<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 24, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 000-26125
RUBIO'S RESTAURANTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 33-0100303
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
1902 WRIGHT PLACE, SUITE 300, CARLSBAD, CALIFORNIA 92008
(Address of Principal Executive Offices)
(760) 929-8226
(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. (1) Yes X No
----- -----
(2) Yes X No
----- -----
As of October 31, 2000, there were 8,888,440 shares of the Registrant's common
stock, par value $0.001 per share, outstanding.
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RUBIO'S RESTAURANTS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
September 24, 2000 and December 26, 1999 3
Consolidated Statements of Operations for the
thirteen weeks ended September 24, 2000 and September
26, 1999 and thirty-nine weeks ended September 24,
2000 and September 26, 199qqq9 4
Consolidated Statements of Cash Flows for the
thirty-nine weeks ended September 24, 2000
and September 26, 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20
PART II OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
</TABLE>
2
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RUBIO'S RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
September 24, December 26,
2000 1999
------------- ------------
(Unaudited) (See Note)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,972 $ 3,459
Short-term investments 7,194 7,376
Other receivables 1,068 579
Income taxes receivable 215 215
Inventory 1,702 618
Prepaid expenses 702 562
Deferred income taxes 72 50
------- -------
Total current assets 14,925 12,859
INVESTMENTS 1,801 8,544
PROPERTY - net 36,293 27,923
OTHER ASSETS 456 439
DEFERRED INCOME TAXES 273 273
------- -------
TOTAL $53,748 $50,038
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,587 $ 3,235
Accrued expenses and other liabilities 3,256 2,572
Income taxes payable 685 -
------- -------
Total current liabilities 7,528 5,807
DEFERRED RENT 1,391 1,109
------- -------
Total liabilities 8,919 6,916
COMMITMENTS AND CONTINGENCIES (NOTE 3)
STOCKHOLDERS' EQUITY:
Preferred Stock, $.001 par value, 5,000,000 shares authorized,
no shares issued or outstanding - -
Common stock, $.001 par value, 75,000,000 shares authorized,
8,885,213 issued and outstanding in 2000 and 8,871,775 issued
and outstanding in 1999 9 9
Paid-in capital 41,376 41,357
Deferred compensation 135 88
Accumulated other comprehensive income (6) 29
Retained earnings 3,315 1,639
------- ------
Total stockholders' equity 44,829 43,122
------- ------
TOTAL $53,748 $50,038
======= =======
</TABLE>
NOTE: The balance sheet for the period ended December 26, 1999 is derived from
audited financial statements and is in accordance with accounting principles
generally accepted in the United States of America. Entire footnotes for that
audited period are not included in this report.
See notes to consolidated financial statements-unaudited.
3
<PAGE>
RUBIO'S RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the 13 Weeks Ended For the 39 Weeks Ended
------------------------------- ------------------------------
September 24, September 26, September 24, September 26,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 26,324 $ 19,729 $ 69,715 $ 50,434
COSTS AND EXPENSES:
Cost of sales 7,892 5,866 20,597 14,829
Restaurant labor, occupancy and other 13,443 9,353 35,721 24,719
General and administrative expenses 2,660 1,860 7,588 5,944
Depreciation and amortization 1,091 800 2,997 2,155
Pre-opening expenses 177 276 556 538
-------- -------- -------- --------
OPERATING INCOME 1,061 1,574 2,256 2,249
OTHER INCOME (EXPENSE):
Interest and investment income 182 268 657 433
Interest expense (51) (28) (95) (131)
(Loss) gain on disposal/sale of property (17) 3 (26) (2)
-------- -------- -------- --------
Other income - net 114 243 536 300
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 1,175 1,817 2,792 2,549
INCOME TAX EXPENSE (468) (727) (1,116) (1,020)
-------- -------- -------- --------
NET INCOME $ 707 $ 1,090 $ 1,676 $ 1,529
======== ======== ======== ========
HISTORIC NET INCOME ATTRIBUTABLE TO
COMMON STOCKHOLDERS:
Basic $ 707 $ 1,090 $ 1,676 $ 1,391
======== ======== ======== ========
Diluted $ 707 $ 1,090 $ 1,676 $ 1,529
======== ======== ======== ========
HISTORIC NET INCOME PER SHARE:
Basic $ 0.08 $ 0.12 $ 0.19 $ 0.30
======== ======== ======== ========
Diluted $ 0.08 $ 0.12 $ 0.19 $ 0.20
======== ======== ======== ========
HISTORIC SHARES USED IN CALCULATING HISTORIC
NET INCOME PER SHARE:
Basic 8,885 8,866 8,880 4,699
======== ======== ======== ========
Diluted 9,052 9,125 9,031 7,761
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements-unaudited.
4
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RUBIO'S RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(In thousands)
<TABLE>
<CAPTION>
For the 39 weeks Ended
--------------------------------------
September 24, 2000 September 26, 1999
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,676 $ 1,529
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,997 2,155
Deferred compensation 47 48
Loss on disposal/sale of property 26 2
Changes in assets and liabilities:
Other receivables (489) (365)
Inventory (1,084) (156)
Prepaid expenses (140) (217)
Other assets (17) (98)
Deferred income taxes (22) 28
Accounts payable 352 278
Accrued expenses and other liabilities 684 142
Income taxes payable 685 529
Deferred rent 282 222
-------- --------
Cash provided by operating activities 4,997 4,097
-------- --------
INVESTING ACTIVITIES:
Proceeds from sale of property - 26
Purchase of property (11,392) (10,211)
Purchases of investments (18,229) (85,522)
Sales and maturities of investments 25,119 73,326
-------- --------
Cash used for investing activities (4,502) (22,381)
-------- --------
FINANCING ACTIVITIES:
Proceeds from initial public offering - 26,111
Proceeds from line of credit borrowing - 1,000
Stock offering costs (2) (2,872)
Principal payments on long-term debt - (1,856)
Payments under line of credit - (1,000)
Proceeds from exercise of stock options 20 47
-------- --------
Cash provided by financing activities 18 21,430
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 513 3,146
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,459 787
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,972 $ 3,933
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ - $ 162
======== ========
Cash paid for income taxes $ 431 $ 491
======== ========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Holding (losses)/gains on available-for-sale investments, before tax $ (58) $ 28
======== ========
</TABLE>
See notes to consolidated financial statements-unaudited.
