<PAGE> 1
UNITED STATES
SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended OCTOBER 3, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
Commission file number: 0-28234
CASA OLE RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0493269
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1135 EDGEBROOK, HOUSTON, TEXAS 77034-1899
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 713/943-7574
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Number of shares outstanding of each of the issuer's classes of common stock, as
of November 12, 1997: 3,597,705 SHARES OF COMMON STOCK, PAR VALUE $.01.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CASA OLE' RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS 12/27/1996 10/3/1997
------------- --------------
(UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 6,419,305 $ 613,853
Marketable securities (approximates fair value) 1,007,255 --
Royalties receivable 110,254 98,132
Receivables from affiliates 14,000 13,000
Other receivables 195,287 315,122
Notes receivable -- 32,500
Inventory 197,475 437,527
Prepaid expenses and other current assets 260,459 546,444
-------------- --------------
Total current assets 8,204,035 2,056,578
-------------- --------------
Property, plant and equipment 7,326,761 21,451,316
Less accumulated depreciation 3,470,953 4,050,506
-------------- --------------
Net property, plant and equipment 3,855,808 17,400,810
Goodwill, net 57,678 6,651,614
Other assets 28,252 96,101
-------------- --------------
$ 12,145,773 $ 26,205,103
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 34,469 $ 1,150,322
Accounts payable 532,039 1,284,388
Income taxes payable 352,375 --
Accrued sales and liquor taxes 132,407 350,254
Accrued payroll and taxes 266,597 1,022,355
Accrued expenses 29,420 687,488
-------------- --------------
Total current liabilities 1,347,307 4,494,807
-------------- --------------
Long-term debt -- 9,923,541
Deferred income taxes 35,577 35,577
Other long-term liabilities 42,500 106,510
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized -- --
Capital stock, $0.01 par value, 20,000,000 shares 47,327 47,327
authorized, 4,732,705 shares issued
Additional paid-in capital 20,685,610 20,685,610
Retained earnings 1,337,452 2,261,731
Treasury stock, cost of 1,135,000 shares (11,350,000) (11,350,000)
-------------- --------------
Total stockholders' equity 10,720,389 11,644,668
-------------- --------------
$ 12,145,773 $ 26,205,103
============== ==============
</TABLE>
2
<PAGE> 3
CASA OLE' RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
40-WEEK PERIODS ENDED 12-WEEK PERIODS ENDED
10/4/1996 10/3/1997 10/4/1996 10/3/1997
-------------- -------------- -------------- ------------
Revenues:
<S> <C> <C> <C> <C>
Restaurant sales $ 13,122,072 $ 23,462,375 $ 4,031,790 $ 10,882,171
Franchise fees 741,656 780,875 269,648 249,106
Other 49,658 60,740 2,401 33,135
------------ ------------ ------------ ------------
13,913,386 24,303,990 4,303,839 11,164,412
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 2,955,672 5,572,854 910,840 2,720,369
Restaurant operating expenses 7,570,528 13,849,335 2,316,793 6,475,923
General and administrative 1,581,590 2,645,314 483,593 1,268,525
Depreciation and amortization 133,353 752,377 39,459 440,390
------------ ------------ ------------ ------------
12,241,143 22,819,880 3,750,685 10,905,207
------------ ------------ ------------ ------------
Operating income 1,672,243 1,484,110 553,154 259,205
------------ ------------ ------------ ------------
Other income (expense):
Interest 174,742 (12,409) 109,064 (178,406)
Other, net 172,889 (4,593) 32,199 (3,452)
------------ ------------ ------------ ------------
347,631 (17,002) 141,263 (181,858)
------------ ------------ ------------ ------------
Income before income tax expense 2,019,874 1,467,108 694,417 77,347
Income tax expense 596,742 542,829 249,360 23,335
------------ ------------ ------------ ------------
Net income $ 1,423,132 $ 924,279 $ 445,057 $ 54,012
============ ============ ============ ============
Pro forma income statement data:
Net income as reported $ 1,423,132 $ 924,279 $ 445,057 $ 54,012
Pro forma adjustments:
Compensation and related party
expense arrangements 161,700 -- -- --
Provision for income taxes (210,422) -- -- --
============ ============ ============ ============
Pro forma net income $ 1,374,410 $ 924,279 $ 445,057 $ 54,012
============ ============ ============ ============
