SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--------- SECURITIES EXCHANGE ACT OF 1934 {FEE REQUIRED}
For fiscal year ended October 1, 1995
---------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 {NO FEE REQUIRED}
Commission File No: 0-14650
-------
RUDY'S RESTAURANT GROUP, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0210808
------ ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
11900 Biscayne Boulevard, Suite 806, Miami, Florida 33181
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(305) 895-7200
--------------
Registrant's fax number, including area code: (305) 895-2881
--------------
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $ .01 per share
Check 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 report(s)
and (2) has been subject to such filing requirements for the past
90 days. X Yes No
----- -----
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-KSB. [ X ]
Issuer's revenues for its most recent fiscal year: $11,091,000
<PAGE> -----------<PAGE>
The aggregate market value of the registrant's Common Stock, $.01
par value, held by non-affiliates of the registrant as of
December 15, 1995 was approximately $2,180,000 based on the
average of the bid ($1.93) and ask ($2.19) prices on that date.
As of December 15, 1995, 3,765,000 shares of the registrant's
Common Stock, $.01 par value, were outstanding.
Exhibit table is on page 39
PAGE
<PAGE>
TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT YEAR ENDED OCTOBER 1, 1995
RUDY'S RESTAURANT GROUP, INC.
PART I: Page
----
Item 1. Description of Business 3
Item 2. Description of Properties 4
Item 3. Legal Proceedings 5
Item 4.Submission of Matters to a Vote of Security Holders 5
ART II
Item 5. Market for Common Equity and Related Stockholder
Matters 5
Item 6. Management's Discussion and Analysis of Results
Of Operations 6
Item 7. Financial Statements 9
Item 8. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure 20
PART III
Item 9. Directors and Executive Officers of the
Registrant; Compliance with Section 16(a)
of the Exchange Act 20
Item 10. Executive Compensation 21
Item 11. Security Ownership of Certain Beneficial
Owners and Management 23
Item 12. Certain Relationships and Related
Transactions 24
PART IV
Item 13. Exhibits and Reports on Form 8-K 24
SIGNATURES 27
PAGE
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
-----------------------
GENERAL
Rudy's Restaurant Group, Inc. (the "Company") is a Nevada
corporation which, through its wholly-owned subsidiaries, owns
and operates six "Samurai" Japanese steak and seafood
restaurants. The Company owns 100% of the stock of The Samurai,
Inc. ("The Samurai"), Maxwell's International, Inc. ("Maxwell's")
and Rudy's Sirloin SteakBurgers, Inc. ("Rudy's").
SUBSIDIARIES
The Samurai. The Company acquired 100% of the outstanding common
stock of The Samurai from Bright Star Holding, Inc. ("BSH") in
1985. The Samurai currently owns and operates five Samurai
restaurants.
Maxwell's. The Company acquired its interest in Maxwell's from
BSH in 1985 at which time Maxwell's was operating under the
protection of Chapter 11 of the United States Bankruptcy Code.
Maxwell's assets, liabilities and results of operations were not
included in the Company's consolidated financial statements until
1989 when Maxwell's plan of reorganization was confirmed. Since
the Company did not guarantee, assume or otherwise secure any
obligations of Maxwell's prior to or at the time of Maxwell's
reorganization, Maxwell's reorganization and related legal
proceedings have not had a material effect on the financial
position of the Company.
Maxwell's currently owns and operates one Samurai restaurant.
Rudy's. The Company acquired its interest in Rudy's in 1985.
Substantially all of the assets, liabilities and operations of
this subsidiary were sold in 1991 and this subsidiary is
currently inactive.
RESTAURANT OPERATIONS
Samurai restaurants feature "teppanyaki" cooking, in which steak,
chicken, shrimp and other seafood are prepared on a grill which
forms the focal point at the center of a large table seating from
eight to ten patrons. The decor of each restaurant features a
traditional Japanese theme. The restaurants range in size from
approximately 5,000 to 10,000 square feet and include a bar and
lounge area designed to provide a casual and comfortable
atmosphere. Seating capacity ranges from 128 to 192 and averages
156 persons.
In addition to entrees prepared at the table, a variety of
Japanese appetizers are available, as are alcoholic and non-
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<PAGE>
alcoholic beverages. In addition, one restaurant has a "sushi"
bar offering various types of raw fish served either in the
traditional manner or as "sashimi".
The Samurai restaurants are open for lunch and dinner. Dinner
entrees range in price from $12.50 to $25.95; the average dinner
check is $19.70. The average luncheon check is approximately
$10.00. Sales of alcoholic beverages represent approximately
14.5% of Samurai restaurant sales.
The Samurai restaurant format includes several features which
limit costs. The "teppanyaki" table arrangement improves
efficiency of service since most seats at the table are occupied
at the same time. Service is coordinated at the table by the
presiding chef so that meals begin and end simultaneously.
Limited menu choices, portion controlled servings and preparation
of entrees at the table minimize waste, contributing to savings
in food costs. In addition, labor costs are reduced by combining
such functions as order taking, preparation and serving.
Quality and uniformity at The Samurai restaurants are maintained
through training and careful supervision of personnel. Restaurant
operations are under the general supervision of the Company's
President and Chief Operating and Financial Officer as well as
the direct supervision of The Samurai's Manager of Restaurant
Operations. Each restaurant has a head manager, assistant
managers and head chefs. The restaurants are operated in
accordance with uniform specifications, as set forth in operating
manuals, relating to food and beverage preparation, maintenance
of premises and conduct of employees. Operational reviews are
conducted periodically to ensure adherence to standards of
quality in food preparation and customer service.
Each restaurant manager is responsible for the purchase and
receipt of restaurant supplies. Food is purchased from a minimum
of two suppliers to provide a reliable source of fresh food at
competitive prices. The Company believes that many alternative
food suppliers are available.
Financial control is maintained through the use of automated data
processing, including centralized accounting and management
reports. Sales information, vendor invoices, payroll data and
other operating information are forwarded periodically to the
Company's headquarters for review and processing.
EXPANSION
Expansion, if any, is dependent upon the availability of and
competition for appropriate locations and the Company's ability
to obtain financing for the development, construction and opening
of new restaurants. See Item 6. Management's Discussion and
Analysis of Results of Operations for a discussion of a business
acquisition contemplated to be completed in fiscal 1996.
PAGE
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COMPETITION
The restaurant business is highly competitive and is affected by
changes in the public's taste and eating habits, local and
national economic conditions affecting spending habits and
population and traffic patterns. While the principal competitive
factors in the industry are the quality and price of the food
products offered, name recognition, restaurant location, service
and attractiveness of facilities are also of importance.
Since the success of the Samurai restaurants is primarily
dependent upon the continued popularity of oriental food and the
"teppanyaki" style of cooking in the communities within which the
restaurants are located, the Samurai restaurants rely heavily on
local newspaper and other forms of print media to promote its
restaurants.
GOVERNMENT REGULATION
The Company is subject to Federal, state and local laws affecting
the operation of the restaurants, including zoning, health,
sanitation and safety regulations and alcoholic beverage
licensing requirements. The suspension of a food service or
liquor license could cause an interruption of operations at the
affected restaurant.
The Company is also subject to the Federal Fair Labor Standards
Act and state and local labor regulations which govern minimum
wage, overtime and other working conditions. Accordingly, any
change in such regulations may affect the Company's results of
operations.
SERVICE MARKS
The Company has registered the service mark and related logo
designs of "Samurai" with the United States Patent and Trademark
Office. The use of these service marks, logo designs and trade
names is one factor supporting the Company's competitive position
in the industry. However, there are no assurances that the
Company will be able to exclusively utilize these trade names.
EMPLOYEES
The Company has approximately 270 employees of which 265 are
employed in restaurant operations and 5 are corporate management
and office personnel. None of the Company's employees are covered
by collective bargaining agreements.
Item 2. DESCRIPTION OF PROPERTIES
-------------------------
The Company's restaurant facilities are leased pursuant to long-
term lease agreements. The following table identifies certain
information with respect to each of the Company's restaurants as
of October 1, 1995. PAGE
<PAGE>
SIZE LEASE
LOCATION (sq ft) Expiration Date
-------- ------ ----------------
Pittsburgh, Pennsylvania 8,000 2001
Cleveland, Ohio 10,392 2004
Cincinnati, Ohio 5,000 1997
Minneapolis, Minnesota 10,000 2000
Miami, Florida 7,500 2006
Washington, D.C. 7,761 2002
The lease year shown is that of the current term, including
exercised renewal options. All leases contain options to renew
ranging between one to three 5-year terms. Aggregate minimum
rentals payable by the Company under operating leases in fiscal
1996 will approximate $675,000. Certain leases also require
additional rental payments based on restaurant sales as well as
real estate taxes, insurance, common area charges and other
costs.
Item 3. LEGAL PROCEEDINGS
-----------------
Garry A. Tyson, Plaintiff vs. The Samurai, Inc., Ysmael (Mike)
--------------------------------------------------------------
Vinas, and Alcide LIpar, Defendants, United States District Court
-----------------------------------------------------------------
for the Northern District of Ohio, Eastern Division, Civil Action
-----------------------------------------------------------------
Number 1:95CV1060.
