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 QUARTER ENDED MARCH 31, 1998
-------------------------------------
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: 0-11877
----------
ELXSI CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 77-0151523
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3600 RIO VISTA AVENUE, SUITE A, ORLANDO, FLORIDA 32805
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (407) 849-1090
----------------------
- --------------------------------------------------------------------------------
(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. [X] Yes No [ ]
On May 5, 1998, the registrant had outstanding 4,569,255 shares of Common Stock,
par value $0.001 per share.
<PAGE>
THIS QUARTERLY REPORT ON FORM 10-Q (THIS "10-Q") INCLUDES FORWARD-LOOKING
STATEMENTS, PARTICULARLY IN THE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" SECTION (ITEM 2 HEREIN).
ADDITIONAL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS MAY BE MADE BY OR ON
BEHALF OF THE COMPANY FROM TIME TO TIME, IN FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, IN PRESS RELEASES AND OTHER PUBLIC ANNOUNCEMENTS OR
OTHERWISE. ALL SUCH FORWARD-LOOKING STATEMENTS ARE WITHIN THE MEANING OF THAT
TERM IN SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INCLUDE,
BUT NOT BE LIMITED TO PROJECTIONS OF REVENUE, INCOME, LOSSES AND CASH FLOWS,
PLANS FOR FUTURE CAPITAL AND OTHER EXPENDITURES, PLANS FOR FUTURE OPERATIONS,
FINANCING NEEDS OR PLANS, PLANS RELATING TO PRODUCTS OR SERVICES, ESTIMATES
CONCERNING THE EFFECTS OF LITIGATION OR OTHER DISPUTES, AS WELL AS EXPECTATIONS
AND ASSUMPTIONS RELATING TO ANY OR ALL OF THE FOREGOING, RELATING TO THE
COMPANY, ITS SUBSIDIARIES AND/OR DIVISIONS.
ALTHOUGH THE COMPANY BELIEVES THAT ITS FORWARD-LOOKING STATEMENTS ARE BASED ON
EXPECTATIONS AND ASSUMPTIONS THAT ARE REASONABLE, FORWARD-LOOKING STATEMENT ARE
INHERENTLY SUBJECT TO RISKS AND UNCERTAINTIES, SOME OF WHICH CAN NOT BE
PREDICTED. ACCORDINGLY, NO ASSURANCE CAN BE GIVEN THAT SUCH EXPECTATIONS OR
ASSUMPTIONS WILL PROVE TO HAVE BEEN CORRECT, AND FUTURE EVENTS AND ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE DESCRIBED IN OR UNDERLYING THE
FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE FUTURE EVENTS AND
ACTUAL RESULTS TO DIFFER MATERIALLY ARE: THE DEMAND FOR THE COMPANY'S PRODUCTS
AND SERVICES AND OTHER MARKET ACCEPTANCE RISKS; THE PRESENCE IN THE COMPANY'S
MARKETS OF COMPETITORS WITH GREATER FINANCIAL RESOURCES, AND THE IMPACT OF
COMPETITIVE PRODUCTS AND SERVICES AND PRICING; THE LOSS OF ANY SIGNIFICANT
CUSTOMERS OR GROUP OF CUSTOMERS; GENERAL ECONOMIC AND MARKET CONDITIONS
NATIONALLY AND (IN THE CASE OF BICKFORD'S) IN NEW ENGLAND; THE ABILITY OF CUES
TO DEVELOP NEW PRODUCTS; CAPACITY AND SUPPLY CONSTRAINTS OR DIFFICULTIES; THE
RESULTS OF THE COMPANY'S FINANCING EFFORTS; THE EMERGENCE OF FUTURE
OPPORTUNITIES; AND THE EFFECT OF THE COMPANY'S ACCOUNTING POLICIES.
