UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED
DECEMBER 28, 1994
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE
TRANSITION PERIOD FROM____ TO____
Commission File Number 0-10943
RYAN'S FAMILY STEAK HOUSES, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0657895
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
405 Lancaster Avenue, Greer, South Carolina 29650
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (803) 879-1000
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of class) (Name of each exchange
on which registered)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
(Title of class)
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___
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-
affiliates (shareholders holding less than 5% of the outstanding
common stock, excluding directors and officers), computed by reference
to the average high and low prices of such stock, as of March 1, 1995,
was $407,419,000.
The number of shares outstanding of the registrant's Common Stock,
$1.00 Par Value, was 53,432,005 at March 1, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated Document Location in Form 10-K
Portions of 1994 Annual Report of Shareholders Parts I and II
Portions of Proxy Statement dated March 24, 1995 Part III
PART I
ITEM 1. BUSINESS.
General
Ryan's Family Steak Houses, Inc., the Registrant (referred to
hereafter as the "Company"), is a South Carolina corporation which
operates a chain of restaurants located principally in the southern
and midwestern United States. At March 1, 1995, 210 Company-owned and
30 franchised Ryan's were in operation. The Company also operated 2
other restaurant concepts, each consisting of 1 unit, on a test basis.
Systemwide sales, which include sales by franchised restaurants, were
approximately $499 million and $450 million in 1994 and 1993,
respectively. Sales by Company-owned restaurants amounted to
approximately $448 million in 1994 and $394 million in 1993. The
Company, headquartered in Greer, South Carolina, was organized in 1977
and completed its initial public offering in 1982.
The following table indicates the number of Company-owned
restaurants opened each year, net of closings, and the total number of
Company-owned restaurants open at each year-end during the 5-year
period ending 1994:
Restaurant Total Open
Year Openings, Net at Year-End
1990 16 126
1991 16 142
1992 23 165
1993 29 194
1994 18 212
Operations - Ryan's
General. A Ryan's restaurant is a family-oriented restaurant
serving a wide variety of foods from its Mega Bar* as well as
traditional "steak house" entrees, such as charbroiled USDA Choice
steaks, hamburgers, chicken and seafood. Several baked seafood
entrees are also available. The Mega Bar* includes, in addition to
fresh and pre-made salad items, soups, cheeses, a variety of hot meats
and vegetables, and hot yeast rolls prepared and baked daily on site.
All entree purchases include a trip to a bakery bar. Bakery bars
feature hot and fresh-from-the-oven cookies, brownies and other bakery
products as well as various dessert selections, such as ice cream,
frozen yogurt, fresh fruit, cakes, cobblers and several dessert
toppings. All restaurants also offer a variety of non-alcoholic
beverages. During mid-1993, the Company modified the layout of the
Mega Bar* to a scatter bar format. This format breaks the Mega Bar*
into five island bars for easier customer access and more food
variety. At the end of 1994, scatter bars had been installed in 105
restaurants. Current plans for 1995 call for the installation of
scatter bars in substantially all remaining units. All new Ryan's
restaurants since mid-1993 have opened with scatter bars.
Each Ryan's restaurant operates seven days a week. Typical hours
of operation are 11:00 a.m. to 10:00 p.m. Sunday through Thursday and
11:00 a.m. to 11:00 p.m. Friday and Saturday. The average customer
count per restaurant during 1994 was approximately 7,400 per week, and
the average meal price (per person) was $5.70 (including beverage).
Management believes that the average table turns over every 35 to 45
minutes.
Each Ryan's restaurant is located in a Company-owned free-standing
brick building of approximately 10,000 to 11,500 square feet. While
most Ryan's have interior brick walls, the interiors of the newer
restaurants, commencing in August 1991, utilize sheet rock, wallpaper
and oak paneling. The interior of each restaurant contains one large
dining room, seating approximately 300 to 500 persons, a customer
ordering area and a kitchen. The focal points of the dining room are
the centrally located Mega Bar* (or scatter bars) and bakery bar. An
average Ryan's has parking for approximately 180 cars.
Restaurant Management and Supervision. The Company emphasizes
standardized operating and control systems together with comprehensive
recruiting and training programs in order to maintain food and service
quality. In each Ryan's restaurant, the management team consists of a
general manager, a manager and two assistant managers. Management
personnel begin employment at the manager trainee level and complete a
formal five-week training program at the Company's management training
center in Greer, South Carolina, prior to being placed in assistant
manager positions.
Each restaurant management team reports to an area supervisor.
Area supervisors normally oversee the operations of four to eight
restaurants and report to one of seven regional directors, a position
that may be at the Vice President level and, in each case, reports to
the Vice President-Operations. Communication and support from all
corporate office departments are designed to assist the area
supervisors and regional directors to respond promptly to local
concerns.
