<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 July 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________________________
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 .
---- ----
As of July 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 July 31, January 31,
----------- ----------
1995 1995
----------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 557,742 $ 801,429
Accounts receivable - trade 51,574 30,082
Inventories 100,404 111,469
Prepaid expenses 225,610 66,899
----------- ----------
Total current assets 935,330 1,009,879
----------- ----------
Property and equipment:
Land 168,800 168,800
Buildings 211,200 211,200
Leasehold improvements 1,152,421 881,837
Equipment and fixtures 3,276,232 3,044,027
Leased property under capital lease 1,832,176 1,832,176
----------- ----------
6,640,829 6,138,040
Less: accumulated depreciation and amortization 3,000,305 2,795,658
----------- ----------
3,640,524 3,342,382
----------- ----------
Other assets:
Cost in excess of net tangible assets of purchased
business, net of amortization of $389,966 and $367,892 231,536 253,610
License fees, net of amortization of $62,285 and $58,983 91,778 86,080
Deposits 6,894 6,624
----------- ----------
330,208 346,314
----------- ----------
$4,906,062 $4,698,575
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 134,406 $ 128,727
Current portion of obligation under capital lease 56,392 56,637
Accounts payable 550,051 396,534
Accrued payroll 111,188 113,306
Other accrued liabilities 205,767 205,787
----------- ----------
Total current liabilities 1,057,804 900,991
----------- ----------
Long-term debt, less current portion 287,740 355,062
Obligation under capital lease, less current portion 1,492,499 1,520,544
Deferred credits 25,355 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 (3,871,734) (4,018,927)
Treasury stock, 60,000 shares of common stock (270,000) (270,000)
----------- ----------
Total stockholders' equity 2,042,664 1,895,471
----------- ----------
$4,906,062 $4,698,575
----------- ----------
----------- ----------
</TABLE>
See notes to financial statements
2
<PAGE>
MAVERICK RESTAURANT CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
------------------------- -------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $2,832,743 $2,275,060 $5,569,419 $4,530,944
---------- ---------- ---------- ----------
Costs and expenses:
Cost of goods sold 884,627 712,387 1,734,542 1,411,378
Operating expenses 1,643,792 1,310,370 3,129,666 2,547,472
Depreciation and amortization 115,259 91,471 228,871 177,442
General and administrative 115,470 110,606 232,446 213,498
---------- ---------- ---------- ----------
2,759,148 2,224,834 5,325,525 4,349,790
---------- ---------- ---------- ----------
Operating income 73,595 50,226 243,894 181,154
---------- ---------- ---------- ----------
Other income (expense)
Interest income 7,018 7,863 17,174 15,573
Interest expense (56,447) (37,200) (113,875) (74,513)
---------- ---------- ---------- ----------
(49,429) (29,337) (96,701) (58,940)
---------- ---------- ---------- ----------
Earnings before income taxes 24,166 20,889 147,193 122,214
Provision for income taxes -- -- -- --
---------- ---------- ---------- ----------
Net earnings $ 24,166 $ 20,889 $ 147,193 $ 122,214
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings per common share $ -- $ -- $ .02 $ .02
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Average shares outstanding 6,081,458 6,054,250 6,081,458 6,053,775
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
3
<PAGE>
MAVERICK RESTAURANT CORPORATION
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 31,
--------------------------
1995 1994
---------- ----------
<S> <C> <C>
Operating Activities
Net earnings $ 147,193 122,214
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 228,871 177,442
Changes in assets and liabilities
(Increase) decrease in accounts receivable (21,492) (18,844)
(Increase) decrease in inventories 11,065 (17,385)
(Increase) decrease in prepaid expenses (158,711) 23,936
Increase (decrease) in accounts payable 153,517 (203,070)
Increase (decrease) in accrued expenses ( 2,138) (31,178)
Cost applicable to closed restaurants -- (19,159)
Other - net (270) (504)
---------- ----------
Net cash provided (used) by operating activities 358,035 47,637
---------- ----------
Investing activities
Purchase of property and equipment (502,789) (331,995)
Purchase of license fees (9,000) ( 9,000)
---------- ----------
Net cash provided (used) by investing activities (511,789) (340,995)
---------- ----------
Financing activities
Sale of common stock -- 50,000
Repayment of long-term borrowing
and capital lease obligations ( 89,933) (93,721)
---------- ----------
Net cash provided (used) by financing activities (89,933) (43,721)
---------- ----------
Net increase (decrease) in cash and cash equivalents (243,687) (337,079)
Cash and cash equivalents at beginning of period 801,429 1,506,290
---------- ----------
Cash and cash equivalents at the end of period $ 557,742 $1,169,211
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements.
4
<PAGE>
MAVERICK RESTAURANT CORPORATION
Notes to Financial Statements
(Unaudited)
July 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 July 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>
tem 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 1995 COMPARED TO THREE MONTHS ENDED JULY 31, 1994.
