<PAGE> 1
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: MARCH 13, 1995
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: 0-6054
SUMMIT FAMILY RESTAURANTS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 87-0264039
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1010 WEST 2610 SOUTH,
SALT LAKE CITY, UT 84119
(Address of principal executive offices) (Zip Code)
(801) 974-4300
(Registrant's telephone number, including area code)
JB'S RESTAURANTS, INC. (FORMER NAME)
(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 .
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
AS OF APRIL 7, 1995 THERE WERE 4,798,102 SHARES OF COMMON STOCK, $.10 PAR
VALUE, OUTSTANDING.
Page 1 of 16
<PAGE> 2
SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company, all adjustments (consisting
only of normal recurring entries) necessary for the fair presentation of the
Company's results of operations, financial position and changes therein for the
periods presented have been included.
Page 2 of 16
<PAGE> 3
SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 13, SEPTEMBER 26,
ASSETS 1995 1994
----------- -----------
(UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 2,726,000 $ 5,303,000
Short-term investments 200,000 2,160,000
Receivables
Short-term portion of notes
receivable 208,000 173,000
Income Taxes 1,642,000 2,045,000
Other receivables 892,000 1,359,000
Inventories 1,707,000 1,386,000
Deferred taxes, net 83,000 78,000
Prepaid expenses 318,000 309,000
----------- -----------
Total current assets 7,776,000 12,813,000
----------- -----------
Property, buildings and equipment, at cost,
less accumulated depreciation and
amortization 46,212,000 45,672,000
----------- ------------
Real property and equipment under capitalized
leases, at cost, less accumulated
amortization 7,152,000 7,480,000
----------- -----------
Other assets
Notes receivable, net of current portion 2,626,000 2,580,000
Investment in HomeTown Buffet, Inc. 5,480,000 5,678,000
Deposits and other 1,225,000 986,000
----------- -----------
Total other assets 9,331,000 9,244,000
----------- -----------
Intangible assets, at cost, less
accumulated amortization
Lease acquisition costs 465,000 569,000
Other intangible assets 792,000 830,000
----------- -----------
Total intangible assets 1,257,000 1,399,000
----------- -----------
Total assets $71,728,000 $76,608,000
=========== ===========
</TABLE>
Page 3 of 16
<PAGE> 4
SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
LIABILITIES AND MARCH 13, SEPTEMBER 26,
STOCKHOLDERS' EQUITY 1995 1994
----------- -----------
(UNAUDITED)
<S> <C> <C>
Current liabilities
Accounts payable - trade $ 4,320,000 $ 6,874,000
Accrued liabilities
Payroll and related taxes 3,074,000 2,764,000
Sales and property taxes 2,040,000 1,855,000
Rent and other 2,302,000 2,762,000
Current maturities of long-term debt 3,412,000 1,960,000
----------- -----------
Total current liabilities 15,148,000 16,215,000
----------- -----------
Long-term debt, net of current maturities
Capitalized real property leases 10,328,000 10,609,000
Notes payable 404,000 2,484,000
----------- -----------
Total long-term debt 10,732,000 13,093,000
----------- -----------
Deferred taxes, net 1,567,000 1,376,000
----------- -----------
Deferred compensation 1,598,000 1,588,000
----------- -----------
Commitments and contingencies
Stockholders' equity
Preferred stock, $1 par value;
1,000,000 shares authorized;
946,714 shares issued
and outstanding 947,000 947,000
Junior common stock, $.01 par value;
500,000 shares authorized; none
outstanding -- --
Common stock, $.10 par value; 10,000,000
shares authorized; 5,288,759 and 5,288,759
shares issued 529,000 529,000
Additional paid-in capital 29,570,000 29,581,000
Unrealized gain on investment in HomeTown
Buffet, Inc., net of tax - Note 5 2,654,000 2,773,000
Retained earnings 12,237,000 13,790,000
----------- -----------
45,937,000 47,620,000
Less: 495,458 and 500,000 common stock treasury
shares, at cost 3,254,000 3,284,000
----------- -----------
Total stockholders' equity 42,683,000 44,336,000
----------- -----------
Total liabilities and stockholders' equity $71,728,000 $76,608,000
=========== ===========
</TABLE>
Page 4 of 16
<PAGE> 5
SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED TWENTY-FOUR WEEKS ENDED
------------------------- -------------------------
MARCH 13, MARCH 14, MARCH 13, MARCH 14,
1995 1994 1995 1994
------------------------- -------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Total revenues $27,061,000 $25,681,000 $54,324,000 $49,909,000
