<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 June 30, 1996
-------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-9214
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Perkins Family Restaurants, L.P.
- -------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 62-1283091
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
6075 Poplar Avenue, Suite 800, Memphis, Tennessee 38119-4709
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(901) 766-6400
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(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 Six Months Ended
June 30 June 30
---------------------- ----------------------
1996 1995 1996 1995
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Food sales $ 58,863 $ 56,602 $ 114,462 $ 109,561
Franchise revenues 4,653 4,241 9,027 8,195
-------- -------- --------- ---------
Total Revenues 63,516 60,843 123,489 117,756
-------- -------- --------- ---------
COSTS AND EXPENSES:
Cost of Sales:
Food cost 16,819 16,525 33,186 31,825
Labor and benefits 20,250 19,629 39,277 38,039
Operating expenses 11,978 11,687 23,796 22,880
General and administrative 6,129 5,729 11,741 11,233
Depreciation and amortization 3,921 3,542 7,747 6,893
Interest, net 1,282 1,181 2,570 2,274
Benefit from litigation settlement - (190) - (190)
Other, net (215) (172) (455) (310)
-------- -------- --------- ---------
Total Costs and Expenses 60,164 57,931 117,862 112,644
-------- -------- --------- ---------
NET INCOME $ 3,352 $ 2,912 $ 5,627 $ 5,112
======== ======== ========= =========
WEIGHTED AVERAGE UNITS OUTSTANDING 10,289 10,267 10,289 10,267
NET INCOME PER UNIT $ 0.32 $ 0.28 $ 0.54 $ 0.49
CASH DISTRIBUTION DECLARED PER UNIT $ 0.325 $ 0.325 $ 0.65 $ 0.65
</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>
June 30, December 31,
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,234 $ 1,825
Receivables, less allowance for
doubtful accounts of $425 and $481 7,059 8,683
Inventories, at the lower of first-
in, first-out cost or market 3,871 4,318
Prepaid expenses and other current assets 2,066 1,505
--------- ---------
Total current assets 15,230 16,331
--------- ---------
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation and amortization 117,723 117,435
NOTES RECEIVABLE, less allowance for
doubtful accounts of $11 and $14 861 1,883
INTANGIBLE AND OTHER ASSETS, net of
accumulated amortization of $25,838
and $25,259 25,558 26,180
--------- ---------
$ 159,372 $ 161,829
========= =========
</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>
June 30, December 31,
1996 1995
--------- ---------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt $ 20,300 $ 3,575
Current maturities of capital lease obligations 1,826 1,984
Accounts payable 7,526 7,525
Accrued expenses 14,864 13,099
Distributions payable 3,475 3,475
--------- ---------
Total current liabilities 47,991 29,658
--------- ---------
CAPITAL LEASE OBLIGATIONS, less current maturities 8,962 8,810
LONG-TERM DEBT, less current maturities 37,800 57,850
OTHER LIABILITIES 4,384 4,415
PARTNERS' CAPITAL:
General partner 603 611
Limited partners (10,482,130 and 10,481,370 Units
issued and outstanding) 62,128 63,373
Deferred compensation related to restricted Units (2,496) (2,888)
--------- ---------
Total partners' capital 60,235 61,096
--------- ---------
$ 159,372 $ 161,829
========= =========
</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 Six Months Ended
June 30 June 30
------------------ -----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 3,352 $ 2,912 $ 5,627 $ 5,112
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,921 3,542 7,747 6,893
Benefit from litigation settlement - (190) - (190)
Other noncash income and expense items 533 474 1,019 911
Gain/Loss on disposition of assets (23) - (23) -
Changes in other operating assets and
liabilities 1,602 (768) 2,393 (953)
------- ------- ------- -------
Total adjustments 6,033 3,058 11,136 6,661
------- ------- ------- -------
Net cash provided by operating activities 9,385 5,970 16,763 11,773
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for property and equipment (4,041) (9,677) (7,004) (16,299)
Proceeds from sales of property and equipment 383 115 383 115
Payments on notes receivable 729 172 1,587 324
------- ------- ------- -------
Net cash used in investing activities (2,929) (9,390) (5,034) (15,860)
------- ------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term debt 9,700 15,650 13,550 22,400
Payments on long-term debt (11,400) (8,575) (16,875) (12,025)
Principal payments under capital lease
obligations (546) (487) (1,042) (968)
Distributions to partners (3,478) (3,473) (6,953) (6,913)
------- ------- ------- -------
Net cash provided by (used in) financing
activities (5,724) 3,115 (11,320) 2,494
------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents 732 (305) 409 (1,593)
------- ------- ------- -------
CASH AND CASH EQUIVALENTS:
Balance, beginning of period 1,502 305 1,825 1,593
------- ------- ------- -------
Balance, end of period $ 2,234 $ - $ 2,234 $ -
======= ======= ======= =======
</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 1995 Annual Report to Unitholders should be read in
conjunction with these statements.