All regional directors, area supervisors, general managers,
managers and first assistant managers participate in incentive bonus
programs. Bonuses paid to restaurant management are based principally
upon the monthly sales volume of their individual restaurant with
deductions for excess spending of key expense items, such as food
cost, payroll and cash shortages. The bonus program for area
supervisors and regional directors is based principally upon same-
store sales, profitability (regional directors only), "hidden shopper"
(service feedback) scores and certain qualitative factors.
Advertising. The Company has not relied extensively on
advertising, expending less than one percent of restaurant sales
during each of the years 1994, 1993 and 1992. Activity in 1994 was
significantly increased from the prior years' levels, particularly in
regards to external media. Television and radio was used extensively
in the Charleston, SC market during late-summer as the Company ran its
first significant advertising campaign. Newspaper ads and billboards
were used in other markets. Management believes that the restaurant
industry has become increasingly competitive over the past several
years and that advertising will become an important factor in the
development and retention of market share. Based on current budgets,
an expansion of advertising and other marketing activities is again
planned for 1995. However, total 1995 advertising expenditures are
estimated at less than one percent of restaurant sales.
Expansion of Company-Owned Restaurants
General. At March 1, 1995, the Company owned and operated 212
Ryan's restaurants and two test concepts for a total of 214
restaurants. During the remainder of 1995, 17 additional Ryan's are
scheduled to open, resulting in 21 new Company-owned Ryan's in 1995.
Target sites for these new restaurants are spread fairly evenly across
the Company's current operating area with the addition of West
Virginia in late 1995. The Company opened 22 restaurants during 1994,
including the two test concepts, compared to 20 and 23 restaurants
during 1993 and 1992, respectively. During 1994, four underperforming
restaurants were closed.
Test Concepts. At March 1, 1995, the Company owned and operated
two test restaurants, each representing a different test concept. One
restaurant, located in Greenville, SC, serves Tex-Mex fare, and the
other is an upscale western-style steakhouse located in Plano, TX.
Both restaurants opened in late-1994 and are considered to be casual-
dining concepts. In contrast to a Ryan's, these concepts are
characterized by full table and bar service and average checks (per
person) ranging from $10 to $15. A Ryan's operates in a limited self-
service format, no alcoholic beverages are served, and the average
check amounted to $5.70 during 1994.
Management believes that the changing demographics of the American
population make the casual-dining segment look promising. However,
due to the limited period during 1994 in which the two test concepts
were open, further expansion of these test concepts will be limited
during 1995 while financial results are being evaluated.
Site Selection. The Company employs a real estate manager and uses
independent real estate brokers to locate potential new sites and to
perform all preliminary site investigative work. Final approval is
made by the Company's executive management. Important factors in site
selection include population, demographics, proximity to both business
and residential areas, traffic count and site accessibility. In
addition, site selection for Ryan's restaurants is also influenced by
the general proximity to other Ryan's in order to optimize the efforts
of the Company's area supervisors.
Construction. The Company presently engages non-affiliated,
general contractors to construct all of its restaurants on a lump-sum
contract basis. The Company requires performance and payment bonds on
all building and site work contracts and closely supervises and
monitors the progress of all construction projects. New restaurants
are generally completed approximately three to four months from the
commencement of construction. The average cost of a new Ryan's (land,
building and equipment) constructed in 1994 was approximately $1.9
million.
Restaurant Opening. When a new Ryan's is opened, all restaurant
management positions are staffed with personnel who have had prior
management experience in another of the Company's restaurants. Prior
to opening, all staff personnel at the new location undergo one week
of intensive training conducted by a store opening team.
Franchising
While the Company has granted Ryan's franchises in the past,
management has not actively pursued new franchisees in recent years in
order to concentrate on the operation and development of Company-owned
restaurants. New franchises may be awarded to existing franchisees
having good operating results or to new franchisees proposing to
operate in regions significantly outside of the Company's existing or
contemplated operating areas. In late-1994, a new franchisee opened a
Ryan's in Ballarat, Australia.
The following table indicates the number of franchised restaurants
opened each year, net of closings, and the total number of franchised
restaurants open at each year-end during the 5-year period ending
1994:
Net
Restaurants Total Open
Year Opened (Closed)at Year-End
1990 2 33
1991 2 35
1992 0 35
1993 (1) 34
1994 (4) 30
The present franchise agreements are for a period of 15 years, with
two five-year renewal options, and provide for a continuing royalty to
the Company of three to four percent of gross receipts. The
agreements provide that the Company will furnish the franchisee all
the necessary information to construct, equip, manage and operate a
restaurant under the Ryan's Family Steak House name or derivative
thereof. The agreements generally provide for the construction and
operation of one restaurant with exclusive territorial protection
within a one to five mile radius.
The franchise agreement with Family Steak Houses of Florida, Inc.
