-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jmxsE6YashiYApXoPqqZ8Jset6cwvKDqUOk9Skhcd98XFyJbT9Q8H2lqFUFcpNdD OthEWHsaBKGTsBF/LyO6Bw== 0000950149-95-000217.txt : 19950427 0000950149-95-000217.hdr.sgml : 19950427 ACCESSION NUMBER: 0000950149-95-000217 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950313 FILED AS OF DATE: 19950426 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUMMIT FAMILY RESTAURANTS INC CENTRAL INDEX KEY: 0000053281 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 870264039 STATE OF INCORPORATION: DE FISCAL YEAR END: 0925 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06054 FILM NUMBER: 95531556 BUSINESS ADDRESS: STREET 1: 1010 W 2610 SOUTH CITY: SALT LAKE CITY STATE: UT ZIP: 84119 BUSINESS PHONE: 8019744300 MAIL ADDRESS: STREET 1: 1010 WEST 2610 SOUTH CITY: SALT LAKE CITY STATE: UT ZIP: 84119 FORMER COMPANY: FORMER CONFORMED NAME: JBS RESTAURANTS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: JBS BIG BOY FAMILY RESTAURANTS INC DATE OF NAME CHANGE: 19810830 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED MARCH 13, 1995 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: MARCH 13, 1995 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: 0-6054 SUMMIT FAMILY RESTAURANTS INC. (Exact name of registrant as specified in its charter) DELAWARE 87-0264039 (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 1010 WEST 2610 SOUTH, SALT LAKE CITY, UT 84119 (Address of principal executive offices) (Zip Code) (801) 974-4300 (Registrant's telephone number, including area code) JB'S RESTAURANTS, INC. (FORMER NAME) (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 . --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. AS OF APRIL 7, 1995 THERE WERE 4,798,102 SHARES OF COMMON STOCK, $.10 PAR VALUE, OUTSTANDING. Page 1 of 16 2 SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES PART I: FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company, all adjustments (consisting only of normal recurring entries) necessary for the fair presentation of the Company's results of operations, financial position and changes therein for the periods presented have been included. Page 2 of 16 3 SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
MARCH 13, SEPTEMBER 26, ASSETS 1995 1994 ----------- ----------- (UNAUDITED) Current assets Cash and cash equivalents $ 2,726,000 $ 5,303,000 Short-term investments 200,000 2,160,000 Receivables Short-term portion of notes receivable 208,000 173,000 Income Taxes 1,642,000 2,045,000 Other receivables 892,000 1,359,000 Inventories 1,707,000 1,386,000 Deferred taxes, net 83,000 78,000 Prepaid expenses 318,000 309,000 ----------- ----------- Total current assets 7,776,000 12,813,000 ----------- ----------- Property, buildings and equipment, at cost, less accumulated depreciation and amortization 46,212,000 45,672,000 ----------- ------------ Real property and equipment under capitalized leases, at cost, less accumulated amortization 7,152,000 7,480,000 ----------- ----------- Other assets Notes receivable, net of current portion 2,626,000 2,580,000 Investment in HomeTown Buffet, Inc. 5,480,000 5,678,000 Deposits and other 1,225,000 986,000 ----------- ----------- Total other assets 9,331,000 9,244,000 ----------- ----------- Intangible assets, at cost, less accumulated amortization Lease acquisition costs 465,000 569,000 Other intangible assets 792,000 830,000 ----------- ----------- Total intangible assets 1,257,000 1,399,000 ----------- ----------- Total assets $71,728,000 $76,608,000 =========== ===========