5
<PAGE>
RUBIO'S RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
1. BASIS OF PRESENTATION
The accompanying consolidated financial information has been prepared
by Rubio's Restaurants, Inc. and its wholly-owned subsidiary (collectively, the
"Company") without audit, in accordance with the instructions to Form 10-Q and
therefore does not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
accordance with accounting principles generally accepted in the United States of
America.
UNAUDITED INTERIM FINANCIAL DATA - In the opinion of management, the
unaudited consolidated financial statements for the interim periods presented
reflect all adjustments, consisting of only normal recurring accruals, necessary
for a fair presentation of the financial position and results of operations as
of and for such periods indicated. These consolidated financial statements and
notes thereto should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 26, 1999 included in
the Company's Form 10-K. Results for the interim periods presented herein are
not necessarily indicative of results which may be reported for any other
interim period or for the entire fiscal year.
2. BALANCE SHEET DETAILS AS OF SEPTEMBER 24, 2000 AND DECEMBER 26, 1999,
respectively: (in thousands)
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
PROPERTY - at cost:
Building and leasehold improvements $ 23,050 $ 17,308
Equipment and furniture 22,173 17,395
Construction in process and related costs 2,406 1,586
-------- --------
47,629 36,289
Less: accumulated depreciation and amortization (11,336) (8,366)
-------- --------
Total $ 36,293 $ 27,923
======== ========
OTHER ASSETS:
Long-term deposits $ 365 $ 366
Other 91 73
-------- --------
Total $ 456 $ 439
======== ========
ACCRUED EXPENSES AND OTHER LIABILITIES:
Compensation $ 947 $ 1,161
Sales taxes 1,317 499
Vacation pay 401 300
Unearned usage allowance 150 95
Other 441 517
-------- --------
Total $ 3,256 $ 2,572
======== ========
</TABLE>
3. CREDIT FACILITIES
REVOLVING LINE OF CREDIT - On August 15, 2000, the Company amended its
existing $7,500,000 credit facility. The facility, which was to mature in May
2001,has been increased to $12,000,000 with a maturity date of July 2004. There
have been no changes to the fee structure on borrowings or the unused portion of
the facility. As of September 24, 2000, there were no borrowings against the
facility, as amended.
6
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RUBIO'S RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
4. EARNINGS PER SHARE
Reconciliation of basic and diluted earnings per share in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
is as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
------------------------------- ------------------------------
September 24, September 26, September 24, September 26,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Numerator
Basic:
Net Income $ 707 $ 1,090 $ 1,676 $ 1,529
Accretion on redeemable convertible preferred stock - - - (138)
------- ------- ------- -------
Net income attributable to common
stockholders 707 1,090 1,676 1,391
Diluted:
Reversal of accretion on redeemable convertible
preferred stock - - - 138
------- ------- ------- -------
Net income attributable to common
stockholders $ 707 $ 1,090 $ 1,676 $ 1,529
======= ======= ======= =======
Denominator
Basic:
Weighted average common shares outstanding 8,885 8,866 8,880 4,699
Diluted:
Effect of dilutive securities:
Common stock options 167 259 151 245
Conversion of convertible preferred stock - - - 2,817
Total weighted average common and potential ------- ------- ------- -------
common shares outstanding 9,052 9,125 9,031 7,761
======= ======= ======= =======
Earnings per share
Basic $ 0.08 $ 0.12 $ 0.19 $ 0.30
======= ======= ======= =======
Diluted $ 0.08 $ 0.12 $ 0.19 $ 0.20
======= ======= ======= =======
</TABLE>
7
<PAGE>
RUBIO'S RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED
5. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. The
new standard will become effective for the Company in the first quarter of the
year ending December 30, 2001. Interim reporting of this standard will be
required. At present, the Company does not hold any derivative instruments nor
does it engage in hedging activities. The Company has not yet assessed the
effect of this standard on our future reporting and disclosures.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements," which summarizes the SEC's interpretation of applying accounting
principles generally accepted in the United States of America to revenue
recognition in the financial statements. SAB No. 101 was subsequently amended in
June 2000 and became effective in the current quarter. Based on the Company's
current revenue recognition policies, the adoption of SAB No. 101, as amended,
has not had a material impact on the Company's consolidated financial position
or the results of operations.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an Interpretation of APB No. 25" ("FIN No. 44"). FIN No. 44
clarifies the application of Accounting Principles Board ("APB") Opinion No. 25
for certain issues including: (a) the definition of employee for purposes of
applying APB Opinion No. 25, (b) the criteria for determining whether a plan
qualifies as a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination. FIN No. 44 took effect July 1, 2000. The adoption of FIN No. 44 has
not had a material effect on the Company's consolidated financial position or
the results of operations.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This quarterly report on Form 10-Q may contain certain projections,
estimates and other forward-looking statements that involve a number of risks
and uncertainties, including without limitation, those discussed below at "Risk
Factors." While this outlook represents our current judgment on the future
direction of the business, such risks and uncertainties could cause actual
results to differ materially from any future performance suggested below. We
undertake no obligation to release publicly the results of any revisions to
these forward-looking statements to reflect events or circumstances arising
after the date of this quarterly report.
