SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 31, 2000
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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
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ELXSI CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 77-0151523
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
3600 Rio Vista Avenue, Suite A, Orlando, Florida 32805
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (407) 849-1090
------------------------------
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(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 [ ]
On May 3, 2000, the registrant had outstanding 4,290,438 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 statements 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-Q, other Securities and Exchange Commission filings 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,
2000 1999
------------ ------------
Unaudited
Current assets:
Cash and cash equivalents $ 613 $ 1,366
Investments 2,181 --
Accounts receivable, net 4,623 4,109
Accounts receivable - related party 3,730 7,487
Inventories 12,461 12,206
Prepaid expenses and other current assets 273 280
Deferred tax asset 5,832 5,832
------------ ------------
Total current assets 29,713 31,280
Property, buildings and equipment, net 33,133 32,444
Intangible assets, net 5,447 5,507
Notes receivable - related party 4,307 4,442
Deferred tax asset - noncurrent 14,969 15,338
Other 869 840
------------ ------------
Total assets $ 88,438 $ 89,851
============ ============
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
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
Unaudited
<S> <C> <C>
Current liabilities:
Accounts payable $ 2,964 $ 3,267
Accrued expenses 5,338 5,988
Capital lease obligations - current 50 51
Current portion of long-term debt 1,992 1,637
------------ ------------
Total current liabilities 10,344 10,943
Capital lease obligations - non current 1,002 1,014
Long-term debt 8,481 10,201
Other non-current liabilities 3,876 3,816
------------ ------------
Total liabilities 23,703 25,974
------------ ------------
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--60,000,000 shares
Issued and outstanding--4,290,438 and
4,275,477 at March 31, 2000 and
December 31, 1999, respectively 4 4
Additional paid-in capital 224,211 224,118
Accumulated deficit (159,212) (159,993)
Accumulated other comprehensive income (268) (252)
------------ ------------
Total stockholders' equity 64,735 63,877
------------ ------------
Total liabilities and stockholders' equity $ 88,438 $ 89,851
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Net sales $ 24,550 $ 23,512
Costs and expenses:
Cost of sales 19,621 18,909
Selling, general and administrative 2,472 2,366
Depreciation and amortization 1,032 942
------------ ------------
Operating income 1,425 1,295
Other income (expense):
Interest income 310 148
Interest expense (325) (176)
Other expense (100) (8)
------------ ------------
Income before income taxes 1,310 1,259
Provision for income taxes (529) (512)
------------ ------------
Net income 781 747
Other comprehensive loss net of tax:
Foreign currency translation adjustment (16) (25)
------------ ------------
Comprehensive income $ 765 $ 722
============ ============
Net income per common share:
Basic $ .18 $ .17
============ ============
Diluted $ .16 $ .16
============ ============
Weighted average number of common
and common equivalent shares:
Basic 4,283 4,296
============ ============
Diluted 4,893 4,749
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Amounts in Thousands, Except Common Shares)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Accum- Other
--------------------------- Paid-in ulated Comprehensive
Shares Dollars Capital Deficit Income
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1999 $ 4,275,477 $ 4 $ 224,118 $ (159,993) $ (252)
Foreign currency translation
adjustment, net of tax -- -- -- -- (16)
Exercise of Common Stock options
to purchase Common Stock 14,961 -- 93 -- --
Net income -- -- -- 781 --
------------ ------------ ------------ ------------ ------------
Balance at March 31, 2000 $ 4,290,438 $ 4 $ 224,211 $ (159,212) $ (268)
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 781 $ 747
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,032 942
Amortization of deferred debt costs 7 6
Gain on sale of land (75) --