------------------
In May 1995 the Company's Samurai subsidiary and certain
employees of The Samurai were named defendants in a lawsuit
alleging discrimination under the Civil Rights Act of 1870, 42
U.S.C. 1981, as amended (1992 Supp).
Although the Company believes that the claims as set forth in the
complaint are without merit, due to the prohibitive costs of
defending such allegations, in September 1995 the Company and
Plaintiff entered into a Settlement Agreement wherein, in return
for certain monetary consideration, the Plaintiff agreed to
release all existing claims against the Company and its
employees. Pursuant to the terms of the Agreement the complaint
was dismissed in September 1995. The costs of settlement,
including legal fees incurred, totalled approximately $50,000.
Accordingly, the Company recorded a nonrecurring charge of
$50,000, included in the accompanying statements of operations as
non-operating expense.
Although the Company is not currently a party to any significant
ongoing legal proceedings, the Company is subject to such legal
proceedings and claims as may arise in the ordinary course of its
business that cover a wide range of matters, including but not
limited to such matters as workers compensation, general
PAGE
<PAGE>
liability and products liability claims. Because the Company
carries comprehensive insurance to assist in limiting the
Company's exposure to financial loss as a result of substantially
all claims as may arise in the normal course of business, such
proceedings and/or claims will not, in the opinion of management
based upon the information it presently possesses, have a
material adverse effect on the financial position of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------
The common stock of Rudy's Restaurant Group, Inc. is quoted on
the NASD electronic bulletin board system under the symbol:
"RUDY". The following sets forth the high and low ask and bid
quotations for the Common Stock of the Company. Quotations do not
include retail markups or commissions and do not necessarily
reflect actual transactions.
Quarter
Beginning Ending Ask Bid
--------- -------- ----- -----
Fiscal 1994: First Quarter 10/4/93 12/26/93 $ .38 $ .12
Second Quarter 12/27/93 3/20/94 $ .37 $ .18
Third Quarter 3/21/94 6/12/94 $ .62 $ .18
Fourth Quarter 6/13/94 10/2/94 $ .64 $ .44
Fiscal 1995: First Quarter 10/3/94 12/25/94 $ .63 $ .31
Second Quarter 12/26/94 3/19/95 $ .60 $ .38
Third Quarter 3/20/95 6/11/95 $ .62 $ .44
Fourth Quarter 6/12/95 10/1/95 $1.03 $ .56
The Company estimates there were approximately 380 holders of
record of the Common Stock of the Company and that the total
number of beneficial holders is in excess of 500 at October 1,
1995. The Company's policy is to retain all available earnings
for the development and growth of its business. Accordingly, the
Company does not contemplate payment of dividends within the
foreseeable future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS
---------------------------------------------------
The consolidated financial statements and related footnotes
should be read in conjunction with the following discussion and
analysis.
Fiscal 1995 Business Overview.
------------------------------
Restaurant revenues, expenses and earnings are dependent upon a
PAGE
<PAGE>
number of factors, including the number of operating restaurants
and the level of restaurant patronage, both in number of guests
served and average check. As more fully discussed below, the
Company's 1995 revenues, net income and earnings per share
increased as a result of both an increase in the number of
restaurants operating during the year and increased restaurant
patronage.
Subsequent Event. In December 1995, through it's Maxwell's
subsidiary, the Company signed an Asset Purchase and Sale
Agreement (the "Agreement") to acquire substantially all of the
assets and business operations of four Japanese steak and seafood
restaurants owned by Asian Restaurants International, Inc. for a
total of approximately $2,400,000 including the cost of a non-
compete and consulting agreement.
The acquisition of the assets and business operations is subject
to various conditions, including, but not limited to, inspections
of the properties and the books and records. The Company expects
this acquisition, which will be treated as a purchase, will be
completed in the second quarter of the Company's 1996 fiscal
year. See Note 10 to the Company's financial statements for
additional information on this proposed acquisition as well as an
unaudited pro forma condensed balance sheet which gives effect to
the acquisition as if it had occurred at October 1, 1995 and
unaudited pro forma consolidated results of operations presented
as though the acquisition had occurred on October 3, 1993.
Inflation. The impact of inflation on the Company's operating
results has not been significant due to lower inflation rates
experienced in the years covered in this discussion.
Federal, State and Local Regulations. The Company presently pays
a significant portion of its employees in excess of the Federal
minimum wage. In addition, a large number of the Company's
employees are tipped employees whose wages are subject to the
Federal tip credit. Therefore, changes in the Federal minimum
wage have not historically had as significant an impact on the
Company's results of operations as might otherwise be expected.
The restaurant business is highly labor intensive. Although the
Company currently provides health insurance to its employees,
management believes the government's introduction of a national
health care program which would require employers to pay a
significant portion of employee health care costs would have a
significant impact on the Company's results of operations.
With the exception of the newly rebuilt Miami Samurai, the
Company's restaurant facilities were built prior to the enactment
of Federal regulations regarding equal opportunity for
individuals with disabilities, the Americans with Disabilities
Act, "ADA". The ADA includes certain requirements to alter public
facilities, including restaurants, as necessary to make
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facilities accessible to and useable by individuals with
disabilities. Although Federal regulations consider the cost of
alterations and the overall financial resources of the Company in
determining the nature and timing of compliance, the cost of such
alterations could have a significant impact on the Company's cash
flow. The Company is proceeding with required alterations as soon
as reasonably economically feasible.
Liquidity and Capital Resources
-------------------------------
Net cash provided by operating activities is $1,424,000 in 1995
as compared to $696,000 in 1994. Cash and cash equivalents total
$1,477,000 at the end of fiscal 1995 as compared to $341,000 at
the end of 1994. At October 1, 1995 the Company had a working
capital surplus of $808,000 as compared to a deficit of $186,000
at October 2, 1994. The primary factors contributing to the
improvement in working capital and increase in cash and cash flow
in 1995 are payments made in 1994 to reduce the Company's
indebtedness to related parties (total $512,100) and the Miami
Samurai restaurant reconstruction costs paid in 1994 (see
discussion below).
Capital expenditures in 1995 total $283,000. The Company
estimates that, including estimated costs of renovation to
accommodate compliance with ADA regulations, capital expenditures
to be funded out of cash flow from operating activities will
approximate $400,000 in fiscal 1996.
The Company is seeking to expand through the acquisition of
operating restaurants as such opportunities become available. As
discussed above, in December 1995 the Company entered into an
Agreement which, if completed pursuant to the terms of the
Agreement, will require cash outlays of approximately $600,000,
excluding expenses associated with the acquisition. This
acquisition, if completed is expected to have a significant
effect on the Company's cash flow and results of operations. See
Note 10 to the Company's financial statements for additional
information on this proposed acquisition as well as an unaudited
pro forma condensed balance sheet which gives effect to the
acquisition as if it had occurred at October 1, 1995 and
unaudited pro forma consolidated results of operations presented
as though the acquisition had occurred on October 3, 1993.
The Company adopted SFAS No. 109 "Accounting for Income Taxes" in
the 1994 fiscal year. The adoption of this statement did not have
a material impact on financial position and results of operations
of the Company in fiscal 1995 or 1994.
Year to Year Comparison of Results of Operations for the Years
Ended October 1, 1995 and October 2, 1994
---------------------------------------------------------------
Revenues. The Company suffered the loss of its most profitable
restaurant when Hurricane Andrew struck South Florida in August
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1992. When the restaurant reopened in March 1994, long pent-up
demand resulted in unusually high sales which did not level off
to more normal levels until the beginning of fiscal 1995. Thus,
while fiscal 1995 operations include the operations of six
restaurants for a full year, fiscal 1995 operations include the
operations of five restaurants for the first six months of the
fiscal year and six restaurants for the balance of the year. The
effect of the Miami restaurant's reopening in the following
discussion has been excluded where appropriate for a clear
presentation of current year operations.
While the Company's fiscal 1995 total revenues increased over 14%
when compared to 1994, same-restaurant revenues increased 4.9%,
including a 2.9% increase in average check and a 2% increase in
customer covers as compared to 1994. The increase in average
check is the result of a combination of price increases which
went into effect in 1995 and changes in customer eating habits to
more expensive items.
The restaurant business is highly competitive, affected by
changes in the public's eating habits and customer perception of
current economic circumstances. Further, because of the limited
number and diverse geographic location of its restaurants, it is
not economically beneficial for the Company to use extensive
mass-media advertising available to larger restaurant companies.
Therefore, management does not consider the increase in customer
covers indicative of a trend but rather the result of the mild
improvement in the national economy in fiscal 1995.
Costs and expenses variable with revenues. Costs and expenses
variable with revenues increased 1% as a percent of revenues in
fiscal 1995 compared to fiscal 1994. The 1% increase in these
costs and expenses is the result of a .6% increase in food,
beverage and supplies costs and a .4% increase in labor and
related benefit costs.
The cost of seafood, meat and chicken, the major components of
the Company's food, beverage and supplies costs, varies with
supply and demand and other market conditions. The increase in
food, beverage and supplies costs is due primarily to seafood
costs which increased approximately 10% in 1995 and meat and
chicken costs which increased approximately 7.5% in 1995.