Page 3 of 16 4 SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND MARCH 13, SEPTEMBER 26, STOCKHOLDERS' EQUITY 1995 1994 ----------- ----------- (UNAUDITED) Current liabilities Accounts payable - trade $ 4,320,000 $ 6,874,000 Accrued liabilities Payroll and related taxes 3,074,000 2,764,000 Sales and property taxes 2,040,000 1,855,000 Rent and other 2,302,000 2,762,000 Current maturities of long-term debt 3,412,000 1,960,000 ----------- ----------- Total current liabilities 15,148,000 16,215,000 ----------- ----------- Long-term debt, net of current maturities Capitalized real property leases 10,328,000 10,609,000 Notes payable 404,000 2,484,000 ----------- ----------- Total long-term debt 10,732,000 13,093,000 ----------- ----------- Deferred taxes, net 1,567,000 1,376,000 ----------- ----------- Deferred compensation 1,598,000 1,588,000 ----------- ----------- Commitments and contingencies Stockholders' equity Preferred stock, $1 par value; 1,000,000 shares authorized; 946,714 shares issued and outstanding 947,000 947,000 Junior common stock, $.01 par value; 500,000 shares authorized; none outstanding -- -- Common stock, $.10 par value; 10,000,000 shares authorized; 5,288,759 and 5,288,759 shares issued 529,000 529,000 Additional paid-in capital 29,570,000 29,581,000 Unrealized gain on investment in HomeTown Buffet, Inc., net of tax - Note 5 2,654,000 2,773,000 Retained earnings 12,237,000 13,790,000 ----------- ----------- 45,937,000 47,620,000 Less: 495,458 and 500,000 common stock treasury shares, at cost 3,254,000 3,284,000 ----------- ----------- Total stockholders' equity 42,683,000 44,336,000 ----------- ----------- Total liabilities and stockholders' equity $71,728,000 $76,608,000 =========== ===========
Page 4 of 16 5 SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
TWELVE WEEKS ENDED TWENTY-FOUR WEEKS ENDED ------------------------- ------------------------- MARCH 13, MARCH 14, MARCH 13, MARCH 14, 1995 1994 1995 1994 ------------------------- ------------------------- (UNAUDITED) (UNAUDITED) Total revenues $27,061,000 $25,681,000 $54,324,000 $49,909,000 Costs and expenses Food costs 8,957,000 8,360,000 17,924,000 16,068,000 Labor costs 9,360,000 8,829,000 19,157,000 17,405,000 Occupancy and other expenses 6,365,000 5,626,000 12,902,000 11,448,000 General and administrative expenses 1,855,000 1,893,000 3,688,000 3,532,000 Depreciation and amortization 1,436,000 1,381,000 2,830,000 2,760,000 ----------- ----------- ----------- ----------- Total costs and expenses 27,973,000 26,089,000 56,501,000 51,213,000 ----------- ----------- ----------- ----------- Loss from operations (912,000) (408,000) (2,177,000) (1,304,000) Interest and other income (expense) Interest expense (381,000) (512,000) (723,000) (1,024,000) Interest income 143,000 185,000 282,000 330,000 Gains on sales of restaurants to franchisees and other 11,000 254,000 11,000 620,000 ----------- ----------- ----------- ----------- Total interest and other income (expense) (227,000) (73,000) (430,000) (74,000) ----------- ----------- ----------- ----------- Loss before income taxes (1,139,000) (481,000) (2,607,000) (1,378,000) Income tax benefit (461,000) (191,000) (1,053,000) (551,000) ----------- ----------- ----------- ----------- Net loss $ (678,000) $ (290,000) $(1,554,000) $ (827,000) =========== =========== =========== =========== Net loss per common share (0.14) $ (0.06) $ (0.32) $ (0.17) =========== =========== =========== =========== Weighted average shares outstanding 4,792,003 4,773,997 4,790,381 4,769,708
Page 5 of 16 6 SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
TWENTY-FOUR WEEKS ENDED ----------------------- MARCH 13, MARCH 14, 1995 1994 ----------------------- (UNAUDITED) Increase (Decrease) In Cash and Cash Equivalents Cash flows from operating activities Net loss $(1,554,000) $ (827,000) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 2,830,000 2,760,000 Provision for losses - 11,000 Loss (gain) on disposal of assets 129,000 (577,000) Change in operating assets and liabilities Decrease in receivables 870,000 579,000 Increase in inventory (321,000) (80,000) Decrease (increase) in other assets 51,000 (128,000) Increase (decrease) in accounts payable (2,554,000) 1,670,000 Increase (decrease) in accrued liabilities 531,000 (413,000) Increase (decrease) in net deferred taxes 265,000 (551,000) ----------- ----------- Net cash provided by operating activities 247,000 2,444,000 ----------- ----------- Cash flows from investing activities Proceeds from sale of short-term investments 1,960,000 -- Acquisition of property, buildings and equipment (4,566,000) (4,372,000) Acquisition of intangible assets -- (256,000) Proceeds from sale of assets 630,000 1,800,000 Payments received on notes receivable 61,000 72,000 Exercise of options in HomeTown Buffet, Inc. -- (120,000) ----------- ----------- Net cash used by investing activities (1,915,000) (2,876,000) Cash flows from financing activities Proceeds from issuance of preferred stock -- 5,043,000 Proceeds from issuance of common stock -- 125,000 Payments under line-of-credit agreement -- (762,000) Principal payments on long-term debt and capital leases (909,000) (928,000) ----------- ----------- Net cash provided (used) by financing activities (909,000) 3,478,000 ----------- ----------- Net increase (decrease) in cash and cash equivalents (2,577,000) 3,046,000 Cash and cash equivalents at beginning of period 5,303,000 1,666,000 ----------- ----------- Cash and cash equivalents at end of period $ 2,726,000 $ 4,712,000 =========== ===========
Page 6 of 16 7 SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
TWENTY-FOUR WEEKS ENDED --------------------------- MARCH 13, MARCH 14, 1995 1994 --------- --------- (UNAUDITED) Supplemental disclosures of cash flow information Cash paid for interest $ 516,000 $ 1,065,000 ========= =========== Cash paid for income taxes -- -- ========= =========== During both fiscal 1995 and 1994, stores were sold to franchisees and notes receivable were recorded in exchange for equipment as follows: Notes receivable $ 377,000 $ 628,000 Gain recognized 11,000 (630,000) Gain deferred (234,000) -- Cash received 98,000 157,000 --------- ----------- Net book value of equipment sold $ 230,000 $ 155,000 ========= ===========
Page 7 of 16 8 SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. NAME CHANGE Effective April 4, 1995, the Company changed its corporate name to Summit Family Restaurants Inc. from JB's Restaurants, Inc. The name change was made to reflect the Company's diverse family restaurant concepts. 2. FISCAL PERIODS The Company utilizes a 52/53 week fiscal year which ends on the last Monday in September. The third quarter of each year contains 16 weeks while the other three quarters each contain 12 weeks. 3. PRESENTATION Certain prior year amounts in the unaudited consolidated financial statements have been reclassified to conform with the current year presentation. 4. NET LOSS PER COMMON SHARE Net loss per common share is computed using the weighted average number of shares of stock and dilutive common stock equivalents outstanding during each period. 5. INVESTMENT IN HOMETOWN BUFFET, INC. In the first quarter of fiscal 1994, the Company elected early adoption of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No. 115"). In accordance with SFAS No. 115, the Company's investment in the common stock of HomeTown Buffet, Inc. meets the definition of available-for-sale securities and, as such, is reported at fair value. On March 13, 1995 and September 26, 1994 the estimated fair value of the Company's 528,220 shares of HomeTown Buffet, Inc. common stock was $10.38 and $10.75 per share, or $5.5 million and $5.7 million, respectively. The unrealized gain (net of tax) of $2.7 million and $2.8 million at March 13, 1995 and September 26, 1994, respectively, is recorded as a separate component of stockholders' equity. Page 8 of 16 9 SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS REVENUES AND SELECTED OPERATING DATA. The following table sets forth, for the periods indicated, certain information regarding the Company's revenues and selected operating data.
