-----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, B4menM6lDu4+7AM/Y+ADbBV2e2ePHX4E+t6PK8Hqc3eM4061PUP6LiliYhkT8cU8 kNiJAtFSitDarr1CXLKdTA== 0000950144-00-003199.txt : 20000316 0000950144-00-003199.hdr.sgml : 20000316 ACCESSION NUMBER: 0000950144-00-003199 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19991229 FILED AS OF DATE: 20000315 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: 1230 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-14311 FILM NUMBER: 570091 BUSINESS ADDRESS: STREET 1: 2113 FLORIDA BLVD STREET 2: STE A CITY: NEPTUNE BEACH STATE: FL ZIP: 32266 BUSINESS PHONE: 9042494197 MAIL ADDRESS: STREET 1: 2113 FLORIDA BLVD STE A STREET 2: 2113 FLORIDA BLVD STE A CITY: NEPTUNE BEACH STATE: FL ZIP: 32266 10-K 1 FAMILY STEAK HOUSES OF FLORIDA, INC. 1 - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 29, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 0-14311 FAMILY STEAK HOUSES OF FLORIDA, INC. (exact name of registrant as specified in its charter) FLORIDA NO. 59-2597349 (State of Incorporation) (I.R.S. Employer Identification) 2113 FLORIDA BOULEVARD NEPTUNE BEACH, FLORIDA 32266 (Address of Principal Executive Offices) Registrant's telephone number, including area code: (904) 249-4197 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.01 PAR VALUE (Title of Class) -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of February 25, 2000, 2,409,000 shares of Common Stock of the registrant were outstanding. The aggregate market value of such voting Common Stock (based upon the closing sale price of the registrant's Common Stock on the NASDAQ SmallCap Market System on February 22, 2000, as reported in The Wall Street Journal) held by non-affiliates of the registrant was approximately $2,635,000. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's 1999 Annual Report to Shareholders are incorporated by reference into Part II. Portions of the Proxy Statement for the registrant's 2000 Annual Meeting of Shareholders are incorporated by reference into Part III. - ------------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS GENERAL Family Steak Houses of Florida, Inc. ("Family" or the "Company"), is the sole franchisee of Ryan's Family Steak House restaurants ("Ryan's restaurants") in the State of Florida. The Company's first Ryan's restaurant was opened in Jacksonville, Florida, in May 1982. The Company presently operates 22 Ryan's restaurants in Florida. A Ryan's restaurant is a family-oriented restaurant serving high-quality, reasonably-priced food in a casual atmosphere with server-assisted service. Ryan's restaurants serve lunch and dinner seven days a week and offer a variety of charbroiled entrees, including various cuts of beef, chicken, and seafood. Most of the restaurants serve a brunch on weekends only. Each restaurant features a diverse selection of items from "scatter bars" and a separate fresh bakery and dessert bar. In addition to traditional salad bar items, the scatter bars offer hot meats, pre-made salads, soups, baked potatoes with toppings, cheeses and a variety of vegetables. The Company believes that its operating strategy of selling top-quality meals at reasonable prices, at food costs to the Company which are higher than the industry average, creates a perception of value to its customers. The Company operates its Ryan's restaurants under a Franchise Agreement with Ryan's Family Steak Houses, Inc., ("Ryan's", or the "Franchisor") which grants the Company the exclusive right to operate Ryan's Family Steak House restaurants throughout North and Central Florida. COMPANY HISTORY The Company was formed by the combination, effective September 1985, of six limited partnerships, each of which owned and operated a Ryan's restaurant franchise. In April 1986, the Company issued 4,266,000 shares of its common stock in exchange for the assets and liabilities of the predecessor partnerships and 1,134,000 shares of its common stock to Eddie L. Ervin, Jr., in consideration for Mr. Ervin assigning to the Company all of his rights under the Franchise Agreement, as defined below. The Company completed its initial public offering of 4,500,000 shares of its 2 3 common stock in 1986 resulting in net proceeds to the Company of approximately $4,145,000. FRANCHISE AGREEMENT The Company operates its Ryan's restaurants under a Franchise Agreement between the Company and the Franchisor dated as of September 16, 1987, which Franchise Agreement amended and consolidated all previous franchise agreements (as amended, the "Franchise Agreement"). The Franchise Agreement extends through December 31, 2010 and provides for two additional ten-year renewal options. The renewal options are subject to certain conditions, including the condition that the Company has fully and faithfully performed its obligations under the Franchise Agreement during its original term. Under the terms of the Franchise Agreement, the Company has the right to use the registered mark "Ryan's Family Steak House" and the right to use the Franchisor's techniques in the operation of Ryan's Family Steak House restaurants. In 1996, the Company and the Franchisor amended the Franchise Agreement. The amended agreement requires the Company to pay a royalty fee of 3.0% through December 2001 and 4.0% thereafter on the gross receipts of each Ryan's Family Steak House restaurant. Total royalty fee expenses were $1,165,300, $1,150,900, and $1,108,400, for the fiscal years ended December 29, 1999, December 30, 1998, and December 31, 1997, respectively. The Franchise Agreement requires the Company to operate a minimum number of Ryan's restaurants on December 31 of each year. Failure to operate the minimum number of restaurants could result in the loss of exclusive franchise rights to the Ryan's concept in North and Central Florida. In 1999, the Company and Ryan's amended the number of restaurants required to be in operation as detailed below. The Company operated 23 restaurants as of fiscal year end 1999 and was therefore in compliance with the Franchise Agreement. In February 2000 the Company sold a restaurant in Jacksonville, Florida, reducing the number of operating restaurants to 22. The Company plans to open at least two restaurants in 2000, and expects to be in compliance with the requirement. 3 4 The following schedule outlines the number of Ryan's restaurants required to be operated by the Company as of December 31 of each year under the amended Franchise Agreement:
Number of Restaurants Required to End of Fiscal Year be in Operation - ------------------ --------------- 1999 21 2000 23 2001 and subsequent years Increases by two each year
The amendment to the Franchise Agreement adopted in 1999 also clarified that the Franchisor's consent is needed for certain kinds of transactions. The Franchise Agreement contains provisions relating to the operation of the Company's Ryan's restaurants. Upon the Company's failure to comply with such provisions, the Franchisor may terminate the Franchise Agreement if such default is not cured within 30 days of notice from the Franchisor. Termination of the Franchise Agreement would result in the loss of the Company's right to use the "Ryan's Family Steak House" name and concept and could result in the sale of the physical assets of the Company to the Franchisor pursuant to a right of first refusal. Termination of the Company's rights under the Franchise Agreement may result in the disruption, and possibly the discontinuance, of the Company's operations. The Company believes that it has operated and maintained each of its Ryan's Family Steak House restaurants in accordance with the operational procedures and standards set forth in the Franchise Agreement, as amended. OPERATIONS OF RYAN'S RESTAURANTS FORMAT. As of February 25, 2000, 19 of the Company's Ryan's restaurants are located in free-standing buildings which vary in size from 7,500 to 12,000 square feet. Three of the Company's Ryan's restaurants are located in shopping malls. Each restaurant is constructed of brick or stucco walls, interior and exterior, with exposed woodwork. The interior of each Ryan's restaurant contains a dining room, a customer ordering area, and a kitchen. The dining rooms seat a total of between 270 and 500 persons and highlight centrally located, illuminated scatter bars and a fresh bakery and dessert bar. Each Ryan's restaurant has parking for approximately 100 to 175 cars on lots of overall size of approximately 50,000 to 70,000 square feet. The Ryan's restaurants operate seven days a week. Typical hours of operation are from 11:00 a.m. to 9:00 p.m., Sunday through Thursday, and from 11:00 a.m. to 10:00 p.m., 4 5 Friday and Saturday. Restaurants that serve breakfast open at 8:00 a.m. Saturday and Sunday. In a Ryan's restaurant, the customer enters the restaurant, orders from the menu, and then enters the dining room. Beverages are brought to the table by servers. Entrees are cooked to order. The customer ordering the salad bar is given unlimited access to the scatter bars and the bakery and dessert bar. Customers receive table service of the entree and beverage refills. For the fiscal year ended December 29, 1999, the average weekly customer count per restaurant was approximately 4,900 and the average meal price (including beverage) was approximately $6.35. RESTAURANT MANAGEMENT AND SUPERVISION. The Company manages the Ryan's restaurants pursuant to a standardized operating and control system together with comprehensive recruiting and training of personnel to maintain food and service quality. In each Ryan's restaurant, the management group consists of a general manager, a manager and one to three assistant managers, depending on sales volume. The Company requires at least two members of the management group on duty during all peak serving periods. Management-level personnel usually begin employment at the manager trainee or assistant manager level, depending on prior restaurant management experience. All new management-level personnel must complete the Company's five-week training period prior to being placed in a management position. Each restaurant management group reports to a supervisor. Presently, the supervisors each oversee the operations of five to seven restaurants. The supervisors report directly to the Director of Operations. Communication and support from all departments in the Company are designed to assist the supervisors in responding promptly to local problems and opportunities. All restaurant managers and supervisors participate in incentive programs based upon the profitability of their restaurants and upon the achievement of certain pre-set goals. The Company believes these incentive programs enable it to operate more efficiently and to attract qualified managers. In 1999, the Company implemented an operating partner program for certain managers to provide them with an additional career path and give them increased incentive to maximize the profitability of their restaurants. PURCHASING, QUALITY AND COST CONTROL. The Company has a centralized purchase control program which is designed to ensure uniform product quality in all restaurants. The program also helps to maintain reduced food, beverage, and supply costs. The Company purchases approximately 95% of the products used by the Company's restaurants through the centralized purchase control program. USDA choice grain-fed 5 6 beef, the Company's primary commodity, is closely monitored by the Company for advantageous purchasing and quality control. The Company purchases beef through various producers and brokers both on a contract basis and on a spot basis. Beef and other products are generally delivered directly to the restaurants three times weekly. The Company has in the past obtained satisfactory sources of supply for all the items it regularly uses and believes it will be able to do so in the future. The Franchise Agreement requires that all suppliers to Ryan's restaurants are subject to approval by the Franchisor. Through its relationship with the Franchisor, the Company has obtained favorable pricing on the purchase of food products from several suppliers. In June 1995, the Company renewed its agreement with Kraft Foodservice, Inc. to serve as its primary supplier. Kraft was subsequently purchased by Alliant Foodservice, Inc. The Alliant agreement is cancelable at any time with 90 days notice. The Company maintains centralized financial and accounting controls for its restaurants. On a daily basis, restaurant managers forward customer counts, sales information and supplier invoices to Company headquarters. On a weekly basis, restaurant managers forward summarized sales reports and payroll data. Physical inventories of all food and supply items are taken weekly, and meat is inventoried daily. DEVELOPMENT GENERAL. The Company operated 22 Ryan's restaurants as of February 25, 2000. SITE LOCATION AND CONSTRUCTION. The Company considers the specific location of a restaurant to be important to its long-term success. The Company's Franchisor assists the Company in selection of new restaurant sites. The site selection process focuses on a variety of factors, including trade area demographics (such as population density and household income level), an evaluation of site characteristics (such as visibility, accessibility, and traffic volume), and an analysis of the potential competition. In addition, site selection is influenced by the general proximity of a site to other Ryan's restaurants in order to improve the efficiency of the Company's field supervisors and potential marketing programs. The Company generally locates its restaurants near or adjacent to residential areas in an effort to capitalize on repeat business from such areas as opposed to transient business. The Company constructs its Ryan's restaurants using a general contractor selected from several solicited bids. For 6 7 certain new restaurants, the Company may use its construction subsidiary to serve as the general contractor in order to expedite the process of obtaining building permits. Management believes that by performing site selection through the Franchisor, the Company can select superior sites with high average sales volumes and control real estate costs. New Ryan's restaurants are usually completed within four months of the date on which construction is commenced. MANAGEMENT OF NEW RESTAURANTS. When a new Ryan's restaurant is opened, the principal restaurant management positions are staffed primarily with management personnel who have prior experience in a management position at another of the Company's restaurants and who have undergone special training. Prior to opening, all staff personnel at the new location undergo one week of intensive training conducted by a training team. Such training includes preopening drills in which test meals are served to the invited public. Both the staff at the new location and personnel experienced in store openings at other locations participate in the training and drills. PROPRIETARY TRADE MARKS The name "Ryan's Family Steak House," along with all ancillary signs, building design and other symbols used in conjunction with the name, are the primary trademarks and service marks of the Franchisor. Such marks are registered in the United States. All of these registrations and the goodwill associated with the Franchisor's trademarks are of material importance to the Company's business and are licensed to the Company under the Franchise Agreement. COMPETITION The food service business in Florida is highly competitive and is often affected by changes in the taste and eating habits of the public, economic conditions affecting spending habits, local demographics, traffic patterns and local and national economic conditions. The principal bases of competition in the industry are the quality and price of the food products offered. Location, speed of service and attractiveness of the facilities are also important factors. The Company's restaurants are in competition with restaurants operated or franchised by national, regional and local restaurant companies offering a similar menu, many of which have greater resources than the Company. The Company is also in competition with specialty food outlets and other vendors of food. The amount of new competition near Company restaurants has increased significantly in the past few years. In some 7 8 cases, competitors have opened new restaurants with superior facilities close to the Company's restaurants. In addition, in the past several years, many restaurants have remodeled their restaurants so that they are similar to the scatter bar format used by the Company. The increased competition had a significant negative impact on sales of some Company restaurants in 1999. Management has developed a plan to attempt to reduce the negative impact on sales from new competition, but there can be no assurance that sales trends will improve. The strategies implemented include the installation of an exhibition grill cooking area in one restaurant, which has to date offset any negative impact from a newly opened competitor's restaurant, and the addition of "all you can eat" steak nights on certain nights at all Company restaurants, which has resulted in positive sales trends for those nights. In addition, the Franchisor has the right to operate restaurants in several west Florida and south Florida counties. EMPLOYEES As of December 29, 1999, the Company employed approximately 1,100 persons, of whom approximately 50% are considered by management as part-time employees. No labor unions currently represent any of the Company's employees. The Company has not experienced any work stoppages