MORE DETAIL REGARDING THESE AND OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS, ASSUMPTIONS AND
FORWARD-LOOKING STATEMENTS ("CAUTIONARY STATEMENTS") MAY BE DISCLOSED IN THIS
10-K, OTHER SECURITIES AND EXCHANGE COMMISSIONS FILING AND PUBLIC ANNOUNCEMENTS
OF THE COMPANY. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY, ITS SUBSIDIARIES OR DIVISIONS OR PERSONS ACTING ON
THEIR BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS.
THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ITS FORWARD-LOOKING STATEMENTS OR
ADVISE OF CHANGES IN THE EXPECTATIONS, ASSUMPTIONS AND FACTORS ON WHICH THEY ARE
BASED.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ELXSI CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
A S S E T S
March 31, December 31,
1998 1997
--------- ---------
Unaudited
Current assets:
Restricted cash and cash equivalents $ 1,094 $ 1,079
Accounts receivable, net 4,132 3,987
Inventories, net 9,645 10,378
Prepaid expenses and other current assets 251 203
Deferred tax asset 4,560 5,024
--------- ---------
Total current assets 19,682 20,671
Property, buildings and equipment, net 29,606 29,681
Intangible assets, net 5,300 5,344
Deferred debt costs, net 136 155
Notes receivable - related party 4,200 4,065
Deferred tax asset - noncurrent 6,019 6,019
Other 584 518
--------- ---------
Total assets $ 65,527 $ 66,453
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
ELXSI CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1998 1997
--------- ---------
Unaudited
Current liabilities
Accounts payable $ 2,497 $ 3,226
Accrued expenses 5,072 5,005
Capital lease obligations - current 96 125
Current portion of long-term debt 479 220
--------- ---------
Total current liabilities 8,144 8,576
Capital lease obligations - non current 1,064 1,074
Long-term debt 10,576 10,935
Other non-current liabilities 2,921 2,696
--------- ---------
Total liabilities 22,705 23,281
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, Series A Non-voting
Convertible, par value $0.002 per share
Authorized--5,000,000 shares
Issued and outstanding--none -- --
Common stock, par value $0.001 per share
Authorized--160,000,000 shares
Issued and outstanding--4,568,980 and
4,660,980 at March 31, 1998 and
December 31, 1997, respectively 5 5
Additional paid-in capital 227,261 228,509
Accumulated deficit (184,195) (185,133)
Accumulated other comprehensive income (249) (209)
--------- ---------
Total stockholders' equity 42,822 43,172
--------- ---------
Total liabilities and stockholders' equity $ 65,527 $ 66,453
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
ELXSI CORPORATION
CONSOLIDATED INCOME STATEMENTS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended March 31,
----------------------------
1998 1997
-------- --------
Net sales $ 23,421 $ 20,079
Costs and expenses:
Cost of sales 18,765 16,141
General and administrative 2,119 1,914
Depreciation and amortization 857 787
-------- --------
Operating income 1,680 1,237
Other income (expense):
Interest income 151 375
Interest expense (258) (423)
Other expense (9) --
-------- --------
Income before income taxes 1,564 1,189
Provision for income taxes (626) (249)
-------- --------
Net income $ 938 $ 940
======== ========
Net income per common share:
Basic $ .20 $ .20
======== ========
Diluted $ .18 $ .19
======== ========
Weighted average number of common
and common equivalent shares:
Basic 4,654 4,661
======== ========
Diluted 5,225 4,827
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
<TABLE>
<CAPTION>
ELXSI CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Amounts in Thousands)
(Unaudited)
Accumulative
Common Stock Additional Accum- Other
------------------------ Paid-In ulated Comprehensive
Shares Dollars Capital Deficit Income
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 4,660,980 $ 5 $ 228,509 $ (185,133) $ (209)
Net income -- -- -- 938 --
Purchase and retirement of
Common Stock (92,000) -- (1,248) -- --
Foreign currency translation
adjustment -- -- -- -- (40)
---------- ---------- ---------- ---------- ----------
Balance at March 31, 1998 4,568,980 $ 5 $ 227,261 $ (184,195) $ (249)
========== ========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended March 31,
-------------------------------
1998 1997
