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U.S. SECURITIES AND 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 fiscal quarter ended June 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-28930
ROADHOUSE GRILL, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0367604
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6600 NORTH ANDREWS AVENUE, SUITE 160, FT. LAUDERDALE, FLORIDA 33309
(Address of principal executive offices and zip code)
Registrant's telephone number (954) 489-9699
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 [ ]
The number of shares of the registrant's common stock outstanding as
of July 25, 1997 was 9,305,408.
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ROADHOUSE GRILL, INC.
FORM 10-Q
FISCAL QUARTER ENDED JUNE 29, 1997
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements:
Condensed Balance Sheets as of June 29, 1997 (unaudited)
and December 29, 1996............................................... 3
Condensed Statements of Operations for the Fiscal Quarters
and Six Months Ended June 29, 1997 and June 30, 1996 (unaudited).... 4
Condensed Statement of Changes in Shareholders' Equity
for the Six Months Ended June 29, 1997 (unaudited) ................. 5
Condensed Statements of Cash Flows for the Six Months Ended
June 29, 1997 and June 30, 1996 (unaudited) ........................ 6
Notes to Condensed Financial Statements.................................. 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................ 12
Item 4. Submission of Matters to a Vote of Security Holders...................... 12
Item 6. Exhibits and Reports on Form 8-K......................................... 12
Signatures........................................................................... 13
Exhibit Index........................................................................ 14
</TABLE>
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PART I
Item 1. Financial Statements
ROADHOUSE GRILL, INC.
Condensed Balance Sheets
June 29, 1997 and December 29, 1996
<TABLE>
<CAPTION>
June 29, December 29,
1997 1996
------------ ------------
<S> <C> <C>
Assets (Unaudited)
Current assets:
Cash and cash equivalents ................................................. $ 2,662,449 $ 6,257,157
Accounts receivable ....................................................... 511,268 196,542
Inventory ................................................................. 833,885 814,225
Current portion of note receivable ........................................ 83,948 76,634
Pre-opening costs, net .................................................... 1,138,743 1,508,310
Prepaid expenses .......................................................... 603,721 577,883
------------ ------------
Total current assets ................................................... 5,834,014 9,430,751
Note receivable ............................................................. 174,072 218,539
Property, plant & equipment, net ............................................ 60,086,310 54,129,230
Intangible assets, net of accumulated amortization of $127,902
and $92,270 at June 29, 1997 and December 29, 1996, respectively .......... 863,492 877,260
Other assets ................................................................ 3,211,313 1,479,718
Investment in and advances to affiliates .................................... 1,243,157 1,199,382
------------ ------------
Total assets .......................................................... $ 71,412,358 $ 67,344,880
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable .......................................................... $ 3,762,584 $ 5,246,738
Accrued expenses .......................................................... 5,590,388 3,059,142
Due to related parties .................................................... 5,000,000 5,000,000
Current portion of long term debt ......................................... 1,003,303 1,452,935
Current portion of capitalized lease obligations .......................... 291,504 277,381
------------ ------------
Total current liabilities ............................................. 15,647,779 15,036,196
Long term debt .............................................................. 6,690,416 7,204,451
Capitalized lease obligations ............................................... 5,727,263 3,993,858
------------ ------------
Total liabilities ...................................................... 28,065,458 26,234,505
Shareholders' equity:
Common stock $.03 par value. Authorized 30,000,000 shares;
issued and outstanding 9,305,408 shares ................................... 279,162 279,162
Additional paid-in-capital .................................................. 48,465,394 48,433,344
Accumulated deficit ......................................................... (5,397,656) (7,612,131)
------------ ------------
Total shareholders' equity ............................................ 43,346,900 41,100,375
Commitments and contingencies ( Note 2 ) .................................... -- --
------------ ------------
Total liabilities and shareholders' equity ............................ $ 71,412,358 $ 67,334,880
============ ============
</TABLE>
See accompanying notes to condensed financial statements.
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ROADHOUSE GRILL, INC.
Condensed Statements of Operations
For the fiscal quarters and six months ended June 29, 1997 and June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Fiscal Quarters Ended Six Months Ended
------------------------------- -------------------------------
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Total revenue ............................. $ 22,960,818 $ 13,764,180 $ 45,931,363 $ 27,633,047
Cost of restaurant sales:
Food and beverage ...................... 7,575,966 4,711,764 15,252,373 9,363,962
Labor and benefits ..................... 6,899,870 4,453,852 13,690,145 8,626,993
Occupancy and other .................... 4,651,755 3,027,704 9,290,797 5,829,113
------------ ------------ ------------ ------------
Total cost of restaurant sales ......... 19,127,591 12,193,320 38,233,315 23,820,068
Depreciation and amortization ............. 1,179,286 675,751 2,255,790 1,352,594
General and administrative ................ 1,489,322 1,227,072 2,824,218 2,315,692
------------ ------------ ------------ ------------
Total operating expenses ............... 21,796,199 14,096,143 43,313,323 27,488,354
------------ ------------ ------------ ------------
Operating income (loss) ................ 1,164,619 (331,963) 2,618,040 144,693
Other income (expense):
Interest expense, net .................. (290,635) (291,780) (549,785) (554,818)
Equity in net income of affiliates ..... 31,307 56,387 52,093 112,787
Other, net ............................. 80,890 52,910 160,627 128,917
------------ ------------ ------------ ------------
Total other income (expense) ...... (178,438) (182,483) (337,065) (313,114)
------------ ------------ ------------ ------------
Pretax income (loss) ............. 986,181 (514,446) 2,280,975 (168,421)
Income tax ................................ 36,500 -- 66,500 --
------------ ------------ ------------ ------------
Net income (loss) ................. $ 949,681 $ (514,446) $ 2,214,475 $ (168,421)
============ ============ ============ ============
Net income (loss) per common share ........ $ 0.10 $ (0.08) $ 0.24 $ (0.03)
============ ============ ============ ============
Weighted average common shares and
share equivalents outstanding ......... 9,305,408 6,426,857 9,312,331 6,089,394
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed financial statements.
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ROADHOUSE GRILL, INC.
Condensed Statement of Changes in Shareholders' Equity
For the six months ended June 29, 1997
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
---------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance December 29, 1996 .... 9,305,408 $ 279,162 $48,433,344 $(7,612,131) $41,100,375
Deferred compensation ........ -- -- 32,050 -- 32,050
Net income ................... -- -- -- 2,214,475 2,214,475
----------- ----------- ----------- ----------- -----------
Balance June 29, 1997 ........ 9,305,408 $ 279,162 $48,465,394 $(5,397,656) $43,346,900
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
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ROADHOUSE GRILL, INC.
Condensed Statements of Cash Flows
For the six months ended June 29, 1997 and June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
June 29, June 30,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) ....................................... $ 2,214,475 $ (168,421)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ......................... 2,255,790 1,352,594
Noncash compensation expense .......................... 32,050 19,800
Equity in net (income) of affiliate ................... (52,093) (112,787)
Changes in assets and liabilities :
Decrease (increase) in accounts receivable ............ (314,726) (98,009)
Decrease (increase) in inventory ...................... (19,660) (213,742)
Decrease (increase) in pre-opening costs .............. 369,567 (558,718)
Decrease (increase) in prepaid expense ................ (25,838) (276,422)
Decrease (increase) in other assets ................... (1,331,595) (81,869)
(Decrease) increase in accounts payable ............... (1,484,154) 631,564
(Decrease) increase in accrued expenses ............... (993,006) 186,118
----------- -----------
Net cash provided by operating activities ............. 650,810 680,108
Cash flows from investing activities
Advances to affiliates, net ............................. (6,013) (39,086)
Payments for intangibles ................................ (21,864) --
Proceeds from payment on notes receivable ............... 37,153 34,333
Proceeds from sale leaseback transactions ............... 1,900,119 450,000
Purchase of property, plant and equipment ............... (8,162,907) (8,834,013)
Deposit on Kendall restaurant acquisition ............... (400,000) --
----------- -----------
Net cash used in investing activities ............... (6,653,512) (8,388,766)
Cash flows from financing activities
Increase in cash overdraft .............................. 3,524,252 734,599
Repayments of amounts due to related parties ............ -- (135,660)
Repayments of long-term debt ............................ (963,667) (303,929)
Payments on capital lease obligations ................... (152,591) (114,070)
Proceeds from issuance of common stock .................. -- 5,000,000
----------- -----------
Net cash provided by financing activities ........... 2,407,994 5,180,940
Decrease in cash and cash equivalents ...................... (3,594,708) (2,527,718)
Cash and cash equivalents at beginning of period ........... 6,257,157 2,805,043
----------- -----------
Cash and cash equivalents at end of period ................. $ 2,662,449 $ 277,325
=========== ===========
Supplementary disclosures:
Interest paid ........................................... $ 847,507 $ 452,731
=========== ===========
Noncash investing and financing activities:
</TABLE>
During the six months ended June 30, 1996, $3,500,000 of long-term debt was
converted to common stock. The Company entered into capital lease obligations
and seller financing mortgage agreements of $44,000 of $1,458,000, respectively,
during the period from January 1, 1996 to June 29, 1996.
