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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 3 TO CURRENT REPORT ON FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 3, 1996
DENAMERICA CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 1-13226 58-1861457
- ------------------------------ -------------------- ---------------------
(State or other (Commission File No.) (IRS Employer ID No.)
jurisdiction of incorporation)
7373 N. Scottsdale Road, Suite D-120, Scottsdale, Arizona 85253
- ---------------------------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (602) 483-7055
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DENAMERICA CORP.
FORM 8-K/A
AMENDMENT NO. 3 TO
CURRENT REPORT ON FORM 8-K
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND
EXHIBITS.
(A) CONSOLIDATED FINANCIAL STATEMENTS OF BLACK-EYED PEA U.S.A. INC. AND
SUBSIDIARIES(1)
Independent Auditors' Report
Consolidated Balance Sheets as of April 1, 1996 and April 3, 1995
Consolidated Statements of Operations for the Years Ended
April 1, 1996, April 3, 1995, and March 28, 1994
Consolidated Statements of Stockholders' Equity for the Years
Ended April 1, 1996, April 3, 1995, and March 28, 1994
Consolidated Statements of Cash Flows for the Years Ended
April 1, 1996, April 3, 1995, and March 28, 1994
Notes to Consolidated Financial Statements
(1) Incorporated by reference to the Registrant's Form 8-K/A
Amendment No. 1 to Current Report on Form 8-K as filed on
September 16, 1996.
(B) PRO FORMA FINANCIAL STATEMENTS.
Introduction
Unaudited Condensed Consolidated Pro Forma Statement of Operations
For the Year Ended December 27, 1995
Unaudited Condensed Consolidated Statement of Operations For the
27-Week Period Ended July 3, 1996
Notes to Unaudited Condensed Consolidated Pro Forma Statements of
Operations
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DENAMERICA CORP.
UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS
INTRODUCTION
On March 29, 1996, Denwest Restaurant Corp. ("DRC") merged with and
into American Family Restaurants, Inc. ("AFR"), with AFR as the surviving
corporation (the "Merger"). In connection with the Merger, the name of AFR was
changed to DenAmerica Corp (the "Company"). Upon consummation of the Merger,
the former shareholders of DRC owned an aggregate of approximately 53.0% of
the Company's outstanding Common Stock. Accordingly, the Merger has been
accounted for as a reverse purchase under generally accepted accounting
principals, pursuant to which DRC is considered the acquiring company for
accounting purposes, even though the Company is the surviving legal entity. As
a result, the historical financial statements of DRC are the continuing
historical financial statements of the Company. The transactions related to
the Merger are more fully described in the Company's Current Report on
Form 8-K as filed with the Securities and Exchange Commission on April 15,
1996, as amended by Form 8-K/A as filed by the Company on June 12, 1996.
On July 3, 1996, the Company acquired all of the issued and
outstanding common stock of Black-eyed Pea U.S.A., Inc. ("BEP") (the "BEP
Acquisition"). The purchase price for the stock of BEP consisted of cash of
approximately $50.0 million and a promissory note in the principal amount of
$15.0 million issued to the seller of BEP (the "BEP Purchase Note"). In
connection with the BEP Acquisition, the Company repaid all of the $6.0 million
principal amount outstanding on its Series A 13% Subordinated Notes due 2003
(the "Series A Notes"), plus accrued and unpaid interest on the Series A Notes.
The Company repaid the Series A Notes by paying cash of approximately $5.2
million and by issuing 250,000 shares of Common Stock valued at $4.00 per share
to the holder of the Series A Notes.
The following unaudited condensed consolidated pro forma statements of
operations of DenAmerica Corp. for the year ended December 27, 1995 and the
27-week period ended July 3, 1996, give effect to (i) the acquisition of BEP
which had an effective accounting date of June 24, 1996, as if it occurred at
the beginning of the period; (ii) the reverse purchase accounting for the
acquisition of AFR by DRC as of March 27, 1996, as if it had occurred at the
beginning of the period; (iii) the repayment of the $6.0 million outstanding
principal of the Series A Notes, together with accrued and unpaid interest on
the Series A Notes, as if it had occurred at the beginning of each period; and
(iv) the net reduction in operating expenses of AFR and BEP after the Merger and
the BEP Acquisition that occurred as a result of employee terminations, closing
of duplicate administrative facilities, or contractual changes. The financial
statements of AFR and BEP for the fiscal year ended December 27, 1995, include
(a) AFR's financial statements for its fiscal year ended September 27, 1995, and
(b) BEP's financial statements for its fiscal year ended April 1, 1996. The
financial statements of AFR and BEP for the 27-week period ended July 3, 1996
include, prior to their acquisition by the Company, (1) AFR's financial
statements for the three-month period ended March 27, 1996, and (2) BEP's
financial statements for the period from January 9, 1996 to June 24, 1996. The
unaudited condensed consolidated pro forma statements of operations presented
herein do not purport to represent what the Company's actual results of
operations would have been had the Merger, the BEP Acquisition, or the other
transactions described above occurred on those dates or to project the Company's
results of operations for any future period.