--------- -------
CASH FLOWS USED IN OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 938 $ 940
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 857 787
Amortization of deferred debt costs 19 23
Amortization of note receivable discount -- (96)
Other -- (3)
(Increase) decrease in assets:
Accounts receivable (145) 166
Inventories 733 532
Prepaid expenses and other current assets (48) (32)
Deferred tax asset 464 (24)
Other (106) 42
Increase (decrease) in liabilities:
Accounts payable (729) (1,537)
Accrued expenses 67 114
Other liabilities 225 187
--------- -------
Net cash used in operating activities 2,275 1,099
--------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property, building and equipment (738) (950)
Investment in notes receivable - related party (135) --
Proceeds from note receivable - related party -- 800
--------- -------
Net cash used in investing activities (873) (150)
--------- -------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net borrowing of long-term debt (100) (921)
Purchase of Common Stock (1,248) --
Principal payments of capital lease (39) (28)
--------- -------
Net cash used in financing activities $ (1,387) $ (949)
--------- -------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
7
<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in Thousands)
(Unaudited)
Three Months Ended March 31,
1998 1997
------- ------
Increase in cash and cash equivalents $ 15 $ --
Cash and cash equivalents, beginning of period 1,079 --
------- ------
Cash and cash equivalents, end of period $ 1,094 $ --
======= ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 261 $ 105
Interest 264 314
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
ELXSI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
NOTE 1. THE COMPANY
GENERAL The information contained in this report is unaudited but, in
management's opinion, all adjustments necessary for a fair presentation have
been included and were of a normal and recurring nature. The results for the
three months ended March 31, 1998 are not necessarily indicative of results to
be expected for the entire year. These financial statements and notes should be
read in conjunction with ELXSI Corporation's Annual Report on Form 10-K for the
year ended December 31, 1997.
Prior to 1990, ELXSI Corporation (together with its subsidiaries, the "Company")
operated principally through its wholly-owned California subsidiary, ELXSI.
During that period, the principal business of ELXSI was the design, manufacture,
sale and support of minisupercomputers. In July 1989, the Company announced a
major restructuring of its computer operations. In September 1989, the Company
discontinued all computer operations.
On July 1, 1991, ELXSI acquired thirty Bickford's and twelve Howard Johnson's
Restaurants, which are located in Massachusetts, Vermont, New Hampshire, Rhode
Island and Connecticut, from Marriott Family Restaurants, Inc.
Between 1992 and 1997, ELXSI sold six of its Howard Johnson's Restaurants,
converted five others into Bickford's Restaurants, opened eleven new Bickford's
Restaurants, acquired 16 Abdow's Family Restaurants ("Abdow's"), sold one of
these Abdow's, closed another of these Abdow's and converted nine of the
remaining Abdow's into Bickford's Restaurants. During the first quarter ended
March 31, 1998, ELXSI opened one new Bickford's Restaurants and closed one
under-performing Abdow's Restaurant. As of March 31, 1998, ELXSI owned 56
Bickford's, 4 Abdow's and one Howard Johnson's Restaurants (the "Restaurants" or
Restaurant Division).
On October 30, 1992, ELXSI acquired Cues, Inc. of Orlando, Florida and its two
wholly owned subsidiaries Knopafex, Ltd., a Canadian company and Cues B.V., a
Dutch company, (together referred to as "Cues").
Cues is engaged in the manufacture and servicing of video inspection and repair
equipment for wastewater and drainage systems primarily for governmental
municipalities, service contractors and industrial users.
NOTE 2. OTHER COMPREHENSIVE INCOME
The Company adopted SFAS 130, "Reporting Comprehensive Income", during the
quarter ended March 31, 1998. SFAS 130 requires the Company to display
"Comprehensive Income", which includes net income and certain amounts recorded
directly to equity.
