SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1
to
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): March 25, 1998
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
<PAGE>
DENAMERICA CORP.
FORM 8-K/A
AMENDMENT NO. 1
TO
FORM 8-K
CURRENT REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 25, 1998, DenAmerica Corp. (the "Company") sold 63 Denny's
restaurants and eight non-branded restaurants in 10 states to Olajuwon Holdings,
Inc. ("Olajuwon"), a Denny's franchisee, for gross proceeds of $28.7 million.
The Company utilized the cash proceeds of $25.2 million from this transaction to
(i) repay an outstanding promissory note at a $2.4 million discount from its
principal amount of approximately $15.3 million; (ii) cancel outstanding
warrants to acquire approximately 1.0 million shares of Common Stock at an
exercise price of $1.90 per share; (iii) permanently reduce its outstanding
borrowings under the term loan portion of its credit facility; and (iv) repay
certain equipment operating leases associated with the sold restaurants.
During 1997 and 1998, the Company also sold an additional 33
restaurants. These sales consist of (i) the sale of 11 non-branded restaurants
located in Michigan on April 9, 1997; (ii) the sale of 17 Denny's restaurants
located in Georgia, Alabama, and South Carolina on July 31, 1997; and (iii) the
sale of five Denny's restaurants located in Wyoming on March 13, 1998. Aggregate
proceeds to the Company from these transactions consisted of cash of
approximately $3.4 million and promissory notes in the principal amount of
$600,000. The transactions related to these sales are more fully described in
the Company's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission on April 15, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Introduction
Unaudited Condensed Consolidated Pro Forma Statements of
Operations for the Fiscal Year Ended December 31, 1997
Unaudited Condensed Consolidated Pro Forma Statements of
Operations for the Three Months Ended April 1, 1998
Notes To Unaudited Condensed Consolidated Pro Forma Statements
of Operations
<PAGE>
DenAmerica Corp.
Unaudited Condensed Consolidated
Pro Forma Statements of Operations
Introduction
The following unaudited condensed consolidated pro forma statements of
operations of DenAmerica Corp. for the fiscal year ended December 31, 1997 and
the three months ended April 1, 1998 give effect to (i) the sale of 71
restaurants to Olajuwon as if it had occurred as of January 1, 1997; (ii) the
sale of a total of 33 restaurants in three other transactions completed during
1997 and 1998 as if those sales had occurred as of January 1, 1997; (iii) the
repayment of an outstanding promissory note at a $2.4 million discount from its
principal amount of approximately $15.3 million as if the repayment had occurred
as of January 1, 1997; (iv) repayments of an aggregate of approximately $10.0
million on the term loan and revolving note portions of the Company's credit
facility, together with accrued and unpaid interest, as if those repayments had
occurred as of January 1, 1997; and (iv) the net reduction in operating expenses
that occurred as a result of employee reductions and reductions in related
administrative expenses as a result of the restaurant sales described above. See
Item 2, "Acquisition or Disposition of Assets." 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 transactions described above occurred on those dates or to project the
Company's results of operations for any future period.
DenAmerica Corp.
Unaudited Condensed Consolidated Pro Forma Statement of Operations
for the Fiscal Year Ended December 31, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Sold Companies Adjustments
Historical ------------------ ----------------------- Pro
DenAmerica Olajuwon Other Subtotal Dr Cr Forma
---------- -------- ----- -------- -- -- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Restaurant sales $ 300,579 $ 53,995 $ 11,649 $ 234,935 $ 234,935
--------- --------- --------- --------- ---------
Restaurant operating expenses:
Food and beverage cost 82,255 14,498 3,362 64,395 64,395
Payroll and payroll related costs 103,451 19,644 4,629 79,178 79,178
Other operating costs 82,305 15,121 4,022 63,162 1,405(a) 64,567
Depreciation and amortization 9,367 2,221 803 6,343 6,343
Charge for impaired assets 14,100 -- -- 14,100 (14,100)(b) 0
--------- --------- --------- --------- --------- --------- ---------
Total operating costs 291,478 51,484 12,816 227,178 1,405 (14,100) 214,483
--------- --------- --------- --------- --------- --------- ---------
Restaurant operating income (loss) 9,101 2,511 (1,167) 7,757 1,405 (14,100) 20,452
Administrative expenses 13,684 -- -- 13,684 (1,076)(c) 12,608
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) (4,583) 2,511 (1,167) (5,927) 1,405 (15,176) 7,844
Interest expenses - net 13,655 433 23 13,199 (3,589)(d) 9,610
Minority interest in joint ventures (519) -- -- (519) (519)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes (17,719) 2,078 (1,190) (18,607) 1,405 (18,765) (1,247)
Income tax provision (benefit) 3,258 -- -- 3,258 3,757(e) (499)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations ($ 20,977) $ 2,078 ($ 1,190) ($ 21,865) $ 1,405 ($ 22,522) ($ 748)
========= ========= ========= ========= ========= ========= =========
Basic and diluted income
(loss) per share ($ 1.56) ($ 0.06)
Basic and diluted weighted
average shares outstanding 13,447 13,447
</TABLE>
2
<PAGE>
DenAmerica Corp.
