-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Am5Lx/BQv4yj+XDys2dMGw51JbzeRE1waruuCFQTix3QOgmRIGNofmnPhQlOBGL5 P1rYCk0aTTN94NavW0+Pzw== 0000950152-00-003223.txt : 20000501 0000950152-00-003223.hdr.sgml : 20000501 ACCESSION NUMBER: 0000950152-00-003223 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAIRY MART CONVENIENCE STORES INC CENTRAL INDEX KEY: 0000721675 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CONVENIENCE STORES [5412] IRS NUMBER: 042497894 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: SEC FILE NUMBER: 000-12497 FILM NUMBER: 611290 BUSINESS ADDRESS: STREET 1: 210 BROADWAY EAST CITY: CUYAHOGA FALLS STATE: OH ZIP: 44222 BUSINESS PHONE: 2037414444 DEFA14A 1 DAIRY MART CONVENIENCE STORES, INC. DEF 14A 1 SCHEDULE 14A (Rule 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only [ ] Definitive Proxy Statement as permitted by Rule 14a-6(e) (2)) [X] Definitive Additional Materials [X] Soliciting Material Pursuant to Rule 14a-12. DAIRY MART CONVENIENCE STORES, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on the table below per Exchange Act Rule 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials: - -------------------------------------------------------------------------------- [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing Party: - -------------------------------------------------------------------------------- (4) Date Filed: - -------------------------------------------------------------------------------- 2 NEWS RELEASE FOR IMMEDIATE RELEASE Contact: Robert B. Stein, Jr. Gregory G. Landry Chairman, President & CEO Vice Chairman, CFO (330) 342-6700 (330) 342-6729 DAIRY MART REPORTS FOURTH QUARTER AND YEAR-END RESULTS; ANNOUNCES PLAN TO SELL 246 STORES, IMPROVE PROFITABILITY, REDUCE DEBT HUDSON, Ohio -- April 27, 2000 -- Dairy Mart Convenience Stores, Inc. (AMEX: DMC) today announced results for the fiscal fourth quarter and year ended January 29, 2000. The company also announced a major initiative to sell stores that do not meet internal profitability criteria and do not meet the company's profile for its store portfolio going forward. The company expects the initiative to enhance profitability and strengthen the balance sheet through the reduction of long-term debt. FOURTH QUARTER AND YEAR END RESULTS Revenues for fiscal 2000 increased 22 percent to $581.1 million compared to revenues of $477.0 million in 1999. For the fourth fiscal quarter, revenues were $147.8 million compared to $114.9 million in the same quarter last year. Comparable store sales increased 11 percent in fiscal 2000 and comparable gasoline gallons sold increased five percent for the year. "Despite some positive indicators for the year, including improved top-line performance and an 11 percent increase in comparable store sales, our results are clearly a disappointment," said Robert B. Stein Jr., Chairman, President and Chief Executive Officer. "As we reported earlier this month, we were hit hard in the fourth quarter by industry-wide trends of lower gasoline profit margins, lower merchandise margins led by tobacco products, and increased operating costs primarily in store labor costs attributable to a tight labor market." In addition to these industry-wide factors, the company had nonrecurring pre-tax expenses totaling $2.0 million in the fourth quarter associated with a derivative litigation settlement, costs associated with its ongoing pursuit of an oil-branding relationship, and the reclassification of the company's two classes of common stock into a single class. 3 As a result, the company had a net loss of $2.5 million, or $0.51 per share for the year ended January 29, 2000, compared with a net profit of $25,000, or $0.01 per share during the prior fiscal year. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $21.3 million from $21.1 million in fiscal 1999. For the quarter, the company reported a net loss of $4.3 million, or $0.88 per share, compared to a net loss of $829,000 or $0.17 per share in the same quarter last year. EBITDA was $908,000 compared to $3.3 million in the fourth quarter of the prior year. STRATEGIC REPOSITIONING OF STORE PORTFOLIO The company also announced that it is implementing a comprehensive program aimed at improving the company's profitability, reducing debt and enhancing the quality of the Dairy Mart asset base. Under the plan, the company will sell or close stores that do not meet internal profitability criteria and do not fit the company's desired one-stop-shopping profile for its stores. Additionally, the company anticipates the sale of an under-utilized Small Business Investment Company (SBIC) subsidiary licensed by the Small Business Administration. "As consumer preferences have changed to put a premium on one-stop shopping and even greater convenience specifically through the inclusion of gasoline, our preferred product offerings for the stores in our portfolio has also changed, as evidenced by our new store development efforts," Stein said. "As a result, we have been examining options for our older and lower-volume stores for some time. In the fourth quarter, the market factors that were negatively impacting our results - higher labor costs, and declining merchandise and gasoline margins - brought into even sharper focus the need to prune non-strategic and inadequately profitable locations from our portfolio." "Accordingly, we began developing an action program last fall to address the quality of our store portfolio and the percentage of stores that sell gasoline," Stein said. "Our goal with this plan, which the Board of Directors approved at its April 6 meeting, is to create a stronger, more competitive organization, with a smaller, higher-quality asset base. For the first time in the company's history, a majority, or 61%, of our locations would offer the sale of gasoline versus 46% today. This puts us in a much better competitive position and provides a much-improved platform from which to pursue our existing growth strategy related to new store development and the growth of higher-margin food service sales." Under the plan, the company will seek one or more buyers for the affected stores, or about 40% of its 601 stores. In aggregate, these 246 stores accounted for approximately $3 million in pre-tax loss in the year ended January 29, 2000 after taking into consideration the variable overhead the company incurred on their behalf. These same stores accounted for approximately 20% of total revenues during the same period. 