<PAGE>
Washington, D.C. 20549
Form 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- ---
Act of 1934
For the quarterly period ended March 31, 2000 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.
---------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 75-1732794
------------ -------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107
-----------------------------------------------------
(Address and zip code of principal executive offices)
(817) 332-4761
--------------------
(Registrant's Telephone Number, Including Area Code)
-------------------------------------------------------------------
(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
--- ---
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
--- ---
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 May 5, 2000
----------- ---------------
Common stock, $.05 par value 3,968,866
1
<PAGE>
BFX HOSPITALITY GROUP, INC.
Index
-----
Page
----
Part I - Financial Information............................................ 3
Item 1 - Financial Statements............................................. 3
Consolidated Condensed Balance Sheets March 31, 2000 (Unaudited)
and September 30, 1999.................................................. 3
Consolidated Condensed Statements of Operations (Unaudited)
Three Months Ended March 31, 2000 and 1999.............................. 4
Consolidated Condensed Statements of Operations (Unaudited)
Six Months Ended March 31, 2000 and 1999................................ 5
Consolidated Condensed Statements of Cash Flow (Unaudited)
Six Months Ended March 31, 2000 and 1999................................ 6
Supplemental Disclosures of Cash Flow Information (Unaudited)............. 6
Notes to Consolidated Condensed Financial Statements (Unaudited).......... 7
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 8
Item 3 - Quantitative and Qualitative Disclosure About Market Risk........ 9
Part II - Other Information............................................... 10
Signatures................................................................ 11
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
BFX HOSPITALITY GROUP, INC.
Consolidated Condensed Balance Sheets
-------------------------------------
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
------- -------
(Unaudited)
Assets (In thousands)
------
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................................... $ 791 $ 3,036
Short-term investments.......................................................... 1,721 -
Accounts receivable............................................................. 277 286
Note receivable................................................................. 43 -
Inventories..................................................................... 214 208
Income tax receivable........................................................... 698 698
Prepaid and other current assets................................................ 210 98
------- -------
Total current assets......................................................... 3,954 4,326
------- -------
Property, plant and equipment, at cost:
Land, building and improvements................................................. 15,510 15,337
Less: Accumulated depreciation and amortization................................ (5,425) (4,930)
------- -------
Net property, plant and equipment............................................. 10,085 10,407
------- -------
Goodwill, net of amortization of $2,059,000 and
$1,929,000, respectively...................................................... 2,226 2,355
Deferred income taxes............................................................. 1,824 1,824
Other assets, net................................................................. 103 81
------- -------
$18,192 $18,993
======= =======
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt............................................... $ - $ 138
Accounts payable................................................................ 592 418
Accrued liabilities............................................................. 710 1,012
Accrued EPA costs............................................................... 1,200 1,200
Income taxes.................................................................... 517 334
------- -------
Total current liabilities..................................................... 3,019 3,102
Long-term debt.................................................................... - 937
Accrued EPA costs................................................................. 1,533 1,570
------- -------
Total liabilities............................................................. 4,552 5,609
------- -------
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............................................................... 5,823 5,522
Treasury stock, at cost, 3,823,012 and
3,788,012 shares, respectively............................................... (9,155) (9,110)
------- -------
Total stockholders' equity........................................................ 13,640 13,384
------- -------
$18,192 $18,993
======= =======
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
</TABLE>
3
<PAGE>
BFX HOSPITALITY GROUP, INC.
Consolidated Condensed Statements of Operations (Unaudited)
----------------------------------------------------------
Three Months
Ended March 31,
--------------------
2000 1999
------- -------
(In thousands, except per
share amounts)
Net revenues.................................... $ 4,531 $ 4,725
------ ------
Cost of goods sold (exclusive of depreciation).. 1,028 1,144
Selling, general and administrative............. 2,824 3,006
Depreciation and amortization................... 306 399
------ ------
Total operating costs and expenses 4,158 4,549
------ ------
Net income before other income
and income taxes.............................. 373 176
------ ------
Other income (expense):
Interest income................................ 21 26
Interest expense............................... - (24)
------ ------
21 2
------ ------
Income before income taxes...................... 394 178
Income tax expense.............................. 171 94
------ ------
Net income...................................... $ 223 $ 84
====== ======
Basic and diluted earnings per share:
Net income...................................... $ 0.06 $ 0.02
====== ======
Weighted average common shares outstanding...... 3,965 3,995
====== ======
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
4
<PAGE>
BFX HOSPITALITY GROUP, INC.
