, the U.S. District Court (District of Massachusetts) extended
the temporary stay of the Bankruptcy Court's confirmation order
until September 18, 1996. The confirmation order had been
previously stayed by the Bankruptcy Appellate Panel for the First
Circuit until August 19, 1996. At CBC's request, the appeal of the
confirmation order was transferred to the District Court on August
14, 1996. The extension of the stay was requested by Institut
Pasteur, Pasteur Sanofi Diagnostics, and Alfa Laval Agri, AB,
pending a resolution of their motions for a temporary restraining
order and preliminary injunction. The District Court has scheduled a
hearing on the motions for September 18, 1996.
Cambridge Biotech Corporation, which filed for protection under
Chapter 11 of the United States Bankruptcy Code on July 7, 1994, is
a therapeutics and diagnostics company focusing on infectious
diseases and cancer. The Company is developing and commercializing
products which stimulate the immune system for use in treating
certain infectious diseases and specific cancers. The therapeutic
products include the Stimulon(TM) family of adjuvants, the most
advanced of which, QS-21, is in clinical development through
corporate and academic partners, and proprietary vaccines. The
proprietary vaccines include a feline leukemia vaccine currently on
the market, and in development human vaccines for pneumococcal
infections, malaria and tick-borne diseases, and animal vaccines for
bovine mastitis and canine Lyme disease. Cambridge Biotech's
diagnostic business (to be sold to bioMerieux Vitek under the
Chapter 11 plan) is primarily focused on retroviral and Lyme
diseases.
Statements in this release which relate to expectations of
management for future operations or otherwise relate to future
performance are forward looking statements. Actual results may
differ from those projected as a result of the Company's success in
emerging from bankruptcy, product demand, pricing, market
acceptance, the effect of economic conditions, intellectual
property, competitive products, risks in product and technology
development, and other risks identified in the Company's Securities
and Exchange Commission filings.
CONTACT: Alison Taunton-Rigby, President, Chief Executive Officer of
Cambridge Biotech Corporation, 508-797-5777, or Peter Feinstein,
President of Feinstein Partners, Inc., 617-577-8110
LATROBE, PA -- Aug. 19, 1996 -- The Italian Oven, Inc.
(Nasdaq: OVEN) today reported a net loss of $3.7 million or $0.85
per share, on total revenue of $5.7 million (including restaurant
sales of $4.8 million and franchise and royalty fees of $900,000)
for the second quarter ended June 30, 1996. In last year's second
quarter, the Company had a net loss of $500,000, or $.21 per share.
Of this net loss for the second quarter of 1996, $2 million is
attributable to reserves, provisions for losses and non- recurring
charges.
For the quarter ended June 30, 1996, total revenue increased by
$2.3 million to $5.7 million or 69% compared to the quarter ended
June 30, 1995. Restaurant sales at Company-owned restaurants
increased by $2.3 million to $4.8 million or 95.6% for the quarter
ended June 30, 1996, compared to the same period in 1995. For the
six months ended June 30, 1996, total revenue increased by $2.9
million to $10.0 million or 41.2% compared to the six months ended
June 30, 1995. Restaurant sales at Company-owned restaurants
increased by $3.0 million to $7.8 million or 61.2% for the six
months ended June 30, 1996, compared to the same period in 1995.
These increases in revenues for the quarter and six months were
largely the result of the addition of 14 Company-owned restaurants
during 1996. Restaurant sales for same Company-owned restaurants
declined by 6.6% during the second quarter in 1996 and by 7.8%
during the first six months of 1996 compared to the same periods in
1995. Management believes that this decline is due to a number of
factors, including adverse weather conditions in the first quarter
of 1996, industry-wide declines in restaurant sales, and price
increases implemented by the Company early in the second quarter of
1996.
During the second quarter, the Company recorded non-recurring
charges of $100,000 related to the class action securities lawsuits
recently filed against the Company, non-recurring charges of
$150,000 for additional Workers Compensation accruals and charges of
$500,000 for supplier contracts the Company does not believe it can
fulfill. The Company also recorded non- recurring charges during
the quarter ended June 30, 1996 of $800,000 to reserve for
employment agreements related to three Company officers that were
terminated and for advances made to the Company's former Chairman
and Chief Executive Officer. The Company also reserved $400,000 for
a loan previously made to The Italian Oven National Advertising
Fund, Inc.
During the first six months of 1996, the Company incurred losses
from operations of $3.8 million. The Company has also utilized all
of the cash proceeds from the initial public offering in November
1995, and has not been able to obtain alternate sources of financing
to cover immediate and future cash needs for general operating
purposes. At June 30, 1996, the current liabilities of the Company
exceeded the current assets by $5.6 million. The first six months
of 1996 has shown a decrease in cash and cash equivalents of $11.3
million. The notes to the Company's financial statements provide
that these factors, among others, create a substantial doubt about
the Company's ability to continue as a going concern.
