-----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, RbQBLvJTHJp7Uc3L4T7i2bnJMY7f0fn1y5F8Bc1sNI0fBSwP/gpJsyefRu5rXqDC 39Uil1WcVAaJbaU2WFLpJw== 0000930661-99-000245.txt : 19990215 0000930661-99-000245.hdr.sgml : 19990215 ACCESSION NUMBER: 0000930661-99-000245 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BFX HOSPITALITY GROUP INC CENTRAL INDEX KEY: 0000351220 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 751732794 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09822 FILM NUMBER: 99534120 BUSINESS ADDRESS: STREET 1: 226 BAILEY AVE STE 101 CITY: FORT WORTH STATE: TX ZIP: 76107 BUSINESS PHONE: 8173324761 MAIL ADDRESS: STREET 1: 226 BAILEY AVE STE 101 CITY: FORT WORTH STATE: TX ZIP: 76107 FORMER COMPANY: FORMER CONFORMED NAME: BUFFTON CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: BUFFTON OIL & GAS INC DATE OF NAME CHANGE: 19830405 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange - --- Act of 1934 For the quarterly period ended December 31, 1998 or - --- Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ________ to _____________ Commission file number 1-9822 BFX HOSPITALITY GROUP, INC. ----------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 75-1732794 - --------------------------------------- --------------------------------------- (State or Other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107 ----------------------------------------------------- (Address and zip code of principal executive offices) (817) 332-4761 -------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) ___________________________________________________________________ (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares outstanding at: Class February 5, 1999 - --------------------------------------- -------------------------------- Common stock, $.05 par value 3,991,863 1 BFX HOSPITALITY GROUP, INC. Index ----- Page ---- Part I - Financial Information............................................ 3 Item 1 - Financial Statements............................................. 3 Consolidated Condensed Balance Sheets December 31, 1998 (Unaudited) and September 30, 1998.................................................. 3 Consolidated Condensed Statements of Operations (Unaudited) Three Months Ended December 31, 1998 and 1997........................... 4 Consolidated Condensed Statements of Cash Flow (Unaudited) Three Months Ended December 31, 1998 and 1997........................... 5 Supplemental Disclosures of Cash Flow Information (Unaudited)............. 5 Notes to Consolidated Condensed Financial Statements (Unaudited).......... 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations................................................... 7 Part II - Other Information............................................... 10 Signatures................................................................ 11 2 PART I - FINANCIAL INFORMATION Item 1. - Financial Statements BFX HOSPITALITY GROUP, INC. Consolidated Condensed Balance Sheets ------------------------------------- December 31, September 30, 1998 1998 ------------- ------------- (Unaudited) Assets (In thousands) ------ Current assets: Cash and cash equivalents......................... $ 2,652 $ 5,342 Accounts receivable............................... 99 128 Inventories....................................... 199 148 Income tax receivable............................. 1,234 1,102 Prepaid and other current assets.................. 62 120 ------- ------- Total current assets........................... 4,246 6,840 ------- ------- Property, plant and equipment, at cost: Land, building and improvements................... 15,770 14,786 Less: Accumulated depreciation and amortization.. (3,991) (3,702) ------- ------- Net property, plant and equipment.............. 11,779 11,084 ------- ------- Goodwill, net of amortization of $1,659,000 and $1,567,000, respectively....................... 3,306 3,397 Deferred income taxes............................... 1,419 1,419 Other assets, net................................... 72 70 ------- ------- $20,822 $22,810 ======= ======= Liabilities and Stockholders' Equity - ---------------------------------------------------- Current liabilities: Current portion of long-term debt................. $ 138 $ 138 Accounts payable.................................. 679 578 Accrued liabilities............................... 3,780 4,793 Income taxes...................................... 266 847 ------- ------- Total current liabilities...................... 4,863 6,356 Long-term debt...................................... 1,040 1,075 ------- ------- Total liabilities.............................. 5,903 7,431 ------- ------- Stockholders' equity: Preferred stock $.01 par value; 5,000,000 shares authorized; no shares issued and outstanding... - - Common stock $.05 par value; 30,000,000 shares authorized; outstanding shares 7,786,878....... 389 389 Additional paid-in capital........................ 