| 2002 Press Releases
August 22, 2002 -- New World Expects 2nd Quarter Adjusted EBITDA to Increase
NEW WORLD TO RECEIVE ADDITIONAL PROCEEDS FROM ENBC/ENBP BANKRUPTCY ESTATES; COURT APPROVES SETTLEMENT REGARDING ASSET DISTRIBUTION EATONTOWN, N.J. (8/20/02)--New World Restaurant Group (Pink Sheets: NWCI) today announced that the Bankruptcy Court with jurisdiction of the proceedings of ENBC, Inc. (formerly Einstein/Noah Bagel Corp.), and ENBP, L.P. (formerly Einstein/Noah Bagel Partners) approved a settlement of the litigation concerning the distribution of the assets of the two estates. Under the settlement agreement approved by the court, $17.1 million is to be paid to creditors of ENBC, of which approximately 49 percent, or $8.3 million, is to be paid to New World. Distribution of the proceeds from the ENBC and ENBP estates approved today in the U.S. Bankruptcy Court, District of Arizona, follows earlier distributions to New World totaling $27.9 million, bringing the company's aggregate proceeds to date to approximately $36.2 million. The payments are made in connection with New World's ownership of approximately $61.5 million in bonds issued by ENBC, which, along with ENBP, filed for Chapter 11 bankruptcy protection in April 2000. In June 2001, New World acquired the assets of ENBC and ENBP at a bankruptcy auction for $160 million in cash and the assumption of certain liabilities. All proceeds from the bankruptcy distributions are being utilized by New World to repay an asset-backed secured loan to its wholly owned non-restricted subsidiary, EnbcDeb Corp., and an investment in New World Greenlight, LLC. As of July 2, 2002, the amounts owed aggregated $15.0 million after giving effect to distributions since that date, including the amount to be paid under the settlement agreement. New World may receive additional proceeds distributed before the bankruptcy case is closed, with the amount of future distributions uncertain at this time. Any remaining amounts then owed by New World on the asset-backed loan and the investment will be settled by the issuance of preferred stock. "With today's action in the Bankruptcy Court, we've taken another major step in closing the book on the Einstein acquisition," said Anthony Wedo, New World chairman and CEO. "Following this latest distribution, the actual proceeds exceed by approximately $2.0 million the carrying value of the investment as stated at fiscal 2001 year end." New World is a leading company in the quick casual sandwich industry, the fastest-growing restaurant segment. The company operates locations primarily under the Einstein Bros and Noah's New York Bagels brands and primarily franchises locations under the Manhattan Bagel and Chesapeake Bagel Bakery brands. As of July 2, 2002, the company's retail system consisted of 460 company-owned locations and 290 franchised and licensed locations in 34 states. The company also operates one dough production facility and one coffee roasting plant. Press Release Contact Information [ back to top ]
NEW WORLD EXPECTS 2ND QUARTER ADJUSTED EBITDA TO INCREASE; FILING DELAYED BY ANTICIPATED RESTATEMENTS
EATONTOWN, N.J. (8/22/02)--New World Restaurant Group (Pink Sheets: NWCI) today announced that it expects adjusted EBITDA for the quarter ended July 2, 2002, to approximate $11.4 million. Adjusted EBITDA excludes unusual charges and legal expenses. The company also announced that the filing of its Form 10-Q for the second quarter of fiscal 2002 will be delayed by anticipated restatements of its financial statements for the four trailing quarters. On July 29, 2002, the company replaced its independent auditors for those historical periods, Arthur Andersen, LLP, with new independent auditors, Grant Thornton, LLP. A review by its new auditors of the accounting treatment in those periods of the company's increasing rate indebtedness, Series F preferred stock and related warrants has led to the anticipated restatements, which are expected to involve non-cash components of interest expense, preferred dividends and accretion, and earnings per share. The company does not currently anticipate that these restatements will have any material effect on its income/loss from operations for any of the periods involved. The anticipated restatements cover the quarters ended July 3, 2001, October 2, 2001, January 1, 2002, and April 2, 2002, and the fiscal year ended January 1, 2002. "Because these anticipated changes apply to non-cash items, we do not expect these restatements to have any material effect on our revenues, EBITDA or income/loss from operations," said New World chief financial officer Max Craig, who joined the