Consolidated Condensed Statements of Operations (Unaudited)
----------------------------------------------------------
Six Months
Ended March 31,
--------------------
2000 1999
------- -------
(In thousands, except per
share amounts)
Net revenues.................................... $ 8,585 $ 8,498
------- -------
Cost of goods sold (exclusive of depreciation).. 1,995 2,093
Selling, general and administrative............. 5,466 5,866
Depreciation and amortization................... 623 779
------- -------
Total operating costs and expenses 8,084 8,738
------- -------
Net income (loss) before other income
and income taxes.............................. 501 (240)
------- -------
Other income (expense):
Interest income................................ 54 70
Interest expense............................... (21) (48)
------- -------
33 22
------- -------
Income (loss) before income taxes............... 534 (218)
Income tax expense (benefit).................... 233 (38)
------- -------
Net income (loss)............................... $ 301 $ (180)
======= =======
Basic and diluted earnings per share:
Net income (loss)............................... $ 0.08 $ (0.04)
======= =======
Weighted average common shares outstanding...... 3,976 4,036
======= =======
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
5
<PAGE>
BFX HOSPITALITY GROUP, INC.
Consolidated Condensed Statements of Cash Flow (Unaudited)
----------------------------------------------------------
Six Months
Ended March 31,
--------------------
2000 1999
-------- --------
(In thousands)
Net cash used in operating activities......... $ 769 $ (1,180)
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment.. (173) (1,578)
-------- --------
Net cash used in investing activities......... (173) (1,578)
-------- --------
Cash flows from financing activities:
Repayments of long-term debt................ (1,075) (69)
Purchase of short-term investments.......... (1,721) -
Treasury stock purchases.................... (45) (242)
-------- --------
Net cash used in financing activities......... (2,841) (311)
-------- --------
Net increase (decrease) in cash (2,245) (3,069)
Cash at beginning of period................... 3,036 5,342
-------- --------
Cash at end of period......................... $ 791 $ 2,273
======== ========
Supplemental Disclosures of Cash Flow Information (Unaudited)
-------------------------------------------------------------
Supplemental schedule of cash payments:
Six Months
Ended March 31,
--------------------
2000 1999
-------- --------
(In thousands)
Cash paid for:
Interest................................ $ 21 $ 48
Income taxes............................ 50 582
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
6
<PAGE>
BFX HOSPITALITY GROUP, INC.
Notes to Consolidated Condensed Financial Statements (Unaudited)
----------------------------------------------------- ---------
Note A
- ------
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 March 31, 2000, the results of its
operations for the three and six month periods ended March 31, 2000 and 1999 and
its cash flows for the six month periods ended March 31, 2000 and 1999.
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
- ------
The results of operations for the three and six month periods ended
March 31, 2000 are not necessarily indicative of the results to be expected for
the full year.
Note C
- ------
During 1997, the United States Environmental Protection Agency (EPA) issued
a revised Record of Decision (ROD) with respect to the Company's Superfund Site
in Vestal, New York requiring removal and treatment of contaminated soil. 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. At March 31, 2000, the Company has a total liability accrued of
$2,733,000 representing the estimated future costs of implementing the agreed-
upon remedy. The Company anticipates $1,200,000 to be incurred during the next
12 months and this amount is included in accrued liabilities in the accompanying
Consolidated Condensed Balance Sheet
7
<PAGE>
BFX HOSPITALITY GROUP, INC.
