you wrote: I agree with much of your analysis. However, the following statement that you made is unsubstantiated garbage: "As it appears that much of the new store opening expenditures is being financed directly and indirectly by KKD (investments, loans, loan guarantees, etc�), it will likely require KKD to raise large amounts of additional capital."
KKD has a few joint ventures, but they are not financing (directly or indirectly) much of the new stores being opened. --- my statements: My concern is with the more recent store openings.
By my calculations, KKD opened 27 new franchise stores (including the Northern California consolidated joint venture) during the three quarters from July 30, 2000 to April 29, 2001. Assuming $1 million per store, a $27 million capital outlay by SOMEBODY is required.
Note the following KKD balance sheet changes during the same period: A/R Affiliates increased by $3.4 million Revolving line of credit increased by $4.4 million Investments in unconsolidated joint ventures increased by $4.9 million
IMO, these changes represent financing of new store openings. The sum, $12.7 million, represents 47% of the assumed $27.0 million outlay.
That is the basis for my statements. I'll be looking closely at these accounts in the upcoming earnings statement to see if the trend has continued.