-----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, EQuPYW+3Hr9XajWnG+lc+jV0gC29XeF6OBStzeVECQVtzL4U4/OlhWEVNcLZoAf9 UMyAEz5jjC7BDmBXfjUD1g== /in/edgar/work/0000912057-00-048943/0000912057-00-048943.txt : 20001114 0000912057-00-048943.hdr.sgml : 20001114 ACCESSION NUMBER: 0000912057-00-048943 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICH CORP /DE/ CENTRAL INDEX KEY: 0000049588 STANDARD INDUSTRIAL CLASSIFICATION: [6321 ] IRS NUMBER: 436069928 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07697 FILM NUMBER: 760216 BUSINESS ADDRESS: STREET 1: 9255 TOWNE CENTRE DRIVE STREET 2: SUITE 600 CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 2149547111 MAIL ADDRESS: STREET 1: P.O. BOX 2699 STREET 2: SUITE 400 CITY: DALLAS STATE: TX ZIP: 75221 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHWESTERN LIFE CORP DATE OF NAME CHANGE: 19940808 FORMER COMPANY: FORMER CONFORMED NAME: ICH CORP DATE OF NAME CHANGE: 19930506 FORMER COMPANY: FORMER CONFORMED NAME: ICH CORP/CONSOL NAT/RTS/CFR/MOD AMER LIFE INS/SW LIFE INS/CF DATE OF NAME CHANGE: 19930505 10-Q 1 a2029884z10-q.txt 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 2000 COMMISSION FILE NUMBER 1-7697 ------------------------ I.C.H. CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 43-6069928 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 9255 TOWNE CENTRE DRIVE 92121 SUITE 600 (Zip code) SAN DIEGO, CALIFORNIA (Address of principal executive offices)
------------------------ Registrant's telephone number, including area code: (858) 587-8533 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 and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / 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 /X/ No / / Number of shares of common stock outstanding on September 30, 2000: 2,834,986 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- I.C.H. CORPORATION AND SUBSIDIARIES INDEX
PAGE NUMBER ------ Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets-September 30, 2000 and December 31, 1999................ 3 Consolidated Statements of Operations for the Three Months ended September 30, 2000 and for the Three Months ended September 30, 1999.............. 4 Consolidated Statements of Operations for the Nine Months ended September 30, 2000 and for the Nine Months ended September 30, 1999............... 5 Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2000 and for the Nine Months ended September 30, 1999............... 6 Notes to Consolidated Financial Statements.......................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................................ 9 Part II. Item 5. Other Information................................................................... 15 Item 6. Exhibits and Reports on Form 8-K.................................................... 16 Signatures.......................................................................... 17
2 I.C.H. CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE AMOUNTS)
AS OF AS OF SEPTEMBER 30, 2000 DECEMBER 31, 1999 ------------------ ----------------- (UNAUDITED) ASSETS Current Assets: Cash and cash equivalents................................. $ 3,416 $ 15,085 Accounts receivable....................................... 933 735 Inventories............................................... 3,110 2,867 Deferred income taxes..................................... 1,029 1,029 Other current assets, net................................. 2,654 2,769 -------- -------- Total current assets.................................... 11,142 22,485 Property and equipment, net................................. 68,084 54,461 Intangible assets, net...................................... 50,842 47,622 Deferred income taxes....................................... 70 70 Other Assets................................................ 7,658 8,018 -------- -------- Total assets............................................ $137,796 $132,656 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable.......................................... $ 8,797 $ 9,962 Accrued liabilities....................................... 8,498 11,539 Current portion of long-term debt......................... 5,452 4,295 Current portion of capital lease obligations.............. 502 244 -------- -------- Total current liabilities............................... 23,249 26,040 Non-current liabilities: Long-term debt............................................ 87,009 78,009 Long-term capital lease obligations....................... 3,100 2,174 Other liabilities......................................... 7,610 7,113 -------- -------- Total liabilities....................................... 120,968 113,336 -------- -------- Stockholders' Equity: Preferred stock, $0.01 par value; 1,000,000 authorized; none issued and outstanding............................. -- -- Common stock, $0.01 par value; 19,000,000 authorized; 2,832,986 outstanding................................... 28 28 Paid-in-capital........................................... 12,434 12,662 Retained earnings......................................... 4,366 6,630 -------- -------- Total stockholders' equity.............................. 16,828 19,320 -------- -------- Total liabilities and stockholders' equity.............. $137,796 $132,656 ======== ========