Costs and expenses
Food costs 8,957,000 8,360,000 17,924,000 16,068,000
Labor costs 9,360,000 8,829,000 19,157,000 17,405,000
Occupancy and other expenses 6,365,000 5,626,000 12,902,000 11,448,000
General and administrative expenses 1,855,000 1,893,000 3,688,000 3,532,000
Depreciation and amortization 1,436,000 1,381,000 2,830,000 2,760,000
----------- ----------- ----------- -----------
Total costs and expenses 27,973,000 26,089,000 56,501,000 51,213,000
----------- ----------- ----------- -----------
Loss from operations (912,000) (408,000) (2,177,000) (1,304,000)
Interest and other income (expense)
Interest expense (381,000) (512,000) (723,000) (1,024,000)
Interest income 143,000 185,000 282,000 330,000
Gains on sales of restaurants to
franchisees and other 11,000 254,000 11,000 620,000
----------- ----------- ----------- -----------
Total interest and other income (expense) (227,000) (73,000) (430,000) (74,000)
----------- ----------- ----------- -----------
Loss before income taxes (1,139,000) (481,000) (2,607,000) (1,378,000)
Income tax benefit (461,000) (191,000) (1,053,000) (551,000)
----------- ----------- ----------- -----------
Net loss $ (678,000) $ (290,000) $(1,554,000) $ (827,000)
=========== =========== =========== ===========
Net loss per common share (0.14) $ (0.06) $ (0.32) $ (0.17)
=========== =========== =========== ===========
Weighted average shares outstanding 4,792,003 4,773,997 4,790,381 4,769,708
</TABLE>
Page 5 of 16
<PAGE> 6
SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TWENTY-FOUR WEEKS ENDED
-----------------------
MARCH 13, MARCH 14,
1995 1994
-----------------------
(UNAUDITED)
<S> <C> <C>
Increase (Decrease)
In Cash and Cash Equivalents
Cash flows from operating activities
Net loss $(1,554,000) $ (827,000)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation and amortization 2,830,000 2,760,000
Provision for losses - 11,000
Loss (gain) on disposal of assets 129,000 (577,000)
Change in operating assets and liabilities
Decrease in receivables 870,000 579,000
Increase in inventory (321,000) (80,000)
Decrease (increase) in other assets 51,000 (128,000)
Increase (decrease) in accounts payable (2,554,000) 1,670,000
Increase (decrease) in accrued liabilities 531,000 (413,000)
Increase (decrease) in net deferred taxes 265,000 (551,000)
----------- -----------
Net cash provided by operating activities 247,000 2,444,000
----------- -----------
Cash flows from investing activities
Proceeds from sale of short-term investments 1,960,000 --
Acquisition of property, buildings and
equipment (4,566,000) (4,372,000)
Acquisition of intangible assets -- (256,000)
Proceeds from sale of assets 630,000 1,800,000
Payments received on notes receivable 61,000 72,000
Exercise of options in HomeTown Buffet, Inc. -- (120,000)
----------- -----------
Net cash used by investing activities (1,915,000) (2,876,000)
Cash flows from financing activities
Proceeds from issuance of preferred stock -- 5,043,000
Proceeds from issuance of common stock -- 125,000
Payments under line-of-credit agreement -- (762,000)
Principal payments on long-term debt
and capital leases (909,000) (928,000)
----------- -----------
Net cash provided (used) by financing activities (909,000) 3,478,000
----------- -----------
Net increase (decrease) in cash and
cash equivalents (2,577,000) 3,046,000
Cash and cash equivalents at beginning
of period 5,303,000 1,666,000
----------- -----------
Cash and cash equivalents at end of period $ 2,726,000 $ 4,712,000
=========== ===========
</TABLE>
Page 6 of 16
<PAGE> 7
SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
TWENTY-FOUR WEEKS ENDED
---------------------------
MARCH 13, MARCH 14,
1995 1994
--------- ---------
(UNAUDITED)
<S> <C> <C>
Supplemental disclosures of cash flow
information
Cash paid for interest $ 516,000 $ 1,065,000
========= ===========
Cash paid for income taxes -- --
========= ===========
During both fiscal 1995 and 1994,
stores were sold to franchisees and
notes receivable were recorded in
exchange for equipment as follows:
Notes receivable $ 377,000 $ 628,000
Gain recognized 11,000 (630,000)
Gain deferred (234,000) --
Cash received 98,000 157,000
--------- -----------
Net book value of equipment sold $ 230,000 $ 155,000
========= ===========
</TABLE>
Page 7 of 16
<PAGE> 8
SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. NAME CHANGE
Effective April 4, 1995, the Company changed its corporate name to Summit Family
Restaurants Inc. from JB's Restaurants, Inc. The name change was made to reflect
the Company's diverse family restaurant concepts.
