<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 JULY 4, 1999
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
MEXICAN 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 August 9, 1999: 3,597,705 SHARES OF COMMON STOCK, PAR VALUE $.01.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Mexican Restaurants, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS 07/04/99 01/03/99
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 214,947 $ 462,847
Royalties receivable 97,702 70,711
Other receivables 405,800 280,335
Inventory 657,792 459,260
Taxes receivable 187,182 547,272
Prepaid expenses and other current assets 291,163 383,365
------------ ------------
Total current assets 1,854,586 2,203,790
------------ ------------
Property, plant and equipment 23,026,933 18,568,632
Less accumulated depreciation 5,028,359 4,526,005
------------ ------------
Net property, plant and equipment 17,998,574 14,042,627
Deferred tax assets 747,104 795,229
Other assets 9,429,296 6,379,332
============ ============
$ 30,029,560 $ 23,420,978
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ -- $ --
Accounts payable 1,797,331 1,454,794
Accrued sales and liquor taxes 339,527 293,743
Accrued payroll and taxes 1,032,522 803,256
Accrued expenses 377,790 699,437
------------ ------------
Total current liabilities 3,547,170 3,251,230
------------ ------------
Long-term debt, net of current portion 8,030,000 2,870,000
Other liabilities 361,625 234,864
Deferred gain 3,378,625 3,505,674
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized -- --
Capital stock, $0.01 par value, 20,000,000 shares
authorized, 4,732,705 shares issued 47,327 47,327
Additional paid-in capital 20,537,076 20,537,076
Retained earnings 5,477,737 4,324,807
Treasury stock, cost of 1,135,000 shares (11,350,000) (11,350,000)
------------ ------------
Total stockholders' equity 14,712,140 13,559,210
------------ ------------
$ 30,029,560 $ 23,420,978
============ ============
</TABLE>
2
<PAGE> 3
MEXICAN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
13-WEEK 13-WEEK 26-WEEK 26-WEEK
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
07/04/99 06/28/98 07/04/99 06/28/98
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Restaurant sales $ 14,123,991 $ 11,677,863 $ 26,060,785 $ 23,197,059
Franchise fees and royalties 370,446 262,353 621,929 519,991
Other 49,008 12,741 118,611 16,942
------------ ------------ ------------ ------------
14,543,445 11,952,957 26,801,325 23,733,992
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 3,938,103 3,158,756 7,250,271 6,275,163
Labor 4,824,585 3,909,799 8,812,806 7,781,350
Restaurant operating expenses 3,044,315 2,381,739 5,706,749 4,855,551
General and administrative 1,301,677 1,067,439 2,511,878 2,101,238
Depreciation and amortization 322,057 324,456 681,763 683,627
Pre-open costs 87,150 65,368 137,201 128,911
------------ ------------ ------------ -----------
13,517,887 10,907,557 25,100,668 21,825,840
Infrequently occurring income (expense) items, net 295,289 -- 295,289 --
------------ ------------ ------------ ------------
Operating income 1,320,847 1,045,400 1,995,946 1,908,152
------------ ------------ ------------ ------------
Other income (expense):
Interest income 4,177 8,409 11,459 11,767
Interest expense (150,514) (215,020) (206,127) (429,925)
Other, net 56,714 13,016 71,616 51,877
------------ ------------ ------------ ------------
(89,623) (193,595) (123,052) (366,281)
------------ ------------ ------------ ------------
Income before income tax expense and extraordinary item 1,231,224 851,805 1,872,894 1,541,871
Income tax expense 472,599 336,463 719,964 602,138
------------ ------------ ------------ ------------
Income before extraordinary item 758,625 515,342 1,152,930 939,733
Extraordinary item -- -- -- 39,975
------------ ------------ ------------ ------------
Net income $ 758,625 $ 515,342 $ 1,152,930 $ 979,708
============ ============ ============ ============
Basic and diluted income per share (before extraordinary item) $ 0.21 $ 0.14 $ 0.32 $ 0.26
------------ ------------ ------------ ------------
Basic and diluted income per share (extraordinary item) $ -- $ -- $ -- $ 0.01
------------ ------------ ------------ ------------
Basic and diluted income per share $ 0.21 $ 0.14 $ 0.32 $ 0.27
------------ ------------ ------------ ------------
Weighted average number of shares (diluted) 3,604,148 3,604,827 3,599,316 3,604,777
============ ============ ============ ============
</TABLE>
3
<PAGE> 4
MEXICAN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
26-WEEK PERIODS ENDED
07-04-99 06-28-98
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,152,930 $ 979,708
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 681,763 812,538