attributable to labor disputes and considers employee relations to be good. EXECUTIVE OFFICERS The following persons were executive officers of the Company effective December 29, 1999: Edward B. Alexander, age 41, has been Executive Vice President since September 1999, and has been Chief Financial Officer of the Company since 1990. In addition, Mr. Alexander served on the Company's Board of Directors from May 1996 to July 1999. Kevin R. Pickett, age 40, has been Vice President of the Company since September 1999, and Director of Operations of the Company since August 1996. Mr. Pickett served as regional supervisor for the Company from July 1993 to August 1996, and was a manager of various Company restaurants from October 1988 to June 1993. GOVERNMENT REGULATION The Company is subject to the Fair Labor Standards Act which governs such matters as minimum wage requirements, overtime and other working conditions. A large number of 8 9 the Company's restaurant personnel are paid at or slightly above the federal minimum wage level and, accordingly, any change in such minimum wage will affect the Company's labor costs. The Company is also subject to the Equal Employment Opportunity Act and a variety of federal and state statutes and regulations. Any new legislation or regulation that may require the Company to pay more in health insurance premiums may adversely affect the Company's labor costs. The Company's restaurants are constructed to meet local and state building requirements and are operated in accordance with state and local regulations relating to the preparation and service of food. More stringent and varied requirements of local governments with respect to land use, zoning and environmental factors may in some cases delay the Company's construction of new restaurants or remodels of existing ones. The Company believes that it is in substantial compliance with all applicable federal, state and local statutes, regulations and ordinances including those related to protection of the environment and that compliance has had no material effect on the Company's capital expenditures, earnings or competitive position, and such compliance is not expected to have a material adverse effect upon the Company's operations. The Company, however, cannot predict the impact of possible future legislation or regulation on its operations. SOURCES AND AVAILABILITY OF RAW MATERIALS The Company procures its food and other products from a variety of suppliers, and follows a policy of obtaining its food and products from several major suppliers under competitive terms. A substantial portion of the beef used by the Company is obtained from one supplier, although the Company believes comparable beef meeting its specifications is available in adequate quantities from other suppliers. To ensure against interruption in the flow of food supplies due to unforeseen or catastrophic events, to take advantage of favorable purchasing opportunities, and to insure that meat received by the Company is properly aged, the Company maintains a two to six-week supply of beef. WORKING CAPITAL REQUIREMENTS Substantially all of the Company's revenues are derived from cash sales. Inventories are purchased on credit and are converted rapidly to cash. The Company does not maintain significant receivables and inventories. Therefore, with the exception of debt service, working capital requirements for continuing operations are not significant. 9 10 In December 1996, the Company entered into a $15.36 million Loan Agreement with FFCA Mortgage Corporation ("FFCA"). The Loan Agreement governs fifteen Promissory Notes payable to FFCA. Each Note is secured by a mortgage on a Company restaurant property. The Promissory Notes provide for a term of twenty years and an interest rate equal to the thirty-day LIBOR rate plus 3.75%, adjusted monthly. The Loan Agreement provides for various covenants, including the maintenance of prescribed debt service coverages. The Company used the proceeds of the FFCA loan to retire its Notes with Cerberus Partners, L.P. ("Cerberus") and its loans with the Daiwa Bank Limited and SouthTrust Bank of Alabama, N.A. In addition, the Company retired warrants for 210,000 shares of the Company's common stock previously held by Cerberus. Cerberus continues to hold warrants to purchase 140,000 shares of the Company's common stock at an exercise price of $2.00 per share. Also in December 1996, the Company entered into a separate loan agreement with FFCA under which it borrowed an additional $2,590,000 in 1998. This additional financing is evidenced by three additional Promissory Notes secured by mortgages on three Company restaurant properties. The terms and conditions of this loan agreement are substantially identical to those of the $15.36 million Loan Agreement described above. In October 1998, the Company received two commitments for new financing from FFCA. The Company borrowed a total of $2.6 million in 1999 under the first commitment, which is secured by mortgages on two restaurant properties. The second commitment was for construction financing for two new restaurants to be built in 2000. Terms of this commitment include funding of a maximum of $1,600,000 per restaurant. Other terms and conditions of these loan agreements are substantially identical to those of the $15.36 million Loan Agreement described above. SEASONALITY The Company's operations are subject to seasonal fluctuations. Revenues per restaurant generally increase from January through April and decline from September through December. RESEARCH The Company relies primarily on the Franchisor to maintain ongoing research programs relating to the development of new products and evaluation of marketing activities. Although research and development activities 10 11 are important to the Company, no expenditures for research and development have been incurred by the Company. CUSTOMERS No material part of the Company's business is dependent upon a single customer or a few customers. INFORMATION AS TO CLASSES OF SIMILAR PRODUCTS OR SERVICES The Company operates in only one industry segment. All significant revenues and pre-tax earnings relate to retail sales of food to the general public through restaurants owned and operated by the Company. The Company has no operations outside the continental United States. ITEM 2. PROPERTIES
Location Date Opened -------- ----------- Jacksonville May 1982 Orange Park May 1984 Ocala September 1986 Neptune Beach November 1986 Lakeland February 1987 Lakeland March 1987 Winter Haven August 1987 Apopka September 1987 Gainesville December 1987 New Port Richey May 1988 Tampa June 1988 Tallahassee August 1988 Daytona Beach September 1988 Tampa November 1988 Orlando February 1989 Clearwater July 1989 Melbourne October 1989 Lake City March 1991 Brooksville January 1997 Leesburg June 1998 Deland April 1999 Tampa September 1999
As of February 25, 2000, the Company operated 22 Ryan's restaurants. The specific rate at which the Company is able to open new restaurants will be determined, among other factors, by its ability to locate suitable sites on satisfactory terms, raise the necessary capital, secure appropriate governmental permits and approvals and recruit and train management personnel. 11 12 As of December 29, 1999, the Company owned the real property on which 17 of its restaurants were located. All of these properties are subject to mortgages securing the FFCA notes. The Company leases the real property on which five of its restaurants are located. Those restaurants are located in Jacksonville, Clearwater, Brooksville, Leesburg, and Tampa, Florida. The Company also leases two buildings in Jacksonville, Florida for its executive offices. The Company's lease on its restaurant in Clearwater, Florida expired September 1999, and the Company's restaurant there is currently operating on a month-to-month rental. Due to a prior ruling by the Sixth Judicial Court in Pinellas County, the Company did not have any renewal options on the lease. In February 2000, the mall where the restaurant is located was sold to a new owner. The new owner has offered the Company a new five-year lease agreement, but with substantially higher monthly rental than is currently paid. The Company is currently negotiating a short-term lease (twelve to eighteen months), and believes that such an agreement will be executed in the near future. Should no agreement be reached, the owner could evict the Company with 30 days notice, and the Company would be required to write-off approximately $260,000 of leasehold improvements. ITEM 3. LEGAL PROCEEDINGS The Company is subject from time to time to various pending legal proceedings arising in the normal course of business. In the opinion of management, based on the advice of legal counsel, the ultimate disposition of currently pending claims and litigation will not have material adverse effect on the financial position or results of operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information contained under the caption "Common Stock Data" in the Company's 1999 Annual Report to Shareholders is incorporated herein by reference. 12 13 ITEM 6. SELECTED FINANCIAL DATA The information contained under the caption "Five-Year Financial Summary" in the Company's 1999 Annual Report to Shareholders is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information contained under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 1999 Annual Report to Shareholders is incorporated herein by reference. ITEM 7.A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK The Company is exposed to market risk from changes in interest rates. For its cash and cash equivalents, investments and mortgages receivable, a change in interest rates effects the amount of interest income than can be earned. For its debt instruments, a change in interest rates effects the amount of interest expense incurred. 13 14 The following table provides information about the Company's financial instruments that are sensitive to changes in interest rates.
2000 2001 2002 2003 2004 Thereafter Total - ------------------------------------------------------------------------------------------------------------------------------- Assets Overnight repurchase account at variable interest rate $ 575,000 $ 575,000 Weighted average interest rate 3.7% Certificates of deposit at fixed interest rates $ 10,000 $ 10,000 Weighted average interest rate 4.8% Mortgages receivable at fixed interest rate $ 77,800 159,800 $ 237,600 Weighted average interest rate 9.0% 9.0% Liabilities Notes payable at variable interest rate $ 381,400 422,300 467,400 517,500 572,900 15,355,500 $17,717,000 Weighted average interest rate 9.2% 9.2% 9.2% 9.2% 9.2% 9.2% Long-term capital lease at fixed interest rate $ 3,400 3,800 18,800 20,900 23,200 982,600 $ 1,052,700 Weighted average interest rate 10.7% 10.7% 10.7% 10.7% 10.7% 10.7%
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Consolidated Financial Statements of the Company and the Report of Independent Certified Public Accountants as contained in the Company's 1999 Annual Report to Shareholders are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 14 15 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information regarding directors contained under the caption "Election of Directors" in the Company's Proxy Statement for the 2000 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission prior to April 27, 2000, is incorporated herein by reference. The information regarding executive officers is set forth in Item 1 of this report under the caption "Executive Officers." The information regarding reports required under section 16(a) of the Securities Exchange Act of 1934 contained under caption "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's proxy statement for the 2000 Annual Meeting of Shareholders, which will be filed with Securities and Exchange Commission prior to April 27, 2000 is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information contained under the caption "Executive Pay" in the Company's Proxy Statement for the 2000 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission prior to April 27, 2000, is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information contained under the captions "Security Ownership of Certain Beneficial Owners and Management" in the Company's Proxy Statement for the 2000 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission prior to April 27, 2000, is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information contained under the captions "Election of Directors - Certain Relationships and Related Transactions" and "Compensation Committee Interlocks and Insider Participation" in the Company's Proxy Statement for the 2000 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission prior to April 27, 2000, is incorporated herein by reference. 15 16 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a)1. The financial statements listed below are filed with this report on Form 10-K or are incorporated herein by reference from the Company's 1999 Annual Report to Shareholders. With the exception of the pages listed below, the 1999 Annual Report to Shareholders is not deemed "filed" as a part of this report on Form 10-K.
Page Reference ----------------------- Form 1999 10-K Annual Report ---- ------------- Consent of Independent Certified Public Accountants 21 Independent Auditors' Report 27 Consolidated Statements of Operations 11 Consolidated Balance Sheets 12 Consolidated Statements of Share- holders' Equity 13 Consolidated Statements of Cash Flows 14 Notes to Consolidated Financial Statements 15
(a)2. No financial statement schedules have been included since the required information is not applicable or the information required is included in the financial statements or the notes thereto. (a)3. The following exhibits are filed as part of this report on Form 10-K, and this list comprises the Exhibit Index.
No. Exhibit 3.01 Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.01 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.) 3.02 Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.02 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.)
16 17 3.03 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.03 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.) 3.04 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.04 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.) 3.05 Amended and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 4 to the Company's Form 8-A, filed with the Commission on March 19, 1997, is incorporated herein by reference.) 3.06 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3 to the Company's Form 8-A filed with the Commission on March 19, 1997, is incorporated herein by reference.) 3.07 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.08 to the Company's Annual Report on Form 10-K filed with the Commission on March 31, 1998 is incorporated herein by reference.) 3.08 Amendment to Bylaws of Family Steak Houses of Florida, Inc. 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.) 10.01 Amended Franchise Agreement between Family Steak Houses of Florida, Inc. and Ryan's Family Steak Houses, Inc., dated September 16, 1987. (Exhibit 10.01 to the Company's Registration Statement on Form S-1, filed with the Commission on October 2, 1987, Registration No. 33-17620, is incorporated herein by reference.) 10.02 Lease regarding the restaurant located at 3549 Blanding Boulevard, Jacksonville, Florida (Exhibit 10.03 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.) 10.03 Amended and Restated Warrant to Purchase Shares of Common Stock, void after October 1, 2003, which
17 18 represents warrants issued to The Phoenix Insurance Company, The Travelers Indemnity Company, and The Travelers Insurance Company, (subsequently transferred to Cerberus Partners, L.P.) (Exhibit 10.07 to the Company's Annual Report on Form 10-K, filed with the Commission on March 28, 1995, is incorporated herein by reference.) 10.04 Warrant to Purchase Shares of Common Stock, void after October 1, 2003, which represents warrants issued to The Phoenix Insurance Company, The Travelers Indemnity Company, and The Travelers Insurance Company. (subsequently transferred to Cerberus Partners, L.P.) (Exhibit 10.08 to the Company's Annual Report on Form 10-K, filed with the Commission on March 28, 1995, is incorporated herein by reference.) 10.05 Amendment of Franchise Agreement between Ryan's Family Steak Houses, Inc. and the Company dated July 11, 1994. (Exhibit 10.17 to the Company's Annual Report on Form 10-K, filed with the Commission on March 28, 1995, is incorporated herein by reference.) 10.06 Agreement between the Company and Kraft Foodservice, Inc., as the Company's primary food product distribution. (Exhibit 10.06 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on August 9, 1995, is incorporated herein by reference.) 10.07 Lease Agreement between the Company and CNL American Properties Fund, Inc., dated as of September 18, 1996. (Exhibit 10.02 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on November 18, 1996 is hereby incorporated by reference.) 10.08 Rent Addendum to Lease Agreement between the Company and CNL American Properties Fund, Inc., dated as of September 18, 1996. (Exhibit 10.04 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on November 18, 1996 is hereby incorporated by reference.) 10.09 Amendment of Franchise Agreement between the Company and Ryan's Family Steak Houses, Inc. dated October 3, 1996. (Exhibit 10.15 to the Company's Annual Report on Form 10-K, filed with the Commission on April 1, 1997 is hereby incorporated by reference.)