TWENTY-FOUR TWELVE WEEKS ENDED WEEKS ENDED ------------------------------ ------------------------------- MARCH 13, MARCH 14, MARCH 13, MARCH 14, 1995 1994 1995 1994 ------------------------------ ------------------------------- Total revenues $27,061,000 $25,681,000 $54,324,000 $49,909,000 Percentage change from prior period 5.4% 1.2% 8.8% (1.9)% JB's Restaurants Company owned units at end of quarter 83 91 83 91 Franchised units at end of quarter 22 19 22 19 Company restaurants transferred to franchisees -- 1 4 3 Company restaurants converted to Galaxy Diners 1 -- 3 -- Company restaurants closed -- 2 -- 3 Average weekly sales per unit $17,846 $18,303 $17,811 $17,758 Percentage change from prior period (2.5)% 4.6% 0.3% 2.9% Same store sales percentage change from prior period (5.1)% (0.5)% (2.8)% (1.4)% Galaxy Diners Company owned units at end of quarter 4 -- 4 -- Restaurants opened 1 -- 3 -- Average weekly sales per unit $30,193 -- $32,663 -- HomeTown Buffets Units operated as a franchisee at end of quarter 14 11 14 11 Restaurants opened -- 4 -- 5 Average weekly sales per unit $47,729 $51,492 $47,692 $50,811 Sbarros Units operated as a franchisee at end of quarter -- -- -- -- Restaurants closed -- -- 10 10
The increase in revenues for the twelve and twenty-four week periods ended March 13, 1995, as compared with the comparable periods of the prior fiscal year, is primarily the result of an increase in the number of HomeTown Buffet restaurants and Galaxy Diners which more than offset the decrease in the number of JB's Restaurants, the disposition of the Company's Sbarro restaurants and the decline in same store sales. During the twelve week period ended March 13, 1995, the average sales per JB's Restaurant decreased 2.5% reflecting an increase in the average customer purchase of 0.2% and a decrease in customer counts per unit of 2.7%. Same store sales for JB's Page 9 of 16 10 Restaurants (sales from JB's Restaurants open during both the fiscal 1995 and 1994 period) decreased 5.1% reflecting a decrease in customer counts of 5.3% while the average customer purchase increased 0.2%. During the twenty-four week period ended March 13, 1995, the average sales per JB's Restaurant increased 0.3% reflecting an increase in the average customer purchase of 0.9% and a decrease in customer counts per unit of 0.6%. Same store sales for JB's Restaurants decreased 2.8% reflecting an increase in the average customer purchase of 1.0% offset by a 3.8% decrease in customer counts per unit. COSTS AND EXPENSES; STATEMENT OF OPERATIONS DATA. The following table sets forth costs as a percentage of revenues for the periods indicated as well as statement of operations data:
TWELVE WEEKS ENDED TWENTY-FOUR WEEKS ENDED ----------------------- ---------------------- MARCH 13, MARCH 14, MARCH 13, MARCH 14, 1995 1994 1995 1994 ----------------------- ---------------------- Total revenues 100.0% 100.0% 100.0% 100.0% --------- ------- -------- --------- Costs and expenses Food costs 33.1 32.5 33.0 32.2 Labor costs 34.6 34.4 35.2 34.9 Occupancy and other expenses 23.5 21.9 23.8 22.9 General and administrative expenses 6.9 7.4 6.8 7.1 Depreciation and amortization 5.3 5.4 5.2 5.5 --------- ------- -------- --------- Total costs and expenses 103.4 101.6 104.0 102.6 --------- ------- -------- --------- Loss from operations (3.4) (1.6) (4.0) (2.6) Interest and other income (expense) Interest expense (1.4) (2.0) (1.3) (2.1) Interest income 0.5 0.7 0.5 0.7 Gains on sales of restaurants to franchisees and other 0.1 1.0 -- 1.2 --------- ------- -------- --------- Total interest and other income (expense) (0.8) (0.3) (0.8) (0.2) --------- ------- -------- --------- Loss before income taxes (4.2) (1.9) (4.8) (2.8) Income tax benefit (1.7) (0.8) (1.9) (1.1) --------- ------- -------- --------- Net loss (2.5)% (1.1) (2.9)% (1.7)% ========= ======= ======== ========= Effective income tax rate 40.5% 39.7% 40.4% 40.0% ========= ======= ======== =========
FOOD COSTS. The increase in food costs as a percentage of total revenues for the twelve and twenty-four week periods ended March 13, 1995 as compared with the comparable periods of the prior fiscal year, is primarily the result of an increase in the number of HomeTown Buffet restaurants which operate at a higher food cost percentage than the Company's JB's Restaurants. LABOR COSTS. The increase in labor costs as a percentage of total revenues in the twelve and twenty-four week periods ended March 13, 1995 as compared with the comparable periods of the prior fiscal year, is primarily due to costs incurred in training and increased scheduling designed to improve customer service in the JB's Restaurants along with a decrease in same store sales. Page 10 