<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended April 4, 1999
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 1-8766
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J. ALEXANDER'S CORPORATION
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(Exact name of Registrant as specified in its charter)
Tennessee 62-0854056
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3401 West End Avenue, Suite 260, P.O. Box 24300, Nashville, Tennessee 37202
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(Address of principal executive offices)
(Zip Code)
(615)269-1900
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal
year, if changed since last report)
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
---- ----
Common Stock Outstanding - 6,531,601 shares at May 18, 1999.
Page 1 of 16 pages.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
J. ALEXANDER'S CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
APRIL 4 January 3
1999 1999
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ........................................ $ 292 $ 1,022
Accounts and notes receivable, including current portion of
direct financing leases ........................................ 91 77
Inventories ...................................................... 795 800
Prepaid expenses and other current assets ........................ 501 324
-------- --------
TOTAL CURRENT ASSETS ........................................... 1,679 2,223
OTHER ASSETS ........................................................ 935 887
PROPERTY AND EQUIPMENT, at cost, less allowances for
depreciation and amortization of $11,969 and $11,053 at
April 4, 1999, and January 3, 1999, respectively ................. 60,983 61,440
DEFERRED CHARGES, less amortization ................................. 566 570
-------- --------
$ 64,163 $ 65,120
======== ========
</TABLE>
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<TABLE>
<CAPTION>
APRIL 4 January 3
1999 1999
-------- --------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ................................................. $ 3,214 $ 3,491
Accrued expenses and other current liabilities ................... 3,254 3,893
Current portion of long-term debt and obligations under
capital leases ................................................. 491 1,917
-------- --------
TOTAL CURRENT LIABILITIES ...................................... 6,959 9,301
LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL
LEASES, net of portion classified as current ..................... 18,248 21,361
OTHER LONG-TERM LIABILITIES ......................................... 877 727
STOCKHOLDERS' EQUITY
Common Stock, par value $.05 per share: Authorized 10,000,000
shares; issued and outstanding 6,531,601 and 5,431,335 shares at
April 4, 1999, and January 3, 1999, respectively ............... 327 272
Preferred Stock, no par value: Authorized 1,000,000 shares; none
issued ......................................................... -- --
Additional paid-in capital ....................................... 34,056 30,007
Retained earnings ................................................ 4,516 4,272
-------- --------
38,899 34,551
Note receivable - Employee Stock Ownership Plan .................. (820) (820)
-------- --------
TOTAL STOCKHOLDERS' EQUITY ..................................... 38,079 33,731
-------- --------
$ 64,163 $ 65,120
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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J. ALEXANDER'S CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Quarter Ended
----------------------
APRIL 4 March 29
1999 1998
-------- --------
(Unaudited)
<S> <C> <C>
Net sales ........................................................... $ 19,208 $ 17,512
Costs and expenses:
Cost of sales .................................................... 6,094 6,192
Restaurant labor and related costs ............................... 6,373 5,965
Depreciation and amortization of restaurant property
and equipment .................................................. 920 853
Other operating expenses ......................................... 3,525 3,364
-------- --------
Total restaurant operating expenses ............................ 16,912 16,374
General and administrative expenses ................................. 1,703 1,495
Pre-opening expense ................................................. -- 311
-------- --------
Operating income (loss) ............................................. 593 (668)
Other income (expense):
Interest expense ................................................. (451) (418)
Other, net ....................................................... 135 (18)
-------- --------
Total other expense ............................................ (316) (436)
-------- --------
Income (loss) before income taxes ................................... 277 (1,104)
Income tax provision ................................................ 33 --
-------- --------
Net income (loss) ................................................... $ 244 $ (1,104)
======== ========
Basic earnings (loss) per share ..................................... $ .04 $ (.20)
======== ========
Diluted earnings (loss) per share ................................... $ .04 $ (.20)
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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J. ALEXANDER'S CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED IN THOUSANDS)
<TABLE>
<CAPTION>
Quarter Ended
----------------------
APRIL 4 March 29
1999 1998
-------- --------
<S> <C> <C>
Net cash provided by operating activities ........................... $ 325 $ 1,034
Net cash (used) by investing activities:
Purchase of property and equipment ............................... (573) (1,613)
Other investing activities ....................................... (45) 72
-------- --------
(618) (1,541)
Net cash (used) provided by financing activities:
Payments on debt and obligations under capital leases ............ (1,433) (15)
Proceeds under bank line of credit agreement ..................... 6,776 6,476
Payments under bank line of credit agreement ..................... (9,882) (5,172)
Sale of stock and exercise of stock options ...................... 4,102 --
-------- --------
(437) 1,289
(Decrease) increase in Cash and Cash Equivalents .................... (730) 782
Cash and cash equivalents at beginning of period .................... 1,022 134
-------- --------
Cash and Cash Equivalents at End of Period .......................... $ 292 $ 916
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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J. ALEXANDER'S CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Certain reclassifications have been made in
the prior year's consolidated condensed financial statements to conform to the
1999 presentation. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended April 4, 1999, are
not necessarily indicative of the results that may be expected for the fiscal
year ending January 2, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the fiscal year ended January 3, 1999, as amended.