18 19 10.10 $15.36m Loan Agreement, between the Company and FFCA Mortgage Corporation, dated December 18, 1996. (Exhibit 10.18 to the Company's Annual Report on Form 10-K, filed with the Commission on April 1, 1997 is hereby incorporated by reference.) 10.11 $4.64m Loan Agreement, between the Company and FFCA Mortgage Corporation, dated December 18, 1996. (Exhibit 10.19 to the Company's Annual Report on Form 10-K, filed with the Commission on April 1, 1997 is hereby incorporated by reference.) 10.12 Form of Promissory Note between the Company and FFCA Mortgage Corporation, dated December 18, 1996. (Exhibit 10.20 to the Company's Annual Report on Form 10-K, filed with the Commission on April 1, 1997 is hereby incorporated by reference.) 10.13 Form of Mortgage between the Company and FFCA Mortgage Corporation, dated December 18, 1996 (Exhibit 5 to the Company's Schedule 14D-9, filed with the Commission on March 19, 1997 is hereby incorporated by reference.) 10.14 Form of Mortgage between the Company and FFCA Mortgage Corporation, dated March 18, 1996. (Exhibit 10.22 to the Company's Annual Report on Form 10-K, filed with the Commission on April 1, 1997 is hereby incorporated by reference.) 10.15 Lease agreement dated January 29, 1998 between the Company and Excel Realty Trust, Inc. (Exhibit 10.19 to the Company's Annual Report on Form 10-K, filed with the Commission on March 31, 1998 is hereby incorporated by reference.) 10.16 Commitment for construction financing for two restaurants from FFCA Acquisition Corporation, dated October 2, 1998. (Exhibit 10.02 to the Company's Quarterly Report on Form 10-Q filed with the commission on November 16, 1998 is incorporated herein by reference.) 10.17 Lease between the Company and Stuart S. Golding Company dated February 3, 1999. (Exhibit 10.23 to the Company's Annual Report on Form 10-K, filed with the Commission on March 24, 1999 is hereby incorporated by reference). 10.18 Employment Agreement between the Company and Lewis E. Christman, Jr., dated as of January 26, 1998.
19 20 (Exhibit 10.17 to the Company's Annual Report on Form 10-K, filed with the Commission on March 31, 1998 is hereby incorporated by reference). 10.19 Amendment of Franchise Agreement between the Company and Ryan's Family Steak Houses, Inc. dated August 31, 1999. 10.20 Stock option agreement between the Company and director Jay Conzen, dated November 3, 1999. 13.01 1999 Annual Report to Shareholders. 21.01 Subsidiaries of the Company. 23.01 Consent of Independent Certified Public Accountants - Deloitte & Touche LLP. 27.00 Financial data schedules (electronic filing only).
(b) None. (c) See (a)3. above for a list of all exhibits filed herewith and the Exhibit Index. (d) None. 20 21 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Annual Report of Family Steak Houses of Florida, Inc. on Form 10-K of our report dated February 18, 2000, appearing in the 1999 Annual Report to Shareholders of Family Steak Houses of Florida, Inc. We additionally consent to the incorporation by reference in Registration Statement No. 33-11684 pertaining to the 1986 Employee Incentive Stock Option Plan of Family Steak Houses of Florida, Inc. on Form S-8 of our report dated February 18, 2000 appearing in and incorporated by reference in this Annual Report on Form 10-K of Family Steak Houses of Florida, Inc. for the year ended December 29, 1999. We further consent to the incorporation by reference in Registration Statement No. 33-12556 pertaining to the 1986 Stock Option Plan for Non-Employee Directors of Family Steak Houses of Florida, Inc. on Form S-8 of our report dated February 18, 2000 appearing in and incorporated by reference in this Annual Report on Form 10-K of Family Steak Houses of Florida, Inc. for the year ended December 29, 1999. We further consent to the incorporation by reference in Registration Statement No. 33-62101 pertaining to the 1995 Long Term Incentive Plan of Family Steak Houses of Florida, Inc. on Form S-8 of our report dated February 18, 2000 appearing in and incorporated by reference in this Annual Report on Form 10-K of Family Steak Houses of Florida, Inc. for the year ended December 29, 1999. Deloitte & Touche LLP Certified Public Accountants Jacksonville, Florida March 15, 2000 21 22 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) 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. Date: March 9, 2000 BY: /s/ Glen F. Ceiley ------------------ Glen F. Ceiley (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in the capacities and on the date indicated.
Signature Title Date - --------- ----- ---- /s/ Edward B. Alexander Executive Vice President March 13, 2000 - ----------------------- (Principal Financial and Edward B. Alexander Accounting Officer) /s/ Glen F. Ceiley Chairman of the Board March 9, 2000 - ------------------ Glen F. Ceiley /s/ Steve Catanzaro Director March 9, 2000 - ------------------- Steve Catanzaro /s/ Jay Conzen Director March 13, 2000 - -------------- Jay Conzen /s/ William Means Director March 9, 2000 - ----------------- William Means
22 EX-3.08 2 AMENDMENT TO BYLAWS 1 EXHIBIT 3.08 AMENDMENT TO AMENDED AND RESTATED BYLAWS OF FAMILY STEAKHOUSES OF FLORIDA, INC. THIS AMENDMENT dated as of November 3, 1999 is to the Amended and Restated Bylaws (the "Bylaws") of Family Steakhouses of Florida, Inc. (the "Company"). WHEREAS, Article X of the Bylaws provides that the Bylaws may be amended or altered by a majority vote of the Board of Directors at any regular or special meeting; and WHEREAS, at duly called meetings of the Board of Directors of the Company held on July 21, 1999 and November 3, 1999, the Board of Directors adopted the following amendments to the Bylaws: NOW THEREFORE, to document the action of the Board of Directors, the Bylaws are hereby amended as follows: 1. Section 5.1. Section 5.1 of the Bylaws is amended to read as follows: The officers of the Corporation shall consist of a Chairman, a President and Chief Executive Officer, one or more Vice Presidents, a Secretary and a Treasurer, each of whom shall be appointed by and serve at the pleasure of the Board of Directors. Any two or more offices may be held by the same person. The Board of Directors at its first meeting after each annual meeting of shareholders shall appoint a Chairman, a President, a Secretary, a Treasurer and may appoint one or more Vice Presidents. The Chairman or the President are authorized to appoint such officers on an interim basis, subject to ratification by the Board of Directors at its next meeting. Such other officers and assistant officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors. 2. Section 3.5. Section 3.5 of the Bylaws is amended to read as follows: The annual meeting of the Board of Directors shall be held at the same place as the annual shareholders' meeting immediately following the annual meeting of the shareholders. In addition, there shall be four regular meetings of the Board of Directors to be held at such time and at such place within or without the State of Florida as the Board of Directors may from time to time designate. Upon the request of any two directors or the President or upon his own initiative, the Chairman may call a special meeting of the Board of Directors to be held at such time and place, within or 2 without the State of Florida, and for such purpose as the notice of the meeting may designate. IN WITNESS WHEREOF, the Company has caused its Secretary to execute this Amendment as of November 3, 1999. FAMILY STEAK HOUSES OF FLORIDA, INC. By: -------------------------------------- Secretary EX-10.19 3 AMENDMENT OF FRANCHISE AGREEMENT 1 EXHIBIT 10.19 August 31, 1999 Mr. Glen F. Ceiley Chairman of the Board Family Steak Houses of Florida, Inc. 2113 Florida Boulevard Neptune Beach, FL 32266 Dear Glen: This letter is to serve as an amendment to the Agreement between Ryan's Properties, Inc. ("Ryan's") and Family Steak Houses of Florida, Inc. ("FSH") dated July 11, 1994, and amended on October 17, 1994 and October 3, 1996 (the "Agreement"). The Agreement itself constituted an amendment of the Franchise Agreement (as defined in the Agreement)(as amended, the "Franchise Agreement"). This letter also serves to amend the Franchise Agreement. 1. Clause (b) of Section 7 (Store Requirements) of the Agreement is deleted and replaced with the following: "At the end of each calendar year, FSH agrees to have at least the following number of Ryan's Family Steak House restaurants in operation:
Number of Ryan's Family Steak House End of Calendar Year restaurants Required to be in Operation -------------------- --------------------------------------- 1999 21 2000 23 2001 25 2002 27 2003 29 Subsequent Years Increases by Two per Year"
The remaining provisions of Section 7 of the Agreement remain in full force and effect. 2 August 31, 1999 Page 2 2. Section XV (TERMINATION AND DEFAULTS) of the Franchise Agreement is amended by the addition at the end of paragraph B thereof of a new subparagraph 5 of paragraph B, which new subparagraph 5 is set forth on the attached Rider A. 3. Section XVIII (TRANSFERABILITY OF INTEREST) of the Franchise Agreement is amended by the addition at the end thereof of new subparagraphs 5 and 6 of paragraph B, which new subparagraphs 5 and 6 are set forth on the attached Rider B. Except as explicitly modified herein, the Agreement and the Franchise Agreement shall continue in full force and effect in all respects. RYAN'S PROPERTIES, INC. Charles D. Way President The undersigned has read the above amendments and agrees to the provisions contained therein. FAMILY STEAK HOUSES OF FLORIDA, INC. By: ---------------------------------------- Mr. Glen F. Ceiley Chairman of the Board Family Steak Houses of Florida, Inc. 3 Rider A (Additional Event of Default) 5. If at the end of any calendar year the number of Restaurants in operation is less than 80% of the number of Restaurants required to be in operation as of that date pursuant to the terms of this Agreement, as amended. 4 Rider B (Additional Transferability Provisions) 5. For purposes of this paragraph XVIII.B, any of the following shall be deemed to be an assignment and transfer of this Agreement that requires FRANCHISOR's prior written consent under this Paragraph XVIII.B: (a) any person or group of persons (within the meaning of the Securities Exchange Act of 1934, as amended (the "34 Act")) (other than any person that beneficially owned 15% or more of the issued and outstanding shares of voting capital stock of FRANCHISEE as of December 15, 1998) shall have acquired after December 15, 1998 beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission (the "SEC") under the 34 Act) of 25% or more of the issued and outstanding shares of capital stock of FRANCHISEE (or FRANCHISEE's direct or indirect parent) having the right to vote for the election of directors of FRANCHISEE (or such parent) under ordinary circumstances, or (b) during any period of twelve consecutive calendar months ending after August 15, 1999, individuals who at the beginning of such period constituted the board of directors of FRANCHISEE (or any direct or indirect parent of FRANCHISEE) (together with any new directors whose election by the board of directors of FRANCHISEE (or such parent), or whose nomination for election by the stockholders of FRANCHISEE (or such parent), was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office, or (c) FRANCHISEE, or any individual or entity that, directly or indirectly, controls, is controlled by or is under common control with FRANCHISEE, directly or indirectly, owns, maintains, engages in, participates in or has any interest in, the operation of any other family-oriented steak house restaurant. For purposes of this subparagraph (c), the term "control" has the meaning of that term under the regulations promulgated by the SEC under the 34 Act. 4 5 For purposes of this paragraph 5, any entity that, directly or indirectly, controls (within the meaning of the regulations promulgated by the SEC under the 34 Act) FRANCHISEE shall be deemed a direct or indirect (as the case may be) "parent" of FRANCHISEE. 6. In the event that FRANCHISOR declines to grant its consent to any transaction requiring its consent under this paragraph XVIII.B., the proposed transaction may nonetheless be consummated (subject, in the case of an asset transfer, to FRANCHISOR's right of first refusal) if the following conditions are satisfied to the reasonable satisfaction of FRANCHISOR: (a) FRANCHISEE shall have paid or cause to be paid to FRANCHISOR in immediately available funds all amounts due and owing to FRANCHISOR under this Agreement or accrued under this Agreement with respect to any period prior to the effective date of such transaction (the "Transaction Effective Date"); (b) No event of default has occurred and is continuing under this Agreement as of the Transaction Effective Date; (c) All documents and information in the possession of FRANCHISEE that FRANCHISOR deems to be confidential trade secrets shall have been returned to FRANCHISOR prior to the Transaction Effective Date; (d) On or prior to the Transaction Effective Date, FRANCHISEE or the transferee (as applicable), on the one hand, and FRANCHISOR, on the other hand, shall have executed and delivered an amendment agreement pursuant to which: (i) This Agreement is modified solely (except as provided in clause (ii) below) to eliminate any requirement that FRANCHISOR provide to FRANCHISEE or such transferee (as applicable) information deemed confidential trade secrets by FRANCHISOR; (ii) The transferee (if applicable) assumes all of FRANCHISEE's obligations under this Agreement; and (iii) This Agreement shall otherwise remain in full force and effect and binding on FRANCHISEE or the transferee (as applicable). 5 EX-10.20 4 STOCK OPTION AGREEMENT 1 EXHIBIT 10.20 FAMILY STEAK HOUSES OF FLORIDA, INC. NON-QUALIFIED STOCK OPTION AGREEMENT THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made and entered into by and between FAMILY STEAK HOUSES OF FLORIDA, INC., a Florida corporation ("Company"), and JAY CONZEN ("Optionee") as of the 3rd day of November, 1999 ("Date of Grant"). WHEREAS, the Company's Executive Compensation Committee (the "Committee") has recommended and the Company's Board of Directors has approved the grant to Optionee of a non-qualified stock option to purchase all or any part of Twenty-Five Thousand (25,000) authorized but unissued shares of voting common stock of the Company, $.01 par value, at the price of $2.00 per share, such option to be for the term and upon the terms and conditions hereinafter stated; NOW THEREFORE, it is hereby agreed: 1. GRANT OF OPTION. Pursuant to the action of the Executive Compensation Committee and Board of Directors, Company hereby grants to Optionee the option to purchase, upon and subject to the terms and conditions of this Agreement, all or any part of Twenty-Five Thousand (25,000) shares of the Company's common stock (the "Shares") at the price of $2.00 per Share. 2. METHOD OF PAYMENT. The exercise price shall be paid in full at the time of exercise in one of the following ways: (i) in cash, for a payment of $2.00 per Share purchased; 2 (ii) by the surrender of such number of shares of the Company's common stock, the fair market value of which is currently equal to the option price for the Shares currently being purchased pursuant to this Agreement; or (iii) by a combination of cash and the Company's common stock, having an aggregate value on the date of exercise equal to the aggregate option exercise price for the shares currently being purchased pursuant to the Plan. The value of any shares of common stock tendered in payment of the option price shall be the closing sale price for such shares (as reported in The Wall Street Journal or other reputable publication) on the trading day preceding the date they are tendered to the Company. Optionee shall deliver all shares of common stock utilized for the payment of the option price free and clear of all liens and encumbrances and in transferable form. 3. WITHHOLDING. Where the Optionee is entitled to receive any Shares pursuant to the exercise of this option, the Company shall have the right to require Optionee to pay to the Company the amount of any federal, state or local income taxes or other amounts which the Company is required to withhold with respect to such exercise ("Withholding Taxes"), or, in lieu thereof, Optionee may make a written election to have withheld a portion of the Shares then issuable with a value equal to the Withholding Taxes. The Company's method of satisfying its withholding obligations shall be solely in the discretion of the Company, subject to applicable federal, state and local laws. 4. EXERCISABILITY. The option shall be exercisable as to all such Shares as of the Date of Grant. 