Pro forma net income and
net income per common share $ 0.42 $ 0.26 $ 0.12 $ 0.02
============ ============ ============ ============
Pro forma weighted average and weighted
average number of common shares 3,303,874 3,598,219 3,713,280 3,597,984
============ ============ ============ ============
</TABLE>
3
<PAGE> 4
CASA OLE' RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
40-WEEK PERIODS ENDED
10/4/1996 10/3/1997
------------- -------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,423,132 $ 924,279
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 133,353 752,377
Loss on sale of fixed assets 28,035 --
Reserve for bad debts and note receivable write-offs -- 112,500
Changes in assets and liabilities, net of acquisition:
Royalties receivable 26,203 (12,122)
Receivable from affiliates 32,701 1,000
Other receivables (99,907) 35,166
Inventory (4,846) (67,459)
Prepaids and other current assets (207,642) (93,854)
Accounts payable 156,553 179,086
Accrued expenses and other liabilities 91,379 32,669
Other assets (20,929) (42,285)
------------ ------------
Total adjustments 134,900 897,078
------------ ------------
Net cash provided by operating activities 1,558,032 1,821,357
------------ ------------
Cash flows from investing activities:
Payment for purchase of acquisition, net of
cash acquired -- (11,754,175)
Proceeds from collection (issuance) of notes receivable 10,000 (115,000)
Net sale of marketable securities -- 1,007,255
Purchase of property, plant and equipment (1,324,607) (7,075,283)
Proceeds from sale of property, plant
and equipment 6,100 --
------------ ------------
Net cash used in investing activities (1,308,507) (17,937,203)
------------ ------------
Cash flows from financing activities:
Payment of distributions (1,313,417) --
Proceeds from issuance of common stock 19,787,996 --
Purchase of treasury stock (11,350,000) --
Proceeds from minority partners' contributions -- 21,000
Net borrowings under line of credit agreement -- 4,640,205
Proceeds from issuance of long-term debt -- 6,000,000
Payments of notes payable (146,095) (350,811)
------------ ------------
Net cash provided by financing activities 6,978,484 10,310,394
------------ ------------
Increase (decrease) in cash and cash equivalents 7,228,009 (5,805,452)
Cash and cash equivalents at beginning of period 1,003,585 6,419,305
============ ============
Cash and cash equivalents at end of period $ 8,231,594 $ 613,853
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period:
Interest $ 18,532 $ 168,169
Income taxes $ 390,000 $ 865,000
Non-cash activities:
Exchange of equipment for note balance $ 53,897 $ --
Note issued for purchase of restaurant $ -- $ 750,000
($123,324 equip., $626,676 goodwill)
Accrual of distributions $ 191,922 --
</TABLE>
4
<PAGE> 5
CASA OLE RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of Casa Ole Restaurants, Inc. (the "Company"),
the accompanying consolidated financial statements contain all
adjustments (consisting only of normal recurring accruals and
adjustments) necessary for a fair presentation of the consolidated
financial position as of October 3, 1997, and the consolidated
statements of income and cash flows for the 40-week and 12-week periods
ended October 3, 1997 and October 4, 1996. The consolidated statements
of income for the 40-week and 12-week periods ended October 3, 1997 are
not necessarily indicative of the results to be expected for the full
year.
To conform to the current year presentation, certain of the
prior year balances have been reclassified. Specifically, paper and
supply costs were reclassified from cost of sales to restaurant
operating expenses.
2. ACCOUNTING POLICIES
During the interim periods the Company follows the accounting
policies set forth in its combined financial statements in its Annual
Report and Form 10-K (file number 0-28234). Reference should be made to
such financial statements for information on such accounting policies
and further financial details.
The Company does not have or participate in transactions
involving derivative, financial and commodity instruments.
3. PRO FORMA DATA
The 1996 pro forma income statement data reflects adjustments
to compensation and related party expense arrangements, and reflects an
adjustment to the provision for income taxes to reflect a 37% effective
tax rate, as if the Company had been taxed as a C corporation prior to
the effective date of the Company's initial public offering.