NOTE B - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
(In thousands, except per share amounts) Quarter Ended
APRIL 4 March 29
1999 1998
-------- --------
<S> <C> <C>
NUMERATOR:
Net income (loss) (numerator for basic earnings per share) .......... $ 277 $ (1,104)
Effect of dilutive securities ....................................... -- --
-------- --------
Net income (loss) after assumed conversions (numerator for
diluted earnings per share) .................................... $ 277 $ (1,104)
======== ========
DENOMINATOR:
Weighted average shares (denominator for basic earnings
per share) ..................................................... 5,600 5,421
Effect of dilutive securities:
Employee stock options ......................................... 173 --
-------- --------
Adjusted weighted average shares and assumed conversions
(denominator for diluted earnings per share) ................... 5,773 5,421
======== ========
Basic earnings (loss) per share ..................................... $ .04 $ (.20)
======== ========
Diluted earnings (loss) per share ................................... $ .04 $ (.20)
======== ========
</TABLE>
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In situations where the exercise price of outstanding options is
greater than the average market price of common shares, such options are
excluded from the computation of diluted earnings per share because of their
antidilutive impact. Due to the net loss incurred during the first three months
1998, all 662,650 outstanding options were excluded from the computation of
diluted earnings per share. For the quarter ended April 4, 1999, options to
purchase approximately 224,000 shares of common stock ranging in price from
$4.97 to $11.69, were excluded from the computation of diluted earnings per
share due to their antidilutive effect.
NOTE C - SALE OF STOCK
On March 22, 1999, the Company completed a private sale of 1,086,266
shares of common stock for approximately $4.1 million to Solidus, LLC
("Solidus"). E. Townes Duncan, a director of the Company, is a minority owner of
and manages the investments of Solidus. In addition, the Company has commenced a
rights offering pursuant to which shareholders of the Company on the record date
for distribution of the rights will be given the opportunity to purchase up to
1,089,067 shares of common stock at a price of $3.75 per share, which is the
same price per share as stock sold in the private sale. If the maximum number of
shares are sold pursuant to the rights offering, the Company will receive net
proceeds of approximately $3.9 million. Proceeds from the above transactions
have been or will be used to repay borrowings outstanding under the Company's
line of credit. Amounts repaid can be reborrowed in accordance with the terms of
the line of credit agreement.
NOTE D - PROPERTY AND EQUIPMENT
Effective as of January 4, 1999, the Company changed the estimated
useful life of its buildings from 25 years to 30 years. Also, the estimated life
of leasehold improvements was changed to include an amortization period based on
the lesser of the lease term, generally including renewal options, or the useful
life of the asset, including the longer 30 year life for structures. The effect
of these changes was to increase net income for the quarter ended April 4, 1999
by approximately $66,000, or $.01 per share.