5. EXERCISE OF OPTION. This option may be exercised by ten (10) days written notice delivered to the Secretary of the Company stating the number of Shares with respect to which this option is being exercised, together with cash, surrendered Company stock or a 2 3 combination thereof in the amount of the purchase price of such shares. Not fewer than one hundred (100) shares may be purchased at any one time unless the number purchased is the total number which may be purchased under this option. Whether the option is exercised by Optionee during his lifetime or by his personal representative or heirs after his death, such option must be exercised, if at all, not later than November 3, 2009; otherwise, such option shall lapse and shall not be exercisable in any amount after November 3, 2009. 6. CESSATION OF SERVICE. If Optionee shall cease to serve as a director of the Company for any reason, including but not limited to Optionee's disability or death, this option shall expire twelve (12) months thereafter or, if earlier, on the date specified in Paragraph 5 hereof. 7. NONTRANSFERABILITY; DEATH OF OPTIONEE. Neither this option nor any interest or right therein or part thereof shall be subject to disposition by transfer (other than by will or the laws of descent and distribution), alienation, anticipation, pledge, encumbrance, assignment or any other means, whether such disposition is voluntary or involuntary or by operation of law, by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect. This option may only be transferable by will or by the laws of descent and distribution and may be exercised only by Optionee during Optionee's lifetime. If Optionee dies while serving as a director of the Company, the persons to whom Optionee's rights under this option shall have passed by will or by the applicable laws of descent and distribution shall have the right to exercise this option for a period of one (1) year after the date of Optionee's death or, if earlier, on the date specified in Paragraph 5 hereof. 3 4 8. CONTINUED SERVICE. This agreement shall not obligate the Company to nominate the Optionee as a director or otherwise cause Optionee to serve as a director or to continue to engage Optionee as a consultant. 9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a stockholder with respect to the Shares until the date of issuance of stock certificates for such Shares to Optionee. Except as provided in Paragraph 10 hereof, no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificates are issued. 10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If the outstanding shares of the common stock of the Company are increased, decreased or changed into, or exchanged for a different number or kind of shares or securities of the Company, without receipt of consideration by the Company, through reorganization, merger, recapitalization, reclassification, stock split-up, stock dividend, stock consolidation or otherwise, an appropriate and proportionate adjustment shall be made in the number and kind of Shares and the exercise price per Share allocated to the unexercised portion of this option, which shall have been granted prior to any such change in capitalization. Any such adjustment, however, in this option shall be made without change in the total price applicable to the unexercised portion of the option but with a corresponding adjustment in the price for each Share subject to this option. Adjustments under this section shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final and conclusive. No fractional shares of stock shall be issued under this option on account of any such adjustment. 11. EFFECT OF CERTAIN TRANSACTIONS. In the event of (i) the liquidation or dissolution of the Company or (ii) a merger or consolidation of the Company (a "Transaction"), this Option shall continue in effect in accordance with its terms and Optionee shall be entitled to 4 5 receive in respect of each Share subject to the unexercised portion of this option, upon its exercise, the same number and kind of stock, securities, cash, property or other consideration that each holder of a share of common stock was entitled to receive in the Transaction in respect of such share. 12. ADMINISTRATION. This option shall be administered by the Committee subject to the express terms and conditions set forth herein. The Committee shall have the power from time to time to construe and interpret this option and to establish, amend and revoke rules and regulations for the administration of this option, including, but not limited to, correcting any defect or supplying any omission, or reconciling any inconsistency in this Agreement, in the manner and to the extent it shall deem necessary or advisable, and generally to exercise such powers and to perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to this option. All decisions and determinations by the Committee in the exercise of this power shall be final, binding and conclusive upon the Company, the Optionee, and all other persons having any interest therein. 13. TAX STATUS OF OPTION. This option is not intended to be an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986 (the "Code") or any successor provision thereof. 14. MODIFICATION OR SUBSTITUTION. The Committee may, in its discretion, modify this option or accept its surrender and grant new options in substitution for it. Notwithstanding the foregoing, no modification of this option shall adversely alter or impair any of Optionee's rights or obligations under this option without the Optionee's consent. 15. SECURITIES LAWS. This option is subject to the requirement that, if at any time the Committee determines, in its discretion, that the listing, registration or qualification of Shares issuable pursuant to this option is required by any securities exchange or under any state 5 6 or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the issuance of the Shares, no Share shall be issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions as acceptable to the Committee. 16. RESTRICTIONS ON SHARES ISSUED UPON EXERCISE. Unless the Shares issuable upon exercise of this Option have been registered under the Securities Act of 1933, as amended (the "Act") and such registration is then effective with respect to such Shares or the Shares are otherwise exempt from such registration, such shares shall be restricted against transfer to the extent required by the Act, and Rule 144 or other regulations thereunder. The Committee may require Optionee as a condition precedent to receipt of such shares, to represent and warrant to the Company in writing that (i) the Shares acquired by him are acquired for Optionee's own account for investment purposes and without any present intention to distribute or resell the Shares; (ii) Optionee acknowledges that the Shares have not been registered under the Act and constitute "restricted securities" thereunder, and, accordingly, the subsequent transfer of such shares will be subject to certain limitations; (iii) the Shares will not be sold or transferred other than pursuant to an effective registration thereof under the Act or pursuant to an exemption applicable under the Act or the rules and regulations promulgated thereunder; and (iv) the Optionee or other person then entitled to exercise such Option or portion will indemnify the Company against and hold it harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the Shares by such person is not made in accordance with the Act or the rules and regulations promulgated thereunder. The certificates evidencing any of such Shares shall be appropriately legended to reflect their status as restricted securities. 17. BINDING EFFECT. This Agreement shall inure to the benefit of and be binding upon the Company's successors and assigns. All obligations imposed upon Optionee and all 6 7 rights granted to Optionee under this Agreement shall be binding upon Optionee's heirs, executors, administrators and successors. 18. SEVERABILITY. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms. 19. GOVERNING LAW. This Agreement shall be governed by the laws of the State of Florida, without regard to its choice or conflict of law rules. "COMPANY' FAMILY STEAK HOUSES OF FLORIDA, INC. By: ----------------------------------------- Glen F. Ceiley, Chairman "OPTIONEE" By: ----------------------------------------- As to Optionee 7 EX-13.01 5 1999 ANNUAL REPORT TO SHAREHOLDERS 1 FAMILY STEAK HOUSES OF FLORIDA, INC. CORPORATE PROFILE ABOUT THE COMPANY Family Steak Houses of Florida, Inc. is the sole franchisee of Ryan's Family Steak House restaurants in the state of Florida. The Company's first restaurant was opened in Jacksonville, Florida in May 1982. The Company presently operates 22 Ryan's restaurants in Florida. A Ryan's Family Steak House restaurant is a family-oriented restaurant serving high-quality, reasonably priced food in a casual atmosphere with server-assisted service. The restaurants feature self-service scatter bars, bakery and dessert bar, and table service of meals and drink refills. Each restaurant serves cuts of charbroiled steaks and hamburgers, seafood and various chicken entrees. In addition to traditional salad bar items, the scatter bars include a variety of hot meats and vegetables, as well as a variety of pre-made salads and cheeses. The bakery bar consists of fresh baked products such as hot yeast rolls, a variety of muffins, sweet rolls, brownies and cookies. Other selections include cobblers, fresh fruit, candy, cheesecake, pudding, ice cream, lowfat yogurt and a wide variety of dessert toppings. The bakery and dessert bar is included in the customer's meal price, and items can also be purchased for take-home. RYAN'S LOCATIONS: Jacksonville (1) Lakeland (2) Gainesville (1) Orange Park (1) Apopka (1) New Port Richey (1) Ocala (1) Winter Haven (1) Tampa (3) Tallahassee (1) Daytona Beach (1) Orlando (1) Melbourne (1) Clearwater (1) Lake City (1) Brooksville (1) Leesburg (1) Deland (1) Neptune Beach (1)
- ---------------------------------(RYAN'S LOGO)--------------------------------- 2 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- DEAR SHAREHOLDERS: 1999 was a year of transition for the Company. You elected a new Board of Directors at the Annual Meeting of Shareholders in July to give the Company a new direction and a fresh start. The new Board created a management team of three individuals called the Office of the President to lead the Company. We would like to tell you about a few of the things we are doing to help return the Company to profitability and to improve the value of your investment. Total sales increased by 1.3% in 1999, despite the fact that we closed or sold five underperforming restaurants in 1999. Same store sales were also up, for the second consecutive year. We also opened a very successful and profitable new restaurant in Deland, Florida in April and another new restaurant in Tampa in September, both of which have consistently exceeded the Company's average unit sales volumes. We continue to believe that our strategy of closing and selling our older, outdated locations and replacing them with new Ryan's in excellent locations can bring about a dramatic improvement in our bottom line. Our goal is to expand the Ryan's concept in Florida at a quicker pace in 2000 and beyond. We are working closely with the site selection team from our franchisor, Ryan's Family Steak Houses, Inc. to identify sites around the state to accomplish this growth. We have already located several excellent areas of opportunity which we are pursuing for new Ryan's restaurants. One of our biggest challenges is the increasing number of competitors opening new restaurants in Florida. In order to outperform the competition in our segment, we are trying several innovations in our restaurants. We have added an "all you can eat steak night" to our already famous buffet offerings at all of our restaurants one night per week and experienced sales gains on those nights far beyond our expectations. Because of this success, we have expanded this offering to additional nights at several locations. In addition, we remodeled one of our restaurants to include an impressive exhibition grill cooking area, and have received glowing remarks from our customers. We are looking forward to expanding on these innovations in 2000. Another new concept which we are excited about is our new operating partner program. This program is offered to our best restaurant managers as a means for them to invest in the Company and the success of their restaurant, while giving them greater financial incentives to increase profits. This plan has been successfully used by our franchisor and other successful restaurant chains, and we look forward to expanding the concept in our Company. In addition to growing the Company more rapidly and working on innovations to improve sales at our current locations, we are focusing on improved cost controls as well. We have set a goal to reduce our food cost by 1% of sales by improving our purchasing and operating efficiencies. We have undertaken a project to review every operating expense item in the Company to determine if each particular cost can be decreased. We believe that Ryan's is a strong concept which can thrive in the State of Florida with its rapidly expanding population. For the fifth consecutive year, consumers in a nationwide survey by Restaurants and Institutions Magazine rated Ryan's as the #1 choice for BEST FAMILY STEAKHOUSE CHAIN IN AMERICA. We are committed to doing everything we can to make Ryan's #1 in Florida. We appreciate all the hard work of our team members and your continued support. We look to the future with a heightened sense of optimism and focus on increasing shareholder value. Sincerely, OFFICE OF THE PRESIDENT Edward B. Alexander Jay Conzen Kevin R. Pickett - ---------------------------------(RYAN'S LOGO)--------------------------------- 2 3 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- FIVE YEAR FINANCIAL SUMMARY
- ---------------------------------------------------------------------------------------------------------------- 1999 1998 1997 1996 1995(1) - ---------------------------------------------------------------------------------------------------------------- SELECTED INCOME STATEMENT DATA: (IN THOUSANDS, EXCEPT PER SHARE DATA) Sales $38,905 $38,412 $36,978 $37,978 $42,105 Cost and expenses: Food and beverage 15,161 15,015 14,642 15,090 16,591 Payroll and benefits 11,416 10,878 10,516 10,538 11,412 Depreciation and amortization 1,966 1,879 1,671 1,663 1,720 Other operating expenses 6,064 6,183 6,150 5,953 6,313 General and administrative expenses 2,703 2,472 2,681 2,220 2,452 Change in control payments 908 -- -- -- -- Franchise fees 1,165 1,151 1,108 1,139 1,263 Asset valuation charge -- 209 550 -- -- Loss (gain) on sale of restaurants 18 -- -- -- (159) Loss (gain) on store closings and disposition of equipment 140 193 146 57 (105) ------- ------- ------- ------- ------- 39,541 37,980 37,464 36,660 39,487 ------- ------- ------- ------- ------- (Loss) earnings from operations (636) 432 (486) 1,318 2,618 Interest and other income 375 410 438 465 536 Gain on sale of property held for sale -- -- -- -- 31 Interest expense (1,721) (1,619) (1,577) (1,516) (1,694) ------- ------- ------- ------- ------- (Loss) earnings before income taxes and extraordinary item (1,982) (777) (1,625) 267 1,491 (Benefit) provision for income taxes -- (68) (201) 53 147 ------- ------- ------- ------- ------- Net (loss) earnings before extraordinary item (1,982) (709) (1,424) 214 1,344 Extraordinary item - gain on early extinguishment of debt, net of income taxes of $89 -- -- -- 348 -- ------- ------- ------- ------- ------- Net (loss) earnings $(1,982) $ (709) $(1,424) $ 562 $ 1,344 ======= ======= ======= ======= ======= Basic (loss) earnings per share: (2) (Loss) earnings before extraordinary item $ (0.82) $ (0.30) $ (0.65) $ 0.10 $ 0.62 Extraordinary item - gain on early extinguishment of debt -- -- -- 0.16 -- ------- ------- ------- ------- ------- Net (loss) earnings per share $ (0.82) $ (0.30) $ (0.65) $ 0.26 $ 0.62 ======= ======= ======= ======= ======= Diluted (loss) earnings per share: (2) (Loss) earnings before extraordinary item $ (0.82) $ (0.30) $ (0.65) $ 0.09 $ 0.57 Extraordinary item - gain on early extinguishment of debt -- -- -- 0.15 -- ------- ------- ------- ------- ------- Net (loss) earnings per share $ (0.82) $ (0.30) $ (0.65) $ 0.24 $ 0.57 ======= ======= ======= ======= ======= SELECTED BALANCE SHEET DATA: Land and net property and equipment $25,261 $26,138 $26,300 $26,350 $26,837 Total assets 30,759 32,092 30,333 32,803 31,260 Long-term debt 17,336 16,574 14,403 15,107 14,420 Current portion of long-term debt 381 371 279 333 1,580 Shareholders' equity 8,335 10,275 10,644 11,998 11,460 SELECTED OPERATING DATA : Current ratio 0.4 0.8 0.6 0.9 0.4 Working capital (deficit) $(2,491) $ (744) $(1,795) $ (617) $(3,285) Cash provided by operating activities 157 1,525 626 1,645 2,135 Property and equipment additions 3,855 2,786 2,304 1,768 2,600
