2010 Financial Results Overview
- Q2 revenues of $14.3 million; six-month revenues of $28.1
million
- Q2 and six-month operating results included $2.1 million
accrual related to legacy litigation, resulting in:
- Q2 operating loss of $0.7 million; six-month operating income
of $1.1 million
- Q2 net loss of $1.3 million, or $0.07 per share; six-month net
loss of $0.6 million, or $0.04 per share
- Excluding $2.1 million accrual:
- Q2 income from operations of $1.4 million; six-month operating
income of $3.3 million
- Q2 net income of $0.3 million, or $0.02 per share; six-month
net income of $1.0 million, or $0.06 per share
- Q2 EBITDA of $(0.4) million; six-month EBITDA of $1.7
million
- $0.7 million of debt paid in Q2; $2.4 million of debt retired
during 2010 first half
- Cash balance of $2.7 million at June 30, 2010
VCG Holding Corp. (Nasdaq:VCGH), a growing and
leading consolidator and operator of adult nightclubs, today
announced financial results for the second quarter and six months
ended June 30, 2010 (see attached tables, including reconciliation
tables).
Troy Lowrie, Chairman and Chief Executive Officer, stated, "We
reported higher revenues during the second quarter of 2010, driven
primarily by the continued success of our recently introduced
club-level revenue streams, which offset a decline in sales of
alcohol. During the first six months of 2010, 10 of our clubs
reported same-store increases in revenue as compared to 7 clubs in
the same period last year. A $2.1 million accrual associated with a
recent judgement involving legacy litigation (explained below)
produced a loss for the three and six month periods of 2010. Absent
this accrual, we operated profitably although results were impacted
by higher salaries and wages, and increased legal fees. Cash
flow from operations remained strong at $3.5 million. Subsequent to
the end of the second quarter, we prepaid loans aggregating
approximately $2.2 million. At June 30, 2010, VCG had access
to liquidity of approximately $0.9 million and cash of $2.7
million."
Second Quarter 2010 Financial Results
Total revenue for the second quarter of 2010 increased to $14.3
million from $14.0 million in the second quarter of 2009.
Revenues increased due to higher sales of food and
merchandise, higher service revenues, and increased other income,
which offset a decline in sales of alcohol. An 11.6% increase
in service revenues reflected continued patron acceptance of table
side services, wristband access to special areas, table dances, and
suite fees, all of which were introduced company-wide in 2009.
Cost of goods sold (the cost of alcohol, food and merchandise)
was $1.6 million, or 26.6% of revenues, compared to $1.5 million,
or 23.6% of revenues, in the second quarter of 2009. The
increase as a percentage of revenues was attributable to costs
associated with VCG's four "A" club restaurants, which recently
entered into management consulting agreements for their restaurant
operations. These consultants elected to use the POS systems
for customer convenience. Following the installation of the
POS systems at the end of fourth quarter of 2009 and in January and
February of 2010, operations for these subleased kitchens were
included in VCG's financial data for the second quarter of
2010. By way of comparison, when "A" club restaurant cost of
sales data is removed from the total, cost of goods sold as a
percentage of applicable revenues for all other clubs drops to
25.0%.
Total operating expenses for the 2010 second quarter were $15.0
million, up from $11.8 million in the second quarter of
2009. The $2.1 million litigation accrual, higher salaries and
wages, and increased legal fees were primarily responsible for the
increase in total operating expenses during the 2010 second
quarter. Higher salaries and wages were attributable to an increase
in club employees, the fee structure used to compensate
entertainers in Minnesota (the only club where entertainers are
treated as club employees) and the executive severance
package.
Higher legal fees were associated with legacy litigation and the
fees associated with a previously disclosed internal controls
review.
The operating loss for the second quarter of 2010 was $0.7
million, and included the $2.1 million accrual for legacy
litigation, compared to income from operations of $2.2 million in
the second quarter of 2009. Excluding the $2.1 million
accrual, operating income for the second quarter of 2010 was $1.4
million.
Total interest expense declined to $707,000 in the 2010 second
quarter from $915,000 in the second quarter of 2009, reflecting the
Company's ongoing efforts to renegotiate and prepay debt.
