-----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, USL9Nbw/jjsuQ508Ngvv5EvVGj6UtOnoJyUSBuQJpFfCE8bmKD1HpFtjvskTts6d mytaBtCcsl6ZpuL13m4pLg== 0000784539-95-000004.txt : 19950512 0000784539-95-000004.hdr.sgml : 19950512 ACCESSION NUMBER: 0000784539-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950329 FILED AS OF DATE: 19950511 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAMILY STEAK HOUSES OF FLORIDA INC CENTRAL INDEX KEY: 0000784539 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 592597349 STATE OF INCORPORATION: FL FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14311 FILM NUMBER: 95536723 BUSINESS ADDRESS: STREET 1: 2113 FLORIDA BLVD STREET 2: STE A CITY: NEPTUNE BEACH STATE: FL ZIP: 32266 BUSINESS PHONE: 9042494197 MAIL ADDRESS: STREET 2: 2113 FLORIDA BLVD STE A CITY: NEPTUNE BEACH STATE: FL ZIP: 32266 10-Q 1 1 UNITED STATES 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 March 29, 1995 Commission File No. 0-14311 FAMILY STEAK HOUSES OF FLORIDA, INC. Incorporated under the laws of IRS Employer Florida Identification No. 59-2597349 2113 FLORIDA BOULEVARD NEPTUNE BEACH, FLORIDA 32266 Registrant's Telephone No. (904) 249-4197 Indicate by check mark whether the registrant 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_____ Title of each class Number of shares outstanding Common Stock 10,815,070 $.01 par value As of May 5, 1995 2 Financial Statements Family Steak Houses of Florida, Inc. Consolidated Statements of Earnings
(Unaudited) For The Quarters Ended -------------------------- March 29 March 30, 1995 1994 ------------ ------------ Sales $11,342,100 $12,042,500 Cost and expenses: Food and beverage 4,443,800 4,866,300 Payroll and benefits 2,917,000 3,170,100 Depreciation and amortization 440,600 515,500 Other operating expenses 1,553,100 1,560,800 General and administrative expenses 606,300 571,100 Franchise fees 340,300 529,200 Loss from joint venture 26,700 -- 10,327,800 11,213,000 ------------ ------------ Earnings from operations 1,014,300 829,500 Interest and other income 141,000 22,700 Loss on disposition of equipment (25,000) (25,000) Interest expense (449,700) (485,700) ------------ ------------ Earnings before income taxes 680,600 341,500 Provision for income taxes 102,000 127,800 ------------ ------------ Net earnings $578,600 $213,700 ============ ============ Net earnings per common and equivalent share $0.05 $0.02 ============ ============ Weighted average common shares and equivalents 11,084,000 10,822,000 ============ ============ See accompanying notes to consolidated financial statements.
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Family Steak Houses of Florida, Inc. Consolidated Balance Sheets (Unaudited) March 29, December 28, 1995 1994 ASSETS ------------ ------------ Current assets: Cash and cash equivalents $2,137,600 $1,603,100 Investments 710,700 710,700 Receivables 133,300 104,900 Income taxes receivable 182,500 332,200 Current portion of mortgage receivable 103,200 32,500 Inventories 313,500 324,800 Prepaids and other current assets 196,600 475,500 ------------ ------------ Total current assets 3,777,400 3,583,700 Mortgages receivable 1,292,700 537,500 Property and equipment: Land 9,342,200 9,677,800 Buildings and improvements 18,204,200 18,726,800 Equipment 11,489,800 11,139,500 ------------ ------------ 39,036,200 39,544,100 Accumulated depreciation (12,570,200) (12,648,200) ------------ ------------ Net property and equipment 26,466,000 26,895,900 Investment in joint venture 73,300 100,000 Property held for resale 568,300 1,039,300 Other assets, principally deferred charges, net of accumulated amortization 623,600 652,200 ------------ ------------ $32,801,300 $32,808,600 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 1,792,500 1,462,900 Accrued liabilities 3,349,300 3,942,900 Current portion of long-term debt 845,400 851,200 ------------ ------------ Total current liabilities 5,987,200 6,257,000 Long-term debt 15,844,600 16,304,800 Deferred revenue 55,200 55,200 Other non-current liabilities 248,300 198,300 ------------ ------------ Total liabilities 22,135,300 22,815,300 Shareholders' equity: Preferred stock of $.01 par; authorized 10,000,000 shares; none issued -- -- Common stock of $.01 par; authorized 20,000,000 shares; outstanding 10,785,100 shares in 1995 and 10,725,200 in 1994 107,900 107,300 Additional paid-in capital 8,095,800 8,002,300 Retained earnings 2,462,300 1,883,700 ------------ ------------ Total shareholders' equity 10,666,000 9,993,300 ------------ ------------ $32,801,300 $32,808,600 ============ ============ See accompanying notes to consolidated financial statements.