The accompanying Notes are an integral part of the Consolidated Financial Statements. 3 I.C.H. CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED (IN THOUSANDS EXCEPT SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED SEPTEMBER --------------------- 2000 1999 --------- --------- Restaurant sales............................................ $ 64,090 $ 61,127 Other....................................................... 462 166 --------- --------- Total Revenues.......................................... 64,552 61,293 Cost and expenses: Restaurant costs and expenses............................. 56,222 52,259 General and administrative................................ 3,940 3,489 Depreciation and amortization............................. 1,985 1,386 Other..................................................... (72) 62 --------- --------- Operating income (loss)..................................... 2,477 4,097 Interest expense.......................................... 2,681 2,062 --------- --------- Income (loss) before income taxes........................... (204) 2,035 Provision for income taxes................................ (83) 824 --------- --------- Net income (loss)........................................... $ (121) $ 1,211 ========= ========= Net income (loss) per share: Basic..................................................... $ (.04) $ .43 Diluted................................................... $ (.04) $ .34 Weighted-average common shares outstanding (see Note 3): Basic..................................................... 2,862,000 2,847,000 Diluted................................................... 2,862,000 3,603,000
The accompanying Notes are an integral part of the Consolidated Financial Statements. 4 I.C.H. CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED (IN THOUSANDS EXCEPT SHARE AMOUNTS)
FOR THE NINE MONTHS ENDED SEPTEMBER --------------------- 2000 1999 --------- --------- Restaurant sales............................................ $ 186,748 $ 181,863 Other....................................................... 736 338 --------- --------- Total Revenues............................................ 187,484 182,201 Cost and expenses: Restaurant costs and expenses............................. 161,552 155,294 General and administrative................................ 11,865 10,904 Depreciation and amortization............................. 5,448 4,128 Non-recurring and restructuring charges................... 4,920 -- Other..................................................... (173) 187 --------- --------- Operating income............................................ 3,872 11,688 Interest expense.......................................... 7,511 6,053 --------- --------- Income (loss) before income taxes........................... (3,639) 5,635 Provision for income taxes................................ (1,474) 2,282 --------- --------- Net income (loss)........................................... $ (2,165) $ 3,353 ========= ========= Net income (loss) per share: Basic..................................................... $ (.75) $ 1.20 Diluted................................................... $ (.75) $ .96 Weighted-average common shares outstanding (see Note 3): Basic..................................................... 2,873,000 2,796,000 Diluted................................................... 2,873,000 3,503,000
The accompanying Notes are an integral part of the Consolidated Financial Statements. 5 I.C.H. CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED (IN THOUSANDS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, ----------------------- 2000 1999 -------- -------- Cash flows from operating activities: Net income................................................ $(2,165) $3,353 Adjustments to reconcile net income to cash from operating activities Depreciation and amortization........................... 5,448 4,128 Deferred income taxes................................... -- (206) Changes in current assets and liabilities: Accounts receivable....................................... (198) (115) Inventories............................................... (243) (337) Accounts payable and accrued expenses..................... (4,206) 1,229 Other, net................................................ (51) 394 ------- ------ Net cash provided (used) by operating activities........ (1,415) 8,446 ------- ------ Cash flows from investing activities: Capital expenditures...................................... (17,152) (8,246) Proceeds from disposition of property and equipment....... -- -- Acquisition of restaurant properties...................... (4,849) (1,351) Other, net................................................ 680 1,458 ------- ------ Net cash used by investing activities................... (21,321) (8,139) ------- ------ Cash flows from financing activities: Proceeds from issuance of long-term debt and capital lease obligations, net........................................ 18,373 3,726 Repayment of long-term debt and capital lease obligations............................................. (6,979) (5,563) Issuance of common stock.................................. 188 119 Repurchases of common stock................................. (515) (282) ------- ------ Net cash provided (used) by financing activities........ 11,067 (2,000) ------- ------ Net changes in cash and cash equivalents.................... (11,669) (1,693) Cash and cash equivalents at beginning of period............ 15,085 9,235 ------- ------ Cash and cash equivalents at end of period.................. $ 3,416 $7,542 ======= ====== Supplemental Disclosure of Non-Cash Financing Activity: During the nine months ended September 30, 2000, the Company entered into a $3.1 million capital lease for the purchase of point of sale equipment.
