Part I - Financial Information was the subject of a
filing under Rule 12b-25 on February 24, 1999.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
(Mark One)
[x] Quarterly Report under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended January 10, 1999
OR
[ ] Transition Report Pursuant to Section 13 Or 15 (D) of the
Securities Exchange Act Of 1934
Commission file number 0-12701
For the transition period from _______________ to _____________
-----------------------------
CUCOS INC.
(Exact name of small business issuer as specified in its charter)
LOUISIANA 72-0915435
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
110 Veterans Blvd., Suite 222, Metairie, Louisiana 70005
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code--504-835-0306
Check whether the issuer: (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Exchange Act during the
post 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 [ ]
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
2,651,730 shares of common stock, no par value, as of February 1,
1999.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
Part I--Financial Information
ITEM I. FINANCIAL STATEMENTS
CUCOS INC.
BALANCE SHEET
Jan. 10, 1999
UNAUDITED
Assets
Current Assets
Cash and Cash Equivalents $528,000
Receivables:
Trade 601,000
Due from Affiliates 205,000
Less Allowance for Doubtful Accounts 277,000
529,000
Inventories 237,000
Prepaid Expenses 369,000
Deferred Taxes and Other Current Assets 4,000
TOTAL CURRENT ASSETS 1,667,000
Deferred Taxes and Noncurrent Assets 250,000
Property, Equipment and Other
Property and Equipment 4,565,000
Building and Leasehold Improvements 5,271,000
Reacquired Franchise Rights 529,000
10,365,000
Less Accumulated Depreciation and Amortization 5,625,000
4,740,000
Investment in LaMexiCo, LLC 233,000
Deferred Costs Less Accumulated Amortization of $53,000 331,000
TOTAL ASSETS $7,221,000
Liabilities and Shareholders' Equity
Current Liabilities
Trade Accounts Payable $2,140,000
Accrued Expenses and Other 457,000
Accrued Payroll 192,000
Current Portion of Long-Term Debt 387,000
TOTAL CURRENT LIABILITIES 3,176,000
Long-Term Debt, Less Current Portion 3,232,000
Deferred Revenue and Other 557,000
Shareholders' Equity
Preferred Stock, No Par Value - 1,000,000 Shares
Authorized, None Issued or Outstanding -
Common Stock, No Par Value - 20,000,000 Shares
Authorized, 2,651,730 Shares Issued and Outstanding 5,253,000
Additional Paid-in Capital 111,000
Retained Earnings (Deficit) (5,108,000)
TOTAL SHAREHOLDERS' EQUITY 256,000
Total Liabilities and Equity $7,221,000
See Notes to Financial Statements
Part I--Financial Information
<TABLE>
<CAPTION>
CUCOS INC.
STATEMENTS OF OPERATIONS
UNAUDITED
12 Weeks 12 Weeks 28 Weeks 28 Weeks
Ended Ended Ended Ended
Jan 10, 1999 Jan 11, 1998 Jan 10, 1999 Jan 11, 1998
Restaurant Operations
<S> <C> <C> <C> <C>
Sales of Food and Beverages $4,631,000 $4,840,000 $10,945,000 $11,345,000
Restaurant Expenses:
Cost of Sales 1,319,000 1,284,000 3,112,000 3,024,000
Restaurant Labor and Benefits 1,658,000 1,642,000 3,900,000 3,785,000
Other Operating Expenses 957,000 847,000 2,272,000 2,055,000
Occupancy Costs 528,000 537,000 1,246,000 1,212,000
Preopening Costs 11,000 23,000 54,000 22,000
Total Restaurant Expenses 4,473,000 4,333,000 10,584,000 10,098,000
Income from Restaurant Operations 158,000 507,000 361,000 1,247,000
Royalties and Franchise Revenues, Net of Expenses
of $595 and 5,897 31,000 25,000 73,000 59,000
Commissary and Other Income 29,000 28,000 66,000 82,000
218,000 560,000 500,000 1,388,000
Operations Expenses 152,000 164,000 420,000 444,000
Corporate Expenses 395,000 332,000 834,000 731,000
Operating Income (329,000) 64,000 (754,000) 213,000
Interest Expense 111,000 127,000 262,000 255,000
Loss Before Income Taxes and
Extraordinary Expenses (440,000) (63,000) (1,016,000) (42,000)
Income Taxes 1,000 - 1,000 -
Loss Before Extraordinary Expenses (441,000) (63,000) (1,017,000) (42,000)
Extraordinary Item - Debt Restructuring Penalties - (166,000) - (166,000)
Net Loss (441,000) ($229,000) (1,017,000) ($208,000)
Weighted Average Shares of Common Stock 2,306,000 2,306,000 2,306,000 2,306,000
Net Loss per Share Before Extraordinary Expenses -
Basic and Diluted ($0.19) ($0.03) ($0.44) ($0.02)
Net Loss Per Share - Basic and Diluted ($0.19) ($0.10) ($0.44) ($0.09)
</TABLE>
See Notes to Financial Statements
Part I--Financial Information
<TABLE>
<CAPTION>
CUCOS INC.