Deferred gain amortization (127,049) --
Deferred tax provision -- (1,366,507)
Gain on early extinguishment of debt -- (39,975)
Gain on sale of fixed assets (519,685) (7,188)
Asset impairments 142,396
Changes in assets and liabilities, net of effects of acquisition:
Royalties receivable (26,991) 27,548
Receivable from affiliates -- 13,000
Other receivables (125,464) 59,133
Income tax receivable/payable 360,090 1,462,168
Inventory (198,532) 673
Prepaids and other current assets 85,867 (134,733)
Accounts payable 342,537 546,088
Accrued expenses and other liabilities 80,163 (594,499)
Other assets (211,675) (137,365)
------------ ------------
Total adjustments 483,420 640,881
------------ ------------
Net cash provided by operating activities 1,636,350 1,620,589
------------ ------------
Cash flows from activities:
Payment for purchase of acquisition, net of cash acquired (4,132,945) --
Purchase of property, plant and equipment (4,097,914) (2,341,016)
Proceeds from sale of property, plant and equipment 1,186,609 11,360,632
------------ ------------
Net cash used in investing activities (7,044,250) 9,019,616
------------ ------------
Cash flows from investing activities:
Net borrowings under line of credit agreement 5,160,000 287,153
Payments of notes payable 0 (10,569,024)
------------ ------------
Net cash used in financing activities 5,160,000 (10,281,871)
------------ ------------
Decrease in cash and cash equivalents (247,900) 358,334
Cash and cash equivalents at end of period 462,847 986,024
------------ ------------
Cash and cash equivalents at end of period $ 214,947 $ 1,344,358
============ ============
Supplemental disclosure of cash flow information
Cash paid during the period:
Interest $ 206,715 $ 401,332
Income taxes $ 597,339 $ 351,745
Non-cash activities:
Exchange of note for equipment and inventory $ -- $ 207,800
</TABLE>
4
<PAGE> 5
MEXICAN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of Mexican 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 July 4, 1999, and the consolidated statements
of income and cash flows for the 26-week and 13-week periods ended July
4, 1999 and June 28, 1998. The consolidated statements of income for
the 26-week and 13-week periods ended July 4, 1999 are not necessarily
indicative of the results to be expected for the full year.
2. ACCOUNTING POLICIES
During the interim periods the Company follows the accounting
policies set forth in its consolidated 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. EXTINGUISHMENT OF DEBT
In fiscal 1997, the Company acquired the assets of one of its
franchise locations for a $750,000 note payable to the prior
franchisee. During the first quarter of 1998, the Company accepted an
offer from the prior franchisee to prepay the remaining $450,000
balance of the note for a discounted sum of $385,000, resulting in a
gain, net of taxes, of $39,975.
4. SALE-LEASEBACK TRANSACTION
On June 25, 1998, the Company completed a sale and leaseback
transaction involving the sale and lease back of the land, building and
improvements of 13 Company-owned restaurants. The properties were sold
for $11.5 million and resulted in a gain of approximately $3.5 million
that will be deferred and amortized over the terms of the leases, which
are 15 years each. The leases are classified as operating leases.
<TABLE>
Future minimum lease payments under the non-cancelable operating lease are:
<S> <C>
1999.................................................$ 546,250
2000.................................................$ 1,114,350
2001.................................................$ 1,136,200
2002.................................................$ 1,158,924
2003.................................................$ 1,181,648
Thereafter...........................................$ 12,465,557
------------
$ 17,602,929
============
</TABLE>
5. ACQUISITION OF LA SENORITA RESTAURANTS
On April 30, 1999, the Company closed on its acquisition of La
Senorita Restaurants. The Company acquired the operations of five
company-owned restaurants, a general partnership interest in a sixth
restaurant, and the rights to the La Senorita franchise system. The
purchase price was approximately $4.0 million in cash financed with
Bank of America (formerly NationsBank).
5
<PAGE> 6
The table below presents pro forma income statement
information as if the Company had purchased La Senorita at the
beginning of the fiscal year. Pro forma adjustments are to remove
compensation that is non-continuing, amortize the resulting goodwill
over 20 years, reflect net interest expense on the debt resulting from
the acquisition and record additional income tax at an effective rate
of 38.5% on the combined income of the Company and La Senorita. This
acquisition was accounted for as a purchase.