OVERVIEW
We opened our first restaurant under the name "Rubio's, Home of the
Fish Taco" in 1983 and grew steadily through 1994, at which time we operated 17
units. We increased the number of restaurant openings in recent years, from
opening six new restaurants in 1995 to opening 31 in 1999. As of September 24,
2000, we have opened 25 new restaurants in the current year. In addition, in
order to continue to expand into new markets, we are currently initiating a
franchise program.
As a result of our expansion, period to period comparisons of our
financial results may not be meaningful. When a new unit opens, it will
typically incur higher than normal levels of food and labor costs until new
personnel gain experience. Hourly labor schedules are gradually adjusted
downward during the first three months of a restaurant opening, in order to
reach operating efficiencies similar to those at established units. In
calculating comparable restaurant sales, we introduce a restaurant into our
comparable restaurant base once it has been in operation for 15 calendar
months.
Sales represents gross sales less sales taxes, coupons and other
discounts. Cost of sales is composed of food, beverage and paper supply
expenses. Components of restaurant labor, occupancy and other expenses include
direct hourly and management wages, bonuses, fringe benefit costs, rent and
other occupancy costs, advertising and promotion, operating supplies, utilities,
maintenance and repairs and other operating expenses.
General and administrative expenses include all corporate and
administrative functions that support existing operations and provide
infrastructure to facilitate our future growth. Components of this category
include management, supervisory and staff salaries and employee benefits,
travel, information systems, training, corporate rent and professional and
consulting fees.
Pre-opening expenses which are expensed as incurred, consist of the
costs of hiring and training the initial workforce, travel, the cost of food
used in training, the cost of the initial stocking of operating supplies and
other direct costs related to the opening.
We have leased all of our facilities, except for one building, in order
to minimize the cash investment associated with each unit. The majority of our
leases are for 10-year terms and include options to extend the terms. The
majority of our leases also include both fixed rate and percentage-of-sales rent
provisions.
9
<PAGE>
We use a 52- or 53-week fiscal year ending on the Sunday nearest
December 31. The three-month periods ended September 24, 2000 and September 26,
1999 each consisted of 13 weeks. The nine-month periods ended September 24, 2000
and September 26, 1999 each consisted of 39 weeks.
RESULTS OF OPERATIONS
13 WEEKS ENDED SEPTEMBER 24, 2000 COMPARED TO THE 13 WEEKS ENDED SEPTEMBER 26,
1999
Our operating results for the 13 weeks, expressed as a percentage of
sales, were as follows:
<TABLE>
<CAPTION>
For 13 Weeks Ended
-----------------------------------
September 24, September 26,
2000 1999
-------------- -------------
<S> <C> <C>
Sales 100.0% 100.0%
Costs and expenses:
Cost of sales 30.0 29.7
Restaurant labor, occupancy and other 51.1 47.4
General and administrative expenses 10.1 9.4
Depreciation and amortization 4.1 4.1
Pre-opening expenses 0.7 1.4
--------- ---------
Operating income 4.0 8.0
Other income - net 0.4 1.2
--------- ---------
Income before income taxes 4.4 9.2
Income tax expense (1.8) (3.7)
--------- ---------
Net income 2.6% 5.5%
========= =========
</TABLE>
Results of operations reflect a full 13 weeks of operations for 107
restaurants and 71 restaurants for the periods ended September 24, 2000 and
September 26, 1999, respectively. Results of operations also reflect a partial
period of operations for 8 restaurants and 11 restaurants for the 13 weeks ended
September 24, 2000 and September 26, 1999, respectively.
SALES. Sales increased $6.6 million, or 33.4%, to $26.3 million for the 13 weeks
ended September 24, 2000 from $19.7 million for the 13 weeks ended September 26,
1999. This increase was principally due to the $1.8 million in sales generated
by a full quarter of operations from the non-comparable 22 units opened in 1999,
combined with the $4.8 million from the 25 units opened during 2000.
COST OF SALES. Cost of sales as a percentage of sales increased slightly to
30.0% in the 13 weeks ended September 24, 2000 from 29.7% in the 13 weeks ended
September 26, 1999. This increase was primarily due to operating more units
outside our Southern California base together with higher tortilla and produce
prices in some out of state markets.
RESTAURANT LABOR, OCCUPANCY AND OTHER. Restaurant labor, occupancy and other
increased as a percentage of sales to 51.1% for the 13 weeks ended September 24,
2000 from 47.4% in the 13 weeks ended September 26, 1999. The increase as a
percentage of sales is primarily due to an increase in total direct labor of
1.4%. These labor increases were due to expected inefficiencies in the new
stores, increasing mix of stores located in newer markets which have on average
lower initial annual sales volumes than our mature markets and overall wage
inflation. In addition, we experienced one-time training costs related to our
new menu board and burrito enhancement rollout. The menu board rollout was
completed in the third quarter of fiscal 2000. The other factor impacting costs
this quarter was the increase in electricity costs in the San Diego area. In
total, utility costs increased 0.7% as a percent of sales compared to the prior
year quarter.
10
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $2.7 million for the 13 weeks ended September 24, 2000 from $1.9
million for the 13 weeks ended September 26, 1999. The increase was primarily
due to increases in recruiting, salaries and benefits related to the hiring and
training of additional corporate employees and field management personnel as
well as the building of a franchising infrastructure. General and administrative
expenses increased as a percentage of sales to 10.1% in 2000 from 9.4% in 1999.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$1.1 million in the 13 weeks ended September 24, 2000 from $800,000 in the 13
weeks ended September 26, 1999. The increase was primarily due to the 25 new
units opened during 2000, as well as the additional depreciation on the 19 new
units opened during the third and fourth quarter of 1999. As a percentage of
sales, depreciation and amortization was 4.1% in both 2000 and 1999.
