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FAMILY STEAK HOUSES LETTERHEAD
Dear Shareholder:
You may have received a letter from Glen Ceiley in the last few days where he
makes some pretty outrageous statements. I'd like to respond to those
statements.
WHO'S THE PIRATE?
Ceiley accuses the Board of "pirating" your Company away from you. Well, I don't
have an eyepatch or a pegleg and neither do any of the other members of the
Board. I'm not sure what Ceiley is talking about when he says the Board is
pirating the Company. What the Board has done is discharge its fiduciary duty,
in accordance with Florida law and the rules and regulations of the Securities
and Exchange Commission. We've looked at his offer and, after taking into
consideration everything we know about the Company and about Ceiley and Bisco,
we've recommended against the offer. Interestingly, most of you seem to agree
with us - based on Ceiley's latest filing, owners of more than 75% of
outstanding shares have declined to tender him their shares. If anyone is doing
any "pirating" it seems to me that it's Ceiley. He's the one who is costing the
Company money. He's the only one who stands to gain if he prevails. He would
acquire 30% of the outstanding shares from you and then, having gained control
over the Company, would treat the rest of the shareholders, owning 70% of the
shares, as he sees fit. That's what a pirate does: loots and raids and leaves
the victims behind to deal with the aftermath.
BISCO'S RESULTS?
Ceiley touts his company's financial results in his letter. Well, anyone can
claim great financial results, but backing them up is something different. The
Company's financial statements are audited by a Big Six accounting firm - are
Bisco's? If so, let's see the audit. The Company shares its audited financial
statements with its shareholders every year. If Ceiley wants you to base your
decision on his supposed business acumen, then we'd like to see audited
financial statements from Bisco for the last several years and make our own
decision.
Ceiley also claims as tremendous successes his last two aborted takeover
attempts: Bell Industries and RB&W. He implies that as a result of his efforts,
the stock of those companies greatly increased in value. The management of those
two companies might have something to say about Ceiley's contributions to their
stock
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price as compared to their own performance in running their businesses. In fact,
during the period Ceiley says he held Bell Industries stock (January 1989 -
February 1990), Bell declared a $4 dividend and almost doubled its earnings from
$.35 per share for its first two fiscal quarters of 1989 to $.60 per share for
its first two fiscal quarters of 1990. Those events may have had more to do with
the increase in Bell's stock price than Ceiley's "dubious" offer as the Los
Angeles Business Journal characterized it. Ceiley also implies that he is
responsible for the rise in RB&W's stock price over a five year period. Surely
Ceiley's investment in that company wasn't the sole event of any business
significance over that five year period.
Typical of a corporate raider, Ceiley thinks that the only thing that can
contribute to a stock's price is his manipulative takeover efforts. What he and
others like him disregard is the fact that a company's business performance
influences stock prices. In fact, he wants to take credit for the increase in
our Company's stock price between February and April of this year. What he
neglects to mention is that during this same period of time the Company
successfully refinanced its long-term debt, obtained a line of credit to open
new restaurants and opened its first new restaurant in four years. These events
did not go unnoticed and in January and February, the "Cheap Investor" and other
publications ran articles recommending our stock. It was immediately after these
articles that the Company's stock began rising. In fact, another point that
Ceiley chooses to ignore is that the Company's stock price was $.88 per share
the day before he announced his $.90 per share offer. Obviously, his offer had
little to do with the rise in the Company's stock price.
BISCO'S MISREPRESENTATIONS
Ceiley also makes several statements that are just plain not true. In fact, they
are materially false and libelous.
- - MISREPRESENTATION NO. 1. Ceiley says the Company has spent over
$200,000 "to take the Company away from" the shareholders.
NOT TRUE: The Company has spent a lot of money defending the interests of
all shareholders against Ceiley's hostile takeover attempt, but substantially
less than $200,000. And every cent we have spent was a direct result of Ceiley's
actions.
- - MISREPRESENTATION NO. 2. Ceiley says the Company "amended their
stock option plans to make their options immediately exercisable on the
first purchase of shares under a tender offer."
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NOT TRUE: The Company has not amended any of its stock option plans. This
is just another "scare tactic" by Ceiley where he makes a statement with no
basis in fact for the sole purpose of disparaging your Board and your Company.
