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
September 5, 2000 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 October 13, 2000
-----
Common Stock, $.01 par value 9,172,571 shares
<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (unaudited)
Condensed Consolidated Balance Sheets at
September 5, 2000 and December 28, 1999 2
Condensed Consolidated Statements of
Operations for the twelve weeks ended
September 5, 2000 and September 7, 1999 3
Condensed Consolidated Statements of
Operations for the thirty-six weeks ended
September 5, 2000 and September 7, 1999 4
Condensed Consolidated Statements of
Cash Flows for the thirty-six weeks ended
September 5, 2000 and September 7, 1999 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 7
Item 3. Quantitative and Qualitative
Disclosures About Market Risk 12
PART II. OTHER INFORMATION
Item 2. Changes in Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
- 1 -
<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 5, 2000 December 28, 1999
----------------- -----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,589,081 $ 2,550,469
Inventories 927,461 973,156
Deferred income taxes 72,816 136,827
Other current assets 743,154 435,639
--------------- ---------------
Total current assets 4,332,512 4,096,091
Property and equipment:
Land 600,000 600,000
Buildings 670,629 670,629
Leasehold improvements 21,192,185 20,720,043
Equipment 13,194,772 13,189,864
Furniture and fixtures 3,146,646 3,108,243
--------------- ---------------
38,804,232 38,288,779
Less accumulated depreciation and amortization 8,372,540 5,988,331
--------------- ---------------
30,431,692 32,300,448
Other assets:
Goodwill, net of accumulated amortization 3,980,423 4,149,459
Deferred income taxes 473,220 490,460
Investment in partnership interests 100,000 --
Other assets 359,771 315,911
--------------- ---------------
Total other assets 4,913,414 4,955,830
--------------- ---------------
Total assets $ 39,677,618 $ 41,352,369
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,085,433 $ 1,040,448
Sales tax payable 419,448 359,458
Accrued payroll 664,827 655,702
Accrued payroll taxes 523,678 355,543
Accrued income taxes 690,490 876,838
Lease obligation for closed store 290,019 368,476
Other accrued liabilities 1,172,790 928,359
--------------- ---------------
Total current liabilities 4,846,685 4,584,824
Notes payable 12,005,000 14,395,000
Deferred revenue 138,780 140,769
Stockholders' Equity:
Preferred stock
Common stock 92,456 96,813
Additional paid-in capital 18,558,457 19,385,229
Retained earnings 4,036,240 2,749,734
--------------- ---------------
Total stockholders' equity 22,687,153 22,231,776
--------------- ---------------
Total liabilities and stockholders' equity $ 39,677,618 $ 41,352,369
=============== ===============
</TABLE>
See accompanying notes.
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<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Twelve weeks Twelve weeks
ended ended
September 5,2000 September 7,1999
---------------- ----------------
<S> <C> <C>
Sales:
Food and beverage $ 10,136,403 $ 10,235,619
Entertainment and other 1,146,264 1,205,036
------------ ------------
Total net sales 11,282,667 11,440,655
Costs and expenses:
Costs of sales 2,953,149 3,133,568
Entertainment and restaurant operating expenses 6,289,942 6,496,924
Depreciation and amortization 826,414 862,511
Store closure expense -- 1,086,785
------------ ------------
Entertainment and restaurant costs and expenses 10,069,505 11,579,788
------------ ------------
Entertainment and restaurant operating income (loss) 1,213,162 (139,133)
General and administrative expenses 851,318 951,862
Goodwill amortization 56,343 56,346
------------ ------------
Income (loss) from operations 305,501 (1,147,341)
Other expense:
Loss on disposal of assets (23,247) --
Interest expense (250,158) (345,674)
------------ ------------
Income (loss) before provision for income taxes 32,096 (1,493,015)
Provision for income tax expense (benefit) 11,875 (552,415)
------------ ------------
Net income (loss) $ 20,221 $ (940,600)
============ ============
Basic and diluted earnings (loss) per share $ 0.00 $ (0.09)
============ ============
</TABLE>
See accompanying notes.