NOTE E - COMPREHENSIVE INCOME
In 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income". The Company has no items of
comprehensive income and, accordingly, adoption of the Statement has had no
effect on the consolidated financial statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, (i) the
percentages which the items in the Company's Consolidated Statements of
Operations bear to total net sales, and (ii) other selected operating data:
<TABLE>
<CAPTION>
Quarter Ended
APRIL 4 March 29
1999 1998
--------- ---------
<S> <C> <C>
Net sales ................................................... 100.0% 100.0%
Costs and expenses:
Cost of sales .......................................... 31.7 35.4
Restaurant labor and related costs ..................... 33.2 34.1
Depreciation and amortization of restaurant property and
equipment .......................................... 4.8 4.9
Other operating expenses ............................... 18.4 19.2
--------- ---------
Total restaurant operating expenses ................ 88.0 93.5
General and administrative expenses ......................... 8.9 8.5
Pre-opening expense ......................................... -- 1.8
--------- ---------
Operating income (loss) ..................................... 3.1 (3.8)
Other income (expense):
Interest expense ....................................... (2.3) (2.4)
Other, net ............................................. 0.7 (0.1)
--------- ---------
Total other expense ................................ (1.6) (2.5)
Income (loss) before income taxes ........................... 1.4 (6.3)
Income tax provision ........................................ (0.2) --
--------- ---------
Net income (loss) ........................................... 1.3% (6.3)%
========= =========
Restaurants open at end of period ........................... 20 19
========= =========
Weighted average weekly sales per restaurant:
All restaurants ........................................ $ 73,900 $ 73,900
Same store restaurants ................................. $ 76,900 $ 74,100
</TABLE>
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NET SALES
Net sales increased $1,696,000, or 9.7%, for the first quarter of 1999,
as compared to the same period of 1998, due primarily to the opening of new
restaurants. Same store sales, which include comparable sales for the 18
restaurants open for more than 12 months, averaged $76,900 for the first quarter
of 1999, an increase of 3.8% over $74,100 averaged for the first quarter of
1998. The increase in same store sales during 1999 is primarily attributed to
three separate menu price increases of approximately 3% each which were
implemented in the months of March, May and July of 1998. Weighted average
weekly sales for all restaurants totaled $73,900 for both the first quarter of
1999 as well as the corresponding period of the prior year.
As noted in previous filings, management continues to believe that the
primary issue faced by the Company in returning it to consistent profitability
is the improvement of sales in several of its restaurants, particularly its
newer restaurants. Management intends to accomplish this through a series of
initiatives which began in 1997 when guest service support was increased in some
of the Company's newer restaurants in order to ensure the highest quality of
operations. Other actions taken include the implementation of operational
systems designed to provide quicker service and increase table turns and the
implementation during the fourth quarter of 1998 of an extensive profit
improvement plan which included certain menu and procedural changes and which
took advantage of significant purchasing opportunities. This plan resulted in
significant food cost savings without sacrificing product quality, while also
improving the quality and efficiency of operations. Management believes that all
or virtually all of the Company's restaurants have the potential over time to
reach satisfactory sales levels.
COSTS AND EXPENSES
Restaurant costs and expenses for all restaurants decreased to 88.0% of
sales during the first quarter of 1999, as compared to 93.5% for the same period
during 1998. This decrease was due to a reduction in restaurant costs and
expenses in the same store group of 18 restaurants from 93.2% in the first
quarter of 1998 to 85.8% during the first quarter of 1999, which more than
offset higher costs associated with the two new restaurants opened during 1998.
Reduced cost of sales, which includes food and alcoholic beverage costs, coupled
with efficiencies in labor and other operating expenses achieved at higher sales
volumes and management's emphasis on expense control, were the primary factors
responsible for the improvements in the same store group achieved during the
1999 period. Cost of sales for all restaurants decreased from 35.4% of sales in
the 1998 quarter to 31.7% of sales in the 1999 period, primarily due to
management's emphasis on increased efficiencies in this area, including the
profit improvement plan discussed previously, and the menu price increases noted
above.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative costs, which include supervisory costs as
well as management training costs and all other costs above the restaurant
level, totaled 8.9% of sales during the first quarter of 1999 as compared to
8.5% of sales during the corresponding period of 1998. Management anticipates
that general and administrative costs will represent a higher percentage of
sales during 1999 on a comparative basis due to favorable experience in 1998
associated with the Company's workers' compensation and self-insured group
medical programs that is not expected to reoccur during 1999.
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PRE-OPENING EXPENSE
The Company expenses pre-opening costs as incurred. As a result of the
timing of new restaurant openings, there was no pre-opening expense during the
first quarter of 1999. Pre-opening expense of $311,000 during the first quarter
of 1998 related to the Louisville restaurant which opened in March, 1998.
OTHER INCOME (EXPENSE)
Interest expense increased by $33,000 during the first quarter of 1999
compared to the same period of 1998 due primarily to the use of the Company's
line of credit to fund development of new restaurants and due to lower amounts
of capitalized interest associated with new unit development.