("Family") provides for exclusive territorial protection in certain
Florida counties as long as a specified number of new Ryan's
restaurants are opened. During the fourth quarter of 1993, Family
informed the Company that it would be unable to pay its royalty fees
from August through December 1993, and this nonpayment condition
subsequently continued through the second quarter of 1994. In July
1994, an agreement was reached with Family regarding both past-due and
future royalty fees. This agreement provided for a $236,000 cash
payment by Family, the relinquishment of Family's exclusive
development rights in certain counties in South Florida and the
Florida panhandle (subject to first refusal and buy-back rights of
Family), an $800,000 long-term note payable to the Company and a
reduction in the royalty fee rate from 4.25% to 3% until April 30,
1997, at which time the rate will increase to 4%. The relinquishment
of development rights was valued at $500,000 and treated as a partial
write-off of Family's past-due royalty fees. In addition, the
agreement with Family decreased the required number of Ryan's
restaurants in operation to 24 through the end of 1996 and to 25 at
the end of 1997. Pursuant to the agreement, the required number of
restaurants in operation will then increase by 1 for each year after
1997. All required payments from Family to the Company subsequent to
the agreement have been received in a timely manner. However, due to
Family's payment history, the Company's accounting policy regarding
Family's royalty fees was changed during 1994 to a cash basis pending
collection of an outstanding $579,000 receivable balance at December
29, 1993. This receivable was fully paid during 1994 and,
accordingly, all royalty fees received thereafter, including payments
required under the long-term note payable, have been recognized as
revenue when received. Based on scheduled payment dates and recent
payment trends, management anticipates that 1995 revenues from
franchised restaurants will increase to approximately $1.8 million.
However, there can be no assurance that these scheduled payments will
be collected and therefore recognized as revenues.
Sources and Availability of Raw Materials
The Company has a centralized purchasing program which is designed
to ensure uniform product quality in all restaurants as well as
reduced food, beverage and supply costs. The Company management
establishes contracts for approximately 85% of its food and other
products from a variety of major suppliers under competitive terms.
Purchases under these contracts are delivered to one of two warehouses
operated by the Company's principal distributor and then delivered to
the restaurants by the distributor. The distributor contracts for
approximately 10% of the Company's products, with the remaining 5%
(principally fresh produce) purchased locally by restaurant
management. The beef used by the Company is obtained from three
western suppliers based on price and availability of product. To
ensure against interruption in the flow of beef supplies due to
unforeseen or catastrophic events and to take advantage of favorable
purchasing opportunities, the Company stockpiles two to six weeks
supply of sirloin at the distributor. The Company believes that
satisfactory sources of supply are generally available for all the
items regularly used.
Working Capital Requirements
The Company's restaurant sales are primarily derived from cash
sales. Inventories are purchased on credit and are rapidly converted
to cash. Therefore, the Company does not maintain significant
receivables or inventories, and working capital requirements for
continuing operations are not significant.
Trademarks and Service Marks
The Company has registered various trademarks and service marks,
including "Ryan's Family Steak House" and "Mega Bar," and their
related designs with the United States Patent and Trademark Office.
All trademarks and service marks have stated expiration dates ranging
from September 1997 to August 2002. However, they are renewable for
an unlimited number of additional 10-year terms at the option of the
Company. In addition, with the opening in late-1994 of the first
franchised Ryan's in Ballarat, Australia, the Company is actively
pursuing similar trademark and service mark protection with the
Australian authorities.
The Company currently operates a restaurant (see "Test Concepts")
located in Greenville, SC under the name of "Caliente Grille." Under
the terms of an agreement with Caliente Cab Restaurant Co., Inc., a
New York corporation and owner of the "Caliente" service mark, the
Company was granted a perpetual, fully paid up license to use the
"Caliente" name in connection with restaurant services only, and in
connection with a single location in Greenville, SC.
Competition
The food service business is highly competitive and is often
impacted by changes in the taste and eating habits of the public,
economic conditions affecting spending habits, population and traffic
patterns. The principal bases of competition in the industry are the
quality and price of the food products offered. Location, speed of
service and attractiveness of facilities are also important factors.
The Company's Ryan's restaurants are in competition with many units
operated or franchised by national, regional and local restaurant
companies that offer steak or buffet-style meals. Although the Company
believes that its price/value to its customers places it in an
excellent competitive posture, it should be noted that during the last
few years many operators have upgraded their restaurants to more
closely match the Ryan's format and particularly the Mega Bar*. The
Company is also in competition with specialty food outlets and other
food vendors.
Seasonality
The Company's operations are subject to some seasonal fluctuations.
Sales per restaurant generally increase during the spring and summer
months and decline in the fall and winter months.
Research
The Company maintains ongoing research programs relating to the
development of new products and evaluation of marketing activities.
The Company's management staff includes a Director of Research and
Development, whose responsibilities include enhancing and updating the
Mega Bar* and entree selections. While research and development
activities are important to the Company, past expenditures have not
been and future expenditures are not expected to be material to the
Company's financial results.