company in June 2002. "Given the complexity of the computations related to these issues, we cannot provide a reasonable estimate of the impact, positive or negative, on our financial statements for the affected periods at this time." The issues related to the restatements were fully disclosed in a Form 12b-25 Notification of Late Filing filed by New World with the Securities and Exchange Commission on August 16, 2002. "The expected second quarter performance demonstrates the continued strength of our core business," said New World chairman and CEO Anthony Wedo. "The successful results also are evidence of our ability to achieve important synergy savings from the consolidation of the New World and Einstein/Noah organizations." Second quarter same-store sales in company-operated Einstein/Noah locations rose 1.7% over the corresponding 2001 period. Wedo added that same-store sales continue to increase during this year's third quarter. New World is continuing the ongoing review of its second quarter results, in consultation with its new auditors. Until this review is completed, the company's results are subject to change. Because of the change in auditors, the company cannot say with certainty when the review will be completed. New World is a leading company in the quick casual sandwich industry, the fastest-growing restaurant segment. The company operates locations primarily under the Einstein Bros and Noah's New York Bagels brands and primarily franchises locations under the Manhattan Bagel and Chesapeake Bagel Bakery brands. As of July 2, 2002, the company's retail system consisted of 460 company-owned locations and 290 franchised and licensed locations in 34 states. The company also operates one dough production facility and one coffee roasting plant. Press Release Contact Information [ back to top ]
NEW
WORLD EXTENDS DISTRIBUTION PACT WITH MARRIOTT; Signs agreement with
first new regional distributor Under the contract extension, Marriott Distribution Services will continue to service New World retail locations with frozen dough and other products until the company completes agreements with other distributors or until December 1, 2002. This timing is consistent with Marriott’s stated intentions to exit the distribution business in the U.S. During the contract extension timeframe, Marriott has the right to terminate New World product distribution from any of its facilities with 60 days notice. Additionally, New World has the right to terminate with 30 days notice. In the first of its new regional agreements, New World signed a five-year contract with Willow Run to distribute frozen dough and other products to 222 franchised, licensed and company-owned Manhattan Bagel and Einstein Bros locations in the Northeast and Mid-Atlantic markets. Kirkwood, N.Y.-based Willow Run services fast food and quick-casual operators in 14 Northeastern and Mid-Atlantic states. “As a major food distributor on the East Coast, Willow Run is pleased to add New World to our restaurant customers,” said Larry Amico, vice president of sales and marketing, Willow Run. “With New World’s plans for continued growth, we expect our relationship will strengthen and expand over time.” In addition to the new contract with Willow Run, which will begin mid-September, New World is currently in negotiations with other large regional custom distribution houses to service its remaining markets and expects to have all agreements in place before December 1, 2002. Some New World distribution centers will be transitioned to new distributors over the course of September, October and November. “The contract extension with Marriott and the new agreement with Willow Run represent a solid first step in ensuring that there will be no interruption of distribution services for New World restaurants,” said Susan E. Daggett, New World’s chief supply officer. “The departure of Marriott from this industry created a situation where many companies are simultaneously seeking new distributors. We are confident that we will complete the new distribution strategy for all of our markets by December, including negotiating competitive pricing agreements.” New World is
a leading company in the quick casual sandwich industry, the fastest-growing
restaurant segment. The company operates locations primarily under
the Einstein Bros and Noah’s New York Bagels brands and primarily
franchises locations under the Manhattan Bagel and Chesapeake Bagel
Bakery brands. As of May 14, 2002, the company's retail system consisted
of 468 company-owned locations and 293 franchised and licensed locations
in 34 states. The company also operates one dough production facility