Unrealized loss on trading securities 346 --
Realized gain on sale of trading securities (181) --
(Increase) decrease in assets:
Accounts receivable (514) 4
Inventories (255) (1,262)
Prepaid expenses and other current assets 7 90
Deferred tax asset 369 355
Other (53) (91)
(Decrease) increase in liabilities:
Accounts payable (303) 995
Accrued expenses (650) (603)
Other non-current liabilities 60 250
------------ ------------
Net cash provided by operating activities 571 1,433
------------ ------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property, building and equipment (1,685) (899)
Collection of accounts receivable - related party 3,757 --
Collection of notes receivable - related party 135 --
Proceeds from sale of land 100 --
Net purchase of securities (2,346) --
------------ ------------
Net cash used in investing activities (39) (899)
------------ ------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net payments of long-term debt (1,365) (252)
Proceeds from exercise of Common Stock
options 93 --
Principal payments on capital lease obligations (13) (13)
------------ ------------
Net cash used in financing activities $ (1,285) $ (265)
------------ ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
7
<PAGE>
ELXSI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
(Decrease) increase in cash and cash equivalents $ (753) $ 269
Cash and cash equivalents, beginning of period 1,366 1,587
------------ ------------
Cash and cash equivalents, end of period $ 613 $ 1,856
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 396 $ 418
Interest 358 140
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
8
<PAGE>
ELXSI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
NOTE 1. THE COMPANY
GENERAL. ELXSI Corporation (together with its subsidiary, the "Company") has
historically operated principally through its wholly-owned California
subsidiary, ELXSI. ELXSI's operating businesses consist of a Restaurant division
in New England and an equipment manufacturer in Orlando, Florida.
RESTAURANT DIVISION. On July 1, 1991, ELXSI acquired 30 Bickford's Restaurants
and 12 Howard Johnson's Restaurants from Marriott Family Restaurants, Inc. These
Restaurants were located in Massachusetts, Vermont, New Hampshire, Rhode Island
and Connecticut.
Between 1991 and 1999, ELXSI sold six of its Howard Johnson's Restaurants,
converted five into Bickford's Family Restaurants, and closed one when the lease
expired. During the same period, ELXSI opened 16 new Bickford's and acquired 16
Abdow's Family Restaurants ("Abdow's"). ELXSI subsequently converted 10 Abdow's
into Bickford's, sold two Abdow's, and closed another. During 2000 two
additional Abdow's were converted to Bickford's and two new Bickford's are under
construction. As of March 31, 2000 ELXSI operates 63 Bickford's and one Abdow's
(the "Restaurants" or "Restaurant Division").
EQUIPMENT MANUFACTURER. 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, collectively referred to
herein as "Cues" or "Cues Division".
Cues is engaged in the manufacturing and servicing of video inspection and
repair equipment for wastewater and drainage systems primarily for governmental
municipalities, service contractors and industrial users.
NOTE 2. ACCOUNTS RECEIVABLE - RELATED PARTY
As of March 31, 2000, advances by the Company to Cadmus Corporation ("Cadmus")
totaling approximately $3,730,000 remained outstanding. A portfolio of private
and public company equities purchased with the proceeds of the advances fully
secures the receivable. In addition, Alexander Milley, President and Chief
Executive Officer of the Company, has personally guaranteed the amounts due from
Cadmus. During the first quarter of 2000, the Company charged interest on the
receivable at prime plus 2% and earned $174,000 of interest income. Certain
officers, directors and/or shareholders of Cadmus are officers and/or directors
of the Company and/or ELXSI. Subsequent to March 2000, the Company advanced an
additional $1,812,000 to Cadmus.
9
<PAGE>
NOTE 3. UNREALIZED GAINS AND LOSSES
As of March 31, 2000, the Company had investments primarily in equity securities
with a net cost basis of $2,527,000. During the first quarter of 2000, the
Company had realized gains of $181,000 and unrealized losses of $346,000.
NOTE 4. COMPOSITION OF INVENTORY
Inventory at March 31, 2000 and December 31, 1999 is summarized in the following
table.