Other income increased $153,000 during the first quarter of 1999
compared to the same period during 1998, primarily due to a $90,000 gain
associated with the Company's purchase of a portion of its outstanding
convertible debentures.
INCOME TAXES
The Company has recorded a tax provision for the first quarter of 1999
using an 11.9% effective tax rate. This effective tax rate differs from the
federal statutory rate of 34% primarily due to a provision for certain expiring
federal net operating loss and credit carryforwards, nondeductible expenses, and
state income taxes, offset by a decrease in the valuation allowance and the
benefit of FICA tip credits generated during 1999.
No income tax benefit was recorded on the pre-tax loss for the first
quarter of 1998, as management was unable to conclude that it was more likely
than not that the carryforwards generated by this and previous losses would be
realized.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash flow from operations totaling $325,000 and
$1,034,000 during the first quarters of 1999 and 1998, respectively. Cash and
cash equivalents decreased from $1,022,000 at year end 1998 to $292,000 at April
4, 1999.
The Company's primary need for capital is expected to continue to be
capital expenditures for the development and maintenance of its J. Alexander's
restaurants. In addition, on June 1, 1999, the Company has an annual sinking
fund requirement of $1,875,000 in connection with its Convertible Subordinated
Debentures, approximately $1.4 million of which will be satisfied through the
delivery of bonds purchased in the open market during the first quarter of 1999.
Management estimates that capital expenditures for 1999 for the West
Bloomfield, Michigan restaurant which will be located on leased land and opened
in 1999; for partial completion of the planned Cincinnati, Ohio restaurant (also
to be located on leased land) for which construction is expected to begin in the
fall of 1999 and will be completed in 2000; and for other additions and
improvements to existing restaurants will total approximately $4.5
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million. In addition, the Company is actively seeking a location for an
additional restaurant to be opened in 2000. If a satisfactory location is found
and successfully negotiated, any amounts expended in 1999 for this location,
including land acquisition if the site were purchased, would be in addition to
the amounts discussed above.
While a working capital deficit of $5,280,000 existed as of April 4,
1999, the Company does not believe that this deficit impairs the overall
financial condition of the Company because it expects cash flow from operations
to be adequate to meet current obligations, including the scheduled sinking fund
payment noted above. Certain of the Company's expenses, particularly
depreciation and amortization, do not require current outlays of cash. Also,
requirements for funding accounts receivable and inventories are relatively
insignificant; thus virtually all cash generated by operations is available to
meet current obligations.
The Company maintains a bank line of credit of $20 million which is
expected to be used as needed for funding of capital expenditures through its
expiration date of July 1, 2000 and which will also provide liquidity for
meeting working capital or other needs. At April 4, 1999, borrowings outstanding
under this line of credit were $6,164,000. The line of credit agreement contains
certain covenants which require the Company to achieve specified levels of
senior debt to EBITDA (earnings before interest, taxes, depreciation and
amortization) and to maintain certain other financial ratios. The Company was in
compliance with these covenants at April 4, 1999 and, based on a current
assessment of its business, believes it will continue to comply with those
covenants through July 1, 2000. The credit agreement also contains certain
limitations on capital expenditures and restaurant development by the Company
(generally limiting the Company to the development of two new restaurants per
year) and restricts the Company's ability to incur additional debt outside the
bank line of credit. The interest rate on borrowings under the line of credit is
currently based on LIBOR plus a spread of two to three percent, depending on the
ratio of senior debt to EBITDA. The line of credit includes an option to convert
outstanding borrowings to a term loan prior to July 1, 2000.
In March 1999 the Company developed a plan for raising additional
equity capital to further strengthen its financial position and, as part of this
plan, completed a private sale of 1,086,266 shares of common stock to Solidus
for approximately $4.1 million. The proceeds from this sale were used to reduce
the Company's outstanding borrowings under its line of credit. In addition, the
Company has commenced a rights offering pursuant to which shareholders of the
Company on the record date for distribution of the rights will be given the
opportunity to purchase up to 1,089,067 shares of common stock at a price of
$3.75 per share, which is the same price per share as stock sold in the private
sale. If the maximum number of shares are sold pursuant to the rights offering,
the Company will receive net proceeds of approximately $3.9 million. Proceeds
from the rights offering will be used to repay borrowings outstanding under the
Company's line of credit. Amounts repaid can be reborrowed in accordance with
the terms of the line of credit agreement. The Company believes that raising
additional equity capital and repaying a portion of its outstanding debt will
benefit the Company by reducing its debt to equity ratio and reducing interest
expense and that it will provide greater flexibility to the Company in providing
for future financing needs.
