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ELXSI Corporation
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ELXSI Corporation
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A Message from the President:
The year 1995 was exciting for ELXSI Corporation as both Bickford's Family
Restaurants and Cues again recorded record sales years and the Company set a new
earnings per share record. Bickford's also reported its fourth year of improved
earnings since our July 1991 entry into the restaurant business with a
record-setting operating income of $7.1 million in 1995. Cues added operating
income of $1.0 million, down from $1.3 million in 1994, as we made significant
investments in new products and research and development expense in 1995.
Bickford's
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At Bickford's, our biggest event of the year was the acquisition of 16
Abdow's Family Restaurants. Abdow's, which had formerly been a Big Boy
franchisee in Western Massachusetts and Connecticut, presented a perfect fit
geographically which allowed us to strengthen our position in these markets. Of
the 16 restaurants acquired, we plan to convert 9 or 10 into Bickford's. The
remaining restaurants, which are geographically close to existing Bickford's
units, will continue to be operated as Abdow's. To date, four Abdow's have been
converted into Bickford's with tremendous early results. The Abdow's acquisition
represented an important strategic event that will pay off immediately and in
future years through increased earnings. The key benefits from the Abdow's
acquisition are as follows:
o We added excellent sites and filled in holes in our New England
market.
o We gained experienced employees who will be crucial to our success
in converting the Abdow's to Bickford's.
o The cost to convert Abdow's into Bickford's is minimal.
o We acquired the chain at a reasonable price.
o We expect to get significant growth in earnings from these units.
Our menu took on a new look as we introduced a new design in March.
Bickford's has historically been known for a superior breakfast which can be
ordered around the clock. Many of our signs were changed during the year to
solidify our theme of "Breakfast Anytime." The new menu, with lunches and
dinners presented more appealingly, strengthened our sales mix to lessen our
dependence on breakfast while simultaneously defending our strongest meal
period, breakfast.
Financially, Bickford's extended its streak of same store sales increases
to four years. Under ELXSI, Bickford's has consistently achieved same store
sales increases in an environment in which few restaurant concepts can say the
same. In addition, Bickford's has contributed its fourth straight year of
increased operating earnings. We look forward to both trends continuing due to
the strength of the Bickford's concept and the Abdow's acquisition.
Overall, 1995 can be characterized as a year in which we set the stage for
future growth by adding excellent sites and gaining a whole new set of seasoned
managers and employees.
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Cues
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At Cues the focus continues to be on developing new products, improving
manufacturing efficiencies to better manage an increased product offering,
consolidating Canadian manufacturing operations and strengthening a sagging
position in the western United States through a formal alliance with four
leading equipment dealers.
Major new customers have been secured through persistent efforts to
produce new value-added products, such as the Kangaroo(TM) line of cutters,
Koala(TM) small tractors, Panther Pan & Tilt(TM) camera, DataCAP 2000(TM)
information system and Inspector General(TM) portable system. The costs of
bringing these new products to final production, along with consolidation costs,
resulted in a decline in 1995 operating margins. Although there remain continued
competitive pressures on basic systems as customers continue to be price
conscious, our efforts to improve product reliability and expand product lines
should result in higher earnings in 1996 and thereafter.
In conclusion, we believe that in addition to an overall successful year
in 1995, we are poised for another strong year in 1996 and beyond. I want to
thank you for your continued support.
Sincerely,
Alexander M. Milley
Chairman of the Board, President & CEO
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