2000 1999
----------- -----------
Inventories:
Raw materials and finished goods $ 7,956,000 $ 7,960,000
Work in process 4,505,000 4,246,000
----------- -----------
$12,461,000 $12,206,000
=========== ===========
NOTE 5. LONG TERM DEBT
In connection with the Bank line of credit, supplemental line of credit, and
Orange County Industrial Development Authority Bonds, ELXSI had covenant
violations resulting from investments and advances to related parties during
1999 and the first quarter of 2000. In addition, ELXSI exceeded the capital
expenditures limit included in the Orange County Industrial Development
Authority Bind agreement. ELXSI subsequently requested and obtained waivers from
the bank for the violations.
NOTE 6. INCOME TAXES
The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts
and the tax basis of other assets and liabilities. Temporary differences giving
rise to deferred tax assets and liabilities include certain accrued liabilities
and net operating loss carryforwards. The provision for income taxes includes:
the amount of income taxes payable for the year that would be paid by the
Company (without their carryforwards) as determined by applying the provisions
of the current tax law to the taxable income for the year; and the net change
during the year in the Company's deferred tax assets and liabilities. In
determining the amount of any valuation allowance required to offset deferred
tax assets, an assessment is made that includes anticipating future income in
determining the likelihood of realizing deferred tax assets.
The Company continually reviews the adequacy of the valuation allowance and is
recognizing deferred tax asset benefits only as reassessment indicates that it
is more likely than not that the benefits will be realized.
The utilization of the Company's net operating loss and tax credit carryforwards
may be impaired or reduced under certain circumstances. Events which may affect
the Company's ability to utilize these carryforwards include, but are not
limited to, cumulative stock ownership changes of 50% or more over a three-year
period, as defined by Section 382 of the Internal Revenue Code (IRC), and the
timing of the utilization of the tax benefit carryforwards. Such changes in
10
<PAGE>
ownership would significantly restrict the Company's ability to utilize loss and
credit carryforwards in accordance with Sections 382 and 383 of the IRC.
NOTE 7. SEGMENT REPORTING.
The Company has two reportable segments, restaurant operations and equipment
manufacturing. The Company is primarily organized into two strategic business
units, which have separate management teams and infrastructures that offer
different products and services. Each business requires different employee
skills, technology, and marketing strategies. The restaurant operations segment
includes 64 Restaurants located in the New England States operating primarily
under the Bickford's brand name. The equipment manufacturing segment produces
sewer inspection equipment for sale to municipalities, contractors, and foreign
governments.
The Company evaluates the performance of each segment based upon profit or loss
from operations before income taxes not including non-recurring gains and losses
and foreign exchange gains and losses.
There has been no significant difference in the basis of segmentation or in the
measurement of segment profit since the Company's last annual report on Form
10-K for the year ended December 31, 1999. The "Other" lines include corporate
related items, results of insignificant operations and, as they relate to profit
and losses, income and expense not allocated to reportable segments.
Summarized financial information by business segment for the three months ended
March 31, 2000 and 1999 is summarized in the following table.
2000 1999
------------ ------------
Revenues From External Customers:
Restaurants $ 17,840,000 $ 17,079,000
Equipment 6,710,000 6,433,000
------------ ------------
$ 24,550,000 $ 23,512,000
============ ============
Segment Profit:
Restaurants $ 1,307,000 $ 1,249,000
Equipment 494,000 583,000
Other (376,000) (537,000)
------------ ------------
$ 1,425,000 $ 1,295,000
============ ============
Segment Assets:
Restaurants $ 32,021,000 $ 31,975,000
Equipment 24,974,000 22,249,000
Other 31,443,000 13,511,000
------------ ------------
$ 88,438,000 $ 67,735,000
============ ============
There were no inter-segment sales or transfers during the first three months of
2000 or 1999. Operating income by business segment excludes interest income,
interest expense, and other income and expenses.
11
<PAGE>
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 Restaurant
and Cues Divisions and the Company's corporate expenses ("Corporate").