9
<PAGE>
The components of comprehensive income, net of related tax, for the quarter
ended March 31 are as follows:
1998 1997
------- -------
Net income $ 938 $ 940
Foreign currency translation adjustment,
net of income taxes (40) (3)
------- -------
Comprehensive income $ 898 $ 937
======= =======
Accumulated other comprehensive income at March 31, 1998 and 1997, was comprised
solely of foreign currency translation adjustments.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's revenues and expenses result from the operation of the ELXSI's
Restaurant and Cues Divisions and the Company's corporate expenses
("Corporate").
COMPARISON OF FIRST QUARTER 1998 RESULTS TO 1997 RESULTS
The first quarter sales increased $3,342,000, gross profit increased $718,000,
selling, general and administrative expense increased $205,000 and depreciation
and amortization increased $70,000 resulting in an operating income increase of
$443,000. Interest expense decreased by $165,000, interest income decreased by
$224,000, other expense increased by $9,000 and income taxes increased by
$377,000 resulting in a decrease in net income of $2,000.
RESTAURANT DIVISION Restaurant sales increased by $1,843,000 or 12.4% and gross
profit increased by $242,000 or 10.1% in the first quarter of 1998 compared to
the same period in the prior year. Operating income increased $128,000 or 10.1%
after deducting an increase in selling general and administrative expense of
$55,000 and an increase in depreciation and amortization of $59,000. The sales
increase was mainly due to an increase in same store sales of $787,000, or 7.4%
and sales from the opening of new Bickford's Restaurants of $907,000. Customer
counts at Restaurants operated in both periods increased 4.5%. Customer counts
at the nine converted and five remaining Abdow's Restaurants were flat in the
first quarter of 1998 compared to 1997.
As a result of the sales increase, partially offset by a 0.4% decrease in the
gross profit percentage from 16.2% to 15.8%, restaurant gross profit increased
by $242,000, or 10.1% in the first quarter of 1998 compared to the same period
in 1997. The decrease in the gross profit percentage was mainly the result of an
increase in food costs of 0.4% attributable to the higher cost of coffee and
dairy products compared to the first quarter of 1997; and an increase in labor
cost of 0.6% attributable to higher levels of staffing during peak business
periods in order to provide better service to customers and to improve customer
counts. These increases were partially offset by a decrease of 0.6% in fixed and
other expenses due to the higher sales resulting from increased customers and a
higher average guest check during the quarter.
10
<PAGE>
Restaurant selling, general and administrative expense increased by $55,000
during the first quarter of 1998.
Restaurant depreciation and amortization increased by $59,000 during the first
quarter 1998. Restaurant depreciation and amortization will continue to increase
each year with the addition of new restaurants.
As a result of the above items, operating income increased by $128,000 or 10.1%
in the first quarter of 1998.
CUES DIVISION Cues's sales increased by $1,499,000 or 28.4% in the first quarter
of 1998 compared to the same period in the prior year. Cues was able to increase
sales volume in the first quarter of 1998 without resorting to price reductions
in the face of continuing competitive pressures. Customers recognized the
benefits of Cues's equipment, thereby permitting the Company to be more
selective on bidding. As a result of the sales increase and a 0.5% increase in
the gross profit percentage from 29.3% in the first quarter of 1997 to 29.8% in
the first quarter of 1998, gross profit increased by $476,000, or 30.7% in the
first quarter of 1998. Operating income increased by $377,000, or 92.6%.
Included in the increase in operating income is the effect of an increase in
selling, general and administrative expense of $88,000 and an increase in
depreciation and amortization expense of $11,000. Sales, gross profit and
operating income established new quarterly records for Cues in the first quarter
of 1998.