PRE-OPENING EXPENSES. Pre-opening expenses decreased to $177,000 for the 13
weeks ended September 24, 2000 from $276,000 for the 13 weeks ended September
26, 1999, primarily due to the decrease in unit openings to 8 in the third
quarter of 2000 compared to 11 in the third quarter of 1999. In addition, some
of the openings last year were among the first in a new market, which normally
require more extensive training and, therefore, higher pre-opening costs.
OTHER INCOME - NET. Other income - net decreased to $114,000 for the 13 weeks
ended September 24, 2000 from $243,000 in other income - net in the 13 weeks
ended September 26, 1999. Interest and investment income decreased to $182,000
for the 13 weeks ended September 24, 2000 from $268,000 in the 13 weeks ended
September 26, 1999. The decrease is primarily due to a decrease in the cash
available for investing after our initial public offering, which was completed
in May 1999. Interest expense increased to $51,000 for the 13 weeks ended
September 24, 2000 from $28,000 in the 13 weeks ended September 26, 1999. This
increase is due to fully amortizing costs related to the $7,500,000 credit
facility which was amended on August 15, 2000.
INCOME TAXES. The provision for income taxes in the 13 weeks ended September 24,
2000 and September 26, 1999, respectively, is based on the approximate annual
effective tax rate applied to the respective quarter's pretax book income. The
40% tax rate applied in 2000 comprises the federal and state statutory rates
based on the estimated annual effective rate for 2000.
RESULTS OF OPERATIONS
39 WEEKS ENDED SEPTEMBER 24, 2000 COMPARED TO THE 39 WEEKS ENDED SEPTEMBER 26,
1999
Our operating results for the 39 weeks, expressed as a percentage of
sales, were as follows:
<TABLE>
<CAPTION>
For 39 Weeks Ended
---------------------------------
September 24, September 26,
2000 1999
------------- -------------
<S> <C> <C>
Sales 100.0% 100.0%
Costs and expenses:
Cost of sales 29.5 29.4
Restaurant labor, occupancy and other 51.2 49.0
General and administrative expenses 10.9 11.8
Depreciation and amortization 4.3 4.3
Pre-opening expenses 0.8 1.1
--------- ---------
Operating income 3.3 4.4
Other income - net 0.7 0.6
--------- ---------
Income before income taxes 4.0 5.0
Income tax expense (1.6) (2.0)
--------- ---------
Net income 2.4% 3.0%
========= =========
</TABLE>
11
<PAGE>
Results of operations reflect a full 39 weeks of operations for 90
restaurants and 59 restaurants for the periods ended September 24, 2000 and
September 26, 1999, respectively. Results of operations also reflect a partial
period of operations for 25 restaurants and 23 restaurants for the 39 weeks
ended September 24, 2000 and September 26, 1999, respectively.
SALES. Sales increased $19.3 million, or 38.2%, to $69.7 million for the 39
weeks ended September 24, 2000 from $50.4 million for the 39 weeks ended
September 26, 1999. This increase was principally due to the $10.8 million in
sales generated by a full 39 weeks of operations from the non-comparable 22
units opened in 1999, combined with the $8.4 million from the 25 units opened
during 2000. In addition, comparable unit sales increased by $0.1 million, or
0.5%.
COST OF SALES. Cost of sales as a percentage of sales increased slightly to
29.5% in the 39 weeks ended September 24, 2000 from 29.4% in the 39 weeks ended
September 26, 1999. This increase is comprised of higher tortilla and produce
costs in some markets outside our Southern California base offset by our
increased purchasing power used to negotiate lower prices on items such as
Pollock, chicken and oil.
RESTAURANT LABOR, OCCUPANCY AND OTHER. Restaurant labor, occupancy and other
increased as a percentage of sales to 51.2% for the 39 weeks ended September 24,
2000 from 49.0% in the 39 weeks ended September 26, 1999. The increase as a
percentage of sales is primarily due to an increase in total direct labor of
1.2%. These labor increases were due to inefficiencies in the new stores and to
the increasing mix of stores located in newer markets which have on average
lower initial annual sales volumes than our mature markets as well as wage
inflation. In addition, we experienced one-time training costs related to our
new menu board and burrito enhancement rollout. This rollout was completed in
the third quarter of fiscal 2000. The other factor impacting costs in the
current year was the increase in electricity expenses in the San Diego area
which began toward the end of the second quarter.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $7.6 million for the 39 weeks ended September 24, 2000 from $5.9
million for the 39 weeks ended September 26, 1999. The increase was primarily
due to increases in recruiting, salaries and benefits related to the hiring of
additional corporate employees and field management personnel as well as other
corporate level expenses required to support and manage unit expansion. In
addition, we have incurred $247,000 in salaries and other expenses in the
current year related to building our franchising infrastructure. General and
administrative expenses decreased as a percentage of sales to 10.9% in 2000 from
11.8% in 1999 primarily due to our expanding revenue base.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$3.0 million in the 39 weeks ended September 24, 2000 from $2.2 million in
the 39 weeks ended September 26, 1999. The $0.8 million increase was
primarily due to the 25 new units opened during 2000, as well as additional
depreciation on the 31 new units opened during 1999. As a percentage of
sales, depreciation and amortization was 4.3% in both 2000 and 1999.
PRE-OPENING EXPENSES. Pre-opening expenses increased to $556,000 for the 39
weeks ended September 24, 2000 from $538,000 for the 39 weeks ended September
26, 1999 primarily due to the increase in unit openings to 25 in 2000 compared
to 23 in 1999.