Certain prior year amounts have been reclassified to conform to 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 Six Months Ended
June 30 June 30
------------------ ----------------
1996 1995 1996 1995
-------- -------- ------ -------
<S> <C> <C> <C> <C>
Net income as reported $ 3,352 $ 2,912 $ 5,627 $ 5,112
Less: 1% general partner's interest (34) (29) (56) (51)
------- ------- ------- -------
Net income applicable to units $ 3,318 $ 2,883 $ 5,571 $ 5,061
======= ======= ======= =======
Weighted average units outstanding 10,289 10,267 10,289 10,267
Net income per unit $ 0.32 $ 0.28 $ 0.54 $ 0.49
</TABLE>
6
<PAGE> 7
Weighted Average Units Outstanding
Weighted average units outstanding are computed as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1996 1995 1996 1995
-------- -------- ------ -------
<S> <C> <C> <C> <C>
Weighted average units 10,284 10,266 10,284 10,266
Weighted average equivalent units 5 1 5 1
------- ------- ------- -------
Weighted average units outstanding 10,289 10,267 10,289 10,267
======= ======= ======= =======
</TABLE>
Contingencies
In March 1995, two former employees filed a lawsuit in the U.S. District Court
for the District of North Dakota alleging sexual harassment and related claims.
After a trial in July 1996, the court found for Perkins on all counts of one
plaintiff and all counts except two of the second plaintiff. The court awarded
damages against Perkins in the amount of $3,500 for the counts for which the
court found for the plaintiff.
The Partnership is a party to various other legal proceedings in the ordinary
course of business. At this time, management does not believe it is likely
that these proceedings, either individually or in the aggregate, will have a
materially 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
franchised restaurants and to purchase and install the Perkins in-store bakery.
The Partnership provides a limited guaranty of the funds borrowed. At June
30, 1996, there were approximately $1,265,000 in borrowings outstanding under
these programs. The Partnership has guaranteed $1,050,000 of these borrowings
which represents its minimum commitments. The Partnership does not anticipate
its guaranties will exceed these minimums in the future.
The Partnership has entered into a separate agreement with one of the lending
institutions to assist a franchisee in obtaining lease financing to install
in-store bakeries in 28 existing restaurants operated by the franchisee.
Pursuant to the agreement, the Partnership will provide a declining limited
guaranty to the lender for payment of the franchisee's obligations between the
lender and the fanchisee, not to exceed $1,350,000. The Partnership's current
maximum liability if the maximum lease commitment is funded would be $945,000.
At June 30, 1996, there were approximately $527,000 in borrowings outstanding
under the program, of which the Partnership has guaranteed approximately
$369,000.