and one coffee roasting plant. [ back to top ]
NEW
WORLD TO CONSOLIDATE MANUFACTURING PLANTS; Company to maintain presence
in New Jersey with East Coast Franchise Support Center As part of this consolidation, New World will close company-operated dough manufacturing facilities in Eatontown, N.J. and San Fernando (metro Los Angeles), Calif. Production from those plants, both of which were operating under capacity, will be consolidated into two state-of-the-art plants, a company-operated facility in Whittier, Calif., added through the Einstein acquisition and an Avon, Ind., plant operated by Harlan Bakery, a contractor that has produced dough to the company’s specifications for the Einstein Bros brand. New World expects to complete the closings of the 24,000-square-foot San Fernando facility and the 90,000-square foot Eatontown facility by December 2002. The company expects to record a one-time charge during this year’s third quarter for estimated employee severance, plant closing and lease obligation costs. The company also intends to repay the approximate $2.0 million balance on a note payable to the New Jersey Economic Development Authority relating to the Eatontown facility. Approximately 40 production and distribution personnel in Eatontown and another 20 in San Fernando will be impacted by the facility closings. This represents less than 1 percent of New World’s more than 7,700 employees nationwide. “The decision to close the Eatontown and San Fernando plants—both added during New World’s November 1998 acquisition of Manhattan Bagel, Inc.—was a painful, but necessary step in our efforts to generate cost savings from the consolidation of the New World and Einstein organizations,” said Anthony Wedo, New World chairman and CEO. “These consolidations are the result of a comprehensive review of the company’s operations. With Whittier and Avon both operating at about 70 percent capacity on average, our management team determined that consolidation to these state-of-the-art facilities was the most prudent course to take from both economic and product quality standpoints. Having both company-owned and outsourced plants allows us to maintain a firm handle on ingredient, production and other manufacturing costs, while the supplier arrangement gives us flexibility to expand production capacity to meet our future growth plans without tying up additional capital.” New World will continue to maintain its East Coast Franchise Support Center in New Jersey. The company plans to relocate its offices and franchisee training facility from Eatontown to another site in central New Jersey by the end of this year. This facility will house New World executives and support personnel for the Manhattan Bagel, Chesapeake Bagel Bakery, and New World Coffee/Willoughby’s Coffee & Tea brands. Einstein Bros will continue to be operated out of Golden, Colo. In connection
with the consolidation, the 53,000-square-foot Whittier facility
expanded a process line and added five employees to its existing
production crew of 75. The plant will now service Manhattan Bagel,
Einstein and Noah’s locations in California, Oregon, Washington,
Nevada, and Arizona. Harlan—which devotes approximately 68,000
square feet in its 150,000-square-foot Avon plant to New World—will
now service all Einstein and Manhattan Bagel locations east of the
Rocky Mountains. New World is
a leading company in the quick casual sandwich industry, the fastest-growing
restaurant segment. The company operates locations primarily under
the Einstein Bros and Noah’s New York Bagels brands and primarily
franchises locations under the Manhattan Bagel and Chesapeake Bagel
Bakery brands. As of May 14, 2002, the company's retail system consisted
of 468 company-owned locations and 293 franchised and licensed locations
in 34 states. The company also operates one dough production facility
and one coffee roasting plant. [ back to top ]
The decision to change auditors was recommended by the Audit Committee of New World’s Board of Directors and unanimously approved by the Board. “Given our continued growth and specialized demands, we decided to retain a firm that specifically focuses on mid-market companies yet offers resources comparable to those of the largest international accounting firms,” said New World Chairman and CEO Anthony Wedo. “We look forward to benefiting from the comprehensive audit and related services Grant Thornton can provide.” About
Grant Thornton About
New World [ back to top ]
NEW