<TABLE>
<CAPTION>
26-WEEKS 26-WEEKS
ENDED ENDED
7/04/99 6/28/98
<S> <C> <C>
Revenues...................................................................$29,262,004 $27,332,482
Net Income.................................................................$ 1,172,172 $ 1,162,244
Diluted income per share...................................................$ 0.33 $ 0.32
</TABLE>
The pro forma information does not purport to be indicative of
results of operations which would have occurred had the acquisition
been consummated on the date indicated or future results of operations.
<TABLE>
<CAPTION>
Allocation of purchase price for La Senorita is as follows:
<S> <C>
Working Capital............................................................$ 149,902
Furniture, Fixtures & Equipment............................................$ 1,593,993
Goodwill...................................................................$ 2,229,583
Other......................................................................$ 210,402
-----------
$ 4,183,880
</TABLE>
6. INFREQUENT ITEMS
The second quarter ended July 4, 1999 includes infrequently
occurring income and expenses consisting of three items that increase
operating income in the aggregate by $295,289. First, the Company sold
one restaurant to the State of Texas (by eminent domain) for
$1,150,000, resulting in a gain of $519,685. Second, the Company
recorded an impairment provision in the amount of $142,396 relating to
the impairment of assets at closed restaurants. Third, as part of the
Company's decision to consolidate with a single outsourcing firm its
accounting process, the Company settled its old outsourcing accounting
contract for $82,000.
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
January 3, 1999, that attempt to advise interested parties of the risks
and factors that may affect the Company's business.
6
<PAGE> 7
RESULTS OF OPERATIONS
Revenues. The Company's revenues for the second quarter of
fiscal 1999 were up $2.6 million or 21.7% to $14.5 million compared
with the same quarter a year ago. Restaurant sales for the second
quarter of 1999 were up $2.4 million compared with the same quarter a
year ago, to $14.1 million. The increase in restaurant sales is
primarily due to the acquisition of La Senorita Restaurants, which was
acquired on April 30, 1999. La Senorita contributed $1.4 million in
restaurant sales in the second quarter of fiscal 1999. Five new stores
were opened, one restaurant was acquired from a franchisee and one
store was closed since the end of the second quarter of fiscal 1998.
Total system sales at restaurants operating in both fiscal quarters
(same-stores) decreased 1.2% over last year's same quarter.
Company-owned same-store sales for the quarter were down 2.2%.
Franchise-owned same-stores sales for the quarter were also down 0.1%.
Due to new store development of higher volume Tortuga Coastal Cantina
and La Senorita restaurants, company-owned average weekly unit sales
increased 3.5%. La Senorita company-owned and franchise-owned same
store sales were up 4.2% and 10.1%, respectively.
On a year-to-date basis, the Company's revenues were up $3.1
million or 12.9% to $26.8 million compared with the same quarter a year
ago. Year-to-date restaurant sales were up $2.9 million compared with
the same period a year ago, to $26.1 million. Year-to-date total system
same-store sales were down 0.6%. Company-owned same-store sales for the
year-to-date period were down 0.9%. Franchise-owned same-stores sales
for the year-to-date period were also down 0.1%. Year-to-date
company-owned average weekly unit sales increased 3.1%. Year-to-date La
Senorita company-owned and franchise-owned same store sales were up
3.1% and 8.7%, respectively.
Costs and Expenses. Cost of sales, consisting primarily of
food and beverage costs, but also includes paper and supplies,
increased as a percentage of restaurant sales in the second quarter
of 1999 to 27.9% as compared with 27.0% in the same quarter in 1998.
The increase was primarily due to higher costs of sales associated
with new store development and the higher average cost of sales of
the Tortuga Coastal Cantina concept. Further, La Senorita's cost of
sales was one percent higher than the Company's historical average.
On a year-to-date basis, cost of sales increased to 27.8% of
restaurant sales compared with 27.1% in the same period a year ago.
Labor and other related expenses increased as a percentage of
restaurant sales by 70 basis points to 34.2% in the second quarter of
1999 as compared with 33.5% in the same quarter in 1998. The increase
was primarily due to the higher labor cost associated with new store
development.
On a year-to-date basis, labor and other related expenses
increased 30 basis points to 33.8% as compared with 33.5% in the same
period a year ago.