During the six months ended June 29, 1997, the Company entered into capital
lease obligations of $1,900,000.
See accompanying notes to condensed financial statements.
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ROADHOUSE GRILL, INC.
Notes to Condensed Financial Statements
1. Basis of Presentation
The financial statements of Roadhouse Grill, Inc. (the "Company") for
the fiscal quarters and six months ended June 29, 1997 and June 30, 1996 are
unaudited and reflect all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial statements for the interim periods. The financial
statements should be read in conjunction with the financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Annual Report to
Shareholders and in the Company's Annual Report on Form 10-K for the fiscal year
ended December 29, 1996. The results of operations for the fiscal quarter and
six months ended June 29, 1997 are not necessarily indicative of the results for
the entire fiscal year ending December 28, 1997.
2. Commitments and Contingencies
The Company is a party to legal proceedings arising in the ordinary
course of business, many of which are covered by insurance. In the opinion of
management, disposition of these matters will not materially affect the
Company's financial condition.
At June 29, 1997, the Company had 9 restaurants under development. The
estimated cost to complete these restaurants and other capital projects in
process was approximately $4.3 million as of June 29, 1997.
3. Acquisitions
In August 1996, the Company entered into an agreement to purchase the
remaining 50 percent interest in the Kendall Roadhouse Grill, L.C. a limited
liability company that owns the Kendall, Florida Roadhouse Grill restaurant
("Kendall joint venture") from the joint venture partners for a purchase price
of $2,300,000. The purchase price was to be paid from the proceeds of the
initial public offering completed by the Company in December 1996 in which
2,500,000 shares were sold at $6.00 per share (the "Initial Public Offering").
During the first quarter of 1997, the agreement was amended as follows: the
purchase price was changed to $1,800,000 with a deposit of $400,000 paid in
January 1997, and the remaining $1,400,000 payable by December 31, 1997 when the
acquisition is closed and consummated. At December 31, 1997, the Company has the
option of extending the acquisition date to June 30, 1998, at which time the
purchase price increases to $1,850,000. In addition, the Kendall joint venture
paid a dividend of $20,000 per month to the sellers throughout the first quarter
of 1997 and will pay a dividend of $11,667 per month to the sellers through the
closing of the purchase.
4. Sale-leaseback
On June 2, 1997, the Company entered into a sale-leaseback agreement
to finance interior furniture, fixtures and equipment packages in five
Company-owned restaurants. The proceeds of approximately $1.8 million, net of
fees and other costs, will be used for expansion of the Company. The
transaction was accounted for as financing, wherein the property remains on the
books and continues to be depreciated over the life of the lease. A financing
obligation was recorded and is reduced based on payments under the lease
agreement.
The initial lease term is 60 months with an early purchase option
exercisable at any time during the lease term. The Company also has the option
to purchase the property at the end of the lease term.
5. Repricing of Stock Options
On February 11, 1997, the Board of Directors authorized a repricing
program which allows employees to elect to reprice all of their outstanding
options to purchase common stock of the Company, granted under the Stock Option
Agreement dated May 1, 1996. Effective February 11, 1997, the employees' stock
options were repriced to $6.75 per share and registered with the Securities and
Exchange Commission (the "SEC") effective July 2, 1997.
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6. Adoption of New Accounting Standards
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128. "Earnings Per Share" ("SFAS
No. 128"). This statement is effective for financial statements for both interim
and annual periods ending after December 15, 1997. It requires restatement of
all prior-period earnings per share ("EPS") data presented once the statement is
implemented. Earlier adoption of SFAS No. 128 is prohibited. SFAS No. 128
establishes standards for computing and presenting EPS and applies to entities
with publicly held common stock. This statement replaces the presentation of
primary EPS with a presentation of basic EPS. The Company will adopt SFAS No.
128 for the fourth quarter and the fiscal year ending December 28, 1997.
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<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto, included elsewhere in this Form
10-Q.
The Company opened its first restaurant in March 1993 in Pembroke
Pines, Florida. As of June 29, 1997 there were 46 Roadhouse Grill restaurants in
operation, consisting of 39 Company-owned and seven franchised or licensed
restaurants.
The average cash investment, excluding real estate costs and
pre-opening expenses, required to open each of the Roadhouse Grill restaurants
opened by the Company prior to June 29, 1997 was approximately $1.2 million. The
average real estate acquisition cost for the 12 restaurant sites owned by the
Company was approximately $836,000. The Company has obtained seller financing in
connection with the acquisition of its owned properties, which financing
generally has required a down payment of 10% of the purchase price. The average
monthly occupancy cost for the second quarter of 1997 for the restaurant sites
leased by the Company was approximately $10,000 per site. The Company expects
that the average cash investment required to open its prototype restaurants,
including pre-opening expenses but excluding real estate costs, will be
approximately $1.1 million or $1.4 million, depending upon whether the Company
converts an existing building or constructs a new restaurant.
In August 1996, the Company contracted to purchase from an unaffiliated
third party the remaining 50% interest in the Kendall joint venture from the
joint venture partners for a purchase price of $2,300,000. The purchase price
was to be paid from the proceeds of the initial public offering completed by the
Company in December 1996 in which 2,500,000 shares were sold at $6.00 per share
(the "Initial Public Offering"). During the first quarter of 1997, the agreement
was amended as follows: the purchase price was changed to $1,800,000 with a
deposit of $400,000 paid in January 1997, and the remaining $1,400,000 payable
by December 31, 1997 when the acquisition is closed and consummated. At December
31, 1997, the Company has the option of extending the acquisition date to June
30, 1998, at which time the purchase price increases to $1,850,000. In addition,
the Kendall joint venture paid a dividend of $20,000 per month to the sellers
throughout the first quarter of 1997 and will pay a dividend of $11,667 per
month to the sellers through the closing of the purchase. In addition, the
Company purchased a 50% interest in the Boca Raton joint venture from an
unaffiliated third party in December 1996. The Company has managed the Boca
Raton restaurant under a management agreement since December 1994 and expects to
continue to due so in the foreseeable future.
Results of Operations
The following table sets forth for the periods indicated certain
selected statement of operations data expressed as a percentage of total
revenues.
<TABLE>
<CAPTION>
Fiscal Quarters Ended Six Months Ended
------------------------------- -------------------------------
June 29, 1997 June 30, 1996 June 29, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total revenues ...................... 100.0% 100.0% 100.0% 100.0%
Cost of restaurant sales:
Food and beverage ................ 33.0 34.2 33.2 33.9
Labor and benefits ............... 30.1 32.4 29.8 31.2
Occupancy and other .............. 20.3 22.0 20.2 21.1
------- ------- ------- -------
Total cost of restaurant sales ... 83.4 88.6 83.2 86.2
Depreciation and amortization ....... 5.1 4.9 4.9 4.9
General and administrative .......... 6.5 8.9 6.1 8.4
------- ------- ------- -------
Total operating expenses ......... 95.0 102.4 94.2 99.5
------- ------- ------- -------
Operating income ................. 5.0 (2.4) 5.8 0.5
Other income (expense):
Interest expense, net ............ (1.3) (2.1) (1.2) (2.0)
Equity in net income of affiliates 0.1 0.4 0.1 0.4
Other, net ....................... 0.4 0.4 0.3 0.5
------- ------- ------- -------
Total other income (expense) ... (0.8) (1.3) (0.8) (1.1)
------- ------- ------- -------
Pretax income (loss) .......... 4.2 (3.7) 5.0 (0.6)
Income tax .......................... 0.2 -- 0.1 --
------- ------- ------- -------
Net income (loss) .............. 4.0% (3.7)% 4.9% (0.6)%
======= ======= ======= =======
</TABLE>
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<PAGE> 10
This form 10-Q contains forward looking statements that involve risks
and uncertainties relating to future events. Actual events or the Company's
results may differ materially from the results discussed in the forward looking
statements.
Quarter Ended June 29, 1997 Compared to Quarter Ended June 30, 1996
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RESTAURANTS OPEN. At June 29, 1997 there were 39 Company-owned
restaurants open, including the Kendall and Boca Raton joint ventures in which
the Company holds a 50% ownership interest ("Company-owned"). At June 30, 1996
there were 24 Company-owned restaurants. This represents a 62.5% increase in the
number of Company-owned restaurants.