16,583 16,583 Retained earnings................................. 7,043 7,307 Treasury stock, at cost, 3,768,100 and 3,637,850 shares, respectively................ (8,973) (8,777) Employee notes for stock purchase................. (123) (123) ------- ------- Total stockholders' equity..................... 14,919 15,379 ------- ------- $20,822 $22,810 ======= ======= See accompanying notes to unaudited Consolidated Condensed Financial Statements. 3 BFX HOSPITALITY GROUP, INC. Consolidated Condensed Statements of Operations (Unaudited) ---------------------------------------------------------- Three Months Ended December 31, -------------------- 1998 1997 -------- -------- (In thousands, except per share amounts) Net revenues.................................... $3,773 $2,206 ------ ------ Cost of goods sold (exclusive of depreciation).. 949 487 Selling, general and administrative............. 2,860 2,197 Depreciation and amortization................... 380 261 ----- ----- Total operating costs and expenses 4,189 2,945 ----- ----- Net loss before other income and income taxes.............................. (416) (739) ----- ----- Other income (expense): Interest income................................ 44 211 Interest expense............................... (24) (30) ----- ----- 20 181 ----- ----- Loss before income taxes........................ (396) (558) Income tax benefit.............................. 132 195 ----- ----- Net loss........................................ (264) (363) ===== ===== Basic and diluted earnings per share: Net income (loss).......................................... $(0.06) $(0.06) ====== ====== Weighted average common shares outstanding...... 4,106 5,615 ====== ====== See accompanying notes to unaudited Consolidated Condensed Financial Statements. 4 BFX HOSPITALITY GROUP, INC. Consolidated Condensed Statements of Cash Flow (Unaudited) ---------------------------------------------------------- Three Months Ended December 31, ------------------ 1998 1997 -------- -------- (In thousands) Net cash provided (used) by operating activities.. $(1,475) $ 500 ------- ------- Cash flows from investing activities: Additions to property, plant and equipment...... (984) (1,784) ------- ------- Net cash used in investing activities............. (984) (1,784) ------- ------- Cash flows from financing activities: Repayments of long-term debt.................... (35) (34) Treasury stock purchases........................ (196) (528) ------- ------- Net cash used in financing activities............. (231) (562) ------- ------- Net decrease in cash.............................. (2,690) (1,846) Cash at beginning of period....................... 5,342 16,356 ------- ------- Cash at end of period............................. $ 2,652 $14,510 ======= ======= Supplemental Disclosures of Cash Flow Information (Unaudited) ------------------------------------------------------------- Supplemental schedule of cash payments: Three Months Ended December 31, ------------------ 1998 1997 -------- -------- (In thousands) Cash paid for: Interest........................................ $ 24 $ 30 Income taxes.................................... 582 63 See accompanying notes to unaudited Consolidated Condensed Financial Statements. 5 BFX HOSPITALITY GROUP, INC. Notes to Consolidated Condensed Financial Statements (Unaudited) ----------------------------------------------------- --------- Note A - ------ In the opinion of management, the accompanying consolidated condensed financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of BFX Hospitality Group, Inc. (the Company), as of December 31, 1998, and the results of its operations and its cash flows for the three month periods ended December 31, 1998 and 1997. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the 1998 BFX Hospitality Group, Inc. Form 10-K. Note B - ------ The results of operations for the three-month period ended December 31, 1998 are not necessarily indicative of the results to be expected for the full year. Note C - ------ During 1992, the United States Environmental Protection Agency (EPA) issued a Record of Decision (ROD) with respect to the Company's Superfund Site in Vestal, New York. The ROD required the Company to construct a water treatment facility at the site and to pump contaminated ground water from bedrock and overburden extraction wells for 15 to 30 years until remediation goals were met. Due to concerns about the correctness of the remedy provided for in the ROD, the Company performed additional fieldwork and, in 1995, the EPA agreed the remedy needed to be modified. After additional discussions with the EPA, a revised ROD was issued in July 1997. The revised ROD eliminates certain provisions of the original ROD and primarily includes the removal and treatment of contaminated soil. At September 30, 1997, the Company had accrued environmental remediation expenses of $3,550,000. In June 1998, the Company signed a Consent Decree with the EPA in regard to the implementation of the agreed-upon remedy and ongoing monitoring of the property. In addition, the Company reimbursed the EPA $550,000 for monies spent by the EPA at the Company's Superfund Site over a ten-year period from October 1987 through April 1997. At December 31, 1998, the Company has a liability accrued of $2,940,000 representing the estimated future costs of implementing the agreed-upon remedy. 