The accompanying Notes are an integral part of the Consolidated Financial Statements. 6 I.C.H. CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) NOTE 1. BUSINESS PREPARATION OF INTERIM FINANCIAL STATEMENTS The Consolidated Interim Financial Statements of I.C.H. Corporation (the "Company") and Subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). These Consolidated Interim Financial Statements include estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the amounts of revenues and expenses. Actual results could differ from those estimates. In the opinion of management, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. All adjustments are of a normal recurring nature unless otherwise disclosed. Certain information and footnote disclosures prepared in accordance with generally accepted accounting principles have been either condensed or omitted pursuant to SEC rules and regulations. The Company believes, however, that the disclosures made are adequate for a fair presentation of results of operations, financial position and cash flows. These Consolidated Interim Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company's latest annual report on Form 10-K. BUSINESS AND PRESENTATION The accompanying Consolidated Interim Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, principally Sybra, Inc. ("Sybra") and Lyon's of California, Inc. ("Lyon's"). All significant intercompany accounts and transactions have been eliminated. NOTE 2. SEGMENT INFORMATION The Company operates entirely in the food service industry with substantially all of its revenues flowing from the sale of menu products at the restaurants operated by its wholly-owned subsidiaries. At September 30, 2000, Sybra owned and operated 208 Arby's restaurants and Lyon's owned and operated 72 Lyon's restaurants. The Company considers each subsidiary a reportable segment. Amounts described as "Corporate and other" relate to revenues, expenses and assets associated with non-segmented operations. 7 NOTE 2. SEGMENT INFORMATION (CONTINUED) The Company evaluates performance based on several factors, of which the primary financial measure is business segment operating income (defined as restaurant sales less restaurant costs and expenses, depreciation and amortization.
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- SALES Sybra................................................. $40,997 $36,192 $117,459 $106,451 Lyon's................................................ 23,093 24,935 69,289 75,412 Corporate and other................................... -- -- -- -- ------- ------- -------- -------- Total consolidated sales.............................. $64,090 $61,127 $186,748 $181,863 ======= ======= ======== ========
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- DEPRECIATION AND AMORTIZATION Sybra....................................................... $1,505 $1,130 $4,174 $3,367 Lyon's...................................................... 480 256 1,274 761 Corporate and other......................................... -- -- -- -- ------ ------ ------ ------ Total consolidated depreciation and amortization............ $1,985 $1,386 $5,448 $4,128 ====== ====== ====== ======
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- OPERATING INCOME Sybra..................................................... $5,226 $5,350 $16,795 $16,046 Lyon's.................................................... 617 2,132 2,953 6,395 Corporate and other....................................... -- -- -- -- ------ ------ ------- ------- Total operating income for reportable segments............ $5,843 $7,482 $19,748 $22,441 ====== ====== ======= =======
NINE MONTHS ENDED SEPTEMBER 30, ------------------- 2000 1999 -------- -------- CAPITAL EXPENDITURES Sybra....................................................... $14,599 $6,986 Lyon's...................................................... 2,553 1,260 Corporate and other......................................... -- -- ------- ------ Total capital expenditures for reportable segments.......... $17,152 $8,246 ======= ======
8 NOTE 2. SEGMENT INFORMATION (CONTINUED)
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ ASSETS Sybra....................................................... $102,909 $ 97,627 Lyon's...................................................... 32,017 30,540 Corporate and other......................................... 2,870 4,489 -------- -------- Total consolidated assets................................... $137,796 $132,656 ======== ========
NOTE 3. EQUITY AND EARNINGS PER COMMON SHARE Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during each period. Diluted computations include dilutive common share equivalents.
