-----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, UUzOPeTyILfnxnI6i+hFcdroavsbtjOHeRkiAFJuev/dgJGwxsGVAwnv6+3aowmB ViosjsFQL5pcvcEWsypJ6g== 0000897101-98-000516.txt : 19980511 0000897101-98-000516.hdr.sgml : 19980511 ACCESSION NUMBER: 0000897101-98-000516 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980325 FILED AS OF DATE: 19980508 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIMBER LODGE STEAKHOUSE INC CENTRAL INDEX KEY: 0000912287 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 411663043 STATE OF INCORPORATION: FL FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-71176-C FILM NUMBER: 98613954 BUSINESS ADDRESS: STREET 1: 4021 VERNON AVE S CITY: ST LOUIS PARK STATE: MN ZIP: 55416 BUSINESS PHONE: 6129299353 MAIL ADDRESS: STREET 2: 4021 VERNON AVE SO CITY: ST LOUISE PARK STATE: MN ZIP: 55416 FORMER COMPANY: FORMER CONFORMED NAME: Q STEAKS INC DATE OF NAME CHANGE: 19950714 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM 10-Q __X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 25, 1998 _____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____. Commission File Number: 0-22786 TIMBER LODGE STEAKHOUSE, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) Minnesota 41-1810126 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 4021 Vernon Avenue South St. Louis Park, Minnesota 55416 (Address of Principal Executive Offices) (612) 929-9353 (Issuer's Telephone Number, Including Area Code) Check whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. __X__ Yes _____ No As of May 1, 1998, there were outstanding 3,636,082 shares of the issuer's Common Stock, $.01 par value per share. TABLE OF CONTENTS Page ---- PART I ITEM 1. FINANCIAL STATEMENTS........................................... 1 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................. 6 PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................... 8 SIGNATURES................................................................. S-1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TIMBER LODGE STEAKHOUSE, INC. BALANCE SHEETS (unaudited)
March 25, December 31, 1998 1997 ------------ ------------ ASSETS Current assets: Cash and cash equivalents ........................ $ 125,279 $ 482,598 Accounts receivable .............................. 169,731 227,473 Inventory ........................................ 295,046 352,289 Pre-opening costs ................................ 394,064 450,510 Pre-paid expenses and other current assets ....... 567,249 541,529 ------------ ------------ Total current assets ....................... 1,551,369 2,054,399 Property and equipment, net ............................. 12,652,903 12,463,740 Note receivable, related party .......................... 346,000 346,000 Deferred tax assets ..................................... 132,400 132,400 Other assets ............................................ 218,038 221,639 ------------ ------------ Total assets ............................................ $ 14,900,710 $ 15,218,178 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ................................. $ 1,069,577 $ 1,512,713 Short-term borrowing ............................. 150,000 -- Accrued salaries and wages ....................... 400,885 386,371 Sales tax payable ................................ 150,585 187,153 Gift certificates payable ........................ 504,187 871,360 Deferred tax liabilities ......................... 59,000 59,000 Accrued expenses and other liabilities ........... 86,263 71,847 ------------ ------------ Total current liabilities .................. 2,420,497 3,088,444 Deferred rent ........................................... 1,177,220 1,063,429 ------------ ------------ Total liabilities ....................................... 3,597,717 4,151,873 Shareholders' equity: Common stock, $0.01 par value Authorized shares -- 10,000,000 Issued shares -- 3,634,415 at March 25, 1998 and 3,625,750 at December 31, 1997 .... 36,344 36,257 Additional paid-in capital ....................... 8,909,052 8,883,701 Retained earnings ................................ 2,357,597 2,146,347 ------------ ------------ Total shareholders' equity .............................. 11,302,993 11,066,305 ------------ ------------ Total liabilities and shareholders' equity .............. $ 14,900,710 $ 15,218,178 ============ ============
