F O R M 1 0 - Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 0-12802
EL CHICO RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Texas 75-0982250
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
12200 Stemmons Freeway, Suite 100, Dallas, Texas 75234
(Address of principal executive offices)
(Zip Code)
(214) 241-5500
(Registrant's telephone number, including area code)
(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 No
Number of shares outstanding of each of the issuer's classes of
common stock, as of August 4, 1995.
Common Stock, $0.10 par value: 3,926,087.
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<CAPTION>
EL CHICO RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(In Thousands of Dollars, Except Par Value)
June 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current Assets:
<S> <C> > <C>
Cash and Cash Equivalents $ 220 $ 727
Accounts Receivable 899 852
Inventories 1,165 1,189
Prepaid Expenses and Other 988 1,488
Deferred Income Taxes 54 56
Total Current Assets 3,326 4,312
Property and Equipment - Net 41,874 38,559
Other Assets and Deferred Costs 1,033 1,093
$46,233 $43,964
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Maturities of Long-Term Debt $ 23 $ 22
Trade Accounts Payable 4,035 4,089
Accrued Liabilities 3,100 4,034
Income Taxes Payable 354 173
Total Current Liabilities 7,512 8,318
Long-Term Debt, Less Current Maturities
8,822 5,533
Other Long-Term Liabilities
1,335 926
Deferred Income Taxes 178 305
Stockholders' Equity:
Preferred Stock - Authorized 1,000,000
Shares of $.10 Par Value;
None Issued
Common Stock - Authorized 10,000,000
Shares of $.10 Par Value;
Issued 4,743,974 and 4,743,640
Shares in 1995 and 1994 474 474
Additional Paid-In Capital 14,634 14,583
Retained Earnings 19,608 17,980
Unamortized Value of Restricted Stock Issued (94) (68)
34,622 32,969
Less Treasury Stock - At Cost,
816,938 and 615,263
Shares in 1995 and 1994, respectively (6,236) (4,087)
28,386 28,882
$ 46,233 $43,964
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<CAPTION>
EL CHICO RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars, Except Share and Per Share Amounts)
(Unaudited)
Quarter Ended Six Months
June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994
Revenues:
Sales from Company-owned
<S> <C> <C> <C> <C>
restaurants $ 25,729 $ 23,920 $ 49,671 $ 46,193
Equipment sales 416 149 608 288
Franchise revenues 542 538 1,003 1,029
26,687 24,607 51,282 47,510
Cost and Expenses:
Restaurant cost of sales - food
and beverage 6,471 6,159 12,547 11,894
Restaurant cost of sales - labor 8,514 7,926 16,654 15,461
Restaurant operating expenses 7,355 6,623 14,164 12,922
Cost of equipment sales 388 113 529 133
General and administrative 2,332 2,306 4,717 4,488
Interest expense 158 39 307 63
Interest income (10) (25) (46) (37)
25,208 23,141 48,872 44,924
Income before income
taxes 1,479 1,466 2,410 2,586
Income tax provision 476 504 782 918
NET EARNINGS $ 1,003 $ 962 $ 1,628 $ 1,668
Net earnings per common share $ 0.25 $ 0.22 $ 0.41 $ 0.39
Weighted average number of shares
and share equivalents outstanding 3,942,393 4,302,919 4,012,951 4,322,783
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3
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<CAPTION>
EL CHICO RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Six Months Ended
June 30, 1995 June 30, 1994
Cash Flows from Operating Activities:
<S> <C> <C>
Net Earnings $1,628 $1,668
Adjustment to Reconcile Net Earnings to Net
Cash Provided by Operating Activities
Depreciation and Amortization of Property and
Equipment 2,447 2,312
Amortization of Deferred Costs 686 666
Decrease (Increase) in Accounts Receivable (47) 116
Decrease in Income Tax Receivable 792
Decrease in Inventories 24 159
Decrease (Increase) in Prepaid Expenses and
Other 255 (54)
Increase in Other Assets and Deferred Costs (625) (205)
Decrease in Trade Accounts Payable and
Accrued Liabilities (988) (1,181)
Increase in Income Taxes Payable 181 84
Increase in Other Long-Term Liabilities 409 66
Deferred Income Taxes (125) (29)
Other 109 269
Net Cash Provided by Operating Activities 3,954 4,663
Cash Flows from Investing Activities:
Purchase of Property and Equipment (5,832) (5,877)
Net Cash Used in Investing Activities (5,832) (5,877)
Cash Flows from Financing Activities:
Borrowings of Long-Term Debt 3,300 1,150
Purchase of Treasury Stock (2,174)
Payment of Note Receivable 245
Net Cash Provided by Financing Activities 1,371 1,150
Net Decrease in Cash (507) (64)
Cash and Cash Equivalents at Beginning of Period 727 843
Cash and Cash Equivalents at End of Period $ 220 $ 779
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4
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EL CHICO RESTAURANTS, INC. AND SUBSIDIARIES
Note to Consolidated Condensed Financial Statements
(Unaudited)