Labor and related benefit costs increased primarily due to base
wage rates which were adjusted throughout the year to give effect
to current costs of living and prevailing local wage scales.
Expenses of restaurant operations: General operations. General
operations expense includes restaurant management and
supervision, occupancy costs, repairs and maintenance, utilities,
advertising, and insurance. A substantial portion of these
expenses vary with revenues. These expenses increased $253,000 in
1995 due primarily to expenses for the full year at the Miami
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restaurant. General operations expense as a percent of revenues
declined 1.5% to 29.3% of revenues in 1995 compared to 30.8% of
revenues in 1994.
Significant general operations cost savings were achieved in 1995
through 1) modifications in the Company's advertising program
which resulted in a $21,000 decrease in advertising expense and
2) a restructuring of the Company's insurance program,
specifically with regards to general liability insurance which
declined over $42,000 in 1995 compared to 1994.
General supplies costs increased $56,000, due to higher sales
volume and costs associated with restocking china and glassware
with new designs; occupancy costs increased approximately $28,000
due to higher rents incurred as certain rent abatements
negotiated in 1992 expired as well as increases in contingent
rentals due to increased revenues.
Corporate overhead: General and administrative expenses. General
and administrative expenses did not change significantly in 1995
compared to 1994.
Interest Expense. Interest expense decreased $38,700 in 1995
compared to 1994 as a result of the reduction in the Company's
indebtedness discussed below.
Non-operating (expense) income. Settlement costs and expenses
(fiscal 1995). In May 1995 the Company's Samurai subsidiary and
certain employees of The Samurai were named defendants in a
lawsuit alleging discrimination under the Civil Rights Act of
1870, 42 U.S.C. 1981, as amended (1992 Supp).
Although the Company believes that the claims as set forth in the
complaint are without merit, due to the prohibitive costs of
defending such allegations, in September 1995 the Company and
Plaintiff entered into a Settlement Agreement wherein, in return
for certain monetary consideration, the Plaintiff agreed to
release all existing claims against the Company and its
employees. Pursuant to the terms of the Agreement the complaint
was dismissed in September 1995. The costs of settlement,
including legal fees incurred, totalled approximately $50,000.
Accordingly, the Company recorded a nonrecurring charge of
$50,000, included in the accompanying statements of operations as
non-operating expense.
Although the Company is not currently a party to any significant
ongoing legal proceedings, the Company is subject to such legal
proceedings and claims as may arise in the ordinary course of its
business that cover a wide range of matters, including but not
limited to such matters as workers compensation, general
liability and products liability claims. Because the Company
carries comprehensive insurance to assist in limiting the
Company's exposure to financial loss as a result of substantially
PAGE
<PAGE>
all claims as may arise in the normal course of business, such
proceedings and/or claims will not, in the opinion of management
based upon the information it presently possesses, have a
material adverse effect on the financial position of the Company.
Loss on guaranty to related parties (fiscal 1994). As previously
disclosed, in connection with the acquisition of the Company's
Rudy's subsidiary in 1985 the Company guaranteed payment of
certain obligations of BSH to the former owners of Rudy's,
including Douglas M. Rudolph (the "Rudolph Obligations").
BSH had been in default under certain of the Rudolph Obligations
since 1989. However, until and through December 1993, BSH owned
certain assets which, upon disposition, were expected to provide
BSH with resources to pay the Rudolph Obligations in full or in
part. In April 1994 BSH advised the Company that it had completed
the sale of one of its most significant assets at far below
expectations and distributed $15,000 from that sale to Mr.
Rudolph in payment of the Rudolph Obligations. Since the asset
sold by BSH was one of BSH's most significant sources of funds
from which payments to creditors could be expected, the Company
determined that future funds available to BSH to reduce the
Rudolph Obligations guaranteed by the Company, if any, will be
limited. As a result of this determination, in May 1994 the
Company and Mr. Rudolph entered into an agreement wherein the
Company's obligation under its guaranty was fixed at $584,800, of
which the Company had previously recorded $150,500. Accordingly,
fiscal 1994 operations include a loss on guaranty to related
parties of $434,300.
The terms of the agreement between the Company and Mr. Rudolph
required the Company to pay Mr. Rudolph a minimum of $230,000 in
1994. However, in order to minimize potential corporate tax
liability, the Company paid Mr. Rudolph a total of $512,100 in
fiscal 1994, including $334,300 principal and $177,800 accrued
interest.
Pursuant to the terms of the agreement between the Company and
Mr. Rudolph, interest is accrued at 7% on the remaining balance.
Interest expense on amounts due Mr. Rudolph totalled $5,000 in
1995 and $37,900 in 1994.
Subject to certain conditions, including a change in control of
the Company, Mr. Rudolph has agreed to waive his rights to demand
additional payment under the Company's guaranty until July 1996.
In addition the Company has agreed to waive its rights to make
future claims against the common stock of the Company presently
or previously held by BSH. The Company's guaranty of payment of
the balance due under the Rudolph Obligations, $106,000 at
December 15, 1995, is secured by substantially all of the assets
of the Company, including but not limited to the stock of the
Company's Samurai subsidiary. The Company intends to reduce the
balance due Mr. Rudolph as cash flow permits. Accordingly, the
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remaining outstanding balance, $105,000 at October 1, 1995, has
been classified as a current liability in the financial
statements.
Insurance recovery from business interruption (fiscal 1994). Non-
operating (expense) income in 1994 includes insurance proceeds
from business interruption insurance equal to estimated profits
lost as a result of Hurricane Andrew, net of continuing expenses.
Insurance proceeds received attributable to business
interruption, reduced by continuing expenses, were recognized as
income over the time period the restaurant was closed for
renovation. Insurance proceeds recognized as revenue attributable
to business interruption, net of continuing expenses totalled
$122,500 in fiscal 1994.
Item 7. FINANCIAL STATEMENTS
--------------------
The following documents are filed on the pages listed below,
as part of Part II, Item 7 of this report:
Page
Independent Auditors' Report 15
Consolidated Financial Statements:
Balance Sheets - October 1, 1995 and October 2, 1994 16
Statements of Operations - Years ended October 1, 1995
and October 2, 1994 17
Statements of Stockholders' Equity - Years ended
October 1, 1995 and October 2, 1994 18
Statements of Cash Flows - Years ended October 1, 1995
and October 2, 1994 19
Notes to Consolidated Financial Statements 20
PAGE
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Rudy's Restaurant Group, Inc.
We have audited the accompanying consolidated balance sheets of
Rudy's Restaurant Group, Inc. and Subsidiaries (the "Company") as
of October 1, 1995 and October 2, 1994, and the related
consolidated statements of operations, stockholders' equity, and
cash flows for each of the two years in the period ended October
1, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on the financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as of October 1, 1995 and October 2, 1994, and the
results of their operations and their cash flows for each of the
two years in the period ended October 1, 1995 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
December 15, 1995
(December 26, 1995 as to Note 10)
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RUDY'S RESTAURANT GROUP, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
October 1, 1995 and
October 2, 1994
<TABLE>
<S> <C> <C>
Assets 1995 1994
------ ------------ -------------
Current Assets:
Cash and cash equivalents $ 1,476,652 $ 341,477
Accounts receivable (Note 4) 5,915 8,113
Inventories 162,685 153,222
Prepaid expenses 107,924 103,779
------------ -------------
Total current assets 1,753,176 606,591
------------ -------------
Property and Equipment, net
(Notes 2 and 3) 2,094,841 2,076,434
Goodwill, net of accumulated
amortization of $309,441
at October 1, 1995 and
$288,464 at October 2, 1994 529,658 550,635
Other assets (Note 4) 204,783 204,401
------------ ------------
$ 4,582,458 $ 3,438,061
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Due to related parties (Note 8) $ 105,076 $ 100,000
Accounts payable and accrued
expenses (Notes 5 and 7) 840,364 692,774
------------ -------------
Total current liabilities 945,440 792,774
------------ -------------
Total liabilities 945,440 792,774
------------ -------------
Legal proceedings, commitments,
contingencies and related party
transactions (Notes 3, 8, 9 and 10)
Stockholders' Equity:
Preferred stock, $.01 par value.
Authorized 10,000,000 shares,
none issued.
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<PAGE>
Common stock, $.01 par value.
Authorized 30,000,000 shares;
issued and outstanding 3,520,000
shares (Notes 6 and 8) 35,200 35,200
Paid-in capital 17,823,603 17,823,603
Accumulated (deficit) (14,221,785) (15,213,516)
------------ ------------
Net stockholders' equity 3,637,018 2,645,287
------------ ------------
$ 4,582,458 $ 3,438,061
============ ============
<FN> See accompanying notes to consolidated financial statements.