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<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Thirty-six Thirty-six
weeks ended weeks ended
September 5,2000 September 7,1999
---------------- ----------------
<S> <C> <C>
Sales:
Food and beverage $ 33,194,577 $ 34,664,130
Entertainment and other 3,744,102 3,956,461
------------ ------------
Total net sales 36,938,679 38,620,591
Costs and expenses:
Costs of sales 9,655,714 10,644,389
Entertainment and restaurant operating expenses 19,072,807 20,481,520
Depreciation and amortization 2,489,077 2,520,572
Store closure expense -- 1,086,785
------------ ------------
Entertainment and restaurant costs and expenses 31,217,598 34,733,266
------------ ------------
Entertainment and restaurant operating income 5,721,081 3,887,325
General and administrative expenses 2,713,123 2,849,448
Goodwill amortization 169,030 169,036
------------ ------------
Income from operations 2,838,928 868,841
Other expense:
Loss on disposal of assets (54,980) --
Interest expense (741,874) (817,562)
------------ ------------
Income before provision for income taxes 2,042,074 51,279
Provision for income taxes 755,568 19,377
------------ ------------
Income before cumulative effect of a
change in accounting principle 1,286,506 31,902
Cumulative effect of change in
accounting principle (net of income tax) -- (1,127,536)
------------ ------------
Net income (loss) $ 1,286,506 $ (1,095,634)
============ ============
Basic and diluted earnings (loss) per share:
Earnings before cumulative effect of a
change in accounting principle $ 0.14 $ --
Cumulative effect of change in
accounting principle (net of income tax) -- (0.11)
------------ ------------
Basic and diluted earnings (loss) per share $ 0.14 $ (0.11)
============ ============
</TABLE>
See accompanying notes.
- 4 -
<PAGE>
TOTAL ENTERTAINMENT RESTAURANT CORP.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Thirty-six weeks Thirty-six weeks
ended Sept. 5, 2000 ended Sept. 7, 1999
------------------- -------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,286,506 $ (1,095,634)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Cumulative effect of change in accounting principle -- 1,127,536
Reserve for store closure -- 1,086,785
Deferred income taxes 81,251 (402,110)
Loss on disposal of assets 54,980 --
Depreciation and amortization 2,658,113 2,689,608
Net change in operating assets and liabilities:
Change in operating assets (323,161) (243,368)
Change in operating liabilities 259,874 (1,109,736)
------------ ------------
Net cash provided by operating activities 4,017,563 2,053,081
Cash flows from investing activities:
Purchases of property and equipment (716,466) (4,333,095)
Purchases of limited partnership interests (100,000) --
Proceeds from disposal of assets 58,645 --
------------ ------------
Net cash used in investing activities (757,821) (4,333,095)
Cash flows from financing activities:
Proceeds from revolving note payable to bank 25,190,000 30,330,000
Payments of revolving note payable to bank (27,580,000) (26,600,000)
Purchases of common stock (831,130) --
------------ ------------
Net cash (used in) provided by financing activities (3,221,130) 3,730,000
------------ ------------
Net increase in cash and cash equivalents 38,612 1,449,986
Cash and cash equivalents at beginning of period 2,550,469 945,861
------------ ------------
Cash and cash equivalents at end of period $ 2,589,081 $ 2,395,847
============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 814,314 $ 789,900
Cash paid for income taxes 860,664 15,400
</TABLE>
See accompanying notes.
- 5 -
<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 1999 Form
10-K. The results of the twelve weeks and thirty-six weeks ended September 5,
2000 are not necessarily indicative of the results to be expected for the full
year ending December 26, 2000.
2. Stock Options
During the twelve week period ended September 5, 2000, the Company
cancelled options for 87,880 shares with a weighted average exercise price of
$4.48 per share pursuant to its 1997 Incentive and Nonqualified Stock Option
Plan. The Company also cancelled options which had expired for 20,000 shares of
Common Stock with a weighted average exercise price of $9.00 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 September 5, 2000 and
September 7, 1999 were 9,303,643 and 10,415,000, respectively; the number of
weighted averaged shares outstanding for the thirty-six week periods ended
September 5, 2000 and September 7, 1999 were 9,450,164 and 10,415,000,
respectively.
