<PAGE>
FORM 10-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 October 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-12145
MAVERICK RESTAURANT CORPORATION
Exact name of registrant as specified in its charter)
Kansas 48-0936946
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Suite 200
302 North Rock Road
Wichita, Kansas 67206
(Address of principal executive offices)
(Zip Code)
(316) 685-8281
(Registrant's telephone number, including area code)
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 .
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As of October 31, 1995, 6,081,458 shares of common stock $.01 par value
were outstanding.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
MAVERICK RESTAURANT CORPORATION
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS October 31, January 31,
------------- -----------
1995 1995
--------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 178,721 $ 801,429
Accounts receivable - trade 33,278 30,082
Inventories 106,529 111,469
Prepaid expenses 173,062 66,899
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Total current assets 491,590 1,009,879
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Property and equipment:
Land 168,800 168,800
Buildings 286,200 211,200
Leasehold improvements 1,323,811 881,837
Equipment and fixtures 3,345,633 3,044,027
Leased property under capital lease 1,832,176 1,832,176
----------- ------------
6,956,620 6,138,040
Less: accumulated depreciation and
amortization 2,957,821 2,795,658
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3,998,799 3,342,382
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Other assets:
Cost in excess of net tangible assets
of purchased business, net of
amortization of $401,003 and $367,892 220,499 253,610
License fees, net of amortization of
$63,926 and $58,983 99,137 86,080
Deposits 6,894 6,624
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326,530 346,314
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$ 4,816,919 $ 4,698,575
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----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 116,273 $ 128,727
Current portion of obligation under
capital lease 56,392 56,637
Accounts payable 583,522 396,534
Payroll 93,247 113,306
Other accrued liabilities 274,274 205,787
----------- ------------
Total current liabilities 1,123,708 900,991
----------- ------------
Long-term debt, less current portion 273,989 355,062
Obligation under capital lease, less
current portion 1,478,354 1,520,544
Deferred credits 24,779 26,507
Stockholders' equity:
Preferred stock, $.01 par value,
authorized 10,000,000 shares,
none issued - -
Common stock, $.01 par value,
authorized 20,000,000 shares, issued
6,141,458, outstanding 6,081,458 61,414 61,414
Additional paid-in capital 6,122,984 6,122,984
Accumulated deficit (3,998,309) (4,018,927)
Treasury stock, 60,000 shares
of common stock ( 270,000) ( 270,000)
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Total stockholders' equity 1,916,089 1,895,471
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$ 4,816,919 $ 4,698,575
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</TABLE>
See notes to financial statements
2
<PAGE>
MAVERICK RESTAURANT CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
--------------------------------- ---------------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 2,696,893 $ 2,143,110 $ 8,266,312 $ 6,674,054
------------- ------------- ------------- -------------
Costs and expenses:
Cost of goods sold 860,024 687,674 2,594,566 2,099,052
Operating expenses 1,669,656 1,309,910 4,799,321 3,857,382
Depreciation and amortization 120,564 93,870 349,436 271,312
General and administrative 118,750 102,510 351,196 316,008
------------- ------------- ------------- -------------
2,768,994 2,193,964 8,094,519 6,543,754
------------- ------------- ------------- -------------
Operating income (loss) (72,101) (50,854) 171,793 130,300
-------------- -------------- ------------- -------------
Other income (expense)
Interest expense (55,875) (45,166) (169,750) (119,679)
Interest income 1,401 6,920 18,575 22,493
------------- ------------- ------------- -------------
(54,474) (38,246) (151,175) (97,186)
-------------- -------------- -------------- --------------
Earnings (loss) before income taxes (126,575) $ (89,100) $ 20,618 $ 33,114
Provision for income taxes - - - -
------------- ------------- ------------- -------------
Net earnings (loss) $ (126,575) $ ( 89,100) $ 20,618 $ 33,114
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
Net earnings(loss) per common
share $ (.02) $ (.01) $ - $ -
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
Average shares outstanding 6,081,458 6,081,458 6,081,458 6,062,708
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</TABLE>
See notes to financial statements.