4 Proceeds from the sale of stores will be used to reduce the company's long-term debt. In the plan, targeted stores have been segmented by sales volume, cash flow, profitability, asset quality, and other factors. The company may elect to retain a limited number of stores in the highest profitability tier if they cannot be sold at an acceptable price. Along with the sale and/or closure of stores, the company will reduce corporate and field overhead commensurately. Approximately 70 positions at the company's Hudson, Ohio, headquarters and in regional offices will be eliminated, though the total number of affected employees may be less due to positions that have gone unfilled pending the completion of the plan. Positions at all levels will be affected, as evidenced by the reduction of two corporate vice president positions already in the first fiscal quarter. "While this is the right thing to do for our company and our shareholders, we recognize that some employees will be negatively impacted," Stein said. "For those employees whose positions are eliminated, we are committed to fair treatment with dignity, including severance and, in most cases, outplacement assistance. And while it is not possible at this point to say precisely who will be affected, we will share more information with our employees as soon as it is available," he added. Affected employees, including store personnel whose locations may be ultimately closed, will also be considered for open positions elsewhere in the organization, Stein added. The company expects the corporate and field position reductions to be effective commensurate with the sale or closings of stores. Dairy Mart Convenience Stores, Inc., was named "Convenience Store Chain of the Year" in 1999 by CONVENIENCE STORE DECISIONS magazine. The company owns and operates approximately 600 retail stores in seven states in the Midwest and Southeast. Through consulting and licensing agreements, the Company is also affiliated with more than 200 stores in Korea and approximately 400 locations in Malaysia. For more information, visit Dairy Mart's web site at www.dairymart.com. Statements contained in this release that are not historical facts, including those relating to future financial performance, the sale of or closure of stores, reduction in debt, increases in shareholder value, and overhead reductions may constitute forward-looking statements with respect to Dairy Mart's future performance. Forward-looking statements are generally identified by the words, "anticipate," "believe," "expect," "will," "plan," "intent," "should," "estimate," and similar expressions. Factors that could cause actual results to differ materially from those stated or implied in the forward-looking statements include competition, general economic conditions, the ability to find one or more suitable buyers for stores at acceptable prices, the ability of such buyers to finance store purchases, the availability of capital, the ability to attract and retain key personnel, and other 5 factors disclosed in Dairy Mart's periodic filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information contained in this release. A definitive proxy statement and form of proxy prepared by the company with respect to the company's annual stockholder's meeting, containing information regarding the nominees for director supported by the company, each participant's interest in the company and information regarding MacKenzie Partners, the company's proxy solicitation firm, will be furnished to shareholders in the company's definitive proxy statement. Shareholders are urged to read the proxy statement carefully as it will contain important information about the company nominees. The definitive proxy statement will be available on the SEC's Internet site at http://www.sec.gov. In addition, the company will provide to any requesting shareholder additional copies of the definitive proxy statement and form of proxy as soon as they are available. Requests for any such materials should be directed to MacKenzie Partners at their toll free number: (800) 322-2885. # # # 6
Dairy Mart Convenience Stores, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, expect per share amounts) FOR THE FOURTH FISCAL FOR THE FISCAL QUARTER ENDED YEAR ENDED ------------------------------------------------------------------- (unaudited) January 30, January 29, January 29, 2000 1999 2000 January 30, 1999 - -------------------------------------------------------------------------------------------------------------------------- Revenues $ 147,828 $ 114,886 $ 581,119 $ 477,047 Cost of goods sold and expenses: Cost of goods sold 113,059 81,614 435,867 339,308 Operating and administrative expenses 38,519 31,955 137,329 126,758 Interest expense 3,267 2,779 11,583 10,806 --------- --------- --------- --------- 154,845 116,348 584,779 476,872 --------- --------- --------- --------- Income (loss) before income taxes (7,017) (1,462) (3,660) 175 Benefit (provision) from income taxes 2,757 633 1,164 (150) --------- --------- --------- --------- Net income (loss) $ (4,260) $ (829) $ (2,496) $ 25 ========= ========= ========= ========= Earnings (loss) per basic share $ (0.88) $ (0.17) $ (0.51) $ 0.01 Weighted average number of shares - basic 4,841 4,846 4,869 4,823 Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) (a) $ 908 $ 3,286 $ 21,338 $ 21,079 ========= ========= ========= ========= (a) EBITDA is significant to the Company's calculations of its financial covenants and is defined as earnings before interest expense, income taxes and depreciation and amortization. EBITDA should not be viewed as a substitute for Generally Accepted Accounting Principles (GAAP) measurements such as net income (loss) or cash flow from operations. AMEX TRADING SYMBOL - DMC - --------------------------------------------------------------------------------------------------------------------------
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