TOTAL REVENUES. Total revenues increased $9.2 million, or 66.8%, from
$13.8 million for the second quarter of 1996 to $23.0 million for the second
quarter of 1997. This increase reflects 15 Company-owned restaurant openings.
For the 19 restaurants opened for 18 months or longer, comparable store sales
were down 1.7%. Average weekly sales were flat as compared to the second quarter
of last year.
FOOD AND BEVERAGE. Food and beverage costs increased $2.9 million, or
60.8%, from $4.7 million for the second quarter of 1996 to $7.6 million for the
second quarter of 1997. Food and beverage costs as a percentage of sales
decreased by 1.2% points from 34.2% for the second quarter of 1996 to 33.0% for
the same period in 1997. This decrease was the result of a larger base of mature
restaurants which have lower average food costs than recently opened locations
and lower average produce costs than for the same quarter last year.
LABOR AND BENEFITS. Labor and benefits costs increased $2.4 million, or
54.9%, from $4.5 million for the second quarter of 1996 to $6.9 million for the
second quarter of 1997. Labor costs as a percentage of sales decreased from
32.4% for the quarter ended June 30, 1996 to 30.1% for the quarter ended June
29, 1997. This represents a 2.3% point decrease. The larger base of mature
restaurants lessened the overall impact of higher labor costs normally
experienced at recently opened restaurants.
OCCUPANCY AND OTHER. Occupancy and other costs increased $1.7 million,
or 53.6%, from $3.0 million for the second quarter of 1996 to $4.7 million for
the second quarter of 1997. Occupancy and other costs, as a percentage of sales
decreased by 1.7% points from 22.0% for the quarter ended June 30, 1996 to 20.3%
for the quarter ended June 30, 1997. The decrease was primarily attributable to
operating efficiencies achieved in direct operating, occupancy and marketing
which were partially offset by an increase in preopening amortization as a
percentage of sales.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $524,000 or 74.5%, from $676,000 for the second quarter of 1996 to
$1.2 million for the second quarter of 1997. As a percentage of sales,
depreciation and amortization were comparable for the two quarters presented.
GENERAL AND ADMINISTRATIVE. General and administrative expense
increased $300,000, or 21.4%, from $1.2 million for the second quarter of 1996
to $1.5 million for the second quarter of 1997. However, general and
administrative costs decreased significantly as a percentage of sales from 8.9%
for the second quarter of 1996 to 6.5% for the second quarter of 1997. This 2.4%
point decrease was the result of economies of scale resulting from a greater
number of Company-owned restaurants in operation during the quarter ended June
29, 1997 compared to the quarter ended June 30, 1996.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) decreased
$4,000, or 2.2%, from expense of $182,000 for the second quarter of 1996 to
expense of $178,000 for the second quarter of 1997. As a percentage of sales,
other income (expense) decreased by 0.5% points from 1.3% for the quarter ended
June 30, 1996 to 0.8% for the quarter ended June 29, 1997. This variance was
due to a 0.8% point decrease in interest expense as a percentage of sales
which was the result of higher sales volumes from new restaurants with interest
dollars remaining relatively constant.
Six Months Ended June 29, 1997 Compared to Six Months Ended June 30, 1996
- -------------------------------------------------------------------------
TOTAL REVENUES. Total revenues increased $18.3 million, or 66.2%, from
$27.6 million for the first six months of 1996 to $45.9 million for the first
six months of 1997. This increase reflects 15 Company-owned restaurant openings.
For the 19 restaurants opened for 18 months or longer, comparable store sales
were down 2.0%. Average weekly sales were flat as compared to the first six
months of last year.
FOOD AND BEVERAGE. Food and beverage costs increased $5.9 million, or
62.9%, from $9.4 million for the first six months of 1996 to $15.3 million for
the first six months of 1997. Food and beverage costs as a percentage of sales
decreased by 0.7% points from 33.9% for the first six months of 1996 to 33.2%
for the same period in 1997. This decrease was the result of a larger base of
mature restaurants which have lower average food costs than recently opened
locations and lower average produce costs than for the same period last year.
-10-
<PAGE> 11
LABOR AND BENEFITS. Labor and benefits costs increased $5.1 million, or
58.7%, from $8.6 million for the first six months of 1996 to $13.7 million for
the first six months of 1997. Labor costs as a percentage of sales decreased
from 31.2% for the first six months of 1996 to 29.8% for the first six months of
1997. This represents a 1.4% point decrease. The larger base of mature
restaurants lessened the overall impact of higher labor costs normally
experienced at recently opened restaurants.
OCCUPANCY AND OTHER. Occupancy and other costs increased $3.5 million,
or 59.4%, from $5.8 million for the first six months of 1996 to $9.3 million for
the first six months of 1997. Occupancy and other costs, as a percentage of
sales decreased by 0.9% points from 21.1% for the six months ended June 30, 1996
to 20.2% for the six months ended June 30, 1997. The decrease was primarily
attributable to operating efficiencies achieved in direct operating, occupancy
and marketing which were partially offset by an increase in preopening
amortization as a percentage of sales.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $900,000 or 66.8%, from $1.4 million for the first six months of 1996
to $2.3 million for the first six months of 1997. As a percentage of sales,
depreciation and amortization were comparable for the first six months of 1996
and 1997.
GENERAL AND ADMINISTRATIVE. General and administrative expense
increased $500,000 or 22.0%, from $2.3 million for the first six months of 1996
to $2.8 million for the first six months of 1997. However, general and
administrative costs decreased significantly as a percentage of sales from 8.4%
for the first six months of 1996 to 6.1% for the first six months of 1997. This
2.3% point decrease was the result of economies of scale resulting from a
greater number of Company-owned restaurants in operation during the six months
ended June 29, 1997 compared to the six months ended June 29, 1996.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) increased
$24,000 or 7.6%, from expense of $313,000 for the first six months of 1996 to
expense of $337,000 for the first six months of 1997. As a percentage of sales,
other income (expense) decreased by 0.3% points from 1.1% for the six months
ended June 30, 1996 to 0.8% for the six months ended June 29, 1997. This
variance was due to a 0.8% point decrease in interest expense as a percentage of
sales which was the result of higher sales volumes from new restaurants with
interest dollars remaining relatively constant.
Liquidity and Capital Resources
- -------------------------------
The Company requires capital principally for the opening of new
restaurants and has financed its requirements through the private placement of
Common Stock and Preferred Stock, an Initial Public Offering, bank loans,
leasing facilities and loans from certain private parties, including present and
former shareholders of the Company.
In June 1997, the Company entered into a leasing agreement for interior
furniture, fixtures and equipment packages located in five Company-owned
restaurants. The proceeds of approximately $1.8 million, net of fees and other
costs will be used for expansion of the Company.
In December 1996, the Company completed an Initial Public Offering of
2,500,000 shares of common stock at $6.00 per share. The proceeds of
approximately $13.2 million, net of underwriting discounts and other costs
incurred in connection with the Initial Public Offering, were used for the
repayment of debt, the acquisition of a 50 percent interest in a former
franchised restaurant, and for expansion of the Company.
The Company's capital expenditures aggregated approximately $8.2
million for the first six months of 1997, substantially all of which were used
to open Roadhouse Grill restaurants. In addition, the Company paid a $400,000
deposit on the purchase of the remaining 50% interest in the Kendall joint
venture. In January 1997, the Company repaid a promissory note in the amount of
$500,000 to SunTrust Bank Miami, N.A.
The Company is currently pursuing several financing options which may
include any or all of the following: monetizing real estate owned by the
Company; negotiating a revolving credit facility; and leasing of interior
furniture, fixtures and equipment packages. However, there can be no assurance
that such debt financing will be available on terms acceptable to the Company,
if at all.
As is common in the restaurant industry, the Company has generally
operated with negative working capital ($ 9.8 million as of June 29, 1997). The
Company does not have significant receivables or inventory and receives trade
credit on its purchases of food and supplies.
Seasonality and Quarterly Results
- ---------------------------------
The Company's sales and earnings fluctuate seasonally. Historically,
the Company's highest earnings have occurred in its first and fourth fiscal
quarters. In addition, quarterly results have been, and in the future are likely
to be, substantially affected by the timing of new restaurant openings. Because
of the seasonality of the Company's business and the impact of new restaurant
openings, results for any quarter are not necessarily indicative of the results
that may be achieved for a full fiscal year.
-11-
<PAGE> 12
Impact of Inflation
- -------------------
The Company does not believe that inflation has materially affected its
results of operations during the past four fiscal years. Substantial increases
in costs and expenses, particularly food, supplies, labor and operating expenses
could have a significant impact on the Company's operating results to the extent
that such increases cannot be passed along to customers.
PART II
Item 1. Legal Proceedings
The Company is involved in various legal actions arising in the normal
course of business. While the resolution of any of such actions may have an
impact on the financial results for the period in which it is resolved, the
Company believes that the ultimate disposition of these matters will not, in the
aggregate, have a material adverse effect upon its business or financial
position.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on June 3, 1997.