Customers
No material part of the Company's business is dependent upon a
single customer or a specific group of customers.
Regulation
The Company is subject to the Fair Labor Standards Act which
regulates matters such as minimum wage requirements, overtime and
other working conditions. A large number of the Company's restaurant
personnel are paid at or near the minimum wage level, and,
accordingly, changes in the federal minimum wage affect the Company's
labor costs.
The Company's restaurants are constructed to meet local and state
building code requirements and are operated in accordance with state
and local regulations relating to the preparation and service of food.
The Company's franchise operations are subject to a variety of laws
regulating franchising. The Federal Trade Commission has adopted a
rule that imposes certain disclosure requirements on persons engaged
in the business of offering franchises. Various states in which the
Company has offered franchises have franchising laws that require
registration prior to offering franchises for sale and/or that
regulate the rights of franchisees, including the circumstances under
which franchises may be terminated. Management believes its
operations are in material compliance with all applicable franchising
laws and regulations.
Environmental Matters
While the Company is not aware of any federal, state or local
environmental regulations which will materially affect its operations
or competitive position or result in material capital expenditures, it
cannot predict the impact of possible future legislation or regulation
on its operations.
Employees
At March 1, 1995, the Company employed approximately 15,000
persons, of whom approximately 14,850 were restaurant personnel. The
Company strives to maintain low turnover by offering all full-time
employees a very competitive benefit package, which includes life and
health insurance and vacations. Part-time employees who work at least
15 hours per week are also eligible to participate in the Company's
life and health insurance plans.
None of the Company's employees are represented by a union. The
Company has experienced no work stoppages attributable to labor
disputes and considers its employee relations to be good.
Information as to Classes of Similar Products or Services
The Company operates in only one industry segment. All significant
revenues and pre-tax earnings relate to retail sales of food to the
general public through either Company-operated or franchised
restaurants. Except for one franchised location in Ballarat,
Australia, the Company has no operations outside the continental
United States.
Information regarding the Company's restaurant sales and assets is
included in the Company's financial statements, which are incorporated
by reference into Part II, Item 8 of this Form 10-K.
ITEM 2. PROPERTIES.
Except for three land leases, the Company owns all of its
restaurant properties, each of which is a free-standing brick building
that covers approximately 10,000 to 11,500 square feet, with seating
for approximately 300 to 500 persons and parking for approximately 150
to 250 cars on sites of approximately 75,000 to 130,000 square feet.
A listing of Ryan's restaurant locations appears on page 2 of the
Company's 1994 Annual Report to Shareholders and is incorporated
herein by reference. As noted above, the Company also operates two
test restaurants in Greenville, SC and Plano, TX.
The Company's corporate offices consist of two office buildings
(30,000 square feet and 16,000 square feet) and a 20,000 square foot
warehouse facility. These properties (land and building) are owned by
the Company and located in Greer, SC.
From time to time, the Company offers for sale excess land that was
acquired in connection with its restaurant properties. Also, at March
1, 1995, three closed restaurant properties were offered for sale.
The Company believes that the eventual disposition or nondisposition
of all such properties will not materially affect its business or
financial condition, taken as a whole.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, the Company is a defendant in legal actions
arising in the normal course of its business. The Company believes
that, as a result of its legal defenses and insurance arrangements,
none of these actions, if decided adversely, would have a material
effect on its business or financial condition, taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information regarding trading of the Company's common stock,
quarterly market prices and dividends appears under "Common Stock
Data" on page 23 of the Company's 1994 Annual Report to Shareholders
and is incorporated herein by reference.
At March 1, 1995, the Company's common stock was held by
approximately 21,000 stockholders of record through nominee or street
name accounts with brokers.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for the last five years is included in the
"Ten Year Financial Summary" on pages 4 and 5 of the Company's 1994
Annual Report to Shareholders and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" is included on pages 6 through 11 of the
Company's 1994 Annual Report to Shareholders and is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's financial statements, unaudited quarterly financial
information and the independent auditors' report are included on pages
12 through 21 of the Company's 1994 Annual Report to Shareholders and
are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required under this item is incorporated herein by
reference to the Ryan's Family Steak Houses, Inc. Proxy Statement for
the Annual Meeting of Shareholders to be held April 27, 1995 under the
headings "Election of Directors," "Executive Officers" and "Certain
Beneficial Ownership of Common Stock - Compliance with Section 16(a)
of the Securities Exchange Act."
ITEM 11.EXECUTIVE COMPENSATION.
The information required under this item is incorporated herein by
reference to the Ryan's Family Steak Houses, Inc. Proxy Statement for
the Annual Meeting of Shareholders to be held April 27, 1995 under the
headings "Election of Directors - Compensation of Directors,"
"Executive Compensation and Other Information," "Compensation
Committee Interlocks and Insider Participation," "Report of the
Compensation Committee and Stock Option Committee" and "Performance
Graph."