OTHER INCOME - NET. Other income - net increased to $536,000 for the 39 weeks
ended September 24, 2000 from $300,000 in other income - net in the 39 weeks
ended September 26, 1999. The increase is primarily due to realizing a full nine
months of additional cash available for investing in fiscal 2000 after our
initial public offering, which was completed in May 1999. Interest and
investment income increased to $657,000 for the 39 weeks ended September 24,
2000 from $433,000 in the 39 weeks ended September 26, 1999. Interest expense
declined to $95,000 for the 39 weeks ended September 24, 2000 from $131,000 in
the 39 weeks ended September 26, 1999. This decrease is primarily due to the
repayment of all long-term debt with the proceeds from our initial public
offering.
12
<PAGE>
INCOME TAXES. The provision for income taxes in the 39 weeks ended September 24,
2000 and September 26, 1999, respectively, is based on the approximate annual
effective tax rate applied to the respective quarter's pretax book income. The
40% tax rate applied in 2000 comprises the federal and state statutory rates
based on the estimated annual effective rate for 2000.
INFLATION
Components of our operations subject to inflation include food,
beverage, lease and labor costs. Our leases require us to pay taxes,
maintenance, repairs, insurance and utilities, all of which are subject to
inflationary increases. We believe that labor inflation has had an impact on our
results of operations recently but has been somewhat mitigated by price
increases taken in recent years.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our capital requirements in recent years through cash
flow from operations, private placements of preferred stock, bank debt, and the
public sale of equity securities.
We generated $5.0 million in cash flow from operating activities for
the 39 weeks ended September 24, 2000 compared to $4.1 million for the 39 weeks
ended September 26, 1999.
Net cash used for investing activities was $4.5 million for the 39
weeks ended September 24, 2000 compared to net cash used for investing
activities of $22.4 million for the 39 weeks ended September 26, 1999.
Net cash provided by financing activities was $18,000 in the 39 weeks
ended September 24, 2000, which primarily consisted of the exercise of stock
options compared to a net cash provided of $21.4 million for the 39 weeks ended
September 26, 1999, which primarily consisted of the proceeds from our initial
public offering. In addition, we have a $12.0 million line of credit agreement
with a financial institution. As of September 24, 2000, there were no borrowings
against the line of credit.
Our principal uses of cash in 2000 were the development and opening of
new restaurants. We incurred $11.4 million in capital expenditures during the 39
weeks ended September 24, 2000, of which $9.9 million was for new unit openings
and $0.7 million was for maintenance expenditures on existing locations and $0.8
million for corporate expenditures. During the 39 weeks ended September 26,
1999, we incurred $10.2 million in capital expenditures, of which $8.8 million
was for new unit openings, $0.7 million was for existing locations and $0.7
million was for corporate expenditures and point-of-sale register replacements.
We believe that the proceeds from the initial public offering completed
in May 1999 together with anticipated cash flow from operations and funds
anticipated to be available from a credit facility will be sufficient to satisfy
our working capital requirements for at least the next 12 months. We plan to
incur substantial costs over the near term in connection with our expansion
program. Changes in our operating plans, amendments to our expansion plans,
lower than anticipated sales, increased expenses, potential acquisitions or
other events may cause us to seek additional financing sooner than anticipated.
Additional financing may not be available on acceptable terms, or at all.
Failure to obtain additional financing as needed could have a material adverse
effect on our business and results of operations.
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RISK FACTORS
Any investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained in this quarterly report, before you decide
to buy our common stock. If any of the following risks actually occur, our
business would likely suffer. In such case, the trading price of our common
stock could decline, and you may lose all or part of the money you paid to buy
our common stock.
OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO SEASONALITY
AND OTHER FACTORS, WHICH COULD HAVE A NEGATIVE EFFECT ON THE PRICE OF OUR COMMON
STOCK.
Our business is subject to seasonal fluctuations. Historically, sales
in most of our restaurants have been higher during the second and third quarters
of each fiscal year. As a result, we expect our highest earnings to occur in the
second and third quarters of each fiscal year.
In addition to seasonality, our quarterly and annual operating results
and comparable unit sales may fluctuate significantly as a result of a variety
of factors, including:
- labor costs for our hourly and management personnel, including
increases in federal or state minimum wage requirements;
- fluctuations in food costs, particularly the cost of chicken, beef,
fish, cheese and produce;
- utility cost increases;
- the timing of new restaurant openings and related expenses;
- the amount of sales contributed by new and existing restaurants;
- our ability to achieve and sustain profitability on a quarterly or
annual basis;
- consumer confidence;
- changes in consumer preferences;
- the level of competition from existing or new competitors in the
quick-service restaurant industry;
- factors associated with closing a unit, including payment of the
base rent for the balance of the lease term;
- impact of weather on revenues and costs of food and
- general economic conditions.
Accordingly, results for any one quarter or for any year are not
necessarily indicative of results to be expected for any other quarter or for
any year. Comparable unit sales for any particular future period may decrease.
IF WE ARE NOT ABLE TO SUCCESSFULLY PURSUE OUR EXPANSION STRATEGY,
OUR BUSINESS AND RESULTS OF OPERATIONS MAY BE ADVERSELY IMPACTED.
We intend to continue to pursue an expansion strategy. Since 1996,
and as of September 24, 2000, we have opened a total of 84 restaurants; 16
restaurants in San Diego county, 33 restaurants in greater Los Angeles, which
includes Los Angeles, Orange, San Bernardino, Ventura and Riverside counties,
13 restaurants in Phoenix/Tucson, Arizona, five restaurants in Las Vegas,
Nevada, seven restaurants in Denver, Colorado, six restaurants in Salt Lake
City, Utah and four in the Sacramento, California area. We plan to open a
total of 36 restaurants in fiscal 2000, 25 of which have been opened to date.
Fifteen of the 36 planned fiscal 2000 openings are outside Southern
California. Our ability to successfully achieve our expansion strategy will
depend on a variety of factors, many of which are beyond our control.
