FOG CUTTER CAPITAL GROUP, INC. REPORTS THIRD QUARTER 2008 OPERATING RESULTS
November 14, 2008
| FOR: |
FOG CUTTER CAPITAL GROUP INC. |
| CONTACT: |
Fog Cutter Capital Group Inc. |
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(503) 721-6500 Andrew A. Wiederhorn, Chairman and CEO |
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(503) 721-6500 R. Scott Stevenson, Chief Financial Officer |
For Immediate Release
FOG CUTTER CAPITAL GROUP INC.
REPORTS THIRD QUARTER 2008 OPERATING RESULTS
PORTLAND, Ore. — November 14, 2008 – Fog Cutter Capital Group Inc. (OTCBB: FCCG.OB) reported a net loss of $4.4 million or $0.55 per share for the three months ended September 30, 2008, compared to net income of $65,000 or $0.01 per share for the third quarter of 2007. The Company reported a net loss of $9.2 million or $1.15 per share for the nine months ended September 30, 2008, compared to a net loss of $7.0 million or $0.88 per share for the same period of 2007.
The Company’s Fatburger restaurant business segment continues to operate in a growth stage, which the Company anticipates will yield long term value. To date during 2008, Fatburger has opened nine new franchise locations, one new company owned location in Hong Kong and acquired ownership of three existing franchise restaurants. The Company and its franchisees anticipate additional expansion in the next six to twelve months in Florida, Maryland / DC, Illinois, Pennsylvania, Nevada, Canada, Connecticut, California, Michigan, Nebraska, Washington, Saudi Arabia, Kuwait, Indonesia, Dubai and Hong Kong. The Company anticipates that approximately 6 new domestic and international restaurant locations will be opened during the remainder of 2008 and is projecting the opening of an additional 20 to 30 new domestic and international restaurants in 2009. The Company and its franchisees continue to evaluate the challenging credit and capital markets in an effort to obtain financing under reasonable terms to facilitate this expansion.
Fatburger Operations
Fatburger, “The Last Great Hamburger Stand”®, opened its first restaurant in Los Angeles in 1952. There are currently 93 Fatburger restaurants located in 13 states, Canada, Hong Kong and Macao. Fatburger specializes in fresh, made to order hamburgers and other specialty sandwiches. French fries, homemade onion rings, hand-scooped ice cream shakes and soft drinks round out the menu. Franchisees currently own and operate 55 of the Fatburger locations.
For the nine months ended September 30, 2008, company-owned restaurant sales increased 7.2% to $23.6 million from $22.0 million for the same period in 2007. For the three months ended September 30, 2008, company-owned restaurant sales increased 8.3% to $7.8 million from $7.2 million for the same period in 2007. This increase was primarily the result of the addition of four company-owned restaurants in the latter part of 2007 and two more stores in the first quarter of 2008. Same store sales for company-owned restaurants open during all of 2007 decreased 3.6% for the first nine months of 2008 but increased 1.4% in the third quarter compared to the same periods in 2007.
Franchise royalty revenue increased to $1.7 million for the first nine months of 2008 compared to $1.6 million for the same period in 2007 and increased to $0.6 million for the three months ended September 30, 2008 compared to $0.5 million for the same period in 2007. This increase was primarily the result of new franchise locations being opened in 2008. Same store sales for franchisees decreased 3.8% for the first nine months of 2008, however, the decrease in comparable store sales had decreased to 1.3% in the third quarter.
System-wide same store sales decreased 3.7% during the first nine months of 2008 compared to the same period in 2007, but only decreased 0.1% in the third quarter of 2008. In order to improve overall operations, two underperforming franchise locations and six company-owned locations have been closed in 2008.
Other Operations
In addition to restaurant operations through Fatburger, the Company currently conducts operations in two other business segments: (1) manufacturing activities conducted through its DAC International subsidiary; and (2) real estate operations. The Company is continuing its strategy to dispose of its non-core businesses in order to focus on the Fatburger expansion
Manufacturing Operations
The Company’s manufacturing activities are conducted through DAC International, a supplier of computer controlled lathes and milling machinery for the production of eyeglass, contact, and intraocular lenses. During the first nine months of 2008, DAC recorded total sales of $8.8 million and had an additional order backlog at September 30, 2008 of $5.4 million.
Real Estate Operations
As of September 30, 2008 the Company owned an apartment building through an equity participating loan to a special purpose Spanish corporation. The property consists of 8 residential and 2 commercial units located in Barcelona, Spain. The Company is holding the building for sale. During the quarter ended September 30, 2008 the Company sold a similar building in Spain for cash proceeds of approximately $4.5 million. Approximately $3.2 million of the proceeds were used to partially repay two outstanding notes payable.
Forward Looking Statements
Certain statements contained herein and certain statements contained in future filings by the Company with the SEC may not be based on historical facts and are “Forward-Looking Statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-Looking Statements are based on various assumptions and events (some of which are beyond the Company’s control) and may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Actual results could differ materially from those set forth in Forward-Looking Statements due to a variety of factors, including, but not limited to the Risk Factors identified herein and the following:
- economic factors, particularly in the market areas in which the Company operates;
- the financial and securities markets and the availability of and costs associated with sources of liquidity;
- competitive products and pricing;
- the real estate market, including the residential real estate market in Barcelona, Spain;
- the ability to sell assets to maintain liquidity;
- fiscal and monetary policies of the U.S. Government;
- changes in prevailing interest rates;
- changes in currency exchange rates;
- acquisitions and the integration of acquired businesses;
- performance of retail/consumer markets, including consumer preferences and concerns about diet;
- effective expansion of the Company’s restaurants in new and existing markets;
- profitability and success of franchisee restaurants;
- availability of quality real estate locations for restaurant expansion;
- the market for Centrisoft’s software products;
- credit risk management; and
- asset/liability management
Except as may be required by law, the Company does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions which may be made to any Forward-Looking Statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. The following financial results should be read in conjunction with the Form 10-Q filed with the Securities and Exchange Commission on November 13, 2008.
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