6 BFX HOSPITALITY GROUP, INC. PART I - FINANCIAL INFORMATION - ------------------------------ Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations General Information At December 31, 1998, the Company owned and operated food service, lodging and entertainment facilities in Texas and Louisiana. Factors That May Affect Future Results Certain matters discussed herein are forward-looking statements about the business, financial condition and prospects of the Company. The actual results could differ materially from those indicated by such forward-looking statements because of various risks and uncertainties. Such risks and uncertainties may include, but are not limited to regional and national economic conditions, changes in customer demand for products offered by the Company, and other matters that may adversely affect the availability of products and pricing, state and federal regulatory environment, possible future acquisitions or dispositions, amendments to the Record of Decision issued by the Environmental Protection Agency (see Liquidity and Capital Resources) and other risks indicated in the Company's previous filings with the Securities and Exchange Commission. The Company cannot control these risks and uncertainties, and in many cases, cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. Results of Operations Revenues for the three month period ended December 31, 1998 increased 71% due to the opening of the second Cabo unit in Houston, Texas in April 1998, the opening of the H3 Ranch restaurant located in the Stockyards Hotel in August 1998 and the opening of the third Cabo unit in Fort Worth, Texas in December 1998. Future revenues are expected to increase as additional Cabo units are planned to open during fiscal 1999. Costs of goods sold (which consists primarily of food and beverage costs) during the three month period ended December 31, 1998 increased 95% compared to the prior year quarter. As a percent of related revenue, these costs were 25% during 1998 versus 22% a year earlier. The absolute increase is due to increased revenues discussed above. The increase in costs as a percentage of revenues is due to the decreased percentage of sales from the Stockyards Hotel which have a lower cost of goods sold than the Company's other concepts. Selling, general and administrative expenses for the three month period ended December 31, 1998 increased 30% compared to the prior year quarter. The primary reasons for the increase is the inclusion of the results of operations of Cabo Travis and H3 Ranch from their respective opening dates in fiscal 1998 and Cabo Fort Worth from its opening date in fiscal 1999. The decrease in interest income to $44,000 for the 1998 three-month period from $211,000 in 1997 is due to the reduction in cash balances due to investing and financing activities in fiscal 1998 and 1999. See Liquidity and Capital Resources. The decrease in interest expense to $24,000 for the 1998 three month period from $30,000 in 1997 is primarily due to the reduction of a mortgage loan balance under the terms of the Company's note agreement. 7 Liquidity and Capital Resources The Company's cash decreased $2,690,000 from $5,342,000 at September 30, 1998 to $2,652,000 at December 31, 1998. The cash used in operating activities during the three months ended December 31, 1998 was primarily attributable to payments made to Jean-Claude Mathot, a former officer of the Company, totaling $831,000 pursuant to the terms of his employment agreement upon termination of his employment. The total payment included $656,000 to purchase shares of the Company's common stock owned by Mr. Mathot and $175,000 for severance compensation. The expense related to this transaction was recorded in fiscal 1998. In addition, $582,000 was paid in federal and state tax liabilities that had been accrued in previous years. Cash used for investing activities of $984,000 related primarily to the construction of Cabo Fort Worth, opened during the first quarter of fiscal 1999. Cash used for financing activities of $231,000 was primarily the result of the Company purchasing 130,250 shares of its common stock at a total cost of $196,000 (average cost of $1.50 per share). The shares are recorded as treasury stock and will be available for employee stock plans and other corporate requirements. At December 31, 1998, the Company's only debt relates to a mortgage loan assumed in the acquisition of the Stockyards hotel with annual commitments of $138,000. The