UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-------------------------
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended Commission file number
March 23, 1999 000-22753
TOTAL ENTERTAINMENT RESTAURANT CORP.
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-2016614
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
9300 East Central Avenue
Suite 100
Wichita, Kansas 67206
(Address of principal executive offices) (Zip code)
(316) 634-0505
(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 7, 1999
Common Stock, $.01 par value 10,415,000 shares
<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Index
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
March 23, 1999 and December 29, 1998 2
Condensed Consolidated Statements of
Operations for the twelve weeks ended
March 23, 1999 and March 24, 1998 3
Condensed Consolidated Statements of
Cash Flows for the twelve weeks ended
March 23, 1999 and March 24, 1998 4
Notes to Condensed Consolidated
Financial Statements 5
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 6
Item 3. Quantitative and Qualitative
Disclosures About Market Risk 11
PART II. OTHER INFORMATION
Item 2. Changes in Securities 11
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
<TABLE>
<CAPTION>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Condensed Consolidated Balance Sheets
(Unaudited)
March 23, 1999 December 29, 1998
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,417,189 $ 945,861
Inventories 1,033,108 854,686
Pre-opening costs - net -- 1,789,740
Other current assets 619,324 769,155
----------- -----------
Total current assets 4,069,621 4,359,442
Property and equipment:
Land 600,000 600,000
Buildings 655,795 655,795
Leasehold improvements 21,026,003 19,175,677
Equipment 12,959,919 11,922,806
Furniture and fixtures 3,078,261 2,633,742
----------- -----------
38,319,978 34,988,020
Less accumulated depreciation and amortization 3,636,217 2,830,656
----------- -----------
34,683,761 32,157,364
Other assets:
Goodwill, net of accumulated depreciation 4,337,276 4,393,621
Deferred taxes 234,667 --
Other assets 378,076 374,007
----------- -----------
Total other assets 4,950,019 4,767,628
----------- -----------
Total assets $43,703,401 $41,284,434
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,867,140 $ 3,666,310
Accounts payable - affiliates 11,451 11,451
Accrued payroll 592,019 465,519
Accrued income taxes 845,256 358,583
Other accrued liabilities 980,479 804,257
----------- -----------
Total current liabilities 5,296,345 5,306,120
Notes payable 14,955,000 $11,815,000
Deferred income taxes -- 427,537
Stockholders' Equity:
Preferred stock -- --
Common stock 104,150 104,150
Additional paid-in capital 20,571,178 20,571,178
Retained earnings 2,776,728 3,060,449
----------- -----------
Total stockholders' equity 23,452,056 23,735,777
----------- -----------
Total liabilities and stockholders' equity $43,703,401 $41,284,434
=========== ===========
See accompanying notes.
-2-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Consolidated Statements of Operations
(Unaudited)
Twelve weeks Twelve weeks
ended ended
Mar. 23, 1999 Mar. 24, 1998
------------- -------------
<S> <C> <C>
Net sales:
Food and beverage $ 12,926,532 $ 5,741,982
Entertainment and other 1,456,987 1,032,601
------------ ------------
Total net sales 14,383,519 6,774,583
Costs and expenses:
Costs of sales 3,959,097 1,785,313
Restaurant operating expenses 6,676,477 2,855,797
Depreciation and amortization 796,556 464,742
Preopening expenses 431,822 --
------------ ------------
Entertainment and restaurant costs and expenses 11,863,952 5,105,852
------------ ------------
Entertainment and restaurant operating income 2,519,567 1,668,731
General and administrative expenses 893,662 566,856
Goodwill amortization 56,345 56,345
------------ ------------
Income from operations 1,569,560 1,045,530
Other income (expense):
Other income, principally interest -- 32,174
Interest expense (230,171) (178)
------------ ------------
Income before income taxes 1,339,389 1,077,526
Provision for income taxes 495,574 398,685
------------ ------------
Income before cumulative effect of a
change in accounting principle 843,815 678,841
Cumulative effect of change in
accounting principle (net of income tax) (1,127,536) 0
------------ ------------
Net (loss) income $ (283,721) $ 678,841
============ ============
Basic (loss) earnings per share:
Income before cumulative effect of a
change in accounting principle $ 0.08 $ 0.07
Cumulative effect of change in
accounting principle (net of income tax) (0.11) --
------------ ------------
Basic (loss) earnings per share $ (0.03) $ 0.07
============ ============
Diluted (loss) earnings per share:
Income before cumulative effect of a
change in accounting principle $ 0.08 $ 0.07
Cumulative effect of change in
accounting principle (net of income tax) (0.11) --
------------ ------------
Diluted (loss) earnings per share $ (0.03) $ 0.07
============ ============
See accompanying notes.