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DENAMERICA CORP.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA
STATEMENT OF OPERATIONS FOR THE
FISCAL YEAR ENDED DECEMBER 27, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUIRED PRO FORMA ADJUSTMENTS
COMPANIES DR(Cr)
HISTORICAL ------------------------- --------------------------- PRO
DENAMERICA AFR BEP AFR BEP FORMA
---------- --- --- --- --- -----
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Restaurant sales:
Denny's restaurants ................... $ 70,429 $ 74,679 $ -- $ -- $ -- $ 145,108
Black-eyed Pea restaurants ............ -- -- 145,455 -- -- 145,455
Other restaurants ..................... 4,254 32,218 -- -- -- 36,472
--------- ---------- --------- --------- ------- -----------
Total restaurant sales ................ 74,683 106,897 145,455 -- -- 327,035
Restaurant operating expenses:
Cost of food and beverage.............. 20,343 30,529 39,914 (328) (a) -- 90,458
Payroll and payroll related costs...... 25,025 36,329 48,897 (164) (b) -- 110,087
Depreciation and amortization.......... 2,936 3,462 8,792 (212) (c) (7,412) (aa) 7,566
Other restaurant operating costs....... 19,213 27,654 35,021 (239) (d) 7,556 (bb) 89,205
Provision for restaurant closures...... -- -- 10,225 -- -- 10,225
Provision for loss on impairment
of assets............................ 523 -- 50,384 -- (50,384) (cc) 523
--------- ---------- --------- -------- -------- -----------
Total restaurant operating
expenses............................. 68,040 97,974 193,233 (943) (50,240) 308,064
Restaurant operating income (loss)......... 6,643 8,923 (47,778) 943 50,240 18,971
Administrative expenses.................... 3,380 5,166 8,588 (1,869) (e) (3,982) (dd) 11,283
--------- ---------- --------- ------ -------- -----------
Operating income (loss).................... 3,263 3,757 (56,366) 2,812 54,222 7,688
Other (income) expense..................... -- (156) 717 -- -- 561
Interest expense, net...................... 2,467 1,714 5,362 3,640 (f) (4,162) (ee) 9,556
535 (g)
--------- ---------- --------- -------- -------- -----------
Income (loss) before minority
interest in joint ventures
and income taxes....................... 796 2,199 (62,445) (1,363) 58,384 (2,429)
Minority interest in joint ventures........ (291) 85 -- -- -- (206)
--------- ---------- --------- -------- -------- -----------
Income (loss) before income taxes.......... 505 2,284 (62,445) (1,363) 58,384 (2,635)
Income taxes............................... 305 578 (12,877) (341) (h) 11,334 (ff) (1,001)
--------- ---------- --------- -------- -------- -----------
Income (loss) from continuing
operations............................. $ 200 $ 1,706 $ (49,568) $ (1,022) $ 47,050 $ (1,634)
========= ========== ========= ======== ======== ===========
Income (loss) from continuing
operations per common
and common equivalent share $ 0.28 $ (0.13)
========== ===========
Weighted average number of common
and common equivalent shares
outstanding(i) 6,171,444 13,108,944
========= ==========
</TABLE>
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DENAMERICA CORP.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA
STATEMENT OF OPERATIONS FOR THE
27-WEEK PERIOD ENDED JULY 3, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUIRED PRO FORMA ADJUSTMENTS
COMPANIES DR(Cr)
HISTORICAL ------------------------- --------------------------- PRO
DENAMERICA AFR BEP AFR BEP FORMA
---------- --- --- --- --- -----
(13 weeks) (24 weeks)
<S> <C> <C> <C> <C> <C> <C>
Restaurant sales:
Denny's restaurants................ $ 64,078 $ 20,417 $ -- $ -- $ -- $ 84,495
Black-eyed Pea restaurants......... 3,402 -- 66,645 -- -- 70,047
Other restaurants.................. 11,693 8,047 -- -- -- 19,740
----------- -------- -------- -------- -------- ----------
Total restaurant sales............. 79,173 28,464 66,645 -- -- 174,282
Restaurant operating expenses:
Cost of food and beverage.......... 21,971 8,628 19,832 (79) (a) -- 50,352
Payroll and payroll related costs.. 27,416 11,686 20,206 -- -- 59,308
Depreciation and amortization...... 2,836 1,134 4,231 (322) (c) (3,541) (aa) 4,338
Other restaurant operating costs... 20,074 8,726 13,745 -- 3,778 (bb) 46,323