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 and six months ended June 30,
consisted of the following (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1996 1995 1996 1995
-------- -------- ------ -------
<S> <C> <C> <C> <C>
(Increase) Decrease in:
Receivables $ 885 $ 222 $ 1,000 $ 665
Inventories (344) (94) 447 (250)
Prepaid expenses and
other current assets (12) (200) (1,013) (762)
Other assets 80 250 218 250
Increase (Decrease) in:
Accounts payable 192 1,274 - 1,031
Accrued expenses 1,463 (2,389) 1,760 (1,834)
Other liabilities (662) 169 (19) (53)
------- ------ ------- -----
$ 1,602 $ (768) $ 2,393 $ (953)
======= ====== ======= ======
</TABLE>
The Partnership paid interest of $1,556,000 and $1,238,000 during the second
quarters of 1996 and 1995, respectively, and $2,876,000 and $2,076,000 for the
six months ended June 30, 1996, and 1995, respectively.
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 June 30, 1996, and December 31, 1995, 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>
June 30, December 31,
1996 1995
-------- --------
<S> <C> <C>
Depreciation $ (1,500) $ (1,670)
Capitalized leases 1,280 1,240
Reserve, store dispositions 490 795
Other, net 230 210
-------- --------
Total deferred tax assets 500 575
Valuation allowance (500) (575)
-------- --------
Net deferred tax assets $ - $ -
======== ========
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE SECOND QUARTER AND SIX MONTHS ENDED
JUNE 30, 1996
RESULTS OF OPERATIONS
Overview:
A summary of the Partnership's results for the second quarter and six months
ended June 30 are presented in the following table. All revenues, costs and
expenses are expressed as a percentage of total revenues. Certain prior year
amounts have been reclassified to conform to current year presentation.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1996 1995 1996 1995
-------- -------- ------ -------
<S> <C> <C> <C> <C>
Revenues:
Food sales 92.7 % 93.0 % 92.7 % 93.0 %
Franchise revenues 7.3 7.0 7.3 7.0
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
----- ----- ----- -----
Costs and expenses:
Cost of sales:
Food cost 26.5 27.2 26.9 27.0
Labor and benefits 31.9 32.3 31.8 32.3
Operating expenses 18.9 19.2 19.3 19.4
General and administrative 9.6 9.4 9.5 9.5
Depreciation and amortization 6.2 5.8 6.3 5.9
Interest, net 2.0 1.9 2.1 1.9
Benefit from litigation settlement - (0.3) - (0.2)
Other, net (0.4) (0.3) (0.5) (0.1)
----- ----- ----- -----
Total costs and expenses 94.7 95.2 95.4 95.7
----- ----- ----- -----
Net income 5.3 % 4.8 % 4.6 % 4.3 %
===== ===== ===== =====
</TABLE>
Net income for the second quarter of 1996 was $3,352,000 or $.32 per limited
partnership unit versus $2,912,000 or $.28 per unit for the same period in
1995. For the six months ended June 30, 1996, net income was $5,627,000 or $.54
per unit compared to $5,112,000 or $.49 per unit in the prior year.
10
<PAGE> 11
Revenues:
Total revenues for the second quarter and first six months of 1996 increased
approximately 4.4% and 4.9% respectively, over the same periods last year due
primarily to higher restaurant food sales and increased sales from Foxtail
Foods ("Foxtail"), the Partnership's manufacturing operation.
The addition of 7 new Partnership-operated restaurants since January 1, 1995,
contributed $2,361,000 and $4,729,000 to the increases in restaurant food sales
over the three and six months ended June 30, 1995. These increases were
partially offset by decreases of approximately $1,231,000 and $2,307,000
attributable to four restaurants which have been closed or franchised over the
past twelve months. Same store comparable sales increased 3.0% over the second
quarter of 1995 due to an increase in comparable guest visits, selective menu
price increases, and guest trends toward higher-priced entrees. Same store
comparable sales increased approximately 2.0% over the first six months of 1995
due to selective menu price increases and guest trends toward higher-priced
entrees.