2. FISCAL PERIODS
The Company utilizes a 52/53 week fiscal year which ends on the last Monday in
September. The third quarter of each year contains 16 weeks while the other
three quarters each contain 12 weeks.
3. PRESENTATION
Certain prior year amounts in the unaudited consolidated financial statements
have been reclassified to conform with the current year presentation.
4. NET LOSS PER COMMON SHARE
Net loss per common share is computed using the weighted average number of
shares of stock and dilutive common stock equivalents outstanding during each
period.
5. INVESTMENT IN HOMETOWN BUFFET, INC.
In the first quarter of fiscal 1994, the Company elected early adoption of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" ("SFAS No. 115"). In accordance with SFAS No. 115,
the Company's investment in the common stock of HomeTown Buffet, Inc. meets the
definition of available-for-sale securities and, as such, is reported at fair
value. On March 13, 1995 and September 26, 1994 the estimated fair value of the
Company's 528,220 shares of HomeTown Buffet, Inc. common stock was $10.38 and
$10.75 per share, or $5.5 million and $5.7 million, respectively. The unrealized
gain (net of tax) of $2.7 million and $2.8 million at March 13, 1995 and
September 26, 1994, respectively, is recorded as a separate component of
stockholders' equity.
Page 8 of 16
<PAGE> 9
SUMMIT FAMILY RESTAURANTS INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES AND SELECTED OPERATING DATA. The following table sets forth, for the
periods indicated, certain information regarding the Company's revenues and
selected operating data.
<TABLE>
<CAPTION>
TWENTY-FOUR
TWELVE WEEKS ENDED WEEKS ENDED
------------------------------ -------------------------------
MARCH 13, MARCH 14, MARCH 13, MARCH 14,
1995 1994 1995 1994
------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Total revenues $27,061,000 $25,681,000 $54,324,000 $49,909,000
Percentage change from prior period 5.4% 1.2% 8.8% (1.9)%
JB's Restaurants
Company owned units at end of quarter 83 91 83 91
Franchised units at end of quarter 22 19 22 19
Company restaurants transferred to franchisees -- 1 4 3
Company restaurants converted to Galaxy Diners 1 -- 3 --
Company restaurants closed -- 2 -- 3
Average weekly sales per unit $17,846 $18,303 $17,811 $17,758
Percentage change from prior period (2.5)% 4.6% 0.3% 2.9%
Same store sales percentage change
from prior period (5.1)% (0.5)% (2.8)% (1.4)%
Galaxy Diners
Company owned units at end of quarter 4 -- 4 --
Restaurants opened 1 -- 3 --
Average weekly sales per unit $30,193 -- $32,663 --
HomeTown Buffets
Units operated as a franchisee at end of quarter 14 11 14 11
Restaurants opened -- 4 -- 5
Average weekly sales per unit $47,729 $51,492 $47,692 $50,811
Sbarros
Units operated as a franchisee at end of quarter -- -- -- --
Restaurants closed -- -- 10 10
</TABLE>
The increase in revenues for the twelve and twenty-four week periods ended March
13, 1995, as compared with the comparable periods of the prior fiscal year, is
primarily the result of an increase in the number of HomeTown Buffet restaurants
and Galaxy Diners which more than offset the decrease in the number of JB's
Restaurants, the disposition of the Company's Sbarro restaurants and the decline
in same store sales. During the twelve week period ended March 13, 1995, the
average sales per JB's Restaurant decreased 2.5% reflecting an increase in the
average customer purchase of 0.2% and a decrease in customer counts per unit of
2.7%. Same store sales for JB's
Page 9 of 16
<PAGE> 10
Restaurants (sales from JB's Restaurants open during both the fiscal 1995 and
1994 period) decreased 5.1% reflecting a decrease in customer counts of 5.3%
while the average customer purchase increased 0.2%.