For fiscal 1996 and 1997, both primary and fully diluted net
income per share are based on the weighted average number of shares
outstanding during the year increased by dilutive common equivalent
shares (stock options and warrants) determined using the treasury stock
method. Because of the April 1996 offering date, the shares outstanding
for the first quarter of 1996 were approximately 865,000 shares less
than the number outstanding thereafter.
4. PURCHASE OF MONTEREY'S ACQUISITION CORP.
The Company purchased 100% of the outstanding stock of
Monterey's Acquisition Corp. ("MAC") on July 2, 1997. The Company
purchased the shares of common stock for $4.0 million, paid off
outstanding debt and accrued interest totaling $7.1 million and funded
various other agreed upon items approximating $500,000. The transaction
was funded using cash on hand of approximately $3.0 million and funds
available to the Company under its amended credit facility. At the time
of acquisition, MAC owned and operated 26 restaurants in Texas and
Oklahoma under the names "Monterey's Tex-Mex Cafe," "Monterey's Little
Mexico" and "Tortuga Cantina."
5
<PAGE> 6
The table below presents pro forma income statement
information as if the Company had purchased MAC at the beginning of the
fiscal year. Pro forma adjustments are to remove consulting fees that
are non-continuing, amortize the resulting goodwill over 40 years and
remove the pre-acquisition goodwill amortization, reflect net interest
expense on the debt resulting from the acquisition and record
additional income tax at an effective rate of 37% on the combined
income of the Company and MAC. Pro forma information for fiscal 1996
was reported on Form 8-K, which was filed with the Securities and
Exchange Commission on July 16, 1997.
<TABLE>
<CAPTION>
COMPANY MAC
40-WEEKS 12/30/96
ENDED THROUGH PRO FORMA PRO FORMA
10/3/97 7/1/97 ADJUSTMENTS COMBINED
------- ------ ----------- ---------
Revenues:
<S> <C> <C> <C> <C>
Restaurant sales $ 23,462,375 $ 10,481,361 $ -- $ 33,943,736
Franchise fees 780,875 -- -- 780,875
Other 60,740 -- -- 60,740
------------- ------------- ------------- -------------
24,303,990 10,481,361 -- 34,785,351
------------- ------------- ------------- -------------
Costs and expenses:
Cost of sales 5,572,854 2,798,983 -- 8,371,837
Restaurant operating expenses 13,853,335 5,608,565 -- 19,461,900
General and administrative 2,641,314 835,229 (99,998) 3,376,545
Depreciation and amortization 752,377 646,222 (105,584) 1,293,015
------------- -------------- -------------- -------------
22,819,880 9,888,999 (205,582) 32,503,297
------------- -------------- -------------- -------------
Operating income 1,484,110 592,362 205,582 2,282,054
------------- ------------- -------------- --------------
Other income (expense):
Interest (12,409) (400,161) (6,546) (419,116)
Other, net (4,593) 7,186 -- 2,593
------------ ------------ -------------- --------------
(17,002) (392,975) (6,546) (416,523)
------------ ------------ -------------- --------------
Income before income tax expense 1,467,108 199,387 199,036 1,865,531
Income tax expense 542,829 -- 147,417 690,246
------------- ------------- -------------- --------------
Net income $ 924,279 $ 199,387 $ 51,619 $ 1,175,286
============= ============= ============== ==============
Net income per common share $ .26 $ .33
===== =====
</TABLE>
5. NEW FINANCIAL ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, Earnings Per Share. SFAS No. 128 replaces primary
earnings per share and fully diluted earnings per share with basic
earnings per share (net income divided by the weighted average common
shares outstanding without the dilutive effects of common stock
equivalents) and diluted earnings per share, respectively. SFAS No. 128
is effective for financial statements for both interim and annual
periods ending after December 15, 1997, with earlier application not
permitted. Effective December 1997, the Company will be required to
adopt SFAS No. 128.