NINE MONTHS ENDED ----------------------------- SEPTEMBER 30, SEPTEMBER 30, 2000 1999 ------------- ------------- Income for computation of basic earnings per share and diluted earnings per share................................ $ (2,165) $3,353 =========== ====== Weighted-average shares for computation of basic earnings per share................................................. 2,873 2,796 Incremental shares on assumed issuance and repurchase of stock options............................................. -- 707 ----------- ------ Weighted-average shares for computation of diluted earnings per share................................................. 2,873 3,503 =========== ====== Basic earnings per share.................................... $ (.75) $ 1.20 Diluted earnings per share.................................. $ (.75) $ .96
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain information discussed below may constitute forward-looking statements within the meaning of the federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from projected results. Among those risks, trends and uncertainties are the general economic climate, costs of food and labor, consumer demand, interest rate levels, the availability of financing and other risks associated with the acquisition, development and operation of new and existing restaurants. Unless otherwise indicated all amounts are in thousands, except share amounts. GENERAL The Company conducts its restaurant operations principally through two wholly-owned subsidiaries, Sybra, Inc. and Lyon's of California, Inc. Restaurant costs and expenses include all direct costs, including direct labor, occupancy costs, advertising expenses, royalty payments, expenditures for repairs and maintenance, and workers' compensation, casualty and general liability insurance costs. Advertising fees paid by the Company's Sybra subsidiary to the AFA Service Corporation, a non-profit association of Arby's restaurant operators, to develop and prepare advertising materials and to undertake marketing research, are equal 9 to 0.7% of restaurant sales. In addition, the Company operates its restaurants pursuant to licenses which require the Company to pay Arby's, Inc. a royalty based upon percentages of its restaurant sales (presently an aggregate of approximately 3.3% of the Company's restaurant sales). The royalty rate for new restaurants (currently 4.0%) will result in an increase in the Company's aggregate royalty rate as new Arby's restaurants are opened. General and administrative expenses consist of corporate and regional office expenses, including executive and administrative compensation, office expenses, travel and professional fees. RESULTS OF OPERATIONS The following table sets forth, with respect to the Company and for the periods indicated, the percentage of total revenues represented by certain expense and income items.
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ---------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Revenues.................................................... 100.0% 100.0% 100.0% 100.0% Expenses Restaurant costs & expenses................................. 87.1% 85.3% 86.2% 85.2% General & administrative.................................... 6.1% 5.7% 6.3% 6.0% Depreciation & amortization................................. 3.1% 2.3% 2.9% 2.3% Non-recurring and restructuring charge...................... -- -- 2.6% -- Other....................................................... (0.1%) -- (0.1%) 0.1% ----- ----- ----- ----- Operating income............................................ 3.8% 6.7% 2.1% 6.4% Interest expense............................................ 4.1% 3.4% 4.0% 3.3% ----- ----- ----- ----- Income (loss) before taxes.................................. (0.3%) 3.3% (1.9%) 3.1% Income tax expense.......................................... (0.1%) 1.3% (0.8%) 1.3% ----- ----- ----- ----- Net income (loss)........................................... (0.2%) 2.0% (1.1%) 1.8% ===== ===== ===== =====
COMPARISON OF THE QUARTER ENDED SEPTEMBER 30, 2000 AND THE QUARTER ENDED SEPTEMBER 30, 1999. Revenues-Consolidated revenues were $64.6 million for the quarter ended September 30, 2000 as compared to $61.3 million for the quarter ended September 30, 1999, an increase of $3.3 million or 5.3%. This sales increase is due primarily to additional sales from Sybra new store openings and acquisitions, offset by the sale of 9 Sybra Arby's location during the fourth quarter of 1999, a Sybra same store sales decrease of 2.8%, one closed Lyon's restaurant in the fourth quarter of 1999, the temporary closing of one Lyon's restaurant for remodeling during the quarter, one Lyon's restaurant closed due to fire in July, 2000 and a Lyon's same store sales decrease of 4.8%. Restaurant Costs & Expenses-Consolidated restaurant costs and expenses were $56.2 million, or 87.1% of revenues, for the quarter ended September 30, 2000, as compared to $52.3 million or 85.3% of revenues for the quarter ended September 30, 1999, an increase of $4.0 million. The increase in total restaurant costs and expenses is due to costs associated with the new Sybra restaurants discussed above. As a percentage of sales, costs increased primarily as a result of reduced restaurant level