During the twenty-four week period ended March 13, 1995, the average sales per
JB's Restaurant increased 0.3% reflecting an increase in the average customer
purchase of 0.9% and a decrease in customer counts per unit of 0.6%. Same store
sales for JB's Restaurants decreased 2.8% reflecting an increase in the average
customer purchase of 1.0% offset by a 3.8% decrease in customer counts per unit.
COSTS AND EXPENSES; STATEMENT OF OPERATIONS DATA. The following table sets forth
costs as a percentage of revenues for the periods indicated as well as statement
of operations data:
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED TWENTY-FOUR WEEKS ENDED
----------------------- ----------------------
MARCH 13, MARCH 14, MARCH 13, MARCH 14,
1995 1994 1995 1994
----------------------- ----------------------
<S> <C> <C> <C> <C>
Total revenues 100.0% 100.0% 100.0% 100.0%
--------- ------- -------- ---------
Costs and expenses
Food costs 33.1 32.5 33.0 32.2
Labor costs 34.6 34.4 35.2 34.9
Occupancy and other expenses 23.5 21.9 23.8 22.9
General and administrative expenses 6.9 7.4 6.8 7.1
Depreciation and amortization 5.3 5.4 5.2 5.5
--------- ------- -------- ---------
Total costs and expenses 103.4 101.6 104.0 102.6
--------- ------- -------- ---------
Loss from operations (3.4) (1.6) (4.0) (2.6)
Interest and other income (expense)
Interest expense (1.4) (2.0) (1.3) (2.1)
Interest income 0.5 0.7 0.5 0.7
Gains on sales of restaurants to
franchisees and other 0.1 1.0 -- 1.2
--------- ------- -------- ---------
Total interest and other income
(expense)
(0.8) (0.3) (0.8) (0.2)
--------- ------- -------- ---------
Loss before income taxes (4.2) (1.9) (4.8) (2.8)
Income tax benefit (1.7) (0.8) (1.9) (1.1)
--------- ------- -------- ---------
Net loss (2.5)% (1.1) (2.9)% (1.7)%
========= ======= ======== =========
Effective income tax rate 40.5% 39.7% 40.4% 40.0%
========= ======= ======== =========
</TABLE>
FOOD COSTS. The increase in food costs as a percentage of total revenues for the
twelve and twenty-four week periods ended March 13, 1995 as compared with the
comparable periods of the prior fiscal year, is primarily the result of an
increase in the number of HomeTown Buffet restaurants which operate at a higher
food cost percentage than the Company's JB's Restaurants.
LABOR COSTS. The increase in labor costs as a percentage of total revenues in
the twelve and twenty-four week periods ended March 13, 1995 as compared with
the comparable periods of the prior fiscal year, is primarily due to costs
incurred in training and increased scheduling designed to improve customer
service in the JB's Restaurants along with a decrease in same store sales.
Page 10 of 16
<PAGE> 11
OCCUPANCY & OTHER EXPENSES. The increase in occupancy and other expenses as a
percentage of total revenues for the twelve and twenty-four week periods ended
March 13, 1995 as compared with the comparable periods of the prior fiscal year,
is primarily due to increased amortization of preopening costs ($71,000 and
$182,000 respectively) resulting from the additional HomeTown Buffet openings
and Galaxy Diner conversions, increased royalty fees, ($72,000 and $157,000
respectively) associated with the additional HomeTown Buffet restaurants in
operation along with the decline in same store sales.