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Twelve weeks Twelve weeks
ended March 23, ended March 24,
1999 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (283,721) $ 678,841
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting principle 1,127,536 --
Depreciation and amortization 852,901 521,087
Net change in operating assets and liabilities:
Operating assets (44,423) (239,446)
Operating liabilities (209,775) 551,954
-------------- --------------
Net cash provided by operating activities 1,442,518 1,512,436
Cash flows from investing activities:
Purchases of property and equipment (3,111,190) (894,292)
Proceeds from sale of marketable securities -- 3,315,056
-------------- --------------
Net cash (used in) provided by investing activities (3,111,190) 2,420,764
Cash flows from financing activities:
Net proceeds from revolving note payable to bank 3,140,000 --
-------------- --------------
Net cash provided by financing activities 3,140,000 --
-------------- --------------
Net increase in cash and cash equivalents 1,471,328 3,933,200
Cash and cash equivalents at beginning of period 945,861 1,220,598
-------------- --------------
Cash and cash equivalents at end of period $ 2,417,189 $ 5,153,798
============== ==============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 228,111 $ 178
Cash paid for income taxes 8,900 34,100
Supplemental disclosure of non cash activity:
Additions to property and equipment in accounts
payable $ 200,000 $ --
See accompanying notes.
-4-
</TABLE>
<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation and Description of Business
The unaudited condensed consolidated financial statements have been
prepared by the Company, pursuant to the rules and regulations of the Securities
and Exchange Commission. The information furnished herein reflects all
adjustments (consisting of normal recurring accruals and adjustments) which are,
in the opinion of management, necessary to fairly present the operating results
for the respective periods. Certain information and footnote disclosures
normally presented in annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to such
rules and regulations. These financial statements should be read in conjunction
with the Company's audited consolidated financial statements in its 1998 Form
10-K. The results of the twelve weeks ended March 23, 1999 are not necessarily
indicative of the results to be expected for the full year ending December 28,
1999.
2. Stock Options
During the twelve week period ended March 23, 1999, the Company granted to
certain key employees stock options for 407,124 shares of Common Stock at
exercise prices ranging from $2.8125 to $4.75 per share pursuant to its 1997
Incentive and Nonqualified Stock Option Plan. The Company also granted to
certain non-employee Directors stock options for 40,000 shares of Common Stock
at exercise prices ranging from $3.375 to $4.3125 per share pursuant to its 1997
Directors Stock Option Plan.
3. Earnings Per Share
Basic earnings per share amounts are computed based on the weighted average
number of shares actually outstanding. The number of weighted averaged shares
outstanding for the twelve week periods ended March 23, 1999 and March 24, 1998
were 10,415,000.
For purposes of diluted computations, the number of shares that would be
issued from the exercise of stock options has been reduced by the number of
shares which could have been purchased from the proceeds at the average market
price of the Company's stock or the price of the Company's stock on the exercise
date if options were exercised during the period presented. The number of shares
resulting from this computation of diluted earnings per share for the twelve
weeks ended March 23, 1999 and March 24, 1998 was 10,551,333 and 10,425,158,
respectively.
4. Recently Issued Accounting Standards
The Company adopted Statement of Position 98-5, Reporting on Costs of
Start-Up Activities, which requires that preopening and other start-up costs be
expensed as incurred rather than capitalized. The adoption has been made
effective as of the beginning of the Company's current fiscal year. As a result
of the adoption, the Company has begun to report preopening costs as part of its
entertainment and restaurant operating expenses, which in turn will result in
lower future amortization expense. The Company had amortized preopening costs
over a one-year period following the opening of its restaurants. The cumulative
effect of the change in accounting, which totaled $1,128,000 net of taxes or
$0.11 per share, was recorded as a one-time charge in the Company's first
quarter results.
-5-
<PAGE>
In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 defines derivative instruments
and requires that these items be recognized as assets or liabilities in the
statement of financial position. This Statement is effective for fiscal years
beginning after June 15, 1999. As of March 23, 1999, the Company does not have
any derivative instruments.
TOTAL ENTERTAINMENT RESTAURANT CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto included elsewhere in this Form 10-Q.