3
<PAGE>
MAVERICK RESTAURANT CORPORATION
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
October 31,
--------------------------
1995 1994
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<S> <C> <C>
Operating Activities
Net earnings $ 20,618 33,114
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 349,436 271,312
Changes in assets and liabilities
(Increase) decrease in accounts receivable ( 3,196) (28,283)
(Increase) decrease in inventories 4,940 1,354
(Increase) decrease in prepaid expenses (106,163) (108,490)
(Increase) in real estate under construction - (281,901)
Increase (decrease) in accounts payable 186,988 8,229
Increase (decrease) in accrued expenses 48,428 10,823
Cost applicalbe to closed restaurants - (19,159)
Other - net ( 270) ( 503)
----------- -----------
Net cash provided (used) by operating activities 500,781 (113,504)
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Investing activities
Purchase of property and equipment (969,527) (371,251)
Purchase of license fees ( 18,000) ( 9,000)
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Net cash provided (used) by investing activities (987,527) (380,251)
----------- -----------
Financing activities
Sale of common stock - 50,000
Repayment of long-term borrowing
and capital lease obligations (135,962) (149,991)
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Net cash provided (used) by financing activities (135,962) (99,991)
----------- -----------
Net increase (decrease) in cash and cash equivalents (622,708) (593,746)
Cash and cash equivalents at beginning of period 801,429 1,506,290
----------- ----------
Cash and cash equivalents at the end of period $ 178,721 $ 912,544
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements.
4
<PAGE>
MAVERICK RESTAURANT CORPORATION
Notes to Financial Statements
(Unaudited)
October 31, 1995
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-
01 of Regulation S-X. 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
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month period ended October 31, 1995 are
not necessarily indicative of the results that may be expected for the
year ended January 31, 1996. For further information, refer to the
financial statements and footnotes thereto included in the Company's 10-K
and Annual Report to Stockholders as filed on April 24, 1995.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1995 COMPARED TO THREE MONTHS ENDED OCTOBER 31,
1994.
For the three months ended October 31, 1995, sales increased 25.8% to
$2,696,893 as compared to sales of $2,143,110 for the first quarter of the prior
year. The Company operated eight Grandy's restaurants and seven Cotton Patch
Cafes as of October 31, 1995 as compared to nine Grandy's restaurants and three
Cotton Patch Cafes as of October 31, 1994. Of the nine Grandy's restaurants
which the Company operated as of October 31, 1994, one has been converted to a
Cotton Patch Cafe while the remaining eight units continue to be operated as
Grandy's restaurants. Same store sales from the eight Grandy's restaurants, for
the third quarter ended October 31, 1995, were down 5.1% as compared to the
third quarter of the prior year.
Cost of sales, as a percentage of total sales, was 31.9% and 32.1% for the
1995 and 1994 periods respectively. Management does not expect any significant
change in cost of sales as a percentage of total sales during the fourth
quarter.
Operating expenses as a percentage of total sales was 61.9% and 61.1% for
the 1995 and 1994 periods respectively. The increase in operating expense, as a
percentage of total sales, can be attributed primarily to the expensing of
preopening costs relating to a new Cotton Patch Cafe which opened during the
third quarter.
Depreciation and amortization has increased from the 1994 period to 1995 as
a result of operating more restaurants. Depreciation and amortization is
directly related to the acquisition or disposition of fixed assets. The Company
operated fifteen restaurants as of October 31, 1995 as compared to twelve as of
October 31, 1994.
General and administrative expense, as a percentage of total sales, was
4.4% and 4.8% for the 1995 and 1994 periods respectively. Management expects
these costs to remain around 5.0% of sales the remainder of the year.
The Company had an operating loss of $72,101 for the three months ended
October 31, 1995, as compared to an operating loss of $50,854 for the third
quarter of the prior year. Total sales for the current quarter were up 25.8% as
compared to the third quarter of the previous. This increase was due solely to
an increase in the number of restaurants operated by the Company. However, five
of our seven Cotton Patch Cafe locations experienced substantial competitive
intrusion during the quarter that had a substantial negative impact on top line
sales and operating income.
NINE MONTHS ENDED OCTOBER 31, 1995 COMPARED TO NINE MONTHS OCTOBER 31, 1994.
For the nine months ended October 31, 1995, sales increased 23.9% to
$8,266,312 compared to $6,674,054 for the first nine months for the prior year.
