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EXHIBIT A
DIGITAL CREATIVE DEVELOPMENT CORPORATION
(FORMERLY ARTHUR TREACHER'S, INC.)
Summary Results of Operations
June 30, 2000 and 1999
2000 1999
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Total revenues $13,557,272 $21,531,829
Total operating expenses 14,482,761 26,571,148
Loss from operations (925,489) (5,039,319)
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Other expenses (228,809) (807,400)
Net loss (1,154,298) (5,846,719)
Undeclared preferred stock dividends (122,280) (102,390)
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Net loss for common shareholders $(1,276,578) $(5,949,109)
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The Company's reported total revenues of $13,557,272 for the fiscal year ended
June 30, 2000, a decrease of 37.0% or $7,974,557, compared to $21,531,829 for
the fiscal year ended June 30, 1999. The decrease is primarily attributed to the
franchising of 21 Company owned restaurants to existing franchisees in the three
month period ended September 26, 1999 and the additional franchising of 6
Company owned restaurants to existing franchisees in the three month period
ended December 26, 1999 and the lease termination of two restaurants compared to
the same period in the previous fiscal year.
The Company recognized a decrease in net restaurant sales (defined as gross
restaurant sales less coupons, promotion cost and discounts) of 39.3% or
$7,480,866, to $11,534,144 for the fiscal year ended June 30, 2000, compared to
$19,015,010 for the fiscal year ended June 30, 1999. The decrease is primarily
attributed to the franchising of 21 Company owned restaurants to existing
franchisees in the first three month period ended September 26, 1999, the
additional franchising of 6 Company owned restaurants to existing franchisees in
the three month period ended December 26, 1999 and the lease termination of two
restaurants compared to the same period in the previous fiscal year. While total
net sales decreased 39.3%, same store net sales comparisons for stores operated
for the full twelve months, decreased by 2.0% or $217,878 to $10,900,615 for the
fiscal year ended June 30, 2000, compared to $11,118,493 for the fiscal year
ended June 30, 1999.
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Franchise and other income increased 48.2% or $468,982 to $1,440,592 for the
fiscal year ended June 30, 2000, compared to $971,610 for the fiscal year ended
June 30, 1999. The increase was partially due to the timeliness of the receipt
of marketing allowances from the Company's suppliers, and the amortization of
the excess conversion funds from the change in the Company's major supplier.
Other income form this conversion fund increased $242,253 to $323,004 for the
fiscal year ended June 30, 2000, compared to $80,751 for the fiscal year ended
June 30, 1999.
The Company's total costs and expenses decreased 45.5% or $12,088,387 to
$14,482,761 for the fiscal year ended June 30, 2000, compared to $26,571,148 for
the fiscal year ended June 30, 1999. The decrease is primarily attributed to the
franchising of 21 Company owned restaurants to existing franchisees in the first
three month period ended September 26, 1999, the additional franchising of 6
Company owned restaurants to existing franchisees in the three month period
ended December 26, 1999 and the lease termination of two restaurants compared to
the same period in the previous fiscal year.
Interest expense increased $53,081 or 30.2% to $228,809 for the fiscal year
ended June 30, 2000, compared to $175,728 for the fiscal year ended June 30,
1999. The increase in interest expense was due to new debt taken on by the
Company.
Depreciation and amortization decreased 38.3% or $460,944 to $743,377 for the
fiscal year ended June 30, 2000, compared to $1,204,321 for the fiscal year
ended June 30, 1999. The decrease is primarily attributed to the franchising of
21 Company owned restaurants to existing franchisees in the first three month
period ended September 26, 1999 and the additional franchising of 6 Company
owned restaurants to existing franchisees in the three month period ended
December 26, 1999 and the lease termination of two restaurants compared to the
same period in the previous fiscal year.
The Company considers earnings before interest, taxes, depreciation and
amortization to be another important indicator of performance. For the fiscal
year ended June 30, 2000, earnings before interest, taxes, depreciation and
amortization increased by 97.3% or $2,363,843 to a loss of ($65,872) compared to
a loss of ($2,429,715) for the fiscal year ended June 30, 1999. This improvement
is partially attributed to the franchising of 27 Company owned restaurants and
the lease termination of two restaurants compared to the same period in the
previous fiscal year.