efficiencies related to the decrease in same store sales and moderate inflation in the cost of food, labor and other restaurant operating costs. General and Administrative-General and administrative costs and expenses were $3.9 million, or 6.1% of revenues, for the quarter ended September 30, 2000, as compared to $3.5 million, or 5.7% of sales, for the quarter ended September 30, 1999. General and administrative costs for the three months 10 ended September 30, 2000 include a non-recurring, pre-opening charge amounting to $131,000 related to Lyon's remodels. Depreciation and Amortization-Consolidated depreciation and amortization expense was $2.0 million, or 3.1% of revenues, for the quarter ended September 30, 2000, as compared to $1.4 million, or 2.3% of revenues, for the quarter ended September 30, 1999, an increase of $599,000. This increase is due to added depreciation expense associated with the new Sybra restaurants discussed above, depreciation associated with a new point of sale system at Lyon's, depreciation associated with the capital expenditures for the three remodeled Lyon's restaurants and depreciation related to normal capital expenditures at both Sybra and Lyon's. Interest Expense-Consolidated interest expense was $2.7 million, or 4.1% of revenues for the quarter ended September 30, 2000, as compared to $2.1 million or 3.4% of revenues for the quarter ended September 30, 1999. This increase is due to interest expense related to Sybra's new store openings and acquisitions as well as interest related to the financing of new point of sale equipment at Lyon's. COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1999. Revenues-Consolidated revenues were $187.5 million for the nine months ended September 30, 2000 as compared to $182.2 million for the nine months ended September 30, 1999, an increase of $5.3 million, or 2.9%. This increase is due primarily to additional sales from Sybra new store openings and acquisitions offset by the sale of 9 Sybra Arby's locations during the fourth quarter of 1999, a Sybra same store sales decrease of 1.6%, one closed Lyon's restaurant in the fourth quarter of 1999, the temporary closing of three Lyon's restaurants for remodeling during the period, one Lyon's restaurant closed due to fire in July, 2000 and a Lyon's same store sales decrease of 6.3%. Restaurant Costs & Expenses-Consolidated restaurant costs and expenses were $161.6 million, or 86.2% of revenues, for the nine months ended September 30, 2000, as compared to $155.3 million, or 85.2% of revenues, for the nine months ended September 30, 1999, an increase of $6.3 million. The increase in total restaurant costs and expenses is due to costs associated with the new Sybra restaurants discussed above. As a percentage of sales, costs increased primarily as a result of reduced restaurant level efficiencies related to the decrease in same store sales and moderate inflation in the cost of food, labor and other restaurant operating costs. General and Administrative-General and administrative costs and expenses were $11.9 million, or 6.3% of revenues, for the nine months ended September 30, 2000, as compared to $10.9 million, or 6.0% of revenues, for the nine months ended September 30, 1999. General and administrative costs for the nine months ended September 30, 2000 include a non-recurring, pre-opening charge amounting to $153,000 related to the remodeling of three Lyon's restaurants. Depreciation and Amortization-Consolidated depreciation and amortization expense was $5.4 million, or 2.9% of revenues, for the nine months ended September 30, 2000, as compared to $4.1 million, or 2.3% of revenues, for the nine months ended September 30, 1999, an increase of $1.3 million. This increase is due to added depreciation expense associated with the new Sybra restaurants discussed above, depreciation associated with a new point of sale system at Lyon's, depreciation associated with the capital expenditures for the three remodeled Lyon's restaurants and depreciation related to normal capital expenditures at both Sybra and Lyon's. Non-recurring and Restructuring Charges-In the second quarter ended June 30, 2000, the Company recorded a charge of $4.9 million primarily related to payments associated with the departure of the former Chief Executive Officer of the Company. 11 Interest Expense-Consolidated interest expense was $7.5 million, or 4.0% of revenues, for the nine months ended September 30, 2000, as compared to $6.1 million, or 3.3% of revenues, for the nine months ended September 30, 1999. This increase is due to interest expense related to Sybra's new store openings and acquisitions and to the purchase of new point of sale equipment for the Company's Lyon's restaurants. OPERATING SEGMENTS The Company operates entirely in the food service industry with substantially all revenues resulting from the sale of menu products at the restaurants operated by its wholly-owned subsidiaries. At September 30, 2000, Sybra owned and operated 208 Arby's restaurants and Lyon's owned and operated 72 Lyon's restaurants. The Company considers each subsidiary a reportable segment. The Company evaluates performance based on several factors, of which the primary financial measure is business segment operating income.