1. Basis of presentation and other accounting information.
The consolidated condensed financial statements and information
included herein are unaudited; however, they reflect all
adjustments which are, in the opinion of Management, necessary
for a fair statement of the results of operations for the
interim periods ended June 30, 1995 and June 30, 1994 and
financial position at June 30, 1995. The adjustments consist
only of normal recurring items. The results of operations for
the six months ended June 30, 1995 are not necessarily
indicative of the results to be expected for the full fiscal
year. The notes to the consolidated financial statements
contained in the December 31, 1994 Annual Report on Form 10-K
should be read in conjunction with the consolidated condensed
financial statements.
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company has an unsecured credit facility with a $16,000,000
commitment comprised of a $15,000,000 revolving line of credit
and a $1,000,000 letter of credit facility. The line of credit
matures on December 31, 1996, and may be converted to a term
loan, payable quarterly on a 10-year amortization schedule, and
maturing on December 31, 1998. Both the line of credit and the
term loan bear interest at the Company's option of prime rate or
up to six-month LIBOR plus .75 percent. Both rates are subject
to maintaining certain financial covenants, and interest is
payable upon maturity of the LIBOR advances or quarterly for
prime rate advances. In addition, a commitment fee of .25
percent is payable quarterly on any unused commitments. As of
June 30, 1995, $8,750,000 was outstanding under the line of
credit. The credit facility was obtained for the funding of the
construction of new Company-owned restaurants, remodeling
existing restaurants, and the purchase of the Company's
headquarters facility during 1993. The Company plans to open
approximately eight El Chico restaurants and estimates capital
expenditures during 1995 to be approximately $13,000,000 to
$15,000,000 which will be funded by internal operations and the
existing credit facility.
During the quarter one Company-owned "El Chico" restaurant and
one franchised "El Chico" restaurant were opened in Humble, Texas
and Wichita, Kansas, respectively.
Working capital decreased from a deficit of $4,006,000 at
December 31, 1994 to a deficit of $4,186,000 at June 30, 1995,
primarily as a result of a decrease in prepaid expenses and cash,
partly offset by a decrease in accrued liabilities.
Results of Operations
Revenues for the quarter ended June 30, 1995 were $26.7 million,
an increase of 8.5 percent, as compared to $24.6 million for the
quarter ended June 30, 1994. Company-owned restaurant sales
included in these amounts were $25.7 million and $23.9 million,
respectively, an increase of 7.6 percent reflecting the addition
of new stores. Comparable Company-owned El Chico concept
restaurant sales were down 1.8 percent.
Year-to-date revenues were $51.3 million compared with $47.5
million for the same period a year earlier. Company-owned
restaurant sales included in these amounts were $49.7 million and
$46.2 million, respectively. The increase of 7.5 percent was due
to the addition of new stores, partly offset by a decrease of 2.0
percent in comparable Company-owned El Chico restaurants.
6
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Results of Operations - Cont'd.