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IMPACT OF THE YEAR 2000 ISSUE
INTRODUCTION. The term "Year 2000 issue" is a general term used to
describe the various problems that may result from the improper processing of
dates and date-sensitive calculations by computers and other machinery as the
year 2000 is approached and reached. These problems generally arise from the
fact that most of the world's computer hardware and software has historically
used only two digits to identify the year in a date, often meaning that the
computer will fail to distinguish dates in the "2000's" from dates in the
"1900's". These problems may also arise from other sources as well, such as the
use of special codes and conventions in software that make use of the date
field.
THE COMPANY'S STATE OF READINESS. The Company has completed its
assessment of its internal information technology systems and its major
information technology vendors and detailed plans have been developed to address
system modifications required by September 30, 1999. Generally, the Company's
information systems are relatively new systems based on personal computer,
rather than mainframe, technology. As a result, the Company's remediation
process consists primarily of replacing personal computers which are not Year
2000 compliant and installing upgrades from certain third party software vendors
which the Company has been advised will make that software Year 2000 compliant.
As indicated, the assessment phase with respect to information technology
systems has been completed. With respect to remediation, all of the Company's
personal computers have been tested for Year 2000 compliance, and replaced as
necessary. Software upgrades are expected to be installed on or before August
31, 1999, with testing completed by September 30, 1999. The Company estimates
that its Year 2000 readiness initiatives with respect to its information
technology systems is approximately 60% complete.
The Company is currently in the process of assessing its
non-information technology systems that utilize embedded technology such as
microcontrollers and reviewing them for Year 2000 compliance. The Company will
continue to assess these systems and take appropriate action with respect to
non-Year 2000 compliant systems of this nature where practicable. However, the
Company does not believe that non-Year 2000 compliance of these systems will
have a material effect on the Company's operations.
The Company's information systems are generally not interfaced with
third party vendors. However, to operate its business, the Company relies upon
government agencies, utility companies, providers of telecommunication services,
suppliers, and other third party service providers ("Material Relationships"),
over which it can assert little control. The Company's ability to conduct its
core business is dependent upon the ability of these Material Relationships to
fix their Year 2000 issues to the extent they affect the Company. If the
telecommunications carriers, public utilities and other Material Relationships
do not appropriately rectify their Year 2000 issues, the Company's ability to
conduct its core business may be materially impacted, which could result in a
material adverse effect on the Company's financial condition. The Company has
had discussions with a limited number of its Material Relationships regarding
their Year 2000 readiness and plans to further query certain of its Material
Relationships in order to obtain additional information from them. The Company
believes that making these inquiries nearer year 2000 will allow it to receive
the latest information from its Material Relationships
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<PAGE> 13
regarding their state of readiness. The Company plans to complete its survey
process prior to June 30, 1999, and will use information obtained from that
process to further assess its risks and assist in the development of contingency
plans prior to the end of 1999.
COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES. The Company expenses
costs associated with Year 2000 system changes as the costs are incurred except
for system change costs that the Company would otherwise capitalize. To date,
the Company has incurred costs of approximately $10,000 in connection with its
Year 2000 compliance plan ("Year 2000 Plan") and estimates it will spend an
additional $50,000 to $150,000 to complete its Year 2000 Plan. The financial
impact of these expenses has not been material, and the Company does not expect
future remediation costs to be material to the Company's consolidated financial
position or results of operations. However, the Company is unable to estimate
the costs that it may incur as a result of Year 2000 problems suffered by the
parties with which it deals, such as Material Relationships, and there can be no
assurance that the Company will successfully address the Year 2000 problems
present in its own systems.
RISKS PRESENTED BY YEAR 2000 PROBLEMS. The Company has begun the
testing phase of its Year 2000 Plan. However, until testing is complete the
Company cannot fully assess the risks of its Year 2000 issue. As a result of the
testing process, the Company may identify areas of its business that are at risk
of Year 2000 disruption. The absence of any such determination at this point
represents only the current status of the implementation of the Company's Year
2000 Plan, and should not be construed to mean that there is no area of the
Company's business which is at risk of a Year 2000 related disruption. As noted
above, many of the Company's business critical Material Relationships may not
appropriately address their Year 2000 issues, the result of which could have a
material adverse effect on the Company's financial condition and results of
operations.