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These factors include:
- our ability to locate suitable restaurant sites or negotiate
acceptable lease terms;
- our ability to obtain required local, state and federal
governmental approvals and permits related to construction of
the sites, food and alcoholic beverages;
- our dependence on contractors to construct new restaurants in
a timely manner;
- our ability to attract, train and retain qualified and
experienced restaurant personnel and management;
- our ability to operate our restaurants profitably;
- our need for additional capital and our ability to obtain such
capital on favorable terms or at all;
- our ability to respond effectively to the intense competition
in the quick-service restaurant industry; and
- general economic conditions.
If we are not able to successfully address these factors, we may not be
able to expand at a rate currently contemplated by our strategy, and our
business and results of operations may be adversely impacted.
OUR RESOURCES MAY BE STRAINED IN IMPLEMENTING OUR BUSINESS STRATEGY.
Our expansion strategy places a strain on our management, financial and
other resources. To manage our growth effectively, we must maintain the level of
quality and service at our existing and future restaurants. We must also
continue to enhance our operational, financial and management systems and
locate, hire, train and retain experienced and dedicated operating personnel,
particularly managers. We may not be able to effectively manage any one or more
of these or other aspects of our expansion. Failure to do so could have a
material adverse effect on our business and results of operations.
WE ARE CURRENTLY INITIATING A FRANCHISING PROGRAM. WE MAY BE
UNSUCCESSFUL IN EXECUTING THIS PROGRAM.
We are planning to use a franchise strategy in selected markets. Our
failure to successfully execute a franchising program could adversely affect our
business and results of operations. We have not used franchising to date and may
not be successful in implementing a franchise program in the future. We have
established preliminary criteria to evaluate prospective franchisees and have
conducted preliminary interviews with these candidates. We may be unable to
identify and attract franchisees that have the business abilities or access to
financial resources necessary to open our restaurants or to successfully develop
or operate our restaurants in their franchise areas in a manner consistent with
our criteria and standards.
THE RESTAURANT INDUSTRY IS INTENSELY COMPETITIVE AND WE MAY NOT HAVE
THE RESOURCES TO COMPETE ADEQUATELY.
The restaurant industry is intensely competitive. There are many
different segments within the restaurant industry that are distinguished by
types of service, food types and price/value relationships. We position our
restaurants in the high-quality, quick-service Mexican food segment of the
industry. In this segment, our direct competitors include Baja Fresh, La Salsa
and Chipotle. We also compete indirectly with full-service Mexican restaurants
including Chevy's, Chi Chi's and El Torito, and fast food restaurants,
particularly those focused on Mexican food such as Taco Bell and Del Taco.
Competition in our industry segment is based primarily upon food quality, price,
restaurant ambiance, service and location. Although we believe we compete
favorably with respect to each of these factors, many of our direct and indirect
competitors are well-established national, regional or local chains and have
substantially greater financial, marketing, personnel and other resources than
we do. We also compete with many other retail establishments for site locations.
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The performance of individual units may also be affected by factors
such as traffic patterns, demographic considerations and the type, number and
proximity of competing restaurants. In addition, factors such as inflation,
increased food, labor and employee benefit costs and the availability of
experienced management and hourly employees may also adversely affect the
restaurant industry in general and our units in particular.
OUR PLANNED EXPANSION INTO NEW GEOGRAPHIC AREAS INVOLVES A NUMBER OF
RISKS WHICH COULD DELAY OR PREVENT THE OPENING OF PLANNED NEW RESTAURANTS.
Almost all of our current restaurants are located in the southwest
region of the United States. Our planned expansion into geographic areas outside
the Southwest involves a number of risks, including:
- uncertainties related to local demographics, tastes and
preferences;
- local custom, wages, costs and other legal and economic
conditions particular to new regions;
- the need to develop relationships with local distributors and
suppliers for fresh produce, fresh tortillas and other
ingredients;
- potential difficulties related to management of operations
located in a number of broadly dispersed locations; and
- lack of market awareness or acceptance of our restaurant
concept in new geographic areas.
We may not be successful in addressing these risks. We also may not be
able to open our planned new operations on a timely basis, or at all, in these
new areas. Delays in opening or failure to open planned new restaurants outside
the Southwest could have a material adverse effect on our business and results
of operations. We currently anticipate that our new restaurants will take
several months to reach planned operating levels due to inefficiencies typically
associated with expanding into new regions, such as lack of market awareness,
acceptance of our restaurant concept and inability to hire sufficient staff.
WE MAY BE UNABLE TO FUND OUR SUBSTANTIAL WORKING CAPITAL REQUIREMENTS
AND MAY NEED ADDITIONAL FUNDING SOONER THAN WE ANTICIPATE.
We believe that the proceeds from our initial public offering completed
in May 1999 together with anticipated cash flow from operations and funds
anticipated to be available from a credit facility will be sufficient to satisfy
our working capital requirements for at least the next 12 months. We plan to
incur substantial costs over the near-term in connection with our expansion
plans. We may need to seek additional financing sooner than we anticipate as a
result of the following factors:
- changes in our operating plans;
- acceleration of our expansion plans;
- lower than anticipated sales of our menu offerings;
- increased food and/or labor costs; and
- potential acquisitions.
Additional financing may not be available on acceptable terms, or at
all. If we fail to get additional financing as needed, our business and results
of operations would likely suffer.
IF WE ARE NOT ABLE TO ANTICIPATE AND REACT TO OUR FOOD AND LABOR COSTS,
OUR PROFITABILITY COULD BE ADVERSELY AFFECTED.
