<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
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Act of 1934
For the quarterly period ended December 31, 1999 or
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the transition period from ________ to _____________
Commission file number 1-9822
BFX HOSPITALITY GROUP, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 75-1732794
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(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107
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(Address and zip code of principal executive offices)
(817) 332-4761
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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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares outstanding at:
Class February 5, 2000
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Common stock, $.05 par value 3,963,866
1
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BFX HOSPITALITY GROUP, INC.
Index
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Page
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Part I - Financial Information............................................ 3
Item 1 - Financial Statements............................................. 3
Consolidated Condensed Balance Sheets December 31, 1999 (Unaudited)
and September 30, 1999.................................................. 3
Consolidated Condensed Statements of Operations (Unaudited)
Three Months Ended December 31, 1999 and 1998........................... 4
Consolidated Condensed Statements of Cash Flow (Unaudited)
Three Months Ended December 31, 1999 and 1998........................... 5
Supplemental Disclosures of Cash Flow Information (Unaudited)............. 5
Notes to Consolidated Condensed Financial Statements (Unaudited).......... 6
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 7
Part II - Other Information............................................... 9
Signatures................................................................ 10
2
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
BFX HOSPITALITY GROUP, INC.
Consolidated Condensed Balance Sheets
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<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
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(Unaudited)
Assets (In thousands)
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<S> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 603 $ 3,036
Short-term investments............................ 1,699 -
Accounts receivable............................... 165 286
Inventories....................................... 268 208
Income tax receivable............................. 698 698
Prepaid and other current assets.................. 110 98
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Total current assets........................... 3,543 4,326
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Property, plant and equipment, at cost:
Land, building and improvements................... 15,439 15,337
Less: Accumulated depreciation and amortization.. (5,184) (4,930)
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Net property, plant and equipment............... 10,255 10,407
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Goodwill, net of amortization of $1,993,000 and
$1,929,000, respectively........................ 2,291 2,355
Deferred income taxes............................... 1,824 1,824
Other assets, net................................... 87 81
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$18,000 $18,993
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Liabilities and Stockholders' Equity
- ----------------------------------------------------
Current liabilities:
Current portion of long-term debt................. $ - $ 138
Accounts payable.................................. 677 418
Accrued liabilities............................... 798 1,012
Accrued EPA costs................................. 1,200 1,200
Income taxes...................................... 346 334
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Total current liabilities....................... 3,021 3,102
Long-term debt...................................... - 937
Accrued EPA costs................................... 1,547 1,570
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Total liabilities............................... 4,568 5,609
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Stockholders' equity:
Preferred stock $.01 par value; 5,000,000 shares
authorized; no shares issued and outstanding... - -
Common stock $.05 par value; 30,000,000 shares
authorized; outstanding shares 7,786,878....... 389 389
Additional paid-in capital........................ 16,583 16,583
Retained earnings................................. 5,600 5,522
Treasury stock, at cost, 3,818,012 and
3,788,012 shares, respectively................. (9,140) (9,110)
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Total stockholders' equity.......................... 13,432 13,384
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$18,000 $18,993
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</TABLE>
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
3
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BFX HOSPITALITY GROUP, INC.
Consolidated Condensed Statements of Operations (Unaudited)
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Three Months
Ended December 31,
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1999 1998
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(In thousands, except per
share amounts)
Net revenues.................................. $ 4,054 $ 3,773
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Cost of goods sold (exclusive of
depreciation)................................ 967 949
Selling, general and administrative........... 2,642 2,860
Depreciation and amortization................. 317 380
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Total operating costs and expenses 3,926 4,189
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Net income (loss) before other income
and income taxes............................ 128 (416)
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Other income (expense):
Interest income.............................. 33 44
Interest expense............................. (21) (24)
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12 20
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Income (loss) before income taxes............. 140 (396)
Income tax expense (benefit).................. 62 (132)
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Net income (loss)............................. $ 78 $ (264)
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Basic and diluted earnings per share:
Net income (loss)............................. $ 0.02 $ (0.06)
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Weighted average common shares outstanding 3,986 4,106
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See accompanying notes to unaudited Consolidated Condensed Financial Statements.
4
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BFX HOSPITALITY GROUP, INC.