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required under this item is incorporated herein by
reference to the Ryan's Family Steak Houses, Inc. Proxy Statement for
the Annual Meeting of Shareholders to be held April 27, 1995 under the
headings "Election of Directors," "Executive Officers" and "Certain
Beneficial Ownership of Common Stock."
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required under this item is incorporated herein by
reference to the Ryan's Family Steak Houses, Inc. Proxy Statement for
the Annual Meeting of Shareholders to be held April 27, 1995 under the
headings "Executive Compensation and Other Information - Deferred
Compensation - Salary Continuation Agreements" and "Compensation
Committee Interlocks and Insider Participation."
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)1-2Financial statements filed as part of this Form 10-K are
listed in the "Index to Financial Statements", at page 12.
(a)3 Exhibits (numbered in accordance with Item 601 of Regulation
S-K):
Exhibit # Description
3.1 Articles of Incorporation, as amended through
April 24, 1986, and Bylaws of the Company:
Incorporated by reference to Exhibits 4(a) and 4(b)
from the Registration Statement of the Company filed
with the SEC on Form S-3 (Commission file no. 33-
7245).
3.2 Articles of Amendment to the Articles of
Incorporation, dated April 22, 1987: Incorporated by
reference to Exhibit 3.2 to the Annual Report on Form
10-K for the period ended January 1, 1992 (Commission
file no. 0-10943) (the "1991 10-K").
3.3 Amendment to By-Laws of the Company, dated
October 25, 1990: Incorporated by reference to
Exhibit 3.3 to the 1991 10-K.
3.4 Articles of Amendment to the Articles of
Incorporation, dated May 25, 1989: Incorporated by
reference to Exhibit 4.3 to the Registration
Statement of the Company filed with the SEC on Form S-
8 (Commission file no. 33-53834).
4.1 Specimen of Company common stock certificate:
Incorporated by reference to Exhibit 4.1 to the 1991
10-K.
4.2 See Exhibits 3.1, 3.2, 3.3, 3.4 and 4.1.
*10.1 Ryan's Family Steak Houses, Inc. Incentive
Stock Option Plan: Incorporated by reference to the
Registration Statement of the Company filed with the
SEC on Form S-8 (Commission file no. 2-83987).
*10.2 Ryan's Family Steak Houses, Inc. 1987 Stock
Option Plan: Incorporated by reference to Exhibit 4
to the Registration Statement of the Company filed
with the SEC on Form S-8 (Commission file no. 33-
15924).
*10.3 Ryan's Family Steak Houses, Inc. 1991 Stock
Option Plan: Incorporated by reference to Exhibit 4.4
to the Registration Statement of the Company filed
with the SEC on Form S-8 (Commission file no. 33-
53834).
*10.4 Ryan's Employee Retirement Savings Plan,
dated March 1, 1992: Incorporated by reference to
Exhibit 10.4 to the 1991 10-K.
*10.5 Salary Continuation Agreement, dated April
22, 1987, between the Company and Alvin A. McCall,
Jr.; as amended on October 26, 1989: Incorporated by
reference to Exhibit 10.5 to the 1991 10-K.
*10.6 Salary Continuation Agreement, dated April
22, 1987, between the Company and Charles D. Way:
Incorporated by reference to Exhibit 10.6 to the 1991
10-K.
*10.7 Agreement and Plan of Restructuring:
Incorporated by reference to Exhibit A to the Proxy
Statement of the Company, dated March 25, 1993, filed
with respect to the Annual Meeting of Shareholders to
be held on April 28, 1993.
*10.8 Split Dollar Agreement by and between the
Company and Charles D. Way dated September 1, 1993:
Incorporated by reference to Exhibit 10.8 to the
Annual Report on Form 10-K for the period ended
December 29, 1993 (Commission file no. 0-10943) (the
"1993 10-K").
*10.9 Split Dollar Agreement by and between the
Company and G. Edwin McCranie dated November 12,
1993: Incorporated by reference to Exhibit 10.9 to
the 1993 10-K.
*10.10 Split Dollar Agreement by and between the
Company and John C. Jamison dated November 12, 1993:
Incorporated by reference to Exhibit 10.10 to the
1993 10-K.
*10.11 Split Dollar Agreement by and between the
Company and James R. Hart dated August 8, 1993:
Incorporated by reference to Exhibit 10.11 to the
1993 10-K.
*10.12 Split Dollar Agreement by and between the
Company and Fred T. Grant, Jr. dated November 12,
1993: Incorporated by reference to Exhibit 10.12 to
the 1993 10-K.
*10.13 Split Dollar Agreement by and between the
Company and Alan E. Shaw dated November 12, 1993:
Incorporated by reference to Exhibit 10.13 to the
1993 10-K.
*10.14 Executive Bonus Plan, commencing in 1994:
Incorporated by reference to Exhibit 10.14 to the
1993 10-K.
