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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO REPORT ON FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): March 29, 1996
DENAMERICA CORP.
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(Exact name of registrant as specified in its charter)
GEORGIA 1-13226 58-1861457
- ---------------------------- --------------------- ---------------------
(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of incorporation)
7373 N. Scottsdale Road, Suite D-120, Scottsdale, Arizona 85253
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (602) 483-7055
American Family Restaurants, Inc.
3000 Northwoods Parkway, Suite 235
Norcross, Georgia 30071
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(Former name or former address, if changed since last report)
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DENAMERICA CORP.
FORM 8-K/A
CURRENT REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
THE MERGER
Pursuant to the Amended and Restated Agreement and Plan of Merger dated
as of August 9, 1995 (the "Merger Agreement") between American Family
Restaurants, Inc. ("AFR") and Denwest Restaurant Corp. ("DRC"), on March 29,
1996 DRC merged with and into 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").
Prior to the merger, DRC operated 102 family-oriented, full-service
restaurants in 21 states in the western and midwestern United States. Of the 102
restaurants, 82 are Denny's restaurants and 20 currently are operated under the
"Kettle" trade name. The Company intends to continue operating the restaurants
previously operated by DRC.
ACCOUNTING TREATMENT
As a result of the Merger, the former shareholders of DRC currently own
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
will be the continuing historical financial statements of the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND
EXHIBITS.
(A) FINANCIAL STATEMENTS OF DENWEST RESTAURANT CORP.(1)
Independent Auditors' Report
Consolidated Balance Sheets as of December 28, 1994 and
December 27, 1995
Consolidated Statements of Operations for the Years
Ended December 30, 1993, December 28, 1994, and December 27, 1995
Consolidated Statements of Shareholders' Equity for the Years
Ended December 30, 1993, December 28, 1994, and December 27, 1995
Consolidated Statements of Cash Flows for the Years Ended
December 30, 1993, December 28, 1994, and December 27, 1995
Notes to Financial Statements
(1) Incorporated by reference to the Registrant's Transition
Report on Form 10-K as filed on June 12, 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 Three Months Ended March 27, 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
The following unaudited condensed consolidated pro forma statements of
operations of DenAmerica Corp. for the year ended December 27, 1995 and the
three months ended March 27, 1996, give effect to (i) the issuance of securities
as contemplated by the Merger; (ii) the reverse purchase accounting for the
acquisition of AFR by DRC; and (iii) a net reduction in operating expenses after
the Merger. The AFR financial statements for the fiscal year ended December 27,
1995 represent AFR's financial statements for the fiscal year ended September
27, 1995. 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 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 YEAR ENDED DECEMBER 27, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
HISTORICAL
----------------------------- PRO FORMA PRO
AFR DRC ADJUSTMENTS FORMA
--- --- ----------- -----
Restaurant sales:
Denny's restaurants $ 74,679 $ 70,429 $ - $ 145,108
Non-Denny's restaurants 32,218 4,254 - 36,472
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Total restaurant sales 106,897 74,683 - 181,580
Restaurant operating expenses:
Cost of food and beverage 30,529 20,343 (328)(a) 50,544
Payroll and payroll related costs 36,329 25,025 (164)(b) 61,190
Charge for impaired assets - 523 - 523
Depreciation and amortization 3,462 2,936 (212)(c) 6,186
Other restaurant operating costs 27,654 19,213 (239)(d) 46,628
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Total restaurant costs and expenses 97,974 68,040 (943) 165,071
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Restaurant operating income 8,923 6,643 943 16,509
Administrative expenses 5,166 3,380 (1,869)(e) 6,677
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Operating income 3,757 3,263 2,812 9,832
Other income 156 - - 156
Interest expense, net (1,714) (2,467) (3,640)(f) (8,356)
- - (535)(g) -
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Income (loss) before minority interest
in joint ventures and income taxes 2,199 796 (1,363) 1,632
Minority interest in joint ventures 85 (291) - (206)
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Income (loss) before income taxes 2,284 505 (1,363) 1,426
Income taxes 578 305 (341)(h) 542
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Net income (loss) $ 1,706 $ 200 $ (1,022) $ 884
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Income per common and common
equivalent share $ 0.28 $ 0.07
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Weighted average number of common and
common equivalent shares outstanding(i) 6,171,444 13,108,944
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DENAMERICA CORP.
UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 27, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
HISTORICAL
----------------------------- PRO FORMA PRO
AFR DRC ADJUSTMENTS FORMA
--- --- ----------- -----
Restaurant sales:
Denny's restaurants $ 20,417 $ 18,156 $ - $ 38,573
Non-Denny's restaurants 8,047 2,005 - 10,052
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Total restaurant sales 28,464 20,161 - 48,625
Restaurant operating expenses:
Cost of food and beverage 8,628 5,632 (79)(a) 14,181
Payroll and payroll related costs 11,686 7,260 - (b) 18,946
Depreciation and amortization 1,134 916 (322)(c) 1,728
Other restaurant operating costs 8,726 5,484 - (d) 14,210
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Total restaurant costs and expenses 30,174 19,292 (401) 49,065
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Restaurant operating income (1,710) 869 401 (440)
Administrative expenses 1,687 1,047 (467)(e) 2,267
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Operating income (3,397) (178) 868 (2,707)
Other income 31 - - 31
Interest expense, net (593) (860) (910)(f) (2,497)
- - (134) -
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Income (loss) before minority interest
in joint ventures and income taxes (3,959) (1,038) (176) (5,173)
Minority interest in joint ventures 95 2 - 97
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Income (loss) before income taxes (3,864) (1,036) (176) (5,076)
Income taxes (1,546) (359) (14)(h) (1,919)
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Income (loss) from continuing operations $ (2,318) $ (677) $ (162) $ (3,157)
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Income (loss) from continuing operations
per common and common equivalent share $ (0.38) $ (0.24)
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Weighted average number of common and
common equivalent shares outstanding(i) 6,171,444 13,108,944
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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 three
months ended March 27, 1996:
FISCAL THREE
YEAR ENDED MONTHS ENDED
DEC. 27, 1995 MAR. 27, 1996
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(a) Adjust food costs for discounts not taken by AFR $ (328) $ (79)
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(b) Adjustment for inclusion of DRC employees under
the new workers' compensation costs $ (164) $ -
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(c) Adjustment for new depreciation and amortization for AFR
Property and equipment 1,700 425
Goodwill 1,550 387
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3,250 812
Amount recorded in financial statements 3,462 1,134
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Pro forma adjustment $ (212) $ (322)
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(d) Adjustment for inclusion of DRC under the new insurance $ (239) $ -
============ =============
(e) Adjustment for consolidation of administrative expenses $ (1,869) $ (467)
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(f) Adjustment for additional interest on subordinated notes
Interest expense at 13% 3,153 788
Amortization of discount 487 122
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$ 3,640 $ 910
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(g) Adjustment for additional interest expense
Additional borrowings of $5,096 for Merger-related
expenses at an effective rate of 10.5% $ 535 $ 134
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(h) Adjustment for income taxes for above adjustments
at an effective rate of 38% $ (341) $ (14)
============ =============
(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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(C) EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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2.1 Amended and Restated Agreement and Plan of Merger, dated as of
August 9, 1995, between American Family Restaurants, Inc. and
Denwest Restaurant Corp.(1)
3.3 Certificate of Merger of Denwest Restaurant Corp. into American
Family Restaurants, Inc.(2)
4.1 Form of Indenture between DenAmerica Corp. and State Street Bank
and Trust Company, as trustee, relating to the Series A Notes
(including the Form of Series A Note).(2)
4.2 Form of Indenture between DenAmerica Corp. and State Street Bank
and Trust Company, as trustee, relating to the Series B Notes
(including the Form of Series B Note).
4.3 Form of Series A Common Stock Purchase Warrant.(1)
4.4 Form of Series B Common Stock Purchase Warrant.(1)
4.5 Common Stock Purchase Warrant dated March 29, 1996, issued to
Banque Paribas.(2)
10.90 Intercreditor Agreement among DenAmerica Corp., certain holders
of DenAmerica's Series B Notes, and State Street Bank and Trust
Company.(2)
10.92 Credit Agreement dated as of February 29, 1996, among DenAmerica
Corp., the Banks named therein, and Banque Paribas, as Agent
(including the Form of Term Note, Form of Revolving Note, and
Form of Delayed Draw Term Note).(2)
10.93 Security Agreement dated as of February 29, 1996, between
DenAmerica Corp. and Banque Paribas, as Agent.(2)
10.94 Form of Senior Intercreditor Agreement among Banque Paribas, as
Agent, the holders of Series A Notes, and State Street Bank and
Trust Company.(2)
10.95 Stock Option Agreement dated March 29, 1996, between DenAmerica
Corp. and William G. Cox.
23.1 Consent of Deloitte & Touche LLP.
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(1) Incorporated by reference to the Exhibits to the Registrant's
Registration Statement on Form S-4, File No. 33-00216, and
Amendment No. 1 thereto, as filed on January 10, 1996 and
February 1, 1996, respectively.
(2) Incorporated by reference to the Registrant's Report on Form 8-K
as filed on April 15, 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.
June 11, 1996 DENAMERICA CORP.
By: /s/ Todd S. Brown
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Todd S. Brown
Vice President and Chief Financial Officer
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