STATEMENTS OF CASH FLOWS
UNAUDITED
28 Weeks 28 Weeks
Ended Ended
Jan. 10, 1999 Jan. 11, 1998
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $72,000 $157,000
INVESTING ACTIVITIES
Purchases of Property and Equipment (103,000) (645,000)
NET CASH USED IN INVESTING ACTIVITIES (103,000) (645,000)
FINANCING ACTIVITIES
Change in Short-Term Borrowings 100,000 -
Proceeds from Long-Term Borrowings - 4,209,000
Principal Payments on Borrowings (220,000) (3,624,000)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (120,000) 585,000
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (151,000) 97,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 679,000 476,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD $528,000 $573,000
</TABLE>
See Notes to Financial Statements
CUCOS INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. The Company: Cucos Inc. (the "Company") owns and franchises
Mexican restaurants under the name "Cucos". At January 10,
1999, fifteen Company-owned restaurants and five franchised
restaurants were in operation. At the end of the Comparable
Quarter, there were sixteen company-owned and five
franchised restaurants in operation.
2. Fiscal Year: The Company uses a 52/53 week year for
financial reporting purposes with the Company's fiscal year
ending on the Sunday closest to June 30 of each year.
Fiscal 1998 and fiscal 1999 are both 52 week years.
3. The accompanying unaudited financial statements have been
prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in the financial
statements have been omitted pursuant to such rules and
regulations. It is suggested that these financial
statements be read in conjunction with the Company's Annual
Report for the fiscal year ended June 28, 1998. In the
opinion of management, these financial statements contain
all normal recurring adjustments necessary to fairly present
the financial results for the twelve weeks ended January 10,
1999. Operating results for the period shown are not
necessarily indicative of the operating results expected for
the full fiscal year ending June 27, 1999.
4. Per share amounts are based on the weighted average number
of shares of common stock and dilutive common stock
equivalents outstanding.
5. Certain reclassifications of previously reported amounts
have been made to conform to current classifications.
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Sales of food and beverages for the 12 weeks ending January 10,
1999 (the "Current Quarter") decreased 4.3% to $4,631,000 from
$4,840,000. Sales of food and beverages for the 28 weeks ending
January 10, 1999 (the "Current First Half") declined 3.5% to
$10,945,000 from $11,345,000. The decrease in the Current
Quarter resulted from having one less restaurant open (Pensacola)
in 1999 than in 1998. The decline in the Current First Half was
the result of one less restaurant partially offset by the opening
of a new restaurant (Meridian, Mississippi), an increase in
average ticket price of 4.4%, and a decline in guest counts of
3.1% in comparable restaurants. The increase in average ticket
price is the result of price increases implemented this year, and
the decline in guest count is the result of increased competition
in several of the Company's smaller markets.
Restaurant expenses in the Current Quarter and the Current First
Half increased by 3.2% and 4.8% respectively. The cost of sales
in both the Current Quarter and the Current First Half were
adversely affected by an increase in prices, primarily cheese and
other dairy items. The increase in restaurant labor and benefits
and other operating costs are primarily the results of the
programs introduced to increase customer satisfaction. The
primary cost increases were related to advertising, uniforms, and
additional managers in each restaurant. A summary of the
components of restaurant expenses as a percentage of sales of
food and beverages are:
Current Comparable
Description Quarter Quarter
Cost of Sales 28.48% 26.53%
Restaurant Labor and Benefits 35.80 33.92
Other Operating Expenses 20.67 17.50
Occupancy Costs 11.40 11.09
Preopening Costs .24 .48
Total Restaurant Expenses 96.59% 89.52%
Operations expenses declined to $152,000 in the Current Quarter
from $164,000 in the Comparable Quarter and to $420,000 in the
Current First Half from $444,000 in the Comparable First Half.