- ------------------------ (1) Fifty-three week period. (2) Per share amounts have been retroactively adjusted to reflect a 1-for-5 reverse stock split effected in March 1998. - ---------------------------------(RYAN'S LOGO)--------------------------------- 3 4 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Shown for the years indicated are (i) items in the statements of operations as a percent of total sales, (ii) operating expense items in the statements of operations as a percent of sales and (iii) the number of restaurants open at the end of each year. - --------------------------------------------------------------------------------
PERCENTAGE CHANGE VERSUS PRIOR YEAR ---------------- 1999 1998 VS VS 1999 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------- Sales $38,904,800 $38,412,400 $36,977,800 1.3% 3.9% =========== =========== =========== === === - -------------------------------------------------------------------------------------------------------------
NET CHANGE IN PERCENTAGE ---------------- PERCENT OF SALES 1999 1998 ---------------------------------- VS VS 1999 1998 1997 1998 1997 - ----------------------------------------------------------------------------------------------------------- Costs and expenses: Operating expenses 89.0% 88.4% 89.1% 0.6 (0.7) General and administrative expenses 6.9 6.4 7.3 0.5 (0.9) Change in control payments 2.3 -- -- 2.3 -- Franchise fees 3.0 3.0 3.0 -- -- Asset valuation charge -- 0.6 1.5 (0.6) (0.9) Loss on sale of restaurants 0.1 -- -- 0.1 -- Loss on store closings and disposition of equipment 0.4 0.5 0.4 (0.1) 0.1 ----- ---- ----- ---- ---- 101.7 98.9 101.3 2.8 (2.4) ----- ---- ----- ---- ---- (Loss) earnings from operations (1.7) 1.1 (1.3) (2.8) 2.4 Interest and other income 1.0 1.1 1.2 (0.1) (0.1) Interest expense (4.4) (4.2) (4.3) (0.2) 0.1 ----- ---- ----- ---- ---- Loss before income taxes (5.1) (2.0) (4.4) (3.1) 2.4 Income tax benefit -- (0.2) (0.5) 0.2 0.3 ----- ---- ----- ---- ---- Net loss (5.1)% (1.8)% (3.9)% (3.3)% 2.1% ===== ==== ===== ==== ==== Operating expenses: Food and beverage 39.0% 39.1% 39.6% (0.1)% (0.5)% Payroll and benefits 29.3 28.3 28.4 1.0 (0.1) Depreciation and amortization 5.1 4.9 4.5 0.2 0.4 Other operating expenses 15.6 16.1 16.6 (0.5) (0.5) ----- ---- ----- ---- ---- 89.0% 88.4% 89.1% 0.6% (0.7)% ===== ==== ===== ==== ==== Restaurants open at end of year 23 26 25 ===== ==== =====
- ---------------------------------(RYAN'S LOGO)--------------------------------- 4 5 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS 1999 COMPARED TO 1998 For the year ended December 29, 1999, total sales increased 1.3% compared to 1998, due to an increase in same-store sales and two additional restaurants opened in 1999. The sales increase in 1999 compared to 1998 consisted of the following components:
- ------------------------------------------------------------------------------------------------------ % CHANGE FROM 1998 1999 1998 CHANGE TOTAL SALES - ------------------------------------------------------------------------------------------------------ Same-Store Sales $34,539,500 $34,485,000 $ 54,500 0.2% New Restaurants* 4,365,300 2,282,400 2,082,900 5.4% Closed Restaurants** -- 1,645,000 (1,645,000) (4.3)% ----------- ----------- ----------- ---- Total Sales $38,904,800 $38,412,400 $ 492,400 1.3% =========== =========== =========== ====
- ------------------------ * Sales at restaurants open for 18 months or less. ** Sales from restaurants closed or sold in 1999, for the comparable period (after the date of closure) from 1998. Same-store sales (average unit sales in restaurants that have been open for at least 18 months and operating during comparable weeks during the current and prior year) for 1999 increased .2% from the same period in 1998, compared to an increase of 1.1% from 1998 as compared to 1997. Total sales (including restaurants open less than 18 months) increased 1.3%. The increase in same-store sales was primarily due to menu price increases implemented at all restaurants in 1999. These increases were somewhat offset by decreases in sales at other Company restaurants caused by the effects of increasing competition, including several new or remodeled restaurants opened by competitors in areas close to Company restaurants. Management is seeking to improve sales trends by focusing on improved restaurant operations and devising competitive strategies to offset the effects of new competition. In 1999, management implemented a plan to sell restaurants which are not meeting sales and profit expectations. To this end, the Company closed three restaurants during the first four months of 1999 and sold one restaurant in July 1999 and one in November 1999. In February 2000, the Company sold one additional restaurant (See Note 12 to the financial statements). The three closed restaurants are currently listed for sale. Proceeds from any sales of restaurants would be used either to reduce long-term debt or build new restaurants with more competitive facilities in superior locations. In 1999, the proceeds of the sales of restaurants were used to pay off long-term debt. The operating expenses of the Company's restaurants include food and beverage, payroll and benefits, depreciation and amortization, and other operating expenses, which include repairs, maintenance, utilities, supplies, advertising, insurance, property taxes, rents and licenses. The Company's food, beverage, payroll and benefits costs are believed to be higher than the industry average as a percentage of sales as a result of 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 increased to 89.0% in 1999 from 88.4% in 1998. Food and beverage costs as a percentage of sales decreased to 39.0% in 1999 from 39.1% in 1998, primarily due to sales price increases implemented in 1999. Payroll and benefits as a percentage of sales increased to 29.3% in 1999 - ---------------------------------(RYAN'S LOGO)--------------------------------- 5 6 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- from 28.3% in 1998, primarily due to higher group health insurance costs in 1999 and lower workers' compensation insurance costs in 1998. Other operating expenses as a percentage of sales decreased to 15.6% in 1999 from 16.1% in 1998, primarily due to lower property insurance costs and to reduced costs for utilities. Depreciation and amortization increased as a percentage of sales to 5.1% in 1999 from 4.9% in 1998, as a result of additions to property and equipment during 1999. General and administrative expenses as a percentage of sales increased to 6.9% in 1999 from 6.4% in 1998, primarily due to costs associated with the proxy contest from the Company's 1999 Annual Meeting of Shareholders, and to increased manager training costs resulting from higher manager turnover in 1999. In 1999 the Company incurred an expense of $907,500 for a one-time payment to four employees pursuant to the terms of their employment agreements upon the change in the control of the Company's Board of Directors. The Company recognized an asset valuation charge of $209,000 in 1998 in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". The charge was based upon a financial review of all Company-owned restaurants and applied to one underperforming restaurant held for sale. No such charges were considered necessary in 1999. Interest expense increased to $1,720,700 in 1999 from $1,618,900 during 1998 due to additional borrowing under the Company's credit facility in 1999. The Company capitalized interest costs of approximately $52,800 in 1999 and $52,600 in 1998, respectively. The effective income tax rates for the years ended December 29, 1999 and December 30, 1998 were 0.0% and (8.7%), respectively. An increase in the valuation allowance in deferred tax assets for 1999 and 1998 resulted in the lower than statutory effective rates for those periods. Net loss for 1999 was $1,982,200, compared to $709,300 in 1998. Loss per share assuming dilution was $.82 for 1999, compared to $.30 in 1998. - ---------------------------------(RYAN'S LOGO)--------------------------------- 6 7 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS 1998 COMPARED TO 1997 For the year ended December 30, 1998, total sales increased 3.9% compared to 1997, due to an increase in same-store sales and one additional restaurant opened in June 1998. The sales increase in 1998 compared to 1997 consisted of the following components:
- ------------------------------------------------------------------------------------------------------ % CHANGE FROM 1997 1998 1997 CHANGE TOTAL SALES - ------------------------------------------------------------------------------------------------------ Same-Store Sales $36,130,000 $35,739,400 $ 390,600 1.1% New Restaurants* 2,282,400 1,238,400 1,044,000 2.8% ----------- ----------- ---------- --- Total Sales $38,412,400 $36,977,800 $1,434,600 3.9% =========== =========== ========== ===
- ------------------------ * Sales at restaurants open for 18 months or less. Same-store sales (average unit sales in restaurants that have been open for at least 18 months and operating during comparable weeks during the current and prior year) for 1998 increased 1.1% from the same period in 1997, compared to a decrease of 8.0% from 1997 as compared to 1996. Total sales (including restaurants open less than 18 months) increased 3.9%. Management believes that the increase in same-store sales was primarily due to significant increases in sales at certain restaurants remodeled by the Company. These remodels included installation of scatter bars at three restaurants, which resulted in same-store sales gains at these locations in excess of 20%. These increases were somewhat offset by decreases in sales at other Company restaurants caused by the effects of increasing competition, including several new or remodeled restaurants opened by competitors in areas close to Company restaurants. Food and beverage costs as a percentage of sales decreased to 39.1% in 1998 from 39.6% in 1997, primarily due to lower beef prices, and sales price increases implemented in 1998. Payroll and benefits as a percentage of sales decreased to 28.3% in 1998 from 28.4% in 1997, primarily due to lower workers' compensation insurance costs. Other operating expenses as a percentage of sales decreased to 16.1% in 1998 from 16.6% in 1997, primarily due to lower repair and maintenance costs and to reduced costs for rental of equipment. Depreciation and amortization increased as a percentage of sales to 4.9% in 1998 from 4.5% in 1997, as a result of additions to property and equipment during 1998. General and administrative expenses as a percentage of sales decreased to 6.4% in 1998 from 7.3% in 1997, primarily due to costs associated with the Bisco Industries, Inc. takeover attempt in 1997. The Company recognized asset valuation charges of $209,000 in 1998 and $550,000 in 1997 in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". The charges were based upon a financial review of all Company-owned restaurants and applied to one underperforming restaurant held for sale in each year. - ---------------------------------(RYAN'S LOGO)--------------------------------- 7 8 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- In 1998, the Company established a reserve to close two restaurants in 1999, resulting in a pre-tax charge to earnings of $53,000. The charge to earnings reflected anticipated costs associated with closing the restaurants. The two restaurants in Jacksonville, Florida were closed in January 1999. Interest expense increased to $1,618,900 in 1998 from $1,576,700 during 1997 due to additional borrowing under the Company's credit facility in 1998. In addition, the Company capitalized interest cost of approximately $52,600 in 1998. The effective income tax rates for the year ended December 30, 1998 and December 31, 1997 were (8.7%) and (12.4%), respectively. An increase in the valuation allowance in deferred tax assets for 1998 and 1997 resulted in the lower than statutory effective rates for those periods. Net loss for 1998 was $709,300, compared to $1,423,900 in 1997. Loss per share assuming dilution was $.30 for 1998, compared to $.65 in 1997. 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 the repayment of debt, working capital requirements for continuing operations are not significant. At December 29, 1999, the Company had a working capital deficit of $2,491,100 compared to a working capital deficit of $744,100 at December 30, 1998. The increase in the working capital deficit in 1999 was primarily due to the increased loss in 1999. Cash provided by operating activities decreased to $157,300 in 1999 from $1,525,100 in 1998, primarily due to the increase in the net loss compared to 1998. Cash provided by operating activities increased to $1,525,100 in 1998 from $626,100 in 1997 due to a reduction in the net loss compared to 1997. The Company spent approximately $3,855,000 in 1999, $3,226,000 in 1998 and $2,741,000 in 1997 for land, new restaurant construction, restaurant remodeling and equipment. Capital expenditures for 2000, based on present costs and plans for capital improvements, are estimated to be $9 million. This amount is based on budgeted expenditures for buildings and equipment for four new restaurants in 2000, plus normal recurring equipment purchases and minor building improvements ("capital maintenance items"). The Company projects that proceeds from the Company's financing agreements (described below) and cash generated from operations will only be sufficient to cover two restaurants, plus the capital maintenance items. The Company's ability to open two additional restaurants will be contingent upon its ability to obtain financing for these restaurants, and its ability to locate suitable locations at acceptable prices. The Company's ability to open all four of the restaurants is also dependent upon certain other factors beyond its control, such as obtaining building permits from various government agencies. In December 1996, the Company entered into a $15.36 million Loan Agreement with FFCA Mortgage Corporation ("FFCA"). The Loan Agreement governs fifteen Promissory Notes payable to FFCA. Each Note is secured by a mortgage on a Company restaurant property. The Promissory Notes provide for a term of twenty years and an interest rate equal to the thirty-day LIBOR rate plus 3.75%, adjusted monthly. The Loan Agreement provides for various covenants, including the maintenance of prescribed debt service coverages. As of December 29, 1999, the outstanding balance due under the loan was $12,625,300. - ---------------------------------(RYAN'S LOGO)--------------------------------- 8 9 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- The Company used the proceeds of the FFCA loan to retire its Notes with Cerberus Partners, L.P. ("Cerberus") and its loans with the Daiwa Bank Limited and SouthTrust Bank of Alabama, N.A. In addition, the Company retired warrants for 210,000 shares of the Company's common stock previously held by Cerberus. Cerberus continues to hold Warrants to purchase 140,000 shares of the Company's common stock at an exercise price of $2.00 per