GENERAL & ADMINISTRATIVE EXPENSES. The decrease in General and Administrative
expenses as a percentage of total revenues for the twelve and twenty-four week
periods ended March 13, 1995 as compared with the comparable periods of the
prior fiscal year is primarily due to reduced employee relocation costs.
DEPRECIATION AND AMORTIZATION. The decrease in depreciation and amortization as
a percentage of total revenues in the twelve and twenty-four week periods ended
March 13, 1995 as compared with the comparable periods of the prior fiscal year
primarily reflects the increase in the number of HomeTown Buffet restaurants
which operate with lower depreciation and amortization as a percent of revenues.
INTEREST EXPENSE. The decrease in interest expense as a percentage of total
revenues for the twelve and twenty-four week periods ended March 13, 1995 as
compared with the comparable periods of the prior fiscal year is due to lower
outstanding debt and no borrowings outstanding on the revolving line-of-credit.
INTEREST INCOME. The decrease in interest income as a percentage of total
revenues for the twelve and twenty-four week periods ended March 13, 1995 as
compared with the comparable periods of the prior fiscal year is primarily a
result of the 5.4% and 8.8% increase in total revenues for the respective
periods while interest income dollars have remained relatively constant.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of working capital historically have been cash
flow from operations and borrowings. During the twenty-four week period ended
March 13, 1995, the Company obtained cash from other sources including the sale
of short-term investments and the sale of assets. The Company requires capital
principally for the acquisition and construction of new restaurants, remodeling
and conversion of existing restaurants, and renewals of equipment and leasehold
improvements. The Company anticipates funding these capital requirements in the
remainder of fiscal year 1995 through cash on hand at the end of the quarter,
internally generated funds, equipment lease financing and utilization of
build-to-suit leases on certain new restaurants.
During the twenty-four week period ended March 13, 1995, cash and cash
equivalents were provided by the following sources:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
In Millions
- ------------------------------------------------------------------------------------
<S> <C>
Net loss $(1.6)
Depreciation and amortization 2.8
Change in operating assets and liabilities (1.1)
Sale of short-term investments 2.0
Proceeds from the sale of assets 0.6
Payments received on notes receivable 0.1
- ------------------------------------------------------------------------------------
Total Provided $ 2.8
- ------------------------------------------------------------------------------------
</TABLE>
Page 11 of 16
<PAGE> 12
During the same period, cash and cash equivalents were applied for the following
uses:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
In Millions
- ------------------------------------------------------------------------------
<S> <C>
Capital expenditures for new stores $1.8
Other capital expenditures 2.7
Principal payments on long-term debt and capital leases 0.9
- ------------------------------------------------------------------------------
Total used $5.4
- ------------------------------------------------------------------------------
</TABLE>
During the first half of fiscal year 1995, cash used exceeded cash provided by
$2.6 million due primarily to capital expenditures associated with the
conversion of underperforming JB's Restaurants to Galaxy Diners and the
remodeling of JB's Restaurants.
The current ratio at the end of the second quarter of fiscal year 1995 was
0.5:1.0 and 0.8:1.0 at the end of fiscal year 1994. Management does not consider
the fact that the current ratio is less than one to be itself an indication of a
liquidity problem as the restaurant business has practically no receivables and
minimum inventories that typically turn faster than accounts payable to
suppliers. The $1.1 million change in operating assets and liabilities is
primarily attributable to the Company collecting $830,000 in landlord
receivables, a $400,000 change in income taxes receivable and a $2.6 million
decrease in accounts payable primarily due to a one time delay in the timing of
payments with the implementation of new accounts payable software.
The Company's $3.0 million line of credit with a bank, which was scheduled to
expire on December 31, 1994, was extended until December 31, 1995. The line of
credit and other bank loans, which have a balance of $2.7 million as of March
13, 1995, are secured by 528,220 shares of HomeTown Buffet, Inc. common stock
and by certain properties owned by the Company. As of March 13, 1995 the Company
had $1,156,625 in letters of credit and no borrowings outstanding against the
line of credit. The Company has agreed to terminate the line of credit during
the fiscal third quarter in exchange for the release of the lien on an
office/warehouse property which the Company expects to sell with net proceeds of
approximately $1.2 million. The Company does not expect to be in compliance with
certain covenants within its lending agreements at the end of its fiscal third
quarter. The Company is currently in discussions with the bank with respect to
waiver or revision of the covenants. In the event no agreement is reached with
the bank, the Company may sell certain assets in order to repay these loans.