The net loss for the second quarter of 2010 was $1.3 million, or
$0.07 per diluted share, and included the $2.1 million accrual for
legacy litigation. This compared to net income of $0.8
million, or $0.04 per share, for the 2009 second
quarter. Excluding the $2.1 million accrual, net income for
the 2010 second quarter was $0.3 million, or $0.02 per diluted
share.
EBITDA for the 2010 second quarter was $(0.4) million as
compared to EBITDA of $2.5 million in the second quarter of
2009.
Six-Month 2010 Financial Results
Total revenue for the 2010 six-month period increased to $28.1
million from $27.7 million in the same period last
year. Revenues increased due to higher sales of food and
merchandise, higher service revenues, and increased other income,
offsetting a decline in sales of alcohol.
Cost of goods sold (the cost of alcohol, food and merchandise)
was $3.1 million, or 26.1% of revenues, compared to $3.0 million,
or 23.6% of revenues. The increase as a percentage of revenues
was attributable to costs associated with VCG's four "A" club
restaurants, as detailed above. When "A" club restaurant cost
of sales data is removed from the total, cost of goods sold as a
percentage of applicable revenues for all other clubs drops to
24.6% for the 2010 six-month period.
Total operating expenses for the 2010 six-month period were
$27.0 million, up from $23.4 million in 2009 six-month period. The
$2.1 million litigation accrual, higher salaries and wages, and
increased legal fees were primarily responsible for the rise in
operating expenses for the first half of 2010, as detailed
above.
Operating income for the 2010 six-month period was $1.1 million,
and included the $2.1 million accrual for legacy litigation,
compared to income from operations of $4.4 million in the same
period last year. Excluding the $2.1 million accrual,
operating income for the 2010 six-month period was $3.3
million.
Total interest expense declined to $1.4 million for the first
six months of the year from $1.8 million in the comparable prior
year period, for the reasons cited
above.
The net loss for the first half of 2010 was $0.6 million, or
$0.04 per diluted share, and included the $2.1 million accrual for
legacy litigation. This compared to net income of $1.4
million, or $0.08 per share, for the 2009 period.
Excluding the $2.1 million litigation accrual, net income for the
2010 first six months was $1.0 million, or $0.06 per diluted
share.
EBITDA for the first six months of 2010 was $1.7 million as
compared to EBITDA of $5.0 million in same period last year.
Subsequent Events
As announced on July 19, 2010, VCG sold its Jaguar's Gold Club
in Fort Worth, Texas to a wholly-owned subsidiary of Rick's Cabaret
International, Inc. ("RICK"). Total consideration consisted of
$1.0 million cash and 467,497 shares of VCG common stock held by
RICK. VCG used the cash proceeds from the sale to pay down
high interest (14%) debt, and retired the shares of common stock
included in the transaction. VCG realized a book gain of
approximately $821,000 in July on the sale of these
assets.
The Company also announced that it repurchased a total of
505,519 shares of VCG common stock at an average price of $1.70 per
share during the second quarter ended June 30, 2010, under its
previously announced share repurchase plan. These purchases
were separate from the 467,497 shares acquired as part of the sale
of Jaguar's Gold Club.
The impacts of the debt repayment, share retirement / repurchase
and gain on the sale of assets will be reflected in VCG's results
for the third quarter ending September 30,
2010.
Thee Dollhouse Litigation
Thee Dollhouse Productions N.C., Inc. ("Thee Dollhouse") filed a
claim in arbitration in June 2008 against Regale, Inc. ("Regale")
as a result of the purchase of the assets of Regale's Raleigh,
NC club by Raleigh Restaurant Concepts, Inc. ("RRC"), a wholly
owned subsidiary of VCG. The claim asserted that Regale, by
selling its assets to RRC, breached a contract between Thee
Dollhouse and Regale. VCG is indemnifying and holding Regale
harmless from this claim pursuant to the terms of the asset
purchase agreement between Regale and RRC. The arbitration hearing
was conducted between April 26 and 29, 2010. On June 28, 2010, the
arbitration panel entered an award in favor of Thee Dollhouse and
against Regale, Inc., awarding Thee Dollhouse damages in the amount
of $2,102,476, plus costs of $32,390 for a total award of
$2,134,866, plus interest. On July 14, 2010, Regale filed a
Petition in the United States District Court for the Eastern
District of North Carolina challenging the award. No hearing or
other dates have been set by the Court. The Company and Regale
intend to vigorously pursue all available appeals of this award. As
of June 30, 2010, the Company has accrued $2,135,000, which is
reported in the Unaudited Condensed Consolidated Statements of
Operations as Contingent Indemnification Claim.