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ---------------------- SYBRA, INC. 2000 1999 2000 1999 - ----------- -------- -------- -------- -------- Sales...................................... 100.0% 100.0% 100.0% 100.0% Expenses Restaurant costs & expenses.............. 83.5% 82.1% 82.1% 81.8% Depreciation & amortization.............. 3.7% 3.2% 3.6% 3.1% ----- ----- ----- ----- Operating income........................... 12.8% 14.8% 14.3% 15.0% ===== ===== ===== =====
COMPARISON OF THE QUARTER ENDED SEPTEMBER 30, 2000 AND QUARTER ENDED SEPTEMBER 30, 1999-SYBRA, INC. Sales-Sybra's sales for the quarter ended September 30, 2000 were $41.0 million, as compared to $36.2 million for the quarter ended September 30, 1999, an increase of $4.8 million, or 13.3% over the prior year comparable period. This increase is due to sales from new store openings and store acquisitions, offset by a same store sales decrease of 2.8% and the disposition of 9 Arby's units in the fourth quarter of 1999. Restaurant Costs & Expenses-Sybra's restaurant costs and expenses were $34.2 million, or 83.5% of sales, for the quarter ended September 30, 2000 as compared to $29.7 million, or 82.1% of sales, for the quarter ended September 30, 1999, an increase of $4.5 million due to the sales increase explained above. As a percentage of sales, costs increased primarily as a result of lower same store sales volumes and moderate inflation in the cost of food, labor and other restaurant operating costs. Depreciation and Amortization-Sybra's depreciation and amortization expense was $1.5 million, or 3.7% of sales, for the quarter ended September 30, 2000, as compared to $1.1 million, or 3.1% of sales, for the quarter ended September 30, 1999. This increase is due to additional depreciation related to Sybra's new store openings and store acquisitions. 12 COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND NINE MONTHS ENDED SEPTEMBER 30, 1999-SYBRA, INC. Sales-Sybra's sales for the nine months ended September 30, 2000 were $117.5 million, as compared to $106.5 million for the nine months ended September 30, 1999, an increase of $11.0 million, or 10.3%, over the prior year comparable period. This increase is due to sales from new store openings and store acquisitions, offset by a same store sales decrease of 1.6% and the disposition of 9 Arby's units in the fourth quarter of 1999. Restaurant Costs & Expenses-Sybra's restaurant costs and expenses were $96.5 million, or 82.1% of sales, for the nine months ended September 30, 2000, as compared to $87.0 million, or 81.8% of sales, for the nine months ended September 30, 1999, an increase of $9.5 million due to the sales increase explained above. As a percentage of sales, restaurant operating costs increased slightly as a result of the lower same store sales volumes and moderate inflation in the cost of food, labor and other restaurant operating costs. Depreciation and Amortization-Sybra's depreciation and amortization expense was $4.2 million, or 3.6% of sales, for the nine months ended September 30, 2000, as compared to $3.4 million, or 3.2% of sales, for the nine months ended September 30, 1999. This increase is due to additional depreciation related to Sybra's new store openings and store acquisitions. New stores typically experience higher depreciation as a percentage of sales and as a result depreciation will increase as a blended percentage of sales as new Arby's units are opened. CAPITAL EXPENDITURES-SYBRA, INC. Sybra's capital expenditures were $14.6 million and $7.0 million for the nine month periods ended September 30, 2000 and September 30, 1999, respectively. These amounts include new store development, as well as store maintenance, store remodel and store renovation capital expenditures.
