<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
--------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission file number 1-9214
----------
Perkins Family Restaurants, L.P.
- - - - --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 62-1283091
- - - - --------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
6075 Poplar Avenue, Suite 800, Memphis, Tennessee 38119-4709
- - - - --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(901) 766-6400
- - - - --------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by [X] whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/ No / /
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PERKINS FAMILY RESTAURANTS, L.P.
STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Unit Data)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------
1995 1994
------- -------
<S> <C> <C>
REVENUES:
Food sales $52,959 $47,164
Franchise revenues 3,954 3,639
------- -------
Total Revenues 56,913 50,803
------- -------
COSTS AND EXPENSES:
Cost of Sales:
Food cost 15,300 13,158
Labor and benefits 18,546 16,405
Operating expenses 11,136 10,041
General and administrative 5,425 5,148
Depreciation and amortization 3,351 2,886
Interest, net 1,093 729
Other, net (138) (175)
------- -------
Total Costs and Expenses 54,713 48,192
------- -------
NET INCOME $ 2,200 $ 2,611
======= =======
WEIGHTED AVERAGE UNITS OUTSTANDING 10,272 10,286
NET INCOME PER UNIT $ 0.21 $ 0.25
CASH DISTRIBUTION DECLARED PER UNIT $ 0.325 $ 0.325
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
PERKINS FAMILY RESTAURANTS, L.P.
BALANCE SHEETS
(Unaudited)
(In Thousands, Except Unit Amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 305 $ 1,593
Receivables, less allowance for
doubtful accounts of $337 and $355 6,973 7,468
Inventories, at the lower of first-
in, first-out cost or market 4,235 4,079
Prepaid expenses and other current assets 2,085 1,659
-------- --------
Total current assets 13,598 14,799
-------- --------
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation and amortization 108,787 105,404
NOTES RECEIVABLE, less allowance for
doubtful accounts of $84 and $25 3,010 2,916
INTANGIBLE AND OTHER ASSETS, net of
accumulated amortization of $24,983
and $24,693 26,967 27,288
-------- --------
$152,362 $150,407
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE> 4
PERKINS FAMILY RESTAURANTS, L.P.
BALANCE SHEETS
(Unaudited)
(In Thousands, Except Unit Amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt $ 3,500 $ 3,425
Current maturities of capital lease obligations 2,001 2,006
Accounts payable 7,623 7,866
Accrued expenses 14,548 13,810
Distributions payable 3,473 3,440
-------- --------
Total current liabilities 31,145 30,547
-------- --------
CAPITAL LEASE OBLIGATIONS, less
current maturities 10,386 10,862
LONG-TERM DEBT, less current maturities 43,100 39,875
OTHER LIABILITIES 4,111 4,345
PARTNERS' CAPITAL:
General partner 636 648
Limited partners (10,482,095 and 10,379,125 Units
issued and outstanding) 66,179 66,090
Deferred compensation related to restricted units (3,195) (1,960)
-------- --------
Total partners' capital 63,620 64,778
-------- --------
$152,362 $150,407
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE> 5
PERKINS FAMILY RESTAURANTS, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------------
1995 1994
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,200 $ 2,611
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 3,351 2,886
Other noncash income and expense items 437 399
Changes in other operating assets and liabilities (185) (2,052)
------- -------
Total adjustments 3,603 1,233
------- -------
Net cash provided by operating activities 5,803 3,844
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for property and equipment (6,622) (5,304)
Other investing activities, net 152 197
------- -------
Net cash used in investing activities (6,470) (5,107)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 6,750 6,001
Payments on long-term debt (3,450) (801)
Principal payments under capital lease obligations (481) (463)
Distributions to partners (3,440) (3,444)
------- -------
Net cash provided by (used in) financing activities (621) 1,293
------- -------
Net increase (decrease) in cash and cash equivalents (1,288) 30
------- -------
CASH AND CASH EQUIVALENTS:
Balance, beginning of period 1,593 3,495
------- -------
Balance, end of period $ 305 $ 3,525
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
PERKINS FAMILY RESTAURANTS, L.P.