This decline was primarily attributable to having fewer
supervisory personnel.
Corporate expenses increased 19.0% in the Current Quarter to
$395,000 and 14.1% in the Current First Half to $834,000. These
increases are the result of additional legal and accounting fees
and increases in insurance and salaries.
Interest expense declined to $111,000 (12.6%) in the Current
Quarter but increased to $262,000 (2.8%) in the Current First
Half. The decline in the Current Quarter is the result of a
lower average borrowing rate.
During the Comparable Quarter, the Company entered into a new
credit facility with a commercial lending institution. In
connection with this refinancing, the Company incurred prepayment
penalties of $166,000 which were reported in the Comparable
Quarter as an extraordinary loss.
LIQUIDITY AND CAPITAL RESOURCES
During the Current First Half, despite a net loss of $1,016,000,
the Company's operating activities provided cash flow of $72,000.
Management has implemented certain actions to improve the guest
experience at the restaurants in an effort to improve operating
results and cash flows. Management believes it will continue to
generate cash flow from operating activities sufficient to allow
it to operate and to meet its obligations. Management also
believes there are alternate sources of financing available to
allow the Company to meet short-term financing needs which may
arise. However, there can be no assurance that management's
plans will be successful or that alternate sources will be
available.
Net cash provided by operations together with $74,000 of funds
from additional borrowings and cash at the beginning of the
Current First Half were sufficient to fund $103,000 of purchases
of property and equipment and make $220,000 of principal payments
on borrowings.
Working capital needs have been and will continue to be financed
from operations and short-term borrowings. Although none is
planned, restaurant expansion and remodeling has been and will
continue to be funded from long-term debt, lessor allowances and
leases. Because of the timing of securing long-term debt and
leases, restaurant expansion and remodeling may be temporarily
funded from operations.
IMPACT OF YEAR 2000
The Company's position on the Year 2000 exposures are described
in the Company's annual report for fiscal year ended June 28,
1998. The Company continues to address this issue and does not
expect any significant problems or exposures arising from this
issue. There have been no significant changes in this area in
the Current Quarter.
FORWARD-LOOKING STATEMENTS
Forward-looking statements regarding management's present plans
or expectations for new unit openings, remodels, other capital
expenditures, the financing thereof, and disposition of impaired
units involve risks and uncertainties relative to return
expectations and related allocation of resources, and changing
economic or competitive conditions, as well as the negotiation of
agreements with third parties, which could cause actual results
to differ from present plans or expectations, and such
differences could be material. Similarly, forward-looking
statements regarding management's present expectations for
operating results involve risk and uncertainties relative to
these and other factors, such as advertising effectiveness and
the ability to achieve cost reductions, which also would cause
actual results to differ from present plans. Such differences
could be material. Management does not expect to update such
forward-looking statements continually as conditions change, and
readers should consider that such statements speak only as to the
date hereof.
Part II-Other Information
ITEM 1. LEGAL PROCEEDINGS.
None, except as previously reported.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits.
27 - Financial Data Schedule
b. Reports on Form 8-K.
None.
INDEX TO EXHIBITS
The following exhibits are filed with this Quarterly
Report or is incorporated herein by reference:
Exhibit Number Title
27 Financial Data Schedule
CUCOS INC.
SIGNATURE
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.
CUCOS INC.
(Registrant)
Vincent J. Liuzza, Jr.
Date: March 2, 1999 By:
Vincent J. Liuzza, Jr.
Chairman, Chief Executive Officer,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-27-1999
<PERIOD-END> JAN-10-1999
<CASH> 528,000
<SECURITIES> 4,000
<RECEIVABLES> 806,000
<ALLOWANCES> 277,000
<INVENTORY> 237,000
<CURRENT-ASSETS> 1,667,000
<PP&E> 9,836,000
<DEPRECIATION> 5,625,000
<TOTAL-ASSETS> 7,221,000
<CURRENT-LIABILITIES> 3,176,000
<BONDS> 3,232,000
0
0
<COMMON> 5,253,000
<OTHER-SE> (5,108,000)
<TOTAL-LIABILITY-AND-EQUITY> 7,221,000
<SALES> 4,631,000
<TOTAL-REVENUES> 4,631,000
<CGS> 1,319,000
<TOTAL-COSTS> 4,473,000
<OTHER-EXPENSES> 541,000
<LOSS-PROVISION> 6,000
<INTEREST-EXPENSE> 111,000
<INCOME-PRETAX> (440,000)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (441,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (441,000)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