Unaudited Condensed Consolidated Pro Forma Statement of Operations
for the Three Months Ended April 1, 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Sold Companies Adjustments
Historical ------------------- ---------------------- Pro
DenAmerica Olajuwon Wyoming Subtotal Dr Cr Forma
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Restaurant sales $ 72,880 $ 11,536 $ 360 $ 60,984 -- -- $ 60,984
-------- -------- -------- -------- --------
Restaurant operating expenses:
Food and beverage cost 19,970 3,141 118 16,711 16,711
Payroll and payroll related costs 25,102 4,433 183 20,486 20,486
Other operating costs 19,588 3,778 217 15,593 576(a) 16,169
Depreciation and amortization 1,786 -- 8 1,778 1,778
-------- -------- -------- -------- --------
Total operating costs 66,446 11,352 526 54,568 55,144
-------- -------- -------- -------- --------
Restaurant operating income (loss) 6,434 184 (166) 6,416 5,840
Administrative expenses 3,056 -- -- 3,056 (208)(b) 2,848
-------- -------- -------- -------- --------
Operating income (loss) 3,378 184 (166) 3,360 2,992
Interest expenses - net 3,426 109 16 3,301 (854)(c) 2,447
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes
and extraordinary item (48) 75 (182) 59 576 (1,062) 545
Income tax provision (benefit) (17) -- -- (17) 194(d) 177
-------- -------- -------- -------- -------- -------- --------
Income (loss) before extraordinary
item ($ 31) $ 75 ($ 182) $ 76 $ 770 ($ 1,062) $ 368
======== ======== ======== ======== ======== ======== ========
Basic and diluted income
(loss) per share $ 0.00 $ 0.03
Basic and diluted weighted
average shares outstanding 13,447 13,447
</TABLE>
3
<PAGE>
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 for the fiscal year ended December 31, 1997:
<TABLE>
<CAPTION>
Fiscal Year Ended
December 31, 1997
-----------------
<S> <C> <C>
(a) Elimination of the gain from restaurants sold $1,405
======
(b) Elimination of capital loss on impairment of assets from Olajuwon sale ($14,100)
=======
(c) Reduction in administrative personnel and related expenses as restaurants
were sold ($1,076)
=======
(d) Reduction of net interest expense for paydown on notes and interest earned
on notes receivable
Interest expense ($3,173)
Interest income (416)
------
($3,589)
======
(e) Income tax for above adjustments at an effective rate of 40% ($3,757)
======
</TABLE>
The following explanations serve to describe the assumptions used in
determining the pro forma adjustments necessary to present the pro forma results
of operations for the three months ended April 1, 1998:
<TABLE>
<CAPTION>
Three Months Ended
April 1, 1998
-------------
<S> <C> <C>
(a) Elimination of gain from sale of Wyoming restaurants $576
====
(b) Reduction in administrative personnel and related expenses as restaurants
were sold $208
====
(c) Reduction of net interest expense for paydown on notes and interest earned
on notes receivable
Interest expense $712
Interest income 142
---
$854
====
(d) Income tax effect for above adjustments at an effective rate of 40% $194
====
</TABLE>
4
<PAGE>
(c) Exhibits.
Exhibit No. Description of Exhibit
- ----------- ----------------------
10.116 Asset Purchase Agreement dated January 27, 1998, among
DenAmerica Corp., Olajuwon Holdings, Inc., and Akinola
Olajuwon (1)
10.117 First Amendment to Asset Purchase Agreement dated March 16,
1998 between DenAmerica Corp., Olajuwon Holdings, Inc., and
Akinola Olajuwon (1)
10.118 Promissory Note dated March 25, 1998, from Olajuwon Holdings,
Inc. to DenAmerica Corp. in the principal amount of $1,800,000
(1)
10-119 Negative Working Capital Note dated March 25, 1998, from
Olajuwon Holdings, Inc. to DenAmerica Corp. in the principal
amount of $1,700,000 (1)
- -------------------------
(1) Incorporated by reference to the Company's Current Report on Form 8-K
as filed on April 9, 1998.
<PAGE>
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.
June 2, 1998 DENAMERICA CORP.
By: /s/ Todd S. Brown
-----------------------------------
Todd S. Brown
Vice President and Chief Financial
Officer
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