NOTES TO FINANCIAL STATEMENTS
Basis of Presentation
The accompanying unaudited financial statements of Perkins Family Restaurants,
L.P. (the "Partnership") have been prepared in accordance with the instructions
to Form 10-Q and therefore do not include all information and notes necessary
for complete financial statements in conformity with generally accepted
accounting principles. The results for the periods indicated are unaudited but
reflect all adjustments (consisting only of normal recurring adjustments) which
management considers necessary for a fair presentation of the operating
results. Results of operations for the interim periods are not necessarily
indicative of a full year of operations. The notes to the financial statements
contained in the 1994 Annual Report to Unitholders should be read in
conjunction with these statements.
Total revenues and food cost for 1994 have been restated to conform to the
current year presentation, which reflects the elimination of Foxtail Foods
sales to Partnership-operated restaurants through third-party distributors.
Previously, these intercompany sales were not significant to the Partnership's
financial statements taken as a whole. Certain other prior year amounts have
been reclassified to conform to the current year presentation.
The Partnership is managed by Perkins Management Company, Inc. ("PMC"). PMC is
also the general partner of Perkins Restaurants Operating Company, L.P.
("PROC"), the entity through which the operations of the Partnership are
conducted. As general partner of the Partnership and PROC, PMC does not receive
any compensation other than amounts attributable to its 1% general partner's
interest in each of the Partnership and PROC. The Partnership reimburses PMC
for all of its direct and indirect costs (principally general and
administrative costs) allocable to the Partnership.
Net Income Per Unit
Net Income Per Unit is computed as follows (in thousands, except per unit
amounts):
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------------
1995 1994
------- -------
<S> <C> <C>
Net income as reported $ 2,200 $ 2,611
Less: 1% general partner's interest (22) (26)
------- -------
Net income applicable to units $ 2,178 $ 2,585
======= =======
Weighted average units outstanding 10,272 10,286
Net income per unit $ 0.21 $ 0.25
</TABLE>
6
<PAGE> 7
Weighted Average Units Outstanding
Weighted average units outstanding are computed as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------
1995 1994
------ ------
<S> <C> <C>
Weighted average units 10,265 10,263
Weighted average equivalent units 7 23
------ ------
Weighted average units outstanding 10,272 10,286
====== ======
</TABLE>
Contingencies
The Partnership recorded a provision of $1,079,000 in 1994 associated with two
lawsuits. These charges represent damages awarded in the cases. The
Partnership intends to appeal those judgments. The Partnership is also a party
to various other legal proceedings in the ordinary course of business.
Management does not believe it is likely that these proceedings, either
individually or in the aggregate, will have a material adverse effect on the
Partnership's financial position or results of operations.
The Partnership has sponsored financing programs offered by certain lending
institutions to help its franchisees procure funds for the construction of new
franchise restaurants and to purchase and install the Perkins in-store bakery.
The Partnership will provide a limited guarantee on the funds borrowed. At
March 31, 1995, there were approximately $1,142,000 in borrowings outstanding
under the programs, of which the Partnership has guaranteed approximately
$907,000. An additional $1,628,000 had been committed to franchisees.
7
<PAGE> 8
Supplemental Cash Flow Information
The increase or decrease in cash and cash equivalents due to changes in
operating assets and liabilities for the three months ended March 31, consisted
of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ --------
<S> <C> <C>
(Increase) Decrease in:
Receivables $ 443 $ (43)
Inventories (156) 104
Prepaid expenses and other current assets (562) (509)
Other assets - (606)
Increase (Decrease) in:
Accounts payable (243) (8)
Accrued expenses 555 (733)
Other liabilities (222) (257)
----- -------
$(185) $(2,052)
===== =======
</TABLE>
The Partnership paid interest of $1,116,000 during the first quarter of 1995
and $830,000 during the first quarter of 1994.
8
<PAGE> 9
Federal Income Taxation
In 1987, tax legislation was enacted which will have the effect of taxing
publicly traded limited partnerships, such as the Partnership, as corporations
for tax years beginning after 1997.