Provision for restaurant closures.. -- -- 10,225 -- -- 10,225
Provision for loss on impairment
of assets........................ -- -- 50,384 -- (50,384) (cc) --
----------- -------- -------- -------- --------- ----------
Total restaurant operating
expenses......................... 72,297 30,174 118,623 (401) (50,147) 170,546
Restaurant operating income (loss)..... 6,876 (1,710) (51,978) 401 50,147 3,736
Administrative expenses................ 3,181 1,687 5,543 (467) (e) (3,240) (dd) 6,704
----------- -------- -------- -------- -------- ----------
Operating income (loss)................ 3,695 (3,397) (57,521) 868 53,387 (2,968)
Other (income) expense................. -- (31) 229 -- -- 198
Interest expense, net.................. 3,651 583 2,549 910 (f) (1,859) (ee) 5,968
134 (g)
----------- -------- -------- -------- -------- ----------
Income (loss) before minority
interest in joint ventures
and income taxes................... 44 (3,949) (60,299) (176) 55,246 (9,134)
Minority interest in joint ventures.... (11) 95 -- -- -- 84
----------- -------- -------- -------- -------- ----------
Income (loss) before income taxes...... 33 (3,854) (60,299) (176) 55,246 (9,050)
Income taxes........................... 13 (1,156) (11,699) (14) (h) 9,353 (ff) (3,503)
----------- -------- -------- -------- -------- ----------
Income (loss) from continuing
operations......................... $ 20 $ (2,698) $(48,600) $ (162) $ 45,893 $ (5,547)
=========== ======== ======== ======= ======= ===========
Income (loss) from continuing
operations per common
and common equivalent share $ 0.00 $ (0.54)
=========== ===========
Weighted average number of common
and common equivalent shares
outstanding(i) 10,293,000 10,293,000
=========== ===========
</TABLE>
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DENAMERICA CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
The following explanations serve to describe the assumptions used in
determining the pro forma adjustments necessary to present the pro forma results
of operations of AFR and DRC for the year ended December 27, 1995 and the
27-week period ended July 3, 1996:
<TABLE>
<CAPTION>
27-WEEK
FISCAL PERIOD
YEAR ENDED ENDED
DEC. 27, 1995 JULY 3, 1996
------------- ------------
<S> <C> <C>
(a) Adjust food costs for discounts not taken by AFR $ (328) $ (79)
========= ========
(b) Adjustment for inclusion of DRC employees under
the new workers' compensation costs $ (164) $ -
========= ========
(c) Adjustment for new depreciation and amortization for AFR
Property and equipment 1,700 425
Goodwill 1,550 387
--------- --------
3,250 812
Amount recorded in financial statements 3,462 1,134
--------- --------
Pro forma adjustment $ (212) $ (322)
========= ========
(d) Adjustment for inclusion of DRC under the new insurance $ (239) $
========= ========
(e) Adjustment for consolidation of administrative expenses $ (1,869) $ (467)
========= ========
(f) Adjustment for additional interest on subordinated notes
Interest expense at 13% $ 3,153 $ 788
Amortization of discount 487 122
--------- --------
$ 3,640 $ 910
========= ========
(g) Adjustment for additional interest expense
Additional borrowings of $5,096 for Merger-related
expenses at an effective rate of 10.5% $ 535 $ 134
========= ========
(h) Adjustment for income taxes for above adjustments
at an effective rate of 38% $ (341) $ (14)
========= ========
</TABLE>
(i) The weighted average number of common shares outstanding includes the
number of common shares of AFR outstanding as of the Merger increased
by the number of shares issued to the former shareholders of DRC in
connection with the Merger
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DENAMERICA CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
The following explanations serve to describe the assumptions used in
determining the pro forma adjustments necessary to present the pro forma results
of operations of BEP for the year ended December 27, 1995 and the 24-week
period ended July 3, 1996:
<TABLE>
<CAPTION>
24-WEEK
FISCAL PERIOD
YEAR ENDED ENDED
DEC. 27, 1995 JULY 3, 1996
------------- ------------
<S> <C> <C> <C>