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Family Steak Houses of Florida, Inc. Consolidated Statements of Cash Flows (Unaudited) For the Quarters Ended -------------------------- March 29, March 30, 1995 1994 ------------ ------------ Operating activities: Net earnings $578,600 $213,700 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 440,600 515,500 Directors' fees in the form of stock options 12,500 10,000 Loss from joint venture 26,700 -- Amortization of loan discount 33,000 33,000 Amortization of loan fees 18,000 29,700 Loss on disposition of equipment 25,000 25,000 Decrease (increase) in: Receivables (28,400) 5,500 Income tax receivable 149,700 -- Inventories 11,300 (37,300) Prepaids and other current assets 278,900 88,500 Increase (decrease) in:. Accounts payable 329,600 374,400 Accrued liabilities (639,300) 234,600 Other non-current liabilities 50,000 (25,000) Deferred income taxes -- 127,800 ------------ ------------ Net cash provided by operating activities 1,286,200 1,595,400 Investing activities: Net proceeds from sale of land held for resale 471,000 -- Proceeds from sale of restaurant 106,600 -- Proceeds from notes receivable 9,100 -- Capital expenditures (821,000) (207,100) ------------ ------------ Net cash used by investing activities (234,300) (207,100) Financing activities: Payments on long-term debt (518,000) (202,300) Proceeds from the issuance of common stock 600 -- ------------ ------------ Net cash used by financing activities (517,400) (202,300) Net increase in cash and cash equivalents 534,500 1,186,000 Cash and cash equivalents - beginning of period 1,603,100 1,513,200 ------------ ------------ Cash and cash equivalents - end of period $2,137,600 $2,699,200 ============ ============ Supplemental disclosures of cash flow information: Cash paid during the quarter for interest $420,500 $408,100 ============ ============ Non-cash transactions: Mortgage receivable as partial proceeds on property sale $835,000 $ -- ============ ============ Warrants issued $81,000 $ -- ============ ============ Accrued interest reclassed to long-term debt $100,000 $ -- Equipment from closed restaurants transferred============ ============ other current assets $ -- $55,800 ============ ============ See accompanying notes to consolidated financial statements.
5 FAMILY STEAK HOUSES OF FLORIDA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 29, 1995 (Unaudited) Note 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q, and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the interim period have been included. Operating results for the thirteen week period ended March 29, 1995 are not necessarily indicative of the results that may be expected for the fiscal year ending January 3, 1996. For further information, refer to the financial statements and footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1994. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany profits, transactions and balances have been eliminated. Note 2. Earnings Per Share Earnings per share for the thirteen weeks ended March 29, 1995 and March 30, 1994 were computed based on the weighted average number of common and common equivalent shares outstanding. Common equivalent shares are represented by shares under option and stock warrants. 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Quarter Ended March 29, 1995 versus March 30, 1994 The Company experienced a decrease in sales during the first thirteen weeks of 1995 compared to the first thirteen weeks of 1994, primarily because it operated three fewer restaurants in 1995. First quarter sales decreased 5.8% to $11,342,100 from $12,042,500 for the same period in 1994. Earnings from operations increased 22.3% to $1,014,300 in 1995 from $829,500 for the same period in 1994, primarily as a result of closing unprofitable restaurants, lower food and beverage costs and lower franchise fees as a percentage of sales. The Company operated twenty-four Ryan's restaurants at March 29, 1995 compared to twenty-six Ryan's restaurants and one Wrangler's restaurant at March 30, 1994. Sales at restaurants open throughout both three-month periods increased 1.1%. Average sales per restaurant increased 6.0% from the same period in 1994. The costs and expenses of the Company's restaurants include food and beverage, payroll, payroll taxes and employee benefits, depreciation and amortization, repairs, maintenance, utilities, supplies, advertising, insurance, property taxes, rents, and licenses. The Company's food, beverage, payroll, and employee benefit costs as a percentage of sales are believed to be higher than the industry average, due to the Company's philosophy of providing customers with high value of food and service for every dollar a customer spends. In total, food and beverage, payroll and benefits, depreciation and amortization and other operating expenses as a percentage of sales decreased to 82.5% in the first quarter of 1995 from 84.0% in same quarter of 1994. 