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS TIMBER LODGE STEAKHOUSE, INC. STATEMENTS OF OPERATIONS (unaudited) Twelve Weeks Ended March 25, March 26, 1998 1997 ------------ ------------ Net sales ............................... $ 7,399,440 $ 5,214,308 Costs and expenses: Food and beverage costs .......... 2,808,566 1,927,169 Labor and benefits costs ......... 2,163,907 1,473,588 Restaurant operating expenses .... 738,272 538,430 Occupancy costs .................. 884,213 584,314 ------------ ------------ Restaurant costs and expenses 6,594,958 4,523,501 ------------ ------------ Restaurant operating income ............. 804,482 690,807 General and administrative .............. 392,180 339,536 Amortization of pre-opening costs ....... 124,777 76,625 ------------ ------------ Operating income ................. 287,525 274,646 Interest expense ........................ 4,597 5,330 Interest and other (income) expense ..... (18,922) (19,568) ------------ ------------ Income before income taxes .............. 301,850 288,884 Income taxes ..................... 90,600 86,700 ------------ ------------ Net income .............................. $ 211,250 $ 202,184 ============ ============ Basic earnings per share ................ $ 0.06 $ 0.06 ============ ============ Diluted earnings per share .............. $ 0.06 $ 0.06 ============ ============ Basic weighted average shares ........... 3,632,641 3,584,747 ============ ============ Diluted weighted average shares ......... 3,740,334 3,658,804 ============ ============ SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS TIMBER LODGE STEAKHOUSE, INC. STATEMENTS OF CASH FLOWS (unaudited)
Twelve Weeks Ended March 25, March 26, 1998 1997 ------------ ------------ OPERATING ACTIVITIES Net income ................................................. $ 211,250 $ 202,184 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation .................................. 279,667 238,350 Amortization .................................. 124,777 76,625 Deferred rent ................................. 113,791 (114,893) Changes in operating assets and liabilities: Receivables ............................. 57,742 5,514 Inventories ............................. 57,243 17,655 Pre-opening costs ....................... (67,431) (130,188) Prepaid expenses and other current assets (25,720) (49,211) Accounts payable ........................ (443,136) 135,982 Accrued salaries and wages .............. 14,514 55,829 Sales tax payable ....................... (36,568) (22,290) Gift certificates payable ............... (367,173) (250,651) Income taxes payable .................... -- (232,482) Other accrued expenses .................. 14,416 (62,590) ------------ ------------ Net cash used in operating activities ...................... (66,628) (130,166) INVESTING ACTIVITIES Purchases of property and equipment ........................ (468,830) (1,383,614) Other assets ............................................... 2,701 970 ------------ ------------ Net cash used in investing activities ...................... (466,129) (1,382,644) FINANCING ACTIVITIES Proceeds from short-term borrowings ........................ 150,000 938,425 Exercise of stock options .................................. 25,438 24,975 Common stock repurchased ................................... -- (7,313) ------------ ------------ Net cash provided by financing activities .................. 175,438 956,087 Net decrease in cash and cash equivalents .................. (357,319) (556,723) Cash and cash equivalents at the beginning of the year ..... 482,598 1,178,373 ------------ ------------ Cash and cash equivalents at end of period ................. $ 125,279 $ 621,650 ============ ============
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS TIMBER LODGE STEAKHOUSE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS MARCH 25, 1998 (unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-KSB/A-1 for the year ended December 31, 1997. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the twelve weeks ended March 25, 1998, are not necessarily indicative of the results that may be expected for the year ended December 30, 1998. 2. EARNINGS PER SHARE Earnings per share have been calculated based on the guidelines established by the Financial Accounting Stands Board (FASB) Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE. Basic earnings per share were calculated by dividing income available to common stockholders by the weighted average common shares outstanding. Diluted earnings per share were calculated using the dilutive effect of stock options and warrants using the treasury stock method. All earnings per share amounts for all periods have been presented, and where appropriate, restated to conform to Statement 128 requirements. The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.