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ---------------------- LYON'S 2000 1999 2000 1999 - ------ -------- -------- -------- -------- Sales...................................... 100.0% 100.0% 100.0% 100.0% Expenses Restaurant costs & expenses.............. 95.2% 90.4% 93.9% 90.5% Depreciation & amortization.............. 2.1% 1.0% 1.8% 1.0% ----- ----- ----- ----- Operating income........................... 2.7% 8.6% 4.3% 8.5% ===== ===== ===== =====
COMPARISON OF THE QUARTER ENDED SEPTEMBER 30, 2000 AND QUARTER ENDED SEPTEMBER 30, 1999-LYON'S Sales-Lyon's sales for the quarter ended September 30, 2000 were $23.1 million as compared to $24.9 million for the quarter ended September 30, 1999, a decrease of $1.8 million, or 7.4%, from the prior year comparable period. This decrease is due to the closing of one Lyon's restaurant in the fourth quarter of 1999, the temporary closing of one restaurant for remodeling during this quarter, one store closed due to fire in July, 2000 and a same store sales decrease of 4.8%. Restaurant Costs & Expenses-Lyon's restaurant costs and expenses were $22.0 million, or 95.2% of sales, for the quarter ended September 30, 2000, as compared to $22.5 million, or 90.4% of sales, for the quarter ended September 30, 1999, a decrease of $551,000 due to the sales decline explained above. As a percentage of sales, costs increased primarily as a result of reduced restaurant level efficiencies related to the decrease in same store sales and moderate inflation in the cost of food, labor and other 13 restaurant operating costs. Additionally, Lyon's financial performance during the quarter was adversely impacted by the earlier conversion to an unregulated utility provider which was subsequently reversed. Depreciation and Amortization-Lyon's depreciation and amortization expense was $480,000, or 2.1% of sales, for the quarter ended September 30, 2000, as compared to $256,000, or 1.0% of sales for the quarter ended September 30, 1999. The increase both in dollars and as a percentage of sales is primarily due to additional depreciation associated with the installation of new point of sale equipment in 67 of the Lyon's locations, depreciation associated with three restaurant remodels and depreciation associated with ongoing capital expenditures. COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND NINE MONTHS ENDED SEPTEMBER 30, 1999-LYON'S Sales-Lyon's sales for the nine months ended September 30, 2000 were $69.3 million as compared to $75.4 million for the nine months ended September 30, 1999, a decrease of $6.1 million, or 8.1%, from the prior year comparable period. This decrease is due to the closing of one Lyon's restaurant in the fourth quarter of 1999, the temporary closing of three Lyon's restaurants for remodeling during the period, one Lyon's restaurant closed due to fire in July, 2000 and a Lyon's same store sales decrease of 6.3%. Restaurant Costs & Expenses-Lyon's restaurant costs and expenses were $65.1 million, or 93.9% of sales, for the nine months ended September 30, 2000, as compared to $68.3 million, or 90.5% of sales, for the nine months ended September 30, 1999, a decrease of $3.2 million due to the sales decline explained above. As a percentage of sales, costs increased primarily as a result of reduced restaurant level efficiencies related to the decrease in sales and moderate inflation in the cost of food, labor and other restaurant operating costs. Depreciation and Amortization-Lyon's depreciation and amortization expense was $1.3 million or 1.8% of sales, for the nine months ended September 30, 2000, as compared to $761,000, or 1.0% of sales, for the nine months ended September 30, 1999. The increase both in dollars and as a percentage of sales is primarily due to additional depreciation associated with the installation of new point of sale equipment in 67 of the Lyon's locations, depreciation associated with three restaurant remodels and depreciation associated with ongoing capital expenditures. CAPITAL EXPENDITURES-LYON'S Lyon's capital expenditures were $5.7 million and $1.3 million for the nine months ended September 30, 2000 and September 30, 1999, respectively. Capital expenditures for the period ended September 30, 2000 include approximately $3.1 million related to the purchase of new point of sale equipment. The balance of these