As of March 23, 1999, the Company owned and operated 37 entertainment and
restaurant locations under the Fox and Hound English Pub & Grille ("Fox and
Hound"), Bailey's Sports Grille and Bailey's Pub & Grille ("Bailey's") brand
names. The Company's entertainment restaurant locations combine a comfortable
and inviting social gathering place, full menu and full-service bar,
state-of-the-art audio and video systems for sports and music entertainment,
traditional games of skill such as pocket billiards and a late-night dining
alternative, all in a single location. As of March 23, 1999, the Company owned
and operated 24 Fox and Hounds and 13 Bailey's located in Alabama, Arkansas,
Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Missouri,
Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee and
Texas. As of March 24, 1998, the Company owned and operated 7 Fox and Hounds and
10 Bailey's.
The components of the Company's net sales are food and non-alcoholic
beverages, alcoholic beverages, and entertainment and other. For the twelve
weeks ended March 23, 1999, food and non-alcoholic beverages were 34.9% of total
sales, alcoholic beverages were 55.0% of total sales and entertainment and other
were 10.1% of total sales. For the twelve weeks ended March 24, 1998, food and
non-alcholic beverages were 28.4% of total sales, alcoholic beverages were 56.4%
of total sales and entertainment and other were 15.2% of total sales.
Components of restaurant operating expenses include operating payroll and
fringe benefits, occupancy, advertising and promotion. These costs are generally
variable and will fluctuate with changes in sales volume and sales mix. All but
one of the Company's locations are leased and provide for a minimum annual rent,
with some leases calling for additional rent based on sales volume at the
particular location of specified minimum levels.
General and administrative expenses include all corporate and
administrative functions that support existing operations and provide an
infrastructure to support future growth. In addition, certain expenses of
recruiting and training unit management personnel are also included. Management,
supervisory and staff salaries, employee benefits, travel, information systems,
training, rent and office supplies as well as accounting services fees are major
items of costs in this category.
-6-
<PAGE>
Results of Operations
The following table sets forth for the periods indicated (i) the
percentages which certain items included in the Condensed Consolidated Statement
of Operations bear to net sales, and (ii) other selected operating data:
<TABLE>
<CAPTION>
Twelve Weeks Ended(1)
Mar. 23, Mar. 24,
1999 1998
<S> <C> <C>
Operating Statement Data:
Net sales 100.0% 100.0%
Costs and expenses:
Costs of sales....................................... 27.5 26.3
Restaurant operating expenses........................ 46.4 42.2
Depreciation and amortization........................ 5.6 6.9
Preopening expenses.................................. 3.0 --
----- -----
Restaurant costs and expenses.................... 82.5 75.4
----- -----
Restaurant operating income.............................. 17.5 24.6
General and administrative expenses...................... 6.2 8.4
Goodwill amortization.................................... 0.4 0.8
----- -----
Income from operations................................... 10.9 15.4
Other income, principally interest....................... -- 0.5
Interest expense ........................................ 1.6 --
----- -----
Income before provision for income taxes and cumulative
effect of a change in accounting principle........... 9.3 15.9
Provision for income taxes .............................. 3.4 5.9
----- -----
Income before cumulative effect of a change in
accounting principle................................. 5.9 10.0
Cumulative effect of change in accounting principle ..... (7.9) --
----- -----
Net (loss) income........................................ (2.0%) 10.0%
===== =====
Restaurant Operating Data (dollars in thousands):
Annualized average weekly sales per location (2) ........ $ 1,819 $ 1,759
Number of restaurants at end of the period............... 37 17
</TABLE>
(1) The Company operates on a fifty-two or fifty-three week fiscal year ending
the last Tuesday in December. The fiscal quarters for the Company consist
of accounting periods of twelve, twelve, twelve and sixteen or seventeen
weeks, respectively.
(2) Annualized average weekly sales per location are computed by dividing net
sales for full weeks open during the period by the number of full weeks
open and multiplying the result by fifty-two.
Twelve Weeks Ended March 23, 1999 Compared to Twelve Weeks Ended March 24, 1998
Net sales increased $7,609,000 (112.3%) for the twelve weeks ended March
23, 1999 to $14,384,000 from $6,775,000 for the twelve weeks ended March 24,
1998, which is principally attributable to sales from the twenty new locations
opened since April 1998. Same store sales decreased 6.7% in the twelve weeks
ended March 23, 1999 compared to the twelve weeks ended March 24, 1998.