The following matters were submitted to votes of the Stockholders:
It was proposed that the six members of the board of directors be
re-elected to serve for a term of one year. Each director was re-elected to
serve for a term of one year. The results of the voting on the foregoing matter
were as follows:
<TABLE>
<CAPTION>
Affirmative Negative Broker
Director Votes Votes Abstentions Non-Votes
- -------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Dr. Christian F. Horn 7,808,410 1,055 -- 1,495,943
Tan Kim Poh 7,808,760 705 -- 1,495,943
Philip Friedman 7,808,760 705 -- 1,495,943
Phillip Ratner 7,808,760 705 -- 1,495,943
Ayman Sabi 7,792,094 17,371 -- 1,495,943
J. David Toole III 7,808,760 705 -- 1,495,943
</TABLE>
It was proposed that the selection of KPMG Peat Marwick, LLP as independent
auditors for the Company for the 1997 fiscal year be ratified. The selection of
KPMG Peat Marwick, LLP as independent auditors for the Company for the 1997
fiscal year was ratified. The results of the voting on the foregoing matter were
as follows:
Affirmative Negative Broker
Votes Votes Abstentions Non-Votes
- ----------- ----------- ----------- ----------
7,803,512 1,605 4,348 1,495,943
It was proposed that the number of shares of the Company's Common Stock
available for issuance under the Amended and Restated 1994 Stock Option Plan be
increased from 216,666 shares to 516,666 shares. The number of shares of the
Company's Common Stock available for issuance under the Amended and Restated
1994 Stock Option Plan was increased from 216,666 to 516,666. The results of the
voting on the foregoing matter were as follows:
Affirmative Negative Broker
Votes Votes Abstentions Non-Votes
- ----------- ----------- ----------- ----------
7,771,811 29,820 3,150 1,500,627
Item 6. Exhibits and Reports on Form 8-K
(a) The Exhibits listed on the accompanying Exhibit Index are filed with or
incorporated by reference in this report.
(b) The Company filed no reports on Form 8-K during the period covered by
this Form 10-Q.
-12-
<PAGE> 13
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 on August 13, 1997, by the undersigned, thereunto duly authorized.
ROADHOUSE GRILL, INC.
(Registrant)
By: /s/ Dennis C. Jones
-----------------------------
Dennis C. Jones, CFO
/s/ Dennis C. Jones Chief Financial Officer, August 13, 1997
- ----------------------- (Principal Financial Officer
Dennis C. Jones and Principal Accounting Officer)
-13-
<PAGE> 14
ROADHOUSE GRILL, INC.
Exhibit Index
Exhibit
Number Description of Exhibit
- ------- ----------------------
3.1 Articles of Incorporation of the Company (incorporated by reference from
the Company's Registration Statement on Form S-1 as filed with the
Securities and Exchange Commission on September 26, 1996, as amended (the
"Registration Statement")).
3.2 Bylaws of the Company (incorporated by reference from the Company's
Registration Statement).
10.1 Employment Agreement by and between the Company and John David Toole III,
dated October 1, 1994 (incorporated by reference from the Company's
Registration Statement).
10.2 Form of the Company's Development Agreement (incorporated by reference
from the Company's Registration Statement).
10.3 Form of the Company's Franchise Agreement (incorporated by reference from
the Company's Registration Statement).
10.4 Intentionally omitted
10.5 Form of the Company's Stock Option Agreement (incorporated by reference
from the Company's Registration Statement).
10.6 Sub-Lease Agreement, dated July 31, 1995, between Equitable Real Estate
Investment, Inc., Compass Management and Leasing, Inc. and the Company,
for property located at 6600 N. Andrews Ave., Ste. 160, Ft. Lauderdale,
Florida 33309 (incorporated by reference from the Company's Registration
Statement).
10.7 Assignment and Assumption Agreement, dated March 15, 1995, between
Roadhouse Waterway, Inc. and Roadhouse Grill Commercial, Inc., for
property located in Ft. Lauderdale, Florida (lease of restaurant
premises) (incorporated by reference from the Company's Registration
Statement).
10.8 Lease Agreement, dated April 26, 1994, between Piccadilly Cafeterias,
Inc. and the Company, for property located in Winter Park, Florida (lease
of restaurant premises) (incorporated by reference from the Company's
Registration Statement).
10.9 Ground Lease, dated May 25, 1995, between Bruno, Inc. and the Company,
for property located in Sandy Springs, Georgia (lease of restaurant
premises) (incorporated by reference from the Company's Registration
Statement).
10.10 Lease, dated April 17, 1995, between Captec Net Lease Realty, Inc. and
New York Roasters, for property located in Cheektowaga, New York (lease
of restaurant premises, assumed by the Company) (incorporated by
reference from the Company's Registration Statement).
10.11 Operating Agreement dated April 28, 1994, of Kendall Roadhouse Grill,
L.C. (incorporated by reference from the Company's Registration
Statement).
10.12 Management Agreement, dated November 8, 1994, between Boca Roadhouse,
Inc. and the Company (incorporated by reference from the Company's
Registration Statement).
10.13 Promissory Note, dated January 15, 1996, made by the Company in favor of
John Y. Brown (incorporated by reference from the Company's Registration
Statement).
10.14 Promissory Note, dated September 27, 1995, made by the Company in favor
of Hal Dickson (incorporated by reference from the Company's Registration
Statement).
10.15 Series A Convertible Preferred Stock Purchase Agreement, dated as of
February 10, 1994, between the Company and several purchasers named in
Schedule I (incorporated by reference from the Company's Registration
Statement).
10.16 Initial Stockholders Agreement, dated February 10, 1994, among the
Company, the several purchasers of the Series A Preferred Shares, and the
initial shareholders of the Company (incorporated by reference from the
Company's Registration Statement).
-14-
<PAGE> 15
10.17 Series B Convertible Preferred Stock Purchase Agreement, dated as of June
8, 1994, between the Company and the several purchasers names in Schedule
I (incorporated by reference from the Company's Registration Statement).
10.18 Stock Purchase Agreement, dated as of September 26, 1994, between the
Company and Berjaya (incorporated by reference from the Company's
Registration Statement).
10.19 1994 Registration Rights Agreement, dated February 10, 1994 (incorporated
by reference from the Company's Registration Statement).
10.20 Amendment to 1994 Registration Rights Agreement, dated June 8, 1994
(incorporated by reference from the Company's Registration Statement).
10.21 Amendment to 1994 Registration Rights Agreement, dated July 26, 1996
(incorporated by reference from the Company's Registration Statement).
10.22 Stock Option Agreement, dated February 10, 1994, between the Company and
J. David Toole III (incorporated by reference from the Company's
Registration Statement).
10.23 Intentionally omitted
10.24 Consulting Agreement, dated August 1992, between Americana
Entertainment Group, Inc. and David Toole, as amended on October 7, 1992
(incorporated by reference from the Company's Registration Statement).
10.25 Investment Agreement, dated July 30, 1995, between Berjaya and John Y.
Brown (incorporated by reference from the Company's Registration
Statement).
10.26 Investment Agreement, dated January 15, 1996, between Berjaya and the
Company (incorporated by reference from the Company's Registration
Statement).
10.27 Assignment and Assumption Agreement, dated February 10, 1994, by and
between John Y Brown, Jr. and the Company (incorporated by reference from
the Company's Registration Statement).
10.28 Purchase and Sale Agreement, dated August 30, 1996, between Roadwear,
Inc. and the Company, relating to the Kendall restaurant (incorporated by
reference from the Company's Registration Statement).
10.29 Intentionally omitted
10.30 Promissory Note, dated August 16, 1996, made by the Company in favor of
Berjaya (incorporated by reference from the Company's Registration
Statement).
10.31 Master Development Agreement, dated January 5, 1996, between the Company
and Roadhouse Grill Asia (incorporated by reference from the Company's
Registration Statement).
10.32 Lease Transfer and Assumption Agreement for equipment used in New York
Roadhouse Grill restaurant, dated March 29, 1995, assumed by the Company
(incorporated by reference from the Company's Registration Statement).
10.33 Promissory Note, dated September 5, 1996 made by the Company in favor of
John Y. Brown, Jr. (incorporated by reference from the Company's
Registration Statement).
10.34 Security Agreement, dated July 12, 1996 made by the Company and John Y.
Brown, Jr. (incorporated by reference from the Company's Registration
Statement).
10.35 Promissory Note, dated September 27, 1996 made by the Company in favor of
Berjaya (incorporated by reference from the Company's Registration
Statement).
10.36 Promissory Note dated September 27, 1996 made by the Company in favor of
SunTrust Bank, Miami, N.A. (incorporated by reference from the Company's
Registration Statement).