Revenues from Foxtail increased 6.8% and 6.3% over the three and six months
ended June 30, 1995 and constituted approximately 7.5% of the Partnership's
revenues for both periods. The increase in Foxtail revenues can be primarily
attributed to increased production at the division's pie plant as well as the
popularity of in-store bakeries at franchised restaurants, to which Foxtail
sells mixes, dough, and pies. Foxtail offers cookie dough, muffin batters,
pancake mixes, pies and other food products to Partnership-operated and
franchised restaurants through food service distributors in order to ensure
consistency and availability of Perkins' proprietary products to each unit in
the system. Additionally, Foxtail manufactures certain proprietary and
non-proprietary products for sale to non-Perkins operations.
Franchise revenues, which consist primarily of franchise royalties and sales
fees, increased 9.7% over the second quarter and approximately 10.2% over the
first six months of 1995. These increases are due primarily to 23 new
franchised restaurants that opened since June 30, 1995, partially offset by
four franchised units that were closed.
Costs and expenses:
Food cost:
In terms of total revenues, food cost for the three months ended June 30, 1996,
decreased .7 percentage points over the same period in 1995. Restaurant
division food cost decreased significantly due to the decline in the costs of
certain key commodities, reduced discounting and selective menu price
increases. Foxtail food cost also declined due to pie plant efficiencies,
offset by raw material cost increases.
Food cost for the six months ended June 30, decreased .2 percentage points due
to the positive impact of second quarter food cost offset by first quarter
increases due to higher cost promotional items in the restaurants and raw
material costs of Foxtail.
The Partnership expects raw material cost pressures at Foxtail to continue for
the remainder of 1996 and also anticipates, specifically, that the current high
level of dairy and grain prices will continue to put pressure on food cost
margins in the restaurant division and at Foxtail for the remainder of the
year.
Foxtail, functioning as a manufacturing operation, typically has higher food
cost as a percent of revenue than the Partnership's restaurants. Although the
restaurants provide the majority of the Partnership's revenue, as Foxtail
becomes a more significant source of revenues to the Partnership, management
expects total food cost to increase as a percent of revenue.
11
<PAGE> 12
Labor and benefits:
Labor and benefits expense, as a percentage of total revenues, decreased .4 and
.5 percentage points, respectively, for the three and six months ended June 30,
1996, due primarily to improved productivity in the Partnership's restaurants.
Labor and benefits expense for Foxtail, in terms of total Foxtail revenues,
improved slightly from 1995 levels due to greater productivity and improved
efficiencies in its pie manufacturing facility. As a percent of revenue
generated, Foxtail labor and benefit charges are significantly lower than the
Partnership's restaurants. As Foxtail becomes a more significant component of
the Partnership's total operations, labor and benefits expense, expressed as a
percent of total revenues, should decrease.
The wage rate of the Partnership's hourly employees are impacted by Federal and
state minimum wage laws. The current proposal approved by Congress for raising
the Federal minimum wage will have a material impact on the Partnership's labor
costs. In the past, the Partnership has been able to offset increases in labor
costs through selective menu price increases and improvements in productivity.
The Partnership anticipates that it can offset the majority of the current
increase through selective menu price increases. However, there is no
guarantee that future increases can be mitigated through raising menu prices.
Operating expenses:
Operating expenses for the second quarter and first six months of 1996,
decreased as a percentage of total revenues. These decreases were primarily
attributable to management's emphasis on controlling restaurant supply costs
through changes in certain purchasing programs over the past year.
General and administrative:
General and administrative expenses, in terms of total revenues, remained
constant for the six months ended June 30, 1996. Increases in incentive
compensation costs were offset by decreases in costs due to the reduction of
new Partnership-operated restaurant development from 1995 levels. General and
administrative expenses increased .2 percent for the three months ended June 30
primarily due to increases in incentive compensation costs.