share. Also in December 1996, the Company entered into a separate loan agreement with FFCA under which it borrowed an additional $2,590,000 in 1998. This additional financing is evidenced by three additional Promissory Notes secured by mortgages on three Company restaurant properties. The terms and conditions of this loan agreement are substantially identical to those of the $15.36 million Loan Agreement described above. As of December 29, 1999, the outstanding balance under this loan was $2,517,200. In October 1998, the Company received two commitments for new financing from FFCA. The Company borrowed a total of $2.6 million in 1999 under the first commitment, which is secured by mortgages on two restaurant properties. As of December 29, 1999, the outstanding balance under this loan was $2,574,500. The second commitment was for construction financing for two new restaurants to be built in 2000. Terms of this commitment include funding of a maximum of $1,600,000 per restaurant. Other terms and conditions of these loan agreements are substantially identical to those of the $15.36 million Loan Agreement described above. The preceding discussion of liquidity and capital resources contains certain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, and in addition to the factors discussed in this Annual Report, among the other factors that could cause actual results to differ materially are the following: failure of facts to conform to necessary management estimates and assumptions; the willingness of FFCA to extend financing commitments; repairs or similar expenditures required for existing restaurants due to weather or acts of God; the Company's ability to identify and secure suitable locations on acceptable terms and open new restaurants in a timely manner; the Company's success in selling restaurants listed for sale; the economic conditions in the new markets into which the Company expands; changes in customer dining patterns; competitive pressures from other national and regional restaurant chains and other food vendors; business conditions, such as inflation or a recession, and growth in the restaurant industry and the general economy; and other risks identified from time to time in the Company's SEC reports, registration statements and public announcements. IMPACT OF INFLATION Costs of food, beverage, and labor are the expenses most affected by inflation in the Company's business. Although inflation in recent years has been low and accordingly has not had a significant impact on the Company, there can be no assurance that inflation will not increase and impact the Company in the future. A significant portion of the Company's employees are paid by the federally established statutory minimum wage. Although no minimum wage increases have been signed into law, various proposals are presently being considered in the United States Congress. News reports suggest that the Federal minimum wage may increase by $1.00 per hour to $6.15 with a two to three year phase-in period, beginning sometime in 2000. The Company is typically able to increase its menu prices to cover most of the payroll rate increases; however, there can be no assurance that menu price increases will be able to offset labor cost increases in the future. Such changes in the federal minimum wage would impact the Company's payroll and benefits costs. Annual sales price increases have consistently ranged from 1.0% to 3.0%. - ---------------------------------(RYAN'S LOGO)--------------------------------- 9 10 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- INFORMATION SYSTEMS AND THE YEAR 2000 In November 1999, the Company completed implementation of its final computer system changes necessary to ensure that all systems were Year 2000 compliant. The Company has experienced no problems with any of its systems or suppliers as a result of the Year 2000 compliance technology issue, with the exception of a credit card software error which affected customers at one restaurant for a three-day period. The error resulted from a software error by the credit card processing company, but did not cause significant problems at the restaurant. The error has been corrected, and the Company does not anticipate any other problems associated with the Year 2000 technology issue. The Company spent approximately $50,000 in 1999 to modify its systems to achieve Year 2000 compliance. - ---------------------------------(RYAN'S LOGO)--------------------------------- 10 11 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------- FOR THE YEARS ENDED ------------------------------------------------ DECEMBER 29, DECEMBER 30, DECEMBER 31, 1999 1998 1997 - ----------------------------------------------------------------------------------------------------------- Sales $38,904,800 $38,412,400 $36,977,800 Cost and expenses: Food and beverage 15,161,100 15,015,500 14,642,500 Payroll and benefits 11,416,100 10,878,300 10,516,000 Depreciation and amortization 1,966,200 1,879,000 1,670,700 Other operating expenses 6,064,100 6,183,100 6,149,700 General and administrative expenses 2,702,600 2,471,800 2,680,900 Change in control payments 907,500 -- -- Franchise fees 1,165,300 1,150,900 1,108,400 Asset valuation charge -- 209,000 550,000 Loss on sale of restaurants 18,400 -- -- Loss on store closings and disposition of equipment 140,200 192,700 146,200 ----------- ----------- ----------- 39,541,500 37,980,300 37,464,400 ----------- ----------- ----------- (Loss) earnings from operations (636,700) 432,100 (486,600) Interest and other income 375,200 409,900 437,900 Interest expense (1,720,700) (1,618,900) (1,576,700) ----------- ----------- ----------- Loss before income taxes (1,982,200) (776,900) (1,625,400) Income tax benefit -- (67,600) (201,500) ----------- ----------- ----------- Net loss $(1,982,200) $ (709,300) $(1,423,900) =========== =========== =========== Basic loss per share $ (0.82) $ (0.30) $ (0.65) =========== =========== =========== Diluted loss per share $ (0.82) $ (0.30) $ (0.65) =========== =========== ===========
See accompanying notes to consolidated financial statements. - ---------------------------------(RYAN'S LOGO)--------------------------------- 11 12 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------ DECEMBER 29, 1999 DECEMBER 30, 1998 - ------------------------------------------------------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents $ 747,300 $ 1,910,200 Investments available for sale 92,300 -- Certificates of deposit -- 644,000 Receivables 125,000 107,000 Current portion of mortgage receivable 77,800 71,100 Income taxes receivable -- 60,200 Inventories 285,400 333,400 Prepaid and other current assets 204,800 296,600 ------------ ------------ Total current assets 1,532,600 3,422,500 Mortgage receivable 159,800 237,600 Certificate of deposit 10,800 -- Investments held to maturity 500,000 -- Property and equipment: Land 7,537,300 8,882,100 Buildings and improvements 21,156,000 21,236,600 Equipment 11,908,100 12,528,600 ------------ ------------ 40,601,400 42,647,300 Accumulated depreciation (15,340,500) (16,509,400) ------------ ------------ Net property and equipment 25,260,900 26,137,900 Property held for sale 2,488,700 1,463,400 Other assets, principally deferred charges, net of accumulated amortization 806,400 830,700 ------------ ------------ $ 30,759,200 $ 32,092,100 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,275,300 $ 1,381,000 Accrued liabilities 2,363,600 2,412,000 Current portion of long-term debt 381,400 370,500 Current portion of obligation under capital lease 3,400 3,100 ------------ ------------ Total current liabilities 4,023,700 4,166,600 Long-term debt 17,335,600 16,574,300 Obligation under capital lease 1,049,300 1,052,700 Deferred revenue 15,200 23,200 ------------ ------------ Total liabilities 22,423,800 21,816,800 Shareholders' equity: Preferred stock of $.01 par; authorized 10,000,000 shares; none issued -- -- Common stock of $.01 par; authorized 4,000,000 shares; outstanding 2,409,500 in 1999 and 2,371,600 shares in 1998 24,100 23,700 Additional paid-in capital 8,624,700 8,594,700 Accumulated other comprehensive income 11,900 -- Retained earnings (accumulated deficit) (325,300) 1,656,900 ------------ ------------ Total shareholders' equity 8,335,400 10,275,300 ------------ ------------ $ 30,759,200 $ 32,092,100 ============ ============
See accompanying notes to consolidated financial statements. - ---------------------------------(RYAN'S LOGO)--------------------------------- 12 13 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 29, 1999, DECEMBER 30, 1998 AND DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------------- RETAINED ACCUMULATED COMMON STOCK ADDITIONAL EARNINGS OTHER --------------------- PAID-IN (ACCUMULATED COMPREHENSIVE SHARES AMOUNT CAPITAL DEFICIT) INCOME - ----------------------------------------------------------------------------------------------------- TOTAL Balance, January 1, 1997 10,920,700 $109,200 $8,098,400 $ 3,790,100 $ -- $11,997,700 Exercise of stock options 32,060 1,600 49,100 50,700 Common stock 1-for-5 reverse split (8,736,560) (88,600) 88,600 -- Directors' fees in the form of stock options 20,000 20,000 Comprehensive loss: Net loss (1,423,900) (1,423,900) ---------- -------- ---------- ----------- ------- ----------- Balance, December 31, 1997 2,216,200 22,200 8,256,100 2,366,200 -- 10,644,500 Exercise of stock options 14,108 100 4,700 4,800 Sale of common stock 141,340 1,400 303,900 305,300 Directors' fees in the form of stock options 30,000 30,000 Comprehensive loss: Net loss (709,300) (709,300) ---------- -------- ---------- ----------- ------- ----------- Balance, December 30, 1998 2,371,648 23,700 8,594,700 1,656,900 -- 10,275,300 Exercise of stock options 37,838 400 400 Directors' fees in the form of stock options 30,000 30,000 Comprehensive loss: Net loss (1,982,200) (1,982,200) Other comprehensive income: Unrealized gains on securities: Unrealized holding gains arising during the period 39,400 39,400 Less: reclassification adjustment for gains included in net income (27,500) (27,500) ----------- ------- ----------- Total comprehensive loss (1,982,200) 11,900 (1,970,300) ---------- -------- ---------- ----------- ------- ----------- Balance, December 29, 1999 2,409,486 $ 24,100 $8,624,700 $ (325,300) $11,900 $ 8,335,400 ========== ======== ========== =========== ======= ===========
See accompanying notes to consolidated financial statements. - ---------------------------------(RYAN'S LOGO)--------------------------------- 13 14 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------------------------------------- FOR THE YEARS ENDED ------------------------------------------------ DECEMBER 29, DECEMBER 30, DECEMBER 31, 1999 1998 1997 - ----------------------------------------------------------------------------------------------------------- Operating activities: Net loss $(1,982,200) $ (709,300) $(1,423,900) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,966,200 1,879,000 1,670,700 Asset valuation charge -- 209,000 550,000 Directors' fees in the form of stock options 30,000 30,000 20,000 Amortization of loan fees 28,800 24,700 22,200 Loss on sale of restaurants 18,400 -- -- Loss on disposition of equipment 93,200 139,700 146,200 (Increase) decrease in: Receivables (18,000) (13,800) (3,200) Income taxes receivable 60,200 237,700 (297,900) Inventories 48,000 (52,900) (78,200) Prepaids and other current assets 91,800 14,600 (64,000) Other assets (17,000) (101,700) 29,100 Increase (decrease) in: Accounts payable (105,700) 94,000 104,000 Accrued liabilities (48,400) (218,300) 48,200 Income taxes payable -- -- (84,800) Deferred revenue (8,000) (7,600) (12,300) ----------- ----------- ----------- Net cash provided by operating activities 157,300 1,525,100 626,100 ----------- ----------- ----------- Investing activities: Net sale (purchase) of investments 52,800 (43,700) 492,800 Principal receipts on mortgage receivable 71,100 124,900 776,100 Proceeds from sale of property held for sale 1,641,600 -- -- Proceeds from sale of property and equipment -- 263,200 900 Capital expenditures (3,855,200) (3,225,800) (2,740,700) ----------- ----------- ----------- Net cash used in investing activities (2,089,700) (2,881,400) (1,470,900) ----------- ----------- ----------- Financing activities: Payments on long-term debt and obligation under capital lease (1,830,900) (329,600) (760,800) Construction draw on building under capital lease -- -- 500,100 Proceeds from issuance of long-term debt 2,600,000 2,590,000 -- Proceeds from the issuance of common stock 400 310,100 50,700 ----------- ----------- ----------- Net cash provided by (used in) financing activities 769,500 2,570,500 (210,000) ----------- ----------- ----------- Net (decrease) increase in cash and cash equivalents (1,162,900) 1,214,200 (1,054,800) Cash and cash equivalents -- beginning of year 1,910,200 696,000 1,750,800 ----------- ----------- ----------- Cash and cash equivalents -- end of year $ 747,300 $ 1,910,200 $ 696,000 =========== =========== =========== Supplemental disclosures of cash flow information: Cash paid during the year for interest $ 1,736,000 $ 1,634,400 $ 1,435,200 =========== =========== =========== Cash paid during the year for income taxes $ -- $ -- $ 181,000 =========== =========== ===========
See accompanying notes to consolidated financial statements. - ---------------------------------(RYAN'S LOGO)--------------------------------- 14 15 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION The Company was organized under the laws of the State of Florida in September l985 and is the sole franchisee of Ryan's Family Steak House restaurants in the State of Florida. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Steak House Construction. All significant intercompany transactions and balances have been eliminated. FISCAL YEAR The fiscal year consists of a fifty-two or fifty-three week period ending on the Wednesday nearest to December 31. Fiscal years 1997, 1998 and 1999 consisted of fifty-two weeks. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company has a cash management program which provides for the investment of excess cash balances in short-term investments. These investments are stated at cost which approximates market value and consist of money market instruments. INVESTMENTS AVAILABLE FOR SALE Investments available for sale represent marketable securities and are stated at fair market value as determined by quoted market prices. CERTIFICATES OF DEPOSIT Certificates of deposit are stated at cost. Certificates of deposit that are classified as current assets have maturities of less than one year. These investments were pledged with various entities in 1998 to support the Company's workers' compensation liability. - ---------------------------------(RYAN'S LOGO)--------------------------------- 15 16 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- INVESTMENTS HELD TO MATURITY Investments held to maturity represent an investment of Company funds in zero-coupon bonds by an insurance company. The bonds are held as collateral for a $1 million bond provided by the insurance company to the State of Florida to support the Company's self-insured workers' compensation liability. INVENTORIES Inventories are stated at the lower of cost (first-in, first-out) or market and consist of food items, ingredients and supplies. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Maintenance, repairs and betterments which do not enhance the value of or increase the life of the assets are expensed as incurred. Depreciation is provided for financial reporting purposes principally on the straight-line method over the following estimated lives: buildings -- 25 years, land improvements -- 25 years and equipment -- 3-8 years. Leasehold improvements are amortized over the life of the related lease, or the life of the asset, whichever is less. Interest expense from the FFCA loan is capitalized to the extent that such proceeds are used for the construction of new restaurants. Interest costs of approximately $52,800, $52,600 and $0 were capitalized in 1999, 1998, and 1997, respectively. PROPERTY HELD FOR SALE Property held for sale consists of three restaurant properties and an outparcel stated at the lower of cost or estimated net realizable value. OTHER ASSETS Other assets consist primarily of deferred charges. Deferred charges and related amortization periods are as follows: financing costs -- term of the related loan, and initial franchise rights -- 40 years. INCOME TAXES Deferred income taxes are provided for temporary differences between financial reporting basis and tax basis of the Company's assets and liabilities using presently enacted income tax rates. RECLASSIFICATIONS Certain items in the prior year financial statements have been reclassified to conform to the 1999 presentation. - ---------------------------------(RYAN'S LOGO)--------------------------------- 16 17 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- NEW ACCOUNTING STANDARDS In April 1998, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 98-5, "Reporting on the Cost of Start-up Activities". This SOP requires that the costs of start-up activities, or one-time activities that relate to the opening of a new facility, be expensed as incurred instead of being capitalized. The Company incurs such costs when opening a new restaurant and previously amortized these pre-opening costs over the first 52 weeks of a restaurant's operations. This SOP was implemented beginning with the first quarter of 1999. In accordance with this change, pre-opening costs previously included under depreciation and amortization on the Company's Consolidated Results of Operations were reclassified as other operating expense for all applicable periods. Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in the financial statements. The adoption of SFAS No. 130 had no material impact on the Company's consolidated results of operations, financial position or cash flows. Comprehensive income equals net income plus other comprehensive income. Other comprehensive income refers to revenues, expenses, gains and losses that are reflected in shareholder's equity but excluded from net income. NOTE 2. CLOSED RESTAURANT COSTS In 1998, the Company established a reserve to close two restaurants in 1999, resulting in a pre-tax charge to earnings of $53,000. The charge to earnings reflected anticipated costs associated with closing the restaurants. The two restaurants in Jacksonville, Florida were closed in January 1999. A third restaurant was closed in Orlando, Florida in April 1999. The total book value of these restaurants as of December 29, 1999 was approximately $2,071,300, which is included in property held for sale. These three restaurants incurred a combined pre-tax loss of $231,000 in fiscal year 1998. NOTE 3. ASSET VALUATION CHARGE In accordance with SFAS No. 121, the Company recognized an asset valuation charge of $209,000 in 1998 and $550,000 in 1997. These charges were based upon a financial review of all Company-owned restaurants and applied to one underperforming unit each year. The charges were based on the difference between each unit's net book value and estimated fair value, which equaled the estimated proceeds from disposal as determined by management. Considerable management judgment is necessary to estimate proceeds from disposal and, accordingly, actual proceeds could vary significantly from such estimates. The restaurant for which the charge was recognized in 1998 was sold in 1999. Management continues to actively market the other restaurant, but currently cannot estimate the expected disposal dates. No such charge was considered necessary in 1999. NOTE 4. FRANCHISE AGREEMENT In October 1996, the Company amended its Franchise Agreement with Ryan's Family Steak Houses, Inc. ("Ryan's"). The amended agreement requires the Company to pay a monthly royalty fee of 3.0% through December 2001, and 4.0% thereafter of the gross receipts of each Ryan's Family Steak House restaurant. Total royalty fee expenses were $1,165,300, $1,150,900, and $1,108,400 for fiscal years 1999, 1998, and 1997, respectively. - ---------------------------------(RYAN'S LOGO)--------------------------------- 17 18 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- The Franchise Agreement requires the Company to operate a minimum number of Ryan's restaurants on December 31 of each year. Failure to operate the minimum number could result in the loss of exclusive franchise rights to the Ryan's concept in North and Central Florida. In 1999, the Company and Ryan's amended the number of restaurants required to be in operation as detailed below. The Company operated 23 restaurants as of fiscal year end 1999 and was therefore in compliance with the Franchise Agreement. The following schedule outlines the number of Ryan's restaurants required to be operated by the Company as of December 31 each year under the amended Franchise Agreement:
- ---------------------------------------------------------------------------------------- NUMBER OF RESTAURANTS REQUIRED TO END OF FISCAL YEAR BE IN OPERATION - ---------------------------------------------------------------------------------------- 1999 21 2000 23 2001 and subsequent years Increases by two each year
NOTE 5. ACCRUED LIABILITIES Accrued liabilities are summarized as follows:
- ---------------------------------------------------------------------------------------- 1999 1998 - ---------------------------------------------------------------------------------------- Payroll and payroll taxes $ 589,200 $ 618,700 Workers' compensation liability 1,067,400 1,074,100 Other 707,000 719,200 ---------- ---------- $2,363,600 $2,412,000 ========== ==========
The Company self-insures workers' compensation losses up to certain limits. The estimated liability for workers' compensation claims represents an estimate for the ultimate cost of uninsured losses which are unpaid as of the balance sheet date. These estimates are continually reviewed and adjustments to the Company's estimated claim liabilities, if any, are reflected in current operations. NOTE 6. LONG-TERM DEBT Long-term debt is summarized as follows:
- ------------------------------------------------------------------------------------------ 1999 1998 - ------------------------------------------------------------------------------------------ Collateralized notes payable to FFCA Mortgage Corporation, monthly principal and interest payments totaling $181,100 effective December 1999, interest at thirty-day LIBOR rate + 3.75% (9.21% at December 29, 1999) $17,717,000 $16,944,800 ----------- ----------- Less current portion: (381,400) (370,500) ----------- ----------- $17,335,600 $16,574,300 =========== ===========
- ---------------------------------(RYAN'S LOGO)--------------------------------- 18 19 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- Total maturities of long-term debt are as follows: 2000 $ 381,400 2001 422,300 2002 467,400 2003 517,500 2004 572,900 Thereafter 15,355,500 ----------- $17,717,000 ===========
In December 1996, the Company entered into a $15.36 million Loan Agreement with FFCA Mortgage Corporation ("FFCA"). The Loan Agreement governs fifteen Promissory Notes payable to FFCA. Each Note is secured by a mortgage on a Company restaurant property. The Promissory Notes provide for a term of twenty years and an interest rate equal to the thirty-day LIBOR rate plus 3.75%, adjusted monthly. The Loan Agreement provides for various covenants, including the maintenance of prescribed debt service coverages. As of December 29, 1999, the outstanding balance due under the loan was $12,625,300. The Company used the proceeds of the FFCA loan to retire its Notes with Cerberus Partners, L.P. ("Cerberus") and its loans with the Daiwa Bank Limited and SouthTrust Bank of Alabama, N.A. In addition, the Company retired warrants for 210,000 shares of the Company's common stock previously held by Cerberus. Cerberus continues to hold Warrants to purchase 140,000 shares of the Company's common stock at an exercise price of $2.00 per share. Also in December 1996, the Company entered into a separate loan agreement with FFCA under which it borrowed an additional $2,590,000 in 1998. This additional financing is evidenced by three additional Promissory Notes secured by mortgages on three Company restaurant properties. The terms and conditions of this loan agreement are substantially identical to those of the $15.36 million Loan Agreement described above. As of December 29, 1999, the outstanding balance under this loan was $2,517,200. In October 1998, the Company received two commitments for new financing from FFCA. The Company borrowed a total of $2.6 million in 1999 under the first commitment, which is secured by mortgages on two restaurant properties. As of December 29, 1999, the outstanding balance under this loan was $2,574,500. The second commitment was for construction financing for two new restaurants to be built in 2000. Terms of this commitment include funding of a maximum of $1,600,000 per restaurant. Other terms and conditions of these loan agreements are substantially identical to those of the $15.36 million Loan Agreement described above. NOTE 7. INCOME TAXES The income tax benefit is comprised of the following:
- ------------------------------------------------------------------------------------------------- 1999 1998 1997 - ------------------------------------------------------------------------------------------------- Current: Federal $ -- $(67,600) $(201,500) ======= ======== =========
- ---------------------------------(RYAN'S LOGO)--------------------------------- 19 20 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- Income taxes for the years ended December 29, 1999, December 30, 1998 and December 31, 1997 differ from the amount computed by applying the federal statutory corporate rate to earnings before income taxes. The differences are reconciled as follows:
- ------------------------------------------------------------------------------------------------- 1999 1998 1997 - ------------------------------------------------------------------------------------------------- Income tax benefit at statutory rate $(693,900) $(271,900) $(568,900) Increase (decrease) in taxes due to: Effect of graduated tax rates 19,800 7,800 16,300 State tax net of Federal benefit (72,000) (28,200) (59,000) Change in deferred tax asset valuation allowance 732,400 224,500 377,900 Expiration of capital loss carryforward 14,100 -- -- Other (400) 200 32,200 --------- --------- --------- Income tax benefit $ -- $ (67,600) $(201,500) ========= ========= =========
The components of deferred taxes at December 29, 1999 and December 30, 1998 are summarized below:
- ---------------------------------------------------------------------------------------- DECEMBER 29, DECEMBER 30, 1999 1998 - ---------------------------------------------------------------------------------------- Deferred tax assets: Capital loss not currently deductible $ 35,200 $ 47,500 Excess tax over book basis: Property held for sale -- 109,300 Asset valuation reserve 207,000 285,600 Federal and state tax credits 589,400 589,400 Accruals not currently deductible 405,100 424,100 Unearned revenue, previously taxed 9,000 12,000 State net operating loss 977,800 267,700 ----------- ---------- Total deferred tax assets 2,223,500 1,735,600 Valuation allowance (1,476,400) (744,200) ----------- ---------- Net deferred tax assets 747,100 991,400 ----------- ---------- Deferred tax liabilities: Excess of tax over book depreciation and amortization 735,800 991,400 Excess book over tax basis: Property held for sale 11,300 -- ----------- ---------- Total deferred tax liabilities 747,100 991,400 ----------- ---------- Net deferred taxes $ -- $ -- =========== ==========
At December 29, 1999 the Company's federal and state tax credit was comprised of $49,200 in general business credits which expire in 2013 and alternative minimum tax credits of $540,200 which have no expiration date. Additionally, at December 29, 1999, the Company has Federal net operating losses of $2,453,000, which begin expiring in 2018 and State net operating losses of $3,965,000 which begin expiring in 2012. - ---------------------------------(RYAN'S LOGO)--------------------------------- 20 21 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- NOTE 8. COMMON SHAREHOLDERS' EQUITY STOCK SPLIT The Company effected a 1-for-5 reverse stock split of its common stock in March 1998, which was recorded by transferring the aggregate par value of the shares retired from common stock to additional paid in capital. Accordingly, the weighted average number of common and equivalent shares, per share amounts for net earnings, and stock option and warrant data have been retroactively adjusted to reflect the reverse stock split for all periods presented. EARNINGS PER SHARE The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for net loss and net loss available to common shareholders:
- -------------------------------------------------------------------------------------------------------- 1999 1998 ------------------------------------ ------------------------------------- INCOME SHARES PER INCOME SHARES PER (NUMERATOR) (DENOMINATOR) SHARE (NUMERATOR) (DENOMINATOR) SHARE - -------------------------------------------------------------------------------------------------------- BASIC EPS: Net loss available to common shareholders $(1,982,200) 2,403,400 $(0.82) $(709,300) 2,348,000 $ (0.30) ====== ======= Effect of Dilutive Securities: Stock options 5,800 1,200 Warrants 5,800 DILUTED EPS: Net loss available to common shareholders plus assumed conversions $(1,982,200) 2,409,200 $(0.82) $(709,300) 2,355,000 $ (0.30) ====== ======= - ------------------------- ------------------------------------- 1997 ----------------------------------- INCOME SHARES PER (NUMERATOR) (DENOMINATOR) SHARE - ------------------------- ------------------------------------- BASIC EPS: Net loss available to common shareholders $(1,423,900) 2,206,000 $(0.65) ====== Effect of Dilutive Securities: Stock options Warrants DILUTED EPS: Net loss available to common shareholders plus assumed conversions $(1,423,900) 2,206,000 $(0.65) ======
The Company has a stock option plan for non-employee directors pursuant to which up to an aggregate of 180,000 shares of the common stock are authorized to be granted. All options expire five years after the date of grant or one year after completion of the term as a director. The Company also had an employee incentive stock option plan pursuant to which up to an aggregate of 108,000 shares of the common stock were authorized to be granted. All options expire ten years after the date of grant or 90 days after termination of employment. This plan expired as of November 30, 1995. Certain options outstanding under this plan as of November 30, 1995 remain exercisable pursuant to terms of the plan. In 1995 the Company's shareholders approved a new employee long-term incentive plan pursuant to which an additional 200,000 shares of common stock are authorized to be granted in the form of stock options or restricted stock. All options granted under this plan expire no later than ten years after the date of grant or in most cases three months after termination of employment. - ---------------------------------(RYAN'S LOGO)--------------------------------- 21 22 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- If compensation cost for stock option grants had been determined based on the fair value at the grant dates for 1999, 1998, and 1997 consistent with the method prescribed by SFAS No. 123, the Company's net loss and diluted loss per share would have been adjusted to the pro forma amounts indicated below:
- --------------------------------------------------------------------------------------------- 1999 1997 1996 - --------------------------------------------------------------------------------------------- Net loss As reported $(1,982,200) $(709,300) $(1,423,900) Pro forma (2,055,200) (735,700) (1,477,800) Diluted loss As reported $ (.82) $ (.30) $ (.65) per share Pro forma (.85) (.31) (.67)
Under SFAS No. 123, the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weight-average assumptions used for grants in 1999, 1998, and 1997 respectively: dividend yield 0 percent each year, expected volatility of 76, 75, and 99 percent, risk-free interest rates of 6.4, 5.1 and 5.6 percent, and expected lives of 10 years for each year. The following table summarizes the changes in the total number of stock option shares outstanding during the three years ended December 29, 1999.
