FCCG News Fog Cutter Capital Group Inc. Reports Third Quarter 2006 Operating Results
PORTLAND, Ore.--(BUSINESS WIRE)--Fog Cutter Capital Group Inc. (OTC: FCCG) reported a net loss of $0.8
million or $0.10 per share for the quarter ended September 30, 2006,
compared to a net loss of $2.5 million or $0.31 per share for the same
period in the prior year. The Company reported a net loss of $3.6
million or $0.45 per share for the nine months ended September 30, 2006,
compared to a net loss of $3.9 million for the same period in 2005.
The Company currently conducts its operations in five business segments:
(1) restaurant operations through its Fatburger subsidiary; (2)
commercial real estate mortgage brokerage operations through its
subsidiary, George Elkins Mortgage Banking Company; (3) manufacturing
activities conducted through its DAC International subsidiary; (4) real
estate operations; and (5) software development and sales conducted
through its Centrisoft Corporation subsidiary. The following summarizes
the general activities in the Company’s areas
of interest:
Restaurant Operations
Fatburger, “The Last Great Hamburger Stand”®,
opened its first restaurant in Los Angeles in 1952. There are currently
85 Fatburger restaurants located in 14 states and Canada. The
restaurants specialize 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.
Fatburger plans to open additional restaurants throughout the United
States, Canada and China through a combination of company owned
restaurants and franchised locations. Franchisees currently own and
operate 53 of the Fatburger locations and the company has agreements for
approximately 230 new franchise locations in the United States and
Canada. In the nine months ended September 30, 2006, Fatburger has added
six locations which include three franchise operations and three
company-owned restaurants. In addition, Fatburger purchased three
locations from franchisees during the period.
For the nine months ended September 30, 2006, company-owned restaurant
sales increased 13.9% to $20.5 million. This increase was primarily the
result of the addition of six company-owned restaurants. System-wide
sales increased 24% to $50.7 million. Royalty revenue from franchise
operations increased 30.8% to $1.7 million for the nine months ended
September 30, 2006.
Commercial Real Estate Mortgage Brokerage
Headquartered in Los Angeles, with offices in the southern California
market, George Elkins provides brokerage services in the origination of
commercial mortgages. George Elkins specializes in arranging commercial
real estate loans for a variety of property types, such as apartments,
hotels, small office, and retail centers, with loan amounts of between
$1 million and $50 million.
George Elkins facilitated the placement of over $806 million in
commercial mortgages during the nine months ended September 30, 2006 and
$1.1 billion for calendar 2005. Of the loans brokered in 2006, 40% were
funded by conduit lenders, 17% were funded by banks or thrifts, 10% were
funded by insurance companies, with the balance funded by bridge lenders
and other investors. The servicing and loan administration department
manages a portfolio of $1.1 billion.
Manufacturing Operations
The Company conducts manufacturing activities through DAC International.
DAC is a supplier of computer controlled lathes and milling machinery
for the production of eyeglass, contact, and intraocular lenses. In the
nine months ended September 30, 2006, DAC had sales revenues of $7.2
million and earned $1.2 million in income.
Real Estate Operations
The Company invests directly and indirectly in real estate, both in the
United States and Europe. During the nine months ended September 30,
2006, the Company earned $4.7 million from its real estate operations.
Of this amount, $2.9 million related to the gain on sale of properties,
$0.6 million due to increases in the exchange rate of foreign currencies
and $0.7 million in earnings from equity investees. The Company’s
major holdings in real estate as of September 30, 2006 are as follows:
Freestanding Retail Properties– The
Company owns or controls 75 freestanding retail buildings throughout
the United States, either directly or through leases. The buildings
are approximately 4,500 square feet and are leased to a variety of
tenants including convenience stores, video rental outlets, shoe
stores and other small businesses. During the first quarter of 2006,
the Company sold 7 similar properties that had been a part of the
portfolio for $3.5 million.
Barcelona Apartments– As of
September 30, 2006 the Company owned two apartment buildings through
equity participating loans to special purpose Spanish corporations.
The properties consist of 33 residential units located in Barcelona,
Spain. The two buildings were acquired subject to below market leases
and the Company has relocated these tenants and is now selling the
properties for development. In July 2006, the Company sold one similar
property for net proceeds of approximately $3.3 million.
Oregon Commercial Properties– During
the nine months ended September 30, 2006, the Company sold two
commercial properties located in Oregon. One property, an
84,000-square-foot warehouse located on 4.5 acres in the city of
Eugene was sold in August 2006 for $2.8 million in cash. The other
property, a 10.9-acre parcel of undeveloped land located in the
Wilsonville, Oregon was sold in May 2006 for $2.6 million in cash. The
Company recognized a combined gain of $2.4 million on the sale of
these properties.
Bourne End– In December 2000, Fog
Cutter organized and led a group of investors, including a subsidiary
of Merrill Lynch & Co., Inc., to purchase all of the outstanding
capital stock of Bourne End Properties Ltd., a UK-based real estate
company. The real estate assets consisted of 1.7 million square feet
in fifteen shopping centers. Bourne End has profitably sold all of the
properties since the acquisition by Fog Cutter and its partners, with
the final property being sold in June 2006. During the nine months
ended September 30, 2006, the Company earned $0.7 million from its
investment in Bourne End.
Software Development and Sales
The Company’s Centrisoft subsidiary develops
and sells software that controls and enhances the productivity of
enterprise networks and provides first level security against
unauthorized applications and users. Centrisoft is marketing its
software to potential customers both directly and through re-seller
relationships.
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 which are based on various assumptions (some of which are
beyond the Company’s control) 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 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;
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 accompanying financial information should be read in conjunction
with the Company’s Form 10-Q, filed with the
Securities and Exchange Commission.
Preferred stock, $.0001 par value; 25,000,000 shares authorized; no
shares issued and outstanding
-
-
Common stock, $.0001 par value; 200,000,000 shares authorized;
11,757,073 shares issued as of September 30, 2006 and December 31,
2005; 7,957,428 shares outstanding as of September 30, 2006 and
December 31, 2005
168,516
168,214
Accumulated deficit
(139,625)
(134,977)
Accumulated other comprehensive income
-
161
Treasury stock, 3,799,645 common shares as of September 30, 2006 and
December 31, 2005, at cost