Depreciation and amortization:
Depreciation and amortization for the three and six months ended June 30, 1996,
increased 10.7% and 12.4%, respectively, over the same periods last year due
primarily to the addition of new Partnership-operated restaurants as well as
refurbishments made to upgrade existing restaurants.
Interest:
Borrowings used for unit expansion and restaurant upgrades caused interest
expense for the second quarter and first six months of 1996 to exceed 1995
levels by 8.6% and 13.0%, respectively. This increase in interest expense was
partially offset by a decrease in interest expense associated with capital
lease obligations.
Other, net:
Other, net increased approximately $43,000 and $145,000 in the second quarter
and first six months of 1996 compared to the same period last year due
primarily to rental income on four restaurant properties which were leased to
franchisees in late 1995 and 1996. Depreciation expense associated with these
four properties totaling $87,000 and $189,000 is included in depreciation and
amortization expense.
12
<PAGE> 13
CAPITAL RESOURCES AND LIQUIDITY
Principal uses of cash during the second quarter and first six months ended
June 30, 1996, were distributions paid to Unitholders, capital expenditures,
and a net reduction in long-term debt. Capital expenditures consisted
primarily of building and equipment purchases for new Partnership-operated
units and remodels to existing restaurants. Remodels and unit upgrades
constituted approximately 55% of the capital expenditures during the first six
months of 1996. The Partnership's primary source of funding was cash provided
by operations.
The Partnership maintains 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 June 30,
1996, $16,700,000 in borrowings and approximately $2,598,000 in letters of
credit were outstanding under the line of credit facility. The $16,700,000 in
borrowings under the line of credit are classified as a current liability as of
June 30, 1996. However, the Partnership is currently negotiating an extension
of the line past June 30, 1997, and believes this extension will be granted.
The borrowings under the term loan agreement are due in quarterly installments
through June 30, 1998. As of June 30, 1996, $6,000,000 was outstanding under
this agreement.
During the fourth quarter of 1995, the Partnership issued $20,000,000 of 7.19%
Unsecured Senior Notes due December 13, 2005, to an insurance company. The
proceeds were used to repay outstanding borrowings under the Partnership's
revolving line of credit. Principal payments on these notes begin December 13,
1997. The note agreement also provides for a $15,000,000 Private Shelf Note
Facility which expires December 13, 1997.
As is typical in the restaurant industry, the Partnership ordinarily operates
with a working capital deficit since the majority of its sales are for cash,
while credit is received from its suppliers. Therefore, operating with a
working capital deficit does not impair the Partnership's short-term liquidity.
At June 30, 1996, this deficit amounted to $32,762,000, which was primarily
the result of utilizing available cash for capital expenditures and
distributions to Unitholders. The significant increase in the deficit as of
June 30, 1996, is due to the classification of the revolving line of credit as
a short term liability.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In March 1995, Sally Schulz and Leah Schulz, former employees, filed a lawsuit
in the U.S. District Court for the District of North Dakota alleging sexual
harassment and related claims. After a trial in July 1996, the court found for
Perkins on all counts of Leah Schulz. The court also found for Perkins on all
counts of Sally Schulz except two, for which the court awarded damages against
Perkins of $3,500.
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: August 13, 1996 BY: /s/ Michael P. Donahoe
--------------- -------------------------------
Michael P. Donahoe
Vice President, Controller
(Chief Accounting Officer)
14
<PAGE> 15
Exhibit Index
Exhibit No. Description
10.0 Amendment No. 2 to Amended and Restated Revolving Credit
and Term Loan Agreement dated March 31, 1996 among Perkins
Restaurants Operating Company, L.P., Perkins Family
Restaurants, L.P., The First National Bank of Boston, The
Bank of Tokyo, Ltd., and First American National Bank.