- - MISREPRESENTATION NO. 3. Ceiley says "Bisco's financial resources are
strong."
NOT TRUE: Dun & Bradstreet says that Bisco is a "slow pay," often running
more than 30 days behind in payments to its suppliers, and that Bisco's payments
to suppliers "average 19 days beyond terms."
Ceiley also takes a swipe at the Board for not asking him to increase his offer
price. We had numerous conversations with Ceiley over the last two months,
(which the Board initiated, by the way). Not once did he bring up the subject of
increasing his offer price. What does he want - an engraved invitation? Mr.
Ceiley, materially increase your offer price, make it fair to ALL shareholders
and the Board will review it and make their recommendation to our shareholders.
MANAGEMENT'S OWNERSHIP
Ceiley attacks the Board and management for only owning 196,641 shares of the
Company's stock and says the Board is "more concerned with salary, benefits,
perquisites and director fees." Ceiley claims his interest is more in tune with
yours because he wants to own 3,000,000 shares of the Company's stock. Well, our
response is simple. We are not a bunch of millionaires. We have been associated
with the Company, in most cases, for less than 4 years. We are not collecting
extravagant salaries or perks. As your CEO, I have one of the lowest salaries of
any CEO of a public company in North Florida. I am the only officer who has a
car allowance. More than two-thirds of outside directors' fees in 1996 were paid
in Company stock, not cash. Does Ceiley think these benefits are extravagant? He
compares our Company to Bisco - what was his total compensation in 1996? And
since he is so proud of his investment in our Company, does he tell you that the
majority of that investment was made by his company's profit sharing plan? HE
DIDN'T PERSONALLY INVEST $500,000 IN OUR COMPANY - HE INVESTED THE PENSION AND
PROFIT SHARING FUNDS OF HIS EMPLOYEES!
BISCO'S PLANS
Ceiley continues to insist that the Board is using "scare tactics" when it
expresses its concerns regarding his plans for the Company. Then, in the very
next breath, he says that the strategic alternatives he is looking at for the
Company include "sale of restaurant business" and "sale of real estate business"
and "acquisitions and mergers." Your Board is not trying to alarm you, we are
simply trying to educate you as to Bisco's admitted strategies. You are then
free to make up your own mind whether to tender your shares and consent to his
proposals, or not.
CEILEY'S CRYSTAL BALL
Ceiley finishes his letter by looking into his crystal ball and telling you that
if you don't vote for him that the Company's stock price will immediately
collapse to $.50 per share. But if you do go along with his plans, then your
shares will be worth $1.25 before you know it. Well, I wish he would share that
crystal ball with me. My review of the facts shows that our stock was at $.88
the day before he launched his offer of $.90 per share. I also note that our
stock traded as high as $1.00 a
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share in the last 12 months. In fact, the average closing price for the 10 days
preceding Ceiley's offer was $.92 per share. He threatens a stock price of $.50
per share - and he accuses the Board of using scare tactics?
Of course, we all want to see a per share price of $1.25 or higher. We are
working hard toward that goal. Are we there yet? No. Are we closer than we were
six months ago? A year ago? Absolutely! For the first time in years, your
Company has its financial house in order and is building new restaurants again.
This should provide the foundation we need for renewed profitability and growth
in our stock price.
We believe the Company is on the right track. We appreciate all the support you
have shown us thus far. We ask for your continued support so that we can finish
the job we have started.
* Do not return the GOLD consent card sent to you by Bisco, even to vote
against their proposal. If you have already done so, please mark the
REVOCATION box on the enclosed WHITE revocation of consent card, sign
and date the form and return it in the postage-paid envelope provided.
* Do not tender your shares to Bisco. If you have already done so, you
can have your shares returned to you by completing the YELLOW Notice of
Withdrawal previously mailed to you.
* If your shares are held through a bank or broker, please contact your
representative at that firm and request the representative to execute
the WHITE revocation of consent card on your behalf.
If you require any assistance, please call our proxy solicitor, Corporate
Investor Communications, at (800) 932-8498.
Thank you.
Sincerely,
Family Steak Houses of Florida, Inc.
Lewis E. Christman, Jr.
President and CEO
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