For the three months ended July 31, 1995, sales increased 24.5% to
$2,832,743 as compared to sales of $2,275,060 for the first quarter of the prior
year. The Company operated eight Grandy's restaurants and six Cotton Patch
Cafes as of July 31, 1995 as compared to nine Grandy's restaurants and three
Cotton Patch Cafes as of July 31, 1994. Of the nine Grandy's restaurants which
the Company operated as of July 31, 1994, one is being converted to a Cotton
Patch Cafe while the remaining eight units continue to be operated as Grandy's
restaurants.
Cost of sales, as a percentage of total sales, was 31.2% and 31.3% 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 third quarter.
Operating expenses as a percentage of total sales was 58.0% and 57.6% for
the 1995 and 1994 periods respectively.
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 fourteen restaurants as of July 31, 1995 as compared to twelve as of
July 31, 1994.
General and administrative expense, as a percentage of total sales, was
4.1% and 4.8% for the 1995 and 1994 periods respectively. Management expects
these costs to remain around 4.0% of sales the remainder of the year.
Operating income for the second quarter ended July 31, 1995 increased to
$73,595 as compared to $50,226 for the second quarter of the prior year.
Substantially all of the increase in operating income can be attributed to the
six Cotton Patch Cafes which are higher volume restaurants and more profitable
than the Grandy's restaurants.
SIX MONTHS ENDED JULY 31, 1995 COMPARED TO SIX MONTHS JULY 31, 1994.
For the six months ended July 31, 1995, sales increased 22.9% to $5,569,419
compared to $4,530,944 for the first six months for the prior year. The Company
operated eight Grandy's restaurants and six Cotton Patch Cafe's as of July 31,
1995, as compared to nine Grandy's restaurants and three Cotton Patch Cafe's as
of July 31, 1994. Of the nine Grandy's restaurants which the Company operated
as of July 31, 1994, one is being converted to a Cotton Patch Cafe while the
remaining eight continue to be operated as Grandy's restaurants.
Cost of sales, as a percentage of total sales, was 31.1% and 31.1% 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 third quarter.
Operating expenses, as a percentage of total sales, was 56.2% and 56.2% for
the 1995 and 1994 periods respectively.
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 fourteen restaurants as of July 31, 1995 as compared to twelve as of
July 31, 1994.
General and administrative expenses as percentage of sales were 4.2% and
4.7% for the 1995 and 1994 periods respectively. Management expects these
costs to remain around 4% of sales for the remainder of the fiscal year.
6
<PAGE>
Operating income for the first six months ended July 31, 1995 increased to
$243,894 as compared to $181,154 for the first six months of the prior year.
Substantially all of the increase in operating income can be attributed to the
six Cotton Patch Cafes which are higher volume restaurants and more profitable
than the Grandy's restaurant.
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 July 31, 1995, the Company had a working capital deficit of
$122,174 compared to working capital of $708,470 as of July 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 $511,789 for six months ended
July 31, 1995, compared to $340,995 for the six months ended July 31, 1994.
These capital expenditures have resulted in an increase in property and
equipment and a decrease in working capital.
The Company plans to continue expansion of the Cotton Patch Cafe concept
into fiscal 1996. The Company intends to lease existing restaurant properties
which are suitable for conversion to the Cotton Patch concept. It is expected
that each conversion will require approximately $300,000 for equipment and
remodel costs. The Company believes it has sufficient cash and cash flow to
open one or two new restaurants. New restaurants beyond one or two would 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.
On May 26, 1995, the Company held its Annual Meeting of Stockholders.
The matters voted upon and the vote tabulations for each matter are as
follows:
1. ELECTION OF DIRECTORS. The following directors were re-elected to
serve on the Board of Directors:
FOR WITHHELD
Chris F. Hotze 5,182,814 10,142
Linn F. Hohl 5,182,814 10,142
Andres Mouland 5,182,814 10,142
C. Howard Wilkins, Jr. 5,182,814 10,142
2. ADOPTION OF THE 1994 STOCK OPTION PLAN. The stockholders of the
Company approved adoption of the 1994 incentive Stock Option Plan.
The vote was as follows:
FOR AGAINST ABSTAIN
4,784,601 30,787 22,005
3. ELECTION OF AUDITORS. The stockholders of the Company elected
KPMG Peat Marwick, LLP, independent certified public accountants, as
auditors for the Company for the fiscal year ending January 31, 1996.
The vote was as follows:
FOR AGAINST ABSTAIN
5,187,601 900 4,355
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 August 25, 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 July 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-31-1995
<PERIOD-START> MAY-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 557,742
<SECURITIES> 0
<RECEIVABLES> 51,574
<ALLOWANCES> 0
<INVENTORY> 100,404
<CURRENT-ASSETS> 935,330
<PP&E> 6,640,829
<DEPRECIATION> 3,000,305
<TOTAL-ASSETS> 4,906,062
<CURRENT-LIABILITIES> 1,057,804
<BONDS> 0
<COMMON> 61,414
0
0
<OTHER-SE> 6,122,984
<TOTAL-LIABILITY-AND-EQUITY> 4,906,062
<SALES> 2,832,743
<TOTAL-REVENUES> 2,832,743
<CGS> 884,627
<TOTAL-COSTS> 2,759,148
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,447
<INCOME-PRETAX> 24,166
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,166
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