of 16 11 OCCUPANCY & OTHER EXPENSES. The increase in occupancy and other expenses as a percentage of total revenues for the twelve and twenty-four week periods ended March 13, 1995 as compared with the comparable periods of the prior fiscal year, is primarily due to increased amortization of preopening costs ($71,000 and $182,000 respectively) resulting from the additional HomeTown Buffet openings and Galaxy Diner conversions, increased royalty fees, ($72,000 and $157,000 respectively) associated with the additional HomeTown Buffet restaurants in operation along with the decline in same store sales. GENERAL & ADMINISTRATIVE EXPENSES. The decrease in General and Administrative expenses as a percentage of total revenues for the twelve and twenty-four week periods ended March 13, 1995 as compared with the comparable periods of the prior fiscal year is primarily due to reduced employee relocation costs. DEPRECIATION AND AMORTIZATION. The decrease in depreciation and amortization as a percentage of total revenues in the twelve and twenty-four week periods ended March 13, 1995 as compared with the comparable periods of the prior fiscal year primarily reflects the increase in the number of HomeTown Buffet restaurants which operate with lower depreciation and amortization as a percent of revenues. INTEREST EXPENSE. The decrease in interest expense as a percentage of total revenues for the twelve and twenty-four week periods ended March 13, 1995 as compared with the comparable periods of the prior fiscal year is due to lower outstanding debt and no borrowings outstanding on the revolving line-of-credit. INTEREST INCOME. The decrease in interest income as a percentage of total revenues for the twelve and twenty-four week periods ended March 13, 1995 as compared with the comparable periods of the prior fiscal year is primarily a result of the 5.4% and 8.8% increase in total revenues for the respective periods while interest income dollars have remained relatively constant. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of working capital historically have been cash flow from operations and borrowings. During the twenty-four week period ended March 13, 1995, the Company obtained cash from other sources including the sale of short-term investments and the sale of assets. The Company requires capital principally for the acquisition and construction of new restaurants, remodeling and conversion of existing restaurants, and renewals of equipment and leasehold improvements. The Company anticipates funding these capital requirements in the remainder of fiscal year 1995 through cash on hand at the end of the quarter, internally generated funds, equipment lease financing and utilization of build-to-suit leases on certain new restaurants. During the twenty-four week period ended March 13, 1995, cash and cash equivalents were provided by the following sources:
- ------------------------------------------------------------------------------------ In Millions - ------------------------------------------------------------------------------------ Net loss $(1.6) Depreciation and amortization 2.8 Change in operating assets and liabilities (1.1) Sale of short-term investments 2.0 Proceeds from the sale of assets 0.6 Payments received on notes receivable 0.1 - ------------------------------------------------------------------------------------ Total Provided $ 2.8 - ------------------------------------------------------------------------------------
Page 11 of 16 12 During the same period, cash and cash equivalents were applied for the following uses:
- ------------------------------------------------------------------------------ In Millions - ------------------------------------------------------------------------------ Capital expenditures for new stores $1.8 Other capital expenditures 2.7 Principal payments on long-term debt and capital leases 0.9 - ------------------------------------------------------------------------------ Total used $5.4 - ------------------------------------------------------------------------------