WORLD NAMES NEW CHIEF SUPPLY OFFICER, NEW SENIOR V.P.-OPERATIONS In her new position, Ms. Daggett—who had been Vice President, Supply Chain, for New World’s Einstein/Noah segment—now has complete responsibility for the manufacturing, distribution and supply functions across all the New World brands. She reports to Anthony Wedo, New World Chairman and Chief Executive Officer. Ms. Daggett joined Einstein/Noah in 1995 as Director, Operations Finance, and was subsequently promoted to Vice President, Operations Finance, then to Vice President and Controller. In May 1998, she moved into the company’s purchasing and distribution areas, initially serving as Vice President Purchasing. Earlier in her career, Ms. Daggett served as Director, Financial Planning & Reporting at Arby’s Inc., and as Director, Financial Planning & Analysis with Burger King. A Certified Public Accountant, she began her career at Ernst & Whinney (now Ernst & Young) after graduating from the University of Northern Iowa with a B.A. degree in Business Administration. A resident of Evergreen, CO, Ms. Daggett will continue to be based in the company’s Golden, CO office. Mr. Phillips, who reports to New World Chief Operating Officer Paul Murphy, is now responsible for all aspects of operations of the company’s four franchised brands. He joined New World in March 2001 as Vice President, Franchise Services, primarily overseeing the Manhattan Bagel system. A resident of Richboro, PA, Mr. Phillips has more than three decades of experience in the franchising and food service businesses. As Corporate General Manager with Rita’s Water Ice Franchise Corp., he directed operations, training, product research and development, non-traditional business development and marketing functions. Earlier in his career, he was a co-founder and President of Philmar Mid-Atlantic, which built, owned and operated 15 KFC restaurants. Mr. Phillips began his foodservice career in 1968 at Gino’s Inc., where he ultimately rose to Vice President-Restaurant Operations, with responsibility for developing new products and concepts for 460 restaurants in 15 states. “The promotions of these experienced executives reflect our desire to improve all facets of manufacturing and distribution to our company operated and franchised stores, as well as to enhance the performance of our network of franchised locations,” explained Mr. Wedo. “These appointments further demonstrate that we are progressing from a period of consolidation of the New World and Einstein/Noah organizations to a growth mode. The well grounded foodservice and franchising credentials that Susan and Michel possess will help take us to the next level.” New World is a leading company in the quick casual sandwich industry. The company operates stores primarily under the Einstein Bros and Noah's New York Bagels brands and primarily franchises stores under the Manhattan Bagel and Chesapeake Bagel Bakery brands. As of May 14, 2002, the company's retail system consisted of 468 company-owned stores and 293 franchised and licensed stores in 34 states. The company also operates three dough production facilities and one coffee roasting plant. Press Release Contact Information [ back to top ]
NEW
WORLD REPORTS RESULTS FOR 1ST QUARTER OF 2002 EATONTOWN, NJ (6/24/02)--New World Restaurant Group (Pink Sheets: NWCI) today announced unaudited results for the quarter ended April 2, 2002. Results for the first quarter of fiscal 2002 include the operations of company-owned and licensed Einstein Bros. and Noah’s NY Bagels stores and related production and support facilities, which were acquired on June 19, 2001. The company also reported selected unaudited pro forma comparisons, which assume that New World and Einstein had been combined for the first quarter of fiscal 2001. On a reported basis, total revenues for the quarter ended April 2, 2002 rose to $98.6 million from $10.5 million in the comparable fiscal 2001 period, with the increase driven by the June 2001 acquisition of Einstein. Comparable store sales in company-operated Einstein/Noah stores were essentially flat, as measured against a 2001 quarter during which the chain initiated an approximate 6% price increase. Retail sales increased substantially as a result of the addition of 458 company-operated stores purchased in the Einstein acquisition, while manufacturing revenues were bolstered by the inclusion of revenues from manufacturing facilities added through the acquisition. Increases in those two revenue categories were partially offset by a decline in franchise related income, due to a lower franchise store base in comparison to the prior year. EBITDA (earnings before interest, taxes, depreciation and amortization, gain on the sale of investments, and minority interest) increased to $5.8 million, or 5.9% of revenues, from $0.9 million, or 8.6% of revenues in the 2001 quarter. The decline in EBITDA as a percent of revenues reflects the shift in the company’s business to one in which 91.5% of the 2002 quarter’s revenues were derived from retail sales, compared with 35.1% in the 2001 quarter, as well as the non-recurring charges detailed below. EBITDA