10.15 Agreement between Ryan's Properties, Inc.
and Family Steak Houses, Inc. dated July 11, 1994 and
as amended on October 17, 1994.
10.16 Ryan's Family Steak Houses, Inc. and
Wachovia Bank of North Carolina, N.A., as Rights
Agent, Shareholder Rights Agreement dated as of
January 26, 1995: Incorporated by reference to
Exhibit 2 to the report on Form 8-K filed with the
Commission on February 9, 1995 (Commission file no. 0-
10943).
13.1 Ryan's Family Steak Houses, Inc. 1994 Report to
Shareholders.
21.1 Subsidiaries of the Company.
23.1 Consent of Independent Auditors' with respect to
Form S-8.
27 Financial Data Schedule (electronic filing
only).
99.1 Ryan's Family Steak Houses, Inc. Proxy Statement
for the Annual Meeting of Shareholders, dated March
24, 1995.
* This is a management contract or compensatory
plan or arrangement.
(b) The Registrant has neither filed nor been required to file
any reports on Form 8-K during the quarter ended December 28,
1994. On February 9, 1995, the Company filed a report on
Form 8-K regarding the adoption of a Shareholder Rights
Agreement.
(c) The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) The response to this portion of Item 14 is submitted as a
separate section of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RYAN'S FAMILY STEAK HOUSES, INC.
March 24, 1995
By:/s/Fred T. Grant, Jr.
Fred T. Grant, Jr.
Vice President - Finance
(Principal Financial
and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Title Date
/s/Charles D. Way Chairman, President and March 24, 1995
Charles D. Way Chief Executive Officer
/s/G. Edwin McCranie Director and Executive March 24, 1995
G. Edwin McCranie Vice President
/s/James D. Cockman Director March 24, 1995
James D. Cockman
/s/Barry L. Edwards Director March 24, 1995
Barry L. Edwards
/s/Brian S. MacKenzie Director March 24, 1995
Brian S. MacKenzie
/s/Harold K. Roberts, Jr. Director March 24, 1995
Harold K. Roberts, Jr.
/s/James M. Shoemaker, Jr. Director March 24, 1995
James M. Shoemaker, Jr.
/s/Fred T. Grant, Jr. Vice President - Finance March 24, 1995
Fred T. Grant, Jr. (Principal Financial and
Accounting Officer)
RYAN'S FAMILY STEAK HOUSES, INC.
INDEX TO FINANCIAL STATEMENTS
The following financial statements of the Registrant included in
the Annual Report to Shareholders for the year ended December 28,
1994, are incorporated herein by reference. With the exception of the
pages listed below and other information incorporated in this report
on Form 10-K, the 1994 Annual Report to Shareholders is not deemed
"filed" as part of this report.
Page Reference
in Annual Report
Independent Auditors' Report 21
Statements of Earnings 12
Balance Sheets 13
Statements of Cash Flows 14
Notes to Financial Statements 15-20
All financial statement schedules have been omitted since the
required information is not applicable or the information required is
included in the financial statements or the notes thereto.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1994
<PERIOD-END> DEC-28-1994
<CASH> 695
<SECURITIES> 0
<RECEIVABLES> 1,736
<ALLOWANCES> 71
<INVENTORY> 2,843
<CURRENT-ASSETS> 8,993
<PP&E> 452,964
<DEPRECIATION> 87,988
<TOTAL-ASSETS> 379,756
<CURRENT-LIABILITIES> 99,927
<BONDS> 0
<COMMON> 53,434
0
0
<OTHER-SE> 215,921
<TOTAL-LIABILITY-AND-EQUITY> 379,756
<SALES> 448,214
<TOTAL-REVENUES> 449,775
<CGS> 307,081
<TOTAL-COSTS> 400,869
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 873
<INCOME-PRETAX> 48,033
<INCOME-TAX> 17,489
<INCOME-CONTINUING> 30,544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,544
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0
</TABLE>
RYAN'S FAMILY STEAK HOUSES, INC.
SUBSIDIARIES OF THE COMPANY
As of March 24, 1995
Jurisdiction of % of Stock
Name of Subsidiary Incorporation Owned by Parent
Big R Procurement
Company, Inc. DE 100%
Caliente Grille, Inc. DE 100%
Italian Eateries, Inc. DE 100%
L-1 Beverage Club, Inc. TX 100%
Laredo Grill, Inc. DE 100%
Ryan's Capital Holding
Corporation DE 100%
Ryan's Family Steak
Houses East, Inc. DE 100%
Ryan's Properties, Inc. DE 100%
Ry-Tex Beverage Corporation TX 100%
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Ryan's Family Steak Houses, Inc.