The Company's $2.5 million equipment lease commitment to finance new HomeTown
Buffet restaurant equipment was extended until September 30, 1995. The Company
had utilized $1.0 million of the commitment as of March 13, 1995.
The Company opened no new HomeTown Buffet restaurants in the first half of
fiscal year 1995 but currently has two HomeTown Buffet restaurants under
construction. The Company expects to open these two HomeTown Buffet restaurants
under the Company's exclusive area development agreement with HomeTown Buffet,
Inc. during the second half of fiscal year 1995, which will bring the total
number of HomeTown Buffet restaurants to 16 at fiscal year end. The exclusive
area development agreement requires the Company to open a minimum of 17 HomeTown
Buffet restaurants by December 31, 1995.
During the first half, the Company remodeled four of its higher performing JB's
Restaurants and does not anticipate remodeling any other higher performing JB's
Restaurants during the remainder of fiscal year 1995. The deferral of remodels
will not impact the Company's plans to continue to routinely repair and maintain
the
Page 12 of 16
<PAGE> 13
Company's restaurants. In addition, the Company has converted three of its lower
performing JB's Restaurants to Galaxy Diners and expects to convert two more
lower performing JB's Restaurants to Galaxy Diners during the remainder of
fiscal year 1995 (one of which opened on April 18, 1995), which will bring the
number of Galaxy Diners to six at fiscal year end. Additional Galaxy Diner
conversions, remodeling of additional JB's Restaurants and additional new
HomeTown Buffet restaurants will be dependent upon the Company improving
internal cash flow and/or finding additional sources of capital. It is expected
that this capital will result from the sale of assets. To the extent that these
assets secure the bank loans, the Company expects that it will repay these loans
when the assets are sold. If the Company's earnings do not improve or other
sources of financing are not obtained, the Company would have to reevaluate its
capital spending plans.
SEASONALITY
The Company's business is seasonal in nature with the spring and summer quarters
being the highest volume periods. The Company's lowest volume periods typically
occur during the first and second calendar quarters.
IMPACT OF INFLATION
Many of the Company's employees are paid hourly rates related to the federal and
state minimum wage laws. Accordingly, increases in the minimum wage could
materially increase the Company's labor costs. Currently, there are no further
scheduled increases in the federal minimum wage. In addition, the cost of food
commodities utilized by the Company are subject to market supply and demand
pressures as is evidenced by the recent increased produce prices (lettuce in
particular) resulting from the unusual weather conditions in the western U.S.
growing regions. Shifts in these costs may have a significant impact on the
Company's food costs. The Company anticipates that increases in these costs can
be offset through pricing and other cost control efforts; however, there is no
assurance that the Company would be able to pass such costs on to its guests or,
if it were able to do so, could do so in a short period of time.
Page 13 of 16
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual Meeting of the Company's shareholders was held on
February 9, 1995.
(b) The directors elected at the Annual Meeting by either the holders
of Common Stock or the holders of the Series A Stock were Don M. McComas,
Ronald N. Paul and William L. Paternotte. The directors whose terms of office as
director continued after the meeting, but who did not stand for election, are
Frederick L. Bryant, Norman N. Habermann, Carl R. Hays, Clark D. Jones, Norton
Parker and Thomas J. Russo.
(c) The following items were voted upon and approved at the Annual
Meeting as indicated by the vote tabulations set forth below the description of
each item.
1. The election of directors.
William L. Paternotte was elected by the holders of the Series A
stock.
For: 946,714 Withheld: -0-
Don M. McComas was elected by the holders of the Common Stock.
For: 4,313,846 Withheld: 12,566
Ronald N. Paul was elected by the holders of the Common Stock.