6. INITIAL PUBLIC OFFERING
The Company announced its initial public offering of 2,000,000
shares of Common Stock at a price of $11.00 per share on April 25,
1996. On May 1, 1996, the Company redeemed 1,135,000 shares of Common
Stock for $10.00 per share from a principal of the Company.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: accelerating growth strategy; dependence on
executive officers; geographic concentration increasing susceptibility to
adverse conditions in the region; changes in consumer tastes and eating habits;
national, regional or local economic and real estate conditions; demographic
trends; inclement weather; traffic patterns; the type, number and location of
competing restaurants; inflation; increased food, labor and benefit costs; the
availability of experienced management and hourly employees; seasonality and the
timing of new restaurant openings; changes in governmental regulations; dram
shop exposure; and other factors not yet experienced by the Company. The use of
words such as "believes", "anticipates", "expects", "intends" and similar
expressions are intended to identify forward-looking statements, but are not the
exclusive means of identifying such statements. Readers are urged to carefully
review and consider the various disclosures made by the Company in this report
and in the Company's Annual Report and Form 10-K for the fiscal year ended
December 27, 1996, that attempt to advise interested parties of the risks and
factors that may affect the Company's business.
RESULTS OF OPERATIONS
The Company closed on its purchase of 100% of the outstanding stock of
Monterey's Acquisition Corp. ("MAC") on July 2, 1997. Accordingly, the results
of operations presented below include the operations of the 26 MAC units from
the date of closing through the end of the Company's third quarter on October 3,
1997. Pro forma information as if the Company had owned MAC for the forty weeks
ended October 3, 1997 is presented in note 4 of the notes to consolidated
financial statements included herein.
Revenues. The Company's revenues for the third quarter of fiscal 1997
were up 159.4% to $11.2 million over revenues of $4.3 million for the same
quarter a year ago. Restaurant sales for the third quarter of 1997 were up $6.9
million over the same quarter a year ago, to $10.9 million. Sales at
restaurants operating in both fiscal quarters ("same-stores") were down 5.1%
over last year's same quarter, offsetting the overall sales increase by
$205,000. The 26 MAC units contributed $5.4 million in the third quarter. The
remaining increase was due to the additional sales contributed by the Company's
new stores.
For the 40 weeks ended October 3, 1997, revenues increased $10.4
million, or 74.7 %, to $24.3 million. Year-to-date same-store sales were down
0.3% from the prior year, offsetting the overall sales increase by $37,000. The
remaining increase was due to the Company's new stores and the acquisition of
MAC.
Costs and Expenses. Cost of sales as a percentage of restaurant sales
during the current quarter was 25% as compared to 22.6% in the same quarter last
year (see note 1). Excluding the impact of MAC, cost of sales was 22.9%.
On a year-to-date basis, cost of sales as a percentage of restaurant
sales was 23.8%, as compared to the prior year-to-date percentage of 22.5%.
Again, excluding the impact of MAC, cost of sales was 22.5%. Modest menu price
increases were implemented in the fall of 1996 and late summer (week of
September 15th) of 1997. The most recent menu price increases were to offset the
federally mandated minimum wage increase.
7
<PAGE> 8
Restaurant operating expenses increased $4.2 million, or 179.5%, in the
third quarter of 1997, as compared with the third quarter of 1996. As a
percentage of restaurant sales, restaurant operating expenses increased to 59.5%
in the current quarter, as compared to 57.5% in the same quarter last year. This
2% increase as a percent of restaurant sales in the current quarter was a result
of higher labor and training costs in the Company's new Casa Ole restaurants,
partially offset by lower operating costs in the MAC units.
Restaurant operating expenses as a percentage of restaurant sales for
the 40 weeks just ended were 59.0%, up from 57.7% in the prior year. The
increase was a result of the higher labor and training costs experienced in the
Company's new Casa Ole units.
General and administrative expenses (G&A) increased $781,000, or
161.5%, in the third quarter as compared with the prior year's same quarter. As
a percentage of total revenues, G&A increased to 11.4% in the third quarter of
1997, from 11.2% in the third quarter of 1996. Third quarter G&A included
$241,000 in special charges. The special charges related to severance packages
for recent management changes, the costs associated with an unsuccessful
acquisition attempt which was subsequent to the MAC acquisition, and a write
down of the Company's investment in a franchise restaurant in Terre Haute,
Indiana. The personnel changes are anticipated to save the Company approximately
$300,000 in G&A costs in fiscal 1998. The increase was also due to training
costs that were incurred for new stores that were not considered preopening
costs, pay rate increases for certain employees effective at the beginning of
fiscal 1997, the addition of corporate personnel and higher legal expenses.