COMPARISON OF FIRST QUARTER 2000 RESULTS TO 1999 RESULTS
The first quarter sales increased $1,038,000, gross profit increased $326,000,
selling, general and administrative expense increased $106,000 and depreciation
and amortization increased $90,000 resulting in an operating income increase of
$130,000. Interest expense increased by $149,000, interest income increased by
$162,000, other expense increased by $92,000 and income taxes increased by
$17,000 resulting in an increase in net income of $34,000.
RESTAURANT DIVISION. Restaurant sales increased by $761,000, or 4.5%, and gross
profit increased by $226,000, or 8.9%, in the first quarter of 2000 compared to
the same period in the prior year. Operating income increased $58,000, or 4.6%,
after deducting an increase in selling general and administrative expense of
$97,000, or 18.4% and an increase in depreciation and amortization of $71,000,
or 9.2%. The sales increase was mainly due to an increase in same store sales of
$413,000, or 2.7%, sales from the opening of new Bickford's Restaurants of
$402,000, and sales from the conversion of Abdow's of $6,000, partially offset
by a decrease in sales due to closed Restaurants of $60,000. Customer counts at
Restaurants operated in both periods decreased 3.5% due primarily to the severe
winter weather in February 2000.
In addition to the sales increase, there was a 0.6% improvement in the gross
profit percentage from 14.9% to 15.5%, and restaurant gross profit increased by
$226,000, or 8.9%, in the first quarter of 2000 compared to the same period in
1999. The increase in the gross profit percentage was mainly the result of a
decrease in food and variable costs partially offset by increase in labor costs.
Restaurant selling, general and administrative expense increased by $97,000, or
18.4%, during the first quarter of 2000.
Restaurant depreciation and amortization increased by $71,000, or 9.2%, during
the first quarter of 2000. 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 $58,000 or 4.6% in
the first quarter of 2000.
CUES DIVISION. Cues's sales increased by $277,000, or 4.3%, in the first quarter
of 2000 compared to the same period in the prior year. The primary reason for
the sales increase was an increase in sales of truck-mounted systems and sales
by Cues Canada. As a result of the sales increase and a 0.2% increase in the
gross profit percentage from 32.0% in the first quarter of 1999 to 32.2% in the
first quarter of 2000, gross profit increased by $100,000, or 4.9%, in the
12
<PAGE>
first quarter of 2000. Operating income decreased by $89,000, or 15.3%. Included
in the decrease in operating income is the effect of an increase in selling,
general and administrative expense of $170,000, or 13.1%, and an increase in
depreciation and amortization expense of $19,000, or 11.0%. The increase in
expenses in the first quarter of 2000 compared to the corresponding period in
the prior year is primarily attributable to increases in wages resulting from
both rate and headcount increases, sales and marketing expenses including an
increase in west coast sales efforts, where a satellite service and sales office
was established in 1999, and facility costs increases.
CORPORATE. Corporate general and administrative expenses decreased by $161,000,
or 30%, during the first quarter of 2000, primarily due to a reduction in the
phantom stock option plan expenses. Interest expense increased by $149,000, or
156.8%, due to a higher average debt balance in 2000. Interest income and other
expense increased by $168,000, or 118.3%, and $176,000, respectively, in the
first quarter of 2000 compared to the same period in 1999.
Income tax expense increased from $512,000 in the first quarter of 1999 to
$529,000 in the first quarter of 2000. The increase in tax expense resulted from
an increase in pre-tax income. Both periods include 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
tax expense in the first quarter of 2000 included deferred tax expense of
$369,000, while the corresponding period in the prior year included deferred tax
expense of $355,000. The Company will continue to pay taxes at the rate of
approximately 12%, 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 first quarter
ended March 31, 2000 were $.18 and $.16 respectively. The basic and diluted
weighted average number of shares outstanding for the quarter ended March 31,
2000 were 4,283,000 and 4,893,000, respectively. This compares to basic and
diluted earnings per share of $0.17 and $0.16 per share, respectively for the
corresponding period in 1999 when there were basic and diluted weighted average
shares outstanding of 4,296,000 and 4,749,000, respectively. The increase in the
diluted weighted average shares outstanding in the first quarter of 2000
compared to the first quarter of 1999 resulted mainly from the exercise of stock
options and to a lesser extent an increase in the average stock market price
during the first quarter of 2000 compared to the corresponding period in 1999.