In 1993, the Partnership recognized the cumulative effect of adopting Statement
of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." SFAS 109 requires the Partnership to recognize deferred tax assets and
liabilities for the expected future tax consequences of existing temporary
differences between the carrying amounts and the tax bases of assets and
liabilities that are projected to reverse after January 1, 1998, the date after
which the Partnership will become a taxable entity.
As of March 31, 1995 and December 31, 1994, the Partnership had deferred tax
assets related to existing temporary differences that are projected to reverse
after January 1, 1998. However, management believes that a conclusion as to the
realizability of certain of those assets based upon current circumstances is
highly subjective, and has therefore established valuation allowances as
appropriate. Accordingly, no deferred provision for income taxes has been
reflected in the accompanying financial statements.
The components of the Partnership's net deferred tax assets were as follows (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
Depreciation $(1,270) $(1,150)
Capitalized leases 1,240 1,240
Reserve, store dispositions 630 700
Other, net 310 290
------- -------
Total deferred tax assets 910 1,080
Valuation allowance (910) (1,080)
------- -------
Net deferred tax assets $ - $ -
======= =======
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE FIRST QUARTER ENDED MARCH 31, 1995
RESULTS OF OPERATIONS
Overview:
A summary of the Partnership's results for the three months ended March 31 are
presented in the following table. All revenues, costs and expenses are
expressed as a percentage of total revenues.
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
1995 1994
-------------------------
<S> <C> <C>
Revenues:
Food sales 93.0 % 92.8 %
Franchise revenues 7.0 7.2
----- -----
Total revenues 100.0 100.0
----- -----
Costs and expenses:
Cost of sales:
Food cost 26.9 25.9
Labor and benefits 32.6 32.3
Operating expenses 19.6 19.8
General and administrative 9.5 10.1
Depreciation and amortization 5.9 5.7
Interest, net 1.9 1.4
Other, net (0.3) (0.3)
----- -----
Total costs and expenses 96.1 94.9
----- -----
Net income 3.9 % 5.1 %
===== =====
</TABLE>
Net income for the first quarter of 1995 was $2,200,000 or $.21 per limited
partnership unit versus $2,611,000 or $.25 per unit for the same period in
1994.
10
<PAGE> 11
Revenues:
Total revenues for the first quarter of 1995 increased approximately 12% over
the same period last year due primarily to higher restaurant food sales and
increased sales from Foxtail Foods, the Partnership's manufacturing operation.
An increase of approximately $5,020,000 in restaurant food sales can be
attributed to the addition of 15 new Partnership-operated restaurants since
March 31, 1994, but was partially offset by a decrease of approximately
$900,000 attributable to restaurants which have been closed or franchised over
the past twelve months. Additionally, certain units are now selectively
reducing their late night operating hours. Same store comparable sales
increased .3% over the first three months of 1994 due primarily to selective
menu price increases, partially offset by a decline in comparable guest visits
and increased discounting.
Revenues from the Foxtail Foods manufacturing division increased approximately
25% over the first quarter of 1994 and constituted approximately 8% of the
Partnership's revenues for the first three months of 1995. The increase in
Foxtail Foods' revenues can be primarily attributed to increased operations at
the division's pie plant.
Franchise revenues, which consist of franchise royalties and sales fees,
increased approximately 9% over the first quarter of 1994. These increases are
due primarily to the addition of ten new franchise restaurants since March 31,
1994. Five franchised units were closed during the last twelve months and one
Partnership-operated restaurant was sold to a franchisee.
Costs and expenses:
Food cost:
In terms of total revenues, food cost for the first quarter increased one
percentage point over the same period in 1994 due in part to the fact that the
cost of food associated with Foxtail Foods sales has become a more significant
component of the Partnership's total food cost. Because Foxtail Foods sales
typically have higher food cost percentages than those associated with
restaurant food sales, as Foxtail Foods sales increase, the Partnership's total
food cost, in terms of total revenues, will also increase.