(aa) Adjustment for new depreciation and amortization for BEP
principally arising from the sale and leaseback of restaurant
property and equipment:
Property and equipment $ 1,380 $ 690
Amount recorded in financial statements 8,792 4,231
--------- ---------
Pro forma adjustment $ (7,412) $ (3,541)
--------- ---------
(bb) Adjustment to reflect new operating lease payments for
land, building and equipment which were sold
and leased back $ 7,556 $ 3,778
========= =========
(cc) Adjustment to reflect the elimination of the historical
provision for loss on impairment of assets resulting
from the sale to DenAmerica $ (50,384) $ (50,384)
========= =========
(dd) Adjustment for consolidation of administrative expenses
arising from the elimination of employees and other costs
when administrative facilities were consolidated $ (3,982) $ (3,240)
========= =========
(ee) Adjustment to eliminate interest on historical debt
agreements at acquisition date and to add interest
on the BEP Purchase Note:
Elimination of historical interest $ (5,182) $ (2,369)
Interest on the BEP Purchase Note 1,800 900
Elimination of interest on the Series A Notes (780) (390)
--------- ---------
$ (4,162) $ (1,859)
========= =========
(ff) Adjustment for income taxes for the above adjustments
at an effective rate of 38% $ 11,334 $ 9,353
========= =========
</TABLE>
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(c) EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
2.5 Stock Purchase Agreement dated May 31, 1996, between BEP
Holdings, Inc. and DenAmerica Corp.(1)
4.6 Supplemental Indenture (Series B Notes) between DenAmerica Corp.
and State Street Bank and Trust Company, as trustee.(1)
4.7 Common Stock Purchase Warrant dated July 3, 1996, issued to BEP
Holdings, Inc.(1)
4.8 Common Stock Purchase Warrant dated July 3, 1996, issued to
Banque Paribas.(1)
10.92A Amended and Restated Credit Agreement dated as of July 3, 1996,
among DenAmerica Corp., the Banks named therein, and Banque
Paribas, as Agent.(1)
10.96 Senior Subordinated Promissory Note dated July 3, 1996, in the
principal sum of $15,000,000, payable by DenAmerica Corp. to BEP
Holdings, Inc.(1)
10.97 Registration Rights Agreement dated as of July 3, 1996, between
DenAmerica Corp. and BEP Holdings, Inc.(1)
10.98 Intercreditor Agreement among DenAmerica Corp., certain holders
of DenAmerica's Series B Notes, and State Street Bank and Trust
Company.(1) 10.99 Sale and Lease Agreement dated July 3, 1996,
among FFCA Acquisition Corporation, Black-eyed Pea U.S.A., Inc.,
and Texas BEP, L.P.(1)
10.100 Form of Lease dated July 3, 1996, between FFCA Acquisition Corp.
and DenAmerica Corp.(1)
10.101 Form of Sublease dated July 3, 1996, between DenAmerica Corp.
and Black-eyed Pea U.S.A., Inc.(1)
10.102 Form of Sublease dated July 3, 1996, between DenAmerica Corp.
and Texas BEP, L.P.(1)
10.103 Equipment Purchase Agreement and Bill of Sale dated July 3,
1996, between LH Leasing Company, Inc. and Black-eyed Pea
U.S.A., Inc.(1)
10.104 Equipment Purchase Agreement and Bill of Sale dated July 3,
1996, between LH Leasing Company, Inc. and Texas BEP, L.P.(1)
10.105 Equipment Lease dated July 3, 1996, between LH Leasing Company,
Inc. and DenAmerica Corp.(1)
10.106 Equipment Sublease dated July 3, 1996, between DenAmerica Corp.
and Black-eyed Pea, U.S.A., Inc.(1)
10.107 Equipment Sublease dated July 3, 1996, between DenAmerica Corp.
and Texas BEP, L.P.(1)
10.108 Asset Purchase Agreement effective as of July 3, 1996, among
Mid-American Restaurants, Inc., Haig V. Antranikian, and
DenAmerica Corp.(1)
21.2 List of Subsidiaries of DenAmerica Corp.(1)
23.2 Consent of KPMG Peat Marwick LLP(2)
- -------------------
(1) Incorporated by reference to the Registrant's Current Report on Form 8-K
as filed on July 18, 1996.
(2) Incorporated by reference to the Registrant's Form 8-K/A Amendment No. 2
to Current Report on Form 8-K as filed on November 1, 1996.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
November 4, 1996 DENAMERICA CORP.
By: /s/ Todd S. Brown
---------------------------
Todd S. Brown
Vice President and
Chief Financial Officer
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