10.37 Amended and Restated 1994 Stock Option Plan (incorporated by reference
from the Company's Registration Statement).
10.38 Stock Purchase Agreement dated May 26, 1995 between the Company and the
several purchasers named in Schedule I (incorporated by reference from
the Company's Registration Statement).
10.39 Investment Agreement, dated October 25, 1995 between Berjaya and the
Company (incorporated by reference from the Company's Registration
Statement).
-15-
<PAGE> 16
10.40 Employment Agreement between the Company and J. David Toole III, dated
October 24, 1996 (incorporated by reference from the Company's
Registration Statement).
10.41 Stock Option Agreement between the Company and J. David Toole III, dated
October 24, 1996 (incorporated by reference from the Company's
Registration Statement).
10.42 Master Lease Agreement between the Company and Pacific Financial Company,
dated June 2, 1997.
27 Financial Data Schedule.
-16-
<PAGE> 1
Exhibit 10.42
LEASE NO. RG0697
------
MASTER LEASE AGREEMENT
----------------------
This agreement (the "Agreement") is made this 2nd day of June, 1997,
between Pacific Financial Company, with an office at 420 E. South Temple, Suite
240, Salt Lake City, UT 84111, (the "Lessor"), and Roadhouse Grill, Inc., with
its principal office located at 6600 N. Andrews Ave., #160, Ft. Lauderdale, FL
33309 (the "Lessee").
1. LEASE:
Lessor agrees to lease to Lessee, and Lessee agrees to lease from
Lessor, the equipment ("Equipment") described in any Equipment Schedule
executed and delivered by Lessor and Lessee in connection with the Agreement.
The terms and conditions contained herein and in each Equipment Schedule shall
govern the leasing and use of the Equipment. In the event of conflict between
the provisions of this Agreement and any Equipment Schedule, the provisions of
the Equipment Schedule shall govern. Each Equipment Schedule shall constitute a
separate lease.
2. ADDITIONAL DEFINITIONS:
a. "Acceptance Date" means, as to the Equipment designated on any
Equipment Schedule, the earliest to occur of: (a) the date specified as the
Acceptance Date in the applicable Equipment Schedule; (b) the date Lessee
accepts the Equipment as set forth in any certificate of acceptance or delivery
signed by the Lessee (the "Acceptance Certificate"); or, (c) the date which is
determined by the manufacturer or vendor of the Equipment to be the date of
installation of such Equipment.
b. "Commencement Date" means, as to the Equipment designated on any
Equipment Schedule, the first day of the calendar quarter following the
Acceptance Date.
3. TERMS OF LEASE:
The Initial Lease Term and the Rent payable with respect to each Leased
Item shall be as set forth in and as stated in the respective Equipment
Schedule(s). Lessee may a) exercise an Early Purchase Option, if applicable; or
b) terminate any Equipment Schedule effective at the expiration of the Initial
Lease Term or any renewal term thereof; by giving the Lessor at least 180 days
but no more than 240 days prior written notice. If said written notice is not
received by Lessor within the specified period, then a) the Lease shall
continue until the end of the Initial Lease Term; or b) the Initial Lease Term
shall be automatically extended for an additional period of one year on the
same terms provided for during the Initial Lease Term. No notice of intent to
exercise an Early Purchase Option or termination may be revoked without prior
written consent of the Lessor.
4. RENT AND PAYMENT:
As to any Equipment leased hereunder, the "Monthly Rental" payable by
Lessee to Lessor shall be as set forth in the applicable Equipment Schedule.
The Monthly Rental shall begin on the Acceptance Date and shall be due and
payable by Lessee in advance on the first day of each month throughout the
Initial Period and any Automatic Renewal Period. If the Acceptance Date does
not fall on the first day of the month, then the first rental payment shall be
a pro rata portion of the Monthly Rental, calculated on a 30-day basis for the
period between the Acceptance Date and the Commencement Date, and shall be due
and payable on the Acceptance Date. Lessee shall pay all Monthly Rental
to Lessor, its successors or assigns, at Lessor's address set forth above (or
as otherwise directed in writing by Lessor, its successors, or assigns),
whether or not Lessee has received any notice that such payment is due. LESSEE
SHALL NOT ABATE, SET OFF, OR DEDUCT ANY AMOUNT OR DAMAGES FROM OR REDUCE ANY
MONTHLY RENTAL FOR ANY REASON WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, ITS
SUCCESSORS, OR ASSIGNS.
Late charges on any payments, taxes, or other charges due hereunder and
not received within ten (10) days of the due date shall accrue at the rate of
10% of the payment amount due per month (or if such rate shall exceed the
maximum rate allowed by law, then at the highest rate that is permitted to be
charged on liquidated amounts after judgment) beginning with the date that such
amount was due and continuing until the amount is paid. If late charges are
assessed by a lending institution due to any late payment, Lessee agrees to pay
such late charges or to reimburse Lessor for their payments. Lessee agrees to
make payment for any late charges promptly upon demand by Lessor.
5. TAXES
Lessee shall pay to Lessor an amount equal to all taxes paid, payable
or required to be collected by Lessor, however designated, which are levied or
based on the Monthly Rental or on the possession, use, operation, lease,
rental, sale, purchase, control or value of the Equipment,
1
<PAGE> 2
including without limitation, registration and license fees and assessments,
state and local privilege or excise taxes, sales and use taxes, personal and
other property taxes, and taxes or charges based on gross revenue, but
excluding taxes based on Lessor's net income. Lessor shall invoice Lessee for
all such taxes in advance of their payment due date, and Lessee shall promptly
remit to Lessor all such taxes and charges upon receipt of such invoice from
Lessor. Lessee shall pay all penalties and interest resulting from its failure
to timely remit such taxes to Lessor when invoiced by Lessor. Lessor shall file
all required sales and use tax and personal property tax returns and reports
concerning the Equipment with all applicable governmental agencies.
6. USE; ALTERATIONS AND ATTACHMENTS:
a. After Lessee receives and inspects any Equipment and is satisfied
that the Equipment is satisfactory, Lessee shall execute and deliver to Lessor
an Acceptance Certificate in a form provided by Lessor; provided, however, that
Lessee's failure to execute and deliver an Acceptance Certificate for any
Equipment shall not affect the validity of this Agreement with respect to the
Equipment.
b. Lessee shall be entitled to unlimited usage of the Equipment during
the Initial Period, the Automatic Renewal Periods and any extension or renewal
periods approved by Lessor in writing.
c. Lessee shall at all times keep the Equipment in its sole possession
and control. The Equipment shall not be moved from the location stated in the
Equipment Schedule without the prior written consent of the Lessor.
d. Lessee shall cause the Equipment to be installed, used, operated
and, at the termination of the Agreement as to each Equipment Schedule, removed
(i) in accordance with any applicable manufacturer's manuals or instructions;
(ii) by competent and duly qualified personnel only; and, (iii) in accordance
with applicable governmental regulations, if any.
e. Lessee may not make alterations in or add attachments to the
Equipment without first obtaining the written consent of the Lessor. Any such
alterations or attachments shall be made at Lessee's expense and shall not
interfere with the normal and satisfactory operation or maintenance of the
Equipment. The manufacturer may incorporate engineering changes or make
temporary alterations to the Equipment upon request of the Lessee. Unless
Lessor shall otherwise agree in writing, all such alterations and attachments
shall be and become the property of the Lessor or, at the option of the Lessor,
shall be removed by the Lessee at the termination of this Agreement as to such
Equipment and the Equipment restored at Lessee's expense to its original
condition, reasonable wear and tear only excepted.
f. Lessee acknowledges that the Equipment is and shall remain personal
property during the term of this Agreement. Lessee shall not permit the
Equipment to become an accession to other goods or a fixture to, or part of,
any real property.
g. Lessee shall comply with all applicable laws, regulations and
orders relating to the Equipment and this Agreement.
h. The Equipment is leased solely for commercial or business purposes.