Consolidated Condensed Statements of Cash Flow (Unaudited)
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Three Months
Ended December 31,
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1999 1998
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(In thousands)
Net cash provided (used) by operating activities.. $ 473 $ (1,475)
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Cash flows from investing activities:
Additions to property, plant and equipment...... (102) (984)
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Net cash used in investing activities............. (102) (984)
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Cash flows from financing activities:
Repayments of long-term debt.................... (1,075) (35)
Purchase of short-term investments.............. (1,699) -
Treasury stock purchases........................ (30) (196)
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Net cash used in financing activities............. (2,804) (231)
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Net decrease in cash.............................. (2,433) (2,690)
Cash at beginning of period....................... 3,036 5,342
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Cash at end of period............................. $ 603 $ 2,652
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Supplemental Disclosures of Cash Flow Information (Unaudited)
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Supplemental schedule of cash payments:
Three Months
Ended December 31,
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1999 1998
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(In thousands)
Cash paid for:
Interest................................ $ 21 $ 24
Income taxes............................ 50 582
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
5
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BFX HOSPITALITY GROUP, INC.
Notes to Consolidated Condensed Financial Statements (Unaudited)
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Note A
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In the opinion of management, the accompanying consolidated condensed
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of BFX
Hospitality Group, Inc. (the Company), as of December 31, 1999, and the results
of its operations and its cash flows for the three month periods ended December
31, 1999 and 1998.
The accounting policies followed by the Company are set forth in Note
1 to the Company's financial statements in the 1999 BFX Hospitality Group, Inc.
Form 10-K.
Note B
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The results of operations for the three-month period ended December
31, 1999 are not necessarily indicative of the results to be expected for the
full year.
Note C
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During 1992, the United States Environmental Protection Agency (EPA) issued
a Record of Decision (ROD) with respect to the Company's Superfund Site in
Vestal, New York. The ROD required the Company to construct a water treatment
facility at the site and to pump contaminated ground water from bedrock and
overburden extraction wells for 15 to 30 years until remediation goals were met.
Due to concerns about the correctness of the remedy provided for in the ROD, the
Company performed additional fieldwork and, in 1995, the EPA agreed the remedy
needed to be modified. After additional discussions with the EPA, a revised ROD
was issued in July 1997. The revised ROD eliminates certain provisions of the
original ROD and primarily includes the removal and treatment of contaminated
soil. At September 30, 1997, the Company had accrued environmental remediation
expenses of $3,550,000. In June 1998, the Company signed a Consent Decree with
the EPA in regard to the implementation of the agreed-upon remedy and on-going
monitoring of the property. In addition, the Company reimbursed the EPA
$550,000 for monies spent by the EPA at the Company's Superfund Site over a ten-
year period from October 1987 through April 1997. At December 31, 1999, the
Company has a total liability accrued of $2,747,000 representing the estimated
future costs of implementing the agreed-upon remedy. The Company anticipates
approximately $1,200,000 to be incurred during the next 12 months.
6
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BFX HOSPITALITY GROUP, INC.
PART I - FINANCIAL INFORMATION
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Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Information
At December 31, 1999, the Company owned and operated food service, lodging
and entertainment facilities in Texas and Louisiana.
Factors That May Affect Future Results
Certain matters discussed herein are forward-looking statements about the
business, financial condition and prospects of the Company. The actual results
could differ materially from those indicated by such forward-looking statements
because of various risks and uncertainties. Such risks and uncertainties may
include, but are not limited to regional and national economic conditions,
changes in customer demand for products offered by the Company, and other
matters that may adversely affect the availability of products and pricing,
state and federal regulatory environment, possible future acquisitions or
dispositions, amendments to the Record of Decision issued by the Environmental
Protection Agency (see Liquidity and Capital Resources) and other risks
indicated in the Company's previous filings with the Securities and Exchange
Commission. The Company cannot control these risks and uncertainties, and in
many cases, cannot predict the risks and uncertainties that could cause its
actual results to differ materially from those indicated by the forward-looking
statements.
Results of Operations
Revenues for the three month period ended December 31, 1999 increased 7%
due to the opening of the third Cabo unit in Fort Worth, Texas in December 1998
and to increased sales at Cats Meow due to increased customer counts.