Franchise-related income increased for the quarter due to a
franchise fee related to the opening of the Wichita, Kansas
restaurant and an increase in comparable store sales of 1.4
percent, partly offset by a decrease in the number of franchise
stores during the quarter. Year-to-date franchise-related income
decreased as a result of a decrease in the number of franchise
stores, partly offset by an increase in same-store sales of .5
percent and the Wichita, Kansas franchise fee.
Pronto Design & Supply, Inc. (Pronto) is a wholly owned
subsidiary in the business of designing food-service kitchens and
supplying the related equipment. Equipment sales increased for
the quarter and year-to-date, primarily due to the sale of
kitchen equipment to the Wichita, Kansas franchisee. Equipment
cost of sales for the quarter and year-to-date increased as a
percentage of sales due to higher vendor rebate income a year
ago.
Restaurant food costs for the quarter decreased as a percentage
of sales to 25.2 percent from 25.7 percent and for the year-to-
date to 25.3 percent from 25.7 percent as a result of a decline
in the cost of beef, cheese, avocados and tomatoes from a year
ago. This decrease was partly offset by an increase in lettuce
costs.
Restaurant labor was stable during the quarter and year-to-date
at 33.1 percent and 33.5 percent of sales, respectively.
Operating expenses for the quarter and year-to-date increased as
a percentage of sales due to an increase in advertising and
supply costs partially offset by lower laundry costs.
General and administrative costs for the quarter increased as a
result of an increase in field supervision costs and training
wages offset by lower incentive compensation. Cost for the year-
to-date increased due to higher employee costs, training wages
and professional fees offset by lower incentive compensation.
Interest expense increased for the quarter and year-to-date as a
result of an increase in average outstanding debt and higher
interest rates. Interest income for the quarter decreased due to
a decline in average invested cash balances. Interest income for
the year-to-date increased due to interest income received
related to amended tax returns.
At June 30, 1995 there were 68 Company-operated restaurants and
29 franchised restaurants.
7
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits 27 Financial Data Schedule.
(b) No report on Form 8-K was filed or required to be filed
during the quarter ended June 30, 1995.
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.
EL CHICO RESTAURANTS, INC.
Date: August 11 1995 By:/s/Susan R. Holland
Treasurer, Controller
8
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sAugust 11, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Room 1004
Judiciary Plaza
Washington, D.C. 20549
RE: El Chico Restaurants, Inc. 10-Q for Quarter Ended June 30,
1995
Gentlemen:
Enclosed for filing are eight complete copies of Form 10-Q for
the above registrant for the quarter ended June 30, 1995, one of
which is manually signed.
By copy of this letter, we are also forwarding three complete
copies, one of which is manually signed, to the National
Association of Securities Dealers, Inc.
Please acknowledge receipt of the enclosed by file-stamping and
returning the enclosed copy of this letter in the envelope
provided.
Sincerely,
Susan R. Holland
Treasurer, Controller
/kgt
cc: National Assoc. of Securities Dealers, Inc.
(w/enclosures)
Lawrence E. White
John A. Cuellar
Ron Frappier
Darl Hatfield
Britt Langford
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000719961
<NAME> EL CHICO RESTAURANTS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 220
<SECURITIES> 0
<RECEIVABLES> 899
<ALLOWANCES> 0
<INVENTORY> 1,165
<CURRENT-ASSETS> 3,326
<PP&E> 41,874
<DEPRECIATION> 0
<TOTAL-ASSETS> 46,233
<CURRENT-LIABILITIES> 7,512
<BONDS> 0
<COMMON> 474
0
0
<OTHER-SE> 8,304
<TOTAL-LIABILITY-AND-EQUITY> 46,233
<SALES> 25,729
<TOTAL-REVENUES> 26,687
<CGS> 14,985
<TOTAL-COSTS> 25,060
<OTHER-EXPENSES> (10)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 158
<INCOME-PRETAX> 1,479
<INCOME-TAX> 476
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,003
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
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