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 September 5, 2000 and September 7, 1999 were 9,311,181 and
10,415,202, and for the thirty-six week periods ended September 5, 2000 and
September 7, 1999 were 9,453,544 and 10,457,910, respectively.
- 6 -
<PAGE>
Item 2. Management's Discussion and Anaysis 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 September 5, 2000, the Company owned and operated 35 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 September 5, 2000, the Company
owned and operated 23 Fox and Hounds and 12 Bailey's located in Alabama,
Arkansas, Georgia, Illinois, Indiana, Kansas, Louisiana, Michigan, Missouri,
Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee and
Texas. As of September 7, 1999, the Company owned and operated 24 Fox and Hounds
and 12 Bailey's.
The components of the Company's net sales are food and non-alcoholic
beverages, alcoholic beverages, and entertainment and other. For the thirty-six
weeks ended September 5, 2000, food and non-alcoholic beverages were 32.5% of
total sales, alcoholic beverages were 57.4% of total sales and entertainment and
other were 10.1% of total sales. For the thirty-six weeks ended September 7,
1999, food and non-alcoholic beverages were 35.5% of total sales, alcoholic
beverages were 54.3% of total sales and entertainment and other were 10.2% 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. 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.
- 7 -
<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) Thirty-six Weeks Ended(1)
----------------------- -------------------------
Sept. 5, Sept. 7, Sept. 5, Sept. 7,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating Statement Data:
Net sales ............................................... 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Costs of sales ...................................... 26.2 27.4 26.1 27.6
Restaurant operating expenses ....................... 55.8 56.8 51.8 53.0
Depreciation and amortization ....................... 7.3 7.5 6.7 6.5
Store closure expense ............................... -- 9.5 -- 2.8
-------- -------- -------- --------
Restaurant costs and expenses ................... 89.3 101.2 84.6 89.9
-------- -------- -------- --------
Restaurant operating income (loss) ...................... 10.7 (1.2) 15.6 10.1
General and administrative expenses ..................... 7.5 8.3 7.3 7.4
Goodwill amortization ................................... 0.5 0.5 0.5 0.4
-------- -------- -------- --------
Income (loss) from operations ........................... 2.7 (10.0) 7.6 2.3
Loss on disposal of assets .............................. 0.2 -- 0.1 --
Interest expense ........................................ 2.2 3.0 2.0 2.2
-------- -------- -------- --------
Income (loss) before provision for income taxes and
cumulative effect of a change in accounting principle 0.3 (13.0) 5.5 0.1
Provision for income tax expense (benefit) .............. 0.1 (4.8) 2.0 0.0
-------- -------- -------- --------
Income (loss) before cumulative effect of a change in
accounting principle ................................ 0.2 (8.2) 3.5 0.1
Cumulative effect of change in accounting principle ..... -- -- -- (2.9)
-------- -------- -------- --------
Net income (loss) ....................................... 0.2% (8.2)% 3.5% (2.8)%
======== ======== ======== ========
Restaurant Operating Data (dollars in thousands):
Annualized average weekly sales per location (2) ..... $ 1,397 $ 1,377 $ 1,524 $ 1,570
Number of restaurants at end of the period ........... 35 36 35 36
</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 September 5, 2000 Compared to Twelve Weeks Ended September 7,
1999
Net sales decreased $158,000 (1.4%) for the twelve weeks ended September
5, 2000 to $11,283,000 from $11,441,000 for the twelve weeks ended September 7,
1999, which is due to the closing of one unit since September 7, 1999. Same
store sales for units open more than 18 months increased 1.0% in the twelve
weeks ended September 5, 2000 compared to the twelve weeks ended September 7,
1999.
Costs of sales, primarily food and beverages, decreased $181,000 (5.8%)
for the twelve weeks ended September 5, 2000 to $2,953,000 from $3,134,000 in
the twelve weeks ended September 7, 1999, and decreased as a percentage of sales
to 26.2% from 27.4%. This decrease as a percentage of sales is principally
attributable to improved controls at the restaurant level.