7 Food and beverage costs decreased as a percentage of sales from 40.4% in 1994 to 39.2% in 1995, due primarily to lower beef costs and to sales price increases implemented throughout 1994. Payroll and benefit costs as a percentage of sales decreased to 25.7% in 1995 from 26.3% in 1994, primarily due to the increase in average store sales, which resulted in increased efficiencies in labor scheduling. Depreciation and amortization expenses decreased as a percentage of sales in the first quarter of 1995, compared to the same period of 1994, primarily as a result of certain assets becoming fully depreciated or amortized. Franchise fees decreased to 3.0% of sales in 1995 from 4.40% in 1994 in accordance with the Company's amended Franchise Agreement. 8 General and administrative expenses as a percentage of sales were 5.3% in the first quarter of 1995 compared to 4.7% in the same quarter in 1994. This increase was primarily due to costs associated with settlement of an outstanding lawsuit, as well as the addition of a new Vice President of Operations and two field supervisor positions which were vacant in the prior year. Interest expense as a percentage of total sales was 4.0% for the first quarter of 1995 and 1994. Interest expense decreased to $449,700 in the first quarter of 1995 versus $485,700 in the same quarter of 1994. The decrease was due primarily to lower outstanding principal balances, resulting from principal payments made throughout the last twelve months, and due to a lower interest rate on the Company's obligations to the Travelers Insurance Company and certain of its affiliates. The effective income tax rate for the first three months of 1995 was 15.0%, compared to 37.4% in 1994. The reduction was due to the utilization of tax credits and the realization of deferred tax assets for which a reserve had been provided in prior periods. Net earnings were $578,600 and $213,700 in the first quarters of 1995 and 1994, respectively. Earnings per share for the quarter were 5 cents in 1995 compared to 2 cents in 1994. The Company's operations are subject to some seasonal fluctuations. Revenues per restaurant generally increase from January through April and decline September through December. Operating results for the quarter ended March 29, 1995 are not necessarily indicative of the results that may be expected for the fiscal year ending January 3, 1996. 9 Recent Developments In March 1995, the Company entered into amended and restructured debt agreements with its lenders. For a complete discussion of the debt restructure, see "Liquidity and Capital Resources" below. In December 1994, the Company formed a subsidiary, Family Steak JV, Inc. which acquired a 50% ownership in a limited liability corporation, Cross Creek Barbeque, L.C. ("Cross Creek"), for the purpose of opening a new restaurant. The Company contributed the equipment formerly utilized by its Wrangler's Roadhouse, Inc. subsidiary to Cross Creek and the other 50% owner of Cross Creek contributed the cash necessary to remodel and open the new Cross Creek restaurant. Wrangler's Roadhouse, Inc. leases the land and building it formerly occupied to Cross Creek. The Cross Creek restaurant opened in January 1995. As a result of higher than anticipated operating costs, the joint venture suffered a loss during the first quarter of 1995. The Company's share of the joint venture loss during the first quarter of 1995 was $26,700. Liquidity and Capital Resources Substantially all of the Company's revenues are derived from cash sales. Inventories are purchased on credit and are converted rapidly to cash. Therefore, the Company does not carry significant receivables or inventories and, other than repayment of debt, working capital requirements for continuing operations are not significant. At March 29, 1995, the Company had a working capital deficit of $2,209,800 compared to a working capital deficit of $2,673,300 at December 28, 1994. The decrease in the working capital deficit during the first three months in 1995 was due primarily to net earnings generated in the first quarter of 1995. Cash provided by operating activities decreased 19.4% to $1,286,200 in the first quarter of 1995 from $1,595,400 in the first quarter of 1994, primarily due to reductions in accrued liabilities as a result of timing of payments. The Company spent approximately $821,000 in the first quarter of 1995 and $207,100 in the first quarter of 1994 for equipment and improvements. Capital expenditures for 1995 and 1996 are estimated to be $2,225,000 and $750,000, respectively. The Company projects that cash generated from operations will be sufficient to fund these improvements. 10 In March 1995, the Company entered into an Amended and Restated Note Agreement, dated as of February 1, 1995, with The Travelers Insurance Company and certain of its affiliates ("the Travelers Agreement"). The Travelers Notes are due May 30, 1998 and provide for an interest rate of 9.0% with $65,000 monthly in principal reductions beginning January 1, 1996. As of March 29, 1995, the outstanding balance due under the Travelers Notes was $11,672,800. The Travelers Agreement includes detachable Warrants for purchases of up to 1,750,000 shares of the Company's common stock at an exercise price of $.40 per share. The Travelers Notes are secured by second mortgages on twenty-two Company restaurant properties. The Travelers Agreement provides for various convenants including prepayment options, the maintenance of prescribed debt service coverages, limitations on the declaration of cash