</TABLE>
PAGE
<PAGE>
RUDY'S RESTAURANT GROUP, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended October 1, 1995 and October 2, 1994
<TABLE>
<S> <C> <C>
1995 1994
Revenues: ------------- ------------
Net sales $ 11,052,603 $ 9,664,379
Other income 38,273 56,796
------------- ------------
Total revenues 11,090,876 9,721,175
------------- ------------
Costs and expenses variable with revenues:
Food, beverage and supplies 3,267,129 2,809,674
Labor and related costs 2,684,946 2,316,097
Total costs and expenses variable with ------------- -----------
revenues 5,952,075 5,125,771
------------- ------------
Costs and expenses of restaurant operations:
General operations 3,251,503 2,998,114
Depreciation and amortization 243,852 170,217
------------- ------------
Total costs and expenses of restaurant
operations 3,495,355 3,168,331
------------- ------------
Earnings from restaurant operations 1,643,446 1,427,073
------------- ------------
Corporate overhead:
General and administrative expenses 516,354 517,489
Depreciation and amortization 32,685 32,191
Interest expense 6,126 44,864
------------- -------------
Total corporate overhead 555,165 594,544
------------- -------------
Non-Operating (expense) income:
Settlement cost and expense (Note 9) (50,000) ---
(Loss) on guaranty (Note 8) --- (434,312)
(Loss) on retirement of assets (550) (3,743)
Insurance recovery from business
interruption (Note 2) --- 122,465
------------ -------------
Total non-operating (expense) income (50,550) (315,590)
------------ -------------
Income before income taxes 1,037,731 516,939
Income tax expense (Note 7) 46,000 65,000
-------------- ------------
Net Income $ 991,731 $ 451,939
============== ============
PAGE
<PAGE>
Primary earnings per share $ .27 $ .12
============== ============
Fully diluted earnings per share $ .26 $ .12
============== ============
Weighted average number of common shares
and common equivalent shares outstanding 3,718,358 3,716,172
============== ============
<FN> See accompanying notes to consolidated financial statements.
</TABLE>
PAGE
<PAGE>
RUDY'S RESTAURANT GROUP, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended October 1, 1995 and October 2, 1994
<TABLE>
<S> <C> <C> <C> <C>
Net
Stock-
Common Paid-in Accumulated holders'
Stock Capital (Deficit) Equity
-------- ------------ ------------- - ----------
Balance October 3, 1993 $ 35,200 $ 17,823,603 $(15,665,455) $ 2,193,348
Net Income --- --- 451,939 451,939
-------- ------------ ------------- -----------
Balance October 2, 1994 35,200 17,823,603 (15,213,516) 2,645,287
Net Income --- --- 991,731 991,731
-------- ------------ ------------- -----------
Balance October 1, 1995 $ 35,200 $ 17,823,603 $(14,221,785) $ 3,637,018
======== ============ ============= ===========
<FN> See accompanying notes to consolidated financial statements.
</TABLE>
PAGE
<PAGE>
RUDY'S RESTAURANT GROUP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended October 1, 1995 and October 2, 1994
<TABLE>
<S> <C> <C>
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES: ------------ -------------
Net income $ 991,731 $ 451,939
Non-cash items:
Depreciation and amortization 276,536 212,171
Loss on retirement of assets 550 3,743
Loss on guaranty to related parties --- 434,312
Changes in assets and liabilities:
Decrease in accounts receivable 2,198 10,017
Decrease in due from affiliate --- 18,368
(Increase) in inventories (9,463) (46,656)
(Increase) in prepaid expenses and other assets (4,144) (11,223)
Increase/(Decrease) in accounts payable and
accrued expenses 161,999 (59,132)
(Decrease) in deferred income --- (177,157)
Increase/(Decrease) in indebtedness to related
parties 5,076 (139,936)
------------- ---------------
Total adjustments 432,752 244,507
------------- ---------------
Net cash provided by operating activities 1,424,483 696,446
------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Insurance recovery of property losses --- 409,157
Proceeds from disposal of assets --- 100
Capital expenditures (282,794) (1,184,361)
Principal received on purchase money note
receivable --- 293,042
Increase in other assets (6,514) (38,438)
------------- -------------
Net cash (used in) investing activities (289,308) (520,500)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of debt --- (13,178)
Payments on guaranty to related parties --- (334,312)
------------- -------------
Net cash (used in) financing activities --- (347,490)
------------- -------------
Net Increase/(Decrease) in Cash and
Cash Equivalents 1,135,175 (171,544)
Cash and Cash Equivalents, Beginning of Year 341,477 513,021
------------- --------------
Cash and Cash Equivalents, End of Year $ 1,476,652 341,477
============ ==============
PAGE
<PAGE>
Supplemental disclosures of cash flow information
Cash paid for:
Interest $ 6,000 $ 185,000
============= ============
Income taxes $ 42,000 $ 66,000
============= ============
Accrued and unpaid asset additions at year end $ 16,300 $ 30,700
============= ============
<FN> See accompanying notes to consolidated financial statements.
</TABLE>
PAGE
<PAGE>
RUDY'S RESTAURANT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Business. Rudy's Restaurant Group, Inc. (the
"Company"), is a Nevada corporation which, through its wholly-
owned subsidiaries, owns and operates six Samurai Japanese steak
and seafood restaurants. The Company owns 100% of the stock of
The Samurai, Inc. ("The Samurai"), Maxwell's International Inc.
("Maxwell's") and Rudy's Sirloin SteakBurgers, Inc. ("Rudy's").
The Company's fiscal year includes either 52 or 53 weeks
consisting of 13 four-week accounting periods or 12 four-week
accounting periods and 1 five-week accounting period, ending on
the Sunday closest to September 30. Fiscal years 1995 and 1994
include 52 weeks of operations.
Principles of Consolidation. The consolidated financial
statements include the accounts of the Company and its wholly-
owned subsidiaries. All material intercompany transactions are
eliminated in consolidation.
Cash Equivalents. The Company considers all highly liquid debt
instruments with an initial maturity of three months or less to
be cash equivalents for purposes of the statements of cash flows.
Inventories. Inventories, consisting primarily of food,
beverages and restaurant supplies, are stated at the lower of
cost (first-in, first-out method) or market.
Property and Equipment. Property and equipment are stated at
cost. Depreciation and amortization are provided on a straight-
line method over the lesser of the estimated useful life of the
asset or the remaining term of the lease.
Goodwill. The Company evaluates the propriety of goodwill, the
excess of the purchase value of net tangible assets of acquired
businesses over recorded value, and the related amortization
policy periodically by review of many factors including current
operating trends, the value of intangibles held by the Company
such as trademarks and leasehold interests, and the current
national economy particularly as it relates to the Company's
business plan and operations. The Company's policy is to amortize
goodwill using the straight-line method over forty (40) years.
Under the current policy goodwill will be fully amortized in the
year 2021.
Income Taxes. The Company adopted SFAS No. 109 - "Accounting for
Income Taxes", in fiscal year 1994. The adoption of this
statement did not have a material effect on the financial
position and results of operations of the Company.
PAGE
<PAGE>
Earnings Per Share. Earnings per share is calculated using the
weighted average number of shares of common stock outstanding and
common stock equivalents if dilutive.
Reclassifications. Certain items have been reclassified in the
1994 fiscal year statement of operations to conform with the
fiscal 1995 presentation.
NOTE 2: PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
1995 1994 Useful lives
----------- ----------- ------------
Leasehold improvements $ 3,151,918 $ 3,133,941 3 - 25 yrs
Restaurant equipment 1,573,427 1,412,475 3 - 7 yrs
Office equipment 157,907 162,295 3 - 7 yrs
Other 259,638 250,572 2 - 7 yrs
----------- ----------- ------------
5,142,890 4,959,283
Accumulated depreciation
and amortization 3,048,049 2,882,849
----------- -----------
$ 2,094,841 $ 2,076,434
=========== ===========
The Company suffered the almost complete destruction of its Miami
restaurant when Hurricane Andrew struck South Florida in August
1992. As a result of this loss, the Company received insurance
proceeds of approximately $692,500 attributable to business
interruption. Insurance proceeds attributable to business
interruption, net of continuing expenses, were recognized as
income while the restaurant was closed for reconstruction. The
restaurant reopened March 1994. Insurance proceeds attributable
to business interruption, net of continuing expenses, totalled
$122,500 in fiscal 1994. The total cost to reconstruct the
restaurant was $1,430,000.
NOTE 3: LEASES
The Company leases land, restaurant buildings and other
facilities under noncancellable operating leases expiring at
varying times through 2011. Lease agreements frequently include
renewal options and require the Company to pay all expenses
related to the property. Certain leases include provisions for
contingent rentals based on a percent of sales. Future minimum
lease payments under noncancellable leases as of October 1, 1995
are as follows:
Fiscal Year Operating
Ending Leases
----------- -----------
1996 $ 675,456
PAGE
<PAGE>
1997 700,457
1998 662,889
1999 647,551
2000 657,551
Thereafter, through 2011 2,861,144
-----------
$ 6,205,048
===========
Rent expense is summarized as follows:
1995 1994
--------- -----------
Minimum rentals $ 648,485 $ 604,614
Contingent rentals 91,080 83,948
--------- -----------
Total rent expense $ 739,565 $ 688,562
========= ===========
NOTE 4: ACCOUNTS RECEIVABLE AND OTHER ASSETS
Accounts receivable consists of credit card and other
receivables.