- 8 -
<PAGE>
Restaurant operating expenses decreased $207,000 (3.2%) for the twelve
weeks ended September 5, 2000 to $6,290,000 from $6,497,000 in the twelve weeks
ended September 7, 1999, and decreased as a percentage of net sales to 55.8%
from 56.8%. This decrease is attributable to the impact of a one-time charge for
a state sales tax assessment incurred during the third quarter of 1999 (2.5%),
offset by higher other operating expenses (1.6%), including higher maintenance
costs and higher live music costs.
Depreciation and amortization decreased $37,000 (4.3%) for the twelve
weeks ended September 5, 2000 to $826,000 from $863,000 in the twelve weeks
ended September 7, 1999, and decreased as a percentage of sales to 7.3% from
7.5%. This net decrease is due principally to the depreciation incurred during
1999 on one unit which was closed in the fourth quarter of 1999.
General and administrative expenses decreased $101,000 (10.6%) for the
twelve weeks ended September 5, 2000 to $851,000 from $952,000 in the twelve
weeks ended September 7, 1999, and decreased as a percentage of sales to 7.5%
from 8.3%. This decrease is attributable primarily to lower professional fees.
Interest expense was $250,000 for the twelve weeks ended September 5, 2000
and $346,000 for the twelve weeks ended September 7, 1999. This decrease is due
principally to the interest on the sales tax assessment during the third quarter
of 1999 of $83,000. This decrease also reflects a lower average balance on the
revolving note payable during the current year compared with the prior year,
offset by a higher interest rate applicable to the revolving note payable in the
current year compared with the prior year.
The effective income tax rate for the twelve weeks ended September 5, 2000
and for the twelve weeks ended September 7, 1999 was 37.0%.
Thirty-six Weeks Ended September 5, 2000 Compared to Thirty-six Weeks Ended
September 7, 1999
Net sales decreased $1,682,000 (4.4%) for the thirty-six weeks ended
September 5, 2000 to $36,939,000 from $38,621,000 for the thirty-six weeks ended
September 7, 1999, which is due to lower average unit volumes for units open
less than 18 months and the closing of one unit since September 7, 1999. Same
store sales for units open more than 18 months increased 1.6% in the thirty-six
weeks ended September 5, 2000 compared to the thirty-six weeks ended September
7, 1999.
Costs of sales, primarily food and beverages, decreased $988,000 (9.3%)
for the thirty-six weeks ended September 5, 2000 to $9,656,000 from $10,644,000
in the thirty-six weeks ended September 7, 1999, and decreased as a percentage
of sales to 26.1% from 27.6%. This decrease as a percentage of sales is
principally attributable to improved controls at the restaurant level.
Restaurant operating expenses decreased $1,409,000 (6.9%) for the
thirty-six weeks ended September 5, 2000 to $19,073,000 from $20,482,000 in the
thirty-six weeks ended September 7, 1999, and decreased as a percentage of net
sales to 51.6% from 53.0%. This decrease is attributable to lower labor costs
(1.2%) resulting from improved controls at the restaurant level, lower
preopening expenses (1.2%) and the impact of a one-time charge for a state sales
tax assessment incurred during the third quarter of 1999 (0.7%), offset by
higher occupancy costs (0.5%) and other operating expenses (1.6%) including
higher maintenance costs, higher live music and premium television costs and
higher costs associated with recruiting and training new managers.
Depreciation and amortization decreased $32,000 (1.3%) for the thirty-six
weeks ended September 5, 2000 to $2,489,000 from $2,521,000 in the thirty-six
weeks ended September 7, 1999, and increased as a percentage of sales to 6.7%
from 6.5%. This increase is due to the depreciation of five units opened during
the first quarter of 1999, offset by depreciation incurred in 1999 on two units
closed during the second half of 1999.