- -------------------------------------------------------------------------------------------------------------- 1999 1998 1997 --------------------------- --------------------------- --------------------------- WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE - -------------------------------------------------------------------------------------------------------------- Options outstanding at beginning of year 190,940 $2.66 181,940 $3.08 193,840 $3.00 Options granted 102,883 1.08 42,478 .77 34,852 2.64 Options exercised (37,383) .01 (14,028) .37 (32,052) 1.58 Options forfeited (27,000) 3.55 (19,450) 4.20 (14,700) 4.23 -------- -------- -------- Options outstanding at end of year 229,440 1.77 190,940 2.66 181,940 3.08 ======== ======== ======== Options exercisable at end of year 188,940 2.41 123,830 2.65 103,670 3.20 ======== ======== ======== Weighted average fair value of options granted during the year $ 72,800 $ 26,400 $ 41,800 Common shares reserved for future grants at end of year 68,289 -- 98,289 -- 125,689 --
- ---------------------------------(RYAN'S LOGO)--------------------------------- 22 23 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- The following table summarizes information about fixed stock options outstanding at December 29, 1999:
- ------------------------------------------------------------------------------------------------------------------------------ YEAR EXERCISE OPTIONS OPTIONS WEIGHTED AVERAGE GRANTED PRICE OUTSTANDING EXERCISABLE REMAINING LIFE (IN YEARS) - ------------------------------------------------------------------------------------------------------------------------------ 1991 $4.06 9,400 9,400 1.3 1992 5.63 2,800 2,800 2.1 1993 3.13 4,600 4,600 3.3 1994 1.25 11,500 11,500 5.0 1995 3.75 22,140 22,140 5.7 1995 2.00 47,500 47,500 5.7 1996 2.81 16,200 16,200 7.0 1997 3.28 21,600 21,600 8.0 1998 1.00 28,200 28,200 8.9 1999 2.00 25,000 25,000 9.8 1999 1.50 40,500 -- 9.9 ------- ------- 229,440 188,940 ======= =======
Remaining non-exercisable options as December 29, 1999 become exercisable as follows: 2000 10,125 2001 10,125 2002 10,125 2003 10,125 ------ 40,500 ======
Cerberus Partners, L.P., holds detachable warrants to purchase 140,000 shares of the Company's common stock at $2.00 per share at any time prior to October 1, 2003. The Company's Board of Directors is authorized to set the various rights and preferences for the Company's Preferred Stock, including voting, conversion, dividend and liquidation rights and preferences, at the time shares of Preferred Stock are issued. As of December 29, 1999 there were no shares of Preferred Stock issued. RIGHTS PLAN On March 18, 1997, the Company entered into a Rights Agreement (the "Rights Agreement") with ChaseMellon Shareholder Services, LLC and declared a dividend of rights to purchase Junior Participating Preferred Stock of the Company ("Rights") to shareholders of record as of March 19, 1997. In accordance with the Agreement, in August 1999 the Company's newly elected Board of Directors redeemed the Rights. Shareholders were paid $.001 per share, resulting in a total redemption cost of approximately $12,000 to the Company. - ---------------------------------(RYAN'S LOGO)--------------------------------- 23 24 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- NOTE 9. PROFIT SHARING AND RETIREMENT PLAN Employees of the Company participate in a profit sharing and retirement plan covering substantially all full-time employees at least twenty-one years of age and with more than one year of service. The plan was established in August 1991. Contributions are made to the plan at the discretion of the Company's Board of Directors. No profit-sharing contributions have been made since the inception of the plan. The profit sharing plan includes a 40l(k) feature by which employees can contribute, by payroll deduction only, l% to l5% of their annual compensation not to exceed $10,000 in 1999. The plan provides for a Company matching contribution of $.25 per dollar of the first 6% of employee contributions. The Company's matching contribution was $37,100 in 1999, $30,900 in 1998 and $29,211 in 1997. Employees vest in Company contributions based on the following schedule:
- ----------------------------------------------------------------------------------------------------------- YEARS OF VESTING SERVICE PERCENTAGE - ----------------------------------------------------------------------------------------------------------- Less than 3 0% 3 20% 4 40% 5 60% 6 80% 7 l00%
NOTE 10. COMMITMENTS AND CONTINGENCIES LEASE OBLIGATIONS At December 29, 1999, the Company is committed under the terms and conditions of real and personal property operating leases for minimum rentals aggregating $3,203,900 plus insurance, common area expenses and taxes. The Company has various renewal options on these leases covering periods of five to twenty years. In September 1996, the Company entered into a twenty-year lease agreement with two five-year renewal options for a restaurant building. The total net book value of the assets covered by the lease amount to $979,600 at December 29, 1999. Interest is computed at an annual rate of 10.65%. - ---------------------------------(RYAN'S LOGO)--------------------------------- 24 25 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- Future minimum lease obligations under the noncancelable capital lease and operating leases consist of the following as of December 29, 1999:
- ----------------------------------------------------------------------------------------------------------------- CAPITAL OPERATING LEASE LEASES - ----------------------------------------------------------------------------------------------------------------- 2000 $ 115,400 $ 355,200 2001 115,400 305,700 2002 129,300 299,300 2003 129,300 256,600 2004 129,300 256,200 Future years 1,792,700 1,730,900 ----------- ---------- Total minimum lease payments 2,411,400 $3,203,900 ========== Amounts representing interest (1,358,700) ----------- Present value of net minimum payments 1,052,700 Current portion (3,400) ----------- Long-term capitalized lease obligations $ 1,049,300 ===========
Rental expense for operating leases for the years ended December 29, 1999, December 30, 1998, and December 31, 1997, was $531,400, $490,000, and $477,700 respectively. The Company's lease on its restaurant in Clearwater, Florida expired in September 1999, and the Company's restaurant there is currently operating on a month-to-month rental. Due to a prior ruling by the Sixth Judicial Court in Pinellas County, the Company did not have any renewal options on the lease. In February 2000, the mall where the restaurant is located was sold to a new owner. The new owner has offered the Company a new five-year lease agreement, but with substantially higher monthly rent than is currently being paid. The Company is currently negotiating a short-term lease (twelve to eighteen months), and believes that such an agreement will be executed in the near future. Should no agreement be reached, the owner could evict the Company with 30 days notice, and the Company would be required to write-off approximately $260,000 of leasehold improvements. LEGAL MATTERS The Company, in the normal course of business, is subjected to claims and litigation with respect to store operations. In the opinion of management, based on the advice of legal counsel the ultimate disposition of these claims and litigation will not have a material effect on the financial position or results of operations of the Company. NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and Cash Equivalents -- For those short-term instruments, the carrying amount is a reasonable estimate of fair value. - ---------------------------------(RYAN'S LOGO)--------------------------------- 25 26 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- Investments Available for Sale -- The Company's investments available for sale consist of marketable securities which are valued at the quoted market price. Certificates of Deposit -- The Company believes that the carrying amount is a reasonable estimate of the fair value of the certificates of deposit. Investments Held to Maturity -- The Company's investments held to maturity represent zero-coupon bonds for which the carrying amount is believed to be a reasonable estimate of fair value. Mortgage Receivable -- The fair value of the mortgage receivable is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The Company believes the carrying amount is a reasonable estimate of fair value. Debt -- Interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities are used to estimate fair value for debt instruments. The Company believes the carrying amount is a reasonable estimate of such fair value. NOTE 12. SUBSEQUENT EVENT (UNAUDITED) In February 2000, the Company sold a restaurant located in Jacksonville, Florida. The proceeds of the sale were used to pay off long-term debt. The sale resulted in a gain of approximately $50,000. After the sale, the Company operates 22 restaurants in Florida. - ---------------------------------(RYAN'S LOGO)--------------------------------- 26 27 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- INDEPENDENT AUDITORS' REPORT THE BOARD OF DIRECTORS AND SHAREHOLDERS FAMILY STEAK HOUSES OF FLORIDA, INC. We have audited the accompanying consolidated balance sheets of Family Steak Houses of Florida, Inc. and subsidiary as of December 29, 1999 and December 30, 1998 and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 29, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Family Steak Houses of Florida, Inc. and subsidiary as of December 29, 1999 and December 30, 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 29, 1999 in conformity with generally accepted accounting principles. Deloitte & Touche LLP Certified Public Accountants Jacksonville, Florida February 18, 2000 - ---------------------------------(RYAN'S LOGO)--------------------------------- 27 28 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- COMPANY'S REPORT ON FINANCIAL STATEMENTS Family Steak Houses of Florida, Inc. has prepared and is responsible for the accompanying consolidated financial statements and related consolidated financial information included in this report. These consolidated financial statements were prepared in accordance with generally accepted accounting principles and are appropriate under the circumstances. These consolidated financial statements necessarily include amounts determined using management's best judgements and estimates. Family Steak Houses of Florida, Inc. maintains accounting and other control systems which the Company believes provide reasonable assurance that assets are safeguarded and that the books and records reflect the authorized transactions of the Company, although there are inherent limitations in all internal control structure elements, as well as cost/benefit considerations. - ---------------------------------(RYAN'S LOGO)--------------------------------- 28 29 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- CORPORATE LISTING CORPORATE OFFICERS AND DIRECTORS Edward B. Alexander Executive Vice President Glen F. Ceiley Chairman of the Board President & CEO, Bisco Industries, Inc. Steve Catanzaro Director CFO, Bisco Industries, Inc. Jay Conzen Director Principal, Jay Conzen Investments William Means Director Vice President of Corporate Development Bisco Industries, Inc. Kevin R. Pickett Vice President ANNUAL MEETING The annual meeting will be held at: Sea Turtle Inn One Ocean Boulevard Atlantic Beach, FL 32233 June 13, 2000 -- 10:00 a.m. INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Deloitte & Touche LLP Suite 2801, Independent Square One Independent Drive Jacksonville, FL 32202-5034 GENERAL COUNSEL McGuire, Woods, Battle & Boothe LLP 3300 Barnett Center 50 North Laura Street P.O. Box 4099 Jacksonville, FL 32201 TRANSFER AGENT Chase Mellon Shareholder Services Four Station Square Third Floor Pittsburgh, PA 15219-1173 EXECUTIVE OFFICE Family Steak Houses of Florida, Inc. 2113 Florida Boulevard Neptune Beach, Florida 32266 FORM 10-K A copy of the Company's Annual Report on Form 10-K for fiscal 1999, as filed with the Securities and Exchange Commission, may be obtained by writing to: Corporate Secretary Family Steak Houses of Florida, Inc. 2113 Florida Boulevard Neptune Beach, FL 32266 - ---------------------------------(RYAN'S LOGO)--------------------------------- 29 30 FAMILY STEAK HOUSES OF FLORIDA, INC. - -------------------------------------------------------------------------------- COMMON STOCK DATA The Company's common stock is traded on the NASDAQ SmallCap Market System under the trading symbol "RYFL". As of February 22, 2000, there were 2,387 shareholders of record, not including individuals holding shares in street names. The closing sale price for the Company's stock on February 22, 2000 was $1.09. The Company has never paid cash dividends on its common stock and does not expect to pay any dividends in the next few years. Management of the Company presently intends to retain all available funds for expansion of the business. The quarterly high and low closing prices (as adjusted for the reverse stock split) of the Company's common stock are as shown below: MARKET PRICE OF COMMON STOCK - --------------------------------------------------------------------------------
1999 1998 QUARTER HIGH LOW HIGH LOW - ------------------------------------------------------------------------------------------------- First 1 1/2 13/16 3 3/4 1 3/4 Second 1 7/32 23/32 3 1/2 1 11/16 Third 1 7/8 25/32 2 7/16 1 1/4 Fourth 1 9/16 1 1 1/2 11/16
Pursuant to a Standstill and Settlement Agreement with Bisco Industries, Inc. ("Bisco") and its affiliates, on February 27, 1998, the Company sold 141,340 shares of its common stock to Bisco at a purchase price of $2.16, which was the average closing price of the Company's common stock for the ten trading days immediately preceding the date of the sale. The total price paid by Bisco to the Company was $305,312. These shares of common stock were sold without registration under the exemption granted under Rule 506 of Regulation D since the sale was made to only one purchaser who qualified as an accredited investor. - ---------------------------------(RYAN'S LOGO)--------------------------------- 30 EX-21.01 6 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21.01 LIST OF SUBSIDIARIES Steak House Construction Corporation, a Florida corporation. EX-23.01 7 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1 EXHIBIT 23.01 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Annual Report of Family Steak Houses of Florida, Inc. on Form 10-K of our report dated February 18, 2000, appearing in the 1999 Annual Report to Shareholders of Family Steak Houses of Florida, Inc. We additionally consent to the incorporation by reference in Registration Statement No. 33-11684 pertaining to the 1986 Employee Incentive Stock Option Plan of Family Steak Houses of Florida, Inc. on Form S-8 of our report dated February 18, 2000 appearing in and incorporated by reference in this Annual Report on Form 10-K of Family Steak Houses of Florida, Inc. for the year ended December 29, 1999. We further consent to the incorporation by reference in Registration Statement No. 33-12556 pertaining to the 1986 Stock Option Plan for Non-Employee Directors of Family Steak Houses of Florida, Inc. on Form S-8 of our report dated February 18, 2000 appearing in and incorporated by reference in this Annual Report on Form 10-K of Family Steak Houses of Florida, Inc. for the year ended December 29, 1999. We further consent to the incorporation by reference in Registration Statement No. 33-62101 pertaining to the 1995 Long Term Incentive Plan of Family Steak Houses of Florida, Inc. on Form S-8 of our report dated February 18, 2000 appearing in and incorporated by reference in this Annual Report on Form 10-K of Family Steak Houses of Florida, Inc. for the year ended December 29, 1999. Deloitte & Touche LLP Certified Public Accountants Jacksonville, Florida March 15, 2000 EX-27.00 8 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF FAMILY STEAK HOUSES OF FLORIDA FOR THE TWELVE MONTHS ENDED DECEMBER 29, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. U.S. DOLLARS YEAR DEC-29-1999 DEC-31-1998 DEC-29-1999 1 747,300 92,300 125,000 0 285,400 1,532,600 40,601,400 15,340,500 30,759,200 4,023,700 17,335,600 0 0 24,100 8,311,300 30,759,200 38,904,800 38,904,800 15,161,100 39,541,500 0 0 1,720,700 (1,982,200) 0 (1,982,200) 0 0 0 (1,982,200) (.82) (.82)
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