27 Financial Data Schedule (for SEC use only)
15
<PAGE> 1
EXHIBIT 10.0
AMENDMENT NO. 2
TO
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This Amendment No. 2 (this "Amendment"), dated as of March 31, 1996,
between Perkins Restaurants Operating Company, L.P. (the "Borrower"), Perkins
Family Restaurants, L.P. ("PFR"), each a Delaware limited partnership, The
First National Bank of Boston ("FNBB"), a national banking association, The
Bank of Tokyo, Ltd., Atlanta Agency, a Georgia agency of a Japanese banking
corporation ("BOT"), First American National Bank ("FANB"), a national banking
association (FNBB, BOT, and FANB collectively referred to herein as the
"Banks"), and The First National Bank of Boston, as agent for the Banks (the
"Agent"), amends the Amended and Restated Revolving Credit and Term Loan
Agreement dated as of June 29, 1994, between the Borrower, the Banks and the
Agent (as amended and in effect from time to time, the "Credit Agreement").
WHEREAS, the Borrower and PFR have requested that the Banks amend the
definition of "Fixed Charge Coverage Ratio" set forth in the Credit Agreement;
and the Banks have agreed to so amend the Credit Agreement upon the terms and
conditions set forth herein; and
WHEREAS, capitalized terms used and not defined herein shall have the
meanings ascribed thereto in, or pursuant to the terms of, the Credit
Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereby agree as follows:
Section 1. Amendment to Credit Agreement. Section 1 of the Credit
Agreement is hereby amended by deleting the definition of "Fixed Charge
Coverage Ratio" set forth therein in its entirety and substituting in lieu
thereof the following definition:
"Fixed Charge Coverage Ratio. For any period, the ratio of (a) the
sum of Consolidated Net Income for such period plus Interest Expense for
such period plus federal, state, local and foreign, income and franchise
taxes paid or accrued by PFR and its Subsidiaries as an expense for such
period plus depreciation and amortization for such period plus Rental
Expense for such period plus non-cash charges relating to Financial
Accounting Standards Board Statement No. 121 deducted in the calculation
of Consolidated Net Income for such period to (b) the sum of Interest
Expense for such period plus Rental Expense for such period."
Section 2. Affirmation and Acknowledgment of the Borrower and PFR.
Section 2.1 The Borrower. The Borrower hereby ratifies and confirms all
of its Obligations to the Agent and the Banks and the Borrower hereby affirms
its absolute and unconditional promise to pay to the Banks the Obligations and
all other amounts due under the Credit Agreement and the other Loan Documents,
in each case as amended hereby.
<PAGE> 2
Section 2.2 PFR. PFR hereby ratifies and confirms all of its Obligations
to the Banks and the Agent and hereby affirms its unconditional and irrevocable
guaranty of the Guaranteed Obligations under the Credit Agreement, as amended
hereby.
Section 3. Conditions to Effectiveness. This Amendment shall become
effective as of the date first written above upon the execution and delivery of
this Amendment by the Borrower, PFR, the Banks and the Agent, in form and
substance satisfactory to the Agent.