CORPORATE Corporate general and administrative expenses increased by $62,000
during the first quarter of 1998 mainly as a result of an increase in the
phantom stock option plan accrual for Bickford's management. Interest expense
decreased by $196,000 due to a lower average debt balance in 1998. During the
first quarter of 1998, the Company recorded interest income of $134,000 compared
to $372,000 in the same period of 1997.
The decrease in interest income was primarily the result of recording $327,000
of interest income in the first quarter of 1997 related to the December 30, 1996
financing transaction with Azimuth Corporation, a related party. This financing
transaction involved a loan from Bank of America National Trust and Savings
Association (formerly Bank of America Illinois) ("BAI") and the purchase from
BAI (at a discount), of certain notes payable by subsidiaries of Azimuth
Corporation ("Azimuth Subsidiary Notes"). ELXSI collected the balance of the
proceeds of the Azimuth Subsidiary Notes in June 1997 and retired the applicable
debt payable to BAI (see the Company's 1997 Annual Report on Form 10-K for
additional details).
Included in interest expense was interest payable to the BAI of approximately
$109,000 directly attributable to the purchase of the Azimuth Subsidiary Notes.
As a result of the Azimuth Subsidiary Notes, the Company recorded net interest
income of approximately $218,000 during the first quarter of 1997.
The first quarter of 1998 did not contain any interest income related to the
Azimuth Subsidiary Notes, however the first quarter of 1998 did include $75,000
of interest on a related party note dated June 30, 1997.
11
<PAGE>
Partially offsetting the decrease in interest income related to the Azimuth
Subsidiary Notes was a $75,000 increase in interest income during the first
quarter of 1998 resulting from a related party note dated June 30, 1997 due from
Cadmus Corporation.
Income tax expense increased from $249,000 in the first quarter of 1997 to
$626,000 in the first quarter of 1998. The increase in tax expense was primarily
attributable to non-cash expense resulting from calculating the deferred tax
provision in accordance with Financial Accounting Standards Board Statement No.
109 "Accounting For Income Taxes". The Company will continue to pay taxes on a
cash basis at the rate of approximately 11%, but will recognize a 40% tax
expense on future quarterly and annual income statements.
EARNINGS PER SHARE Basic and diluted earnings per share for the quarter ended
March 31, 1998 were $0.20 and $0.18, respectively. The basic and diluted
weighted average number of shares outstanding for the quarter ended March 31,
1998 were 4,654,000 and 5,225,000, respectively. This compares to basic and
diluted earnings per share of $0.20 and $0.19 per share, respectively for the
corresponding period in 1997 when there were basic and diluted weighted average
shares outstanding of 4,661,000 and 4,827,000, respectively. The increase in the
diluted weighted average shares outstanding in the first quarter of 1998
compared to the first quarter of 1997 resulted mainly from an increase in the
average stock market price during the first quarter of 1998 compared to the
corresponding period in 1997. The average stock market price for the first
quarter of 1998 was $12.43 compared to an average of $6.45 in the corresponding
period of 1997. An increase in the stock price results in a slightly greater
number of shares outstanding for purposes of determining the weighted average
shares outstanding used in the earnings per share calculation.
LIQUIDITY AND CAPITAL RESOURCES
AVAILABLE RESOURCES The Company's unrestricted consolidated cash positions at
March 31, 1998 and December 31, 1997 was $0. The Company has a cash management
system whereby cash generated by operations is immediately used to reduce bank
debt. The immediate reduction of outstanding debt provides the Company with a
reduction in interest expense greater than the interest income that cash could
safely earn from alternative investments. Working capital needs, when they
arise, are met by daily borrowings.
During the first quarter of 1998, the Company had cash flow from operations of
$2,275,000. The cash from operations funded the acquisition of property, plant
and equipment totalling $738,000, the payment of long-term debt of $100,000, and
the repayment of capital leases obligations of $39,000 and the investment in a
related party note receivable of $135,000. During the first quarter of 1998,
current assets decreased by $989,000 primarily due to a $704,000 decrease in
Cues's inventory and a reduction in the deferred tax asset of $464,000 partially
offset by an increase in accounts receivable of $145,000. Partially offsetting
the decrease in current assets, current liabilities decreased $432,000 mainly
due to a reduction in Bickford's accounts payable due to the timing of certain
payments.