Company expects to incur approximately $2,000,000 in construction costs for the two additional Cabo units expected to open in the last two quarters of fiscal 1999 in Austin, Texas. Management anticipates incurring $250,000 in fiscal 1999 in the initial phase of implementing the agreed-upon remedy for its EPA Superfund Site. As long as the Company's shares continue to represent an attractive investment and a prudent use of capital, the Company intends to periodically purchase up to an additional 40,000 shares of the Company's common stock pursuant to its stock repurchase plan. Also, the Company will fund the cost of ensuring that the Company's systems are Year 2000 compliant, which are not currently expected to be significant. Management believes that cash flow from operations combined with cash on hand will provide sufficient resources to fund the Company's fiscal 1999 operations as well as its planned fiscal 1999 capital expenditures. During 1992, the United States Environmental Protection Agency (EPA) issued a Record of Decision (ROD) with respect to the Company's Superfund Site in Vestal, New York. The ROD required the Company to construct a water treatment facility at the site and to pump contaminated ground water from bedrock and overburden extraction wells for 15 to 30 years until remediation goals were met. Due to concerns about the correctness of the remedy provided for in the ROD, the Company performed additional fieldwork and, in 1995, the EPA agreed the remedy needed to be modified. After additional discussions with the EPA, a revised ROD was issued in July 1997. The revised ROD eliminates certain provisions of the original ROD and primarily includes the removal and treatment of contaminated soil. At September 30, 1997, the Company had accrued environmental remediation expenses of $3,550,000. In June 1998, the Company signed a Consent Decree with the EPA in regard to the implementation of the agreed-upon remedy and ongoing monitoring of the property. In addition, the Company reimbursed the EPA $550,000 for monies spent by the EPA at the Company's Superfund Site over a ten- year period from October 1987 through April 1997. At December 31, 1998, the Company has a liability accrued of $2,940,000 representing the estimated future costs of implementing the agreed-upon remedy. 8 Year 2000 The Company is currently assessing all systems that could potentially be affected by the Year 2000 Issue, including facility systems, POS systems, telephone hardware and software, out-sourced services and suppliers. Based on information currently available, management does not anticipate significant replacements of any of its computer systems. By spring 1999, management intends to have obtained upgrades or replacements for all equipment that is determined not to be Year 2000 compliant. Management has the intent and ability to commit the required resources to the upgrades or replacements but at the current time cannot estimate what the total cost will be, though it is not anticipated to be material. The Company will diligently test all upgrades or replacements prior to summer 1999 to ensure their compliance. In addition to the current assessment of its systems, the Company is working with its key suppliers and other third parties with which it has a material relationship to determine that such parties are achieving compliance with respect to the Year 2000 Issue in those systems affecting the Company's operations. Although the Company believes that such persons are working diligently to properly address the Year 2000 Issue, the Company cannot guarantee that these third parties will be compliant in a timely manner, or that a failure to be compliant by another company would not have a material adverse effect on the Company. Though the Company is not able to estimate the full impact of any potential failure of its systems as a result of the Year 2000 Issue, the Company believes that its operations are such that a contingency plan based primarily on manual processing of information will be adequate for the Company to continue operations. 9 BFX HOSPITALITY GROUP, INC. PART II - OTHER INFORMATION - --------------------------- Item 1. - Legal Proceedings None Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K None 10 BFX HOSPITALITY GROUP, INC. SIGNATURES ---------- Pursuant to the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BFX HOSPITALITY GROUP, INC. (Registrant) By: /s/ Robert H. McLean ------------------------ Chairman of the Board and President February 13, 1999 - ----------------- By: /s/ Robert Korman ------------------------- Vice President and Chief Financial Officer February 13, 1999 - ----------------- 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS SEP-30-1999 OCT-01-1998 DEC-31-1998 2,652 0 99 0 199 4,246 15,770 3,991 20,822 4,863 0 0 0 389 14,530 20,822 3,773 3,773 949 4,189 0 0 24 (396) (132) (264) 0 0 0 (264) (0.06) 0
-----END PRIVACY-ENHANCED MESSAGE-----