7. MAINTENANCE AND REPAIRS; RETURN OF EQUIPMENT:
a. During the continuance of this Agreement and at its expense, Lessee
(i) shall keep the Equipment in good repair, working order and condition; (ii)
shall make all necessary adjustments, repairs and replacements; (iii) shall
furnish all required parts, mechanisms, devices, and servicing; and, (iv) shall
not use or permit the Equipment to be used for any purpose for which, in the
opinion of the manufacturer, the Equipment is not designed or suitable. Such
parts, mechanisms, and devices shall immediately become part of the Equipment
for all purposes hereunder.
b. During the continuance of this Agreement and at its own expense,
Lessee shall enter into and maintain in force a contract with the manufacturer
or other qualified maintenance organization for maintenance of each item of
Equipment. Such contract as to each item shall commence upon expiration of the
manufacturer's warranty period, if any, relating to such item. Lessee shall
furnish Lessor with a copy of such contract upon demand.
c. At the termination of the Agreement and at its expense, Lessee shall
return the Equipment to Lessor at the location within the Continental United
States designated by Lessor. Upon such return, the Equipment shall be in the
same operating order, repair, condition, and appearance as on the Acceptance
Date, excepting reasonable wear and tear from proper use thereof, including all
engineering changes theretofore prescribed by the manufacturer. If the
Equipment or its component parts were packed or crated for shipping when new,
Lessee shall pack or crate the same carefully and in accordance with any
recommendations of the Supplier or manufacturer before redelivering the item to
Lessor. Lessee shall also deliver to Lessor the plans, specifications,
operating manuals, software documentation, discs, warranties and other
documents furnished by the manufacturer or supplier of the Equipment and such
other documents in Lessee's possession relating to the maintenance and method
of operation of such Equipment. Lessee shall return and convey to Lessor at no
cost to Lessor all upgrades and/or enhancements made to the equipment that is
inherent to the functioning of the Equipment. Lessee shall provide maintenance
qualification
2
<PAGE> 3
letters and/or arrange for and pay the cost of repairs which are necessary for
the manufacturer or qualified maintenance organization to accept the Equipment
under contract maintenance at its then standard rates. At Lessor's written
request, Lessee shall provide free storage for any item of Equipment for a
period not to exceed sixty (60) days after the expiration of the Agreement
before returning such item to Lessor and permit Lessor access to the Equipment
for inspection and/or resale. If Lessee shall fail to return any item of
Equipment as provided herein, Lessee shall be responsible for all cost and
expense incurred by Lessor in returning the Equipment to such required condition
or and reduction in value as a result thereof.
8. OWNERSHIP AND INSPECTION:
a. The Equipment shall at all times remain the property of Lessor or its
assigns. By this Agreement, Lessee acquires no ownership rights in the
Equipment. Lessor may affix (or require Lessee to affix) tags, decals, or
plates to the Equipment indicating Lessor's ownership, and Lessee shall not
permit their removal or concealment.
b. LESSEE SHALL KEEP THE EQUIPMENT AND LESSEE'S INTEREST UNDER THIS
AGREEMENT FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES, EXCEPT THOSE PERMITTED
BY LESSOR OR ITS ASSIGNS.
c. Lessor, its assigns and their agents shall have free access to the
Equipment at all reasonable times during normal business hours for the purpose
of inspecting the Equipment and for any other purpose contemplated in this
Agreement.
d. Lessee shall immediately notify Lessor in writing of all details
concerning any damage or loss to the Equipment arising from the alleged or
apparent improper manufacture, functioning, or operation of the Equipment.
9. WARRANTIES:
a. LESSEE ACKNOWLEDGES THAT LESSOR HAS NOT MADE ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT,
INCLUDING, WITHOUT LIMITATION, WARRANTIES RELATING TO ANY OF THE FOLLOWING: (i)
THE DESCRIPTION, CONDITION, DESIGN, QUALITY OR PERFORMANCE OF THE EQUIPMENT;
(ii) ITS MERCHANTABILITY OR FITNESS OR SUITABILITY FOR PARTICULAR PURPOSE
WHETHER OR NOT DISCLOSED TO LESSOR; AND, (iii) DELIVERY OF THE EQUIPMENT FREE
OF THE RIGHTFUL CLAIM OF ANY PERSON BY WAY OF INFRINGEMENT OR THE LIKE. LESSOR
EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES. LESSOR SHALL HAVE NO LIABILITY TO
LESSEE FOR ANY CLAIM, LOSS, OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER,
INCLUDING SPECIAL OR CONSEQUENTIAL DAMAGES.
b. Lessor hereby assigns to Lessee all assignable warranties on the
Equipment, as described in Lessor's purchase contract, which assignment shall
be effective only (i) during the Initial Period and any Automatic Renewal
Periods, and, (ii) so long as no uncured Event of Default exists.
10. NET LEASE; LESSEE'S OBLIGATIONS ABSOLUTE AND UNCONDITIONAL:
This Agreement is a "net lease" and, as between Lessor and Lessee,
Lessee shall be responsible for all costs, expenses and claims of every nature
whatsoever arising out of or in connection with or related to this Agreement or
the Equipment (such as, but not limited to, transportation in and out, packing,
installation, deinstallation, shipping and other such charges).
Lessee agrees that its Monthly Rental and other obligations hereunder
shall be irrevocable, independent, absolute, and unconditional and shall not be
subject to any abatement, reduction, recoupment, defense, offset or
counterclaim otherwise available to Lessee against Lessor, nor, except as
otherwise expressly provided herein or as agreed to by Lessor in writing, shall
this Agreement terminate for any reason whatsoever prior to the end of the
Initial Period.
11. ASSIGNMENT:
a. Lessee shall not assign any of its rights or obligations under this
Master Lease or any Equipment Schedule or any interest therein, or sublease any
Equipment, or part with possession of any Equipment, without the prior written
consent of Lessor (and the Assignee to any Equipment Schedule which has been
assigned by Lessor).
b. Lessor may sell and assign its rights and interests in any Equipment
and in any Equipment Schedule hereunder, to another party ("Lessor's Assignee")
either outright or as collateral security for loans. Upon notice of any such
assignment and instructions from Lessor, Lessee shall pay its Monthly Rental
and perform its other obligations hereunder to the Lessor's Assignee (or to
another party designated by Lessor's Assignee). Upon any such sale or
assignment, LESSEE'S OBLIGATIONS TO LESSOR'S ASSIGNEE UNDER THE ASSIGNED
3
<PAGE> 4
EQUIPMENT SCHEDULE SHALL BE ABSOLUTE AND UNCONDITIONAL AND LESSEE WILL NOT
ASSERT AGAINST LESSOR'S ASSIGNEE ANY CLAIM, DEFENSE OR COUNTERCLAIMS WHICH
LESSEE MIGHT HAVE AGAINST LESSOR. Lessor's Assignee shall have all of the
rights but none of the obligations of Lessor under this Agreement.
Notwithstanding any assignment by Lessor, Lessor's Assignee shall not be deemed
to have assumed or to be obligated to perform any of the obligations of
Lessor.
In connection with any assignment by Lessor of its interest in the
Equipment of this Agreement, Lessee acknowledges that the assignment will not
materially change the duty of or materially increase the burden or risk imposed
on Lessee; and Lessee waives its rights, if any, to demand Lessor's Assignee to
comply with the provisions of Utah Uniform Commercial Code-Leases, Section
70A-2a-303(2) (as it now exists or hereafter modified) dealing with adequate
assurance and assumption requirements, among other things.
Upon any such assignment, Lessee agrees to execute (i) any document
reasonably requested by Lessor acknowledging such assignment and affirming to
Lessor's Assignee basic provisions of this Agreement and the Equipment Schedule,
and (ii) UCC-1 precautionary filings reasonably requested.
Only one executed counterpart of any Equipment Schedule shall be
marked "Original"; any other executed counterparts shall be marked "Duplicate
Original" or "Counterpart". No security interest in any Equipment Schedule may
be created through the transfer and possession of any counterpart other than
the "Original".
12. RISK OF LOSS ON LESSEE:
From and after the date the Equipment is delivered to Lessee and until
the Equipment is returned to Lessor as provided in the Agreement, Lessee shall
bear all risk of loss, damage, theft, or destruction to the Equipment,
howsoever caused. If any item of Equipment is rendered unusable as a result of
any physical damage to or destruction of the Equipment or if any item of
Equipment is lost or stolen, then:
a. Lessee shall give Lessor immediate notice thereof, and this
Agreement as to such item shall continue in full force and effect without any
abatement of any Monthly Rental. Lessee shall determine and notify Lessor,
within fifteen (15) days after the date of occurrence of such damage or
destruction, whether such item of Equipment can be repaired.
b. If Lessee determines that such item of Equipment can be repaired,
Lessee shall cause such item of Equipment to be promptly repaired.
c. If Lessee determines that the item of Equipment cannot be repaired
or if the item of Equipment is lost or stolen, then at Lessor's option, Lessee
shall either (i) at its expense promptly replace such item of Equipment with
like equipment having a comparable or greater value and convey title to such
replacement to Lessor free and clear of all liens and encumbrances, whereupon
this Lease shall continue in full force and effect as though such loss, damage,
theft, or destruction had not occurred; or (ii) pay Lessor an amount equal to
the Casualty Loss Value of the item of Equipment determined under any Casualty
Loss Schedule attached to the Equipment Schedule, or if none is attached, then
an amount equal to the replacement cost of such item of Equipment.