During the first half of fiscal year 1995, cash used exceeded cash provided by $2.6 million due primarily to capital expenditures associated with the conversion of underperforming JB's Restaurants to Galaxy Diners and the remodeling of JB's Restaurants. The current ratio at the end of the second quarter of fiscal year 1995 was 0.5:1.0 and 0.8:1.0 at the end of fiscal year 1994. Management does not consider the fact that the current ratio is less than one to be itself an indication of a liquidity problem as the restaurant business has practically no receivables and minimum inventories that typically turn faster than accounts payable to suppliers. The $1.1 million change in operating assets and liabilities is primarily attributable to the Company collecting $830,000 in landlord receivables, a $400,000 change in income taxes receivable and a $2.6 million decrease in accounts payable primarily due to a one time delay in the timing of payments with the implementation of new accounts payable software. The Company's $3.0 million line of credit with a bank, which was scheduled to expire on December 31, 1994, was extended until December 31, 1995. The line of credit and other bank loans, which have a balance of $2.7 million as of March 13, 1995, are secured by 528,220 shares of HomeTown Buffet, Inc. common stock and by certain properties owned by the Company. As of March 13, 1995 the Company had $1,156,625 in letters of credit and no borrowings outstanding against the line of credit. The Company has agreed to terminate the line of credit during the fiscal third quarter in exchange for the release of the lien on an office/warehouse property which the Company expects to sell with net proceeds of approximately $1.2 million. The Company does not expect to be in compliance with certain covenants within its lending agreements at the end of its fiscal third quarter. The Company is currently in discussions with the bank with respect to waiver or revision of the covenants. In the event no agreement is reached with the bank, the Company may sell certain assets in order to repay these loans. The Company's $2.5 million equipment lease commitment to finance new HomeTown Buffet restaurant equipment was extended until September 30, 1995. The Company had utilized $1.0 million of the commitment as of March 13, 1995. The Company opened no new HomeTown Buffet restaurants in the first half of fiscal year 1995 but currently has two HomeTown Buffet restaurants under construction. The Company expects to open these two HomeTown Buffet restaurants under the Company's exclusive area development agreement with HomeTown Buffet, Inc. during the second half of fiscal year 1995, which will bring the total number of HomeTown Buffet restaurants to 16 at fiscal year end. The exclusive area development agreement requires the Company to open a minimum of 17 HomeTown Buffet restaurants by December 31, 1995. During the first half, the Company remodeled four of its higher performing JB's Restaurants and does not anticipate remodeling any other higher performing JB's Restaurants during the remainder of fiscal year 1995. The deferral of remodels will not impact the Company's plans to continue to routinely repair and maintain the Page 12 of 16 13 Company's restaurants. In addition, the Company has converted three of its lower performing JB's Restaurants to Galaxy Diners and expects to convert two more lower performing JB's Restaurants to Galaxy Diners during the remainder of fiscal year 1995 (one of which opened on April 18, 1995), which will bring the number of Galaxy Diners to six at fiscal year end. Additional Galaxy Diner conversions, remodeling of additional JB's Restaurants and additional new HomeTown Buffet restaurants will be dependent upon the Company improving internal cash flow and/or finding additional sources of capital. It is expected that this capital will result from the sale of assets. To the extent that these assets secure the bank loans, the Company expects that it will repay these loans when the assets are sold. If the Company's earnings do not improve or other sources of financing are not obtained, the Company would have to reevaluate its capital spending plans. SEASONALITY The Company's business is seasonal in nature with the spring and summer quarters being the highest volume periods. The Company's lowest volume periods typically occur during the first and second calendar quarters. IMPACT OF INFLATION Many of the Company's employees are paid hourly rates related to the federal and state minimum wage laws. Accordingly, increases in the minimum wage could materially increase the Company's labor costs. Currently, there are no further scheduled increases in the federal minimum wage. In addition, the cost of food commodities utilized by the Company are subject to market supply and demand pressures as is evidenced by the recent increased produce prices (lettuce in particular) resulting from the unusual weather conditions in the western U.S. growing regions. Shifts in these costs may have a significant impact on the Company's food costs. The Company anticipates that increases in these costs can be offset through pricing and other cost control efforts; however, there is no assurance that the Company would be able to pass such costs on to its guests or, if it were able to do so, could do so in a short period of time. Page 13 of 16 