Twelve weeks ended March 25, March 26, 1998 1997 ----------- ----------- BASIC EARNINGS PER SHARE: Numerator Net income ................................... $ 211,250 $ 202,184 =========== =========== Denominator Basic weighted average number of common shares outstanding for the period ................... 3,632,641 3,584,747 =========== =========== Basic earnings per share ............................ $ 0.06 $ 0.06 =========== ===========
2. EARNINGS PER SHARE - CONTINUED
Twelve weeks ended March 25, March 26, 1998 1997 ---------- ---------- DILUTED EARNINGS PER SHARE: Numerator Net income ..................................... $ 211,250 $ 202,184 ========== ========== Denominator Basic weighted average number of common shares outstanding for the period ..................... 3,632,641 3,584,747 Incremental common shares attributable to exercise of: outstanding options ............... 107,693 74,057 outstanding warrants .............. -- -- ---------- ---------- Diluted weighted average number of common shares outstanding for the period ..................... 3,740,334 3,658,804 ========== ========== Diluted earnings per share ............................ $ 0.06 $ 0.06 ========== ==========
3. RECLASSIFICATION Certain prior year items have been reclassified to conform with the current year presentation. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following table sets forth the percentage relationship to net sales of certain items included in the Company's statements of operations. TWELVE WEEKS ENDED ----------------------- MARCH 25, MARCH 26, 1998 1997 --------- --------- Net sales ................................. 100.0% 100.0% Costs and expenses: Food and beverage costs .............. 38.0 37.0 Labor and benefits costs ............. 29.2 28.3 Restaurant operating expenses ........ 10.0 10.3 Occupancy costs ...................... 11.9 11.1 -------- -------- Restaurant costs and expenses ... 89.1 86.7 -------- -------- Restaurant operating income ............... 10.9 13.3 General and administrative ................ 5.3 6.5 Amortization of pre-opening costs ......... 1.7 1.5 -------- -------- Operating income ...................... 3.9 5.3 Interest expense .......................... 0.1 0.1 Interest and other (income)/expense ....... (0.3) (0.4) -------- -------- Income before income taxes ................ 4.1 5.6 Income taxes ......................... 1.2 1.7 -------- -------- Net income ................................ 2.9% 3.9% ======== ======== Number of restaurants open at end of period 17 12 TWELVE WEEKS ENDED MARCH 25, 1998, COMPARED TO TWELVE WEEKS ENDED MARCH 26, 1997. NET SALES. The Company's net sales increased 41.9% to $7,399,440 compared to $5,214,308 for the first quarter last year. The increase is attributable to the five new restaurants opened since the beginning of the first quarter of fiscal 1997. Same store sales for stores open at least 18 months were up 1.3%. The Company continues to use television as its primary media vehicle in its core market of Minneapolis/St. Paul and has expanded television advertising to Sioux Fall, SD and Duluth, MN. The Company uses radio advertising in the Wisconsin market and print advertising in the Illinois and New York markets. The Company's management feels confident, that despite increased direct competition in its markets, same store sales will continue to be positive. COSTS AND EXPENSES. Cost of restaurant sales, consisting of food and beverage costs, increased 1.0% to 38.0% compared to 37.0% for the same period last year. This increase is due in part to the Company experiencing higher costs of meat, produce, and dairy in the early part of the current year quarter. Labor and related benefit costs increased 0.9% to 29.2% compared to 28.3% for the same period last year. The increase is attributable to the higher minimum wage paid to Minnesota servers. Minnesota is one of a few states that does not permit "tip credit" (the practice of employers paying tipped employees below the federal minimum wage, with tips from customers making up the balance of the minimum wage). These increases were offset somewhat by the Company implementing a partially self-insured health and dental insurance program for all eligible and participating employees. Restaurant operating expenses and occupancy costs include all other unit-level costs, the major components of which are rents, real estate taxes, utilities, store supplies, repairs and maintenance and other related occupancy costs. Restaurant operating costs are semi-variable while most of the occupancy expenses are fixed. In the aggregate for the first quarter, restaurant operating expenses and occupancy costs increased 0.5% to 21.9% of net sales compared to 21.4% for the same period last year. The increase is attributable to occupancy costs, mainly equipment leases, being higher for new stores added in the past year compared to the mature existing stores operating during the same period. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses decreased 1.2% to 5.3% of net sales compared to 6.5% for the same period last year. This decrease is due to the first time cost of television in the Minneapolis/St. Paul market in the first quarter of 1997. Also, the Company has experienced increased efficiencies while adding new stores without adding corporate personnel and overhead. AMORTIZATION OF PRE-OPENING COSTS. Amortization of pre-opening costs increased to 1.7% of net sales compared to 1.5% for the same period last year. The increase is attributable to the pre-opening costs for the latest five new stores (three were outstate locations) being higher than the three new restaurants being amortized for the same period last year. The Company amortizes pre-opening costs for new restaurants over a twelve month period commencing with the first full period after the restaurant's opening. INTEREST AND OTHER INCOME. Interest was paid on short term borrowings via a line of credit the Company has with a local bank. The increase in short term borrowings was used to meet the Company's needs in funding new restaurant construction and to pay income taxes. Income was earned on marketable securities and a promissory note related to the 1995 Q. Cumbers sale. Interest income combined with other miscellaneous income was $18,922 for the first quarter compared to $19,568 for the same period last year. The decrease is due to a reduction of marketable securities used to finance new restaurant construction. PROVISION FOR INCOME TAXES. The Company's effective tax rate is estimated at 30% for the first quarter, which is the same as first quarter 1997. The company's tax rate is impacted by tax credits for FICA taxes paid on tips received by restaurant employees. NET INCOME. The Company's net income was $211,250 in the first fiscal quarter of 1998 compared to $202,184 for the same period last year. Basic and diluted earnings per share were $.06 in the first quarter 1998 compared to $.06, respectively, for the same quarter last year. LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has leased its restaurant sites under non-cancelable leases for periods of six to twenty years, with renewal options of between three and ten years. The Company plans to continue leasing sites for expansion in the foreseeable future. Cash used in operating activities was $66,628 compared to cash used of $130,166 for the same period last year. The Company had a net working capital deficit of ($869,128) at March 25, 1998, compared to a deficit of ($1,034,045) at December 31, 1997. The increase in working capital is a result of the Company paying down its accounts payable and customers redeeming gift certificates. The Company has a $500,000 bank line of credit that it has used to fund short-term cash needs. At the end of first quarter 1998 this line had an outstanding balance of $150,000. This balance is planned to be paid down in subsequent quarters. Most of the Company's sales are paid by cash or credit card and the Company generally receives 30 days credit from trade suppliers. Sale leaseback financing with AEI Fund Management, Inc. of St. Paul, Minnesota provided $1,575,000 for the November 1997 purchase of the St. Cloud, Minnesota restaurant. The financing agreement between the Company and AEI Fund Management, Inc. executed on September 23, 1997, provided for the funding of up to four restaurants/parcels. The Rochester, Minnesota site that is under construction is being financed pursuant to that agreement between the Company and AEI. This financing facility could fund two more restaurants beyond the St. Cloud and Rochester sites. The Company currently intends to focus its expansion on steakhouse restaurants and estimates that the average costs of developing a new steakhouse restaurant to be approximately $1,200,000. The actual cost will vary depending on the size of the restaurant, the amount of landlord contributions, if any, and whether extensive renovation or remodeling is required. Pre-opening costs, primarily labor, advertising, travel and other costs related to the four new steakhouses opened in 1997 were approximately $130,000 per restaurant. Expenses for new restaurants opening in the future are expected to be lower as training and general start-up efficiencies are achieved from the Company opening additional restaurants in markets away from Minnesota. The Company believes that cash generated from operations and funds available under its line of credit will be sufficient to finance current and forecasted operations and obligations. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: None (b) No reports on Form 8-K have been filed during the quarter for which this report was filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TIMBER LODGE STEAKHOUSE, INC. Date: May 8, 1998 By: /s/ Dermot F. Rowland ----------------------------------- Dermot F. Rowland Its: Chief Executive Officer Date: May 8, 1998 By: /s/ Peter S. Bedzyk ----------------------------------- Peter S. Bedzyk Its: President EX-27 2 ART 5 FDS FOR QTR 25 MAR '98 FORM 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TIMBER LODGE STEAKHOUSE'S BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000912287 TIMBER LODGE STEAKHOUSE INC 1 OTHER DEC-30-1998 JAN-01-1998 MAR-25-1998 125,279 0 169,731 0 295,046 1,551,369 12,652,903 0 14,900,710 2,420,497 0 0 0 36,344 11,266,649 14,900,710 7,399,440 7,399,440 2,808,566 6,594,958 498,035 0 4,597 301,850 90,600 211,250 0 0 0 211,250 0.06 0.06
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