All proceeds of insurance received by Lessor or Lessee under any
insurance policy shall be applied toward the cost of any such repair of
replacement.
13. INSURANCE:
During the continuance of this Agreement as to each Equipment Schedule,
Lessee, at its expense, shall keep in effect (i) an all risk casualty insurance
policy covering the Equipment designated in such Equipment Schedule that
includes, without limitation, coverage against extended coverage risks,
vandalism, theft, and malicious mischief, for amounts not less than the
casualty loss Value of the item of Equipment determined under any Casualty Loss
Schedule attached to the Equipment Schedule, or if none is attached, then for
amounts not less than the replacement cost of each item of Equipment, with
Lessor and its assigns designated as insured and loss payees under such policy;
and (ii) a comprehensive general liability policy in amounts acceptable to
Lessor and that designates Lessor and its assigns as co-insured. All such
insurance policies shall be with licensed insurance companies acceptable to
Lessor, shall prohibit cancellation or modification thereof without at least
thirty (30) days prior written notice to Lessor; shall be evidenced whether by
certificates of insurance or other written evidence acceptable by Lessor; and
shall provide that as to Lessor, its successors, and assigns, the insurance
shall not be invalidated by any act, omission, or neglect of Lessee. Lessee
shall be responsible for paying any deductibles on such policies.
14. INDEMNIFICATION:
Except for the gross negligence or willful misconduct of Lessor or as
otherwise provided herein, Lessee shall indemnify Lessor against and hold
Lessor harmless of and from any and all claims (including without limitation,
claims involving strict or absolute liability), actions, suits, proceedings,
costs, expenses (including a reasonable attorney's fee incurred by Lessor either
in enforcing this indemnity or in defending against
4
<PAGE> 5
such claims), damages and liabilities at law or in equity, arising out of,
connected with or resulting from this Agreement or the Equipment (including
without limitation the delivery, possession, use, operation, condition, lease,
return, storage, or disposition thereof). For purposes of this paragraph, the
term "Lessor" shall include Lessor, its successors and assigns, shareholder,
directors, officers, representatives and agents, and the provisions of this
paragraph shall survive expiration of the Agreement with respect to events
occurring prior thereto.
15. EVENTS OF DEFAULT:
The occurrence of any one or more of the following events (each an
"Event of Default") shall constitute a default under this Agreement:
a. Lessee fails to pay any Monthly Rental when the same becomes due and
such failure shall continue uncured for ten (10) days after written notice
thereof is given to Lessee;
b. Except as expressly provided herein, Lessee attempts to, or does,
remove, sell, assign, transfer, encumber, sublet, or part with possession of
any one or more items of the Equipment, or any interest under this Agreement,
except as expressly permitted herein.
c. Through the act or omission of Lessee, any item of Equipment is
subject to any levy, seizure, attachment, assignment, or execution; or Lessee
abandons any item of Equipment.
d. Lessee fails to observe or perform any of the other obligations
required to be observed or performed by Lessee thereunder and such failure
shall continue uncured for ten (10) days after written notice thereof is given
to Lessee.
e. Lessee's representations and warranties made in this Agreement or in
connection herewith shall be false or misleading in any material respect.
f. Lessee makes an assignment for the benefit of creditors, is
insolvent, admits in writing its inability to pay its financial obligations as
they become due, files a voluntary petition in bankruptcy, is adjudicated a
bankrupt or an insolvent, files a petition seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar arrangement under any present or future statute, law or
regulation or files an answer admitting the material allegation of a petition
filed against it in any such proceeding, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of it or of all or any
substantial part of its assets or properties, or if it or its shareholders
shall take any action looking to its dissolution or liquidation. Lessee ceases
to exist or terminates its independent operations by reason of any
discontinuance, dissolution, liquidation, merger, sale of substantially all of
its assets, or otherwise ceases doing business as a going concern.
g. Within thirty (30) days after the commencement of any proceedings
against Lessee seeking reorganization, arrangement, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, such proceedings shall not have been dismissed, or if within thirty
(30) days after the appointment without Lessee's consent or acquiescence of any
trustee, receiver, or liquidator of it or of all or any substantial part of its
assets and properties, such appointment shall not be vacated.
h. Lessee defaults under any promissory note, credit agreement, loan
agreement, conditional sales contract, guaranty, lease, indenture, bond,
debenture or other material obligation whatsoever, and a party thereto or a
holder thereof is entitled to accelerate the obligations of Lessee thereunder,
or Lessee defaults in meeting any of its trade, tax or other current
obligations as they mature, unless such obligations are being contested
diligently and in good faith.
16. REMEDIES:
Upon the occurrence of any Event of Default, Lessor shall have the
option, with or without giving notice to Lessee, to do any one or more of the
following:
a. Lessor may enforce this Agreement according to its terms;
b. Lessor may advance funds on Lessee's behalf to cure the Event of
Default, whereupon Lessee shall immediately reimburse Lessor therefor, together
with late charges accrued thereon.
c. Lessor may refuse to deliver the Equipment to Lessee;
d. By notice to Lessee, Lessor may terminate this Agreement as to any
or all Equipment Schedules;
e. Lessee shall remain fully liable for and shall pay Lessor for (i)
all sums due and payable under the Equipment Schedule for all periods up to and
including the date on which Lessor has declared this Agreement to be in
default; (ii) all costs and expenses incurred by
5
<PAGE> 6
Lessor on account of such default, including, but not limited to, all court
costs and reasonable attorney's fees; and, (iii) all reasonable damages as
provided by law (collectively "Lessor's Damages").
f. Whether or not this Lease is terminated as to any or all Equipment
Schedules, Lessor may (i) take possession of any or all of the Equipment listed
on any or all Equipment Schedules, wherever situated and for such purpose,
Lessor may enter upon any Lessee's premises without any court order and without
liability for so doing (Lessee hereby waives any action for trespass or damages
by reason of such entry or taking possession); (ii) cause Lessee (and Lessee
hereby agrees) to assemble the Equipment and either make it available to Lessor
at a place designated by Lessor or return it to Lessor as provided in this
Agreement.
g. Lessor may sue for and recover all rents and other payments that
accrue after the occurrence of the Event of Default, as the same become due.
h. Lessor may recover from Lessee, as liquidated damages ("Liquidated
Damages") for loss of a bargain and not as a penalty, an amount equal to the
present value of all future Monthly Rentals to be paid by Lessee during the
remainder of the Initial Period or any Automatic Renewal Period then in effect
discounted at the rate of six percent (6%) per annum, which payment shall
become immediately due and payable.
i. Lessor may sell, dispose of, hold, use, or lease any Equipment as
Lessor in its sole discretion may determine without any duty, except as
provided below, to account to Lessee. Lessor may purchase at any such sale, and
Lessor shall not be obligated to give preference to the sale, lease, or other
disposition of the Equipment over the sale, lease, or other disposition of
similar equipment owned or leased by or through Lessor.
If Lessee shall have paid to Lessor all of the Liquidated Damages, then
Lessor shall pay to Lessee, promptly after receipt thereof, all rentals or
proceeds received from (a) the reletting of the Equipment during the remainder
of the Initial Period or the Automatic Renewal Period then in effect (after
deduction of an amount equal to all Lessor's Damages); or (b) any sale of the
Equipment occurring during the remainder of the Initial Period or Automatic
Renewal Period then in effect less an amount equal to the estimated fair market
value of the Equipment at the end of the Initial Period or Automatic Renewal
Period then in effect (after deduction of an amount equal to all Lessor's
Damages), said amount never to exceed the amount of the Liquidated Damages paid
by Lessee. Any remaining amounts from reletting or sale shall be retained by
Lessor.
Lessor may exercise any and all rights and remedies available at law or
in equity, including those available under the Uniform Commercial Code
(including the section thereof dealing with Leases) as enacted in Utah or in
any state in which the Equipment is located; or other applicable law.
The right and remedies afforded the Lessor hereunder shall not be
deemed to be exclusive, but shall be in addition to any rights or remedies
provided by law. Lessor's failure to promptly enforce any right hereunder shall
not operate as waiver of such right, and Lessor's waiver of any default shall
not constitute a waiver of any subsequent or other default. Lessor may accept
late payments or partial payments of amount due under this Agreement and may
delay enforcing any of Lessor's rights hereunder without losing or waiving any
of Lessor's rights under this Agreement.
17. TAX INDEMNITY:
This Agreement is entered into on the basis that: (i) Lessor shall be
the owner of the Equipment for federal and state income tax purposes and
entitled to such deductions, credits, and other benefits as are provided an
owner of personal property, including but not limited to the maximum Modified
Accelerated Cost Recovery System deductions ("depreciation") for the MACRS
Property Class life under the Internal Revenue Code of 1986 ("Code"); and
interest paid or accrued with respect to any loan made to or assumed by Lessor
or its assigns to finance the purchase of the Equipment (collectively referred
to herein as the "Tax Benefits").