Restaurant operating expenses, which primarily includes rent,
utilities, repair and maintenance and advertising, increased as a
percentage of restaurant sales by 120 basis points to 21.6% in the
second quarter of 1999 as compared with 20.4% in the same quarter in
1998. Compared to the second quarter a year ago, rent expense increased
approximately 200 basis points due to last year's $11.5 million sale
and leaseback transaction which closed on June 30, 1998. Improvements
in other restaurant operating expenses, however, mitigated the increase
in rent expense. The increase in rent expense was partially offset by a
reduction in interest and depreciation expense.
On a year-to-date basis, restaurant operating expenses
increased 100 basis points to 21.9% as compared with 20.9% in the same
period a year ago.
General and administrative expenses increased slightly as a
percentage of total revenues by 10 basis points to 9.0% in the second
quarter of 1999 as compared with 8.9% in the same quarter in 1998. The
increase was primarily due to higher compensation and training expenses
required for the acquisition of La Senorita and the resumption of new
restaurant development.
7
<PAGE> 8
On a year-to-date basis, general and administrative expenses
increased as a percentage of total revenues by 50 basis points to 9.4%
compared with 8.9% in the same period a year ago.
Depreciation and amortization expense decreased as a
percentage of total revenues by 50 basis points to 2.2% in the second
quarter of 1999 as compared with 2.7% in the same quarter in 1998. This
decrease results primarily from the sale and leaseback transaction
involving the sale and lease back of land, building and improvements of
13 Company-owned restaurants. The leases are classified as operating
leases.
On a year-to-date basis, depreciation and amortization
decreased as a percentage of total revenue by 40 basis points to 2.5%
compared with 2.9% in the same period a year ago.
Pre-open costs increased as a percentage of total revenue by
10 basis points to 0.6% in the second quarter of 1999 as compared with
0.5% in the same quarter in 1998. The increase was due to faster new
store development as compared with the same period a year ago.
On a year-to-date basis, pre-open costs remained constant at
0.5% compared with the same period a year ago.
Infrequently occurring (income) and expense consist of three
items that increase operating income in the aggregate by $295,289. The
Company sold one restaurant to the State of Texas (by eminent domain)
for $1,150,000, resulting in a gain of $519,685. The Company recorded
an impairment provision in the amount of $142,396 relating to the
impairment of assets at closed restaurants. As part of the Company's
decision to consolidate with a single outsourcing firm its accounting
process, the Company settled its old outsourcing accounting contract
for $82,000.
Other Income (Expense). Net other expense decreased as a
percentage of total revenues by 100 basis points to 0.6% in the second
quarter of 1999 compared with 1.6% in the same quarter a year ago. The
improvement was primarily due to last year's $11.5 million sale and
leaseback transaction, the proceeds of which were used to pay off
long-term debt, thus reducing interest expense.
On a year-to-date basis, net other expense decreased as a
percentage of total revenues by 100 basis points to 0.5% in the second
quarter of 1999 compared with 1.5% in the same quarter a year ago.
Income Tax Expense. The Company's effective tax rate for the
second quarter 1999 was 38.5%, comparable with the same quarter a year
ago.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $1.6 million for
the 26 week period ended July 4, 1999, compared to $1.6 million for the
same period last year. As of July 4, 1999, the Company had a working
capital deficit of $1.7 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 26 weeks of 1999, capital expenditures on
property, plant and equipment were approximately $4.1 million as
compared to $2.3 million for the same period in 1998. Capital
expenditures included the remodeling of seven restaurants. No
additional remodels are planned for the remainder of the fiscal year.
One previously closed restaurant was reopened after a concept
conversion (from a Casa Ole to a Monterey's Little Mexico), and two new
restaurants opened during the 26 week period of 1999. Just after the
second quarter ended, a third new restaurant was opened. The Company
currently has two restaurant sites under construction, one of which is
scheduled to open in the third quarter of fiscal 1999 and the other is
scheduled to open in the fourth quarter of fiscal 1999. Additionally,
the Company had cash outlays for necessary replacement of equipment and
leasehold improvements in various older units. The Company estimates
its capital expenditures for the remainder of the fiscal year will be
approximately $4.1 million.
8
<PAGE> 9
On April 30, 1999, the Company closed on its acquisition of La
Senorita Restaurants. The Company paid approximately $4.1 million,
including closing costs. The Company acquired the operations of five
company-owned restaurants, a general partnership interest in a sixth
restaurant, and the rights to the La Senorita franchise system.