Our restaurant operating costs principally consist of food and labor
costs. Our profitability is dependent on our ability to anticipate and react to
changes in food and labor costs. Various factors beyond our control, including
adverse weather conditions and governmental regulation, may affect our food
costs. We may not be able to anticipate and react to changing food costs,
whether through our purchasing practices, menu composition or menu price
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adjustment in the future. In the event that food and labor price increases cause
us to increase our menu prices, we face the risk that our guests will choose to
patronize lower-cost restaurants.
Failure to react to changing food costs or to retain guests if we are
forced to raise menu prices could have a material adverse effect on our business
and results of operations.
A substantial number of our employees are subject to various minimum
wage requirements. Many of our employees work in restaurants located in
California and receive salaries equal to or slightly greater than the California
minimum wage. Effective March 1, 1998, the minimum wage in California increased
to $5.75 per hour from $5.15. Effective January 1, 2001, the minimum wage rate
will be increased from $5.75 to $6.25 in California. In addition, another $0.50
minimum wage increase in California has been passed for January 1, 2002. Similar
proposals may come before legislators or voters in other jurisdictions in which
we operate or seek to operate. Such minimum wage increases could have a material
adverse effect on our business and results of operations.
Our results may be adversely affected due to other labor related cost
increases beyond our control. For example, workers' compensation rates have
increased in California. In addition, we may be exposed to higher health costs
due to changes in the insurance industry and our expanding labor base.
THE ABILITY TO ATTRACT AND RETAIN HIGHLY QUALIFIED PERSONNEL TO OPERATE
AND MANAGE OUR RESTAURANTS IS EXTREMELY IMPORTANT AND OUR FAILURE TO DO SO COULD
ADVERSELY AFFECT US.
Our success and the success of our individual restaurants depend upon
our ability to attract and retain highly motivated, well-qualified restaurant
operators and management personnel, as well as a sufficient number of qualified
employees, including guest service and kitchen staff, to keep pace with our
expansion schedule. Qualified individuals needed to fill these positions are in
short supply in some geographic areas. Our ability to recruit and retain such
individuals may delay the planned openings of new restaurants or result in
higher employee turnover in existing restaurants, which could have a material
adverse effect on our business or results of operations. We also face
significant competition in the recruitment of qualified employees. In addition,
we are heavily dependent upon the services of our officers and key management
involved in restaurant operations, marketing, finance, purchasing, expansion,
human resources and administration. The loss of any of these individuals could
have a material adverse effect on our business and results of operations. We
currently do not have employment agreements with any of our employees.
UNANTICIPATED COSTS OR DELAYS IN THE DEVELOPMENT OR CONSTRUCTION OF OUR
RESTAURANTS COULD PREVENT OUR TIMELY AND COST-EFFECTIVE OPENING OF NEW
RESTAURANTS.
We depend on contractors and real estate developers to construct our
restaurants. Many factors may adversely affect the cost and time associated with
the development and construction of our restaurants, including:
- labor disputes;
- shortages of materials and skilled labor;
- adverse weather;
- unforeseen engineering problems;
- environmental problems;
- construction or zoning problems;
- local government regulations;
- modifications in design; and
- other unanticipated increases in costs.
Any of these factors could give rise to delays or cost overruns which
may prevent us from developing additional restaurants within our anticipated
budgets or time periods. Any such failure could have a material adverse effect
on our business and results of operations.
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OUR RESTAURANTS ARE CONCENTRATED IN THE SOUTHWEST REGION OF THE UNITED
STATES, AND THEREFORE, OUR BUSINESS IS SUBJECT TO FLUCTUATIONS IF ADVERSE
BUSINESS CONDITIONS OCCUR IN THAT REGION.
As of September 24, 2000 all but 13 of our existing restaurants are
located in the southwest region of the United States. Accordingly, we are
susceptible to fluctuations in our business caused by adverse economic or other
conditions in this region, including natural or other disasters. Our significant
investment in, and long-term commitment to, each of our units limits our ability
to respond quickly or effectively to changes in local competitive conditions or
other changes that could affect our operations. In addition, some of our
competitors have many more units than we do. Consequently, adverse economic or
other conditions in a region, a decline in the profitability of several existing
units or the introduction of several unsuccessful new units in a geographic area
could have a more significant effect on our results of operations than would be
the case for a company with a larger number of restaurants or with more
geographically dispersed restaurants.
OUR FAILURE OR INABILITY TO ENFORCE OUR TRADEMARKS AND TRADE NAMES
COULD ADVERSELY AFFECT OUR EFFORTS TO ESTABLISH BRAND EQUITY.
Our ability to successfully expand our concept will depend on our
ability to establish and maintain "brand equity" through the use of our
trademarks, service marks, trade dress and other proprietary intellectual
property, including our name and logos. We currently hold three trademarks and
have seven service marks relating to our brand. Some or all of the rights in our
intellectual property may not be enforceable, even if registered, against any
prior users of similar intellectual property or our competitors who seek to
utilize similar intellectual property in areas where we operate or intend to
conduct operations. If we fail to enforce any of our intellectual property
rights, we may be unable to capitalize on our efforts to establish brand equity.
It is also possible that we will encounter claims from prior users of similar
intellectual property in areas where we operate or intend to conduct operations.
Claims from prior users could limit our operations and possibly cause us to pay
damages or licensing fees to a prior user or registrant of similar intellectual
property.
AS A RESTAURANT SERVICE PROVIDER, WE COULD BE SUBJECT TO ADVERSE
PUBLICITY OR CLAIMS FROM OUR GUESTS.
We may be the subject of complaints or litigation from guests alleging
food-related illness, injuries suffered on the premises or other food quality,
health or operational concerns. Adverse publicity resulting from such
allegations may materially affect us and our restaurants, regardless of whether
such allegations are true or whether we are ultimately held liable. We may also
be the subject of complaints or allegations from current, former or prospective
employees from time to time. A lawsuit or claim could result in an adverse
decision against us that could have a material adverse effect on our business
and results of operations.