- 9 -
<PAGE>
General and administrative expenses decreased $136,000 (4.8%) for the
thirty-six weeks ended September 5, 2000 to $2,713,000 from $2,848,000 in the
thirty-six weeks ended September 7, 1999, and decreased as a percentage of sales
to 7.3% from 7.4%. Through February 28, 1999, certain accounting and
administrative services were contracted from Lone Star Steakhouse & Saloon, Inc.
("Lone Star"), a restaurant company, of which the Company's former Chairman of
the Board, Jamie B. Coulter is Chairman and CEO. The service agreement provided
for specified accounting and administrative services to be provided on a cost
pass-through basis. Through February 28, 1999, the fixed annual charge was
$194,500, plus an additional fee of $466 per restaurant per 28-day accounting
period. Beginning March 1, 1999, these services were provided by Franchise
Services Company ("FSC") at a market rate.
Interest expense decreased $76,000 for the thirty-six weeks ended
September 5, 2000 to $742,000. This decrease is due principally to the interest
on the sales tax assessment during the third quarter of 1999 of $83,000. This
decrease also reflects a lower average balance on the revolving note payable
during the current year compared with the prior year, offset by a higher
interest rate applicable to the revolving note payable in the current year
compared with the prior year.
The effective income tax rate for the thirty-six weeks ended September 5,
2000 and for the thirty-six weeks ended September 7, 1999 was 37.0%.
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. The
Company believes low inflation rates in its market areas have contributed to
stable food and labor costs in recent years. However, there is no assurance that
low inflation rates will continue or that the Federal minimum wage rate will not
increase. To date, inflation has not had a material impact on operating margins.
- 10 -
<PAGE>
Liquidity and Capital Resources
On September 1, 1998 the Company entered into a loan agreement with
Intrust Bank, N.A. (the "Facility") which provides for a line of credit of
$20,000,000 subject to certain limitations based on earnings before interest,
taxes, depreciation and amortization of the past fifty-two weeks. The Facility
requires monthly payments of interest only until November 1, 2001, at which time
equal monthly installments of principal and interest are required as necessary
to fully amortize the outstanding indebtedness plus future interest over a
period of four years. Interest is accrued at 1/2% below the prime rate as
published in The Wall Street Journal. Proceeds from the Facility are being used
for restaurant development and stock repurchases.
Cash flows from operations were $4,017,000, purchases of property and
equipment were $716,466, and net payments of the revolving note payable to bank
was $2,390,000 for the thirty-six week period ending September 5, 2000.
On September 28, 2000, the Board of Directors authorized an increase in
the Company's stock repurchase program for up to an additional 500,000 shares of
the Company's common stock. This approval supplemented the Board's
authorizations on February 29, 2000 and October 5, 1999 to purchase 1,500,000
shares of stock. As of October 12, 2000, the Company had spent $2,249,000 to
repurchase 1,242,429 shares of common stock.
At September 5, 2000, the Company had $2,589,000 in cash and cash
equivalents. The Company intends to open up to three new locations in 2000. Five
leases have been executed and six 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 $10.0 to $13.0 million to
open new locations over the next twelve months.
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, lower than
anticipated revenues, increased expenses, stock repurchases, 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.
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.
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<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
8.56% for the thirty-six weeks ended September 5, 2000. The following table
presents the quantitative interest rate risks at September 5, 2000:
<TABLE>
<CAPTION>
Principal Amount by Expected Maturity
-----------------------------------------------------------
(In thousands)
Fair
There- Value
(dollars in thousands) 2000 2001 2002 2003 2004 after Total 9/05/00
---------------------- ---- ---- ---- ---- ---- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Variable rate debt -- $ 419 $2,650 $2,898 $3,170 $2,868 $12,005 $12,005
Average Interest Rate--
1/2% below prime 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%
</TABLE>
- 12 -
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Securities Sold
(c) No unregistered securities were issued by the Company during the twelve
weeks ended September 5, 2000:
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
- 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 October 19, 2000 /s/ James K. Zielke
--------------------- ------------------------------------
James K. Zielke
Chief Financial Officer,
Secretary and Treasurer
(Duly Authorized Officer)
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