Section 4. Representations and Warranties. The Borrower and PFR hereby
represent and warrant to the Banks as follows:
(a) The representations and warranties of the Borrower and PFR
contained in the Credit Agreement, as amended hereby, were true and
correct in all material respects when made and continue to be true and
correct in all material respects on the date hereof, except that the
financial statements referred to therein shall be the financial
statements of the Borrower and PFR most recently delivered to the Banks,
and except as such representations and warranties are affected by the
modifications contemplated hereby;
(b) The execution, delivery and performance by the Borrower and PFR
of this Amendment and the consummation of the transactions contemplated
hereby: (i) are within the partnership powers of the Borrower and PFR and
have been duly authorized by all necessary action by the General Partner
on behalf of the Borrower and PFR, (ii) do not require any approval,
consent of, or filing with, any governmental agency or authority, or any
other person, association or entity, which bears on the validity of this
Amendment and which is required by law or the regulation or rule of any
agency or authority, or other person, association or entity, (iii) do not
violate any provisions of any order, writ, judgment, injunction, decree,
determination or award presently in effect in which the Borrower or PFR
is named, or any provision of the Partnership Documents, (iv) do not
result in any breach of or constitute a default under any agreement or
instrument to which the Borrower or PFR is a party or by which they or
any of their properties are bound, including without limitation any
indenture, loan or credit agreement, lease, debt instrument or mortgage,
except for such breaches and defaults which would not have a material
adverse effect on the Borrower, PFR and their subsidiaries taken as a
whole, and (v) do not result in or require the creation or imposition of
any mortgage, deed of trust, pledge or encumbrance of any nature upon any
of the assets or properties of the Borrower or PFR; and
(c) This Amendment, the Credit Agreement as amended hereby, and the
other Loan Documents constitute the legal, valid and binding obligations
of the Borrower and PFR, enforceable against the Borrower and PFR in
accordance with their respective terms, provided that (i) enforcement may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights
and remedies of creditors, and (ii) enforcement may be subject to general
principles of equity, and the availability of the remedies of specific
performance and injunctive relief may be subject to the discretion of the
court before which any proceeding for such remedies may be brought.
Section 5. Miscellaneous Provisions.
<PAGE> 3
Section 5.1 Credit Agreement in Effect. Except as expressly provided in
this Amendment, all of the terms and conditions of the Credit Agreement and the
other Loan Documents shall remain in full force and effect.
Section 5.2 Governing Law. THIS AMENDMENT IS INTENDED TO TAKE EFFECT AS
AN AGREEMENT UNDER SEAL AND SHALL BE CONSTRUED ACCORDING TO AND GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
Section 5.3 Counterparts. This Amendment may be executed in any number of
counterparts, but all such counterparts shall together constitute but one
instrument. In making proof of this Amendment it shall not be necessary to
produce or account for more than one counterpart signed by each party hereto by
and against which enforcement hereof is sought.
Section 5.4 Costs and Expenses The Borrower agrees to pay to the Agent,
on demand by the Agent, all reasonable out-of-pocket costs and expenses
incurred or sustained by the Agent in connection with this Amendment (including
reasonable legal fees).
<PAGE> 4
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
under seal as of the date first set forth above.
PERKINS RESTAURANTS OPERATING
COMPANY, L.P.
By: PERKINS MANAGEMENT COMPANY,
INC., its General Partner
By:
---------------------------------
Title:
------------------------------
PERKINS FAMILY RESTAURANTS, L.P.
By: PERKINS MANAGEMENT COMPANY,
INC., its General Partner
By:
---------------------------------
Title:
------------------------------
THE FIRST NATIONAL BANK OF BOSTON,
for itself and as Agent
By:
---------------------------------
Title:
------------------------------
THE BANK OF TOKYO, LTD., Atlanta
Agency
By:
---------------------------------
Title:
------------------------------
FIRST AMERICAN NATIONAL BANK
By:
---------------------------------
Title:
------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF JUNE 30, 1996, AND FROM THE STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,234
<SECURITIES> 0
<RECEIVABLES> 7,920
<ALLOWANCES> 436
<INVENTORY> 3,871
<CURRENT-ASSETS> 15,230
<PP&E> 202,462
<DEPRECIATION> 84,739
<TOTAL-ASSETS> 159,372
<CURRENT-LIABILITIES> 47,991
<BONDS> 46,762
0
0
<COMMON> 0
<OTHER-SE> 60,235
<TOTAL-LIABILITY-AND-EQUITY> 159,372
<SALES> 114,462
<TOTAL-REVENUES> 123,489
<CGS> 33,186
<TOTAL-COSTS> 96,259
<OTHER-EXPENSES> 21,603
<LOSS-PROVISION> 143<F1>
<INTEREST-EXPENSE> 2,570
<INCOME-PRETAX> 5,627
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,627
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,627
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
<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>