for the first quarter of 2002 was adversely affected by non-recurring
charges totaling $5.1 million that were included in general and
administrative (G&A) expenses. These included charges of approximately
$2.6 million (including related payroll tax expenses) in connection
with the previously disclosed unauthorized bonus payments to former
officers and employees of the company. Such unauthorized bonus payments
were offset against payments to be made in connection with the separation
of certain officers and employees from the company. The 2002 period’s
G&A also reflected extraordinary legal expenses of approximately
$1.7 million incurred in connection with the company’s voluntary
internal investigation of the unauthorized bonus payments. Also
included in 2002 G&A expenses are $0.6 million in performance
bonuses paid to the former officers and employees referenced above,
which the company believes would not have been paid both based on
its recently completed restatement of results and in light of the
unauthorized bonuses. In the 2001 period, these individuals received
$0.2 million in performance bonuses. Additionally, G&A expenses
in the 2002 and 2001 periods included $0.2 million of salary and
direct expenses for several of the former officers and employees
whose positions are duplicative with others. The company does not
intend to replace these individuals. Results for the 2002 quarter were also impacted by an increase in depreciation and amortization expense to $4.5 million from $0.8 million in the 2001 period. The increase was attributed primarily to depreciation on assets purchased in the Einstein acquisition, partially offset by the implementation of FAS 142 under which intangible assets with indefinite lives are no longer required to be amortized. During the 2001
quarter, New World recorded a $0.2 million gain from sale of debt
securities. This gain, however, was offset by a $0.7 million charge
for minority interest, attributable to accretion of the value assigned
to warrants and the guaranteed investment return to investors in
Greenlight New World. No such gains or minority interest charges
were recorded in the first quarter of 2002. Pro
forma results On
this basis, reported revenues of $98.6 million declined from a pro
forma $122.3 million in the 2001 quarter. The decrease is primarily
attributable to differences in the fiscal calendar between the periods,
as well as a decline in the store base. In the core Einstein segment,
the 2001 period included 16 weeks (112 days) of operations, compared
to 13 weeks (91 days) for the 2002 period. On a normalized equal-week
basis, Einstein sales would have increased 0.8% from approximately
$90.5 million in the 2001 quarter to $91.2 million the 2002 period.
“We
are pleased with the ongoing improvement in adjusted EBITDA. Excluding
non-recurring items, we continue to exceed consecutive quarterly
performance as well as year-over-year pro forma results,”
said Anthony Wedo, New World Chairman and Chief Executive Officer.
“We believe these results clearly Mr. Wedo added: “We are rapidly moving forward on efforts to rationalize our capital structure, including the refinancing of our increasing rate notes. These efforts are of a highest priority and we expect to report progress on this front within the next 60 days.” The company forecast
that adjusted EBITDA for the second quarter of 2002, ending July
2, will exceed pro forma levels for the corresponding 2001 quarter
as well as the first quarter of 2002. For the fiscal 2002 year ending
December31, the company forecasts adjusted EBITDA in the mid- $40
million range, significantly exceeding adjusted pro forma EBITDA
for 2001. Comparable store sales in company-operated Einstein/Noah
stores are projected to increase by approximately 1.5-2% during
the second quarter and by approximately 2% for all of fiscal 2002. New World is
a leading company in the quick casual sandwich industry. The company
operates stores primarily under the Einstein Bros and Noah’s
New York Bagels brands and primarily franchises stores under the
Manhattan Bagel and Chesapeake Bagel Bakery brands. As of May 14,
2002, the company's retail system consisted of 468 company-owned
stores and 293 franchised and licensed stores in 34 states. The
company also operates three dough production facilities and one
coffee roasting plant.
