Priszm Income Fund, which gets royalties on sales at more than 400 KFC, Taco Bell and Pizza Hut restaurants, has taken another $65.9-million writedown on the value of dozens of underperforming properties that had been marked for sale or closure.
The fund also announced today that it has decided to keep 95 of the stores that had been on the block, leaving only 18 to be sold or closed.
“While the reclassification of 95 stores to continuing operations will result in a one-time catch up in amortization, it did not affect our cash flow for the fourth quarter nor increase our headcount or related store support expenses in 2008 and 2009. In fact, these restaurants have been performing better recently and could enhance operating performance over the long term,” Steve Boyack, Priszm’s chief financial officer, said in a statement.
Including the fourth quarter impairment charges, a non-cash accounting item, Priszm’s net loss for the 2008 fiscal year was $30 million, compared with a net loss of $31.4 million in 2007, which included impairment charges totalling $51.3 million.
Excluding these impairment charges, net income for the 2008 fiscal year was $9.5 million in 2008 versus a net loss of $0.6 million in 2007.
The fund, which announced in 2007 that it would concentrate on its high-volume locations and divest the rest, said 21 locations have been closed since then and 16 have been sold.
“Although there was a lot of interest in our assets, the soft economy together with the tight credit markets made the sales process very difficult,” Boyack said.
On the operations front, restaurant sales for the fourth quarter were $137.6 million, an increase of $3.2 million, or 2.4%, from the same quarter in 2007.
For the full year, restaurant sales were $444.3 million, a slight decline from the previous year.