Year-to-date G&A was 10.9% of total revenues, as compared to 11.4% for
the same period last year. The prior year G&A included approximately $162,000 of
related party expense that was not a component of the current year expenses.
Giving effect to this, G&A as a percentage of total revenues would have been
10.2% for the 40 weeks ended October 4, 1996. The increase from 10.2% to 10.9%
was attributed to the same items as discussed in the preceding paragraph.
Depreciation and amortization expense (D&A) as a percentage of total
revenues increased for the quarter and year-to-date to 3.9% from 0.9%, and to
3.1% from 1.0%, respectively. These increases were a direct result of the
addition of depreciable assets related to Company's five new store openings
since the third quarter of 1996, along with added depreciation and amortization
related to two stores acquired from prior franchisees and the acquisition of
MAC. As the Company opens new restaurants, D&A as a percentage of total revenues
is expected to continue to increase.
Other Income (Expense). Net other income as a percentage of total
revenues decreased from income to an expense of 1.6% for the third quarter and
an expense of 0.1% for the year, from income of 3.3% and 2.5% for the prior year
same periods, respectively. The net decrease in both the quarter and
year-to-date amount was due to the constant reduction in interest income and the
incurrence of interest expense as the proceeds from the 1996 initial public
offering were used for construction projects and debt was incurred related to
the acquisition of MAC. Additionally, during the second quarter of fiscal 1996,
the Company received and recorded a $60,000 rent refund that related to years
prior to fiscal 1996.
Income Tax Expense. Prior to the Company's initial public offering in
April 1996, substantially all of the predecessor corporations elected to be
taxed as S corporations under the provisions of Subchapter S of the Internal
Revenue Code. As a result of such election, federal income taxes on the net
income of these corporations were payable personally by the shareholders. The
provision for income taxes reflected in the first quarter of fiscal 1996 is for
state franchise taxes on all restaurants and for federal income taxes on the
predecessor corporations that were taxable as C corporations. The effective tax
rates on those corporations were less than the expected rates due to applicable
graduated tax rates. The provision for income taxes reflected in quarters
subsequent to the initial public offering reflects an estimated 37% effective
tax rate.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $1,821,357 for the 40
weeks ended October 3, 1997, compared to $1,558,032 for the same period last
year. Despite a 35.1% decrease in net income, net income plus depreciation and
amortization increased by $120,171 to $1.68 million from $1.56 million. The
additional increase in operating cash flow was primarily due to special charges
and to other changes in various components of working capital. At October 3,
1997, the Company had a working capital deficit of $2.4 million, which is common
in the restaurant industry, since restaurant companies do not typically require
a significant investment in either accounts receivable or inventory.
During the first 40 weeks of 1997, capital expenditures on property,
plant and equipment were approximately $7.1 million as compared to approximately
$1.3 for the same period of 1996. Capital expenditures during the year-to-date
period included the acquisition of real estate and construction costs for its
restaurants in Corpus Christi, Texas and Garden City, Idaho, which is a Market
Partner restaurant. Corpus Christi is due to open in the spring of 1998, while
Garden City is expected to open in mid December 1997. Three real estate sites
were acquired in Texas, New Mexico and Idaho respectively, with the Idaho site
planned for a future Market Partner restaurant. Capital expenditures also
included the acquisition of real estate for its Market Partner restaurant in
Pocatello, Idaho, which opened just after the end of the second quarter; and
construction costs for the Company's new Tortuga Mexican Kitchen casual dinning
prototype in Baytown, Texas, which opened just after the end of the second
quarter. Other stores which opened during the year were in Plainview, Texas on
March 18 and in Bryan and Lubbock, Texas, which opened during the second
quarter. Additionally, the Company had cash outlays for necessary replacement
equipment in various older units. In addition to capital outlays, the Company
acquired the assets of one of its franchise locations during the first quarter
for a $750,000 note payable to the prior franchisee, of which $626,676 was
allocated to goodwill, and the remainder was allocated primarily to fixed
assets.
During the second quarter, the Company closed on its acquisition of the
stock of MAC. The Company purchased the shares of common stock for $4.0 million,
paid off outstanding debt and accrued interest totaling $7.1 million and funded
various other agreed upon items approximating $500,000. The transaction was
funded using cash on hand of approximately $3.0 million and funds available to
the Company under its amended credit facility.