Other assets consist of the following:
1995 1994
--------- -----------
Liquor licenses, net of accumulated
amortization of $31,225 and $28,656
at 10/1/95 and 10/2/94, respectively $ 71,534 $ 74,103
Restaurant supplies 80,577 74,063
Deposits and other 52,672 56,235
--------- -----------
$ 204,783 $ 204,401
========= ===========
NOTE 5: ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses are summarized as follows:
1995 1994
--------- ---------
Trade accounts payable $ 372,409 $ 279,824
Sales and property taxes 8,031 5,425
Accrued payroll and related costs 226,064 223,006
Rent 90,866 52,551
State and local income taxes 39,367 35,170
Gift certificates payable 23,130 21,385
Professional fees 23,805 28,801
Insurance 39,634 32,403
Other 17,058 14,209
--------- ---------
$ 840,364 $ 692,774
========= =========
NOTE 6: CAPITAL STOCK
PAGE
<PAGE>
The Company's 1985 Employee Stock Option Plan, as amended (the
"Plan") terminated in May 1995. The Plan provided that options to
purchase up to 600,000 shares of the Company's common stock may
be granted. The Plan was designed so that either options intended
to satisfy the requirements of the Internal Revenue Code with
respect to "Incentive Stock Options" ("ISO's") or options that
are not intended to satisfy such requirements ("Non ISO's") may
be granted. Exercise prices for the options ranged from 100% to
110% of the fair market value of the Company's common stock, with
the option price dependent upon whether the option was qualified
as an ISO and whether the optionee had prior holdings in excess
of 10% of the outstanding common stock at the time of the grant.
The following summarizes stock option transactions for fiscal
years ended 1995 and 1994:
Options outstanding October 3, 1993 266,656 $ .10 - $
4.63
Expired (8,531) $
2.76
Options outstanding at October 2, 1994 258,125 $ .10 - $
4.63
Expired (13,125) $ 1.23 - $
4.63
--------
Outstanding and exercisable options
at October 1, 1995 245,000 $ .10 - $
.15
=========
No options had been exercised at October 1, 1995. All outstanding
options were exercised in December 1995 (see Note 8).
NOTE 7: INCOME TAXES
The Company adopted SFAS No. 109 "Accounting for Income Taxes" in
fiscal 1994. Under SFAS No. 109, the effect of a change in tax
rates is recognized for the tax consequences of temporary
differences between book and taxable income in the period that
includes the enactment date of the tax rate change. Deferred tax
liabilities are recognized for future taxable amounts and
deferred tax assets are recognized for future deductions and
operating loss carryforwards. A valuation allowance is recognized
to reduce net deferred tax assets to amounts that are more likely
than not to be realized.
The Company and its subsidiaries file a consolidated Federal
income tax return. The Company's tax loss carryforwards total
approximately $8,200,000, expiring 2001 through 2007. The Company
also has certain unused business tax credits totalling
approximately $170,000 which arose in fiscal 1995, 1994 and prior
to 1989. The Company's unused business tax credits are limited by
Federal regulation and expire in 1996 through 2010.
The Company's Maxwell subsidiary has approximately $6,000,000 tax<PAGE>
loss carryforwards in addition to the Company's consolidated tax
loss carryovers. These losses arose in 1982 through 1986, are
limited by Federal regulation and expire in 1997 through 2001.
Maxwell's deferred tax assets total approximately $2,000,000;
none
<PAGE>
of which have been recorded in the financial statements of the
Company due to the uncertainties associated with the realization
of tax benefits from the utilization of limited tax loss
carryforwards.
The Company's deferred tax assets (excluding Maxwell's) total
approximately $2,980,000 related to tax loss carryforwards and
unused business tax credit carryforwards. The Company's deferred
tax liabilities total approximately $180,000 related to
accelerated depreciation for tax purposes. No deferred tax assets
or deferred tax liabilities have been recognized as a result of
the Company's valuation allowance (total $2,800,000) established
to reflect uncertainties associated with realization of tax
benefits from the utilization of existing tax loss carryforwards
and unused business tax credits.
Income tax expense (benefit) includes the following:
Fiscal Years Ended
-----------------------
1995 1994
--------- ---------
Current State and local income taxes $ 106,900 $ 90,100
Utilization of net operating loss
carryforward (74,400) (30,100)
Federal income tax expense 337,100 157,300
Utilization of net operating loss
carryforward (323,600) (152,300)
---------- ---------
Income Tax Expense $ 46,000 $ 65,000
========== ==========
The actual income tax rate for income differs from the expected
statutory Federal income tax rate of 34% as follows:
Fiscal Years Ended
------------------
1995 1994
---------- ----------
Expected Federal tax provision at
statutory rate $ 352,800 $ 175,800
Increase (decrease) in income
taxes resulting from:<PAGE>
State and local income taxes, net
of Federal tax benefit 70,600 59,500
Tax effect of non-deductible items 7,100 7,100
Alternative minimum tax 13,500 5,000
Change in Valuation:
Tax benefits of utilization of
net operating loss carryforwards (398,000) (182,400)
--------- ---------
$ 46,000 $ 65,000
========= =========
<PAGE>
Income taxes due currently and included in current liabilities,
net of estimated taxes paid, total $39,400.
NOTE 8: RELATED PARTY TRANSACTIONS AND GUARANTEES
Change in Control. Through June 1993 Bright Star Holding, Inc.
("BSH") owned 59.1% of the Company's common stock, and BSH's
holdings in the common stock of the Company were held as
collateral to secure certain of BSH's obligations to its major
creditor, Chemical Bank, N.A. New York ("Chemical"). In April
1990 the Company, BSH, Chemical and certain of the Company's
directors entered into an agreement whereby the Company was
released from all guarantees to Chemical.
In June 1993 Chemical agreed to release the Company's stock held
as collateral for BSH's indebtedness and BSH agreed to sell
1,467,000 of the 2,080,000 shares released by Chemical to Douglas
M. Rudolph, a director, Chairman of the Company's Board of
Directors and President of the Company ("Mr. Rudolph"). As a
result of these transactions at October 2, 1994 Mr. Rudolph owned
56.3% of the Company's then outstanding common stock. During
fiscal 1995 Mr. Rudolph sold 100,000 shares of stock and in
December 1995 Mr. Rudolph exercised options granted in 1992 to
purchase 200,000 shares of common stock under the employee stock
option plan (see Note 6). Mr. Rudolph held 53.4% of the Company's
outstanding common stock at October 1, 1995 and 55.3% of the
Company's common stock at December 15, 1995. BSH holds 12.8% and
11.9% of the Company's outstanding common stock at October 1,
1995 and December 15, 1995, respectively.
Transactions with Majority Shareholder, Officer and Director.
Guarantees. In connection with the acquisition of Rudy's in 1985,
the Company guaranteed payment of certain obligations of BSH to
the former owners of Rudy's, including Mr. Rudolph (the "Rudolph
Obligations"). BSH had been in default under certain of the
Rudolph Obligations since 1989. However, until and through
December 1993, BSH owned certain assets which, upon disposition,
were expected to provide BSH with resources to pay the Rudolph
Obligations in full or in part. In April 1994 BSH advised the
Company that it had completed the sale of one of its most
significant assets at far below expectations and distributed
$15,000 from that sale to Mr. Rudolph in payment of the Rudolph
Obligations. Since the asset sold by BSH was one of BSH's most<PAGE>
significant sources of funds from which payments to creditors
could be expected, the Company determined that future funds
available to BSH to reduce the Rudolph Obligations guaranteed by
the Company, if any, will be limited. As a result of this
determination, in May 1994 the Company and Mr. Rudolph entered
into an agreement wherein the Company's obligation under its
guaranty was fixed at $584,813, of which the Company had
previously recorded $150,501. Accordingly, fiscal 1994 operations
include a loss of $434,312 as a loss on guaranty to related
parties.
<PAGE>
The terms of the agreement between the Company and Mr. Rudolph
required the Company to pay Mr. Rudolph a minimum of $230,000 in
1994. However, in order to minimize potential corporate tax
liability, the Company paid Mr. Rudolph a total of $512,100 in
fiscal 1994, including $334,300 principal and $177,800 accrued
interest. Interest is accrued at 7% on the outstanding principal
balance due. Interest on amounts due Mr. Rudolph totalled $5,000
in 1995 and $37,900 in 1994.
Subject to certain conditions, including a change in control of
the Company, Mr. Rudolph agreed to waive his rights to demand
additional payment under the Company's guaranty until July 1996
and the Company has agreed to waive its rights to make future
claims against the common stock of the Company presently or
previously held by BSH. The Company intends to reduce the balance
due Mr. Rudolph as cash flow permits. Accordingly, the remaining
outstanding balance, $105,076 at October 1, 1995, has been
classified as a current liability in the financial statements.
Employment Agreement. The Company has an employment agreement
with Mr. Rudolph and a consulting agreement with a company wholly
owned by Mr. Rudolph. These agreements provide a total annual
compensation of $150,000, a possible incentive bonus up to
$100,000 annually to be determined by the board of directors, and
reimbursements for certain expenses incurred. No bonus was
awarded in fiscal 1995 or 1994. Amounts paid or accrued under
these agreements and for continuing services rendered and
expenses incurred totalled $160,800 in 1995 and 1994.
Transactions with BSH. Prior to 1990 the Company and BSH entered
into numerous intercompany transactions resulting in a balance
due the Company by BSH of $18,400 at October 3, 1993, of which
$2,800 was received in fiscal 1994. The balance, $15,600, was
included in general and administrative expense in fiscal 1994.