Restaurant division food cost accounted for the most significant portion of the
increase in total food cost, expressed as a percent of revenues, due primarily
to the higher cost of certain commodities, particularly coffee and lettuce,
used in the Partnership's restaurants and the addition of new
Partnership-operated restaurants. New stores typically generate higher food
cost percentages, as the mix of products sold is generally weighted more
heavily toward higher-cost dinner items. Increased marketing promotions, which
contributed to the increase in food cost percentages by reducing the net
revenues generated, were heavily concentrated on certain entrees that
inherently carry higher food cost margins. The cost of certain product
enhancements was partially offset by selective menu price increases.
11
<PAGE> 12
Labor and benefits:
Labor and benefits expense, as a percentage of total revenues, increased .3
percentage points for the first three months of 1995 due primarily to higher
hourly labor costs in the Partnership's restaurants. The addition of new
Partnership-operated stores, which typically have higher labor percentages than
more established restaurants, and wage rate inflation caused by low
unemployment, a shrinking labor pool and increased competition for employees
contributed to the increase. These increases were partially offset by a
decrease in workers compensation insurance costs attributable to restaurant
operations.
Labor and benefits expense for Foxtail Foods, in terms of total Foxtail Foods
revenues, increased over the first three months of 1994 due primarily to
additions in personnel to support increased production at the division's pie
manufacturing facility and the higher cost of workers' compensation insurance.
The impact of the increases in both restaurant division and Foxtail Foods labor
and benefits costs are diluted by the fact that these costs are significantly
lower for the manufacturing division, expressed as a percentage of total
revenues, than in the restaurant division. Therefore, as Foxtail Foods becomes
a more significant component of the Partnership's total operations, labor and
benefits expense as a whole, expressed as a percent of total revenues, will
decrease.
Operating expenses:
Operating expenses for the first three months of 1995, expressed as a
percentage of total revenues, decreased .2 percentage points from the same
period in 1994, due primarily to decreases in restaurant utilities costs and
preopening expenses attributable to Foxtail Foods. These decreases were
partially offset by the increased cost of restaurant supplies and higher local
store marketing expenses.
General and administrative:
General and administrative expenses, in terms of total revenues, decreased .6
percentage points from the first quarter of 1994 due primarily to lower
incentive costs. As a percent of total revenues, administrative payroll costs
were flat compared with 1994 as investments in personnel to support the
Partnership's new growth over the past twelve months have leveled off.
Depreciation and amortization:
Depreciation and amortization for the three months ended March 31, 1995,
increased approximately 16% over the same period last year due primarily to the
addition of 15 new Partnership-operated restaurants and refurbishments and
remodels to upgrade and improve existing Partnership-operated restaurants.
Interest:
Interest expense for the first quarter of 1995 was approximately 50% higher
than the comparable period last year due to increased borrowings associated
with the addition of new stores and remodels to existing Partnership-operated
units. This increase was partially offset by a decrease in interest expense
associated with capital lease obligations.
12
<PAGE> 13
Capital Resources and Liquidity
Principal uses of cash during the first quarter ended March 31, 1995 were
capital expenditures and distributions paid to unitholders. Capital
expenditures consisted primarily of land, building and equipment purchases for
new Partnership-operated units and remodels to existing restaurants. The
Partnership's primary sources of funding were cash provided by operations and
borrowings under its credit facilities.
The Partnership has deferred until 1996 four of the fifteen new stores it was
originally planning to open in 1995, as a result of continued soft sales growth
in the mid-scale family segment, upward pressure in food and labor costs, and
pressure on store-level management resources, resulting in a reduction of
additional capital spending of approximately $6,600,000. Of such amount,
approximately $1,400,000 will be reallocated to the remodeling of an additional
nine existing stores, which historically result in additional sales and
increased cash flow.
During the second quarter of 1994, the Partnership refinanced the outstanding
borrowings under its existing line of credit by entering into a $40,000,000
revolving line of credit facility and a $10,000,000 term loan agreement with
three banks. The revolving line of credit contains a $6,000,000 sublimit for
letters of credit and expires on June 30, 1997, at which time all amounts
outstanding become payable. As of March 31, 1995, $20,700,000 in borrowings
and approximately $3,700,000 in letters of credit were outstanding under the
line of credit facility. The borrowings under the term loan agreement are due
in quarterly installments through June 30, 1998. As of March 31, 1995,
$8,600,000 was outstanding under this agreement.