The Company increased its revolving credit facility with Bank
of America (formerly NationsBank) from $9.0 million to $10.0 million.
The interest rate is either the prime rate or LIBOR plus a stipulated
percentage. Accordingly, the Company is impacted by changes in the
prime rate and LIBOR. The Company is subject to a non-use fee of 0.35%
on the unused portion of the revolver from the date of the credit
agreement. Within the terms of the credit agreement, the Company must
meet certain financial covenants. Approximately $4.0 million of the
revolver was used on April 30, 1999 for the acquisition of La Senorita
Restaurants. The Company currently has $2.0 million available under the
revolver.
The Company also has a $14.5 million forward commitment
agreement with Franchise Finance Corporation of America ("FFCA"). At
July 4, 1999, the Company had approximately $12.2 million available
under the FFCA forward commitments.
The Company's management believes that the sale-leaseback
forward commitments with FFCA, along with operating cash flow and the
Company's revolving line of credit with Bank of America, will be
sufficient to meet its operating requirements and to finance its
expansion plans (exclusive of any acquisitions other than La Senorita)
through the end of the 2000 fiscal year.
Year 2000. In 1998, the Company reached a decision to continue
outsourcing its accounting processes. The new outsourcing group has set
up an accounting department on the premises of the Company and has
installed new computer hardware and software that is Year 2000 adapted.
Further, the Company is in the process of updating its information and
other systems to insure they are Year 2000 compliant. The Company also
has initiated discussions with its significant suppliers and financial
institutions to ensure that those parties have appropriate plans to
remediate Year 2000 issues where their systems interface with the
Company's systems or otherwise impact its operations. The Company is
assessing the extent to which its operations are vulnerable should
those organizations fail to remediate their computer systems properly.
Although management believes that the Company's systems will be
compliant on or before December 31, 1999, the most likely "worst case"
scenario would be that the Company may not be able to process credit
card transactions and/or experience delays in food and supply orders.
In the interim, there are other manual procedures the Company could
utilize in the event of a "worst case" scenario. All maintenance and
modification costs are expensed as incurred, while the cost of new
computer hardware and software, if material, is being capitalized and
depreciated over its expected useful life. The cost of the Year 2000
compliance program is not anticipated to be greater than $50,000 or to
have a material adverse effect on its financial position or results of
operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have or participate in transactions
involving derivative, financial and commodity instruments. The
Company's long-term debt bears interest at floating market rates. Based
on amount outstanding at July 4, 1999, a 1% change in interest rates
would change interest expense by $40,150.
9
<PAGE> 10
<TABLE>
<CAPTION>
PART II - OTHER INFORMATION
<S> <C>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit
Number Document Description
------- --------------------
27.1 Financial Data Schedule
</TABLE>
(b) REPORTS ON FORM 8-K
The Company filed a report on Form 8-K during its second
fiscal quarter to report its acquisition of the La Senorita Restaurants
operations.
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.
MEXICAN RESTAURANTS, INC.
Dated: August 17, 1999 By: /s/ Louis P. Neeb
----------------------
Louis P. Neeb
Chairman of the Board & Chief Executive Officer
(Principal Executive Officer)
Dated: August 17, 1999 By: /s/ Andrew J. Dennard
----------------------
Andrew J. Dennard
Vice President, Chief Financial Officer & Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
11
<PAGE> 12
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> APR-05-1999
<PERIOD-END> JUL-04-1999
<CASH> 214,947
<SECURITIES> 0
<RECEIVABLES> 533,502
<ALLOWANCES> (30,000)
<INVENTORY> 657,792
<CURRENT-ASSETS> 1,854,586
<PP&E> 23,026,933
<DEPRECIATION> 5,028,359
<TOTAL-ASSETS> 30,029,560
<CURRENT-LIABILITIES> 3,547,170
<BONDS> 0
0
0
<COMMON> 47,327
<OTHER-SE> 14,664,813
<TOTAL-LIABILITY-AND-EQUITY> 30,029,560
<SALES> 14,123,991
<TOTAL-REVENUES> 14,543,445
<CGS> 3,938,103
<TOTAL-COSTS> 9,579,784
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 150,514
<INCOME-PRETAX> 1,231,224
<INCOME-TAX> 472,599
<INCOME-CONTINUING> 758,625
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 758,625
<EPS-BASIC> 0.21
<EPS-DILUTED> 0.21
</TABLE>