Other. Each director receives an annual fee of $12,000 plus
$1,000 per meeting attended. Director fees and costs totalled
$36,000 in 1995 and 1994.
NOTE 9: LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES
In May 1995 the Company's Samurai subsidiary and certain<PAGE>
employees of The Samurai were named defendants in a lawsuit
alleging discrimination under the Civil Rights Act of 1870, 42
U.S.C. 1981, as amended (1992 Supp).
Although the Company believes that the claims as set forth in the
complaint are without merit, due to the prohibitive costs of
defending such allegations, in September 1995 the Company and
Plaintiff entered into a Settlement Agreement wherein, in return
for certain monetary consideration, the Plaintiff agreed to
release all existing claims against the Company and its
employees. Pursuant to the terms of the Agreement the complaint
was dismissed in
<PAGE>
September 1995. The costs of settlement, including legal fees
incurred, totalled approximately $50,000. Accordingly, the
Company recorded a nonrecurring charge of $50,000, included in
the accompanying statements of operations as non-operating
expense.
Although the Company is not currently a party to any significant
ongoing legal proceedings, the Company is subject to such legal
proceedings and claims as may arise in the ordinary course of its
business that cover a wide range of matters, including but not
limited to such matters as workers compensation, general
liability and products liability claims. While there are
presently no ongoing proceedings, because the Company carries
comprehensive insurance to assist in limiting the Company's
exposure to financial loss as a result of substantially all
claims as may arise in the normal course of business, such
proceedings and/or claims will not, in the opinion of management
based upon the information it presently possesses, have a
material adverse effect on the financial position of the Company.
NOTE 10: SUBSEQUENT EVENT (UNAUDITED)
On December 26, 1995 the Company, through its Maxwell's
subsidiary, signed an Asset Purchase and Sale Agreement (the
"Agreement") to acquire substantially all of the assets and
business operations of four Japanese steak and seafood
restaurants owned by Asian Restaurants International, Inc. for a
total of $2,400,000. The Agreement calls for an initial payment
of approximately $600,000 cash, the issuance of notes totalling
$1,400,000, payable over four years, and the signing of a non-
compete and consulting agreement requiring payment of $400,000
over five years.
The acquisition of the assets and business operations is subject
to various conditions, including, but not limited to, inspections
of the properties and the books and records. The Company expects
this acquisition, which will be treated as a purchase, will be
completed in the second quarter of the Company's 1996 fiscal
year.
The following unaudited proforma condensed balance sheet gives<PAGE>
effect to this acquisition as if it had occurred at October 1,
1995.
Proforma Condensed
-------------------------------------------
Proforma
Assets As Reported Adjustments Proforma
------ ----------- ------------ -----------
Cash $ 1,477,000 $ (600,000) $ 877,000
Net property and
equipment 2,095,000 1,675,000 3,770,000
All other assets 1,010,000 725,000 1,735,000
----------- ------------ -----------
$ 4,582,000 $ 1,800,000 $ 6,382,000
=========== ============ ===========
<PAGE>
Liabilities and
Stockholders Equity
------------------------
Notes payable, current $ --- $ 314,000 $ 314,000
All other liabilities 945,000 400,000 1,345,000
Notes payable,
long-term --- 1,086,000 1,086,000
Stockholders equity 3,637,000 --- 3,637,000
----------- ------------ -----------
$ 4,582,000 $ 1,800,000 $ 6,382,000
=========== ============ ===========
The following unaudited proforma consolidated results of
operations give effect to the proposed acquisition as though it
had occurred October 3, 1993.
October October
Fiscal Years Ended 1, 1995 2, 1994
------------ ------------
Revenues $ 17,319,000 $ 15,989,000
============ ============
Net Income $ 1,612,000 $ 1,129,000
============ ============
Net income per share:
Primary $ .43 $ .30
============ ============
Fully diluted $ .43 $ .30
============ ============
Permitted proforma adjustments include only the effects of events
directly attributable to a transaction that are factually
supportable and expected to have a continuing impact. Proforma
adjustments reflecting anticipated "efficiencies" in operations
resulting from a transaction are, under most circumstances, not
permitted. For purposes of presenting the above unaudited
consolidated results of operations certain proforma adjustments
were made including adjustments to depreciation, interest expense
and general and administrative expense to reflect the effect of
the acquisition and the Company's basis in the assets to be<PAGE>
acquired.
The unaudited proforma information is presented to provide the
reader with information about the continuing impact of this
proposed acquisition by showing how it might have affected
historical financial statements and is not necessarily indicative
of results of operations that would have occurred had the
acquisition been made on October 3, 1993 or of future results of
operations of the Company.
<PAGE>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT;
---------------------------------------------------
(a) Identification of Directors.
----------------------------
The following sets forth certain information with respect to all
directors of the Company:
Name Age Position and Term of
Offices Held Office
------------------ --- ------------- ----------
--
Douglas M. Rudolph 44 President, Chairman of the 1985-
Present
Board, Chief Executive
Officer, Secretary and
Director
Peter Graham 40 Director 1986-
Present
Eli Boyer 76 Director 1986-
Present
Pursuant to the Company's By-Laws, as amended in fiscal 1988, the
Board of Directors is divided into four classes defined with the
purpose of providing for continuity of management by staggering
the term of office of each director. The term of office of Class
A expires in one year and the term of office of the remaining
three classes expires in the second (Class B), third (Class C)
and fourth (Class D) succeeding years. Subsequent terms of office
for each class expire the fourth year after election to the
initial term of office.
Mr. Boyer comprises the member of Class A, the term of which was
to have expired in 1991. Mr. Graham comprises the member of Class
B which was to have expired in 1993. Mr. Rudolph comprises the
member of Class D, the term of which was to expire in 1991. The
terms of all the directors have been extended until the next
Meeting of Shareholders.
Mr. Rudolph is a director, President and Chairman of the Board of
Rudy's Restaurant Group, Inc. and its subsidiaries and has held<PAGE>
these positions since prior to 1990. He is also a member of the
Executive Committee and the Transactions Committee of the
Company's Board of Directors. Mr. Rudolph has been the principal
shareholder and president of Rudolph Entertainment, Inc. ("REI",
formerly Rudolph Foods, Inc.) since 1983. Mr. Rudolph is a
registered
<PAGE>
Florida real estate salesman.
Peter Graham was elected a director of the Company in June 1986.
In addition, he is a member of the Executive Committee,
Transactions Committee, Stock Option and Executive Compensation
Committee and Audit Committee of the Company's Board of
Directors. Mr. Graham is a principal and director at Ladenburg
Thalmann & Co. Inc., an investment banking firm, and has been
associated with such firm for over ten years. Mr. Graham served
as a director of BSH and Safety Harbor Corporation through
February 1990 at which time he resigned from these boards. Mr.
Graham also serves as a director of SPI-Suspension and Parts
Industries Ltd., Regency Equities Corp., Prism Entertainment
Corp. and Seventh Generation.
Eli Boyer was elected a director of the Company in April 1986. In
addition, he is a member of the Stock Option and Executive
Compensation Committee and Audit Committee of the Company's Board
of Directors. Previously Mr. Boyer was a senior partner in the
accounting firm of Laventhol & Horwath. Mr. Boyer now performs
consulting services. He is a director of Fries Entertainment,
Inc., a company engaged in the television entertainment business.
Mr. Boyer was formerly a director of Safety Harbor Corporation,
and The Horn and Hardart Company.
(b) Identification of Executive Officers.
-------------------------------------
The following sets forth certain information with respect to all
executive officers of the Company:
Name Age Position(s) Held
------------------ --- -------------------------------------
--
Douglas M. Rudolph 44 President, Chief Executive Officer,
Secretary and Director
Marie G. Peterson 48 Vice President, Treasurer, Chief
Operating and Financial Officer
See "Identification of Directors" for a biography of Mr. Rudolph.
Ms. Peterson is the Vice President of Finance, Treasurer and
Chief Financial Officer of Rudy's Restaurant Group, Inc. and its
subsidiaries and has held these positions since prior to 1990.
She was named Chief Operating Officer of the Company and its<PAGE>
subsidiaries in 1995.
(c) Compliance with Section 16(a) of the Securities Exchange
Act
-----------------------------------------------------------
Section 16(a) of the Securities Exchange Act requires the
Company's executive officers and directors and persons who own
more than ten percent of the Company's common stock to file
reports of ownership
<PAGE>
and changes in ownership of the Company's Common Stock and any
other equity securities of the Company with the Securities and
Exchange Commission (the "SEC"). Executive officers, directors
and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section
16(a) forms filed.
Based solely on its review of the copies of such forms received
by the Company, or written representations from certain reporting
persons that no Form 5's were required for those persons, the
Company believes that all its executive officers, directors and
greater than 10% shareholders complied with all filing
requirements applicable to them during 1995.