dividends, sale of assets, and certain other restrictions. Also in March 1995, the Company entered into an Amended and Restated Loan Agreement with The Daiwa Bank, Limited, and SouthTrust Bank of Alabama, National Association (the "Bank Loan") which extends the maturity date of the Bank Loan until May 30, 1998. The Bank Loan bears interest at prime rate plus 0.50%, with monthly principal payments of $41,250 beginning April 1, 1995 ($67,100 prior to April 1, 1995). The Bank Loan is secured by first mortgages on twenty-two of the Company's restaurant properties, and provides for various covenants substantially consistent with those of the Travelers Agreement. As of March 29, 1995, the outstanding balance under the Bank Loan was $4,575,400. Impact of Inflation Costs of food, beverage, and labor are the expenses most affected by inflation in the Company's business. Althrough inflation has not been a major factor for the past several years, there can be no assurance that it will not be in the future. A significant number of the Company's personnel are paid at the federally established minimum wage level, which was last increased April 2, 1991. Sale prices were increased approximately 4% in 1994. 11 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES Prior to the execution of The Travelers Agreement and the Bank Loan, the Company was in default of certain covenants associated with the previous debt agreements. Upon execution of the new debt agreements, the Company was no longer in default of any debt covenants. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of this report on Form 10-Q, and this list comprises the Exhibit Index. No. Exhibit 4.01 Specimen Stock Certificate for shares of the Company's Common Stock (Exhibit 4.01 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.) 4.02 Amended and Restated Loan Agreement, dated March 14, 1995, by the Company and certain of its subsidiaries, as borrowers, in favor of The Daiwa Bank, Limited, and SouthTrust Bank of Alabama, National Association, as lenders. (Exhibit 10.04 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) 4.03 Second Amended and Restated Renewal Mortgage and Security Agreement and Mortgage Spreading Agreement, dated March 14, 1995, by the Company as mortgagor, and The Daiwa Bank, Limited, and SouthTrust Bank of Alabama, National Association, as lenders. (Exhibit 10.05 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) 4.04 Amended and Restated Senior Note Agreement, dated as of February 1, 1995, by the Company and certain of its subsidiaries, as maker, and The Phoenix Insurance Company, and The Travelers Insurance Company, as noteholders. (Exhibit 10.06 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) 4.05 Amended and Restated Warrant to Purchase Shares of Common Stock, void after October 1, 2003, which represents warrants issued to The Phoenix Insurance Company, and The Travelers Indemnity Company, and the Travelers Insurance Company (Exhibit 10.07 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) 4.06 Warrant to Purchase Shares of Common Stock, void after October 1, 2003, which represents warrants issued to The Phoenix Insurance Company, and The Travelers Indemnity Company, and the Travelers Insurance Company (Exhibit 10.08 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) 4.07 Second Amended and Restated Renewal Promissory Note, dated March 14, 1995, by the Company and certain of its subsidiaries, as maker, in favor of SouthTrust Bank of Alabama, National Association. (Exhibit 10.18 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) 4.08 Second Amended and Restated Renewal Promissory Note, dated March 14, 1995, by the Company and certain of its subsidiaries, as Maker, in favor of The Daiwa Bank, Limited. (Exhibit 10.19 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) 13 4.09 Mortgage and Security Agreement, dated March 14, 1995, by the Company, as Mortgagor, in favor of The Travelers Insurance Company, as collateral agent. (Exhibit 10.20 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) 4.10 Amended and Restated 9.0% Senior Notes, due June 1, 1998, by the Company, as maker, in favor of TRAL & CO., an affiliate of The Travelers Insurance Company, dated as of February 1, 1995. (Exhibit 10.21 to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference.) (b) During the first quarter of 1995, the Company filed a current report on Form 8-K, dated January 5, 1995, to report; (i) the closure of it's Wrangler's Roadhouse Restaurant and the effect on 1994 earnings, (ii) the sale of the Company's restaurant located on Old St. Augustine Road, Jacksonville, Florida on December 29, 1995, and (iii) the Company had reached an agreement in principle with its Bank lenders to extend the maturity date of it's secured credit facility. 14 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 thereunto duly authorized. FAMILY STEAK HOUSES OF FLORIDA, INC. (Registrant) /s/ Lewis E. Christman, Jr. Date: May 10, 1995 Lewis E. Christman, Jr. President (Chief Executive Officer) /s/ Edward B. Alexander Date: May 10, 1995 Edward B. Alexander Director of Finance (Principal Financial and Accounting Officer) /s/ Michael J. Walters Date: May 10, 1995 Michael J. Walters Controller -----END PRIVACY-ENHANCED MESSAGE-----