For: 4,317,035 Withheld: 9,377
2. Amendment to the Company's 1992 Stock Option Plan (the "Plan")
to (i) increase the shares authorized for the grant of options
under the Plan from 460,000 to 1,060,000, (ii) provide for grants
of nonqualified stock options to non-employee directors of the
Company on a formula basis, (iii) increase the Compensation
Committee's discretion under the Plan with regard to vesting, terms
of options and payment methods, and (iv) provide for other minor
amendments to update the Plan as described in the Proxy Statement.
For: 2,379,734 Against and Abstentions: 607,244
3. Amendment to the Company's Certificate of Incorporation to
change the Company's name from JB's Restaurants, Inc. to Summit
Family Restaurants Inc.
For: 4,256,620 Against, Abstentions and Broker non-votes: 122,768
4. Ratification of the appointment of KPMG Peat Marwick LLP,
certified public accountants, as independent auditors to examine
the Company's financial statements for the fiscal year ending
September 25, 1995.
For: 4,339,438 Against and Abstentions: 39,949
Page 14 of 16
<PAGE> 15
SUMMIT FAMILY RESTAURANTS INC.
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are attached to this report:
<TABLE>
<CAPTION>
Exhibit Description
Number of Exhibit
------- -----------
<S> <C>
3(1) Certificate of Amendment to the Certificate of
Incorporation filed with the Delaware Secretary of State
on April 4, 1995.
27(1) Financial Data Schedule
</TABLE>
Other Items
- -----------
There were no other items to be reported under Part II of this report.
Page 15 of 16
<PAGE> 16
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 HEREUNTO DULY AUTHORIZED.
SUMMIT FAMILY RESTAURANTS INC.
------------------------------
(Registrant)
Date: April 26, 1995 By: /s/ David E. Pertl
--------------------------
David E. Pertl
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
(A duly authorized officer)
By: /s/ Theodore Abajian
--------------------------
Theodore Abajian
Vice President and Controller
(Principal Accounting Officer)
Page 16 of 16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C>
3(1) Certificate of Amendment to the Certificate of Incorporation filed with
the Delaware Secretary of State on April 4, 1995.
27(1) Financial Data Schedule
</TABLE>
<PAGE> 1
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
JB'S RESTAURANTS, INC.
(Pursuant to Delaware Code, Title 8, Section 242)
Don M. McComas hereby certifies that:
1. he is the President of JB's Restaurants, Inc. (the "Corporation");
2. Article First of the Corporation's Certificate of Incorporation is
hereby amended in its entirety as follows:
FIRST: The name of this corporation is:
Summit Family Restaurants Inc.
3. the foregoing amendment was duly approved by the Corporation's Board
of Directors and the Corporation's shareholders.
The undersigned hereby certifies, under penalties of perjury, that the
foregoing amendment is his individual act and deed, and the act and deed of the
Corporation, and that the facts stated above are true.
Date: April 4, 1995 /s/
-------------------------------
Don M. McComas, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrants balance sheet and statements of operations as of and for the first
half ended March 13, 1995 and is qualified in its entirety by reference to such
financial statements, including the notes thereto.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-25-1995
<PERIOD-START> SEP-27-1994
<PERIOD-END> MAR-13-1995
<CASH> 2,726,000
<SECURITIES> 200,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1,707,000
<CURRENT-ASSETS> 7,776,000
<PP&E> 99,727,000
<DEPRECIATION> 46,363,000
<TOTAL-ASSETS> 71,728,000
<CURRENT-LIABILITIES> 15,148,000
<BONDS> 10,732,000
<COMMON> 529,000
0
947,000
<OTHER-SE> 41,207,000
<TOTAL-LIABILITY-AND-EQUITY> 71,728,000
<SALES> 54,324,000
<TOTAL-REVENUES> 54,324,000
<CGS> 17,924,000
<TOTAL-COSTS> 17,924,000
<OTHER-EXPENSES> 34,889,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 723,000
<INCOME-PRETAX> (2,607,000)
<INCOME-TAX> (1,053,000)
<INCOME-CONTINUING> (2,607,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,554,000)
<EPS-PRIMARY> (0.32)
<EPS-DILUTED> (0.32)
</TABLE>