Costs of sales, primarily food and beverages increased $2,174,000 (121.8%)
for the twelve weeks ended March 23, 1999 to $3,959,000 from $1,785,000 in the
twelve weeks ended March 24, 1998, and increased as a percentage of sales to
27.5% from 26.3%. This increase is
-7-
<PAGE>
principally attributable to an increase in the food sales mix, which has a
higher cost of sales compared to beverages and entertainment.
Restaurant operating expenses increased $3,820,000 (133.8%) for the twelve
weeks ended March 23, 1999 to $6,676,000 from $2,856,000 in the twelve weeks
ended March 24, 1998, and increased as a percentage of net sales to 46.4% from
42.2%. Most of this increase is attributable to higher labor costs resulting
from the increase in food sales mix, which has a higher labor cost compared to
beverages and entertainment, and incremental labor in the five new locations
opened during the twelve weeks ended March 23, 1999.
Depreciation and amortization increased $332,000 (71.4%) for the twelve
weeks ended March 23, 1999 to $797,000 from $465,000 in the twelve weeks ended
March 24, 1998, and decreased as a percentage of sales to 5.6% from 6.9%. This
percentage decrease is due principally to the change in accounting method for
preopening expenses which, prior to 1999, were capitalized and then amortized
over a twelve month period. The preopening amortization expense included for the
twelve weeks ended March 24, 1998 was 2.1% of sales.
Preopening expenses incurred during the twelve week period ended March 23,
1999 was $432,000 or 3.0% of sales. This related to the opening of five new
locations during the twelve weeks ended March 23, 1999.
General and administrative expenses increased $327,000 (57.7%) for the
twelve weeks ended March 23, 1999 to $894,000 from $567,000 in the twelve weeks
ended March 24, 1998, and decreased as a percentage of sales to 6.2% from 8.4%.
This percentage decrease reflects the leveraging of sales from the twenty new
units added since April 1998. For fiscal 1998 and through February 28, 1999,
certain accounting and administrative services were contracted from Coulter
Enterprises, Inc. ("CEI"), a restaurant management services company owned by the
Company's former Chairman of the Board, Jamie B. Coulter. The service agreement
provided for specified accounting and administrative services to be provided on
a cost pass-through basis. For fiscal 1998 and through February 28, 1999, the
fixed annual charge was $194,500, plus an additional fee of $466 per restaurant
per 28-day accounting period.
On October 19, 1998, Lone Star Steakhouse & Saloon, Inc. ("Lone Star"), a
restaurant company of which Mr. Coulter is chairman and CEO, purchased certain
assets and assumed certain liabilities of CEI, including the former services
agreement with the Company. From October 19, 1998 to February 28, 1999, such
services were provided by Lone Star. Beginning March 1, 1999, these services
were provided by Franchise Services Company ("FSC") at a market rate.
Other income, principally interest, decreased $32,000 (100.0%) for the
twelve weeks ended March 23, 1999 from $32,000 in the twelve weeks ended March
24, 1998. The interest earned during the twelve weeks ended March 24, 1998 was
from the investment of the net proceeds of the initial public offering of the
Company, which commenced on July 17, 1997 (the "Initial Public Offering"). The
decrease in interest earned resulted from the prior utilization of the proceeds
from the Initial Public Offering to develop additional locations. Interest
expense increased $230,000 for the twelve weeks ended March 23, 1999 to
$230,000. This increase reflects the borrowings made to fund additional unit
development since July 1998.
The effective income tax rate for the twelve weeks ended March 23, 1999 was
37.0% and the effective income tax rate for the twelve weeks ended March 24,
1998 was 37.0%.
-8-
<PAGE>
Quarterly Fluctuations, Seasonality and Inflation
As a result of the revenues associated with each new location, the timing
of new unit openings will result in significant fluctuations in quarterly
results. The Company expects seasonality to be a factor in the operation or
results of its business in the future due to expected lower second and third
quarter revenues due to the summer season. The primary inflationary factors
affecting the Company's operations include food, liquor and labor costs.
Although a large number of the Company's restaurant personnel are paid at the
federal minimum wage level, the majority of personnel are tipped employees, and
therefore, recent as well as future minimum wage changes are likely to have
little effect on labor costs. As costs of food and labor have increased, the
Company has historically been able to offset these increases through economies
of scale and improved operating procedures. To date, inflation has not had a
material impact on operating margins.
Liquidity and Capital Resources
Cash flows from operations were $1,443,000, purchases of property and
equipment were $3,111,000, and net proceeds from the revolving note payable to
bank was $3,140,000 for the twelve week period ending March 23, 1999.