The following unaudited table includes pro forma financial data for the quarter ended April 1, 2001, which gives effect to the Einstein Acquisition as if it had occurred as of the beginning of that period. All of the following unaudited pro forma financial data gives effect to purchase accounting adjustments necessary to complete the acquisition. These pro forma results have been prepared for the purpose of supplementary analysis only and do not purport to be indicative of what operating results would have been had the acquisitions actually taken place as of the beginning of each period reported, and may not be indicative of future operating results.
[ back to top ]
NEW WORLD SCHEDULES CONFERENCE CALL
FOR
JUNE 24th During the call, New World Chairman and CEO Anthony Wedo and CFO Max Craig will discuss the company's financial results for fiscal 2001 and the first quarter of fiscal 2002, as well as other recent developments. The company expects to release its results for the quarter ended April 2, 2002 in advance of the conference call. To listen to the call, call 888-278-8831. A replay of the call will be available from 7:00 p.m. (EST) on June 24th through 7:00 p.m. on July 19th . To access the replay, call (888) 893-3741. Additionally, a live webcast of the call will be available through a link on New World's website, www.newworldrestaurantgroup.com. The webcast will also be archived and available through the link for 90 days following the call. New World is a leading company in the quick casual sandwich industry. The company operates stores primarily under the Einstein Bros and Noah's New York Bagels brands and primarily franchises stores under the Manhattan Bagel and Chesapeake Bagel Bakery brands. As of May 14, 2002, the company's retail system consisted of 468 company-owned stores and 293 franchised and licensed stores in 34 states. The company also operates three dough production facilities and one coffee roasting plant. Press Release Contact Information [ back to top ]
NEW
WORLD NAMES FORMER TACO BELL FINANCE CHIEF CFO; ALSO NAMES NEW COO
& CPO The company also announced that it has promoted Paul J. B. Murphy III, Executive V.P. of its Einstein/Noah business unit, to Chief Operating Officer for the entire New World Restaurant Group. New World additionally named Richard R. Lovely, a former Pepsico/KFC Corp. and First USA human resources executive, as Chief Personnel Officer, a newly created position. "We are very excited about the appointments of these foodservice industry professionals," said Anthony Wedo, New World Chairman, President and Chief Executive Officer. "These underscore how New World is building both a world class executive team and a strong operating platform." As CFO, Mr. Craig, 48, is responsible for the company's finance, accounting, strategic planning, compliance, treasury, risk management and information technology functions. The Laguna Hills, CA resident is a veteran of the foodservice industry, with more than 22 years experience in finance, information systems, strategic planning, real estate development, franchising and acquisitions at the approximately 7,000-unit Taco Bell and its parent company. He joined Pepsico Food Systems' finance department in 1980 and rose through the ranks to become Senior Director, Finance. In 1987, he moved to the Taco Bell unit as V.P., Business Planning, and subsequently held V.P. positions in the areas of development and acquisitions/divestitures before being appointed CFO in 1997. He began his career in 1977 in the finance department of Ford Motor Company. Mr. Craig holds a bachelor's degree in accounting from Southwestern College in Winfield, KS, and an MBA in finance from the University of Kansas in Lawrence, KS. Mr. Murphy, 47, in his newly created corporate level position of COO, assumes responsibility for day- to-day operations of all 761 company-owned, franchised and licensed stores across New World's six brands. He joined Einstein/Noah in December 1997 as Senior V.P., Operations, was promoted to Executive V.P. in March 1998 and continued in that position following New World's acquisition of the assets of Einstein/Noah in June 2001. His prior experience in the quick casual restaurant arena includes serving as COO with an Einstein/Noah area developer, and as director of operations for R&A Foods, LLC, a Boston Chicken area developer. Murphy also spent 11 years in operations with S&A Restaurants, the owner and operator of Steak & Ale and Bennigans Restaurants. The Evergreen, CO resident holds a BA degree from Washington and Lee University. "Paul's appointment represents a consolidation of operational responsibility for all six brands," said Mr. Wedo. "We strongly believe that this will help facilitate the growth of our Manhattan Bagel, Chesapeake Bagel