If, with respect to any item of Equipment, Lessor or its assigns shall
not have or shall lose the right to claim all or any portion of the Tax
Benefits or if all or any portion of the Tax Benefits shall be disallowed or
recaptured (hereinafter referred to as "Tax Benefit Loss") due to the acts or
omission of Lessee, then the following provisions shall be applicable:
a. Subject to the exceptions set forth below, Lessee shall, within
thirty (30) days after written notice from Lessor that a Tax Benefit Loss has
occurred, pay to Lessor at Lessor's option, either a lump-sum payment or an
increase to the remaining monthly payments due under the Equipment Schedule in
an amount which, after taking into account the effects of interest, penalties,
and additional taxes payable by Lessor as a result of the Tax Benefit Loss and
the receipt of payment hereunder, will cause Lessor's net effective after-tax
return over the term of the Equipment Schedule to equal the net effective
after-tax return which would have been available if Lessor had been entitled to
the utilization of all Tax Benefits.
6
<PAGE> 7
b. For purposes hereof a Tax Benefit Loss shall occur upon the earliest
of (i) the payment by Lessor to the Internal Revenue Service or the applicable
state revenue office of the tax increase resulting from such Tax Benefit Loss,
or (ii) the adjustment of the tax return of the Lessor to reflect such Tax
Benefit Loss.
c. Notwithstanding the foregoing, Lessor shall not be entitled to a
payment hereunder on account of any Tax Benefit Loss directly attributable to
any other following: (i) any act on the part of the Lessor which causes a Tax
Benefit Loss; (ii) the failure of Lessor to have sufficient taxable income or
tax liability to utilize such Tax Benefits; or, (iii) the happening of any other
event with respect to Lessor (such as disqualifying change in Lessor's business
or characterization of Lessor as a personal holding company) which causes a Tax
Benefit Loss.
d. This Section is expressly made for the benefit of, and shall be
enforceable by Lessor, any person, firm corporation, or other entity to which
Lessor transfers title to all or a portion of the Equipment and their successors
and assigns (collectively, the "Owner"). For the purpose hereof, the term
"Owner" shall include an affiliated group (within the meaning of the Code) of
which a person or entity is a member for any year in which a consolidated income
tax return is filed for such affiliated group. Lessee shall indemnify and hold
harmless any such Owner from any Tax Benefit Loss on the same terms and to the
same extent as it would have indemnified Lessor and held Lessor harmless as if
said Owner were the Lessor hereunder. All of Lessor's rights and privileges
arising from the indemnities contained herein shall survive the expiration or
other termination of this Lease.
18. COVENANT OF QUIET POSSESSION:
Lessor agrees that so long as no Event of Default has occurred and is
continuing, Lessee shall be entitled to quietly possess the Equipment subject to
and in accordance with the terms and conditions of this Agreement.
19. GENERAL:
a. INTEGRATION: All schedules or riders to this Agreement, Equipment
Schedules executed hereunder, schedules or riders attached to Equipment
Schedules, other documents referred to in Equipment Schedules, and Acceptance
Certificates, whether they are signed before, on, or after the date of this
Agreement, are incorporated into this Agreement by this reference. Such
documents appertaining to any Equipment Schedule and this Agreement constitute
the entire agreement between the parties with respect to the items of Equipment
listed on such Equipment Schedule.
b. MODIFICATION: This Agreement may not be amended or modified except
by writing, signed by a duly authorized representative of each party, but no
such amendment or modification needs further consideration to be binding.
Notwithstanding the foregoing, Lessee authorizes Lessor to amend any Equipment
Schedule to identify more accurately the Equipment (including without
limitation, supplying serial numbers or other identifying data), and such
amendment shall be binding on Lessor and Lessee unless Lessee objects thereto
within fifteen (15) days after receiving notice of the amendment from Lessor.
c. INTERPRETATION: The provisions of this Agreement shall be deemed to
be independent and severable. The invalidity or partial invalidity of any one
provision or portion of this Agreement under the laws of any jurisdiction shall
not affect the validity or enforceability of any other provision of this
Agreement. The captions and headings set forth herein are for convenience of
reference only and shall not define or limit any of the terms hereof.
d. NOTICES: Notices hereunder shall be in writing and addressed to the
other party at the address herein or such other address provided by notice
hereunder and shall be effective: (i) upon the next business day, if sent by
guaranteed overnight express service (such as Federal Express); (ii) on the same
day, if personally delivered; or (iii) three (3) days after mailing if sent by
certified or registered U.S. Mail, postage prepaid and addressed to the other
party.
e. GOVERNING LAW: This Lease shall be governed by and shall be
interpreted pursuant to the laws of the State of Utah.
LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY,
THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR
(OR ANY ASSIGNEE OF LESSOR) RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION
OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED
BETWEEN LESSEE AND LESSOR (OR ITS ASSIGNEE). THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS
IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND
THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT
OF LITIGATION, THIS LEASE MAY
7
<PAGE> 8
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
f. BINDING EFFECT: The provision of this Agreement shall inure to the
benefit of and shall bind Lessor and Lessee and their respective permitted
successors and assigns.
g. FINANCING STATEMENTS: Lessee shall sign and deliver to Lessor one or
more financing statements, supplements thereto, and other instruments in order
to establish, perfect, extend, and/or enforce the parties' interest in the
Equipment and under this Agreement. Lessee shall pay all costs of filing such
statements. A photocopy of this Agreement shall be sufficient as, and may be
filed as, an original financing statement. If Lessee defaults hereunder, then
Lessor shall automatically be constituted as Lessee's attorney-in-fact for the
purpose of carrying out the provision of this paragraph.
h. OPINION OF COUNSEL: Upon request, Lessee shall provide to Lessor an
opinion of its counsel as to Lessee's legal standing, the authorization and
execution of this Agreement and other documents, the enforceability of its
Agreement against Lessee, and other matters reasonably requested.
i. AUDITED FINANCIAL STATEMENTS: Upon request, Lessee shall provide to
Lessor a copy of its annual audited financial statements and any quarterly
financial statements whether audited or unaudited.
j. PROVISIONAL SECURITY INTEREST: In the event a court of competent
jurisdiction or their governing authority shall determine that this Agreement is
not a "true lease" or that Lessor (or its assigns) does not hold legal title to
or is not the Owner of the Equipment, then this Agreement shall be deemed to be
a security agreement with Lessee, as debtor, having granted to Lessor, as
secured party, a security interest in the Equipment effective the date of this
Agreement; and Lessor shall have all of the rights, privileges, and remedies of
a secured party under the Utah Uniform Commercial Code.
k. As to new Equipment, Lessee acknowledges that Lessee ordered the
Equipment from the supplier thereof, and either (a) Lessee received a copy of
the contract by which Lessor acquired the Equipment, or (b) Lessor has informed
Lessee in writing of (i) the identity of the supplier, (ii) that Lessee may have
rights under said contract and may be entitled, under the version of Uniform
Commercial Code Article 2A ("UCC2A") as in effect in the state specified in
Section 11, to the benefit of warranties provided to Lessor by said supplier,
and (iii) that Lessee may and should contact the supplier to receive an accurate
and complete description of such rights including any disclaimers or limitations
on them or of the remedies thereunder. Lessee makes this acknowledgment so that
each such Schedule shall qualify as and be a "finance lease" under UCC2A.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Agreement on
the day and year first above written.
LESSOR: Pacific Financial Company
by Amembal Capital Corporation,
General Partner
By: /s/ Loni Lowder
--------------------------------
Title: COO
--------------------------------
LESSEE: Roadhouse Grill, Inc.
By: /s/ Dennis Jones
--------------------------------
Title: Chief Financial Officer
--------------------------------
8
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> DEC-30-1996
<PERIOD-END> JUN-29-1997
<CASH> 2,662,449
<SECURITIES> 0
<RECEIVABLES> 511,268
<ALLOWANCES> 0
<INVENTORY> 833,885
<CURRENT-ASSETS> 5,834,014
<PP&E> 60,086,310
<DEPRECIATION> 0
<TOTAL-ASSETS> 71,412,358
<CURRENT-LIABILITIES> 15,647,779
<BONDS> 6,690,416
0
0
<COMMON> 279,162
<OTHER-SE> 43,067,738
<TOTAL-LIABILITY-AND-EQUITY> 71,412,358
<SALES> 0
<TOTAL-REVENUES> 22,960,818
<CGS> 19,127,591
<TOTAL-COSTS> 21,796,199
<OTHER-EXPENSES> 178,438
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 290,635
<INCOME-PRETAX> 986,181
<INCOME-TAX> 36,500
<INCOME-CONTINUING> 949,681
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 949,681
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
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