At March 23, 1999, the Company had $2,417,000 in cash and cash equivalents.
The Company intends to open up to eight new locations in 1999 (five of which
were opened during the twelve week period ending March 23, 1999) and 10 to 12
locations in 2000. Three units are currently under non-binding letters of intent
to lease with pending contingencies. The Company is currently evaluating
locations in markets familiar to its management team. However, the number of
locations actually opened and the timing thereof may vary depending upon the
ability of the Company to locate suitable sites and negotiate favorable leases.
The Company expects to expend approximately $12.0 million to open new locations
over the next twelve months. In order to fund new unit development, the Company
has entered into a $20 million line of credit with Intrust Bank, N.A. (the
"Facility"), of which $5,045,000 is available at March 23, 1999.
The Company believes the funds available from the Facility and its cash
flow from operations will be sufficient to satisfy its working capital and
capital expenditure requirements for at least the next twelve months. There can
be no assurance, however, that changes in the Company's operating plans, the
acceleration or modification of the Company's expansion plans as outlined above,
lower than anticipated revenues, increased expenses, potential acquisitions or
other events will not cause the Company to seek additional financing sooner than
anticipated, prevent the Company from achieving the goals of its expansion
strategy or prevent any newly opened locations from operating profitably. There
can be no assurance that additional financing will be available on terms
acceptable to the Company or at all.
Recently Issued Accounting Standards
In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 defines derivative instruments
and requires that these items be recognized as assets or liabilities in the
statement of financial position. This Statement is effective for fiscal years
beginning after June 15, 1999. As of March 23, 1999 the Company does not have
any derivative instruments.
-9-
<PAGE>
Year 2000 Compliance
The Company utilizes and is dependent upon computer systems and software to
conduct its business. In 1997, the Company initiated a review and assessment of
all hardware and software to confirm they will function properly in the year
2000. The systems and software include those developed and maintained by FSC
in-house computer department as well as purchased software which is run on
in-house computer systems, including POS systems and back-of-house systems in
the units. The systems and software utilized by FSC are believed to be year 2000
compliant. The Company is currently undergoing an upgrade of its POS and
back-of-house systems to allow for a seamless interface with FSC's accounting
systems. Certain back-of-house applications which are not year 2000 compliant
will be made compliant as part of this upgrade. This upgrade is expected to be
completed by the end of the second quarter in 1999, at which time all systems
and software are expected to be year 2000 compliant. The total cost of this
upgrade, including updating the hardware and software as well as training costs
is expected to be between $150,000 and $200,000.
Management of the Company believes it has an effective program in place to
resolve the year 2000 issue in a timely manner. As noted above, the Company has
not yet completed all necessary phases of the year 2000 project. In the event
the Company does not complete any additional phases, the Company might be unable
to process transactional and financial reporting information. In addition,
disruptions in the economy generally resulting from the year 2000 issues could
also materially adversely affect the Company. The Company could be subject to
litigation for computer systems product failure, for example, equipment shutdown
or failure to properly date business records. The amount of potential liability
and lost revenue cannot be reasonably estimated at this time.
The Company has contingency plans for certain applications and is working
on such plans for others. These contingency plans involve, among other actions,
manual workarounds and adjusting staffing strategies.
Forward Looking Statements
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and, therefore, there
can be no assurance that the forward-looking statements included in this report
will prove to be accurate. Factors that could cause actual results to differ
from the results discussed in the forward-looking statements include, but are
not limited to, potential increases in food and liquor costs, competition and
the inability to find suitable new locations. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved.