Item 10. EXECUTIVE COMPENSATION
----------------------
Cash Compensation
-----------------
The following sets forth certain information with respect to
annual compensation for all executive officers of the Company for
fiscal years ended October 1, 1995, October 2, 1994 and October
3, 1993:
<TABLE>
<S> <C> <C> <C> <C> <C>
Name and Principal Year Options
Position(s) Held Ended Salary Bonus Other Granted
------------------ ----- -------- -------- ------- -------
Douglas M. Rudolph,
President, CEO,
Secretary, Director 1995 $150,000 None $22,800 None
1994 $150,000 None $22,800 None
1993 $150,000 $100,000 $22,800 None
Marie G. Peterson,
VP, Treasurer, COO
and CFO 1995 $84,000 None None None
1994 $84,000 None None None
1993 $84,000 $36,000 None None
</TABLE>
Mr. Rudolph's other compensation includes an annual expense
allowance of $10,800 and annual Director's fees of $12,000.
The executive officers of the Company are provided with insurance
coverage under the Company's group medical plan under the same
terms and conditions as are available to other salaried
employees.
Mr. Rudolph renders services to the Company on a full time basis
pursuant to the terms of an employment agreement and a consulting
agreement with his wholly owned company, REI. These agreements
provide Mr. Rudolph a total annual compensation of $150,000,
<PAGE>
reimbursement for certain expenses incurred by him, and a
possible annual incentive bonus of up to $100,000 annually as
determined by the Company's Board of Directors (the "Board"). The
Company believes that the terms of its existing arrangements with
Mr. Rudolph are no less favorable to the Company than similar
arrangements which might have been entered into with similarly
qualified unrelated parties. All references to such employment
agreement and consulting agreement are qualified in entirety by
reference to Exhibits 10.19 and 10.20 of this report,
respectively.
Ms. Peterson renders services to the Company on a full time basis
pursuant to the terms of an employment agreement entered into in
February 1990. The initial term of the employment agreement was
for
a term of one year with certain renewal periods, as agreed by the
parties. All references to such employment contract are qualified
in its entirety by reference to Exhibit 10.11 of this report.
Each director (including employee directors) earns an annual fee
of $12,000 for serving on the Board of Directors plus $1,000 per
meeting attended. In addition, the Company reimburses all
directors for travel and other reasonable and normal expenses
incurred on behalf of the Company. Directors fees totalled
$36,000 in 1995 and 1994. Payment of accrued directors fees
totalled $36,000 in 1995 and 1994.
Employee Stock Option Plan
--------------------------
The Company's 1985 Employee Stock Option Plan, as amended (the
"Plan") terminated in May 1995. The Plan provided that options to
purchase up to 600,000 shares of the Company's Common Stock may
be granted. The Plan was designed so that either options that are
intended to satisfy the requirements of the Internal Revenue Code
with respect to "Incentive Stock Options" ("ISO's") or options
that are not intended to satisfy such requirements ("Non ISO's")
were authorized.
Pursuant to Plan provisions, the Board designated the Stock
Option and Executive Compensation Committee (the "Committee"),<PAGE>
consisting of Messrs. Graham and Boyer, to administer the Plan.
Within the applicable limits of the Plan, the Committee had full
authority to select from among eligible individuals those to whom
options would be granted under the Plan, the number of shares
subject to each option and the price, terms and conditions of any
options to be granted thereunder. The Board of Directors had full
authority to amend the Plan, provided, however, that any
amendment which (i) increases the number of shares which may be
the subject of stock options granted under the Plan, (ii) expands
the class of individuals eligible to receive options under the
Plan, (iii) increases the period during which options may be
granted or the permissible term of options under the Plan, or
(iv) decreases the minimum exercise price of such options, could
only be adopted by the Board of Directors, subject to
shareholders approval.
<PAGE>
Executive officers and key employees of the Company and its
subsidiaries were eligible to receive options under the Plan. The
exercise price of any option was to be not be less than 100% (or,
in the case of an ISO granted to a 10% shareholder, 110%) of the
fair market value of the shares purchasable thereunder on the
date of grant.
Payment for shares purchased upon the exercise of options were
authorized to be made in cash, certified check or by transfer to
the Company of a number of shares of the Company's Common Stock
whose aggregate market value is equal to the aggregate option
price (provided that, unless waived by the Committee, with
respect to
options issued after April 19, 1988 the shares of Common Stock
shall have been owned at least six months). This latter provision
would include the "pyramiding" of shares in successive
simultaneous exercise. Thus, an optionee could initially exercise
an option in part, acquiring a few shares of Common Stock, and
thereafter effect further exercises of the option, using the
Common Stock acquired upon the earlier exercises to pay for the
increasingly greater number of shares received on each successive
exercise. This procedure would permit an optionee to pay the
option price with only a single share of Common Stock and to
acquire a number of shares of Common Stock having an aggregate
fair market value equal to the excess of (a) the fair market
value of all shares to which the option relates over (b) the
aggregate exercise price under the option. The Company was
authorized to make loans to an optionee for the purpose of fully
or partially exercising an option under the Plan.
From June 1, 1985 to May 1, 1995, employees received options to
purchase 538,155 shares of Common Stock of which 245,000 were
exercisable and were exercised in December 1995. The weighted
average option price under such options is $.13 per share.
Inasmuch as the purpose of the Plan was to attract and retain
qualified employees, the Company intends to establish an employee
stock option plan with terms similar to those outlined herein in<PAGE>
1996.
The above summary is qualified in its entirety by reference to a
full description of the Plan, found in Exhibit 10.1 of this
report.
Stock Options of Executive Officers
-----------------------------------
The following sets forth certain information with respect to
stock options granted executive officers of the Company under the
Company's 1985 Employee stock option plan.
<PAGE>
<TABLE>
<S> <C> <C> <C>
All Officers
Douglas M. Marie G. consisting of
Stock Options Rudolph Peterson two individuals
---------------------------- ---------- --------- ------------
----
Options granted June 1985 through
October 1, 1995 248,750 53,125 301,875
Average per share exercise price $ .12 $ .73 $ .25
Options exercised June 1985 through
October 1, 1995 None None None
Options expiring June 1985 through
October 1, 1995 48,750 13,125 61,875
Unexercised Options at October
1, 1995 200,000 40,000 240,000
</TABLE>
The exercise price of each option is at or above the approximate
fair market value of the Company's Common Stock on the date the
option was granted. Directors who are not executive officers of
the Company have not received any options to purchase shares of
Common Stock. All unexercised options at October 1, 1995 were
exercised in December 1995.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
--------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
-----------------------------------------------
The following sets forth certain information as of December 15,
1995 with respect to the Common Stock of the Company beneficially
owned by any person who is known to the Company to be the
beneficial owner of more than 5% of the Company's voting
securities. The percent of common stock shown is as of December
15, 1995 and includes the effect of 245,000 shares issued
pursuant to the terms of options exercised in December 1995:
Name and Address of Amount and Nature of Percent
of
Beneficial Owner Beneficial Ownership Common
Stock
--------------------- -------------------- ----------
--
Bright Star Holding, Inc.
101 Convention Center Drive
Las Vegas, NV 89109 450,000 12.0%
Douglas M. Rudolph
4000 Towerside Terrace
Miami, FL 33138 2,081,100* 55.3%
*Does not include (i) 7,500 shares owned by Judi Male, Mr.
Rudolph's sister, (ii) 7,500 shares owned by Richard Rudolph, Mr.
<PAGE>
Rudolph's brother, or (iii) 12,900 shares owned by Muriel
Rudolph, Mr. Rudolph's mother. Mr. Rudolph may be deemed a parent
of the Company as that term is defined under the Securities Act
of 1933.as amended.
(b) Security Ownership of Management
--------------------------------
The following sets forth certain information as of December 15,
1995 with respect to the Common Stock of the Company beneficially
owned by all directors and nominees (other than directors listed
as principal shareholders in the preceding table) and by all
executive officers and directors as a group. The persons
identified in this table have sole voting and investment power
with respect to the shares according to information furnished to
the Company by each of them.
Name of Individual or Amount of Beneficial Percent of
Identity of Group Ownership Common
Stock*
Eli Boyer 1,000 Less than
1%
Peter Graham 100,000
2.7%
Marie G. Peterson 40,000
1.1%
All executive officers and
directors as a group
(consisting of 4 individuals)
including 1,982,100 shares
outstanding at October 1,
1995 and 240,000 shares issued
December 1995 pursuant to
options exercisable October
1, 1995 2,222,100
59.0%
* Percent shown is of 3,765,000 shares outstanding at December
15, 1995
(c) Change in Control
-----------------
In June 1993 BSH sold 1,467,000 of the 2,080,000 shares then held
by BSH to Douglas M. Rudolph. As a result of this transaction,
there was a change in control of the Company. At December 15,
1995, Mr. Rudolph holds 55.3% of the Company's outstanding Common
Stock and BSH holds 12% of the Company's outstanding Common
Stock.
A change in control of the Company constitutes an event
triggering certain severance provisions of certain employment
contracts between the Company and its executive officers.
However, as of December 15, 1995 the Company's executive officers
have not elected to exercise their rights under such severance
provisions.
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
See Note 8 to the Company's financial statements regarding
transactions with BSH, the Company's majority shareholder and
related transactions.
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K.
----------------------------------
(a) Exhibits
--------
3.1 Amended and Restated Articles of Incorporation of the
Company dated April 24, 1986. Incorporated by reference to
Exhibit 3.1 to The Company's Registration Statement on Form S-18
as filed with the Securities and Exchange Commission File No. 33-<PAGE>
5362, effective June 18, 1986 (the "Registration Statement").