WE MAY NOT BE ABLE TO OBTAIN AND MAINTAIN STATE AND LOCAL PERMITS
NECESSARY TO OPERATE OUR UNITS.
The failure to maintain necessary licenses, permits or approvals,
including food and alcoholic beverage licenses, or to comply with other
government regulations could have a material adverse effect on our business and
results of operations. In addition, difficulties or failures in obtaining
required licenses and approvals will result in delays in, or cancellations of,
the opening of new units. Restaurants are subject to licensing and regulations
by state and local health, environmental, labor relations, sanitation, building,
zoning, land use and environmental regulations. There can be no assurance that
we will be able to obtain necessary variances or other approvals
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on a cost-effective and timely basis in order to construct and develop units in
the future. Changes in any or all of these laws or regulations, such as
government-imposed paid leaves of absence or mandated health benefits, could
have a material adverse effect on our business and results of operations.
OUR CURRENT INSURANCE MAY NOT PROVIDE ADEQUATE LEVELS OF COVERAGE
AGAINST CLAIMS.
There are types of losses we may incur that may be uninsurable or that
we believe are not economically insurable, such as losses due to earthquakes and
other natural disasters. In view of the location of many of our existing and
planned units, our operations are particularly susceptible to damage and
disruption caused by earthquakes. Further, we do not currently maintain any
insurance coverage for employee-related litigation or the effects of adverse
publicity. In addition, punitive damage awards are generally not covered by
insurance. We may also be subject to litigation which, regardless of the
outcome, could result in adverse publicity and damages. Such litigation, adverse
publicity or damages could have a material adverse effect on our business and
results of operations.
THE LARGE NUMBER OF SHARES ELIGIBLE FOR PUBLIC SALE COULD CAUSE OUR
STOCK PRICE TO DECLINE.
The market price of our common stock could decline as a result of sales
by our existing stockholders of a large number of shares of our common stock in
the market or the perception that such sales could occur. These sales also might
make it more difficult for us to sell equity securities in the future at a time
and at a price that we deem appropriate.
THE MARKET PRICE OF OUR STOCK MAY BE ADVERSELY AFFECTED BY MARKET
VOLATILITY.
The stock market has experienced extreme price and volume fluctuations.
The trading price of our common stock could be subject to wide fluctuations in
response to a number of factors, including:
- fluctuations in our quarterly or annual results of operations;
- changes in published earnings estimates by analysts and whether our
earnings meet or exceed such estimates;
- additions or departures of key personnel; and
- changes in overall stock market conditions, including the stock
prices of other restaurant companies.
In the past, companies that have experienced volatility in the market
price of their stock have been the object of securities class action litigation.
If we were subject to securities class action litigation, it could result in
substantial costs and a diversion of our management's attention and resources.
THE INTERESTS OF OUR CONTROLLING STOCKHOLDERS MAY CONFLICT WITH YOUR
INTERESTS.
As of September 24, 2000, the executive officers, directors and
entities affiliated with them, in the aggregate, beneficially own approximately
36.6% of our outstanding common stock. These stockholders are able to exercise
control over all matters requiring approval by our stockholders, including the
election of directors and approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying or preventing a
change in control of our company.
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ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW
COULD MAKE A THIRD-PARTY ACQUISITION OF US DIFFICULT.
The anti-takeover provisions in our certificate of incorporation, our
bylaws and Delaware law could make it more difficult for a third party to
acquire us. As a result of these provisions, we could delay, deter or prevent a
takeover attempt or third party acquisition that our stockholders consider to be
in their best interest, including a takeover attempt that results in a premium
over the market price for the shares held by our stockholders.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our market risk exposures are related to our cash, cash equivalents and
investments. We invest our excess cash in highly liquid short-term investments
with maturities of less than one year and corporate bonds, mortgage-backed
securities, commercial paper, tax free municipals, municipal bonds, U.S.
Treasury notes and agencies with maturities in excess of one year. These
investments are not held for trading or other speculative purposes. Changes in
interest rates affect the investment income we earn on our investments and,
therefore, impact our cash flows and results of operations.
In addition, we have a $12.0 million line of credit agreement with a
financial institution. Interest on the line is calculated on either a bank
reference rate plus 1.00% - 2.00% or on an adjusted LIBOR plus 2.50% - 3.50% per
annum based on computed leverage ratio. However, there currently is no
outstanding balance under this agreement. Should we draw on this line in the
future, changes in interest rates would affect the interest expense on these
loans and, therefore, impact our cash flows and results of operations.
Many of the food products purchased by us are affected by changes in
weather, production, availability, seasonality and other factors outside our
control. In an effort to control some of this risk, we have entered into some
fixed price purchase commitments with terms of less than a year. In addition, we
believe that almost all of our food and supplies are available from several
sources, which helps to control food commodity risks.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) We currently have approximately $8.9 million remaining from our
initial public offering in May 1999. The use of proceeds for this
reporting period has conformed with our intended use outlined in
the prospectus.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) 3.1 (1) Amended and Restated Certificate of Incorporation
3.2 (1) Restated Bylaws
10.1 Second Amendment to the Credit Agreement between us
and Fleet National Bank dated August 15, 2000.
27.1 Financial Data Schedule
-------------------------------------------------------------------
(1) Filed as an exhibit to Registrant's Registration
Statement on Form S-1, and incorporated herein by reference.
b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant
during the 13 weeks ended September 24, 2000.
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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 dully authorized.
Dated: November 6, 2000 RUBIO'S RESTAURANTS, INC.
/s/ Joseph N. Stein
---------------------------------------------
Joseph N. Stein
Chief Strategic and Financial Officer
(Principal Financial and Accounting Officer)
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