Proposal From Chairman of the Board
On July 20, 2010, the Company received a non-binding proposal
(the "Proposal") from Family Dog, LLC ("Purchaser"), an entity
affiliated with the Company's Chairman and Chief Executive Officer,
Troy Lowrie, and Lowrie Management, LLLP to acquire all of the
outstanding common stock of the Company (other than the shares held
by Purchaser, its affiliates and certain other investors) for $2.10
per share in cash (the "Acquisition"). The Proposal contemplates
that the Company would no longer be a public reporting or trading
company following the closing of the Acquisition. On July 21, 2010,
the Company's Board of Directors formed a Special Committee
consisting solely of directors who are independent under the NASDAQ
independence rules to review and evaluate the Proposal, recommend
to the Company's Board of Directors whether to approve or decline
the Proposal and evaluate the Company's alternatives to the
Proposal. The members of the Special Committee are George Sawicki,
Carolyn Romero and David Levine. The Proposal is subject to the
approval of the Special Committee, the Company's Board of Directors
and the Company's stockholders. The Special Committee retained
North Point Advisors LLC ("North Point") to serve as financial
advisor to the Special Committee. In its capacity as financial
advisor, North Point will assist the Special Committee in
evaluating the Proposal and alternatives thereto. In addition
to retaining North Point as its financial advisor, the Special
Committee retained Faegre & Benson LLP to serve as legal
counsel to the Special Committee.
On August 4, 2010, Lowrie notified the Special Committee that in
order to allow sufficient time to consider and review the Proposal,
the expiration of the Proposal has been extended to 7:00 p.m.
(Mountain Standard Time) on August 20, 2010. No assurance can
be given that an agreement on terms satisfactory to the Special
Committee or the Board of Directors will be entered into or
consummated by the Company with respect to the Proposal or any
other transaction.
ABOUT VCG HOLDING CORP.
VCG Holding Corp. is an owner, operator, and consolidator of
adult nightclubs throughout the United States. The Company
currently owns 19 adult nightclubs located in Anaheim,
Indianapolis, St. Louis, Denver, Colorado Springs, Dallas, Raleigh,
Minneapolis, Louisville, Miami, and Portland, ME.
The VCG Holding Corp. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5105
FORWARD LOOKING STATEMENT
Certain statements in this press release are forward-looking
statements within the meaning of the Securities Litigation Reform
Act of 1995, as amended. All statements, other than statements of
historical fact, included in this press release that address
activities, events or developments that we believe or anticipate
will or may occur in the future are forward-looking statements.
Such statements are based on current expectations, estimates and
projections about the Company's business based, in part, on
assumptions made by management. These statements are not guarantees
of future performance and involve risks and uncertainties that are
difficult to predict, including, without limitation, whether the
Special Committee of the Company's Board of Directors and the full
Board of Directors will approve the Proposal, or any other
transaction, and, if approved, whether the Proposal, or any other
transaction, will be successfully completed. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecasted in such forward-looking statements due to numerous
risks, uncertainties and factors identified from time to time in
the Company's reports with the Securities and Exchange Commission,
including our Annual Report on Form 10-K for the year ended
December 31, 2009, and the Quarterly Report to be filed on August
10, 2010. All forward-looking statements attributable to us or
any persons acting on our behalf are expressly qualified in their
entirety by these risks, uncertainties and factors. All guidance
and forward-looking statements in this press release are made as of
the date hereof and we do not undertake any obligation to update
any forecast or forward-looking statements, except as may be
required by law.