costs are related to restaurant remodels and maintenance. LIQUIDITY AND CAPITAL RESOURCES The Company's primary liquidity needs arise from debt service on indebtedness incurred in connection with the Sybra acquisition, the Lyon's acquisition, operating lease requirements and the funding of capital expenditures primarily for new store openings. As of September 30, 2000, the Company had total long-term debt of $92.5 million, which included $26.4 million under a term facility with Atherton Capital Incorporated (the "Atherton Loan"), $15.4 million under a term facility with USRP (Finance) LLC (the "USRP Loan"), $15.5 million under three term loans with FINOVA Capital Corporation (the "FINOVA Loans") and certain other indebtedness totaling $35.2 million. The Atherton Loan has a weighted-average maturity of 12.5 years (of which approximately 9.1 years remain), bears interest at 10.63%, requires monthly payments of principal and interest, is collateralized by substantially all of the assets owned by Sybra at the time it was acquired by the Company and imposes certain financial restrictions and covenants. The USRP Loan has a weighted average maturity 14 of 12 years (of which approximately 10.3 years remain) a weighted average interest rate of 12.75%, requires monthly payments of principal and interest, is collateralized by substantially all of the assets owned by Lyon's and imposes certain financial restrictions and covenants. The FINOVA loans have original maturities of 10 to 15 years, interest rates ranging from 10.10% to 10.88%, require monthly payments of principal and interest and are collateralized by certain restaurant assets as defined in the agreements. The Company's primary source of liquidity during the quarter was the operation of the restaurants owned by its principal operating subsidiaries, Sybra and Lyon's, debt and lease financing, and a $7.0 million revolving credit facility with FINOVA Capital which may be used for the development and acquisition of Arby's restaurants and for the refinancing of other existing Sybra indebtedness. In the future, the Company's liquidity and capital resources will primarily depend on the operations of Sybra and Lyon's which, under the provisions of the Company's loan agreements, would permit, under certain conditions, distributions and dividends to the Company. Sybra and Lyon's, like most restaurant businesses, are able to operate with nominal or deficit working capital because all sales are for cash and inventory turnover is rapid. Renovation and/or remodeling of existing restaurants is either funded directly from available cash or, in some instances, is financed through outside lenders. Construction or acquisition of new restaurants is generally, although not always, financed by outside lenders. The Company believes that it will continue to be able to secure adequate financing on acceptable terms for new restaurant construction and acquisitions and that cash generated from operations will be adequate to meet its needs for the foreseeable future, although no assurances can be given. ITEM 5. OTHER INFORMATION On July 24, 2000 the Company's Sybra subsidiary completed the acquisition of eight Arby's restaurants located in the state of Connecticut. The purchase price of the acquisition was approximately $6,75 million, of which approximately $2.25 million was financed through sale-leaseback transactions, and approximately $4.45 million was financed through leasehold mortgages. 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed herewith:
EXHIBIT NO. EXHIBIT TITLE - ----------- ------------- 27.1........ Financial Data Schedule
16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, I.C.H. Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: November 14, 2000 I.C.H. CORPORATION BY: ___________JOHN A. BICKS__________ CO-CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER By: ________ROBERT H. DRECHSLER_______ CO-CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER By: __________GLEN V. FRETER__________ CHIEF FINANCIAL OFFICER 17 EX-27.1 2 a2029884zex-27_1.txt EXHIBIT 27.1
5 1.0 3-MOS DEC-31-2000 JUL-1-2000 SEP-30-2000 1.0 3,416 249 933 0 3,110 11,142 80,560 (12,476) 137,796 23,249 0 0 0 28 16,800 137,796 64,090 64,552 56,222 62,147 0 (72) 2,681 (204) (83) (121) 0 0 0 (121) (0.04) (0.04)
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