and New World Coffee brands into the quick casual segment." Mr. Murphy will be taking over responsibility for those brands from New World Coffee/Manhattan Bagel President and COO William Rianhard, who is leaving the company to pursue other opportunities. Mr. Lovely, 43, as New World's Chief Personnel Officer, is responsible for the human resource function, including organizational development and compensation and benefits, across the company's six brands. He joins the company with over 18 years of human resources and administrative management experience primarily in the foodservice and financial services industries. His background includes nearly seven years at PepsiCo's KFC Corporation, where he rose through the ranks from Employee Relations Manager to become Division Human Resource Director. In the latter position, he headed HR for KFC's Southeast Division, which had over 1,200 restaurants in 15 states. Mr. Lovely most recently spent eight years at First USA/Bank One, where he served as Senior V.P., Human Resources for business units in the U.S. and United Kingdom that employed as many as 20,000 people. The Kennett Square, PA resident began his career in 1984 as a labor relations representative at Ford Motor Company. Mr. Lovely holds a bachelor's degree in industrial and labor relations from Cornell University, and a Juris Doctor degree from Georgetown University. New World is a leading company in the quick casual sandwich industry. The company operates stores primarily under the Einstein Bros and Noah's New York Bagels brands and primarily franchises stores under the Manhattan Bagel and Chesapeake Bagel Bakery brands. As of May 14, 2002, the company's retail system consisted of 468 company-owned stores and 293 franchised and licensed stores. The company also operates three dough production facilities and one coffee roasting plant. Press Release Contact Information [ back to top ]
NEW
WORLD REPORTS RESULTS FOR FISCAL 2001 EATONTOWN,
NJ (5/31/02)--New World Restaurant Group (Pink Sheets: NWCI) today
announced audited results for the fiscal year ended January 1, 2002.
Results for fiscal 2001 include the operations of company-owned
and licensed Einstein Bros. and Noah's NY Bagels stores and related
production and support facilities from June 19, 2001, the date of
New World's acquisition of the assets of Einstein/Noah Bagel Corp.
and its majority owned subsidiary, Einstein/Noah Bagel Partners,
L.P. The company also reported selected unaudited pro forma results
for the year, which assume that the combination of New World and
Einstein occurred from the beginning of fiscal 2000. EBITDA (earnings before interest, taxes, depreciation and amortization, integration and reorganization costs, non-cash charge in connection with realization of assets, gain/loss on the sale of investments, and minority interest) for the year increased 151.3% to $20.1 million, or 8.5% of revenues, from $8.0 million, or 17.5% of revenues in 2000. The decline in EBITDA as a percent of revenues reflects the shift in the company's business to one in which 87.3% of 2001 revenues were derived from retail sales, compared with 26.2% in 2000. EBITDA for the fourth quarter of 2001 reached $10.7 million, or 10.7% of revenues of $99.9 million. The
company reported a $36.3 million net loss for 2001, compared to
net income of $6.0 million in 2000. The loss for the most recent
year reflected $14.6 million in non-cash charges. Items recorded
in fiscal 2001 included $5.8 million in non-cash charges for impairment
in the value of investments, reflecting management's estimate of
the proceeds the company will receive from the bankruptcy estate
of Einstein Noah Bagel Corp. from its investment in certain Einstein
debentures; a $2.8 million non-cash charge in connection with the
realization of assets, resulting from management's evaluation of
long lived assets in accordance with SFAS 121; a $4.4 million provision
for costs associated with the reorganization and integration of
existing facilities and operations with those acquired in the Einstein
transaction; and $1.6 million for allocation of earnings to the
minority interest. No such items were recorded in 2000. Additionally,
New World had a $167,000 income tax provision in 2001, compared
with a $3.1 million income tax benefit the prior year resulting
from the recognition of deferred tax assets. Pro
forma results For
fiscal 2001, pro forma revenues decreased 3.7% to $405.6 million
from $421.4 million in fiscal 2000. The decline is predominantly
attributable to a decrease in the pro forma store base (to a combined
770 at the end of 2001 from 814 the prior year) as well as the fiscal
calendar differences. The fiscal 2000 calendar included nine additional
operating days for Einstein and five additional days from New World.