| VCG HOLDING
CORP. |
| CONDENSED CONSOLIDATED
BALANCE SHEETS |
| |
|
|
| |
(unaudited) |
(audited) |
| |
June 30, |
December 31, |
| |
2010 |
2009 |
| Assets |
|
|
| Current Assets |
|
|
| Cash |
$ 2,655,166 |
$ 2,677,440 |
| Other receivables |
77,863 |
254,333 |
| Income taxes receivable |
349,725 |
594,720 |
| Inventories |
911,789 |
926,321 |
| Prepaid expenses |
554,718 |
354,730 |
| Current portion of deferred income tax
asset |
42,350 |
76,920 |
| Total Current
Assets |
4,591,611 |
4,884,464 |
| Property and equipment, net |
22,645,523 |
22,946,114 |
| Non-compete agreements, net |
15,380 |
23,898 |
| Trade names |
452,000 |
452,000 |
| Licenses, net |
34,759,819 |
34,834,018 |
| Goodwill, net |
2,279,045 |
2,279,045 |
| Favorable lease rights, net |
1,612,034 |
1,647,968 |
| Other long-term assets |
208,757 |
241,993 |
| Non-current portion of deferred income
tax asset |
3,965,440 |
3,841,673 |
| Total Assets |
$ 70,529,609 |
$ 71,151,173 |
| Liabilities and Equity |
|
|
| Current Liabilities |
|
|
| Accounts payable — trade |
$ 1,540,694 |
$ 1,750,940 |
| Accrued expenses |
4,550,699 |
1,930,049 |
| Income taxes payable |
11,786 |
67,917 |
| Deferred revenue |
100,761 |
110,010 |
| Current portion of unfavorable lease
rights |
279,144 |
277,920 |
| Current portion of long-term debt and
capital lease |
3,698,150 |
3,805,277 |
| Current portion of long-term debt,
related party |
59,328 |
62,067 |
| Total Current
Liabilities |
10,240,562 |
8,004,180 |
| Long-Term Liabilities |
|
|
| Capital lease, net of current
portion |
40,350 |
-- |
| Deferred rent |
1,960,279 |
1,628,301 |
| Unfavorable lease rights, net of current
portion |
6,015,939 |
6,156,123 |
| Long-term debt, net of current
portion |
18,015,608 |
19,751,021 |
| Long-term debt, related party, net of
current portion |
7,167,648 |
7,129,018 |
| Total Long-Term
Liabilities |
33,199,824 |
34,664,463 |
| Commitments and Contingent
Liabilities (Note 8) |
|
|
| Equity |
|
|
| Common stock $.0001 par value; 50,000,000
shares authorized;16,805,204 (2010) and 17,310,723 (2009) shares
issued and outstanding |
1,680 |
1,731 |
| Additional paid-in capital |
51,146,297 |
51,932,082 |
| Accumulated deficit |
(27,609,015) |
(26,996,863) |
| Total VCG Stockholders'
Equity |
23,538,962 |
24,936,950 |
| Noncontrolling interests in consolidated
partnerships |
3,550,261 |
3,545,580 |
| Total Equity |
27,089,223 |
28,482,530 |
| Total Liabilities and
Equity |
$ 70,529,609 |
$ 71,151,173 |
| |
| |
| VCG HOLDING
CORP. |
| CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
|
(unaudited) |
| |
|
|
|
|
| |
|
|
|
|
| |
Three Months
Ended |
Six Months
Ended |
| |
June
30, |
| |
2010 |
2009 |
2010 |
2009 |
| Revenue: |
|
|
|
|
| Sales of alcoholic beverages |
$ 5,340,529 |
$ 5,895,184 |
$ 10,664,286 |
$ 11,759,847 |
| Sales of food and merchandise |
509,445 |
464,595 |
1,031,666 |
936,127 |
| Service revenue |
7,610,153 |
6,820,358 |
14,784,609 |
13,518,639 |
| Other income |
826,705 |
779,175 |
1,616,078 |
1,519,117 |
| Total Revenue |
14,286,832 |
13,959,312 |
28,096,639 |
27,733,730 |
| Operating Expenses: |
|
|
|
|
| Cost of goods sold |
1,554,982 |
1,500,411 |
3,055,473 |
2,993,334 |
| Salaries and wages |