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Information
At March 31, 2000, 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 2000 three month period decreased 4% and revenues for the
six month period increased 1% both due to increased sales at Cats Meow offset
by sales declines at each of the three Cabo units.
Consolidated costs of sales (which consist primarily of food and beverage
costs) during the 2000 three and six month periods versus 1999 decreased 10% and
5%, respectively. As a percent of related revenue, these costs were 23% during
the 2000 three month period versus 24% a year earlier. For the six month
period, the costs were 23% versus 25% a year earlier. The decrease in absolute
dollars and the decrease in costs as a percent of revenue is due to increased
operating efficiencies at each of the Cabo units and at the Stockyards Hotel.
Consolidated selling, general and administrative expenses for the 2000
three and six month period decreased 6% and 7%, respectively, compared to 1999.
The primary reason for the decrease is increased operating efficiencies at each
of the Cabo units and at the Stockyards Hotel.
8
<PAGE>
The decrease in interest income to $21,000 for the 2000 three month period
from $26,000 in 1999 and the decrease to $54,000 for the 2000 six month period
from $70,000 in 1999 is due to the reduction in cash balances due to investing
and financing activities in fiscal 1999. See Liquidity and Capital Resources.
The decrease in interest expense to $0 for the 2000 three month period from
$24,000 in 1999 and to $21,000 for the 2000 six month period from $48,000 in
2000 is primarily due to the reduction of a mortgage loan balance under the
terms of the Company's note agreement and to the repayment of this note during
the first quarter of fiscal 2000.
Liquidity and Capital Resources
The Company's cash decreased $2,245,000 from $3,036,000 at September 30,
1999 to $791,000 at March 31, 2000. The cash used in operating activities during
the six months ended March 31, 2000 was primarily due to net income of $301,000
plus non-cash items of depreciation and amortization of $623,000.
Cash used for investing activities of $173,000 related primarily to capital
improvements at Cabo Travis.
Cash used for financing activities of $2,841,000 was primarily the result
of the Company purchasing $1,721,000 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 1997, the United States Environmental Protection Agency (EPA) issued
a revised Record of Decision (ROD) with respect to the Company's Superfund Site
in Vestal, New York requiring removal and treatment of contaminated soil. 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. At March 31, 2000, the Company has a total liability accrued of
$2,733,000 representing the estimated future costs of implementing the agreed-
upon remedy. The Company anticipates $1,200,000 to be incurred during the next
12 months and this amount is included in accrued liabilities in the accompanying
Consolidated Condensed Balance Sheet
Item 3 - Quantitative and Qualitative Disclosure About Market Risk
Not applicable.
9
<PAGE>
BFX HOSPITALITY GROUP, INC.
PART II - OTHER INFORMATION
- ---------------------------
Item 1. - Legal Proceedings
None
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
10
<PAGE>
BFX HOSPITALITY GROUP, INC.
SIGNATURES
----------
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
------------------------
Chairman of the Board
and President
May 9, 2000
- -----------
By: /s/ Robert Korman
-------------------------
Vice President and
Chief Financial Officer
May 9, 2000
- -----------
11
<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> MAR-31-2000
<CASH> 791
<SECURITIES> 1,721
<RECEIVABLES> 277
<ALLOWANCES> 0
<INVENTORY> 214
<CURRENT-ASSETS> 3,954
<PP&E> 15,510
<DEPRECIATION> 5,425
<TOTAL-ASSETS> 18,192
<CURRENT-LIABILITIES> 3,019
<BONDS> 0
0
0
<COMMON> 389
<OTHER-SE> 13,251
<TOTAL-LIABILITY-AND-EQUITY> 18,192
<SALES> 4,531
<TOTAL-REVENUES> 4,531
<CGS> 1,028
<TOTAL-COSTS> 4,158
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 394
<INCOME-TAX> 171
<INCOME-CONTINUING> 223
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 223
<EPS-BASIC> 0.06
<EPS-DILUTED> 0.06
</TABLE>