14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual Meeting of the Company's shareholders was held on February 9, 1995. (b) The directors elected at the Annual Meeting by either the holders of Common Stock or the holders of the Series A Stock were Don M. McComas, Ronald N. Paul and William L. Paternotte. The directors whose terms of office as director continued after the meeting, but who did not stand for election, are Frederick L. Bryant, Norman N. Habermann, Carl R. Hays, Clark D. Jones, Norton Parker and Thomas J. Russo. (c) The following items were voted upon and approved at the Annual Meeting as indicated by the vote tabulations set forth below the description of each item. 1. The election of directors. William L. Paternotte was elected by the holders of the Series A stock. For: 946,714 Withheld: -0- Don M. McComas was elected by the holders of the Common Stock. For: 4,313,846 Withheld: 12,566 Ronald N. Paul was elected by the holders of the Common Stock. For: 4,317,035 Withheld: 9,377 2. Amendment to the Company's 1992 Stock Option Plan (the "Plan") to (i) increase the shares authorized for the grant of options under the Plan from 460,000 to 1,060,000, (ii) provide for grants of nonqualified stock options to non-employee directors of the Company on a formula basis, (iii) increase the Compensation Committee's discretion under the Plan with regard to vesting, terms of options and payment methods, and (iv) provide for other minor amendments to update the Plan as described in the Proxy Statement. For: 2,379,734 Against and Abstentions: 607,244 3. Amendment to the Company's Certificate of Incorporation to change the Company's name from JB's Restaurants, Inc. to Summit Family Restaurants Inc. For: 4,256,620 Against, Abstentions and Broker non-votes: 122,768 4. Ratification of the appointment of KPMG Peat Marwick LLP, certified public accountants, as independent auditors to examine the Company's financial statements for the fiscal year ending September 25, 1995. For: 4,339,438 Against and Abstentions: 39,949 Page 14 of 16 15 SUMMIT FAMILY RESTAURANTS INC. PART II: OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are attached to this report:
Exhibit Description Number of Exhibit ------- ----------- 3(1) Certificate of Amendment to the Certificate of Incorporation filed with the Delaware Secretary of State on April 4, 1995. 27(1) Financial Data Schedule
Other Items - ----------- There were no other items to be reported under Part II of this report. Page 15 of 16 16 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED HEREUNTO DULY AUTHORIZED. SUMMIT FAMILY RESTAURANTS INC. ------------------------------ (Registrant) Date: April 26, 1995 By: /s/ David E. Pertl -------------------------- David E. Pertl Senior Vice President and Chief Financial Officer (Principal Financial Officer) (A duly authorized officer) By: /s/ Theodore Abajian -------------------------- Theodore Abajian Vice President and Controller (Principal Accounting Officer) Page 16 of 16 17 EXHIBIT INDEX
Exhibit Number - ------- 3(1) Certificate of Amendment to the Certificate of Incorporation filed with the Delaware Secretary of State on April 4, 1995. 27(1) Financial Data Schedule
EX-3.(1) 2 CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORP. 1 CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF JB'S RESTAURANTS, INC. (Pursuant to Delaware Code, Title 8, Section 242) Don M. McComas hereby certifies that: 1. he is the President of JB's Restaurants, Inc. (the "Corporation"); 2. Article First of the Corporation's Certificate of Incorporation is hereby amended in its entirety as follows: FIRST: The name of this corporation is: Summit Family Restaurants Inc. 3. the foregoing amendment was duly approved by the Corporation's Board of Directors and the Corporation's shareholders. The undersigned hereby certifies, under penalties of perjury, that the foregoing amendment is his individual act and deed, and the act and deed of the Corporation, and that the facts stated above are true. Date: April 4, 1995 /s/ ------------------------------- Don M. McComas, President EX-27.(1) 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the registrants balance sheet and statements of operations as of and for the first half ended March 13, 1995 and is qualified in its entirety by reference to such financial statements, including the notes thereto. 6-MOS SEP-25-1995 SEP-27-1994 MAR-13-1995 2,726,000 200,000 0 0 1,707,000 7,776,000 99,727,000 46,363,000 71,728,000 15,148,000 10,732,000 529,000 0 947,000 41,207,000 71,728,000 54,324,000 54,324,000 17,924,000 17,924,000 34,889,000 0 723,000 (2,607,000) (1,053,000) (2,607,000) 0 0 0 (1,554,000) (0.32) (0.32)
-----END PRIVACY-ENHANCED MESSAGE-----