In the core Einstein segment, revenues increased approximately 2.5%
when measured on an equal-week basis, with comparable store sales
for company-owned locations also increasing 2.5%. Full-year pro
forma EBITDA decreased 11.2% to $31.7 million, or 7.8% of revenues,
from $35.7 million, or 8.5% of revenues, in fiscal 2000. The company
attributed the decline to the impact of the nine additional days
in fiscal 2000, as well as increased general and administrative
expenses during 2001 primarily as a result of the unauthorized bonus
payments at New World, executive bonuses at Einstein and other expenses
associated with the Einstein restructuring. The latter items (all
recorded during the first three quarters of the year) included approximately
$2.8 million in Einstein restructuring charges and retention bonuses;
$1.4 million in one-time legal fees related to franchisee settlements;
$1.3 million in one-time bonuses associated with former officers;
$1.2 million in unauthorized compensation; and $0.8 million in lease
settlements for store closures. Excluding those items, pro forma
EBITDA for 2001 would have been $39.2 million, or 9.7% of revenues. "We will continue to build on our operating success as we rationalize our capital structure," he continued. "Now that our 2001 10-K is filed, we are focused on immediately evaluating the company's refinancing alternatives. These efforts will include refinancing the company's increasing rate notes." Mr.
Wedo, who joined New World as CEO in August 2001, assumed responsibility
for the company's finance and accounting functions on April 2, 2002,
when he was appointed to the additional post of Chairman by the
Board of Directors following the resignation of Chairman and founder
Ramin Kamfar. On that same date, Chief Financial Officer Jerold
Novack was dismissed by the Board with cause. Under the company's
former structure, the CFO reported directly to the Chairman. Mr.
Wedo added that the company Operating
results revised New World is a leading company in the quick casual sandwich industry. The company operates stores primarily under the Einstein Bros and Noah's New York Bagels brands and primarily franchises stores under the Manhattan Bagel and Chesapeake Bagel Bakery brands. As of May 14, 2002, the company's retail system consisted of 468 company-owned stores and 293 franchised and licensed stores in 34 states. The company also operates three dough production facilities and one coffee roasting plant. Press Release Contact Information
The following unaudited pro forma financial data for the years ended January 1, 2002 and December 31, 2000, gives effect to the Einstein Acquisition as if it had occurred as of the beginning of each period reported. All of the following unaudited pro forma financial data gives effect to purchase accounting adjustments necessary to complete the acquisition. These pro forma results have been prepared for the purpose of supplementary analysis only and do not purport to be indicative of what operating results would have been had the acquisitions actually taken place as of the beginning of each period reported, and may not be indicative of future operating results.
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NEW
WORLD DELISTED FROM OTC BULLETIN BOARD; COMPANY WILL PURSUE REINSTATEMENT The company will pursue reinstatement on the OTC Bulletin Board once it is current in its periodic reports. The common stock is currently trading in the pink sheets. Further information regarding trading of securities on the "Pink Sheets" is available on the web at www.pinksheets.com. New World is a leading company in the "fast/quick casual" sandwich | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