During the first quarter of 1997, the Company had cash flow from operations of
$1,099,000. The cash from operations and the proceeds from the Azimuth
Subsidiary notes receivable of $800,000 funded the acquisition of property,
plant and equipment totalling $950,000, the payment of long-term debt of
$921,000 and the repayment of capital leases obligations of $28,000. During the
12
<PAGE>
first quarter of 1997, current assets decreased by $666,000 primarily due to a
$540,000 decrease in Cues's inventory and the collection of the $225,000 Azimuth
Subsidiaries closing fee, which was classified as a receivable at December 31,
1996. Offsetting the decrease in current assets, current liabilities (excluding
the current portion of long-term debt and capital leases) decreased $1,423,000
mainly due to a reduction in Cues's accounts payable.
FUTURE NEEDS FOR AND SOURCES OF CAPITAL Management believes that cash generated
by operations is sufficient to fund current operations including the interest
payments on the long-term debt. With bank approval, excess funds are available
under the Company's loan Agreement to finance additional acquisitions.
IMPACT OF INFLATION Inflationary factors such as increases in food and labor
costs directly affect the Company's operation. Many of the Restaurant employees
are paid hourly rates related to the federal minimum wage, and accordingly,
increases in the minimum wage will result in increases in the Company's labor
costs. In addition, the cost of food commodities utilized by the Company are
subject to market supply and demand pressures. Shifts in these costs may have an
impact on the Company's food cost. The Company anticipates that food cost
increases can be offset through selective price increases, although no
assurances can be given that the Company will be successful in this regard.
Increases in interest rates could negatively affect the Company's operations.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
The Company's annual meeting will take place on May 19, 1998. In connection
therewith the Company submitted the following proposals to stockholders in the
annual proxy statement.
o Nomination of the following current directors for re-election: Farrokh K.
Kavarana, Kevin P. Lynch, Alexander M. Milley, Denis M. O'Donnell and Robert
C. Shaw.
o Approval of the ELXSI Corporation 1998 Incentive Stock Option Plan.
o Adoption of amendments to the Company's Charter to reduce the authorized
shares of Common Stock of the Company.
ITEM 5. OTHER INFORMATION - none
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
27.1 Financial Data Schedule
(b) Reports on Form 8-K - none
13
<PAGE>
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 thereunto duly authorized.
ELXSI CORPORATION
--------------------------------------------------
(Registrant)
Date: May 11, 1998 /s/ ALEXANDER M. MILLEY
--------------------------------------------------
Alexander M. Milley, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 11, 1998 /s/ THOMAS R. DRUGGISH
--------------------------------------------------
Thomas R. Druggish, Vice President,
Treasurer and Secretary (Chief Accounting
Officer and Principal Financial Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000712843
<NAME> ELXSI CORPORATION
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 4,254,000
<ALLOWANCES> 122,000
<INVENTORY> 9,645,000
<CURRENT-ASSETS> 19,682,000
<PP&E> 29,606,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 65,527,000
<CURRENT-LIABILITIES> 8,144,000
<BONDS> 0
<COMMON> 5,000
0
0
<OTHER-SE> 42,817,000
<TOTAL-LIABILITY-AND-EQUITY> 65,527,000
<SALES> 23,421,000
<TOTAL-REVENUES> 23,421,000
<CGS> 18,765,000
<TOTAL-COSTS> 21,741,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 258,000
<INCOME-PRETAX> 1,564,000
<INCOME-TAX> 626,000
<INCOME-CONTINUING> 938,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 938,000
<EPS-PRIMARY> .20
<EPS-DILUTED> .18
</TABLE>
