<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 April 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
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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 April 30, 1995, 6,081,458 shares of common stock $.01 par value were
outstanding.
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
MAVERICK RESTAURANT CORPORATION
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS APRIL 30, JANUARY 31,
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1995 1995
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 825,371 $ 801,429
Accounts receivable - trade 45,220 30,082
Inventories 103,089 111,469
Prepaid expenses 51,178 66,899
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Total current assets 1,024,858 1,009,879
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Property and equipment:
Land 168,800 168,800
Buildings 211,200 211,200
Leasehold improvements 919,613 881,837
Equipment and fixtures 3,067,728 3,044,027
Leased property under capital lease 1,832,176 1,832,176
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6,199,517 6,138,040
Less: accumulated depreciation and amortization 2,897,157 2,795,658
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3,302,360 3,342,382
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Other assets:
Cost in excess of net tangible assets of purchased
business, net of amortization of $378,929 and $367,892 242,573 253,610
License fees, net of amortization of $60,636 and $58,983 84,427 86,080
Deposits 6,684 6,624
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333,684 346,314
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$4,660,902 $4,698,575
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<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Current portion of long term debt $ 129,910 $ 128,727
Current portion of obligation under capital lease 56,580 56,637
Accounts payable 339,503 396,534
Accrued payroll 87,689 113,306
Other accrued liabilities 172,787 205,787
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Total current liabilities 786,469 900,991
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Long-term debt, less current portion 323,548 355,062
Obligation under capital lease, less current portion 1,506,456 1,520,544
Deferred credits 25,931 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 (3,895,900) (4,018,927)
Treasury stock, 60,000 shares of common stock ( 270,000) ( 270,000)
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Total stockholders' equity 2,018,498 1,895,471
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$4,660,902 $4,698,575
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----------- -----------
</TABLE>
See notes to financial statements
2
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MAVERICK RESTAURANT CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
------------------------
1995 1994
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<S> <C> <C>
Net sales $2,736,676 $2,255,884
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Costs and expenses:
Cost of goods sold 849,915 698,991
Operating expenses 1,485,874 1,237,102
Depreciation and amortization 113,612 85,971
General and administrative 116,976 102,892
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2,566,377 2,124,956
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Operating income 170,299 130,928
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Other income (expense)
Interest income 10,156 7,710
Interest expense (57,428) (37,313)
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(47,272) (29,603)
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Earnings before income taxes 123,027 101,325
Provision for income taxes - -
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Net earnings $ 123,027 $ 101,325
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----------- -----------
Net earnings per common share $ .02 $ .02
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----------- -----------
Average shares outstanding 6,081,458 6,053,333
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</TABLE>
See notes to financial statements.
3
<PAGE>
MAVERICK RESTAURANT CORPORATION
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
-------------------------
1995 1994
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<S> <C> <C>
Operating Activities
Net earnings $ 123,027 101,325
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 113,612 85,971
Changes in assets and liabilities
(Increase) decrease in accounts receivable (15,138) (15,640)
(Increase) decrease in inventories 8,380 (17,385)
(Increase) decrease in prepaid expenses 15,722 10,807
Increase (decrease) in accounts payable (57,031) ( 5,353)
Increase (decrease) in accrued expenses (58,617) 17,364
Cost applicable to closed restaurants - (19,159)
Other - net ( 60) ( 504)
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Net cash provided (used) by operating activities 129,895 157,426
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Investing activities
Purchase of property and equipment ( 61,477) (310,939)
Purchase of license fees - ( 9,000)
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Net cash provided (used) by investing activities ( 61,477) (319,939)
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Financing activities
Repayment of long-term borrowings
and capital lease obligations ( 44,476) (52,367)
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Net cash provided (used) by financing activities (44,476) (52,367)
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Net increase (decrease) in cash and cash equivalents 23,942 (214,880)
Cash and cash equivalents at beginning of period 801,429 1,506,290
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Cash and cash equivalents at the end of period $ 825,371 $1,291,410
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</TABLE>
See notes to financial statements.
4
<PAGE>
MAVERICK RESTAURANT CORPORATION
Notes to Financial Statements
(Unaudited)
April 30, 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 April 30, 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 APRIL 30, 1995 COMPARED TO THREE MONTHS ENDED APRIL 30, 1994.
For the three months ended April 30, 1995, sales increased 21% to $2,736,676
as compared to sales of $2,255,884 for the first quarter of the prior year. The
Company operated nine Grandy's restaurants and five Cotton Patch Cafes as of
April 30, 1995 as compared to nine Grandy's restaurants and three Cotton Patch
Cafes as of April 30, 1994. Same store sales from the nine Grandys
restaurants, for the first quarter ended April 30, 1995, were down 2.6% as
compared to the first quarter of the prior year.
Cost of sales, as a percentage of total sales, was 31.1% and 31.0% 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 54.3% and 54.8% 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 second 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 fourteen restaurants as of April 30, 1995 as compared to twelve as of
April 30, 1994.
General and administrative expense, as a percentage of total sales, was
4.3% and 4.6% for the 1995 and 1994 periods respectively. Management expects
these costs to remain around 5.0% of sales the remainder of the year.
Interest expense for the three months ended April 30, 1995 was $57,428 as
compared to $37,313 for the three months ended April 30, 1994. Interest for
1995 represents interest expense on all debt. In addition to the interest
reflected above for 1994, interest costs of $7,273 which was attributed to
closed restaurant units, have been charged against the accrual for restaurants
closings during the three months ended April 30, 1994.
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 April 30, 1995, the Company had a working capital of $238,239
compared to working capital of $612,156 as of April 30, 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 $61,477 for three
months ended April 30, 1995, compared to $310,939 for the three months ended
April 30, 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 three to four new restaurants. New restaurants beyond three or four 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.
6
<PAGE>
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)
/s/ LINN F. HOHL
Date MAY 17, 1995 ---------------------------------
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 April 30, 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> FEB-01-1995
<PERIOD-END> APR-30-1995
<CASH> 825,371
<SECURITIES> 0
<RECEIVABLES> 45,220
<ALLOWANCES> 0
<INVENTORY> 103,089
<CURRENT-ASSETS> 1,024,858
<PP&E> 6,199,517
<DEPRECIATION> 2,897,157
<TOTAL-ASSETS> 4,660,902
<CURRENT-LIABILITIES> 786,469
<BONDS> 0
<COMMON> 61,414
0
0
<OTHER-SE> 6,122,984
<TOTAL-LIABILITY-AND-EQUITY> 2,018,498
<SALES> 2,736,676
<TOTAL-REVENUES> 2,736,676
<CGS> 849,915
<TOTAL-COSTS> 2,566,377
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,428
<INCOME-PRETAX> 123,027
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123,027
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