To facilitate the acquisition of MAC, the Company negotiated an
amendment to its existing $10 million credit facility with NationsBank. Terms,
including applicable prime or LIBOR based interest rates, of the amended
facility are similar to those in the original facility, however, the facility
was expanded to $13 million, with $6 million designated as a term note payable
over six years, and the remaining $7 million designated as a revolving credit
line. At October 3, 1997, the Company had $5.8 million outstanding under the
term facility and approximately $4.6 million outstanding under the revolver.
While the special charges discussed above resulted in technical non-compliance
with certain debt covenants, the bank has indicated in writing that the bank has
approved an amendment to bring the Company into full compliance. As before the
most recent amendment, which is expected to be documented promptly, the
revolving line may be used for certain acquisitions, construction of new units
and other working capital needs. The line no longer restricts the Company's use
solely for the acquisition of one of the Company's franchisees.
Capital expenditures over the next 12 months are anticipated to
approximate $4.2 million, which includes seven to eight existing store remodels
and constructing or converting five to six new units through a combination of
Company-owned and market partner arrangements. Remodeling will focus on both the
Monterey's Little Mexico concept and the new Casa Ole' prototype. New
construction will focus primarily on Tortuga Mexican Kitchen. The Company also
plans to sell certain stores (Monterey's Tex-Mex Cafes) and certain real estate.
Management of the Company anticipates that cash flow from operations,
combined with the remaining availability under the $13 million credit facility,
will be sufficient to fund these planned capital
9
<PAGE> 10
expenditures. Planned capital expenditures as presented do not include the
potential acquisition of any of the Company's franchised units or any other
Mexican restaurant concept.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(A) EXHIBITS
(A) Exhibit
Number Document Description
------- --------------------
<S> <C>
11.1 Statement re Computation of Net Income Per Share
27.1 Financial Data Schedule
(B) REPORTS ON FORM 8-K
The Company filed a Form 8-K Current Report with the
Securities and Exchange Commission on July 16, 1997
regarding the Company's acquisition of Monterey's
Acquisition Corp.
</TABLE>
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASA OLE RESTAURANTS, INC.
Dated: November 12, 1997 By: /s/ Louis P. Neeb
----------------------
Louis P. Neeb
Chairman and Chief Executive Officer
(Principal Executive Officer)
Dated: November 12, 1997 By: /s/ Andrew J. Dennard
--------------------------
Andrew J. Dennard
Vice President, Controller & Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
11
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Document Description
- ------- --------------------
<C> <S>
11.1 Statement re Computation of Net Income Per Share
27.1 Financial Data Schedule
</TABLE>
12
<PAGE> 1
EXHIBIT 11.1
CASA OLE' RESTAURANTS, INC.
COMPUTATION OF NET INCOME PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
40-WEEK PERIODS ENDED 12-WEEK PERIODS ENDED
10/4/1996 10/3/1997 10/4/1996 10/3/1997
----------- ----------- ----------- -----------
Net income (or pro forma net income)
<S> <C> <C> <C> <C>
applicable to common stock $ 1,423,132 $ 924,279 $ 445,057 $ 54,012
=========== =========== =========== ===========
Computation of weighted average common shares:
Shares issued pursuant to
contribution agreement 2,732,705 2,732,705 2,732,705 2,732,705
Shares issued in initial public offering 2,000,000 2,000,000 2,000,000 2,000,000
Shares redeemed (1,135,000) (1,135,000) (1,135,000) (1,135,000)
Effect of days outstanding on
weighted average calculation (516,352) -- (51,488) --
Assumed net common share
equivalents of options and warrants
using the treasury stock method 55,931 514 130,505 279
----------- ----------- ----------- -----------
3,137,284 3,598,219 3,676,722 3,597,984
=========== =========== =========== ===========
Net income per share $ 0.42 $ 0.26 $ 0.12 $ 0.02
=========== =========== =========== ===========
</TABLE>
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<S> <C>
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<PERIOD-END> OCT-03-1997
<CASH> 613,853
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<RECEIVABLES> 458,754
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<PP&E> 21,451,316
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0
0
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<CGS> 5,572,854
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<EPS-PRIMARY> .26
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