-10-
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
The Company's Facility has a variable rate which is directly affected by
changes in U.S. interest rates. The average interest rate of the Facility was
7.25% for the twelve weeks ended March 23, 1999. The following table presents
the quantitative interest rate risks at March 23, 1999:
<TABLE>
<CAPTION>
Principal Amount by Expected Maturity
-----------------------------------------------------------
(In thousands)
Fair
There- Value
(dollars in thousands) 1999 2000 2001 2002 2003 after Total 3/23/99
- ---------------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Variable rate debt -- -- $748 $4,685 $5,037 $4,485 $14,955 $14,955
Average Interest Rate-
1/2% below prime 7.25% 7.25% 7.25% 7.25% 7.25% 7.25%
</TABLE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Securities Sold
(c) The following unregistered securities were issued by the Company during the
twelve weeks ended March 23, 1999:
<TABLE>
<CAPTION>
Number of Shares
Description of Sold/Issued/Subject Offering/Exercise
Date of Sale/Issuance Securities Issued to Options or Warrants Price Per Share
--------------------- ----------------- ---------------------- ---------------
<S> <C> <C> <C>
December 30, 1998 Common Stock Options 17,778 $ 2.813
January 1, 1999 Common Stock Options 20,000 $ 3.75
January 1, 1999 Common Stock Options 10,000 $ 3.75
January 6, 1999 Common Stock Options 15,094 $ 3.313
January 7, 1999 Common Stock Options 10,000 $ 3.375
January 7, 1999 Common Stock Options 10,000 $ 3.375
January 11, 1999 Common Stock Options 12,598 $ 3.969
January 13, 1999 Common Stock Options 12,500 $ 4.00
January 14, 1999 Common Stock Options 10,000 $ 4.313
January 14, 1999 Common Stock Options 10,000 $ 4.313
February 1, 1999 Common Stock Options 10,526 $ 4.75
February 10, 1999 Common Stock Options 13,333 $ 3.75
February 10, 1999 Common Stock Options 10,000 $ 3.75
February 10, 1999 Common Stock Options 10,000 $ 3.75
February 10, 1999 Common Stock Options 10,000 $ 3.75
February 10, 1999 Common Stock Options 10,000 $ 3.75
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
February 10, 1999 Common Stock Options 10,000 $ 3.75
February 10, 1999 Common Stock Options 10,000 $ 3.75
February 10, 1999 Common Stock Options 12,500 $ 3.75
February 10, 1999 Common Stock Options 15,000 $ 3.75
February 10, 1999 Common Stock Options 20,000 $ 3.75
February 10, 1999 Common Stock Options 20,000 $ 3.75
February 10, 1999 Common Stock Options 20,000 $ 3.75
February 10, 1999 Common Stock Options 20,000 $ 3.75
February 10, 1999 Common Stock Options 20,000 $ 3.75
February 10, 1999 Common Stock Options 30,000 $ 3.75
February 10, 1999 Common Stock Options 30,000 $ 3.75
February 21, 1999 Common Stock Options 11,765 $ 4.25
March 1, 1999 Common Stock Options 12,500 $ 4.00
March 19, 1999 Common Stock Options 11,765 $ 4.25
March 19, 1999 Common Stock Options 11,765 $ 4.25
</TABLE>
All of the above options were granted to certain key employees pursuant to
the 1997 Incentive and Nonqualified Stock Option Plan or to non-employee
directors pursuant to the Directors Stock Option Plan. The options for
employees have a vesting period of three to five years and a life of ten
years and the options for non-employee directors have a vesting period of
three years and a life of five years.
The issuance of these securities is claimed to be exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended, as
transactions by an issuer not involving a public offering. There were no
underwriting discounts or commissions paid in connection with the issuance
of any of these securities.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
The following exhibits are filed as part of this report:
Exhibit No.
27........................................Financial Data Schedule
Reports on Form 8-K
None
-12-
<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Total Entertainment Restaurant Corp.
(Registrant)
Date May 7, 1999 ------------------------------------
James K. Zielke
Chief Financial Officer,
Secretary and Treasurer
(Duly Authorized Officer)
-13-
<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Total Entertainment Restaurant Corp.
(Registrant)
Date May 7, 1999 /s/ James K. Zielke
------------------------------------
James K. Zielke
Chief Financial Officer,
Secretary and Treasurer
(Duly Authorized Officer)
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE COMPANY'S FORM 10-Q FOR THE QUARTER ENDED MARCH 23, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1999
<PERIOD-START> DEC-30-1998
<PERIOD-END> MAR-23-1998
<CASH> 2,417
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1,033
<CURRENT-ASSETS> 4,070
<PP&E> 34,684
<DEPRECIATION> 0
<TOTAL-ASSETS> 43,703
<CURRENT-LIABILITIES> 5,296
<BONDS> 0
0
0
<COMMON> 104
<OTHER-SE> 23,348
<TOTAL-LIABILITY-AND-EQUITY> 23,452
<SALES> 14,384
<TOTAL-REVENUES> 14,384
<CGS> 3,959
<TOTAL-COSTS> 7,905
<OTHER-EXPENSES> 950
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 230
<INCOME-PRETAX> 1,339
<INCOME-TAX> 495
<INCOME-CONTINUING> 844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (1,127)
<NET-INCOME> (284)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