Costs of goods sold (which consists primarily of food and beverage costs)
during the three month period ended December 31, 1999 increased 2% compared to
the prior year quarter. As a percent of related revenue, these costs were 24%
during 1999 versus 25% a year earlier. The absolute increase is due to
increased revenues discussed above. The decrease in costs as a percentage of
revenues is due to the increased percentage of sales from Cats Meow which have a
lower cost of goods sold than the Company's other concepts.
Selling, general and administrative expenses for the three month period
ended December 31, 1999 decreased 8% compared to the prior year quarter. The
primary reasons for the decrease is due to decreased corporate expenses.
The decrease in interest income to $33,000 for the 1999 three-month period
from $44,000 in 1998 is due to the reduction in cash balances due to investing
and financing activities in fiscal 1999 and 2000. See Liquidity and Capital
Resources.
The decrease in interest expense to $21,000 for the 1999 three month period
from $24,000 in 1998 is primarily due to the reduction of a mortgage loan
balance under the terms of the Company's note agreement.
7
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Liquidity and Capital Resources
The Company's cash decreased $2,433,000 from $3,036,000 at September 30,
1999 to $603,000 at December 31, 1999. The cash provided by operating
activities of $473,000 is primarily due to net income of $78,000 plus non-cash
items of depreciation and amortization of $317,000.
Cash used for investing activities of $102,000 related primarily to capital
improvements of Cabo Travis.
Cash used for financing activities of $2,804,000 was primarily the result
of the Company purchasing $1,699,000 of treasury bills (at discounted value)
with original maturities in excess of 90 days and repayment of $1,075,000
related to a bank loan assumed in the acquisition of the Stockyards Hotel.
During 1992, the United States Environmental Protection Agency (EPA) issued
a Record of Decision (ROD) with respect to the Company's Superfund Site in
Vestal, New York. The ROD required the Company to construct a water treatment
facility at the site and to pump contaminated ground water from bedrock and
overburden extraction wells for 15 to 30 years until remediation goals were met.
Due to concerns about the correctness of the remedy provided for in the ROD, the
Company performed additional fieldwork and, in 1995, the EPA agreed the remedy
needed to be modified. After additional discussions with the EPA, a revised ROD
was issued in July 1997. The revised ROD eliminates certain provisions of the
original ROD and primarily includes the removal and treatment of contaminated
soil. At September 30, 1997, the Company had accrued environmental remediation
expenses of $3,550,000. In June 1998, the Company signed a Consent Decree with
the EPA in regard to the implementation of the agreed-upon remedy and on-going
monitoring of the property. In addition, the Company reimbursed the EPA
$550,000 for monies spent by the EPA at the Company's Superfund Site over a ten-
year period from October 1987 through April 1997. At December 31, 1999, the
Company has a total liability accrued of $2,747,000 representing the estimated
future costs of implementing the agreed-upon remedy. The Company anticipates
approximately $1,200,000 to be incurred during the next 12 months.
8
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BFX HOSPITALITY GROUP, INC.
PART II - OTHER INFORMATION
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Item 1. - Legal Proceedings
None
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
9
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BFX HOSPITALITY GROUP, INC.
SIGNATURES
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Pursuant to 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.
BFX HOSPITALITY GROUP, INC.
(Registrant)
By: /s/ Robert H. McLean
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Chairman of the Board
and President
February 11, 2000
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By: /s/ Robert Korman
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Vice President and
Chief Financial Officer
February 11, 2000
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10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 603
<SECURITIES> 1,699
<RECEIVABLES> 165
<ALLOWANCES> 0
<INVENTORY> 268
<CURRENT-ASSETS> 3,543
<PP&E> 15,439
<DEPRECIATION> 5,184
<TOTAL-ASSETS> 18,000
<CURRENT-LIABILITIES> 3,021
<BONDS> 0
0
0
<COMMON> 389
<OTHER-SE> 13,043
<TOTAL-LIABILITY-AND-EQUITY> 18,000
<SALES> 4,054
<TOTAL-REVENUES> 4,054
<CGS> 967
<TOTAL-COSTS> 3,926
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 140
<INCOME-TAX> 62
<INCOME-CONTINUING> 78
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