However, management is attempting to resolve the current
shortage of operating capital by selling certain assets, seeking
alternate sources of financing and by restructuring the corporate
functions in an effort to reduce general and administrative costs.
To date, the Company has taken various steps, including, as
previously announced by the Company, terminating or suspending
without pay 10 employees (25% of its corporate staff) at its
Latrobe, Pennsylvania headquarters, selling its Erie and Cranberry,
Pennsylvania restaurants and entering into agreements with
landlords, construction contractors and trade creditors to defer
current payables. The Company also reached agreement with its
principal supplier to continue supplying food and restaurant
supplies to the Company's restaurants. In this connection, the
Company delivered its $1.1 million note to the supplier. This note
requires the Company to make five daily installment payments per
week of $30,000 through December 30, 1996, with all outstanding
amounts due and payable on December 31, 1996. To collateralize
these obligations, the Company granted to this supplier a security
interest in substantially all of the Company's assets. In addition,
as previously announced, the Company has engaged Wheat, First
Securities, Inc. to assist and advise the Company in seeking to
obtain suitable financing of up to $4 million and to explore
potential strategic partnerships.
J. Garvin Warden of Cornerstone Capital, Inc., the Company's
interim CEO, stated: "Although results for the quarter are
disappointing, since the end of the second quarter, when Cornerstone
was brought in as the Company's interim manager, we have taken
important steps to improve operations. We have seen, and may see
during the third quarter, reserves, provisions for losses and non-
recurring charges of a kind customarily associated with
restructurings of the type The Italian Oven is undertaking. We are,
however, pleased with the cost controls implemented by the Company
to date, and we plan to take all appropriate steps to improve
operations."
Separately, Michael B. Understein, the Company's COO, added:
"Obviously, we are not pleased with the results for the second
quarter, but the operations of the Company's three new Kansas City
restaurants continue to be encouraging. These restaurants have been
opened in free standing buildings, and each has adopted a casual
dining concept structured to appeal more strongly to adults. We
have been encouraged by the strong sales at these restaurants, which
underscore the strength of The Italian Oven concept."
The Italian Oven, Inc. operates and franchises Italian-theme,
casual dining restaurants.
The Company's Statements of Operations follows (footnotes omitted):
THE ITALIAN OVEN, Inc.
Consolidated Statements of Operations
(Unaudited)
Quarter Ended Six
Months Ended
June 30, June 30,
1996 1995 1996
1995
REVENUE:
Restaurant sales $4,752,965 $2,430,101
$7,848,484$4,869,309
Franchise and development fees237,000 232,832 756,125 883,832
Royalty fees 684,339 693,742 1,388,3091,321,988
Total revenue 5,674,304 3,356,675 9,992,9187,075,129
COSTS AND EXPENSES
Costs of restaurant sales 1,315,957 644,767 2,132,1321,309,897
Other restaurant expenses:
Restaurant labor expenses 1,986,545 858,023 3,321,0451,764,159
Occupancy and other costs 1,362,289 598,241 2,135,6381,236,646
General and administrative 2,881,737 1,486,387 4,349,6182,996,953
Provision for employment
agreements 445,000 -0- 445,000 -0-
Provision for losses
on advances and loans
to related parties 732,450 -0- 732,450 -0-
Depreciation
and amortization 494,242 157,005 760,945 318,998
Total costs and expenses 9,218,220 3,744,423 13,876,8287,626,653
Loss from operations (3,543,916) (387,748) (3,883,910)(551,524)
OTHER INCOME (EXPENSE):
Equity in loss
of joint venture (8,525) (34,054) (28,933) (65,541)
Interest income 34,512 -0- 173,984 2,637
Interest expense (54,913) (34,840) (75,587) (66,299)
Other income (expense), net (3,478) 14,043 (2,885) 25,855
Total other
income (expense) (32,404) (54,851) 66,579(103,348)
Loss before taxes (3,576,320) (442,599) (3,817,331)(654,872)
PROVISION FOR INCOME TAXES (107,811) -0- (5,493) (375)
Net loss (3,684,131) (442,599) (3,822,824)(655,247)
UNDECLARED DIVIDENDS ON
PREFERRED STOCK -0- (53,221) -0-(107,503)
ACCRETION OF DISCOUNT ON
PREFERRED STOCK -0- (1,139) -0- (2,279)
NET LOSS APPLICABLE TO
COMMON STOCK $(3,684,131) $(496,959)
$(3,822,824)$(765,029)
NET LOSS PER COMMON SHARE $(0.85) $(0.21) $(0.88) $(0.32)
SHARES USED IN COMPUTING
PER SHARE AMOUNTS 4,351,991 2,067,168 4,339,991 2,067,166