We consent to incorporation by reference in the Registration Statement
(No. 0-10943) on Form S-8 of Ryan's Family Steak Houses, Inc. of our
report dated January 18, 1995 (except for note 11 as to which the date
is January 26, 1995), relating to the consolidated balance sheets of
Ryan's Family Steak Houses, Inc. as of December 28, 1994 and December
29, 1993 and the related consolidated statements of earnings,
shareholders' equity, and cash flows and related schedules for each of
the years in the three-year period ended December 28, 1994 which
reports appear or are incorporated by reference in the 1994 annual
report on Form 10-K of Ryan's Family Steak Houses, Inc.
/s/KPMG Peat Marwick LLP
Greenville, South Carolina
March 24, 1995
AGREEMENT BETWEEN
RYAN'S PROPERTIES, INC.
AND
FAMILY STEAK HOUSES OF FLORIDA, INC.
DATED JULY 11, 1994 AND
AS AMENDED ON OCTOBER 17, 1994
This Agreement is made as of July 11, 1994, by and
between Ryan's Properties, Inc., a Delaware ("Ryan's"), and
Family Steak Houses of Florida, Inc., a Florida corporation
("FSH"). In consideration of the mutual covenants and
promises contained herein, the parties hereby agree as
follows:
1. Past Due Royalties. Ryan's and FSH hereby agree
that as of the date hereof the amount currently due Ryan's
under the Franchise Agreement dated as of September 16,
1987, by and between FSH and Ryan's, as previously amended
(the "Franchise Agreement"), is $1,536,029.43 ("Past Due
Royalties"). This amount is based on FSH sales through May
4, 1994 and does not include amounts that have accrued under
the Franchise Agreement with respect to FSH sales after May
4, 1994.
2. Satisfaction of Past Due Royalties. In
satisfaction of the Past Due Royalties, simultaneously with
the execution of this Agreement:
(a) FSH has paid to Ryan's the sum of
$236,029.43, receipt of which is acknowledged by
Ryan's;
(b) FSH has executed and delivered to Ryan's a
note in the form of Exhibit A hereto in the amount of
$800,000 payable to the order of Ryan's; and
(c) In consideration of $500,000, FSH does hereby
relinquish any and all of its franchise, exclusive
development and similar rights otherwise granted to FSH
in the Franchise Agreement with respect to those
Florida counties set forth in Exhibit B ("Ceded
Territory"), subject to the terms and conditions
hereof. FSH agrees that the payment from Ryan's for
said rights will be paid as an offset against Past Due
Royalties.
3. Right of First Refusal. Ryan's hereby agrees
that, during the term of the Franchise Agreement, in the
event that it receives an offer from an unaffiliated third
party (a "Third Party Offer") with respect to franchise
rights for a "Ryan's Family Steak House" in any county
contiguous to those counties in which FSH operates a "Ryan's
Family Steak House" restaurant on the date hereof, which
counties are listed on Exhibit C (the "Restricted
Territory"), it will not accept such offer until it first
communicates the material terms of the Third Party Offer to
FSH. FSH shall then have a period of thirty (30) days in
which to offer to enter into an agreement with Ryan's for
such franchise rights on substantially equivalent terms as
the Third Party Offer. Ryan's shall determine in its sole
reasonable discretion whether or not FSH's offer is on
substantially equivalent terms as the Third Party Offer
within twenty (20) business days of receiving the offer of
FSH. In the event that Ryan's determines that the offer of
FSH is on substantially equivalent terms as the Third Party
Offer, Ryan's shall not accept the Third Party Offer until
thirty (30) days after Ryan's has offered to enter into an
agreement with FSH on substantially equivalent terms
(including, without limitation, cash payment up front and
the number of restaurants in operation) as the Third Party
Offer. If FSH does not accept such offer of Ryan's within
such period, Ryan's shall be free to accept the Third Party
Offer. In the event FSH accepts the offer, the transaction
must be completed within one hundred twenty (120) days of
the date of acceptance or any rights of first refusal of FSH
will lapse. Any counter-offer by an unaffiliated third
party shall be treated as a new Third Party Offer hereunder.
This limited right of first refusal shall not in any event
apply to any activity by Ryan's itself or its subsidiaries
or affiliates, including, without limitation, any existing
or future restaurant(s) owned or operated by Ryan's and/or
its subsidiaries or affiliates.
4. Right to Repurchase. Ryan's hereby agrees that,
during the period commencing on the date hereof and ending
June 30, 1998, FSH may at any time, in its sole discretion,
exercise a right to repurchase the Ceded Territory and all
franchise, development and similar rights otherwise granted
to FSH in the Franchise Agreement with respect to the Ceded
Territory. FSH shall exercise such rights by giving Ryan's
thirty (30) days written notice of same. The repurchase
price shall be $500,000.00. FSH agrees that, in the event
it exercises this right of repurchase, it will abide by the
territorial restrictions governing development of new
restaurants within five miles of any existing "Ryan's Family
Steak House" restaurant, as set forth in the Franchise
Agreement. This right of repurchase shall expire on June
30, 1998.