THE COMPANY'S CONTINGENCY PLANS. The Company's Year 2000 Plan calls for
the development of contingency plans for areas of the business that are
determined to be susceptible to substantial risk of a disruption resulting from
a Year 2000 related event. Because the Company's remediation, testing and, with
respect to Material Relationships, assessment phases are not complete, it has
not fully assessed its risk from potential Year 2000 failures and has not yet
developed detailed contingency plans specific to Year 2000 events for any
specific area of business. The Company does, however, maintain contingency
plans, outside of the scope of the Year 2000 issue, designed to address various
other business interruptions. The Company is prepared for the possibility that
the testing process may hereafter identify certain areas of business at risk.
Consistent with its Year 2000 Plan, the Company will develop specific Year 2000
contingency plans, to the extent practicable, for such areas of business as and
if such determinations are made.
FORWARD-LOOKING STATEMENTS
Certain information contained in this Form 10-Q, particularly
information regarding future economic performance and finances, development
plans, and objectives of management is forward-looking information that involves
risks, uncertainties and other factors that could cause actual results to differ
materially from those expressed or implied by forward-looking statements.
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<PAGE> 14
Factors which could affect actual results include, but are not limited to, the
Company's ability to increase sales in certain of its restaurants; the Company's
ability to recruit and train qualified restaurant management personnel;
competition within the casual dining industry, which is very intense; changes in
business and economic conditions; changes in consumer tastes; and government
regulations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the disclosures set forth in
Item 7a of the Company's Annual Report on Form 10-K, as amended, filed with the
Commission on May 14, 1999.
PART II - OTHER INFORMATION
Item 2. Sale of Unregistered Securities
On March 22, 1999, Solidus purchased 1,086,266 shares of common stock
from the Company for $4,073,497.50, or $3.75 per share. This sale to
Solidus was exempt from registration requirements pursuant to Section
4(2) of the Securities Act of 1933.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual meeting held May 6, 1999.
(b) Pursuant to Instruction 3 to Item 4, no response is required
to this item.
(c) At the Annual Meeting conducted May 6, 1999, the shareholders
voted on the Election of directors. A summary of the vote is
as follows:
<TABLE>
<CAPTION>
Beasley Duncan Fritts Stout Tobias
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
For 5,379,922 5,381,904 5,387,814 5,382,949 5,375,591
Against 37,796 35,814 29,904 34,769 42,127
Abstain 28,399 28,399 28,399 28,399 28,399
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit (27) Financial Data Schedule (for SEC use only)
(b) No reports on Form 8-K were filed for the quarter ended April
4, 1999.
-14-
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J. ALEXANDER'S CORPORATION
/s/ Lonnie J. Stout II
------------------------------------------------
Lonnie J. Stout II
Chairman, President and Chief Executive Officer
/s/ R. Gregory Lewis
------------------------------------------------
R. Gregory Lewis
Vice-President and Chief Financial Officer
Date: May 18, 1999
-15-
<PAGE> 16
J. ALEXANDER'S CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No. Page No.
- ------------- --------
(27) Financial Data Schedules (For SEC Use Only)
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF AND FOR THE THREE-MONTH PERIOD
ENDED APRIL 4, 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> JAN-02-2000
<PERIOD-START> JAN-04-1999
<PERIOD-END> APR-04-1999
<CASH> 292
<SECURITIES> 0
<RECEIVABLES> 91
<ALLOWANCES> 0
<INVENTORY> 795
<CURRENT-ASSETS> 1,679
<PP&E> 72,952
<DEPRECIATION> 11,969
<TOTAL-ASSETS> 64,163
<CURRENT-LIABILITIES> 6,959
<BONDS> 18,248
0
0
<COMMON> 327
<OTHER-SE> 37,752
<TOTAL-LIABILITY-AND-EQUITY> 64,163
<SALES> 19,208
<TOTAL-REVENUES> 19,208
<CGS> 6,094
<TOTAL-COSTS> 12,467
<OTHER-EXPENSES> 4,445
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 451
<INCOME-PRETAX> 277
<INCOME-TAX> 33
<INCOME-CONTINUING> 244
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 244
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