As of March 31, 1995, the Partnership had a working capital deficit of
$17,547,000, which was primarily the result of utilizing available cash for
capital expenditures and distributions to unitholders. Operating with a
working capital deficit is common in the restaurant industry and does not
impair the Partnership's short-term liquidity as its revenues are derived
primarily from cash transactions.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Reference is made to the Index of Exhibits attached hereto as
page 15 and made a part hereof.
(b) Reports on Form 8-K - None
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PERKINS FAMILY RESTAURANTS, L.P.
BY: PERKINS MANAGEMENT COMPANY, INC.,
GENERAL PARTNER
DATE: May 12, 1995 BY: /s/ Michael P. Donahoe
------------- ----------------------
Michael P. Donahoe
Vice President, Controller
(Chief Accounting Officer)
14
<PAGE> 15
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
- - - - ----------- -----------
<S> <C>
10.1 Amendment No.1 dated April 17, 1995
to Finance Program Agreement dated
September 13, 1993 among Perkins
Restaurants Operating Company, L.P.,
Perkins Family Restaurants, L.P.,
and Finova Capital Corporation,
successor to Bell Atlantic Capital
Corporation
27 Financial Data Schedule (for SEC use
only)
</TABLE>
15
<PAGE> 1
EXHIBIT 10.1
AMENDMENT NO. 1
TO FINANCE PROGRAM AGREEMENT
This Amendment No. 1 (this "Amendment") to Finance Program Agreement (the
"Agreement") dated September 14, 1993 among FINOVA Capital Corporation
("FINOVA"), a Delaware corporation f/k/a Greyhound Financial Corporation,
successor by merger to TriCon Capital Corporation, transferee of Bell Atlantic
TriCon Leasing Corporation a/k/a Bell Atlantic Capital Corp. ("BACC"), Perkins
Restaurants Operating Company, L.P. ("PROC"), a Delaware limited partnership
and Perkins Family Restaurants, L.P. ("PFR"), a Delaware limited partnership
(PROC and PFR being sometimes herein collectively referred to as "Perkins").
RECITAL
A. The parties hereto desire to renew the Agreement and make
certain changes and clarifications thereto.
NOW, THEREFORE, in consideration of the mutual agreements and
undertakings set forth herein, the parties intending to be
legally bound agree as follows:
1. The following sentence is added at the end of Section
1.13:
"In addition thereto, "Loan" shall mean (iii) a
construction loan to a Borrower for site acquisition
and hard and soft construction costs for a Restaurant
which will serve as Collateral for a permanent Loan
under the Program and (iv) a loan secured by a
leasehold first mortgage or deed of trust on a ground
lease for the Restaurant site as well as on the
improvements comprising the Restaurant and a security
agreement or equipment lease intended as a security
agreement granting a first perfected security
interest in the furniture, fixtures and equipment to
be installed in the Restaurant. Each Loan described
in Section 1.13 (iii) or (iv) shall have as an
effective date the date that FINOVA first advances
any funds to or on behalf of a Borrower, and shall
contain the additional basic terms summarized in
Exhibit 1.13A attached hereto."
2. Section 6.1 of the Agreement is hereby deleted in its
entirety and the following is substituted in lieu
thereof:
"6.1 Expiration of BACC's Obligations. BACC's
obligation to consider applications for Loans under
the Agreement shall terminate on the earlier of (a)
December 31, 1995 or (b) the date upon which BACC
shall have approved and issued commitment letters to
Borrowers in an aggregate amount approximating (but
not to exceed) $17,000,000. This Agreement may be
renewed upon the express written approval of both
parties upon terms and conditions mutually
satisfactory to the parties and upon the commitment
of additional funds for Loans. BACC shall be under
no obligation to fund any Loan which has not closed
on or before June 30, 1996."
<PAGE> 2
3. Exhibit 1.13A (attached) to this Amendment is hereby
added to the Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
respective duly authorized representatives.
PERKINS RESTAURANTS
OPERATING COMPANY, L.P.
By: PERKINS MANAGEMENT COMPANY, INC.