5. Royalty Fees. Ryan's and FSH agree that effective
May 5, 1994, royalty fees due Ryan's under the Franchise
Agreement shall be three percent (3%) of sales as defined in
the Franchise Agreement. The three percent rate will remain
in effect through April 30, 1997, at which time the rate
will change to four percent (4%). FSH agrees to pay all
royalty fees on sales after May 4, 1994 at such time as such
fees are due under the Franchise Agreement. FSH
acknowledges that, based on reported sales of $3,395,604.03
as set forth in Exhibit D, royalty fees for May 1994 amount
to $101,868.12 and are due to Ryan's on July 1, 1994 and
will be paid to Ryan's simultaneously with the execution of
this Agreement.
6. Operational Requirements. FSH agrees to abide by
its obligations under the Franchise Agreement, including,
without limitation, its obligation to operate its Ryan's
Family Steak Houses in a manner consistent with the
standards established by Ryan's from time to time. In
accordance with the amendment dated May 29, 1992 to the
Franchise Agreement, FSH agrees to purchase only food
products as specified, and to such specifications, as
approved by Ryan's from time to time. Any deviation from
the approved list must have prior written authorization by
Ryan's Vice President of Purchasing. Should Ryan's, in its
sole discretion, determine that unauthorized food products
or specifications for products are being used by FSH, FSH
shall have thirty (30) days, from the receipt of written
notice from Ryan's, to cease using such food products in its
restaurants. Upon receipt of such notice and failure to
cure within thirty (30) days, the royalty fee due to Ryan's
under the Franchise Agreement will revert immediately to
five percent (5%) and stay at that rate through the
remaining term, including any extensions, of the Franchise
Agreement.
In addition, FSH hereby acknowledges that the 30-day
"cure" procedure should be utilized only in extraordinary
circumstances. Any changes in food products or food product
specifications should be made only after authorization from
Ryan's.
7. Store Requirements. Ryan's and FSH hereby agree
that the provision in the Franchise Agreement concerning the
number of restaurants in operation is hereby amended as
follows:
(a) At the end of calendar years 1994 through
1996, FSH agrees to have at least 24 Ryan's Family
Steak House restaurants in operation.
(b) At the end of calendar year 1997, FSH agrees
to have at least 25 Ryan's Family Steak House
restaurants in operation. The number of required
restaurants in operation will then increase by 1 for
each year after 1997 during the term of the Franchise
Agreement. Therefore, 26 restaurants will be required
at the end of 1998, 27 restaurants will be required at
the end of 1999, and so on.
In addition, FSH acknowledges that all new restaurant
sites must be approved in advance by Ryan's in accordance
with the terms of the Franchise Agreement. Further, Ryan's
acknowledges and affirms its prior agreement that no initial
franchise fees shall be payable solely as a result of the
opening of new restaurants and waives said requirement under
Article I Section G of the Franchise Agreement. Franchise
fees and royalty fees as a result of sales and other
activities by all such new restaurant sites shall, however,
continue to be due under the Franchise Agreement.
8. No Further Modification. Except as expressly set
forth herein, the Franchise Agreement, as amended to date,
will continue in full force and effect in all respects and
this Agreement does not constitute a waiver of any provision
thereof.
9. Miscellaneous.
(a) This agreement shall be construed as a
contract entered into under the laws of the State of
South Carolina, without regard to the doctrine of
conflicts of law. Any litigation regarding this
Agreement shall be brought and litigated in the same
manner as a dispute under the Franchise Agreement.
(b) The rights and remedies of Ryan's hereunder
are in addition to those provided by common or
statutory law.
(c) This Agreement embodies the entire agreement
and understanding of the parties with respect to the
subject matter hereof, and there are no promises,
representations, warranties, covenants or undertakings
of any party to the other with respect to such subject
matter other than those expressly set forth or referred
to herein. This Agreement supersedes all prior
discussions, agreements, writings and undertakings
among the parties with respect to such subject matter.
(d) No provision contained in this Agreement
shall be deemed to have been abrogated or waived by
reason of any failure or delay to enforce the same,
regardless of the number of breaches or violations
which may occur. All waivers of any such provision
shall be in writing executed by the party against whom
the same is sought to be enforced. This Agreement may
be amended only by a writing executed by each party
hereto.
(e) This Agreement and all rights hereunder may be
assigned and transferred only in accordance with the
provisions in Article XVIII of the Franchise Agreement
and shall be binding upon and inure to the benefit of
the parties and their respective heirs, executors,
personal representatives, administrators, and
authorized successors and assigns.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on their behalf by a person
thereunto duly authorized, as of the date first above
written.
RYAN'S PROPERTIES, INC.
By: /s/Charles D. Way
Title: President
FAMILY STEAK HOUSES OF
FLORIDA, INC.
By: /s/Lewis E. Christman, Jr.
Title: President and Chief
Executive Officer