The Company operated eight Grandy's restaurants and seven Cotton Patch Cafe's as
of October 31, 1995, as compared to nine Grandy's restaurants and three Cotton
Patch Cafe's as of October 31, 1994. Of the nine Grandy's restaurants which the
Company operated as of October 31, 1994, one has been converted to a Cotton
Patch Cafe while the remaining eight continue to be operated as Grandy's
restaurants. Same store sales from our eight Grandy's restaurants were down
2.3% for the nine months ended October 31, 1995, as compared to the first nine
months of the prior year.
Cost of sales, as a percentage of total sales, was 31.4% and 31.5% for the
1995 and 1994 periods respectively. Management believes chicken prices will
remain stable during fourth quarter.
Operating expenses, as a percentage of total sales, was 58.1% and 57.8% for
the 1995 and 1994 periods respectively. Management does not expect any
significant change in operating expense, as a percentage of total sales, during
the fourth quarter.
6
<PAGE>
Depreciation and amortization has increased for the 1994 period to 1995 as
a result of operating more restaurants. Depreciation and amortization is
directly related to the acquisition or disposition of fixed assets. The Company
operated fifteen restaurants as of October 31, 1995, as compared to twelve as of
October 31, 1994.
General and administrative expenses as percentage of sales were 4.3% and
4.7% for the 1995 and 1994 periods respectively. Management expects these
costs to remain around 5.0% of sales for the remainder of the fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds to finance its business have been
its cash flow from operations, and proceeds from the sale of the Company's
common stock. At October 31, 1995, the Company had a working capital deficit of
$632,118 compared to working capital of $632,088 as of October 31, 1994.
Substantially, all of the Company's revenues are derived from cash sales.
The Company does not maintain significant receivables and inventories;
therefore, working capital requirements for continuing operations are not
significant.
Additions to property and equipment represent the single largest use of
funds by the Company. These expenditures are primarily made for the development
of new restaurants. Capital expenditures were $987,527 for nine months ended
October 31, 1995, compared to $380,251 for the nine months ended October 31,
1994. These capital expenditures have resulted in an increase in property and
equipment and a decrease in working capital.
The Company presently has one Cotton Patch Cafe under construction in
Salina, Kansas and has closed on the purchase of an existing restaurant property
in Emporia, Kansas which will be converted to a Cotton Patch Cafe. It is
expected that these two units will require approximately $600,000 for equipment
and remodel costs. These costs will be financed with bank debt.
The Company does not expect to pay dividends in the foreseeable future, but
rather intends to retain all available funds for the development of the
business.
INFLATION
The Company is constantly evaluating ways to improve efficiency,
productivity and operational standards to increase its return on investment.
Management believes it has done an effective job of countering the effects of
inflation on operating costs.
The Company's food costs are closely tied to market conditions. The
Company has been able to maintain its cost of sales percentages by refining cost
controls, directing marketing activities to reemphasize low-cost menu items and
selectively increasing menu prices.
7
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Not applicable.
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
8
<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.
MAVERICK RESTAURANT CORPORATION
(Registrant)
Date December 11, 1995 /s/ LINN F. HOHL
--------------------- -----------------------------------
Linn F. Hohl - Vice President
of Finance,
Secretary and
Treasurer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Unaudited Financial Statements of Maverick Restaurant Corporation for the three
months ended October 31, 1995 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 178,721
<SECURITIES> 0
<RECEIVABLES> 33,278
<ALLOWANCES> 0
<INVENTORY> 106,529
<CURRENT-ASSETS> 491,590
<PP&E> 6,956,620
<DEPRECIATION> 2,957,821
<TOTAL-ASSETS> 4,816,919
<CURRENT-LIABILITIES> 1,123,708
<BONDS> 0
<COMMON> 61,414
0
0
<OTHER-SE> 6,122,984
<TOTAL-LIABILITY-AND-EQUITY> 4,816,919
<SALES> 2,696,893
<TOTAL-REVENUES> 2,696,893
<CGS> 860,024
<TOTAL-COSTS> 2,768,994
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,875
<INCOME-PRETAX> (126,575)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (126,575)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