4,202,625 |
3,520,710 |
8,013,187 |
7,026,133 |
| Impairment of building and land |
-- |
268,000 |
-- |
268,000 |
| Contingent indemnification claim |
2,135,000 |
-- |
2,135,000 |
-- |
| Other general and administrative: |
|
|
|
|
| Taxes, permits and licenses |
790,031 |
730,919 |
1,780,812 |
1,619,796 |
| Charge card and bank fees |
164,403 |
214,701 |
344,196 |
407,937 |
| Rent |
1,520,151 |
1,475,348 |
3,016,469 |
2,923,864 |
| Legal fees |
702,283 |
279,904 |
935,526 |
685,853 |
| Other professional fees |
763,401 |
764,659 |
1,424,329 |
1,296,264 |
| Advisory fees related to change in control
proposals |
(1,264) |
-- |
15,137 |
-- |
| Advertising and marketing |
717,497 |
692,050 |
1,378,647 |
1,392,246 |
| Insurance |
524,904 |
437,246 |
941,748 |
817,604 |
| Utilities |
237,476 |
238,181 |
494,281 |
519,253 |
| Repairs and maintenance |
275,073 |
298,278 |
554,811 |
590,502 |
| Other |
983,789 |
914,077 |
1,964,062 |
1,955,641 |
| Depreciation and amortization |
443,044 |
434,171 |
898,541 |
859,540 |
| Total Operating
Expenses |
15,013,395 |
11,768,655 |
26,952,219 |
23,355,967 |
| Income (Loss) from
Operations |
(726,563) |
2,190,657 |
1,144,420 |
4,377,763 |
| Other Income
(Expenses): |
|
|
|
|
| Interest expense |
(526,387) |
(696,480) |
(1,066,824) |
(1,456,258) |
| Interest expense, related party |
(180,498) |
(218,467) |
(360,574) |
(387,545) |
| Interest income |
2,895 |
36 |
4,222 |
72 |
| Gain (Loss) on sale of assets |
1,324 |
12,357 |
(1,676) |
11,421 |
| Total Other Income
(Expenses) |
(702,666) |
(902,554) |
(1,424,852) |
(1,832,310) |
| Income (Loss) Before Income
Taxes: |
(1,429,229) |
1,288,103 |
(280,432) |
2,545,453 |
| Income tax expense — current |
76,000 |
32,832 |
122,000 |
173,243 |
| Income tax expense (benefit) —
deferred |
(343,000) |
385,168 |
(15,000) |
724,757 |
| Total Income Taxes |
(267,000) |
418,000 |
107,000 |
898,000 |
| Profit (Loss) of Consolidated and
Affiliated Companies |
(1,162,229) |
870,103 |
(387,432) |
1,647,453 |
| Net Income (Loss) Attributable to
Noncontrolling Interests |
(113,691) |
(106,820) |
(224,720) |
(231,997) |
| Net Income (Loss) Attributable to
VCG |
$ (1,275,920) |
$ 763,283 |
$ (612,152) |
$ 1,415,456 |
| Earnings (Loss) Per
Share |
|
|
|
|
| Basic and fully diluted income (loss) per
share attributable to VCG's stockholders |
$ (0.07) |
$ 0.04 |
$ (0.04) |
$ 0.08 |
| Basic and fully diluted weighted average
shares outstanding |
17,265,536 |
17,557,403 |
17,288,005 |
17,607,941 |
| |
| |
| VCG HOLDING
CORP. |
| CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
|
(unaudited) |
| |
|
|
| |
For the Six
Months Ended |
| |
June
30, |
| |
2010 |
2009 |
| Operating Activities: |
|
|
| Profit (loss) of consolidated and
affiliated companies |
$ (387,432) |
$ 1,647,453 |
| Adjustments to reconcile profit (loss) of
consolidated and affiliated companies to net cash provided by
operating activities: |
|
|
| Impairment of building and
land |
-- |
268,000 |
| Depreciation |
890,023 |
851,023 |
| Amortization of non-compete
agreements |
8,518 |
8,517 |
| Amortization of leasehold rights and
liabilities, net |
(103,026) |
(98,982) |
| Amortization of loan fees |
34,497 |
121,903 |
| Stock-based compensation