3.2 By-Laws of the Company. Incorporated by reference to Exhibit
3.1 of the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 5, 1988.
4.1 Specimen of Common Stock Certificate. Incorporated by
reference to Exhibit 4.1 of the Registration Statement.
4.2 $750,000 10% Convertible Subordinated Secured Note of Rudy's
Sirloin SteakBurgers, Inc. issued to Douglas M. Rudolph.
Incorporated by reference to Exhibit 4.2 of the Company's Annual
Report on Form 10-K for the fiscal year ended September 27, 1987
(the "1987 Form 10-K").
4.3 $750,000 10% Convertible Subordinated Secured Note of Rudy's
Sirloin SteakBurgers, Inc. issued to Sidney J. Rudolph.
Incorporated by reference to Exhibit 4.3 of the 1987 Form 10-K.
4.4 $296,250 Promissory Note of Rudy's Sirloin SteakBurgers,
Inc. issued to Douglas M. Rudolph, as amended. Incorporated by
reference to Exhibit 4.4 of the 1987 Form 10-K.
4.5 $296,250 Promissory Note of Rudy's Sirloin SteakBurgers,
Inc. issued to Sidney J. Rudolph, as amended. Incorporated by
reference to Exhibit 4.5 of the 1987 Form 10-K.
4.6 Rights Agreement dated as of April 21, 1988 between Rudy's
Restaurant Group, Inc. and Bank of America National Trust and
Savings Association. Incorporated by reference to Exhibit 2.1 of
the Company's Form 8-A dated May 6, 1988.
10.1 1985 Employee Stock Option Plan of the Company, as amended.
Incorporated by reference to Exhibit 10.1 of the Company's Annual
Report on Form 10-K for the fiscal year ended October 2, 1988
(the "1988 Form 10-K").
<PAGE>
10.2 Non-transferable Stock Purchase Warrant issued to Sidney J.
Rudolph. Incorporated by reference to Exhibit 10.3 of the
Registration Statement.
10.3 Non-transferable Stock Purchase Warrant issued to Judi
Male. Incorporated by reference to Exhibit 10.3 of the
Registration Statement.
10.4 Amendment to Employment Agreement dated as of April 30,
1989 among Rudy's Restaurant Group, Inc., Rudy's Sirloin
SteakBurgers, Inc., The Samurai, Inc. and Douglas M. Rudolph.
Incorporated by reference to Exhibit 10.4 of the Company's Annual
Report on Form 10-K for the fiscal year ended October 1, 1989
(the "1989 Form 10-K").
10.5 Consulting Agreement dated as of October 1, 1988 between
Rudy's Restaurant Group, Inc. and Peter Graham. Incorporated by<PAGE>
reference to Exhibit 10.8 of the 1988 Form 10-K.
10.6 Collateral Agreement between BSH and the Company.
Incorporated by reference to Exhibit 10.13 of the Registration
Statement.
10.7 Acquisition Agreement dated as of October 21, 1985 among
the Company, BSH, Sidney J. Rudolph, Douglas M. Rudolph and
Rudy's Sirloin SteakBurgers, Inc. Incorporated by reference to
Exhibit 10.5 of the Registration Statement.
10.8 Directors and Officers Liability Indemnification Agreement
dated as of April 1, 1987 among BSH and the officers and
directors of BSH, the Company and all subsidiaries thereof,
Directors and Officers Liability Indemnification Trust dated
April 1, 1987 among BSH, as Settlor, and Jeffrey Mischel, Peter
Graham, and Eli Boyer, as original Co-Trustees; Mortgage dated
April 3, 1987 from BSH to Directors and Officers Liability
Indemnification Trust. Incorporated by reference to Exhibit
10.12 of the 1987 Form 10-K.
10.9 Loan and Security Agreement dated as of December 8, 1988 by
and among Rudy's Restaurant Group, Inc., Rudy's Sirloin
SteakBurgers, Inc., The Samurai, Inc. and Heller Financial, Inc.
Incorporated by reference to the Company's Report on Form 8-K
dated December 19, 1988.
10.10 Letter Agreement dated December 8, 1988 among Donald
Schupak, Rudy's Restaurant Group, Inc., Rudy's Sirloin
SteakBurgers, Inc., The Samurai, Inc. and Heller Financial, Inc.
Incorporated by reference to Exhibit 10.13 to the 1988 Form 10-K.
10.11 Form of Employment Agreement between the Company and
certain of its executive officers. Incorporated by reference to
Exhibit 10.11 to the December 24, 1989 Form 10-Q.
<PAGE>
10.12 Stipulation of Settlement filed in that certain action
------------------------------------------------------
styled Chemical Bank v. Bright Star Holding, Inc., Rudy's
---------------------------------------------------------
Restaurant Group, Inc., Sidney Rudolph and Douglas
Rudolph,
----------------------------------------------------------
(U.S.District Court,Southern Districtof NewYork) 89
Civ. 0609 (WK) dated April 20, 1990. Incorporated by reference to
the Company's Current Report on Form 8-K dated April 25, 1990.
10.13 Agreement for Acquisition of Assets and Assumption of
Certain Liabilities of Rudy's Sirloin SteakBurgers, Inc. by and
between Rudy's Sirloin SteakBurgers, Inc. and Euro- American
Holding Corporation, Inc., dated December 24, 1990;<PAGE>
Indemnification and Security Agreement from RSSB, Inc., a Florida
corporation in favor of Rudy's Sirloin SteakBurgers, Inc.,
executed on January 25, 1991; Guaranty of payment from Euro-
American Holding Corporation, Inc., a Florida Corporation and
East-West Logistics, Inc., a Liberian corporation, in favor of
Rudy's Sirloin SteakBurgers, Inc., dated January 25, 1991;
Agreement for Sale and Purchase of Proprietary Information dated
December 24, 1990. Incorporated by reference to the Company's
Report on Form 8-K dated January 25, 1991.
10.14 Asset Purchase Agreement by and between Rudy's Sirloin
SteakBurgers, Inc. and Supreme Chicken of Kendall, Inc. dated
10/30/90. Incorporated by reference to the Company's Report on
Form 8-K dated January 25, 1991.
10.15 Settlement Stipulation and Agreement dated April 9, 1991
by and between Chester Del Bello, Trustee for the Amended and
Restated Irrevocable Trusts for Dale Del Bello Jr. and Danielle
Del Bello and The Samurai, Inc. and Rudy's Restaurant Group, Inc.
Incorporated by reference to Exhibit 10.15 of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 17,
1991.
10.16 Settlement Stipulation dated April 7, 1992 by and between
12605 Biscayne, Rudy's Restaurant Group, Inc. and Rudy's Sirloin
SteakBurgers, Inc. Incorporated by reference to Exhibit 10.16 of
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 15, 1992.
10.17 Joint Stipulation of the Parties to Settlement dated June
24, 1992 by and between Metlife Capital Corporation, Rudy's
Sirloin SteakBurgers, Inc. and Rudy's Restaurant Group, Inc.
Incorporated by reference to Exhibit 10.17 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 7, 1992.
10.18 Joint Motion for Approval of Stipulation and Compromise of
Claim dated December 17, 1992 by and between RSSB, Inc., and
Rudy's Sirloin SteakBurgers, Inc. Incorporated by reference to
Exhibit 10.18 of the Company's Annual Report on Form 10-K for the
fiscal year ended October 3, 1993 (the "1992 Form 10-K").
<PAGE>
10.19 Employment Agreement by and between Rudy's Restaurant
Group, Inc. and Douglas M. Rudolph dated July 1, 1992 and
Amendment to Employment Agreement dated April 1, 1992.
Incorporated by reference to Exhibit 10.19 of the 1992 Form 10-K.
10.20 Consulting Agreement by and between The Samurai, Inc. and
Rudolph Entertainment, Inc. ("REI") dated April 1, 1992.
Incorporated by reference to Exhibit 10.20 of the 1992 Form 10-K.
10.21 Rudolph Obligation Agreement by and between Rudy's
Restaurant Group, Inc. and Douglas M. Rudolph dated June 1, 1994.
Incorporated by reference to Exhibit 10.21 of the 1994 Form 10-K.<PAGE>
22 Subsidiaries of the Company. Incorporated by reference to
Exhibit 22 of the 1986 Form 10-K.
(b ) Reports on Form 8-K:
--------------------
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RUDY'S RESTAURANT GROUP, INC.
(Registrant)
By: /s/ Douglas M. Rudolph
-------------------------
Douglas M. Rudolph
Chief Executive Officer
Chairman of the Board
Dated: January 12, 1996
--------------------
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated:
/s/ Douglas M. Rudolph President, Chairman January 12, 1996
- ----------------------- ofthe Board, Chief
Douglas M. Rudolph Executive Officer,
Secretary and Director
/s/ Marie G. Peterson Vice President, January 12, 1996
- --------------------- Treasurer, Chief
Marie G. Peterson Financial and
Operating Officer,
and Principal
Accounting Officer
/s/ Eli Boyer Director January 12, 1996
- -----------------------
Eli Boyer
/s/ Peter Graham Director January 12, 1996
- -----------------------
Peter Graham
<PAGE>