The average stock market price for the first quarter of 2000 was $13.32 compared
to an average of $10.42 in the corresponding period of 1998. An increase in the
stock price results in a slight increase in the 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 consolidated cash positions at March 31, 2000
and December 31, 1999 was $613,000 and $1,366,000, respectively. 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.
13
<PAGE>
During the first quarter of 2000, the Company had cash flow from operations of
$571,000. The cash from operations of $571,000, collection of a related party
loan of $3,757,000, collection of a related party note of $135,000, proceeds
from the sale of land of $100,000, and proceeds from the exercise of common
stock options totaling $93,000 funded payment of long-term debt of $1,365,000,
net purchase of equity investments of $2,346,000, acquisition of property, plant
and equipment totaling $1,685,000, and payment of capital leases obligations of
$13,000. During the first quarter of 2000, current assets decreased by
$1,567,000 primarily due to a collection of Corporate advances to a related
party, partially offset by Corporate investments and an increase in Cues's
accounts receivable. Also included in current assets is a decrease in an account
receivable from a related party totaling $3,757,000 at March 31, 2000 (see Note
2). Current liabilities decreased $599,000 mainly due to a decrease in accrued
expenses and repayment of current portion of long-term debt. Current liabilities
includes $561,000 of the remaining payable to stockholders related to the
Company's June 28, 1999 reverse stock split, which resulted in the repurchase
and retirement of 157,000 shares of Common Stock, in 1999.
During the first quarter of 1999, the Company had cash flow from operations of
$1,433,000. The cash from operations funded the acquisition of property, plant
and equipment totaling $899,000, the payment of long-term debt of $252,000 and
the repayment of capital leases obligations of $13,000. During the first quarter
of 1999, current assets increased by $1,437,000 primarily due to an increase in
Cues's inventory. The inventory increase resulted from an increase in work in
process and inventory used for sales and product demonstrations. Partially
offsetting the increase in current assets, current liabilities increased
$559,000 mainly due to an increase in 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 is
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.
14
<PAGE>
ITEM 3. OTHER INFORMATION
None
ITEM 4. 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
15
<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 10, 2000 /s/ ALEXANDER M. MILLEY
-------------------------------------------
Alexander M. Milley, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 10, 2000 /s/ DAVID M. DOOLITTLE
-------------------------------------------
David M. Doolittle, Vice President,
Treasurer and Secretary (Chief Accounting
Officer and Principal Financial Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000712843
<NAME> ELXSI CORPORATION
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 613,000
<SECURITIES> 2,181,000
<RECEIVABLES> 8,571,000
<ALLOWANCES> 218,000
<INVENTORY> 12,461,000
<CURRENT-ASSETS> 29,713,000
<PP&E> 33,133,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 88,438,000
<CURRENT-LIABILITIES> 10,344,000
<BONDS> 0
4,000
0
<COMMON> 0
<OTHER-SE> 64,731,000
<TOTAL-LIABILITY-AND-EQUITY> 88,438,000
<SALES> 24,550,000
<TOTAL-REVENUES> 24,550,000
<CGS> 19,621,000
<TOTAL-COSTS> 23,125,000
<OTHER-EXPENSES> 100,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 325,000
<INCOME-PRETAX> 1,310,000
<INCOME-TAX> 529,000
<INCOME-CONTINUING> 781,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 781,000
<EPS-BASIC> .18
<EPS-DILUTED> .16
</TABLE>