expense |
73,508 |
155,576 |
| Deferred income taxes |
(15,000) |
724,757 |
| (Gain) Loss on disposition of
assets |
1,676 |
(11,420) |
| Accrued interest added to long-term
debt |
122,813 |
170,065 |
| Changes in operating assets and
liabilities |
2,913,015 |
(344,329) |
| Net cash provided by operating
activities |
3,538,592 |
3,492,563 |
| Investing Activities: |
|
|
| Additions to property and
equipment |
(544,533) |
(480,170) |
| Deposits |
(1,261) |
-- |
| Proceeds from sale of assets |
3,000 |
122,051 |
| Net cash used by investing
activities |
(542,794) |
(358,119) |
| Financing Activities: |
|
|
| Proceeds from debt |
100,000 |
1,168,626 |
| Payments on debt |
(2,345,177) |
(1,573,213) |
| Proceeds from related party debt |
-- |
25,099 |
| Payments on related party debt |
(21,948) |
(880,944) |
| Borrowing (payments) on revolving line of
credit |
330,000 |
(1,200,000) |
| Payments on capitalized lease |
(1,564) |
(19,111) |
| Repurchase of stock |
(859,344) |
(447,934) |
| Distributions to noncontrolling
interests |
(220,039) |
(264,082) |
| Net cash used by financing
activities |
(3,018,072) |
(3,191,559) |
| Net decrease in cash |
(22,274) |
(57,115) |
| Cash, beginning of
period |
2,677,440 |
2,209,060 |
| Cash, end of period |
$ 2,655,166 |
$ 2,151,945 |
| |
| |
| VCG Holding
Corp. |
| EBITDA
Reconciliation |
|
(unaudited) |
| |
|
|
|
|
| |
Three Months
Ended |
Six Months
Ended |
| |
June
30, |
| |
2010 |
2009 |
2010 |
2009 |
| |
|
|
|
|
| Net Income (loss) |
$ (1,275,920) |
$ 763,283 |
$ (612,152) |
$ 1,415,456 |
| Add back: |
|
|
|
|
| Depreciation |
438,785 |
429,913 |
890,023 |
851,023 |
| Amortization of non-compete
agreements |
4,259 |
4,258 |
8,518 |
8,517 |
| Amortization of leasehold rights and
liabilities, net |
(51,513) |
(50,377) |
(103,026) |
(98,982) |
| Amortization of loan fees |
17,249 |
41,560 |
34,497 |
121,903 |
| Interest expense |
689,636 |
914,947 |
1,392,901 |
1,843,803 |
| Total income tax expense |
(267,000) |
418,000 |
107,000 |
898,000 |
| EBITDA |
$ (444,504) |
$ 2,521,584 |
$ 1,717,761 |
$ 5,039,720 |
| Total Revenue |
$ 14,286,832 |
$ 13,959,312 |
$ 28,096,639 |
$ 27,733,730 |
| EBITDA as a percentage of revenue |
* |
18.1% |
6.1% |
18.2% |
| ________________ |
|
|
|
|
| *- not meaningful |
|
|
|
|
| VCG Holding
Corp. |
|
| Calculation of Free
Cash Flow |
|
(unaudited) |
| |
|
|
|
|
| |
Three Months
Ended |
Six Months
Ended |
| |
June
30, |
| |
2010 |
2009 |
2010 |
2009 |
| |
|
|
|
|
| EBITDA |
$ (444,504) |
$ 2,521,584 |
$ 1,717,761 |
$ 5,039,720 |
| Less: |
|
|
|
|
| Interest expense |
689,636 |
914,947 |
1,392,901 |
1,843,803 |
| Current income tax |
76,000 |
32,832 |
122,000 |
173,243 |
| Capital expenditures |
337,354 |
348,914 |
544,533 |
480,170 |
| Free Cash Flow |
$ (1,547,494) |
$ 1,224,891 |
$ (341,673) |
$ 2,542,504 |
CONTACT: VCG Holding Corp.
Troy Lowrie, Chief Executive Officer
(303) 934-2424
tlowrie@vcgh.com
The Equity Group Inc.
Devin Sullivan, Senior Vice President
(212) 836-9608
dsullivan@equityny.com
Vcg Holding Corp. (MM) (NASDAQ:VCGH)
Graphique Historique de l'Action
De Jan 2025 à Fév 2025
Vcg Holding Corp. (MM) (NASDAQ:VCGH)
Graphique Historique de l'Action
De Fév 2024 à Fév 2025