ITS GENERAL PARTNER
By: /s/ Michael P. Donahoe
------------------------------
Title: Vice President
Date Executed: 4/17/95
PERKINS FAMILY RESTAURANTS, L.P.
By: PERKINS MANAGEMENT COMPANY, INC.
ITS GENERAL PARTNER
By: /s/ Michael P. Donahoe
------------------------------
Title: Vice President
Date Executed: 4/17/95
FINOVA CAPITAL CORPORATION
By: /s/ William McKinney
-------------------------------
Title: Vice President
Date Executed: 3/31/95
<PAGE> 3
EXHIBIT 1.13A
GROUND LEASE FINANCING
(LEASEHOLD MORTGAGE)
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________________________
<S> <C> <C>
FINANCING TERM o 10 year term, 10 year amortization
AMOUNT FINANCED o 80% of hard costs of building and leaseholds
GROUND LESSOR & FEE MORTGAGE o Recognition, notification and non-disturbance agreement, including notice
of default, right to cure, right to transfer to another franchisee
FIXED RATE o Fixed at closing, based upon a constant spread over the applicable 10 year
Treasury constant maturity rate
1 YEAR ADJUSTABLE RATE o 1 year, adjustable rate mortgage, fixed at closing based upon a constant
spread above the 1 year Treasury Bill rate. Option to convert to a fixed
rate on the anniversary date
5 YEAR ADJUSTABLE RATE o 5 year, adjustable rate mortgage, fixed at closing based upon a constant
spread over the 5 year Treasury Note. Option to convert to a fixed rate
on the 5 year anniversary date
PERMANENT LOAN POINTS o 1 point paid at closing
ENVIRONMENTAL REPORT o Phase 1 report required
o Shall be the responsibility of the franchisee
HARD COSTS o Building construction cost, tap fees, building permits, Engineering,
Architectural and Construction Management Fees, excavation and paving
costs.
</TABLE>
<PAGE> 4
EXHIBIT 1.13A
CONSTRUCTION FINANCING
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________________________
<S> <C> <C>
LOAN TERM o Maximum of 6 months
AMOUNT FINANCED o 90% of the cost of the land and approved building construction contract.
HOLDBACK o There will be a 10% contractor holdback on all construction funds.
INTEREST RATE o Prime + 1.75% (Chase Manhattan Bank reference rate)
CONSTRUCTION POINTS o 1 1/2 points, paid at closing (In addition to the permanent loan points)
CLOSING AND REPAYMENT o There shall be one closing for the construction and permanent loans.
After 6 months, the construction loan will automatically convert to the
permanent loan FINOVA's program pricing for fee simple real estate
transactions
PRE-CLOSING o Satisfactory title policy, soil sample, site review and Phase 1
Environmental Report required prior to closing of the construction loan.
INSPECTING ENGINEER/ARCHITECT o FINOVA shall retain an engineer to perform 3 site visits to review and
approve all contracts and monthly draw requests, the cost which shall be
born by franchisee and be capped at $3,000. Interim review work may be
requested and performed by franchisee's architect at franchisee's cost.
DISBURSEMENTS o Disbursements of draw requests shall be once monthly as approved by the
inspecting architect/engineer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
BALANCE SHEET AS OF MARCH 31, 1995 AND FROM THE STATEMENT OF INCOME FOR THE
THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 305
<SECURITIES> 0
<RECEIVABLES> 9,983
<ALLOWANCES> 421
<INVENTORY> 4,235
<CURRENT-ASSETS> 13,598
<PP&E> 196,867
<DEPRECIATION> 88,080
<TOTAL-ASSETS> 152,362
<CURRENT-LIABILITIES> 31,145
<BONDS> 53,486
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 152,362
<SALES> 52,959
<TOTAL-REVENUES> 56,913
<CGS> 15,300
<TOTAL-COSTS> 44,982
<OTHER-EXPENSES> 8,638
<LOSS-PROVISION> 39<F1>
<INTEREST-EXPENSE> 1,093
<INCOME-PRETAX> 2,200
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,200
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0
<FN>
<F1>The provision for doubtful accounts and notes is presented within operating
expenses in the accompanying financial statements and is included in total
costs above.
</FN>
</TABLE>
